6 Elements of Employee Engagement

We believe that employee engagement exists at the most fundamental operating unit in an organisation – me and my team. In this article I want to explore the subject in a bit more detail and outline 6 key elements that we believe leaders should look out for. If leaders focus on these 6 elements their ability of create a more engaged climate improves, and as a consequence team performance increases.

There are, of course, many definitions of engagement in the world of human resources and business. Our own view is that engagement can be defined as:

“Working in a trusting climate in which individuals experience a sense of being valued, a desire to be here, feel motivated to give the best of themselves, participate and take ownership for their own and the team’s success, and consequently feel pride in their organisation and its work.”

Researchers say that engagement can be most observed in the workplace from three angles:

• The energy angle: This has to do with how much energy someone puts into their actual work and day to day routines.

• The focus angle: This has to do with attention and concentration. How much someone is focused at work, while they are at work – rather than doing their shopping list in their head or thinking about arranging their next holiday.

• And the emotional angle: This has to do with how they feel at work. How much dedication for – and connection with – what they do day to day, the people they work with, and the organisation itself

This last angle is a really important one from our point of view. We think there are three foundations stones on which all employee engagement gets built. These are: Trust, Climate and Emotion.

From our own research and working real time with clients on the subject, we believe there are at least six key elements relating to employee engagement.

One important element is that employee engagement is about connection. Experts say that connection is key. Engagement is about having a deep connection between what we do and who we are. This is true about most things in life because we will tend to put more of our heart and soul into those things we care most about. It’s like having a hobby or interest that we are passionate about. When we disconnect, we disengage with the subject or activity.

Employee engagement at work is about enabling people to feel connected in meaningful and authentic ways with their roles and responsibilities, their colleagues and what the organisation is trying to deliver to its chosen customers. It’s about having a belief in – and passion for – what we are trying to do together. And of course this state of engagement is observable through behaviour.

Another important element is that employee engagement is variable, not an absolute. Employees aren’t either engaged or disengaged. Several studies have shown that approximatelyThe truth is that we can’t expect everyone to sustain high levels of engagement all of the time. Frequency, amount and conditions are all factors, so when leaders reflect on the level of engagement they perceive in their work group they need to ask themselves several questions: How engaged do people really feel? How often do they feel fully engaged, and under what circumstances do they feel that way?

• 31% of employees are “actively engaged,” - as I’ve described above

• 52% are “neither fully engaged or fully disengaged,” just sort of neutral, and

• 17% are “actively disengaged”, that is actively focusing on other things while at work.

This leads me to another significant element in employee engagement. Because it’s a variable this challenges the annual engagement survey that organisations employ. I’m not saying that the information it produces is not useful – of course it is. But we know that large surveys are usually too big and not frequent enough to give us an accurate picture. In the interval between annual surveys, individuals may have swung through different levels of engagement at any given time. We would argue that employee engagement really has to be temperature checked often so that a team leader can adjust what she or he does in order to sustain high levels of engagement in the team.

 

Ownership is another very important element of employee engagement. The individual is the only person who can say whether they feel engaged or not. No one can have greater ownership about how I feel about what I do, than me. This is so important to my psychological and emotional well-being at work, that I can’t wait for management to Do something about my engagement. I have to take the first step. The trouble is that in many organisational setting employees are waiting for managers to engage them, often with the unintentional consequence of creating a ‘moaning climate’ when they are disappointed.

 

The only caveat here is that people need to feel they are working in a culture and climate that enables them to take ownership for their engagement; enables them to consider and reflect on it, and, with their colleagues, enables them to connect in the way that I have described above.

 

We also believe that another key element is that employee engagement is fundamentally about relationships. A recent study showed that 97% of respondents cared very much about their relationships with work colleagues. We believe that if employee engagement is about how I feel about being here, then my colleagues and my boss, the nature and quality of my relationships with them and other people – perhaps departments across the organisation – is going to be critical. To what extent do I get what I need at a personal level from my immediate boss and my work colleagues? What kind of trusting relationships do I have and what is the nature of the work climate those relationships foster?

 

Another important aspect of employee engagement is that the combination of these elements must produce something meaningful for people. In other words organisations don’t chase the holy grail of employee engagement just because it’s a good idea in itself. Organisations put a lot of effort into creating highly engaged workplaces because people give the best of themselves in these circumstances. When people work in open, trusting environments in which they enjoy working, they connect with their job beyond the day to day tasks and more with the mission and vision of the organisation. As a consequence they feel pride in what they do and look forward to giving of their best. This is so important. After all when is the last time you heard someone say “I’m glad it’s Monday”, rather than “I can’t wait for it to be Friday.” This pride in something more meaningful than just the day to day tasks leads to more discretionary effort, with all the business benefits that produces.

