Should you link employee goals, performance reviews and variable compensation to Customer Loyalty/CX measures? A simple question that lends itself to a complex “yes, but . . . “ answer.
- We know that loyal customers are good for business and that the customer relationship is a good predictor of future customer behavior that creates (or destroys) value for the firm.
- We know that employees are key to delivering great customer experiences, connecting with customers and building the bonds of loyalty.
- And we know that clearly articulated goals and incentives help focus and drive employee behaviors.
Sounds like a slam dunk. In reality, however, this is a minefield that requires careful navigation.
Motivate and Channel
Yes, the ideal employee is self-motivated. But if you think that all you need to do to get employees to deliver great experiences is to hire those who are self-motivated, good luck. Look at the gene pool; does anyone see an abundance of self-motivated people (at all levels of skill and salary) readily available?
Even when you have skilled, self-motivated staff, they need incentives, recognition and direction. Just asking staff or associates to do everything they can to improve the customer experience is like telling people to be nice: it’s a bit too soft and fuzzy to have much meaning.
If you want to motivate or encourage employees to do something, they need to know what you want them to do. What are the goals? What specific behaviors are required? How will performance be measured? At a bare minimum, this is necessary to help set priorities, allocate resources and channel energies.
Goal Setting and Measurement
Of course, the rule is that we should use SMART goals – Specific, Measureable, Achievable, Relevant and Time-bound (or some variation thereof on the acronym). At an executive level, this is challenging with regards to CX. Infusing this throughout the organization for CX is even more daunting.
- What are the measurements?
- Are the measurements accurate?
- Are they meaningful?
- How will goals be set?
- Are there sufficient resources for improvement?
- Do people feel empowered?
- What about staff that don’t directly interact with customers?
The challenges multiply sharply as you move from “hard” measures – say, for example, sales, profits or the time to complete some process – to “softer” measures, such as loyalty or delight with a recent experience. The Voice of the Customer, however, is captured in such softer measures that bring with it a host of issues.
How large is the sample, for example. Quite frankly, I’ve seen any number of instances where samples are so small and the associated sampling error is so large that savvy employees could have easily challenged the validity of the metrics being used to assess their performance and make decisions on variable compensation.
At a macro level, the company must be concerned about the representativeness of its VoC data, the mode of data collection and possible mode effects, weighting and a host of other issues inherent in data collection. All of these issues are magnified at a micro level when applied to a subset of employees or even an individual employee. These issues are even more poignant when relying on social media, comment cards or unsolicited feedback.
Some Dos and Don’ts
There is no ideal way to weave VoC metrics into performance assessment and comp plans. Every approach will have its strengths and weaknesses. Here are some tips for managing the quagmire.
- Keep your business objectives in mind: motivating employees to deliver great customer experiences that strengthen customer relationships and a system for recognizing and rewarding employee performance
- Pick some common corporate goals: while everyone complains they can’t affect such overarching metrics (actually, they only complain when the goals are missed), it is important to have some shared company-wide goals to nurture a culture of shared success and common purpose
- Link and align both macro (company-wide) and micro(group or individual) metrics to those business objectives: while seemingly obvious, do not promote behaviors that run contrary to the business objectives and never give some staff goals that are incompatible with the goals of others, especially their managers
- Give the What and the Why: Enumerate the goals and how they will be measured; also explain both how the goals were developed and why the goals are important (that is, how they feed into the larger business objectives)
- Train and empower (the How): telling people what to do must be supported by training, investment and providing the processes and tools for them to be successful
- Involve employees: you’d be amazed at the ideas people have for how to achieve objectives and improve customer experiences
- Communicate (over and over again): over-index on frequent, open, honest communications and complete transparency; avoid black boxes at all costs
- Make sure goals are realistic: nothing is worse or more counterproductive than goals that are dismissed out of hand as impractical
- Model behavior: senior leadership is part of the process, not above the process; they need to walk the talk, not just mouth it
- Don’t breed risk aversion or stifle innovation: you might need a carve out or other ways to avoid deterring new ideas and risk talking
- Watch out for unintended consequences: they always pop up, typically when least expected
- Unfortunately, also be wary of efforts to game the system (AKA cheating): As W.C. Fields put it, “anything worth having is worth cheating for,” so there always will be those who try put their thumb on the scale in some manner
- Take a slow test drive: test you metrics, set a baseline, set and track against soft goals before going live
This is a daunting list, and there no doubt are other dos and don’ts worth adding. It sure won’t be easy. But nothing worth the effort ever is.