Introduction to Behavioural Competencies

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Its not JUST about engagement
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Agenda

• Who is RWE npower?
• What is the problem?
• The missing link - the people agenda
• Our challenge
• Our response
• Measurement and analysis - defining the model
• The people agenda - putting the model to work
• The case for measuring and managing engagement
• Conclusions

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Who is RWE npower?

• CEGB ? National Power Privatisation
• National Power ? National Shower
  Internationalisation
• National Power ? Innogy Focus on Transformation
  and Integration
• Innogy ? RWE npower - Focus on Growth through
  Excellence
• in two very different fields

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What is the problem?

• Technology is key vs customer is king
• We work to keep the lights on vs we work to keep
  our customers
• Employees are committed vs employees have
  transferable skills
• Engagement with job content vs engagement with
  job context
• Knowledge workers vs production workers

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The missing link - the people agenda

• Q How do you develop a people strategy which
  meets the demands of two very different
  bedfellows?
• A Not by trying to create a single strategy

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Drivers of Engagement
Engagement Drivers Knowledge Workers Production Workers
Manager 4 1
Senior Leadership 2 4
Values 3 3
Work Life 1 2
Values
Values
Values
Manager
Manager
(2)
(2)
(2)
Values
Senior
EMPLOYEE
EMPLOYEE
Values
Values
EMPLOYEE
EMPLOYEE
(2)
Leadership
ENGAGEMENT
ENGAGEMENT
(2)
(2)
ENGAGEMENT
ENGAGEMENT
Overall Satisfaction

• Job Satisfaction
• Advocacy
• Retention

Overall Satisfaction
Overall Satisfaction



Advocacy
Advocacy
Advocacy


Senior
Senior
Senior
Values
Leadership
Values
Leadership
Leadership
(3)
(3)
(3)
Based on PeopleMetrics proprietary research on
employee engagement among knowledge workers and
production workers at 40 global 2000 companies
Direct Manager
Direct Manager
Direct Manager
Work Life
(4)
(4)
(4)
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The missing link - the people agenda

• Q How do you develop a people strategy which
  meets the demands of two very different
  bedfellows?
• A? By really understanding the key drivers of
  value creation in each part of the business, and
  focusing on the things you can do something about

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The Employee Engagement and Customer
Satisfaction Cycle
The Profit Chain

• Profit and growth are stimulated primarily by
  customer loyalty
• Loyalty is a direct result of customer
  satisfaction.
• Satisfaction is largely influenced by the value
  of services provided to customers.
• Value is created by satisfied, loyal and
  productive employees.
• Employee satisfaction, in turn, results
  primarily from high-quality support services and
  policies that enable employees to deliver results
  to customers.

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Our Challenge
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Our Response

• npower Retail vision Turning Customers into Fans
• npower wheel integrated performance measures

Measure Example Metrics
I only ask once A customer moving home, who wants to stay with npower New address etc. right first time
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Our Response - a worked example

• Switching is now less supplier event driven
  (door-knocking), and more customer event driven
  (moving house).
• Many triggers for customers to switch poor
  service experience - we can do something about.
• Right first time rate is an obvious metric to
  watch as an indicator of service performance.

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Building the model for registering a new address
Internal Service Quality
Employee Satisfaction
Employee Retention
External Service Quality
Customer Satisfaction
Customer Retention
Profit

• Direct impact of rework costs on cost to serve
  reduces profitability

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Building the model for registering a new address
Internal Service Quality
Employee Satisfaction
Employee Retention
External Service Quality
Customer Satisfaction
Customer Retention
Profit

• Poor service experience reduces satisfaction
  and increases risk of customer defection, and
  hence reduces profitability

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Building the model for registering a new address
Internal Service Quality
Employee Satisfaction
Employee Retention
External Service Quality
Customer Satisfaction
Customer Retention
Profit

• Frustrated customers are often unpleasant to
  deal with, reducing employee satisfaction and
  retention ..
• .. which in turn erodes competence and hence
  service quality

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Building the model for registering a new address
- straw man
Systems Capability
Management Capability
Employee Engagement
Cost to serve
right first time
Training Investment
Employee Competence
Employee Tenure
Customer Satisfaction
Customer Retention
Profit
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Building the model for registering a new address
- straw man
Employee Engagement
Fully engaged
Engaged
right first time
Disengaged
Employee Competence
Expert
Competent
Not yet competent
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Putting the model to work

• Linkages are articulated empirically.
• By measuring competence and engagement, we can
  develop a monetized value for each shift in a
  particular metric (e.g. not yet competent to
  competent) and hence an ROI curve. This sits
  at the core of our people strategy
• Provides us with a very clear definition of what
  constitutes good managerial performance, e.g,
  outcomes rather than processes

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Performance Competence X Engagement



Expert Competent Not yet competent
Knowledge workers
Competence
Terrible twos
Newly promoted
New starts
Not engaged Somewhat engaged Engaged
Engagement
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Why do we believe in this approach?

• General case for link between engagement and
  productivity is now well established.
• The model provides predictions, which can be
  tested and the size of effects can be determined
  with high levels of confidence due to large data
  set.
• There are precious few other levers we can access
  directly to impact performance.

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Top 100 listed firms v FTSE 100
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Linking Human Capital to Business Results
Source Accenture Institute for Strategic Studies
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Engagement Logic

• An engaged employee is someone who cares and will
  go the extra mile.
• Strong leadership, opportunities for personal
  development, good management, decent pay and
  benefits, a reasonable work-life balance, fun
  activities which help build close-knit teams, and
  staff believing the firm to be ethical levels
  of engagement will tend to be high.

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Engaged/Disengaged Analysis Example
Increase in odds of an employee moving from a
lower segment to higher segment (e.g., On the
Fence to Engaged) if his/her rating on that item
is increased by one unit (e.g., from 4 to 5)

• On the Fence ? Engaged
• Key factors are
• I have a sense of accomplishment in my job
  (1.67)
• My manager provides the information I need to do
  my job (1.54)
• Senior leaders actions are consistent with their
  words (1.48)
• ABC cultivates an environment where each of us
  can excel (1.48)
• ABC values outstanding people (1.33)

Fully Engaged (24)
Engaged(38)

• Engaged ? Fully Engaged
• Key factors are
• ABC cultivates an environment where each of us
  can excel (1.75)
• ABC is a socially and ethically responsible
  organization (1.50)

On the Fence(26)
Disengaged(12)

• Disengaged ? Engaged
• No significant drivers were found

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Impact of employee engagement
Employee engagement has been empirically linked
to business outcomes through its impact on
workforce productivity
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Conclusions

• A focus on engagement enables us to drive up the
  motivational aspects of our performance.
• It is the combination of engagement and
  competence which drives performance.
• Demonstrating not only that the links exist, but
  the size of the effects enables the creation of
  an effective ROI model for investment in
  competence and engagement. This defines the
  people strategy.

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Challenges

• Getting clarity of vision has been essential to
  gaining buy-in of HR community and senior
  management.
• Establishment of Retail Survey Action Group
  provided the mechanism for educating the business
  and HR function.
• Not all that common to find HR people (or senior
  managers) with good experience of employee
  research
• hence we work with Getfeedback