Allegiance Blog

How much impact does employee engagement have on a company’s bottom line? More than you think.

A recent Gallup study estimated that disengaged employees wasted more than $300 billion in productivity at U.S. firms. The flip side:  firms with engaged workforces have 2.6 times the earnings per share growth rate compared to their industry counterparts.

So what’s the connection of engagement to productivity? It’s based on the premise of “Pay it Forward” — engaged employees lead to engaged customers lead to increased profits. At Nicor National, we measure both our employee engagement and customer engagement on a monthly basis using the Allegiance platform and see a consistent correlation between the two — the upticks and the downticks tend to go hand in hand.

Our engagement efforts beyond monthly tracking include a combination of e-based and direct communications, both on a scheduled and ad-hoc basis. To keep your finger on the pulse of employee engagement, you can’t rely on just one approach, since not all employees respond to our communications in the same way.

Given that our business sucess is based on creating stronger relationships with our customers, the connection between customer engagement (i.e. customer satisfaction) and profitability in our company is well documented. We’ve learned that in order to achieve our business goals and meet customers’ changing expectations, we have to start with our employees.

Barbara Porter is Vice President, Customer Service and Business Development at Nicor National

Congratulations on reaching a milestone.

You have a well-designed, comprehensive feedback program in place, with several gigabytes of data on employee and customer satisfaction, loyalty and engagement. You have identified the key drivers of customer engagement and trended employee loyalty and satisfaction over time.  In response, action plans have been drafted and executed in a constant effort to move the needle toward increased customer and employee satisfaction, loyalty and engagement. What’s next?

Your data is worth more!

Now is the time to maximize the actionability of your VOC (Voice of the Customer) and VOE (Voice of the Employee) initiatives and optimize the ROI realized from your feedback program. To take your feedback program to the next level, you will want to link strategically-selected operational data with your valuable survey data.

These operational data variables are uploaded to your survey database as part of the invitation process (or such variables may be back-augmented after data collection has taken place). These variables remain hidden to the survey taker and are pre-populated at the record-level (meaning each survey invite record contains unique values for each variable for maximum reporting flexibility). 

Segmentation Variables

A typical customer or employee database contains variables that can be used to segment survey respondent data. Pre-populating survey records with information already available frees up valuable and limited “survey real estate,” enabling a shorter survey focused on capturing customer or employee feedback. Operational variables can be used to drive survey logic, producing a brief and targeted survey. They can even be used to guide data collection soft quotas. Finally, by pre-populating “known “values, the surveyor can avoid annoying the survey taker with questions they think researchers should know the answer to (e.g. if you really valued me as a customer, you would know that I purchased my Jeep Rubicon from Rudy on September 8, 2010 at 6:27 PM…I should not have to remind you!)

Here are a few examples of segmentation variables that add value to a survey database:

Drive Operational Excellence

Now you have a shorter, more targeted survey with data amped up by the integration of operational data. From this, you can make simple customer or employee segment comparisons. This arms decision makers with the results of these segment comparisons, backed by correlation analysis, to drive action.  Here are some examples:

Customer
Finding: The West Coast call center has much shorter hold times than the East Coast call center. Shorter hold times are correlated with higher satisfaction with the support experience.

Action: Investigate what factors are driving shorter West Coast hold times and replicate these conditions (e.g. staffing, technology, training, culture, etc.) at the East Coast call center.

Employee
Finding:  The Operations Team has much higher PTO (Paid Time Off) utilization rates than other departments. Higher PTO utilization is correlated with greater employee engagement.

Action:  Encourage employees in all departments to utilize their PTO through a corporate communications effort. Empower departmental leadership to foster a culture conducive to taking time away from work to “recharge the batteries” and hold management accountable for increased PTO utilization.

Operational Intelligence Mother Lode

Like un-mined gold sitting right under your nose, you can use these new variables linked to customer and employee feedback to drive strategic decision support and continuing operational improvement. Segment comparisons fueled by this data augmentation can guide targeted marking and communications efforts. These insights drive lasting, positive change in the organization, increase operating efficiency and cost savings, and drive increased satisfaction, loyalty and engagement for both customers and employees.

Still looking to up your game? Stay tuned for another blog post on Linking Business Performance Metrics with Operational & Survey Data.

What are your employees talking about? What keeps them up at night about their job? What distracts them from their day-to-day activities?

During tough economic times, employee stress levels are up. This directly affects their job satisfaction, which impacts the way they treat customers. This can hurt revenue and profits.

