Engagement key to business performance

by 01 May 2008

EXECUTING FLAWLESSLY in either employee engagement or customer engagement is not sufficient to create enhanced value for an organisation, according to Dr John Fleming, chief scientist customer engagement and human sigma at Gallup.

Instead, both areas must work in harmony to have any real impact on profitability he said. Speaking at the recent launch of Gallup’s new HumanSigma management approach – which focuses on more effectively managing the moment where employees interact with customers as a driver of success – Fleming said that if these two departments work together they can have a huge impact on profitability.

The study shows that if you fully engage your employee but not your customer you get about a 70 per cent boost in performance. If you fully engage your customer but not your employee you get about a 70 per cent boost in performance. If you engage both, you get a 240 per cent boost in performance.

“When the body’s heart and respiratory system work in harmony they create the vital sign of blood pressure, a real indication of how your systems are working together. The same is when employee engagement and customer engagement are working in harmony it creates the vital sign which is finance or performance,” said Fleming.

Companies who have both engaged employees and customers outperform their top five peers by 26 per cent growth and 85 per cent in sales growth according to a Gallup study which measured customer engagement and employee engagement in 2000 different business units within 10 companies.

“Employee engagement is often owned by HR and customer engagement owned by marketing. We believe that within the next five to 10 years we will be seeing more companies begin to merge their functional silos around their human systems into single organisational entities,” he said.

Effective customer engagement is fundamentally emotional, according to Fleming. It was found that rationally satisfied customers behaviour is no different to dissatisfied customers. They key value add is emotionally engaged customers and this is due to the fact that human beings make decisions based on feelings rather than facts.

“One of my goals in life is to eradicate customer satisfaction management from the business landscape because I do believe it’s bad for businesses to focus on that, it doesn’t return the value that most companies think it does,” said Fleming.

Furthermore an emotionally engaged customer delivers about a 23 per cent premium in terms of revenue growth and profitability. An actively disengaged customer delivers about a 13 per cent discount. So they cost you money to have on the books he said.

In Australia 21 per cent of employees are fully engaged and about 18 percent are actively disengaged. So for every one person who is contributing, innovating and adding value to the firm, there’s another employee taking all that apart, said Fleming. A further six out of 10 employees are what he described as ‘clock-watchers’. They show up, don’t give any discretionary effort and do not add anything to the bottom line.

“If you want to drive high levels of employee engagement you have to deal with more fundamental levels of the emotional connection that employees have with your business,” he said.

This involves measurement of their basic needs, such as do you have a best friend at work, do you have the tools needed to do your job, do you have management that care about you and do your opinions count in work?

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