“The interaction between an employee and a customer – what we call the employee-customer encounter – is the new factory floor.”
Human Sigma, page 16
We’ve all heard of Six Sigma and how it has revolutionized the manufacturing process. But how does it fit into an increasingly service-based economy that we have today? The simple answer is that it doesn’t. Six Sigma deals with inputs like metal or glass that have predictable and consistent qualities. The inputs in a service economy are (gasp) humans – customers and employees who are unpredictable, unique, and even irrational sometimes. This is where Human Sigma comes in.
John H. Fleming and Jim Asplund are Principals at top research firm Gallup. They explore the need to effectively measure and manage the employee-customer interaction in order for organizations to survive in an increasingly competitive marketplace. Based on research from 10 million employees and 10 million customers around the globe, the authors use compelling case studies and scientific evidence to prove that intangible assets (people) have a measurably significant impact on a company’s bottom line.
Pay Attention to the Vital Signs
“Employee engagement does have a direct and measurable relationship to and impact on customer engagement.”
Human Sigma, page 201
Throughout the book, Fleming and Asplund compare organizations to the human body. A healthy body requires all parts to work in coordination with each other – the brain tells the heart to pump blood, the lungs to pump air, the stomach to process food, etc. Similarly, a healthy organization requires collaboration and commitment to shared goals across departments and business units.
In today’s service based economies, the two vital signs are customer engagement and employee engagement. Human Sigmaprovides convincing research that shows business units with high customer engagement and high employee engagement are 3.4 times more financially effective than those which ranked low on both levels. Furthermore, business units that had high customer engagement and low employee engagement (or vice versa) were only 1.7 more effective than those that ranked low on both levels.
GEM # 1
Measure Accurately and Act Accordingly
“Far too many companies treat their customer and employee metrics as ends unto themselves rather than as a means to a higher end.”
Human Sigma, page 224
In typical organizations, Operations measures customer satisfaction, while Human Resources measures employee engagement. Unfortunately, in most organizations, these metrics are not shared between departments. This means that solutions meant to increase either or both are ineffective because the two are inextricably linked. Measuring the customer-employee interaction is critical to determining an organization’s health.
You need to define the current and ideal benchmarks for customer satisfaction and employee engagement. You need to ask the right questions and obtain feedback (usually through both random and regular surveys) to determine what appropriate actions need to be taken. Depending on the results, it is important to probe the interactions more deeply. For example, if customer satisfaction is low, yet employee engagement is high, then perhaps you need to investigate the feedback or direction that employees are given, and whether it matches up to what it takes to provide excellent service.
GEM # 2
Think Globally, Measure and Act Locally
“Within the same airlines, some flights are never on time; some always are. Within the same retailer, one store delivers exceptional service; another struggles to drag customers through the door. Within the bank, some branches are exceptional places to work; others are awful.”
Human Sigma, page 188
We’ve all experienced this. We have a friend who works for a company ranked as one of Canada’s Top 100 Employers who hates it. We have a favourite dish at a restaurant chain that tastes differently at another location. Variability is a part of a service-oriented business, but reducing variability is key to winning the hearts of your customers.
From a leadership perspective, it’s important to convey a consistent message and goal across all business units. However, when measuring for health, it’s important to drill down to the local business unit. Appraising a summary of customer satisfaction results for the entire organization won’t help you determine which particular branches are doing exceptionally poorly. Nor will it help you determine which branches are doing spectacularly; knowledge that would help you identify best practices and apply them to the low-performing branches. Think Globally. Measure (and Act) Locally.
Although this book is geared towards senior leadership in large organizations, any organization that faces the challenge of satisfying customers and engaging employees will find the research useful. While, intuitively, we know that satisfied customers and engaged employees lead to successful companies, Human Sigma provides real-life metrics and scientific studies that make the argument more compelling.