Tag Archives: Chief Executive Officer

Linking Employee Satisfaction to Customer Loyalty: Happy Employees Can Help Drive Profitability

On a recent Southwest flight to Las Vegas (yes, it was a business trip), I removed Spirit Magazine from the seatback pocket and started flipping.  One of the first articles, by the Chairman and CEO of Southwest, discussed the company’s focus on customer service.  The central point of the article was that service excellence is a “way of life” at Southwest and it starts with the employees.  Now, if I didn’t know any better, the article could be yet another business leader talking about the importance of customer service, while doing little to back it up.

However, as anyone who has flown Southwest knows, the company definitely “walks the walk.”  It was only about 48 hours later that we experienced clear evidence of this.  While waiting by the gate for our return flight to board, my colleague lamented how she wasn’t feeling well and would love some Ginger Ale.  Unfortunately, after visiting several stores in the concourse, no Ginger Ale was located. When we boarded the plane, the flight attended, having overheard our conversation, handed her a can of Ginger Ale. If that doesn’t demonstrate the Southwest service culture, I don’t know what does.

Achieving service excellence in any company requires participation from every employee.  A well-known Harvard Business Review article entitled “Putting the Service Profit Chain to Work” described the relationship (or “links in the chain”) between employee loyalty and customer loyalty. A simplified version of what the researchers found is – employee satisfaction rises when you equip employees with the skills and power to serve customers. Employee satisfaction in turn raises employee productivity, and higher productivity means greater service value for customers. This increases customer satisfaction and loyalty, which stimulates profitability.

It stands to reason that a happy employee is more likely to go the extra mile to service a customer, as evidenced on my Southwest Airlines flight. If your employees feel appreciated and empowered, they will probably be more pleasant to deal with and show a greater willingness to ensure every customer interaction is handled in accordance with the high standards you expect.  It has also been well documented that dissatisfied employees are less productive and contribute to higher employee turnover in a company (check out a recent Twitter post on creating “happy worker bees”).

Fast-forward to today and there are a number of companies that live and breathe these concepts, including Southwest Airlines. What can leaders and managers of smaller organizations do to promote employee loyalty?

  • Show a willingness and ability to listen to employees. Engage with them often, ask for feedback and suggestions on how to improve both the work environment and the customer experience. Make it safe for employees to talk about workplace dissatisfiers.
  • Set clear expectations and hold employees accountable to a high standard of service. Reinforce to all employees how they contribute to satisfying customers, and thus generating profits.
  • Recognize success, both on a company and individual employee level.  When an employee does something extraordinary, use it as an opportunity to celebrate achievement.
  • Understand factors that contribute to employee turnover.  Uncover the root cause of employee frustrations so they can be quickly addressed.
  • Provide ongoing coaching, training and education so employees have the tools to make decisions that are beneficial for the company and each individual customer.
  • Use metrics to measure and track employee satisfaction and retention, including employee surveys and exit interviews.
  • Finally, communicate effectively and keep your employees ‘in the loop’ when you implement any changes that stem from their feedback.

The linkage between employee loyalty and financial performance is proven and strong. Investing in employees provides companies with another opportunity to gain competitive advantage.

Evan Klein, Guest Blogger, Satrix Solutions Founder & President   

Evan Klein is the founder and President of Satrix Solutions.  For nearly 20 years, he has been responsible for maximizing customer satisfaction, retention and profitability in high touch point, customer-centric organizations.  As an enthusiastic champion for voice-of-customer driven change, Evan has designed and executed customer feedback programs for dozens of business-to-business firms.  He has experience with all phases in the life cycle of these programs, including design, construction, execution, analysis and, most important, ensuring they are driving positive change.

About Satrix Solutions – Satrix Solutions was founded with a singular goal – help businesses maximize potential and opportunity by engaging in active dialogue with their customers. Companies rely on our formal customer feedback programs to gather valuable insights from existing, former and potential customers. The analysis and recommendations we deliver serve as a blueprint for driving operational improvements to enhance the customer experience. By leveraging our proven approach to capturing and responding to the needs of the market, our clients are able to improve customer retention, maximize share-of-wallet and increase sale close rates. Satrix Solutions serves small to mid-size businesses in a variety of industries, each focused on realizing the financial benefits of creating a differentiated service experience. To learn more visit www.SatrixSolutions.com.

Ranking Top Performing Managers Means What?

Our company was presenting a program about improving the performance level of what we call “B” managers to more closely mirror the behavior of Top performing “A” managers to 7 different CEOs representing companies with multi-unit locations ranging from less than 10 to over 100.  What resulted was a lively discussion as to how you evaluate who your “A”, “B”, and “C” managers are.

What we heard varied from, “You know when you see them,” to “We measure them on a lot of different factors.” We discussed that good managers follow the systems in place, while the managers doing their own thing were not as successful.  We also heard that you may have an “A” manager in a “C” location.  A story was told about a location that was about to go out of business until they brought in a seasoned “A” manager. It became one of their highest profit stores. Unfortunately we did not reach a conclusion on how to best grade managers.

