My Corporate Culture Favs Over 2 Years

In a continuation of the look back at my first two years of blogging, today I’m listing some of my…

Favorite Corporate Culture Posts 

I really like how leadership guru Arthur F. Carmazzi describes the value of corporate culture:

The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.

The bottom line: Organizations change, but culture persists.

Execs Need To Focus More On Culture

Here’s an excerpt from Bruce Nussbaum’s recent blog post on BusinessWeek called Chrysler, Culture and Cerberus:

The Obama Administration’s lead car guy, Steven Rattner, is a Wall Street investment banker who lives by numbers and it makes sense to him to basically give Chrysler to Fiat to save American jobs. But neither he, nor Nardelli nor President Obama understand that cars and car organizations are all about culture, not numbers.

In the post, Bruce poses the question of whether it’s more important to manage a business by the numbers or to manage the culture. Great question!

My take: I wrote a post about Bob Nardelli’s reign at Home Depot called Home Depot Still Has A Spark Of Customer Centricity which was a follow-on to a post that looked at how Frank Blake (who replaced Nardelli) was trying to rebuild Home Depot’s customer-centric culture. These represent a case study about the potential downfall of  “numbers-driven” management style.

Here’s the comment that I left on the BusinessWeek blog:

The problem is that you need to manage both; culture and numbers. Over the last few decades, however, executives have overdosed on the numbers. So it leads to situations where leaders like Nardelli sap the soul out of Home Depot because they don’t understand culture.

Times have changed, but management has not kept up. That’s why I wrote a mini book called “The 6 New Management Imperatives: Leadership Skills For A Radically Changed Business Environment.” The first imperative is: “Invest in culture as a corporate asset.”

The bottom line: Culture is an undermanaged asset.

6 C’s Of Customer-Centric DNA

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It’s impossible to talk about customer experience excellence without discussing corporate culture. Firms can’t sustain customer experience success unless it becomes embedded within their core operating fabric. According to leadership guru Arthur F. Carmazzi:

The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.

Culture is an important, yet all too often under-appreciated, aspect of corporate performance. That’s why “Invest in culture as a corporate asset” is one of my six new management imperatives.  

When it comes to great customer experience, organizations must develop a culture that I call customer-centric DNA, which is defined as:

A strong, shared set of beliefs that guides how customers are treated.

My research uncovered the following six components of customer-centric DNA:

  1. Clear beliefs. The only way for an organization to operate consistently is if everyone understands what’s important. High performing organizations don’t leave this to chance; they create clear descriptions of their core values. But these aren’t just posters or slogans; they’re used as guideposts for hiring, firing, and promoting employees.
  2. Constant communications. When a company goes through a major transformation, which is true for most firms in the midst of a customer experience journey, it’s important for employees to continuously hear what’s going on. Leading firms develop explicit internal communications plans to make sure that employees are kept up to date on the priorities and progress of these efforts. 
  3. Collective celebrations. Organizations celebrate when individuals or groups outperform metrics for sales growth or profitability. In customer-centric cultures, companies generate the same excitement around customer experience success. These firms create customer experience metrics and use public acknowledgements and incentives to reward employees for exceeding those goals. (See law #5 of customer experience: Employees do what is measured, incented, and celebrated).
  4. Compelling stories. The author Philip Pullman was quoted as saying “‘Thou shalt not’ is soon forgotten, but ‘Once upon a time’ lasts forever.” Stories play a powerful key role in shaping the culture of any firm. Companies use stories to tell how founders or employees have helped customers, demonstrating customer-centric behaviors that are valued by the organization.
  5. Commitment to employees. There’s no way to deliver great customer experience if employees aren’t on board. But you can’t just “expect” employees to do what’s right. Companies need to help employees better serve customers with investments in training and enabling tools. Leading companies also provide incentives and perks that create highly-desirable work environments. (See law #4 of customer experience: Unengaged employees don’t create engaged customers).
  6. Consistent trade-offs. Employees respond to what execs do more than to what they say. So guess what happens when execs proclaim that customer experience is important but continue to reward other behavior. Nothing. The true commitment to customer experience shows up when executives have to make trade-offs. (See law #6 of customer experience: You can’t fake it).

