Photography by James Salzano

First articulated in the Harvard Business Review in 1994, the serviceñprofit chain holds that satisfied employees deliver superior service that creates satisfied clients—and satisfied clients create growth in revenue and earnings and increased shareholder value.

A no-brainer, right? But in turning theory into reality, many companies shortchange one leg of this three-legged stool, paying just lip service to employee satisfaction. But not ACNielsen. To restore its reputation as a global market research powerhouse, executives at the Stamford, Connecticutñbased company committed to providing client service that is second to none. But they also embraced employee satisfaction as a key component of client service—and fueled a remarkable turnaround in the process.

The foundation of their commitment to employee satisfaction is the company's Business Effectiveness Survey (BES). Administered annually since 1995, BES is a critical measurement of employee satisfaction—so critical, in fact, that survey results are linked directly to executive compensation. A full 25 percent of incentive compensation for the company's top 1,500 leaders depends on achieving an ever-improving Employee Satisfaction Index (ESI).

"Our senior leadership has created a culture that not only supports the Business Effectiveness Survey but also embraces it—weaving it into the fabric of the organization," says Althea R. DeBrule, senior vice president of global human resources. "They know that we can only create shareholder value by first creating a satisfying environment for our employees. Line management is committed to acting on survey results because they recognize the validity of the serviceñprofit chain. They know that organizations with a high degree of employee satisfaction have stronger retention and greater productivity. Productive and committed employees create value and service for our clients. Clients who receive excellent service over time become satisfied. Highly satisfied clients become loyal, and profit and growth are stimulated by client loyalty."

"ACNielsen is in the forefront of companies linking employee satisfaction data to compensation," observes Bruce Pfau, Ph.D., Watson Wyatt's national practice director of organization assessment and performance, who developed the survey process. "At ACNielsen, meeting BES targets is as important as meeting financial goals."

Bottom-Line Results

The service profit chain is a spot-on strategy, judging from the company's results. Since 1996, its first year of renewed independence, operating income has more than tripled and net income has nearly quintupled. Return on equity and return on assets have more than tripled as well.

"We live, breathe and sleep client service," Chrenc says. "We are fanatical about how we collect, process and deliver data and insights that contribute to our clients' success." And with a large number of global consumer products companies as clients, the company is well on its way to achieving its vision of being recognized worldwide as the premier professional services firm in market research.

Employee satisfaction scores worldwide have soared along with revenues. Since 1995, when the survey was first instituted, the Employee Satisfaction Index has increased 50 percent, from 42 percent to 63 percent. Participation continues to be record-breaking, with a 91 percent participation rate last year, up from 80 percent in 1995. According to Pfau, ACNielsen's participation rates are among the highest compared to other companies conducting similar surveys.

However, DeBrule cautions, "we still have a long way to go. We exceeded our global ESI improvement target last year, but our goal is nothing less than world-class levels of satisfaction—70 percent-plus. Frankly, we'd like to go higher." Based on Watson Wyatt's normative database, high-performance companies consistently score in the mid-70s on employee satisfaction. "That's what we're aiming for," she says. "Some countries and sub-regions are there already, but we want to be world-class everywhere we operate."

Acting on the Results

Driving this improvement is a companywide commitment to action plans aimed at boosting employee satisfaction. "The most significant aspect of the survey is what is done with the results," she points out. "Each manager must develop an action plan aimed at achieving measurable improvement in time for the next survey."

The action-planning process starts with local meetings held to review the results in detail. With a goal of determining department-specific findings, the meetings offer an opportunity for employees to ask questions, voice concerns and provide suggestions for action. In this way, plans can be developed and implemented based on issues that have been identified and prioritized by employees and managers alike.

To help the process along, Watson Wyatt developed a comprehensive resource guide describing how to conduct survey feedback meetings and create empowered teams to develop action plans. Organization measurement consultant Diane Buckley also described how to develop the plans themselves and suggested ideas for action based on survey responses.

Employee satisfaction across all survey dimensions has improved significantly. Company managers have focused attention on Leadership and Communication, two areas with which employees had voiced dissatisfaction. Now receiving particular attention are the Career Development and Reward and Recognition dimensions, which, out of the 12 areas, are the only two still showing less than 60 percent favorable ratings.

"Improving employee satisfaction is not a simple, linear task," DeBrule says. "If I had one piece of advice to give other companies looking to improve employee satisfaction, I would tell them not to underestimate the value of action planning. If done purposefully, with full input from employees, you will see results. We still have a lot more work to do, but the specific programs we instituted in these four areas have proven effective."

