WHITE PAPER ITAGroup, Inc.
TRENDS IN PEOPLE PERFORMANCE MANAGEMENT Companies must generate maximum return on their marketing, including investment in employee performance management programs. In recent years, however, several trends have emerged that not only justify this approach, but have refined it to the point where people performance improvement strategies are as important to a company’s success as are product innovation, customer satisfaction, quality and operational efficiency.
DIRECTING FUNDS TOWARD INTERNAL BRANDING The first trend is a shift in corporate attitude toward the role of employees and channel partners in the overall branding strategy and its effect on the bottom line. It is the growing realization that external efforts to promote a company’s brand to its customers are necessary, but in order to actually deliver on that brand promise, there also must be a plan for aligning employee attitudes and actions with that brand. Internal branding, which involves communicating to employees what the brand is and how each employee can bring to life, is becoming increasingly important in a company’s ability to differentiate itself from its competition. Although the link between engaged employees, satisfied customers and an improved bottom line has been supported intuitively by business executives, there is a growing body of evidence that quantifies this link. Brands aren’t logos and taglines; they are customer experiences delivered over time. And aside from the product or service itself, people can be the most important element in delivering on the brand promise. Studies show that companies that align their employees with the corporate mission and brand consistently outperform their competition. One example of research that connects employee engagement to employee satisfaction, and employee satisfaction to profitability, is a 2007 study conducted by the Russell Investment Group. The study analyzed the stock performance of Fortune’s annual list of the “100 Best Companies to Work For” and compared it to the stock performance of the broader market. The study found that since 1998 the companies on this list delivered five times as much to investors as the general market—a clear link between employee engagement and financial performance.1 Another example is a study of a major hotel chain conducted by Dr. Don Schultz, a professor at Northwestern University. The study tested the belief that engaged employees, who are focused on delivering on the brand promise of exceptional service to customers, can positively impact financial performance. Analysis of survey and spending data collected from customers © 2011 | ITAGroup®, the associated design/logo and Driven by Loyalty® are registered service marks of ITAGroup, Inc. All rights reserved. | Page 1 of 6