 This discussion made me think that maybe companies are struggling with management performance because they refuse to set simple and objective measurement criteria.  Jack Welch at GE was famous for setting up a 10-80-10 system where the bottom 10% got cut every year and top 10% would get special attention.  Nowhere in this system were there excuses or rationalizations about the manager.  If they performed they stayed, if they didn’t they were gone.  Very simple, very objective and, some would say, very harsh.   The question is, did it work?  Many people would say that it worked well.

So what measurement(s) should a multi-unit location company use to determine the performance level of a manager?  Each location has a multitude of variables to consider from demographics, footprint, facility condition, and competition, just to name a few.   Many believe that due to these variables there is no valid objective measurement.   Are these just excuses or rationalizations to not grade performance on an individual level?

Next, do managers who have a single simple objective measurement do better than managers who have a very complex system that allows for numerous variables?  Studies have shown that simple ,easy-to-understand measurement systems work the best as long as they are fair.  Can you select a single measurement system that is fair to everyone?  Jack Welch seemed to believe so and his businesses were in many different industries.  For a multi-unit operator, all your locations are basically the same and therefore, it seems that creating a fair measurement system would be inherently easier.

If you believe that this makes sense, there are many different measurements from return on sales, EBITDARreturn on invested capital, or 3-5 key metrics.   At Red Book Solutions we found that a  focused scorecard which measures 3-5 key metrics allows us to rate our employees and management team as “A”, “B”, and “C” performers. We then provide the appropriate resources to close the performance gap between the “B” and “A” players—thus increasing our field of top performers.

Once again the key is to make it simple, objective and to the greatest extent possible, make it fair.   You might find it easier to evaluate your managers and, just as importantly, your managers can easily evaluate themselves;  both for the sake of heightening your overall company’s performance around your core standards and initiatives.

Greg Thiesen, CEO, Red Book Solutions

Welcome to the Better Managers Blog

Welcome to the Better Managers Blog brought to you by Red Book Solutions.  By being part of our community, you will be given new avenues on how to increase manager’s performance.  Our philosophy contains three core beliefs:

  1. Managers  directly affect  results
  2. When Managers follow company initiatives and standards results improve
  3. Managers’ behaviors can be changed

What does this mean to you?  You can rest assured that improving manager performance is simpler than one would think.  Even more enticing is the fact that companies with multi-unit locations benefit the most from the Red Book Solutions’ philosophy.

Thanks to the internet and the rapid changes in technology, we have watched companies put all of their focus on getting as much information as possible to their managers.  It made perfect sense, information is knowledge and knowledge is power.  However, what were the substantiated results?  Hard to tell.

What we do know is everyone became overwhelmed with large quantities of data and reports.  More over, they are generally confused about what to do with it all.  Maximum results are derived from how the information is evaluated and what actions are taken as a result of the evaluation, not solely from the information itself.   As companies start to warm up to this fact, they appear to take one of two approaches:

  • The “Central” approach assumes that the people in the field are not capable of evaluating the information and definitely cannot create sufficient action plans to solve the problem, so they will do it for them.
  • The “Better Manager” approach gives managers in the field the top customized performance tools to help them evaluate information and create their own action plans.  These tools then make sure their growth is constantly and consistently fueled by providing meaningful feedback and guided practice.

Frankly, we strongly side with the “Better Manager” approach.

We believe that companies need to reinforce basic business practices.  When you look back through history, tradesmen upheld their trade through the exchange between the Master Craftsman and the Apprentice.   What the Master Craftsman did was make sure that the Apprentice learned the trade.  The Apprentice didn’t learn the trade by just being part of a few hours or days of training, they had to practice their trade for many years under the guided supervision of the Master Craftsman.

Fast forward to the industrial revolution where a new model came about to keep up with the explosive growth of the times.  The Master Craftsmen evolved into the Manager where production reigned.  The Apprentice position broke down into various roles split between various people.   Today, many businesses’ structures have led to the creation of franchises.  The management model modified further with the introduction of area supervisors who are now responsible for dozens upon dozens of outlying managers.   Inevitably, this new era of geographic expansion has left field managers isolated.

What can make this model work is when the company provides the manager with tools and systems that do the following:

  1. Cause the manager to live the standards established by the company
  2. Focus the manager on evaluating critical information and creating action plans to resolve issues
  3. Provide channels to give meaningful feedback for overall performance evaluation

Many companies lean on expensive consulting firms to tell them how to increase performance.  What they do not provide are the tools and systems to make that advice come to life, much less sustain it.  Generally none of their services are directed at improving the performance of managers in the field.  Your Better Manager Blog, along with Red Book Solutions, is here to be a part of changing that.

Greg Thiesen, Chief Executive Officer, Red Book Solutions

At Red Book Solutions, we make good managers better. Every business has certain standards they know must be met—every day, every where—in order to achieve their Vision and Mission.  The Better Managers Group gets your people to live the standards you believe in.

Stay tuned each week for more valuable insights from our Better Managers Blog.

Join our Better Managers group on LinkedIn.

Learn more about our philosophy, be reviewing our white paper “The Dramatic Effect on Profitability by Changing the Performance of Good Managers to Top Performers”


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