Ultimate Software's Blog

Does Employee Engagement Equal Customer Satisfaction?

“The true measure of a company is how they treat their lowest-paid employee.”

At Ultimate Software, these words—immortalized by CEO Scott Scherr—are quoted and framed above the entryway in our South Florida headquarters. They serve as a reminder, for everyone from the C-suite to our newest hires, that “People First” is more than our motto. It’s our lifeline.

With the help of Vivian Maza, Ultimate’s much-loved Chief People Officer, Scott built the company’s culture to put employees first, always. Scott often reiterates his conviction that, when you put your people first, they will take great care of your customers. And when you take care of your customers, they’ll take care of your bottom line.

It’s simple, it’s powerful, and it’s true.

By keeping our culture strong and placing people at the heart of all we do, we’ve received numerous Great Place to Work® recognitions over the years and enjoy an incredible 97% employee retention rate. Walk through our hallways and you’ll see smiling faces, homemade treats in the break rooms, and, more often than not, donation boxes filled with items for those in need. When “People First” is passed down from the top, it resonates with everyone.

The impact is significant.

High employee satisfaction and engagement are associated with lower turnover, improved productivity, increased sales, and better shareholder returns. Countless studies have also confirmed what Scott has believed from day one: employee engagement and customer satisfaction are directly correlated. Time and again, when organizations prioritize their people, their customers benefit in turn—so, too, do their profits.

In fact, one study calculated the relationship between employee engagement and customer satisfaction as r=.43, which is comparable to the relationship between sleeping pills and insomnia improvement (r=.3). Organizations reporting high engagement scores enjoy two times more customer loyalty than their counterparts with average engagement scores, and teams classified with higher levels of engagement increased their net promoter scores (NPS) by 27%.

It’s clear that customer satisfaction is also directly tied to profit. In 2012, Alex Edmans analyzed 28 years’ worth of stock market statistics and found that organizations that invested in employee satisfaction yielded up to 3.8% higher annual returns than their competitors. These findings are consistent with meta-analyses from Gallup, Washington State University, Bain & Company, and many others.

At Ultimate, we credit our “People First” culture with our industry-leading 95% customer satisfaction rate, rapid growth, and technological innovation. Twenty-seven years later, Scott’s advice continues to ring true: What’s good for your people is good for your customers and good for your organization.

So, does employee engagement equal customer satisfaction? Yes—and so much more. Leaders should take care to ensure they’re doing everything possible to keep their employees engaged and optimistic.

Care for your people, and they’ll care for you.

Sources:
http://news.gallup.com/businessjournal/163130/employee-engagement-drives-growth.aspx
http://www.sciencedirect.com/science/article/pii/S0278431908000790
http://www.bain.com/publications/articles/the-chemistry-of-enthusiasm.aspx