 

So, as you can see, employee engagement is complex. Like cogs in a giant machine, there are a number of elements that must exist, working together to create a high performance, highly engaged workplace. Our research points to a number of key indicators of employee engagement that exists at that fundamental operating unit I talked about earlier – the team.

 

Here, I have outlined our thoughts on the six key elements of employee engagement that leaders should be looking out for. Our next question is, what can leaders actually do about those key indicators to help foster employee engagement. But that's a subject for another blog.

 

If you would like to hear a podcast of this blog then please click here >>

Building employee engagement at a core level

Building employee engagement at a core level

Employee engagement: Its all in the relationships

Here's a recent podcast I made about our approach to employee engagement. In our work though he have seen that orgaisations do several things to build engagement, we have found that there are some basic things that need to exist at the team and one-to-one relationship level in order to drive engagement.

Here's our podcast.

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If you want to find out how to build employee engagement contact us here to find out more

Economic, market and organisational challenges are all vexing senior leaders in their efforts to drive their companies’ performance. But what can they focus on internally that would enable them to fully execute their companies’ strategy and achieve their business goals? How can they drive execution and organisational effectiveness? Joe España, MD of Performance Equations considers four fundamental areas that drive business performance.

It’s unsurprising that senior managers in most organisations are exhorting additional effort from their managers and employees in cutting costs and boosting sales – especially in the current climate. Both these factors are undoubtedly important, but they don’t in themselves help senior leaders actively manage sustainability performance. Building the business pipeline and closing sales obviously leads to top-line growth, but says nothing about how effective the organisation is in delivering its goods and services. Managing costs and margins clearly help with bottom-line profits, but says nothing about where growth is going to come from.

Approximately 70% of business strategies and goals are not fully executed and achieved not because of a focus on these two aspects of business, but because of four clear levels that, according to research, senior leaders need to pay attention to in order to drive strategic business performance.

What are the four drivers of organisational performance?

Strategic Focus

The first is strategic focus. Organisations need to create clarity, unity and engagement behind its strategy. In my business experience working with clients in a broad range of sectors, many organisations have a strategy and vision but by the time it leaves the executive team it has been filtered, interpreted, become hazy, ambiguous and difficult to operationalise. Moreover, very often strategic goals are communicated solely as headline figures, providing no back ‘story’. What are the particular customer needs the company specifically wants to meet? What are the business processes and initiatives that are required in order to meet those needs, and what are the organisational capability requirements in order to ensure the business can actually achieve its intended goals?

According to Robert Kaplan and David Norton, the founders of the balanced scorecard and strategy mapping, only 5% of employees understand their company's strategy. It is important that all staff have an understanding of the strategy and its rationale and how it drives the business. The need to make sense of what it looks like operationally and how they can contribute and add value. They can only do this if they know where the organisation wants to go.

Additionally one of the elements that motivate people to perform is the size of the challenge. A strategy with little or no challenge will not encourage staff to give of their best. Equally, too much, unrealistic challenge (give available resources) will de-motivate people as they perceive there to be little if any chance of success.

Organisational values also play an important role in strategic focus. As guiding principles they help all employees to understand and contribute to ‘the way things are done’ in the organisation – its culture. Organisational values need to be clearly understood by everyone in relation to the business’ strategy, and role modelled by every influential person in the company to that they become ingrained.

Performance Management

The next performance driver is performance management. Human beings do not cope particularly well with ambiguity. Although different individuals will have their own ambiguity tolerance levels, the greater the clarity about goals and performance expectations the more comfortable we are. Clarity about goals and expectations is an integral part of getting commitment. Individuals tend not to buy into things that are not clear to them. Having goals, therefore, that make sense and can be envisioned as possible are more likely to engender motivation and energy investment in their achievement.

Understanding by itself is not enough. Eventually any organisational vision, mission and strategy have to be translated into team and individual goals. Without this alignment individual goals would sit in a vacuum. Organisational goal ‘fit’ tells the individual that their job is important and how their piece of the jigsaw puzzle contributes. This ‘fit’ provides understanding that their effort makes a difference and links their performance to the rest of the organisation.

At the same time, just like the level of challenge in organisational strategy, the level of challenge in individual goals will determine the amount of effort individuals will put into their achievement. Goals that are under or overly challenging influence the level of energy expended on their achievement. Review of performance and feedback received must be appropriate in terms of frequency and quality. As a leadership tool, feedback is one of the most powerful means of developing and sustaining performance, creating a sense of challenge, and motivating human endeavour.

