SConner_Manage_Your_Human_Sigma_2007

8/7/2019 SConner_Manage_Your_Human_Sigma_2007

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Manage Your HumanSigma

Susan Conner, PrincipalGallup

Washington, DC


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Agenda

Who is Gallup?

What is HumanSigma?

What is Employee Engagement?

What is Customer Engagement?

HumanSigma (5 Core Principles)

Best Practices


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Who is Gallup?


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IntroductionLeading Research-Based Management Consulting Firm

Founded in 1935 Staff of 2,500 in 41 offices worldwide World experts on human behavior leveraging the latest advances in

economics, psychology, statistics, sociology and neuroscience Experts on Employee, Patient, and Physician Engagement Experts human capital management and employee life-cycle

Unparalleled Research Experience & Fact Base

History as worlds leading polling company Best-in-class database over 10 million respondents (over 5.2

million respondents in last 3 years), 422,522 work groups, 14 majorindustries, 112 countries, 37 languages

Among clients are 35% of F500 companies 40% of the Fortune 100 companies

12 of the top 35 companies 4 of the top 10 companies 40 of the Worlds Largest companies Over 2,200 hospitals


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Select Gallup Healthcare Clients

*Clients who have given permission for Gallup to utilize their name/brand for marketing purposes.


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Select Gallup Consulting Relationships

*Clients who have given permission for Gallup to utilize their name/brand for marketing purposes.


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THE GALLUP PATH

ENTERHERE

IDENTIFY

STRENGTHS THERIGHT FIT

GREATMANAGERS

ENGAGEDEMPLOYEES

ENGAGEDCUSTOMERS

SUSTAINABLEGROWTH

REAL PROFITINCREASE

FULFILLMISSIONTo

reliablyinfluencethese . . .

. . . thesemust be

managed.

Copyright 1996-2002 The Gallup Organization, Princeton, NJ. All rights reserved.

7


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In manufacturing, value is created on the factory floorwhen a product is made available for sale.

But with sales and service organizations, value is created

when an employee meets and interacts with acustomer and their family.

To achieve meaningful operational and financialimprovements, the employee-customer encounter mustbe measured and managed.

The Employee-Customer Encounter


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First, what is Six Sigma? Six Sigma at many organizations simply means a measure of quality that

strives for near perfection. Six Sigma is a disciplined, data-drivenapproach and methodology for eliminating defects (driving towards sixstandard deviations between the mean and the nearest specification limit)in any process -- from manufacturing to transactional and from productto service.

Six Sigma is a system of practices originally developed by Motorola to

systematically improve processes by eliminating defects. Defects aredefined as units that are not members of the intended population. Sinceit was originally developed, Six Sigma has become an element of many Total Quality Management initiatives.

To achieve Six Sigma, a process must not produce more than 3.4 defectsper million opportunities - a Six Sigma defect is defined as anything outside of customer specifications.

The fundamental objective of the Six Sigma methodology is theimplementation of a measurement-based strategy that focuses on processimprovement and variation reduction through the application of SixSigma improvement projects.

Six Sigma is a registered service mark and trademark of Motorola, Inc.


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A holistic approach to optimizing anorganizations vital signs.

Like Six Sigma, focus on reducing variability andimproving organizational performance.

Unlike Six Sigma, focus on the human aspects of

organizational performance to drive profitabilityand growth.

What Is HumanSigma ?


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Team Member Engagement

IDENTIFYSTRENGTHS THE

RIGHT FIT

GREATMANAGERS

ENGAGEDEMPLOYEES

ENTERHERE

11

Copyright 1994-200, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.


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60% reported being60% reported being worse off worse off after the survey!after the survey!

We Were Wrong

1993 - Human resources, organizational development personnel in Fortune500 companies, were interviewed about creating positive culture change -the ways and means.

80% conduct employee surveysAverage length - 150 question itemsFrequency - every one to two years


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Why?Strategic/Macro in focusNo drive for local accountabilityPurpose unclearConfusion

Solution (What weve learned)Survey needs to be focusedYou must measure what is importantIt must be comparableIt should reinforce accountability localIt should emphasize process versusevent


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More productive workgroups

High ratingLow rating

Poor Question

I feel I am paid the right amount.

