Why your eNPS is a KPI, but not an external benchmark
By Martin Meulenkamp | 15/04/2019
”A lot is going on within the labor market: the war on talent, work pressure, burnouts, branche reputation issues, differences between millennials and babyboomers and the search for a sense of purpose in your job. Is it essential to take all of that into consideration as a CEO? Yes! But you can’t consider everything. You’re focused on the day to day management. So as an employer, how do you get a realistic image of what’s going on in your workplace? You can conduct numerous in-depth research and measurements. But as a starting point, I often advise CEOs: set an internal benchmark! To what extent are your employees ambassadors of your organization? You can easily calculate this with the Employee Net Promoter Score (eNPS).”
The eNPS is a measurement variable that gives you insight in how enthusiastic your employees are about their own organization. Our HR and engagement expert Martin Meulenkamp answers three different frequently asked questions:
- How does the eNPS work?
- How do you benchmark with the eNPS?
(and why is Martin actually against external benchmarks)
- What does the eNPS score mean in reality?
(and what does this have to do with golden chains?)
“In the Netherlands a lot of companies still work with external benchmarks. So, there will be a lot of comments on this, but: I don’t believe in external benchmarks; they even frustrate me.”
How does the eNPS work?
The eNPS measures on a scale of 0 to 10 the extent to which employees would recommend their employer to others. Employees will then, according to this score, be divided into three categories:
Promotors, Score 9-10: these are the ambassadors of the organization. They’re passionate (their enthusiasm is radiant) and engaged (they run just a bit faster than the rest). These people are often very productive and proactive. They talk about their work to others with pride. They often introduce new talents to the organization. In short, they provide contagious energy and growth!
Passives, score 7-8: these employees are satisfied, but not very passionate or involved. They either won’t speak or will very rarely speak enthusiastically to people about their current projects. The passives often cover a big chunk of organizations. A study by Ouweneel, Schaufeli en le Blanc (2009) shows 18% unhappy, disengaged employees, 70% satisfied and 12% engaged employees in the Netherlands. A recent study by Tempo-Team (2018) reveals that the Dutch rate their job a 7,2 on average.
Detractors, score 0-6: These employees are uninterested and often unhappy or disloyal. They don’t think there are any positive matters to share about the organization. They even bring about negative press or vouch against the company as an employer. Who would want to work at a company with (according to detractors) ‘uncertainty and insecurity’, ‘bad conditions’, or an ‘unpleasant, bureaucratic work atmosphere’.
The overall score
“Every group deserves attention. Of course, promotors are the employees every company wants to create. But you will also have to figure out where the detractors’ pain points lie to achieve improvement. And the passives? They might have the potential (with a little more attention) to become promoters! The percentage of promoters minus the percentage of detractors eventually determine the eNPS of the entire organization. A good employee Net Promotor Score is something you have to earn. By continuously working on your work environment and the job satisfaction of your employees. Studies done by the Happiness Bureau (2018) confirm that. More job satisfaction leads to more promotors. With the eNPS measurement of 2DAYSMOOD you get (repeated) insight into the number of promotors, passives and detractors, and where they are within your organization.”
How do you benchmark with the eNPS? And how not?
“I sometimes get the question: Martin, can we also benchmark? The eNPS score is an internationally validated formula, so then I say: Yes, of course you can. But what do you want to benchmark? What does your score say in comparison to the eNPS of another company? Does it say something about the culture, the processes, the working conditions. Unfortunately, that comparison isn’t so easy.”
How not to benchmark with the eNPS
“In the Netherlands, a lot of companies still work with external benchmarks. So, there will be a lot of comments on this, but: I don’t believe in external benchmarks; they even frustrate me. Suppose, company X is located in South Holland; do you compare it with companies in Groningen, Limburg, Germany? Or do you compare it with a competitor with a totally different mentality? Every organization or region has another culture, other norms, other kinds of people, or another corporate structure. Is it even relevant to benchmark, then?”
How to benchmark with the eNPS
“You just want to know: how is my company doing? What do people think of my company? What the rest of the world is doing, shouldn’t be relevant. It’s important that your employees are happy. You need those promotors that want to fulfill your vision and objectives with you. That way you will become sustainably successful and the outside world will automatically notice you. Regardless of whether the company is big or small, sells software or toilet seats, pays well or has other advantages. What counts is that you’re a good company for the people that (will) work for you. Therefore, the only benchmark you should impose is the internal benchmark. According to me, and many other innovative leaders, the eNPS is the most important KPI of your company.”
“Okay, if you still need some data to help interpret your score or to put it into perspective… The eNPS lies somewhere between -100 and 100. The average eNPS score in the Netherlands in 2018 was -4. In Europe the average was -9.6.”
“I’m certainly in support of good working conditions, but they can also have negative consequences if there is no intrinsic motivation present.”
What does the eNPS score mean in reality?
“From my HR background, I have experienced that intrinsic and extrinsic motivation could play a big role in the eNPS evaluation employees give their company. Employees’ extrinsic motivation might work short term, but it can also be a pitfall that hinders your own organizational growth. We often called it ‘golden chains’.”
“A golden chain means as much as: having such generous working conditions – like a high salary, a luxury company car, and a good retirement plan – that they become the primary source of motivation. A study done by ADP (2017) revealed that salary and good working conditions motivate employees the most, 42% of Dutch employees state this. However, employees who are attached to this golden chain often don’t have a positive effect on the accomplishments or atmosphere of the organization. Let alone them being a promotor of the company. These employees probably score fairly low on the eNPS, a six or a seven at most. Nonetheless, they stay at your company, while they may have never further developed themselves or their skills. They stay, because they want to do their time and enjoy their extrinsic motivation. Even if the management steers for departure.”
Example: the Tax Authorities (Belastingdienst)
“A good real-life example of golden chains is perhaps the abandonment of the Tax Authorities (Belastingdienst) in the Netherlands in 2016. When the Tax Authorities decided to reorganize, they offered employees a very good exit agreement. This appeared popular among detractors and passives! Too many people decided to take advantage of the agreement. It cost the Tax Authorities a lot of prestige and money.”
“This type of situation can be prevented by having earlier insight into the satisfaction and involvement of your employees. I’m certainly in support of good working conditions, but they can also have negative consequences if there is no intrinsic motivation present. This was probably the case with employees who massively decided to leave the Tax Authorities in 2016. If an eNPS measurement had been released, the organization could have seen that the employees were totally disengaged and not passionate, and that loyalty was based was on extrinsic motivation. They would have chosen a different approach to make the reorganization a success.”
“That frustration I was talking about is partly due to this example. Intrinsic motivation is the most important thing, just like internal goals and internal benchmarks. Extrinsic motivation and external benchmarks, on the other hand, say too little about the actual situation in the workplace. The employee Net Promoter Score fits seamlessly with that internal approach. If things go well with the enthusiasm and engagement of employees, this will automatically radiate to the outside world. ”
“Lastly. I am now largely talking about measuring and gaining insight, but to earn a good eNPS, action is of course also needed. In another blog that I wrote, I give 5 tips on how to take action on your eNPS. Good luck!”