1. Providing Leaders with the Missing Link: Making Customer Information that is Linked to the Bottom Line Part of Leaders’ 360-Degree Feedback Jim Miller Shon Magnan Jennifer Mattocks For more information please contact Jim Miller at: 651-688-1912 or jmiller@questarweb.com Presented in “Making 360 Matter: Program Attributes and Links to Organizational Outcomes” at the Eighteenth Annual Meeting of the Society for Industrial and Organizational Psychology, Orlando, FL April 11, 2003

2. Background Strategic benefit of 360° feedback is receiving input from each of a leader’s constituents … Leader Supervisor Subordinates Peers Customers?

3. Background Why isn’t customer feedback included in leadership development? –Not all leaders interact with external customers –Reliability of customer ratings is suspect –Often no direct link between particular managers and customers. Instead of attempting to include customer feedback in a typical leadership assessment model, some retail organizations are using linking models to target leader development as one way to improve consistency and excellence in concept delivery.

4. Background Linking Models of organizational functioning and outcomes (e.g., Heskett, et al., 1994; Wiley, 1996; Rucci, et al., 1998)

5. Research Questions Will the climate for service created by a leader impact the consistency and excellence of concept delivery? Does it make a difference if customer feedback is utilized for administrative vs. development purposes?

6. Method: Sample Program #1: Survey responses obtained during a customer service tracking survey for a nation-wide 4000-unit retail chain. Customers were invited to complete an IVR survey. Data collected from March 2001 through December 2001. Total sample size 500,000 respondents. Survey used for administrative purposes - store managers evaluated and compensated for their customer results.

7. Method: Sample Program #2: Survey responses obtained during a customer service tracking survey for a nation-wide 150 unit restaurant chain. Customers were invited to complete an IVR or Internet survey. Data collected from January 2002 through December 2002. Total sample size over 90,000 respondents. Survey used for developmental purposes - store managers are not compensated for their customer results.

8. Method: Measures Program #1: Service Compliance –e.g. Associates Professional?, Wait Time Under 15 Minutes, Cleanliness of Store Program #2: Customer Satisfaction –Taste of Meal, Atmosphere of Restaurant, Knowledge of Associate, Overall Satisfaction 5-point Likert satisfaction scales.

9. Results: Linking Feedback to Sales Performance Found significant correlations between customer feedback scores and sales growth Sales Growth Overall Customer Score Overall Customer Score Sales Growth Overall Customer Score Overall Customer Score.23.31 Retail Chain (administrative) Restaurant Chain (developmental)

10. Results: Customer Feedback and Sales Growth Restaurant Chain Customer Satisfaction Scores Sales Growth - YTD

11. Results Feedback was developed for store managers that correlated sales growth to specific customer feedback items. Allows leaders to focus on the aspects that most affect their bottom line.

12. Results For feedback to be valuable, store managers need to receive timely feedback. –Unlike traditional 360° feedback, data are collected continuously. –Managers do not have to wait a year to see if the improvement efforts they are making are impacting their customers. –Feedback can be used as a early warning system - don’t need to wait until sales lag to correct a problem.

13. Results Results used to determine not only where managers need to improve - but how to improve. Overall Low Service Inconsistent Service High Performance Low Percent Very Satisfied

14. Conclusions Customer feedback can be an important component of a leader’s development plan. Strategies, such as linking, need to be created that provide timely customer feedback. Customer feedback developed with either an administrative or developmental purpose can provide valuable data.

15. Further Research How do we integrate customer feedback into a traditional 360° program? How does an organization where customers cannot be linked to individual leaders take advantage of this type of feedback?