Less productive workgroups

High ratingLow rating

Great QuestionAt work, I have the opportunity todo what I do best every day.

The Sorting Effect



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Why Satisfaction is a necessary, but not a sufficient condition

We start every employee survey with Overall, how satisfied areyou with your organization as a place to work? There is adifference between engagement (which the Q 12 measures) andsatisfaction. Engagement is mostly driven by the localworkgroup environment, while satisfaction takes into account

how employees feel about the organization as a whole, much of which is beyond the control of the local manager.

It is important to distinguish between engagement andsatisfaction. For example, we find situations where employeesare very satisfied with their organization as a place to work, butthey are not all that engaged.


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Employee Engagement

What is Employee Engagement? Employee Engagement is a systematic approach to reduce and

improve the variance in engagement, in human capital, to benefit thebottom line performance.

Through years of analysis, Gallup identified 12 items for measuring employee engagement. The process consists of evidence-based measurement, education,

action planning, and consulting that is proven to improve key clinical,operational, and financial outcomes.


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I know what is expected of me at work.I have the materials and equipment I need to do my work right.At work, I have the opportunity to do what I do best every day.In the last seven days , I have received recognition or praise for doinggood work.My supervisor, or someone at work, seems to care about me as a person.

There is someone at work who encourages my development.At work, my opinions seem to count.The mission or purpose of my company makes me feel my jobis important.My fellow employees are committed to doing quality work.I have a best friend at work.

In the last six months, someone at work has talked to me aboutmy progress.This last year, I have had opportunities at work to learn and grow.


The 12 Questions That Matter


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Employee Engagement Groups- what do they mean?

25% 55% 15%Engaged Not Engaged Actively Disengaged

These employees are loyal and psychologically committed to theorganization. They are moreproductive and more likely to staywith their company for at least ayear.

These employees may beproductive, but they are not psychologically connected to their

company. They are more likely tomiss workdays and more likely toleave.

These employees are physicallypresent but psychologically absent.They are unhappy with their work

situation and insist on sharing thisunhappiness with their colleagues.


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U.S. Overall vs. Healthcare

15% 17%

55% 48%

30% 35%

0%

20%

40%

60%

80%

100%

U.S. Overall Healthcare

%Engaged

Engaged

Not Engaged

Actively Disengaged

Source: Gallup Poll data of U.S. working population. 18 years and older, accumulated March-October 2003.


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Engagement Index by Country

1THE GALLUP ORGANIZATIONv. 1.0 (7/05)

Engagement Index by Country

15%31%

18% 15% 22%24%

66%57% 69%

65%69% 60%

19%12% 13% 20%

9% 16%

0%

20%

40%

60%

80%

100%

Copyright 2005 The Gallup Organization, Princeton, NJ. All rig hts reserved.

Engaged

Not Engaged

0.39:1 1.33:1

FranceSept. 2003

GermanyMay 2005

IsraelJan. 2002

UKOct. 2005

0.72:1 0.67:1Ratio of Engaged to Actively Disengaged:

ActivelyDisengaged

SwitzerlandMar. 2005

AustriaMar. 2005

1.27:1 0.41:1


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The Cost of Disengagement

Australia: $32 Billion Aus Brazil: 75 Billion BRL France: 96 Billion Euro Germany: 90 Billion Euro

New Zealand: $4 Billion Aus Singapore: 3 Billion SGD UK: 51 Billion Euro United States: $270-343 Billion


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Engagement in Service Industries

13% 14% 17% 17% 18%

41% 46%48% 51% 52%

46% 40%35% 32% 30%

0%

20%

40%

60%

80%

100%

Hospitality* Retail Healthcare Education PublicAdmin.

Engaged

Not Engaged

Actively Disengaged

Copyright 2007 The Gallup Organization, Princeton, NJ. All rights reserved.

