If you can name one thing, what is the most important driving factor of your business? The answer might be varied depending on your line of work or industry, but there is one answer that would most likely resonate with all: the customer. People who work in customer engagement, sales, and other customer-facing jobs know it best. Yet it might help to take a better look at your customers and their behaviors, regardless of what your market is.
Customer service is an experience
Often overlooked as a complementary part of a business, many failed to consider how important it is to maintain a good relationship with the customers. Looking at it from the customer’s point of view, the service they experience can be a critical aspect that can help decide how certain products or services are valued in a company. A study published by Harvard Business Review concluded that customers do remember good and bad customer service experiences and are willing to reward companies that give them good services.
A similar survey conducted by American Express showed that seven out of 10 consumers in the United States decided to spend more money with a company that offered great customer service. Understanding what a good customer experience seems like a simple job. After all, almost all of us were customers for another’s business at some point. Even so, it is also a fact that bad customer experience has been the downfall of a lot of businesses.
An article written by Amy Gallo pointed out several things that helped determine what a good customer experience is. First, customers value your active presence in any online platform, including social media. The second is that customers value a fast and reliable response; some studies even show that a fast response is directly linked to sales performance.
Third, customers will feel more engaged with the business if they can get a response, regardless if it will be received with a bad, good, or neutral tone. Responding to both positive and negative comments is proven to give a better impact on the customer rather than ignoring them. Finally, it is important to build a personal connection with the customer; remember that customers are human beings too, thus it is important to treat them as a person. It is always helpful to try understanding them by reflecting on how you want to be treated if you were in their position.
The big potential in recurring customers
Acquiring new customers is important, but keeping your existing customer base is also very crucial. Research by Frederick Reichheld showed that a 5% increase in customer retention can boost your profit by 25-95%. It is also important to note that following up with existing customers often costs less than acquiring new ones. Signing up for the Certified Customer Service Performance Professional course can also help in helping your organization perform better with your clients.
It is a given that having a good customer engagement process will definitely help to secure recurring customers. Even so, it may be not enough to build a long-term connection. There are few other things to consider if you want to increase your client retention rate. Regular contact is believed to be the most effective way to maintain relationships and minimizing churn rate.
Keeping them in the loop for new products and taking note of their feedback can also positively impact your relationship with the customers. Similar to any other human relationship, it is always a good thing to feel involved and heard. Other benefits such as discounts or loyalty rewards can also boost sales. In the end, your customers are more than just numbers; they are the driving factors that deserve your attention.
A remuneration strategy is implemented by companies to attract high talent, reward employees for demonstrating the right behavior,and motivate people to achieve the organization’s goals.
The International Labor Organization (ILO) recognizes remunerationnot only as “the ordinary, basic or minimum wage or salary” but also “any additional emoluments whatsoever payable directly or indirectly, whether in cash or in kind, by the employer to the worker and arising out of the worker’s employment.” Wage differentials, benefits in kind, and allowances, such as those for travel and housing, are also considered remuneration.
To be effective, a remuneration strategy should have long-term and short-term incentives and combine monetary and non-monetary compensation.
As they face global competition, tight hiring markets, and the continuing need for performance, companies must develop a remuneration strategy that aligns with the company’s vision, values, and strategy, responds to market conditions, and complies with regulatory requirements.
Establishing specific principles on which the remuneration strategy is based has become a common practice in large organizations not only for recruitment and talent retention but also for promoting a high-performance culture.
Remuneration principles are abstract, affirmative statements that frame how remuneration decisions should be made. Distinct from rules, principles do not prohibit any remuneration practices and processes. Such principles are not tight constraints and are open to interpretation.
Moreover, remuneration principles are intended to guide remuneration committees towards better project pay arrangements and to decide upon rewards that encourage the desired behaviors required to drive long-term strategic success.
Market principle: An executive’s remuneration should be set relative to that of other executives, so that there is a degree of horizontal equity among executives.
Human resources principle: Consider talented executives’ preferences and expectations when negotiating the remuneration packages.
Fairness principle: An executive’s remuneration should be set relative to other employees in the organization, so that there is a degree of vertical equity from the highest to lowest paid employee.
Pay-for-performance principle: An executive’s remuneration should be tied to the firm’s performance.
Strategic pay principle: An executive’s remuneration should be tied to the firm’s strategy.
Motivation principle: Variable remuneration should be used to motivate an executive to maximize his/her effort.
Ability-to-pay principle: The board should take the firm’s financial position into account when deciding on an executive’s potential and actual remuneration.
Conformance principle: The board should take best practice, regulations, and the legitimate interests of stakeholders into account when deciding on executive remuneration.
Independence principle: An executive should not be involved in the setting of his/her own remuneration.
Consultant principle: The board should seek advice from specialist, independent remuneration consultants when making decisions on executive remuneration.
