Setting Expectations

By Navigator member John Champion, Director, EBS Human Resources

What's the link between profit and employee engagement?
Research has shown that there is a clear link between a healthy business and employee engagement. 

*  Good leaders and managers drive employee engagement
*· Engaged employees drive customer loyalty
*· Loyal customers drive sustainable growth
*· Sustainable growth drives real profit increase
*· Real profit growth drives up company value
 
This summary comes from the Gallup organization.  Have a look at 'First Break All the Rules' by Marcus Buckingham and Curt Coffman for a deeper explanation. More details are at the foot of this letter.
 
Also, recent research by the CIPD (Chartered Institute of Personnel & Development) shows that only a third of UK employees are engaged at work and that employee engagement is linked to improved performance, lower levels of sickness etc.   So anything you do which helps to improve the motivation of your employees is likely to give you a competitive advantage.  What proof is there that this philosophy works?
 
I proved it when I worked at Xerox, over a decade ago.  My international leadership award said:
 
"In 1994, Xerox Engineering Systems recorded the biggest turnround in Employee Satisfaction for a Business Division in the history of the Xerox Corporation, an increase of 14% points in one year.  Your achievements in the UK Operations played a significant part in this success.  You also enjoyed 13% revenue growth and a dramatic year on year profit improvement.  To recognise this, I am pleased to confirm that you have been chosen to receive the 1994 Leadership Award for Xerox Engineering Systems." 
 
I still have the crystal trophy to prove it but the cash award has long gone!  However, it did demonstrate to me that applying quality techniques to a business will produce financial rewards over time.
 
Now you might say - "well that's fine for a massive organisation like Xerox, they have the resources to do all this quality stuff".  But my Father proved it when he ran a small garage in Sheffield.  The business he founded still has his name over the door and he died over 25 years ago!  He looked after his employees because they were the main interface with his customers.  So this is not 'rocket science'.
 
Common sense tells you if your employees are motivated and feel good about their company, they'll give good service to your customers.  On the other hand................?
 
Therefore, it makes good commercial sense to constantly work on improving things over time for both your customers and your employees.
 
For an article by Claire West on 'Employee Engagement', please scroll to the foot of this article.

Why is setting the right expectations so important?
People tend to be happier when they know where they stand.  So how is this going to help with customer satisfaction, employee motivation and driving growth?

Customers need to know what they can expect from your products or services.  They'll have expectations which are formed when they go through the buying process.  Sales people will lay these out in some form of a proposal or contract.  If you meet their expectations they'll probably be satisfied.  If you exceed their expectations, they'll hopefully be very satisfied.  On the other hand, if you fail to deliver to specification or on time they'll be dissatisfied.

The best way to find out if you're meeting your customers' expectations is to ask them.  When did you last ask a customer if their expectations had been met?  A quick call to ask a few simple questions will give you valuable feedback.  If you would like help in carrying out 'post delivery' checks, we can advise on the best questions to ask, how to handle various responses and how to seek information to improve your products and services.  Most importantly, ask a question to assess their overall satisfaction on a scale of 1 to 5, where 5 is very satisfied and 1 is very dissatisfied.  You might be surprised by the answers!

Employees need to know 'the ropes'.  One of the biggest factors in employee motivation is letting people know what you expect from them in terms of behaviour and performance.  There are a number of ways to do this such as:

Writing down your rules, policies and procedures and making these available to everybody.  It's usually in the form of a document in printed form (often it's called a handbook but you might like to call it something else to make it sound less boring) or on the company computer network.  It needs to be updated every so often when you or the Government change the rules.  If you'd like a checklist of the sections that should go into this document - please download our factsheet by clicking this link:
http://www.ebshr.co.uk/downloads/EBS_hr_level1_factsheet.pdf

Each employee should know their individual role and their responsibilities.  As things change, you'll need to review these periodically to make sure they cover the current priorities.

Each employee should know how you are going to measure their performance.  So setting goals and objectives is essential.  Otherwise, how will you be able to assess their progress?

Giving feedback and letting people know how they're doing on a regular basis is a very useful discipline.  Regular appraisals will help to iron out any problems before they become critical.  Appraisals can be a burden if the onus is on the manager to do all the work.  So, it's best if the employee is engaged in preparation and coming up with action plans.  A useful tool to use with employees who are doing OK is the GROW model of coaching. 

