Enterprise engagement is a sub-discipline of marketing and management that focuses on achieving long-term financial results by strategically fostering the proactive involvement and alignment of customers, distribution partners, salespeople, and all human capital outside and inside of an organization. Enterprise engagement is distinct from the traditional sub-disciplines of financial management, marketing, sales, operations, and human resources in that it seeks to achieve long-term success by integrating these various traditional business disciplines to consistently focus the organization on identifying and meeting target audience needs. Enterprise Engagement is related to brand engagement, a term developed in Great Britain in the 2000s to describe an integrated external and internal marketing approach to achieving long-term success for a brand. Enterprise Engagement applies similar principals to the achievement of an organization’s overall financial objectives.
Organizations run on the basis of enterprise engagement work collaboratively across departments and divisions to collectively find the best way to achieve long-term financial results by maximizing all human capital, from customers and distributors, agents, or other value-added resellers, to salespeople, employees, and even vendors and shareholders. This approach unifies the organization around a brand and mission that continually seeks to find better ways to help the end-user customer, enhance the relationship with channel partners, suppliers, and employees and ultimately create new opportunities for the business, rather than simply finding ways to improve processes. It looks at human capital in an integrated fashion, rather than separating customer and distribution partner engagement from sales or employee engagement.
Examples of companies run on the basis of enterprise engagement principles include: Whole Foods, Southwest Airlines, Chick Fil-A, Wegman's, Costco, and Campbell Soup. A list of companies determined to have high levels of customer, employee, and community engagement is listed at PeopleCentricCapitalism.org. The field has gained greater visibility in 2017 as a result of increased interest in the subject from leading investors such as the CalPERs pension fund or the Human Capital Coalition, as well as the development of ISO 10018 certification for quality people management practices and the decision by ISO to create employee engagement standards. See Benefits, below.
Traditional organizations have a siloed approach, in which each business area often works quite independently from the other. Each business unit may or may not be directed to have specific goals related directly or indirectly to improving value or service to their audience – whether that be employees, channel partners, vendors or customers. The silos have a tendency to focus on maintaining and improving processes in order to promote their influence and share of resources. This is demonstrated in the willingness of many companies to sacrifice customer satisfaction to save money on automated telephone answering systems; in this case they have determined that the cost savings of eliminating customer service employees outweighs the benefits of creating a more satisfying customer experience. It is easy to measure the cost savings involved with this decision, but not so easy to measure the impact on customer engagement over time.
While enterprise engagement is related to the field of integrated marketing and has part of its roots there, it is more related to Management in that it requires an integration of all business disciplines across the organization, and therefore cannot be easily organized under one specific sub-discipline of management or another.
Enterprise engagement has its roots in research conducted in the 1990s connecting financial results in Sears stores to the engagement of employees. An early reference to the concept appears in a New York Times article by Stuart Elliott in 1993 in which Larry Light, the chairman of the Coalition for Brand Equity for the American Association of Advertising Agencies, said, "The No. 1 priority is to keep your customers sold and, only second, to build new brand relationships." In that same article, Bruce Bolger, a trade show director who was quoted, observed that, "consumer-product companies spend billions of dollars to attract customers, without any kind of strategic focus on keeping them …You have to motivate consumers to come to buy your product, but then you have to deliver to them. Advertising creates customers, but once you get them, what are you doing to keep them?"
In their 1993 book, The One to One Future, Don Peppers and Martha Rogers were among the early proponents of customer-focused rather than product- and process-focused marketing, and identified the necessity to address the human element of relationships between customers and an organization.
Additional research on the connection between customer and employee engagement began to emerge in 1999, when Gallup published its ground-breaking book First, Break All the Rules by Buckingham and Coffman which was based on a meta-analysis of decades of employee and business outcomes data from over 100,000 employees and a wide range of industries. They also began publishing studies on the cost of disengaged workers. [see: Would You Fire Your Boss, Gallup Management Journal, Sept. 2007.]. In 2002, a study was released in Great Britain demonstrating a financial link between customer and employee engagement.
