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

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.

Most of the CEO’s I speak with agree that innovation and improved customer service is the key that will help their company emerge from the recession stronger than their competitors. To accomplish this requires employees with good morale and solid productivity. The problem may be that if your employees are like 55% of American workers, they are suffering from poor morale which is leading to dropping productivity and stifled innovation.

According to the Conference Board research group, employee job satisfaction in America is at a 22 year low with the largest percentage of workers suffering from poor morale and low productivity (http://bit.ly/4ViPWr).

The study reports the low job satisfaction stems from:
• Fewer workers consider their jobs to be interesting.
• Incomes have not kept up with inflation.
• The soaring cost of health insurance has eaten into workers’ take-home pay.
What really stood out to me was a quote from one of the research participants who said he wished bosses would take time to listen to worker’s ideas – and their difficulties on the job.

Many companies today are focusing on listening to their customers to find ways to improve customer service and drive product innovation. However, your employees represent the whole of your company’s brain trust. Many of our customers have also set up Voice of the Employee initiatives with the goal of identifying ways to improve employee morale, better engage their employees, identify ways to save money, improve procedures and in short, do things better and faster.

Since the same tools used to survey customers can be used with your employees for little or no incremental cost, you might seriously consider setting up a Voice of the Employee program.

We would love to hear your comments and thoughts on this.

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

Enterprise feedback management (EFM) and Customer Relationship Management (CRM) solutions are equally important to the success of your company.

Keeping tabs on customer information is an important piece of your company’s operations. Can you imagine what would happen if your company had to manually monitor and file all of the customer information that has been gathered over the years? This is why CRM software was developed – to ensure that critical customer information is managed and handled efficiently. CRM simply helps corporations capture, manage and store their customer’s personal information.

Where CRM’s fall short, though, is in their ability to analyze data. This is where EFM software comes to the rescue. EFM – a relatively new industry – helps manage customer and employee feedback company-wide. While CRM helps you capture , manage and store your customers’ personal information, EFM helps you capture, manage and analyze your customer and employee feedback – making your organization more customer and employee-centric.

In the age of advanced information technology, automating the process of gathering each and every type of customer information is vital to a business’s success. This is why CRM and EFM software are both important.

The right CRM software will allow your company to:

• Increase productivity
• Develop effective marketing strategies
• Reduce production and operational costs through proper information management
• Improve the customer’s overall experience with the company

The right EFM software will complement your CRM software by:

• Helping you manage feedback company-wide
• Quickly route and manage your company’s feedback
• Predict where in your company you can focus to improve customer and employee loyalty
• Gauge how satisfied your customers and employees are

Aside from these benefits, the right CRM and EFM software will allow you to identify your company’s most valuable clients and customers. This way, preferred and loyal customers can be given more priority so that their business can be retained. In the same vein, customers who have a good potential of remaining loyal to the company can be given incentives to stay with the company.

On the administrative side, these software packages will make customer interactions flow smoothly and data analysis can be done more efficiently. With all these advantages and more, CRM & EFM software is truly something that major corporations in any industry cannot do without.