Most business managers agree that good employees have an impact on customer satisfaction. At Allegiance, we call this the Spillover Effect and define it as the statistical relationship between employee engagement and customer engagement.

When employees are engaged, they believe are doing something valuable for their organizations and that their efforts will make a difference. The positive feelings that employees have about their jobs and employers influence the level of service they give to customers. These positive experiences “spill over” to customers, who become advocates for the company’s products and services.

Allegiance recently published a paper called “The Spillover Effect” based on one of the largest research studies conducted on engagement. This study found that disengaged employees hurt one out of every 10 customers. The paper identifies job enhancers that are effective at creating employees who are likely to be emotionally engaged. Critical job enhancers include:

• Having a positive impact on the lives of customers and team members
• Having opportunities for learning important new skills
• Having the ability to offer suggestions
• Completing whole jobs from start to finish
• Receiving feedback about the results of efforts
• Feeling free to perform the work the way they believe is best

Engaged employees contribute to the bottom line. As their engagement is reflected in their service to customers, they are helping to create more loyal customers. Highly engaged customers buy more products, refer potential customers to a company, stay longer and give more feedback, which, in turn, gives companies the opportunity to address issues and concerns and preserve potentially lost revenue.

For any VOC initiative, it is just as critical to conduct employee surveys as it is to survey customers.  Employee engagement drives customer engagement, and without understanding the hearts and minds of your employees, your VOC initiative will be incomplete. 

Conducting employee surveys within your organization presents opportunities for you to show employees that you care about them and their needs. At the same time, it provides employees an avenue for providing feedback about the company, culture, management, tools, resources, training, and more.  For survey results to be most effective, employees need to trust that they can provide candid feedback in an anonymous fashion without retribution.

Even more important than conducting these surveys is to act on the results – and then to hold managers accountable for creating action plans and executing on them. However, is it a good or standard practice to compensate managers based on their employee satisfaction scores?  This is a practice that is difficult to support, given the following complications caused by providing incentives to managers based on the satisfaction of their employees.

1. Any time you tie survey results to a bonus plan, managers will waste time and energy trying to find fault with the overall program design, survey questions, or data quality – instead of taking the candid feedback at face value, taking ownership, and putting the feedback to work. 
2. Tying compensation to employee feedback also leads to situations that I refer to as the “car dealer syndrome,” which includes gaming the system, bribes, and other seedy behavior.
3. The potential to earn more money because of these results can also lead to retribution for low scores and poor feedback; employees need to know they can provide feedback without fear of recourse for negative feedback.

If you want to reward your managers, use objective measures, such as employee turnover, that can’t be tinkered with.  If you feel the need to reward managers, do so based not on the scores and the feedback, but on the execution of action plans created as a result of the feedback.

Having said all that, I do believe that company executives should certainly have a portion of their bonus plans tied to both customer satisfaction and employee satisfaction scores.  Creating a customer-centric culture begins when you first focus on your employees and make their satisfaction a priority.  This culture can only be created and driven by those at the top.

During a quantitative survey that Allegiance recently conducted with voice of the employee (VOE) practitioners, including human resource vice presidents, directors and managers, as well as other HR-related titles, we found that:

• 78% of the survey respondents strongly agree or agree that their top management listens and responds to employee feedback.
• However, while most companies say they listen to employees, few solicit real-time feedback. For instance, 38% of respondents only solicit employee feedback once a year, 10% solicit feedback every six months, 16% solicit feedback once a quarter, and 18% solicit feedback monthly. By comparison, 3% solicit employee feedback weekly, and 9% solicit feedback daily.
• In addition, 79% believe engaged employees are very important or important to their company in creating a sustainable competitive advantage.

What’s interesting about these survey findings is that there have been several media articles published recently on the fact that employees are stressed and suffering from poor morale due to the recession, and that once the economy rebounds, there will likely be a backlash against employers. So in order for companies to create and maintain a sustainable competitive advantage once they economy rebounds, they not only need to be actively listening to their employees now in real-time to address and resolve any concerns that they have, but also start putting some strategic measures in place to retain their best and brightest employees.

For more information on these and other survey findings, download the report at: www.allegiance.com/voereport

Chris Cottle, VP of Marketing, Allegiance

In the work that we do at Allegiance, we occassionally come across a company that is afraid to ask for or collect feedback from its customers or employees for fear of what those individuals might say – or that the only feedback that they’ll receive will be negative.

