Talent Management - November 2008 - (Page 31)

Benchmarking helps to identify and facilitate sharing of key performance factors among peer organizations. It also helps organizations evaluate their existing performance measures and goal-setting standards against leading industry criteria. But are benchmarking practices outmoded? How might they be changed to reﬂect modern business attitudes and practices? n “Benchmarking of Interest but Little Used,” a 2008 Vovici survey of 334 North American organizations, 34 percent were interested in benchmarking employee satisfaction and loyalty against other organizations — but only 4 percent of them do so. What CEO or talent management leader would say they are not interested in seeing how satisﬁed and loyal the staff is compared to other organizations? If an organization has greater employee satisfaction in key areas, talent managers can, for example, use that information when interviewing potential new hires. Further, if an organization has lower satisfaction in certain areas, that could help explain retention problems. It also could provide a framework to prioritize changes the organization needs to make to improve employee loyalty. However, there are several issues with employee benchmarking. First, 77 percent of those who use a benchmark reported being somewhat satisﬁed or very satisﬁed. Those who were neutral or somewhat dissatisﬁed wanted more information, such as additional breakdowns by industry subsectors or geographic region, or comparable turnover and retention statistics. Three important benchmarks to consider are Employee Net Promoter Score, Gallup Q12 and Walker Loyalty. The best one for your organization will depend on which paradigm of employee loyalty most closely matches your organization’s understanding of its staff. Employee Net Promoter Score The Net Promoter Score (NPS) — popularized by Fred Reichheld in his book The Ultimate Question: Driving Good Proﬁts and True Growth — is one of the simplest loyalty measures on the market. Customers are asked “How likely is it you would recommend us to a friend or colleague?” They then provide a rating from zero, “Not at all likely,” to 10, “Very likely.” The measure is called the net promoter score because detractors are subtracted from promoters to provide an estimate of how many more promoters than detractors the organization has. I Traditional customer-satisfaction measures may omit word of mouth, but focus on perceived value, customer satisfaction, corporate image and rational and emotional commitment. All of these drive word-of-mouth recommendations and customer loyalty. If talent managers only ask one question about loyalty, this is the one to ask. Avis, HP and IBM are NPS adopters. The benchmark is popular for its simplicity, and Reichheld claims it correlates to company growth. Critics contend it doesn’t and that its 11-point scale has lower predictive validity than other scales, that the segmentation of promoters/neutrals/detractors is arbitrary and other questions may be better predictors of growth rates. NPS remains popular because it is well-marketed, easy to understand, and its model makes intuitive sense: every organization wants more promoters than detractors. As a result of this popularity, NPS has crossed over to employee loyalty research, where it is known as the Employee Net Promoter Score (ENPS). The critical question is, “How likely is it you would recommend our organization to a friend as a place to work?” International brands such as Symantec, Holcim and Celanese recently have adopted ENPS. Holcim Ltd., a global building materials provider, uses ENPS to measure the loyalty of its 90,000 staff, but doesn’t benchmark staff in different countries against one another because cultural differences contribute to dramatic measurement differences, according to Christian Birck, a senior vice president at Holcim. Celanese, a chemical producer, was an early adopter of ENPS, embracing it in September 2007. Alan Maxwell, vice president of corporate human resources, said, “From a Six Sigma perspective, there was a need to baseline current state and track progress as the model/programs were implemented. ENPS hit the mark for us.” Since quarterly tracking began, Celanese has seen its ENPS steadily increase from -8 percent to 24 percent. Further, key performance indicators have improved. For example, turnover dropped by half. Gallup Q12 Transforming unengaged and disengaged employees into fully engaged employees can unlock tremendous organizational value, but a benchmark’s value often November 2008 talent management magazine www.talentmgt.com 31 http://www.talentmgt.com

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Talent Management - November 2008 Editor’s Letter Contents Human Performance Leading Edge Learning Connections Recruitment & Retention Assessment & Evaluation Compensation & Benefits Performance Management Learning & Development Succession Planning Insight Dashboard Application Advertisers’ Index Editorial Resources Full Potential

Talent Management - November 2008

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