Leadership

Efforts to increase managerial effectiveness have driven a 25-percentage-point improvement in employee satisfaction since the survey first began. A Global Leadership Institute, begun in August 1998, teaches leadership skills to the company's top 250 executives and high-potential managers. This week-long executive education program teaches leadership "The ACNielsen Way," a phrase that describes a unique, globally consistent approach that ties business units together more closely. The Institute also includes participation by the board of directors and a 360-degree feedback instrument.

Following on this approach, a Regional Leadership Institute was begun for an additional 1,250 senior managers last year. It introduced 10 leadership competencies and established development plans to improve selected competencies in all the company's top leaders.

Finally, a Leadership Review Process for succession planning has identified ACNielsen's internal talent pool. This all-employee database classifies high-potential performers so that appropriate career opportunities can be provided globally.

Communication

As a result of survey feedback, communicating business objectives and financial targets to employees has become a key strategy in the company's turnaround. Globally, ACNielsen provides employees with a weekly electronic and a quarterly printed newsletter, as well as regional- and country-specific electronic and printed publications. In addition, the company instituted a worldwide celebration for all employees called ACNielsen Day, a direct result of the action-planning process that followed the release of earlier survey results. The event takes place at the end of the year for all employees, in every country, on the same day, to reflect on the past year's accomplishments, look to the challenges ahead and celebrate being a part of a multinational organization like ACNielsen.

Survey results also showed that employees wanted more face-to-face communication with senior management. In response, key executives and some senior leaders began visiting more countries and conducting town hall meetings for employees. These sessions included not just question-and-answer periods but prepared remarks on company vision, progress on business targets and feedback from clients and shareholders.

In the latest survey, "we see a direct correlation between these visits and strong improvement in communication," DeBrule notes. "We registered a gain of 38 percentage points in senior leadership communication, and a gain of 30 percentage points in employee confidence in the company's strategy and objectives—direct reflections, we believe, of employees interacting with senior management and buying into their goals." Overall employee satisfaction with communication increased by 31 percentage points.

Reward and Recognition

In response to employees' desire for greater recognition, a "Built to Last" global awards program was introduced in early 1998 with three components. The Chairman's Award for Excellence, which includes a trip and a significant monetary award, is given annually to 25 employees who have delivered exemplary client service or gone considerably beyond their job requirements. The Arthur C. Nielsen, Jr. Award honors excellence in adhering to the 10 core principles articulated by the company's founder. The ART Award, named after the company's stock symbol, recognizes individual or team efforts to provide outstanding client service and exemplify the company's core values.

As for rewards, benefit programs in the U.S. were enhanced last year by increasing flexibility in medical plans and in the tuition reimbursement program. "We've always scored well on our benefit plans," DeBrule says, "so we took the U.S. results to heart in order to stay competitive."

The Reward and Recognition dimension gained 20 percentage points during the past four years, thanks to these efforts. However, overall satisfaction is still only 49 percent, the lowest score of all the dimensions. (In comparison, customer satisfaction and quality scores 75 percent satisfaction among employees—a world-class ranking.) Clearly, ACNielsen's attention will stay focused here, and new action plans will result.

Career Development

To better prepare employees for rewarding careers at the company, DeBrule's organization identified 60 functional competencies. These competencies are spread across four capabilities that comprise ACNielsen's organizational model: general management, client service and practice development, operations and expert knowledge. The model, developed by the company's chairman, specifies that all areas are equally important so that all competencies are treated as equally important, too. "Employees wanting to be promoted now know how to get there," DeBrule explains. In addition, a Career Road Map, implemented last year, helps guide operations employees on the experience and courses they need in order to be promoted.

In response to employee concerns about training and development in Latin America, the company rolled out the ACNielsen University in December. This program provides job-specific skills training and teaches the ACNielsen Way of providing client service, which aims to continually improve the consistency and quality of the services delivered in all markets.

These efforts are paying off. Employee satisfaction with career development has risen 20 percentage points over the last four years. But overall satisfaction with career development is still only 57 percent. "We won't be satisfied until that figure is greater than 60 percent, which shows a clear strength," DeBrule says.

Looking to the Future

As successful as the company's actions have been to date, DeBrule believes that the action-planning process must be intensified so that it can transform the organization. "The low-hanging fruit has been plucked, by and large," she observes. "The challenge now becomes, ëHow do we make the process richer?'"

One approach she intends to pursue is to use the best practices database maintained by Watson Wyatt's People Management Resources subsidiary, marrying its research with the best practices demonstrated at ACNielsen to deepen this year's action plans. Pfau explains, "We don't leave our clients to start from scratch and figure out their own solutions. Our web-based best-practices database gives clients access via the Internet to more than 300 in-depth case studies."

