Executives: You’re Leaving Money on the Table

Three steps to increase your engagement premium

Published: Thursday, August 9, 2012 - 10:19

Many companies measure employee and customer satisfaction without much to show for it. That’s because their surveys—whether one magic question for customers or 100-plus-item monstrosities for employees—often focus on the rational and exclude the emotional. However, it’s vital to measure emotional factors because with customers and employees, feelings are facts.

You can significantly boost your company's performance by measuring, managing, and focusing on your customers’ and employees’ emotional engagement, Gallup’s research shows. We call it the “engagement premium” because that boost in performance is extremely lucrative.

Engagement premium = higher business performance

Recently, a large Asia-Pacific financial services company asked Gallup to survey its employees and customers in 80 of its retail banking branches, using Gallup’s HumanSigma framework. This approach works by measuring the rational and emotional drivers, needs, and perceptions of employees and customers, enabling managers and staff to apply learnings and insights from this measurement to maximize performance.

The framework consists of Gallup’s Q12 employee engagement and CE11 customer engagement items. Integrating them amplifies their revenue-producing results by aligning an engaged workforce with customers’ emotional needs. It also discourages companies from focusing on each area separately, which could lead to an engaged workforce that’s pointed in the wrong direction, that wastes effort, or that doesn't provide customers with engaging experiences in every customer interaction.

After taking a baseline measure, the company worked with Gallup to divide the branches into two equal groups: the test group and the control group. Gallup controlled each group for size, demographics, location, and engagement scores to ensure a fair and even split. Branch managers in the test group were involved in a four-month, location-specific program of coaching, education, and training based on insights that HumanSigma provided. The control group received no interventions or insights into their engagement scores.

The program was structured this way so Gallup could control for the company’s other customer and employee activities, which covered rational rather than emotional elements. Isolating a group of branches that focused on emotional as well as rational drivers and comparing it to a control group would clearly show any effect resulting from a focus on emotional engagement.

The real power behind this program was that for the first time, branch managers in the test group received local-level insights into what their employees and customers felt and needed. These insights included the results of the customer and employee engagement surveys, complete with unedited customer comments and feedback. Branch managers also received coaching that helped them translate those insights into behavior that would increase both employee and customer engagement.

At the same time, branch managers received insights into their talents through Gallup’s Clifton StrengthsFinder assessment. They also received feedback from a Gallup coach to help them learn how to use their talents to tackle challenges and management tasks. Gallup has found that people who know their strengths and apply them intentionally in the workplace are more productive and engaged in their work. The confidential and regular one-on-one coaching provided a support system for branch managers as they headed into unfamiliar management territory; it also kept them focused on and accountable for the elements that would matter to their employees and customers.

Managers also attended two workshops to deepen their understanding of HumanSigma concepts and its potential impact on performance. The first workshop focused on teaching the branch managers the principles of HumanSigma and emotional engagement. The key was to ensure that managers were not just aware of the power that comes from aligning their employees and their customers but more importantly, how to make that alignment happen. Managers were also presented with scenarios that gave them the opportunity to engage employees to create a wonderful customer experience.

The second workshop brought the branch managers together after several weeks to discuss progress and setbacks and to share success stories about how they addressed their employees’ and customers’ emotional needs.

It didn’t take long for branch managers to put what they learned into practice. One manager told Gallup that for the first time, he knew what his customers really needed and valued. “Up to now,” he said, “we were giving out chocolates when the problem was that our customers didn’t think they were getting a fair response to problems.”

The final crucial aspect of the program was integrating engagement discussions into the managers’ daily business operating rhythms. One effective strategy was for branch managers to spend five minutes during each morning’s daily meeting focusing on the key drivers of their customers’ engagement. This also gave the branch staff a dedicated time to raise any related concerns, learnings, or problems in engaging their customers or issues that were affecting employee engagement.

Workers didn’t miss any opportunities to do so. “There has been a huge change in the work climate since focusing on HumanSigma,” said one branch manager. “It has given the staff a chance to verbalize how they feel and has provided a springboard for discussions.”

Assessing the results

After four months, the company again measured the scores for the branches in the test and control groups. Gallup found significant differences between the two groups:
• The test group realized an 83-percent increase in employee engagement vs. a 19-percent increase in the control group.
• The test group achieved a 28-percent increase in customer engagement vs. a 5-percent increase in the control group.

These results, though excellent, were predictable. Gallup research shows that one of the key determinants of engaged customers within the control of the local branch manager is engaged employees. As the branch managers received information about their workers’ emotional needs, they were better able to focus on activities that helped to increase their employees’ emotional engagement, which in turn could help create higher levels of customer engagement.

