Taleo Research White Paper

Alignment Drives Employee Engagement and Productivity

 Table of Contents
Alignment Drives Employee Engagement and
Productivity............................................................... 1
Alignment........................................................... 2
Aligning Business Goals to Talent Goals....... 2
Management Commitment............................ 2
HR’s Role....................................................... 3
Developing a Clear Line of Sight................... 4
Review and Modify Goals.............................. 4
Technology Tools............................................ 4
Reporting....................................................... 4
Automating Goals Management.................... 5
Launch Goals-based Reviews....................... 6
Cascading Goals........................................... 6
Summary............................................................ 7

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 Alignment Drives Employee Engagement
and Productivity
By a two to one margin, companies surveyed in
a Taleo Research study reported the largest risk
to their company’s bottom line and brand is low
employee engagement and productivity. Why are low
engagement and productivity1 an increasing threat?
Because, in an economic downturn companies are doing
more with less and cannot afford to have suboptimal
performance from any employee.
In 2006, the cost of lost productivity in the US
was estimated at $554 billion dollars.2 This loss of
productivity was calculated when the US had a
relatively strong economy: employment was up,
salaries were high, and the economic climate was
upbeat. Now, consider the state of this down economy
in which employees face significant pressures
including fear of losing their homes, worries about
losing their jobs, and concern that their retirement
savings will be wiped out. With these anxieties, the
loss of productivity in 2009 will likely be even greater.
Source: The State of Employee Engagement, BlessingWhite 2008.
1 Recessionary Management: The Dos and Don’ts of a Down Economy, Taleo Re-
search and Human Capital Institute, 2009.
2 Price Tag for Lost Productivity:$544B, Inc.com Magazine, Leslie Taylor Aug 21, 2006
© Copyright 2009 Taleo Research
There is a direct correlation between engagement and
productivity. Studies have quantified it by measuring
these interrelated factors.
1. One study found that when employees are highly
engaged, their companies enjoy 26 percent higher
revenue per employee.3
2. Another study showed that highly engaged
employees are twice as likely to be top performers,
thus more productive.4
3. Companies with highly engaged employees also
earned 13 percent greater total returns to shareholders
over the last five years.5
Alarmingly, a global survey focused on employee
engagement found on average fewer than one in
three employees (29%) are fully engaged, 52 percent
are moderately engaged, and 19 percent are
actually disengaged.6
3 Driving Business Results through Continuous Engagement, Watson Wyatt 2008/2009
4 Playing to Win in a Global Economy, Watson Wyatt 2007-2008
5 Driving Business Results through Continuous Engagement, Watson Wyatt 2008/2009
6 The State of Employee Engagement, Blessingwhite, 2008
Alignment Drives Employee Engagement and Productivity PAGE 1
 Many drivers affect employee engagement and
productivity. In fact it is hard to separate the two.
Highly engaged employees are more productive,
but, how do you keep employees engaged to
maintain high levels of productivity on the job,
even in a down economy?
Goals alignment is the first step in the process.
Aligning employee goals and giving them a clear
line of sight to their contribution to business results
will help drive improved engagement and thereby
improve productivity.
A clear linkage can also be made between alignment
and bottom line results. Consider a study by Dr. Jac
Fitz-enz—an expert in HR metrics—that showed
of 40 companies studied: 44 percent of the stronger
performers had almost 100 percent aligned goals at
the managerial level. None of the weaker performers did.7
The Alignment Process
Strategic
Plan
Review and Develop
Revise Plans Business Goals
Clear Line of Sight
to Employee Goals
Alignment
Aligning Business Goals to Talent Goals
Aligning goals starts with a company’s strategic plan.
All successful businesses have a clear understanding
of their strategy. The strategy is then reflected in
business goals that align to the strategy. This requires
Management Commitment at all levels since all
managers not only have to develop the business goals
but also have the ability to develop a Clear Line of
Sight from those business goals to employees goals.
7 LRP Publications, Dr. Jac Fitz-enz 2007
PAGE 2 Alignment Drives Employee Engagement and Productivity
These plans are living, breathing documents that are
revised when and if the business plans change. While
technology will help facilitate, manage, and report
progress, it starts with a committed management
team and a solid process for execution.
Management Commitment
Senior management needs to articulate the corporate
strategy and create the environment to drive that
strategy down through the business. Management
must align business goals with the strategy and create
accountability and responsibility in the execution of
those goals.
Next, a system of rewards and recognition should
be developed to ensure those goals are met and
stipulates accountability when goals are not attained.
This requires a company-wide effort. There are
distressing examples in which employees attain
their goals and are even paid large bonuses while
the company was losing money. This disconnect is
recounted in the news. Consider the Merrill Lynch
reports that cite this large financial institution paid
out millions of dollars in bonuses as the company
was going under. How does this happen? There is
misalignment between strategy, business goals, and
employee goals.
Yet, alignment is seen by many as a difficult task.
Taleo Research conducted a global survey of more
than 900 HR and line of business executives to
understand the challenges and priorities of talent
management. When asked how difficult it is to link
talent goals to business goals, 85 percent of
companies reported it to be “Challenging” or
“Very Challenging”.8
8 Global Unified Talent Management Survey, Taleo Research with Human Capital Insti-
tute (HCI), Business Intelligence, Markess International, Quantum Market Research 2008
© Copyright 2009 Taleo Research
 85% find linking talent management goals to corporate goals challenging

