Best Employers 2.0 Korea 2013 Study Results Report
Welcome to Best Employers 2.0 - Korea 2013 Results Report Dear Reader, We are proud to present the 7th edition of Aon Hewitt's flagship study in Asia: Best Employers 2.0 Asia 2013. Aon Hewitt is the authority on measuring and improving employee engagement to drive workforce performance. Through our research, we know that high employee engagement not only delivers greater shareholder value, but also reduces staff turnover and improves customer satisfaction. Aon Hewitt's Best Employers Study is the most extensive research study in Asia Pacific to investigate what constitutes an employer of choice. Best Employers 2.0 so named to reflect our newly designed model for defining Best Employers has been conducted in nine countries in Asia this year (China, Hong Kong, India, Indonesia, South Korea, Malaysia, Singapore, Taiwan and Thailand). This Results Report provides the key findings from the Best Employers 2.0 - Korea 2013 Study. The report is structured along the four key themes of high employee engagement, compelling employer brand, effective leadership and a high performance culture. The South Korea country results are presented here, together with insights from Best Employers. We know that the journey to becoming a Best Employer is a unique experience for each organization. We hope that you enjoy this Results Report and consider joining the upcoming Best Employers - Korea 2014 Study. Gabriela Domicelj Engagement Practice Lead, Asia Pacific Edouard Merette Chief Executive Officer, Asia Pacific Best Employers 2.0 Korea 2013 Country Insights Report Proprietary & Confidential 2
Introduction Aon Hewitt first began the Best Employers Study in Asia Pacific in 2001 to: provide insights into how to create real competitive advantage through people; explore what makes a workplace of choice; and identify the Best Employers in the region. Since its inception, we have conducted seven studies across Asia Pacific and six studies in South Korea. The Best Employers Korea 2013 Study includes 26,000 employee responses, representing the opinions of over 70,000 employees in total, as well as data collected from the CEOs and HR Directors of all participating organizations. The Study includes organizations from 10 industries, with the strongest industry representation coming from Heavy Industries, Energy and Transportation, Consumer Goods and Retailing, and Information Technology. Our construct for what constitutes a Best Employer is based on four characteristics: 1. High Employee Engagement - Engaged employees display three key behaviors: they speak positively about their organization; they intend to stay with the organization; and they feel motivated to exert extra effort to meet business goals. 2. Compelling Employer Brand - Organizations with a compelling employer brand: are well-known and have a good reputation in the market; ensure that people joining the company experience what they had imagined before recruitment; and have employees who are proud of being part of the organization. 3. Effective Leadership - Organizations with effective leaders have: senior leaders who provide a clear vision for the organization; employees who believe that their senior leaders make good business decisions; and employees who feel treated as a valued asset and think that communications from their senior leaders are open and honest. 4. High Performance Culture - In organizations with high performance cultures: employees are aware of their goals and how they contribute to the organization s overall performance; employees share in the overall success of the organization; and there are excellent career and employee learning opportunities. In addition, Best Employers have human resources practices that are aligned with the vision for both their people and their business. This report presents the results of the Best Employers 2.0 Korea 2013 Study and the implications for organizations in South Korea today. Proprietary & Confidential 1
Executive Summary The Best Employers Korea 2013 Study identified the top ranking business challenge for CEOs as people issues, followed closely by innovation. Other concerns from participating CEOs were: Employee productivity is still a major problem despite improvements in operational efficiency in recent years. Availability of critical skills and people management capability will be a challenge in the next three years. People processes need to become robust and streamlined for greater business impact. While most organizations are grappling with such challenges, our research suggests that Best Employers are able to transform these challenges into competitive advantage. These organizations know that discretionary efforts of their people add measurable value to their organization. The efforts and commitment of employees become part of the fabric of the organization, which helps build a strong sense of ownership, accountability and purpose across the workforce. Specifically, Best Employers have been able to achieve higher levels of engagement, create a compelling employer brand, provide more effective leadership, and deliver a high-performance culture more effectively than the average Korean organization. Best Employers vs. Market Average Scores for the Four Best Employer Indices Business leaders and HR practitioners in South Korea have taken progressive steps to provide a better employee experience. Nonetheless, there is still a long way to go to achieve mature HR processes that are clearly aligned to business needs. Our Study shows that there is a need for: Programs aimed at improving the engagement of key employee groups, specifically Generation Y, female employees, and middle management. Equipping middle management for success in supervising, developing and motivating their employees. More creative career management and recognition solutions (not necessarily increases in pay and benefits) to contribute to the establishment of a high-performance culture. Stronger alignment between senior leaders, HR and employees with respect to talent management and delivery of the employee offering. Proprietary & Confidential 2
