Employee Hierarchy of Needs

I actually considered calling this post, “If mama ain’t happy, ain’t nobody happy.” In the same way that mothers are often the key connector in familial relationships, employees are the key connector in the relationships between a company and its customers. As a result, if our employees aren’t happy, our customers won’t be happy with our companies and our companies won’t be happy with the business results.

For some reason, the topic of employee satisfaction has come up in a multitude of conversations I’ve had lately. I recently had a great one with my most excellent colleague at ForeSee Results, Maggie Kalahar. Maggie had this to say:

“Employees shape the experience a customer has with your company each time they have contact, making employees the most memorable voice of your brand as they constitute the actual brand experience.  It’s people who ultimately deliver your brand promise.  It does not make a difference what you tell your customers about your brand if those who actually encounter the customer don’t deliver the values consistently.  For example, one poor experience with a rude sales associate at Retailer X can undo millions of dollars of brand advertising touting “The Friendly Faces of Retailer X”.  On the other hand, when employees deliver a positive experience consistent with your brand promise, your customers will in turn become stewards of your brand as well, translating to dollars for your company.”

Given the huge importance of satisfied employees in the overall success of a company, it’s surprising that more attention isn’t paid to employee satisfaction as a key financial driver. (And by the way, I’m certainly not guiltless. Sadly, it’s taken me way too many posts about other topics before getting to this important topic.)

All too often, we take our employees and their job satisfaction for granted. We focus all the power of our Type-A personalities on achieving financial results, acquiring new customers, launching new businesses, and driving customer satisfaction, but too often we forget about the people who actually turn all those action verbs into real-life actions.

We spend lots and lots of time considering our brand messaging, and we even spend a lot of time teaching our brand stewards (our front line employees, in particular) how to message our brand. But how much time do we spend ensuring our employees have the tools and the environment they need to effectively deliver our brand promises (as well as the actual desire to deliver the brand promises)? Sure, HR probably talks about it all the time, but this is not an HR issue.

This is really about the basic service every manager in an organization should provide to his or her staff in order to achieve those financial goals.

I previously mentioned putting employees first (even before customers) as one of the keys principles of a customer centric organization. The base principle is really the same as when flight attendants advise us to put the oxygen mask on ourselves before assisting our children. If we don’t provide a productive, positive environment for our employees, how can we expect them to provide the right environment for our customers?

But, man, satisfying employees is hard!

Providing the type of consistent environment required to really satisfy employees is actually a lot harder than providing the type of experience that satisfies customers. The reality is employee relationships are more interdependent, frequent, intense and intimate than the relationships we have with even our best customers. And we have so many more interactions with employees, any one of which can potentially derail the relationship if we don’t handle it correctly.

So what do we need to do to satisfy employees?

In my experience, the things that make the biggest differences are not parties, free lunches or even bonuses. Those things, while good and worth doing, are fairly temporary. They come and they go and they can be quickly forgotten if there are problems in the basic working environment.

I think the tenets of great working environments are really more akin to Maslow’s Hierarchy of Needs. Maslow’s pyramid starts with physiological needs and progress through safety, belonging, esteem and ends with self-actualization.

The Employee Hierarchy of Needs, if you will, contains a similar progression to ultimate satisfaction:

Basic tools
Certainly, a company’s employees need to have the basic tools to do their jobs. Those tools could be computers, uniforms, office supplies, etc. I don’t think many companies have big problems at this level. I would even add being paid a fair wage here. There can be little question that pay is an important aspect of any job. But getting the pay right is part of the very basic level of the working environment.

Trust and Respect
Trust and respect are the foundation of pretty much all successful human relationships, and it’s certainly no different in employee relationships. One of the best ways to assess the levels of trust in an organization is to examine assumptions regarding intentions. Do policies and procedures seem to assume the employees act on their best intentions or their worst intentions? In other words, are the policies in place mostly to ensure employees don’t do things they shouldn’t do, or are the policies in place to ensure employees have the right environment to do the things they should be doing.

