IMPROVING CUSTOMER SATISFACTION THROUGH EMPLOYEE SATISFACTION…. PROVE IT!

CUSTOMER SATISFACTION

While it has been long established that organizations with a quality foundation have better leverage to achieve high levels of customer satisfaction, one key way to attaining this goal comes from being particularly focused on employee satisfaction. (1)  You might hear this cited but its believe it or not so often overlooked. Also you may have heard this before but never actually seen any data to prove it. Well here is some evidence for you.

“Employee satisfaction is significantly related to service quality and to customer satisfaction, while the later in turn influences firm profitability…. leading to a satisfaction-quality-profit cycle.” (2)  In one study based on 7,939 business units in 36 companies found that, “on average business units in the top quartile on the employee engagement measure produced 1-4 percentage points higher in terms of profitability. Similar results were found for productivity (revenue or sales per month). Business units in the top quartile on employee engagement had, on average, from $80,000 to $120,000 higher monthly revenue or sales”. (3)

So satisfied employees are more productive, innovative and loyal, which in turn leads to customer retention. Therefore, employee satisfaction plays a “strong, central role” (4)  in predicting profitability and “organizational effectiveness” (5).

With direct links between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance, what are the elements that explain and drive employee satisfaction. (6) In a study of 5,568 employees across 90 companies and 37,036 of their customers, it was found that organizational communication, employee engagement and organizational culture are the three key antecedents to employee satisfaction. (6)

There is also clear evidence that there is substantial value to “upward feedback for increasing employee sensitivity to managerial and unit performance and for enhancing managers’ attention to behaviors that influence departmental performance and customer satisfaction”. (7)

RULES OF THUMB FOR CUSTOMER SATISFACTION

• Each satisfied customer will tell 6 others about you
• But a dissatisfied customer will tell 48 others about you
• 68% of customer defection is due to customers feel poorly treated or experiencing a poor product or service

EMPLOYEE SATISFACTION

This is an important time to focus on employee satisfaction. Even Americans who are lucky enough to have work in this economy are becoming more unhappy with their jobs, according to a January 2010 survey that found only 45 percent of Americans are satisfied with their work. That was the lowest level ever recorded by the Conference Board research group in more than 22 years of studying the issue. The drop in workers' happiness can be partly blamed on the worst recession but worker dissatisfaction has been on the rise for more than two decades." It says something troubling about work in America. It is not about the business cycle or one grumpy generation," says Linda Barrington, managing director of human capital at the Conference Board, who helped write the report. Workers have grown steadily more unhappy including because fewer workers consider their jobs to be interesting. If the job satisfaction trend is not reversed, economists say, it could stifle innovation and hurt America's competitiveness and productivity. And it could make unhappy older workers less inclined to take the time to share their knowledge and skills with younger workers.

• Show respect and genuine concern for employees and their families.
• Provide ongoing training for all employees.
• Communicate to your employees.
• Involve employees in the company.
• Reward your employees for work well done.

What are YOUR thoughts on customer and employee satisfaction?

References

1. Nilson, L., Johnson, M., and Gustafsson, A. (2001). The impact of quality practices on customer satisfaction and business results: Product versus service organizations. Journal of Quality Management, 6 (1), pp. 5-27.

2. Yee, R.W.Y., Yeung, A.C.L., and Cheng, T.C.E. (2008). The impact of employee satisfaction on quality and profitability in high contact service industries. Journal of Operations Management, 26 (5), pp. 651-668.

3. Harter, J.K., Schmidt, F.L, and Hayes, T.L (2002). Business unit level relationship between employee satisfaction, employee engagement and business outcomes: A meta analysis. Journal of Applied Psychology, 87 (2), pp. 268-279.

4. Yoon, H.Y., Seo, J. H., and Yoon, T.S. (2004). Effects of contact employee supports on critical employee responses and customer service evaluation. Journal of Services Marketing, 18 (5), pp. 395-412.

5. Koys, D. J. (2006). The effects of employee satisfaction, organizational citizenship behavior and turnover on organizational effectiveness: A unit level longitudinal study. Personal Psychology, 54 (1), pp. 101-114.

6. Cozzani, C.A., and Oakley, J. L. (2005). Linking organizational characteristics to employee attitudes and behavior: A look at the downstream effects on market response and financial performance. Forum for People Performance Management & Measurement, pp. 1-15.

7. Adsit, D.J., London, M., Crom, S., & Jones, D. (1996). Relationships between employee attitudes, customer satisfaction and departmental performance. Journal of Management Development, 15 (1), pp. 62-75.

NEXT TIME, The ‘House of Quality Model’ for the NHQA

UPCOMING TOPICS

1. The Value of Checklists & Audits
2. The True Value of the NHQA Feedback Report
3. The Impact of Quality for Builders
4. Benchmarking High Performers
5. The Importance of Process Management in Green Building
6. A3 an Improvement Tool