Treating employees as consumers

Extending customer relationship marketing techniques to staff is becoming more popular. By matching staff values with the organisation, and tailoring a benefits package accordingly, employers will benefit. By Debbie Lovewell

Case studies: Whitbread, Nationwide

Article in full

Customer relationship marketing techniques have become something of a talking point among employers, particularly those in the retail and leisure sectors. In theory, it isn’t hard to see why. "Organisations have more to fear from a lack of quality internal customer service than from any level of external customer service," explains US training consultant Ron Tillotson.

Ensuring that customers experience a high level of service to encourage them to return and build brand loyalty is one of the fundamental principles on which businesses are built. And most organisations have a whole host of tricks up their sleeves to do just that. Anyone that owns a branded loyalty card, for example, will have experienced just one of the methods that organisations use to encourage customers to return. Points-based loyalty schemes are used to record exactly what shoppers are buying and tailor money-off vouchers and subsequent freebies to suit their spending habits.

But while organisations may invest millions of pounds a year in identifying just what makes their customers tick, how many would think of doing the same for their staff? Shaun Tyson, professor of HR Management at Cranfield School of Management, believes that employers’ relationship with staff can be one of the most important associations within an organisation. "It is a more important relationship than with customers. The relationship is stronger." Adapting customer relationship marketing (CRM) techniques for use on employees is increasingly being used by employers to find out a little bit more about their staff. Richard Stocker, senior consultant at consultancy firm Jardine Lloyd Thompson (JLT), explains that while the concept is not yet widespread, employers that are using it are not shying away from its complexities.

So staff needn’t worry that their employer is carrying out Orwellian Big Brother-style surveillance techniques on them. "I’m hearing them talk the classic [CRM] language of segmentation, analysis and all the right reasons for doing it. So those that are doing it are using it in quite a sophisticated way." Segmentation can be based on a wide variety of differentials such as employees’ age or family status.

Some employers will also find that staff in similar roles or from the same department have very similar requirements. "Any organisation that is probably approaching 1,000 or more employees is likely to have some quite distinct clusters of different types of roles. It’s not just a stereotype to say that these groups have quite different behaviours, have quite different backgrounds, but quite often the drivers in their roles make them quite different people," he explains. Categorising employees according to their distinctive characteristics and behaviours means that employers can then tailor HR policies to meet their needs. But simply relying on data gleaned from employers’ own analysis, however, can be risky so this should always be validated by employee feedback. The challenge for employers is deciding how to use this information. After all, it would be far too easy if staff were to indicate that they would all value exactly the same benefits.

Malcolm Higgs, academic dean of Henley Management College, believes that increased flexibility in benefits arrangements have contributed to the shift in the way that employers interact with staff. Packages which provide employees with the scope to make some benefits choices for themselves, therefore, are a popular option for employers looking to go down this route. "Typically, it seems to be the concept of flexible benefits but also the use of technology to enable employees to create their own [package]," says Cranfield’s Tyson. But significantly revamping a benefits package is not necessarily always part of the deal. "Sometimes it’s not about implementing changes but reinforcing the package," he adds. So where benefits already fit with employees’ consumer needs, the process could be used to tailor a more bespoke communications strategy to boost take up.

A flexible or voluntary benefits scheme that has been up and running for several years, for example, could use this approach to confirm that its options are still relevant to employees and reinforce what is available. Once organisations have decided what to offer, the way these products are marketed to staff is also important. So as well as monitoring employees in the same way as they would their customers, employers should consider applying similar sales techniques. "Organisations are increasingly seeing their HR policies as products to sell to their employees," explains Tyson. This can be crucial in obtaining management buy in. It is all very well introducing a fabulous new benefit that staff love, but if it complicates the running of a department or creates more work for line managers, they are hardly likely to support it or willingly promote it to employees. "[Line managers are like customers] because it is line managers who manage employees on a daily basis so they have to be satisfied with the products as well," Tyson says. It makes sense then that HR is increasingly turning to its marketing colleagues for inspiration in promoting its benefits strategy. Henley Management College’s Higgs explains that some organisations have even appointed marketing staff to work in the HR department. This might not seem like an immediately obvious match, but using the same marketing techniques both internally and externally can align organisational and employee values.

Successfully implementing a consumer approach to policy or benefits changes, therefore, can help to shape an organisation’s brand and business culture. "It’s starting to build the employer brand in an indirect way. Organisations that have gone down this route will see [a greater] business alignment," explains JLT’s Stocker. With clear goals in sight, it will be easier for employers to boost employee understanding of the business’ objectives. And CRM techniques can also be used to promote consistent messages throughout a business to both customers and staff. Those that wish to drive their customers online, for example, could introduce an online benefits system for employees to promote a deeper understanding of the principles involved and enable them to deliver a higher level of customer service.

