Blog Post | Employee Retention, Industry Trends, WorkStep
March 30, 2023
The Employee Net Promoter Score (eNPS) is a valuable north star metric HR leaders use to calculate levels of engagement within their organization. This is a single question often included in annual engagement and check-in surveys to determine loyalty, advocacy, and commitment company-wide. Successful HR and Ops leaders understand the importance of keeping a pulse on satisfaction, with a recent Gallup poll reporting that highly engaged workforces are 23% more profitable, enjoy 64% less workplace accidents, have 81% lower absenteeism, and up to 48% lower turnover rates. Since eNPS is a universally benchmarkable way to measure employee satisfaction and loyalty, it can act as a litmus test against industry standards and help leaders see how they stack up against the competition.
With a steadily declining engagement rate, 32% in 2022 across US employees, it is vital for employers to address this trend and find new and innovative ways to boost morale and identify employee advocates. Employee net promoter scores, and subsequently eNPS questions, are a quick way to reveal how employees feel about their company and if they would recommend working there to a friend or family member. Generally speaking, employees who rate highly on this metric unlock more growth opportunities and production potential while those who rank poorly are at the highest risk of turnover. Whether using this score to measure the success of existing employee engagement initiatives, or starting with a new program, eNPS provides a real-time data point to better understand the internal reputation of any organization.
This is important because just as a satisfied customer is likely to recommend their favorite product or service, an unsatisfied employee is prone to leave negative reviews, talk poorly about their role on social sites, complain to friends at dinner parties, or become a negative influence on the clock. Put simply, the internal employee experience inevitably makes or breaks an organization’s reputation externally. Therefore, it is vital to ensure that employees are highly engaged so they can attract new talent, increase productivity, and build a culture designed to help others thrive.
“We view employees differently than we did 20 years ago. We view them more as internal customers. So when we think about, ‘how do we please our employees in a way that gets the results,’ we need to have a customer mindset. You would never pull your customers, who you are trying to please and delight, only every once in a while. You want a constant flood of data and information coming from your customer set.” – Drew Holler, CHRO of Lennar (former SVP, People Partner to the COO at Walmart)
The Net Promoter Score (NPS) is a sales metric developed in 2003 by Fred Reichheld to measure levels of satisfaction, engagement, and loyalty of an organization’s customer base. Many companies use NPS to this day to determine how likely their patrons are to recommend their products or services to their friends or family. The simplicity of NPS surveys made it an easy inclusion to customer experience best practices, leading to widespread adoption and speculation that the question could be adapted to assess employee satisfaction levels as well. Thus, eNPS came to be the standard measure of the employee experience internally while NPS focused on the customer experience externally.
Employee Net Promoter Scores typically ask the question, “How likely are you to recommend this business to a friend or family member?” This makes their answer personal, because an employee may be satisfied with their position but still not recommend the organization to someone close to them, an important distinction. The key difference between employee satisfaction and eNPS is that a satisfied worker may not have any immediate issues with their role, manager, or position but may still be open and seeking new opportunities whereas those with high eNPS tend to be emotionally invested in their peers as well as the organization as a whole.
Despite the fact that NPS and eNPS evaluate engagement rates of a different subset of groups, the scores are often correlated. For instance, a company with a high eNPS score is more likely to have a high NPS. The research backs up the idea that a world-class employee experience directly ties to a best-in class customer experience since happy employees are more likely to transfer that positivity to their patrons, especially in frontline roles. The Harvard Business Review took a deep dive into Glassdoor metrics, looking at 293 enterprise companies spanning 13 unique industries and found that every 1-star employee rating on Glassdoor correlates to a 1.3-point out of 100 increase on the The American Customer Satisfaction Index (ACSI), doubled for customer-facing organizations. Their research shows that each 1% improvement to the ACSI therefore translates to 7.8% to 18.9% improvement in long-term market valuation depending on the industry. This indicates high eNPS scores affect more than just internal relationships, they can influence long-term market valuation and the customer experience.
As an important HR metric, eNPS should be tracked closely since high scores deliver ample benefits. Employee experience initiatives have never been as important as they are today. New societal norms and younger generations are demanding better working environments, a healthier work-life balance, more autonomy, and career development opportunities. As such, it is imperative that successful HR and Ops leaders focus on creating a culture that fosters engagement and a social environment where workers have an intrinsic desire to show up early, work diligently, and are invested in their organization’s organic growth. Employees who rate highly on eNPS are not only more likely to stay, but they take the successes and the failures of the company personally.
