Auto parts supplier General Parts International Inc., owner of Carquest Auto Parts retail stores, understands the importance of employee engagement and how high satisfaction levels can positively impact business performance. The company believes a critical determinate of any retailer’s net profit hinges on how well the product is managed from the supply chain, merchandising and marketing perspectives. Just as critical is workforce management and maximizing productivity through engagement, which impact the bottom line. The challenge is proving this relationship and driving engagement results that permeate throughout the entire organization.
There is a fine line between perception and reality. Many organizations perceive engagement as important and understand driving it is necessary. But those same organizations don’t understand the tangible impact engagement can have on their bottom line, nor do they take meaningful action to improve it. Most don’t measure engagement within their own walls; instead, they rely on proof from consulting firms, vendors and other organizations to show employee engagement value.
In 2010, General Parts realized it needed to recalibrate its own engagement efforts and designed a custom-built survey tailored to its business that would prove business impact.
General Parts, like many other organizations, had been administering a yearly engagement survey to its 17,000 employees using an off-the-shelf, vendor-provided product. For two years — 2008 and 2009 — the survey proved to be functional and effective, providing a snapshot of the company’s engagement levels.
In 2010 the organization realized the results didn’t show how engagement impacted bottom-line financial results, nor did the questions answer what was most pressing within the company’s walls. While leadership and field teams accepted the survey as one of HR’s annual initiatives, it lacked the confidence that would come from a tool that proved it could add value and impact the business financially.
General Parts needed to prove engagement related to both productivity and retention measures, and it needed to be able to act quickly to develop actionable plans to improve engagement levels post-survey. Repairs and upgrades needed to be made.
The company developed a custom in-house survey leveraging internal subject matter experts, including members from HR analytics, organizational effectiveness and senior HR leadership teams for design input. The survey’s foundation was based around two organizational behavior theories derived from Abraham Maslow’s hierarchy of needs and Frederick Herzberg’s hygiene and motivators. From these theories, the team developed 10 categories that mapped back to both Maslow and Herzberg.
Categories based on Herzberg’s motivators include employee development, recognition, communication, working conditions and benefits and compensation. Categories based on the hygiene factors include discretionary effort, relationship with boss, relationship with team, relationship with the organization and employee role. The categories layered on Maslow’s hierarchy of human needs to strengthen the survey’s foundation.
The next step was to use these categories to build a vehicle to ask engagement questions. The initial draft included 80 questions originating from the core survey team, which were vetted by a group of leaders and professionals across the organization. Each question was reviewed and ranked based on its importance, perceived effectiveness and intention. During the course of a few weeks, multiple reviews of the question sets were made until 40 questions were finalized. Each of these was scrutinized by the core survey development team again for context and interpretation before launch.
The new survey also included three open-ended questions: What do you like best about the organization? What do you like least, and what would you change and why? These questions would give General Parts the data points needed to drive change.
The survey was launched in November 2010, and employee participation rates exceeded 50 percent. Participation increased from 2009 in part through use of an off-network online survey tool that promoted anonymity, which was an improvement over the previous year’s deployment that leveraged the company’s own LMS.
While overall engagement results were good, the survey highlighted opportunities and successes that could be leveraged for improvement. General Parts now had access to a raw data set that included more than 8,000 survey responses and 24,000 open-ended responses. The company’s analytics team compiled survey results across the enterprise by business entity, division/region, department and distribution center.
Further, the company was able to summarize results by tenure, ethnicity/race, gender and leadership level. Having ownership of the data also allowed the team to analyze results down to the question level, which allowed leaders to tell a story about motivators and de-motivators within the organization.
Regression analysis was conducted on the subcategories that comprised the survey, and leaders found the proof they needed to show that engagement was more than a buzzword. They found questions centered on how benefits and compensation had a direct relationship to sales performance at brick and mortar stores. In particular, a one-point increase in engagement — on a four-point scale — resulted in a 17 percent improvement in sales performance. Results around “relationship with boss” showed a $60 sales per hour improvement for the same one-point engagement increase. Discretionary effort showed a $37 per hour improvement and recognition a $9 per hour improvement.
The team could validate and prove this relationship using statistics. The stronger the relationship employees had with their own leadership teams, the harder they worked. Further, more recognition resulted in greater productivity. Approximately 23 percent of the variation in sales performance could be explained by employee engagement.
While the data painted a good picture, the company could not claim success until action plans were developed and all opportunities were addressed.
Approximately three months after the survey was launched, and after results were analyzed and disseminated, General Parts was ready to develop action plans and drive real change. The company focused on the top two and bottom two results for each respective business unit, division, region or department. This allowed each group to focus on the areas to be improved while celebrating and continuing focus on areas where the company displayed its best efforts.
Each group worked with its respective HR partner to develop actionable steps, then committed to drive those steps throughout the remainder of the year. The action plans’ goal was to narrow the focus to the few critical areas — dependent upon each respective business unit — and allow the field to design a game plan to improve and maintain engagement levels.
Upgrading the Engine
While the engagement survey allowed General Parts to understand key drivers of employee satisfaction, it lacked a key perspective that is seldom addressed in these instruments — human capital effectiveness — how satisfied employees were with areas such as leadership development, training, HR field support and recruiting systems. The HR team measured these areas by asking questions around the effectiveness of a particular area against how important it is to the business. The outputs from these questions gave the company a matrix of scores measuring effectiveness versus importance. The most important areas would be those deemed high importance but low effectiveness. Recalibrating against these areas would give General Parts the opportunity to address engagement from a more comprehensive and strategic level.
These questions were embedded into the engagement survey in 2011 so existing demographic/location questions could be leveraged to analyze the results. Gap analysis examined which business units and levels in the organization had the largest delta between overall effectiveness and importance. This would be a valuable asset to improve opportunities based on the most critical areas that were found to be least effective.
The second year General Parts used its home-grown survey instrument was 2011, and the results proved the time invested in 2010 was worth it. Once again the company was able to show the tangible impact engagement had on business by running regression analysis against engagement scores. When the team compared 2011 and 2010, overall scores had increased 3.3 percent, with individual categories increasing by as much as 6 percent.
The engaged vs. disengaged ratio also improved by 73 percent; a large number of employees with scores just below the engaged level in 2010 rose above the bar in 2011. The company’s ratio of engaged to disengaged was 2.2 to 1 in 2011, which is above a 2011 Gallup statistic showing the ratio for average organizations to be 1.83 to 1. General Parts credits these results to 2010 action planning. Those areas where the business focused to develop targeted action plans in 2010 showed the biggest improvements and in turn helped drive up the overall score.
John E. DiBenedetto is executive vice president and chief people officer and Jonathan E. Jones is manager of HRIS and HR analytics for General Parts International Inc. They can be reached at firstname.lastname@example.org.