Leadership and Management

The role of senior leaders in clearly articulating a vision for the company and a sense of inspiration for the organisation as a whole is a key performance driver. Acting as role models for the organisation’s values and principles, and managing major organisational processes are vital to delivering the organisations intended results. Perceived leadership behaviours strongly influence the way staff feel about their company and the extent to which they feel engaged with its goals and ambitions.

While senior leaders may set the overall tone for the organisation, line managers influence the immediate work climate that staff experience day to day. Manager’s influence task and job structures, informal reward systems and operating processes. They also operate as interpreters of the organisations vision and strategy for their team members. Their effectiveness in managing structures, systems, processes and people have an enormous impact on the organisations performance.

Financial rewards also play an important role in driving performance. Being remunerated for work done in a way that is perceived to be fair and reasonable for the job level, is well understood by organisations as one of the drivers of performance. What is often overlooked, however, is how misalignment and perceived unfairness can creep into the system. Often organisations encourage team work, for example, and reward achievement of individual goals. Bonus schemes are often notorious for being managed to fit the system and the ‘bonus pot’ rather than truly rewarding performance.

What is often underestimated and under-utilised by managers is the potential impact on performance derived from psychological reward and recognition. Managers all too often rely on monetary rewards to drive performance, even though years of research and evidence points to the greater influence of recognition as a driver of performance.

Likewise, the extent to which staff feel involved, appropriately, in goals, decisions and plans that affect them makes a significant contribution to organisational performance. Participation gets the best knowledge, information and expertise focused on an issue (the best place to solve a problem is as close as possible to where it exists). Participation and involvement increases individuals’ commitment to implementation of decisions. Participation and involvement also devolves influence throughout the organisation as well as builds capability. Study after study has shown that organisations with devolved influence are better able to cope with business challenges, and participation enables organisations to manage change more effectively.

Building on this element, it is also vital that organisations encourage and sustain cross-functional collaboration and team work. Typically when companies measure satisfaction and co-operation among teams, they very often report that the level of co-operation and collaboration is perceived to be far less from other teams with whom they have to interact.

Structure and resources

The formal structure of an organisation is usually presented in the form of the organisation chart, designed to show the relationships and reporting lines between individual positions and functions. This formal structure determines information flow, decision processes and often positional status. The informal structures of a company may operate differently, however. Who knows who, the unspoken relationships and cross-boundary influences, and socio-political working of the organisation. Organisational structure determines how people behave towards one another. It can create defences or encourage collaboration. It is a driver of organisational performance because in can create efficiency or inefficiency in communication, innovation, product and service delivery.

Likewise, the way that jobs themselves are structured – the nature of the task requirements of job roles – is a driver of performance. Jobs can either be satisfying for the holder, tapping into their creativity and skills, or they can be designed to stifle these, leading to a sense of little autonomy, high dependency and frustration. Jobs that are designed to make best use of the cumulative skills, motivations and potential of the job holder, contribute significantly to their sense of satisfaction and motivation, helping to drive engagement.

Traditions and rules also provide a contextual driver of organisational performance. The way things have always been done, the tried and preferred ways and the rules and policies may provide a reference point for managing performance, but can also act as a break to strategy execution, particularly if that strategy requires new ways of working. This is often seen in post M&A integration activity, where two conjoining departments find that their operating methods and procedures clash and preferences are involved.

An absence of appropriate resources/facilities, too, impacts on organisational performance. While efficiencies and cost-effectiveness is a perpetual consideration, lack of resources often means that individuals and teams cannot perform effectively and struggle to deliver the expectations demanded by the business strategy.

These sixteen factors operate within the four primary drives of organisational performance. They combine and influence one another in dynamic ways. When trying to measure and manage organisational performance, senior leaders are well advised to consider these drivers and factors and the extent to which they are either helping or hindering the full execution of their strategic intent.

about the author

Joe España is Managing Director of Performance Equations, a specialist organisational development and change consultancy. Performance Equations helps companies and individuals become more competitive by directly linking strategy to people and business performance. Their areas of focus are: Organisational culture & change, Leadership development, Team development and Service excellence. Joe and his team provide measurable solutions that are bespoke to particular needs, and that deliver performance where it matters most; the bottom line.

For a free information pack call +44 (0)1252 545171. Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit www.performance-equations.co.uk.

I recently had and email exchange with a colleague of mine about the role of leaders as both students and teachers in in-company leadership development initiatives. Our debate was wether is was better to develop a pool of leadership talent using external expertise or have the intervention led by organisational leaders. It was such an interesting thought that it led me to 'pencil' my own views.