Linking Talent Management Goals to Corporate Goals

15%
26%

Very Challenging
Challenging
Not Challenging
59%

HR’s Role Successful HR executives would agree that aligning

HR is key in driving the process and selecting the
tools needed to achieve alignment. How well is HR
rated in driving this process? A McKinsey study asked
both HR and line of business (LOB) executives “Does
HR lack the capabilities to develop talent strategies
aligned with business objectives?” Only one-quarter
of the HR participants agreed with this statement,
while the majority (58%) of line managers agreed.
This is a gap of 33 percent. Clearly LOB managers do
not see HR as being up to the task.
talent to business, defining roles, recruiting,
developing, and measuring performance creates an
environment where people’s passion for the business
can grow and drive overall business performance.
Alignment, nonetheless, is not just an HR issue.
Although HR may facilitate the process and
implement the systems to help ensure a talent strategy
aligns to the business, HR cannot execute this strategy
without the commitment of the line managers.

How well are you doing?

% of interviewees in each category

Human-resources Line who agree
(HR) professionals Managers
02 55 07 5 100 Gap

HR lacks capabilities to develop talent strategies

aligned with business objectives 25 58 33

HR is administrative department, not strategic

business partner 60 60 9

HR relies too much on best practices—some of

which are inappropriate—when designing systems 30 38 8

HR is not held accountable for success or

failure of talent-management initiatives 36 64 28

HR lacks authority/respect to influence the way

people are managed 38 47 9

Talent Management is viewed as responsibility of HR 36 58 22

HR doesn’t provide enough support to line managers 43 58 15

Source: McKinsey study

© Copyright 2009 Taleo Research Alignment Drives Employee Engagement and Productivity PAGE 3
 HR’s responsibility is to understand the corporate
strategy—perhaps even help shape it. Then HR
needs to develop a process to track and measure the
progress. But all managers must be committed to the
alignment of goals throughout the organization.
Developing a Clear Line of Sight
According to research from Bersin and Associates,
only 29 percent of organizations create employee
goals which are aligned to the organization.9 This lack
of alignment not only impinges on business outcomes,
but it also negatively affects employee engagement
and motivation. Employees feel valued when they see
the link between what they do and the success of the
department and the organization.
Management’s role does not end with understanding
how to translate corporate strategies into business
goals. Next, managers must develop the goals for
their employees that link to that strategy. Key in this
process is the ability to develop a clear line of sight for
their employees so employees understand how they
contribute to the overall business.
People may sit in a meeting and agree on the goals
and a course of action, but once back to their routine,
they risk becoming diverted. Companies need to
review progress and provide an ongoing system of
measurement to sustain alignment from initiation
through execution to delivery.
When employees have a clear line of sight to their
contribution to corporate goals and strategies, not
only are people working on the right things, but they
are also more engaged in their work.
Review and Modify Goals
Although an organizational strategy should not
change in the short term, business and economic
conditions can certainly require reshaping business
plans. In a Recessionary Management survey
conducted by Taleo Research and The Human Capital
Institute (HCI), 59 percent of 345 companies surveyed
said they needed to revise their work plans in
order to achieve alignment given the current
economic environment.10
9 High Impact Talent Management and High Impact Performance Management
research, Bersin & Associates 2006 and 2007
10 Recessionary Management: The Top Do’s and Don’ts for Managing Talent in the Cur-
rent Downturn, Taleo Research and Human Capital Institute, 2009
PAGE 4 Alignment Drives Employee Engagement and Productivity
Periodic health checks should be built into the process
at least on a quarterly basis to ensure the alignment is
still on target. Companies need to examine whether:
• There have been changes in the economic climate.
• There have been changes in the competitive
landscape.
• They have the right talent pool needed to
execute the plan.
Technology Tools
Technology is now available to give companies the
ability to automate, manage, and measure the goals
alignment process. Automation can provide greater
control over business outcomes by automating the
creation, alignment, and monitoring of organizational
goals. Now goals can be set at any level and employee
directives adjusted to support initiatives.
A goals management software solution automates the
process of creating, cascading, and monitoring the
process of company-wide goals. These technology
tools provide the ability to set goals at any level of
the organization and align employee efforts with
organizational initiatives.
Reporting
Without a clear process and metrics in place to
monitor the progress of achievement to those goals,
even employees with the best intentions can lose
their line of sight and alignment breaks down.
Reporting and analytical tools should assist companies
in tracking:
• How many employees have goals in place (not
just managers)?
• What percentage of those goals is aligned to the
corporate strategy?
• Which of those goals are critical?
• How are employees progressing in achieving
those goals?
Commitment plus technology to measure the progress
are necessary to keep managers on the right track.
© Copyright 2009 Taleo Research
 Employee/Business Goal Alignment

