Establishing Accountability for Employee Survey Results

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1 CORPORATE LEADERSHIP COUNCIL FACT BRIEF Establishing Accountability for Employee Survey Results February 2000 Table of Contents Research Methodology Background Information Report Missions and Imperatives Overview Research Findings What are companies objectives in using employee satisfaction surveys? What processes do companies use to follow-up on survey results? What incentives do companies use to ensure that executives are accountable for acting on survey results? This project was researched and written to fulfill the specific research request of a single member of the Corporate Leadership Council and as a result may not satisfy the information needs of other members. In its short answer research, the Corporate Leadership Council refrains from endorsing or recommending a particular product, service or program in any respect. Sources are contacted at random within the parameters set by the requesting member, and the resulting sample is rarely of statistically significant size. That said, it is the goal of the Corporate Leadership Council to provide a balanced review of the study topic within the parameters of this project. The Corporate Leadership Council encourages members who have additional questions about this topic to assign custom research projects of their own design. Catalog No.:

2 CORPORATE LEADERSHIP COUNCIL CORPORATE EXECUTIVE BOARD 2000 Pennsylvania Avenue, N.W. Washington, DC Telephone: FAX: TABLE OF CONTENTS RESEARCH METHODOLOGY AND BACKGROUND INFORMATION 2 REPORT MISSIONS AND IMPERATIVES 3 EXECUTIVE SUMMARY 4 RESEARCH FINDINGS 5 SECTION ONE OBJECTIVES OF EMPLOYEE SATISFACTION SURVEYS 5 Business Objectives 5 SECTION TWO SURVEYS 7 Surveys and Follow-Up 7 SECTION THREE INCENTIVES USED 12 Compensation Tie-In and Other Accountability Tools 12 APPENDIX 15

3 CORPORATE LEADERSHIP COUNCIL CORPORATE EXECUTIVE BOARD 2000 Pennsylvania Avenue, N.W. Washington, DC Telephone: FAX: FACT BRIEF Establishing Accountability for Employee Survey Results February 2000 RESEARCH METHODOLOGY The Corporate Leadership Council interviewed human resources employees at five United States corporations. These individuals discussed establishing creating accountability for employee surveys. In addition, Corporate Leadership Council staff reviewed secondary materials and sources concerning this topic. BACKGROUND INFORMATION Company Number of Employees Revenues Industry Company A More than 100,000 More than $20 billion Manufacturing Company B 20,000 60,000 $5 billion - $10 billion Information Technology Company C 7,500 20,000 $10 billion - $20 billion Utilities Company D 20,000 60,000 More than $20 billion Insurance Company E 60, ,000 $10 billion - $20 billion Transportation

4 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 3 REPORT MISSIONS AND IMPERATIVES SECTION ONE OBJECTIVES OF EMPLOYEE SATISFACTION SURVEYS 1) What are companies objectives in using employee satisfaction surveys? 2) How have the results of the employee surveys been used to improve business results? SECTION TWO SURVEYS AND FOLLOW-UP 3) Do companies use an off-the-shelf instrument or develop an in-house survey? 4) After the completion of the survey, who is responsible for planning follow-up efforts? 5) Is survey follow-up an informal or formal process? Please describe the process and timeframe of survey follow-up. SECTION THREE INCENTIVES USED 6) What tools or incentives do companies use to ensure that executives are accountable for acting on survey results? 7) How do companies measure whether or not executives have been held accountable for acting on the results of employee surveys? 8) What are the critical factors for ensuring accountability for employee surveys?

