Aon Hewitt Study Reveals Strong Link Between Employee Engagement and Employee Perceptions of Total Rewards. Honest Leader Communication Also Influences Engagement

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Apr 08, 2015, 10:35 ET

LINCOLNSHIRE, Ill., April 8, 2015 /PRNewswire/ -- With rising health benefit costs and relatively flat wage increases deflating employees' perceptions of their work environment, new survey data from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), shows a strong relationship between employees' perceptions of their Total Rewards package and their overall engagement levels.

Engaged Employees Perceive Total Rewards More Competitively

Aon Hewitt recently surveyed more than 2,500 U.S. employees at mid-size and large U.S. employers to determine their perspectives and attitudes about their employment experience―including values and culture, work environment, engagement, total rewards and communication.

The survey found that 60 percent of engaged employees say their Total Rewards overall (everything an employer provides to an employee, including pay, benefits, and the work environment) are above or well above what other employers offer, while only one-quarter (24 percent) of those who are disengaged say so. Similarly among engaged employees, half (51 percent) view career development/training programs as better than what other employers offer, while only 19 percent of disengaged employees would rate these programs as better competitively.

"While we consistently see employees ranking pay as the most valuable reward they earn from their employer, it's not the only thing that matters," said Ray Baumruk, partner, employee research leader, Aon Hewitt. "Engaged employees value a more balanced, less oriented toward pay-only, rewards package compared to those who are disengaged."

Understanding and Perceived Competitiveness of Total Rewards
According to Aon Hewitt's survey, paid time off (84 percent) and base pay (83 percent) were the most understood of all Total Rewards programs, while bonus (64 percent), career development/training (61 percent) and work/life balance (60 percent) were among the least understood.

"Employees are telling us that nothing about their Total Rewards package stands out," said Baumruk. "This lack of differentiation could be damaging to attraction, and many of the least understood programs are also the ones viewed by employees as less competitive."

While overall awareness and understanding was strong, perception of competitiveness could be improved. Employees rated their current employer's paid time off programs (42 percent) and pension plans (41 percent) as above the competition. Bonus incentives/commissions (30 percent), base pay (27 percent), career development/training programs (22 percent) and work/life balance (20 percent) were less likely to be viewed as competitive relative to other companies.

"Companies could see improvements in employee engagement by increasing awareness and understanding of these programs," said Pam Hein, partner, Communication Consulting, Aon Hewitt. "Often providing Total Rewards statements and related web tools can help foster greater understanding. Administering engaging quizzes or quick assessments to employees can also draw attention to rewards that may be undervalued or misunderstood."

Total Rewards by Gender
According to Aon Hewitt's data, men are more likely than women to perceive their Total Rewards to be competitive. More specifically, men are more likely to believe their pay programs are better than others (39 percent) and their bonus opportunity is better than what other organizations provide (38 percent). Male participants are also more likely to say the following rewards are well above or above what other organizations offer:

Savings and company-match programs (40 percent)
Work/life balance programs (38 percent)
Life and disability insurance (32 percent)

Total Rewards by Generation
Perceived competitiveness of Total Rewards is also higher among Millennials than other generations, particularly on career development/training programs (41 percent).

Better Communication Improves Engagement
According to the study's findings, there is a significant gap between the communication perceptions of engaged and disengaged employees. Among engaged employees, more than three-quarters (77 percent) feel encouraged to share ideas while only 22 percent of those who are disengaged would agree. Similar gaps exist when considering how open and honest senior leaders are viewed, and how managers share and provide information with employees.

Communication Perception (strongly agree/agree)	Total Population	Engaged	Not Engaged
Encouraged to share ideas	47%	77%	22%
Senior leaders open and honest	38%	67%	14%
Managers provide relevant and valuable input on performance or work experience	46%	74%	23%

Aon Hewitt's study revealed that most employees feel they receive the right amount of communication on benefits and job-related topics. Employees feel they receive too little communication related to important aspects of engagement such as career development (42 percent), recognition of efforts and achievement (46 percent), incentive/bonus pay (40 percent) and work/life balance or stress management (40 percent).

"The most engaged employees are the ones who are encouraged to share ideas and who witness open, honest communication from senior leadership," said Hein. "Offering communication training for managers and leaders, regularly sharing key messages, and instituting performance- and reward-related metrics, related to communication from managers and leaders, will be essential to achieve improvement in this area."

Learn more about the Inside the Employee Mindset™ study at aon.com/employeemindset.

About Aon Hewitt
Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.

About Aon
Aon plc (NYSE:AON) is a leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon's global partnership with Manchester United.