Manage Your HumanSigma

The Employee-Customer Encounter

In manufacturing, value is created on the factory floor
when a product is made available for sale.
But in sales and services, value is created when an
employee meets and interacts with a customer.
Indeed, this employee-customer encounter is the factory floor of
sales and services.

To achieve meaningful operational and financial

improvements, the employee-customer encounter must
be measured and managed.

The Gallup Path

To
reliably
influence
these ...

REAL PROFIT
INCREASE

STOCK
INCREASE

SUSTAINABLE
GROWTH

ENGAGED
RESIDENTS
ENGAGED
EMPLOYEES

... these
must be
managed.

GREAT
MANAGERS

ENTER
HERE
IDENTIFY
STRENGTHS

THE
RIGHT FIT

Whom do you build a company around?

Employees?

Copyright 1996-2000, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.

Residents &
Family Members?

What Is HumanSigma ?

A holistic approach to optimizing a companys

vital signs.
Like Six Sigma, focus on reducing variability and
improving organizational performance.
Unlike Six Sigma, focus on the human aspects of
organizational performance to drive profitability
and growth.

Team Member Engagement

ENGAGED
EMPLOYEES

GREAT
MANAGERS

ENTER
HERE
IDENTIFY
STRENGTHS

Copyright 1994-200, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.

THE
RIGHT FIT

Net Loyal Customer Creation

The Worst
Bottom
3
1%

5%

-31

3rd
QTL
10%

4th
QTL

-14

-2

1st
2nd QTL
QTL 61

88
71

77

40
27
10%

5%

1% Top 7

The Best

-63
-100

100

5,000 CSRs

The Sorting Effect

Poor Question

I feel I am paid the right amount.

Low rating

High rating

Great Question
Low rating

High rating

More productive workgroups

Less productive workgroups

At work, I have the opportunity to

do what I do best every day.

The 12 Questions That Matter

I know what is expected of me at work.

I have the materials and equipment I need to do my work right.
At work, I have the opportunity to do what I do best every day.
In the last seven days, I have received recognition or praise for doing
good work.
My supervisor, or someone at work, seems to care about me as a person.
There is someone at work who encourages my development.
At work, my opinions seem to count.
The mission or purpose of my company makes me feel my job
is important.
My fellow employees are committed to doing quality work.
I have a best friend at work.
In the last six months, someone at work has talked to me about
my progress.
This last year, I have had opportunities at work to learn and grow.
Copyright 1992-1999 The Gallup Organization, Princeton, NJ. All rights reserved.

Gallup Engagement Hierarchy

Opportunities to learn and grow
Progress in last six months
I have a best friend at work
Coworkers committed to quality
Mission/Purpose of company
At work, my opinions seem to count
Someone encourages my development
Supervisor/Someone at work cares
Recognition last seven days
Do what I do best every day
I have materials and equipment
I know what is expected of me
at work
Copyright 1992-1999 The Gallup Organization, Princeton, NJ. All rights reserved.

How
do we
grow?

Growth

Teamwork

Do I belong?
Management
Support

What do I give?
Basic
Needs

What do I get?

Employee Engagement Groups

28%
Engaged
These employees are loyal and
psychologically committed to the
organization. They are more
productive and more likely to stay
with their company for at least a
year.

55%
Not Engaged
These employees may be
productive, but they are not
psychologically connected to their
company. They are more likely to
miss workdays and more likely to
leave.

17%
Actively Disengaged
These employees are physically
present but psychologically absent.
They are unhappy with their work
situation and insist on sharing this
unhappiness with their colleagues.