And because engagement is a leading indicator of business performance, a critical element of this study was to measure the effect of increased engagement on branch performance. The company provided Gallup with key branch financial and activity metrics to use as a yardstick for business performance for the test and control branches. Gallup indexed the control group’s performance at 100, then compared the test group’s performance to that score to measure the effect of HumanSigma and the coaching, education, and training program.

The test group’s performance index scores outstripped the control group’s scores in every branch-level metric that the bank asked Gallup to study, including total revenue, total number of customers, average deposit balances, dollar size of deposits, average total balances for customers, and money drawn down at settlement for home loans. The test branches also outperformed the control branches on key activities that drive branch performance: a higher number of customer enquiry forms (CEFs), the first step in a sales process; an increase in the number of recommendations the branch staff made to customers from those CEFs; an increase in customer sales opportunities due to those recommendations; and an improvement in actual sales from opportunities. (See figure 1.)

Figure 1: The engagement premium: banking case study

Getting the premium

A close examination of the test group’s results shows the performance and profitability benefits that come from a focus on emotional engagement rather than just rational satisfaction. Fortunately, most companies don't need to divide their employees into a test group and a control group to see results. Unfortunately, some companies are a control group, forcing employees to take badly designed surveys, overlooking the complex emotional drivers of customers and employees, and losing rather a lot of profit—the engagement premium—because of it.

Three steps to increase your engagement premium

1. Use the right survey. There has been an opposing trend for some time when comparing typical employee and customer surveys. At one end of the spectrum are employee satisfaction surveys with more than 100 questions. They rarely improve outcomes because they don’t focus on employees’ emotional needs. What’s more, answering that many questions annoys respondents. The deluge of answers also inundates managers with so much data that they just don’t know how to respond. The result is a waste of resources. And it is self-defeating: Employees start to realize that no matter how they answer, no one will follow up.

At the other end of the spectrum, customer satisfaction surveys have been getting shorter and shorter with the belief that only one question can or will lead to increases in business performance. Ironically, that leaves customer-facing managers with too little information. They have no idea what their customers actually need to be engaged emotionally, and what the managers learn is generic, isn’t actionable, and gives little or no guidance for improvement.

Gallup research shows that there is no one question that diagnoses all problems or captures the emotional responses of a company’s many customers. Customer engagement is too psychologically, operationally, and economically rich for a single question to elicit deep insights into employees, customers, and their interactions.

2. Keep it local. Whatever the results of the customer or employee survey, they must translate into action at the local level. Managers must ensure that they not only engage their employees but also keep employees focused on the things that engage customers—person by person, person to person. Further, higher-level managers shouldn’t make assumptions about what drives emotional connections with customers based on one location’s results. A widely dispersed branch or retail network has a variety of customer needs, making specific, local-level insight even more important.

Gallup often sees significant differences in customers’ emotional drivers at the local level. At this financial services organization, we found that one branch’s customers wanted a sense of community. In a second branch, customers wanted knowledgeable staff. And the main driver of emotional engagement in a third branch was an environment in which it is easy to do banking business.

3. Hold all managers accountable, and coach them on emotional engagement. This requires more than a manager’s boss. It takes a dedicated team with real coaching talent that can partner with managers to build action plans and hold them accountable, track their progress, and ensure they continuously focus on emotional engagement.

Many organizations that are great at building customer and employee engagement appoint “engagement champions” to do just that. These champions are specifically trained on emotional engagement: how to measure it; how to fully understand and interpret survey results; and how to build, execute, and follow up on action plans for building employee and customer engagement. This team of champions becomes an organization’s internal engagement support, maintaining the expertise needed to keep the company focused on what’s important.

In the best companies Gallup has studied, these champions report to a head of employee engagement or a head of customer engagement who has explicit executive support and can provide key resources. They also ensure that emotional engagement becomes a widespread cultural trait in the organization.

Article by David Helvadjian and Allan Watkinson. It first appeared in the Aug. 7, 2012, edition of the Gallup Business Journal.

About The Author

Gallup

Gallup has studied human nature and behavior for more than 70 years. Gallup’s reputation for delivering relevant, timely, and visionary research on what people around the world think and feel is the cornerstone of the organization. Gallup employs many of the world’s leading scientists in management, economics, psychology, and sociology; and their consultants assist leaders in identifying and monitoring behavioral economic indicators worldwide. Gallup consultants help organizations boost organic growth by increasing customer engagement and maximizing employee productivity through measurement tools, coursework, and strategic advisory services. Gallup’s 2,000 professionals deliver services at client organizations, through the web, and in 40 offices around the world.