Enterprise Engagement
Encyclopedia
Enterprise Engagement is a sub-discipline of marketing
and management
that focuses on achieving long-term financial results by strategically aligning the engagement of customers, distribution partners, salespeople, and all human capital
outside and inside of an organization. Enterprise Engagement is distinct from the traditional sub-disciplines of financial management
, marketing, sales
, operations
, and human resources
in that it seeks to achieve long-term success by integrating these various traditional business disciplines to consistently focus the organization on identifying and meeting target audience needs. Enterprise Engagement is related to Brand Engagement
, a term developed in Great Britain in the 2000s to describe an integrated external and internal marketing approach to achieving long-term success for a brand. Enterprise Engagement applies similar principals to the achievement of an organization’s overall financial objectives.
Organizations run on the basis of Enterprise Engagement work collaboratively across departments and divisions to collectively find the best way to achieve long-term financial results by maximizing all human capital, from customers and distributors, agents, or other value-added resellers, to salespeople, employees, and even vendors and shareholders. This approach unifies the organization under the banner of continually seeking to find better ways to help the end-user customer, enhance the relationship with channel partners and suppliers and ultimately create new opportunities for the business, rather than simply finding ways to improve processes. It looks at human capital in an integrated fashion, rather than separating customer and distribution partner engagement from sales or employee engagement.
Examples of companies run on the basis of Enterprise Engagement principles include: McDonalds, Southwest Airlines, and Campbell Soup.
Traditional organizations have a siloed approach, in which each business area often works quite independently from the other. Each business unit may or may not be directed to have specific goals related directly or indirectly to improving value or service to their audience – whether that be employees, channel partners, vendors or customers. The silos have a tendency to focus on maintaining and improving processes in order to promote their influence and share of resources. This is demonstrated in the willingness of many companies to sacrifice customer satisfaction to save money on automated telephone answering systems; in this case they have determined that the cost savings of eliminating customer service employees outweighs the benefits of creating a more satisfying customer experience. It is easy to measure the cost savings involved with this decision, but not so easy to measure the impact on customer engagement over time.
While Enterprise Engagement is related to the field of Integrated Marketing and has part of its roots there, it is more related to Management in that it requires an integration of all business disciplines across the organization, and therefore cannot be easily organized under one specific sub-discipline of management or another.
In their 1993 book, The One to One Future, Don Peppers and Martha Rogers were among the early proponents of customer-focused rather than product- and process-focused marketing, and identified the necessity to address the human element of relationships between customers and an organization.
Additional research on the connection between customer and employee engagement began to emerge in 1999, when Gallup
published its ground-breaking book First, Break All the Rules by Buckingham and Coffman which was based on a meta-analysis of decades of employee and business outcomes data from over 100,000 employees and a wide range of industries. They also began publishing studies on the cost of disengaged workers. [see: Would You Fire Your Boss, Gallup Management Journal, Sept. 2007.] . In 2002, a study was released in Great Britain demonstrating a financial link between customer and employee engagement.
In 1998, A.J. Rucci, S.P. Kim, and R.T. Quinn, authors of “The Employee-Customer Profit Chain at Sears” (Harvard Business Review, 1998), identified a direct connection between employee engagement and profitability in Sears stores. The concept was further explored by a private academic collaboration between the Integrated Marketing Communications department at the Medill School of Journalism at Northwestern University and a community of businesses and trade associations in marketing. Founded in 1993 by Don Schultz and Frank Mulhern, professors at Northwestern University, and by Bruce Bolger, principal of a target marketing and media company, the Forum for People Performance Management and Measurement (www.performanceforum.org) was among the first organizations in the U.S. to focus on conducting research into the connection between financial results and employee and customer engagement. It has since funded over a half-dozen studies looking at the linkage between customers, employees, and financial results.
