Retaining the Internal Customer: The Science of Employee Engagement


While many executives agree that keeping the customer happy is the key to increased profitability, few pinpoint their employees as their most important customer. The customer base most focused on is typically the revenue generating one. However, considering cause and effect, the internal customer (the employee) should be on at least equal footing with the external customer. While “traditional” customers write the checks, employees provide the horsepower that cause these checks to be written. They are closely linked.

For most companies focused on recovery in a trepid market, employee retention is not top-of-mind. Why? Many companies currently have less employee turnover than they have seen in a decade. But as the economy improves, employees start weighing their options again, even amid a tight labor market. Job seekers, including those still employed, reenter the marketplace with shortened tenures and high hopes, searching for increased benefits, flexibility and higher compensation. Hiring managers attuned to the current job market will still closely consider candidates they might not have previously considered.  Job hoppers (those with gaps in their employment history) and individuals who have taken reduced skill positions will still be viable new hires. High performing, underpaid employees will be in high demand.

The Impact of Employee Turnover. The longer people work together, the more familiar and comfortable things become. However, the rules change dramatically every time someone leaves or someone new is introduced to the team. It is likely that morale will decline as people have to take on extra workload. Turnover impacts the bottom line. It also decreases employee productivity and customer satisfaction. If it goes on long enough, rest assured, the external customers are going to notice quality, service, and customer satisfaction decline.

What companies do now for employees while times are tough will have a direct impact on what the employees will do when the economy strengthens. In a survey conducted by in February 2009, 80% of the employers believed their employees would not begin a job search; at the same time, 60% of the employees said they planned to intensify their job search. The top employees that you cannot afford to lose can find jobs “now” and even the good / average performers will find jobs at least when the economy picks up. Who is left? Ask a recruiter! Recruiters find that replacing employees is not as easy as some might think it would be when unemployment levels are at 9.5%. Companies that are actively recruiting are reporting receiving as many as 1500 or more resumes in response to an ad on the national job boards. Hours of screening is resulting in the same question, “Where are all the good candidates?” For some companies, filling a position is not an easy task now nor will it be when the economy improves. The best way to reduce turnover is to increase retention efforts.

Recruiters find that replacing employees is not as easy as some might think it would be

It Begins and Ends with Retention. In today’s marketplace, many companies are quick to say that employee retention is not an issue.  Some will even go as far as to say, “Employees are lucky to have a job right now.” These companies may quickly learn the value of a loyal, trained employee.

How can a company retain their current workforce? Factor in the company culture and investigate what will work. This can be accomplished through employee opinion surveys, performance reviews, exit interviews, and even casual conversations. Often the solutions are simple and not too expensive. Develop an action plan based on employee input and over communicate the plans as well as the reasoning behind them. Be creative in the actions and make decisions with the employee demographic in mind. Some of the best retention plans simply include asking employees, involving them, communicating, taking action, and following up.

Most property management companies are focused on retention; it is an age old problem in the service industry. Employees who feel valued and empowered are much more productive than those who do not. We recently spoke to a few of our Benchmark participants regarding this topic, and based on their comments, they are listening to their employees and responding with programs that promote loyalty and increased productivity. Noted below is some feedback our property management colleagues have shared:

