The science behind happier workplaces

Our study shows that active managers lead teams with 5x higher eNPS than teams led by non-active managers

NPS® and eNPS

Net Promoter Score®, or NPS®, is a measure of customer experience and a predictor of business growth [1]. First introduced in 2003 by Fred Reichheld, Bain & Co., it has become a de facto metric to measure how likely customers would be to recommend a company’s products or services to others. A similar measurement, when applied to employees, is the “employee Net Promoter Score” or eNPS. As a measure of how likely employees are to recommend their organization to others as a place to work [2], eNPS can reveal gaps and opportunities in employee engagement, retention, and more.

Many factors can make employees unlikely to recommend their organization as a place to work. Commonly cited reasons include the work environment, team culture, and people manager. Here, we studied how a manager’s reply rate to team feedback (a proxy for manager activity) contributes to their team’s eNPS.

Study & Results

Our Hypothesis: “Teams with active managers are more likely to have higher eNPS than ones with non-active managers.”

Our Study

We collected the manager activity data from 3 different companies with a combined total of 59 teams and 428 members (we only considered teams with three or more members). A manager’s activeness is evaluated by their reply rate (the rate in which they reply to team feedback). Managers are then grouped either as Non-active or Active.

Non-active (G0): Managers with low or no activity (reply rate less than or equal to 33%). 33 out of 59 teams have non-active managers.

Active (G1): Managers with high activity (reply rate greater than 33%). 26 out of 59 teams have active managers.

eNPS examines the response from the question On a scale of 0 to 10, how likely would you recommend this company as a place to work?. Respondents are classified into three categories:

  1. Promoters: Those who respond with a score of 9 or 10 represent the loyal and brand advocated employees
  2. Passives: Those who respond with a score of 7 or 8 represent employees satisfied with their organization but not advocating enough to be considered promoters
  3. Detractors: Those who respond with a score of 0 to 6 represent employees who would not recommend their organization to others and may also detract others from joining

The eNPS is calculated by subtracting the percentage of detractors from the percentage of promoters to result in a score between -100 and 100.

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The median eNPS for the G0 and G1 groups is 6 and 31 (with a mean of 9 and 29). A 2019 eNPS study across various organizations around the world conducted by QuestionPro found scores ranging between -62 and 83 with a median of 13. [3] In our study, only 45% of teams in the G0 group scored higher than the global median while 73% of the teams in the G1 group scored higher.

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Teams with active managers have a median eNPS 5x higher than teams with non-active managers.

The eNPS can help us understand the underlying factors that shape the mindset, attitude, and behavior needed to develop better employee engagement and promoters. The activeness of a manager is one such factor. Employees who take the time to share feedback with their managers are participating in a business-critical activity. Managers who make the time and effort to respond create a real positive organizational impact.

Promoters and detractors can be gained and lost.

During times of change and challenge, organizations have the opportunity to forge and transform culture. The effects of one company’s decisions during the COVID-19 pandemic are evaluated from eNPS gathered before and after. Between January and July 2020, 35% of employees converted from one category (either promoter, passive, or detractor) to another. Employees on teams with non-active and active managers performed differently. Of the 73 managers, 50 were non-active (68%), and 23 were active (32%).

During this period, non-active managers gained 13 promoters and lost 13 promoters for a net increase of 0. They also gained 21 detractors and lost 2 for a net increase of 19 detractors. Meanwhile, active managers gained five promoters and lost 1 for a net increase of 4 promoters. They also gained six detractors and lost 2 for a net increase of 4 detractors. Overall, 112 employees remained unchanged.

Building a feedback culture

Managers play a vital role in forming detractors, passives, or promoters in an organization. Managers must be encouraged and rewarded for being responsive to feedback and active in managing their teams.

Four ways to create a meaningful feedback culture in the organization [4]:

  1. Encourage giving feedback starting from the top of the organization (leaders and managers).
  2. Share good examples of feedback that are high impact, constructive, and actionable.
  3. Give feedback frequently and readily.
  4. Develop special events of giving and receiving feedback (e.g., a positive feedback week).

Feedback is most valuable as two-way communication and as a tool for self and organizational improvement. Critical feedback can be challenging to receive; managers need training and guidance on how to respond and take action. Once in place, however, the feedback loop is an investment that will pay dividends.

Conclusion

Our study shows that managers have a real impact on eNPS. Active managers lead teams with significantly higher eNPS, which means better ambassadorship, engagement, and retention. Therefore, we should encourage employees’ feedback and the responsiveness of our managers to reply and act on feedback received.

Happily.ai can help your organization develop a meaningful feedback culture by giving your managers the right tools to develop into active managers.

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References

[1] https://www.netpromoter.com/know/

[2] https://www.qualtrics.com/au/experience-management/customer/net-promoter-score/?rid=ip&prevsite=en&newsite=au&geo=TH&geomatch=au

[3] https://www.questionpro.com/blog/culture-benchmarks-for-enps/

[4] https://memory.ai/timely-blog/how-to-build-a-feedback-culture