While this is a natural human concern, it isn’t a concern that typically matches up with reality.

In fact, we’ve found that the businesses that we work with on their voice of the customer (VOC) and voice of the employee programs receive feedback of all types–compliments, suggestions, questions, complaints, concerns, etc. And regardless of how that feedback is shared (e.g. via an e-mail, a letter, a phone call, an in-person discussion, survey, etc.), this feedback–when centrally collected, stored and analyzed–can provide a business with tremendous insights about what its customers need, want, and value most. Moreover, it can help a business understand what’s working and what’s not working in their organization so that they can continue to do more of what’s working and discontinue or fix what’s not.

In contrast, if a company only collects or receives feeback from customers when something goes wrong or a customer has a bad experience, that business can end up having a pretty distorted view of what its customers think and feel about its business. Not only that, but the business also typically misses the opportunity to gain a better understanding of its customers, as well as develop more meaningful and lasting relationships with them.

My point is that collecting customer feedback isn’t just about finding out what your customers are unhappy about–instead, it’s about gaining a better understanding of what your customers want, need and care about most in order to create more and lasting value for them.

And, if you do happen to receive some negative comments along the way, don’t take them personally. Instead, view that feedback as an opportunity to improve. As Bill Gates, chairman and founder of Microsoft, once said, “Your most unhappy customers are your greatest source of learning”. And he’s right. Talking to your customers and listening to their feedback is the only means through which you can gain clairity about what’s most important to them. Plus, if you listen closely, it may even show you where and how to gain a competitive advantage. And in my next blog post, I’ll tell you how.

Kimberly Carroll, MarCom Manager, Allegiance

A survey recently conducted by Towers Perrin, a global professional services firm, reveals that the current economic environment is stirring widespread anxiety among U.S. employees about their job security.

For instance, nearly half (45%) of all survey respondents said they expect their job to change or be eliminated, and even more (55%) believe their future earnings will either plateau or decline.

In this environment, the most important thing that companies can do to increase their employee productivity and loyalty is communicate more with employees and gain a better understanding of their workforce—i.e. their employees’ attitude, opinions, motivation and satisfaction—so that they can help their employees successfully navigate change and increase their employees’ loyalty.

According to research conducted by Dr. Gary Rhoads and Dr. David Whitlark, Allegiance loyalty experts, there are four areas that drive employee loyalty. These are: 1) being helpful; 2) feeling confident and improved; 3) feeling accepted; and 4) feeling respected. Thus, by regularly asking your employees questions related to these areas through surveying, you’ll be able to get into their hearts and minds. And that can make a big difference in increasing employee loyalty and productivity in a down economy.

If you’d like more information on this topic, read our white paper titled “The Top 11 Ways to Increase Employee Loyalty.

Kyle LaMalfa, Best Practices Manager and Loyalty Expert, Allegiance

In my previous blog (see: “Community – Items to Consider before Diving Into this New World (Part 1 of a 2 part series)”), I talked about the importance of companies considering capacity and effectiveness before incorporating communities into their marketing communication and public relations strategies. And, here are two additional items that your company should consider during this process:

Analysis Point 3: Something I have come to understand because of this new community wave is that employee and customer communities have existed in our corporate spheres for a long time, even before the modern day internet. Anyone remember CompuServe or the old dial-up bulletin boards?  (If you can’t remember, rent the movie “WarGames” starring Matthew Broderick). The pre-internet crowd used dial-up communities for all the things that we now do with MySpace, Facebook and Second Life (and the water cooler has existed even longer than dial-up bulletin boards). Before you decide to launch your own community, analyze existing communities. Find out where your customers and employees hang out in both the virtual and real world. Listen to them there. Determine why they are gathering and what problem(s) they are trying to solve by doing so. Determine what your company’s roles have been and should be. You may find that it may be better to join an existing community (online or not) as a guest rather than to force your community concept on an established group. By the way, I would recommend either dedicating an existing Generation X, Y, Z or V (for Virtual) employee or hiring one who is already deep in social networking to help in this process. They are already tuned-in to that world and will be much more efficient at finding your existing community. Better yet, find someone who is already an engaged customer advocate and team them up with your cyber-genius to tackle this endeavor. 