Respect can certainly be gauged by how we treat each other. Do we follow the Golden Rule? In the workplace, one of the best ways to test Respect is in how input is heard from various members of the team. Are people’s ideas, when presented with thought and backed with supporting evidence, taken seriously? For the record, I don’t think “taken seriously” necessarily means the ideas are always accepted and implemented. However, if the idea is ultimately rejected, it should be rejected with the same or better level of thought and supporting evidence. To me, that’s taking an idea seriously and respecting the generator of the idea.

Matching the “A”s
This one is critical, and a mismatch here is often the source of some of the biggest problems I’ve seen during my career. The “A”s are Accountability and Authority. Many positions have job descriptions, but I’m talking about something a lot more specific and meaningful. I’ve found it’s critically important to be very, very clear about what each and every person in the organization is accountable for. This takes a lot of careful thought. Once we’ve defined those accountabilities, we have to ensure each person has the authority to deliver those accountabilities. This is hard. Accountabilities will inevitably overlap in some areas, particularly in hierarchies in the organizational structure. So the accountabilities need to be defined specifically and conflict resolution paths must be predefined. (Frankly, this could be a whole separate blog post…and maybe it will be.)

All of this is made much easier if the company has the types of vision, values and objectives frameworks I discussed in a recent post. Such a centrally defined framework provides the types of guidelines for decision-making that, while not eliminating conflicts and disagreements, at least provides a solid basis for debate and resolution.

Confidence
With a solid framework for decision-making, clear accountabilities and matching authority, employees can begin to make decisions about their daily work with confidence. As those decisions become more and more effective, employees become more self-confident. I’ve always found that self-confidence is the key to success in all aspects of life. Self-confident staff find it much easier to do what’s right for customers and for the business.

Training/Knowledge/Growth
The final layer of employee satisfaction is all about growth. Companies that invest in their employees’ growth will not only have happier employees, they will have more productive employees who generate better and better ideas for improving the company. This means mentoring employees, training them in areas even beyond their current scope of responsibilities, being more transparent about aspects of the business that are interesting to particular employees and more. Creating more skilled and more knowledgeable employees has an extremely high ROI.

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Focusing and delivering on all layers of the Employee Hierarchy of Needs can lead to the type of employee satisfaction that leads to customer satisfaction and big profits (investor satisfaction?). But there’s no question that it takes constant focus and a lot of hard work.

Behavioral economist and author Dan Ariely, in his excellent book The Upside of Irrationality, ran some interesting experiments around meaningful working conditions. He found that “if you take people who love something…and you place them in meaningful working conditions, the joy they derive from the activity is going to be a major driver in dictating their level of effort. However, if you take the same people with the same initial passion and desire and place them in meaningless working conditions, you can very easily kill any internal joy they might derive from the activity.”

We’ve all encountered employees of various establishments who’ve had their joy killed. They’re not productive and they don’t provide great experiences. We certainly want more for our teams and our companies. The alternative of course, is joyful employees, customers and investors. That’s a happy world I want to live in!

What do you think? How would you describe the Employee Hierarchy of Needs? What have you seen work and not work in your organization?

It seems we also drive our businesses in circles if we don’t have strong focal points like clearly defined visions, goals and strategies.

I learned this odd fact about humans walking in circles when listening to a recent NPR piece that covered a research paper on the topic written by Jan Souman, Ilja Frissen, Manish Sreenivasa, and Marc Ernst. According to the paper:

We tested the ability of humans to walk on a straight course through unfamiliar terrain in two different environments: a large forest area and the Sahara desert. Walking trajectories of several hours were captured via global positioning system, showing that participants repeatedly walked in circles when they could not see the sun. Conversely, when the sun was visible, participants sometimes veered from a straight course but did not walk in circles. We tested various explanations for this walking behavior by assessing the ability of people to maintain a fixed course while blindfolded. Under these conditions, participants walked in often surprisingly small circles (diameter < 20 m), though rarely in a systematic direction. These results rule out a general explanation in terms of biomechanical asymmetries or other general biases. Instead, they suggest that veering from a straight course is the result of accumulating noise in the sensorimotor system, which, without an external directional reference to recalibrate the subjective straight ahead, may cause people to walk in circles.

