Employee Engagement in Asia Remains Steady as Global Levels Rise

By Roy Maurer Dec 20, 2013

Maintaining a high level of employee engagement against the worldwide economic slump of recent years is a key factor for business performance and positioning as market conditions improve.

According to Aon Hewitt’s 2013 Trends in Asia Pacific Employee Engagement report, overall employee engagement and perceptions of the work experience remained static or slightly declined in Asia-Pacific, contrary to global engagement levels, which have improved during the same period.

Employee engagement levels rose 2 percentage points globally (from 58 percent in 2011 to 60 percent in 2012), while remaining constant in Asia-Pacific at 58 percent, according to the survey report. Out of the eleven countries presented in the report, six saw improvements in employee engagement levels in 2012 and five experienced declines. Indonesia’s 5 percent improvement was the highest within Asia-Pacific (from 66 percent in 2011 to 71 percent in 2012), while on the other end Hong Kong experienced the largest drop in engagement levels (from 58 percent to 50 percent).

Employee engagement is an “excellent barometer of organizational health,” said the report’s author, Manasi Vartak, regional project leader for Aon Hewitt’s Engagement Practice in Asia-Pacific. “It is imperative that employers understand how current trends in demographics and culture are reshaping what employees demand in exchange for their discretionary efforts.” With these trends in mind, companies need to take action to optimize the motivation and productivity of their employees, she said.

“The companies that get employee engagement right can enjoy a competitive advantage that is hard for others to replicate. In addition, with nearly two out of three CEOs in Asia citing ‘people issues’ as their top business challenge, there is a clear consensus that talent is one of the key frontiers of competitive advantage,” Vartak said.

Defining Engagement

Aon Hewitt defines engagement as “the psychological and behavioral outcomes that lead to better employee performance.” The Aon Hewitt model examines both the individual’s engagement outcomes and the potential engagement drivers that are part of the organizational work experience—these are the areas over which management has a great deal of control. Aon characterizes them as: the work people do, the people they work with, career opportunities, total rewards, company practices and general quality of life.

Aon defines individual engagement through three attributes that include the extent to which employees:

  • Speak positively about the organization.
  • Have a strong desire to be a part of the organization.
  • Are motivated toward success in their job and for the company.

Asia-Pacific Engagement Distribution

So 58 percent of Asia-Pacific employees self-report as being engaged, but are all these employees engaged equally? The answer is no. Only 16 percent say they are “highly engaged,” while the remaining 42 percent labeled themselves as “moderately engaged.”

At the other end of the spectrum, the research shows that four out of ten employees are not engaged. This group ranges from the “passively disengaged” employees who form a quarter of the Asia-Pacific engagement distribution and the “actively disengaged,” who “actively destroy value” and constitute 17 percent of the workforce, which aligns with other regions worldwide. “There are significant opportunity costs associated with not addressing the passive or actively disengaged members of the labor force,” Vartak said.

Indonesia had the highest employee engagement score in 2012, yet Indonesia did not lead in terms of highly engaged employees. That designation goes to India. With an overall employee engagement score of 63 percent, nearly a third of India’s engaged employees are highly engaged. “This is good news for India as these are the employees who add the most value to companies and drive substantially higher outcomes,” Vartak said.

Despite a 71 percent overall employee engagement level, 56 percent of Indonesia’s employees fall into the moderately engaged category. On a positive note, Indonesia has the smallest number of actively disengaged workers (7 percent).

Japan has the highest percentage of disengaged employees (33 percent passive and 33 percent actively disengaged). Even though Japan has made significant progress with employee engagement over the last five years (in 2008 less than a quarter of its workforce was engaged), the fact that two-thirds of its workforce is not engaged (half of whom are actively disengaged) means that there is still much work to be done to build strong employee engagement, and achieve optimum productivity, Vartak said.

The Asia-Pacific region showed the widest range of employee engagement scores, compared to any other region worldwide according to the survey results. In 2012, Asia-Pacific employee engagement levels ranged from 34 percent in Japan to 71 percent in Indonesia. Six out of eleven countries—Australia, China, Indonesia, Japan, Korea and New Zealand—experienced improvement in their employee engagement scores. Five—Hong Kong, India, Malaysia, Singapore and Thailand—experienced decline.

China vs. Hong Kong

With the exception of 2008, which marked a five-year low at 50 percent for China’s employee engagement scores, China scores have been consistently higher than those of Hong Kong. China’s score peaked in 2009 at 67 percent, while Hong Kong’s five-year high score was in 2011 at 58 percent. The spread between Hong Kong and China reached a maximum in 2012, when China’s employee engagement score at 62 percent led Hong Kong’s score by 12 percentage points (50 percent). As a point of reference, Taiwan’s employee engagement score in 2012 was also strong at 62 percent.