* Hospitality is made up of Accommodation and Food Services


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Q 12

Meta-Analysis Study Information


Correlations of Q 12 to:

turnover/retentioncustomer metrics

safetyabsenteeismshrinkageproductivityprofitability

Correlations of Q 12 to:

turnover/retentioncustomer metricssafetyabsenteeismshrinkageproductivityprofitability

Analysis of:

681,799 employees

23,910 business units*125 organizations**

37 industries

Analysis of:

681,799 employees

23,910 business units*125 organizations**

37 industries

* Includes business units in 23 countries in Asia,Central/South America, Europe, and North America

** 20 organizations exclusively outside the United States


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Q 12

Meta-Analysis: Outcomes


-51% -51%

-62%

12%18%

12%

-31%-27%

-70%-60%-50%-40%-30%-20%-10%

0%10%20%30%

Difference between top and bottom quartiles

Turnover

Absenteeism ShrinkageSafety

Incidents

Customer Productivity Profitability

Difference between engaged and actively disengagedemployees in unexcused absences

High-Turnover

Orgs.

Low-Turnover

Orgs.


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Employee Engagement and Nosocomial Infections

0.150.00

0.150.250.54

2.72

0.00

1.00

2.00

3.00

URTI SSI Sepsis

Top Units Bottom Units

NosocomialInfections/1000ptdays

Employee Engagement and Infection Rates



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Employee Engagement & Avoidable Complications

0.75

0.77

0.79

0.810.83

0.85

0.87

Complication Index

Bottom Quartile 3rd Quartile 2nd Quartile Top Quartile

Correlation-regression analysis of Engagement GrandMean and Complication Index statistically significant at -.23 (n=152)


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Prediction of Complication Index

Gallups

ComplicationIndex

Key predictors, in rank order, of better or worse than expectedComplication Index in hospitals:

1. Engagement Level of Nurses2. % Contract Hours per Year3. % ICU/CCU Days (Acuity) per

Year

*Results obtained by regression statistically significant at p


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Employee Engagement & Avoidable Deaths

0.65

0.7

0.75

0.8

0.85

Mortality Index

Bottom Quartile 3rd Quartile 2nd Quartile Top Quartile


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Prediction of Mortality Index

* Results obtained by regression statistically significant p


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($600,000)

($400,000)

($200,000)

$0

$200,000

$400,000

$600,000

$800,000

Most Engaged

2nd Quartile

3rd Quartile

Least EngagedQuartile

.

Employee Engagement Correlates with Malpractice Payments

Hospitals in the most engaged quartile pay $1,120,000 less inannual malpractice claims than hospitals in the least engaged

quartile.


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Nurse Turnover



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Nurse Turnover by Quartile

Q12 Quartile

205

9.9%13.0%

18.8%

30.3%

0%

10%

20%

30%

40%

Top 25% Middle Quartiles Bottom 25%



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3.28 3.33

3.68 3.80

3.23.43.63.84.0

Year One Year Two Year Three Year Four

Results Workplace Engagement

Results Nurse Turnover

Employee Engagement is Directly Related to Nurse Turnover

32.9%23.2%

13.8%

0%

20%

40%

Year One Year Two Year Three

*360 Bed Facility*360 Bed Facility


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What drives Engagement?


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Participated in

Impact PlanningSession

Team Made Progress

in Impact Plans

Positive Change Has

Occurred Based on2003 Q12

3.94

4.334.21

3.353.002.93

1.00

2.00

3.00

4.00

5.00

GrandMean

No Yes

Action planning drives engagementPercentile for Yes Groups*: 63 rd 82nd 88th

Percentile for No Groups*: 18th

4th

5th

Yes: (n=714) (n=508) (n=668)No: (n=115) (n=161) (n=270)

*Percentiles based on the 2005 Gallup Q 12 Overall database


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7%

77%

22%

52%

6%

83%

7%

87%

18%

43%

8%

56%

0%

20%

40%

60%

80%

100%

U.S. UK Canada France Japan China

Percent A'sPercent F's

What we focus on


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Strengths: Focusing on who we are

