Incentives and Customer Satisfaction

Improving Customer Satisfaction
Through
Incentive Compensation

Halifax Electric Membership Corporation, in Enfield North Carolina, wanted to make sure they were meeting the needs of its 12,000 customers, who also happen to be its owners. They designed an incentive plan in 1999, with the help of HURECO, INC., of Vienna, VA, to focus employees on improving customer satisfaction. During the ensuing years, satisfaction ratings have moved up from 8.58 to 9.08 in 2004, a record that others are unlikely to match.

What do the employees think of the program?

“The major contributor for Halifax EMC is a group of employees who are already connected to the members they serve. When the survey process began and the results and member comments were shared by management, employees took initiative to adjust and implement changes…even sharing suggestions on how to improve between each other and throughout the organization. I don’t believe there are many organizations whose employees have a better feel of their customer’s pulse than here at Halifax EMC.” Brady Martin

“The incentive plan has employees taking pride in their work and assisting our fellow employees with their duties to be more efficient as a company. We try to keep outages as short as possible. We go out and beyond to give our new and old members the best service possible.” Roger Chappell

“The incentive plan has made us conscious of communication with members and talking with members about what we are doing on their property and just being nice in general.” Danny Pendergrass

“The key has been the incentive compensation program. As Member Services Representative at Halifax EMC for 42 years, my public relations with members has been extensive, and I think the survey gives the members a feeling of ownership and of having an active voice in their cooperative. Also, since employees know that the survey is being conducted, each one is aware that any member can be called at any time. With an ongoing survey, there is an overwhelming feeling of togetherness between employees and members as we are a team working together for improved welfare for all concerned.” Kathryne K. Hamill

The incentive compensation program has been the primary tool used to focus employee efforts on member satisfaction. It took time for some employees to warm up to this approach. Some are still uncomfortable with it. However the incentive program has gained overwhelming support over the last few years as employees were able to realize gains when member satisfaction increased.

We don’t know how high the member satisfaction number will go. Of course a rating of 10 is the highest, but every notch up is increasingly more difficult because there is less room to go to the top. Is Halifax at the highest level it can reach? Whatever the future, Halifax has already experienced a triumph in customer satisfaction improvement that is seen as a model for other employers.

Customer satisfaction is only one part of the incentive plan designed for Halifax by HURECO, INC. The plan also targeted revenue growth, efficiency, and product sales. The overall return for Halifax for the last 4 years has been an average of 344% per year. For every dollar the organization spent on the plan- including the design, operation and employee pay-outs – it received $ 3.44 in additional revenue and cost savings. You can review the full article and gain more information on designing incentive compensation plans at www.performanceresult.com.

Article by Al Weide of HURECO, INC. Helping You Select, Develop and Reward Talent. aweide@hureco.com