In every company, there are workgroups that outperform the others, sometimes enormously. These groups are more productive, profitable, customer-focused, safer, and more likely to withstand the temptation to go elsewhere. Gallup spent years researching how to replicate their success -- and found that employee engagement is the key to high performance.

In every company, there are customers who outspend the others, sometimes enormously. They visit more often, resist competitive overtures, promote your brand to others, and forgive the occasional service hiccup. Gallup spent years researching how to replicate those customer relationships -- and found that customer engagement is the key to high profitability.

But then the researchers uncovered something puzzling. The data showed that when workgroups with engaged employees served engaged customers, the end result was something more than the sum of its parts. The equation of "engaged employees + engaged customers" produced results far exceeding what the researchers expected. So they dug deeper.

Using meta-analysis to analyze 1,976 business units in 10 different companies, they found that workgroups that score above the median on employee engagement and below the median on customer engagement are 1.7 times more financially effective than units that score below the median on both measures. Results were similar for workgroups that achieved the opposite results: above the median on customer engagement, below the median on employee engagement. But workgroups that scored above the median on both customer and employee engagement were, on average, 3.4 times more financially effective than the units ranking in the bottom half on both measures. They called the management approach developed to measure and manage the human systems in business "HumanSigma." (See graphic "The Impact of HumanSigma.")

It took a few more years to figure out how and why HumanSigma works and how to integrate the science into businesses. In their book Human Sigma: Managing the Employee-Customer Encounter, Gallup researchers John H. Fleming, Ph.D. and Jim Asplund explain HumanSigma and how companies can use it to get the most from their human systems.

In part one of this interview, the authors provide explicit insights for GMJ readers: what companies do to undermine HumanSigma; why people, not products, are the fulcrum of profitability; and why it's tempting to replace workers with machines -- and why you really, really shouldn't.

GMJ: How much of your thinking on HumanSigma is owed to Six Sigma?

Dr. Fleming: My answer to that is "some." Six Sigma offers some good conceptual ideas that help an organization improve itself by improving its processes. But remember that Six Sigma was developed in a manufacturing context, and the role people played in its equation was relatively small.

Once businesses had wrung all the improvements they could from improving their processes, they tried to apply Six Sigma to their human systems. And they failed, because people are hard to "fix." HumanSigma was developed as a response to the lack of effectiveness of Six Sigma methodology to increase productivity from people.

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Article from The Gallup Management Journal