Manage Your HumanSigma
The Employee-Customer Encounter
In manufacturing, value is created on the factory floor
when a product is made available for sale.
But in sales and services, value is created when an
employee meets and interacts with a customer.
Indeed, this employee-customer encounter is the factory floor of
sales and services.
To achieve meaningful operational and financial
improvements, the employee-customer encounter must
be measured and managed.
The Gallup Path
To
reliably
influence
these ...
REAL PROFIT
INCREASE
STOCK
INCREASE
SUSTAINABLE
GROWTH
ENGAGED
RESIDENTS
ENGAGED
EMPLOYEES
... these
must be
managed.
GREAT
MANAGERS
ENTER
HERE
IDENTIFY
STRENGTHS
THE
RIGHT FIT
Whom do you build a company around?
Employees?
Copyright 1996-2000, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.
Residents &
Family Members?
What Is HumanSigma ?
A holistic approach to optimizing a companys
vital signs.
Like Six Sigma, focus on reducing variability and
improving organizational performance.
Unlike Six Sigma, focus on the human aspects of
organizational performance to drive profitability
and growth.
Team Member Engagement
ENGAGED
EMPLOYEES
GREAT
MANAGERS
ENTER
HERE
IDENTIFY
STRENGTHS
Copyright 1994-200, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.
THE
RIGHT FIT
Net Loyal Customer Creation
The Worst
Bottom
3
1%
5%
-31
3rd
QTL
10%
4th
QTL
-14
-2
1st
2nd QTL
QTL 61
88
71
77
40
27
10%
5%
1% Top 7
The Best
-63
-100
100
5,000 CSRs
The Sorting Effect
Poor Question
I feel I am paid the right amount.
Low rating
High rating
Great Question
Low rating
High rating
More productive workgroups
Less productive workgroups
At work, I have the opportunity to
do what I do best every day.
The 12 Questions That Matter
I know what is expected of me at work.
I have the materials and equipment I need to do my work right.
At work, I have the opportunity to do what I do best every day.
In the last seven days, I have received recognition or praise for doing
good work.
My supervisor, or someone at work, seems to care about me as a person.
There is someone at work who encourages my development.
At work, my opinions seem to count.
The mission or purpose of my company makes me feel my job
is important.
My fellow employees are committed to doing quality work.
I have a best friend at work.
In the last six months, someone at work has talked to me about
my progress.
This last year, I have had opportunities at work to learn and grow.
Copyright 1992-1999 The Gallup Organization, Princeton, NJ. All rights reserved.
Gallup Engagement Hierarchy
Opportunities to learn and grow
Progress in last six months
I have a best friend at work
Coworkers committed to quality
Mission/Purpose of company
At work, my opinions seem to count
Someone encourages my development
Supervisor/Someone at work cares
Recognition last seven days
Do what I do best every day
I have materials and equipment
I know what is expected of me
at work
Copyright 1992-1999 The Gallup Organization, Princeton, NJ. All rights reserved.
How
do we
grow?
Growth
Teamwork
Do I belong?
Management
Support
What do I give?
Basic
Needs
What do I get?
Employee Engagement Groups
28%
Engaged
These employees are loyal and
psychologically committed to the
organization. They are more
productive and more likely to stay
with their company for at least a
year.
55%
Not Engaged
These employees may be
productive, but they are not
psychologically connected to their
company. They are more likely to
miss workdays and more likely to
leave.
17%
Actively Disengaged
These employees are physically
present but psychologically absent.
They are unhappy with their work
situation and insist on sharing this
unhappiness with their colleagues.
