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"The Customer Comes Second, Behind Our Employees" The Extraction Systems Inc. Story It Makes Plain Good Business Sense to Have Happy, Motivated People The Perry, Pyron, & McCown Story The Owner Really Trusts His People The Label Technology Story

The Business Research Lab surveyed the employees of Extraction Systems in December 2000. Compared with our norms, overall satisfaction was marginally above average. Although ratings in many specific areas were above average, there were also several below average areas including satisfaction with the benefits package; willingness to recommend the company to a friend seeking employment and corporate communications. In our report, we wrote: "Improvements in these areas promise to substantially improve overall satisfaction in the future. We should note that while improvement in these areas would bode well for improving employee satisfaction, Extraction Systems' ratings were above the average in most areas."

When the employees were re-surveyed in December 2001, overall satisfaction had increased by a remarkable thirteen percentage points. The company showed significant improvements in all categories and its results are now in the top 15% of companies surveyed. More importantly, the areas that were noted as needing improvement in December 2000 improved as well. Satisfaction with the overall benefits package increased 17%. Employees willingness to recommend Extraction Systems to a friend improved 20%, satisfaction with corporate communication frequency increased 17%, and satisfaction with its informativeness increased 24%.

We asked Devon Kinkead- Chief Executive Officer of Extraction Systems, Patricia Deziel- Director of Finance and Administrator at Extraction Systems, and Van Latham, Ph.D.-PathPoint Consulting to explain the company's attitude toward employee satisfaction.

Extraction: Clearly, satisfied and happy employees translate into satisfied customers and shareholders. Based on this fundamental management principle, we have redirected our focus on ensuring that the satisfaction of our employees comes before the customer, embracing the mantra: 'The customer comes second,' behind our employees. Logically, it is impossible to satisfy customers with unsatisfied employees. Besides, who wants to create, or work 40-60 hours/week in an untenable environment?

The Lab: Satisfaction with corporate communications improved significantly in 2001. Most employees - significantly more than in other companies - say they understand corporate strategy, feel corporate communications are frequent enough, and believe corporate communications keep them informed. What did Extraction do to improve communication among its employees?

Extraction: Extraction has always been an open information company… meaning that all information, except employee files, are available to anyone, at any time. We probably accelerated that openness in 2001, which may have helped our corporate communication scores. However, I think the reason that we made significant overall improvements in employee satisfaction (ESAT) in 2001 was because we measured satisfaction in 2000, presented the results to everyone at the beginning of 2001, identified the areas that we would fix, fixed them, and therein created credibility in the feedback process with our people.

The Lab: In recent years, companies have focused much of their compensation efforts around employee benefits as a way to attract, hire, and retain high quality employees. Based on your most recent satisfaction survey, you clearly have made a concerted effort to improve your benefits package. Satisfaction with the overall package increased significantly in 2001. How did Extraction Systems attack this issue?

Extraction: We benchmarked our benefits package with other companies to provide us a framework to improve upon. Based on this study, we then set out to add benefits not previously offered as part of our existing benefits program and improve those parts of the package that we felt were below the average of the firms we benchmarked. It was important that any changes made to the benefits plan must be driven by employee satisfaction and what is competitive. With this in mind, the Human Resource and Finance departments developed a new benefits philosophy and plan called the Plan to Live Well program which starts with company paid personal financial planning and ends with a benefit suite that enables our people to take action on their personal financial plans in the most tax efficient manner.

The Lab: Many executives like to quantify improvements in employee satisfaction levels in terms of a reduction in employee turnover, increased productivity, or greater company profitability. What is Extraction Systems' "yardstick" for measuring company performance against employee satisfaction levels?

Extraction: Accurate measurement of the impact of employee satisfaction levels on company performance probably "defies analysis." Perhaps in the future, once we collect a more significant data set, we will be able to correlate ESAT improvement to Extraction's organizational performance. But, the statistics aren't terribly important because deductively, one cannot reason that one can drive up customer satisfaction levels with unsatisfied employees. Moreover, given the financial value of customer loyalty in these days of intense competition, it is difficult to argue that one can, in the long term, grow profits without maintaining a very high level of customer satisfaction.

There is little doubt about the pervasive role happy employees play at Extraction. It helps drives the company's strategic vision and direction. It is so critical to the company that action plans devoted entirely to employee satisfaction have become an integral part of the company's yearly business plan. This unwavering commitment explains why the company is in the top 15% of all companies surveyed. According to Kinkead, "No longer can the measurement of employee satisfaction be merely an HR function. ESAT improvement is, at the most fundamental level, an executive management credibility issue. If senior management isn't trying to improve ESAT, then they probably aren't listening to their people either, and that is a very dangerous path!"

If you are looking for a company that is genuinely concerned about the welfare of its employees or interested in getting more information on Extraction Systems' products and services, please visit their website at www.extraction.com/.

PathPoint Consulting is a human resources consulting firm specializing in the custom design of leadership and organizational development products, interventions, and solutions. For more information on PathPoint Consulting's products and services, please visit their website at www.pathpointconsulting.com.

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