Bersin Report the Science of Fit

8/6/2019 Bersin Report the Science of Fit

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BERSIN & ASSOCIATES RESEARCH REPORT | v.1.0

The Science o FitUsing Psychology to Replicate High Performance

Josh Bersin,

Principal Analyst

June 2011


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Bersin & Associates June 2011This material is licensed to Kenexa or distribution only.

The Science o Fit 2

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The Science o Fit 3

TABLE OF CONTENTS

Introduction 4

The Biggest Challenge in Management: Replicating

High Perormance 6

Implementing the Science and Strategy o Fit 8

Focus on Fit Drives Market Share Growthat Vodaone 11

Focus on Fit Drives Dramatic Improvement inSales at Bon-Ton Stores 13

Focus on Fit Drives Growth at Regeneron 15

How to Apply the Science and Strategy o Fit 17

Conclusion 18

Appendix I: Case in Point 19

Appendix II: Case in Point 22

Appendix III: Case in Point 24

Appendix IV: Case in Point 26Appendix V: Table o Figures 28

About Us 29

About This Research 29
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The Science o Fit 4

Introduction

The business world is undergoing rapid change. Globalization, shortened product cycles, new

technologies, and the recovering economy have created new business challenges.

What is the key to creating an enduring, globalized, high-perorming business?

The answer lies in people. While executives know that innovation, product leadership, and customer

service are keys to success, they also know that without the right people, none o these strategies can

succeed. Our research on leadership and talent management proves this. During the last three years,

organizations which rate among the 10 percent in talent management signicantly outperormed their

peers. These people-ocused businesses generated 26 percent more revenue per employee, had 40

percent lower turnover rates, and were 24 percent less likely to have had layos during the

last recession1.

We also know that these high-perorming companies are lled with people who are passionate,productive and highly engaged2. Kenexa, a global provider o business solutions or human resources,

ound that organizations that rank in the top 25 percent in employee engagement achieve earnings per

share almost 2.5 times higher than average3. There is a magic element to business success and it revolves

around how we manage people.

What are the keys to this people-driven success?

Traditionally managers have been taught that people perormance is driven by the perormance

management process: create a vision, develop goals, align people toward these goals, and hold them

accountable. Fortune 100 companies, like bellwethers GE, IBM and others, have promoted this processor years, and innumerable authors and consultants have written books and articles about the need or

strong perormance management, the need to dierentiate people, and the need to provide coaching

and development to employees.

Those activities are indeed important. But our research shows that peak-perorming companies go much

urther. They do not only practice great management; they have learned how to make great hiring

decisions or the business and or each individual role.

1 For more inormation, Talent Management Factbook 2010: Best Practices and Benchmarks in U.S. Talent Management,

Bersin & Associates / Karen OLeonard and Stacey Harris, September 2010. Available to research members at www.bersin.com/

library or or purchase at www.bersin.com/tmactbook.2 Employee engagement reers to an employees job satisaction, loyalty and inclination to expend discretionary eort

toward organizational goals. Companies typically measure engagement through an annual employee survey. Kenexa, a leading

provider o engagement research and services, has developed a global database o engagement actors and helps companies

to implement rigorous engagement measurement programs to identiy weaknesses in management, leadership, business

processes and culture. Many other consulting rms also oer various types o engagement surveys, and many companies do this

themselves.3 Kenexa WorkTrends Annual Report, 2008.
http://www.bersin.com/libraryhttp://www.bersin.com/libraryhttp://www.bersin.com/tmfactbookhttp://www.bersin.com/tmfactbookhttp://www.bersin.com/libraryhttp://www.bersin.com/library


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The Science o Fit 5

These peak-perorming companies, such as Google, Apple, Zappos, and Amazon.com, outdistance their

competition by understanding how to select and promote the right people. They have identied the

personality types and traits that reinorce their business proposition and culture, largely by studying the

characteristics o high perormers. They ocus on who they hire, not just what people do and build

tools and systems to help managers and leaders assess and attract the right type o people into each

particular job.

The implement something we explore in this research: the science and strategy o ft.


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The Science o Fit 6

The Biggest Challenge in Management:Replicating High Perormance

Successul business leaders know that a small percentage o people typically drive a large percentage ocompany value. Bill Gates, ounder o Microsot, once stated that i he had lost the top ve perormers

in the company, Microsot would never have become the company it is today. In sales organizations it

is common or the top 10 percent o perormers to generate 30-50 percent or more o the revenue. In

sotware engineering, the top programmers oten write 10 times the code as average perormers. In

customer service there are individuals who are loved by clients, while others struggle with the job.

We all recognize these top perormers when we see them. The challenge is how we replicate this success.

How do we bring the rest o the team up to this level o peak perormance?

