Posts tagged: Dan Ariely

Employee Satisfaction Leads to Customer Satisfaction (and Big Profits)

“Companies with strong consumer branding outperform Standard & Poor’s index.  It’s a lesser known fact that companies with a high rating from both consumers and employees double that return.”
Carol Parish, Enterprise Global Brand Agency

Employee Hierarchy of Needs

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 Maggie Kalaharexperience.  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?

My Favorite Business Books of the Year

“I am learning all the time.  The tombstone will be my diploma.” ~Eartha Kitt

“Books are the bees which carry the quickening pollen from one to another mind.” ~James Russell Lowell

And my all-time favorite quote about reading…

“Outside of a dog, a book is man’s best friend.  Inside of a dog it’s too dark to read.” ~Groucho Marx

I love to read books and absorb new information and ideas. In this final post of the year, I thought I would share some of the books that most inspired me this year. I hope you might also get great value from them. Some of them aren’t exactly business books, but I got business value from them and I thought you might benefit similarly.

Without further ado, and in no particular order, here are my favorite books of the year:

Customer Culture bookCustomer Culture: How FedEx and Other Great Companies Put the Customer First Every Day
by Michael D. Basch

This one was recommended to me by Anna Barcelos after I wrote my post on the 4 Keys to a Customer Centric Culture. Luckily, I think I was largely on the same page as Michael Basch, but I learned so much more about company cultures after reading his tome. Basch was a co-founder of FedEx and their initial SVP of Sales and Customer Service. He relays plenty of his learnings at FedEx, but he also relates the stories of other customer focused businesses small and large. He even covers an incredibly innovative Australian dentist office! Many of the stories sparked plenty of ideas in my mind, and I even excerpted one to highlight in my blog post on the power of naivete. Basch gives some very specific and easy-to-follow advice on creating the types of customer-focused cultures that drive businesses that simply succeed more because of their focus on their customers.

Why Can't You Just Give me the Number

Why Can’t You Just Give Me the Number? An Executive’s Guide to Using Probabilistic Thinking to Manage Risk and Make Better Decisions
by Patrick Leach

Every manager and executive should read this book. Patrick Leach does an excellent job explaining the concepts of probabilistic thinking and decision making, and he does it in everyday language that is easy to consume for business people who don’t necessarily have advanced degrees in mathematics. He makes a very compelling case for using probabilistic thinking to greatly improve the bottom line. This book, more than any other, was the inspiration for some of my posts on Monte Carlo simulations.

Hidden BrainThe Hidden Brain: How Our Unconscious Brains Elect Presidents, Control Markets, Wage Wars and Save Our Lives
by Shankar Vedantam

This is a book that I actually didn’t love immediately after reading it. However, the concepts I got from it kept creeping back into my brain, and maybe that’s an even better way to value a book. I excerpted a bit of it in my most recent blog post on the power of our hidden brains to dominate our decision making in ways we don’t consciously realize. Author Shankar Vedantam deftly manages to explain complicated brain inner workings through easy-to-read stories that illustrate the concept and leave lasting memories.

Upside of IrrationalityThe Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home
by Dan Ariely

I included Dan Ariely’s first book, Predictably Irrational: The Hidden Forces That Shape Our Decisions, as an all-time favorite in last year’s list of best business books. While the experiments and ideas in that book were probably more useful in the marketing and merchandising functions, I would say this book is much more about human interactions and general management and leadership. Ariely focuses on topics such as the effect of pay on performance, the motivational value of creating things, and the high addiction of our own ideas. As you might guess from the title, Ariely’s conclusions are not often what we’d expect but extremely beneficial.

SwitchSwitch: How to Change Things When Change is Hard
by Dan and Chip Heath

Anyone who’s attempted to implement major change in an organization knows how difficult it can be. This book is an excellent guide for how to implement and encourage change in business and in life. I loved not only the tips but the explanations about why we humans have such a difficult time with change. The Heath brothers use a metaphor of the Rider and the Elephant to describe the rational and emotional parts of our brains that are so fundamental to accepting and embracing change (and making decisions of any kind). It’s an excellent way to visualize the concept and a concept that I’ll not likely forgot.

ClickClick: The Magic of Instant Connections
by Ram and Ori Brafman

I actually dedicated a post to this book. This is a fascinating look at the reasons people click with each other. The authors really break it all down and in the process provide an excellent roadmap for creating better connections between people. Used in a business environment, this knowledge can help up create better functioning, happier and more productive teams.

design of everyday thingsThe Design of Everyday Things
by Don Norman

This is not a new book by any means, but I somehow never read it until this year. I found this book to be extremely eye opening and completely fascinating. Don Norman spends a lot of time talking about the design of objects like doors and faucets, yet the design principles he discusses and the human psychology learnings that go into those design principles are absolutely relevant to usable designs of things that didn’t even exist in the time he wrote this (the ’80s) — like websites. I explored just a couple of these concepts, and how they apply to retail websites,  in a post earlier this year.