I think the starting point is not whether the development intervention should be led by leaders or externals, but rather what is the intervenion supposed to be achieving. Te first is a debate about the methodology or vehicle and there may be all sorts of ways of delivering high performance leadership. The second is about measurement, evaluation, end results and questioning the strategic intent of the eventual programme. Assuming we can pin down and hook the eventual impact of any initiative into the strategic requirements of the business, then the methodology debate is slightly easier to answer.

I say slightly easier because there will be a variety of ways of deploying and implementing leadership development in organisations, each with their own valid benefits and short comings. I really like the idea of having leadership development being led by the company's leaders, though I recognise that this approach raises some challenges of its own (I'll come to them in a minute), but one of the arguments for having the leadership development intervention led by leaders internally rather than by external consultants and providers (don't mean to do myself out of work here!) is that being put into the 'spotlight' of having to develop others in the values, practices and behaviours leaders require to demonstrate in order to fully execute the strategy is actually VERY developmental of itself.

Of course there are some caviats: Do these leaders, charged with the development of the future leaders in an organisation themselves role model what is being described? Do they have the skills and acumen to be able to effectively develop those that follow? Do they have credibility in their own positions as well as in a development scenario? etc etc.

But I don't think these challenges are insurmountable. We have all read plenty of research that provides evidence of the need for leaders irrespective of their professional standing and quality, to learn and renew themselves. If they are not continually learning they are standing still. So leaders have to be students, if they have to be anything. In the last couple of weeks I have been working with very senior executives in a global company getting them to tangibly think about what they do and could do to develop further the talent in their organisation. They found it extremely difficult but, I was told, extremely rewarding. They were students because they were learning about new ways to think about developing others and their role in making it happen. They enjoyed it because they realised they could be more creative than they had first thought and were able to envision their roles in directly engaging, coaching and creating interesting workplace assignments for their people.

Now here is my point. Initially I would not expect busy senior business leaders to be fully conversant with the 'magic and mystery' of leadership development, or indeed to have technical knowledge of design, development or delivery, but if I can learn how to do it, they certainly can. The role of leader as coach, developer and 'teacher' I think is an ever more important one, as employees look to their leaders for more than direction and guidance, but to reasons for staying.

There are enormous benefits in utilising internal resources, and in this case, internal leaders as the developers of a pipeline of future leaders in a company. The role of the external consultant/coach is one to provide some framework, advice and guidance on assessment, design and delivery; knowing the technical benefits and pitfalls of a variety of potential solutions. I think where an external consultant works in this way, as a true partner to the organisation on an intervention like this, the end result is stronger and longer lasting. If any further argumentative proof were required, Britannia Building Society is a great case in point. They developed qualified internal coaches from their senior leadership group to develop coaching internally to develop leaders.

I believe this approach is the way to go in the future. The very process is very developmental of leaders and having to develop others is a great way to build organisational glue for the ethos, values, practices and behaviours that future leaders need in order to execute their business strategies.

Organisational Culture: Help or hindrance?

When working like the highly oiled pistons of a high performance engine, organisational culture can transform companies, but this isn’t always the case. Joe España, MD of Performance Equations exposes the reasons why mergers and business strategy often fail because of culture.


There are a number of inter-related performance factors in a company’s operating style/culture (the way things are done) that can significantly influence its organisational effectiveness. Poor execution caused by organisational issues is held responsible for over 50% of corporate failures to fully deliver business strategy. Moreover, at least 60% of company mergers fail to realise their anticipated pre-acquisition values, and approximately 75% of all change programmes are unsuccessful. Why? Because organisational culture can secretly conspire against these efforts.

Cultural clashes mean that what looks on paper to be a sensible restructuring solution often doesn’t work in reality unless potential incompatibilities of organisations and units during merger integration are addressed. Discovering cultural differences too late can prove costly, time consuming and hugely frustrating.

What is organisational culture?
Many books, filling plenty of library shelving, give us all sorts of statements and descriptions characterising organisational culture. Organisational psychologists talk of the values, assumptions, behavioural patterns, style, climate, atmosphere, norms, and observable attributes that we associate with a particular organisation or group. Put more simply, it’s “the way things are done around here.”

Employees soon learn the ropes about the organisation’s culture by experiencing how people behave towards one another and about the ‘rules of the game’ through what is paid attention to. These behavioural norms may or may not be aligned with the company’s stated values or conducive to the achievement of its stated strategy.

Examples abound. The CEO who is adamant about the need for entrepreneurial creativity and innovation as a strategic imperative, and whose senior manager’s immediate response to any volunteered creative idea is: “It won’t work.”

The corporate centre that entreats frontline staff at a bank to engage in more consultative (and time consuming) dialogue with customers, only to have the branch manager quietly mouth “hurry up” from behind the customer queue. The FMCG leadership who extol an end to bureaucracy, encouraging operational slickness and efficiency while at the same time demanding the 27 monthly reports, 50% of which nobody reads.