I’ll explore each of these 6 C’s of Customer-Centric DNA in later posts.

The bottom line: Don’t underestimate the power of customer-centric DNA.

At Four Seasons, Customer Experience Is Everyone’s Business

I just read an excellent blog post called The Real Secret of Thoroughly Excellent Companies. The author, Peter Bregman, discusses how the Four Seasons in Dallas has earned his loyalty. To understand how the hotel delivers such great experiences, Bregman sat down with the hotel’s general manager, Michael Newcombe. Here’s one of stories he heard from Newcombe:

During his meeting with the front desk staff, he learned they were slower than usual in checking in guests because rooms weren’t available. Then, in his meeting with housekeeping staff, someone asked if the hotel was running low on king size sheets. Most CEOs wouldn’t be interested in that question, but Michael asked why. Well, the maid answered, it’s taking us longer to turn over rooms because we have to wait for the sheets. So he kept asking questions to different employee groups until he discovered that one of the dryers was broken and waiting for a custom part. That reduced the number of available sheets. Which slowed down housekeeping. Which reduced room availability. Which delayed guests from checking in.

He fixed the problem in 24 hours. A problem he never would have known about without open communication with all his employees.

My take: I’m writing this post while sitting in a lounge at The Ritz-Carlton in San Juan; enjoying some quiet time while my daughter is at a Jonas Brothers concert with a friend. Before I even read Bregman’s blog post I was thinking about how much better my experiences have been at Four Seasons hotels. It’s not that I have a large sample of these experiences, but we periodically get to vacation at these resorts.

While we are having a great time at this hotel, and there’s nothing to complain about (except maybe the water pressure in the shower), there’s also nothing memorable. At Four Seasons hotels, employees go out of their way to see if visitors need anything and always greet people with a nice hello. At this Ritz-Carlton, the doormen haven’t even been opening the doors. And the concierge wasn’t able to offer any suggestions for activities other than handing over a poorly copied page describing tours from the resident tour agency.

Does this make The Ritz-Carlton a bad hotel? No. But it is certainly not delivering customer experiences at a level to maintain it’s branding as a 5-star hotel.

Four Seasons, on the other hand, makes customer experience everyone’s business. Michael Newcombe understands that delivering great experiences takes more than just smiles from front-desk employees; sometimes it even requires fixing a dryer.

The bottom line: All employees are in the customer experience department

Management Imperative #1: Invest In Culture As A Corporate Asset

Why do companies create capital expenditure approval processes and develop strict cash management procedures? To manage their corporate assets. But executives often spend little time, if any, focusing on another critical asset, their corporate culture. Leadership guru Arthur F. Carmazzi does a great job of describing the value of corporate culture:

The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.

Think about it: Corporate culture can amplify the value provided by just about every employee. How much is it worth to make employees 1%, 5%, 10%, 25%, or 50% more effective? When you consider this type of impact, it’s clear that corporate culture is, in fact, a real corporate asset. While it doesn’t show up on the balance sheet like other assets, executives need to treat corporate culture like they do other long-term assets.