And just for kicks, since I’m a music nut, here are my top 10 albums of the year:

  1. Trombone ShortyBackatown
    A great combination of jazz, funk, hip-hop and rock. Trombone Shorty rips on both the trombone and the trumpet. Standout track: “Hurricane Season.”
  2. Florence + the MachineLungs
    Technically, this record came out in 2009, but the Grammys have nominated them for Best New Artist this year I think I get to include the record in my list. Great vocals from Florence and the drums in particular are amazing on this record. The sound is powerful, a bit dark and different from anything I’ve ever heard. Standout track: “Dog Days are Over”
  3. Grace Potter & the NocturnalsGrace Potter & the Nocturnals
    Grace Potter can flat out sing, and the songs on this record are top-notch. This is just good, ol’ rock ‘n’ roll and a rollicking good time. Standout track: “Paris (Ooh la la)”
  4. The Gaslight AnthemAmerican Slang
    Gaslight Anthem are kind of a Green Day meets with Replacements and (not surprisingly since they are from New Jersey) jams with Bruce Springsteen. Standout track: “The Spirit of Jazz
  5. Mumford and SonsSigh No More
    The bluegrass tinted pop from British newcomers Mumford and Sons is highly infectious. Very impressive vocal harmonies as well. Standout track: “Winter Winds”
  6. Sons of SylviaRevelation
    A band of brothers (I assume their mother is named Sylvia), these guys have put together what I guess could be called an alt-country record because it’s basically pop music with country instruments. Lead singer Ashley Clark can flat out wail, and the band certainly holds their own. Standout track: “50 Ways.”
  7. Sharon Jones and the Dap KingsI Learned the Hard Way
    Sharon Jones and the Dap Kings are the best of the new wave of R&B retro, and this record does not disappoint. Standout track: “Money”
  8. OzomatliFire Away
    I’ve been an Ozomatli fan for a long time, but I think this is their best record since 2001’s Embrace the Chaos. Great combination of Latin, hip-hop and rock, and the songs are lots of fun. Standout track: “Yeah, Yeah, Yeah, Yeah”
  9. Aloe BlaccGood Things
    I suppose Aloe Blacc is a bit of an R&B retro artist, but he’s got a sound that feels both contemporary and throwback at the same time — and he’s very smooth. Standout track: “I Need a Dollar”
  10. SantanaGuitar Gods: The Greatest Guitar Classics of All-Time
    Carlos Santana teaming up with a bunch of guest vocalists to record some of rock’s all-time great guitar songs (sort of — I’m not sure Dance the Night Away would be my choice for a Van Halen song). Artistically, this is not particularly impressive. However, it’s a lot of fun to just listen to Carlos Santana wail away — even when he’s stepping all over the melodies. Standout track: “Back in Black”

What were your favorite business books of the year (and music, too)?

Best Business Books of the Year

With the holiday season upon us, I thought I would write about my favorite business books of the year to provide some gift giving ideas for you and your teams. Here, in no particular order, are my favorites among the books I read this year. (Note: These books were not all published this year, but since I read them this year I’m including them in my list.)

Six Pixels of Separation: Everyone is Connected. Connect Your Business to Everyone.
by Mitch Joel

Six Pixels of Separation begins as a primer for any business leader with limited knowledge of the Internet’s capabilities and quickly turns into an indispensable set of guidelines and advice for any business person who plans to make use of the web (which should be any business person). Mitch Joel offers excellent insight and plenty of simple, direct, digestible advice. This is a must read.

The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty
by Sam L. Savage

Every business person should read this book. We are so often looking for precise numbers when precise numbers are unrealistic. The reality is, we would actually be much more accurate to use probabilities and ranges when referencing uncertain number such as sales forecasts or project timelines. Savage takes us through the dangers of using averages to describe distributions and offers solid solutions that can be used to better manage our business.
Preview Flaw of Averages

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
by Nassim Nicholas Taleb

This book made me think more than any book in recent memory. That may be partly because it’s pretty dense and I had to read it more slowly than I normally read. However, I’ll give a lot more credit to the fact that Taleb’s makes some very interesting points about the amount of randomness in our lives and how that randomness is all too often mistaken for something more substantive.
Preview Fooled by Randomness

How We Decide
by Jonah Lehrer
I loved this book. Jonah Lehrer takes us through some fairly common behavior economics principles and experiments, but the very interesting twist he takes is to explain the brain mechanics that drive our thinking and decisions. He really uncovers why we’re “predictably irrational” and provides great insight into how we make decisions and how we can use that knowledge to improve our decision making.

