“The three most important things you need to measure in business are customersatisfaction, employee satisfaction, and cash flow." Jack Welch – Lessons for Success, 1993THE COSTS“Most managers know that turnover is expensive, but two-thirds of 1,290 managers were unable to quantify the cost of turnover when asked in a recent poll. The cost of hiring and training a new employee can vary greatly—from only a few thousand dollars for hourly employees to between $75,000 and $100,000 for top executives. Estimates of turnover costs may range from 25 percent to almost



200 percent of annual compensation. Costs that are more difficult to estimate include customer service disruption, emotional costs, loss of morale, burnout/absenteeism among remaining employees, loss of experience, continuity, and ’corporate memory." - F. Leigh Branham, Vice President and Director of Professional Services, Right Management Consultants (one of the worlds’ leading firms in human resources consulting.)THE BENEFITS"Between 40 and 80 percent of customer satisfaction and loyalty is

determined by the customer-employee relationship, depending upon the industry and market segment. At Sears, employee satisfaction accounts for 60 to 80 percent of customer satisfaction." (Anthony Rucci, Steven Kim, Richard Quinn “Employee Customer Profit Chain at Sears" Harvard Business Review Jan.-Feb. 1998) THE REVISED MODEL: -THE EMPLOYEE-CUSTOMER-PROFIT CHAIN"When companies put employees and customers first, their employees are satisfied, their customers are loyal, their profits increase, and their continued success is sustained. A growing body of research is supporting the correlation between employee and customer satisfaction. More specifically, employee commitment is cited as a source of increased customer satisfaction. More committed employees stay with the company longer. The longer an employee stays with a company, the better the employee becomes at understanding its processes, its products, and its customers. Therefore, employee commitment increases the likelihood of customer satisfaction and therefore customer commitment".“Conducting employee surveys is an inexpensive, sensible approach to monitoring if you are doing the right things to earn that sense of commitment from your employees. The small investment of time and money in an employee survey will be repaid many times over through more satisfied and loyal customers and reduced hiring and re-training costs." (Satisfied Employees Increase Customer Loyalty, Scott Andersohn, SPHR, May 2004)THE RETURNSCUSTOMER LOYALTYBy reducing the costs associated with employee attrition and increasing customer loyalty through improved employee moral companies can greatly improve their bottom line. 1. According to “The Loyalty Effect" by increasing customer loyalty by just 5% companies can increase profitability by 40-95%. The experts seem to agree that “companies won’t realize the fruits of loyalty until usable measurement systems enable firms to measure their performance against clear loyalty goals – just as they now do in the case of profitability and quality goals." 2. Since employee surveys are the most accurate and cost-effective employee attitude measurement tool currently in existence, organizations of all

sizes may wish to consider implementation of an ongoing employee survey program to better measure their performance against defined loyalty objectives.

The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value by Frederick F. Reichheld, Thomas Teal. Copyright 1996 Reed Business Information, Inc.

The One Number You Need to Grow, Frederick F. Reichheld HBR OnPoint Enhanced Edition Dec 1, 2003

To learn more about using employee surveys as a tool to measure and improve the satisfaction of your employees, please visit the "Employee Surveys" page of the Infosurv website www.infosurv.com/