Category: Organizational Excellence

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Customer Loyalty Begins With Employee Loyalty

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Customer loyalty is fast becoming a key strategic initiative for most businesses because loyal customers stay with your organization, and will continue to buy your products or services. Revenue and profitability are important business indicators, but too often they reflect decisions an organization made yesterday; whereas growing a loyal customer base is a key predictor of future success. When an organization is focusing both on profitability and loyal customers, they have the best chance of creating a sustainable business.

A key factor that many organizations miss is the fact that they cannot have loyal customers if they do not have loyal employees. Employee loyalty can be defined as employees being committed to the success of the organization and believing that working for the organization is their best option. It is not about employee tenure. It is about wanting to contribute to the success of the organization.

Finding good employees can be challenging and time consuming. However, once you find the right fit and nurture the employee relationship, it can be quite costly to see that relationship go by the wayside. Depending on what research you read the cost to replace a hourly employee can be anywhere from 35% to 50% of their salary, and for a professional staff person, the replacement cost can go as high as 125%.

How can your organization foster employee loyalty?

  1. Share your vision and strategic plan.
    Communicating what the organization stands for, where the organization is going, and how that impacts all stakeholders, particularly the employees, is key. Employees want and need to know what they are a part of and how their contribution will make a positive impact on the success of the organization. Give them a reason to be there!
  2. Encourage ideas and feedback.
    Create an organizational culture that is open to new ideas and fresh perspectives. Your employees are on the front lines and they can tell you what is working and what might work better. In a recent client engagement where we were working with a cross functional team, a woman who had the least to do with the process made one simple suggestion that ended up saving the organization hundreds of thousands of dollars. Loyal employees make positive contributions!
  3. Walk your talk.
    Everything you do and say needs to embody the values and culture of employee loyalty. Recognize and respect your employees. Let them know when they are exceeding goals and objectives, and praise accordingly. If there is a challenge, then give your employee the details straight up. Give employees open and honest feedback and they will reward you with loyalty.
  4. Measure Your Company’s Employee Loyalty.
    You cannot manage or improve what you are not measuring. Your organization cannot improve its employee loyalty factor unless you know your starting point. Do you have a system in place to capture that data? If not, create one or find one. Give your employees an opportunity to tell you what is going well and what needs to be improved. Based on the data you will be able to make strategic decisions that will continue to foster employee loyalty. Your people really are your greatest asset!

 

Creating a loyal customer base can be the measurable difference between you and your competitors. Enhance your ability to accomplish that strategic goal by creating and maintaining loyal employees. Your employees will always be the key!

Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses assess, measure and improve their employee and customer loyalty. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.

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Take a Look in The Mirror

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Since at least the time of Plato and Socrates some 2400 years ago, mankind has been implored to “know thyself,” in life and in business. Individually, this is often taken to mean knowing your strengths so you can leverage them and knowing your areas of weakness so you can improve them or compensate for them. But it involves much more than this. While at the business level, many organizations struggle with getting more done with fewer people and less resources. As your employees have changed roles or added responsibilities, you need to have confidence that you have the right people in the right positions to get the best possible results.

In some cases you do have the right team members in the right places and in some cases you probably made some wrong choices, as we all have. Companies forced to reorganize made quick decisions resulting in people landing in the wrong roles. Likewise, companies that have experienced significant growth have ended up with similar staffing outcomes. Diagnostic assessments can help you identify performance gaps and help your company effectively understand and align the talents, behaviors, and motivators of every employee. Having the right employee in the right position is as critical to each individual’s success as it is to the success of the entire company.

The first step in bridging performance gaps is for management to commit to a people development process for employees. It should be based on the skills, attitudes, and behaviors necessary for them to do their jobs successfully. If the size of the organization is large enough, it can be implemented by HR. Regardless, the objectives and strategies of developing employees, and how those employees are going to help drive results, needs to be owned by management.

After commitment has been gained and the objectives have been identified, diagnostic assessments can help determine individual performance gaps, since developmental opportunities will be employee-specific. Assessments can also be utilized as an important tool for creating skill development as well attitudinal and behavioral improvement while eliminating employee and organizational resistance to change.

There are a multitude of individual assessment tools available, but regardless of which we utilize, when working with clients we focus diagnostically on the whole person as defined by these three key areas:

  1. WHAT natural talents do your employees possess? An analysis of TALENTS gets at a person’s ability to do things, how they make decisions and interact with the world around them, as well as how they perceive themselves.
  2. WHY are your employees motivated to use their natural talents, based on their personal motivators and drivers? An analysis of MOTIVATORS gets at why people do things. Everyone has their own unique mix of personal drivers and motivators that help guide them toward success. Understanding what really drives a person is a crucial element of success.
  3. HOW do your employees prefer to use their natural talents, based on their preferred behavioral style? An analysis of BEHAVIORS gets at a person’s manner of doing things; how they do things. Since each individual has their own unique preferences and habits for how they like to behave, this understanding is crucial when working with team members as a leader or a manager, or in an environment that requires conflict resolution.