Here’s how execs can manage their corporate culture assets:

  • Track employee goodwill. When companies buy other companies, they often account for part of the price as “goodwill;” acknowledging that items like brand name and competitive positioning can be long-term assets. Following this approach, companies should track “employee goodwill.” How? By surveying employees and reporting the results like you report the balance sheet; analyzing quarterly snapshots and changes over time. Think about creating a metric from  questions like “How committed are you to helping the company achieve it’s mission and objectives?” “How likely are you to recommend this company as a place to work to your family and friends?”
  • Develop a Voice Of The Employee program. I often write about the importance of a strong Voice of the Customer (VoC) program. Firms need to infuse customer insight throughout all of their activities. Companies should follow the same approach in designing a Voice of the Employee (VoE) program. What are the key elements to a VoC, and therefore also a VoE, program? LIRMing, which means designing processes for Listening, Intepreting, Reacting, and Monitoring. Companies should listen to employees in many different ways; similar to the five levels of a VoC program.
  • Establish a vocabulary around culture. Culture is often seen as a “squishy” topic. To make it more tangible, execs need to use a consistent set of terminology and concepts. Edgar Schein’s research can help, especially his work on the three cognitive levels for organizational culture: 1) attributes that can be seen, felt and heard; 2) items that can be depicted by company slogans, mission statements, and different operational creeds; and 3) tacit assumptions that are unseen and not cognitively identified. In my research on customer-centric culture, I identified the 6 C’s of customer-centric DNA: Clear beliefs, Compelling stories, Consistent trade-offs, Collective celebrations, Constant communications, and Commitment to employees.
  • Actively manage it. Just like with any asset that can gain or lose significant value, companies need to actively manage their corporate culture. This requires execs to spend their time and make investments on it; trying to optimize the ROC (return on culture). In Organization Development and Change, Cummings and Worley provide the following steps for cultural change: Formulate a clear strategic vision, display top-management commitment, model culture change at the highest level, modify the organization to support organizational change, select and socialize newcomers and terminate deviants, and develop ethical and legal sensitivity. 

The bottom line: Don’t squander your corporate culture asset.

P.S. Here’s a link to all 6 New Management Imperatives

The Customer Experience Journey

I’m thrilled to announce that we just published a new Forrester report called The Customer Experience Journey. This is the culmination of several months of research where I looked into how companies progress towards Experience-Based Differentiation (EBD), the blueprint for customer experience excellence. In this report, I defined five stages of EBD maturity:

Some other highlights from the report:

  • Here’s a little bit of what goes on in each of the 5 stages:
    • Stage 1 (Interested): In the first level of EBD maturity, organizations begin to believe that customer experience is an important part of their business. They start undertaking a number of different efforts without making any major investments, attempting to get a handle on the current situation. There’s a flurry of uncoordinated activity and no real leadership for customer experience activities.
    • Stage 2 (Invested): Companies enter into the second level of EBD maturity after they recognize that customer experience is worthy of a significant investment; in both capital and key personnel. So the approach to customer experience becomes more organized with an intensified focus on fixing problems. We start to see centralized customer experience groups and more formalized voice of the customer programs.
    • Stage 3 (Committed): In the third level of EBD maturity, firms are embracing customer experience because they understand the specific impact it has on business results like growth and profitability. The effort is no longer isolated to a few groups as customer experience becomes a major transformational effort across the organization. Instead of just trying to fix problems, the focus turns to redesigning processes.
    • Stage 4 (Engaged): When companies enter into the fourth level of EBD maturity, customer experience is a key component of everything they do. Instead of re-engineering processes, the focus turns to designing break-through experiences and solidifying the culture. There’s significant emphasis on employee engagement and companies become much less dependent on a centralized customer experience group.
    • Stage 5 (Embedded): At the highest level of EBD maturity, which can take companies several years to achieve, customer experience is deeply ingrained throughout the organization. Just about every employee feels ownership for maintaining the culture. The executive team no longer focuses on change but views itself as keeper of the customer-centric culture, which is viewed as a critical asset.
  • Based on results from 287 companies that took our Experience-Based Differentiation self-assessment, we estimate that 37% of firms have not yet reached the first stage of maturity and the 41% are in the first two stages. Only 4% are in the 5th stage.
  • I outlined 8 major activities that these customer experience groups work on including customer insight management, customer experience measurement, employee communications, and culture and training. 
  • I also looked at Customer-Centric DNA, which we define as: a strong, shared set of beliefs that guides how customers are treated. It turns out that Customer-Centric DNA starts to show up in Stage 3 of maturity (Committed) and becomes fully developed in Stage 5 (Embedded).
  • I also uncovered a set of behaviors that make up Customer-Centric DNA, which I call the 6 C’s of Customer-Centric DNA:
    • Clear beliefs
    • Compelling stories
    • Consistent trade-offs
    • Collective celebrations
    • Constant communications
    • Commitment to employees

The bottom line: Get ready for a multi-year customer experience journey.

