The Need for Change

Corporate profits are driven by customer satisfaction, customer satisfaction is driven by employee satisfaction, and employee satisfaction is very clearly driven by information flow within the company. Yet some organizations consider customers and employees to reside in separate silos. Sales and marketing engage in making explicit or implicit promises to customers and distribution partners, while human resources engages in an entirely different set of communications with employees. The result, all too frequently, is a breakdown between what the customer expects and what the company actually delivers in terms of the quality of its products, services, and customer experience. Employees in a call center, for example, might be unaware of the features of a new product the company is advertising on TV, or production employees may actually end up working at cross-purposes with marketing because operations managers have their own agenda.

Another study by the Forum for People Performance Management and Measurement proved that this type of disconnect is widespread. The survey of marketing and human resources executives, conducted in 2003, found a rigid system of communication silos between organizations' HR and marketing departments. Respondents from the two groups admitted that they do not communicate as effectively as they should, and in many of the companies studied, the two departments hold different views about which company personnel most affect customers. The survey showed that companies which work on linking external and internal marketing increase the customer orientation of customer-facing employees. It also revealed that higher-performing companies better understand the importance of treating customers well than do lower-performing companies.

One high performer that has already internalized the PPM message is Nationwide Insurance and Financial Services. Jerry Jurgensen made employee engagement with the brand a top priority when he became the company's CEO five years ago. A small yet powerful example of Nationwide's commitment to PPM is its recent translation of the "Nationwide is on your side" jingle into a ring tone that employees can download onto their cell phones. "No matter how strong the brand is, no matter how great the advertising, engaging the hearts and minds of associates is key to deliver on the brand and is Jerry's number-one priority," says Candice R. Barnhardt, associate vice president, organizational effectiveness practice. As one of the company's key PPM emissaries, Barnhardt is responsible for leading strategies that support a healthy, high-performance culture, including change leadership, cultural transformation, diversity and inclusion, and employee engagement.

Engaging the hearts and minds of its employees was the company's goal in launching ImagiNationwide, a far-reaching internal initiative that uses experiential workshops to develop a more performance-oriented culture and to further connect employees to corporate values. "Each and every associate is in customer service one way or the other," Barnhardt says, "even if it means talking to a neighbor over the back fence about the company you work for." More than 11,000 of Nationwide's 33,000 employees have already taken part in the program, and 10,000 more will participate by year-end. Since the program's launch in 2001, the company has seen remarkable changes among its workforce. There has been a shift to a more collaborative environment, both informally and formally. This is no small feat since the company has three distinct lines of business -- domestic property and casualty insurance, life insurance and retirement savings, and asset management -- that historically were culturally separate and were managed as discrete entities. In addition, employees' interest in the company's mission has increased.

Jurgensen has also mandated coaching sessions between employees and their managers, along with annual reviews of how each employee is living and communicating the company's core values, communicating the brand's message internally, and encouraging high performance. Measurement of employee satisfaction and engagement is systemic throughout Nationwide. Annual employee engagement studies measure employees' emotional and intellectual commitment to the organization. These studies focus on four overarching engagement categories, or levers: leaders' proficiency at balancing the interests of employees and the interests of the company, employee opportunities and skill development, the ability of corporate values and culture to help employees deliver results, and the degree to which employees feel they are doing meaningful work.

An annual corporate culture survey is administered companywide and is analyzed in conjunction with the employee engagement survey. The corporate culture survey measures employees' perception of the organization's culture as it pertains to vision, mission, and goals; its leadership alignment; performance expectations; accountability; and the organization's health. Barnhardt explains, "We have seen significant shifts in moving toward clear alignment at the top, openness to change, coaching and feedback, and trust."

Over the past three years, as employee engagement has increased by 9 percent, Nationwide has continued to deliver year-on-year growth despite coping with the not-insignificant challenges that have riddled big business in general and the insurance industry in particular. "The research put forth by the Forum for People Performance Management validates our own efforts and commitment to performance," Barnhardt notes. "The forum's most recent study detailing the financial benefits of engaged employees is the Nationwide story."

All Roads Lead Back to Demand

The mission of the Forum for People Performance Management and Measurement -- and of industry advocates for PPM -- is to better understand the link between external and internal marketing (i.e., communication with customers and with employees) and to develop strategies that strengthen that connection. Achieving this mission will require more research, not only to better substantiate the financial outcomes of PPM, but also to better understand its organizational implications and to determine how and when specific tactics should be applied.

In his recent presentation, Schultz outlined the overall schematic for a people performance management-focused approach to developing an integrated demand-chain business model (see exhibit 4, below). It starts by identifying the key needs and desires of customers, which the company may or may not have already recognized. Managers should ask: What do customers expect, and how do all people -- our channel partners, salespeople, and other employees -- affect how we deliver on their expectations, either directly or indirectly?

From such an analysis will flow proposed solutions and an evaluation of those solutions based on the specific needs of the situation. In other words, a company's solutions to problems with customer satisfaction and profitability will flow from the organization's objectives and audiences, not from the maneuvering of internal departments vying for management resources. The solutions relate to the specific issues faced by each business unit that has a role in helping to achieve the goal, be it marketing, sales, product development, operations, or manufacturing. What will each division contribute, and how will it be measured against the goal?

Getting even more granular, the process also includes an understanding of the media involved with people performance management -- i.e., the communication tools needed to get through to employees and equip them to do their part in achieving corporate goals. These tools can include anything from meetings to incentive and recognition programs to idea-sharing processes. (For a closer look at methods of improving communication with employees, see Operational Alignment: Bridging the Gap Between Strategy and Execution in the March issue of BPM.)

Within this planning framework, people must not be viewed in silos divided between external and internal audiences or between functional units, but in a continuum that has to be addressed as a whole as well as in its parts. Most organizations are clearly not prepared to ensure that all employees and channel partners understand how they can individually contribute to customer satisfaction and retention. Fortunately, ongoing research will help make the connection for them, leading to happier customers, engaged employees, and business success.

Frank Mulhern, Ph.D., is associate professor and chair of the Department of Integrated Marketing Communications at Northwestern University.

Bruce Bolger helped found Northwestern's Forum for People Performance Management and Measurement. He is the founder and president of Selling Communications Inc.

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