Employee Engagement Webinar - February 2014 - Beyond Philosophy

1. Employee Engagement, Ambassadorship and Customer Centricity Michael Lowenstein Thought Leadership Principal Colin Shaw Founder & CEO www.beyondphilosophy.com

2. Who Is Beyond Philosophy? Customer Experience is Customer Experience is all weall we do! 2002! do.. Since We focus on the emotional side of customer experience © Copyright Beyond Philosophy 2002 -2014 All rights reserved We work globally with offices in London and North America; with partners in Africa & Asia. ‘Secrets of a Successful Global Customer Experience Program’ – Palgrave MacMillan 2013 beyondphilosophy.com Thought leadership is our differentiator Evidence based consulting & training 2

4. Defining the Customer Loyalty Behavior Landscape Today’s B2B and B2C customer is more mobile, contentseeking, impatient, and independent than at any time in history. Even with all of these new decision dynamics, the fundamentals of trust and perceived value have become increasingly powerful drivers of loyalty and bonding. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 4

5. Why Customer Loyalty Is At Growing Risk ! ! ! ! ! ! Companies aren’t current with rising consumer expectations, need for personalized value Loyalty programs are passive, miss mark Digitization/mobile makes everything transparent and accessible; companies arent omnichannel Overfocus on rational, functional touch points and transactional value rather than overall experience No unique relevance or innovation for consumers; everything becomes a price-based commodity Customer-centricity, and especially employee engagement and ambassadorship, are key ‘back to basics’ elements of value delivery missing from many organizations © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 5

6. Becoming a More Customer-Centric Enterprise: Moving from Naïve to Natural •  •  •  •  Customer Awareness – customers known, but in aggregate; the organization believes it understands customer needs; measurement of stakeholder behavior is rudimentary, if it exists at all; hierarchical management model; chimneyed communication, with little teaming Customer Sensitivity – customers known, but still mostly in aggregate; service more in evidence (focus on problem/complaint management); measurement is attitudinal and functional, with little emphasis on emotional drivers; traditional management hierarchy Customer Focus – customers both known and valued, down to individual level; customers recognized as having varied needs; service and value provisions are enterprise priorities; more proactive communication and collaboration with customers; more horizontal management structure Customer Obsession – customer needs and expectations are well understood throughout the enterprise; everyone provides value; loyalty behavior is paramount, and optimal relationships are a key priority, with service a vital, and profitable element of delivery; management is extremely horizontal, with emphasis on customer inclusion and teaming © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 6

8. Customer-Centric Linkage of Stakeholder Groups ! Customers who ac'vely (vocal, level of favorability, reduced considera'on set, etc.) express their personal commitment to a supplier can be strongly posi've (advocates), neutral, or nega've (saboteurs). ! Employees, similarly, can signiﬁcantly impact customer loyalty behavior toward their employer through a range of a>tudes and behaviors on behalf of the brand, company and customer. These a>tudes and behaviors, like customers, can range from highly posi've, to indiﬀerent, to highly nega've. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 8

9. The Role of People… Why They Can Be So Critically Important 68% 41% …of customers LEAVE because of poor employee aCtude …of customers are LOYAL because of a good employee aCtude Source: Parkington and Buxton, Study of the US Banking Sector, Journal of Applied Psychologyy Source: MCA Brand Ambassador Benchmark 70% …of customer brand percepGon is determined by experiences with PEOPLE Source: Ken Irons, Market Leader UK retailer: 1% increase in employee commitment = 9% increase in monthly sales Enterprise IG © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com

11. Customer Value is About Much More Than Money – It Is the Overall Experience ! Value = Customer-‐perceived raGonal (funcGonal and tangible) and emoGonal (intangible and relaGonship) beneﬁts supplied + soluGons provided -‐ what is required by customer to obtain beneﬁts and soluGons ! Today, emoGonal components of delivery have greater impact, in both B2B and B2C products and services ! The Kano Model !   Expected -‐ Failure to deliver will result in likely defecGon !   One-‐Dimensional -‐ Desired, standards of compeGtors !   A?rac@ve/Surprising -‐ PosiGve and unanGcipated © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com

12. Kano Model Eﬀects of Experience and InteracGons With Employees on PotenGal Commitment and Advocacy Behavior Figure 1: Kano Analysis The lower curve of the model reﬂects basic © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com

