Connecting Employee Engagement to Business Performance

PricewaterhouseCoopers2 Lifting employee engagement drives high levels of customer satisfaction which leads to increased revenue growth: The employee-customer profit chain at Sears. Employee engagement – Why is it important? Source: Harvard Business Review, Jan-Feb 1998

PricewaterhouseCoopers3 In a study conducted by ISR using data from over 360,000 employees from 41 companies in the world’s ten largest economies, the relationship between different levels of employee engagement and corporate financial performance was measured. Comparing high- engagement to low- engagement companies over a three-year period, the differences were substantial. Employee engagement – Why is it important? Globally, organisations with high levels of employee engagement have significantly higher operating margins and net profit margins Impact of Engagement on Business Performance

PricewaterhouseCoopers4 Employee engagement – Why is it important? Australian organisations with high levels of employee engagement have reported significantly higher earnings and revenue growth * No date on report Revenue and Profit/Earnings Growth for the Period FY00-FY03 Hewitt’s 2004 Best Employer Research aims to better understand the link between people practices and business performance Judges look for organisations that can demonstrate both high levels of engagement among their employees and strong alignment of their people practices with organisation strategy and brand The employee engagement data was collected from over 40,000 employees

PricewaterhouseCoopers5 Linking the data Measuring employee engagement by itself and inferring its effect on customer engagement, productivity and other business outcomes is too generic. Employee engagement data should be linked to HR metrics, customer engagement measures, and financials. HR Metrics Employee Survey HR Metrics

PricewaterhouseCoopers6 I am provided with equal opportunities no matter what my gender or ethnicity Gender diversity I am considering leaving within the next 6 months Employee Turnover Customer retention Absence I am provided with opportunities to develop both myself and my career Career path ratio EBITDA Revenue growth % Customer loyalty Revenue per customer L&D investment per FTE New products Customer satisfaction Employee perception Human Capital MetricsCustomer FeedbackBusiness performance Development of a detailed linkage model enables organisations to identify the strongest links between key data categories

PricewaterhouseCoopers7 SRM Vs Engagement, XYZ Centres AHT Vs Engagement, XYZ Centres SRM As engagement increase SRM increases Leading performance indicator, proxy for growth Insights AHT As engagement increases AHT decreases Leading indicator, profit proxy (increased efficiency) Insights Case Study – Call Centres Engagement links directly to performance metrics, eg SRM and AHT leading indicator.

PricewaterhouseCoopers8 Take Action Align HR, marketing and finance Evaluate the data you have and identify the data you need Determine what motivates your employees to deliver a superior customer experience Define what will engage and inspire your employees to consistently create an exceptional experience for every customer Quantify the impact that employees and customers have on your organisation’s business results