This was a question asked at the Stop Doing Dumb Things conference at the end of November as part of a discussion about measuring engagement – albeit asked more generally as how can we prove engagement makes a difference?
Lots of comments, views, ideas and more questions ensued, exploring the customer engagement in particular. Yet, the employee engagement side has been bugging me ever since so I thought I would try and summarise my own thoughts and observations to the question, How can we prove employee engagement makes a difference?
What is Engagement?
There are many definitions of employee engagement on Google, but the one we like to refer to comes from the Institute for Employment Studies:
A positive attitude held by the employee towards the organisation and its values. An engaged employee is aware of the business context, and works with colleagues to improve performance within the job for the benefit of the organisation. The organisation must work to develop and nurture engagement which requires a two-way relationship between employee and employer.
Therefore, employee engagement assumes mutual respect between management and staff and relies on sound two-way communication. The challenge is that ‘Engagement’ needs to be understood, quantified (some how) and monitored.
Engagement is often treated as a project – this quarter management will be engaging with staff … – but it is a continuous/ongoing process. We have to tap into what creates engagement, and figure out where it is strong and where it needs improving. Effectively, an employee engagement survey will measure the drivers of engagement to determine how engaged (or disengaged) the workforce is. (Just checking for Job Satisfaction is not the answer because it’s only one factor – e.g. staff can be satisfied with their job but not actually perform any meaningful work. Job satisfaction on its own does not equate to high performance in an organisation.)
Joined-Up Surveys
Creating a survey to measure employee engagement isn’t rocket science – and I’m sure many organisations get it right (there is no magic formula, although the variations between organisations’ surveys share common themes). However, it is rare for an employee survey to be planned and conducted in unison with another survey aimed at customers/measuring customer satisfaction.
Can you join up results from your employee and customer surveys?
This is likely to be a challenge if the demographic data for teams/locations is not consistent between your employee survey and your customer survey. Some business units will only have internal customers and don’t often have their own internal customer survey, restricting what analysis can be done.
A simple solution may be to take the results of your employee survey and review the numbers by departments/locations, and correlate these results with financial performance, for example, sales figures at each store. This isn’t perfect as other factors need to be taken into account, but patterns should emerge – here are good leaders, or examples of good communications, etc.
Start small and simple
We have been analysing the results of an employee survey for a business with depots nationwide. Some of the engagement scores have 100% variation or greater, ranging from a score of 40 for the lowest engaged to 80+ for the highest (the maximum (best) score is 100). How does this impact on turnover (and profit) at each depot?
We don’t need to conduct a nationwide customer survey covering every depot. Start with a limited pilot study to a random selection of customers in a single region, or a handful of depots under a willing and friendly area manager.
If your survey results could be joined up, what would you see? More importantly, what could you do with the knowledge?
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this would be a very interesting approach in the NHS where staff problems can reach toxic levels and this has to impact patient care – staff attitudes always rides very high in lists of problems patients have with the NHS – in both GP practices and hospitals.
Thanks for your comment, Colin.
You may also find the report “The Drivers of Engagement” published by the IES in 2004 of interest. It’s a study based on analysis of a survey of over 10,000 NHS employees (across 14 organisations in the NHS). This only looks at the drivers of engagement… no joined-up surveys in this study(!). The summary page http://www.employment-studies.co.uk/pubs/summary.php?id=408 lists some of the key findings such as engagement levels decline as length of service increases.
This is a really interesting article! I think the crux though really rests with how you can analyse data jointly if this data comes from two separate surveys asking slightly different questions to two different audiences.
Maybe a bit more complex statistically, multilevel models (http://en.wikipedia.org/wiki/Multilevel_model) may be a great way to overcome the limitations of correlating financial performance as a proxy for customer satisfaction with some measure of employee engagement because you can actually include an aggregated measure (maybe by site/ region) of employee engagement as an explanatory variable into a statistical model with customer satisfaction as the dependent variable.
Hi Lukas, thanks for your feedback and the link.
I wasn’t really thinking of similar questions to the 2 audiences when I was writing this post, but this can be very useful to figure out whether employees (and the business) really understand what is important to their customers.
I think we are probably thinking along the same lines though…
We ask the engagement questions to our employees, and the feedback/experience questions to the customers. Then examine the results of the “higher-engaged” employees (by site/region) against the customer survey results also broken down by the same site/region. Do the same sites also have better customer sat. scores? Which sounds relatively simple!
I think it may have been about 20 years ago and it may have been Susan Keaveny who reported in HBR on a Serendipititious survey by Rank Xerox about customer service and customer loyalty.
Xerox did two separate surveys, one about customers’ perceptions of the service they received (this as part of an employee reward scheme) and one about customers’ intention to buy again (this as part of a sales forecast). Neither department knew of the other’s survey, but they happened to survey the same customers. Eventually, it was realised that they had asked the same people and someone suggested they overlay the data to see if there was a correlation between satisfaction and repurchase.
They found that the people who very, very dissatisfied (4/5) were very, very likely to buy again and likely to tell others about the great service. What was surprising was that customers who were quite satisfied were scarcely more likely to buy again than customers who were quite dissatisfied. Customers who rated service above 4 out of 5 were six times more likely to buy again than customers who rated service between 3 and 4.
We looked into this in more detail and used it as the basis of Lotus Development/IBM’s award winning Customer 2000 project. We also found that while total costs increase as companies improve service levels from 1 – 4, they fall significantly as companies climb from 4 towards 5. This seems to be because to get to level 4 the basic infrastructure must work, but at the highest levels service is about engagement, attitude, pride, friendliness, personability, which are all the outcome of peoples responses to good leading and as priceless as they are ‘free’.
Results of such customer responses’ include free disclosure of valuable information about feelings and intentions, customers’ willingness to make long commitments that reduce costs and customers effectively selling on behalf of the company.
Before and since then companies such as Apple, Amazon and Southwest Airlines have followed similar models, achieving the triple gold standard of increasing perceived service, revenue growth and greater profitability simultaneously year after year, while most other companies have found it impossible to do more than one (or even one) at a time.
Hi Jonathan,
Excellent info. I was introduced to a similar approach when I worked for TARP (another research company) at the end of the 90′s – albeit using just the 1 survey to examine both customers’ satisfaction and purchase intention, willingness to recommend, etc. This is common in a lot of customer surveys today – I imagine the very first time someone dared to ask both types of questions in the same survey they perhaps thought they had stumbled upon an amazing ability! Often, the simplest ideas…
I’m particularly intrigued by the cost of service levels and what it takes to convert a ‘mollified’ customer into a very satisfied customer. Definitely agree that a lot of the steps needn’t cost the organisation money.
Thanks for sharing.
Wonder if you guys have looked at the ‘net promoter score’ in this context? See ‘The Ultimate Question’ by Fred Reichheld, 2006 HBS Press. Also http://www.netpromoter.com.
Best wishes
Peter
Hi Peter. We have used NetPromoter scores in a lot of surveys (but more in customer satisfaction research than employee engagement). John is quite a fan of Fred Reichheld and has recommended the books too. I might come back to this (you’ve prompted a thought!) Thanks!