EMPLOYEES AS CUSTOMERS: What HR needs to Learn from Marketing

EMPLOYEES AS CUSTOMERS: What HR needs to Learn from Marketing
Summary:
During the earlier stages of my career I was fortunate to have worked for a large corporation that had a management development program for up-and-coming managers. This program combined formal management courses with on the job training. The job training involved assignments to different divisions in the company. Two learning goals were mandated by these assignments:
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During the earlier stages of my career I was fortunate to have worked for a large corporation that had a management development program for up-and-coming managers. This program combined formal management courses with on the job training. The job training involved assignments to different divisions in the company. Two learning goals were mandated by these assignments:

1. Acquire knowledge in a new discipline
2. Learn about the different parts of the organization, experience their challenges and understand how they contribute to the success of the whole

My formal education was in environmental studies with a specialty in ecology. One of the key principles in ecology is that ecosystems are made up of interdependent elements. A change in one part of an ecosystem will result in changes in other parts of the same system. Without knowing it at the time, my classmates and I became “systems thinkers”. This ability to see systems has guided my decision making throughout my life in business and in my private affairs. Naturally, I thrived in this opportunity to be a part of a management training program where I was able to experience different parts of the organization and see first hand how each part related to the whole company.

When I concluded the training program I was appointed manager of marketing planning. My appointment coincided with a strategic decision made by the company to aggressively increase its share of the energy market. I had a staff of 35 and a budget of three million dollars for market research. I was learning on the job. I learned from my staff and I learned from the consultants we hired to conduct much of the market research. In addition I was sent on a two week intensive executive marketing program at the Graduate School of Business, Columbia University in New York, and a year later to the Wharton School of Business in Philadelphia. This was an amazing time of learning, personal growth and achieving demanding goals.

After that my career continued to flourish. I moved through the senior ranks of several companies until I reached president. Nine years ago I established Entec Corporation a company that specializes in measuring employee engagement. Although I loved marketing, I returned to my first passion-creating working environments where employees can thrive and be fully engaged.

Over the last nine years I have worked with many organizations and I have also been privy to the HR practices of many others. To my surprise I discovered the lack of research discipline that HR departments applied when conducting employee surveys. I was prompted to write this article after reading a piece by Sudipta Dev, from Aptech. In his article, "Is Job Happiness a Myth?" he wrote about the importance of conducting an employee satisfaction survey as a way of gauging employee sentiment. He also mentioned how important it was to conduct focus groups afterwards to fully understand the survey results. I witnessed this process of conducting an employee survey, followed by focus groups in several companies over the years. This included a well known company with 35,000 employees. However, I thought these were isolated cases. When I read this article it was evident that this was common and considered a best practice. I could not believe what I was reading. Why spend money on an employee survey if it is going to be followed by focus groups? Isn’t this placing the cart before the horse?

Conducting an employee survey is conducting research. My marketing training and experience taught me that the survey is the last step not the first step in the research process. The purpose of the survey is to quantify and prioritize. Focus groups are used at the start of the research process to get an understanding of potential issues. In our marketing work and now in Entec’s HR work, we use the focus group information to develop a model first. This is followed by developing questions that fit within the parts of the model. Creating a model before developing the questions provides a framework for the questions. This framework provides a structure for the survey analysis so that the results are organized and presented in a way that point clearly to follow up action. When the survey and the analyses are completed, there is no question as to what the survey results mean. There is no question about priorities. There is no question about who is responsible for follow up action

Marketing and market research are sophisticated, disciplined processes that produce highly effective results. For example, automobile manufactures use a variety of “focus group” techniques to clearly understand the reasons and motivators for a purchase decision: Is it external design, internal design, color, performance, quality, comfort, size, fuel efficiency, financing and so on. How will the different market segments prioritize these factors? The focus group information is used to develop the market research survey that will quantify the information. The research results are used to create the marketing programs for the various products and market sectors.

Employees are no less important than customers. Understanding the “root causes” of employee behavior and motivation is especially important in today’s knowledge based economy. We are in an economy where a company’s success rests on the mental performance of its employees. It seems to me that in this environment, HR departments would bring greater value to their organizations if they adopted and applied marketing’s sophistication and research discipline to understanding employee needs. A change in perception is required, where employees are viewed as customers. This will provide the information to unlock the creative and innovative energy of employees.

Let me share a personal story. Nine years ago when Entec Corporation was founded, we spent the first year conducting research. The purpose of the research was to clearly understand the key factors that contributed to the employee experience in the workplace. We organized focus groups in several organizations from different business sectors. For example, the General Manager of an electric utility consented to personally participate along with half a dozen staff from different parts of his organization and different job levels. We facilitated many meetings over a three months period to create an “employee experience model”. The model depicted all the factors that contribute to the employee working experience. At the end of this period the group formulated questions for an employee survey that was designed to measure the employee experience at work. The questions were clear and precise and they led directly to follow up action. This process was repeated at a health care facility and several other private sector companies. The surveys were tested and validated.