It’s easy to see the parallels in our business environments. Without a clear vision of where we’re going, it’s easy for “accumulating noise in the sensorimotor system” (I love that phrase) to send us off course. In the world of retail, we’re constantly bombarded by internal and external demands for short-term change. Those demands are often driven by overly narrow data analysis (such as daily or even hourly comps), emotional reactions, gut feel, wild ideas, competitive shifts and more.

So what do we do about it?

We can’t stop the noise, but we can provide ourselves some solid focal points and guide rails to keep us on a straight path towards ultimate success.

1. Write a meaningful, compelling, and easy-to-remember vision statement
   

   I’ve often personally had negative reactions to even the idea of vision statements because so often they are overly wordy and meaningless to everyone in the company who wasn’t in the room when they were developed (which is generally almost everybody). A particularly bad example would be something like: “We are committed to achieving new standards of excellence by providing superior human capital management services and maximizing the potential of all stakeholders – clients, candidates and employees – through the delivery of the most reliable, responsive, flexible, and cost-effective services possible.” Too wordy. Too many buzz phrases. Not enough inspiration. Not enough meaning to most people in the company or its customers.

   All too often, vision statements like the previous example are created in a boardroom, printed on posters hung all over the company and almost immediately ignored. And then the business runs in circles.

   But it doesn’t have to be this way. A carefully created vision statement can be the focal point that drives all business decision and keeps the entire company moving in a straight line to success.

   Consider the following excellent examples and how they might guide your decisions:

   Amazon: “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

   Google: “To organize the world’s information and make it universally accessible and useful”

   Ritz-Carlton (they call theirs a “credo”: “The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission.

   We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience.

   The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.”

2. Develop measurable goals that lead toward the vision
   There are millions of articles online (according to Google it’s more that 3 million) that explain how to set good business goals, so I won’t go into all of that.

   But I will say just creating “SMART” goals is not enough. The goals have to also be aligned with the vision and serve as milestones along that straight walk to success. It’s entirely possible to create a specific, measurable, attainable, relevant and timely goal that doesn’t progress us towards our vision. I suppose you could argue that “relevant” should be the attribute that aligns us with the vision, and it should be, but I’ve seen “relevance” twisted to individual agendas too often to rely on it without comment.

   So the goal has to lead us toward the vision. For example, a Ritz-Carlton hotel manager might have a goal that says “Improve lobby ambience scores on guest satisfaction scorecard from 83 to 85 by December 31, 2011.” That would be something that specifically aligns with the vision and tells the manager how well he’s walking the straight line to the success.

3. Implement brand  and service guidelines to establish boundaries
   Brand guidelines are also critical to help us understand what boundaries we can work within on our straight line to success. I think of them almost as swim lanes. We might not swim perfectly straight, but as long as we stay in our lanes we’ll have the latitude to deal flexibly with changing conditions while continuing to head toward our vision. Consider Ritz-Carlton’s 12 service values:
   1. I build strong relationships and create Ritz-Carlton guests for life.
   2. I am always responsive to the expressed and unexpressed wishes and needs of our guests.
   3. I am empowered to create unique, memorable and personal experiences for our guests.
   4. I understand my role in achieving the Key Success Factors, embracing Community Footprints and creating The Ritz-Carlton Mystique.
   5. I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
   6. I own and immediately resolve guest problems.
   7. I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
   8. I have the opportunity to continuously learn and grow.
   9. I am involved in the planning of the work that affects me.
   10. I am proud of my professional appearance, language and behavior.
   11. I protect the privacy and security of our guests, my fellow employees and the company’s confidential information and assets.
   12. I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.

Of course, the entire process is not as simple to implement as it is to write about. But I’ve found over the years that dedicating considerable thought to providing clear, compelling direction for all employees to follow a relatively straight line can help prevent destructive business circles and keep us on the straight line to business success.

What do you think? What types of business direction have you seen that worked best for you? Would you share some examples? How about the opposite? When have you seen it all go horribly wrong? What can we learn from those failures?

