“How likely are you to recommend this company to a friend or relative?” This is a question you have probably answered on a scale from 0-10. The number you chose contributes to the Net Promoter Score.
Net Promoter Score or NPS was originally conceived by Fred Reichheld, a partner at Bain & Company, in 2003, to determine how effectively a brand is perceived by its customers. It is now an inseparable part of companies to understand the loyalty factor among employees.
How to calculate employee NPS?
Calculation of Employee NPS is based on the original framework. In this process, an NPS survey is created and employees are asked to enter their choices. The survey respondents are divided into three groups based on their choice of ratings:
- Detractors: Unhappy employees who rate the company between 0-6 fall in this category
- Passives: Unenthusiastic workers who are not motivated or are vulnerable can choose a rating between 7-8 and are known as passives
- Promoters: Employees who are highly engaged, happy, and loyal, and rate their organisation between 9-10 belong to group.
To find out the employee NPS for your company, apply this formula:
(Number of promoters — number of detractors) / (number of respondents) x 100
You can either take help from an NPS calculator or do it manually.
Employee NPS gives an insight on employee engagement and employee experience. And that is why companies need to focus on achieving a good NPS.
You as an organisation or human resource manager should target for a maximum score and turning more employees as promoters.
How NPS helps your company
There are various benefits of knowing the employee NPS. Some of which are:
Slashes attrition rate and company turnover
It is hard to predict how long your employees want to be in the organisation but not impossible. A good NPS helps HRs and organisations to ensure their employees spend more time in the company. Whereas, poor scoring raises an alarm for employers.
Taking this opportunity, organisations can work to find out what factors are responsible for their employees to choose poor ratings. And in return, they can reduce attrition rate.
Attrition always has a negative impact on a company’s turnover. To replace and hire a new employee, organisations spend 20 per cent more of an employee’s annual salary which goes towards advertisement, training and time. And that does not always guarantee a good hire.
Increases employee loyalty
Employee satisfaction is at the core of an organisation’s success. And employee NPS helps to quickly measure how happy your employees are. It is important for your company’s overall health and environment.
If you interpret it this way- higher the score, greater engagement, and loyalty.
Loyal employees are more likely to perform better, show improvements in their work and contribute more towards the company’s success and growth.
Improves productivity and profitability
A good NPS is manifested in increased productivity and profitability. If your employees are happy, their quality of work would improve and so is their productivity.
A research paper published as part of Global Perspectives series by Social Market Foundation, revealed that happy employees are 20 per cent more productive than the rest.
Unhappy employees negatively impact business and that is why you need to conduct surveys more often to find out employee NPS and build an effective strategy to address disengaged and unmotivated employees.
Increase in employee referrals
Employee referrals reduce the cost of recruitment and that is why securing a good NPS is important.
When you create job advertisements to hire new people, it costs your organisation a lot of money, time and other resources. Talent acquisition teams can reduce the cost of hiring new people by asking their employees to refer their friends.
And most importantly, referrals lead to talent pipelining and building long-term relationships with employers.
How to increase employee NPS
Now that you know why a good employee NPS is crucial for your company, emphasize on building good relationships with your current employees.
- Combined with other metrics, use eNPS score to identify crisis
- Increase employee engagement by organising casual meetings, games, parties, and celebrations
- Acknowledge your employees’ strengths and give them a token of appreciation
- Conduct one-to-one meetings to address their concerns
- Conduct surveys more often and use a good NPS calculator to measure accurate results
- Bring in positive changes and implement them to find out if that is well-perceived by employees.
Employee NPS is undoubtedly crucial for talent acquisition teams and HRs across organisations. It creates more awareness of the current situation in the company and gives an opportunity to employers to work on them.
Does your company conduct regular surveys to find employee NPS? If not, you need to rethink.
- Bhavika Sharma: What is employee Net Promoter Score and why it matters? - Tuesday, February 4, 2020