0

250500750

1,0001,2501,5001,7502,0002,2502,5002,7503,000

Average Reader

Above AverageReader

WordsPer

Minute

TimeOne

90

TimeOne

350150

TimeTwo

2,900

TimeTwo


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Talent x Investment = STRENGTH

Talents and Strengths

Talent is a natural way of thinking, feeling & behavior Investment is time invested into development of the proper

knowledge (information & understanding) and skills (basicsteps in a given activity) Strength is the ability to provide consistent,

near-perfect positive performance in a given activity


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The Impact of a Strengths-Based Approach

22%

33%

45%

Weakness0%

20%

40%

60%

80%

100%

Engaged

Not Engaged

Actively Disengaged

38%

61%

Strengths

1 %

Ignored

40%

58%

2%

What happens if you start focusing on your employees strengths, rather

than their weakness?


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Lets look at

how focusing on Strengths can help youremployees, patients, financials, etc.


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Why do it?

An employee who truly knows how to apply their strengths is8.2 times as likely to strongly agree that they know what isexpected of them at work.

An employee who truly knows how to apply their strengths is

15.3 times as likely to strongly agree that they have theopportunity to do what they do best.

Of the people who felt their manager focus on theirweaknesses, 22% were actively disengaged as employees.

When people felt their manager focused on their strengths, only1% were actively disengaged.


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Loyalty Effect of Focusing on Strengths

60%

85%

74%

21%

37%29%

0

10

20

30

40

50

60

70

80

90

100

Recommend Company'sProducts and Services

Plan to Be Here One YearFrom Now

Plan to Spend My CareerHere

Focus on strengths (5) No focus on strengths (1)

%StronglyAgree

Source: Gallup Poll data of U.S. working population aged 18 and older, April 2004


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Points of Customer Impact

ENGAGEDEMPLOYEES

LOYALRESIDENTS/

FAMILY MEMBERS



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Understanding Customer Engagement

When it comes to customers,feelings are facts.

-Simon Cooper, President & COO,Ritz-Carlton Hotel Company LLC.


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CE 11: Assessing Customer Engagement

Overall, how satisfied are you with Country Meadows?How likely are you to continue to choose Country Meadows?How likely are you to recommend Country Meadows to a

friend/associate?

I cant imagine a world without Country Meadows .Country Meadows is the perfect organization for people like me.Country Meadows always treats me with respect.I feel proud to be a Country Meadows customer.If a problem arises, I can always count on Country Meadows to

reach a fair and satisfactory resolution.Country Meadows always treats me fairly.Country Meadows always delivers on what they promise.Country Meadows is a name I can always trust.

L3

A8


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The Emotional Attachment Hierarchy

Confidence. The resident/family member feels the brand is trustworthy and keeps itspromises.

Integrity. The resident/family members feelings of brand integrity willdepend on whether he is treated fairly by the company, both routinelyand when something goes wrong.

Pride. The resident/family member feels really good about thebrand, and how using or owning the brand reflects upon him.

Passion . This resident/family member feels the brand isperfect for her, that she cant live without it.

Copyright 1994-200, 2006 The Gallup Organization, Princeton, NJ. All rights reserved.


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Every company has four different types of customers

Fully Engaged Strongly attached andloyal. These are your best customers.

Engaged Somewhat emotionallyattached but not yet fully engaged

Not Engaged Emotionally and

attitudinally neutral; no positiveassociation

Actively Disengaged Active emotionaldetachment; occasional antagonism

FullyEngaged

Engaged

ActivelyDisengaged

NotEngaged


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Medical claims decline as Patient Loyalty increases

10.839

10.032

9.444

8.881

8

9

10

11

12

Bottom Quartile 2nd Quartile 3rd Quartile Top Quartile

AverageRiskFactor*

Patient Loyalty*Risk factor represents annualized claims per 1,000 beds.

The higher the risk factor, the higher the potential for claims and financial losses.