 

Establishing new behaviors requires that the employee feels able to adopt those behaviors and feels comfortable doing so. A well-designed people-development process focused on objectives leveraging diagnostic assessments drives long-term change. After the completion of a development process, we consistently see high levels of adaptable change with sustainable results. To learn how to achieve these types of sustainable results for your people and your business give us a call or visit www.pb-coach.com.

When you are looking in the mirror, you are looking at the problem. But, remember, you are also looking at the solution.

 

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A Winning Team

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As children and teenagers most of us have played on a sports team. Can you remember what it felt like to be part of a winning team or a losing team? Remember the elation you felt when your team won a big game and the despair of losing the big game or championship? It is something special to experience being part of something bigger then yourself.

In my experience the concept of a “team based culture” is something a lot of entrepreneurs, business owners and executives want but find very difficult to achieve.  The difficulty begins with the definition.  Plato said that wisdom begins with the definition of terms. So what does Webster’s Dictionary have to say about teams: “a number of persons associated together in work or activity”. Webster’s goes on to describe teamwork as: “work done by several associates with each doing a part but all subordinating personal prominence to the efficiency of the whole”.  This is a good start but does not give us enough practical detail and guidance in the business world. Steven Yelen a New York based Business Coach with over 20 years experience in supporting organizations and teams give us some guidance with his ideas on fundamental principles and behaviors that work.

Fundamental Principles of a Successful Team:

-Common Purpose

-Clear and mutually agreed to working approach

-Appropriate balance of task focus and relationship focus

-Agreement on Measurements and Aligned Rewards

Behaviors that support Successful Teams:

-Push for high quality communications

-Help create a climate of trust

-Play your position and bring talent to the team

-Help drive discipline into the team

-Be prepared to sacrifice for the team-be a good sport

-Help new members make the entry

-Strengthen the leader through good followership

-Play down yourself and build up others

Why Teams fail to deliver results?

The biggest root cause of team failures in business can often traced to the lack of establishment of clear purpose, goals, measurements and rewards. Without these foundation pillars in place trust is often the first casualty followed by a lack of energy and sense of helplessness.  Finally, if the leadership is not walking the talk then you can expect cynicism to spread quickly and undermine any opportunity for success.

Final Thought:

There are many examples of organizations that have achieved excellence and delivered exceptional results by creating a team based culture. Some examples include GE, Motorola, McKinsey and Pall Corporation.   Do your research and look at the top players in your industry and you will often find a team based approach separating the leaders from the followers.

A great resource for helping you understand and build high performance teams can be found in the book “The Wisdom of Teams” by Jon R. Katzenbach and Douglas K. Smith. 

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The Formula For Success

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STRIVING. PERFORMING. ACHIEVING. Those three words say a lot. When you STRIVE, you work hard and exert yourself, often against the tide of conventional opinion, competition, and your own complacency, doubts and fears. When you PERFORM, you are using your skills and abilities to do something…to execute and to get results. Ultimately, when you ACHIEVE, you are living a purposeful life. You reach a level of performance that is indicative of true success: you’re achieving your goals and dreams!

We understand that success is a journey and a way of living purposefully, not a destination. The foundation of our business coaching work is represented by The Formula for Success:

A ( S + K ) + G = PBC      IR (O, P)

Attitudes plus Skills & Knowledge directed by Goals delivers Positive Behavior Change which yields Improved Results, both Organizationally and Personally.

Let’s look at each component of the Formula, working from right to left…

IR

The first thing we look for is how our clients define success. We start out by asking what improved results (IR) our clients want to achieve in their organization or in their personal lives, and how that will be tracked and measured. The importance of a thoughtful definition of success is that it provides a target toward which everyone can aim. Everything else we do is specifically geared around achieving those results.

PBC

Wouldn’t you agree that if that target is different than where you are today, then you must do something (behave) differently to get there? PBC represents positive behavior change. A definition of insanity is doing the things you’ve always done, but expecting different outcomes.

G

G represents goals. Goals provide focus, otherwise there is no direction. Doesn’t it make sense that if people had goals on which to focus their energy, it would be easier to change their behavior in a way that can be sustained? Goal setting is the tool that generates the activity necessary to turn ideas into strategy, strategy into plans, and plans into reality.

S+K

S+K represent the necessary skills (the how to do something) and knowledge (the where and when to do something). Our process focuses on development of behavioral management skills, meaningful communications, influencing or selling skills, problem solving, decision making, organizing time, disciplining, developing subordinates, delegating authority, motivating others, appraising performance, etc. Everyone needs to be very competent in these areas, but especially in the workplace, where more than 50% of any manager’s job involves using these skills.

