March 19, 2025
“Customer Satisfaction” Metrics: A Recent Example
A big insurance company is getting a bit of positive press for its announcement that it would incorporate customer satisfaction metrics into its incentive plan. As I’ve previously noted, it’s not uncommon for a company to include this type of metric in its executive compensation program. Info gathered by The Conference Board from 2024 proxy statements confirms this:
For example, in both the S&P 500 and the Russell 3000, emissions reduction and DEI metrics are both more commonly measured using a strategic scorecard approach, while customer satisfaction and employee health and safety metrics are more commonly included as a standalone metric, and cybersecurity is most commonly an individual performance assessment. These findings reflect executive-specific and company-wide responsibilities.
What is a little different here is that the initiative is responsive to an issue the industry is facing – and the company is committing to public updates on the overall strategic goal. The company has established 5 areas for improvement and says it will publish an annual “Customer Transparency Report” to make its progress toward its commitments clear. When it comes to the details of the compensation metric, the company’s proxy statement says that this metric is a component of the 2025 annual incentive plan. Strategic priorities are weighted at 25% for that plan, and within “strategic priorities,” customer and patient satisfaction is weighted at 15%, with this quantitative measurement:
Customer Net Provider Score (NPS) and progress on customer experience measures related to perception of value, ease of accessing care, and ease of interaction
On a more general note, I haven’t seen as much commentary this year on ESG metrics. Part of that may be due to shifts in the political environment, and part of that may be that these metrics have been normalized and there’s not as much to say. The report that I mentioned above from The Conference Board analyzed nuanced trends based on 2024 proxy statements. It will be interesting to see whether companies move away from and/or change their metrics over time – but we won’t have market-wide data about our current “moment” until after the 2025 (or even 2026) proxy season.
– Liz Dunshee