1
56 3
Employee Employee Goal
Has Goal Plan Approval
Plan Status

No Approved
Yes In Progress
45 42
Not Approved
# Employees # Employees

28 8
Goal Employee
Criticality Goal Is
Aligned

Critical No
33
Not Critical Yes
98

# Employees # Employees

Goals Due By Month

52 100
Goal
Percentage 80
28
# Employees

Complete
60

40
0-25% 20
19 25-50%
50-75% 0
75-100% 03-Mar 04-April 05-May 06-June 07-July 09-Sep 10-Oct 12-Dec
25
Month Goals Are Due
# Employees

Example of Goals Alignment Reporting

Automating Goals Management Much work today crosses the traditional departmental
Goals management supported on a technology or cost center structures of an organization. Goals
platform should provide the ability to define: management software needs to provide the ability to
establish an alternative to traditional organizational
• Themes or categorization of goals that can be hierarchy that’s used for goals management. For the
reported on or used in a Balanced Scorecard or purpose of goals management, multiple departments
for reporting goals related to finance, customers, or cost centers may share the same goals. These goals
or development. need to be summarized and managed across multiple
groups. Just as business strategy is overarching
• Business goals that are qualitative or quantita- and not siloed by department, the goals alignment
tive statements of an organization’s intent or platform should be flexible and configurable to match
objectives such as “Increase operational business operations.
efficiency 5%”.

• Projects that are discrete efforts by the organiza-

tion such as “Evaluate, select, and implement
talent management solution”.

• Project milestones as elements that mark the

completion of a specific work package or phase.

© Copyright 2009 Taleo Research Alignment Drives Employee Engagement and Productivity PAGE 5
 Copyright 2009,Taleo
2009 Copyright, Taleo Corporation
Corporation

Launch Goals-based Reviews When an employee

Individual employees can also have goals, which
like business goals, are qualitative or quantitative
statements of the employee’s intent or objectives.
Individual goals require collaboration between the
manager and employee to develop goals for a given
period. Employee and manager need the ability
to collaborate on the employee’s goal plan and
acknowledge when both are satisfied with the plan.
Instead of an obligatory annual or semi-annual view,
the agreed upon goals and progress should be easily
accessible and visible throughout the work year.
31% is aligned with a project,
individual efforts directly contribute to the
completion of the project. In other words, the project
and the employee’s goal should be 100% complete
simultaneously.
Goals management software can now show in real
time how the goals are aligned and executed from
the strategy to the business goals and from the
departments to the manager and employees.
Strategy

Cascading Goals
Cascading goals form the basis of alignment, and
provide the employee with the clear line of sight to Business
on i
let

Goals
Ca

view how work efforts benefit the organization. For

mp

sc
Co

ad

example, for a business goal of “Increase operational

ing
ort
ep

Go

Department Goals
efficiency 5%”, a call center employee might have a
dR

als
an

Do

goal of “Resolve 80% of first level support calls

ze

wn
ari

within 5 minutes”.
mm
Su

Managers Goals

Employee Goals

Source: Taleo Research

PAGE 6 Alignment Drives Employee Engagement and Productivity © Copyright 2009 Taleo Research
 “When talent management applications and practices
Steps to Achieve Alignment
align with corporate strategies, goals are met and
sustained.” 1. Obtain senior management commitment.
David Ulrich, The HR Value Proposition (modification
2. Set the corporate strategy.
of quote)
3. Develop business goals from the strategy.
Summary
4. Obtain consensus on business goals.

Studies have proven that goals alignment and
engagement improve productivity and company
performance. When employees are engaged and
aligned they can have a major impact on the bottom
line of a business.
Achieving and maintaining alignment requires
management commitment, a clearly defined process
and the discipline to stay on course. Technology can
provide the tools to measure and monitor
your progress.
5.Set departmental and/or manager goals from busi-
ness goals and enter into system.
6.Set employee goals with a clear line of sight up to
business goals and strategy (cascading goals).
7. Set measurements, accountability, and responsibility.
8. D
 evelop reporting structure to review progress
through reporting and analytics.
9. Hold regularly scheduled meetings to review progress.

10. Adjust plans based on external or internal factors.

Value from Engagement and

Alignment

© Copyright 2009 Taleo Research Alignment Drives Employee Engagement and Productivity PAGE 7
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