Published by: Forum for People Performance Management and Measurement
- Summary of Key Findings
- Background and Theoretical Underpinnings of this Research
- Methodology & Response
For a complete copy of the study, click here.
A survey among 175 corporate executives was undertaken in late 2003 by the Forum for People Performance Management and Measurement to study the relationship of the marketing and human resources functions in motivating the behaviors of customer-contact employees and the impact of that behavior on organizational performance.
- This study specifically investigated the following issues:
- Value of the interaction between Human Resources and Marketing
- Importance of top management’s customer orientation
- Most valued communications tools for customer-contact employees
- Most useful employee performance evaluation tools
- Most effective motivational tools for top performance
This Executive Summary provides an overview of the key findings from the study and then provides more specific data to support these findings. Please see Appendix A and B for a complete summary of survey results.
Key findings from the study include the following:
- Marketing & HR do not communicate as effectively as they should, and both groups recognize this.
- There is wide disagreement between HR and Marketing on who the key customer contact employee is.
- Higher performing firms do a better job of sharing corporate goals with customer contact employees.
- There is a high degree of correlation between marketing integration and customer orientation by customer contact employees.
- Higher performers better understand the importance of treating customers well than lower performers.
- An open, networked corporate culture is predictive of overall performance.
- Higher performing firms measure customer satisfaction to a greater degree than lower performers.
- Higher performing firms measure employees on customer satisfaction and sales goals to a greater degree than lower performers.
- High market performers incentivize their employees based on customer satisfaction and low performers do not.
- Marketing places a higher value on printed newsletters and 1-on-1 meetings than HR.
- No specific incentives predict performance, but the most popular incentives are bonuses and recognition awards.
What is the Forum for People Performance Management and Measurement?
The Forum for People Performance Management and Measurement is a research center within the Medill Integrated Marketing Communications (IMC) graduate program at Northwestern University. It is funded by the Incentive Performance Center, which is made up of a number of top incentive companies and industry leaders dedicated to research and educational programs that improve human performance in business. A central objective of the Forum is to develop and disseminate knowledge about communications, motivation and management such that businesses can better design, implement and manage people-based initiatives both inside and outside an organization.
A number of research initiatives by the Forum are planned over the next three years to investigate the value and importance of employee incentives along with the other key issues of communications, motivation, and management.
A number of studies exist that address the issues of incentives, employee motivation, and organizational performance. Unfortunately, few of them measure and link all three issues simultaneously, and those that do, are rarely published because of their proprietary nature.
The only published study that definitively established the connection between the three was published in the Harvard Business Review in 19981. Titled, “The Employee-Customer Profit Chain at Sears,” the study among 800 Sears stores found that a 5% increase in employee attitude scores resulted in a 1.3% increase in customer satisfaction scores as well as a .5% increase in revenues. But even that study failed to identify which incentives were the most motivating or what type of organizational structure or communications activities were most effective.
Two other important studies have been recently published that raise important issues that need further investigation. A 2002 research report by the SITE Foundation2 indicates that, despite a $27 billion annual corporate expenditure on employee incentives in the U.S. and more than 100 years of research on the value of these expenditures, there continues to be a high degree of controversy about the impact and value of such tangible incentives as cash, merchandise, and travel in motivating employees. That study, which undertook a review of more than 60 research studies, concluded that, despite the existence of research that suggests that tangible incentives can be demotivating to employees3, work performance can be increased along with interest and enthusiasm for work when the incentives are carefully chosen for the appropriate objective.
The second study that motivated this current study was undertaken in the United Kingdom in 2002 on the importance of inter-functional coordination between the marketing and human resources departments for the attainment of organizational goals4. The study, citing marketing expert Phil Kotler5 (1991), asserts that “… the marketing department’s effectiveness depends… on how well its personnel are selected, trained, directed, motivated, and evaluated,” which implies a very close dependence on and cooperation with the HR function. That study, among other things, found that top performing firms had better organizational integration and cooperation between the marketing and human resources departments than in the poor performing firms.
This current Forum for People Performance study is an attempt to add to the compelling evidence of these previous studies by specifically inquiring about a number of organizations’ customer and marketing philosophies and linking them with their organizational and communications activities, their incentive and motivational practices, and their financial performance.
A mail survey consisting of 37 multi-part questions (see Appendix A) was mailed to a total of 4,139 recipients on 30 July 2003. Approximately half were mailed to marketing managers from names provided by InfoUSA and Dun&Bradstreet. The remainder were mailed to HR managers, whose names and addresses were acquired from the Society of Human Resources Management. A follow-up postcard was sent approximately two weeks later, on 10 August 2003, as a reminder to return the survey by mail. A total of 175 completed surveys were returned and analyzed. This represents a 4.22% response rate (175/4139), which is similar to response rates for consumer surveys where the addresses are obtained from third-party providers and it is impossible to control attrition and relocation.
A profile of the respondents’ firm and individual characteristics is provided at the end of this report.
For a complete copy of the study, click here.
1Rucci, A.,J., Kim, S. P., and Quinn, R.T., “The Employee-Customer Profit Chain at Sears,” Harvard Business Review, 1998, 76 (1), 83-97.
2“Incentives, Motivation, and Workplace Performance: Research and Best Practices,” (January 2002), sponsored by The International Society for Performance Improvement and funded by the Society of Incentive and Travel Executives (SITE).
3Deci, L.E. (1971). “Effects of Externally Mediated Rewards on Intrinsic Motivation,” in Journal of Personality and Social Psychology, 18, 105-115. Deci, L.E. (1972). “The Effects of Contingent and Non-contingent Rewards and Controls on Intrinsic Motivation,” in Organizational Behavior and Human Performance, 8, 217-229. Lepper, M.R., Greene, D. & Nisbett, R.E. (1973). “Undermining Children’s Intrinsic Interest With Extrinsic Rewards: A Test of the Over Justification Hypothesis,” in Journal of Personality and Social Psychology, 23, 129-137.
4Chimhanzi, 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. Also referred to as the “U.K. study” in this report.
5Kotler, P., Marketing Management: Analysis, Planning and Control, 8th edition, p 71. McGraw-Hill, New York, NY.