Annualized Claims per 1,000 beds


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-12%

-3%

17%

-1%

4%

19%

-20%

-10%

0%

10%

20%

30%

Out PatientIn Patient

East Coast Hospital System, Change over previousyear

Physician data cleaned to remove physicians who are no longer in the service area, sick, or otherwise not practicing.

Bottom 25% Middle 50% Top 25%(< 2.27) (2.27 -4.60) (>4.60)CE 11 GM:

Business Impact Analysis:In-patient/out-patient Admissions


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Bringing the Employee-Customer(residents and their families) relationship

together.


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The HumanSigma approach is based on five core principles that our research andexperience have found facilitate the effectivemanagement of the employee-customerencounter:

HumanSigma


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(1) Like vital signs, the employee-customer encounter

must be conceptualized and managed holistically.(2) The employee-customer encounter is fundamentally

emotional.(3) The employee-customer encounter must be measured

and managed locally.(4) The effectiveness of the employee-customer

encounter can be quantified and summarized in asingle performance metric the HumanSigma metric that is powerfully related to financial performance.

(5) Improvement in local HumanSigma performance alsorequires attention to a combination of transactionaland transformational intervention activities.

HumanSigma Principles


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(1) Like vital signs, the employee-customer encounter must beconceptualized and managed holistically.

Because value creation in SSOs flows from the interactionbetween employees and customers, both sides of the employee-customer encounter must be viewed as interrelated andmutually-dependent systems that should be measured andmanaged as a coherent whole, not as independent activitieshoused within separate organizational entities.

HumanSigma Principle #1:


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(2) The employee-customer encounter is fundamentallyemotional.

Because both employees and customers are human agents, themeasurement and management of the employee-customerencounter must acknowledge and incorporate the criticalemotional infrastructure of human behavior and decision-making, yielding a concept that extends well beyond traditionalconsiderations of employee and customer satisfaction a

concept we refer to as engagement .

HumanSigma Principle #2:

Feelings Are Facts


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Engagement is Emotional !!!!!!

It is about the brand you choose.

The job you prefer.

The organization you work in


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AVERAGE MONTHLY SPENDING BYCREDIT CARD CUSTOMERS

$251

$136 $136

$0

$100

$200

$300

Engaged Satisfied Dissatisfied

Copyright 2005 Harvard Business Review School Publishing Corporation.All rights reserved.

Emotionally engaged customers spend more


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(3) The employee-customer encounter must be measured andmanaged locally.

While many other kinds of organizational activities may bemanaged effectively from the top down, the employee-customer

encounter is an intensely local phenomenon whoseeffectiveness varies considerably from location to locationwithin the same organization. Because of this variability in localeffectiveness, its measurement and management must befocused locally.

HumanSigma Principle #3:Think Globally, Act Locally


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HumanSigma:Bringing the Employee-Customer relationship together.

Employee EngagementPatient/PhysicianEngagement

High Customer Engagementand Low Employee

Engagement

OptimizedHigh Customer

Engagementand High Employee

Engagement

Low Customer Engagementand Low Employee

Engagement

Low Customer Engagementand High Employee

Engagement



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(4) The effectiveness of the employee-customer encounter canbe quantified and summarized in a single performancemetric the HumanSigma metric that is powerfullyrelated to financial performance.

Our research has revealed that the two sides of the employee-customer encounter potentiate one another and can bequantified into a single HumanSigma metric. The interactiveeffects of employee and customer engagement at the local unitlevel exponentially drive operational and financial performanceand growth.

HumanSigma Principle #4


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More return businessCustomer retentionHigher share of walletLess price sensitivityMore cross-buyingBetter word of mouth

Higher employee retentionFewer lost work daysHigher productivityHigher safetyHigher customer engagement

1.81.0

3.8

2.5

5.2

4.5

PerformanceMultipliers

HumanSigma Levels


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Optimized

3.4

1.7

1.7

1.0

70%boost

240%boost

70%boost

HumanSigma Quadrants


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Optimized stores: Generate $16-$22 more profit PER

SQUARE FOOT than non-optimizedstores

This accounts for a difference inearnings of $26.3-$33.6 million per year

Improvement from managing HumanSigma:

1 Year Ago = 13 Optimized Stores Today = 47 Optimized Stores

HumanSigma - A retail example

Optimized


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(5) Improvement in local HumanSigma performance alsorequires attention to a combination of transactional andtransformational intervention activities.