Q12 2006 Meta-Analysis Study
Information
12
Correlations
Correlationsof
ofQQ12to:
to:
Analysis
Analysisof:
of:
681,799
681,799employees
employees
23,910 business units*
23,910 business units*
125
125organizations**
organizations**
37 industries
37 industries
turnover/retention
turnover/retention
customer metrics
customer metrics
safety
safety
absenteeism
absenteeism
shrinkage
shrinkage
productivity
productivity
profitability
profitability
* Includes business units in 23 countries in Asia,
Central/South America, Europe, and North America
** 20 organizations exclusively outside the United States
Average % Gain/Loss in Profitability
Engagement Drives Profitability
100
78.7
80
60
40
20
0
st
rc
e
P
44.1
ile
t
en
th
10
29.1
th
20
-20
th
th
30
40
-18.1
-40
-8.7
0.0
th
50
8.7
th
60
-29.9
-79.5
70
th
80
th
90
99
-80
-100
th
th
-45.6
-60
18.1
Engagement Percentile
r
Pe
ile
t
en
Nurse Turnover by Quartile
40%
30.3%
30%
18.8%
20%
13.0%
10%
9.9%
0%
Top 25%
Middle Quartiles
Bottom 25%
Q12 Quartile
Copyright 2002 The Gallup Organization, Princeton, NJ. All rights reserved.
205
Employee Engagement & Avoidable
Complications
Bottom Quartile
3rd Quartile
2nd Quartile
Top Quartile
0.87
0.85
0.83
0.81
0.79
0.77
0.75
Complication Index
Correlation-regression analysis of Engagement GrandMean and Complication Index statistically significant at -.23 (n=152)
Employee Engagement & Avoidable Deaths
Bottom Quartile
3rd Quartile
2nd Quartile
0.85
0.8
0.75
0.7
0.65
Mortality Index
Top Quartile
Innovation and Engagement
Innovation Index
My current job brings out my most creative ideas
I feed off of the creativity of my colleagues
My company encourages new ideas that defy conventional wisdom
I have a friend at work who I share new ideas with
Engagement Drives Innovation
30%
Percent
Strongly
Agreeing
With All
Four Items
27%
20%
10%
2%
0%
Not Engaged
Engaged
Of Those That Are
Employee Engagement Related to Innovation
Dollars Saved per Idea Implemented
$12,000
$11,061
$10,000
$8,000
$6,000
$4,065
$4,000
$2,000
$0
Top Quartile Engagement
Bottom Quartile
Engagement
Change Management Index
There is open communication throughout all levels of the
organization.
My supervisor is an active supporter of the changes that affect
our group.
I am asked for my input regarding the changes that affect my
work.
Leaders in my company help me see how changes made today
will affect my companys future.
6% of US working population
strongly agree to all items
Ability to manage change relates to employee
engagement index
Top-quartile on Change Management Index:
77% engaged
23% not engaged
0% actively disengaged
Bottom-quartile on Change Management Index:
1% engaged
45% not engaged
54% actively disengaged
Points of Customer Impact
LOYAL
RESIDENTS/FAMILY MEMBERS
Copyright 2004 The Gallup Organization, Princeton, NJ. All rights reserved.
ENGAGED
EMPLOYEES
Understanding Customer Engagement
When it comes to customers,
feelings are facts.
-Simon Cooper, President & COO,
Ritz-Carlton Hotel Company LLC.
Core Principles of Customer Engagement
1.
Customers are not strictly rational; your most profitable
customers have strong emotional bonds with your company.
2.
Level of engagement drives the long-term financial success you
will have with each customer.
3.
Every time your company touches a customer, they either become
a little more, or a little less, engaged but they never stay the
same.
4.
Simply satisfying customers is not enough. Satisfaction is the cost
of entry; necessary but not sufficient.
5.
Your company has as many brands as there are customer
touch points.
6.
Strong customer relationships must be managed locally.
The 11 Questions
3
L
A8
Overall, how satisfied are you with Brand A?
How likely are you to continue to choose Brand A?
How likely are you to recommend Brand A to a
friend/associate?
I cant imagine a world without Brand A.
Brand A is the perfect company for people like me.
Brand A always treats me with respect.
I feel proud to be a Brand A customer.
If a problem arises, I can always count on Brand A to reach a
fair and satisfactory resolution.
Brand A always treats me fairly.
Brand A always delivers on what they promise.
Brand A is a name I can always trust.
The Emotional Attachment Hierarchy
Passion. This resident/family member feels the brand is
perfect for her, that she cant live without it.
