Germany
About the artist
A strong desire to create comes naturally to most artists, and Art Valero is no exception. For his thought-provoking illustrations, Valero works primarily in acrylics on paper or board. His award-winning conceptual paintings have been featured internationally in corporate advertising, brochures, and annual reports. Valero was born in Mexico
Introduction
Are employees in Germany engaged in their work and committed to their organisation’s success? Do they have confidence in senior management and do they understand how their work contributes to business per-formance? Are the organisation’s HR practices and systems aligned with its business strategy, and are they having the desired effect?
These are not questions asked by a benevolent manager showing concern for his or her employees. Rather, they are part of an analytical process that can help an organisation determine whether it is operating at its peak effectiveness.
A well-established body of research now demonstrates that employees’ view of their work environment influences not only the quality of their work but also
■absenteeism and turnover, ■operating efficiency,
■customer satisfaction and reten-tion,
■sales performance, and ■shareholder return.
Engaged employees who are inspired by leadership, guided by manage-ment, equipped with the right tools, and managed by the right systems and processes deliver superior per-formance and business success. So for organisations in a competitive marketplace, the challenge is clear: they need to make the best use of their human capital to improve per-formance and establish a long-term source of competitive advantage. But how to get there?
Unfortunately, there is no one best solution. Each organisation’s history, environment, strategy, and workforce characteristics are unique. Developing the right human capital strategy requires an accurate understanding of what employees think and feel. Properly designed employee surveys can provide this information and have become a critical strategic tool for leadership.
Mercer’s
What’s Working
™
studies
As part of our commitment to pro-viding clients with research-based solutions, Mercer Human Resource Consulting conducts a series of national studies across the globe entitled What’s Working. These studies let us identify national trends and perceptions of work, and develop scientific norms that help us evaluate our clients’ specific survey results. The What’s Workingstudies provide insight into workers’ attitudes and the factors that drive their engage-ment. The results are based on data collected from a statistically valid sample from a broad cross-section of industries, weighted to represent the German workforce. The survey’s 125 questions elicit views in the areas defined by Mercer’s Human Capital Strategy Model (see Figure 1,The elements of human capital strategy) and cover such topics as training and development, work processes, leader-ship, performance management, work/ life balance, communication, com-pensation, benefits, and engagement.
A better approach to using
norms
Understanding our results is easier if you know how we use norms. Mercer’s What’s Workingstudies yield normative data that organisations can use to evaluate their own survey results. But what’s the best way to use norms?
Traditionally, norms establish a stan-dard and become the criterion against which to judge your company. This presumes that achieving or exceeding the norm represents the best strategy for organisational improvement. Mercer prefers to combine normative data with historical data and key driver analyses to produce a more robust picture of how employee per-ceptions affect company performance. In this way, companies can set priorities based on a more accurate understanding of the factors that influence organisational outcomes. The survey can measure some of these drivers directly, such as employee engagement or perceptions of operating efficiency. Others can be found outside of the survey by linking employee perceptions to business outcomes such as sales performance, customer satisfaction ratings, and employee turnover.
Once priority items are identified, norms and historical data add context to determine how well the company is performing according to the key drivers. You can judge whether your organisation’s pay scores are consistent with normalised scores, or compare norms of several coun-tries to check for any cultural bias.
Scores above norm represent areas of strength where the organisation is already performing well on the identified key drivers. Scores below norm indicate where the organisation is not performing well and present opportunities for improvement. Figure 2 on the right illustrates this approach. The size of a circle indi-cates the strength of the item as a performance driver; the larger the circle, the stronger the driver. All else being equal, an organisation should focus on the largest circles to have the greatest impact on organisational performance. But examining norma-tive data provides additional guidance for planning. In this illustration, the upper right-hand quadrant represents organisational strengths. Scores here have improved, are above norm, and are significant drivers of engagement. These areas warrant continued focus to maintain their positive impact on perform-ance. Scores in the lower left-hand quadrant represent weaknesses and warrant improvement strategies to leverage their positive impact on engagement. Scores in these areas have declined, are below the norm comparison, and are key drivers of engagement.
The elements of human capital strategy
The Mercer Human Capital Strategy Model describes six factors that are significant predictors of productivity. It was developed from a review of research conducted over the past 30 years in the areas of economics, psychology, communication, management, and related disciplines. Ongoing Mercer research has fur-ther refined and validated the six factors. Based on more than 300 individual studies conducted in over 1,000 organisations, these factors represent the system within which employees function daily.
How these factors combine is unique to each organi-sation, and they form the foundation of an organisa-tion’s human capital strategy – in other words, the people side of the business design. Changing one of these areas may create operational improvements that lead to marginally improved performance. But the most effective strategies address several factors simultaneously in an integrated way. An integrated human capital strategy can create a self-perpetuating cycle of engaged, committed employ-ees who deliver superior business performance.
