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Newsletter: January 2011

PEOPLE–CENTRIC LEADERSHIP: Achieve Greater Results through a People-Centered Approach

Does a leader need to be the smartest person in the company to result in growth and customer satisfaction? No. In fact, an impediment to growth we often see is that some leaders just can’t get over “themselves”, and the chance that their company will emerge from this recession stronger and more competitive is diminished. Yet unfortunately when it’s suggested, it’s often met with one of the following responses: confusion (i.e. you talking to me?), dismissiveness (i.e. you have no idea what you’re talking about), shock (i.e. how dare you talk to me that way), anger (i.e. you’re out of here). After all, they are the smartest person in the company; they know the problems, they know what needs to be done, and they will do it.

We have a secret to share – no one is that smart, no one can do it all exceptionally alone (at least for long), and talented employees want to – well – contribute and show their talent! And the greatest tragedy in this delusional thinking is that great employees will leave, the remaining employees will do just (meaning only) what they are told, and the replacement employees will be less talented. And whom does this adversely affect outside of the leader and your employees? Your customer. Who benefits? Your competition!

It is essential for leaders to understand that customer service is the lifeblood of their business. (Yes we are aware that cash is king and without positive cash flow the business ceases to exist. Without satisfied customers, however there is no cash. And without satisfied and engaged employees there are no customers – satisfied or not!) So let’s consider a model to help.

James L. Heskett with four co-authors in 1994 wrote an article that was re-printed in the Harvard Business Review (July – August 2008) titled: Putting the Service-Profit Chain to Work. The premise is simple:

  • Highly satisfied customers drive growth and profitability
  • Equipping employees with the skills and power to serve the customer results in:
    • Increased employee satisfaction
    • Increased employee loyalty and productivity
    • Increased service to the customer
    • Increased customer satisfaction and loyalty
    • Revenue

According to the American Customer Satisfaction Index, good examples of companies with high customer satisfaction are Nordstrom, Southwest, Jones Apparel, Publix, Apple, Netflix. Are they perfect? Of course not. Are they serious competitors? Absolutely.

We see this as an employee driven profit model – and it’s “people centric”, which to us is the heart of your business. And leaders can better engage their employees and improve customer satisfaction through using the concepts presented in the service-profit chain model.

And the service-profit chain model reinforces a critical contributor to customer satisfaction – satisfied employees. Briefly, the service-profit chain posits:

  • Internal service quality is a key driver for the company
    • Preparing for internal service quality improvement involves:
      • Workplace redesign
      • Job redesign
      • Employee selection and development
      • Employee rewards and recognition
      • Tools for serving customers
  • Internal service quality leads to employee satisfaction
    • Which results in:
      • Employee retention
      • Employee productivity
  • Employee satisfaction leads to increased customer satisfaction
    • Because the service was designed and delivered to meet customer needs (based on the learning empowered capacity of the customer facing employee)
  • Customer satisfaction leads to customer loyalty
    • Which results in:
      • Retention
      • Repeat business
      • Referrals
  • And, customer loyalty leads to revenue growth and profitability

Our experience supports the service-profit chain / people-centric model of greater customer satisfaction resulting in positive returns for the business. One healthcare software consulting company came through the recession relatively unscathed. They provide outstanding customer service. Another grew over 20 percent during the heart of the recession. They provide personalized and highly focused customer service. Are these companies exceptions? Yes they are and that’s what makes them so interesting and so successful. As small businesses emerge from the recession and look to differentiate themselves and grow, improving customer service through a people-centric approach will be an important strategy to adopt.

So, when leaders start to think about their customer and how to provide value, they’ll realize that it’s their employees that are the golden egg; those who have the front line contact with their customer. Then the conclusion is inescapable: prepare and support your employees to provide outstanding service and your customers too, will reward your efforts.

Healthcare Corner – News and Issues

The recent election, which saw the Republicans gain control of the House, will create an interesting and uncertain time for healthcare legislation. They promise to repeal the Affordable Care Act. This will be symbolic as the Senate is not likely to support repeal, and if by some odd chance it does, the President will veto the bill. Although they will not succeed, the Republicans promise to continue their opposition by interfering with the funding of portions of the Act.

And not only are the Republicans in Congress looking to repeal the Act, but:

  • 20 states are challenging the constitutionality of the federal requirement that all Americans have health insurance. A recent Virginia court ruled that it is unconstitutional for the government to compel Americans to buy health insurance. The federal government is appealing.
  • 33 Republican governors plan to send a letter to the White House requesting removal of a part of the healthcare law that results in a loss of federal funds if the states drop enrollees. (Medicaid costs are a heavy burden for states and the high unemployment caused an increase in state Medicaid enrollment.)

Yet, a recent CBO (Congressional Budget Office) report estimates repealing the Affordable Care Act will cost approximately $230 billion…..

Are you confused? Well so are a lot of other people. While congress argues, and the political parties debate and posture, the need to address the cost of health care continues. In 2009, health care costs represented 17.6% of the GDP, and in 2010, the increase is over 5% greater than 2009. Conclusion – health care is costly.

So, what does this mean for you and your business?

  • Continue to understand and stay abreast of current developments
  • Familiarize yourself with your current health insurance plan and ask your broker what impact current changes, or proposed changes, will have on you and your employees
    • Request an explanation for any increases
  • Remember the incentives to provide coverage for your employees will expire – understand this and the details so you can prepare for it.
  • Not much will happen in 2011, but the big changes will come in 2014 with the introduction of health insurance exchanges
  • Work on improving your health and the health of your employees through encouraging better self-care and through preventive care
    • Learn more about the Healthy Workplace and Wellness Initiatives
    • Here are some links to sites where you can learn more about the Healthy Workplace and Wellness Initiatives
      • http://newworkplaceinstitute.org/healthy_workplace.php
      • http://www.infinitewellnesssolutions.com/workplace-wellness.html
      • http://www.whitehouse.gov/the_press_office/Fact-Sheet-Innovative-Workplace-Practices-A-Discussion-With-President-Obama/

Featured Articles

"10 Ways to Differentiate Your Customer Service & Make Your Clients Actually Feel Valued" published in Microsoft Dynamics
https://community.dynamics.com/roletailored/customerservice/ b/csarticles/archive/2011/01/07/10-ways-to-differentiate-your-customer-service-amp-make-your-clients-actually-feel-valued.aspx

"Is Your Management Causing Employee Issues and Slow Business Growth?" published at ArticleRich.com
http://www.articlerich.com/Article/Is-Your-Management-Causing-Employee-Issues-and-Slow-Business-Growth-/1242751

Upcoming Presentations

IFMA March 23, 2011 Boston, MA – Results Trump Time: Accelerated Practices for Today's Leaders in Time, Influence, and Focus Management.