Wednesday, May 30, 2012

Employee Satisfaction leads to Customer Satisfaction: Myth or Reality?

‘Commonsense is most uncommon’—this universally applicable cliché has often times led to my being excessively conscious in readily accepting anything that appears (to my mind) to be commonsensical! This tendency has stayed with me for quite some time now, sometimes to my advantage and sometimes to the contrary as well.

I remember as a young professional – especially with the academic grounding in HR, I thought it was obvious that when people felt great about their work, their work place—physical and emotional environment et al, they would naturally deliver better customer service, which would result in high customer satisfaction. And then I met one Management Guru (though self-proclaimed, but undoubtedly a highly successful corporate honcho) , who told me – with authority, conviction and the rich experience that he had behind him, that when employees were happy and enjoyed their work and work environment, it invariably led to adverse impact on customer service. In fact, one of his favourite idioms was—‘behind every happy and comfortable employee stands an unhappy customer!’

It didn’t quite make sense to me then and certainly does not now. Those were my early professional days with the conventional brick and mortar manufacturing sector. At that time, while we had a very well established quantitative discipline around the core areas of manufacturing, the so called ‘softer’ i.e. ‘difficult to measure’ areas were often left to people’s imaginative/creative interpretations/analyses. And to add to the complexity, if you had a stronger personality like the one referred above, what ‘he’ believed in remained a final word on the subject—at least within the community of his influence.

But thankfully, the world has moved ahead. Numerous studies and empirically irrefutable data are now available on a global platform that clearly establish that employee satisfaction (E-sat) definitely leads to customer satisfaction (C-sat). The space and the scope of this blog do not permit me to go through these research findings here. In fact, normally such established facts should not be even worthy of yet one more article on the subject and still I was driven to come up with my observations. The reasons for the same are equally compelling.

On one hand, we have a plethora of research that says employee satisfaction has a direct bearing on customer satisfaction. And on the other hand, (especially in the recent past) when I tried to explore the existence of such correlation at unit/ enterprise levels (with some of the business heads of organizations of eminence and repute), I got fairly mixed responses. Some heads told me that they did not find any sustained correlation between E-sat and C-sat – sometimes both came out to be high on the scale and some other times, higher E-sat did not equate with high C-sat etc…

The overall sense that I got from these business leaders was that their respective organizations had independent and standalone mechanisms that measured and monitored E-sat and C-sat and not in conjunction with each other. On detailed inquiry I also realized that these business leaders were not terribly worried about the fact that they didn’t necessarily notice any direct correlation between E-sat and C-sat in their businesses. I was also told that all these organizations worked with a lot of focus on continually improving their E-sat and C-sat scores (independently) by initiating actions based on what they hear from the employees and the customers through the ongoing survey mechanisms.

Now this raises the important question: If studies after studies have settled that the equation of higher E-sat=higher C-sat holds good universally, then how can some business leaders live with converse reality in their businesses?

My possible answers are:

1. These businesses do not realize that E-sat has a strong bearing on C-sat.

2. These businesses do not have a holistic program that monitors these two metrics on a common platform. It is often seen that HR manages the E-sat process without any real reference to the C-sat and Marketing (or some such market-focused function) manages the C-sat process without any reference the E-sat. Both employ comprehensive survey mechanisms and take resultant actions independently.

3. These businesses don’t measure these two metrics in the same period, thereby leaving no room to improvise one (i.e. E-sat) for making an impact on the other (i.e. C-sat).

4. These businesses believe that the two metrics must be tracked separately, because they survey two distinct constituencies.

Whatever may be the real answer/s, I feel that in the least E-sat should be taken as one of the major ‘leading indicators’ for C-sat. And I must explain: If the emerging trend in E-sat indicates that the employee satisfaction is dwindling then it should provide as ‘an early warning indicator’ of the prospective decrease in C-sat. I’m patently aware that the E-sat alone can’t determine C-sat—because if that were to be the case, organizations wouldn’t have two metrics in the first place! However, given a strong correlation between the two, organizations should at least put appropriate mechanisms in place to leverage this knowledge rather than pretending their standalone existence.

