Competitive Advantage in a Recession * Thoughts from Watson Wyatt

In this recession, are you holding on by your fingernails or are you trying to grow your market share and increase your competitive advantage? I started to talk about this last week in connection with retention. This week, I’ll examine the connection between competitive advantage and employee engagement more deeply.

Watson Wyatt’s 2008/2009 Work USA Report really dug into this, finding:

“When employees are highly engaged, their companies enjoy 26 percent higher employee productivity, have lower turnover risk and are more likely to attract top talent. Their companies have also earned 13 percent greater total returns to shareholders over the last five years.

“According to the survey findings, highly engaged employees are twice as likely as their less engaged peers to be top performers. They also miss 20 percent fewer days of work and three-quarters of them exceed or far exceed expectations in their most recent performance review. Additionally, highly engaged workers tend to be more supportive of organizational change initiatives and resilient in the face of change.”

Three strong take-aways from the Watson Wyatt research are:

1) Communicate New Directions – The research reiterates our best practice recommendation to clearly communicate changed strategic objectives or company plans and “directly connect employees to the purpose of the organization.” We’ve found the best way to accomplish both is through a strategic recognition program that ties frequent and timely employee recognition directly to strategic objectives and company values. In this way you not only communicate strategic objectives to employees, but you show them how their specific actions help accomplish those objectives.

2) Recognize and Reward Equitably – “Employees who indicate their organization effectively delivers on the employment deal are 20 times as likely to be highly engaged and 50 percent more likely to be top performers.” Your employees know you could not meet your goals without them and their efforts. Acknowledge that simple fact. Tell them “thank you.” Reward them appropriately, even in lean times. As long as awards are equitable across recipients, reduced values will be accepted.

3) Include the Middle Tier – Another Globoforce best practice is to offer all the opportunity to participate. Watson Wyatt calls this “investing in the core” (60% of the typical workforce). Why is this important? I can’t put it better than Watson Wyatt’s researchers: “Highly engaged employees are already working at or near their peak but are often limited by their less engaged co-workers. Focusing on engaging core contributors can improve both groups' productivity.

Have your strategic objectives changed due to the recession? How are you communicating those changes? Are you confident all employees “get it” and are working together as productively as possible to achieve them? What are you doing proactively to encourage that? Do you agree with Watson Wyatt’s findings? Join the conversation in comments.