5 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 4 EXECUTIVE OVERVIEW The following table provides observations regarding establishing accountability for employee survey results: OBSERVATIONS ABOUT EMPLOYEE SURVEY USAGE AND ACCOUNTABILITY SECTION OF REPORT OBSERVATION Business Objectives Survey Follow-Up Compensation Tie-In and Other Accountability Tools All profiled companies believe that employee engagement is linked to customer satisfaction. As a result, companies use employee surveys, that were developed in-house, to help ensure customer service quality. All profiled companies designate survey follow-up to the business units. All profiled companies, except Company B, tie managers compensation to survey accountability. Company B uses a section of the survey to ask about managerial follow-up to survey result. The following table lists success factors regarding establishing accountability for employee survey results: SECTION OF REPORT Business Objectives Surveys Survey Follow-Up Compensation Tie-In and Other Accountability Tools LESSONS LEARNED ABOUT EMPLOYEE SURVEYS AND ACCOUNTABILITY ADVICE Hold people accountable for employee survey results in order to ensure expected business results caused by greater employee satisfaction. Allow line managers and different groups of management to develop portions of the survey so that they will be more invested in the results and responses will be of greater use to them. Communicate survey results to employees to ensure that the process has credibility. Focus on exemplary areas in addition to areas that need improvement in order to benchmark internal best practices. Use frequent surveys, to measure score improvement and to ask specifically if employees believe that managers are taking action, in order to ensure accountability. Break down survey results to the smallest business unit to increase accountability across all units and to enable comparison of similar functions in different business units or locations. Pair presentations of results with immediate action planning in order to maintain momentum and focus on improvements. Have leadership buy-in and support to demonstrate the priority of acting on survey results. ADVISED BY COMPANY Company D Company A Companies B and E Company E Companies D and E Companies A and B Company E Company C

6 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 5 RESEARCH FINDINGS SECTION ONE OBJECTIVES OF EMPLOYEE SATISFACTION SURVEYS Business Objectives Observation All profiled companies believe that employee engagement is linked to customer satisfaction. As a result, companies use employee surveys to help ensure customer service quality. Companies A, C, D and E base their use of employee satisfaction surveys on the following philosophy, which Company D identifies as James Heskett s service profit chain theory: 1 Employee satisfaction and commitment Customer satisfaction and loyalty Advice #1 Hold people accountable for employee survey results in order to ensure expected business results caused by greater employee satisfaction. The table on the following page provides background information regarding the development and implementation of surveys used at profiled companies and the objectives for the surveys use. 1 Please see appendix for about how to obtain Heskett s book called The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value.

7 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 6 Business Objectives (continued) Company Company A Company B Company C PURPOSES OF EMPLOYEE SURVEYS Survey Development Reasons for Using Surveys and Frequency Track employee attitude toward current conditions and potential change Communicate to managers that employee attitudes affect overall business results in the following areas: In-house annually Absenteeism Cost reduction Safety Turnover Assess process efficiency, as measured in one section of the survey In-house annually Drive productivity, improvement and employee satisfaction Gather feedback on human resources processes In-house annually Compare company to a normative bank of Fortune s Best Companies to Work For Identify key issues so that the company can take definitive steps to correct any problems Measure employee confidence in company leadership Company D Company E In-house switched from quarterly to semiannually In-house semi-annually Measure employee satisfaction and commitment Understand organizational effectiveness issues and performance measurements Aid action planning Understand how employees feel about being employed at the company Improve employee environment Advice #2 Allow line managers and different groups of management to develop portions of the survey so that they will be more invested in the results and the responses will be of greater use to them.

8 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 7 SECTION TWO--SURVEYS Survey Follow-Up Observation All profiled companies designate survey follow-up to the business units. Each company practices different follow-up procedures. The follow-up processes of the profiled companies is described below and on the following pages: Company A s Informal Process Presenting Results to Managers The company trains field surveyors, who are usually part of the human resources department, to gather the results from the field, present information to managers and provide recommendations. Field surveyors tell managers relevant information about results. Example If a group has a low score in productivity, the group may not know how to carry out a business plan. However, if field surveyors know that the managers also scored low, they may be better able to pinpoint problem areas. Business Units Responsibilities Presidents of operations groups or department directors determine how much emphasis to place on survey results. Amount of follow-up and the timeframe for action determined by the attention senior managers give to results.

