Towers Perrin Study Demonstrates Connection between Employee Engagement and Financial Performance

TORONTO, OCTOBER 22, 2007 – A survey of nearly 90,000 workers worldwide, including 5,000 people in Canada, reveals that employees do not believe their organizations or their senior management are doing enough to motivate them to go the extra mile at work and contribute to their companies� success.

The Global Workforce study conducted by professional services firm Towers Perrin found that only 6% of Canadians believe senior management treats people as if they�re the most important part of the organization (and 10% globally).

Despite people�s strong desire to become �engaged� in their work, meaning they�re willing to go the extra mile to help their company succeed, only 23% in Canada (vs 21% globally) are currently engaged at work. Of serious concern for management and investors, 32% of Canadian employees are partly to fully �disengaged�. This highlights a significant gap � which Towers Perrin has dubbed the �engagement gap� � between the discretionary effort that people actually want to invest and companies� effectiveness at tapping into this effort to enhance business performance.

The study found that companies with the highest levels of employee engagement achieve better financial results and are more successful in retaining their most valued employees than companies with lower levels of engagement.

�It�s impossible to overstate the importance of an engaged workforce on a company�s bottom-line,� states Kevin Aselstine, Managing Principal at Towers Perrin in Toronto. �We analyzed financial results versus employee engagement levels at 40 global companies. We found that firms with the highest percentage of engaged employees collectively increased operating income 19% and earnings per share 28% year-to-year. By contrast, the companies with the lowest percentage of engaged employees showed year-to-year declines of 33% in operating income and 11% in earnings per share.�

The unveiling of the survey findings coincides with a landmark in Canadian history, with Canada’s unemployment rate dipping below six per cent for the first time in 33 years � giving people many more choices about employment options. Employers will have concerns that only one third (32%) of Canadians have no plans to change their current jobs, since their ability to hold on to key talent may be compromised. Driving engagement up, however, can make a real difference. The study shows that among the 23% of Canadians who are fully engaged at work, fully 52% plan to stay with their current employer.

�These mobility numbers sound an alarm for employers,� said Michel Tougas, Managing Principal for Towers Perrin in Montreal. �At a time when the balance of power in the labour market is shifting from employers to employees � or from buyers of talent to sellers � companies should be focusing on how to engage their workforce, in order to help them both attract and retain talent.�

The study clearly demonstrates that the engagement gap poses an array of business risks. For instance, more than 80% of engaged employees believe they can and do contribute to the quality of products and services and to customer satisfaction. But only half as many of the disengaged share that view.

Interestingly, the study reveals that Canadians embrace a more optimistic approach to their working life, with a slightly higher learning orientation compared to the global norms. For instance, 69% (versus 58% globally) stated they tend to invest time and effort beyond what is required, and 90% (versus 84% globally) said they enjoy challenging work that allows them to learn new skills.

Employees are also concerned about the credentials and conscience of their organization. Canadian employees, like the rest of the global workforce, are more likely to feel engaged if they are affiliated with an organization with a strong reputation for social responsibility.

�Talent is our most valuable natural resource� adds Tougas. �It�s critical that companies understand their employees as well as they know their customers. If companies aren�t looking directly at their workforce and understanding what it takes to unleash that potential, they will quickly find themselves at a serious competitive disadvantage.�

�You can�t hire or buy an engaged workforce � only leadership can build it,� concludes Aselstine. �While employees want to invest more of themselves to help their employers, our study clearly concludes the onus to tap into this productivity reservoir lies with management�s ability to cultivate an engaged and fully productive workforce. However, there is no �one size fits all� solution. Developing and implementing the right �engagement recipe� requires a rigorous review of the organization�s unique situation and challenges to develop a customized human capital strategy.�

Additional detail about the Towers Perrin Global Workforce Study is available at www.towersperrin.com/gws.

About the Towers Perrin Global Workforce Study

The Towers Perrin Global Workforce Study, the largest of its kind, surveyed nearly 90,000 people in 18 countries, including over 5,000 respondents from Canada. It uses an analytic model to calculate both engagement levels and the impact that those levels have on performance, retention and many other factors.

About Towers Perrin HR Services

Towers Perrin is a global professional services firm that helps organizations improve their performance through effective people, risk and financial management. Through its HR Services business, Towers Perrin provides global human resource consulting that helps organizations effectively manage their investment in people. Areas of focus include employee benefits, compensation, communication, change management, employee research and the delivery of HR services. The firm�s other businesses are Reinsurance, which provides reinsurance intermediary services, and Tillinghast, which provides management and actuarial consulting to the financial services industry. Together these businesses have offices and business partner locations in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia and New Zealand. More information about Towers Perrin is available at www.towersperrin.com/hrservices..