High Employee Engagement We care about our staff and their ideas. Twice a month, I meet with eight associates and ask for their suggestions on how to improve our hotel. I have found this so useful. It helps us make our hotel a better place to work. CEO, JW Marriott, Seoul Aon Hewitt defines engagement as the state of emotional and intellectual commitment to an organization that motivates employees to do their best work, or the extent to which an organization wins the hearts and minds of its employees. Our research shows that high employee engagement not only delivers greater shareholder value, but also reduces staff turnover and improves customer satisfaction. In our methodology, employee engagement expresses itself in three key behaviors: The Best Employers Study has found that overall employee engagement scores in South Korea have increased at a steady rate over the past 10 years. Korean organizations are clearly taking progressive steps to provide a better employment experience for their workforces. Market Average Engagement Scores (2003-2013) Proprietary & Confidential 3
While our latest Study shows that just over half of the Korean workforce is engaged, how this engagement demonstrates itself varies by organization. Nearly two-thirds of employees speak positively about their organization, whereas just over half say they strive to do their best and intend to stay with the organization beyond the short-term. In comparison, Best Employers engagement scores average 80%, with around the same number of employees speaking positively about their organization. In addition, three quarters of the workforce say they are committed and endeavoring to do their best to ensure business success. Market Average High Employee Engagement Scores We see the following trends in employee engagement in Korea: Men have higher engagement levels than women (62% and 52%, respectively). Generation Y (born between 1979 and 1990) have the lowest engagement (16% lower than Baby Boomers). Employees who have spent two to ten years in the organization have a 27% lower engagement score than new hires. Middle management is significantly less engaged than top leaders (by 23%). Engagement Score Demographic Gap Analysis Proprietary & Confidential 4
The implications for management are that specific human resource programs should be tailored to the employee groups whose engagement scores are significantly lower than the average; in particular Generation Y, female employees, and middle management. Engagement Impact Drivers for South Korea Engagement Drivers People/HR Practices 2013 Change (since 2011) Gen Y Female Middle Management 1 4 2 1 Pay 2 2 1 5 Managing 3 1 3 Performance Senior 4 3 4 2 Leadership Work Processes 5 2 Career 6 5 4 5 Opportunities Innovation 6 Recognition 6 Diversity 2 The table above provides a comparison of the top engagement drivers, which also represent rich opportunity areas for organizations seeking to improve their employee engagement levels. Overall, the top drivers for engagement improvement are people/hr practices, pay, and managing performance, and they have all increased in importance since our last study. When analyzed by employee demographic, we find that although Generation Y, female employees and middle management share four of the six drivers identified, each group has additional unique drivers. The top impact driver for Generation Y employees indicates that younger employees are seeking improved performance management processes in the workplace. Innovation also features in the top six drivers for Generation Y, highlighting their interest in working in organizations that encourage new ideas. For female employees, career opportunities rank within their top four drivers, with recognition included in their top six. In planning strategies to increase female engagement, organizations in South Korea should take note of these, as perhaps female employees contributions are undervalued. Unlike the other employee groups, diversity had been identified as a key driver for middle management. In order to improve engagement levels among middle managers, programs that promote diversity in the workplace should be considered. Proprietary & Confidential 5
Compelling Employer Brand Making employees aware of the history of DHL and their role in the organization has meant they no longer see this as just a shipping business, but rather a dynamic organization in which their contribution is valued. As a result we are making great profits and are ranked as 11th out of 220 country branches within DHL. CE, DHL Korea An employer brand includes the promise an employer makes to existing and prospective employees that articulates the unique employee experience they will have with the organization. Best Employers define an employee experience that is unique and compelling, one which attracts, motivates and retains people for their business. A consistent and compelling employer brand is built upon the following three factors: In our study results, we found that 77% of the employees in South Korea feel that their organization has a defined employer brand. However, only one in every two Korean employees agrees with the statement, This organization delivers on the promises it makes to its employees. There is a clear gap between the articulation of an employer promise and the actual delivery on that promise. When asked about the themes that most closely reflected their employee offer, only 13% of the responses from CEOs and HR were aligned with each other. Market Average Compelling Employer Brand Scores Proprietary & Confidential 6