What type of culture is best?
These might all be examples of potential misalignment between organisational behaviours and the view from the top, but they illustrate reality for many employees in UK Plc.

What these examples don’t really tell us and what many organisational culture diagnostics fail to uncover is what the “right” culture to have is. Even the grandfather of organisational culture gurus, Dr Roger Harrison, couldn’t get us past the strengths and limitations of his model of four organisational cultures: Power, Role, Achievement, and Support. It has still been left to organisations to try to fathom out what type is best for them.

Ultimately, why organisational cultures secretly conspire against what a company is trying to achieve is because they are by their very nature so difficult to pin down. Virtually intangible, organisational culture has been notoriously difficult to describe in terms of how it operates and its concrete impact on organisational performance, even despite the plethora of stories and examples.

Luckily for us the 1980’s and ‘90’s saw an advent in corporate UK of organisational culture change initiatives with a strong emphasis perceiving them as the key mechanism to organisational effectiveness and performance. A focus was given to answering questions including: What type of culture do we need? What is the relationship between culture and performance?

What has to be changed to modify the culture? Recent writers including Collins & Porras, Hesketh and Kotter have found positive relationships, in terms of process, between organisational culture and organisational performance. Models such as the European Foundation for Quality Management’s Business Excellence Model also provide some hooks to be able to understand and measure the impact of “the way we do things here.”

With these frameworks for measuring and monitoring how the way things are done influence an organisation’s performance outputs, we can begin to develop an answer to not only how “the way things are done around here” helps or hinders our organisational strategy, but also allows for a definition of the type of culture that is needed to achieve strategic goals.

So how does organisational culture help or hinder?

The body of research into this field of organisational performance seems to have certain common themes. There are be two discrete and independent scales or dimensions of organisational culture that work with each other to help to describe a number of combined organisational characteristics.
The first of these two dimensions provides a picture of whether an organisation tends to be orientated more towards tasks, processes and quantitative goals rather than people, relationships and qualitative goals. The second dimension describes an orientation either towards collaboration, slower timelines, and considered responses or more towards competition, faster timelines and pro-activity.

Rather than providing strict labels of organisational culture, they offer typical behavioural patterns depending on their combination. The research also identifies a number of internal performance factors directly linked to and influencing business performance and other outcomes. What all the research points to is that there are a number of very discernable, inter-related organisational performance factors in a company’s operating style/culture (the way things are done) that can significantly influence its organisational effectiveness.

These factors, processes, ways of working and behaviours, clearly influence the psychological contract between company and employee and ultimately how it performs in the market. They include the extent to which the strategy is clearly communicated and understood and is in keeping with organisational values; the extent to which goals are clear at the individual and team level and have an explicit fit with one another and the organisations overall business objectives.

They include the extent to which leaders and managers operate in ways that are consistent with the stated vision and values of the organisation, providing psychological reward and recognition over and above the financial aspects, and engendering employee participation and cooperation across the business. They also include the extent to which the business is generally structured and organised to facilitate decision-making, autonomy and control dispersed at the appropriate levels in the organisation and freed from layers and bureaucracy.

What research has gone on to demonstrate is a correlated relationship between these organisational factors and levels of employee satisfaction and morale; the levels of willingness and ability to initiate and manage change successfully; the extent to which employees feel personal responsibility and accountability for customer service and business performance; the effectiveness of internal communications, cross-functional collaboration and ultimate organisational performance effectiveness.

The perennial ‘problem’ with organisational culture has always been the difficulty of pinning it down so that something tangibly could be done about improving or changing it. With these performance drivers it is much easier to identify what exactly is operating in the organisations style that is influencing the results it sees. With some regressional analysis of the co-relation and relationship between these behavioural norms and the organisations resulting effectiveness, it is possible to address the root causes rather than the symptoms.

These performance factors in an organisation’s style or culture are so powerful that they can make all the difference to the successful delivery of business strategy and execution of business plans. They represent the glue that creates engaged, highly committed workplaces. And when working like the highly oiled pistons of a high performance engine, organisational culture can transform companies, as Collins describes, “From Good to Great.”




about the author

Joe España is Managing Director of Performance Equations, a specialist organisational development and change consultancy. Performance Equations helps companies and individuals become more competitive by directly linking strategy to people and business performance. Their areas of focus are: Organisational culture & change, Leadership development, Team development and Service excellence. Joe and his team provide measurable solutions that are bespoke to particular needs, and that deliver performance where it matters most; the bottom line.

For a free information pack call +44 (0)1252 545171. Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit www.performance-equations.co.uk.