9 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 8 Survey Follow-Up (continued) Company B s Roll Up Follow-Up 1. Team Focus The human resources department delivers the results to the lowest levels of the organization 3,000 teams with anywhere from 2-4 people to people on each team. The HR department provides survey training and analysis for any requesting manager. Managers can address teams with the necessary tools for action and teams then can start reviewing results and developing action plans immediately. Example of Follow-Up to Identified Survey Issues A team has lower skills in personal development. They hold a focus group to determine the cause and discover that their workload does not allow them enough time for outside training. The team makes sure they have enough back ups for their roles so that they can attend classes. 2. Action Plans The company gives teams discretion to create action plans e.g., 20 teams may have various results, but desire to pursue one or two plans at a higher level where action may have more impact. The company expects more senior employees to address issues with broader reach. These actions do not have as much visibility due to less communication about the plans and their more strategic nature. 3. Monitoring Action Plans The company has a website with a place for all 3,000 teams The website has a site specifically for issues, root cause analysis, action plan and marking action plan implementation. Staff enters their team s progress onto the site regarding their chosen issue, providing an accounting system for progress on survey results at all levels. Anyone can log onto the website and chart the progress of different action plans. 4. Roll Up of Action Teams then roll up activity to the business unit heads by reporting the implementation of their action plans. That said, business unit heads have the responsibility to measure accountability in their units.

10 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 9 Survey Follow-Up (continued) Company C s CEO-Led Follow-Up 1 Survey analysis identifies major areas of improvement and employee concern. Please register! 2 Human resources presents survey results at a meeting of senior executives called the Operating Group. 3 Each organization head is responsible for disseminating survey results through individual organizations. 4 When this did not happen on a prior occasion, the CEO personally held 14 to 15 focus groups with employees to discuss results. Examples of Follow-Up to Issues Identified in Surveys In one survey, employees identified safety as an issue of concern. Solution The company created the position of Safety Executive and provided the executive with a safety council to address concerns and resolve issues. In one survey, employees identified recent downsizing actions as an issue of concern. Solution A program called the Employee Commitment Program was implemented by the CEO s initiative. The program required several steps to be taken before an employee is involuntarily terminated, including the following: Employees are offered a voluntary severance package Employees are informed about other jobs in the company and are given first priority for those jobs and training, if needed Since its implementation, there have been no involuntary releases at the company.

11 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 10 Survey Follow-Up (continued) Company D s Cascading Rollout The human resources department breaks down survey results to the lowest level in the organization. Results are provided to executives in whatever form makes the best business sense. During this time and after, human resources consultants offer support to executives in the form of: Standard survey analysis and written comments Joint action planning The action planning process utilizes the following tools, depending on which tools best address the issues faced by business groups: Leadership Action Planning For strategic issues usually addressed by senior leadership Employee Action Committee For issues that cut across sub-units; committee is composed of mixed level employees Work Unit Action Planning Processes For issues specifically within work units Bottom line Executives of each business group down to leaders of work units are responsible for follow-up efforts and action planning.

12 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 11 Survey Follow-Up (continued) Company E s Focus Groups Survey Results Results reported at three levels: Local Business Departmental Everyone sees results and executives of business units are held accountable for all areas that need improvement. Human resources executives aid managers in understanding survey results, holding focus groups and planning actions Presentation of Results Line managers organize focus groups, with their direct reports, where they discuss results specific to the location or business unit. Action Planning Line managers begin action planning during the focus groups or soon after. Implementation of Action Plans Line managers are then responsible for implementing action plans. Advice #3 Communicate survey results to employees to ensure that the process has credibility. Advice #4 Focus on exemplary areas in addition to areas that need improvement in order to benchmark internal best practices.