Pride. The resident/family member feels really good about the brand, and
how using or owning the brand reflects upon him.
Integrity. The resident/family members feelings of brand integrity will
depend on whether he is treated fairly by the company, both routinely and
when something goes wrong.
Confidence. The resident/family member feels the brand is trustworthy and
keeps its promises.
Copyright 1994-200, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.
Every company has four different types of
customers
Actively
Disengaged
Fully
Engaged
Not
Engaged
Engaged
Fully Engaged Strongly
attached and loyal. These are
your best customers.
Engaged Somewhat emotionally
attached but not yet fully engaged
Not Engaged Emotionally and
attitudinally neutral; no positive
association
Actively Disengaged Active
emotional detachment; occasional
antagonism
HumanSigma
The HumanSigma approach is based on five
core principles that our research and
experience have found facilitate the effective
management of the employee-customer
encounter:
HumanSigma Principles
(1) Like vital signs, the employee-customer encounter
must be conceptualized and managed holistically.
(2) The employee-customer encounter is fundamentally
emotional.
(3) The employee-customer encounter must be measured
and managed locally.
(4) The effectiveness of the employee-customer encounter
can be quantified and summarized in a single
performance metric the HumanSigma metric that
is powerfully related to financial performance.
(5) Improvement in local HumanSigma performance also
requires attention to a combination of transactional
and transformational intervention activities.
HumanSigma Principle #1:
(1) Like vital signs, the employee-customer
encounter must be conceptualized and managed
holistically.
Because value creation in SSOs flows from the
interaction between employees and customers, both
sides of the employee-customer encounter must be
viewed as interrelated and mutually-dependent
systems that should be measured and managed as a
coherent whole, not as independent activities housed
within separate organizational entities.
HumanSigma Principle #2:
Feelings Are Facts
(2) The employee-customer encounter is
fundamentally emotional.
Because both employees and customers are human
agents, the measurement and management of the
employee-customer encounter must acknowledge
and incorporate the critical emotional infrastructure
of human behavior and decision-making, yielding a
concept that extends well beyond traditional
considerations of employee and customer
satisfaction a concept we refer to as engagement.
Emotionally engaged customers have lower attrition rates
7%
6.0%
6%
5.8%
5%
4%
3.8%
3%
2%
1%
0%
Engaged
Satisfied
Dissatisfied
Copyright 2005 Harvard Business Review School Publishing Corporation.
All rights reserved.
ATTRITION RATES OF BANK CUSTOMERS
(account closures per six months)
AVERAGE MONTHLY SPENDING BY
CREDIT CARD CUSTOMERS
$300
$251
$200
$136
$136
Satisfied
Dissatisfied
$100
$0
Engaged
Copyright 2005 Harvard Business Review School Publishing Corporation.
All rights reserved.
Emotionally engaged customers spend more
HumanSigma Principle #3:
Think Globally, Act Locally
(3) The employee-customer encounter must be
measured and managed locally.
While many other kinds of organizational activities
may be managed effectively from the top down, the
employee-customer encounter is an intensely local
phenomenon whose effectiveness varies
considerably from location to location within the
same company. Because of this variability in local
effectiveness, its measurement and management
must be focused locally.
The majority of Green Zone hotels have
highly engaged work force
Green Zone 54%+
Fully Engaged
70
65
60
Yellow
47%-53%
CE11
Past 12 55
Months
% Fully 50
Engaged
Red Zone < 46%
Fully Engaged
45
40
35
30
3.7
3.8
3.9
4.1
Q12 Grand Means
(4.01)
4.2
4.3
4.4
4.5
The majority of red zone hotels have low levels of
employee engagement.