Separately, in the July–August 2005 issue of the Harvard Business Review, the concept of linking customer and employee engagement that is the distinctive element of Enterprise Engagement was articulated in an article by John H. Fleming, Curt Coffman, and James K. Harter, entitled “Manage Your Human Sigma.” The authors wrote, “It’s possible to arrive at a single measure of effectiveness for the employee-customer encounter, this measure has a high correlation with financial performance.” Fleming along with co-author
The term “Enterprise Engagement” was created in 2008 by a coalition of not-for-profit and for-profit organizations formed to promote education and research supporting this approach to business management. These organizations include the http://www.humancapitalinstitute.orgHuman Capital Institute, consisting of 140,000 members in all areas of management; the Peppers & Rogers Group consulting firm, 1to1 Media, and Selling Communications Inc., a marketing, media and technology firm, which have since been joined by the Business Marketing Association, an organization representing business-to-business marketers, Gallup, the research and consulting firm, the Incentive Research Foundation and the Incentive Federation (http://www.Incentivefederation.org), along with a half-dozen sponsors in the fields of marketing and performance improvement.
Happy employees are better equipped to handle workplace relationships, stress and change, according to the latest Gallup Management Journal survey. When respondents were asked how they would characterize their interactions with their coworkers, 86% of engaged employees said their interactions were always positive or mostly positive, vs. 72% of unengaged workers and just 45% of actively disengaged workers. (Gallup Management Journal, 2009)
Research by CLC-Genesee and its parent, the Corporate Executive Board, shows that average three-year revenue growth for “high-performing companies” – meaning, in part, those that effectively manage employee engagement – was more than twice that of their industry peers. Other key findings: Engaged employees are more likely to stay with their employer than those who have a lower level of engagement, and the more engaged employees are, the lower the inventory “shrink.” (CLC-Genesee/Corporate Executive Board, 2009)
Towers Perrin found that high-engagement firms experienced an earnings-per-share (EPS) growth rate of 28%, compared with an 11.2% decline for low-engagement firms. (Towers Perrin survey, July 2008)
Gallup research indicates that public organizations ranking in the top quartile of employee engagement had EPS growth more than two-and-a-half times greater than organizations that were below average. (Gallup Management Journal survey, 1/12/06)
Sirota Survey Intelligence found that when managers become disengaged, their employees are over three times as likely to be disengaged; 12% less likely to stay; 13% less likely to be innovative; and 33% more likely to be frustrated with the company’s systems and processes. (Sirota, ‘The Enthusiastic Employee,’ 2009)
A recent BlessingWhite study found that there’s a clear correlation between engagement and retention, with 85% of engaged employees indicating that they plan to stay with their employer for at least the next 10 months. (BlessingWhite State of Engagement 2008 report, April/May 2008)
Data from Best Buy show that stores where employee engagement increased by a tenth of a point (on a five-point scale) experienced a $100,000 increase in annual sales. (CFO magazine, ‘Measuring Up,’
JC Penney has found that store with top-quartile engagement scores generate roughly 10% more in sales per square foot than average and 36% more operating income than similar-sized stores in the lowest quartile. (JC Penney 8-K SEC Filing,
A Manpower survey of call center customers and employees revealed that centers with high employee satisfaction also have high customer satisfaction, whereas centers with low employee satisfaction have low customer satisfaction. (Manpower/SQM Group survey, September 2006)
A report by the Society for Human Resource Management
(SHRM) estimates that by strengthening engagement, MolsonCoors saved more than $1.7 million in one year (SHRM ‘Employee Engagement and Commitment,’ 2006)
Gallup research has also shown that engaged employees are more productive, profitable, safer, create stronger customer relationships and stay longer with their company than less engaged employees. (Gallup Management Journal survey,
In their 2008 book, “Rules to Break and Laws to Follow,” authors Don Peppers and Martha Rogers observed that the shift of the balance of power to the consumer will cause organizations to place greater importance on building trust with customers. “The advent of the Internet has shifted the balance of power to consumers, who can move away from a company with a click of the mouse,” they wrote.
Today’s organizational structures emphasizing silos and the lack of any place in an organization for a “chief people officer” spanning all audiences – other than the chief executive officer – makes it difficult to get started unless the CEO leads the way.
Enterprise Engagement requires the commitment of the chief executive officer and alignment of communications across the organization.
Enterprise Engagement requires leadership, not only at the senior level but also at the branch and departmental level.
Enterprise Engagement is not presently taught in schools or written about in business journals, limiting the number of managers and executives exposed to it.
An organization run on Enterprise Engagement principles is not immune to the deleterious effects of changing market forces or poor financial management that could undermine an organization with otherwise engaged customers and employees.
