Renowned business builders carefully watch over their employees, like a shepherd over a beloved flock. They are kind, respectful, encouraging and highly supportive. They value their team and have learned that happy employees are the key to a first rate business. This unique attribute is one of the powerful characteristics of award-winning entrepreneurs.
Several years ago, I was taught why and how to take care of employees. I had attended a senior management seminar sponsored by Omnicom, the publicly traded firm that purchased MarketStar Corporation; the company I had founded and led for many years. During a week in Boston with thirty other CEOs, we were taught by several distinguished Harvard professors the key principles and best practices of leadership. The instruction was insightful and invigorating. I soaked up every word spoken by these famous thought leaders. In many ways, the information I gleaned I had already learned from my parents and wise teachers. Other concepts were new and welcomed. I noted that my leadership style was consistent with their principles.
I am pleased to share with you a powerful business model called the Service Profit Chain, authored by Harvard professors Heskett, Sasser and Schlesinger. Its premise is that if leaders honor employees, profits will be the ultimate result. It is the opposite approach from a leader that has money as his or her number one goal; where people are dispensable.
In short, the model focuses first and foremost, on providing high quality service to employees as well as to customers, with financial reward as a byproduct. It's a wonderful model used by many of the world's top companies. The points and sequential steps are as follows:
1) Find and hire the best person for the job.
2) Provide a culture with high values and employee support systems.
3) Ensure employees are happy and productive.
4) Note that happy employees take good care of customers.
5) Happy customers reward the company with revenues, profits and referrals.
Conversely, consider a poor leader who hires the wrong people, promotes a vile culture, continually criticizes employees, who in turn mistreat customers who never return to shop and tell their friends to do likewise. Sadly, we all know companies that fit this profile, and these companies eventually fail.
There are several factors that have the most positive impact on employee happiness. The overarching sentiment is the Golden Rule; to treat people as you would want to be treated. As I visit with employees, these good people are delighted to share what activities, values and programs bring good cheer to them.
All want to know the company’s vision, mission, strategies and tasks that will yield company success and continuous employment. They abhor a weekly change in direction. They appreciate constant communication from management, whether good or bad. They desire clarity on their specific duties and how these tasks relate to all other employee assignments. They expect management to pay a marketable wage with benefits and provide the necessary resources to complete a project. They wish for feedback on their performance and to clearly understand a leader’s expectations. Happy employees want to feel they own their errands, having authority and responsibility to accomplish their objectives. They detest a micro manager. They seek a company culture where industry is recognized, honored and rewarded. They expect an environment of trust, fairness and justice. They aspire to live a balanced life. To them, opportunities for continuing education and promotions are very important. As these expectations are met by management, they feel valued as employees and willing to give their best effort every day of the week.
Happy employees honor customers and customers return the favor with purchases, not just one time, but regularly. They know they are respected and treated well. They tell their friends to shop. Dollars flow into the cash register, profits increase, and the company grows. Everyone is happy. Research shows there is a one to one correlation between happy employees and significant positive financial returns.
Year after year, management measures the happiness level of MarketStar employees. When it is high, profits are excellent. When morale is less than optimal, profits are lower as well.
Two powerful concepts are highlighted in this article. In sum, caring for employees is the right and best approach from both a benevolent and business point of view. Entrepreneurs who follow this wise model will be called blessed by their associates and will also enjoy the personal satisfaction of leading a highly successful company.
How well does your business follow the Service Profit Chain? I welcome your thoughts. You can reach me at www.AlanEHall.com or connect with me at @AskAlanEHall.
Alan E. Hall is a co-founding managing director of Mercato Partners, a regionally focused growth capital investment firm. He founded Grow Utah Ventures, is the founder of MarketStar Corp. and is the Chairman of the Utah Technology Council.
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