Customer Experience: Everything is an emotional buy

Satisfying customer expectations no longer provides a competitive advantage. Nowadays, companies have to connect at a different level. Joe España, MD of Performance Equations ponders on making the emotional connection.


Everything is an emotional buy; everything. Whether buying a cup of coffee, a holiday, a car, or a house. Our emotional reaction to a service transaction is the fundamental driver of the purchasing decision. But more importantly, it’s a determining factor in customer retention and loyalty. More that satisfaction, customer emotion is the underpinning factor in the customer experience; what it’s like to do business with the product or service provider.

Yes of course rational thought, reflection, consideration of pros and cons may be part of the buying decision, but an emotion definitely will be. One’s feeling, sense, intuition, gut reaction and experience of the interaction will play a significant part in the buying decision.

This example illustrates the point. I was walking through a shopping centre with a colleague recently. We walked passed a well known coffee shop and I suggested we stopped and had a coffee. My colleague immediately responded with a suggestion that we should go further into the shopping precinct and around the corner to his favourite coffee shop. “I like it there,” he said. Not, they do better coffee, it’s less expensive, or I have a loyalty card, but “I like it there”. In fact he liked it so much that he was willing to take us out of our way in order to get that cup of coffee. This was an emotional reaction. No rational and logical weighing up taking place; a simple instinctive response.

Why is this important?

During the ‘80’s and ‘90’s customer satisfaction was king. It was based on research suggesting that continued improvement in product and service quality would mean corresponding increases in satisfaction, and customer satisfaction was going to ensure a returning purchase. What further academic research and empirical evidence now shows is that companies who followed this guideline were surprised to find that even high scores in customer satisfaction did not guarantee loyalty. Companies have discovered that loyalty, not satisfaction, drives profits. The economics are very compelling. As little as a 5% decrease in customer defections can mean a doubling of profits. Why? Because loyal customers are not only repeat purchasers, and are more likely to buy other products and services, they become advocates of the company. It is nine times cheaper to keep an existing customer than acquire a new one. The unit operating costs of servicing repeat purchasers is also reduced. Advocates become the ‘virtual’ marketing function of the product or service provider, recommending it potential new buyers amongst family, friends and colleagues.

But there are other reasons based on service recovery. No product or service operation is flawless. Though a company may want to diminish the incidence, it is almost inevitable that something will go wrong sometime, however small the error. When customers are positively disposed and emotionally engaged to service providers, they will be more willing to tolerate a whole range of service or quality shortfalls. The coffee not quite as tasty or as frothy as last time, the delayed flight or the clothes shop that has sold out of the garment you particularly wanted. Customer satisfaction surveying doesn’t quite get to grips with the emotional effect of the service interaction or the value that customers perceive from it. Satisfaction in many respects is an outcome. Something happened that created that sense of satisfaction. And that ‘something’ is the experience itself. Satisfaction, or dissatisfaction for that matter, is the result of what it felt like for the customer in being dealt with by the service provider. Satisfaction somehow seems such an inappropriate and often inadequate description of what the customer is experiencing.

Doing business at the emotional level

Recently I went along to my nearest toy retailer to browse for a suitable gift for my eight year old son and witnessed the sheer joy and marvel experienced by a small toddler being given a replacement cuddly toy. The parent had gone to the toyshop to ask if a toy that had not even been purchased at that particular outlet could be replaced because it had been given as a gift to her two year old, was one in a series, and the child already had it. The customer service agent said it wasn’t their policy, but left her counter, went to the appropriate shelving to retrieve the entire set of toys for the child to choose the one she wanted. The shop lost £3.99 and gained an overjoyed child, an appreciative parent and a story that will be repeated several times as an example of superior service. Neither the child nor the mother were merely satisfied with how they had been treated. The broad smiles on both their faces gave a real sense of the appreciation and happiness felt (as well as giving a clue of the potential sense of relief in the mother in not having to deal with a disappointed child). Even I walked out of the shop with a bit more of a skip in my step than I had walked in with.

By contrast, a colleague told me of his less that satisfying flight to a client meeting in which he stupidly (his words) packed all the materials he needed for his presentation in his checked-in luggage. On arrival the surly lost baggage clerk explained that his luggage was still at his departure point and that it would not be with him till later in the afternoon and that if he had needed all the material then it was his own fault for having checked it in. My colleague explained to me later that neither dissatisfied or extremely dissatisfied, were words that accurately described his feelings about the treatment he had received. Incandescent with fury were probably closer adjectives to the truth of his emotional reaction.