Our research shows that most managers are not trained or equipped to meet this critical challenge4.

They understand the principles o perormance management and are armed with tools to help them set

goals and evaluate people, but they do not understand how to build world-class teams.

4 TalentWatch Q1 2011, organizations rate rst line and mid-level management readiness as the weakest part o their

organizational readiness. Only 30% o organizations rated their rst-line or mid-level leadership as ully ready or excellent.

(insert link)

Peak PerformersTop 10% who Generate

80% of Value

How do we create

more of these top 10%?

Mid-Level PerformersKeeping the BusinessRunning

Low Performers

Those who must be developed,moved, or asked to leave

Number of People

Distribution of High-Performers

Figure 1: The Distribution o High Perormers in an Organization

Source: Bersin & Associates, 2011.


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The Science o Fit 7

The science and strategy o t can help. By applying the principles that we will explain in this report, any

organization can replicate high perormance, driving tremendous increases in customer loyalty, revenue,

market share and protability.

The Main Idea: Hundreds o books have been written on the importance o traditional

perormance management creating a top-level strategy, setting goals, measuring progress

against those goals, identiying high perormers and weeding out low perormers. Those activities

are important. But many top companies are discovering a lesser known and yet highly eective

means o creating a high-perorming organization: applying the science and strategy o t.e


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The Science o Fit 8

Implementing the Science and Strategy o Fit

Our research shows that implementing the science and strategy o t has our steps:

1. Clearly identiy the top perormers in a role or business unction.

In any major business area (e.g. sales, IT, customer service, operations), identiy the top 10 percent in

perormance. These are the employees who ar outperorm their peers. You can do this by looking

at business-outcome data measured at an individual level (e.g. sales perormance, quality metrics,

output volume and other measures available on an individual basis).

2. Figure out what makes the top perormers dierent.

Using science5 (this is really the magic part o the process), compare these top perormers to the rest

o the team. Identiy what makes this group dierent. Look at all elements, including experience,

personality, education, job history, skills and personal nature. Through this process you will identiyt characteristics, the traits, skills and behaviors that determine success.

During the process, you will nd that some o your pre-existing belies about high perormers

hold true: they work hard, they have experience in the role, they have deep skills, and they ocus

on quality. But you will also nd other characteristics (the secret sauce) which may not have been

obvious (the Bon-Ton Stores example in this research explains some o these non-

obvious characteristics).

3. Incorporate the ft characteristics into all management practices, making it easy or

managers to fnd and develop high perormers.

Next organizations build tools and systems to help managers select and hire people based on t.

These tools whill help managers assess candidates or t, train or t, coach or t, and promote

based on t. Tools should include pre-hire assessments, interview guides and coaching and sel-

development aids. Build a management culture based on how people succeed, not just what they are

supposed to do.

4. Clearly communicate your defnitions o ft throughout the organization:

Finally, publicize the winning traits and behaviors you have identied throughout the organization.

Discuss why and how people succeed. Celebrate not only results, but also how individuals

deliver results.

5 The science o t is part o Industrial and Organizational Psychology (called IO Psychology), which is a discipline o skills

and tools to assess individual capabilities.


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The Science o Fit 9

You will nd that many o the characteristics o high perormers are common across the company

they make up your culture and employment brand. Other t characteristics are very role and discipline

specic. Together these characteristics tie your company together and make up your

organizational culture.

This ocus on t creates a fywheel o high perormance. Managers now have the tools they need to helphire the right people into their open positions. Employees now have a model or success which they can

use or their own development plans. Executives understand how to heighten overall job satisaction

and engagement.

Employees also eel more comortable in their jobs because they succeed. And the organization

becomes more collaborative and productive, driving greater revenues and prot.

Kenexa, a company which ocuses heavily on recruitment and employee engagement, uses a ormula

to explain this process: i X e =s, where i represents individual, e represents environment, s

represents success, and X represents the t characteristics. When you multiply the right individual by

the right environment, success is inevitable. Using the science and strategy o t, an organization can

identiy the right i, create the right e and guarantee the s.

Case in Point: AMC Theaters Uses Fit to Drive Proftable Growth

In the 1990s, AMC Entertainments business perormance was suering because o lackluster

concession sales and high employee turnover. The companys market share was diminishing. Ater

studying high-perorming theaters, AMC realized that guest experience was one o the biggest

drivers o concessions sales (popcorn and candy), whch contribute greatly to the bottom line.

To address this challenge, AMC trained all managers and theater employees to understand how

to deliver great customer service. While this had some positive eect, the cost was high, and the

overall results were inconsistent. Even ater training, some theaters continued to

outperorm others.

Rethinking the problem, AMC embarked on a project to study t. The company looked at the

characteristics o employees in its top theaters, and ound that a certain type o individual was

much more likely to provide top-quality guest service and drive the resulting concessions sales.