In 1998, A.J. Rucci, S.P. Kim, and R.T. Quinn, authors of "The Employee–Customer Profit Chain at Sears" (Harvard Business Review, 1998), identified a direct connection between employee engagement and profitability in Sears stores. The concept was further explored by a private academic collaboration between the Integrated Marketing Communications department at the Medill School of Journalism at Northwestern University and a community of businesses and trade associations in marketing. Founded in 1993 by Don Schultz and Frank Mulhern, professors at Northwestern University, and by Bruce Bolger, principal of a target marketing and media company, the Forum for People Performance Management and Measurement (www.performanceforum.org) was among the first organizations in the U.S. to focus on conducting research into the connection between financial results and employee and customer engagement. It has since funded over a half-dozen studies looking at the linkage between customers, employees, and financial results.
Separately, in the July–August 2005 issue of the Harvard Business Review, the concept of linking customer and employee engagement that is the distinctive element of enterprise engagement was articulated in an article by John H. Fleming, Curt Coffman, and James K. Harter, entitled "Manage Your Human Sigma." The authors wrote, "It’s possible to arrive at a single measure of effectiveness for the employee-customer encounter, this measure has a high correlation with financial performance." Fleming along with co-author
The term "Enterprise Engagement" was created in 2008 by a coalition of not-for-profit and for-profit organizations formed to promote education and research supporting this approach to business management. Over the next few years, the organization recruited several dozen educators, corporate practitioners, and educators to create the first formal framework and implementation process for a strategic approach to organizational engagement.
In 2011, David Cameron, then Prime Minister of Great Britain, created the Employee Engagement Task Force "to launch a national conversation about employee engagement right across the private, public and other sectors, with a view to improving the U.K. economy."
In the meantime, the technical committee responsible for the management of ISO 9000 quality process management issued Quality Management Principles and formal standards 10018 for the quality management of people involvement and competence. The principles and standards include the concept of an enterprise approach to engagement; i.e., a consideration of the need to address customers, employees, vendors, distribution partners, etc., in an integrated way to ensure alignment of priorities and expectations.
In March, 2014, the book "Enterprise Engagement" by Bruce Bolger, Allan Schweyer and Richard Kern was published by the Enterprise Engagement Alliance. The textbook was unveiled at the first Annual Enterprise Engagement conference in Nashville, TN in April, 2014.
In October 2017, an organization known as the International Center for Enterprise Engagement in Galveston created the first certification program for ISO 10018 quality people management.
The emergence of enterprise engagement is based on the growing ability of organizations to measure the long-term benefits of engagement in a way that has drawn increasing attention to the subject from leading investors in public companies.
- A simulated Exchange Traded Fund composed of companies found through independent surveys and other data to have highly engaged customers, employees, and communities (as measured by relative lack of litigation) has outperformed the S&P 500 by over 30% in the five years since it was created in 2012.
- A study by Alex Edmans, Professor of Finance at London Business School published in the Harvard Business Review found that firms with high employee satisfaction outperformed their peers by 2.3% to 3.8% per year in long-run stock returns – 89% to 184% cumulative – over a 28-year period.
- Investors increasingly acknowledge the connection between human capital investments, engagement, and financial results. The Human Capital Coalition of pension funds in 2016 sent a concept paper to the U.S. Securities & Exchange Commission advocating for the disclosure human capital and specifically engagement investments and outcomes.
- In July 2017, the Securities & Exchange Commission was petitioned by CalPERs, a leading U.S. pension fund, to mandate disclosure of human capital investments, engagement.
- The accounting profession has begun to address the importance of finding a way to measure the value of human capital in financial reporting.