“What does it really mean to create a customer-centric culture ? We hear companies say it all the time. I would wager that almost every retailer claims to have it. But what does it really mean and how do you know if you really have it?”

Culture is a powerful and interesting beast, and I certainly don’t claim to be an expert in developing corporate cultures. However, it’s a topic of great interest for me, and I’ve had the opportunity to observe and operate within many corporate cultures. I’ve learned that corporate cultures cannot be decreed from the top as cultures get their power from all of the people within them. While CEOs and other leaders can be influential in culture development, they can also be completely enveloped by powerful cultures that are driven from all levels of the organization and formed over many, many years.

That said, I believe there are certain dynamics that drive cultures, and we can influence and shift cultures by focusing on these key areas.

Without further ado, here are what I believe are the four key facets of a truly customer-centric culture:

1. Faith
   Customer-centric organizations believe in an almost religious way that sales and profits are the by-product of great customer experiences. They are unwavering in their belief that intense focus on creating the best possible experience for their customers is the best way to grow their businesses. Some of these organization will go as far as saying sales don’t matter, but that’s not exactly accurate. All businesses need to create profits, but truly customer-centric organizations focus on the customer experience and not on directly “driving sales.” They believe the best way to improve sales is to view them as an outcome of great customer experiences rather than something that can be directly affected.

   I once had the opportunity to meet with Yahoo and Google in back-to-back meetings regarding potential partnerships with my company, and the two discussions could not have been more different. The Yahoo team was very focused in determining how the partnership would increase Yahoo’s revenues while the Google team interrupted us immediately when we began to discuss revenue. They said they were only interested in opportunities that would enhance the Google experience for their users. Period. I didn’t take this to mean they weren’t interested in growing their business. They simply believed that Google’s purpose was to help people find all the world’s information, and they would maximize their revenue by delivering on their purpose in the best way possible for their users.

2. Fortitude
   Relentless focus on the customer experience is not easy, particularly for public companies. Truly customer-centric organizations constantly have their faith tested by both external and internal forces who are looking for short-term sales or profits, even if those sales and profits might come at the expense of the customer experience. Customer-centric organizations focus on the value of a customer engagement cycle that relies on great customer experience as an engine that drives retention and positive word of mouth.

   There will always be pressure to run short-term promotion to goose sales. It’s not that customer-centric organizations don’t run promotions; it’s just that they run those promotions in context of their larger purposes in service of their customer. They focus on earning  sales and loyalty rather than buying sales and loyalty.

3. Employees first (even before customers)
   It may seem counterintuitive to say customer-centric organizations put their employees before their customers, but in my experience this is true and this may actually be the most important of the four keys I’m discussing here. It’s a bit like when we’re instructed by flight attendants to secure our own oxygen masks before helping our children secure theirs. All employees play a part in the experiences we provide our customers. Some have direct contact with our customers and others make daily decisions that ultimately affect the experiences our customers have with us. Their attitudes about their jobs and the company can make or break the experience they provide for our customers. This is sort of obvious for front line staff like store associates and call center agents, but it’s also true for site developers, delivery truck drivers, mid-level managers, executives and, frankly, janitors. Even those not on the front lines are constantly making decisions that affect our customers’ experiences.

   Truly customer-centric organizations therefore provide absolutely great career experiences for their employees so their employees pass along the greatness to their customers. While decent salaries are certainly a factor, money alone is not enough. An “employees first” approach means employees are treated with great respect. They’re trusted with the authority to deliver on clearly defined accountabilities. They’re also given clear direction and clear guidelines and fully supported when they make decisions that improve the customer experience.  Colleen Barrett, President Emeritus at Southwest Airlines (a customer-centric organization), also points out that the customer is not always right. There are scenarios where the customer is clearly out-of-bounds and truly customer-centric organizations know when to support an employee over the customer. Watch a brief clip of her discussion at the recent Shop.org Annual Summit for some of her keen wisdom on empowering employees and defining an employee-first, customer-centric culture.

