By Audrey Widjaja, General Manager, Aon Hewitt, East China
and Jeremy Andrulis, General Manager, Aon Hewitt, Hong Kong

Evaluating what makes the Best Employers "the best" starts at "the end" by understanding how the "Best" delivered on the three key business performance measures impacted by investments in people: profit, employee engagement and employee turnover.

The overall financial results for organizations that participated in the study show that Best Employers delivered differentiated financial returns from the "Rest". From 2007 to 2009, Best Employers achieved double the growth in profit levels compared to the "Rest" (16% to 8%, which includes their performance during the economic crisis from 2008-09.) See the chart below.

In addition to higher profits, the "Best" achieved higher employee engagement levels with an average of 88% of employees engaged compared to 60% employee engagement for the "Rest". Both of these results are improvements from our last study in 2009 where the averages for the "Best" and the "Rest" were 86% and 57%, respectively. These levels continue the decade long trend of the "Best" having significantly higher engagement levels, but they also highlight that organizations face more challenges in differentiating themselves as the engagement levels for the "Rest" continue to improve.

The ongoing challenge that many organizations face in attracting, retaining and replacing talent makes the lower employee turnover for the Best Employers the third key measurement of success for the "Best". For senior leaders and employees, the "Best" had lower employee turnover levels. While the "Best" and the "Rest" were equally challenged to retain managers, the "Best" were able to replace a significantly higher percentage of all employees, particularly managers, from internal sources. This underscores the deeper pipeline of talent, which reduces recruitment costs, increases productivity, and confirms for employees that growth opportunities exist. 

Combined, the differentiated performance for Best Employers in profit growth, engagement levels and employee turnover highlights that they are achieving the results that matter to the business. But the question remains, how do the "Best" achieve these results? The following sections explore this question … with more questions.

Revealing how the "Best" achieve the results: Answering the critical employee questions

There is no single formula for becoming a Best Employer. The organizations identified as Best Employers possess vastly different business models, business strategies, work cultures, and human capital programs. However, in the 2011 study, it was clear that the "Best" differentiated themselves versus the "Rest" in their ability to answer five critical questions that employees are asking of their organizations.

1. Are we all aligned on the people investments needed to achieve our goals? 
2. Is there a compelling reason for me to work here?
3. Will I be effectively developed and fairly rewarded for extra effort?
4. Do I receive timely and quality support?
5. Am I trusted and encouraged to take ownership? 

While the "Best" apply many different solutions to address these questions, they all recognize that meaningful, long-term answers rely on the collective ownership and involvement of all employee segments: Leaders, Managers, Employees, and Human Resources (HR). This simply means that the "Best", compared to the "Rest", better know what specific actions and behaviors Leaders, Managers, Employees and HR need to display, implement and communicate to consistently answer these questions. The following brings to the fore the critical actions and behaviors for each employee segment across these five questions.

1. Are we all aligned on the people investments needed to achieve our goals? 
    Moving out of the leadership bubble
In this year's study, it was evident that CEOs and senior leaders of many companies operate in a "Leadership Bubble". CEOs and employees at the "Best" have strikingly more aligned views on the performance of leaders, managers and HR compared to CEOs of the "Rest", who held significantly more positive views than their employees on the effectiveness of their fellow leaders, managers and HR.

The large gap between CEOs' and employees' perspectives in the "Rest" across all categories suggests that these leaders may not fully understand the "pulse" of their organization or their employees' critical "wants" and "needs". This may result in their not making the required investments in the right areas to improve the organization's ability to attract, develop and retain staff. This gap also suggests that leaders of the "Rest" are not effectively receiving or delivering clear, timely, transparent, two-way messages with employees on the organization's direction and needs.

2. Is there a compelling reason for me to work here?
    Delivering on the employee promise when it matters
Demonstrating a commitment to employees is typically easier during booming economic times when resources are less constrained and the future outlook is positive. However, this year's study revealed that during the difficult economic crisis of 2008 and 2009, leaders and managers at the "Best" distinguished themselves by continuously investing time and resources into employees and consistently communicating that they are the engine for future growth. 

The investments in the future and commitment to deliver a compelling employee promise are also evident in examining how the leaders, managers and HR at the "Best" enabled career development and built critical capabilities. Employees at the "Best" hold significantly higher perception levels than employees at the "Rest" regarding the ability of their leaders, managers and HR to effectively design career programs and communicate clearly to staff the skills  required.

