Newsletter: November 2011
PEOPLE–CENTRIC LEADERSHIP: How Leadership Impacts Customer Satisfaction Delivered Through Your Employees
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), and anger (i.e. you’re fired). 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 well alone, 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 just do what they are told, and the replacement employees are less talented. And whom does this adversely affect outside of the leader and your employees? Your customer. Who benefits? Your competition! Now, how’s that work for you?
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 a great article that was re-printed in the Harvard Business Review (July – August 2008) and is still relevant: 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, Barnes & Noble. 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.
We love this model because the service-profit chain 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
- Preparing for internal service quality improvement involves:
- Internal service quality leads to employee satisfaction
- Which in results in:
- Employee retention
- Employee productivity
- Which in results in:
- 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 direct provider)
- Customer satisfaction leads to customer loyalty
- Which results in:
- Retention
- Repeat business
- Referrals
- Which results in:
- And, customer loyalty leads to revenue growth and profitability
So, if leaders start by thinking 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.
Components of a Strong Leadership Development Program: Creating a Culture of Talent Growth and Readiness
One of the most important decisions a Board can make is to hire an executive that is capable of building and working with a strong team. We love the definition of leadership in a recent article, Leadership101, by Dr. Robert Hogan, “Leadership should be defined in terms of the ability to build and maintain a high-performing team, and evaluated in terms of the performance of the team”. (see footnote)
If you do not have a Board and run a small company, one of the most important decisions you will make is to hire a strong and complimentary team. And it’s just not the executive team that’s important; the department heads and key managers and supervisors are also important. Executives set strategy; your people execute it. And ultimately, success depends on execution.
Now that this point is clear, let’s consider a holistic means to ensure your people are capable to do so while also readying them for increased responsibility. This is done through creating a “Culture of Talent Growth” and positioning your business as a learning organization. And as we say over and over - this is a process not an event.
So, what’s most important to include in your leadership program and talent development initiatives for lasting, high-impact growth and promotion readiness?
We recommend that an organization’s leadership development process include the following three key elements for growing your people/your talent:
- Introductory and Periodic Leadership Training (such as workshops, seminars on relevant topics such, Roles and Responsibilities of Managers, Conscious and Results Oriented Communication, Leading Teams and Strategic Initiatives, Performance Management/Charting Accountabilities, Managing Competing Demands, Creating a Positive and Productive Workplace, Influence and Persuasion Skills, etc.)
- Pre and post assessment (ideally personality and job performance profiling) and respective developmental goal setting of the individual(s) and the group at large (if a management group is participating as a team)
- A Coaching and/or Mentoring element throughout the program/process time period, both for individuals and the group, if relevant.
Post the training/development activities above, ongoing “alumni” or peer-to-peer group follow-up activities will promote skill transference and continued development through gathering lessons learned and the support and encouragement from the emerging leaders.
Lastly, consider optimizing the mentoring element as a fabulous way for “graduates” or completers of the leadership program to continue to learn in a collaborative fashion: After a period (6 months -1 year) they can then become mentors to those completing the program behind them. This correlates strongly with succession planning, which positions your company for growth and sustainability.
Footnote: Dr. Hogan is founder of Hogan Assessment Systems, who is recognized as an international authority on personality assessment, leadership, and organizational effectiveness. He has authored more than 300 journal articles, chapters and books, and is widely credited with demonstrating how personality factors influence organizational effectiveness.
Healthcare Corner
Evolving Care Concepts: Non-Physician Care Givers
Healthcare Reform is underway.
We're not just talking about the Affordable Care Act, ARRA, HITECH and other similar legislation that's bombarding healthcare providers. We are talking about Nurse Practitioners and Physician's Assistants, the expansion of "Quick Service Clinics", the move to a concept referred to as the "medical home", and specialty physician groups who are moving to take more responsibility for longitudinal patient care, like the urologists providing integrated urology care for the patient with prostate cancer. No, we have not forgotten about Accountable Care Organizations, but whether they represent a meaningful change in care concepts is yet to be seen.
As the cost of healthcare continues to escalate, as we read about the shortage of primary care physicians, as the population ages, as we see more chronic illness, as quality continues to be inconsistent, creating alternative care options is inevitable. The challenge will be in managing the "transitional noise": the in-fighting that is occurring now for who's in charge of the patient, the process and the decisions.
For example, Quick Service Clinics are popping up in drug stores, food stores, and retail companies. CVS has approximately 645 clinics since purchasing MinuteClinic. Walgreens has approximately 350 clinics and Kroger, Target, Safeway, Wal-Mart and others are looking to expand their clinic business. What makes this possible are nurse practitioners and physician's assistants (both of whom can prescribe in most states), and in the case of some in-pharmacy clinics, the clinical pharmacist.
Some primary care physicians are not happy. The argument of sub-quality care and missing more serious health issues is the purported reason; they are right and they are wrong. Patients coming to Quick Service Clinics with a sore throat, ear infection, urinary tract infection are likely to get similar care to the care they will receive in a physician's office (as reported in the Annals of Internal Medicine). And they un-clog the emergency room and they don't have to wait to see the physician - seriously risking developing a more serious condition.
The "medical home" is a concept intended to provide comprehensive primary care. Success in the "medical home" model also relies on nurse practitioners and physician's assistants. And specialists looking to manage the broader care needs of patients such as the ones diagnosed with prostate cancer also rely on nurse practitioners and physician's assistants to provide the continuum and quality of care needed.
As healthcare evolves, nurse practitioners, physician's assistants and other care providers will play a bigger role in this evolution.
One very critical question is: Who will lead the transition to more affordable care, better quality care and improved access to care? Will it be hospitals, physicians, Accountable Care Organizations, Payers or non-health care related entities such as retailers, private equity firms and others… If past innovative breakthroughs are examined, then we are likely to continue to see new players in the healthcare market.
