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March 2008

“The growth of a company is really the aggregate of the growth of its individuals.”

This 'no-brainer' statement is actually a serious indictment on the management of most organisations, who just don't 'get it.' Don’t believe me? Then just ask yourself what the correlation is between the investment in people in your organisation and the growth on its profits and/or performance. In most companies this isn’t even measured!   

Early in my career one of the biggest inhibitors of productivity was the tendency for many managers to assess their importance by the number of people they had working for them.  Fortunately we have moved on from there: unfortunately that is due more to the emphasis on downsizing than enlightened management.

If we really value people and the contribution they make to a business, why is it that when times get tough, almost invariably the first two things to get cut are:
1.    Headcount; and
2.    Training and development?
That very prevalent tendency proves that, as a general rule, management has no idea of the economic correlation between business growth and personal growth.   

The wonderful thing here, however, is that we are not actually talking theoretically. The growth of  Rosenbluth International from a $20 million company into a $6 billion global leader provides irrefutable evidence of the practical wisdom of Hal Rosenbluth's words. Yet, despite his example, and his detailed explanation of how he did it in his seminal book, “The Customer Comes Second,” very few organisations have picked up on his approach and followed his example. I cannot for the life of me understand why not.

Nor is that opening quote a single one-off statement. He backs it up when he says, “It’s important to look at training as a long-term investment. Companies that look for immediate returns on the time and money spent on training will be disappointed. The investment in training should be viewed no differently from any capital project. Its success should be gauged by the benefits over the entire life of the project, not just by looking at years one and two.”(P 85)

The only thing I would quibble with there, are the words’ “the entire life of the project.” To me a person’s training is part of the cost of growing that individual, something that has benefits way beyond the life of a single project.  This is why, in the Zealise approach, I would capitalise these costs, but as part of the increase in human asset value of the individual. This is what provides the added value, for it is this that re-establishes and reinforces the partnership between the individual and the organisation. It is thus not only the means to engender employee engagement and ensure that people are truly happy at work, but it is the glue that will cement the organisation and provide the basis for developing meaningful, empirical KPI that will improve business performance measurement AND prove the relationship between the growth individual growth and bottom line business growth.


“Companies earn the bad attitudes of their people.”

That is certainly a statement that doesn’t pull any punches! And, if it is true, then the Towers Perrin 2007 Global Workforce Survey revealing that 79% of employees are disengaged, is clear evidence that most organisations have a serious problem.   

So the $64,000 question is, “Is it true?” As it is largely a statement of opinion that probably isn’t possible to answer categorically, without a lot of research which I don’t have, but its validity can be established by looking at the source: Hal Rosenbluth, who made the statement in his book, “The Customer Comes Second.” 

As someone who definitely “walked the talk” he is unquestionably someone whose opinion has to be respected. In fact I would even go so far as to say, after the remarkable success he achieved putting his people first, he is certainly someone who should be listened to, and more effort made to follow his example. As I wrote last week, his book is a panacea for the ills of employee disengagement highlighted by the Towers Perrin and justifies the Zealise approach totally.

Let’s just have a look at some of the other things he says.

“Cries from corporate America lament a lack of motivation in the workplace, absenteeism, turnover, apathy, lethargy, and a host of other evils that drag production in our country down and make us a less fierce global competitor. The origin of these maladies is a lack of happiness in the workplace. Without it, the best-planned processes, the finest tools, and most marketable products go to waste. Without it, eventually all else breaks down.” (Page 35) And as the survey shows, its not just in the US.

“If more corporations paid as much attention to their people as they do to politics, public image and increased profits, everything else would fall into place. Profits are the natural extension of happiness in the workplace.” (P 36) Don’t you think treating people as human assets will provide a mechanism to ensure this?

“Most of us choose our spouse with care and rear our children with nurturing and compassionate attention. Yet we tend to select the people that will join our company on the basis of an interview or two, and once they have joined, they often find that they must fend for themselves.”

“Service begins in the heart. Too often a person’s job history carries more weight than his or her human values.”
(P 51) As I wrote last week, how can you possibly expect to deliver customer delight if a person’s job description carries more weight than the person doing the job?

That’s just the first quarter of the book, and there’s enough wisdom there to start a revolution. The tragedy is that it is so fundamental it should not need a revolution, but as the Towers Perrin survey shows; one is clearly needed! 


The Customer Is NOT Always Right

I have always thought the statement “The customer is always right” was a rather sweeping presumption that was at best questionable and at worst downright wrong. 

From a purchasing perspective alone it doesn’t always make sense. As a customer myself, there have been times when my purchasing decisions have been poor: when ‘buyer’s remorse’ has not been the result of hard selling on the part of the salesperson, but rather of my own prejudice, inflexibility, and unwillingness to be guided. In fact many of the purchases where I have been most satisfied have been those where I have been given advice and guidance. The adage that the customer is always right thus can be a Machiavellian principle that would make it legitimate to sell concrete lifebelts if that is what the customer requested.

But the issue runs deeper than just purchasing; it seems to me to be a statement that gives the customer superior rights and powers in what should rightfully be a mutually-beneficial relationship between equals.  Thus, when I read Hal Rosenbluth’s “The Customer Comes Second” recently, I was delighted to find that my instincts were sound. In fact, ever, since reading it, I have wanted to draw others’ attention to this very important and all-too-often overlooked fact. However, the words for a blog have simply eluded me. So I am delighted to have been saved that labour, for here is one that says everything that I wanted to, and more! I cannot recommend it highly enough, and invite you to read it and share your comments, and, if you are of the same mind, to spread the word!