4. They talk the talk and walk the walk
   As Sarah says in her question, most retail organizations profess to be customer-centric. Those that truly are customer-centric talk about customer experience internally exponentially more than they talk about it externally. Strategic and tactical discussions always center around improvements for the customer. These organizations measure the success of their businesses by metrics that represent the perceptions and voices of their customers. They spend a lot of time and effort ensuring these voice of customer metrics are credible, reliable and accurate, and they focus on them incessantly. These metrics are the first metrics that are discussed in weekly staff meetings from the executive level to the front line level. Bonuses are driven by these metrics, too, but the regular discussion of the voice of customer metrics and the drive to improve the experience on a daily basis is what separates customer-centric organizations from companies that discuss sales first and customer metrics later, if ever.

Are these attributes ideals for a perfect world that aren’t rooted in reality? I don’t think so. Organizations such as Google, Zappos and Southwest Airlines attribute their success to such thinking, and based on some of my experiences with them they seem to be living up to the promise. Is it easy? No way. While earning loyalty may not yield the immediate sales results buying loyalty can, the longer term efficiencies gained through providing great customer experiences can more than make up for the difference.

Those are my observations about customer-centric cultures. But as I said a the beginning of this post, I am not an expert. I’m very curious to hear from you.

What are your observations about customer-centric cultures? Have your worked for such an organization? Did true customer-centricity ultimately lead to solid financial results? What would you add to the keys I’ve listed?

(By the way, this is the first time I’ve had a reader submitted topic for discussion, but I would love to have more. Please email me at kevin.ertell@yahoo.com if you’ve got a topic that would be good for discussion in this space.)

But we’re certain about a lot more things than we should be.

A recent University of Michigan study by Brendan Nylan and Jason Reifler shows that the more certain we are about particular ideas or situations the more we become blind to facts that discredit our certainty. In fact, in many cases opposing facts are not just ignored but actually strengthen our prior beliefs.  A recent Boston Globe article provides an excellent summary of the research.

From the article:

Most of us like to believe that our opinions have been formed over time by careful, rational consideration of facts and ideas, and that the decisions based on those opinions, therefore, have the ring of soundness and intelligence. In reality, we often base our opinions on our beliefs, which can have an uneasy relationship with facts. And rather than facts driving beliefs, our beliefs can dictate the facts we chose to accept. They can cause us to twist facts so they fit better with our preconceived notions. Worst of all, they can lead us to uncritically accept bad information just because it reinforces our beliefs. This reinforcement makes us more confident we’re right, and even less likely to listen to any new information.

Both the research and the article focus primarily on our political viewpoints, but while reading I couldn’t help but think of people I’ve come across in the business world who were unbelievably certain about their viewpoints based on information or experiences that seemed less than obvious to me. I immediately thought of dozens of people, and I bet you’re thinking of many such people now.

In fact, it was so easy for me to think of other people that fit the bill that I couldn’t help but think the man in the mirror was not immune to this universal human fallacy.

In my experience in the business world, we often assume with undue certainty that past experiences will reflect future possibilities. We say things like, “We tried that before and it didn’t work” or “I know what our customers want.” While our past experiences are extremely valuable and are very important for informing future decisions, we simply don’t have enough of them to blindly ignore changes in circumstances, timing and other variables that could significantly alter results for a new effort.

So how do we overcome our natural instincts in order to make better business decisions?

