Why employee well-being is the key to engagement and performance

Towers Watson

KAREN, a manager at a communications company,wasn’t surprised when her company announced layoffs and furloughs. “The rumours had been going around for weeks. The only question was how bad it would be. I guess I was lucky to keep my job, but we were hit with a twoday- a-month furlough plus a salary cut. The worst part was the way they told us: by email.” Not surprisingly, the current economic situation has built fear, resentment, and often reduced levels of engagement among employees fortunate enough to remain on the job. Contrast Karen’s experience with that of Bonnie, a senior manager at technology developer and manufacturer EMC. In her story, which was featured in Closing the EngagementGap by Towers Perrin Managing Directors Julie Gebauer and Don Lowman, she describes how her boss of 10 years treats employees. “Frank is just great at stopping by the office, asking how it’s going, or if he sees you’re a little distressed, he just sort of lets you know he’s there. He doesn’t forget to say ‘thank you.’ If he recognizes something I did, you better believe I want to work harder. That means more than money.” The difference between these experiences can be summed up in one phrase — the organization’s concern for employee wellbeing. What do we mean by well-being? Towers Perrin, the author of this study, defines it as encompassing three interconnected aspects of an individual’s “work life”:


  • Physical health — overall health, energy/ stamina
  • Psychological health — stress/anxiety, intrinsic satisfaction, accomplishment, optimism, confidence, control, empowerment, safety
  • Social health — work relationships, balance in work and personal life, equity, fairness, respect, social connectedness. Because time spent at work is such a huge part of modern life, the workplace has become a major factor in individual health and well-being. Add in the impact of wellbeing on employee engagement and retention, and it’s not surprising companies are paying more attention to this issue. For employees, the rewards of a strong sense of well-being are clear: greater balance between work and home life, meaningful work that’s appreciated by the employer, overall good health, and a feeling of control over one’s life. For the employer, the benefits are also significant: higher levels of sustained engagement and lower turnover. In short,   it’s the advantage of having the whole employee on the job, contributing high levels of sustained engagement. Employee well-being should be an integral part of an organization’s culture, reflected in its benefits design, training and development policies, employees’ ability to create work–life balance, and the way managers are expected to interact with and manage employees.



Why is well-being so important? Because employees’ level of well-being can sustain — or erode — their level of engagement. Towers Perrin’s research shows how wellbeing affects engagement. Exhibit 1 depicts how employee engagement and well-being can move in tandem or in opposition. When both are strong, you see true, sustainable engagement. When one is strong and the other weak,however, you see a range of outcomes at odds with an organization’s needs. Highly engaged employees with low levels of well-being are more likely to leave their company than those who are both highly engaged and feel a strong sense of wellbeing. Creating a different but equally challenging situation for a company are those employees who feel a strong sense of well-being but are not highly engaged. They have a greater tendency to stay, but it is unlikely that they will make much discretionary effort. Without strong employee well-being, employee engagement declines, retention suffers, and motivation and performance are affected over time. The mandate for organizations is clear: Sustaining employees’ discretionary effort and retaining key talent depends on understanding well-being, identifying ways to measure and track it, and developing targeted strategies and interventions to address — and if necessary correct— levels of workforce engagement and well-being.


As organizations ramp up for growth while continuing to manage costs tightly, they need to understand the impact these pressures will have on employees, both short term and long term. The research shows that certain aspects of culture have the highest impact on employee well-being: physical environment, leadership effectiveness, and working relationships, as well as people’s sense of competency, their aspirations and need for personal growth, and their views about access to and fairness of performance-based rewards. Employee health is also a critical factor in overall well-being, and companies need to invest in ways to support it through both individual programs and a commitment to a sustained “culture of health”. Because well-being has multiple facets, enhancing it requires strategies that differ from those for enhancing engagement. Companies need to focus on both. This dual approach will ensure engagement is not only high but also sustainable.



  • Understand and measure both engagement and well-being, as well as the way the culture supports or inhibits either or both. Companies that examine and measure their own cultures and how those cultures affect engagement and well-being understand their “hot spots” and their critical issues in rich detail, paving the way for rapid, costeffective, and targeted solutions.
  • Focus on effective leadership. The role of leadership in employee engagement is always critical, but never more so than in times of change and uncertainty. Closing the Engagement Gap offers common-sense  approaches for senior management in laying out a road map for a high-performance work environment: Know them. Being as familiar with employees as you are with customers helps shape workplace programs that win people’s hearts and minds.
  • Grow them. People want to learn and excel in their jobs, and they commit to companies that help them do those things.
  • Inspire them. When their work has meaning, employees are more inclined to do whatever it takes to ensure success.
  • Involve them. Knowledgeable, empowered workers add more value.
  • Reward them. When people believe they are treated fairly, they give more of their time and creative energy.

Re-evaluate the value proposition.

Now may be the right time to re-evaluate what the organization expects from employees and what employees can expect from the organization in return. How has the economic downturn affected the employment value proposition? What changes have you had to make, such as reducing or eliminating certain benefits or revising incentive criteria, and how have employees reacted? What steps can you take to “rebalance" both the organization’s needs and the employees’ as well? Acting on the concept of “knowing them”, the first step is determining through surveys and other means whatmatters to employees, a process that can yield valuable insights. Measuring workforce attitudes and knowing what is more or less important to different segments of the population helps organizations optimize their workforce investments — managing costs without compromising high levels of employee engagement and well-being.


Focus on training and development.

In companies undergoing major changes, the main drivers of engagement continue to be development opportunities and clear career paths.Top talent is the most mobile and will find it easiest to change jobs if workplace conditions aren’t meeting their needs. It’s important to understand the impact of cuts in training and development, and weigh cost savings against loss of key people.


Align total rewards.

Does your reward philosophy support employee well-being? Do the reward programs address all facets of well-being, including the psychological and social? The research says that benefits and compensation are not the most important drivers of engagement or wellbeing, but they are needed. Employees who feel they’re being asked to do more with less will expect reciprocation from their employer at some point.

Develop the capabilities of front-line managers.

Managers and supervisors are in the best position to understand employees’ workloads, personal issues, and day-today activities. For example, they can support a culture of well-being by giving employees flexibility in scheduling when and where they work, recognizing and addressing employees’ challenges and problems, giving effective performance reviews, and creating a collaborative team spirit. Because managers are on the front line, they can make decisions that have an impact on individuals. So it’s critical that they receive training in managerial skills and know the organizational programs available to employees and how people can best access and use those programs. Considering the uncertain economic outlook for the months ahead, companies are going to need to work harder than ever to receive the best from their workforce,while continuing continuing to manage bottom-line spending. The challenge in any economy is maintaining high levels of sustainable engagement in the current environment, while retaining the best talent for the future. Companies that understand the link between well-being and sustained engagement — and take steps to implement wellbeing strategies to support engagement — will be able to develop a healthy, motivated workforce committed to the workplace, no matter what the economic climate.

Employee Well-Being:Taking Engagement and Performance to the Next Level C 2009. Excerpt reprinted with the permission of Towers Watson, a leading global professional services company that helps organizations improve performance through effective people, risk and financial management.www.towerswatson.com  Retaining your best staff is essential to your company’s performance. Your employees need to be productive, happy, and focused on your organization’s success. Drake International can assist your organization with orientation and onboarding, performance reviews, career planning, communication and employee engagement, employee surveys, exit interviews and,more. For practical and actionable employee retention tactics that have an immediate effect on improving staff retention, contact the Drake International office near you.


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