It s not just about engagement
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It’s not JUST about engagement. Agenda. Who is RWE npower? What is the problem? The missing link - the people agenda Our challenge Our response Measurement and analysis - defining the model The people agenda - putting the model to work The case for measuring and managing engagement

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It s not just about engagement

It’s not JUST about engagement


Agenda

Agenda

  • Who is RWE npower?

  • What is the problem?

  • The missing link - the people agenda

  • Our challenge

  • Our response

  • Measurement and analysis - defining the model

  • The people agenda - putting the model to work

  • The case for measuring and managing engagement

  • Conclusions


Who is rwe npower

Who is RWE npower?

  • CEGB  National Power: Privatisation

  • National Power  National Shower: Internationalisation

  • National Power  Innogy: Focus on Transformation and Integration

  • Innogy  RWE npower - Focus on Growth through Excellence…

  • … in two very different fields


What is the problem

What is the problem?

  • Technology is key vs customer is king

  • We work to keep the lights on vs we work to keep our customers

  • Employees are committed vs employees have transferable skills

  • Engagement with job content vs engagement with job context

  • Knowledge workers vs production workers


The missing link the people agenda

The missing link - the people agenda

  • Q: How do you develop a people strategy which meets the demands of two very different bedfellows?

  • A: Not by trying to create a single strategy…


Drivers of engagement

Drivers of Engagement

Values

Values

Values

Manager

Manager

(#2)

(#2)

(#2)

Values

Senior

EMPLOYEE

EMPLOYEE

Values

Values

EMPLOYEE

EMPLOYEE

(#2)

Leadership

ENGAGEMENT

ENGAGEMENT

(#2)

(#2)

ENGAGEMENT

ENGAGEMENT

Overall Satisfaction

  • Job Satisfaction

  • Advocacy

  • Retention

Overall Satisfaction

Overall Satisfaction

Advocacy

Advocacy

Advocacy

Senior

Senior

Senior

Values

Leadership

Values

Leadership

Leadership

(#3)

(#3)

(#3)

* Based on PeopleMetrics’ proprietary research on employee engagement among knowledge workers and production workers at 40+ global 2000 companies

Direct Manager

Direct Manager

Direct Manager

Work Life

(#4)

(#4)

(#4)


The missing link the people agenda1

The missing link - the people agenda

  • Q: How do you develop a people strategy which meets the demands of two very different bedfellows?

  • A?: By really understanding the key drivers of value creation in each part of the business, and focusing on the things you can do something about


The employee engagement and customer satisfaction cycle

Internal

Service

Quality

Employee

Satisfaction

Employee

Retention

External

Service

Quality

Customer

Satisfaction

Customer

Retention

Profit

From “Achieving Breakthrough Service”. Sept/Oct 1997 Harvard Business Review

The Employee Engagement and Customer Satisfaction Cycle

The Profit Chain

  • Profit and growth are stimulated primarily by customer loyalty

  • Loyalty is a direct result of customer satisfaction.

  • Satisfaction is largely influenced by the value of services provided to customers.

  • Value is created by satisfied, loyal and productive employees.

  • Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.


Our challenge

Q. For which of these do you think that you will change provider in the next 12 months

27/3-23/4/06

Car insurance

Gas supplier

Electricity supplier

Home insurance

Mobile phone network provider

Home telephone

Credit card account

Mortgage

Bank account

Base:

(223)

Our Challenge


Our response

Our Response

  • npower Retail vision: Turning Customers into Fans

  • npower ‘wheel’: integrated performance measures


Our response a worked example

Our Response - a worked example

  • Switching is now less supplier event driven (door-knocking), and more customer event driven (moving house).

  • Many triggers for customers to switch: poor service experience - we can do something about.

  • ‘Right first time’ rate is an obvious metric to watch as an indicator of service performance.


Building the model for registering a new address

Building the model for registering a new address

Internal

Service

Quality

Employee

Satisfaction

Employee

Retention

External

Service

Quality

Customer

Satisfaction

Customer

Retention

Profit

  • Direct impact of rework costs on cost to serve reduces profitability


Building the model for registering a new address1

Building the model for registering a new address

Internal

Service

Quality

Employee

Satisfaction

Employee

Retention

External

Service

Quality

Customer

Satisfaction

Customer

Retention

Profit

  • Poor service experience reduces satisfaction and increases risk of customer defection, and hence reduces profitability


Building the model for registering a new address2

Building the model for registering a new address

Internal

Service

Quality

Employee

Satisfaction

Employee

Retention

External

Service

Quality

Customer

Satisfaction

Customer

Retention

Profit

  • Frustrated customers are often unpleasant to deal with, reducing employee satisfaction and retention …..