Historical
comparison
Norm comparison
Below Above Improved Declined Performance review Work/life balance Teamwork IT support Goal clarity Empowerment Leadership Customer focus Training Rewards CommunicationSurvey follow-up priorities
People Rew ards W ork p ro ce sse s Man ager ial s tru ctu re
Information & knowledge
D e cisio n -m ak ing Figure 1 Figure 2
Satisfaction ... 72%
Employee engagement ...
67%
Quality & customer focus ... 65%
Benefits ... 64% Work-life balance ... 63% Communication ... 61%
Teamwork & cooperation ...
57%
Performance management ...
52%
Leadership & direction ...
48% Compensation ... 47% Work processes ... 46% 45% 44% 40% 39% Immediate manager ...
Training & development ... Job security/career growth ... Ethics & integrity ...
Germany category results
Using the six-factor model described in Figure 1 as a guide, 125 survey items are organised into 15 survey categories that address unique aspects of the work environment, such as leadership, teamwork, com-munication, quality, and customer focus. Category scores are based on the percentage of employees that respond favourably to the items in that category. The chart below dis-plays the scores for each category ranked by favourability.Employees in Germany respond most favourably when asked about their level of satisfaction, how their work is organised, their organisation’s focus on quality and the customer, and their level of engagement at
work. Conversely, employees respond least favourably to questions asking about their managers, training and development, and job security and career growth.
Besides the specific results, the range of favourable scores across categories illustrates why it is important for a company to compare its own survey data to normative data. For instance, many companies find, year in and year out, that their employees’ per-ceptions of compensation are one of the lowest-scoring areas. In most countries this is very common. Knowing how their employees’ responses compare to the norm can help a company determine whether compensation is an area of strength or weakness. If compensation were
Survey category scores for Germany ranked by favourability
determined to be a key driver of engagement for a particular organi-sation, knowing where it stood against norm would help management decide whether to design strategies to maintain an area of strength or improve an area of weakness.
A closer look: highlights of
key findings
Germany remains an affluent and technologically powerful economy – the largest in Europe and fifth largest in the world. However, it has also become one of the slowest growing economies in the euro zone; economic growth falling short of 1 percent per annum in recent years. Unification of the German economy, an aging population, and relatively high unemployment rates have contributed to rising government expenditure and placed pressure on pro-labour legislation and work practices. Employees express concern about their future and are critical about organisation investments in training and development. There are also signs of tension between employees and management – with diminished trust in management communication and low levels of confidence in management leader-ship. Here are highlights of our study’s most important findings:
Factor: People
Employee commitment high despite concerns about future career and development opportunities
With slow economic growth, employ-ees express concern about the future and are critical about training and development opportunities. Only 1 in 3 employees believe that they have a
long-term future in their organisation and are confident that they will be able to achieve their long-term career objectives with their current employer. Fewer than half feel that they have adequate opportunities to receive training to improve their job skills and only 1 in 3 believe that their organisation does a good job of developing people. These are impor-tant issues, as further analysis shows that perceptions of training and development are a key driver of employee engagement (see Figure 4,What drives employee engagement in Germany?).
Despite these concerns, employee commitment and satisfaction remain relatively high. Almost 9 in 10 employ-ees report that their job gives them a chance to do interesting and chal-lenging work and that they are highly committed to their organisation.
Factor: Work processes
Employees are favourable about resource support, but some concerns expressed about work life balance
Employee views are more positive regarding work processes and resources. Over 8 in 10 employees report that they have the equipment and tools required to do their work and almost 6 in 10 indicate that are a sufficient number of employees in their group to handle the workload. Despite these positive views, there are some indications that workload and stress levels may be growing. Fewer than half reported that they are able to maintain a healthy balance between their work and personal lives.
Factor: Managerial structure
Confidence in leadership and trust in senior management low
Uncertainty about the future has had an impact on employee confidence and trust in senior management. Fewer than 4 in 10 employees believe that senior management is doing a good job of managing the organisation and that senior management has communicated a clear vision of the future direction of the organisation. Perhaps of even greater concern, fewer than 4 in 10 employees trust manage-ment to communicate honestly. The relationship between employees and management also show signs of strain. Fewer than 1 in 3 employees believe that management under-stand the problems they experience in their job and fewer than half report that their manager is available when needed. The area of manage-ment leadership is an important issue for organisations to consider as it is a key driver of employee engage-ment for the German workforce.
Factor: Information and knowledge
Communication tends to be task focussed, rather than based on concerns of employees Almost 7 in 10 employees report that they have access to the information required to do their job well. This is an area that has benefited from IT support; 6 in 10 feel that the IT systems in their organisation are sufficiently integrated. However, there are concerns expressed about the provision of information that addresses the more personal needs and concerns of employees. Fewer than half report that they are kept informed about changes that are made which affect their job and only 1 in 5 feel that they have sufficient information to manage their career.