14. Employee Research Approaches Employee Attitudes and Behaviors Research Employee Satisfaction, Values, and Loyalty © Copyright Beyond Philosophy 2002 -2014 All rights reserved Employee Engagement and Alignment beyondphilosophy.com Employee Commitment and Ambassadorship (Advocacy) 14

15. Definitions of Employee Research Concepts and Methods ! Employee Sa@sfac@on and Loyalty – Iden'fies employee a>tudes and behaviors leading to job sa'sfac'on and employer loyalty ! Employee Engagement and Alignment – Iden'fies employee a>tudes and behaviors leading to agreement with, and belief in, overall company mission and objec'ves, as well as ‘fit’, or alignment, and produc'vity within organiza'onal culture ! Employee Ambassadorship – Iden'fies the most ac've level of employee commitment to the company’s product and service value promise, to the company itself, and to op'mizing the customer experience. It is linked to, but dis'nc've from, the produc'vity and empowerment elements of employee sa'sfac'on, engagement, and alignment research because its emphasis is building customer bonds through employee interac'on. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 15

16. OpGmizing Customer Experience and RelaGonships Linking Customer and Employee Commitment to Business Results C U S T O M E R R E S E A R C H Employee Commitment and Ambassadorship Customer Commitment and Advocacy Now Strong CorrelaGon Employee Engagement and Alignment Customer Loyalty 1990’s Now Weak and IntuiGve CorrelaGon 1990’s TQ and SaGsfacGon Employee SaGsfacGon & Loyalty 1980’s and earlier E M P L O Y E E R E S E A R C H 1980’s and earlier © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 16

17. Many Ways to Define Employee Engagement Analysis conducted by The Conference Board in 2006 showed that, among twelve leading engagement research companies, there were 26 key drivers, of which eight were common to all: -‐ Trust and integrity – How well do managers communicate and 'walk the talk‘? -‐ Nature of the job – Is it mentally s'mula'ng day-‐to-‐day? -‐ Line of sight between employee performance and company performance – Do employees understand how their work contributes to the company's performance? -‐ Career growth opportuniGes – Are there opportuni'es for growth within the company? -‐ Pride about the company – How much self-‐esteem do the employees feel by being associated with their company? -‐ Coworkers/team members – How much inﬂuence do they exert on the employee’s level of engagement ? -‐ Employee development – Is the company making an eﬀort to develop the employee's skills? -‐ RelaGonship with one's manager – Does the employee value rela'onship(s) with manager(s), and is there trust and credibility between the levels? Typically, little or no mention/inclusion of ‘customer’ or ‘customer focus’ in measures or analysis of employee engagement. Though customer experience, and resultant behavior, is impacted by engagement, it tends to be more tangential than purposeful in nature. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 17

18. The Three Components of Employee Ambassadorship Commitment to Company - Commitment to, and being positive about, the company (through personal satisfaction and an expression of pride), and to being a contributing, and fully aligned, member of the culture. Commitment to Value Proposition - Commitment to, and alignment with, the mission and goals of the company, as expressed through perceived excellence (benefits and solutions) provided by products and/or services Commitment to Customers - Commitment to understanding customer needs, and to performing in a manner which provides customers with optimal experiences and relationships, as well as delivering the highest level of product and/or service value. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 18

19. Employees That Score High on Commitment to the Company, The Value Proposition, and the Customer Are Considered Ambassadors Company Value ProposiGon Ambassador Customer © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 19

20. Employee Ambassador/Saboteur ‘Swing Voter Analysis uncGon Analysis) (Discriminant F What turns indifferent employees into ambassadors? Employee Ambassadors Indifferents Saboteurs What turns indifferent employees into saboteurs? © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 20

21. Looking Under the Hood A Detailed Ambassadorship Case Study: Employee and Guest Research Results for Major Las Vegas Hotel/Casino © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 21

22. Employee Ambassadorship Levels Overall and High/Low Divisions N Employee Ambassadors Positive Loyalists Passive Contributors Disinterested Seatfillers Employee Saboteurs 2,622 23% 28% 25% 15% 9% Sales Convention 101 47% 28% 19% 4% 3% Fitness Center 37 40% 30% 14% 16% - Marketing 43 37% 33% 12% 16% 2% Valet 53 36% 40% 19% 6% - Pool Bars 40 35% 40% 13% 10% 3% Retail 57 35% 25% 18% 21% 2% Banquets 204 29% 28% 20% 11% 3% Restaurant 69 6% 19% 36% 17% 9% Security 76 8% 17% 33% 22% 20% Housekeeping 170 9% 19% 27% 25% 16% Bell 47 13% 13% 17% 26% 32% Casino Bars/Lounges 129 16% 14% 29% 25% 17% OVERALL HIGH LOW © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 22

