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Managing for performance has long-been used as a correlation of
salary or bonus pay. Performance is weighted against customer satisfaction
and loyalty as a way of motivating employees and increasing the
company's responsiveness to its customers. To do this fairly, however,
companies must be able to accurately measure one factor against
the other.
SRA compiled results from several sources, including clients and
contacts that are actively involved in performance management,
and has come up with the following guidelines:
• Employee Input is Essential
The number one observation of our clients and contacts is that
before any customer satisfaction program is undertaken, research
must be conducted among employees. In order to have employees buy
into the system, it is imperative that their voices be heard. Ideally,
this is accomplished through a series of focus groups.
• Indicators of Satisfaction Identified
Based on the information provided by employees at focus groups,
a series of key factors for delivering quality service and driving
customer satisfaction are developed and tested. Ongoing surveys
are then conducted among customers to measure a company's performance
on these key indicators.
• Reward Systems Based on a Mix of Several Factors
Among the factors typically included in a reward/bonus program
are the following:
– Financial: Revenues, Return on Investment, Operating
Costs
– 360-degree Review: Evaluations based on peers,
customers, subordinates, and supervisors
– Customer Satisfaction Score: Metrics derived from
a statistically valid sample of customer interviews
– Quality Performance Ratings: Metrics derived from
internal measurements of performance in areas important to
quality of service
• Balance Between Financial and Customer Satisfaction Factors
Although the percentage of rewards based on customer satisfaction
varies widely by company, about one-quarter to one-third of rewards
is a commonly accepted level, with the rest apportioned between
financial measures and peer review. In companies that take internal
measurements of performance (i.e., number of customer service calls,
time on hold, time to resolution) to complement customer satisfaction
ratings, internal measures are balanced with customer ratings.
Among companies without standardized internal performance measures,
customer satisfaction ratings are commonly used as a “gate.” The
gate establishes the level at which an employee becomes eligible
for some level of bonus, while other factors are used to determine
the actual amount of the bonus. The gate is recommended by many
because the entry level decision remains in the hands of management.
• Fair Requirements
Incentives are scaled to provide a disincentive for below-acceptable
performance and a reward for outstanding performance. In other
words, both a high bar and a low bar are established.
To be effective motivators, minimum requirements need to be seen
as fair and obtainable. While rewards for attaining high bar levels
should be substantial enough to create an incentive, they should
be somewhat difficult to achieve. Finally, reward scales or gate
levels should be reviewed at regular intervals. ‡
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