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EMPLOYEE & CUSTOMER SATISFACTION.
Term Paper ID:26513
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Essay Subject:
Examines relationship between satisfied workers & customers in successful companies. Incentives, examples (Fidelity Bank, Kentucky Fried Chicken, Sears).... More...
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8 Pages / 1800 Words
10 sources, 17 Citations,
APA Format
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Paper Abstract:
Examines relationship between satisfied workers & customers in successful companies. Incentives, examples (Fidelity Bank, Kentucky Fried Chicken, Sears).
Paper Introduction:
Employee satisfaction is too often ignored by employers beyond fulfilling the basic requirements for acquiring and retaining workers, and the real link that exists between employee job satisfaction and customer treatment, and so customer satisfaction, is not noted or developed. The literature shows that companies that do make this connection and work to achieve employee satisfaction are rewarded with better customer treatment and so better customer satisfaction and the consequent retention of those customers.
Sellers & McGowan (1993) note this with reference to banking, a business which they say follows management practices that mitigate against employee satisfaction in many respects. They recommend that to retain customers, a company should retain workers. Buyers deal primarily with regular employees rather than
Text of the Paper:
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dealer customerretention rate is 2 percent), and increased productivity in alldepartments over 2 percent (Werner, 1996, 46-48). What it does necessarily mean is employees who've learned to take active responsibility for their own behavior, develop and share first-rate information about their jobs, and make good use of genuine empowerment to shape lasting solutions to fundamental problems (Argyris, 1994, 77).Brown (1996) notes that companies should consider their customer serviceand become what customers want most -- that is, organizations that are easyto do business with. Erdman (1993, April 5). In analyzing the problems facing car dealers, Werner (1996) notes thatthe old way of thinking, called flat-rate thinking, did not see the linkbetween employee satisfaction and service to the customer. SDU is a virtual university with five colleges and a well- developed curriculum. McColgan, E.A. Sellers, P. Another kind of business with a high turnover problem is the fast-foodbusiness, and Kentucky Fried Chicken is a company that has recognized theproblem and tried to develop higher employee satisfaction to contribute tocustomer service and treatment.Fast-food chains have a typical employee turnover of well over 1 percentin a year; they also tend to have minimal training. Managing in the midst ofchaos." Fortune, 38. In any given locale, the manager haslittle incentive to build loyal clients, knowing that it will be his or hersuccessors who will reap the benefits. Indeed, flat-rate is piecework that reduced employee satisfaction. Brown, S.A. "The employee-customer-profit chain at Sears." Harvard Business Review, 82. Arepresentative of the company explains: The short answer is that we created a model for the development of associates called Service Delivery University (SDU) and made the commitment that each associate would receive 8 hours of developmental activity per year. It helps managers target new investments to develop service and satisfaction levels for maximum competitive impact, widening the gap between service leaders and their merely good competitors (Heskett & Jones, 1994, 164).The service-profit chain these companies use establishes relationshipsbetween profitability, customer loyalty, and employee satisfaction,loyalty, and productivity, in the following way: Profit and growth arestimulated primarily by customer loyalty; loyalty is a direct result ofcustomer satisfaction. The division was doing good business, with aclient base and assets under management growing 4 percent per year. Employee satisfaction is too often ignored by employers beyondfulfilling the basic requirements for acquiring and retaining workers, andthe real link that exists between employee job satisfaction and customertreatment, and so customer satisfaction, is not noted or developed. Because ofthe reorganization, many associates lost their direct contact with thecustomer and also lost the sense that what they did had a dramatic impacton customer satisfaction. References Argyris, C. Sellers & McGowan (1993) note this with reference to banking, abusiness which they say follows management practices that mitigate againstemployee satisfaction in many respects. Quinn (1998, January 1). "The new deal what companiesand employees owe one another." Fortune, 44. Argyris (1994) notes the importance of nurturing employee satisfactionfor the company of the next century as he states that