As the customer experience industry gains momentum, an increasing number of its proponents are asking the question, “Should we compensate employees and managers based on the quality of customer experiences provided? And, if so, how?”
It makes sense, right? If a company understands the impact that exceptional experiences have on long-term business growth, it should reward employees for contributing to those experiences.
Unfortunately, it’s really not that simple.
Understanding Motivation
When was the last time you bought or leased a new vehicle? Did you encounter the clichéd “arm twisting” from your sales consultant? In some instances, solely rewarding certain behaviors can encourage the wrong behaviors and, by extension, destroy the quality of the customer experience. Furthermore, offering extrinsic rewards is often not the only, or indeed, most effective method for driving desired behaviors from front line employees.
Rob Markey in the ominously titled HBR article, The Dangers of Linking Pay to Customer Feedback, examines some of the inherent risks of the practice. He discusses negative behaviors such as a hyper focus on the score, gaming the system, and jaded employees who feel cheated owing to unstable metrics.
Further, Dan Pink, the wildly popular behavioral theorist and author of Drive: The Surprising Truth About What Motivates Us, argues that the “carrot and stick” approach of traditional compensation is actually counterproductive. Pink cites several research studies demonstrating that when money is involved it can suck the purpose and fun out of the innate accomplishment of work. He instead encourages leaders to tap into three intrinsic human motivators: autonomy, mastery, and purpose.
PeopleMetrics research has revealed that a company’s “customer focus” is actually a driver of Employee Engagement. Our 2011 Employee Engagement Trends Study found that employees who work in a company that emphasizes customer focus as a part of its strategy are nearly twice as likely to Agree or Strongly Agree that they plan to continue working for their current employer, that they go above and beyond for customers, that they would recommend their employer, and that they love their current job.
In addition, employees who receive positive customer feedback are 4.5 times as likely to be engaged at work compared to those who do not receive this feedback. Leaders should not assume that motivation only stems from the promise of more money. A sense of accomplishment, success, and the chance to have a meaningful impact within the organization can be an equally powerful motivator. That said, building customer experiences into a company’s reward structure can send a crystal clear message about how important the experiences are to the company and its leaders.
How to Reward
In the article, Connecting Frontline Staff to Customer Experience: Two Conundrums, Forrester Analyst Kerry Bodine examines this issue and finds no clear answer or simple best practices. She writes, “As an analyst, it’s always fun to step into big steamy pile of conflicting opinions and philosophical beliefs.” It can be messy. Approach the issue with caution, be clear about your messaging and measurement, and ensure that your managers and employees are intrinsically motivated to deliver exceptional experiences. The following are some recommended ways of doing this.
Autonomy: Before rewarding based on experiences, ensure that employees are free to be genuine in their work and that that they feel invested in the customer experience. We found in our Trend Report that employees who report that they are empowered to do right by the customer are 3x more likely to be Engaged than those who report that they feel unempowered. These empowered employees also report that 88% of their customers are loyal compared to unempowered employees who feel that only 53% of their customers are loyal.
So how can leaders empower employees and create autonomy in their work?
- Provide direct access to customer feedback and scores.
No one will buy-in to a program that they don’t understand. Share the scores, share customer feedback, and provide a space where employees and managers can discuss the “why” and “what next” behind the feedback scores
- Identify, remove, or re-design policies and procedures that inhibit genuine interactions with customers
If you want your employees to deliver the best in customer experiences, it’s important that they don’t feel limited by a company’s policies and procedures that may serve to do the opposite. Trusting employees to be themselves and to do the “right thing” for the customer is important if an emotional connection is to be forged
Mastery: Acknowledge that humans seek to be experts and appreciate being involved. Build this internal motivator into your customer experience program
- Encourage employees to provide suggestions and correct ongoing customer issues
Employees see things that you can’t. Tap into this knowledge and make it easy for employees to provide suggestions and see the impact of their own feedback
- Give employees the knowledge and tools to deliver
We cannot change or improve if we don’t know we need to or how to. For employees to become masters at customer experience, it is the role of leaders and managers to help them to understand what the company’s great customer experience looks like and what they specifically need to do to deliver it. Mining customer feedback for the behaviors that get recognized is a great starting point
Purpose: Finally, and perhaps most importantly, we all want to feel that our work matters, that it is meaningful, and that we are actively contributing to something worthwhile
- Tie your customer experience initiatives to organizational purpose, mission, values, and success
For instance, most suppliers of customer feedback software are able to tie customer experience metrics to other business KPI’s. Seeing this at a department level can be highly impactful to your front-line employees
- Share the results of employee work
Adam Grant, Wharton Professor coined the term “outsourcing inspiration” to describe the act of bringing in customers and end-users to speak with engineers, accountants, and other internal employees. Seeing how people are interacting with and benefiting from the employees’ work provides context and motivation that far exceeds a bonus
“Show Them the Money!” is Not Enough
Rewarding people who deliver exceptional experiences should be an item on any customer experience agenda. However, monetary rewards may not be enough to motivate employees to offer the best experience possible. It’s important to approach a rewards program with caution, once expectations have been set, employees have been educated, and there is cultural alignment.
Most of all, employees need to connect emotionally with the company’s customer experience vision before any external reward is introduced. Autonomy, mastery, and purpose will start the engine while a well-designed reward structure will keep it running.
Janessa Lantz contributed to this article.
Kate: thanks for the insightful study. Making sure employees and managers are accountable for positive customer experiences is a great idea, but I question whether tying an employee’s compensation to customer experience is the right thing to do.
1. Customers are not always the expert. A heretical idea to some, I’ll admit. But customer opinions must be considered in the context of several variables. Some employees can deliver truly outstanding service, but it’s not always recognized. Which brings me to point #2 . . .
2. Customers can perpetuate racial and ethnic biases, and employee compensation can be unfairly influenced. I wrote about this in a 2009 Blog, Race and Gender Impact Employee Service Bonuses..
3. Goal conflict still rules in most organizations–at least in my experience. Here’s an example from the article: “Trusting employees to be themselves and to do the “right thing” for the customer is important if an emotional connection is to be forged.” and “Tie your customer experience initiatives to organizational purpose, mission, values, and success.”
While I emphatically agree with both, I’m unclear how to reconcile the conflicts created when imposing these simultaneously. An employee cannot consistently “do the right thing” for the customer if the employee has a cause he or she is expected to support. Bringing that cause to the problem biases how a problem is defined in the first place.
So “doing the right thing” isn’t as easy as it seems. Eliminating goal conflict is part of the battle. An overarching challenge for any measurement system–especially one tied to compensation–is to instill fairness and objectivity for all employees. My concern is that adding customer feedback into the mix may solves some headaches, but will create others.
Andrew,
Thank you for your comment, you raised some good points. This is a really tough issue and we like Bruce Temkin’s response: (http://experiencematters.wordpress.com/2010/07/29/should-customer-feedback-scores-drive-compensation/),”The bottom line: Companies should tie compensation to customer feedback scores… slowly.” Changing the compensation structure will certainly create new headaches, I think the key is in being prepared, being aware, and being ready to make adjustments as needed.