23. Overall Satisfaction with Job Aspects Except for work safety, extent of diversity, and immediate supervisor, there tended to be very high concentraGons of high job environment saGsfacGon among Ambassadors. NegaGve feelings about immediate supervisor, hotel management, and opportunity advancement were strong and spread beyond Saboteurs, in other words there was more pervasive negaGvism among employees. % of Ambassadors (Top Box) / % of Saboteurs (Bottom Box) The hotel as a whole 49% (9%) The hotel management as a whole 65% (16%) 75% (11%) 34% (19%) My immediate supervisor 51% (25%) 25% (20%) The extent of diversity among my co-workers Ambassadors 33% (9%) The safety of my workplace 47% (24%) 36% (9%) Overall work environment Saboteurs 53% (22%) 75% (13%) 41% (14%) Opportunity for career advancement 65% (15%) 25% (25%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Percent Score © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 23

24. Employee Ambassadorship Diagnostics Customer Focus Empowerment, though showing a high concentration, is not associated with ambassadorship as much as other factors. A relatively low concentration of Lack of Recognition among Saboteurs extends beyond saboteurs suggests that this problem is pervasive in other employee segments as well. % Ambassadors (Top Box % Agreement) / % Saboteurs (Bottom Box % Disagreement) 53% (17%) Employees receive the training needed to serve guests 30% (13%) We regularly use guest feedback to improve our work processes 54% (17%) 34% (14%) á Ambassadors á 47% (25%) I feel empowered to solve guest problems Saboteurs 32% (12%) My department has clear objectives for helping improve the guest experiences 56% (22%) á 37% (12%) 56% (17%) Employees are recognized for delivering outstanding service to guests á 0% 10% 20% 26% (21%) á 30% 40% 50% 60% 70% Percent Score © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 24

25. Employee Ambassadorship Diagnostics Business Alignment Motivation to help the hotel be successful and clear understanding of hotel mission, though receiving high agreement, were not particularly strong in their association with Ambassadorship. The negative effects of poor ratings on information about the hotel having tools and technology, encouragement of diverse perspectives and decision participation likely extend beyond Saboteurs. % Ambassadors (Top Box % Agreement) / % Saboteurs (Bottom Box % Disagreement) I am motivated to help the hotel be successful 47% (36%) á á á 63% (8%) 53% (26%) 58% (8%) The hotel is a leader in its field á I have a clear understanding of the hotel’s mission I am kept well informed about what’s going on at the hotel á Diverse perspectives are valued and encouraged in my dept. á I am encouraged to participate in decisions that affect my work á 0% 10% 20% 51% (23%) 32% (12%) á á I have the tools, technology, and equipment to do my job (33%) á 55% (6%) 46% 33% (14%) á á á 30% (21%) á 40% Saboteurs 51% (23%) 32% (16%) á 30% Ambassadors 50% 58% (21%) 57% (20%) 60% 70% 80% Percent Score © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 25

26. Employee Engagement/Ambassadorship Workshop Will Also Cover…. ! Management Effectiveness – diagnostics which address supervisor/employee interaction ! Career and Growth - diagnostics which address staff opportunity for accomplishment and advancement ! Morale and Culture - diagnostics which address personal value, work environment, and relationships throughout the enterprise ! Cohesion - diagnostics which address levels of support, teamwork and cooperation, within and between groups © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 26

27. Hotel Ambassadorship Swing Voter Analysis Classification of Attributes In swing voter analysis, key hotel drivers are divided into three groups depending on their unique contribution to employee growth and/or risk. These are: •  Delighters: Improving performance on these attributes will move swing voters into the ambassadors group while declining performance on them has little impact. These delighters tend to have impact if there is good employer performance where good performance wasn’t expected. •  Dissatisfiers: Declining performance on some attributes will move swing voters into the saboteur group while improving performance has little impact. These dissatisfiers tend to have impact when there is poor performance where good performance is expected. •  Dual Effects: These dual effect attributes show improved overall feelings about the hotel in both directions, i.e. they are associated with moving swing voters into the Ambassador camp with good performance as well as with moving swing voters into the Saboteur camp with poor performance. The following charts show selected attributes that are either Delighters or Dissatisfiers © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 27