Tesco Showcases Strategy + Culture

I just read a post on the Harvard Business discussion board about a speech that Sir Terry Leahy, Tesco’s CEO, gave about the company’s strategy. He described the challenges of delivering a distinctive and consistent buying experience to consumers in every store when you have more than 400,000 employees in multiple countries. Here’s how Leahy explained his approach:

Tesco doesn’t want one leader. We want thousands of leaders who take initiative to execute the strategy

That’s just a great quote!

In the early 90’s Tesco created a “steering wheel” to help clarify and communicate its mission, values, and strategy. So I went looking for a copy of the steering wheel on the Tesco corporate site. It wasn’t easy to find, but I finally located a version of it on the “Managing Corporate Responsibility” page.

Interestingly, in the center of the steering wheel is a phrase “Every Little Helps” which seems to be a pervasive theme at Tesco. On the retailer’s Our Values page, I found the following graphic that the company uses to depict its “Every Little Helps” strategy:

My take: Did I mention that I really liked Leahy’s quote?!? It does a great job of capturing the importance of engaging your employees. While I feel the need to insert a word in the phrase “Every Little [Bit?] Helps,” the concept seems quite powerful. Why? Because it defines simple cultural norms using easy-to-understand language and graphics. If you want 10s of thousands of people to get on board with something, it needs to be simple and easy to understand!

The bottom line: This is a great example of “Strulture” (I just made up this word to describe a strategy that focuses heavily on organizational culture).

Home Depot Still Has A Spark Of Customer Centricity

I’m in the process of publishing a report called “The Customer Experience Journey” which describes 5 levels of maturity as companies head towards Experience-Based Differentiation. As companies evolve past the first couple of stages, they need to develop “Customer-Centric DNA,” which I’ve defined as:

A strong, shared set of beliefs that guides how customers are treated  

So I’m always looking for tangible examples of this type of culture. Well, I found an example in a comment to one of my posts called Can Frank Blake Revive Home Depot? I know that people don’t always read the comments, so I decided to post an excerpt of it here:

I’ve been an Employee for 8years and yes the Nardelli era was hard, not only for the customers but also the employees who’s heart pumps orange blood. I stuck it out with the company because I know the creation of this company wasnt built on the values Bob Nardelli tried to push on all of us…. Now that we have Frank, I can feel the flame spark again… it may never be a strong flame like it once was but I still have faith that it will one day light again. For all of you frustrated customers I would like to tell you that I am personally sorry, even I lost the customer service focus that bernie and arthur built this company around… but I can honestly say I got it back, and I want to rub it off on every employee I come in contact with…. Frank understands that in order to do this we have to teach train and develop each other so that we can better serve you… it will take some time to build that back, but I can see the light at the end of the tunnel.

The bottom line: If most of Home Depot’s employees still feel this way, then I’m betting on the company!

Customer Experience Is The New Quality

As I discussed in “My Manifesto: Customer Experience Is Free,” today’s push for customer experience is very similar to the quality push in the 1980s. The similarities include:

  • Nobody “owns” it
  • It requires culture change
  • It requires process change
  • It requires discipline
  • Upstream issues cause downstream problems
  • Employees are a key asset in the battle
  • Executive involvement is essential

Interestingly, several people who I interviewed for my current research on customer-centric DNA mentioned quality techniques (e.g., Six Sigma, Lean Sigma, TQM) in our discussions. I even interviewed someone who had the very cool title of “EVP, Customer Experience and Kaizen.” (For those of you who aren’t familiar with Kaizen, it’s a Japanese word for continuous improvement. This quality concept was popularized in the 1986 book called Kaizen: The Key to Japan’s Competitive Success).

