strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
 / Summer 2007 / Issue 47(originally published by Booz & Company)


Why Wait for Trouble?

The second area where I check for alignment is employee and customer satisfaction. There’s often a singular and very heavy drumbeat: “Just show me the financials.” Companies in turnaround situations usually have focused almost all of their effort on pleasing the shareholder through hitting today’s financials at virtually any cost, rather than addressing the inputs that create sustainable value. If your company has engaged and loyal employees, your customers will be engaged and loyal as well, and solid financial results will follow. Thus, in addition to financial metrics, a CEO’s compensation should be linked to employee and customer satisfaction — the metrics that show where leaders can make a genuine difference. If customers are engaged and loyal, then shareholders, who reap the benefits, will also be engaged and loyal. And then what happens to the employees? The odds are, they’ll have a better life by working for a successful company that creates wealth and opportunities for personal growth and financial gain.

Unsurprisingly, in companies in crisis, I always hear a variety of misaligned answers about employee and customer satisfaction. This often reflects the lack of any survey data. It also shows that the executives aren’t listening. The next step is to find better ways of measuring satisfaction. If the voluntary employee attrition rate is too low or too high, the company has a problem. The same applies to measures of customer churn and retention.

Improving employee satisfaction does not simply mean offering competitive pay and benefits (although these are important). Usually the employees’ concerns involve questions like, “Do I know what my company stands for? Does my supervisor know my name? Does he or she care enough about me to know my personal situation? Does the company provide me with the tools and training to do my job? Do managers give me the opportunity to develop and grow?”

To build employee satisfaction, leadership must communicate a clear view of today (I like to do this by describing the company’s current place among the five stages) and a compelling vision of the future. All employees need truthful and frequent information about the company’s performance, what’s happening in the external world, the nature of their own job, and the best ways to measure how well they are doing. They also need to know their supervisors, and the supervisors need to recognize every employee as a business partner — and as an individual human being. This creates an environment of trust, which gives the employee a reason to show up for work every day and help the company run well — thus avoiding the necessity of a turnaround.

Driving Accountability
When integrity is lacking at the core of any company’s culture, serious problems ensue. So I always ask questions like this one: “Has the leadership set accountability guidelines and expectations for employees, and does it monitor performance?” Without measures that tell if a job is well done, or clear decision rights that outline specific ownership of a particular issue, it’s hard to be personally accountable.

I also pay a lot of attention to observable behavior. Within 10 minutes of walking into a factory or a department, it is clear to me if there’s an accountability problem. Do the employees make eye contact when you walk up to say hello? Do they know the name of the person who’s running the factory or their department? If the answer is no, what are the odds that they have a clear view of their job and its impact on the customers?

Simple procedural questions can also highlight accountability problems. In one situation, on my first day on the job I asked my management team: “Can you describe your organization’s structure and give me the names of your key people?” Silence. Only one of the top people had an organization chart for their area of responsibility. There were no job descriptions. There were no performance reviews.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store


Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.