Decades of research on managing the human element of business -- including interviews with more than 10 million customers and 10 million employees -- can be boiled down to five rules for getting the most out of those moments when your employees encounter your customers. So say John H. Fleming, Ph.D. and Jim Asplund, authors of Human Sigma: Managing the Employee-Customer Encounter. Their book details some of the ways the world's best performing organizations measure, manage, and improve the points of contact between their employees and customers to drive financial performance.
Studies of those companies helped shape what Fleming and Asplund deem the "Five New Rules of HumanSigma Management," which suggest a new approach for managing a company's employee-customer encounters. At a recent Gallup event that showcased the success stories of 15 organizations and their efforts to optimize their human systems, Fleming acknowledged that the companies that presented during the event were among the driving forces behind the definitions of the five rules.
This is the second article in a series about the five rules that will explore the work of some of those organizations and how they translated those rules into action. Here, we explore Rule 2: Emotion frames the employee-customer encounter.
A personal connection
Feelings are facts. This is especially true for customers. Whether they're buying a $2.00 cup of coffee or a $20,000 SUV, consumers want to feel good about the product they're buying -- and the company they're buying it from. Because of this, customers want more from the companies they do business with than mere transactions -- they want to feel a personal connection with them.
But why? As Fleming and Asplund note, new fields of research, such as the relatively new science of behavioral economics, require business leaders in every industry to rethink traditional models of rational/functional decision making. According to the authors, this groundbreaking research provides new insights into what organizations should pay attention to when assessing their employee-customer encounters.
"Every company has a largely untapped, enormous potential for breakthrough improvements in employee productivity, customer retention and profitability, and authentic sustainable growth," write Fleming and Asplund. "Before companies can achieve these gains, they must first improve their understanding of how the emotional economy works in their company and in the larger marketplace."
The following example highlights how Alegent Health has embraced the challenge of understanding the emotions of its employees and customers. This nonprofit healthcare system, which provides services in Nebraska and southwestern Iowa, encompasses nine hospitals and more than 100 service sites and has about 1,300 physicians on its medical staff and about 9,000 employees. The organization has implemented its own innovative programs and has created a unique culture to emotionally engage its associates and customers. The result has been greater performance in the metrics that matter most to this healthcare provider.
Alegent Health: Creating relationships that transform lives
What is more emotional than caring about the health of your loved ones? There is arguably nothing more powerful than watching -- or treating -- someone's battle between life and death. That is one of the reasons, says Alegent Health President Richard Hachten II, that this healthcare provider has spent the better part of the past decade focusing on developing personal connections with its patients. At a recent event, Hachten said that what initially began as an attempt to increase patient satisfaction scores blossomed into a dynamic effort to create emotional connections between Alegent's patients, their families, and the organization's employees -- an effort that reflected what Hachten called "an absolute commitment to improving the experiences our patients have when in our care."
This unwavering commitment was behind Alegent's efforts to measure and create emotional connections with its customers -- because Alegent's patients and their well-being are the top priority for the 120-year-old faith-based healthcare provider. "Our sole reason for existence is to serve the community," Hachten said. "We have [many] types of 'customers,' and they are demanding and expecting more from healthcare providers all the time. Each individual is responsible for so many interactions and relationships."
Hachten estimates that there are 60 to 100 potential touchpoints between customers and employees during the average patient stay of four days. Multiply these chances for emotional engagement by the roughly 320,000 hospital patients who spend time at Alegent hospitals in a year, and it is clear why Hachten and others at the organization have spent the past eight years emphasizing the importance of capitalizing on these moments to create strong emotional connections with their customers.
"By putting patients at the center of the healthcare equation, we not only care for them medically, but also emotionally and spiritually. When connections are made on all of those levels, patients find themselves taking part in their healing experience," explained Alegent Health Chief Executive Officer Wayne Sensor. "If we can help our patients 'take the wheel' -- in other words, truly engage them in their own healthcare -- I have to believe they will make better decisions for themselves and their families."
Alegent began its journey toward engaging customers in 2000. Its first step was diagnosing its consumer market. The findings from focus groups and other research confirmed that community members wanted a care experience similar to the one that Alegent's mission statement promises -- "high quality care for the body, mind, and spirit of every person." Alegent's vision statement calls on the care provider to "achieve world-class leadership" in its health services, and the organization's satisfaction ratings showed it was falling short of this goal. "We stepped back, and we identified that we had an obligation to deliver on what we'd promised," Hachten said. Hachten and others promised the health system's board of directors that the organization would move from the 37th percentile of its patient satisfaction rating system to the 90th within three years. "The problem was, we didn't know how we would do it," Hachten said.
What Alegent's leadership did know, however, was that the changes needed to be more substantive than just the introduction of a program or two. "We needed to build something from the ground up; we needed to transform our culture," Hachten said.
