In every industry and organization, we’re hearing about “the future of work” and the need to redesign our approach to leadership, teams, and the nature and structure of work in the aftermath of the Covid pandemic.
For all the anguish, however, it’s fascinating to note how many of the core principles of work/life and effective leadership are the same. Much of what we have now over prior eras is new and better means to obtain empirical data that proves the principles out.
In a nutshell, the Service-Profit Chain still prevails.
As a case in point, we can boil the principle that became classic 15-20 years ago, “Putting the Service-Profit Chain to Work” down to this: The more genuine investment we make in customers and our people (with money and time but also in aligning the heart and mission of the organization), the more revenue and profit we gain.
The principle was true when spoken and is equally true now, but even more readily proven in the current times that come after the pandemic. Great organizations understand that the mission and “why” of serving customers must be so fully embedded in employees’ psyche that it practically exudes from their pores before great results will occur. When it happens, the team is unstoppable.
When it’s missing, time spent setting profit goals or focusing on market share means little (in the current economy or in any economy).
For service businesses, especially, the factors that drive profitability are directly in line with the company’s investment in people and relentless focus on customers. Designing work around your customers’ needs and your employees’ happiness is, then and now, the surest path to revenue success.
What does it look like?
Our own company, TAB Bank (an online bank in Ogden, Utah), put this theory to the test during the years from 2016 to 2021. We devised a TAB2021 campaign designed to re-think every task and aspect of work in terms of putting our customers first. An immediate result was that 95 percent of the employee base was ready to work from anywhere, well before the pandemic made it a necessity. We did it as a way to better serve customers.
Of course, the Covid pandemic has given (or forced) nearly everyone onto an ideal perch to play these principles out, especially during a period of high change and high strife. The things we learned in this should be equally applicable to others:
• The concept of genuinely putting customers (and people) first requires high and sustained effort. It needs to become a way of life, and not a campaign.
This means the implementation involves everyone and every function. The principles apply from the president and CEO on down. I found at times that as CEO, I was the biggest detriment by halting work to request unscheduled reports, or when people were waiting on me to make a decision. It even includes the board, as the higher the rank of the requester, the higher the tendency to pull focus away from customers and back to traditional concerns that are admittedly paramount. Infrastructure, technology and evolving regulatory rules are vital to the company’s life. But they can’t be allowed to impede the commitment and reality of making our customer- and people-focus the highest priority of every decision.
• Think “company culture,” not merely time and attention. Employees require (and respond to) a “why” and a vision and mission they can align with even more than attention to flexible working conditions, career and salary advancement, and comforts.
• You must measure the outcomes. In our case, consistent and thorough employee surveys were paramount. With this data, we were able to track three metrics with consistency across a six- year period of time: 1) Employee sentiment, 2) Revenue, and 3) NPS (Net Promoter Score – would you recommend the company to others). It is fascinating to see the way these metrics correspond to each other at various moments in time.
The company’s revenue and profitability rose in line with the scores, as measured both with and without the additional revenue from supporting businesses through the PPP (Payroll Protection Plan) program.
Our net promoter score rose from 45 in 2016 to 72 in 2019. (Interestingly, a recent report of the world’s 100 major brands concluded that of the top 100 measured, only Starbucks and Costco had NPS scores this high). Employee engagement (measured on the question of “would you recommend the organization to your friends and family?”) rose from 38 percent in 2017 to 88 percent in 2019 and rose even slightly more after the pandemic lockdown period to 89 percent in May 2021.
Revenue followed. At the start of the initiative, we were an organization of approximately $650 million in assets. Now we’ve passed $1 billion. The first quarter of 2021 was the company’s best quarter in history. Then Q2 exceeded Q1 and Q3 exceeded Q2. In this example, revenue was nearly doubled from the five years prior, in near direct proportion to the rise of net promoter score and employee satisfaction.
This was not a fluke. While we don’t have access to the exact reporting of other organizations, we observe the rise of satisfaction for companies like Chick Fil A, Starbucks and Costco during this same time period while public reporting has shown their revenues rising as well. New or old, when it comes to revenue and profit, we can readily observe and prove the “virtuous cycle” of the Service-Profit Chain. The principle is the same regardless of technology or time. Putting customers and people first is the surest path to success.
The post Forget The ‘Future Of Work.’ If You Focus On Customers First, Revenue Follows appeared first on ChiefExecutive.net.
