Authors: Leonardo Inghilleri,Micah Solomon,Horst Schulze
Tags: #Business
3. Standard Setting
: A leader needs to be a manager of processes and a force for performance measurement—there is much more to leadership than just cheerleading. For example, when launching an improvement effort, a leader will not only provide the vision (‘‘
This new
packaging initiative is important because it will allow us to become the industry
leader in the use of recycled packing materials by the end of next year. And as
the recognized leader, we’ll have a chance to be an inspiration for many
.’’). The leader will also insist that appropriate time and other support for the fledgling undertaking are built in to the daily work schedule. Important steps forward need to be given the room they require for proper execution.
A great leader must also be capable of setting performance standards and holding people accountable. Most companies suffer from being in-consistent, which is a by-product of the lack of standards. Without a full complement of well-implemented standards, even the most talented service team will have trouble fighting inconsistency. For example, think about what should be a simple concept:
timeliness.
In traveling the world, you may have noticed how drastically the definition of timeliness varies from culture to culture. If you have teenagers, you’ve probably noticed that they, too, don’t share your standard of timeliness. This is not a complaint against teenagers: They come from a different time-culture than adults, so they have a different understanding of what timeliness implies. But the discrepancy naturally disrupts and demoralizes somebody like you, an ambassador from grown-up culture, when you try to cooperate with your teenagers on an important project. In busi-
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ness, to successfully manage performance you must set, track, and enforce performance standards.
4. Support:
A good leader won’t let an employee suffer with an ineffective toolkit, either literally or figuratively; few things are more demoralizing. Too often, workers are asked to perform their jobs without the proper support. A good leader knows workers need support—specifically, the resources, training, equipment, and material to execute their tasks—and they make sure this support is there.
5. Motivation, recognition, and reward:
Many leaders underestimate the importance of these factors. Motivation is your employees’ flotation de-vice and their swimming coach. When the seas are rough, motivation keeps an employee afloat. It lets her know that she’s got support: She can keep swimming and succeed. She can keep going because the goal is up ahead, and she’s getting there. At a certain point, she’s begun swimming well; she’s helping the efforts of the company. You recognize her for the good job she’s doing; you give her a prize, a medal, a bonus, or simply a thank you. Great leaders miss few opportunities to recognize somebody for a contribution, and they seek events to celebrate with the same intensity they use to find problems that need to be solved.
An employee cannot be treated like a piece of a machine—a cog or a bolt. It’s not moral, and it doesn’t make business sense: A bolt can’t stretch to help a customer. It can only be a bolt. But a person, inspired by a leader, can stretch a bit to the right or left to be helpful—and thus build the value of your business.
What we call the moral leadership of employees involves, at a minimum:
? Involving them in the design of the work that will affect them
? Enhancing their pride in their work
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? Enhancing their purpose, rather than using them only for their function
? Supporting their community and family involvement (however they define ‘‘family’’), in good times and bad
? Supporting their involvement in areas of the company outside of their strict area of assignment
And, most fundamentally, moral leadership of employees involves knowing that it’s wrong to see a worker as ‘‘eight hours of labor’’—even though, if you look at your Profit & Loss report, labor may be classified as FTEs (full-time equivalents). Companies make hiring requests for shift workers this way, never writing the word
people
: ‘‘We need five FTEs, five FTEs insured, three shifts a day, 365 days a year.’’
People are
not
FTEs.
Leadership Throughout the Ranks
An organization with a great leader will spawn other leaders throughout the ranks. Let’s illustrate this in the humblest of settings: The low-level supervisor charged with helping a new worker learn to clean a restroom properly can be a service leader in her own right. How? First, she can convey her vision before any specific skills are taught: Maintaining a clean restroom is the right thing to do, because guests and visitors will appreciate it. When our guests are offered a clean restroom, they’ll feel comfortable with our company; they’ll look on us with favorable eyes and want to return to our establishment. And return business is very important to our company’s financial health.
Then, once she has explained this vision, she’ll begin to train her new employee.
(‘‘Use these particular chemicals in this particular way, with these particular safety precautions.’’)
She’ll establish and explain the standard for what ‘‘cleanliness’’ means concretely: No trash or dirt on the floor. The mirrors need to sparkle. The trash cans are never more than half full.
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A service leader in this position sets up a good measurement and inspection system as well, ensuring that an appropriate level of performance can be maintained on an ongoing basis.
She also makes sure she supports her new worker properly.
She supplies him with high quality supplies and ensures that he is trained in their safe and environmentally appropriate usage.
In addition, she communicates frequently and clearly: If the company is expecting an unusual number of visitors on a given day, she lets her employee know in advance.
Finally, she works continually to ensure that her employee is motivated. She lets him know when he is doing a good job and applauds the ways he is helping the organization reach its goal.
She involves him in changes to the work processes that affect him, and she looks for opportunities for recognition and advancement for him in the organization.
Pointers on Value, Costs, and Pricing
Customer loyalty is a thing of wonder—and it’s a hard-nosed kind of wonder that you can take to your accountant. Loyalty makes customers less price sensitive, more willing to spend money with you, more willing to take a chance on extensions to your product line (assuming you don’t abuse this trust in inappropriate ways), and much more immune to competitive entreaties. But no company can afford to spend all of its revenue trying to maximize the customer experience or guarantee customer loyalty. Fortunately, there isn’t a need to. In Chapter 6 we explained how systems derived from manufacturing can help service-focused companies minimize their costs behind the scenes. In this chapter, we work through some of our clients’ most common concerns about how to control costs while still providing superior service.