Once t characteristics were clearly identied, AMC reduced its ormal training and reocusedits eorts on assessing and selecting the right job candidates. The result was an increase in

concessions sales and a signicant reduction in turnover. Overall prots rose to the highest in

the industry.

Theaters that implemented the t strategy increased their prot per customer by 1.2 percent,

which translated into millions o dollars in net income. Concessions sales and employee


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The Science o Fit 10

engagement scores rose. Turnover rates ell by 11 percent. These results, multiplied across more

than 320 theaters around the world, had a major impact on AMCs bottom line. Overall prots

rose to the highest in the industry. e

Case in Point: AMC Theaters Uses Fit to Drive Proftable Growth (contd)


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Focus on Fit Drives Market Share Growthat Vodaone

People who t are more engaged. They enjoy their work (because they are good at it), and they take onmore responsibility to help their organization change and grow. Kenexas research in 20096 showed that

companies with higher levels o employee engagement outperorm their peers in a variety o nancial

measures. This takes place because people in these companies take on more responsibility and react to

change more openly and assertively.

Case in Point: Vodaone Qatar Leverages Fit to Build Market Share

Qatar is a small, ast-growing country on the Persian Gul that is largely populated by immigrantworkers rom the Philippines, India, Egypt and other Middle Eastern countries. Workers in Qatar

come to the country as contractors, earn high wages and oten work six or seven days a week

to send money home to their amilies. As in other ast-growing countries in the region, mobile

telecommunications is a vital part o Qatars liestyle and economy.

Vodaone Qatars CEO, Graham Maher, knew that in order to rapidly penetrate this market, the

company needed a bold and clear mission. He and his management team studied the market and

realized that quality o lie was a signicant problem in this country. So they dened their mission

as one o improving the lives o all in Qatar through telecommunication services. They set an

internal goal o becoming the most admired employer in Qatar.

Many executives ail to see the value in such high-minded missions. But Maher, who had

previously turned around Vodaphones Australia operation leading it over the past ve years

to become one o Vodaphones most protable businesses knew what he was doing. He

understood that to succeed in Qatar, he had to attract and engage a workorce that could speak

more than ve languages, deliver excellent service, and remain loyal despite the ability to quit at

any time. He also needed employees who were willing and able to help Vodaphone out-innovate

companies that had been in the region longer. In short, he needed a workorce that believed in

the companys mission and could translate it into market share growth.

Working with his internal team, Maher crated a clear talent strategy identiying the precise

skills, qualities and behaviors that would lead to organizational success. The company then

developed a series o assessment and management tools that specied the personal values,

characteristics and behaviors o an ideal Vodaone Qatar employee.

6 Kenexa workorce trends report 2009


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Vodaphones t-ocused talent strategy worked amazingly well. In less than two years, Vodaone

Qatar became the most highly engaged workorce in Vodaone and the most protable new

business in the company. Today, Vodaone holds more than 30 percent market share in Qatar,

and the percentage is rising. The companys net-promoter score (the percentage o customers

who would actively recommend Vodaone to their riends) was more than 81 percent, among the

highest in Vodaone around the world.

This t model also helps the company to out-innovate its competition. By thinking about how

to improve the lives o people in Qatar, the company ound that many workers struggle each

week to nd time to go to Western Union and wire money home. To address this need, Vodaone

partnered with a local bank to launch a service that enables electronic und transers directly

rom the cell phone. This service greatly boosted Vodaone Qatars business and caught the

competition o guard.e

Case in Point: Vodaone Qatar Leverages Fit to Build Market Share (contd)


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Focus on Fit Drives Dramatic Improvement in Salesat Bon-Ton Stores

Think about the problem o sales management in most organizations. Sales leaders are taught to setclear goals or people, coach individuals or success, measure perormance against their goals, and weed

out those who cannot compete. I this process is handled well, the organization becomes execution-

ocused people are aligned and held accountable, high perormers are rewarded, and low perormers

are let go or moved to other positions.7

This sounds reasonable, except or the act that most organizations ace tremendous gaps in sales

management skills. According to our TalentWatch research, over 70 percent o all organizations believe

their rst- and second-line leaders lack the basic managerial skills needed to succeed, and 45 percent

believe the same o their director-level leaders8. Companies know that the supply o great leaders is thin,

so relying on each manager to gure out how to drive high perormance will oten bring uneven results.

When we ocus on t and apply science to the process, management becomes ar easier and employees

and managers succeed. Lets look at another example, Bon-Ton Stores.