It’s no surprise that this is coming up in my research on culture given what Philip Crosby, the author of “Quality Is Free,” once said:

Quality is the result of a carefully constructed cultural environment. It has to be the fabric of the organization, not part of the fabric. 

The bottom line: Make customer experience the fabric of your organization.

Will Thompson’s Departure Hurt Wachovia’s Customer Experience?

Last week, Ken Thompson (Wachovia’s CEO) was asked to retire by the bank’s board of directors. What will that mean to the bank’s culture that has grown increasingly customer centric under his leadership? Here are a few factoids:

To get a sense of Thompson’s imprint on the bank’s customer-centric culture, I examined his letter to shareholders in Wachovia’s last 7 annual reports. They show a clear and consistent focus on customer experience as a strategic mission. Here are excerpts from each of those annual reports:

  • 2001: “The merger of First Union and Wachovia produced an improved market position, exciting growth potential and an operating strategy designed to generate enhanced shareholder value. We are focusing the resources of two fine companies on building a level of service, quality of product and degree of caring for customers that we believe will set Wachovia apart.”
  • 2002: “Delivering the Promise In 2003, we intend to demonstrate Wachovia can grow organically as well as anybody in our industry. To do so, our goals are to deliver: Best-in-class sales and service excellence; Best-in-class risk management and financial disclosure; and Top quartile earnings growth.”
  • 2003: “In every meeting of the merger integration team, the first comment when considering integration activity was “how will this affect our customers?”… We believe that having fully engaged employees who find real meaning in their work is crucial to our success. It is crucial to attracting and retaining the most talented people; it is crucial to providing consistently superior customer service; and ultimately it is crucial to enhancing shareholder value over the long term.”
  • 2004: “Our revenue and earnings performance in 2004 is no accident, but the result of several years of hard work during which all of our employees, from the top levels to the front line, focused their full attention on providing the best possible service experience for our customers.”
  • 2005: “With all of these advantages, we have no intention of taking our eyes off the ball. We’ll continue to focus on being the best at providing excellent service to our customers, at being the employer of choice, and in making a real and lasting contribution to the communities we serve.”
  • 2006: “Wachovia’s success in leading the industry in customer service for the last six years has attracted attention, and competitors are trying very hard to replicate our success… So in response we remain obsessive about our attention to service… While we earn high marks for the quality and breadth of our product offerings, we are challenging ourselves to be better at seamless coordination between delivery channels, alignment of incentive plans, and ensuring that competing priorities do not hurt our results.”
  • 2007: “While most of 2008 will likely continue to be a tough financial environment, we are focused foremost on two things: 1) Vigilantly and conservatively managing risk, and 2) Continuing to take good care of our customers. We believe that the actions we took in 2007 have already taken a lot of risk out of our company, and when the external environment once again improves, we’ll benefit from our steadfast focus on our core businesses and on our customers.”

Other execs can learn a lot from Thompson. He understands a key formula in retail banking: employee engagement leads to good customer experience which leads to higher loyalty which leads to growth. This excerpt from the 2004 annual report represents a blueprint for all CEOs who want to transform their firm’s customer experience:

Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.

The bottom lineGreat customer experience takes Thompson-like leadership.

Great Scene: Al Pacino On Cultural Change

My discussion with Tony Hsieh about the Zappos culture made me think about a scene from “Any Given Sunday” where Al Pacino addresses the football team that he’s coaching. Pacino’s speech is about how winning takes every player to focus on every element of every play; as a team.

