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Source: In the following article I have jotted down my thoughts based on my understanding of the article - Putting the Service-Profit Chain. I OWN the article written below.
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I read an article called ‘Putting the Service-Profit Chain to Work’ by James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., and Leonard A. Schlesinger. This article talks about how employee loyalty can drive company’s growth and profitability.
A month ago I had given a similar feedback to the manager of Hotel Kodai International. I was aware of the fact that if a company keeps its employees happy then they are bound to get satisfied customers; however, I was not aware that this theory was called as Service-Profit chain.
How does the service-profit chain work?
In this article, the authors have mentioned that if a company works on its internal service quality (listening to employees, providing an excellent work-environment, training, etc) then it would lead to 100% employee satisfaction. Employee satisfaction would in turn fuel employee loyalty which would raise their productivity. Higher productivity would bring in greater value to the external service that is being provided by the company. Excellent service boosts satisfaction and loyalty amongst clients. High loyalty drives growth and profitability.
A company is a link between its employees and clients. Employees are the ones who are responsible for driving the growth. As discussed above, growth and profitability will come only if the client considers the service or product to be a value for money. It is extremely essential to keep the employees satisfied and engaged. Employees should feel “proud” to be a part of a particular organization not because of the pay package they are getting but because of the values and environment given to them by the company.
Employers can introduce some of the following techniques in order to keep their employees happy:
1) Job rotation – this can be on a project basis where employees would get exposure to other departments within the organization. Examples:
· Delivery team associates could work for a shorter duration with CRM – this will give them exposure to client feedback and will be able to use it effectively in their core work.
· Client servicing associates can work with the marketing team – this will give them an exposure to the market needs and accordingly work harder in converting the client and meeting their needs. They will also be able to understand pressures faced by marketing team.
· Marketing team associates can work with client servicing.
· HR associate can work with CRM – this will help the person in understanding client needs and accordingly keep those in mind while looking for the required candidate(s).
2) Conduct employee satisfaction surveys regularly – HR can select the most critical factors affecting satisfaction and accordingly take the desired steps.
3) Having one-on-ones with low performers – we get to hear about top performers becoming low performers. These people either quit or get fired. It is extremely essential to know why a person is performing low on quality and productivity. A little bit of concern can do wonders.
4) If an employee’s quality scores are dipping – then we need to understand why this is happening. If it is a case of skill issue then you either ask him to improve or leave; if other factors then take necessary steps to help him improve his quality.
5) Recognition - start mentioning the names (along with photos) of employees who have high productivity scores – either on company newsletters or websites. In case of service industry, the risk is that clients might ask for the same person to work on their files but the advantage would be that others in the company would strive to work hard to earn this recognition. If you implement this it would have more value than any other gift vouchers.
So the bottom line is that if companies keep their employees happy, they can safely expect higher growth and profitability.
Tuesday, January 20, 2009
Perception and Priorities
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Source: The following is an e-mail forward and I am not the ORIGINAL writer of this post.
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A man sat at a metro station in Washington DC and started to play the violin; it was a cold January morning. He played six Bach pieces for about 45 minutes. During that time, since it was rush hour, it was calculated that thousand of people went through the station, most of them on their way to work.
Three minutes went by and a middle aged man noticed there was musician playing. He slowed his pace, stopped for a few seconds and then hurried up to meet his schedule.A minute later, the violinist received his first dollar tip: a woman threw the money in the till and without stopping continued to walk.
A few minutes later, someone leaned against the wall to listen to him, but the man looked at his watch and started to walk again. Clearly he was late for work. The one who paid the most attention was a 3 year old boy. His mother tagged him along, hurried but the kid stopped to look at the violinist. Finally the mother pushed hard and the child continued to walk turning his head all the time. This action was repeated by several other children. All the parents, without exception, forced them to move on.In the 45 minutes the musician played, only 6 people stopped and stayed for a while. About 20 gave him money but continued to walk their normal pace. He collected $32.
When he finished playing and silence took over, no one noticed it. No one applauded, nor was there any recognition. No one knew this but the violinist was Joshua Bell, one of the best musicians in the world. He played one of the most intricate pieces ever written ; with a violin worth 3.5 million dollars.
Two days before his playing in the subway, Joshua Bell sold out at a theatre in Boston and the average ticket was $100.This is a real story. Joshua Bell playing incognito in the metro station was organized by the Washington Post as part of a social experiment about perception, taste and priorities of people.
The outlines were: in a commonplace environment at an inappropriate hour: Do we perceive beauty? Do we stop to appreciate it? Do we recognize the talent in an unexpected context?One of the possible inferences from this experience could be:If we do not have a moment to stop and listen to one of the best musicians in the world playing the best music ever written, how many other things are we missing?