Q12 2006 Meta-Analysis Study

Information
12
Correlations
Correlationsof
ofQQ12to:
to:

Analysis
Analysisof:
of:

681,799
681,799employees
employees

23,910 business units*

23,910 business units*

125
125organizations**
organizations**

37 industries

37 industries

turnover/retention
turnover/retention

customer metrics

customer metrics

safety

safety

absenteeism

absenteeism

shrinkage

shrinkage

productivity

productivity

profitability

profitability

* Includes business units in 23 countries in Asia,

Central/South America, Europe, and North America
** 20 organizations exclusively outside the United States

Average % Gain/Loss in Profitability

Engagement Drives Profitability

100

78.7

80
60
40
20
0

st

rc
e
P

44.1

ile
t
en
th

10

29.1
th

20

-20

th

th

30

40

-18.1

-40

-8.7

0.0
th

50

8.7
th

60

-29.9

-79.5

70

th

80

th

90
99

-80
-100

th

th

-45.6

-60

18.1

Engagement Percentile

r
Pe

ile
t
en

Nurse Turnover by Quartile

40%
30.3%
30%
18.8%

20%
13.0%
10%

9.9%

0%

Top 25%

Middle Quartiles

Bottom 25%

Q12 Quartile
Copyright 2002 The Gallup Organization, Princeton, NJ. All rights reserved.
205

Employee Engagement & Avoidable

Complications

Bottom Quartile

3rd Quartile

2nd Quartile

Top Quartile

0.87
0.85
0.83
0.81
0.79
0.77
0.75
Complication Index
Correlation-regression analysis of Engagement GrandMean and Complication Index statistically significant at -.23 (n=152)

Employee Engagement & Avoidable Deaths

Bottom Quartile

3rd Quartile

2nd Quartile

0.85
0.8
0.75
0.7
0.65
Mortality Index

Top Quartile

Innovation and Engagement

Innovation Index
My current job brings out my most creative ideas
I feed off of the creativity of my colleagues
My company encourages new ideas that defy conventional wisdom
I have a friend at work who I share new ideas with

Engagement Drives Innovation

30%

Percent
Strongly
Agreeing
With All
Four Items

27%

20%

10%
2%
0%
Not Engaged

Engaged

Of Those That Are

Employee Engagement Related to Innovation

Dollars Saved per Idea Implemented

$12,000

$11,061

$10,000
$8,000
$6,000
$4,065
$4,000
$2,000
$0
Top Quartile Engagement

Bottom Quartile
Engagement

Change Management Index

There is open communication throughout all levels of the

organization.

My supervisor is an active supporter of the changes that affect

our group.

I am asked for my input regarding the changes that affect my

work.

Leaders in my company help me see how changes made today

will affect my companys future.
6% of US working population
strongly agree to all items

Ability to manage change relates to employee

engagement index

Top-quartile on Change Management Index:

77% engaged
23% not engaged
0% actively disengaged

Bottom-quartile on Change Management Index:

1% engaged
45% not engaged
54% actively disengaged

Points of Customer Impact

LOYAL
RESIDENTS/FAMILY MEMBERS

Copyright 2004 The Gallup Organization, Princeton, NJ. All rights reserved.

ENGAGED
EMPLOYEES

Understanding Customer Engagement

When it comes to customers,

feelings are facts.

-Simon Cooper, President & COO,

Ritz-Carlton Hotel Company LLC.

Core Principles of Customer Engagement

1.

Customers are not strictly rational; your most profitable

customers have strong emotional bonds with your company.

2.

Level of engagement drives the long-term financial success you

will have with each customer.

3.

Every time your company touches a customer, they either become

a little more, or a little less, engaged but they never stay the
same.

4.

Simply satisfying customers is not enough. Satisfaction is the cost

of entry; necessary but not sufficient.

5.

Your company has as many brands as there are customer

touch points.

6.

Strong customer relationships must be managed locally.

The 11 Questions

3
L

A8

Overall, how satisfied are you with Brand A?

How likely are you to continue to choose Brand A?
How likely are you to recommend Brand A to a
friend/associate?
I cant imagine a world without Brand A.
Brand A is the perfect company for people like me.
Brand A always treats me with respect.
I feel proud to be a Brand A customer.
If a problem arises, I can always count on Brand A to reach a
fair and satisfactory resolution.
Brand A always treats me fairly.
Brand A always delivers on what they promise.
Brand A is a name I can always trust.

The Emotional Attachment Hierarchy

Passion. This resident/family member feels the brand is

perfect for her, that she cant live without it.

