The Performance Improvement Blog

Employee Satisfaction and Engagement Once Again Linked to Financial Success

Still another study , recently published by The Forum at Northwestern University, supports the notion that satisfied and engaged employees are essential to the financial success of companies. Dr. James Oakley, now Associate Professor of Marketing at UNC Charlotte's Belk College of Business, led this comprehensive study of these factors across a sample of 100 media companies. His research team surveyed a representative group of employees in each organization and received responses from 5,568 employees, averaging about 60 respondents from each company. They decided on doing the research within one industry in order to prevent some of the problems that occur when collecting data from a heterogeneous sample of businesses. Several different survey instruments were used to measure culture, climate, HR managerial practices, and market characteristics affecting each company.

• They used R.A. Cooke and D.M. Rousseau’s (1988) definition of organizational culture: “…the ways of thinking, behaving, and believing that members of a social unit have in common.”
• They defined organizational climate as: “…the way that organizations operationalize their culture in daily routines and behaviors.”
• HR managerial practices included selection, development, performance management, and compensation.
• Market characteristics included customer satisfaction, retention, and loyalty. And profitability was used as a proxy for financial success.

The following chart represents key factors that were identified and the positive and negative relationships among these factors.

A major finding was “… a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance.”

Based on their findings, the investigators recommend the following:

1. Ensure that the employee voice is being heard up and down the organization and that they feel they are making a difference.
2. Regularly survey employees about the strengths and weaknesses of the organization and take visible action based on that information.
3. Develop a healthy mix of employee cooperation and competition for the benefit of customers.
4. Establish clear performance objectives related to the customer experience and recognize employees for achieving those goals.

What I like about this study is that, unlike so many studies done by consulting firms, this research examines intervening variables that explain how and why employee satisfaction and engagement are linked to financial outcomes of companies and how culture and climate contribute to the employee experience as well as the customer experience. Of course, one could still argue that the links are not necessarily causal. It could be that company profitability causes high levels of employee satisfaction and engagement rather than the other way around. But at least in the case of this research there is a compelling theory to go with the data.

The study adds to evidence that is piling up around the impact of employee satisfaction and engagement on organization success. As we emerge from a depressed world-wide economy, the long-term financial success and sustainability of companies will be more important than ever. Therefore, we need to pay greater attention to the conditions that contribute to a positive and supportive work culture. Now, if we can only get leaders to pay attention to these factors in their organizations. 

 

Investing in Training in Downturns and Upturns

The U.S. is emerging from a training drought that occurred during the worst economic period since the Great Depression. At least, that’s what’s indicated by organizations that do this kind of
research. ASTD reports an increase in spending on L&D in 2010 (latest year for which data is available); they estimate companies spent about $171.5 billion. Bersin & Associates reports that corporate spending on training increased 9.5% in 2011 – the largest gain in three years.  And Training magazine’s research found a 13% increase in spending on L&D in 2011. Each of these studies uses a different method for calculating spending. However, the trend is undeniable: spending on employee training is increasing.  

With this increase in spending comes a great opportunity to do things right. In our book, The 5As Framework, Sean Murray and I wrote that most training programs significantly impact only 10% to 20% of their participants. This represents a huge waste that no organization can afford any longer. As the worldwide recession comes to an end, organizations must use every dollar very wisely. Garry Marsh, director of the U.K. company THM Business Simulations, gives us some thoughts about best ways to use those dollars. Here are those seven ideas with my spin on each one:

• Get it right first time – Think in terms of what learners need, not the latest training fad (content or delivery). Only provide experiences that will help learners improve performance and contribute to achieving the strategic goals of the organization – no more and no less. Pay attention to the quality of content and quality of the learning intervention.
• Keep employee satisfaction high – Involving employees in opportunities to learn is an effective way to increase engagement. Many employees value learning more than a pay increase. To keep engagement high, make continuous learning part of the culture of the organization.
• Train your managers – Many managers did not reach that position because they were great managers of people. This is something that all managers need to keep learning. And if organizations want to prevent their top talent from leaving as the economy improves, they must give managers the opportunity to learn and grow.
• Focus on customer experience – All organizations should have the improvement of customer experience as one of their top strategic goals. To achieve this goal, they will have to train employees in how to create a better experience. Learning about the customer experience should be on every manager’s agenda.
• Spend less, get more – Organizations should not rely on the usual suspects and usual methods for delivery of training. It’s about learning; it’s not about glitzy programs. It doesn’t have to cost much to develop talent. Maybe a manager will become a more effective team leader with the help of a mentor. Maybe a manager will become more effective at giving performance feedback with the help of a coach. Maybe a manager will become better at financial management by attending the CEO’s “open-book” meetings.
• Be ready for the upturn – As the economy improves and companies start hiring again, the best talent will look elsewhere. They have stayed only because nobody else was growing and hiring. Unless managers continue to see opportunities in their current organizations and they feel respect from their leadership, they will be gone. Organizations should do something about these conditions now.
• Look after yourself – Many resources are available to help any organization be successful while keeping costs low. Look for help internally and externally. Use what the organization already owns when that makes sense and then go outside to peers, consultants, and training organizations when they can help you improve performance and achieve your business goals.