Use eNPS surveys, and subsequent follow up questions, to discover what employees like or don’t like about their experience. This data gives leaders a baseline to identify gaps, strengths, and areas of high impact company-wide and make the necessary improvements. For example, if frontline employees are expressing consistent issues with their site’s leadership style, it may be a good investment to offer managers additional training in the highlighted problem areas.
Low eNPS scores are a key indicator of turnover risk. Couple the survey question with a follow-up to dig a bit deeper into the reasons employees may be leaving the company. Use this data to identify potential causes of low retention and formulate action plans to tackle those issues head-on. Workers who see that providing feedback translates to action are more likely to engage in the future as well. It really boils down to continuous improvement and understanding what is having a negative impact on the employee experience before rolling out reactive strategies to improve every interaction.
The Employee Net Promoter Score is an incredibly easy metric to work with, universally benchmarkable, and simple to compare to leaders in any industry. Simplicity is key here, and eNPS is not bogged down with multiple convoluted questions or messy back-end calculations. The survey gets straight to the point with one question asking, “Would you recommend us to a friend or family member on a scale of 0-10?”, and if opting to use a follow-up question, “Why or why not?”
Categorize each employee according to their score, as follows:
Because passives are neutral, we won’t include them in this calculation, so focus on adding up the totals for each category and subtract the percentage of detractors from the percentage of promoters, as follows:
Percentage of promoters (%) – Percentage of detractors (%) = eNPS
This will produce a score between -100 (all employees are detractors) and +100 (all employees are promoters). For example, let’s say there are 100 employees. 70 of them score as promoters (70%), 10 as passives (10%) and 20 as detractors (20%).
In this case, the final eNPS calculation would be:
70 – 20 = eNPS of +50
As a general rule of thumb, the higher the score the better, but there is no one “golden” score across all industries that is the standard. This score varies greatly across retail, manufacturing, logistics, customer-facing, or roles with no customer interaction – and for good reason. Every workplace has its own set of challenges, people, and policies that makes it unique. Companies who utilize eNPS successfully benchmark against themselves first and foremost before comparing to industry benchmarks.
While eNPs is generally a standalone question, there is room for follow-up. Often, this looks like a text box asking why the employee feels the way that they do, giving them ample opportunity to express themselves. Use this space to collect qualitative data from participants to better understand the hot-button issues driving turnover and address them accordingly. Simplicity is key, so this open-ended follow-up question should serve as a platform for employees to freely explain their score without the need for a comprehensive survey.
Successful leaders actively use this feedback to inform employee engagement initiatives and communicate those action-plans openly with their workforce. When frontline workers feel that their voice is heard, and when managers close the loop with them on feedback, valuable trust is built and eNPS scores naturally improve over time. As an example; if a large percentage of employees are categorized as passives and express a need for more career development opportunities, providing additional training would be a low-effort, high impact way to create more promoters.
Coach site managers on how to receive feedback as well and encourage them to keep an open mind. As valuable as this feedback is, it isn’t worth much if leadership teams turn a blind eye to sentiments that may paint them in a negative light. Remind leaders that they are meant to serve as an example and pillar in the organization, which means that continual improvement includes their own behaviors. Sometimes a common feedback theme may be a negative interaction with a particular supervisor, and may even provide specifics – those situations should be treated as a learning opportunity for everyone involved. With that said, it is important to remind employees that eNPS surveys are completely anonymous so there is no risk of retaliation and to remind managers that negative or constructive feedback is an opportunity to improve.
While comparing industry benchmarks allows company leaders to see how they stack up, it is important to remember that every company has a different group of employees with unique problems, policies, and leadership philosophies. Look to measure eNPS regularly. Organizations should focus on benchmarking against their own historic data frequently, constantly being in competition with themselves and striving to best last month’s or last year’s score.
Tom Goyette, Product Marketing Manager | email@example.com
Tom Goyette is a Product Marketing Manager at WorkStep. With experience in start-up and enterprise level SaaS and eCommerce organizations, Tom excels at managing and creating content, marketing, and analytics. Tom believes people are a at the center of every great organization and is eager to share stories that highlights the value of the employee voice.