Mint

Motivating workers through metrics

Some leading Indian companies are beginning to put systems in place that use customer feedback to reward their frontline employees.

By Ashish Singh, Karan Singh and Vivek Gambhir

First published on Μαΐου 21, 2007
min read


Getting enough people, let alone the right people, is a huge challenge for Indian companies. So, it might seem that tying employee performance and compensation to customer feedback-and not just to individual productivity and sales numbers-is a sure-fire recipe for greater attrition. But some leading Indian companies are beginning to put systems in place that use customer feedback to reward their frontline employees, with the aim of getting them to work together to serve the customer. Alongside, they are also rising to the challenge of training and re-equipping their people for this purpose. Internationally, a handful of firms are putting customers and employees, rather than bosses, in charge of performance rankings. These companies are tying rewards to team performance. The local and international trendsetters apply simple metrics for compensation, promotions and career transitions. Take the case of Enterprise Rent-A-Car, one of the world's leading car-rental companies. At Enterprise, managers cannot be promoted unless their branch delivers customer service at or above the average for all comparable branches. Success is judged by the enterprise service quality index (ESQi), which shows the percentage of customers who rate a branch five out of five. If this metric isn't met, the entire team is ineligible for promotion. Many teams have introduced a voluntary weekly metric called The Vote, in which team members rank one another on how well each has provided outstanding customer service. This personal accountability for team success has led to higher ESQi scores-and happier customers. Guest inputs Indian Hotels, which runs the Taj Group of Hotels, similarly uses frequent customer input to rate its employees. The staff is rewarded if hotel guests or colleagues compliment its service: The hotel's Special Thanks and Recognition System recognizes achievements on a daily basis. Its Guest Satisfaction Tracking System measures quality based on customer perception. Managers, executives and the staff can view their scores on a daily, monthly, quarterly or annual basis and the ratings are included in the performance assessments of more than 80% of the employees of Indian Hotels. Inspiring even the best employees requires clear, personal and immediate goals, and not some broad mandate to maximize overall profit. Titan Industries, a leading manufacturer of watches and jewellery, uses its 'Face of Titan' programme to motivate, educate and retain talent and also to increase productivity. Winners are given a trophy, cash reward of Rs20,000, a company-funded trip to the sunny beaches of Goa and an invitation to the Titan Annual Business Associates meeting. The programme covers 1,200 frontline staff deployed in 113 cities. In addition to curbing attrition among the best, the programme has increased sales ticket size by 35%. At Ireland's Superquinn grocery chain, the bakery staff at one store was challenged to increase the number of households that purchased from the bakery. The reward: a helicopter trip around a local bay. The team set up a doughnut cooker inside the main entrance, offered shoppers a taste and guaranteed the doughnuts' freshness. As a result, the households that purchased from the bakery increased to 90% from 75%—and all the 20 bakery colleagues won helicopter trips. Keeping the best Retaining the best is not easy, particularly when money is not the only reason that people move. Extensive re-training is often important to not only motivate the best people to stay, but also to equip the rest. Titan's contest has cut attrition among the 150 finalists, the best performers, down to 12%. This compares favourably with the overall rate of up to 40%. RPG Retail hopes to rein in attrition through a system on where employees are given bonuses, not on the basis of their performance, but on the total sales the shop makes. Revenue share Metrics can help here, too. At Subhiksha, a chain of around 700 grocery and pharmacy stores, employees get a percentage of excess revenues if stores as a whole exceed monthly targets for sales, profitability or customer acquisition. Applebee's restaurants, a chain of eateries in the US, go even further. General managers' bonuses are based on financial results, measurements of how well patrons rate their overall dining experience and staff turnover rates. In the casual-dining segment of the restaurant business, an entire staff can turn over twice in one year. Applebee's looks at turnover among the top 20% of performers, the middle 60% and the bottom 20%. Managers are rewarded for their success in retaining that top 80% and encouraged to help poor performers to improve or seek other opportunities. Since 2000, turnover among hourly associates dropped from 146% to an industry-leading 84%, evidence not only that managers are more motivated to hold on to their teams, but also that the teams, minus poorer performers, are more stable. By keeping these principles in mind, managers can get employees pulling in the same direction. Ashish Singh is managing director of Bain and Company India. Karan Singh and Vivek Gambhir are Bain partners in Delhi www.livemint.com

Getting enough people, let alone the right people, is a huge challenge for Indian companies. So, it might seem that tying employee performance and compensation to customer feedback-and not just to individual productivity and sales numbers-is a sure-fire recipe for greater attrition.

