It’s not JUST about engagement

http://www.getfeedback.net

Measuring the Success and Returns of Employee Engagement

Getfeedback with RWE npower

Alison Gill & Jon Cowell

Who Are Getfeedback?

In the Business of Talent

Shaping and measuring investment in people

Best in class consultants and technology – delivering to global organisations

N o r m s f r o m 3 6 5 , 0 0 0 + r e s p o n d e e s f r o m t h e l i k e s o f …

E m p l o y e e R e s e a r c h E x p e r t i s e

• B u s i n e s s p s y c h o l o g i s t s

• B e s t i n c l a s s d e v e l o p e r s

• S t a t i s t i c i a n s

• P r o j e c t m a n a g e r s

Agenda

Who is RWE npower? What is the problem? The missing link - the people agenda Our challenge Our response Measurement and analysis - defining the model The people agenda - putting the model to work The case for measuring and managing engagement Conclusions

Who is RWE npower?

CEGB National Power: Privatisation

National Power National Shower: Internationalisation

National Power Innogy: Focus on Transformation and Integration

Innogy RWE npower - Focus on Growth through Excellence…

… in two very different fields

What is the problem?

Technology is key vs customer is king

We work to keep the lights on vs we work to keep our customers

Employees are committed vs employees have transferable skills

Engagement with job content vs engagement with job context

Knowledge workers vs production workers

The missing link - the people agenda

Q: How do you develop a people strategy which meets the demands of two very different bedfellows?

A: Not by trying to create a single strategy…

Engagement

Drivers*

Knowledge

Workers

Production

Workers

Manager #4 #1

Senior Leadership

#2 #4

Values #3 #3

Work Life #1 #2

Values(#2)

Values(#2)

Senior Leadership

(#3)

Senior Leadership

(#3)

EMPLOYEE ENGAGEMENT

• Overall Satisfaction• Advocacy

EMPLOYEE ENGAGEMENT


Direct Manager(#4)

Direct Manager(#4)

Values(#2)

ValuesSenior Leadership

(#3)

Senior Leadership

EMPLOYEE ENGAGEMENT


EMPLOYEE ENGAGEMENT• Job Satisfaction• Advocacy• Retention

Direct Manager(#4)

ManagerValues(#2)

Values(#2)

Values(#2)

Work Life

Values

Manager

* Based on PeopleMetrics’ proprietary research on employee engagement among knowledge workers and production workers at 40+ global 2000 companies

Drivers of Engagement

The missing link - the people agenda

Q: How do you develop a people strategy which meets the demands of two very different bedfellows?

A?: By really understanding the key drivers of value creation in each part of the business, and focusing on the things you can do something about

The Employee Engagement and Customer Satisfaction Cycle

From “Achieving Breakthrough Service”. Sept/Oct 1997 Harvard Business Review

InternalServiceQuality

Employee Satisfaction

Employee Retention

ExternalServiceQuality

Customer Satisfaction

Customer Retention Profit

Profit and growth are stimulated primarily by customer loyalty Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.

The Profit Chain

Our Challenge

171313

10988

43

Car insuranceGas supplier

Electricity supplierHome insurance

Mobile phone network provider Home telephone

Credit card accountMortgage

Bank account

Q. For which of these do you think that you will change provider in the next 12 months

Base: (223)

27/3-23/4/06

Our Response

npower Retail vision: Turning Customers into Fans npower ‘wheel’: integrated performance measures

Measure Example Metrics

I only ask once A customer moving home, who wants to stay with npower

New address etc. right first time

Our Response - a worked example

Switching is now less supplier event driven (door-knocking), and more customer event driven (moving house).

Many triggers for customers to switch: poor service experience - we can do something about.

‘Right first time’ rate is an obvious metric to watch as an indicator of service performance.

Building the model for registering a new address



Employee Retention




Direct impact of rework costs on cost to serve reduces profitability




Employee Retention




Poor service experience reduces satisfaction and increases risk of customer defection, and hence reduces profitability




Employee Retention




Frustrated customers are often unpleasant to deal with, reducing employee satisfaction and retention …..