Experts agree that organisations that match employees’ values with their own are likely to experience higher levels of staff engagement and performance, which in turn can help to recruit and retain top-performing staff. "There is a realisation that you can’t take employees’ commitment for granted. We have to recognise that people have choices and one of their choices is whether they want to work for us. The nature of the employment relationship is that [employers] can’t assume that [staff] will stay and give 110%," explains Higgs. This is particularly vital in sectors such as retail which rely heavily on customer-facing staff but can be notorious for the speed at which employees come and go.

Leisure company Whitbread (see box page 31), which employs a large number of pub and restaurant workers, uses a consumer approach to tailor its voluntary benefits package to employees’ needs. Since adopting the method, it has experienced increased staff satisfaction across the business. Research consistently shows that employee satisfaction is directly linked to performance. So when staff are dealing with customers directly, it is vital to ensure they feel they are being treated well so that they remain engaged. "You can go into some stores and know that staff aren’t treated well because the service is horrible," says Higgs.

But while treating employees as consumers certainly has its advantages, employers need to be realistic about its limitations. "I think that’s the Holy Grail in that it isn’t realistic. There are trade offs in there. It’s never going to be all things to all people. It’s about getting it more focused," explains JLT’s Stocker. His view is echoed by Aly Shariff, reward and policy director at Whitbread: "If we’re going to spend a large amount of money, we want to put in something that employees want. You won’t be able to please everyone but you are not trying to offer one-size-fits-all [perks]."

By researching employees’ spending habits, Shariff believes that the organisation is best placed to offer staff discounts on products that they actually value. Its table waiting staff in its pub restaurant brands, for example, indicated that discounted footwear would be appreciated because they spend much of their time on their feet. Calculating a tangible return on investment, however, is not always straightforward. Shariff recommends tracking the usage of benefits over time to build up a more comprehensive picture. Alternatively, Cranfield’s Tyson recommends attributing employees’ own values to what they expect a benefits strategy to achieve. "Costing benefits can be tricky so there are all kinds of difficulties in predicting costs.

The value is in the eyes of the employee, so there is a question of how do [employers] calculate value? [If the organisation] can produce benefits that minimise the cost to them but maximise the value to staff, they have achieved all they can from this structure." It all just goes to show that it pays to keep your customers close, but your employees closer.

Case study: Whitbread

Researching the demands placed upon employees and factors such as what consumer items they are likely to spend their weekly pay on, has enabled Whitbread to put together a benefits package that helps to support employees’ lifestyles.Aly Shariff, reward and policy director at the leisure company, explains that the organisation wanted to offer a package that staff could really use as opposed to an off-the-shelf option: "We have continually sought views from employees about what they want to see in the package. [If we had gone with an off-the-shelf package] there may have been one or two things that they want but 35 that were useless for our people.

Our thinking really came when we looked across Whitbread and thought about our sheer size and leverage, and thought we could offer some fantastic products for staff." He acknowledges that it can be tricky to measure a return on investment from this strategy, but since introducing it two years ago the organisation has improved staff satisfaction levels across all its brands, which include TGI Fridays and Pizza Hut. And these are not the only results. "We’re building employee commitment, engagement and making them proud to work for Whitbread," adds Shariff.

Case Study: Nationwide

Nationwide uses customer relationship marketing techniques to identify what staff want from its flexible benefits scheme.It chose to adopt a more scientific approach to benefits in order to improve its schemes’ processes. Evan Davidge, rewards consultant, explains one of the building society’s philosophies is that employees should experience the same level of service as its customers.

"It’s a mechanism we use for assessing the best way of delivering flex. In many ways, we use a multimedia approach. It’s a very holistic approach. We constantly look for different means of feedback from employees, whether it’s through intranet surveys, our personnel advice line, focus groups and roadshows. We also use our Brainwaves suggestion scheme." The strategy also enables Nationwide to test the usability of any new benefits and processes that it intends to introduce. "[By] using this integrated system of feedback, it gives us a handle on what employees are thinking about current and future developments.

The underlying principle behind it all is that without it, the scheme would not be focused," adds Davidge By improving processes, the firm hoped to ease enrolment to the scheme and encourage more staff to join. And this approach has contributed to the company’s return on investment from the plan. "With any flex scheme, you’ve got to look carefully at what you want it to achieve on the bottom line," says Davidge.