Another challenge is to "bring BES into the new millennium." With Watson Wyatt's help, the company is considering making the survey electronic to get results even faster, though multiple translations and cost concerns may pose problems. "This process is so efficient now that we would need to seriously leapfrog current procedures to achieve significant gains," DeBrule points out. She also wonders if some of the questions will need to be refocused now that the company has moved from a turnaround to a growth phase, acquiring other companies and entering new businesses.

Her final challenge, however, may be the most persistent: "Once we achieve world-class levels of employee satisfaction, how do we maintain them?" Employees in the Americas already register 71 percent satisfaction, and satisfaction levels for Asia/Pacific and European employees are moving up fast. "Linking satisfaction to incentive compensation was a wake-up call for all our leaders to give employee satisfaction the attention it deserves," DeBrule says. "In retrospect, however, that has been the easy part. The ongoing challenge is to ensure that behavior changes take root and flourish throughout the organization."

The Survey At A Glance ACNielsen's 50-question Business Effectiveness Survey covers 12 work-related dimensions: Pride and commitment Change management Career development Business conduct Leadership Teamwork Reward and recognition Performance enablement Support for innovation Client satisfaction and quality Communication Performance management Each dimension, made up of about five questions, is equally important. Scores for each question are averaged together to produce the score for that dimension. The scores for each dimension, in turn, are averaged together to produce the final Employee Satisfaction Index. ESI scores can be generated for groups as small as 10 people all the way up to countries, geographic regions, major business units and the company as a whole. Precise Questions and Responses The survey measures employee responses in an unusually precise way. For example, the typical "to what extent" measurement includes not only the typical "great" and "some" extent. It also includes "to a very great extent," "to a small extent" and "to a very small extent," in addition to "don't know/not applicable." The following questions for the Leadership dimension illustrate the degree of scrutiny the company expects from its employees: "To what extent do you have trust and confidence in the overall job being done by the senior leadership team of ACNielsen?" (The question then lists the chairman's name and the names of his four direct reports.) "Has senior leadership clearly communicated ACNielsen's business vision, strategy and objectives?" "Do you have confidence that ACNielsen's strategy and objectives will position it for business success?" "Is senior leadership flexible and open to change?" "Is senior leadership making the changes necessary to ensure that ACNielsen will achieve its short-term business objectives (i.e., one- to two-year objectives)?" "Is senior leadership making the changes necessary to ensure that ACNielsen will be a winner in the marketplace over the long-term (i.e., over the next three to five years)?" "Do you understand how your work fits into ACNielsen's strategy and objectives?" "Does senior leadership demonstrate personal visibility in your part of ACNielsen?" A Streamlined Process The survey process itself is streamlined and user-friendly. It begins with a month-long internal communications campaign in August. Posters, letters, e-mail messages, one-on-one conversations and even games are used to generate awareness and interest. The survey is administered in September to all 20,700 employees, in more than 100 locations around the world, and translated into more than 20 languages. Survey coordinators handle translation issues and ensure distribution to all employees, including those on vacation or business trips. "We're constantly working to improve efficiency," says Watson Wyatt senior consultant Diane Buckley. By mid-October—only two weeks after the last surveys have been distributed—Watson Wyatt produces top-line global and regional results that are e-mailed to 2,000 managers worldwide and presented to the board of directors. More specific results for countries and corporate headquarters departments are generated through November. Electronic survey reports allow managers to quickly navigate to their own strengths and weaknesses. The chairman sends all employees a letter communicating global results, and regional presidents send a follow-up letter reporting regional and country ESI scores. By the end of December, all results are available for all groups and geographies. Action plans to improve results are drafted in January and February, with implementation beginning in March and reviewed again in May and July.

Translating People Strategy into Business Vision As In many organizations, human resources at ACNielsen used to focus primarily on operational and transaction issues, spending as much as 80 percent of its time on administrative tasks. All that changed with the introduction of the Human Resources Directional Framework, a business model developed by the company's Global Human Resources Board. "This framework is a dynamic continuous process for executing ACNielsen's people strategies," explains Althea DeBrule, senior vice president. "It links the company's vision, corporate direction, business targets and business capabilities directly to its people requirements. The framework also focuses on employee commitment, forcing us to listen and ask employees, ëWhat matters most?' This is where the survey comes in. With the business strategies and people requirements in mind, we can decide on the appropriate HR priorities and actions. Then we can align the five HR systems—rewarding, staffing, organizing, performing and learning—and develop effective execution and measurement. All this in turn enhances our organizational capabilities in support of the corporate vision."