Transactional activities, such as action planning and training,

are cyclical interventions that tend to be more topical and short-term in focus, but recur regularly. Transformational activities,on the other hand, are structural interventions that focus onhow companies select employees, select and promotemanagers, pay and appraise employees, do successionplanning, and recognize and develop employees.Transformational activities are focused on creating anorganizational infrastructure that supports HumanSigma .

HumanSigma Principle #5


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Progress on Goals During Impact Planning

Q12GrandMeaninWaveII2006

Q12 GrandMean Wave I 2005

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

4.5

4.7

2.7 2.9 3.1 3.3 3.5 3.7 3.9 4.1 4.3 4.5 4.7

Did not make progresson action planninggoalsMade progress onaction planning goals


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Patients and Physicians -Similar Perceptions of Nursing

36th3.74Teamwork between doctors and nurses

34th3.64Competency of staff nurses

30th3.62Nurses judgment when to call doctor

26th3.54Overall quality of nursing care

30th3.31Delivered quality care all shifts/departments

PercentileScore

Physician perceptions of nursing and care delivery

13th3.27Nurses responded to requests

11th3.32Nurses helped calm fears

10th3.31Nurses explained procedures

14th3.25Nurses anticipated needs

PercentileScore

Patient perceptions of nursing and care delivery


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Clinical Accuracy

0

0.04

0.13

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

Recommend

ConditionalNon-recommend

Clinical Accuracy: Average number of medication errors per nurse annually


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(1) The employee-customer encounter must beconceptualized and managed holistically.

(2) The employee-customer encounter is fundamentallyemotional.

(3) The employee-customer encounter must be measured andmanaged locally.

(4) The effectiveness of the employee-customer encountercan be quantified and summarized in a singleperformance metric the HumanSigma metric that ispowerfully related to financial performance.

(5) Improvement in local HumanSigma performance also

requires attention to a combination of transactional andtransformational intervention activities .

HumanSigma Summary


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The Wachovia Story


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The Wachovia StoryThe ROI of building a superior multi-channel service qualityinfrastructure

Service Quality (Excellence) improvements have helped Wachovia become oneof the most successful super-regional banks in the U.S. These improvementshave lead to growth in deposits and consumer loans that have outpaced those oftheir peer group over the past few years.


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Improvements Across 800 BranchesService quality improvements accelerate over time

2003 Struggle to compete with other top banksBegin aggressive service quality effort

2004 Communicate KPI to managers at the beginning of the yearFocus training on high score branches

2005 Start sharing internal best practice within each areaFocus aggressively on low score branches

2006 Establish Service Excellence Unit to drive bottom 25% branches2004 2005 2006


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WEB basedlinks.LatestTechnologyLatestTechnologyClearExplanationsOptimismQuality careMeans

Quick Quick EfficientProfessionalFriendlyStaff

NotImportant

NotImportant

ER AcademicMarcusWelby

MDPersonality

Now Get me outfast

Get me outfast tell youhow to

Get me outfast- tell youhow to

Will wait forgood bedsidemanner

Service/Promptness

NGens/Millenials

Gen xerBoomer IIBoomer IPre-Boomer

Cohort Patient Expectations


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Copyright Standards

This document contains proprietary research, copyrighted materials, and literary property of The Gallup Organization. It is forthe guidance of your company only and is not to be copied, quoted, published, or divulged to others outside of yourorganization. Gallup and (list trademarks with appropriate trademark symbols here) are trademarks of The GallupOrganization, Princeton, NJ. All other trademarks are the property of their respective owners.

This document is of great value to both your organization and The Gallup Organization. Accordingly, international anddomestic laws and penalties guaranteeing patent, copyright, trademark, and trade secret protection protect the ideas, concepts,and recommendations related within this document.

No changes may be made to this document without the express written permission of The Gallup Organization.

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