….. which in turn erodes competence and hence service quality

Building the model for registering a new address - ‘straw man’

ManagementCapability

Employee Engagement

Employee Competence


Customer Retention

Cost to serve

Profit

% right first time

Employee Tenure

SystemsCapability

Training Investment

Building the model for registering a new address - ‘straw man’

Employee Engagement

Employee Competence

%right first timeExpert

CompetentNot yet competent

Fully engagedEngaged

Disengaged

Putting the model to work

Linkages are articulated empirically. By measuring competence and engagement, we can develop

a monetized value for each shift in a particular metric (e.g. ‘not yet competent’ to ‘competent’) and hence an ROI curve.

This sits at the core of our people strategy

Provides us with a very clear definition of what constitutes good managerial performance, e.g, outcomes rather than processes

Expert

Competent

Not yet competent

Not engaged Somewhat engaged Engaged

Performance = Competence X EngagementC

ompe

tenc

e

Engagement

New starts

Terrible twos

Knowledge workers

Newly promoted

Why do we believe in this approach?

General case for link between engagement and productivity is now well established.

The model provides predictions, which can be tested and the size of effects can be determined with high levels of confidence due to large data set.

There are precious few other levers we can access directly to impact performance.

Top 100 listed firms v FTSE 100

Linking Human Capital to Business Results

Workforce Proficiency

Workforce Performance Employee Engagement Workforce

AdaptabilityHuman Capital Efficiency

Productivity Quality Innovation Customers

Key Performance Drivers

Economic ValueAdded

Revenue Growth Market Share Stock Performance

Business Results

Human Capital Processes

Competency Management

Career Development

Performance Appraisal

Succession Planning/ Leadership Development

Recruiting Workforce Planning

Workplace Design

Rewards and Recognition

Employee Relations

Human Capital Strategy

Learning Management

Knowledge Management

Human Capital Infrastructure

Leadership

Human Capital Capabilities

Tier 1

Tier 2

Tier 3

Tier 4

Source: Accenture Institute for Strategic Studies

Engagement Logic

An engaged employee is someone who cares and will “go the extra mile”.

Strong leadership, opportunities for personal development, good management, decent pay and benefits, a reasonable work-life balance, fun activities which help build close-knit teams, and staff believing the firm to be ethical

= levels of engagement will tend to be high.

Engaged/Disengaged Analysis: Example

Disengaged(12%)

On the Fence(26%)

Engaged(38%)

Fully Engaged (24%)

On the Fence EngagedKey factors are:• I have a sense of accomplishment in my job

(1.67*)• My manager provides the information I need to do

my job (1.54*)• Senior leaders’ actions are consistent with their

words (1.48*)• ABC cultivates an environment where each of us

can excel (1.48*)• ABC values outstanding people (1.33*)

Engaged Fully Engaged

Key factors are:• ABC cultivates an environment where each

of us can excel (1.75*)• ABC is a socially and ethically responsible

organization (1.50*)

* Increase in odds of an employee moving from a lower segment to higher segment (e.g., On the Fence to Engaged) if his/her rating on that item is increased by one unit (e.g., from 4 to 5)

Disengaged Engaged• No significant drivers were found

Impact of employee engagement

Employee engagement has been empirically linked to business outcomes through its impact on workforce productivity

Engaged Employees

• More satisfied• Less likely to leave• More likely to

recommend

Enhanced Productivity

• Enhanced quality• Better performance reviews

BusinessOutcomes

• Increased revenue growth

• Increased EPS

Conclusions

A focus on engagement enables us to drive up the motivational aspects of our performance.

It is the combination of engagement and competence which drives performance.

Demonstrating not only that the links exist, but the size of the effects enables the creation of an effective ROI model for investment in competence and engagement.

This defines the people strategy.

Challenges

Getting clarity of vision has been essential to gaining buy-in of HR community and senior management.

Establishment of Retail Survey Action Group provided the mechanism for educating the business and HR function.

Not all that common to find HR people (or senior managers) with good experience of employee research …… hence we work with Getfeedback

It’s not JUST about engagement

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