 

What Do You Mean?

Dan Pallotta, president of Advertising for Humanity and HBR blogger, in a post titled “I Don't Understand What Anyone Is Saying Anymore”, writes about business jargon and how it affects communication in organizations. The blog post must have hit a nerve because it has broken the record for most comments to a single HBR Blog Network post.

One of these comments is a perfect way to begin 2012. That is, with humor that pokes fun at ourselves and the way we talk to each other. The commenter, BrainToniq (Scott Ohlgren), writes as if talking to his staff:

While in the run-up to transitioning in this phase of right-sizing and redeployment, we still need to—at the end of the day—drill down and make sure that our mission-critical, goal-oriented core competencies are in alignment and on the same page as the most current best-practices paradigm. While we as a customer-centric longtail company are still on the runway, we need to each firewall enough time to allow out-of-the-box thinking and strategize the low-hanging fruit in the marketplace. Envisioning the metrics here will require accountability management on each team member to come up with a value-added solution that doesn’t require putting out fires or a lot of bandwidth. Bottom line? The truth is we have to step up, work smarter, not harder, and create a Web 2.0 solution. This is an exciting model for limitless potential and mutually agreed synergies!

I’ve got an open door policy, so touch base and keep me in the loop. If we can move forward and proactively get on the same page about this, it’ll be a win-win-win. Remember: our people make the difference.

Come again? The truth is this is how we sound sometimes. And with email, text messaging, and all of the forms of social media, the use of buzzwords to replace plain speaking has gotten much worse. We are sacrificing clarity for brevity, which means there is greater risk of miscommunication.

Dan Pallotta’s solution is to “speak authentically” in communicating with employees and customers. He writes:

You will gain tremendous credibility, become much more productive, make those around you much more productive, and experience a great deal more joy in your working life if you look someone in the eye after hearing one of these verbal brain jammers and tell the person, "I don't have any idea what you just said to me."

Let's hope communication improves in all of our organizations in 2012. 

High Touch vs. High Tech

Technology is putting up barriers to the kind of deep listening that helps two people learn from each other. This is especially true in healthcare. Medical patients, often nervous, scared, and in pain, are comforted by the personal caring and touch of their doctors, yet technology (and time pressure) is getting in the way of that relationship. Abraham Verghese, Stanford University physician and best-selling author, argues that the tendency today is for doctors to order tests before or in lieu of conducting a thorough physical exam. By doing this, they risk missing information that can help them make a more accurate diagnosis and enhance the patient experience. He makes that point in this TED talk:

 

An emphasis on “high tech” at the expense of “high touch” is happening in other workplace situations as well. We seem to be moving away from closeness and the expression of caring between employees and their supervisors. The work relationship has become automated and digitized, putting more distance between people who should be continuously learning together. Email, texting, conference calls, and Skype meetings are replacing face-to-face conversation. The efficiency of these technologies is wonderful; I couldn’t accomplish nearly as much if I didn’t have them.  But something is lost when performance feedback is emailed and difficult conversations are held over the phone.

The effect is limited when performance reviews are reduced to an annual exchange of evaluation forms between employee and supervisor. Employees are more likely to respect the sender, hear the message, and change behavior when the encounter between these collaborators is in-person and over a dedicated and sufficient amount of time. Maybe it doesn’t require physical touch, but proximity and deep listening, especially in western culture, conveys a level of respect and caring that cannot be felt from the latest communication technology.  

 

Patient Experience

Having recently assisted a family medicine department with their annual retreat where the “patient experience” was a major topic of discussion, I have renewed my interest in the customer experience economy and, in particular, how that notion applies to healthcare.

Studies of customer experience (although sometimes confused with customer service) in other industries are quite common. For example, the Beyond Philosophy 2011 Global Customer Experience Management Survey reports:

The top three companies most admired by CE experts for the customer experience they deliver are technology companies, with Apple ranking first, followed by Amazon and Zappos. “Apple has married all the elements of its experience and connected with its customers in a deeply emotional, irrational way,” said Walden, adding, “Amazon put a stake in the ground when it announced it would become the world’s most customer-centric company, and Zappos claims to be a customer service organization that happens to sell shoes.”

