Hewitt Finds Continued Decline in Employee Morale

July 29, 2010 (PLANSPONSOR.com) – Though the economy is slowly recovering, employee engagement and morale in the workplace are not, according to a Hewitt Associates analysis.

A Hewitt news release said 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.  

Historically, Hewitt’s research shows that about half of the organizations studied improved their engagement levels in a one- or two-year period, while only 15% had experienced a decline. However, in the past two years the percent of organizations with declining engagement has been steadily growing. Hewitt’s found 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.

Keys to Improving Engagement  

According to news release, Hewitt found that companies with improved engagement levels:  

  • Focus on the long term: While many of these organizations did cost-cutting and reductions in staff, they made changes consistent with their principles and values and without losing sight of their overall goals. 
  • Obtain buy-in from leadership: Engagement is a top priority for leaders at companies that saw improved engagement scores. Leaders at these organizations were visible and provided ongoing updates to reduce employee uncertainty and stress. They also created excitement among employees about the future of the organization (82% compared to 51% at other companies). 
  • Implement measurable actions: Successful organizations use employee information as a call to action rather than an assessment. They define specific and measurable actions and take steps in areas where the organization will see a clear impact.  
  • Involve all stakeholders: Organizations with improved engagement understand that creating a "high engagement" environment requires the involvement of multiple stakeholders—the organization (leadership, policies and program), managers and employees. They communicate to these stakeholders to ensure everyone is clear on their role in the process and on the employment proposition.  
  • Understand key employee segments: Successful organizations understand that not all employees are necessarily equal. They focus on key segments and critical talent so that they’re able to engage or re-engage them once the job market improves.  
  • Utilize a broader array of information and analytics: Hewitt’s analysis shows that 34% of organizations help employees through the on-boarding process to minimize the dip in engagement most organizations see in the first year of employment. Additionally, almost three quarters conduct exit surveys to understand why employees are leaving and proactively identify potential hot spots.  


Since July 2008, Hewitt began closely analyzing changes in employee engagement levels by quarter for more than 900 organizations globally that conducted annual engagement studies.