Research by Gallup has shown that if you want to build a strong and vibrant workplace, the most important first step is to make sure everybody knows what's expected of them and how they stand.  So, if you asked each of your employees this simple question - "do you know what is expected of you at work?"-what would the result be?  Ask them for a score out of 5.  Getting a high proportion of 4s or 5s is not easy but it will be a very good indicator of employee satisfaction.  For further reading on this - scroll to the foot of this article.

How might setting the right expectations increase sales?
When we buy something we like to get what we ordered and we like it delivered on time.  That's true for everybody isn't it?  For business customers it's particularly important.  How often do you have problems because your sales people promised something which you couldn't achieve?  They promised something which wasn't detailed in the proposal or wasn't in the specification.  They committed you to a delivery time without checking the facts.  In other words, they set expectations in the mind of the customer but didn't let you know.  This sort of 'omission' goes on all the time and is often a root cause (see later for root causes) of customer dissatisfaction, reduced margins and increased costs. 

Addressing issues like this could help to increase sales because:

*  Customer requests for other features or services can be assessed at the proposal stage and could lead to increased order values
*  If customers get what they expect on time they are more likely to come back for more
* They will tell others enthusiastically about what you did for them
* Frequent requests for other features or services could be consolidated into new offerings

How will using facts help you make better decisions about change?
Often, when the pressure is on, it seems to make sense to take action quickly.  Life can be just too hectic to waste time on measuring things and doing analysis.  Some executives think it's much better to go on 'gut feel' and the opinions of just a few people.  How often have you heard the phrase 'paralysis by analysis' or words to that effect?  However, it might be the wrong approach.  The trick is to work out the 'vital few' actions that will bring about the most success.  A useful technique to adopt when solving problems is to use these 4 steps:

The 4 step quality process for solving problems
*  Identify the problem or critical business issue (CBI)
* Analyse the reasons for the problem and identify the root causes
* Develop solutions to eliminate the root causes
* Translate the chosen solutions into actions

Usually there are one or two root causes of any problem that stand out from all the rest.  Eliminating these will probably solve the problem or significantly close the performance gap.  So identifying these and focussing on the best ways of removing them will mean that the actions chosen will have the most impact.

How do you know if you have a problem in the first place?  The easiest way to identify a problem is to monitor a few key business parameters on a regular basis and compare the actual results with targets.  As an example, the most vital measurement in most businesses is cash in the bank.  If cash in the bank should be £100,000 at month end and it turns out to be £25,700 - that's a fact and a big problem.  It's only 25.7% of plan.  Analysing the reasons for the shortfall should show why it's happened.  Has a large customer gone bust and failed to pay, have sales fallen below target, have costs gone over budget?

A useful technique at the analysis stage is to 'ask the 5 whys'.  An explanation of this technique can be found using the link below.  Asking why in this way helps you to 'drill down' to the root of a problem.  So, as an example, if the above situation was in an IT company the drill down might go like this;-

Problem: Cash in the bank is only 25.7% of plan

Why 1? A large system implementation wasn't signed off last month.
Why 2? The customer was expecting functionality that wasn't in the implementation plan.
Why 3? The installation paperwork was incomplete and missed out some of the items the sales person promised.
Why 4? The sales person was unsure whether some of the things the customer wanted could be delivered on time but needed the order to meet his target so he missed them out.
Why 5? There is no policy of vetting quotations to ensure that customers' requirements are clearly laid down and can be delivered on time. 

And so on .................

In this case, it looks like the root cause is a break down in the sales process.  The solution might be a review of the steps between technical vetting and implementation to ensure that commitments made at the proposal stage are understood and can be delivered.

For action oriented people it often seems expedient to miss out steps 2 and 3.  Why not just identify the problem and move to actions as rapidly as possible?  Well, it could be that the wrong actions will just create busy work, burn resources and might make the problem worse.

We'll come back to a more detailed look at problem solving in a later edition.  However, if this is something you want to explore now - by all means get in touch by email or phone.

A useful technique at the analysis stage is to 'ask the 5 whys'. An explanation of the '5 whys' can be found using the link below:

Useful Web Links
Additional information on topics in this e-letter can be obtained from the following websites:

HR Services from EBS Management Resources: www.ebs-hr.co.uk

Employee Engagement - An article by Claire West: www.freshbusinessthinking.com
and look under Business Advice and HR.

Problem Solving - Asking the 5 Why's: www.mindtools.com and go to the Problem Solving page.

The GROW Coaching model www.mindtools.com and go to the Leadership Skills page.

Further reading: 'First, Break All The Rules'  What the World's Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman. Simon & Schuster ISBN 0-7432-1987-2

John Champion, Director, EBS Human Resources
www.ebs-hr.co.uk




 


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