What Does Loyalty-Enhancing Service Really Cost?
We would argue that service that wins you loyal customers is well worth it at nearly any cost—because of its immense benefits. Still, what
does
it cost? In some cases, superior service clearly
does
cost more to 108
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deliver than average service. For example, the ESF group of summer camps in Pennsylvania and Connecticut employs counselors and staff who are older and more experienced than the ‘‘kids counseling kids’’
you often find in competing institutions. Even the greenest counselor you’ll encounter at an ESF camp will be a college student pursuing a degree in early childhood, elementary, or secondary education, child psychology, social work, counseling, or another child-related field. The staff-to-camper ratio is among the lowest in the industry and is cleverly allocated: for example, while one nurse is on premises throughout the day,
two
nurses are put on duty during all peak periods.
Is this approach more expensive than the customary approach? Absolutely. But parents are devoted to the camps; the farthest thing from their minds would be to compare it on a commodity/price point basis with other summer options. Plus, like loyal customers everywhere,
they
promote the camps tirelessly to their friends and neighbors.
Recently, in fact, a group of 35 ‘‘expat’’ camp families who had moved from Pennsylvania to Connecticut due to job relocation suggested a new camp location up there to ESF. Even better, they then signed up enough of their New England neighbors and friends to ensure the camps were able to successfully carry off the expansion. (Imagine that: loyal customers who encourage and facilitate your business expansion by serving as your ‘‘siting service’’ and ‘‘advance team’’—
pro bono
.)
This last point is fundamental: For a fuller accounting of the net cost of maintaining loyalty-building standards such as quality of staffing, you must consider the various kinds of expenses saved and revenue earned through energetic word of mouth marketing, unusually low staff turnover, unusually low client (in this case camper) turnover, lower insurance rates, and elimination or reduction of negligence lawsuits.
Well-trained, well-equipped, and well-treated personnel have longer company tenures, lower accident rates, and fewer behavior problems. When you hire and train the right kind of employees—those who embrace their underlying service purpose in your company—you receive back far more productive work than is achieved by a typical employee in a typical organization. Like the purpose-driven security 110
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guard posited in Chapter Seven, patrolling the mall and
also
guiding lost shoppers to their destinations, super-staffers can be—and want to be—everywhere that a customer needs them. They can do this for you, and they
will
. Similarly, solid facilities, high quality tools and materials, strong safety programs, and other key supports for staff and customers: Are they hard to justify sometimes? Hard
not
to justify if you want repeat business—and repeat staff showing up every day and giving you their best performance.
As discussed in Chapter 6 features our customers value need to be shielded from willy-nilly cost cutting. At the same time, there are un-doubtedly excesses built into some customer encounters and services. A specific sort of excess you should tune your antennae for is called
lily
gilding.
(The term comes from compressing a Shakespeare phrase; the original quote from his
King John
is ‘‘To gild refined gold, to paint the lily’’—to overdo the already perfect.) Lily gilding is the brilliantly hand-polished finish on an end table—when the end table is always hidden by a tablecloth. It’s an air conditioning compressor too powerful for the space it cools.
In customer interactions, lily gilding often takes the form of fancying up your offering beyond what your customers are interested in (or interested in paying for). This has both obvious and hidden costs. The hidden costs include excess features that can make your offering less attractive by complicating it for customers or implying to customers that they’re paying for something they don’t need.
Finding Gold in De-Gilding
Sometimes, de-gilding will bring a surprise benefit to your customers—and you, in addition to bottom-line savings. In a recent tradition-breaking example, famous glassmaker Riedel realized What’s Worth It, and What’s Not?
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that the
bowl
was the essence of the wine glass and that the stem, rather than being a necessary feature, was ornamentation that carried drawbacks with it. Mass retailer Target then saw the benefit to themselves in Riedel’s new approach, including reduced storage costs and inventory breakage for the retailer, and they brought the product to consumers on a scale that Riedel could never have done by itself. And once a few customers took them home and realized how well they fit into the cupboard and dishwasher and how rarely they broke (having no stem to snap off ), they spread the word for free.
‘‘Compared to What?’’: Value Is Relative
Customers often judge your value relatively. That is, they judge each interaction with your company against their previous interactions with you—and with your competitors. For example, when a passenger gets on an airplane in first class, he expects to be offered his choice of bever-age. If he isn’t, the service feels wrong. This isn’t something each airline can make its own decision about without understanding that its customers’ expectations are determined by an
industry-wide standard
for what first-class service means.
To make sure you understand the comparative expectations of your customers, shop the competition—your
best
competition. (Truly shop.
Don’t just wander in; spend some money, and take a transaction from beginning to end. You may be amazed at what you learn.) Survey the customers of your competition. Survey your
own
customers, or at least customers in your market segment, about the competition. (Do this only anonymously. Never insert questions about the competition into one of your own branded surveys. You damage your brand when, un-bidden, you bring up the competition.)
Don’t let resentment or insularity lead you to dismiss a competitor’s innovations. Think rationally about whether there is value there you could make use of for your own customers.
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Pricing Is Part of Your Value Proposition
A good equation for value is ‘‘Value ס Personal Benefit minus Cost and Inconvenience.’’ But the Personal Benefit variable can easily over-ride the cost factor for a significant sector of the market, at least up to a certain point. Not everybody values money the same, clearly: If commerce were all about low pricing, there would be no space for retailers like Nordstrom; everyone would be shopping at Walmart. Instead, for Nordstrom customers, quality, personal shoppers, and a great return policy provide a Personal Benefit that make the equation—for them—work out in favor of paying more to get more.