When we measure happiness, we're measuring 8 different components in the employee’s experience to determine how they might impact your customer experience.
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There are 3 main areas that authors focus on in terms of an employee's experience: employee engagement, employee happiness, and employee satisfaction. All of these can impact customer satisfaction.
Many authors use these terms with overlapping definitions.
As a summary statement, there is a lot of overlap between the ideas. For example, this author talks about creating a positive work environment - this can affect engagement, happiness, and satisfaction.
For me, the bigger question is how do we measure the investment in retention or engagement tactics - is it through productivity KPIs, attendence, turnover, structured feedback from employee or customer surveys?
We know we should have a non-monetary reward/recognition system - but how do we determine if it is meeting our needs? What's the metric, measurement process, reporting, and action steps/milestones along the path of making improvements?