Case in Point: The Science o Fit Helps Sell Cosmetics

Bon-Ton Stores makes much o its prot rom the sale o cosmetics a high-margin business that

dierentiates Bon-Ton rom competitors, such as JCPenney and Target (who have smaller cosmetic

businesses). When Bon-Ton looked at its cosmetics sales by store, the company ound year ater

year that some stores ar outperormed others yet management did not understand why. To try

to replicate high-perorming stores success, Bon-Tons leaders implemented a traditional sales-

management approach that included more goal-setting, competitive scorecards and a variety o

training tools to help cosmetics salespeople succeed. Despite these eorts, the vast dierences in

perormance remained.

7 The theory behind this traditional approach to perormance management, developed in the 1950s and promoted by such

companies as GE over the years, is what we call the competitive assessment model. It assumes that an organization, like

any ecosystem, has a ready supply o talented people, and that through the process o setting clear goals, competition and a

culture o accountability, high perormers will advance and low perormers will either improve or leave. It ocuses heavily on

accountability and training and assumes that any rugged individual can rise to the top. It oten leaves out the need to clearly

identiy the characteristics o success and build strong science to screen and assess who the right people are.8 Bersin & Associates TalentWatch Summer 2010. Among 350 senior HR and business leaders, 72 percent o organizations

rate the readiness o rst-line and mid-level managers to lead as weak or well behind what is needed. This trend has

remained consistent over the last three years.


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Bon-Ton worked with Kenexa to study the characteristics o the top 10 percent o cosmetics sales

representatives. Ater careully reviewing the data rom hundreds o stores, Bon-Ton realized that

it had the wrong people in many o these jobs. The traditional thinking had been that good looks

were the most important driver o success in a cosmetics salesperson. But the research indicated

that the typical high perormer rated only average in personal appearance. Other characteristics,

such as high intelligence and analytical abilities, correlated much more strongly with sales success.

Armed with a resh and clear view o what success required, Bon-Ton developed new tools to help

supervisors screen applicants and hire the right people. Managers received scientically designed

pre-hire assessment and interview guides, and training to look or specic experiences in each

candidates background.

The results have been astonishing. In the initial pilot group, sales grew by more than 35 percent

in one year, encouraging the company to implement the new approach nationwide. Now, ater

rolling out the tools and process across the entire company, Bon-Ton estimates an overall 12percent increase in cosmetics sales per employee.

This work has been so successul that cosmetics manuacturers who sell their products in Bon-Ton

stores are rethinking their entire model or identiying and assessing sales representatives in all

their retail outlets.e

Case in Point: The Science o Fit Helps Sell Cosmetics (contd)


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Focus on Fit Drives Growth at Regeneron

As the AMC and Bon-Ton examples show, hiring the right people and putting them into the right jobs

drives individual perormance, which in turn helps employees to eel valuable and ullled. Fullled

employees are engaged and passionate about the companys products and services, resulting in higherproductivity and lower turnover.

But the process also drives growth in recruiting and stang. Today many companies are trying to hire

critical sta to uel their global growth. Regeneron used the science o t to drive tremendous growth in

sta and resulting revenues.

Case in Point: Regeneron Fuels its Growth by Focusing on Fit

Regeneron, a mid-sized, ast-growing pharmaceuticals research rm, recently won a major

contract to build a new line o drug products. This required the company to quickly hire 350

scientists. Because great scientists can be hard to nd and hard to recruit, Regeneron needed a

bold approach.

Regeneron knew its existing recruitment process was ill-suited or the task at hand, so it

partnered with Kenexa. Kenexa conducted a study o overall employee t, and ound through

interviews that Regeneron had a unique and powerul culture. Unlike traditional pharmaceutical

companies that ocus on research, manuacturing, marketing and sales, Regeneron is a company

o scientists passionate about science. The study inormed the development o ve statementsabout Regeneron people that captured the essence o Regenerons employment brand:

1. Science drives our business, and passion drives our science.

2. We are a select team.

3. People here are challenged every day.

4. Thats the way weve always done it is the wrong answer.

5. We reuse to let bureaucracy drive away good ideas.

These ve statements, now called The Regeneron Five, became the companys mantra or

hiring, promotion and development. Regeneron re-engineered its recruiting programs to ocus on

these principles. The company helped its leaders and supervisors understand its culture and the

sort o people who would be a good t or it.


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With the new employment brand clearly dened, Regenerons candidate pipeline grew

dramatically. The percentage o candidates who accepted jobs with Regeneron more than

doubled. The companys culture got stronger every day, and as the company grew, the senior vice

president o human resources cited the ocus on t as one o the most important reasons

or success.

This program also helped the bottom line. The contract, worth approximately $1 billion, was

ullled ahead o schedule, enabling Regeneron to beat its revenue and protability targets. In

the highly competitive market or pharmaceuticals research contracts, Regeneron continues to

increase its market share.e

Case in Point: Regeneron Fuels its Growth by Focusing on Fit (contd)


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How to Apply the Science and Strategy o Fit

Any organization can apply the science and strategy o t. Whether you are the CEO, HR manager, or

business leader, ask yoursel these questions:

1. Do leaders understand the core o our companys (or my business areas) value proposition and what

drives success?