3. Will I be effectively developed and fairly rewarded for extra effort? 
    Managers find the time and have the skills to drive a performance driven culture

At the "Best", managers find the time to drive improved performance – and are more effective in creating a performance-driven culture. For example, one-quarter of all managers at the "Best" provide daily performance feedback and coaching and one-half provide coaching and feedback at least on a weekly basis (versus less than one-third of managers at the "Rest").

It is not just the commitment of managers at the "Best" to spend time providing feedback and coaching, they also possess significantly higher core managerial skills when addressing poor performance, coaching and setting stretch goals than managers at the "Rest". The "Best" also distinguish themselves by creating total rewards programs that more effectively deliver on the stated rewards philosophy and thus promote a performance-driven culture.

4. Do I receive timely and quality support?
    Human Resources that lead from the front
Human Resources at the "Best" are more active in driving the design and implementation of people programs. However, HRs at the "Best" don't just spend time gathering business needs and aligning programs to the business strategy. They are also more active and creative in:

• gathering employee needs from multiple sources,
• tracking the effectiveness of people-related program implementation by leaders and managers, and
• developing HR capabilities along with business.

The HR function at the "Best" are more proactive in part because they are working towards a different set of business-focused outcome measures -- performance measures that hold them to account to help achieve business goals.

5. Am I trusted and encouraged to take ownership? 
    Driving trust and accountability across all employee segments

For the "Best", driving accountability and trust is more than a tag line; it represents a core part of their cultures and is viewed as critical to executing their business strategies. Whether it is making a real-time decision in front of a customer, or having the freedom to take a chance on a new product, or including more employees in the decision-making process, the "Best" view pervasive accountability and trust as a cornerstone to their success.

The study decisively shows that pervasive accountability and trust is more evident across all employee segments at the "Best". Most notably, leaders at the "Best" are more effective at cascading the culture of empowerment and accountability throughout the organization. In addition, managers at the "Best" build on this accountability and effectively instill more employee ownership by limiting employees from "delegating up". These consistent behaviors create an environment where managers and employees are relatively more empowered and encouraged to make decisions and drive execution. HRs at the "Best" are more active in driving implementation of people programs that enable them to help managers and employees establish more trusted relationships – a foundational component of building accountability and trust.

How to become an Aon Hewitt Best Employer: Practical lessons from the “Best”

The five key questions where the "Best" provide differentiated answers represent five foundational pillars that all organizations can focus on to continue their journey to becoming an Aon Hewitt Best Employer.  These Best Employer pillars include:

• Strong organizational alignment – At the "Best", leaders regularly deliver timely, transparent, inspiring and clear communications and Human Resources and Managers deliver on these communications by actively partnering by applying insights on the business strategies and capabilities to improve people management.
• Clear vision and compelling employee promise – The "Best" continuously inspire and meet the changing needs and expectations of employees as they progress through their lifecycle. They have effective leaders who deliver on their commitments and managers who provide clear directions on the skills and knowledge needed for future success and then identify new opportunities to develop their teams – with or without promotions. 
• Performance-driven culture – The "Best" instill higher performance as an integral part of their day-to- day activities. Their leaders drive continuous improvement. Their managers sustain this culture by working towards stretch goals, providing valuable performance-based feedback and coaching, and directly addressing issues of poor performance. 
• Efficient and effective people practices – The "Best" differentiate themselves through people programs that are designed and continuously improved, based on a deeper understanding of the specific needs and pulse of different employee segments. They do this while meeting the goals of speed, quality and value. 
• Pervasive accountability and trust – The "Best" enable employees to take ownership for actions and decisions and build trusting relationships. Their leaders effectively "own" the improvement of people management and continuously empower and encourage their employees to drive execution and make decisions.

The "Best" deliver on these pillars by continually investing and improving the "right" programs and behaviors for leaders, managers, employees and HR. It is this focus on consistently strengthening these five pillars across all employee segments that truly distinguishes the "Best" from the "Rest".

Contact us

For more information about lessons from the Best Employers, please contact Jeremy Andrulis, General Manager of Aon Hewitt Consulting  in Hong Kong, or Audrey Widjaja, General Manager of Aon Hewitt Consulting in East China.

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