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Hewitt Analysis Shows Steady Decline in Engagement

Hewitt Analysis Shows Steady Decline in Engagement

While the economy is slowly recovering, a recent analysis by Hewitt Associates, a global human resources consulting and outsourcing company, shows employee engagement and morale in the workplace are not. Almost half of organizations around the world saw a significant drop in employee engagement levels at the end of the June 2010 quarter, the largest decline Hewitt has observed since it began conducting employee engagement research 15 years ago. This highlights the growing tension between employers and employees, who are showing fatigue in response to a lengthy period of stress, uncertainty and confusion brought about by the recession and their company's actions.

Since July 2008, at the onset of the economic downturn, Hewitt began closely analyzing changes in employee engagement levels by quarter for more than 900 organizations globally that conducted annual engagement studies. These studies covered topics such as employee morale, confidence in the organization, career opportunities, rewards and recognition programs and trust in leadership.

Historically, Hewitt's research shows that about half of these organizations improved their engagement levels in a one- or two-year period, while only 15% had experienced a decline. However, the past two years have been more challenging: the percent of organizations with declining engagement has been steadily growing. This trend is particularly notable in 2010. Hewitt's research shows that 46% of organizations experienced a decline in engagement levels in the quarter ending June 2010, while just 30% saw an improvement.

Hewitt's analysis suggests a clear link between employee engagement levels and financial performance. Organizations with high levels of engagement (where 65% or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions.

During 2009, total shareholder return for these companies was 19% higher than the average total shareholder return. Conversely, companies with low engagement (where less than 40% of employees are engaged) had a total shareholder return that was 44% lower than the average. For more information on the study, visit www.hewitt.com