2. Can leaders identiy the roles that contribute most to revenue growth, customer satisaction,

innovation and savings?

3. Do we have an employment brand or outward-acing communications program to nd and attract

people with the background and nature we need?

4. Do my managers have the tools to easily select the right people even i these managers are not

seasoned in their jobs?5. Do we communicate and reinorce our core values through stories about employees who embody

what we want to encourage?

6. Do we have a strong culture? Can all managers describe it, talk about it and help reinorce it?

7. Do we apply the principles o t to all levels o management, rom supervisor to top executives? Do

we understand what makes leaders succeed in our organization?

8. Do we understand how engaged our employees are in each business area, and do we have programs

in place to regularly measure and monitor t and engagement?

9. Do our executive team members understand and believe in the power o having the right people in

the company, and do they themselves understand how to assess the t characteristics o

top perormers?

I you cannot answer yes to these questions, you have an opportunity to dramatically improve your

companys perormance through the science and strategy o t.


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Conclusion

Fit is a simple but proound concept that managers at all levels should understand. Unlike the traditional

perormance management process (which ocuses on goal-setting and appraisal), the science o t

orces the organization to understand success drivers at an individual level. Organizations can identiythese drivers by studying the characteristics o high-perormers and then use this inormation to help

managers better hire, develop, and coach to t.

When applied across an organization, the science o t helps leaders create a strong and enduring

company culture one which attracts the right people and encourages people to nd the best roles

where they can add the most value. Engagement levels go up, and the organization becomes more agile

and customer ocused.

The examples in this research-- AMC, Bon-Ton, Regeneron, and Vodaone each demonstrate how a

ocus on t can improve sales, customer service, business growth, and overall employee satisaction.

We hope this research helps you rethink your management approach and gives you new tools to drive

perormance in your own organization.


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Case in Point: Bon-Ton Stores Use Fit to Boost Cosmetics Sales

One o the most critical business unctions in any organization is sales. Whether the company

sells high-value, complex products, such as telecommunications services, or retail products, such as

cosmetics, the perormance o the sales team can make or break its success. Not only do salespeople

contribute directly to revenue and growth, they orm an important eedback loop regarding what

customers need and want.

Sales leaders know that in every selling environment, there are high perormers and others who

are only average. I companies had more superstars, revenue would go up year ater year. But theskills and attributes that make a salesperson highly successul are oten hard to discern.

Using the strategy and science o t, a company can identiy super-perormers and nd ways to

replicate their success. This is precisely what Bon-Ton Stores did, with Kenexas help, in its retail

cosmetics business.

Bon-Ton, a ull-line department store chain, generates nearly 17 percent o its revenue rom

cosmetics, one o the companys most protable product areas. So naturally, Bon-Ton searches or

ways to increase sales.

Several years ago, Bon-Ton sought to address a high turnover rate among cosmetics salespeople.Through an array o surveys, the company ound a variety o problems in that segment o its

workorce, mostly centered on a lack o experience and diering levels o success. Cosmetics

salespeople are oten young and may not even know whether sales is their ultimate career goal.

Bon-Ton initially ocused on improving accountability. The company ormalized a goal-setting

process, made use o perormance appraisals, and ranked sales perormance among peer

employees. Still, overall sales perormance remained very uneven, and turnover remained high.

The company ocused next on t. Working with Kenexa, Bon-Ton studied the characteristics

o the top-perorming salespeople. Commonly accepted wisdom held that the best cosmetics

salespeople were those who were most attractive. The cosmetics manuacturers that pay a portion

o sales salaries always ocused on appearance in lling cosmetics sales jobs. The theory was that

a good-looking salesperson would attract customers because the customers would assume that

salesperson could help to improve their appearance.

Bon-Ton and Kenexa tested this assumption. A pool o 600 cosmetics salespeople were selected at

random and divided into three groups: top perormers, middle perormers, and low perormers.

Appendix I: Case in Point


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This group drew rom each o Bon-Tons 270 sites, representing urban and rural locations, and

large and small stores.

The team then careully assessed this pool o 600 to identiy the range o characteristics that might

be causing good sales perormance. The team looked at demographics, physical attractiveness,cognitive skills, experience and a wide range o psychological attributes. It also looked at

perormance-appraisal ratings to gauge whether the existing management process was working.

This process is part o implementing what we call the science and strategy o t identiying

the characteristics, skills, attributes and personalities o top perormers.

Bon-Ton learned that the highest-perorming cosmetics salespeople were not the most attractive;

many were only average in looks. Rather, they were the strongest in terms o cognitive ability.