There is currently a lack of research documentation as to the relative merits of various types of engagement tactics, or the best ways to deploy them.
Businesses use a wide array of tactics to address the above issues, including:
The expertise, products, and services related to these various practices comprise the emerging field of Enterprise Engagement. Bottom line: Much more research is needed to better understand how these various elements affect customer and employee engagement, and financial results.
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
and management
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
that focuses on achieving long-term financial results by strategically aligning the engagement of customers, distribution partners, salespeople, and all human capital
Human capital
Human capitalis the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience...
outside and inside of an organization. Enterprise Engagement is distinct from the traditional sub-disciplines of financial management
Managerial finance
Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique....
, marketing, sales
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
, operations
Business operations
Business operations are those ongoing recurring activities involved in the running of a business for the purpose of producing value for the stakeholders...
, and human resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...
in that it seeks to achieve long-term success by integrating these various traditional business disciplines to consistently focus the organization on identifying and meeting target audience needs. Enterprise Engagement is related to Brand Engagement
Brand engagement
Brand engagement is a term loosely used to describe the process of forming an attachment between a person and a brand. It comprises one aspect of brand management...
, a term developed in Great Britain in the 2000s to describe an integrated external and internal marketing approach to achieving long-term success for a brand. Enterprise Engagement applies similar principals to the achievement of an organization’s overall financial objectives.
Organizations run on the basis of Enterprise Engagement work collaboratively across departments and divisions to collectively find the best way to achieve long-term financial results by maximizing all human capital, from customers and distributors, agents, or other value-added resellers, to salespeople, employees, and even vendors and shareholders. This approach unifies the organization under the banner of continually seeking to find better ways to help the end-user customer, enhance the relationship with channel partners and suppliers and ultimately create new opportunities for the business, rather than simply finding ways to improve processes. It looks at human capital in an integrated fashion, rather than separating customer and distribution partner engagement from sales or employee engagement.
Examples of companies run on the basis of Enterprise Engagement principles include: McDonalds, Southwest Airlines, and Campbell Soup.
Traditional organizations have a siloed approach, in which each business area often works quite independently from the other. Each business unit may or may not be directed to have specific goals related directly or indirectly to improving value or service to their audience – whether that be employees, channel partners, vendors or customers. The silos have a tendency to focus on maintaining and improving processes in order to promote their influence and share of resources. This is demonstrated in the willingness of many companies to sacrifice customer satisfaction to save money on automated telephone answering systems; in this case they have determined that the cost savings of eliminating customer service employees outweighs the benefits of creating a more satisfying customer experience. It is easy to measure the cost savings involved with this decision, but not so easy to measure the impact on customer engagement over time.
While Enterprise Engagement is related to the field of Integrated Marketing and has part of its roots there, it is more related to Management in that it requires an integration of all business disciplines across the organization, and therefore cannot be easily organized under one specific sub-discipline of management or another.
History
Enterprise Engagement has its roots in research conducted in the 1990s connecting financial results in Sears stores to the engagement of employees. An early reference to the concept appears in a New York Times article by Stuart Elliott in 1993 in which Larry Light, the chairman of the Coalition for Brand Equity for the American Association of Advertising Agencies, said, “The No. 1 priority is to keep your customers sold and, only second, to build new brand relationships.” In that same article, Bruce Bolger, a trade show director who was quoted, observed that, “consumer-product companies spend billions of dollars to attract customers, without any kind of strategic focus on keeping them…You have to motivate consumers to come to buy your product, but then you have to deliver to them. Advertising creates customers, but once you get them, what are you doing to keep them?”In their 1993 book, The One to One Future, Don Peppers and Martha Rogers were among the early proponents of customer-focused rather than product- and process-focused marketing, and identified the necessity to address the human element of relationships between customers and an organization.
Additional research on the connection between customer and employee engagement began to emerge in 1999, when Gallup
The Gallup Organization
The Gallup Organization, is primarily a research-based performance-management consulting company. Some of Gallup's key practice areas are - Employee Engagement, Customer Engagement and Well-Being. Gallup has over 40 offices in 27 countries. World headquarters are in Washington, D.C. Operational...
published its ground-breaking book First, Break All the Rules by Buckingham and Coffman which was based on a meta-analysis of decades of employee and business outcomes data from over 100,000 employees and a wide range of industries. They also began publishing studies on the cost of disengaged workers. [see: Would You Fire Your Boss, Gallup Management Journal, Sept. 2007.] . In 2002, a study was released in Great Britain demonstrating a financial link between customer and employee engagement.
