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.
Agree with your do’s and don’ts for driving what I define as employee ambassadorship, essentially the linkage of customer experience and behavior to employee experience and behavior; however, from my ‘glass is half full’ perspective it’s much more of an enterprise opportunity than a quagmire. Getting the VoE metrics right (and actionable re customer experience), is at least as important as the VoC metrics.
I’ve always taken the words of Hal Rosenbluth and Diane Peters, from their seminal book, ‘The Customer Comes Second’, as instructive: “Companies are only fooling themselves when they believe that ‘The Customer Comes First.’ People do not inherently put the customer first, and they certainly don’t do it because their employer expects it. We’re not saying choose your people over your customers. We’re saying focus on your people because of your customers. That way, everybody wins.”
Hard to disagree with any of your points. I thought this was going to be a post about motivating employees to focus on CX and the role of VoC input into performance assessment. But it ended up being a piece on goal setting. So, here is another angle. Hope it triggers some dialogue about a topic we make complex..
What if organizations focused on encouraging employees to love their organization and brand? Employees who deeply care about the reputation of their company (like they owned it) will take care of customers and take care of the bottom line. It is more than “employee engagement” which is a BS label–all employees are either engaged or dead!! It is about passion and a sense of ownership.
Coach K of the Duke University Men’s basketball team tells his players to take care of the team and play their very best and the fans will be happy! He has had an extraordinary record. Sure he uses all manner of stats and goals to coach. But success comes from individual and collective zeal, not obedience. Might that be a worthy perspective for employees.
I am proud of my 50 year marriage. The success of the long relationship comes from a passion for the union and a commitment to a partnership and has little to do with whether my wife gave me a good performance review or used the proper incentive to get me to take out the trash!!
One last point. There are plenty of talented people who are self motivated. Just ask Ritz-Carlton, Zappos, Google and Disney!!
It’s a great article and the ensuing comments have also hit the mark for me. I’ll just add this point:
You can drive rewards any way you like but unless the people have the right mindset the rewards will only result in lip service. Rewards alone will not bring about culture change.
One of our clients found this out the hard way when the CEO wanted to embark his organisation on a CX journey only to find out through our assessment that the executive team was not on board with him at all.
CEOs: make sure that when you call out “Follow Me!” that there is actually someone behind you.
I completely agree that there is no substitute for having employees with a passionate commitment to the company. that said:
* Even passionate employees need direction on where they should focus their efforts, set priorities and the most important behaviors.
* Sure, I agree more than ever that companies should hire for attitude as much (or perhaps more) than for skills. But please be practical: THERE AREN’T ENOUGH PEOPLE WITH GREAT ATTITUDES TO FILL ALL EMPLOYEE ROLES. The fact that you can cite 4 or, for that matter. 40 or even 400 companies with an outstanding CX reputation by no means implies that it is anywhere near realistic to think that every employee at every firm will meet these standards. For these employees that aren’t self-motivated, it is all the more important for the company to provide the structure, guidance and incentives to channel employee behaviors.
Yes Howard Lax, We need the passion to succeed and the structure to win.
Thanks for your comments. Could it be that self starting employees are attracting to great companies because of their customer centric cultures? Your post focuses on trying to direct and mold employee behavior to be more customer focused and my point is leaders attracting and inspiring the greatness within employees. My favorite question to leaders is this: How would your leadership change if all your employees were independently wealthy full time volunteers??
Agree with Howard that this is an important issue, and no simple/easy answers.
But I think Chip nailed it, too. Leadership is not just about finding the right set of measures and rewarding the right behavior — although surely that’s not something to be ignored. Based on my customer-centric research, measures and rewards was a very weak differentiator between leader and laggard brands.
Great leaders are passionate about their cause, and it isn’t “maximizing shareholder return.” They attract like-minded people (and repel those who don’t share that passion) so to extent you could call that molding the culture. But it’s more nuanced than just dangling the right carrots in front of people.
One of my favorite examples comes from an interview years ago with an Amica employee. Amica is well known for great service and a customer-centric culture in the insurance industry. I asked what managers did to motivate her, and her answer was “nothing.” She said that the culture was such that everyone wanted to serve customers and do their best.
KPIs can almost always be “gamed” by those chasing the reward instead of really being committed to the mission. Leaders, and they example they set, makes all the difference in the world.
Agree with Bob and Chip. Leadership, especially servant leadership, is essential for both creating and sustaining a proactive and stakeholder-centric culture of employee ambassadorship. In 2004, David Cole, Honeywell International’s CEO at that time, told the company’s 120,000 employees: “Every Honeywell employee is a brand ambassador. With each customer contact, and whenever we represent Honeywell, we have the opportunity to either strengthen the brand or cause it to lose some of its luster and prestige. Generations of Honeywell employees have built our powerful brands with their hard work, spirit of innovation, passion for quality, and commitment to customers. I am counting on every Honeywell employee to continue that legacy.” Note that Cole was speaking to ALL employees performing as ambassadors, in every function and location, at every level, and whether that person was customer-facing or not.
I don’t think any of us disagree per se: the ideal situation is when a company has inspirational leadership and self-motivated employees. Now what?
Chip mentions Disney as an example. But DIsney is BY FAR the largest private sector employer in Orlando. Unless Orlando is uniquely blessed with a population of self-motivated go-getters, Disney must work at cultivating a culture that motivates the behviors they want employees to embrace.
Michael always speaks about employee ambassadorship. The question is are ambassadors born or made? Sure, some people have it in their DNA it seems. But that is a distinct minority. If they are born, there aren’t enough even to fill the ranks of the 2+ million emplyees of Wal*Mart.
So companys have to find a path to “motivating” employees by creating, instilling, supporting and incenting the right behaviors.
Some employee ambassadors are born, but they are rare as hens’ teeth. Most ambassadors are made, not by leveraging job satisfaction or the alignment and productivity of engagement but through direction from leadership, stakeholder-centric enterprise culture, hiring, mentoring, training, reward, recognition, and communication continuity.