These people were quick thinkers, able to deal with lots o inormation, and excellent analytic

decision-makers.

The discovery deed conventional wisdom, but made perect sense. Selling cosmetics is a complex

business. Salespeople are expected to understand more than 700 products. They must deal with

customers who stand only a ew eet away and rapidly ask questions. They have to build rapport

and demonstrate value quickly. I a salesperson cannot think quickly, answer questions condently

and recommend appropriate products, the prospect simply walks away. Raw intelligence plays a

major role in success.

Bon-Ton now knows precisely what type o person is most likely to succeed in cosmetics sales. The

next step or Kenexa was to help Bon-Ton to build a set o tools, including new-hire assessments

and interview guides, that helped all managers quickly and easily identiy the right people.

Bon-Ton previously had a set o interview assessments, but it had ocused on traditional screening

criteria, such as age, educational background, GPA and sales experience. Armed with its newly

established, proven t characteristics, the company developed a new interview guide a

tool that helps line managers to ask specic questions careully designed to assess a candidates

cognitive ability, initiative, situational judgment and maturity. Rather than ask about grades and

prior experience, managers now ask about extracurricular activities and past leadership roles.

While intuition still comes into play, managers no longer make hiring decisions based primarily

on gut eelings or an applicants attractiveness. They have a dened process or assessing t. AndBon-Tons new tools and ocus resulted in an immediate increase in sales per employee by 12

percent and a dramatic reduction in turnover. Today, the cosmetics department outpaces the rest

o the company in employee engagement and retention.

The ocus on t in cosmetics was so successul that Bon-Ton is now replicating the process or ne

jewelry sales and other specialty products business areas where small increases in perormance

result in tremendous increases in protability.

Case in Point: Bon-Ton Stores Use Fit to Boost Cosmetics Sales (contd)


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Bottom line: In this case, as in almost all high-perorming sales organizations, Bon-Ton discovered

what we call a secret sauce o success. By using the science o ft, the company took the

guesswork out o hiring processes and helped managers to improve their own perormance and

build stronger, more engaged teams.e

Case in Point: Bon-Ton Stores Use Fit to Boost Cosmetics Sales (contd)


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Case in Point: Creating Movie Theaters That Pop How AMC UsedFit to Become Number One in Customer Satisaction

The movie-theater business presents many management challenges. AMC Entertainment, the

second-largest theater company in the U.S., relies on more than 385 general managers to operate

320 theaters with a total o more than 4,500 screens in the U.S., Hong Kong, Canada, France and

the U.K. Each general manager is responsible or a wide variety o business measures that include

total revenue, concessions revenue, protability, guest-satisaction ratings, employee engagement

and turnover. These managers must hire the right sta, work with corporate teams to negotiate

or the best lms, decide how to promote key movies in their region and manage daily theateroperations. Their roles are key to AMCs success.

In the theater industry, most prots come rom concessions. The core business o selling tickets,

running the theaters and paying royalties on the movies is typically break-even, leaving the theaters

in the business o selling popcorn. To make a chain protable and grow, each theater must drive

per-person concessions sales. Many actors contribute to this measure, including such things as

the price and quality o popcorn, promotional materials and layout, cleanliness o the theater, the

length o lines, the type and brand o concessions oered, and the entire guest experience.

AMC always knew that the quality o the guest experience had a direct impact on sales. I thetheater is clean, i employees are smiling and happy, i movies are new, i seats are comortable,

i concessions are resh and appetizing, and i the experience is un and enjoyable, people open

their wallets and indulge in lots o ood and candy. I the theater is dirty, employees are grumpy

or unavailable, and the ood is unappetizing or o low quality, the customers dont buy.

The challenge was to gure out how to continuously improve the guest experience. Could AMC

do this through training? Better management? Process improvements? Where were the levers

or success?

Ater reading research on the relationship between employee engagement and customer

satisaction, AMC embarked on a major study o employee engagement. The company believedthat i it could increase employee engagement, positive guest experiences would ollow. It ound,

as one might expect in a service operation, that employee engagement had a direct relationship to

prot. Theaters with the most highly engaged employees had higher per-capita concessions revenues

and in these theaters, revenues grew more rapidly. Thereore, the ormula worked: Positive guest

experiences translated into increased concessions sales, and the quality o the guest experience

correlated closely to the happiness, satisaction and engagement o the theater employees.

Appendix II: Case in Point


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AMC also ound a link between low engagement and high employee turnover. Many theater

chains have annual employee turnover rates as high as 150 percent (which is not nearly as high

as ast ood and some other retail industries). AMC ound that theaters with low engagement

levels had turnover rates o 84 percent or higher, while theaters with high engagement levels had

turnover rates o 77 percent or less. This dierence translated to millions o dollars in savings on

new-employee training.