So it all seems to rest on the emotional experience. How the engagement with the service provider leaves us feeling – about them, the transaction and the company as a whole. And even when the system - the procedures and protocols the service provider is sometimes required to follow - get in the way, (as they often do in financial services), appreciation and handling of the customer at the emotional level can make all the difference.

Only a couple of weeks ago I called by business bank early on a Monday morning to check that they had reissued and sent a replacement to my business card that was about to expire. Confirming that they had, I explained that I was about to leave on a business trip and that I had not yet received it. Straight into automatic mode, the call centre operator informed me that they would have to cancel the card that was lost in the post and reissue a new card. This would take between 3 and 5 working days. Too late, I advised, as I was leaving on my business trip over the weekend, needed the card, and my existing card would expire mid week. Can’t help you they said. I suggested that rather than relying on the postal service, they should courier a replacement card and I would sign for it. This seemed a viable possibility, except they added that in cancelling the lost card on the Monday would also automatically cancel my existing card which was still valid till the Thursday. Increasingly angry and frustrated, I suggested that they should not cancel a card that was still valid and usable, and enquired how they could creatively suggest some options to deal with the presenting problem. None were available. After much haggling and finding I was getting no where with the ‘system’, I begged that they please ensure that the card was delivered in the minimum amount of time. This they assured me they would do. Frustrated, manacled by their procedures and feeling completely undervalued, I agreed. Unfortunately, insult was further heaped on a far from satisfying experience. A very pleasant voice called about an hour later to say that I could collect my card from my local bank branch at the end of the week. The communication within the system had obviously not understood my earlier point about being busy and the inconvenience of the situation. The rising tied of indignation, frustration, helplessness and seething venom was far too great to contain, and the unfortunate caller received a tirade describing their incompetence, insensitivity and inability to organise an escape from a wet paper bag.

What is the point of this?

What the customer feels or doesn’t feel at every single encounter with a service provider is directly related to the service providers ability to manage the totality of the experience and customers expectations. Customer experience is not simply about smiling sweetly, or keeping an even tone when handling an irate customer. It is about creating, operationally, transactionally and behaviourally an emotional connection with the customer that leaves them feeling – no matter what – that they are the most important person in that moment in time. Addressing the emotional needs, desires expectations of fickle - I want it now and I’m not going to wait - customers is difficult and can’t be left entirely to the great customer service skills of the individual. Defining the goal of the intended customer experience, so that it is differentiated, intentional supports the brand promise and adds real value to the customer requires a whole company approach which goes beyond procedural quality standards and protocols.

Before a product or service provider can determine the best way to manage their customer experiences it has to define and articulate exactly the emotional reaction they want to create in the customer at every point of contact. Arguably customer satisfaction surveying and market research will provide the data required in order to do so. This seems very logical except for the fact that customer satisfaction measures very often don’t give enough, if any, data about drives satisfaction or indeed loyalty at the emotional level.

Customer experience management requires much greater insight into the drivers of satisfaction and loyalty. That insight is very likely to demonstrate that a whole package of different factors lead to a sense of satisfaction and loyalty, based on a mixture of expectations, needs and reactions to the organisation and the perceived value received by the customer.

Managing the customer experience, then moves critical elements such as product and service quality, and perceptions of value-for-money, beyond merely hygiene factors – the minimum requirements needed to be seen as a ‘player’ in the market – to fundamental delivery mechanisms in creating the sort of personal, deep seated emotional and psychological connections with the customer that enable them to feel themselves satisfied and loyal. A consistent, differentiated, valued and completely intentional approach to managing the customers emotional response to doing business with the company is the only way of dealing with the irrational, illogical, intuitive and feelings based drivers that underpin every buying decision.

Now then, about that coffee I was going to have.


about the author

Joe España is Managing Director of Performance Equations, a specialist organisational development and change consultancy. Performance Equations helps companies and individuals become more competitive by directly linking strategy to people and business performance. Their areas of focus are: Organisational culture & change, Leadership development, Team development and Service excellence. Joe and his team provide measurable solutions that are bespoke to particular needs, and that deliver performance where it matters most; the bottom line.

For a free information pack call +44 (0)1252 545171. Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit www.performance-equations.co.uk.

Customer Experience: It's More Than Customer Satisfaction

The time, money and effort spent on gathering and analysing customer satisfaction measures isn't worth the economic payback, and yet companies large and small regularly survey their customers to get feedback on their satisfaction levels. The problem with customer satisfaction surveys is that they don't tell you much about the perceived differentiated customer experience that drives loyalty in terms of intentions to repurchase, or advocacy in terms of willingness to actually refer you to friends, family and colleagues.

Why is this important?

