Employee & Customer Satisfaction
Is there a Relationship?
This is a major topic of interest to me and something that was kickstarted by an ex company Director I worked for who first introduced The Sears Model to us at least 10 years ago. The Sears Model is otherwise known as the Employee-Customer- Profit Chain Model which details a major culture shift in the Sears Roebuck company taking the business from massive financial losses to multi-billion dollar successes. This change in company culture was led by then CEO Arthur Martinez and a group of his top executives over the course of a three year period. The premise of this change was to examine the relationship between Employee Satisfaction and the Profit Chain. The crux is that they clearly determined that happy employees make for happy customers. If you get a chance to read up on The Sears Model you’ll find it quite fascinating and well worth the time.
Of course, many of you will have seen other business owners advocating the same thing, Richard Branson of Virgin Group, famously tweeted that “If you look after your staff well, they will look after your customers. Simple.”
I was reminded of this last weekend, when during a huge clear out of my office, I came across a white paper entitled ‘Employee Satisfaction & Customer Satisfaction: Is there a Relationship?’ by Caterina C. Bulgarella, 2005 (Guide Star Research) I started to reminisce about what got me into the field of ‘People Transformation’ in a business and why it’s still so important to me.
This white paper reminded me that The Sears Model had reported that a 5 point increase in employee satisfaction corresponded with a 1.3 rise in customer satisfaction or 0.5 increase in revenue. I guess that means that as much as your can lift employee spirits as measured in their Employee Satisfaction Survey there will be at least a 10% increase in profits which could be quite substantial. According to the model, employee satisfaction and therefore attitudes towards the business and their loyalty to the business had a sizable impact on the customer’s perception of product quality and service. This would hint at the fact that happy, committed employees are in a better place to authentically sell your products, they are motivated and therefore engaged with the entire profit chain. At the very least, happy employees ooze energy and enthusiasm for their company and this comes across when serving clientele.
In the conclusions section of the paper, Bulgarella asks the question: “What should organizations do to ensure high job satisfaction among their employees?” After conducting research on Fortune 100 companies she states the following strategic steps:
1. Identify root causes of employee dissatisfaction;
2. Conduct benchmarking to determine other company practices;
3. Introduce Employee Satisfaction Grading System and monitor regularly;
4. View Employees as the primary source of competitive advantage;
5. Make a conscious effort to show concern for employee wellbeing;
6. Develop meaningful employee engagement through good communication channels;
7. Introduce managerial accountability for people management.
Number 4 was always of super importance to me, I spent a lot of time studying the RBV – Resource Based View of the Firm with an emphasis on people as resources. Jay Barney's 1991 article "Firm Resources and Sustained Competitive Advantage" is widely cited as a pivotal work in the emergence of the resource-based view. Barney’s RBV criterion states that ‘resources’ should be valuable, rare, imperfectly imitable and non-substitutable. What better way than to build up a team of highly trained, highly motivated individuals to act as brand ambassadors for your business? The term Brand Ambassador, is fairly new, and usually associated with Social Media, certainly not something we had heard of 10 years ago when discussing The Sears Model for the first time. According to Wikipedia a brand ambassador “is a person who is employed by an organization or company to represent a brand in a positive light, and by doing so, help to increase brand awareness and sales. The brand ambassador is meant to embody the corporate identity in appearance, demeanor, values and ethics.” Surely this is in essence, what we expect from our employees? So what is the difference? Brand Ambassadors have a specific motivation to do what they do – you have to know what motivates your employees in the same way.
Therefore, for me, there is no question that there is a clear link between employee motivation & customer satisfaction. I don’t think this subject will ever cease to fascinate me and I’ll always look at ways to help a business organization grow with the help of its employees.
If you take some time to read some of the articles mentioned above I’d love to hear from you and have a bit of a discussion around employee motivation vs. customer satisfaction.