What is your temperature?

Most of us do not take our temperature on a regular basis and in fact, some people never take their temperature. Why would we? We just assume that if we are feeling fine that our temperature must be within the normal range. Although we may not feel the need to monitor our temperature, it is one of the first measurements taken during a visit to the doctor. Why? Because an abnormal reading is a quick indicator that something is wrong. This is true for humans and for their pets. Recently, for example, I noticed some changes in my cat. First, she lost some weight. This seemed like a good thing to me since, like many indoor cats, she was overweight anyway. Then I began to notice she was meowing more loudly and frequently. Well, she has always seemed fond of the sound of her own voice so... But then she lost more weight and our family decided a trip to the veterinarian was a good idea.

What do you think was the first thing the doctor's office did to my cat? That's right, they took her temperature. Immediately they knew something was wrong as it was quite a bit higher than normal for a cat. The doctor soon discovered that my cat had an infection.

At this point you may be wondering "what does this have to do with my company?" A lot. Just like I want my pet to be healthy, we all want our companies to be healthy. But in determining whether our companies are healthy we don't always gather enough information or focus on the right information. I initially made this mistake with my cat. I thought, "She doesn't act sick." She was still grooming herself and demanding a lot of attention. But I was focusing on the wrong information. I did not take notice of the fact that she was shedding a lot more than usual, for example. In like fashion, we may focus on our companies profits for the last three or four quarters but not look at other indicators of business health. Peter F. Drucker, in his book Management Challenges for the 21st Century, stated that success "comes to those who know themselves - their strengths, their values, and how they best perform." This is true for both individuals and companies.

So how do we know what is really going on with our companies? While looking at profit margins is one indicator, it is important to keep in mind that companies are made up of people. Without employees our companies could not operate and without customers our companies would cease to exist. Let's begin with the importance of knowing your employees.

In an article published in the Journal of Applied Psychology, James Harter, Frank Schmidt, and Theodore Hayes reported the results of a meta-analysis based on 7,939 business units in 36 companies. In this study they examined the relationship at the business-unit level between employee satisfaction and engagement and the business-unit outcomes of customer satisfaction, productivity, profit, employee turnover, and accidents. They concluded from this study that employee satisfaction and engagement are related to meaningful business outcomes at a magnitude that is important to many organizations and that these relationships generalize across companies. The authors believe one implication of their findings is that changes in management practices that increase employee satisfaction may increase business-unit outcomes, including profits. Thus, taking our employees' "temperature" can help us make changes that lead to improved perceptions and increased profits.

What about knowledge of your customers? Is this equally important? Don't customer attitudes reveal themselves in sales statistics? Not completely. Even if sales were great in the last several quarters, customer perceptions could be changing and sometimes companies are unaware of such changes until it is too late. Brian Tracy, in a book titled The 100 Absolutely Unbreakable Laws of Business Success, discusses the importance of customer perceptions. According to Tracy, "Companies are profitable in direct proportion to their quality ranking, as customers perceive it. What this means is that if a research firm were to go into your marketplace and conduct an honest, objective survey amongst the customers for what you sell, it could develop a quality ranking for your company in terms of how it compares to your competition." Companies that are perceived as high-quality companies are more profitable because customers have a need for security and safety in their purchase decisions. In customer's minds, better quality is associated with greater safety and predictability. The perception of better quality reduces the feeling of uncertainty or risk in making the buying decision, thus making it easier to buy. Thomas Ruskin said "The bitterness of poor quality is remembered long after the pleasure of low price has been forgotten." Taking your customers' "temperature" by conducting customer surveys on a regular basis can help you to identify any perceptions that may lead to problems later.

Thus, in business it is important to get a temperature reading of both our employees and our customers on a regular basis. If we do so we can identify problems before they become fatal. By taking my cat to the veterinarian and having her temperature taken, the doctor was able to identify not only the infection, but another condition that could have proven fatal: hyperthyroidism. Had the cat's condition remained untreated, she would eventually have experienced organ failure and death. However, the problem was discovered before any damage was done to other systems. Likewise, monitoring the "temperature" of our employees and customers can help us identify problem areas before any damage is done to the health of our company.