My take: Pacino captures the essence of culture’s role in delivering great customer experience. Any CEO trying to fix her/his firm’s customer experience problem should think about Pacino’s words:

Either we heal as a team or we’re going to crumble; inch by inch, play by play, until we’re finished.

The bottom line: Customer experience is made up of millions of inches, delivered one inch at a time.

Discussing Zappos’ Culture With Tony Hsieh

As I mentioned in my post about popular customer experience topics, I’m currently researching best practices for the 3rd principle of Experience-Based Differentiation: Treat customer experience as a competence, not a function. It’s a topic that I sometimes call customer-centric DNA.

As part of that research, I’m interviewing a number of executives. So I reached out to Tony Hsieh, the CEO of Zappos, a company that’s renown for its great customer service.

Given our schedules, Tony and I ended up speaking on Monday (Memorial Day) morning at 10:30 AM EDT (7:30 AM his time). I checked out Tony’s twitter right before we spoke and found this tweet:

About to do a conference call. Way too early to be awake, couldn’t find another time to do it. Getting out of bed was not easy. Red Bull!

So let me start by thanking Tony for getting on the phone so early on a holiday. That shows his commitment to getting the Zappos word out!

How good is Zappos’ customer experience? Well, my wife loves Zappos. And my mother-in-law, after finding out about my discussion with Tony, excitedly told me that she loved Zappos because “it is so easy it use.” She once ordered a pair of shoes at 10:00 PM and was amazed to receive them before noon the next day.

Those are not isolated impressions about Zappos; the retailer has a lot of adoring customers. As a matter of fact, Tony shared an interesting fact with me: the company’s Net Promoter Scores (NPS) are so high that they do not provide any guidance on areas for improvement.

Well, the interview was great. Tony was open, informative, and inspiring. Here are some of the interesting factoids from our discussion:

  • The company’s culture is defined in its ten core values that include items like “deliver WOW through service” and “be humble.”
  • Tony felt funny when the company codified those core values, because it felt a bit too corporate. But he realized that it needed to happen given the company’s growth.
  • Tony doesn’t want to prescribe actions for employees that show how much Zappos cares about customers; he wants employees to do things because they genuinely care about customers. 
  • Zappos uses its culture as a reason to hire and fire people. All new hire candidates have a separate interview with the HR department that focuses just on cultural fit.
  • New employees go though 4-5 weeks of training that includes education about the culture and spending time on the phone with customers.
  • To ensure that employees have a strong fit with the culture, new employees are offered $1,000 to quit after their first week of training. That way they weed out the people who aren’t committed to working at Zappos. Hsieh didn’t feel like enough people were taking the company up on its offer, so he discussed raising the bonus to $1,500.
  • Every year Zappos publishes its “Culture Book” in which all employees are encouraged to write about what the culture means to them.
  • Tony recognizes that cultures often go downhill when companies scale. He wants Zappos’ culture to get stronger as it grows.
  • Tony offers this advice to Zappos employees: It’s completely up to you guys. I can’t force the culture to happen; so part of your job description is to display and inspire the culture.

I asked Tony if I could share some of our discussion in my blog. He said yes. Why? It met his basic principle for deciding what he’s willing to share:

Would sharing it make the world a better place?

The bottom line: Most firms would be a better place if they were more like Zappos.

Which Customer Experience Topics Are Hot?

I like to look at how many people (Forrester clients) are reading my research reports. It helps me figure out the topics that people care about. So I decided to share some of that info in this post. These are my 15 most-read documents over the last 6 months [along with their publications dates]:

(Here are links to my complete list of research and my 2008 research agenda).