Pride. The resident/family member feels really good about the brand, and
how using or owning the brand reflects upon him.

Integrity. The resident/family members feelings of brand integrity will

depend on whether he is treated fairly by the company, both routinely and
when something goes wrong.

Confidence. The resident/family member feels the brand is trustworthy and

keeps its promises.
Copyright 1994-200, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.

Every company has four different types of

customers

Actively
Disengaged

Fully
Engaged

Not
Engaged

Engaged

Fully Engaged Strongly

attached and loyal. These are
your best customers.
Engaged Somewhat emotionally
attached but not yet fully engaged
Not Engaged Emotionally and
attitudinally neutral; no positive
association
Actively Disengaged Active
emotional detachment; occasional
antagonism

HumanSigma

The HumanSigma approach is based on five

core principles that our research and
experience have found facilitate the effective
management of the employee-customer
encounter:

HumanSigma Principles

(1) Like vital signs, the employee-customer encounter

must be conceptualized and managed holistically.
(2) The employee-customer encounter is fundamentally
emotional.
(3) The employee-customer encounter must be measured
and managed locally.
(4) The effectiveness of the employee-customer encounter
can be quantified and summarized in a single
performance metric the HumanSigma metric that
is powerfully related to financial performance.
(5) Improvement in local HumanSigma performance also
requires attention to a combination of transactional
and transformational intervention activities.

HumanSigma Principle #1:

(1) Like vital signs, the employee-customer

encounter must be conceptualized and managed
holistically.
Because value creation in SSOs flows from the
interaction between employees and customers, both
sides of the employee-customer encounter must be
viewed as interrelated and mutually-dependent
systems that should be measured and managed as a
coherent whole, not as independent activities housed
within separate organizational entities.

HumanSigma Principle #2:

Feelings Are Facts

(2) The employee-customer encounter is
fundamentally emotional.
Because both employees and customers are human
agents, the measurement and management of the
employee-customer encounter must acknowledge
and incorporate the critical emotional infrastructure
of human behavior and decision-making, yielding a
concept that extends well beyond traditional
considerations of employee and customer
satisfaction a concept we refer to as engagement.

Emotionally engaged customers have lower attrition rates

7%
6.0%
6%

5.8%

5%
4%

3.8%

3%
2%
1%
0%
Engaged

Satisfied

Dissatisfied

Copyright 2005 Harvard Business Review School Publishing Corporation.

All rights reserved.

ATTRITION RATES OF BANK CUSTOMERS

(account closures per six months)

AVERAGE MONTHLY SPENDING BY

CREDIT CARD CUSTOMERS
$300
$251

$200
$136

$136

Satisfied

Dissatisfied

$100

$0
Engaged

Copyright 2005 Harvard Business Review School Publishing Corporation.

All rights reserved.

Emotionally engaged customers spend more

HumanSigma Principle #3:

Think Globally, Act Locally

(3) The employee-customer encounter must be
measured and managed locally.
While many other kinds of organizational activities
may be managed effectively from the top down, the
employee-customer encounter is an intensely local
phenomenon whose effectiveness varies
considerably from location to location within the
same company. Because of this variability in local
effectiveness, its measurement and management
must be focused locally.

The majority of Green Zone hotels have

highly engaged work force
Green Zone 54%+
Fully Engaged

70

65

60

Yellow
47%-53%

CE11
Past 12 55
Months
% Fully 50
Engaged

Red Zone < 46%

Fully Engaged

45

40

35

30
3.7

3.8

3.9

4.1

Q12 Grand Means

(4.01)

4.2

4.3

4.4

4.5

The majority of red zone hotels have low levels of

employee engagement.
Green Zone 54%+
Fully Engaged

70

65

60

Yellow
47%-53%

CE11
Past 12 55
Months
% Fully 50
Engaged

Red Zone < 46%

Fully Engaged

45

40

35

30
3.7

3.8

3.9

4.1

Q12 Grand Means

(4.01)

