Linking employee engagement with customer engagement and performance: the evidence

We all “get” the link between having engaged employees, engaged customers and bottom-line performance. It’s intuitive, isn’t it? Yet a huge number of companies are still not leveraging this relationship. So why is that?

The first EdelmanENGAGE “State of Engagement” study wanted to explore what companies are actually doing globally to convert engagement into competitive advantage. What’s working and what isn’t? And how can we improve things for the future?

A handful of simple findings from the study can help us to understand why relatively few firms are yet exploiting the employee/customer engagement link to boost performance:

 

1. Only 56% of companies include issues around the customer in their definition of employee engagement

As things stand, most definitions of employee engagement are pure play “HR”: do you like working here, do you want to keep working here, would you tell others to come and work here? It’s about whether people are engaged with you as an employer.  But these definitions ask nothing about whether your people are engaged with serving your customers. We find that having a more balanced definition (and therefore way of measuring) employee engagement is paramount if you want to connect employee and customer engagement more explicitly. In fact, your engagement “model” should be balanced between:

  • Are you engaged with the company as an employer?
  • Are you engaged with providing great service to our customers?
  • Are you engaged with trying to help the company achieve its goals (e.g. growth, innovation etc.)?

 

2. Only 55% of companies yet have an explicit employee engagement strategy

This simply compounds the problem above. With only just over one in two firms having an explicit engagement strategy, it is very hard for the remaining companies to put the link between employee and customer engagement on the Board’s agenda. Only by creating an explicit engagement strategy will Boards be persuaded of the business benefits of engagement (both internally and externally).  These strategies need to outline issues including:

  • What business objectives will engagement help us deliver?
  • Where do we need to focus to improve engagement (and what will we not be doing)?
  • What levers can we best pull to help deliver engagement?
  • How will we do this with different employee and customer segments?
  • How will we measure our success?

 

3. Only 37% of companies measure the impact of employee engagement on customer engagement

Finally, only a relatively small minority of companies are working to link their data on employee and customer engagement. As a result, the majority of firms still cannot prove the ROI of engagement on the bottom-line.  Our work suggests there are two main root causes to this:

  • Political factors: in most organisations different functions “own” the data sets that need knitting together to make this ROI analysis possible: HR “own” the people data, Marketing “own” the customer data and Finance own the performance data. This means that these various data sets are rarely shared or linked together; this can be due to “possessiveness” or there simply being no one natural integrator of all the data sets. This drives CEOs mad:  they want more than anything to be able to have all these data knitted together to create a cohesive, integrated picture of what factors are driving particular outcomes in the organisation. But, often, that simply does not happen.
  • Technical factors: there may be insufficient data of one type or another to allow engagement data to be linked to it or there being technical incompatibilities in the data. For example, employee engagement data may only be captured once a year in an annual survey whereas customer service data might be tracked on a monthly basis. The various data may not be available for the same business units; for instance, employee engagement data may be available down to team level but financial data is only available at divisional level. There is simply not the statistical capability within the organisation to conduct the types of statistical analysis needed to carry out integrated linkage analytics (such as causal path modelling or structural equation modelling).
  • Until a company can overcome these political and technical barriers, linkage of employee and customer data is likely to remain a minority activity.