- Happy employees are better equipped to handle workplace relationships, stress and change, according to the latest Gallup Management Journal survey. When respondents were asked how they would characterize their interactions with their coworkers, 86% of engaged employees said their interactions were always positive or mostly positive, vs. 72% of unengaged workers and just 45% of actively disengaged workers. (Gallup Management Journal, 2009)
- Research by CLC-Genesee and its parent, the Corporate Executive Board, shows that average three-year revenue growth for "high-performing companies" – meaning, in part, those that effectively manage employee engagement – was more than twice that of their industry peers. Other key findings: Engaged employees are more likely to stay with their employer than those who have a lower level of engagement, and the more engaged employees are, the lower the inventory "shrink." (CLC-Genesee/Corporate Executive Board, 2009)
- Towers Perrin found that high-engagement firms experienced an earnings-per-share (EPS) growth rate of 28%, compared with an 11.2% decline for low-engagement firms. (Towers Perrin survey, July 2008)
- Gallup research indicates that public organizations ranking in the top quartile of employee engagement had EPS growth more than two-and-a-half times greater than organizations that were below average. (Gallup Management Journal survey, 1/12/06)
- Sirota Survey Intelligence found that when managers become disengaged, their employees are over three times as likely to be disengaged; 12% less likely to stay; 13% less likely to be innovative; and 33% more likely to be frustrated with the company’s systems and processes. (Sirota, ‘The Enthusiastic Employee,’ 2009)
- A 2008 BlessingWhite study found that there’s a clear correlation between engagement and retention, with 85% of engaged employees indicating that they plan to stay with their employer for at least the next 10 months. (BlessingWhite State of Engagement 2008 report, April/May 2008)
- Data from Best Buy show that stores where employee engagement increased by a tenth of a point (on a five-point scale) experienced a $100,000 increase in annual sales. (CFO magazine, ‘Measuring Up,’ June 26, 2007)
- JC Penney has found that store with top-quartile engagement scores generate roughly 10% more in sales per square foot than average and 36% more operating income than similar-sized stores in the lowest quartile. (JC Penney 8-K SEC Filing, April 4, 2007)
- A Manpower survey of call center customers and employees revealed that centers with high employee satisfaction also have high customer satisfaction, whereas centers with low employee satisfaction have low customer satisfaction. (Manpower/SQM Group survey, September 2006)
- A report by the Society for Human Resource Management (SHRM) estimates that by strengthening engagement, MolsonCoors saved more than $1.7 million in one year (SHRM ‘Employee Engagement and Commitment,’ 2006)
- Gallup research has also shown that engaged employees are more productive, profitable, safer, create stronger customer relationships and stay longer with their company than less engaged employees. (Gallup Management Journal survey, January 12, 2006).
- In their 2008 book, Rules to Break and Laws to Follow, authors Don Peppers and Martha Rogers observed that the shift of the balance of power to the consumer will cause organizations to place greater importance on building trust with customers. "The advent of the Internet has shifted the balance of power to consumers, who can move away from a company with a click of the mouse," they wrote.
- Because of the lack of an agreed-upon nomenclature, framework, and implementation process for engagement, organizations tend to focus on tactical approaches such as "employee experience"; management "civility"; or recognition, benefits, or work-life policies, etc., rather than address engagement on a strategic basis linked to the brand and organizational goals.
- Much of the above-cited research suggests that enterprise engagement requires a strategic approach that focuses on yielding long-term results; it is not a business strategy likely to produce a short-term bounce.
- Today’s organizational structures emphasizing silos and the lack of any place in an organization for a "chief people officer" spanning all audiences – other than the chief executive officer – makes it difficult to get started unless the CEO leads the way.
- Enterprise engagement requires the commitment of the chief executive officer and alignment of communications across the organization.
- Enterprise engagement requires leadership, not only at the senior level but also at the branch and departmental level.
- Enterprise engagement is not presently taught in schools or written about in business journals, limiting the number of managers and executives exposed to it.
- An organization run on enterprise engagement principles is not immune to the deleterious effects of changing market forces or poor financial management that could undermine an organization with otherwise engaged customers and employees.
- There is currently a lack of research documentation as to the relative merits of various types of engagement tactics, or the best ways to deploy them.
Tools of engagement
Engagement involves a broad range of disciplines and tactics. A comprehensive study of what motivates people in business conducted in 2002 by the International Society of Performance Improvement for the Incentive Research Foundation identified the following key factors:
- Leadership and culture– the ability of the organization to articulate a culture and vision with benefits to all its constituents.
- Communication – the ability of the organization to convey its vision to its constituents.
- Capability – the ability of an organization’s constituents to do what is asked of them.
- Buy-in – the willingness of an organization’s constituents to do what is asked of them.
- Support – the degree to which people feel recognized by the organization.
- Emotion – the state of mind people have related to their work or relationship with the organization.
- Measurement and feedback – the degree to which constituents receive feedback for their contribution and to which the organization analyzes results and adjusts accordingly.