1. Be aware of the problems with certainty
   You’ve read this far, so maybe you’re awareness is already active. I know that I am reassessing all the things I “know” to try to truly separate what is fact and what is assumption. I very much value all my experience, and I know I make better decisions because of what I’ve seen and heard along the way. But I want to make doubly sure that assumptions I make based on past experiences are tested and validated before I turn them into absolute fact.
2. Actively seek alternate points-of-view
   In my experience, the combination of multiple experiences provides a much more solid foundation for decision making than basing decisions on singular past experiences. Techniques I’ve used, like The Monkey Cage Sessions, are based on the incorporating viewpoints from people in different functional areas and levels of the organization. While it’s acceptable to discount data or opinions that are in opposition to a decision I might make, I want to be sure I’m not simply rationalizing opposing information or viewpoints solely because they are different from my biases.
3. Envision alternate scenarios
   I addressed this some in a previous post, “Obscure and pregnant with conflicting meanings”, where I discussed a technique I called “Scenario Imagination.” I’ve since read an excellent interview with Daniel Kahneman and Gary Klein where they detail a similar and better technique they call “pre-mortem” (which is also a better name than mine). Whenever we make decisions, we have a tendency to assume our decisions are going to produce the best possible results. These pre-mortem techniques have us imagine worst case scenarios to try to dissect potential problems before they occur.
4. Be flexible and plan for contingencies
   Once we admit we’re not 100% certain, we can move forward with plans that are flexible and able to react to changing conditions. To be clear, I’m not saying we should just be wishy-washy and not make clear decisions. What I’m saying is that we should be open to new facts and be sure we have created an environment that allows us to change course when warranted.

If we’re aware of our certainty biases and take active steps to address them, I believe we can significantly improve our decision-making in our businesses.

What do you think? Upon self-examination, have you turned beliefs into facts in your mind? How would you suggest addressing these biases? Or, do you think is all a load of hooey?

But they didn’t understand.

When shown an image of fans burning his jersey, James seemed temporarily startled before stating that he couldn’t “get involved in that.” His Sports Q rating, which determines an athlete’s popularity and advertisers use to determine whom to endorse , was the highest in the NBA pre-announcement, but it’s sure to take a hit now. In fact, this post calculates a drop in Q score could cost him as much as $150 million.

But what does this all have to do with retail?

I think there’s a lesson we can all learn about dangers of making business decisions without fully considering the effects of those decisions on our customers. After all, our businesses wouldn’t exist without our customers, and we continue operations at their pleasure.

We’ve probably all been in those meetings where a suggestion motivated by self-interest groupthinks its way into a spectacularly anti-customer business decision. I imagine that’s the type of meeting that occurred with LeBron and team when they hatched the national TV special idea.

A retailer colleague of mine recently told me a story of such a session at his company. The head of the call center was complaining about volume spikes that kept hitting the call center. Her call center operations were deemed a cost center, so the metrics she used to measure her operation were all cost related. These spikes in volume were jacking up her costs, and she was making a lot of noise about it. My colleague noted the spikes in volume were following promotional email blasts that were widely considered very popular because they drove a lot of sales. No one would even consider stopping those emails, so the group began to latch on to the idea that they simply close the call center on days when the promotional email went out. Seriously. Luckily, my colleague was able to pull the group back from the brink and save them from going LeBron. But it was close.

We have to be careful that we don’t get so caught up in our own perspectives that we lose sight of our customers’ perspectives. Because we have direct control over the experience we provide, it’s sometimes easy to let that control be dominated by our own needs without considering the needs of our customers. When that happens, we’re seriously in danger of going LeBron.

Consider a few potential scenarios:

Does your company’s loyalty program makes its rewards intentionally difficult to redeem in order to reduce costs? If so, you might be going LeBron.

If your return policies make your job easier while making your customers’ returns a lot more difficult, you might be going LeBron.

If you promote a sale of up to 70% discounts and bury only an item or two at 70% off within a sea of items that are less than 20% off, you might be going LeBron.

If you choose to leave in place an onerous process for customers to check the status of their orders because it saves you time and money, you might be going LeBron.

Whenever our needs get way out of line with our customers’ needs, we’ve got a business problem that could be deadly. We provide products, services and conveniences that our customers value enough to give us their hard earned cash in exchange. But the relationships we have with most of our customers are somewhat fragile. When we make business decisions that are primarily motivated by our own self interests (especially those motivated by some subsection of our businesses and driven by short sighted personal motivation), we risk potentially fatal damage to many of those relationships. We don’t want be caught startled that our customers are burning our jerseys. We don’t want to go LeBron.

Instead, we can best succeed by regularly considering our customers’ needs and desires when making business decisions. Such consideration will help us maximize the customer engagement cycle and lead us to solid and profitable growth.

What do you think? What examples have you seen of companies going LeBron?