TALENT RETENTION Hanging on to High Performers:

TALENT RETENTION Hanging on to High Performers: Building and Sustaining Effective People Leaders Prepared by Aon Hewitt Thursday, March 29, 2012 Part two of a three part webcast series 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved.

Welcome Neil Crawford, is a Partner in Aon Hewitt's Talent and Engagement practice. Neil consults with organizations around talent (including measuring and improving employee engagement) and is the leader of the Best Employers in Canada study. Neil is based out of the Vancouver office but works with clients across the country. Todd Mathers, is a Partner working in Aon Hewitt's Talent and Engagement practice. Todd works closely with clients to identify, design and implement human resources solutions that align with business priorities, strengthen both leader and employee engagement, and enhance organization effectiveness. Todd works out of the Toronto office. Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 2

Three Part Webcast Series Part One Building and Engaging Great Leaders March 7 Part Two People Manager Effectiveness Part Three Connecting with Employees through Social Media April 24 Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 3

Agenda Why Leadership Matters People Manager Effectiveness & Support A Deeper Dive Organizational Practices Supporting People Manager Effectiveness Top Five Things to Consider Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 4

Why Leadership Matters There is a strong link between business performance and leadership effectiveness... People don t leave organizations they leave bad bosses! Leadership effectiveness Employee engagement 69% of the variance in engagement is a function of leadership effectiveness R = 0.83 Better business results 39% of the variance in business results is a function of engagement R = 0.63 Source: Hewitt s Double Digit Growth Research Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 6

Leadership Practices Webcast 1 Attendees How well does your organization ensure it has enough qualified leaders 5% 41% 54% select the right leaders 10% 33% 57% assess leaders against expectations 13% 40% 47% develop leaders 5% 33% 62% support leaders 7% 32% 61% measure leadership effectiveness 3% 43% 54% This is a strength We're OK We need to improve Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 7

Engaged Leaders are a Key Enabler for Improving and Sustaining Manager Effectiveness 100% Engagement by Role 90% 80% 70% % Engaged 60% 50% 40% 30% 20% 10% 0% Executive Senior Management Middle Management Supervisor / Team Leader Professional / Specialist / Technician Front-line Employee / Team Member Administrative / Clerical Support High Engagement (65% & Above) Moderate Engagement (45% to 65%) Low Engagement (Below 45%) * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 8

2012 Best Employers Research: People Manager Effectiveness Organizational Support / Accountability (HR Survey) Perceived Effectiveness (Employee) People Manager Effectiveness 267 organizations 118,000 employees 2,500 executives Perceived Effectiveness & Support (Managers / Leaders) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 10

How Canadian Leaders Fare Overview Leaders in high engagement organizations feel more supported and are viewed to be more effective by their people % of employees who view their leader to be effective Top Team s perception of leaders effectiveness % of leaders who feel well supported by their organisation Top Team s perception of support given to leaders Organizations with HIGH engagement (65%+) 73% 87% 68% 76% Organizations with LOW engagement (below 45%) 45% 70% 36% 52% Leaders feel engaged when they feel supported (0.74 correlation) Do some Top Teams have a blind spot? * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 11

What Makes Employees View Their Direct Leader as Effective? Regular, meaningful feedback and advice about four things: 1. How they re doing against what s expected 2. Why their contribution is appreciated 3. What they could do to develop their skills 4. What they should be doing to advance their careers Be treated as a unique individual when it matters most High standards of ethics and integrity Treats employee fairly and consistently identifies and meaningfully recognizes high performance; addresses poor performance Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 12

Manager Effectiveness Index Manager Effectiveness Index % of respondents rating their people manager as having high, moderate or low effectiveness Index Development Based on Survey results analysis Focus group findings Root cause analysis Action plan patterns My manager (the person you report to): Provides the support I need to succeed Sets clear expectations and goals with me Provides regular feedback that helps me to improve my performance Works with me to find ways I can develop and grow in my job Effectively deals with poor performance in our team Takes action to support my health and well-being where appropriate Displays integrity and ethical conduct at all times Inspires me to do my best work every day Takes the time to let me know my efforts are appreciated Understands my job well enough to evaluate my performance Does an excellent job of addressing employee questions or concerns Makes sure that we take the time to celebrate our successes Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 13