  • ….. which in turn erodes competence and hence service quality


Building the model for registering a new address straw man

Building the model for registering a new address - ‘straw man’

Systems

Capability

Management

Capability

Employee

Engagement

Cost to

serve

% right

first

time

Training

Investment

Employee

Tenure

Employee

Competence

Customer

Satisfaction

Customer

Retention

Profit


Building the model for registering a new address straw man1

Building the model for registering a new address - ‘straw man’

Employee

Engagement

Fully engaged

Engaged

%

right

first

time

Disengaged

Employee

Competence

Expert

Competent

Not yet competent


Putting the model to work

Putting the model to work

  • Linkages are articulated empirically.

  • By measuring competence and engagement, we can develop a monetized value for each shift in a particular metric (e.g. ‘not yet competent’ to ‘competent’) and hence an ROI curve. This sits at the core of our people strategy

  • Provides us with a very clear definition of what constitutes good managerial performance, e.g, outcomes rather than processes


It s not just about engagement

Performance = Competence X Engagement

Expert

Competent

Not yet competent

Knowledge workers

Competence

Terrible

twos

Newly promoted

New starts

Not engagedSomewhat engaged Engaged

Engagement


Why do we believe in this approach

Why do we believe in this approach?

  • General case for link between engagement and productivity is now well established.

  • The model provides predictions, which can be tested and the size of effects can be determined with high levels of confidence due to large data set.

  • There are precious few other levers we can access directly to impact performance.


Top 100 listed firms v ftse 100

Top 100 listed firms v FTSE 100


Linking human capital to business results

Business Results

Tier 1

Economic Value

Added

Revenue Growth

Market Share

Stock Performance

Key Performance Drivers

Tier 2

Productivity

Quality

Innovation

Customers

Human Capital Capabilities

Tier 3

Leadership

Workforce

Proficiency

Workforce Performance

Employee Engagement

Workforce Adaptability

Human Capital

Efficiency

Human Capital Processes

Tier 4

Career

Development

Performance Appraisal

Succession Planning/ Leadership Development

Recruiting

Workforce Planning

Workplace Design

Competency Management

Rewards and Recognition

Employee Relations

Human Capital Strategy

Learning

Management

Knowledge Management

Human Capital

Infrastructure

Linking Human Capital to Business Results

Source: Accenture Institute for Strategic Studies


Engagement logic

Engagement Logic

  • An engaged employee is someone who cares and will “go the extra mile”.

  • Strong leadership, opportunities for personal development, good management, decent pay and benefits, a reasonable work-life balance, fun activities which help build close-knit teams, and staff believing the firm to be ethical= levels of engagement will tend to be high.


Engaged disengaged analysis example

Engaged/Disengaged Analysis: Example

* Increase in odds of an employee moving from a lower segment to higher segment (e.g., On the Fence to Engaged) if his/her rating on that item is increased by one unit (e.g., from 4 to 5)

On the Fence  Engaged

Key factors are:

  • I have a sense of accomplishment in my job (1.67*)

  • My manager provides the information I need to do my job (1.54*)

  • Senior leaders’ actions are consistent with their words (1.48*)

  • ABC cultivates an environment where each of us can excel (1.48*)

  • ABC values outstanding people (1.33*)

Fully Engaged (24%)

Engaged(38%)

Engaged  Fully Engaged

Key factors are:

  • ABC cultivates an environment where each of us can excel (1.75*)

  • ABC is a socially and ethically responsible organization (1.50*)

On the Fence(26%)

Disengaged(12%)

Disengaged Engaged

  • No significant drivers were found


Impact of employee engagement

Impact of employee engagement

Employee engagement has been empirically linked to business outcomes through its impact on workforce productivity


Conclusions

Conclusions

  • A focus on engagement enables us to drive up the motivational aspects of our performance.

  • It is the combination of engagement and competence which drives performance.

  • Demonstrating not only that the links exist, but the size of the effects enables the creation of an effective ROI model for investment in competence and engagement. This defines the people strategy.


Challenges

Challenges

  • Getting clarity of vision has been essential to gaining buy-in of HR community and senior management.

  • Establishment of Retail Survey Action Group provided the mechanism for educating the business and HR function.

  • Not all that common to find HR people (or senior managers) with good experience of employee research …

    … hence we work with Getfeedback


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