"The three most important things you need to measure in business are
customersatisfaction, employee satisfaction, and cash flow." Jack Welch –
Lessons for Success, 1993
THE COSTS"Most managers know that turnover is expensive, but two-thirds of 1,290
managers were unable to quantify the cost of turnover when asked in a recent
poll. The cost of hiring and training a new employee can vary greatly—from only
a few thousand dollars for hourly employees to between $75,000 and $100,000 for
top executives. Estimates of turnover costs may range from 25 percent to almost
200 percent of annual compensation. Costs that are more difficult to estimate
include customer service disruption, emotional costs, loss of morale,
burnout/absenteeism among remaining employees, loss of experience, continuity,
and 'corporate memory." - F. Leigh Branham, Vice President and Director of
Professional Services, Right Management Consultants (one of the worlds' leading
firms in human resources consulting.)
THE BENEFITSBetween 40 and 80 percent of customer satisfaction and loyalty is
determined by the customer-employee relationship, depending upon the industry
and market segment. At Sears, employee satisfaction accounts for 60 to 80
percent of customer satisfaction. (Anthony Rucci, Steven Kim, Richard Quinn
"Employee Customer Profit Chain at Sears" Harvard Business Review Jan.-Feb.
1998)
THE REVISED MODEL: -THE EMPLOYEE-CUSTOMER-PROFIT CHAIN
When companies put employees and customers first, their employees are
satisfied, their customers are loyal, their profits increase, and their
continued success is sustained. A growing body of research is supporting the
correlation between employee and customer satisfaction. More specifically,
employee commitment is cited as a source of increased customer satisfaction.
More committed employees stay with the company longer. The longer an employee
stays with a company, the better the employee becomes at understanding its
processes, its products, and its customers. Therefore, employee commitment
increases the likelihood of customer satisfaction and therefore customer
commitment.
"Conducting employee surveys is an inexpensive, sensible approach to
monitoring if you are doing the right things to earn that sense of commitment
from your employees. The small investment of time and money in an employee
survey will be repaid many times over through more satisfied and loyal customers
and reduced hiring and re-training costs." (Satisfied Employees Increase
Customer Loyalty, Scott Andersohn, SPHR, May 2004)
THE RETURNS
CUSTOMER LOYALTY
By reducing the costs associated with employee attrition and increasing customer
loyalty through improved employee moral companies can greatly improve their
bottom line. 1. According to "The Loyalty Effect" by increasing customer loyalty
by just 5% companies can increase profitability by 40-95%. The experts seem to
agree that "companies won't realize the fruits of loyalty until usable
measurement systems enable firms to measure their performance against clear
loyalty goals – just as they now do in the case of profitability and quality
goals." 2. Since employee surveys are the most accurate and cost-effective
employee attitude measurement tool currently in existence, organizations of all
sizes may wish to consider implementation of an ongoing employee survey program
to better measure their performance against defined loyalty objectives.
The Loyalty Effect: The Hidden Force Behind Growth,
Profits, and Lasting Value by Frederick F. Reichheld, Thomas Teal. Copyright
1996 Reed Business Information, Inc.
The One Number You Need to Grow, Frederick F. Reichheld
HBR OnPoint Enhanced Edition Dec 1, 2003
To learn more about using employee surveys as a tool to measure and
improve the satisfaction of your employees, please visit the Employee
Surveys page of the Infosurv website www.infosurv.com
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