Tuesday, May 7, 2013

Satisfied Employees = Satisfied Customers = Profitable Companies

When it comes to understanding how to balance the need to keep a sharp eye on the bottom line and keep a workforce fully satisfied and productive, some managers and companies seem to get it while others don’t have a clue.

There’s a ton of research and surveys that prove the following:

Satisfied employees = satisfied customers = profitable companies
While I may not be a researcher, I have no shortage of stories from readers, friends, family, and acquaintances that bring this simple formula to life.

Here are two real recent examples. The names have been changed to protect the innocent.
Company #1: 20 Cents an hour

“Marty” is a department manager at a regional grocery chain. Marty consistently hits his numbers – in fact, he often the #1 performing department of the entire chain for stores.

How does he do it? Well, he works hard, keeps waste to a minimum, is good with the customers, and takes care of his employees.
He recently did a performance evaluation for one of his assistant managers, “Bob”. Bob is a 17 year employee, hard worker, never calls in sick, and over the last year has consistently gone above and beyond to help Marty meet his goals and take care of the customers. After submitting the paperwork and getting the required approval from above, Marty gave him a great review and a 70 cents per hour raise.

You would have thought Bob had won the lottery! He was ecstatic, grateful, proud, and walking on air for the next two weeks. It was the biggest raise he had ever received. Bob was already a solid employee, but as a result of that extra recognition, he was working even harder with extra enthusiasm.
Four weeks later Marty got a call from one of the regional managers. It seems there was an oversight in the approval process, and Bob’s raise was 20 cents more than allowed under company policy. No matter how hard Marty fought, at the end of the day, he had to tell Bob his raise would be 20 cents less.

Bob was devastated. What was once an engaged, productive, proud “associate” quickly turned into a dejected, bitter, and completely demotivated employee. Marty did the best he could to soften the blow, but he couldn’t blame Bob for being ticked off.
I’m not sure how the story will end – maybe Bob will come around – or maybe he’ll go work for a competitor or get fired for a bad attitude. If that happens, it’s going to cost the company thousands of dollars in lost productivity, replacement hiring costs, and training costs. Some estimate the average cost of turnover to be $75,000. I’d say that’s conservative.

All for 20 cents per hour. $400 dollars per year.

Company #2: The $2000 sales management training lesson

Tony, a newly hired sales manager, went to his manager, Joanne, and confessed: “I screwed up! I made a promise to a sales rep that I shouldn’t have made. The operations manager just let me know that I didn’t fully understand our compensation policy and we need to take it back, or it’s going to put us $2,000 over budget. What should I do?”
The response from Joanne? “Take it back?! Hell no! Admit that you made a mistake, and the let the sales rep keep the payment. He’ll respect you for it, and word will quickly spread amongst the rest of the sales reps that you have their backs. That’s a small price to pay for that kind of loyalty and commitment. We’ll make up the $2000 in no time. I’ll talk to the operations manager.”

Joanne clearly understood the impact of the perception of screwing over one of the company’s top sales reps because of a management mistake. The sales rep was even more appreciative when he found out it was a mistake yet it wouldn’t be taken away. While the operations manager wasn’t too happy initially, he got over when he saw the sales numbers at the end of the month.

And now….. the rest of the story:
Company #1 continues to struggle and just got purchased by a competitor. Company # 2 is making money hand over fist in a tough economy. You might argue that company #2 could afford to make the policy exception. Actually, one of the reasons that company is so successful is that they keep a sharp eye on costs and wastes.  Apparently, making good on a promise isn’t considered an unnecessary expense; it’s considered an investment in keeping your workforce engaged and productive.

Both true stories – better than anything I could make up. Two similar management mistakes and company policies, yet two very different responses and results.

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