Confidence in big bosses declines

October 22 2002 - A Watson Wyatt survey shows that declining employee confidence in corporate leadership is threatening Canadian competitiveness.

Canadian employees are increasingly committed to the organizations they work for but their trust and confidence in senior management have fallen, according to the 2002 Watson Wyatt WorkCanada(R) survey - including over 2,300 Canadian employees at all job levels and in all major industries. Employee engagement is also weak and the growing distrust of corporate leadership and a poor opinion of management effectiveness are damaging the financial performance of their companies. Just 51% of Canadian workers have trust and confidence in senior management and even fewer (45%) consider that their organizations are being managed effectively.

Yet employee commitment has increased by 12% since 2000 reach 61% today. How can we explain this increase? The report suggests that the jump is likely to be due to a general belief that the risks of job-changing during an economic downturn are greater than any potential benefits. A mere 31% of Canadian employees feel that they are involved in the activities of their employers. The result is that engagement and productivity levels may suffer.

"It is quickly evident that few companies have escaped untouched by the fallout from the recent turmoil in the business environment" says Jan Grude, National Practice Director, Human Capital Group. "Corporate Canada needs to work on repairing that damage before future financial performance and competitiveness are further hindered. Employees who are committed, but not engaged, do not actively contribute to the organization's success. To ensure that employees stay engaged, organizations need to effectively evaluate and recognize employee performance."

But addressing these issues can lead to improved financial performance and return on investment in human capital. The study shows that Total Returns to Shareholders are 9 times higher for firms with high trust and confidence levels in senior managers and 12 times higher for businesses with high management effectiveness. The results also indicate that firms with engaged employees are worth five times more than companies with workers who are disengaged.

Other significant findings from the survey:

* Only 31% of employees are actively involved in management decisions.

* Only 39% of employees consider that their companies effectively evaluate and reward employees for performance.

* Only 50% of workers are satisfied with their compensation and benefits.

* Only 50% employees give their companies a high rating for training and development.

Compared to a similar survey of US companies conducted earlier this year, Canadian businesses are faring only slightly better than their U.S. counterparts. But employee commitment in Canadian firms is significantly higher (65%) than in the USA (57%).

"By assessing just how far trust levels have fallen at their specific organizations, companies can gain insight into the depth of the problem among their workers and establish a baseline against which to measure the success of their efforts to restore trust," says Dawn Bell, Organizational Effectiveness Leader, Watson Wyatt Canada. "To increase employee engagement, the workforce must be motivated to bring their capabilities to work each day; feel the organization is attracting the best talent and surrounding them with highly qualified people; and believe that there is a convincing plan to grow and manage the business, including keeping costs under control."