Green Zone 54%+
Fully Engaged
70
65
60
Yellow
47%-53%
CE11
Past 12 55
Months
% Fully 50
Engaged
Red Zone < 46%
Fully Engaged
45
40
35
30
3.7
3.8
3.9
4.1
Q12 Grand Means
(4.01)
4.2
4.3
4.4
4.5
Three Green Zone hotels have less engaged
workforces
Green Zone 54%+
Fully Engaged
70
65
60
Yellow
47%-53%
CE11
Past 12 55
Months
% Fully 50
Engaged
Red Zone < 46%
Fully Engaged
45
40
35
30
3.7
3.8
3.9
4.1
Q12 Grand Means
(4.01)
4.2
4.3
4.4
4.5
Red Zone hotels with more engaged work
forces
Green Zone 54%+
Fully Engaged
70
65
60
Yellow
47%-53%
CE11
Past 12 55
Months
% Fully 50
Engaged
Red Zone < 46%
Fully Engaged
45
40
35
30
3.7
3.8
3.9
4.1
Q12 Grand Means
(4.01)
4.2
4.3
4.4
4.5
HumanSigma Principle #4
(4) The effectiveness of the employee-customer
encounter can be quantified and summarized in a
single performance metric the HumanSigma
metric that is powerfully related to financial
performance.
Our research has revealed that the two sides of the
employee-customer encounter potentiate one another
and can be quantified into a single HumanSigma
metric. The interactive effects of employee and
customer engagement at the local unit level
exponentially drive operational and financial
performance and growth.
HumanSigma Quadrants
70%
1.7
boost
240%
3.4
boost
Optimized
1.0
70%
1.7
boost
HumanSigma Principle #5
(5) Improvement in local HumanSigma performance
also requires attention to a combination of
transactional and transformational
intervention activities.
Transactional activities, such as action planning and training,
are cyclical interventions that tend to be more topical and
short-term in focus, but recur regularly. Transformational
activities, on the other hand, are structural interventions that
focus on how companies select employees, select and
promote managers, pay and appraise employees, do
succession planning, and recognize and develop employees.
Transformational activities are focused on creating an
organizational infrastructure that supports HumanSigma.
Progress on Goals During Impact Planning
Q12 GrandMean in Wave II 2006
4.7
Did not make progress
on action planning
goals
Made progess on
action planning goals
4.5
4.3
4.1
3.9
3.7
3.5
3.3
3.1
2.9
2.7
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
Q12 GrandMean Wave I 2005
4.5
4.7
Patients and Physicians Have Similar
Perceptions of Nursing for Health System
Physician perceptions of nursing and care delivery
Score
Percentile
Delivered quality care all shifts/departments
3.31
30th
Overall quality of nursing care
3.54
26th
Nurses judgment when to call doctor
3.62
30th
Competency of staff nurses
3.64
34th
Teamwork between doctors and nurses
3.74
36th
Score
Percentile
Nurses anticipated needs
3.25
14th
Nurses explained procedures
3.31
10th
Nurses helped calm fears
3.32
11th
Nurses responded to requests
3.27
13th
Patient perceptions of nursing and care delivery
Considerations for Potential Role-Fit
Past
Performance
Talent to Role Fit
(Gallup Assessment)
Overall Fit Position,
Culture, and
Relevant
Team
Skills &
Knowledge
Impact of Nurse Talent on Patient
Service
10
9
8
7
6
Recommend
Conditional
Non-recommend
5
4
3
2.75
1.5
2
1
0
Patient Service: Number of positive comments spontaneously volunteered
by patients per nurse annually
Associates Who Were Selected For Talent Are More
Engaged
4.40
4.40
Under Cut Off
Made Cut Off
4.30
4.23
4.20
Q12 GrandMean
4.20
4.10
4.08
87th
4.00
3.90
83rd
74th
91st
3.98
82nd
60th
67th
60th
3.80
Sales
Marketing
Front Office
Service Fulfillment
HumanSigma Summary
(1) The employee-customer encounter must be
conceptualized and managed holistically.
(2) The employee-customer encounter is fundamentally
emotional.
(3) The employee-customer encounter must be measured
and managed locally.
(4) The effectiveness of the employee-customer
encounter can be quantified and summarized in a
single performance metric the HumanSigma metric
that is powerfully related to financial performance.
(5) Improvement in local HumanSigma performance also
requires attention to a combination of
transactional and transformational intervention
activities.