Transparency principle: The board should disclose the firm’s remuneration policies and practices.
Case: Eagers Automotive’s remuneration strategy and principles
Eagers Automotive is one of the companies that attach great importance to the development of a remuneration strategy. However, the company faced many challenges in 2020 mainly because of the COVID-19 pandemic, when the demand for vehicles was drastically reduced.
Eagers Automotive experienced historically low sales figures. In this context, they had to take decisive actions in terms of remuneration to implement a cost reduction initiative. As a result, the overall remuneration for directors and other employees during 2020 was down 23% on the prior year.
As restrictions eased and vehicle demand rebounded, the company was able to deliver exceptional sales during the remainder of 2020.
After the strike it received in 2020, the company had to develop a new remuneration framework for FY21 that is more closely aligned with market practices. Figure 1 shows the company’s remuneration framework for FY20.
The Board has engaged with shareholders, proxy advisors, and other stakeholders to better understand their concerns and has also obtained independent external advice on their remuneration framework.
As a result, several changes have been made to the remuneration framework while maintaining a strong pay-for-performance culture.
Eagers Automotive’s remuneration principles are in accordance with the principles promoted by specialists in the domain. Based on their new strategy and principles, the company implemented several changes to the previous remuneration framework, particularly on short- and long-term incentives.
Based on the company’s annual report 2020, some of them were:
“Short-Term Incentives (STI)
A new remuneration framework is being introduced for FY21.
The STI Plan for FY21 will be assessed against both financial and non-financial performance hurdles and will be awarded in a mix of cash and equity.
Long-Term Incentives (LTI)
A new LTI plan for FY21 will be introduced with a performance period of 4 years and awarded wholly in equity.
The new LTI plan will include appropriate change-in-control and claw-back provisions in line with market practice.
Other:
Improved transparency and disclosure in relation to the remuneration framework and structure”
With the changes they implemented, the company took into consideration the principles and the strategy they developed. They promote equity, transparency, pay for performance principle, and flexibility.
In addition, they intend to remain competitive by attracting and retaining quality talent and remaining aligned with shareholder interests.
Eagers Automotive based their change decisions on the remuneration principles they developed, so that it would be able to deliver remarkable results in the future while maintaining a strong pay-for-performance culture.
Time is becoming a scarcity due to the rapid developments in technology. Information overflow, the need for change, and a shift in priorities are often a response to the increasing demand for products and services accelerated by the expanding global competition. Therefore, the ability to optimize one’s time to improve performance and increase productivity is a skill that is highly valued in today’s workplaces.
However, to grow such a skill, one must also deal with procrastination which includes the tendency to avoid starting and finishing tasks, as well as poor time management. As such, this problem of procrastination is becoming frequent and costly, especially for businesses. Some studies found that 30-65% of this wasted time is suggested to contribute 30-40% of productivity loss. This, in turn, was found to incur annual losses amounting to $8,875 per employee, adding up to $85 billion per year in the US only.
Therefore, it’s crucial to understand the act of procrastination. This includes defining what it is, why people do it, who does it more, how it is done, and what happens as a result of it. From there, one can understand ways to reduce it and decrease its impact.
Defining procrastination
Procrastination is a trait that has been defined as the tendency to “voluntarily delay an intended course of action, despite expecting to be worse off for the delay”. Organizational researchers studied irrational delay of work but referred to aspects such as time management at work, cyberslacking, and presenteeism. In terms of the workplace, employees procrastinate in two ways: soldiering and cyberslacking.
Soldiering is the act of avoiding work without passing it on to their colleagues. Examples of this include daydreaming and having extended coffee breaks. Meanwhile, cyberslacking is spending time in digital media which includes online shopping, gaming, or engaging in instant messaging. This is more detrimental as it has seen reduced performance and lower network security, incurring costs of around $130,000 per organization in the US alone.
Different conditions can explain why procrastination happens. For example, employees with high education, income, and job autonomy levels are more likely to procrastinate. These employees experience what researchers call “time famine” wherein the pressure to meet multiple deadlines is unequal to the time they have to complete them. Meanwhile, lower-level employees tasked with work requiring less cognitive complexity can perceive the work as boring and can often engage in procrastination.
Impact at work
Employees often take breaks to re-energize. However, excessive breaks may result in procrastination that leads to costly delays. Furthermore, employees commonly face interruptions like procrastination that lead to work disorganization and can affect the completion of a task.
Procrastinators may choose to work on achieving easy and short-term goals instead of striving for hard and long-term goals. Even if they choose to go for easier work, their goals are vaguely set without deadlines or evaluation of progress. Due to this, they are more likely to be behind schedule on their projects and have lower scores on aspects such as time management. They also make more errors and work slower than non-procrastinators when performing time-limited tasks.