The Drunkard’s Walk: How Randomness Rules Our Lives
by Leonard Mlodinow

I’m on a randomness kick lately, and this is the book that got me started on it. Mlodinow does a nice job of illustrating some of the finer statistical points in a pretty accessible manner. While this book isn’t as deep at the book I’m currently reading, “Fooled by Randomness,” it’s definitely an easier read and does a nice job of covering the basics.
Preview The Drunkard’s Walk

Sway: The Irresistible Pull of Irrational Behavior
by Ori Brafman, Rom Brafman

Another one of the behavior economics books I so love. This one has some pretty interesting stories and anecdotes, and its insights benefit from one of the writers being a psychologist and the other a businessman.
Preview Sway

More Than a Motorcycle: The Leadership Journey at Harley-Davidson
By Rich Teerlink and Lee Ozley

This is a very interesting book about culture change at Harley-Davidson during the ’90s written by the CEO and lead consultant who initiated the change. It can be a bit dry at times, but the details behind the thinking and the execution are excellent. I learned a lot by reading it.
Preview More than a Motorcycle


And here are some great books that I re-read this year:

The OPEN Brand: When Push Comes to Pull in a Web-Made World
by Kelly Mooney, Nita Rollins
The world is changing rapidly, and those who fail to realize it will be left in the dust. However, those who open their brand and see the value of allowing their best customers to participate in the brand will not only reap the benefits of those customers ideas, but they will also benefit from those customers becoming the largest and more credible Marketing department a company could have. Kelly Mooney and Nita Rollins explore these themes in an extremely insightful book that comes with lots of examples that help the reader visualize how these ideas could apply to his or her own business. The writing style and formatting is fun and extremely easy to read. This is a great handbook for any marketer in the 21st century.

Moneyball: The Art of Winning an Unfair Game
by Michael Lewis

While this is ostensibly a baseball book about the success of Oakland A’s GM Billy Beane, I actually found this to be an excellent business book. Michael Lewis tells the story of Beane defying the conventional wisdom of longtime baseball scouts about what good baseball players look like. Rather than trust scouts who literally would determine a baseball player’s prospects by how he physically looked, Beane went to the data as a disciple of Bill James’ Sabermetrics theories. Lewis describes how James took a new look at traditional baseball statistics and created new statistics that were actually more causally related to winning games. By following the James’ approach, Beane was able to put together consistently winning teams while working with one of the lowest payrolls in the Major Leagues. How can the same principles of trusting data over tradition and “gut” play in the business world? That is a thought I constantly ponder thanks to reading this book.
Preview Moneyball

The Culture Code: An Ingenious Way to Understand Why People Around the World Live and Buy as They Do
by Clotaire Rapaille

I picked this book up on a whim one day because the title was interesting. I was quickly engrossed by reading the story in the introduction of Clotaire Rapaille’s work with Chrysler on Jeep Wrangler. He describes the “code” word for Jeep in America is HORSE and advises executives to design round headlights instead of square headlights because horses have round eyes. They think he’s nuts, of course, but when it turns out round headlights are cheaper they go with them — and they’re a hit. They also then position the Wrangler as a “horse” in their ads and have great success. Rapaille goes on to describe what he means by “culture code” and details some of the hidden cultural patterns that affect most all of us. Some samples of other codes within the book are:
– The American Culture Code for love is FALSE EXPECTATION
– The female code for sex is VIOLENCE (Whoa! You’ve got to read the book to understand)
– The code for hospital in America is PROCESSING PLANT

There are tons more of these interesting observations embedded in short, easy-to-read chapters. Whether or not you buy into everything he says, it’s very interesting to see how he developed each code and certainly will expand your understanding of how and why people behave as they do under the powerful forces of culture
Preview The Culture Code

Predictably Irrational: The Hidden Forces That Shape Our Decisions
by Dan Ariely

This is the book that first turned me on to the fascinating world of behavioral economics. Ariely does an excellent job of explaining many of the core principles of behavioral economics with stories and experiments. Every retailer should read this book to better understand how people (customers) think and behave. It will absolutely open your eyes.

Those are some of my favorites. I’m always looking for a new read. What books fired you up this year?



Retail: Shaken Not Stirred by Kevin Ertell


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