Members of Alegent's Service Excellence Leadership Team, headed by Hachten, conducted research to determine what behaviors and priorities they should implement throughout their organization. The group's findings stressed three important areas on which to focus their efforts: improving processes, developing leaders throughout Alegent, and giving the organization's employees the tools and support they needed to succeed.
Hachten and others spent the next two years translating the ideas embedded in the organization's mission into actionable focal points. This included bringing a group of employees together from all levels of the organization to identify the commitments they would need to make to emotionally engage their customers. These employees, who were identified as among those within Alegent who consistently forged strong emotional bonds with their patients, formulated six commitments as a response to the need for actionable behaviors: compassion; responsibility; teamwork; responsiveness; integrity; and dignity and respect.
Hachten and the Service Excellence Leadership Team introduced these employee- and customer-centric commitments in 2002. Alegent's patient satisfaction scores rose from the 37th percentile to the 80th percentile following the introduction of these commitments and the focus necessary to achieve these pledges, and the following years found the organization routinely above the 90th percentile in "excellent" customer satisfaction ratings. "We kept moving our 'excellent' scores up and our 'good/fair/poor' scores down by focusing on the culture and relationships in our hospitals," Hachten said.
Remaining focused during times of change
But just as soon as Alegent put together consistent years of patient satisfaction scores, the playing field changed. In 2006, the Centers for Medicare & Medicaid Services (CMS) introduced a government-sponsored Consumer Assessment of Health Providers and Systems (CAHPS) measurement program. This program, which when measuring hospitals acquired the acronym HCAHPS, sought to create a national standard for making quality comparisons between healthcare providers. "We were very leery of this transformation," Hachten said. "But we participated in it from the beginning because we [anticipated] this being required of hospitals around the country."
While their hospitals transitioned to the HCAHPS system to measure the basic needs and interactions between their employees and patients, Alegent's leaders understood the importance of focusing on the patient experience and how employees drive the emotional engagement in their encounters with patients. In 2006, Alegent began measuring employee engagement using Gallup's 12-item employee engagement survey, the Q12. And with the advent of the HCAHPS model, in 2007, Alegent and Gallup established a partnership to research patient engagement, using the HCAHPS questions to measure rational patient needs and Gallup's CE11 customer engagement items to measure emotional connections and relationships.
Alegent's leaders believed that Gallup's science would ensure that the organization could create and implement a patient engagement strategy driven by passionate people, a plan that would make a dynamic difference in care and in business outcomes. "Intuitively, we believed for many years that engaged employees drive engaged patients, but we couldn't demonstrate that correlation statistically until Gallup's HumanSigma tools were developed," Hachten said. "The connection between engaged patients and superior business outcomes is even more obvious. With Gallup's tools and analyses, we have been able to effectively demonstrate these correlations to all of our key constituents."
In the first administration of the surveys, Alegent's demonstrated commitment to emotionally engaging its customers resulted in ratings above the 90th percentile in both the HCAHPS results and Gallup's customer engagement database. In fact, Alegent was rated the top healthcare provider nationwide in the combined overall HCAHPS and Quality Rank measure from Q3 2006 through Q2 2007. Additionally, Alegent's patient engagement results showed that the organization had seven "fully engaged" customers for every "actively disengaged" customer. (See graphic "How Engaged Are Your Customers?")
"We didn't know what to expect when we started measuring patient engagement," Hachten said. "But we think our results were great because of the six-plus years we focused on the importance of emotional connections between our employees and patients."
This determined effort to define the organization's culture by emotional encounters and engagement resulted in improved business outcomes as well. Teams throughout Alegent that had higher levels of employee engagement were more likely to report high patient engagement measures -- Gallup's first HumanSigma correlation in the healthcare industry.
The measurement and management of both employee and patient engagement have a direct impact on the quality of the patient care experience and the subsequent financial outcomes. Alegent's 2008 HumanSigma measurements placed 63% of the organization's inpatient work teams in the "optimized" quadrant. Local business units that score above the database median on both employee and customer engagement metrics ("optimized" units) are 3.4 times more effective financially than units that do not. The remaining 37% of Alegent's inpatient teams fall within a partially optimized quadrant, in which business units are 1.7 times more effective financially than other teams. (See graphic "The Impact of HumanSigma.")
For Alegent, managing the emotional engagement of employees and patients is critical for the success of the organization. If employees' emotional needs are not met, they cannot adequately meet the needs of their patients. And considering the strong correlation Gallup finds between patient engagement levels and customers' ratings of Alegent through the "best hospital" question in the HCAHPS survey, understanding and addressing the emotional connection between employees and patients is vital to healthcare providers. "We are well aware that patients have choices of providers; hence, success with our business and in serving our mission calls us to effectively support the engagement of our employees," Hachten said.
"Engaged employees are our key to success. You can have the best medical technology and science in the world, but if customers do not feel connected to the people providing that care, they won't come back," said Sensor. "It is the power of the employee-customer encounter that ensures that patients receive the highest quality of care -- and ultimately, the best possible outcome."