Analysis Point 4: Do you have the willingness to be completely forthcoming? One of the evolutions in this new phase of the Internet is that users and the virtual communities they inhabit are increasingly requiring a bi-directional relationship as mandatory for citizenship/membership.  Relationship is no longer just two entities interacting. A Web 2.0 relationship now implies openness, long-term commitment, genuineness, and a willingness to put the concerns of the other party above (or at least equal to) your own. One litmus test as to your readiness is to ask yourself, “How would our company feel if an irate customer posted a less than flattering story about your company on a public or your own community?” If you are confident that your company would honestly be grateful for the opportunity to publically admit culpability, apologize to the community, and work with the citizens toward a mutually beneficial solution, then you are ready to dive into this new world.

So before you blog, chat, write on someone’s wall, or otherwise step out into the bright sunlight of communities, please take the time to “consider” these things.  The good news is that great benefits await those who do. 

John Epeneter, VP of Product Management, Allegiance

In the consulting work that I do with companies, I find that businesses looking for ways to increase their sales and profits often overlook a critical ingredient: employee engagement.

The reason this is an important ingredient is because there is a direct connection between employee engagement and customer engagement, otherwise known as “The Spillover Effect”.

For example, in their book, Return on Customer: A Revolutionary Way to Measure and Strengthen Your Business, Don Peppers and Martha Rogers, founders of management consultancy Peppers & Rogers Group, emphasize that “Motivated employees are clearly more productive and keep a company’s employee churn rate down, which lowers expenses. Yet they also have a profound impact on customers as well by creating positive experiences through efficient and smart customer service.”

And, my colleague, Dr. David Whitlark and I, have also found this to be true. For example, in a large research study that we conducted on engagement, we found that one out of every 10 customers was hurt by disengaged employees. We also found that the work environment combined with employee attitudes has a significant impact on a customer’s perception of quality. For this reason, it’s important that companies lead with their strengths, emphasize the positives, and remove the barriers that lead employees to be disengaged with their jobs, their organization and customers.

After all, in the end, the Spillover Effect is much more than a discussion about employee happiness. It is about emotional engagement that is continually shared from employee to employee, employee to customer and customer to customer. And it is a concept that encompasses and impacts all aspects of a business, ranging from company culture to profits.

Companies that understand and leverage the Spillover Effect to their advantage will realize higher customer and employee engagement, and ultimately, greater profits.

To learn more about this topic, read the new Allegiance “Spillover Effect” white paper.

Dr. Gary Rhoads, Allegiance Loyalty and Engagement Expert

I don’t know if you have noticed but the internet has morphed (again) recently. The hot new word on the street is “Community.” Before I get too far into my thoughts on this subject, we should get our terms straight. Wikipedia’s definition is: “A virtual community, e-community or online community is a group of people that primarily interact via communication media such as newsletters, telephone, email, online social networks or instant messages rather than face to face, for social, professional, educational or other purposes….Many means are used in social software separately or in combination, including text-based chatrooms and forums that use voice, video text or avatars.”

But things are different now. One could say that we have reached the tipping point where companies must incorporate communities into their marketing communications and public relations strategies.

And that is why I say: Hold the bus!

We should rephrase the above by replacing the word “incorporate” with “consider.” We absolutely must consider communities in our marketing communications strategies, but we should analyze this carefully.

Analysis Point 1: How much capacity does my company have to listen and then respond to our customers? How many people, processes, and technologies (i.e. your capacity) are you willing to put in place to listen to your customers, both by soliciting their feedback as well as letting them come to you unsolicited with their thoughts and concerns? Has this capacity (i.e. the amount of people, process, and technology) risen proportionally with the size and complexity of your company? Perhaps more importantly, has your capacity to respond been increased proportionally with your capacity to listen? When “considering” communities, are you willing to add capacity to your communications machine to adequately support adding a community emphasis to your marketing communications strategy? If you cannot add resources, but are determined to add community to your communications mix, you better prepare to either diminish the capacity of other efforts, or fail.

Analysis Point 2: Is your listening and response capacity proportional with effectiveness? For example, one of my wife’s and my favorite movies is the “Hunt for Red October” starring Sean Connery. One of the great analogies in that movie is “They are pinging away at their sonar but at almost 30 knots they could run over my daughter’s stereo and not hear it.” Are you listening to so many customers on so many transactions that you cannot understand not just what your customers are saying, but what they really feel? We must analyze the role of all communication tools in the above context. Would adding community resources to your communication efforts increase you ability to understand your customers’ and employees’ problems more effectively?

Keep an eye out for my next blog in this series, in which I’ll go over existing communities and willingness.

John Epeneter, VP of Product Management, Allegiance