28. Swing Voter Analysis Importance Scores for Selected Anributes (“Swing Up” To Ambassadors, “Swing Down” To Saboteurs) Swing Up Swing Down I trust the hotel 28% 4% My work gives me a sense of personal accomplishment 8% 4% The hotel is focused on attaining the highest quality possible 7% - Overall value of service provided 6% 23% I very much enjoy doing my job 6% 10% I feel a lot of stress at work 6% 6% The hotel is very loyal to its employees 6% 2% My immediate supervisor 4% - The hotel will do whatever it takes to makes guests happy 4% - I have a clear understanding of the hotel’s mission, goals, and objectives 2% 13% - 8% 2% 5% The extent of diversity of co-workers I am very committed to my work Delighters © Copyright Beyond Philosophy 2002 -2014 All rights reserved Dissa'sﬁers beyondphilosophy.com Dual eﬀects 28

29. Delighters (Opportunities for Ambassadorship Growth) Building employee trust and pride in the hotel (viewpoint that the guests believe Las Vegas Hotel/Casino has their interests at heart), pride in their work and their accomplishments at work, clear supervisory direction and training, and a clear view to the potential of a promising future at Las Vegas Hotel/Casino all can create a higher proportion of Employee Ambassadors at Las Vegas Hotel/Casino. Primarily upside diagnostics (in order of importance): •  •  •  •  •  •  •  •  •  •  •  •  •  I trust the hotel My work gives me a sense of personal accomplishment The hotel is focused on attaining the highest quality possible My immediate supervisor The hotel will do whatever it takes to make guests happy Guests would continue to stay at the hotel because of the high level of personal service they receive Diverse perspectives are valued and encouraged in my department The safety of my workplace My supervisor makes it clear what I am expected to do Employees receive the training needed to serve guests I feel I have a promising future at the hotel How likely do you think it is that you will be promoted next year? Trust, pride in hotel, pride in self, supervision, growth © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 29

30. Dissatisfiers (Risk of Ambassadorship Decline) Feelings of low self-esteem because of the perceived worth of their jobs, feelings of isolation from the Las Vegas Hotel/Casino mission, its management and fellow employees, feelings that they are not adequately enabled to carry out their respective tasks, and beliefs that Las Vegas Hotel/Casino is not a leadership resort all contribute to turning neutral and disenchanted employees into Employee Saboteurs. Primarily downside diagnostics (in order of importance): ! ! ! ! ! ! ! ! ! Overall value of service provided I have a clear understanding of the hotel's mission, goals and objectives The hotel is committed to providing equal opportunities for all employees I am kept well-informed about what's going on at the hotel I have the tools, technology and equipment I need to do my job There is team work between management and staff at the hotel The hotel is a leader in its field I have a sense of closeness with other employees at the hotel Employees are recognized for delivering outstanding service to guests © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 30

31. Some Mirroring Diagnostic Elements (Top 2 Box Scores – 7 Point Scale) ! Employee Ambassadors were dramatically more likely to rate hotel/casino highly when compared to Saboteurs, but employees often out of sync – and sometimes significantly so - with Guests All Employees Guests Employee Ambassadors Employee Saboteurs 100% 90% Percent Top 2 Box 80% 82% 81% 79% 82% 73% 72% 70% 60% 50% 40% 49% 49% 46% 48% 32% 40% 39% 36% 38% 37% 31% 25% 30% 20% 15% 9% 10% 14% 10% 6% 0% The hotel will do whatever it takes to make guests happy © Copyright Beyond Philosophy 2002 -2014 All rights reserved The hotel has the guests best interest at heart The hotel will do what it takes to resolve any problems the guests have beyondphilosophy.com The hotel trends guests as valued customers The hotel exceeds guests’ expectations 7% Guests feel they have a personal relationship with the hotel as their Las Vegas destination 31

32. Summary of Key Employee Ambassador Behavior Implications for Hotel ! Hotel had a stronger employee ambassadorship profile than the service industry in general (ambassadorship is the likelihood of employees to be so positively disposed toward hotel that they actively promote it as a place to work). !   There is a significantly higher percentage of ambassadors among hotel employees (compared to service industry employees in general); !   however, several hotel departments had high percentages of saboteurs, including restaurant, security, housekeeping, bell, and casino bars, lounges ! Hotel employees had significantly lower one year from now employment likelihood scores compared to the service industry as a whole. !   However, their higher likelihood to recommend hotel as a place to work suggest reasons for leaving may be less driven by dissatisfaction than one would expect and more driven by expected career changes or by the availability of several alternative employers for the same jobs in Las Vegas © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 32

