By Joseph A. Michelli, PhD, CSP
Today's consumers expect (no, demand) an extraordinary service experience. Providing it is no longer optional. With a hypercompetitive global economy spawning endless options for consumers (members)—who, not incidentally, come to the table pre-armed with reams of Internet research—players who can't continuously up the delight ante might as well hang it up now. All leaders know this in theory, but how many are willing to bet their paychecks on their ability to knock the customer's (member’s) socks off?
Few are willing, perhaps, but more companies are moving in that direction.
Customer-or member-driven compensation makes people uncomfortable. We're used to thinking in terms of financial performance; it feels normal to have your income tied to overall profitability, sales, or meeting membership goals. To have it tied to what the customer (member) thinks about how well you served him or her—well, that's scary because it feels arbitrary, or unpredictable.
Yet, this is a trend whose time has come. Indeed, in healthcare, the U.S. government has gotten in on the act. With its Value-Based Purchasing initiative (part of the Affordable Care Act), the Centers for Medicare & Medicaid Services (CMS) already links a percentage of reimbursement to how well a healthcare organization scores on a standardized patient survey. Many private insurance companies are following the same pay-for-service-performance formula.
Bold leaders in other industries are following suit in their own organizations. The idea is to create true partnerships with your employees, to share risks and rewards in a very concrete way, and it's hard to get more concrete than the numbers on your bonus check."
The following tips will help you integrate the customer (member) experience into your own compensation structure:
Get buy-in for the new member experience performance measurement system. There are three crucial keys:
- Be ready to demonstrate the relevance of the items being measured to the well-being of the organization;
- Ensure that those who are being measured can create positive changes in the metrics; and
- Make sure rewards and consequences associated with desired performance levels are fair.
Don't expect the change to be smooth and easy. Effective negotiations are complex and often fraught with conflict. There will be fear. Pushback will occur. Extra effort and patience are absolutely necessary. In general, change is hard for everyone. It implies that there must be something you are not doing well enough and suggests that your life is going to be disrupted. These are things no one wants to face.
When money is involved, even more effort has to be exerted to keep all parties constructively moving forward, manage overt conflict, and quell passive resistance. Executives and staff become frustrated, the directions of the change initiatives are challenged, and meetings become contentious. In the end, though, when effective leaders present a compelling vision, craft solutions that are win/wins, and achieve a tipping point for buy-in, negotiated agreements are successful.
Share proven best practices with member-facing staff so they can affect performance and reap the rewards. Develop best practice guidelines to improve staff performance with members. It’s not enough to say "You need to improve the member experience." You need to show staff how to do it or what is in it for them.
Offer training to make sure employees get it. In addition to offering best practice guidelines, consider providing coaching and staff development programs that will teach and encourage new behaviors. When employees grasp the true gravity of the member experience—and when they're given the tools and the incentives to actually effect a change—they are almost always willing to do their part.
Many organizations are great at setting customer or member experience goals, but not so great at creating a line of sight between those goals and individual staff performance. They often don't align incentives directly to performance and/or they don't coach or train to develop the right skills. And they don't take action on individuals who are chronic underperformers—even in the face of coaching and training. This creates an accountability gap that negates even the best corporate intentions.
Linking pay to the member experience closes that gap, and quickly. It forces everyone—executive staff, leaders, and employees alike—to really think about the issues and how to solve them. You'll see change start to happen. In the end, the member delight you create will become its own reward and keep the momentum going.
Joseph A. Michelli, PhD, CSP, is an organizational consultant, and author of Driven to Delight: Delivering World-Class Customer Experience the Mercedes-Benz Way (©2015, McGraw-Hill). He can be reached through his website at www.josephmichelli.com.