13 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 12 SECTION THREE INCENTIVES USED Compensation Tie-In and Other Accountability Tools Observation All profiled companies, except Company B, tie managers at-risk bonuses to survey accountability by including an evaluation of action taken on survey results as part of performance reviews. Company Company A Company C Company D Company E Companies Compensation Tie-In Strategies Compensation Tie-In Survey scores determine executive compensation bonuses. The company stopped tying survey accountability to incentive payoffs due to factors such as changes in management philosophy and survey vendor changes. The company plans to tie performance measurement to compensation using balanced scorecards for measurement in early Survey accountability will be a part of assessing performance management. Survey accountability is included in business unit heads and executives performance contracts. Contracts include a section called the Employee Climate Component that measures employee attitude and behavior based on the survey and turnover rates, respectively. There is an additional diversity component. Performance contract weighting determines compensation and bonuses. The company began tying bonus payments to the Employee Engagement Index in January The Index provides a target range for survey scores. The company pays out bonuses for executives who make their target. The plan affects all levels of management and non-union, salaried employees. Percentage of Total Bonus 8 percent of bonuses tied to survey action. The company has not yet determined the percentage of compensation that survey accountability will affect. Turnover rates and survey scores account for 10 percent of the performance contract The index constitutes 5 percent of employee bonuses. Additional Information Regarding Company D s Employee Climate Component Company D includes an Employment Commitment Index in the survey. Eight out of the survey s 30 questions focus on the drivers of employee commitment, described below. 1. Connection to the company mission 2. Managerial effectiveness 3. Personal influence whether employees believe that their actions and opinions matter 4. Ethics and diversity

14 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 13 Compensation Tie-In (continued) Company B Exception to Compensation Tie-Ins Company B abolished tying bonuses to survey scores because of the perceived drawbacks outlined below: Possible manipulation of survey questions and numbers Too much emphasis on numbers and measures An overall negative atmosphere in regards to discussions about survey processes. Instead, Company B includes a section on its survey that assesses how the results have been used in the past, in addition to using their website to check on teams progress. This section has shown the greatest raises in improvement earning a 12 percent increase from the last survey. Survey questions included in the employee survey: Ask how managers have used last survey s results Focus on how managers have addressed survey issues in the past year Please register! Due to Company B s website accounting system, managers can easily track which teams are progressing with their action plans. Thus, accountability among lower and mid-levels is very high, while the company has experienced limited success at the executive level. Survey results are incorporated into balanced scorecard evaluations and do impact performance objectives causing executives to be held accountable informally. The company engages in side-by side comparisons of team and score improvements, resulting in an informal competition.

15 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 14 Compensation Tie-In and Other Accountability Tools (continued) Company C evaluates executive accountability through the use of 360-degree evaluations. Individuals completing 360-degree reviews for executives are asked to comment on the employee s contribution to the survey follow-up. Company E believes that conducting surveys twice a year demonstrates quantitatively whether executives are taking action on survey results. Advice #5 Frequently administer surveys to help measure score improvement over time and determine if employees believe that managers are trying to improve the workplace, which helps ensure executive accountability. Advice #6 Break down survey results to the smallest business unit to increase accountability across all units and to enable comparison of similar functions in different business units or locations. Advice #6 Pair presentations of results with immediate action planning in order to maintain momentum and focus on improvements. Advice #7 Have leadership buy-in and support to demonstrate the priority of acting on survey results.

16 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 15 APPENDIX Service Profit Chain Theory The book describing James Heskett s theory is available at Amazon.com: The Service Profit Chain: How Leading Companies Link Profits and Growth to Satisfaction, Loyalty and Value Authors: James L. Heskett, W. Earl Sasser and Leonard Schlesinger (April 1997) Suggested price: $30.00

17 ESTABLISHING ACCOUNTABILITY FOR EMPLOYEE SURVEY RESULTS PAGE 16 Professional Services Note The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members. This project relies upon data obtained from many sources, however, and the Council cannot guarantee the accuracy of the information or its analysis in all cases. Further, the Council is not engaged in rendering legal, accounting or other professional services. Its projects should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither Corporate Executive Board nor its programs is responsible for any claims or losses that may arise from any errors or omissions in their reports, whether caused by Corporate Executive Board or its sources.

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