It’s going to be a lot of work in identifying common drivers of both E-sat and C-sat, but I believe the effort will be well worth it. Can we start deriving such common drivers from some of the relatively novel and well researched concepts such as Net Promoter Scores (NPS) etc.? If my readers have a question on NPS, there is plenty of material available in the public domain—else, I can cover it sometime later in the ensuing blogs.


Nitin Deshpande said...

I agree completely and thanks for reinforcing this reality.

Shree Bhave said...

Abhay, interesting blog. I know, it is a baffling equation which sometimes goes right and sometimes inverts !

You may have probably read 'Human Sigma' (a Gallup publication) which is the summation of Employee Engagement (EE) and Customer Satisfaction (CE) using a common platform. Quite interesting.

Shree Bhave

Abhay Valsangkar said...

Thanks Nitin. As Always, your response is prompt and encouraging. Cheers...Abhay

Abhay Valsangkar said...

Thanks for your insightful comment, Shree.

Yes, Human Sigma captures it well and there are plenty of studies that clearly establish the relationship. It's time for the HR/Mktg folk to take note of it urgently.


Abhay Valsangkar said...

Thanks Atul. All such critical as well as encouraging comments help me equally. I appreciate your prompt feed-back....Cheers..Abhay

From: Atul Srivastava

Par bahut lamba likhate ho yaar.
I am pleasantly surprised to see this side of your telant.
What is next ???

Best Regards,
Atul Srivastava,
CEO, Effective People,

Abhay Valsangkar said...
This comment has been removed by the author.
Abhay Valsangkar said...

I acknowledge (with thanks)responses of APimple, Madhura Desh and Anant Tope...Cheers...Abhay

Abhay Valsangkar said...

Dear Pranav,


You are absolutely right in pointing out that it is not just a one way equation! I also agree with your point about quality of product/service having a direct bearing on E-sat--and it is beyond doubt that it has a very strong influence on C-sat.


From: Pranav Mokashi


Blog masta aahe...loved it!

Just food for thought...

Doesn't quality of certain company's product or services have direct corelation with E-Sat & C-sat of that company?

I think...that might be one of the factors that brings E & C together.

If you have Customer satisfaction in-built in your product/services then success of the product will have direct positive effect on Employee Satisfaction which in turn will ensure further Customer Satisfaction through better quality of product/ services provided by employee.



Abhay Valsangkar said...

Thanks Ashish, appreciate your response. Cheers, Abhay.
Thanks Abhay. Great insights. Keep it coming. In the last few decades, CEOs have typically emerged from the Finance, Marketing and sometimes Technical domains. It is anticipated that now the CEOs will emerge from the HR domain, which indicates the importance of HR (particularly talent management) in the business world.

Regards, Ashish Desai

Amit Malik said...


ABsolutely critical thought and also a compelling one. Maybe like a lot of cylo's in an organisation E sat ( HR team ) and C sat ( custormer focussed teams) have generally not mae the effort to bridge the ivie and study the possibilities of corelation.

Somewhere how we respond depends upon how we feel. It happens in everyday life at home and am sure also happens at workplace though the drivers of feelings could be different.

Food for thought as always from you .


Abhay Valsangkar said...

Thanks Amit.

Unknown said...

If employees believes in the vision, direction, leadership etc of the company, and are happy in their roles, they are very likely to create better products and services, and eventually better results for the company, and scores like employee satisfaction and customer satisfaction would show a rising trend and corelation could be drawn.

On the other hand I am not convinced about using measures like customer satisfaction or employee satisfaction as indication of results, they are at best indicators of trends, I have found them more valuable if used for analyzing impact of actions or defining areas of focus.

Measures like drop in customer contract renewal rates, or increasing attrition on the other hand are a lot more clearer indicators of results in my opinion, and finally those have a direct impact on business results.


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