Source: The following is an e-mail forward and I am not the ORIGINAL writer of this post.
*****************************
A man sat at a metro station in Washington DC and started to play the violin; it was a cold January morning. He played six Bach pieces for about 45 minutes. During that time, since it was rush hour, it was calculated that thousand of people went through the station, most of them on their way to work.
Three minutes went by and a middle aged man noticed there was musician playing. He slowed his pace, stopped for a few seconds and then hurried up to meet his schedule.A minute later, the violinist received his first dollar tip: a woman threw the money in the till and without stopping continued to walk.
A few minutes later, someone leaned against the wall to listen to him, but the man looked at his watch and started to walk again. Clearly he was late for work. The one who paid the most attention was a 3 year old boy. His mother tagged him along, hurried but the kid stopped to look at the violinist. Finally the mother pushed hard and the child continued to walk turning his head all the time. This action was repeated by several other children. All the parents, without exception, forced them to move on.In the 45 minutes the musician played, only 6 people stopped and stayed for a while. About 20 gave him money but continued to walk their normal pace. He collected $32.
When he finished playing and silence took over, no one noticed it. No one applauded, nor was there any recognition. No one knew this but the violinist was Joshua Bell, one of the best musicians in the world. He played one of the most intricate pieces ever written ; with a violin worth 3.5 million dollars.
Two days before his playing in the subway, Joshua Bell sold out at a theatre in Boston and the average ticket was $100.This is a real story. Joshua Bell playing incognito in the metro station was organized by the Washington Post as part of a social experiment about perception, taste and priorities of people.
The outlines were: in a commonplace environment at an inappropriate hour: Do we perceive beauty? Do we stop to appreciate it? Do we recognize the talent in an unexpected context?One of the possible inferences from this experience could be:If we do not have a moment to stop and listen to one of the best musicians in the world playing the best music ever written, how many other things are we missing?
Monday, January 19, 2009
Starbucks Experience
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Source: The following article is a collection of my thoughts based on my understanding of the book - The Starbucks Experience. I OWN the article written below.
*****************************
I came across a book in my personal library yesterday – it was called ‘The Starbucks Experience’. The first few pages were so interesting that I got down making notes for myself.
The book talks about how Starbucks turned an ordinary business into an extraordinary organization – that is loved not only by its customers worldwide but also its employees.
What defines a great company?
A great organization would be a combination of a great vision along with a plan that is implemented to perfection. Starbucks is one such organization that not only dared to create a vision but also implemented it to perfection.
Let us take a look at how Starbucks managed to create such a great organization.
Values and Culture
Starbucks has a unique culture in which the senior management believes in sharing not only their resources but also their wealth. Their employees are called as ‘partners’. They believe in giving their employees, quality and customer focused training, work-friendly environment which would enable them to keep their customers happy.
The best thing about them is that they have been maintaining consistency across all their outlets worldwide.
1) Leaders have created a unique culture for their partners in which Empowerment, Entrepreneurship, Quality and Service form their core values.
2) Partners in turn believe in creating a unique and personal experience for every customer.
Leadership
1) Starbucks leadership believes that the right way of doing business is to turn your employees in to partners. In fact their CEO distributed stock options not only to the senior management but to all the employees who spent more than 20 hours every week. Through this sharing, their partners appreciated the direct link between their efforts and the success of their company.
2) Starbucks has created their own Mission Review committee that is responsible for checking whether their leaders are living their vision and mission and also passing it down to their partners.
3) Starbucks believes in having an aligned mindset between the senior leadership and its partners.
4) It is only when the leaders live the values will the partners imbibe it.
5) Leaders believe in staying small while growing.
6) They face constant challenges in attracting quality and like-minded workforce.
7) They have a separate department called ‘Culture and Leadership development.
8) Senior leadership says – ‘It does not matter how many millions/billions of cups we serve if it doesn’t suit our clients need.
Values, mission and excellent customer and employee focus has been the driving force behind their ultimate success.
Starbucks partners
1) Partners feel ‘proud’ to be a part of this organization because they have the liberty to make things right.
2) The above point is a result of constant training and grooming.
3) Partners believe in creating an emotional bond with every customer.
4) They give importance to every customer by customizing their needs, making them feel important. It is only this trait that has resulted into higher loyalty amongst their customers.
5) Their packing is so great that they aim for 0 spill rate.
6) They believe in making a difference in the lives of their customers – this has been passed down through their leaders. This is what they call as ‘The Starbucks Experience’.
Other important facts
1) Starbucks has been maintaining the same quality consistently for years across all their outlets worldwide.
2) They spend more money on quality and customer focused training than on advertisement.
3) Apart from sharing financial benefits with its partners they provide the following as well – training in product knowledge, guiding principles for success, personal empowerment and the importance of creating a warm customer experiences. These things have resulted in to higher customer satisfaction and loyalty.