Businesses use a wide array of tactics to address the above issues, including:
- Leadership recruitment, training and coaching
- Communications, i.e., print, direct mail, and electronic communications, media, meetings, and promotional products
- Job design to create variety, flexibility, opportunity
- Benefits, wellness, and work-life balance strategies
- Community and social networking activities
- Training and professional development
- Recognition, reward, and incentive programs
- Statistical process controls and analytics
The expertise, products, and services related to these various practices comprise the emerging field of Enterprise Engagement. Bottom line: Much more research is needed to better understand how these various elements affect customer and employee engagement, and financial results.
- Going One to One: The New Rules of Engagement; Incentive Performance Center at incentivecentral.org, 2007.
- "Manage Your Human Sigma", John H. Fleming, Curt Coffman, James K. Harter, The Harvard Business Review, July–August 2005.
- Testing the Internal Marketing Model: An Empirical Analysis of the Relationship between Employee Attitudes, Customer Attitudes and Customer Spending, Don Schultz, Heidi Schultz, Frank Mulhern and Robert Passikoff, department of Integrated Marketing Communications at the Medill School of Journalism for the Forum for People Performance Management and Measurement 2005.
- Internal Marketing Best Practice Study 2006, Department of Integrated Marketing Communications at the Medill School of Northwestern University for the Forum for People Performance Management and Measurement.
- Linking Performance Strategies to Financial Outcomes – The Interaction between Marketing & Human Resources and Employee Measurement & Incentives, Prof. Frank Mulhern and Patricia Whalen of Northwestern University 2004, for the Forum for People Performance Management and Measurement.
- Rucci, A.,J., Kim, S. P., and Quinn, R.T., "The Employee–Customer Profit Chain at Sears," Harvard Business Review, 1998, 76 (1), 83-97.
- Consumer-Product Marketers are Using Premiums and Incentives as Rewards for Customers' Loyalty, Stuart Elliott, New York Times, May 4, 1993.
- Rogers, Martha; Peppers, Don, The One to One Future, Currency and Doubleday, 1993.
- Chimhanzi, J., and Morgan, R.E. "Explanations from the Marketing/HR Dyad for Market Competitiveness: A Perspective on Marketing Strategy Implementation Effectiveness and Market Performance in Service Firms," presented at the 2002 American Marketing Association Winter Educator’s Conference
- "Our History/Achievements - Engage for Success". Engage for Success. Retrieved 2017-10-08.
- "Engaged Company Stock Index - Enterprise Engagement Alliance". Enterprise Engagement Alliance. Retrieved 2017-10-08.
- "28 Years of Stock Market Data Shows a Link Between Employee Satisfaction and Long-Term Value". Harvard Business Review. Retrieved 2017-10-08.
- "Engagement Strategies Media: $2.6 Trillion Investor Coalition Sees Link Between Human Capital Management and Shareholder Return". enterpriseengagement.org. Retrieved 2017-10-08.
- "Engagement Strategies Media: S.E.C. Petitioned to Mandate Disclosure of Human Capital Investments, Engagement | Engagement Strategies media". enterpriseengagement.org. Retrieved 2017-10-08.
- "Engagement Strategies Media: Accounting Profession Faces Increased Pressure to Address Human Capital Reporting". enterpriseengagement.org. Retrieved 2017-10-08.
- SQM Group - Employee Satisfaction for FCR Effectiveness
- Rules to Break, Laws to Follow, Don Peppers, Martha Rogers, John Wiley 2008.
- Incentive, Rewards, and Workplace Motivation, Harold D. Stolovitch, Richard E. Clark, and Steven J. Condly, University of Southern California 2002, for the International Society of Performance Improvement.
- Enterprise Engagement Alliance - Home portal for Enterprise Engagement Resources
- EngageforSuccess.org, the U.K. portal for information on employee engagement.
- ESM (Engagement Strategies Media) at EnterpriseEngagement.org, a portal and information service on enterprise engagement.
- The International Center for Enterprise Engagement at TheICEE.org, which has created the first certification program for ISO 10018 quality people management standards and is launching the first university-based curriculum development program for professional and academic education on the subject of Enterprise Engagement.
- the Human Capital Institute
- Peppers & Rogers Group
- Incentive Research Foundation
- Employee Satisfaction for FCR Effectiveness