The term Employee Net Promoter Score® or eNPS is seen increasingly often in company reports, but what is it and should you use it?
Since late in 2003, Net Promoter Score and the Net Promoter Score process have been used by an ever-increasing number of companies as a way to measure and improve customer loyalty. Recently, the concept has been extended by a number of organisations (Vodafone, Symantec, Atlas Copco, Holcim to name a few) to measure Employee loyalty and employee engagement.
Employee Net Promoter Score is based on the NPS process with a slight change to the question and respondents. eNPS asks employees:
How likely are you to refer <Company> as an employer to friends and associates?
For more information on Net Promoter Score and how/why it works download our free Introduction to Net Promoter Score (NPS).
The reason to use Employee NPS are based on two simple assumptions:
- Higher employee loyalty leads to lower costs: Overall if a company can reduce involuntary employee turnover, then costs and productivity will improve. Many companies already target ways to reduce involuntary turnover as they know it reduces recruitment and training costs. Employee NPS offers another tool to understand what employees are thinking and develop ways to drive higher employee engagement.
- Higher employee engagement will drive higher customer loyalty: There is a reasonable amount of research and empirical studies that show a linkage between happy employees and happy customers. This linkage is reinforced in the upcoming Ultimate Question 2.0 book. This book is co-authored but Fred Reichheld, one of the instigators of Net Promoter Score. In the new book the term Promoter Flywheel (sm) has been coined to cement self-reinforcing effects of employee loyalty and customer loyalty.
In both of these cases eNPS enables the organisation to track and understand how loyal employees are and make business changes to improve that loyalty.
Employee NPS Pros
There are a range of pros for using eNPS as compared to a traditional omnibus employee survey.
- The eNPS question is easy to understand and ask. One of the key reasons that for the success of NPS is that it is easy for people to understand. This is true also of eNPS. Most companies that track employee engagement use larger annual omnibus surveys. While this approach can give a very accurate reading it is often difficult for the staff in the organisations to interpret and action the survey results.
- Lower cost: Compared to proprietary omnibus surveys, eNPS can be less expensive to implement. The basic question can be asked by any organisation and the analysis is simpler and easier to perform.
- Consistency of message: As the eNPS hooks into the same idea as NPS, it’s a natural extension for any organisation that is already using NPS to drive customer loyalty.
- Can be used in a Transactional survey format: Given an organisation of a large enough size, eNPS can be implemented in a transactional format. This entails surveying employees at key points along their relationship with the company: hiring, performance review, start date anniversary etc. The benefit of performing the survey in this way is that the company receives a constant stream of feedback from staff.
Employee NPS Cons
Unlike the extensive set of research on Net Promoter Score there is currently little published validation of the eNPS linkage to employee loyalty.
This is not to say that no links have been identified, some companies are reporting a link between eNPS and other important KPIs:
Since quarterly tracking began, Celanese has seen its ENPS steadily increase, from -8% to -3% to 7% to 24%. Further, KPIs have also improved, with turnover dropping by half, for example.
Where to next
If you haven’t considered using eNPS in your business, then perhaps you should. The incremental cost of performing the survey is not high and the benefits may turn out to be great.
Are you using eNPS? What are your thoughts on it’s effectiveness?
Promoter Flywheel is a service mark of Bain & Company, Inc.