But some leading Indian companies are beginning to put systems in place that use customer feedback to reward their frontline employees, with the aim of getting them to work together to serve the customer. Alongside, they are also rising to the challenge of training and re-equipping their people for this purpose.

Internationally, a handful of firms are putting customers and employees, rather than bosses, in charge of performance rankings. These companies are tying rewards to team performance.

The local and international trendsetters apply simple metrics for compensation, promotions and career transitions.

Take the case of Enterprise Rent-A-Car, one of the world's leading car-rental companies. At Enterprise, managers cannot be promoted unless their branch delivers customer service at or above the average for all comparable branches. Success is judged by the enterprise service quality index (ESQi), which shows the percentage of customers who rate a branch five out of five. If this metric isn't met, the entire team is ineligible for promotion.

Many teams have introduced a voluntary weekly metric called The Vote, in which team members rank one another on how well each has provided outstanding customer service. This personal accountability for team success has led to higher ESQi scores-and happier customers.

Guest inputs

Indian Hotels, which runs the Taj Group of Hotels, similarly uses frequent customer input to rate its employees. The staff is rewarded if hotel guests or colleagues compliment its service: The hotel's Special Thanks and Recognition System recognizes achievements on a daily basis. Its Guest Satisfaction Tracking System measures quality based on customer perception.

Managers, executives and the staff can view their scores on a daily, monthly, quarterly or annual basis and the ratings are included in the performance assessments of more than 80% of the employees of Indian Hotels.

Inspiring even the best employees requires clear, personal and immediate goals, and not some broad mandate to maximize overall profit. Titan Industries, a leading manufacturer of watches and jewellery, uses its 'Face of Titan' programme to motivate, educate and retain talent and also to increase productivity. Winners are given a trophy, cash reward of Rs20,000, a company-funded trip to the sunny beaches of Goa and an invitation to the Titan Annual Business Associates meeting. The programme covers 1,200 frontline staff deployed in 113 cities. In addition to curbing attrition among the best, the programme has increased sales ticket size by 35%.

At Ireland's Superquinn grocery chain, the bakery staff at one store was challenged to increase the number of households that purchased from the bakery. The reward: a helicopter trip around a local bay. The team set up a doughnut cooker inside the main entrance, offered shoppers a taste and guaranteed the doughnuts' freshness. As a result, the households that purchased from the bakery increased to 90% from 75%—and all the 20 bakery colleagues won helicopter trips.

Keeping the best

Retaining the best is not easy, particularly when money is not the only reason that people move. Extensive re-training is often important to not only motivate the best people to stay, but also to equip the rest.

Titan's contest has cut attrition among the 150 finalists, the best performers, down to 12%. This compares favourably with the overall rate of up to 40%. RPG Retail hopes to rein in attrition through a system on where employees are given bonuses, not on the basis of their performance, but on the total sales the shop makes.

Revenue share

Metrics can help here, too. At Subhiksha, a chain of around 700 grocery and pharmacy stores, employees get a percentage of excess revenues if stores as a whole exceed monthly targets for sales, profitability or customer acquisition.

Applebee's restaurants, a chain of eateries in the US, go even further. General managers' bonuses are based on financial results, measurements of how well patrons rate their overall dining experience and staff turnover rates. In the casual-dining segment of the restaurant business, an entire staff can turn over twice in one year.

Applebee's looks at turnover among the top 20% of performers, the middle 60% and the bottom 20%. Managers are rewarded for their success in retaining that top 80% and encouraged to help poor performers to improve or seek other opportunities. Since 2000, turnover among hourly associates dropped from 146% to an industry-leading 84%, evidence not only that managers are more motivated to hold on to their teams, but also that the teams, minus poorer performers, are more stable.

By keeping these principles in mind, managers can get employees pulling in the same direction.

Ashish Singh is managing director of Bain and Company India. Karan Singh and Vivek Gambhir are Bain partners in Delhi