Satisfaction, as we all know, is an ever moving bar. What kept customers happy about our products and services in the last 10, 5 or even two years wouldn’t now meet the expectations of the average person in the street. Customer wants, needs and expectations move as quickly as the market itself, and so what would have delighted and surprised them a short while back is now seen as run of the mill and worse still as a hygiene factor: while they may not remain loyal because it, they will defect the moment it is absent. So customer satisfaction ratings only ever measure a customer “happiness quotient” with existing transactions.

Recent studies on the other hand, particularly those of Fredrick Reicheld (et al), have shown that measuring and managing the perceived value that the customer places on the ‘experience’ of dealing with the product or service provider is a much better measure of organisational performance from a customer perspective, and from it a better predictor of profitability and growth. The reason for this is that real profitability and growth comes from loyal customers who not only buy more (and other things), but stay with the company longer and are more likely to refer the service provider to family, friends and colleagues. We already discovered in the mid 1980’s that it’s operationally nine times cheaper to keep an existing customer than to acquire a new one, so customer retention is key to growth and profitability.

Customer loyalty in these days of ‘rate chasing’ with credit cards and mortgages, and best unit price with gas and electric utility companies is, of course, a fickle thing. What is known is that customer loyalty is a value-laden concept that has everything to do which the customer-relationship, and particularly the psychological and emotional perceptions engendered in the customer experience. In other words the customer has to feel good about their relationship with the company. Customer loyalty is more than the sum of the parts of superior value in terms of price, features, quality, functionality and ease of use. It’s about the entire customer experience that drives growth and profitability.

Customer satisfaction surveys only tend to provide a superficial measure of the behaviours that drive profitability and growth. We know this because detailed research has shown that between 60 – 80% of those customers who judged themselves to be “satisfied” or “very satisfied” on satisfactions surveys were saying so just before they defected to the competition.

No, the new measure of customer economic value and relationship with the company is Customer Experience Management.

What is Customer Experience Management?

Customer experience management is a way of looking at every single aspect and touch point of the company-customer relationship in order to develop and manage a customer experience that is intentional, consistent at every point of contact, differentiated from the competition and, most importantly, valued by the customer. Customer loyalty is based on the psychological value that the customer perceives in doing business with the service provider. It enables the customer to come to positive conclusions about how satisfied they feel when doing business with the company and its employees, whether or not she or he wants to continue doing business with the company, and most importantly, whether or not they are willing so say positive things about their experience rather than bad mouth the company and its employees.

The customer experience concept is advocated not only by researchers, but by operational exponents in the business world such as, Dell Computers, Four Seasons Hotels and Superquinn supermarkets. Indeed, Feargal Quinn, CEO of Superquinn is quoted as saying: “We are in the business of selling an experience that delights our customers”. ‘Selling an experience’, not ‘the best products at the most affordable prices’. But to ‘sell’, manage and measure the customer experience service providers have first to answer three questions:

- What customer experience is the company trying to deliver?
- What emotions does the company want to evoke in its segmented market?, and
- What is the company’s customer experience vision?

In answering these questions companies have to evaluate the very basis of their relationship with their customers, rather than the transactions they have with them. By trying to assess and manage the quality of their customer relationships, companies are using a different metric to the simple ‘satisfaction’ one. Evaluating the customer relationship requires understanding what is valued by the customer in the experience – in every detail and at every level. The quarterly, 6-monthly or yearly customer satisfaction survey doesn’t provide the depth of insight that customer experience management does because, inevitably, it will seek general feedback on products, pricing and service. Customer satisfaction surveys don’t usually measure the emotional impact of the customer relationship, and it’s the emotional impact that is a primary driver of a customers’ decision to choose one provider above another. While they provide data on key areas of customer satisfaction, satisfaction surveys don’t generally provide much insight into how a company can nurture and develop customer loyalty; the one key driver of profitability and growth.

Customer experience management rather than satisfaction surveying

There is no doubt that customer experience management (CEM) is the new wave in managing the customer relationship. It goes beyond and takes much more than just good customer service. In a world in which it’s becoming ever more difficult to be differentiated, where similar products, similar prices and similar services are becoming more of the norm, the differences will emerge in the customers mind based on the brand, the perception and the feel of a company; all of which are managed and delivered through the customer experience. And it’s the customer experience that differentiates the company, creates and builds loyalty and ultimately leads to growth and profitability.



about the author

Joe España is Managing Director of Performance Equations, a management consultancy that helps companies and individuals become more successful by directly linking strategy to people and business performance. Joe and his colleagues typically work with organisations who realise that "off the shelf" solutions will not best meet their particular circumstances or strategic objectives. Their clients want intelligent, robust and measurable solutions that are bespoke to their particular needs, and that deliver performance where it matters most; the bottom line.

Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit http://www.performance-equations.co.uk/.