Page 50 - AGL Sustainability Report 2011

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AGL Energy Limited 48
Employee engagement
Introduction to employee engagement
Employee engagement measures the degree to which
employees are emotionally connected and committed
to the company they work for, and is a core metric for
measuring the health and success of the organisation.
AGL undertakes the annual AGL Engagement Survey to understand
how engaged employees are by measuring key drivers that are
important to them such as employment experience, career
opportunities, company reputation, change management, customer
focus, safety and diversity.
The survey is administered by Aon Hewitt, an external and
independent provider. Organisations that achieve engagement
scores greater than 65% are defined by Aon Hewitt as being in the
‘best employer’/high performance zone.
Being a ‘best employer’ will assist AGL in becoming more effective
in attracting and retaining the best talent. Research also shows
that organisations scoring in the ’best employer‘ zone generally
enjoy superior business results, with a significant impact on total
shareholder return.
AGL uses the results from the engagement survey to formulate
action plans to address the key opportunities to drive an
improvement in employee engagement.
Vision for employee engagement:
AGL’s vision is to have an
engagement score within the ‘best employer’ range (i.e. minimum
of 65%).
Improving performance in key areas such as diversity and
(page 49)
, talent acquisition and development
(page 51)
and reward and recognition
(page 53)
, will influence the engagement
of employees over the long term. Safety
(pages 56 to 59)
also has a
strong influence on engagement.
AGL set a target to increase engagement to 65%, but fell short of
this target with a decrease of eight percentage points compared to
the FY2010 score. Even though AGL is tracking closely to the Aon
Hewitt Australian Energy and Utilities benchmark of 55%, overall
employee engagement remains within the ‘indifferent’ zone (as
defined by Aon Hewitt). A number of individual business units are
tracking within the ‘best employer’ zone.
The 2011 AGL Engagement Survey was completed during June and
July 2011, following a period of significant organisational change
that was undertaken to position AGL for long-term profitable
growth. Regrettably, the organisational changes resulted in a number
of positions being made redundant across the business. Employee
engagement fell in some parts of the business most affected
by the changes.
Engagement scores declined in the Merchant Energy and Upstream
Gas business units. However, despite the overall decrease, Retail
Energy sustained engagement levels in a number of areas, and
improvements to engagement also occurred in the Information
Systems Group and Customer Operations business unit, which had
the lowest engagement in FY2010.
For FY2012, AGL is targeting a minimum increase in engagement of
eight percentage points to regain the engagement levels recorded in
FY2010. To improve engagement, Aon Hewitt has recommended a
continued focus on improvement strategies in the areas of managing
change, clarifying career paths, delivering on promises made to new
employees, as well as targeting groups such as leaders in the middle
ranks and specific locations where engagement is particularly low.
Employee engagement scores are used as a key performance
indicator in senior managers’ Performance and Development
Review. Operational leaders and employees are measured on
their contribution to specific engagement action plans that have
been agreed in their business units and other activities that aim to
positively impact on engagement.
Employee engagement
Engagement score
Aon Hewitt ‘Best Employer’ Zone
> 65%
The FY2011 survey was conducted
in June and July 2011 with an overall
response rate of 73.5%.