An HR vice president briefly reviews the company's employee performance scores and relevant compensation increases over the past four years. The data reveals a .7 correlation between performance scores and salary increases and a significance level of less than .05. Additionally, the HR VP finds that the use of personal days increases by 30% around the annual performance review time and production falls by 5%.
Over the past three years, there has been a steady decline in profits and employee morale. Employees seem less engaged, and both the voluntary and involuntary turnover rates are currently 15 percentage points over the industry average. The senior team asks HR if there is any correlation between the performance scores, decreased production, and employee engagement. As the HR VP is conducting a cursory review of the current performance management system and analyzing the data to make recommendations, the CEO asks the HR VP to increase all salaries by 4%, citing the correlation between salaries and performance as a rationale.
The next week, at the weekly management team meeting, one of the senior leaders states that at her previous company the employees were 80% engaged, and she suggests using the same number as an engagement benchmark. The CEO likes this number and asks the HR VP to put a plan in place to meet this engagement number. Another senior leader suggests to the HR VP that the company should prohibit the use of personal leave before, during, and after the review period.
How should the HR VP respond to the CEO's request to use a benchmark figure of 80%?