Factor: Decision-making
Employees empowered to do their job, but do not feel involved in decision-making processes Within specified job boundaries, employees feel engaged and empow-ered in their work. Almost 7 in 10 feel that they have sufficient flexibility to meet customer needs and 6 in 10 believe that they have sufficient authority to be effective in their jobs. However, beyond defined job roles the results are less positive – only 4 in 10 report that they are encouraged to innovate. Contributing to this concern are low scores in the area of upward
communication and participation in the decision-making process. Fewer than half report that differing views are discussed when making decisions and only 4 in 10 believe that man-agers make sufficient efforts to solicit employee views.
Factor: Rewards
Fairness and the link between pay and performance questioned
While not as strong as other key drivers, perceptions of pay and bene-fits are found to have a impact on employee engagement in Germany. Despite the widespread practice of setting wages on a national basis, employees question the fairness and competitiveness of pay. Fewer than 4 in 10 believe that they are paid fairly relative to their performance and only 4 in 10 believe that their pay is competitive with what they might make working for another organisa-tion. Contributing to this concern may be a lack of clarity regarding pay policies and the tenuous link between pay and performance. Only half report that they understand how their pay is determined and only 1 in 4 feel that their organisation does a good job of matching pay to performance.
Conclusion
The need to understand employees
Human capital is the largest expense that CEOs know the least about. Organisations spend an average of 36 percent of their revenue on their employees. Yet remarkably, human capital and the issues driving employee engagement and motiva-tion tend to be poorly understood by decision makers.
Today, high-performing organisations invest significant time and resources in developing an accurate under-standing of employee views and engaging employees in dialogue. These organisations view human capital research as a continuous activity that forms an essential part of their management information systems and provides direction for the business planning process, rather than as a one-off data collection exercise designed to convey a caring management style. This is a profound
cultural shift: employees are viewed as an asset and a resource to be man-aged effectively, rather than simply a cost to be contained or reduced. While national trends from Germany are identified in this report, organi-sations are unique, and key drivers of engagement will vary across organisations and over time. Context matters, and off-the-shelf solutions to human resource issues can achieve only limited success at best. Therefore, human capital research should form an integral element of an organisation’s management infor-mation systems and figure promi-nently in the business planning process. Knowing what employees think not only makes good business sense, it also lets an organisation improve engagement while allocating resources more effectively. Engaged employees and optimal resource allocation can, and do, have a pro-found impact on success.
What drives employee
engagement in Germany?
Employee engagement goes beyond an employee’s intent to leave. It includes an employee’s commitment to the organisa-tion and motivaorganisa-tion to contribute to the organisation’s success. Over the last sever-al decades, the drivers of employee engagement have changed. By analysing key drivers, we learned that employee confidence in senior management has emerged as one of the primary drivers of engagement in Germany – along with customer focus, training opportunities, fairness and competitiveness of pay, and feedback on performance and workload.
Employee engagement Sense of personal accomplishment
Senior management leadership
Fair pay Customer focus Workload 1 2 3 4 5 6 Training and opportunities
Feedback on performance
7 Figure 4
About Mercer
Mercer Human Resource Consulting is the global leader for trusted HR and related financial advice, products, and services. In our work with clients, we make a positive impact on the world every day. We do this by enhancing the financial and retirement security, health, productivity, and employment relationships of the global workforce.
Mercer Human Resource Consulting has more than 15,000 employees serving clients from more than 180 cities and 41 countries and territories worldwide.
As a wholly owned subsidiary of Marsh & McLennan Companies, Inc., we can also provide access to the complementary consulting services of our sibling companies, Mercer Management Consulting, Mercer Delta Organizational Consulting, Mercer Oliver Wyman, Lippincott Mercer, and NERA Economic Consulting.
For any questions or comments on this report, or for more
information on Mercer’s employee survey approach, please contact: Americas
Paul Sanchez, ABC New York +1 212 345 0102 [email protected] Dan McCauley, PhD Chicago +1 312 902 7809 [email protected] Joseph Greenberg New York +1 212 345 3140 [email protected] Asia/Pacific Sandy Hutchison Melbourne +61 3 9623 5316 [email protected] Stella Voules Melbourne +61 3 9623 5653 [email protected] Li Yong Beijing +86 10 6505 9355 [email protected] Europe Patrick Gilbert, PhD London +44 20 7178 5496 [email protected] David Tong London +44 20 7178 5735 [email protected]
For further information, contact your local Mercer Human Resource Consulting office: 1 Tower Place West
Tower Place London EC3R 5BU +44 (0) 20 7626 6000 Or visit our website:
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