I’ve spent a lot of time in the last six  months talking about the results from my organization’s third biennial national benchmark study on Workforce Engagement.  More and more of these discussions have revolved around the concept of ROI (return on investment), and the linkage between employee engagement and customer retention.  As the economy soured, CEO’s began to look at their employees a little bit differently, not just as a “cost of doing business”, but an investment that could differentiate their organization from their competitors.

I have developed  ten reasons companies should concern themselves with both employee engagement and customer satisfaction. So, with homage to fellow Hoosier and Ball State graduate David Letterman…

10. Customers who are committed to your company will continue to buy your products and services, will buy more of your product line when appropriate, will recommend your company’s products and services to associates and colleagues, and will not allow your competition to get a foothold in their company.  Today’s fragile business economy further defends the need to understand and manage relationships with your customers.

Employees who are engaged with their organizations will stay longer, work harder, recommend the company as a good place to work (and buy from), and  go the extra mile.  The actions of your employees are affected every day by your company’s  policies and procedures as are the actions of your customers.  Does anyone question the linkage between the two?

9. In The Loyalty Effect, Frederick Reichheld lists seven economic effects associated with employee loyalty, developed over the last decade by Bain & Company: Employee referrals, customer referrals, customer selection, customer retention, training, efficiency, and the overall investment the company makes in recruiting and hiring workers. This just ain’t Drizin talking, this is quantifiable data by a leading international consulting company.   And I had the pleasure of working with Fred during my time in a different work-life.  Heck, we were even quoted in the same Harvard blog a couple of weeks ago.

8. As products become more and more difficult to differentiate, the importance of your after-sales care and support becomes more crucial. In study after study the areas receiving the lowest scores from customers were the interactions these customers had with people. Although customers may be “satisfied” with their vendor, significantly less of them have a positive impression of customer service, account representatives, billing and finance, help-desk support, and warranty and repair services.

7. Customers purchase products from your company, but they form relationships with your people.  Simple.6. Committed employees create satisfied customers who purchase more products and services. You know the numbers… In the famous Sears study, an increase in employee satisfaction of 5 percent led to an increase in customer satisfaction of 1.3 percent, which increased same store revenue by .5 percent. That can make a world of difference to a company’s bottom line – just ask Sears.

5. Low customer and employee turnover does not, by itself, indicate future success.  Just because customers and employees aren’t leaving your organization, it doesn’t mean they are acting and behaving the way you need them to on an ongoing basis. Customers and employees can both be “trapped in their relationship with your company.  What you want are stakeholders that are with you because they want to be, not because they believe they have to be.

4. When was the last time someone said something nice about the human resource manager in your organization? Human resource professionals are business people too, just like the rest of your product development, finance, sales & marketing, customer support, and management staff. While others in the organization take care of the needs of your external stakeholders, your HR folks are responsible for the human resources you count on every day to keep the business surviving and thriving… your assets with feet.

3. Pay for your satisfaction and retention programs  with decreased costs and increased productivity that come with improved employee engagement. As you increase employee engagement, employees will stay longer and work harder. The longer employees stay retained by your organization, the further you can push employee replacement costs into the future.

I recently created a “productivity calculator” that resides on my corporate website.  It gets a lot of attention from CFO’s because it shows the impact workforce engagement has on the productivity of workers based on the annual payroll of the company.  Fully Engaged employees give discretionary effort of 120% (according to a just released Conference Board survey), while Reluctant employees (75% discretionary effort) and Unengaged employees (60% discretionary effort) the math is simple.  A five-hundred employee company with workforce engagement levels at parity with the Employee Hold’em national benchmark averages loses over $2,000,000 in productivity due to low engagement.

Employee engagement is an investment in your company’s success.

2. Measuring and managing employee engagement is simply the right thing to do. You can be reactive and spend all your time fixing problems with your customers after the problems occur. Or you can lessen the probability of customer issues by ensuring that your employees are likely to go the extra mile for customers.  It’s the Fram Oil Filter Game… pay me now or pay me later.

And the number one reason….

1. “Customer” and “employee” each have eight letters, what further proof do you need to understand the linkage between the two?  OK, try this one: “Turnover” has eight letters and two relevant definitions:  the ratio of the labor turnover to the average number of employees in a given period and the amount of business transacted during a given period of time. (Look, I’m a researcher and we look for linkages…).

To be fair, another definition of turnover is a small pastry made by covering one half of a piece of dough with a filling, folding the other half over on top, and sealing the edges. I’m not sure what that has to do with anything other than it is breakfast-time and I’m hungry.

Have a great holiday with your family and friends.