Service-Profit chain

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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.