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What is an Employee Net Promoter Score (eNPS) and How Does it Impact your Bottom Line?

The long-term success of any company depends on the loyalty workers have to an organization, and the productivity that occurs because of their loyalty. Many organizations realize there is a direct link between turnover, loyalty and bottom line.

 

The biggest way loyalty impacts costs is through turnover - and the true cost of turnover adds up.  It’s estimated that an entry-level employee, who makes an average salary of $40,000, costs 40% of their annual salary to replace.

 

Imagine having employees that were loyal to your organization and being able to negate the cost of disloyal employees at your organization. What if there was a simple way to measure loyalty and then uncover exactly what makes an employee more likely to be loyal or not?

 

Why is employee loyalty important?

There are many reasons why employee loyalty matters, but three of the most important ones are:

  1. If employees are loyal, they care more about the organization and work harder
  2. Loyal employees stay with you longer
  3. Loyal workers improve your bottom line

 

Without loyalty, your HR department will be in a constant state of turnover and recruitment - and these occurrences are expensive. Consider these expenses:

  • The costs of hiring (advertising, interviewing, posting on job boards, etc.)
  • Cost of training a new employee (including time lost by the trainer)
  • Lost productivity
  • Cost of mistakes made by a new employee

 

Don’t overlook the fact that the U.S. is experiencing incredibly low unemployment rates. This makes it really hard to recruit, especially for skilled laborers. As an organization, it’s imperative to focus on loyalty so you can reduce turnover, and increase applicant pools by word of mouth from your current employees.

 

How can you see the loyalty or satisfaction of your employees? Let’s look at an age-old marketing concept - NPS.

 

What is NPS?

Net Promoter Score or NPS is a method used to track satisfaction and advocacy of a brand.

 

The Net Promoter Score is usually conducted through a single question survey, “how likely are you to recommend [brand] to a friend or colleague?” The user answers on a scale of 0-10.  High NPS scorers tend to have higher growth rates. It’s a simple measurement, and instantly educational for an organization.  

 

Human resource departments are now using this logic to determine employee satisfaction and advocacy.

 

What is eNPS, or NPS for employees?

By taking the philosophy of the NPS, you can tweak the question to get a sense of employee satisfaction and loyalty. The question here is “on a scale of 0-10, how likely are you to recommend this company as a place to work?”

 

The employee net promoter score is more than just a number, it is a reflection of how employers are doing when it comes to cultivating a strong workforce.

 

How do you calculate the total score?

For both the NPS and the eNPS, each respondent falls into a category.

Promoters: answered 9-10

Promoters are the most loyal segment who will enthusiastically recommend employment at a company.

 

Passives: answered 7-8

This group is not necessarily negative, but is not entirely loyal either. They are neutral or passive.

 

Detractors: answered 0-6

This category defines those that are not likely to recommend employment at the company.

 

The formula for calculating your eNPS looks like this:

(Number of Promoters — Number of Detractors) / (Number of Respondents) x 100

So, if your company has:

  • 50 people answered 9-10 (promoters)
  • 25 people answered 6 or less (detractors)
  • 25 people answered 7-8 (passives)

Your eNPS score would be:

(50 — 25) / (100) x 100 = eNPS score of 25.

 

What is a strong eNPS score?

Remember, the eNPS score is a scale, technically from -100 to 100, so it's not a passing or failing percentage. And many factors play into the overall scoring, so it's difficult to compare eNPS between companies, or even departments.

 

But, one study conducted by OfficeVibe.com suggests 59% of employees wouldn’t recommend their organization as a good place to work.

 

One way to really measure your efforts is through change over time - give yourself a benchmark. It doesn't particularly matter if a team or company starts on 10, 20 or 30 if they are moving upwards each time. Improvement is the key.

 

How can employers earn a higher eNPS?

There is always room to grow. To earn a higher eNPS each time, you need to get to the bottom of “why” you get detractors in the first place, and how you can improve culture and employee benefits.

 

We’ve found that employers who offer DailyPay as an employee benefit experience higher employee loyalty, lower employee turnover, and as a result increased applicant pools for when recruiting is a must.

 

In one case study, we targeted an organization notorious for its high turnover rates. UCode is a provider of coding education for children in California. UCode suffers from low employee retention rates because the majority of their tutoring staff are highly qualified coders who could work at more lucrative coding jobs throughout the Silicon Valley.

 

In an effort to improve loyalty and employee retention rates, UCode started offering DailyPay to their instructors. The response was so great that the administrative staff of the company also requested that they be added to DailyPay.

See how DailyPay can improve your eNPS and in turn improve your company's bottom line.

 


Written by DailyPay


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