Using employee surveys to drive business decisions
A look at the next
generation of measurement
By Rod Fralicx
In boom times, companies can be pressured into spending
lavishly to please their employees, providing a variety
of perks in the belief that happy employees are productive
employees. While this may be true, when leaner times come
and businesses struggle to grow, the goal of employee
satisfaction is put under greater scrutiny. Today, investments
in employee-related plans and programmes must do more
than satisfy employees. They must be able to provide a
measurable return on investment.
One traditional tool, employee research, has transformed
in recent times. Once perceived as a "warm and
fuzzy" organisational classic limited to capturing
employee perceptions and opinions, employee research
now incorporates other measures of the employee experience
that, when properly interpreted and applied, can directly
improve business outcomes.
Employee research has evolved through three stages:
Stage 1 -- Gauging satisfaction
Focus - Employee perceptions on a range of "satisfaction"
issues -- including pay, benefits, supervision and workplace
conditions.
Derived value - A "nice-to-know" barometer
of employee satisfation/dissatisfaction with company
and HR policies and programs.
Stage 2 -- Assessing for content
Focus -- Employee perceptions of a broader range
of issues relating to the company's unique operating
context -- including its external environment, business
design and specific workforce practices.
Derived value -- A more strategic diagnostic
tool measuring the relationship between employee perceptions
and business outcomes (such as absenteeism, employee
safety and customer retention) and providing insight
on where to focus improvement efforts or change activities.
Stage 3 -- Measuring for impact
Focus -- Employee perceptions integrated with
other aspects of the employee experience within the
company's unique operating context.
Derived value -- The most thorough assessment
available to quantify and connect the whole employee
experience to workforce behaviours and business outcomes.
There is no doubt that connecting what employees say
and understand to perceived workforce and business outcomes
is a powerful management tool. Yet the most compelling
advancement in the transformation of employee research,
measuring for impact, has only just begun to take hold.
It is a process that enables organisations to combine
employee perceptions with other aspects of the employee
experience and to uncover how these affect business
performance.
To build this research capability, new methods have
now been pioneered for measuring the impact of employee
attributes, practices and attitudes on business performance.
Set in context, these methods allow organisations to
build a picture of how their workforce takes shape over
time and to determine the consequences of changes on
business performance.
Creating a more complete picture of the employee experience
assumes that perceptions represent only a portion of
that experience. Understanding the other components
requires additional internal and external data, including
an organisation's HR and payroll systems as well as
data on the local market. Combining this information
allows organisations to get a picture of their unique
internal labour market. This picture highlights movements
into, through and out of a company as well as the underlying
drivers of these movements. The analysis also provides
insights into the skills and attributes most valued
by the organisation.
Internal labour market analysis can be used before,
in conjunction with or after a survey, depending on
the specific needs of the organisation. For example,
if the analysis is conducted first, it can form the
basis of the questions that the survey must address
to fully understand the reasons behind specific cause
and effect relationships -- and the potential resolution
of major issues.
The difference between this new methodology and past
approaches is that it uses an organisation's historical
experience (both employer and employees') to model the
future -- identifying cause and effect relationships
between workforce perceptions, practices and business
outcomes.
On their own, employee surveys can help organisations
understand what employees say and feel about the firm
and how their perceptions affect business performance.
But combining this information with an understanding
and a measure of the more comprehensive employee experience
can have a far more dramatic impact on business performance.
As traditional and non-traditional measurement capabilities
become more sophisticated and are applied to intangible
assets, demand from top management for proof of economic
returns on a firm's HR policies, programmes and initiatives
can only increase.
Case Study
A major financial services firm was experiencing a turnover
problem with regards to employees who quit within their
first year of employment. Through an internal labour
market analysis it was discovered that, though turnover
was highly sensitive to changes in unemployment rates,
there were many actions that could be taken to address
the problem.
The company decided to focus on improving the way it
incorporated and socialised employees into the firm.
It launched an orientation programme to educate new
staff about the firm's values and culture. It was believed
that this would help them cope with their complex and
ever-changing work environment and would therefore result
in more favourable employee attitudes, higher retention
and increased sales.
To analyse the effectiveness of the programme, we analysed
employee perceptions, behaviours and business performance
using data from employee surveys and the firm's HR and
payroll system. We determined that the staff who went
through the programme were much more committed to the
organisation, and turnover was reduced by half in the
first three months.
We also found that employee commitment levels within
business units had a significant impact on sales performance.
The net effect of reduced turnover and absenteeism and
increased sales on bottom-line business performance
amounted to over U.S. $5 million in the first year.
Rod Fralicx is a principal at Mercer Human Resource Consulting
www.mercerHR.com.
He can be reached at rod.fralicx@mercer.com.
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