Manager Effectiveness Index Employee Perceptions High Manager Effectiveness = on average, % responding Agree and Strongly Agree Moderate Manager Effectiveness = on average, % responding Slightly Agree and Slightly Disagree' Low Manager Effectiveness = on average, % responding Disagree and Strongly Disagree There is a much larger proportion of employees who report a high level of manager effectiveness at high engagement organizations compared to low engagement organizations High Engagement (65% and Above)* Moderate Engagement (45% to 64%)* Low Engagement (Below 45%)* 23% 4% 8% 13% 31% 45% 73% 61% 42% * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 14

Elements of Manager Effectiveness 100% % Strongly Agree / Agree 90% 80% 70% 60% 50% Manager Once Removed 40% 30% 20% 10% 0% My manager effectively deals with poor performance in our team My manager works with me to find ways I can develop and grow in my job My manager makes sure that we take the time to celebrate our successes My manager has had meaningful conversations with me about my development and/or career goals (in the last year) My manager inspires me to do my best work every day My manager sets clear expectations and goals with me My manager does an excellent job of addressing employee questions or concerns I see strong evidence of effective leadership from the person my manager reports to (my manager's manager) High Engagement (65% and above)* Moderate Engagement (45% to 64%)* Low Engagement (Below 45%)* * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 15

Elements of Manager Effectiveness (Cont d) 100% % Strongly Agree / Agree 90% 80% 70% 60% Integrity, ethical conduct are table stakes 50% 40% 30% 20% 10% 0% My manager My manager takes provides regular the time to let me feedback that helps know my efforts are me to improve my appreciated performance My manager provides the support I need to succeed My manager has My manager takes had meaningful action to support conversations with my health and wellbeing where me about my performance (in the appropriate last year) My manager understands my job well enough to evaluate my performance My manager displays integrity and ethical conduct at all times High Engagement (65% and above)* Moderate Engagement (45% to 64%)* Low Engagement (Below 45%)* * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 16

Positive Links Between High Impact Drivers and People Manager Effectiveness % of Organizations where a Top 5 Driver to IMPROVE Engagement Engagement Driver Overall* Low Engagement (less than 45%) Moderate Engagement (45% to 64%) High Engagement (65% or more) Managing Performance 96% 100% 98% 94% Career Opportunities 93% 100% 94% 92% Recognition 85% 50% 84% 90% These three areas are at the core of a people manager s interactions with direct reports * Source: Aon Hewitt Best Employers Database (2012) 400+ employees Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 18

Positive Links Between High Impact Drivers and People Manager Effectiveness % Rating People Manager Highly Effective Perception of Engagement Driver Negative on Driver Moderate on Driver Positive on Driver Managing Performance 19% 46% 87% Career Opportunities 26% 52% 86% Recognition 20% 53% 90% The large majority of employees rating their Manager as being highly effective also feel positive about the engagement drivers most influenced by their manager * Source: Aon Hewitt Best Employers Database (2012) 400+ employees Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 19

Meaningful Feedback and Coaching Conversations Make a Difference 12% 5% 9% 3% 88% 69% 51% 45% 91% 59% 42% 51% Employees who have meaningful conversations (about performance or career / development goals) are more likely to perceive their manager as effective 38% 26% 4% 7% Agree / Strongly Agree Slightly Disagree / Slightly Agree Strongly Disagree / Disagree Agree / Strongly Agree Slightly Disagree / Slightly Agree Strongly Disagree / Disagree My manager has had meaningful conversations with me about my performance (in the last year) My manager has had meaningful conversations with me about my development and/or career goals (in the last year) * Source: Aon Hewitt Best Employers Database (2012) High Effectiveness* Moderate Effectiveness* Low Effectiveness* Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 20

Manager Support Index Manager Support Index % of people manager respondents rating their organization as providing high, moderate or low manager support Index Development Based on Focus group findings Root cause analysis Action plan patterns People Managers: I get the support I need to successfully manage others (e.g. training, development, coaching, tools, time, resources) I have enough time each day to coach and develop my team I have the tools and resources I need to provide valuable career advice to individuals on my team I have the training / development / coaching I need to provide valuable career advice to individuals on my team I receive effective feedback from my manager on how my leadership style influences my team I get the support I need to help people on my team improve their performance (e.g. training, development, coaching, tools, resources) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 22

