Missing Link between Employee Satisfaction and Business Performance
November 26 2002
Research consultancy, ORC International, has recently eveloped a mathematical analysis ool for Nationwide Building Society in the UK that reveals the link between employee commitment, customer satisfaction and business performance.
Working alongside the building society's planning and development team, ORC International has uncovered strong links between people management and its product sales, after analysing data from a mix of HR indicators, a staff attitude survey, sales figures and extensive customer research.
Nationwide has been running its employee opinion survey since 1993, but it is only in the last year that it has carried out analysis to gain a more detailed view of the key drivers of its business, and demonstrate the impact which employee satisfaction has on sales. ORC International's business model has been used to investigate how research data can be combined with management information and performance measures to gauge their relative impacts.
Direct relationships that have been highlighted include:
- Increasing employee satisfaction with basic pay, increases customers' overall satisfaction, their view that employees are informed, and employee trustworthiness, which increases personal loan sales.
- Increasing customers' view that employees are friendly, increases overall customer satisfaction, which increases personal loan sales.
- Increasing employee average length of service, increases general insurance product sales, personal loan sales and direct mortgage sales.
- Increasing employee satisfaction with recognition, increases direct mortgage sales, and sale of non-borrower buildings and contents insurance.
- Increasing employee average age by one year increases the sale of non-borrower buildings and contents insurance.
John Wrighthouse, Nationwide's head of planning and development, is delighted that the project has led to the society has been judged overall winner in the Management Today/Unisys Service Excellence Awards 2002. 'Being able to prove that staff retention leads to better sales figures and that specified changes to employee satisfaction lead to improved retention has been a tremendous result for us. One of the factors that drives positive customer perception and buying intention is the impact of the behaviour of customer-facing employees which is, in turn, driven by their commitment and pride in their employer. With £76 billion of assets and 15,000 employees, we already knew that our people provide a unique competitive advantage. However, as a result of the development of the business model, I can now go to the Board and show them the actual effect HR measures are having in financial terms. We will be now be able to use the figures from the model to justify investment in areas that might not otherwise be considered to add value. This initiative has influenced the direction and priority of our thinking about managing people, and has given our branch managers a clearer sense of what drives sales and financial performance.'
The research for Nationwide Building Society has enabled the development of a model to fit a 'typical' service sector organisation which is capable of supporting measures of employee attitudes, customer satisfaction and business performance data. Investigating links via statistical techniques and ORC International's business model demands that data used to test the model should be available for a number of branches, outlets or establishments, include customer and employee survey data captured over the same time periods and offer a range of people and business performance measures - for the same, or ideally longer, time periods.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