Let's look at a case study to further illustrate the importance of conducting employee and customer surveys. Recently the National Business Research Institute (NBRI) was asked to conduct employee and customer surveys for a U.S. company in the travel industry. While this company had periodically conducted surveys in the past, they had not been conducting them on a regular basis. NBRI was hired to "take the temperature" of their employees and customers and to benchmark this data against other companies in the same industry.

Now for a moment I want you to think of one word that illustrates how you would like your company to rank when compared to others in your industry. What word came to mind? Was it... AVERAGE? No, I did not think so. Unfortunately, that was the word that most accurately described the company in this case study. Let's start with their employee survey. In the benchmarking rankings used by NBRI, the national average falls at the 50th percentile. Thus, if a company scores at this level on their overall survey, a topic, or on an individual question on the survey, it indicates a score that is similar to those of the majority of companies in their industry. It is similar to getting a "C" on an exam in school - average. Some companies fall below the average. A score falling between the 1st and 24th percentiles is labeled as a "Threat," and one falling between the 25th and 49th percentiles is labeled a "Weakness" in the NBRI scoring. Other companies score at or above the national average. Any score falling between the 50th and 74th percentiles is labeled as an "Opportunity" while those scores falling between the 75th and 89th percentiles is categorized as a "Strength." Some companies have outstanding scores falling in the 90th percentile and above range. These scores are labeled as "Best in Class."

The travel company in this case study had an overall score at the 62nd percentile for their employee survey. While this score is 12 percentiles above the national average, it still falls in the "Opportunity" category and is not a score that the company was excited about. This employee survey included twenty different topics. An analysis of the responses to items in these topics revealed that most of the topics (16 total) fell within the "Opportunity" range. An additional three topics fell in the "Strength" category and one topic scored in the weakness category. Not surprisingly, no topics scored in the "Best in Class" category. Overall, the results were quite unremarkable.

Unfortunately, the results of the customer survey were even less remarkable. The overall score for the customer survey was average - right at the 50th percentile. Nine topics were included in this customer survey. Once again, none scored in the "Best in Class" range. In fact, there was not even a single topic that fell in the "Strength" category. Five topics scored in the "Opportunity" category and four in the "Weakness" category.

For the company in this case study, their "temperature" definitely indicated a cause for concern. While no company would be excited about these results, there is some good news. This company made a sound decision when it chose NBRI to conduct these surveys because not only were they provided with benchmarking data so that they could accurately determine where they stand, but they were also provided with Root Cause Analyses (RCAs). An RCA is a highly sophisticated statistical procedure that identifies the drivers of behavior. In this case study, the RCA of all survey items resulted in the identification of three root causes of the employee perceptions that were driving forty-eight percent (48%) of the company's employee survey results. That means that if this company can improve employee perceptions of just these three survey questions, scores will improve on almost half of the other survey questions! The results indicated that the primary root cause was: "Management decisions are in line with Company values." The secondary root cause was: "My work is rewarding" and the third root cause was: "I am comfortable in my relationship with my supervisor."

The analysis of the customer survey included two RCAs: one of overall customer satisfaction and one of customers' intent to return (intent to do business with this company again). For overall customer satisfaction, three root causes were identified. The first root cause identified was "This Company understands customer's expectations." The second root cause was, "I am impressed with this company's products" and the third was "I am impressed with this company's services." Two root causes were identified for intent to return; they were "This company's personnel deliver what is promised" and "The amount of communication I receive from this company is satisfactory."

Now that this company has knowledge of the key drivers of their employees' and customers' behaviors, they can take action to improve perceptions and future survey scores, resulting in a healthier company. The Root Cause Analyses have provided this business with a manageable number of issues to address and, provided they follow through with appropriate action, should lead to improved readings the next time they take their "temperature."

If you would like to learn more about how employee and customer surveys can help you "see inside the crystal ball" contact NBRI at 1-800-756-6168.

Jan Stringer, Ph.D.
Organizational Psychologist
National Business Research Institute, Inc.