But what about healthcare? Who are the leaders in customer experience in doctors’ offices, clinics, and hospitals? The Beryl Institute defines the “patient experience” as “the sum of all interactions, shaped by an organization’s culture, that influence patient perceptions across the continuum of care.” Are there good examples of healthcare organizations that put this holistic view of quality into practice?

Some examples of healthcare organizations that care deeply about the customer experience are:

UCLA Hospital System – Their mission is “Healing humankind one patient at a time, by improving health, alleviating suffering, and delivering acts of kindness.” Dr. David T. Feinberg, Associate Vice Chancellor and CEO for the UCLA Hospital System, describes how that mission has been applied in the following entertaining and inspiring TED talk.

  

St. Jude Children’s Research Hospital – One of its strongest values is “a commitment to provide our patients with the highest quality of medical and supportive care, and their families with the level of information and support necessary for them to make informed decisions and to become active participants in the care of their children.” I saw this played out at St. Jude in the way spaces are designed for families and the care that employees show for children and their parents.

Sharp Healthcare – This San Diego hospital system is striving to be:

The best place to work — attracting highly skilled and passionate staff members who are focused on providing quality health care and building a culture of teamwork, recognition, celebration and professional and personal growth.

The best place to practice medicine — creating an environment in which physicians enjoy positive, collaborative relationships with nurses and other caregivers.

The best place to receive care — providing a new standard of service in the health care industry by employing service-oriented individuals who see it as their privilege to exceed the expectations of every patient by treating them with the utmost care, compassion and respect.

Are there other examples of a superior patient experience? Every clinic and hospital says that it cares about patients, but which ones are making that experience top priority? What are they actually doing to reduce patient anxiety, build trust and confidence, encourage healthy behavior, develop loyalty, and, of course, achieve positive outcomes for patients? 

 

Trust, Employee Engagement, and Customer Service

The latest "10X10" (ten tips and ten resources) from RealTime Performance is about customer service. It's a useful list of ideas for improving employee performance as it relates to customer service and a book title that corresponds to each suggestion. Employees can read these books to learn more about each idea.

The key to most successful relationships with customers, as it is in all relationships, is a sense of mutual trust. This "10X10" offers some suggestions for building trust. For example, one tip is:

Grant employees as much autonomy as possible when working with customers to meet their current and future needs.  At Ritz-Carlton, every employee has the ability to exercise judgment in spending up to $2,000 per day, per guest to resolve issues and enhance the guest experience. What companies like Ritz-Carlton have realized over the years is that the least costly solution is the one that happens immediately. The more time a customer complaint or an issue has to grow, the bigger and more costly it becomes. Trust your employees to resolve customer issues when and where they happen.

Being responsive to customers, even if you can't fulfill their requests, helps build trust. We know from our own experiences as customers that we quickly lose trust in people who take an unreasonably long time to do what they said they were going to do. And giving employees the responsibility and authority to resolve customer issues, goes a long way toward building their trust in you, as well as enhancing employee engagement.  

Complacency in the Cockpit?

Two Northwest Airlines pilots may have been asleep at the wheel when their Minneapolis-bound plane overshot its destination by 150 miles before they realized what had happened, turned the plane around, and returned to their destination. One national TV commentator speculated that since many passenger jets today have the technology to essentially fly themselves, this may have been a case of pilots becoming complacent and not fully doing their job of closely monitoring the plane’s performance. In a previous blog post, I labeled this kind of behavior the “complacency syndrome.”

Airplane pilots are not the only employees who risk complacency. Staying with air-travel examples, I have noticed TSA employees being more interested in socializing with their co-workers than paying attention to the repetitive and mind-numbing task of checking people and their luggage day after day. And flight attendants, who have to announce safety instructions at the beginning of every flight, doing this sounding like they couldn’t care less about safety. And luggage handlers who, over time, become careless and lackadaisical in their treatment of passengers’ precious goods, which leads to lost and damaged property. It’s unpleasant and annoying to passengers when flight attendants and luggage handlers suffer from the complacency syndrome; it’s life-threatening when TSA officers and airline pilots have this disease.   

Customer Service at Enterprise Rent-A-Car

Examples of outstanding customer service, where an organization truly puts the customer first and it’s not just marketing rhetoric, are rare these days. Often, a company’s complicated automated phone system is what they try to pass for a commitment to the customer. So when I was given “royal treatment” by an Enterprise Rent-A-Car company employee this week, I was taken aback. This employee managed to keep my day from turning into what could have been a disaster.