As a result of procrastination, an employee would be likely to experience low self-esteem and a lack of impulse control. They would also have higher levels of anxiety compared to non-procrastinators. This creates a vicious circle of procrastination to make up for their anxiety and improve their mood. They are also found to be relatively more agitated, dejected, anxious, and miserable in the long run.
Solving the problem
Procrastination is the silent killer for any organization today. It is also an underestimated problem that can end up incurring massive financial and productivity losses. Organizations should give more attention to solve this issue and maintain effectiveness. To do that, here are some ways that organizations can tackle employee procrastination.
First, organizations should provide training employees on time management to reduce the tendency of their employees to procrastinate. Some studies showed that a one-month training course on time management reported a significant decrease in avoidance behavior and worry. Research also showed that this can reduce procrastination by increasing the ability of employees to manage their time better.
Second, providing training on self-regulation skills which can relate to sales performance and prove to be important in time management. As self-regulation can help improve one’s self-control, it also instills the practice to achieve goals that have long-term gains instead of short-term gratification. Additionally, developing this skill helps foster high job performance amongst their employees and curb counterproductive behaviors.
Finally, organizations can make use of job crafting to motivate their employees to be more involved in their jobs. This includes deciding over different aspects in how they want to work on tasks to match their preferences, skills, and competencies. This can be a useful strategy to make the job more interesting for employees and limit procrastination.
We already know that good quality data can help in the decision-making process. The first important step is to collect data from reliable sources. There are two types of data sources to consider: primary and secondary.
Data from primary sources are first-hand data, tailored to provide information on the firm’s own products, customers, and markets. It can be collected from both the internal (employees, board of directors, investors etc.) and external stakeholders (customers, suppliers etc.) of our organization.
Data from secondary sources are facts & figures already collected and recorded prior to the analysis done by others, and can be collected from internal sources, i.e., our annual report, sales data etc., or external secondary data, from government database and reports, national reports etc. This type of data includes both raw data and published summaries.
Primary and secondary data can be either quantitative or qualitative. Quantitative data refers to numbers and quantities like age, competency level, etc. Qualitative data is descriptive, observable and cannot be measured, i.e., clothing style.
Sources of primary data
The most widely used methods of primary data collection include the observation, interview, and survey. While these are not the only ones, most others are less popular than the former three.
The observation is the most used method of data collection in social and natural sciences. This method consists of gathering knowledge by observing certain phenomena when it occurs.
There are two types of observations: participant and non-participant. In case of the participant observation, the researcher watches the events and activities from inside, by taking part in the group he is observing. The researcher can freely interact with the participants. In the case of non- participant observation, this occurs when the researcher observes the events passively, from a distance, without direct involvement.
During this specific data collection process, chances of personal biases are high, as the observer interprets the situation in his/her own way.
When it comes to all fields of science, the survey is one of the most used methods of data collection in research. Questionnaires are formulated to acquire specific point information on any subject area. The questionnaire is an inexpensive method of data collection, when compared to other methods of primary research. Questionnaires can be submitted by vast audiences, at a time, and responses can be registered quite easily.
Lastly, the interview is another important method of primary data collection in all fields of science. During the exchange, the interviewer collects information from each respondent independently, making this process much more expensive and time-consuming when compared to other methods of data collection.
Sources of secondary data
We can collect secondary data from many sources, such as:
Text-based data sources, i.e., magazines, newspapers etc.
Non-text-based documents, i.e., TV, radio etc.
Survey research conducted by other entities, i.e., the government, NGOs etc.
What data sources should we focus on?
There are advantages and disadvantages to each of the sources, which is why choosing the appropriate data source is highly dependable on the research’s objective. Here are some considerations that might help deciding:
Advantages of data from primary sources
It is more reliable, because the source of the information and the data collection method are known
The collected information is up to date
The collected information is owned by the organization conducting the research
The organization conducting the research can ensure that it is addressing a specific issue, rather than investing in extracting relevant information from other sources
Disadvantages of data from primary sources
More expensive than secondary data
Time-consuming
Advantages of data from secondary sources
It is easy to access, so it is less time-consuming, and the data collection-related costs are lower
A large amount of data can be collected easily
Disadvantages of data from secondary sources
It may be possible that it is not tied to the organizational needs
It is not as accurate as primary data, and it might be outdated
As we can see, data collection can come in many forms, types, and methods, almost as varied as the very object it desires to aggregate. Which method suits your needs is conditional on your research objective. Whilst some may require an in-depth, live approach via the interview or even observation, others could do with just a quick & easy fix, via surveys.
Moreover, carefully consider which sources will yield the most accurate and trustworthy data. Some research benefit greatly when you incur information from primary sources, whilst others yield surprisingly pinpoint results with just secondary references.