The employer brand index that scored the highest was Pride; nearly seven out of ten employees felt that they share goals and values with their organization and are proud to be associated with their employer. Despite this, only 56% of employees said that they are likely to recommend their organization to a friend seeking employment, while 20% of employees stated they definitely would not. Korean organizations named the following as top employer brand themes: pride in products, services and brand; new ideas; and learning. New themes employee empowerment, fun in the workplace, and corporate social responsibility also emerged as important employer brand themes for Korean organizations. Employer Brand Theme %* Pride: This is an organization where people have a great sense of pride in our products, 70% service and brand New Ideas: This organization encourages new ideas and provides choices in the way we 40% work. Learning: This organization provides opportunities to learn new things. 37% Empowerment: This organization empowers and challenges its employees. 30% Social Responsibility: Working in this organization provides the opportunity to contribute to 20% society and the community. Fun: In this organization, we have lots of fun. 20% Rewards: This organization provides best rewards (pay and benefits) to its employees. 17% Careers: This organization offers exciting careers. 17% Recognition: In this organization, we recognize and reward high performance. 13% Great Leaders: In this organization, you are inspired and supported by great leaders. 13% Teamwork: In this organization, there is a great sense of teamwork and camaraderie among co-workers. 10% Well-being: This organization puts the well-being of its employees first. 7% Entrepreneurial: In this organization, we encourage entrepreneurial spirit. 7% Flexibility at work: In this organization, we provide flexibility to the employee to manage 0% his/her own work timings and pace of work. *The percentage of organizations that said this particular Employee Theme aligned most closely with their top three Employee Offerings. Our study found that for those organizations offering specific employer brand themes, their employees did not report any significant increase in satisfaction in those specific areas, when compared to those organizations where there was no similar employee offer. This reinforces the assumption that, while Korean organizations may have defined their employer brand, the delivery of the associated employer promise is yet to be realized by their employees. Proprietary & Confidential 7
Effective Leadership One of our best HR programs is Global Leader. Every year we sent our outstanding talent to work in our branches in Singapore, Vietnam and China. Senior Vice President, Hyundai Oilbank Organizations that have effective leadership practices demonstrate stronger financial results over the long term. 1 Aon Hewitt believes that effective leadership is one of the most valuable competitive advantages available to organizations today, allowing them to gain an edge over their competition. Effective leadership is built upon the following factors: Our Best Employers Study for South Korea showed that 60% of employees felt that their organizations demonstrated effective leadership. Employees felt their leadership was able to provide Future Vision (65%) and deliver Business Excellence (65%). However, only 52% felt that their company offered their employees a strong People Focus. Our Study identified that only one in two employees agreed with the statement Our senior leaders treat employees as this organization s most valued asset, which substantiates the comparatively lower score on People Focus. Best Employers scored better, with over three in five employees recognizing effective leadership in their organizations. However, they, too, scored relatively lower on People Focus. This observation is confirmed by the CEOs of participating organizations who identify People Management Capability as one of the top people challenges for their business in the next three years. 1 Top Companies for Leaders 2011 Study, Insights and Best Practices, Asia Pacific, Aon Hewitt Proprietary & Confidential 8
Market Average Effective Leadership Scores Effective leadership plays a critical role in achieving a highly engaged workforce. While employees are engaged by factors like people/hr practices, pay and performance management, the role that leadership plays in developing and maintaining employee engagement should not be undervalued: senior leadership emerges as one of the top four drivers for improving employee engagement in South Korea. Even so, less than half of employees perceive senior leadership as effective or having a positive impact on their overall engagement at work, and only slightly more around three in five employees feel that their senior leaders demonstrate organizational values through their actions and are open and honest in their communication. When asked the same questions, nearly 80% of CEOs and senior leaders responded positively. The apparent disconnect is stark and should be a cause for concern. I see strong evidence of effective leadership from our senior leaders. Our senior leaders consistently demonstrate our organization s values through their behavior and actions. Our senior leaders treat employees as this organization s most valued asset. Our senior leaders are open and honest in communication. CEO/ Senior Employees Difference Leaders 71% 50% 21% 77% 61% 16% 74% 47% 27% 79% 56% 23% The importance of senior leadership as a driver of engagement is further highlighted in this study; female employees, Generation Y and middle management all identify senior leadership as one of their top drivers for improving engagement. The implication for organizations is clear - senior leadership have a critical role to play in managing talent. While leaders appear to be successful in articulating the future of the organization, there needs to be greater focus on aligning senior leaders and employees expectations of senior leadership, and how that can be demonstrated effectively to employees. Proprietary & Confidential 9