It all began with a car in my garage that wouldn’t start. AAA sent a tow truck driver to my house. He arrived promptly and, knowing the peculiarities of my 2000 Volvo, got the engine going in a matter of minutes. So far, so good. Not wanting to take a chance on the battery dying again, I immediately drove the car to my dealership, expecting to replace the battery and be on my way in a short time and back to my office for a full day of work. But once the car was up on the rack, the mechanic found a number of other serious problems (all legitimate) and he said that he needed to keep it for the whole day. The dealership offered to arrange a car for me to use. I accepted the offer but I was thinking that this was going to set me back hours. Within a few minutes, Tom Cosgrove showed up with a van to take this frustrated car owner to the Ann Arbor office of Enterprise. Once in the office, Tom immediately began to do the paperwork to set me up with a car and get me on my way as quickly as possible. The only problem was, I couldn’t find my driver’s license which was missing from my wallet. I was a bit frantic thinking about the legal implications of this situation. “No problem,” Tom said. He would drive me to my house to look for my license. All of the other employees at Enterprise looked like this was normal operating procedure. So back into the van we went, drove across town, and arrived at my house only to discover that I didn’t have my house key with me. “No problem,” Tom said. “I’ll wait while you get a key from your neighbor.” Fortunately my neighbor was home, found the spare key, and I got into my house.

After a frantic house search, going through the pockets of anything I had worn in the past several weeks, I failed to find my license. I went back to the waiting van, expecting to see annoyance in Tom’s face. To the contrary, he couldn’t have been more understanding. “No problem,” Tom said. “This isn’t the first time this has happened. I’ll drive you to the Secretary of State’s office and you can get a duplicate license.” At this point, I didn't want to ask him to waste any more of his valuable time due to my mistakes, so I said that I would stay where I was. “No problem," Tom said, and back to his office he went. He couldn’t have been more cooperative and gracious the whole morning. I don’t know if Enterprise hires well, or trains well; it’s probably both. Enterprise lost money on me that day, but gained a loyal fan. (My driver’s license turned up the next day in my fax machine. Don’t ask.)

Amazon.com Continues to Put Customers First

This is no time to be short changing your customers. Amazon.com is a great example of the positive things that can happen when you continue to keep customers your primary focus. The company has not let the depressed economy become an excuse to stop doing the things that have made them successful. Fourth quarter sales at Amazon were up 18%. BusinessWeek recently put Amazon top on its list of this year's "customer service champs."

What are they doing that many other companies are not doing? First of all, they pay attention to the entire customer experience. And by customer, they mean everyone, including buyers, distributers, re-sellers, small merchants who sell through Amazon, and, as I know from my own experience, writers and publishers. Jeff Bezos, the Fortune 500 CEO with the mindset of a start-up entrepreneur, said in an interview with PBS Nightly Business Report's Scott Gurvey:

We didn’t do anything special to recognize this economy…we continue to focus on fundamental things we’ve focused on for 14 years: having the lowest price, having the biggest selection, and getting products to customers really quickly and accurately…Our whole mentality around how we run the company is to focus on obsessing over the customer rather than our competitors. We try to pay attention to our competitors, but we don’t obsess over them.

I have to assume that their customer service training is exceptional. Technology takes care of most of the buying process, but when there is a special request or problem, employees get involved. Their responses are consistent, decisive, and intended to satisfy customers even when it is a financial loss to the company in the short run. The proof of the effectiveness of this approach is in the numbers and reputation of this exceptional company.

Companies are making deep cuts across the board and doing anything they can to reduce costs. The customer experience and customer service are often victims of this slashing. Amazon is an example of a company that thinks differently about the economy and customers and, so far, has the evidence that proves them right.

Productivity Swap Bubble

And you thought "credit swaps" were bad! Wait until we get into the "productivity swap" bubble. This is the warning from John Psarouthakis, successful entrepreneur, and Tom Ferguson, musical entertainer. They say in Other Voices column of the January 12 issue of Crain's Detroit Business that the productivity of companies is shifting from employees to customers and this shift is not being recognized in measures of output. They write:

For every tick of productivity a customer expends, productivity ascribed to that company should be reduced two ticks: one because it didn't do the work, another because it outsourced the work, making it a debt.

This outsourcing of productivity is obvious to me...now that Psarouthakis and Ferguson have brought it to my attention. The classic is customers pumping gas, washing car windows,and checking oil at so-called "service stations". Also, customers must already know the answers to their own questions when calling an automated (so-called) "help desk" or else they won't get to the right information. Grocery stores are installing automated check-out stations where customers do all the work pricing and bagging groceries. Airlines penalize customers for not using online services to make their own travel arrangements and issue their own tickets and then airlines want customers to check their own bags at the airport. Book stores are rewarding their customers for ordering books online, thereby eliminating the need for knowledgeable, helpful store clerks. And, of course, there are the ubiquitous ATMs which have shifted the work of personal banking from tellers and bankers to bank customers.

The swap is on. What will happen when this productivity bubble bursts? Will we discover that our GNP has been a sham and that much of what was thought to be worker productivity is really customer productivity? Will there be a backlash against this shift? What effect will this have on our fragile economy?