Ominously, a survey conducted by Watson Wyatt a few months before the worst of the financial tsunami became apparent in October, found that employee engagement in Hong Kong had fallen by 17 percentage points to 52 per cent last year, the worst in the 12-market study which included the mainland, Taiwan and Singapore. The survey covered more than 11,500 full-time employees from all major sectors in the region. Each of the participating companies had at least 250 employees.

Deidre Lander, Hong Kong head of human capital group for Watson Wyatt, a provider of consultancy services including retention strategies, said it reflected the still-buoyant job market conditions at the time, suggesting that this could be worse now.

With Asia believed to be spared the worst of the financial contagion spreading across the US and Europe at the time, companies in Asia devoted the lion's share of their human resources into recruitment at the expense of maintaining employee engagement - defined as the amount of discretionary effort that workers are willing to put into their jobs when they feel they are fully involved with their work.

Ms Lander said the current downturn is creating an atmosphere of uncertainty and job insecurity. While by itself this does not create greater disengagement, it certainly does nothing in the way of making employees more engaged.

'It just means [employees] stay in the organisation and they are an even bigger liability because they are not engaged and they are still in the business,' she said.

And this is perilous because companies with disengaged employees will find it difficult to weather the crisis due to lowered overall productivity caused by such things as greater absenteeism, and a tendency for workers not to share as much information as their highly-engaged peers, she said.

The end cost of all this is lower revenues, inflated expenses, and generally leaner profits - all of which will hinder an organisation's ability to ride out economic difficulties.

To support this point, research conducted by Watson Wyatt showed that, all things being equal, companies with a highly engaged workforce achieve 16 per cent higher five-year total returns to shareholders, command a 50 per cent premium on the stock market, and enjoy 26 per cent greater employee productivity.

To further cement this point, it showed that a company with US$1.7 billion in assets and 7,500 employees stands to gain US$1.2 billion in annual revenues, but a 10 per cent decline in employee engagement corresponds to a drop in productivity equivalent to US$1,120 per employee translating to US$8.4 million.

But many companies are underestimating just how important employee engagement is to maintaining workforce productivity.

'A lot of employers would say that it was obviously important ... [but] they often can't name one thing that they are doing to address this,' Ms Lander said.

In many cases, she added, the difference between whether the company is staffed by highly engaged employees or not also depends on whether a company can get its employment brands right.

Employer branding is a relatively new concept, similar to the concept of consumer branding.

Simply put, it creates an image in the labour market that a certain company is a great place to work in.

'In the old days when people join an organisation for life, there was an expectation you would stay no matter what,' Ms Lander said. 'Nowadays ... the employer really has to market their employment deal very strongly and reinvigorate that employment deal from year to year.'

According to the company's research, eight out of 10 engaged employees said they believed their company had a reputation for providing a good employment deal. They essentially said their company had an employment brand that is valuable to them.

Despite this glaring fact, sadly many companies in Hong Kong focus on employer branding at the recruitment stage, but simply do not pay enough attention to the employees who are already in the company and neglect to keep communicating the brand to them, she said.

Research by human resources consultancy firm Mercer has shown that globally there are four relatively consistent drivers of employee engagement, each of which could be hurt when the going gets tough. They are: the intrinsic work itself, confidence and trust in leadership, recognition and rewards, and the level of communication within the organisation.

To minimise employee disengagement Patricia Milligan, Mercer's chief markets officer, suggests companies should focus their efforts on employee communication to boost morale.

Leaders need to be perceived as 'walking the talk', demonstrating the values of the organisation and gaining the confidence of their employees that they will be able to navigate the company through the downturn.

Even in cases where an organisation is faced with a necessary and unfortunate reduction in the number of workers, the question becomes whether the layoffs are being done in such a way that they treat people with respect and in accordance with the company's own values, she said.

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