companies need betterwork from their employees: This does not necessarily mean harder work or more work. (1996, July 1). When the manager does leave, he orshe takes the knowledge acquired of customers and leaves nothing behind(Sellers & McGowan, 1993, 56). &T.O. Theliterature shows that companies that do make this connection and work toachieve employee satisfaction are rewarded with better customer treatmentand so better customer satisfaction and the consequent retention of thosecustomers. Sears considered the relationship between employee satisfaction andservice to the customer and developed what is called the Employee-Customer-Profit Chain. But how? Too manycompanies see new technologies as the answer, adopting technology fortechnology's sake and neglecting to explore other areas for improvement intheir customer relationships. However,that growth also required that the division add upwards of ten people perweek to a staff of 1,4 . "Building loyaltykeeping the buyers you already have." Fortune, 56. The one measure that continued to be a problem was thatcustomer satisfaction scores were not increasing fast enough. The challenges stemming from rapid growth were setbefore a group of managers who were adherents of the service-profit-chainconcept: The basis of that concept is that instead of beginning with profit and growth, companies should begin with employee satisfaction and loyalty. & J. (1997, January 1). "Ties that bind: wise small-businesspeople aim for long-term relationships that benefit both buyer and seller." Nation's Business, 12-18. Satisfaction is largely influenced by the value ofservices provided to customers, and this value is created by satisfied,loyal, and productive employees. Werner, R.G. "Becoming processed focused." Ward'sDealer Business, 46-48. Heskett, J.L. "Good communication that blockslearning." Harvard Business Review, 77. "Fidelity investments, how fidelityinvests in service professionals." Harvard Business Review, 137. One problem is that banks tend to rotate managersthrough a series of local branches. McGowan (1993, November 22). What often occurs is decreased employeerelations and reduced productivity as employees straggle to acquire theskills necessary to adapt to the new technologies in their workplace andoften miss opportunities for improving customer satisfaction. It requires companies to relinquish much of the control they have held over employees and give genuine authority to work teams. The new economicsof service requires innovative measurement techniques which calibrate theimpact of employee satisfaction, loyalty, and productivity on the value ofproducts and services delivered so that managers can build customersatisfaction and loyalty and assess the corresponding impact onprofitability and growth: The service-profit chain, developed from analyses of successful service organizations, puts "hard" values on "soft" measures. It can be difficult to bring new hires up tospeed in any industry, but when your business is service delivery, there islittle room for error. Companies must work harder than ever to make themselves attractive places to work. Thedivision was also expanding into new markets with new products. Moreover, the work of creating the model and the measures made such demands on the managers involved that it changed the way they think and behave (Rucci, Kirn, & Quinn, 1998, 82).The basic elements of an employee-customer-profit model begin with theintuitive understanding that there is a chain of cause and effect runningfrom employee behavior to customer behavior to profits, and it is notdifficult to see that behavior depends primarily on attitude. "Technology and customer satisfaction:Myths and facts." Canadian Business Review, 29-31. (McColgan 1997, 137).The company reorganized in 1993 by automating and reengineering virtuallyevery system, process, and procedure. One financial institution that sought to change this situation wasFidelity's FIRSCo division. Jones (1994, March 1). O'Reilly and Wyatt (1994) simply point out that the nature of work ischanging and that good employees have more options. In addition, many associates had less than oneyear of experience in their job at the time, and some were being managed bypeople who had recently been promoted to supervisory positions. While there has been a marked increase in the numberof companies that are focused on improving customer satisfaction andmanaging customer relationships, it has also been noted that many less-than-successful organizations seem to "jump on the customer satisfactionbandwagon" without really understanding their specific customer serviceneeds or where they should be concentrating their efforts. Kirn, & R.T. They recommend that to retaincustomers, a company should retain workers. (1994, July 1). O'Reilly, B. The authors note that this link is ignored by many companies, andparticularly banks, where teller turnover averages 5 percent to 1 percent annually. Employee satisfaction, in turn, resultsprimarily