In our online training course on creating a Digital HR strategy, Chris Rowlands and the other instructors share their learnings from over 2,000 global companies and what has worked for them when building their digital HR strategies. In the video below, Chris gives an overview on how to measure the customer experience of HR.
The argument for proactively managing the customer experience of HR (CxHR) is clear: organisations who successfully deliver on the ‘moments that matter’ (such as recruitment, onboarding, relocation, life event etc.) can positively influence employee engagement, with tangible benefits to retention and discretionary effort. For the more transactional interactions with HR services, HR should deliver an ‘effortless experience’. By removing friction from transactional processes, we can safeguard employee productivity and avoid damaging employee engagement. So how do we measure the customer experience of HR?
Customer Satisfaction (CSAT)
In a fantastic article in the Journal of Marketing, Lemon and Verhoef note that it is useful to compare customer experience with other customer focused constructs, such as CSAT. They suggest that CSAT is a key component of the customer experience construct, reflecting the customer’s cognitive evaluation of the experience.
Building on this, CSAT is generally considered to be the result of a direct comparison between actual delivered performance verses the customer’s expectation. The outcome of this comparison (if positive) has been empirically shown to improve satisfaction, which is linked to improved firm performance.
Here lies our first CxHR measurement hypothesis. If we can measure the satisfaction of HR customers at the touchpoint level, then we can use that information to optimise the touchpoint and improve the experience during moments that matter. In turn, this will drive outcomes such as intent to stay and discretionary effort.
Practically speaking, the exact wording of the CSAT question and the corresponding rating system used in surveys tends to differ from organisation to organisation. This means that there is no industry-standard way to measure CSAT. A few commonly used questions include:
– Were you satisfied with ….? (Yes/No)
– On a scale of 1-10, how satisfied are you with ….?
– How would you rate your satisfaction with ….? (very unsatisfied, unsatisfied, satisfied, very satisfied etc)
Net Promotor Score (NPS)
While CSAT is an entrenched measurement practice, new measures have been suggested as an alternative such as Fred Reichheld’s NPS measurement, a measure of customer loyalty. A word search for “NPS” within the majority of large company investor reports is almost guaranteed to yield results. While the academic / practitioner landscape is once again fragmented, many argue that NPS is more intuitive and forward looking than CSAT.
NPS is calculated by asking the following question: on a scale, how likely is it that you would recommend our company/ product/ service to a friend or colleague? Respondents answer the question with a number from 0 to 10, with 0 being extremely unlikely and 10 being extremely likely.
NPS scores are divided into three brackets: (i) 0-6 are considered detractors: customers who are unhappy and can damage a brand; (ii) – 7-8 are passives: satisfied but unenthusiastic customers; and (iii) – 9-10 are promoters: loyal enthusiasts who will fuel growth.
NPS is calculated by subtracting the percentage difference between the promoters and the detractors. Companies can score anywhere from -100 to 100.
While some argue that NPS is a better predictor of behaviour than CSAT, research by the likes of De Haan, Verhoef and Wiese suggest that the predictive power of CSAT and NPS for customer retention are similar. Interestingly, they note that combining both metrics improves predictive performance. This brings me to our second measurement hypothesis.
If we can measure the NPS of HR customers at the touchpoint level, then we can use that information to optimise the touchpoint and improve the experience during moments that matter. In turn, this will drive the outcomes mentioned at the start of this article (intent to stay, discretionary effort).
As recommended by De Hann, Verhoef and Wiesel, there is a benefit to combining both CSAT and NPS within a single measurement strategy. There is also a significant need to ask the free text question, ‘why have you given this score?’. Qualitative data will add the context and explanation needed to make tangible improvements at the touchpoint and journey levels.
Customer Effort Score (CES)
When it comes to HR’s services it is important to reiterate the distinction between moments that matter and transactional interactions. Moments that matter shape the employee’s opinion of the company and impact their engagement. Transactional interactions (which could include activities such as updating the payroll system) are less likely to represent a defining moment. That said, they can take up employee time and cause frustration if poorly delivered and should therefore represent an ‘effortless service’. With this in mind allow me to introduce our third measurement – Customer Effort Score (CES).
The simple logic behind CES is that service organisations can create loyal customers by decreasing effort. CEB, now Gartner, authors of the research which sits behind CES, found that 96% of customers reporting high-effort experiences became more disloyal in the future, compared with only 9% of those with low-effort experiences.
Early criticism of the work (inconsistent interpretation of the scale, poor language translation of the word ‘effort’) resulted in further research and validation. Today, we sit with the following measurement approach.
‘To what extent do you agree or disagree with the following statement:
The company made it easy for me to handle my issue.
1. Strongly disagree 2. Disagree 3 Somewhat disagree 4. Neither agree nor disagree. 5. Somewhat agree 6. Agree 7. Strongly Agree’
When applied to transactional HR activities, we do not necessarily believe that we can improve employee loyalty to the company by improving the ease of a payroll interaction. Companies do not typically have competing HR services either, so the employee does not have the option to choose one HR provider over another. We do however believe that a consistently poor service will reinforce an employee’s perception that their company is slow and cumbersome. This could damage an employee’s intent to stay and discretionary effort. There is also a logical link between slow and frustrating HR service interactions and reduced employee productivity. Our third hypothesis follows. If we can reduce the level of effort required to interact with HR’s transactional services, we can a) safeguard employee engagement and b) improve productivity.
A Game of Measurement Tetris?
In summary of the above, it feels like we are playing a game of measurement Tetris. Our objective is to build a concrete view of CxHR by combining a variety of measurement approaches. In this article we have introduced primary measurement sources such as NPS, CSAT and CES. It is equally important however to consider secondary sources. These could include click-through-rates on the employee portal, or portion of service tickets that are opened and closed by employees in one session using a career management app. We argue that it is through a combination of both primary and secondary sources that we can create a holistic picture of CxHR.
If you’re interested in learning more about how to build a digital HR strategy and what to include in your roadmap, then you might be interested in our online training course on digital HR, where we walk through the critical areas to include in your digital HR strategy in more detail. You can also read more about the WHAT and the HOW of building a digital HR roadmap in this blog post.
ABOUT THE AUTHOR
Volker Jacobs is the CEO and founder of TI People and an Executive Director and co-founder of Insight222 Limited. Volker holds degrees in economics and information sciences, has worked for U.S. and European consulting companies and started his own HR management consulting business that he sold to CEB. At CEB, Volker held a senior management position with a global responsibility for HR consulting and HR technology before co-founding TI People.