Vartak explained this difference of engagement between China and Hong Kong as being due to Hong Kong’s “extremely sensitive and vulnerable” economy. “Since the 2008 economic crisis, other external factors, such as the European sovereign debt, have put pressures on the economic conditions of Hong Kong. We believe that these macroeconomic factors have impacted microeconomic decisions, which have influenced Hong Kong employees’ engagement levels,” she said.

In addition, Vartak said that exposure to multinational companies’ mature HR practices in Hong Kong has familiarized employees with strong talent management practices. Therefore, they view local organizations as lagging, resulting in lower employee engagement scores.

The more positive sentiment in China can be attributed to the robust economic growth that the country has achieved over the last two decades, according to the report. “This economic growth, coupled with a talent shortage, has meant that some organizations in China have started to invest in their workforces to build competitive advantage, which has resulted in the increasingly positive sentiments of China’s employees,” Vartak said.

Southeast Asia

Overall, Southeast Asia presents an inverse pattern to the Asia-Pacific scores. Southeast Asian countries have achieved high employee engagement levels over the past five years. Indonesia (71 percent) and Thailand (59 percent) have been consistently outperforming the Asia-Pacific regional score (58 percent), while Singapore (57 percent) and Malaysia (53 percent) scores are close to the Asia-Pacific score.

Malaysia and Indonesia experienced the biggest changes in their employee engagement scores in 2012. Malaysia’s drop in score from 60 percent to 53 percent perhaps can be attributed to the uncertain political and economic environment leading up to the 2013 elections, Vartak said.

Indonesia, on the other hand, has been enjoying economic growth, and its organizations are investing more in their people and talent management practices, according to the report.

Highs and Lows

India has exhibited volatility in employee engagement scores over the last five years, according to Aon’s survey results, but has largely outperformed the Asia-Pacific score. In 2012, despite experiencing a 5 percent decline in employee engagement, India’s score ranked second highest among Asia-Pacific countries, after Indonesia.

Over that same period, Japan has consistently scored around 20 percentage points below the Asia-Pacific average. “Clearly, culture influences these engagement scores as Japan’s tendency is to rate all surveys lower,” Vartak said.

South Korea scores have overall shown improvement in employee engagement levels over the last five years, from 49 percent in 2008 to 55 percent in 2012. This improvement is in line with the economic conditions in Korea, Vartak said. “During this period, Korean organizations have shown commitment towards measuring employee engagement and taken progressive steps to provide a better employment experience.”

Engagement Down Under

Employee engagement in Australia largely mirrors the Asia-Pacific trend, whereas New Zealand’s employee engagement levels show more volatility. Australia and New Zealand have both registered gains in employee engagement scores since 2011, resulting in a combined 2 percentage point rise from 54 percent to 56 percent.

Australia is the strongest developed economy in Asia-Pacific, and has maintained a focus on employee engagement and investment in employee engagement initiatives, Vartak said. “The impact of this is evident as Australia’s employee engagement scores have fluctuated little over the last five years.”

New Zealand’s high volatility in employee engagement scores is a reflection of the sensitivity of New Zealand’s economy to global economic developments, she said.

Despite making steady progress since 2010, Australia and New Zealand scores have largely remained below the Asia-Pacific score, which is believed to be higher due to the higher employee engagement scores from developing economies like China, India, Indonesia and Thailand, according to the report.

Improving Engagement

The survey findings signal to business leaders that employee engagement must be an imperative. Aon Hewitt recommended the following priorities for organizations across Asia-Pacific to improve their employee engagement levels:

Career opportunities. Forty-one percent of Asia-Pacific employees do not believe that they have good advancement opportunities with their current employer. Aon recommends organizations use flexible, clearly defined career paths and options for short-term assignments and geographic transfers to differentiate themselves from other organizations. Additionally, there should be a focus on improving people-management capability to enable leaders to conduct successful career conversations with their employees.

Compensation. Only a third of Asia-Pacific employees (33 percent) think they are paid fairly for their work. This driver has been rising in its ranking over the last two years in some Asia-Pacific countries, according to Aon.

Recognition. Recognition is certainly less costly for an employer than direct pay and can also have a significant impact on employee engagement, Aon said. Employees want recognition for their performance, but only 31 percent say they get this recognition.

Reputation. When asked “Does your organization have a positive reputation in the job market?”, only 31 percent of respondents answered positively. Yet, reputation is ranked as the fourth most important employee engagement driver in Asia-Pacific.

Brand alignment. It is important that organizations are consistent in the promises they make to their employees. Only 50 percent of Asia-Pacific employees confirmed that their organizations delivered on the promises made to them. “This represents a great opportunity for organizations. Those who focus on articulating a unique and compelling employee value proposition for prospective and current employees, and then subsequently deliver on that proposition, will be rewarded with higher employee engagement,” Vartak said.

Roy Maurer is an online editor/manager for SHRM.

Follow him at @SHRMRoy

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