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Do ‘Happy’ Employees Lead to ‘Happy’ Customers?: Revisiting the Employee-Customer Relationship

Do ‘Happy’ Employees Lead to ‘Happy’ Customers?: Revisiting the Employee-Customer Relationship . July 2008. The Service-Profit Chain. Increased Employee Satisfaction & Commitment. Increased Customer Satisfaction & Loyalty. Growth in Revenues & Profits.

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Do ‘Happy’ Employees Lead to ‘Happy’ Customers?: Revisiting the Employee-Customer Relationship

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  1. Do ‘Happy’ Employees Lead to ‘Happy’ Customers?: Revisiting the Employee-Customer Relationship July 2008

  2. The Service-Profit Chain Increased Employee Satisfaction & Commitment Increased Customer Satisfaction & Loyalty Growth in Revenues & Profits Source: Heskett, J. L., Sasser, W. E., & Schlesinger, L. A. (1997) The Service Profit Chain. New York: Free Press.

  3. Reasons for Customer Defection Other Service (43%) Employee Attitude and/or Behavior (77%) Other Nature of Service Failure Customers Frequently Defect Because of Poor Experiences with Employees Source: 2006 Maritz Poll

  4. Service Quality Employee engagement and service quality delivery are only moderately correlated Employee Engagement (14%)

  5. What Can Employees Tell Us? • Their degree of engagement and commitment to the organization and its success • Performance climate, including leadership, work environment, communication, and relationships with co-workers • Their jobs and their “place” in the organization • What customers like and/or dislike about their experiences with a company, its products and services, its people, and/or its business processes • What facilitates or inhibits creation of a positive customer experience

  6. A Framework of Employee Measurement Leadership & Management Conventional Employee Surveys Performance Climate Business Results Overall Employee Engagement My Job & My Place In This Organization Customer Orientation & Focus Customer Satisfaction & Loyalty

  7. Leadership & Management CONVENTIONAL SURVEY MEASURES • My company genuinely listens to and cares about its employees. • Senior management’s actions are completely consistent with its words. • My supervisor is concerned about my personal well being. • Senior executives in our company have frequent direct interaction with our customers • Senior executives in our company have frequent direct interaction with customer-contact employees • Feedback from front-line managers and employees must pass through several layers of management before it reaches senior executives (-) CUSTOMER-FOCUSED SURVEY MEASURES

  8. Performance Climate CONVENTIONAL SURVEY MEASURES • Our company only hires individuals who are qualified to do the work they are assigned to perform • All employees in our company are given an equal opportunity for advancement • Open and honest dialogue is encouraged here • My company is a fun place to work • Work expectations at my company are realistic and fair • Everyone in my company contributes to a team effort to satisfy customers • Employees in marketing frequently interact with customer-contact employees regarding the levels of quality and service to be delivered to customers • Our salespeople often make promises and commitments to customers that the company cannot deliver (-) CUSTOMER-FOCUSED SURVEY MEASURES

  9. My Job & My Place in the Organization CONVENTIONAL SURVEY MEASURES • I know exactly what is expected of me in my role • My job gives me a strong feeling of personal accomplishment • I have real opportunities to develop the skills I need to do the best job possible • I have real opportunities to learn and develop at my company • I am recognized for my work performance in ways that are important to me • My work and personal life are well balanced • I spend a great deal of time on the job attempting to solve customer problems over which I have little control (-) • I have the authority I need to respond promptly to customer complaints and requests • I understand how my job relates to satisfying our customers CUSTOMER-FOCUSED SURVEY MEASURES

  10. Customer Orientation and Focus ADDITIONAL EXEMPLARY MEASURES • My company always acts in the best interests of its customers. • My company eliminates processes and procedures that interfere with best serving my customers. • Employees in my company are given incentives to provide the best possible service to our customers. • My co-workers consistently think about how to better serve our customers. • Our company has formal programs and processes for improving customer satisfaction • Our company sets specific goals for achieving and improving customer service and satisfaction • Our company effectively uses technology to deliver a consistently positive customer experience • Our company commits the resources required to fulfill the needs and expectations of customers

  11. Three Areas We Typically Evaluate • Employee engagement: Defined as how much satisfaction and loyalty employees feel toward their jobs. • Customer affinity: Defined as how much employees enjoy their interactions with customers. • Customer service perceptions:Defined as how employees evaluate the quality of service provided by their companies.