High Performance Culture Although Korea has a strong culture of seniority, at McDonald s Korea we treat people equally regardless of age and gender. Everyone is provided with equal training and we focus on promoting the best talent. This has worked well and has been a success with our employees. CEO, McDonald s Korea Based on Aon Hewitt s research, high-performance organizations have leaders with clear accountability for their strategic goals, which are well communicated and understood by their employees. This robust alignment across the employee hierarchy helps them not only reward and recognize their prime talent, but also provides challenging growth opportunities that meet the future needs of the organization. A high performance culture is built upon the below factors: Of those employees who participated in our Study, 62% felt their organization exhibited a highperformance culture with over 80% agreeing with the statement I understand how my work goals relate to the organization s goals. However, employees generally did not feel that their organizations recognized this contribution. Employees did not score their organizations well overall on Reward (60%) and Growth (56%). Less than three in five employees agreed with the statement My performance has a significant impact on my pay. Also, less than half of employees agreed with the statement This organization offers excellent career opportunities to employees who are strong performers. In contrast, Best Employers did well; on average, they scored 20% higher than the market average in this arena. Proprietary & Confidential 10
Market Average High Performance Culture Scores These market sentiments are also reflected in the employees perceptions, with less than half feeling positive and recognized fairly in terms of pay and career opportunities, both of which are identified in the top six drivers for engagement in South Korea. Additional engagement drivers directly linked to a high-performance culture also scored poorly in South Korea: recognition (42%), managing performance (42%), and work processes (43%). The implications for organizations are great: this Study indicates that managers are able to articulate how individual s goals contribute to their organization s goals; however, they are less successful at activities such as career management. Around half of employees disagreed with the statement My manager provides the support I need to succeed. The Study also identified the role managers can play in managing employee s expectations around pay and career opportunities, in addition to increasing employee performance. In conclusion... this Study found that Best Employers have largely been able to manage the challenges faced by organizations in South Korea better than the average organization. Overall they have been able to achieve higher levels of engagement, create a more compelling employer brand, provide more effective leadership and deliver high-performance culture more successfully. Opportunities for improvement have been summarized in this report and further insights will be available through a regional report capturing best practices. Proprietary & Confidential 11
The Winners Information collected from CEOs, senior leaders, HR, and employees of participating organizations was collated and presented in a blind format to an independent panel for judging. This panel comprised representatives from academia, HR, and business in South Korea. They not only reviewed the raw scores and HR practices, but also studied the alignment between the employee, CEO and HR voices, to identify the Best Employers. This year, we have included three special awards Commitment to Engagement, Best Employer of Generation Y, and Best Employer of Women to recognize the specific efforts of certain organizations. We are delighted to announce the following 2013 Best Employers for South Korea. Best of Best Employers 2013 Kookmin Bank Best Employers 2013 (in alphabetical order) HanmiGlobal Co., LTD Hanwha Chemical Hyundai Oilbank Intel Korea Johnson & Johnson Vision Care JW Marriott Seoul KT Corporation McDonald s Korea Qualcomm Best Employer for Commitment to Engagement DHL Korea Best Employer for Generation Y FedEx Express, Korea Best Employer for Women Hanwha Life Insurance Proprietary & Confidential 12
Contact Information Manasi Vartak Regional Project Manager Best Employers Asia Pacific +65.6239.7655 manasi.vartak@aonhewitt.com Benjamin Kim Project Manager Best Employers Korea +82.2.399.3600 benjamin.kim@aonhewitt.com Austin Kweon Chief Executive Officer Aon Hewitt Consulting Korea Inc. +82.2.399.3600 austin.kweon@aonhewitt.com Aon Hewitt Consulting Korea Inc. 7th Floor, Gwanghwamun Bldg 211,Sejongno, Jongno-gu Seoul 110-730 Korea www.bestemployersasia.com Copyright 2013 Aon Hewitt Singapore Pte. Ltd. This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of publicly available information. The content of this document is made available on an as is basis, without warranty of any kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document. Proprietary & Confidential 13
About Aon Hewitt Aon Hewitt is the global leader in human resource solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com/apac. Proprietary & Confidential 14 Copyright 2013 Aon Hewitt Singapore Pte. Ltd.