Carried out in partnership with the European Club for Human Resources, this annual Aon Hewitt study gathers insights from European HR VPs on their people management policies and practices. This year’s edition has a particular focus on employee benefits, diversity and inclusion, and corporate social responsibility.

1. Is HR caught in a vicious circle?
After another year of cost cutting, it could be argued
that waiting for the economy to improve is not enough.
Organizations in Europe will only be able to break out of the
current no-growth environment by investing pro-actively
in their people, their skills and their processes. However,
the results of the 8th
European HR Barometer paint a different
picture. HR leaders are seemingly stuck in a vicious circle,
unable to push the longer-term agenda hard enough with
their fellow business leaders.
During a period when labor cost reduction rose up the
priority list by 18 per cent, HR performed well in this and
other narrow-focus areas such as the response to executive
pay legislation and improving governance. Yet the study
yielded less encouraging results in other areas. This begs
the question why, rather than just doing well on the
regulatory and downsizing agenda, HR leaders are not
improving their performance in broader, longer-term issues
such as diversity, growing talent and employee engagement.
Employee engagement as KPI
Despite the continued high prioritization of employee
engagement and its growing use as a key metric for HR,
companies struggle to harness the power of employee
engagement and use it effectively.
■■ Improved delivery by HR in focused areas such as cost cutting,
response to executive pay legislation and governance
■■ Performance shortfall of HR in longer-term areas such as
diversity, growing talent and employee engagement
■■ Despite expressing the need for more performance indicators
and better IT systems, HR seems to struggle with the metrics it
needs to deliver on more strategic tasks
■■ In the longer-term, building a pipeline of leaders for the future
and succession planning top the priority list
■■ Second tier priorities are workforce management and
improvement of service delivery
■■ 64% of all surveyed companies measure employee
engagement, a 24% increase since 2012, but only 36% focus
on action planning
■■ Continued decrease in linking performance and rewards,
with compensation and benefits not seen as a big priority
■■ 57% of respondents consider diversity to be a strategic issue
but mainly as a way to build reputation externally
■■ External factors and brand attractiveness are the most
prominent drivers for CSR activities
8th
HR Barometer: Executive Summary
Key findings
64 per cent of the companies surveyed measure employee
engagement, an encouraging increase of 24 per cent
since 2012. 61 per cent also say that they try to educate
and empower managers and leaders to drive engagement.
However only 36 per cent really focus on action planning and
only 34 per cent plan to measure this KPI on a continuous basis.
There are a number of possible reasons why companies
are not leveraging their results appropriately. It is likely
that the necessary time and resources are not allocated
once the results are on the table. While it is relatively easy
to communicate the results, it is not so easy to mobilize
a whole organization, managers and employees to
execute accordingly. If companies are addressing employee
engagement in order to drive business performance, then
simply measuring employee engagement is not enough.
HR needs to be equipped with the right tools and resources
to implement effective communication and action planning
at all levels of the organization.

2. Three new topics
This year’s survey into HR trends in Europe brought
a focus on three new and heavily discussed topics:
■■ Employee benefits management
■■ Diversity and inclusion and
■■ Corporate social responsibility (CSR)
Employee benefits management:
lack of focus
Another surprising finding is that compensation and benefits
are not seen as a strong priority by HR. This is worrying in
a period when living standards are declining across much
of Europe and managing personal and family budgets is
becoming an issue for an increasing number of workers.
Furthermore, recent research1
indicates that pay is an
increasingly important driver for employees. Historically,
the design of sophisticated pay schemes has only been a hot
topic at senior leadership levels. But demographic changes
are bringing in a generation of younger, highly demanding
employees who expect higher and more individualized
financial as well as non-financial rewards for their input.
If the offer is not attractive they will not hesitate to take their
skills to a different employer.
Research also indicates that most companies do not really try
to understand the needs and preferences of their employees
when it comes to total rewards as they simply do not ask
them2
. The consequence is that companies design expensive
benefits and rewards schemes which do not meet their
employees’ needs.
So, while compared to last year, more companies say they
want to establish and improve the links between employee
performance and business results, the reverse seems to be
happening. The introduction and improvement of non-
financial and individualized employee recognition schemes,
as well as the implementation of performance-related bonuses
appear to be on the decline. Add to this the lack of focus on
total rewards strategies and it is easy to conclude that interest
in rewarding creative ideas and exceptional performance is
also dwindling.
Diversity and inclusion:
superficial commitment?
Although they are new to the list of HR priorities in this study,
diversity and inclusion are ranked quite highly. 57 per cent
of respondents consider diversity to be a strategic issue and
it is stated as a key priority for around 43 per cent. However,
48 per cent of all responding companies have no specific
program for diversity in place and creating such a program
is seen as a key priority for around 43 per cent. It seems that
many view this as an issue for external brand and reputation
building rather than an opportunity for talent management.
Low scores for the range of diversity and inclusion-related
activities in companies raise the question whether companies
really believe in the impact of diversity and inclusion on
business performance.
CSR with branding focus
The results show a similar trend for CSR. Instead of being
driven by altruism or values, it is external factors that make
companies engage in CSR activities. CSR seems to be used
primarily as an external branding tool beneficial for talent
attraction, brand recognition and building reputation with
colleagues, clients and regulatory bodies.
A lack of tangible and integrated activities is noticeable.
As with diversity and inclusion, it is relatively rare for
companies to have consistent CSR programs and processes
in place that are clearly linked to the business strategy.
What does HR think it needs?
When asked to identify longer-term HR priorities, study
participants put talent management and leadership
development at the top of the list. Second-tier priorities
include both workforce planning and improving HR delivery.
It is particularly interesting to see the list of requested items
to help HR work more effectively or singled out for urgent
improvement: meaningful HR metrics and performance
indicators, integrated HR-related IT systems and increased
credibility with lines of business are all featured.
The good news is that after years of striving towards a more
strategic role for HR, this finally seems to be becoming a reality
in many companies. Survey participants rate themselves
well in HR strategy design and delivery. Yet the ratings for
overall HR execution are lower than in the past. This may be
down to resourcing issues, a shift in perception of the role
or the importance of other topics. Whatever the reason, HR
execution seems to have been pushed into the background
for many corporate HR departments.
This is where the vicious circle comes into play. If missing
systems lead to missing KPIs, these combined with operational
weaknesses will in turn lead to missing credibility in the
business. As a result, HR’s ability to drive the longer-term
issues will be undermined and HR will appear to be incapable
of managing both the strategic and operational aspects of
the role at the same time.
©Aon plc 2013
1
Source: Aon Hewitt 2013 Trends in Global Engagement
2
Source: Aon Hewitt 2012 Total Rewards Survey
The 8th
European HR Barometer study was carried out by
Aon Hewitt in co-operation with the European Club for
HR between November 2012 and February 2013.
44 organizations, with a total of 2.3 million employees and
combined revenue of 480 billion Euros, completed this
year’s survey. 70 per cent are listed companies and
52 per cent have more than 10,000 employees.
HR leaders sharing their views come from 12 European
countries and 70 per cent are executives and directors with
exclusive responsibility for HR at European or global level.
For more information, visit:
www.aonhewitt.com
www.europeanclub-hr.eu
About the Research
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.
Contact us
Jenny Merry | +44 (0)1727 888395 | jenny.merry@aonhewitt.com
Duncan Brown | +44 (0)20 7301 4266 | duncan.brown@aonhewitt.com