THERE is a direct correlation between high employee commitment levels and increased shareholder value, according to recent research conducted in Asia
THERE is a direct correlation between high employee commitment levels and increased shareholder value, according to recent research conducted in Asia.
A survey of 500 companies across the Asia Pacific region indicated that companies with high levels of employee commitment over the past five years had three to four times the total shareholder return (TSR) of companies with low levels of commitment.
Furthermore, the Watson Wyatt survey found companies with high levels of employee commitment outperformed others by about 100 per cent during times of recession.
“The research demonstrates that employee commitment is supporting organisations through both good times and bad times,” said Lloyd Moskalik, director of Watson Wyatt Australia.
“Everyone understands that a lot of HR practices have a huge impact on shareholder value, but one of the common themes to come out of the research is that companies are very weak on execution, in other words no-one is implementing it correctly,” he said.
“That raises a whole set of issues around how you put human capital strategies in place that have a direct link to shareholder value.”
If CEOs are going to invest in effective HR strategies, Moskalik said they needed to see a strong business case with measures around bottom line impact, which reflects back onto shareholder value.
“In most instances that piece is missing, and you’re finding that a lot of HR people without that credibility of numbers behind them are not sitting at the executive table and being involved in some critical strategic decisions, which HR are a very strong part of, but they’re being discounted because no-one can put a dollar value on it.”
The WorkAsia survey, which took in companies across ten countries across the Asia Pacific region, including: China, India, Japan, South Korea, Singapore and Taiwan, also demonstrated some region-wide consistencies in employee attitudes, Moskalik said.
Employees across the region demonstrated a thirst for leadership. Besides their own compensation, employees rated their company’s leadership and management effectiveness lower than any other areas studied.
The research also found employees’ commitment was more heavily impacted by their job satisfaction and having a sense of accomplishment, learning new things, and utilising their abilities on the job.
Employees also demonstrated a desire more feedback. In terms of alignment, most employees believe they know their company’s goals, how their job contributes to those goals, and how their job affects their customers.
However, they were much less positive about the specific feedback they get from their supervisors to help them reach their goals.
Asian companies with subsidiaries in Australia didn’t fare so well in this area, according to Moskalik.
“What jumps out as the number one issue here, after compensation, is performance management. Australian employees are saying that performance management needs improvement –how they’re being managed and the feedback they receive.
“But more importantly, they don’t have a clear line of sight in how to they contribute to the overall benefit of the organisation. That’s not just occurring in Australia.” he said.
Compensation received the lowest ratings: only 33 per cent of Asia-Pacific employees responded favourably to questions about compensation and benefits – far less than any other category.
This is also significantly less than the results of surveys conducted in other regions, such as North America and Europe.
Additionally, fewer than one in three employees rated their companies favourably when it came to sharing information across the company.
However, in other areas related to job enablement, they felt the amount of work they were expected to do was reasonable and that they had access to resources needed to do their job.
Watson Wyatt is currently in the process of researching Australian companies for its WorkAustralia survey, which will offer local companies an insight into employee attitudes with respect to critical areas of the business.
It will also provide a real-time comparison with other Australian organisations, specific industry sectors and the Asia Pacific region.
More HR functions across Australia are looking to benchmark themselves internationally, Moskalik said.