4.2

4.3

4.4

4.5

Three Green Zone hotels have less engaged

workforces
Green Zone 54%+
Fully Engaged

70

65

60

Yellow
47%-53%

CE11
Past 12 55
Months
% Fully 50
Engaged

Red Zone < 46%

Fully Engaged

45

40

35

30
3.7

3.8

3.9

4.1

Q12 Grand Means

(4.01)

4.2

4.3

4.4

4.5

Red Zone hotels with more engaged work

forces
Green Zone 54%+
Fully Engaged

70

65

60

Yellow
47%-53%

CE11
Past 12 55
Months
% Fully 50
Engaged

Red Zone < 46%

Fully Engaged

45

40

35

30
3.7

3.8

3.9

4.1

Q12 Grand Means

(4.01)

4.2

4.3

4.4

4.5

HumanSigma Principle #4

(4) The effectiveness of the employee-customer

encounter can be quantified and summarized in a
single performance metric the HumanSigma
metric that is powerfully related to financial
performance.
Our research has revealed that the two sides of the
employee-customer encounter potentiate one another
and can be quantified into a single HumanSigma
metric. The interactive effects of employee and
customer engagement at the local unit level
exponentially drive operational and financial
performance and growth.

HumanSigma Quadrants

70%
1.7
boost

240%
3.4
boost
Optimized

1.0

70%
1.7
boost

HumanSigma Principle #5

(5) Improvement in local HumanSigma performance

also requires attention to a combination of
transactional and transformational
intervention activities.
Transactional activities, such as action planning and training,
are cyclical interventions that tend to be more topical and
short-term in focus, but recur regularly. Transformational
activities, on the other hand, are structural interventions that
focus on how companies select employees, select and
promote managers, pay and appraise employees, do
succession planning, and recognize and develop employees.
Transformational activities are focused on creating an
organizational infrastructure that supports HumanSigma.

Progress on Goals During Impact Planning

Q12 GrandMean in Wave II 2006

4.7

Did not make progress

on action planning
goals
Made progess on
action planning goals

4.5

4.3

4.1

3.9

3.7

3.5

3.3

3.1

2.9

2.7
2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

Q12 GrandMean Wave I 2005

4.5

4.7

Patients and Physicians Have Similar

Perceptions of Nursing for Health System
Physician perceptions of nursing and care delivery
Score

Percentile

Delivered quality care all shifts/departments

3.31

30th

Overall quality of nursing care

3.54

26th

Nurses judgment when to call doctor

3.62

30th

Competency of staff nurses

3.64

34th

Teamwork between doctors and nurses

3.74

36th

Score

Percentile

Nurses anticipated needs

3.25

14th

Nurses explained procedures

3.31

10th

Nurses helped calm fears

3.32

11th

Nurses responded to requests

3.27

13th

Patient perceptions of nursing and care delivery

Considerations for Potential Role-Fit

Past
Performance

Talent to Role Fit

(Gallup Assessment)

Overall Fit Position,

Culture, and
Relevant
Team
Skills &
Knowledge

Impact of Nurse Talent on Patient

Service
10

9
8
7
6

Recommend
Conditional
Non-recommend

5
4
3

2.75
1.5

2
1
0

Patient Service: Number of positive comments spontaneously volunteered

by patients per nurse annually

Associates Who Were Selected For Talent Are More

Engaged
4.40

4.40

Under Cut Off

Made Cut Off
4.30
4.23
4.20

Q12 GrandMean

4.20

4.10
4.08

87th

4.00

3.90

83rd
74th

91st

3.98

82nd

60th
67th

60th
3.80
Sales

Marketing

Front Office

Service Fulfillment

HumanSigma Summary

(1) The employee-customer encounter must be

conceptualized and managed holistically.
(2) The employee-customer encounter is fundamentally
emotional.
(3) The employee-customer encounter must be measured
and managed locally.
(4) The effectiveness of the employee-customer
encounter can be quantified and summarized in a
single performance metric the HumanSigma metric
that is powerfully related to financial performance.
(5) Improvement in local HumanSigma performance also
requires attention to a combination of
transactional and transformational intervention
activities.