In 1998, A.J. Rucci, S.P. Kim, and R.T. Quinn, authors of “The Employee-Customer Profit Chain at Sears” (Harvard Business Review, 1998), identified a direct connection between employee engagement and profitability in Sears stores. The concept was further explored by a private academic collaboration between the Integrated Marketing Communications department at the Medill School of Journalism at Northwestern University and a community of businesses and trade associations in marketing. Founded in 1993 by Don Schultz and Frank Mulhern, professors at Northwestern University, and by Bruce Bolger, principal of a target marketing and media company, the Forum for People Performance Management and Measurement (www.performanceforum.org) was among the first organizations in the U.S. to focus on conducting research into the connection between financial results and employee and customer engagement. It has since funded over a half-dozen studies looking at the linkage between customers, employees, and financial results.
Separately, in the July–August 2005 issue of the Harvard Business Review, the concept of linking customer and employee engagement that is the distinctive element of Enterprise Engagement was articulated in an article by John H. Fleming, Curt Coffman, and James K. Harter, entitled “Manage Your Human Sigma.” The authors wrote, “It’s possible to arrive at a single measure of effectiveness for the employee-customer encounter, this measure has a high correlation with financial performance.” Fleming along with co-author
The term “Enterprise Engagement” was created in 2008 by a coalition of not-for-profit and for-profit organizations formed to promote education and research supporting this approach to business management. These organizations include the http://www.humancapitalinstitute.orgHuman Capital Institute, consisting of 140,000 members in all areas of management; the Peppers & Rogers Group consulting firm, 1to1 Media, and Selling Communications Inc., a marketing, media and technology firm, which have since been joined by the Business Marketing Association, an organization representing business-to-business marketers, Gallup, the research and consulting firm, the Incentive Research Foundation and the Incentive Federation (http://www.Incentivefederation.org), along with a half-dozen sponsors in the fields of marketing and performance improvement.
Benefits
The emergence of Enterprise Engagement is based on the growing ability of organizations to measure the long-term benefits of engagement. For example:Happy employees are better equipped to handle workplace relationships, stress and change, according to the latest Gallup Management Journal survey. When respondents were asked how they would characterize their interactions with their coworkers, 86% of engaged employees said their interactions were always positive or mostly positive, vs. 72% of unengaged workers and just 45% of actively disengaged workers. (Gallup Management Journal, 2009)
Research by CLC-Genesee and its parent, the Corporate Executive Board, shows that average three-year revenue growth for “high-performing companies” – meaning, in part, those that effectively manage employee engagement – was more than twice that of their industry peers. Other key findings: Engaged employees are more likely to stay with their employer than those who have a lower level of engagement, and the more engaged employees are, the lower the inventory “shrink.” (CLC-Genesee/Corporate Executive Board, 2009)
Towers Perrin found that high-engagement firms experienced an earnings-per-share (EPS) growth rate of 28%, compared with an 11.2% decline for low-engagement firms. (Towers Perrin survey, July 2008)
Gallup research indicates that public organizations ranking in the top quartile of employee engagement had EPS growth more than two-and-a-half times greater than organizations that were below average. (Gallup Management Journal survey, 1/12/06)
Sirota Survey Intelligence found that when managers become disengaged, their employees are over three times as likely to be disengaged; 12% less likely to stay; 13% less likely to be innovative; and 33% more likely to be frustrated with the company’s systems and processes. (Sirota, ‘The Enthusiastic Employee,’ 2009)
A recent BlessingWhite study found that there’s a clear correlation between engagement and retention, with 85% of engaged employees indicating that they plan to stay with their employer for at least the next 10 months. (BlessingWhite State of Engagement 2008 report, April/May 2008)
Data from Best Buy show that stores where employee engagement increased by a tenth of a point (on a five-point scale) experienced a $100,000 increase in annual sales. (CFO magazine, ‘Measuring Up,’
JC Penney has found that store with top-quartile engagement scores generate roughly 10% more in sales per square foot than average and 36% more operating income than similar-sized stores in the lowest quartile. (JC Penney 8-K SEC Filing,
A Manpower survey of call center customers and employees revealed that centers with high employee satisfaction also have high customer satisfaction, whereas centers with low employee satisfaction have low customer satisfaction. (Manpower/SQM Group survey, September 2006)
A report by the Society for Human Resource Management
Society for Human Resource Management
The Society for Human Resource Management is a professional human resources association headquartered in Alexandria, Virginia. The largest such association in its field, SHRM promotes the role of HR as a profession and provides education, certification, and networking to its members while lobbying...
