NPS & Employee Engagement: From Insight to Action
Many Qualtrics customers already use Net Promoter ScoresSM to measure customer loyalty, but we wanted to know how NPS is being used to measure employee engagement. So, in this third blog post in our three-part series with Bain & Company, we talked with Rob Markey and Fred Reichheld to learn about eNPS.
Q. Net Promoter® is fast becoming the industry standard for measuring customer loyalty and advocacy. Can it be adapted to measure employee engagement as well?
FRED: It certainly can, and many companies have done just that—Apple’s retail stores, for example. We call it eNPS or “employee NPS.” Practitioners regularly ask employees how likely they would be to recommend the company to a friend or family member as a place to work. They score the results on a zero-to-ten scale, just like customer NPS®. And, of course, they ask the reasons for each employee’s rating, so they get useful feedback in the employee’s own words.
Q. eNPS, employee engagement surveys and traditional employee satisfaction measurements are all different. Engagement surveys give manager-specific results at every level of an organization. This is quite different from how most organizations measure employee satisfaction. How does eNPS differ from traditional employee satisfaction measurements?
ROB: If you’re talking about the metrics, yes, they’re all quite different. But what really distinguishes eNPS is that it’s part of the Net Promoter SystemSM. And in the Net Promoter System, we use eNPS in a manner similar to the way we use customer feedback: rather than focusing primarily on aggregated results, statistical averages and overall results, the Net Promoter System’s emphasis remains on providing regular, high-frequency feedback and on facilitating a dialogue with employees about how to improve their work environment and their positive impact on customers.
So the eNPS approach turns the traditional approach to employee engagement surveys or employee satisfaction on its head. It puts the focus on small teams of employees as the central unit of examination and analysis. This is in stark contrast to the more traditional approaches, in which a central team (often from HR) launches initiatives based on the results of long surveys done once or twice a year. That approach tends to yield initiatives that are largely companywide—and because they’re led by HR or a headquarters team, line managers and supervisors feel little ownership or involvement with the process. Of course, results are usually reported down to the team level, and team leaders may feel accountable for improvement. But unlike the Net Promoter System, actions and initiatives in the traditional approach rarely come from the teams themselves. Often, the organization focuses on these initiatives for a few months and then turns its attention to other issues. Employees can be left feeling there’s no point in even filling out the survey.
To be clear, feedback in the employee Net Promoter System is also anonymous. However, because it generates detailed, granular feedback from employees on a nearly continuous basis, and because the information is made available to teams and team leaders or supervisors almost immediately, it becomes more compelling and actionable. The team is the core unit of feedback, dialogue and action in the system.
Q. That is exactly what we’ve discovered with engagement surveys as well. The ability to drill down to the team level is what gives managers the insights they need to improve their organizations. So with eNPS, these team leaders can then “close the loop” with employees?
ROB: Exactly. In the Net Promoter System, they can address directly what’s on their employees’ minds in small work groups or teams. Closing the loop takes place through team meetings led by line supervisors, something we generally call the team huddle. When issues are so sensitive that open dialogue in the huddle is difficult, supervisors often appoint a team member as “huddle captain” who can probe for root causes and potential solutions. Companies using this system usually make a point of training supervisors on how to encourage candid, constructive discussions and how to handle potentially challenging feedback or requests for better pay—issues outside the team’s control. The training also emphasizes the importance of involving the team in finding solutions and promptly communicating actions taken and results.
Q. How does the loyalty of employees affect the loyalty of customers while driving growth and profit?
FRED: Engaged employees benefit a company in countless ways. They’re more productive, more innovative, do better work and are less likely to quit than employees who say they aren’t engaged. The connection between an employee’s passionate commitment to a company and customer loyalty is clear, but it can be difficult to quantify because of the self-reinforcing loyalty loop. An employee who is engaged and committed is far more likely to go the extra mile for customers and make sure they’re delighted—and evidence that they have succeeded in delighting a customer by earning 9s and 10s is precisely what motivates and inspires the best employees.
Research bears out this connection. At a retail bank, we found that branches with top-quartile scores on employee engagement generated two-and-a-half times as much customer loyalty as fourth-quartile branches. And the correlation works both ways. A large cell-phone service provider found that stores with the highest revenue had 30% higher engagement scores than stores with lower revenue.
Q. Do you expect eNPS to spread?
ROB: Absolutely. It’s a powerful approach to engaging employees in shaping their own work environment, and it reinforces the power of customer Net Promoter. The Qualtrics platform will be useful in this context, too, because it helps companies solicit and collect feedback in a reliable, consistent way and quickly tabulate the response so that supervisors can take action.
Fred Reichheld is a Fellow at Bain & Company and coauthor of the best-selling book The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World (Harvard Business Review Press, 2011).
Rob Markey is a partner at Bain & Company and leader of the firm’s Global Customer Strategy and Marketing practice. He is coauthor of the best-selling book The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World (Harvard Business Review Press, 2011).