After all, how can you ever expect to create customer delight, if your people management makes your people feel unimportant and inferior.


Who drives customer experience?

Business is ultimately about meeting the customer’s needs, which is why for so long ‘Customer Satisfaction' has been the primary CRM measure. Yet surveys indicate that 60-80% of customer’s who defect reported that they were ‘satisfied.’   

So the bar has been raised, and now it’s all about the ‘customer experience’ and creating ‘customer delight.’ Yet even while raising the bar, the judgement remains subjective and it is still all about perception. However, if that isn’t difficult enough, the challenge is compounded by the question, “Who is responsible for the customer experience?”

The fact is that customer experience is not, nor ever can be, the responsibility of any single person, for it is the culmination of the way things pull together. For example, the best efforts of a salesman to ensure that a delivery is made on the date the customer requested can be futile if the despatch process is chaotic. Customer experience can, and most likely will, vary in every single instance. Customers might change the experience themselves: after all eating the same meal in the same restaurant will not be the same two nights running.  

Yet even that is not the end of it. So much of the customer experience is determined by others outside the organisation and over whom one has no control. For example, imagine flying with a group of friends to go snowboarding in the Alps and arriving to find that some of the party’s luggage, including snowboards, had not made the journey with you! This happened to a relative recently. Initial enquiries resulted in a promise that the missing luggage would be sent out on the next flight and would be with them by lunchtime the following day, but in fact it only finally arrived 3 days later. Certainly not much ‘customer delight’ in an experience where the sole purpose of a holiday is adversely affected for literally half its scheduled duration! The inconvenience and inability to use their own equipment was offset, but not compensated for, by insurance. In this instance, however, the problem was caused by the baggage handlers at the airport and not the airline. So who here really shaped the customer experience?

Such inter-dependence is mirrored in countless organisations every day and, with the prevalence (curse?) of outsourcing, is becoming ever more commonplace. How will any organisation that aims to have loyal customers ensure a delightful customer experience in such conditions? 

This inter-dependence is why an organisation has to be considered as a team, and why it is so very important that people be regarded as assets and treated as such. There can be no  organisational alignment when there is no organisational teamwork, or people are not fully engaged and prepared to collaborate effectively. This can only happen when people assets are treated as such and feel like assets. Only then will you have the role-ownership, combined with the sense of team with its concomitant sense of collective responsibility. Furthermore, it is only when all this happens that it will become possible to ensure that there is proper inter-company liaison, that, even if service itself isn’t seamless, the standards of service and commitment will be universal.

Only then will it be possible to drive the customer experience.


It’s all about the people!

Business is not complicated. In essence it is simply a case of people finding a way to deliver a product or service to other people requiring that product or service. Consequently, for all the glamour and mystery we give it, business strategy is ultimately only about the development of a master plan to connect producer and customer. And no matter how sophisticated we make the production process, it all ultimately revolves around people.  

Since our earliest days as hunters and gatherers, when we first reasoned that we could be more economically efficient if we diversified and optimised individual talents for mutual benefit, business has always been about trade. Increasing sophistication has undoubtedly swelled the scale, but ultimately the increase in scale boils down to nothing more than the volume of transactions required. Unfortunately with scale the focus mysteriously switches to the transaction rather than the relationship that underpins it – with significant consequences for all involved. The old sales adage that “people buy from people” somehow gets completely overlooked, and a take-it-or-leave-it attitude begins to prevail.   

This applies just as much to intra-business transactions as to inter-business transactions, and is epitomised by the term “Human Resources” – a designation that equates people with the other inanimate “factors of production.” So the burgeoning trend to talk about people as assets and the increasing use of the term “Human Capital” is good news. But, driven as it is by a need for new management measures, there is a danger that the change in terminology will not change underlying attitudes. Without this change the workplace conflict, declining levels of employee engagement and poor customer service so prevalent today will remain a problem.

Signs that this tendency to dehumanise may be continuing include:
•    The classification of people as intangible assets;
•    The subordination of “Human Capital” below “Knowledge Management” and “Intellectual Capital”; and, possibly,
•    The burgeoning topicality of “Talent Management” with its inherent risk of focusing on talents rather than the whole persona, a possibly dangerous tendency when we all know that it is not always the star-studded team that wins the tournament, and when allowing people to develop and discover new talents is potentially the single biggest contributor to happy, engaged employees. 

Of course this is paradoxical when the trend is being driven by the recognition of the importance of people and the widely accepted fact that people constitute as much as 80% of the worth of a business, something which clearly corroborates my initial point. It also points to the fact that the most successful businesses will be those that manage their people best. So any organisation wanting to survive and thrive in today’s competitive world, simply must recognise the importance of people and find a way to effectively manage them.

Equally paradoxically, despite appearing to turn people into numbers on a balance sheet, Return on Human Assets not only offers a mechanism to drive this, but a universal benchmark to compare different organisations regardless of the nature of their business. This is because it goes to the very essence of business and deals with the fundamentals – the people: identifying the individuals who make both the internal and external trades that are the heartbeat of the business.