Organisation Dynamics

Designing Organisation Performance

Best Practice Note

The ability of an organisation to achieve its strategic objectives is to a large extent influenced by how engaged its employees are.  Employee engagement can best be described as the discretionary behaviour that an employee can give over and above the basic performance necessary to do the contracted work.

Although stating the obvious, the degree to which employees work to the highest level (i.e. give that discretionary effort) varies widely. Performance is largely an output, not an input, and can largely be linked to the levels of engagement with the business. Towers Willis (formerly Towers Watson and an Organisation Dynamics partner) has identified some of the factors that drive executive engagement. These range from the strategy and direction of the business, its leadership and values and the level of pay and rewards on offer. However, not all factors are equal.


Research has shown that organisations with high employee engagement have a higher return to shareholders compared to those with lower engagement levels.  Towers Willis research shows that companies with strong engagement programmes have provided a 91% total return to shareholders from 2002 to 2006, compared with 62% for firms that engaged least effectively, while those with the least effective programmes had a negative 15% return.

The Corporate Leadership Council conducted research that has shown a 20% improvement in discretionary performance within high engagement organisations. However, this increase in performance comes from how clearly its intentions (goals, strategy, values etc.) are communicated. The same research has shown that compensation has a much larger impact on employee retention (21%) than on increase in discretionary effort (9%).
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Driving Performance and Retention Through Employee Engagement, Corporate Executive Board, 2004
1: Towers Watson 2010 Global Workforce Study – Global

2 Towers Watson 2007/2008 Communication ROI Study Secrets of Top Performers
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