When we used our employee survey we noted that there was a direct link between the survey results and a company’s financial performance. For example, we surveyed three electric utilities. Although the number of employees ranged from 150 to 400, the customer profile for each utility was very similar. The revenue split between large industrial customers, commercial customers and residential customers was about the same for each utility. In other words we were able to compare apples to apples. The utility with the highest employee survey scores were also the most profitable. The utility with the lowest employee survey scores was the least profitable.

Since that time our employee models and surveys have evolved and have become more sophisticated. Today we no longer talk about measuring the employee experience but rather we talk about employee engagement. When the employee surveys and analyses are completed there is no question as to what they mean. There is no need for post survey focus group. There is a direct link between the survey results and the company’s financial performance. The following note from a client summarizes this best.

Gap Inc. Canada has partnered with Entec since 1999 to customize, implement, analyze and then action a compelling employee survey. I have reviewed and used many employee satisfaction instruments in the past, but none were as comprehensive, accurate or as linked to improving both business results and employee commitment as this one.

Vice President
Gap Inc. Canada

It is interesting to note that in 2004 the three Gap brands in Canada: Gap, Old Navy and Banana Republic are among the most profitable in the world. Gap has approximately 175,000 employees, world wide.

I think companies and HR departments need to change their perception of their employees and view their employees as customers. To do this they need to adopt the full spectrum of marketing concepts, processes and tools to understand their employees and to meet their needs. These would include disciplined employee research, followed by appropriate communication, relationship building and provision of products and services. Naturally, the products and services will depend on the survey results but could include improved workplace practices such as greater participation in decision making, infusing a high level of trust and fairness, choosing from a menu of benefits that best suit individual needs, consideration around work/life balance issues, zero tolerance policy on sexual harassment, verbal abuse and bullying etc. Some companies are addressing many of these important issues but frequently the programs are developed in a piece meal fashion. There is little knowledge about the value and contribution of each program to unlocking employee energy and to the bottom line.

A classic example of this is the company gym. I am a great supporter of physical fitness. I exercise each morning. In the past I worked for two companies that provided a physical fitness facility. I appreciated the convenience of these facilities. However, the fact that the facility was there did not change my behavior and it did not seem to change the behavior of most other employees. Those who worked out did so whether there was a company gym or not. Those who do not exercise did not start exercising. Typically health departments measure the utilization rate of their gyms. But they do not measure relevant measures such as the “conversion rate”- the number of employees that did not exercise in the past but exercise now. They do not link the presence of a gym to the financial performance of the company. Is a gym the best way for a company to be spending its money? Should they be investing in strategically located meditation rooms, or a day care centre, or a full time chaplain? Most companies cannot answer these questions because they do not have the information. They have not developed a framework to ask the right questions. They have not conducted disciplined employee market research.

The Beginnings of a Framework-Employee Engagement

The Gallup organization has placed the term employee engagement on the map. There contribution to understanding the underlining factors of employee motivation has been significant. There is however, an important piece missing in Gallup’s work. There are two parts to employee engagement:

1. the employee and their own unique psychological make up
2. the employer and their ability to create the conditions that will promote employee engagement.

Gallup’s work does not address the first part. Entec Corporation assembled a team of experts in strategic management, organizational development, leadership, behavioral psychology and psychiatry. The team was asked to develop a model of employee engagement. They determined that there were five factors that are primary drivers of employee engagement:

1. Employee emotional well-being
2. Department practices
3. Leadership behaviors
4. Corporate practices
5. Vision and values

The focus of the organizational measures in the Employee Engagement Survey' is on practices and on leadership behaviors. Practices and behaviors create the specific working conditions that influence an employee to be motivated, and emotionally committed to their work and to their company. Since every employee has a unique psychological make up, each employee will respond differently to the same conditions.

For example, every employee has a different level of self-motivation. One employee may require verbal recognition once a year for a job well done while another employee may require recognition once a week. Each of these employees will score the question regarding recognition differently even though they may have the same supervisor and they are treated in the same way.

If 40% of employees scored in the disengaged category it means that for these employees the organizational practices and leadership behaviors are not meeting their needs to motivate them to be fully engaged. It does not mean that 40% of employees are a lost cause. It means they need more from their organization to lift their level of performance. Disengaged employees can become engaged employees under the right working conditions.

It is important to convey to all employees that “disengagement” is not necessarily a negative reflection of their own desire to do a good job. The organization needs to create the environment to bring the best out in their employees. The majority of people want to do a good job.

But employees also need to understand that employee engagement is a partnership between themselves and the company. The responsibility for employee engagement does not rest solely on the shoulders of the organization. It is not one or the other - it is both. Employees have a responsibility to shape their own destiny and career path just as much as the employer.

Therefore employee engagement is a partnership between the company and the employees where everyone works together to achieve the business objectives of the company and the personal aspirations of employees. The organization has the responsibility to create the conditions for this to happen. But before the organization can enter into an effective partnership with employees to create the appropriate conditions for engagement, they need to have the right information that is derived from employee market research.