  • It Starts at The Top. How would you feel if your boss gave up their raise so that you could receive yours? One industry expert we spoke with shared that her company did just that. A tough economy resulted in the top executive level team giving up increases so that those working the front-line could receive one. This is an incredibly powerful message!
  • Health Matters. Another company launched a full blown Wellness Program for employees and their families. This initiative offers important health screening and tests (cholesterol, stress, blood pressure, flu shots, etc.) all free of charge.
  • Work Life Balance / Paid Sabbatical. When you hear the word “sabbatical”, you probably think of university professors who earn a year off to conduct research or teach overseas. Sabbaticals are definitely most prevalent in education, but the concept is beginning to take hold in business. In fact, a few property management companies currently offer a sabbatical program. Good idea? A recent study showed that workers under age 35 typically rate work balance and flexibility as more important than their relationships with their bosses. Interesting! Did you know that McDonald’s, with 400,000 employees in 119 countries, has had a sabbatical program for more than 40 years. At McDonald’s, after each 10-year milestone, any good standing employee can take a sabbatical and lengthen the eight-week leave by adding on up to four weeks of vacation. Besides the obvious advantages for preventing burnout and aiding in retention and work/life balance, a sabbatical can serve a training purpose. A sabbatical program enables employees who are not on sabbatical to expand on their abilities and experience new jobs by simply filling in for an absent team member. This approach offers an employee a clearer understanding of a job and of his or her own aptitude for it.  The benefits gained by “filling in” for a fellow vacationing colleague are amazing.
  • Growth Potential. Studies of U.S. work attitudes before the mid-1970s suggest that work was regarded as a way to make a living, not a primary place for personal fulfillment, growth, or learning. In contrast, 70 percent of U.S. workers today regard work not only as a way to make a living but also as their personal identity. A lack of opportunities to learn and grow often leads an employee to move on to other employment. Over and over again, the property management professionals we interviewed mentioned the importance of promoting from within their organization. For some organizations, it is stated in their “core values”. In fact, one industry professional commented that it was “very rare” to hire a management level position from the outside. Starting with a newly hired leasing professional, a career map is offered to those who desire to move up the ladder. Once promoted, programs are offered to support them in their new roles. This is very encouraging to those wishing to “climb the ladder” and invest their time and future in a company.
  • Internal Job Opportunities. The motivation of knowing that tomorrow will bring new opportunities to employees motivates them to strive to be the best they can. All of the companies we spoke with cited ongoing training as a key component of their retention program. However, sometimes there are internal and external forces working against a person who desires to be promoted or transferred within a company. The ability to “raise your hand” for a position or location change is often left to those with an outwardly assertive personality and good connections. In an effort to create a more level playing field one property management company shared how they created a web based job search program for those employees wanting to transfer or be promoted within the company. This offers an employee the opportunity to enter their name into a company database for a current position in any location or even for a position that is not yet available.

Additional Employee Retention Ideas include:

  • Improve company communications (good and bad news) through company-wide conference calls led by top level executives
  • Continue to keep compensation competitive, even during these times of cutback
  • Frequently express gratitude for stellar performance through more formal and ongoing recognition programs
  • Continue to develop and train employees (even in difficult financial times)
  • Reduce stress by including some “fun” in the workplace
  • Share how employees fit into the goals of the company
  • Alternative benefits (i.e. wellness programs, job share, flex time)
  • Skills development (i.e. job enrichment)

Companies that understand what their employees want and need in the workplace and make a strategic decision to proactively fulfill those needs will become the dominant players in their respective markets.  

If the topic of employee retention has not been on the top of your list, we hope this article will inspire you. Many companies (inside and outside of the property management industry) have been proactive, placing employee retention on the top of the list, some even before the recession hit. Two companies not only made retention a priority but also created programs that are truly radical and over the top!

  • My Maid Service, an Ohio-based cleaning company, has found one of best ways to retain employees is to promise to train them for other careers. Yes, you read it correctly! Anyone who stays with the company for at least two years will receive free training in the career of their choice. My Maid Service reduced its turnover rate from 300 percent in 2007 to zero in 2009. Now, that is an extreme example that is working.
  • HCL tried to understand what really makes a difference to the Gen Y employee and launched several initiatives and programs that are aimed at providing a unique work environment – a work culture in which employees take pride. A leading global IT services company with over $2 billion in revenues, HCL decided in 2005 to put their “Employee First, Customer Second” philosophy into place. They realized that in a service industry the value gets created not in the back office but in the face to face interactions between customers and employees. It is both radical and familiar at the same time. This “Employee First” philosophy is featured as “The World’s Most Modern Management Idea” by Fortune Magazine. Interestingly enough, HCL was one of a select few to grow during the recession.

In the service industry the employee is the face of your business. From the external customer standpoint, they are going to be most comfortable dealing with familiar faces that know exactly what, when, where and how they like to receive their service. Given that most of us are creatures of habit and routine, every time that routine is broken, the customer relationship is at risk.

Retaining employees gives a business a competitive advantage. As you improve employee satisfaction and a lifetime of loyalty, you are improving everything about your customer service.