(SHRM) estimates that by strengthening engagement, MolsonCoors saved more than $1.7 million in one year (SHRM ‘Employee Engagement and Commitment,’ 2006)
Gallup research has also shown that engaged employees are more productive, profitable, safer, create stronger customer relationships and stay longer with their company than less engaged employees. (Gallup Management Journal survey,
In their 2008 book, “Rules to Break and Laws to Follow,” authors Don Peppers and Martha Rogers observed that the shift of the balance of power to the consumer will cause organizations to place greater importance on building trust with customers. “The advent of the Internet has shifted the balance of power to consumers, who can move away from a company with a click of the mouse,” they wrote.
Drawbacks
Much of the above-cited research suggests that Enterprise Engagement requires a strategic approach that focuses on yielding long-term results; it is not a business strategy likely to produce a short-term bounce.Today’s organizational structures emphasizing silos and the lack of any place in an organization for a “chief people officer” spanning all audiences – other than the chief executive officer – makes it difficult to get started unless the CEO leads the way.
Enterprise Engagement requires the commitment of the chief executive officer and alignment of communications across the organization.
Enterprise Engagement requires leadership, not only at the senior level but also at the branch and departmental level.
Enterprise Engagement is not presently taught in schools or written about in business journals, limiting the number of managers and executives exposed to it.
An organization run on Enterprise Engagement principles is not immune to the deleterious effects of changing market forces or poor financial management that could undermine an organization with otherwise engaged customers and employees.
There is currently a lack of research documentation as to the relative merits of various types of engagement tactics, or the best ways to deploy them.
Tools of Engagement
Engagement involves a broad range of disciplines and tactics. A comprehensive study of what motivates people in business conducted in 2002 by the International Society of Performance Improvement for the Incentive Research Foundation identified the following key factors:- Leadership – the ability of the organization to articulate a vision to its constituents.
- Communication – the ability of the organization to convey its vision to its constituents.
- Capability – the ability of an organization’s constituents to do what is asked of them.
- Buy-in – the willingness of an organization’s constituents to do what is asked of them.
- Support – the degree to which people feel recognized by the organization.
- Emotion – the state of mind people have related to their work or relationship with the organization.
- Measurement and feedback – the degree to which constituents receive feedback for their contribution and to which the organization analyzes results and adjusts accordingly.
Businesses use a wide array of tactics to address the above issues, including:
- Leadership training and coaching
- Print, direct mailDirect mailAdvertising mail, also known as direct mail, junk mail, or admail, is the delivery of advertising material to recipients of postal mail. The delivery of advertising mail forms a large and growing service for many postal services, and direct-mail marketing forms a significant portion of the direct...
, and electronic communications, media, meetings, and promotional products - Training and professional development
- RecognitionRecognition (sociology)Recognition in sociology is public acknowledgement of person's status or merits .When some person is recognized, he or she is accorded some special status, such as a name, title, or classification...
, reward, and incentive programs - Statistical process controls.
The expertise, products, and services related to these various practices comprise the emerging field of Enterprise Engagement. Bottom line: Much more research is needed to better understand how these various elements affect customer and employee engagement, and financial results.
External links
- Enterprise Engagement Alliance - Home portal for Enterprise Engagement Resources
- EEA Blog - Blog for Enterprise Engagement Alliance
- People Performance Management and Measurement - Affiliated with the department of Integrated Marketing Communications at the Medill School of Journalism at Northwestern University
- Incentive Performance Center
- the Human Capital Institute
- Peppers & Rogers Group
- Incentive Research Foundation
- Forum for People Performance Management and Management