33. Summary of Key Implications for Hotel, contd. ! “Swing Voter Analysis” !   Trust and personal accomplishment are primary delighters (drivers of ambassadorship) !   Perceived value of services employees provide is a major dissatisfier (driver of prospective sabotage), especially among key customer-facing groups, followed by having a clear understanding of the hotel mission, vision, and goals !   Primary dual effect attributes (both driving ambassadorship and saboteur status) are stress level and job enjoyment, perhaps two sides of the same coin. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 33

34. Nine Ambassadorship and Customer Centricity Employee Best Practices ! ! ! ! ! ! ! ! ! Build a climate of trust and authenticity Train, train, train (and cross-train in customer sensitivity and value proposition) Make certain everyone has a career path Provide frequent evaluations/contribution reviews Seek to inform, seek to debrief, and be transparent Recognize and reward customer-focused initiative and proaction Don’t just ask employees what they want, provide it By all means, have fun Hire the ‘right’ employees in the first place Source: Customer WinBack, Jill Griﬃn and Michael Lowenstein Will be broadly covered in ambassadorship workshop © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 34

36. Customer-Centricity Is About More than Structure, Strategy, and Systems…. ! ! ! ! ! Most brands and corporations get by on macro, passive, and transactional approaches to customer relationships: service speed, price promotions, merchandising gimmicks, new product offerings, etc. Customers, as a result, see no brand personality or brand-tobrand differentiations Experience of brand is non-engaging and one-dimensional, easily capable of replacement Customer has no personal investment in choosing, or staying with, one brand or supplier over another Per Raj Sisodia and John Mackey (Conscious Capitalism): “… many corporations seem to exist primarily to maximize the compensation of their executives and secondarily to create shareholder value, rather than to optimize sustained value creation for all stakeholders.” © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 36

37. …It’s About Emotions, Humanity…and Profit ! ! ! ! ! “Being human” – Not just a buzzword, especially in brandbuilding and leveraging customer relationships To better understand customers, enterprise must think in emotional and human terms To become more trusted, organizations must connect with customers through branded experiences Emotional connections in all elements of value – service, advertising, packaging, billing, products, etc. – should be thought out for consistency Sisodia, Sheth, and Wolfe (Firms of Endearment): “What we call a humanistic company is run in such a way that its stakeholders – customers, employees, suppliers, etc. - develop an emotional connection with it. Humanistic companies seek to maximize their value to society as a whole, not just to their shareholders. They are the ultimate value creators. They create emotional value, experiential value, social value, and of course, financial value.” © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 37

38. Based on Ambassadorship-Based Strategic Research, What Customer-Centric Actions Should Companies Be Taking? ! ! ! ! Employees, at all levels and in all functions, need to have a thorough understanding of what is important to customers so that their actions match customer expectations and performance requirements. Within a customer-centric enterprise, employees’ behavior needs to be aligned around positive customer experiences and customer loyalty; driving employee engagement, enablement and energy, components of ambassadorship, should be stressed Management must build processes, technology, training, reward, recognition, and organizational/cultural practices that support employees being able to optimize customer experience. Companies should evaluate the effectiveness of key metrics associated with delivering customer value – financial and nonfinancial performance, addressing customer life cycle, amount of cross-functional collaboration to support customers. © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 38

39. Employee Engagement Course 4 live interactive webinars 60-90 mins in length Homework Exam for certification 30th April – 21st May 2014 Advertised price $ 599 $ 50 off $ 549 © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com Use promotion code: WEBINAR50 39

40. What You Will Learn in Employee Engagement and Ambassadorship Workshop ! ! ! ! ! ! ! How to assess, and build, the enterprise culture to focus on customer-centricity How to have a better understanding of customer life cycle, and how employees influence it How to assure that employees, at all levels and in all functions, have a thorough understanding of what is important to customers How to align employee behavior around positive customer experiences and customer loyalty How to build processes, training, reward/recognition and cultural practices that both support employees and optimize customer value and experiences How to apply contemporary and actionable metrics, through employee emotional connection and behavior that drive value How to sustain employee ambassadorship within the enterprise © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 40

41. Thank You/Q & A ! Beyond Philosophy Employee Engagement and Ambassadorship Workshop: http://www.beyondphilosophy.com/training-courses/ employee-engagement ! Contact information for Michael Lowenstein: michael.lowenstein@beyondphilosophy.com © Copyright Beyond Philosophy 2002 -2014 All rights reserved beyondphilosophy.com 41

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