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Performance Management

Published November 2008

Break Away From Paradigm Blindness

 

  Jeffrey Henning

In "Benchmarking of Interest but Little Used," a 2008 Vovici survey of 334 North American organizations, 34 percent were interested in benchmarking employee satisfaction and loyalty against other organizations — but only 4 percent of them do so.

What CEO or talent management leader would say they are not interested in seeing how satisfied and loyal the staff is compared to other organizations? If an organization has greater employee satisfaction in key areas, talent managers can, for example, use that information when interviewing potential new hires.

Further, if an organization has lower satisfaction in certain areas, that could help explain retention problems. It also could provide a framework to prioritize changes the organization needs to make to improve employee loyalty. However, there are several issues with employee benchmarking.

First, 77 percent of those who use a benchmark reported being somewhat satisfied or very satisfied. Those who were neutral or somewhat dissatisfied wanted more information, such as additional breakdowns by industry subsectors or geographic region, or comparable turnover and retention statistics.

Three important benchmarks to consider are Employee Net Promoter Score, Gallup Q12 and Walker Loyalty. The best one for your organization will depend on which paradigm of employee loyalty most closely matches your organization's understanding of its staff.

Employee Net Promoter Score
The Net Promoter Score (NPS) — popularized by Fred Reichheld in his book The Ultimate Question: Driving Good Profits and True Growth — is one of the simplest loyalty measures on the market. Customers are asked "How likely is it you would recommend us to a friend or colleague?" They then provide a rating from zero, "Not at all likely," to 10, "Very likely."

The measure is called the net promoter score because detractors are subtracted from promoters to provide an estimate of how many more promoters than detractors the organization has.

Traditional customer-satisfaction measures may omit word of mouth, but focus on perceived value, customer satisfaction, corporate image and rational and emotional commitment. All of these drive word-of-mouth recommendations and customer loyalty. If talent managers only ask one question about loyalty, this is the one to ask.

Avis, HP and IBM are NPS adopters. The benchmark is popular for its simplicity, and Reichheld claims it correlates to company growth. Critics contend it doesn't and that its 11-point scale has lower predictive validity than other scales, that the segmentation of promoters/neutrals/detractors is arbitrary and other questions may be better predictors of growth rates. NPS remains popular because it is well-marketed, easy to understand, and its model makes intuitive sense: every organization wants more promoters than detractors.

As a result of this popularity, NPS has crossed over to employee loyalty research, where it is known as the Employee Net Promoter Score (ENPS). The critical question is, "How likely is it you would recommend our organization to a friend as a place to work?" International brands such as Symantec, Holcim and Celanese recently have adopted ENPS.