Manager Support Index People Manager Perceptions High Manager Support = on average, % responding Agree and Strongly Agree Moderate Manager Support = on average, % responding Slightly Agree and Slightly Disagree' Low Manager Support = on average, % responding Disagree and Strongly Disagree There is a much larger proportion of people managers who report a high level of support at high engagement organizations High Engagement (65% and Above)* 3% Moderate Engagement (45% to 64%)* 6% Low Engagement (Below 45%)* 12% 29% 36% 68% 44% 49% 52% * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 23

Level of Support Two weak links 100% % Strongly Agree / Agree 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% I get the support I need to successfully manage others (e.g. training, development, coaching, tools, time, resources) I have enough time each day to coach and develop my team I have the tools and resources I need to provide valuable career advice to individuals on my team I have the training / development / coaching I need to provide valuable career advice to individuals on my team I receive effective feedback from my manager on how my leadership style influences my team I get the support I need to help people on my team improve their performance (e.g. training, development, coaching, tools, resources) High Engagement (65% and above)* Moderate Engagement (45% to 65%)* Low Engagement (Below 45%)* * Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 24

People Managers with More Support More Confident Having Pay Conversations 2% 4% 22% 26% 59% 76% 57% 37% 17% Agree / Strongly Agree Slightly Disagree / Slightly Agree Strongly Disagree / Disagree * Source: Aon Hewitt Best Employers Database (2012) I can confidently explain our compensation programs to individuals on my team High Support* Moderate Support* Low Support* Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 25

Upward Evaluation More Common in High Engagement Organizations Employees have the opportunity to evaluate their manager 53% (bottom-up appraisal) 50% 73% Employees have the opportunity to evaluate their peers 33% 59% 67% High Engagement (65% and above)* Moderate Engagement (45% to 64%)* Low Engagement (Below 45%)* *Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 27

Effectiveness of Recognition Practices Varies More than Prevalence Manager behaviour is a key driver of recognition effectiveness Does your organization formally budget for employee recognition? (% = Yes) 67% 89% 88% Does your organization have a formal, just-in-time recognition program to recognize those who go above and beyond? (% = Yes) 50% 75% 73% Do front-line managers in your organization have a discretionary budget to recognize above and beyond performance? (% = Yes) 17% 65% 73% High Engagement (65% and above)* Moderate Engagement (45% to 64%)* Low Engagement (Below 45%)* *Source: Aon Hewitt Best Employers Database (2012) Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 28

Top Five Things to Consider 1 2 3 4 5 High people manager engagement is a key enabler for sustaining or improving manager effectiveness Meaningful feedback and coaching are core capabilities that support setting and monitoring against expectations, appreciating contributions and stimulating skill and career advancement Effective leaders demonstrate managerial courage - failing to address poor performance negatively impacts high performers Truly effective people managers see and understand the unique individual in every employee especially when it matters Most Best Employers provide employees with an avenue to give feedback about their people manager Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 30

The Path to Highly Effective People Managers Employment Value Proposition Manager Expectations and Requirements Role Structure Attract and Build Manager Capability Management Tools & Support Accountability for Results Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 31

How Do You Compare? Benchmark Yourself Manager Effectiveness and Support Compare your organization to the Best, others in your engagement zone and / or industry Also available is an analysis of your Manager Effectiveness/Support results by an Aon Hewitt consultant. This includes: An analysis of what aspects of manager effectiveness contribute to employee engagement How the findings and analysis can help your organization become a better place to work A qualitative analysis of employeesubmitted verbatim comments to support the above findings 2011 Top Companies for Leaders Benchmark Report Available against Global and/or Regional Top Companies, Regional Top Companies, by industry, or any combination Report covers over 57,000 data points from the study comparing your organization against a selected benchmark group and all other participants; includes specific gaps and opportunities along with general insights into what the best do on a number of leadership practices Insights/deep dives include ((# of survey items): Leadership Strategy (160) Succession Management (93) Leadership Development (212 High Potential/Critical Talent (207) Top Companies for Leaders Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 34

For more information contact: Colin Platt Tel: 416-2275817 colin.platt@aonhewitt.com Marie Pinsonneault Tel: 514-840-7856 marie.pinsonneault@aonhewitt.com Aon Hewitt 2012 Aon Consulting Inc./Hewitt Associates Corp. (Aon Hewitt). All Rights Reserved. 35