But what drove high levels o engagement? Did managers o high-perorming theaters hire

better people? Were these managers better trained? I so, what skills, traits and activities did

they have? How could general managers improve turnover and engagement numbers, and what

specic characteristics were needed or someone to be a good general manager?

AMC decided to develop a major new training program to teach employees how to deliver great

customer service. The company spent millions on this program and ound that it seemed to have

some small, positive eect. But ater studying the ROI , AMCs leaders ound that some theaterscontinued to perorm well while others did not indicating that the training was not necessarily

a big key to success.

About 18 months into the training cycle, Keith Wiedenkeller, the senior vice president o human

resources, woke up one day and realized AMC had missed something. Just as Curly in the movie

City Slickers talked about the one big thing, Wiedenkeller realized that the single most

important key to ensuring a good guest experience was or the employees to simply be riendly.

And it is very dicult to train people to be riendly.

In act, riendliness is an innate personality trait. Friendly people are naturally outgoing, they

smile, and they enjoy being in a service role. Unriendly people do not.

In recognizing this, AMC began to shit its ocus to using t not perormance or management

to drive business success.

Ater AMC realized that having riendly salespeople was a key to success, the company partnered

with Kenexa to build assessments and revamp interview guides to help managers assess the

riendliness o job applicants. In the past, AMC had looked at educational background, grade

point average and a variety o achievement metrics to assess candidates. For example, AMC had

looked at applicants overall GPAs. By studying t, AMC discovered a better predictor o success

in its theaters: candidates GPA and achievement level in their avorite classes. This more ocusedmetric helps to identiy candidates who have the passion and condence to identiy what they

like. That ability tends to make people happy which makes them enjoyable to be around.

AMCs ocus on t has driven customer satisaction to the highest in the industry, and the

company recently acquired another chain to uel its growth.e

Case in Point: Creating Movie Theaters That Pop (contd)


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Case in Point: Biotech Company Regeneron Harnesses theScience o Fit

Regeneron is one o the most successul biotechnology companies in the world. With

approximately $450 million in revenues, the company is so successul in research and development

(R&D) that even competitors contract with Regeneron to help them develop products. Much

o Regenerons market value comes rom its ability to collaborate with other pharmaceutical

manuacturers a process the company calls collaborative R&D.

In 2007, Regeneron signed one o its largest-ever contracts, a $1.2 billion agreement with Sano-Aventis. To implement the contract, the company needed to nearly double its entire sta to add

more than 300 scientists to the payroll.

Hiring Ph.D.-level scientists in biology and pharmaceutical sciences is dicult. Not only are these

people hard to nd, they are oten happy with their current employers. While Regeneron had an

excellent reputation and had been able to recruit successully, the companys existing recruiting

process could not scale up to meet the demands o the Sano-Aventis contract.

In early 2008, the vice president o human resources met with the CEO and discussed the issue.

The company had been successul in hiring technical proessionals, but ound that many were not

staying with the company, and the hiring rate was too low. Leaders realized that in order to meet

growth plans and deliver on the contract, the company had to rethink the recruiting process.

Regeneron at that time did not ully understand the role o t. What type o scientist really t into

the Regeneron culture and business model? Where were these people, and how could the company

nd more o them? And most importantly, what could the organization do to attract them?

Regeneron partnered with Kenexa to harness the power o t. First, Kenexa interviewed executives,

lead managers and scientists to get a strong sense o the values, behaviors and passions o

Regeneron employees. Second, Kenexa took this inormation and developed a simple, compelling

set o messages that described Regeneron people. These messages, the essence o the Regeneronemployment brand, were developed to help the company transorm its recruiting process.

Kenexa ound that this was a company run by scientists with a passion or science. It characterized

Regenerons culture as that o a sage ull o people who want to push the envelope, discover

Appendix III: Case in Point


25/29



new things and continuously innovate. This culture was distilled into ve statements about

people at Regeneron:

1. Science drives our business, and passion drives our science.

2. We are a select team.

3. You will be challenged every day.

4. Thats the way weve always done it is the wrong answer.

5. We wont let bureaucracy drive away good ideas.

These statements became known as the Regeneron Five. They were posted on walls throughout

the company. Stories were published about employees who embodied each o the principles,

which became the core o Regenerons new employment brand.

An employment brand is the image a company projects to job candidates. By careully creating

a new series o recruiting programs centered on the ideas set orth in the Regeneron Five, the

company could change its recruiting process rom a unnel to a tunnel careully nding just the

right candidates who t at Regeneron.

