I’ll say it until you’re bored of listening. Happy staff + happy customers = profitability. Simple! I think that’s all any successful business needs. Through my career as Managing Director of three technology companies, this has been my guiding principle. So much so, that I believe everyone else must be the same. Not so.
Now that I’m a business coach speaking at events, I find that the majority of companies in the room have no handle on staff or customer engagement. That’s crazy!
Regular, systematic measurement of engagement is essential to your company’s future growth and prosperity. Here are 6 reasons why:
1. Acts as an early warning system for your business
Put in place decent metrics and you’ll have an efficient early warning system to alert you to any issues with staff or customers before they do too much damage. Instead of waiting for an annual appraisal or customer survey, you can sort things out quicker.
The system I’ve always used for staff engagement is the Gallup Q12. I first read about it in Marcus Buckingham’s best-selling book ‘First break all the rules’ and immediately introduced it as MD at Rackspace. It’s a fantastic metric. Just 12 questions in a pyramid that measure the most important elements of employee engagement. Gallup can run it for you, or you can manage it yourself.
At Rackspace, we were growing fast. We needed something to help us maintain the clarity of communication and satisfaction levels that we’d enjoyed as a small start-up. So we ran the Gallup Q12 annually across the whole company and quarterly within teams. This enabled us to keep a close eye on all areas of the business.
Following this, I put in Net Promoter Score as a measure for customer satisfaction. Another perfect metric that enables you to grow your business through word of mouth. By implementing this and running it on a quarterly cycle, you can keep tabs on your company’s performance and have accurate data when you most need it.
2. Removes corrosive attitudes
Have you ever felt you’re doing a good job but people around you don’t care? Or that you’re working harder than someone else but being paid the same? How did that make you feel? It’s so easy for resentful, corrosive attitudes to set in and spread like wildfire. This is why you need input/output metrics to measure performance against the values you think are important. And everybody needs to know and understand these metrics.
They encourage clarity and transparency. If you share KPIs, everyone knows what everyone else’s goals are. Introduce salary bandings as well, showing different levels within each job role. Then people will know what they need to do to get more money or develop further. Suddenly, the resentment and tension melts away.
3. Identifies issues with management
When we merged ServerBeach into Peer 1, we asked all the staff, ‘If you could run the business for a day, what would you do differently?’ We thought they’d say they wanted more money or training. But you know what? They overwhelmingly said they’d like to work with better people. We knew we had work to do around our middle managers!
When you get past 30 people in the business, you’re no longer an owner/founder interacting regularly with all your staff. It’s more likely that their experience of your company will revolve around working for one of your managers. This is why you, as owner/founder, have got to stay on top of the recruitment process to make sure only good people get in. You’ll want to promote your managers from within. Your best salesperson might become Head of Sales or your best Dev guy become Head of Development, but you need to know whether they are having a positive or negative impact on staff.
Some of the Gallup questions relate particularly to managers. Although the surveys are anonymous, respondents can say where they fit into the organisation. You’ll get a sense of whether engagement is being hindered or driven by frontline management. And then you can do something about it!
4. Motivates staff and customers
The first question on the Gallup Q12 is important. ‘I know what’s expected of me at work’. I don’t think most people get up every morning and say, ‘I’m going to do a sh*t job today.’ They want to feel they’re making progress, growing and doing well. So you need to put in place metrics to ensure they’re clear on what ‘good’ looks like.
Quarterly OKRs and KPIs are essential along with a system where staff can see how they, personally, are making a contribution to these. Come up with a leading indicator (e.g. hours on phone, numbers of meetings, numbers of proposals) and a lagging indicator (e.g. revenue in the sales team). At Rackspace we worked out that every minute our salespeople spent on the phone correlated with £1 of monthly recurring revenue. Once we had this, we could track it on a board. You could see your cumulative hours and strive towards your target. This also gave crystal clear focus to what was important in your workload.
Having these systems in place means every member of staff knows what’s expected of them. They themselves can keep score. And they never get to the point at the end of the year when they’re asking their manager, how did I do?
Games have rules, white lines and scores. How many golfers get no better over time? Most? That’s the contrast of just playing the game versus deliberately practising. To get better over time, the team need to deliberately practice and know the score in real time. Not just the rules and the white lines.
Similarly, a regular feedback mechanism for customers will encourage better loyalty. When I first joined IT Lab, our NPS was -5. Two years later, we’d got it up to +55. Every quarter, we’d write to customers telling them about the feedback we’d been given and what we’d done about it. This showed that, instead of paying lip service, we were listening and improving. Closed-loop feedback meant they were more likely to engage in giving further feedback.
We also invited our top 25 customers onto a steering board, asking for their views to help improve our business. This resulted in stronger emotional bonds and loyalty from the small number of customers that were responsible for the majority of our revenue.
5. Gives an external benchmark
If you use Gallup to run your Q12, they’ll put your results into the context of engagement levels in similar companies. External benchmarks can be pretty useful. The year that Rackspace did well in the Sunday Times ‘Best Places to Work’ and won a service excellence award in Management Today, we’d benchmarked 26 different companies who’d ranked highly as great places to work. We’d send out teams to visit them and bring back ideas.
Every 6 months or so, we’d get visits from organisations keen to see what we had done. Our staff loved this – they’d see them walking around and feel proud to share.
One year, we were nominated for a European award. We asked all the staff, ‘Who has made the biggest contribution towards making Rackspace a great place to work in the last year?’ The result? Overwhelmingly – Sam and Annalize. So we sent our crack team to the ceremony in Copenhagen and they came back brimming with even more ideas for staff motivation!
6. Shows staff and customers you care
The Gallup Q12 will tell you if you have a culture of praise in your company. This is so important for engagement and links directly back to management. It tells staff that someone cares for them. They’re not just a number.
The question that provokes most hilarity is ‘I have a best friend at work’. Gallup included this as they found it was a characteristic of high performing teams. We were really hot on this at Rackspace. When Sam and Annalize came back from Copenhagen, they said they wanted to be ‘fluff fairies’. Come again? Yes – they wanted to secretly spread a little fluff amongst Rackspace staff!
They made it their mission to know when a member of staff was having a tough time. And they’d do something anonymously to help. One time, there was a ex-pat that needed to go home at short notice for a family emergency but it was the school holidays and the flights were too expensive. Next thing she knew, the fluff fairies had paid a surprise visit to her desk. She came in to see fairy dust all over her keyboard and underneath it, an envelope containing flight tickets. She was over the moon. You couldn’t get more caring than that.
We’d also go out of our way to remove little annoyances and irritations that drain energy and engagement. New members of staff were given a little black book. We told them we valued their fresh perspective and asked them to write down anything, no matter how small, that seemed odd or stupid. We also had an open email address and gave a £10 Amazon voucher to anyone who flagged up stupid rules or suggested a way we could improve. And we acted on as many of these suggestions as possible.
All these measures ensured staff churn was kept at a healthy level which also helped us retain our customers. On top of this, the directors would personally ring any customer who’d given us a detractor score in their NPS and would close the loop by feeding back to them afterwards.
Measurement of engagement in staff and customers is critical to your company’s success. Studies have shown a direct link between high levels of engagement and business results. And you won’t know if you’re on track without regular, systematic measurement. You need to create a culture that seeks criticism. If you can achieve that magic balance between happy staff and happy customers, then everything else will fall into place. Your vision for a growing, profitable business will start to become a reality.
Written by business growth coach Dom Monkhouse. Find out more about his work here.