from high-quality support services and policies enablingemployees to deliver results to customers (Heskett & Jones, 1994, 164). As a result of this program, the service associates at FIRSCo have an entirely new approach to thinking about customers and the company (McColgan 1997, 137). This is the management philosophy that is more andmore in place: a belief in worker teams, customer focus, employeeempowerment. Huey, J. (1997, August 1). Managers desirous of finding what Sears was andwanted to become developed a business model of the company that trackedsuccess from management behavior through employee attitudes to customersatisfaction and financial performance: Along with its measurement system, this employee-customer- profit model is rigorous enough to serve as an integral piece of the management information system and as a tool that every individual in the company can use for self-assessment and self- improvement. This helped produce a turnaround in the company's businessand in its profit picture. Employees become far more responsible for their work and careers: No more parent-child relationships, say the consultants, but adult to adult (O'Reilly & Wyatt, 1994, 44).The reward for the company is improved customer service and improvedcustomer satisfaction. the way to keep them is to give theminteresting and challenging work and more responsibility: For some companies and some workers, that is exhilarating and liberating. A staff of loyal, satisfied employees drives customer satisfaction and loyalty--which in turn drive profit and growth. Wyatt (1994, June 13). Part ofemployee satisfaction is to provide the training the employee needs to dealwith technology and customer alike: A major challenge for technology-focused companies is providing timely, comprehensive training for employees on new systems. Rucci, A.J., S.P. A growing number of companies including Banc One, Intuit Corporation,Southwest Airlines, ServiceMaster, USAA, Taco Bell, and MCI are following atrend similar to that for Fidelity noted above, and to do so they show thatthey know that when they make employees and customers paramount, a radicalshift occurs in the way they manage and measure success. If they are notsatisfied, they will leave. One problemis the difficulty in measuring employee or customer attitudes, or"satisfaction," and not surprisingly, many companies do not have arealistic grasp of what their customers and employees actually think anddo. Buyers deal primarily withregular employees rather than with top executives, "so employeesatisfaction powerfully drives customer loyalty" (Sellers & McGowan, 1993,56). Putting the service-profit chain to work."Harvard Business Review, 164. Companies thatdeveloped a different management style and did consider the importance ofemployee satisfaction leading to improved customer service showedconsiderable improvement. Sears tries to accomplish this with an ongoing process of datacollection, analysis, modeling, and experimentation to show the company howwell it is doing with customers, employees, and investors (Rucci, Kirn, &Quinn, 1998, 82). When front-line employees do not know how to use technologies properly, the systems themselves become barriers to good customer relations and employee productivity, rather than the enablers they were intended to be (Brown, 1996, 31). (1996, June 22). & A. A number of managers report the value of employeesatisfaction on customer service and customer satisfaction, leading tocustomer loyalty and improved profits (Huey & Erdman, 1993, 38). Gregg Dedrick is KFC'ssenior vice president of human resources, and he states that "one of themost important things I did" was to talk to a half-dozen of the system'sstrongest franchisees to learn "what they were doing on the people side ofthe business to really drive results." He found that the critical elementwas recognition -- "recognizing people who are doing good things in thefront line to satisfy customers." The company also conducted focus groupsacross the country, and it was found that "the overwhelming message we gotfrom [customers] was that what they really wanted to see in our employees -- what cued them as to whether this was a place they wanted to come back toand eat -- was friendliness, pride in being there, and pride in servingthem, and teamwork" (Barrier, 1997, 14). These companies installed a customer-drivenplanning and deployment process that drives key business factors, achievedimproved employee satisfaction over 3 percent, followed by total customerretention (all departments) of 6 percent (the average U.S. For FIRSCo, applying this idea meant we needed to reach out to our service associates in a new and powerful way. & J. It also encompasses on-the-job developmental assignments, such as leading a team or supervising a task force. Barrier, M. The immediate results were positiveas the company decreased operating costs considerably and streamlined manyoperations.
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