One o the campaigns Regeneron used, or example, was titled Five Reasons You Do Not Want

to Work or Us. Another was Five Things to Know Beore You Say Yes. These campaigns

challenged candidates to think about the Regeneron Five, and to decide or themselves whether

they were innovative, passionate and ocused enough to join the company. The campaign was a

huge success. The recruitment process accelerated so quickly that Regeneron made its recruitmenttargets almost a year earlier than expected.

The company set out to embrace the Regeneron Five internally. Regenerons onboarding

program, perormance management program, leadership development program and uture

succession program are now all built on these key identity statements.

The senior vice president o human resources and CEO have seen a transormation. Recruitment

has been easier, and the quality o new employees has risen dramatically. More job applicants

approach Regeneron, instead o always waiting or the company to approach them. And

Regeneron has attracted some o the most passionate scientists in the industry. This passion

enables Regeneron to pursue innovation, an area where many big pharmaceutical companies

today no longer excel, giving Regeneron a strong competitive advantage.

Without its keen ocus on t, however, Regeneron might have stalled, ailing to become the

thriving company it is today. e

Case in Point: Biotech Company Regeneron Harnesses the Science o Fit (contd


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Case in Point: Vodaone Qatar Leverages Fit to Build Market Share

Qatar is a small, ast-growing country on the Persian Gul that is largely populated by immigrant

workers rom the Philippines, India, Egypt and other Middle Eastern countries. Workers in Qatar

come to the country as contractors, earn high wages and oten work six or seven days a week

to send money home to their amilies. As in other ast-growing countries in the region, mobile

telecommunications is a vital part o Qatars liestyle and economy.

Vodaone Qatars CEO, Graham Maher, understood the importance o mission, culture and t to

drive growth. His management team started its business with a strong ocus on its mission in

this case, improving the lives o all in the country with a long-term strategy o becoming the

most admired employer in Qatar.

Many executives ail to see the value in such high-minded missions. But Maher, who had

previously turned around Vodaphones Australia operation leading it over the past ve years

to become one o Vodaphones most protable businesses knew what he was doing. He

understood that to succeed in Qatar, he had to attract and engage a workorce that could speak

more than ve languages, deliver excellent service, and remain loyal despite the ability to quit at

any time. He also needed employees who were willing and able to help Vodaphone out-innovate

companies that had been in the region longer. In short, he needed a workorce that believed in

the companys mission and could translate it into market share growth.

Working with Kenexa and his internal team, Maher crated a clear talent strategy identiying

the precise skills, qualities and behaviors that would lead to organizational success. The company

then developed a series o assessment and management tools that specied the personal values,

characteristics and behaviors o an ideal Vodaone Qatar employee.

In keeping with its mission, Vodaone Qatar hires only people who understand and demonstrate

emotional maturity and a passion to improve the lives o others. The company identies and

coaches leaders by evaluating their ability to communicate and live by the mission. Top leaders

visit sales oces and call centers weekly to reinorce and monitor the culture. And the companysrecruitment, coaching, compensation and evaluation processes continually remind employees o

the aim to improve lives in Qatar.

We are here beyond making money, said the vice president o human resources. We ask our

people to help us achieve our vision becoming the most admired company in Qatar.

Appendix IV: Case in Point


27/29



Vodaphone Qatars t-ocused talent strategy worked amazingly well. In less than two years,

Vodaone Qatar became the most highly engaged workorce in Vodaone and the most protable

new business in the company. Today, Vodaone holds a market share o more than 30 percent,

and the percentage is rising. The companys net-promoter score (the percentage o customers

who would actively recommend Vodaone to their riends) was more than 81 percent, among the

highest in Vodaone around the world.

This t model also helps the company to out-innovate its competition. By thinking about how to

improve the lives o people in Qatar, the company ound that many workers struggle each week

to nd time to go to Western Union and wire money home. To address this need, Vodaphone

partnered with a local bank to launch a service that enables electronic und transers directly

rom the cell phone. This service greatly boosted Vodaphone Quatars business and caught the

competition o-guard.

Does Vodaone still use traditional practices o rating and ranking? Yes, o course. But eachemployee conversation is built around the concepts o mission, culture and t. As Graham Maher

puts it, By continuously reinorcing our mission in every single way, we can build an organization

o passionate, high-perorming people who uel our growth, deliver or our customers and drive

our team ever aster toward success.e

Case in Point: Vodaone Qatar Leverages Fit to Build Market Share (contd)


28/29



Appendix V: Table of Figures

Figure 1: The Distribution o High Perormers in an Organization 6


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About This Research

Copyright 2011 Bersin & Associates. All rights reserved. WhatWorks

and related names such as Rapid e-Learning: WhatWorks and The

High-Impact Learning Organization are registered trademarks oBersin & Associates. No materials rom this study can be duplicated,

copied, republished, or reused without written permission rom Bersin &

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Bersin Report the Science of Fit

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