My take: Some observations about this readership…

  • Experience-Based Differentiation (EBD), the oldest piece of research on this list, remains a vibrant blueprint for customer experience excellence. I continue to get a lot of demand on this topic for speeches, workshops, and advisory sessions. I am very excited about my current research on “Customer Centric DNA” which will illuminate the third principle of EBD: “Treat customer experience as a competence, not a function.” Look for that to get published in late June.
  • Clearly the Forrester’s Customer Experience Index is hot, especially with three of our key industries: banking, insurance, and retail. We plan to repeat that research again this year, with even more industries.
  • Many companies are beginning to actively look at how to reach Gen Y. Our data shows that these consumers are quite different and relatively underserved across many industries.
  • One of my newer reports, The Business Impact Of Customer Experience, is getting a ton of readership because people are looking for quantitative proof (to reinforce their intuition) that customer experience is tied to loyalty. Well, this research shows that it is. So now it’s time for companies to get moving and make some improvements.
  • Customer experience remains a hot topic overall. I continue to have the highest level of readership at Forrester; the number of clients that read my research during the past 6 months was nearly 70% higher than the second analyst on the list.

The bottom line: If people keep reading, then I’ll keep writing.

State Bank And Trust Pays It Forward

This past Friday I saw a very inspiring news report about State Bank and Trust in Fargo, N.D. In what it called the “Pay It Forward Challenge,” the bank gave each of its 500+ employees $1,000. The only stipulation, according State Bank’s chief operating officer Michael Solberg, was as follows:

There were three rules. You can’t give it to your family. You can’t give it to a co-worker. And you have to document your good deed. Other than that, the sky’s the limit.

The bank also gave every employee a video camera to document their gift.

When employees were asked what they hate about working at the bank, here were some of their responses:

  • What do I hate about management? They’re just too nice!”
  •  “I haven’t found anything yet.”
  • I have to go home.”

Why is this important for customer experience? According to COO Solberg:

That’s our mission statement: happy employees, happy customer.

My take: State Bank highlights a critical concept: Customer-centric DNA starts with employees.

The bottom line: Don’t you want to do business with a bank like State Bank?

Joie de Vivre Engages Employees And Everyone Wins

I just read an interesting article in Monday’s Wall Street Journal called Hotelier Finds Happiness; Keeps Staff Checked In. It’s a story about how Joie de Vivre Hospitality improved the performance of its hotels by focusing on employees. Here’s the opening story…

Former management at the Hotel Carlton in San Francisco didn’t like to replace aging vacuums, despite staff complaints. After Joie de Vivre Hospitality Inc. took over operations in 2003, the new manager bought a vacuum for each of the 15 housekeepers — and replaces them every year.

This was just one example of how Hervé Blondel, the Hotel Carlton general manager, said he tried to treat workers as partners rather than employees. In addition, he did things like sitting in for front-desk workers on their lunch breaks and heeding staff suggestions to eliminate minibars, which generated little revenue at the midprice hotel.

My take: The founder and CEO of the firm, Chip Conley, definitely seems to understand the strong link between employee satisfaction and good customer experience. The article talks about a number of things that he does to engage employees like sponsoring parties and awards, arranging paid annual retreats for employees, hosting regular dinners with those who want to chat, and offering free classes on subjects from Microsoft Excel to English as a second language.

It looks like Joie de Vivre Hospitality is a great example of a key principle of Experience-Based Differentiation: “Treat customer experience as a competence, not a function.”

But that wasn’t what caught my eye the most in this article. What I really found amazing were the numbers that were quoted. Here’s what it said:

  • Joie de Vivre’s turnover is 25% to 30% annually, about half of the industry average.
  • Market Metrix estimates that each departure costs a midrange hotel about $5,000 in lost productivity, and recruiting and training a replacement
  • Joie de Vivre has 2,500 employees. About 90% are hourly workers who take reservations, clean toilets and perform other low-status jobs.

So lets do some math with those numbers. Reducing the turnover from 50% to 25% for its 2,250 hourly workers means that the hotel chain has 562 fewer employees leaving each year. That saves the company more than $2.8 million each year. And that doesn’t even include any revenue from the likely uptick in loyalty and positive word-of-mouth. Wow! 

The bottom line: Engaging employees makes sense for customers and the bottom line!