  12. The Study • 1478 full-time employees • 18 years or older • Work 30+ hours or more per week • Not self employed • Wide variety of business sectors • Conducted on-line • Panel provided sample • February 2008 • Wide range of questions • 65 total questions surveying attitudes toward employer

  13. Key drivers of overall employee engagement do not include customer-focused issues • I have real opportunities to learn and develop at my company. • I am able to use my best talents every day in my job. • My company genuinely listens to and cares about its employees. • I have real opportunities to develop the skills I need to do the best job possible. • My company’s values are completely consistent with my own values. • I am completely satisfied with the way my organization communicates with me. • My company actively encourages creativity and innovative thinking. • At my company, it seems like we’re all on the same team, working for the same goals. • Work expectations at my company are realistic and fair. • I completely trust my employer to look out for my best interests.

  14. Key drivers of customer affinity include a mix of engagement and customer-focused items • I look forward to coming to work every day. • My work gives me a strong feeling of personal accomplishment. • I am able to use my best talents every day in my job. • Our customers would rate the service we deliver as 'excellent'. • I completely understand how my work impacts customers’ experiences. • I completely trust my employer to look out for my best interests. • I am completely satisfied with the way my organization communicates with me. • My company’s values are completely consistent with my own values. • Open and honest dialogue is encouraged here. • My company has the necessary capabilities to fulfill the needs and expectations of our customers.

  15. Perceptions of customer service are driven almost exclusively by customer-focused issues • Policies, systems, and procedures at our company support the delivery of outstanding customer service. • My company’s policies and procedures make it easy to satisfy customers. • My company commits the resources required to fulfill the needs and expectations of our customers. • My company has the necessary capabilities to fulfill the needs and expectations of our customers. • Salespeople at our company rarely make promises and commitments to customers that our company cannot deliver. • My company provides effective training to support excellent customer service. • My company’s commitment to customers is reflected in senior management’s decisions. • My company sets specific goals for achieving and improving customer service and satisfaction. • My company has effective formal programs and processes for improving customer satisfaction. • My company frequently seeks suggestions for improving customer satisfaction from employees who have regular contact with customers. • My workgroup has a clear understanding of our customers’ needs.

  16. What Does This All Mean? • Employee ‘engagement’ has some impact on the customer experience. • Positive cultures attract and retain a better talent pool. • Happy employees enjoy interacting with customers more than unhappy employees. • Employee engagement is necessary, but not sufficient to produce positive customer experiences.

  17. What Does This All Mean? • ‘Happy’ customers produce ‘happy employees’. • When a company has satisfied customers, employees feel less stress and enjoy customer interactions to a greater extent. • Having a personal sense of mission toward customers is an essential link in the employee-customer relationship. • Important to connect to the employee’s personal values • Customer satisfaction is as much a product of a strong system as it is having engaged employees. • Put a good person in a bad system and the system will win every time. • Both customers and employees will be aligned against the company.

  18. Recommendations • Strive to create a customer-focused culture in the workplace. • Examine whether policies are truly customer-serving vs. primarily company-serving. • Provide meaningful recognition and incentive programs to associates at all levels who provide great customer service. • Focus on customer service rather than operational efficiency. • Evaluate the resources that are committed toward providing customer service. • Talk directly to customer-facing associates about the factors that either facilitate or inhibit a positive customer experience. • Empower people to resolve customer complaints or problems without having to escalate the issue to a manager.

  19. Recommendations • Evaluate the effectiveness of training programs relative to customer service. • Is customer service emphasized in employee training? • Are there clear guidelines for providing customer service? • Is training sufficient to give people a thorough knowledge of their jobs? • Emphasize the importance of everyone’s contribution to the customer experience. • Clearly communicate to everyone how critically important his or her job is to creating a positive overall customer experience. • Connect each person’s job to his or her own personal value system. • Recognize all, not just some. • Celebrate customer success stories.

  20. Recommendations • Managers must involve everyone and create a strong team feeling. • All employees should feel he or she has a stake in everyone else’s success. • Consider implementing ‘team’ recognition. • Create activities to foster relationships and team cohesion. • Seek suggestions from employees at all levels of the organization for improving customer • Although it is understandable that salespeople want to sell as much as possible, there is a clear breakdown between what is being promised and what can be reasonably delivered. • Evaluate the reasons for this discrepancy • Staffing issues? • Process issues?

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