4) Employee turnover rate is 120% less than the industry average.
5) Partners have an 82% satisfaction rate.
6) One of their loyal customers not only knows where all the outlets are situated but also gives her family and friends directions to those outlets.
Apart from a great vision, core values and a strong work force they believe in 5 principles that act as their oxygen for surviving:
Make it your own
Everything matters
Surprise and delight
Embrace resistance
Leave your mark
Most of the companies may or may not be able to follow suit but we can definitely extract some of the important aspects and use it in our day-to-day work life. We could start off with the following:
1) Create a vision and share
2) Create an environment such that every employee feels proud to be a part of the organization. This can happen through client focused training, giving them the desired things, empowerment (basically a feeling of ownership).
3) In short, we need to create a Service-Profit sharing chain that will lead to employee satisfaction and loyalty, which in turn would lead to customer satisfaction and loyalty and drive our growth and profitability.
Source: The following article is a collection of my thoughts based on my understanding of the book - The Starbucks Experience. I OWN the article written below.
*****************************
I came across a book in my personal library yesterday – it was called ‘The Starbucks Experience’. The first few pages were so interesting that I got down making notes for myself.
The book talks about how Starbucks turned an ordinary business into an extraordinary organization – that is loved not only by its customers worldwide but also its employees.
What defines a great company?
A great organization would be a combination of a great vision along with a plan that is implemented to perfection. Starbucks is one such organization that not only dared to create a vision but also implemented it to perfection.
Let us take a look at how Starbucks managed to create such a great organization.
Values and Culture
Starbucks has a unique culture in which the senior management believes in sharing not only their resources but also their wealth. Their employees are called as ‘partners’. They believe in giving their employees, quality and customer focused training, work-friendly environment which would enable them to keep their customers happy.
The best thing about them is that they have been maintaining consistency across all their outlets worldwide.
1) Leaders have created a unique culture for their partners in which Empowerment, Entrepreneurship, Quality and Service form their core values.
2) Partners in turn believe in creating a unique and personal experience for every customer.
Leadership
1) Starbucks leadership believes that the right way of doing business is to turn your employees in to partners. In fact their CEO distributed stock options not only to the senior management but to all the employees who spent more than 20 hours every week. Through this sharing, their partners appreciated the direct link between their efforts and the success of their company.
2) Starbucks has created their own Mission Review committee that is responsible for checking whether their leaders are living their vision and mission and also passing it down to their partners.
3) Starbucks believes in having an aligned mindset between the senior leadership and its partners.
4) It is only when the leaders live the values will the partners imbibe it.
5) Leaders believe in staying small while growing.
6) They face constant challenges in attracting quality and like-minded workforce.
7) They have a separate department called ‘Culture and Leadership development.
8) Senior leadership says – ‘It does not matter how many millions/billions of cups we serve if it doesn’t suit our clients need.
Values, mission and excellent customer and employee focus has been the driving force behind their ultimate success.
Starbucks partners
1) Partners feel ‘proud’ to be a part of this organization because they have the liberty to make things right.
2) The above point is a result of constant training and grooming.
3) Partners believe in creating an emotional bond with every customer.
4) They give importance to every customer by customizing their needs, making them feel important. It is only this trait that has resulted into higher loyalty amongst their customers.
5) Their packing is so great that they aim for 0 spill rate.
6) They believe in making a difference in the lives of their customers – this has been passed down through their leaders. This is what they call as ‘The Starbucks Experience’.
Other important facts
1) Starbucks has been maintaining the same quality consistently for years across all their outlets worldwide.
2) They spend more money on quality and customer focused training than on advertisement.
3) Apart from sharing financial benefits with its partners they provide the following as well – training in product knowledge, guiding principles for success, personal empowerment and the importance of creating a warm customer experiences. These things have resulted in to higher customer satisfaction and loyalty.
4) Employee turnover rate is 120% less than the industry average.
5) Partners have an 82% satisfaction rate.
6) One of their loyal customers not only knows where all the outlets are situated but also gives her family and friends directions to those outlets.
Apart from a great vision, core values and a strong work force they believe in 5 principles that act as their oxygen for surviving:
Make it your own
Everything matters
Surprise and delight
Embrace resistance
Leave your mark
Most of the companies may or may not be able to follow suit but we can definitely extract some of the important aspects and use it in our day-to-day work life. We could start off with the following:
1) Create a vision and share
2) Create an environment such that every employee feels proud to be a part of the organization. This can happen through client focused training, giving them the desired things, empowerment (basically a feeling of ownership).
3) In short, we need to create a Service-Profit sharing chain that will lead to employee satisfaction and loyalty, which in turn would lead to customer satisfaction and loyalty and drive our growth and profitability.
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