A

The A stands for attitude (the want to). Our coaching approach is based on a result-oriented philosophy that first involves developing a goal-oriented attitude among people. Attitude is more of a multiplier of skills and knowledge that will directly influence the goals they set and achieve. People will directly determine in many cases whether they turn a problem into an opportunity, or succumb to it; whether they behave in ways that benefit the entire organization or maintain fiefdoms; whether they expand the client base and services provided or allow atrophy to set in; and whether they diligently look for continuous improvement, or remain satisfied with the status quo.

The results we get depend upon our behavior and attitudes toward the people or events involved, and toward ourselves. If attitudes are basically negative, goals will be set low, and it will be difficult to progress. Growth and promotion will be all but impossible until a positive mindset is developed.

There are many ways and opportunities for individuals and organizations to better focus on results, attitudes and behaviors, skills and knowledge, goal setting and achievement. If you are interested in taking an important first step, let’s chat.

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How Many Partners Do You Have?

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“I want to take my business to the next level. We need to grow by 40% this year and 150% over the next 3 years.  But…”

I heard this from a business owner just last week. His “but” was his concern that his staff wasn’t prepared to get it done. They didn’t follow procedures, spent time on unimportant tasks, didn’t think out of the box and looked to him for all of the important answers.  With those issues, taking his business to the next level will be difficult if not impossible.

What he needs are some partners. When I say “partners”, I don’t mean legal partners with a financial investment in the business. I mean people who have an emotional investment in the business. He needs to find ways to make people feel like owners even though they’re not. As the true owner of the business, he may never have a team that’s a passionate as him about growing the business. However, there are things he can do to dramatically increase his team’s level of ownership and passion. By doing this, he can create a team that feels ownership, even if they’re not true owners.

Here are some ways to make that happen:

1.       Conduct Joint Planning & Goal Setting – Typically, goals are set by leaders and passed down to the “rank and file”. Since the team had no hand in setting these goals, there’s never total buy-in. What’s worse, when goals aren’t met, the team blames unrealistic goals, rather than their own performance. Leaders should give their team enough information (company goals, historical performance, strategic objectives, etc.) to set their own goals. Of course, leaders should still be responsible for approving all goals; challenging those goals that are either too aggressive or not aggressive enough.

2.       Help Employees Understand the WIIFM – Most leaders try to motivate by rallying the troops around what’s important to the company. That’s important…but there’s something much more important. People are more motivated by What’s In It For Me (WIIFM). It’s not that they’re selfish, it’s just human nature.  Work with your team members to understand how they’re personally impacted by the business goals that have been set. Notice I didn’t recommend you tell them how they’re impacted. Everyone is different. You (and/or your leadership team) need to work with each team member to find their own unique “why”.

3.       Don’t Have All The Answers – Don’t let your ego get the best of you. Stop dictating decisions to your team and ask your team for advice. This doesn’t mean “management by consensus”. Ultimately, as a leader, you need to make the final decision, but it’s critical to make your team part of the process. Even if you think you know the answer, ask your team what they think first, before dictating a decision.

4.       Encourage Conflict – Does your team get along great? Do you always seem to agree with each other? Do you have trouble remembering your last major team conflict? This may seem strange, but if you answered yes to these questions…you’ve got problems. A team needs conflict to evolve. Think of it as Darwin’s theory of evolution for business. If good ideas don’t crush bad ideas, and great ideas don’t crush good ideas, a business (and its employees) will grow stagnant and die.

Implementing these ideas will certainly allow business owners to do a great deal more than just increase revenues. Having additional “partners” in a business will also increase productivity, improve morale, enhance customer loyalty, increase margins and maybe most important of all, reduce stress.

How are you cultivating partners in your business?

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How Do My Goals Contribute To The Strategy?

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Strategy and goals should influence everyone’s behavior in the organization!

The work at the top of the organization in creating strategy and goals is intended to influence behavior that drives results. Unfortunately, it’s not unusual for the primary impact of the work to remain at the senior management level. It’s kind of like having a car with an engine and no wheels. Despite the importance of driving the strategy and goals deeper into the organization, the messages as to how the strategy relates to execution typically become unclear and confusing the further down they go.

Passing goals down without creating meaning causes frustration…

The responsibility for creating clarity around what the strategy means at the business unit, team and individual levels, and for ensuring that the strategy is executed is a shared management responsibility.

There are many dynamics within fast paced changing organizations that contribute to the lack of alignment. However, the biggest obstacle appears to be “a lack of understanding.” Why is this? Repeating the company strategy is easy enough, but without translating strategy into relatable actions with those who are expected to execute at every level of the organization, has limited impact. When managers involve people and teams they lead in these discussions, SMART goals can be written that connect everyone’s contributions to the strategy. It also improves sustained commitment through the ability to measure ongoing results.

Planning backwards focuses on results…

Managers can facilitate the process by asking three questions:

  1. How does the strategy affect our unit?
  2. What must we accomplish?
  3. How will we accomplish it?

Through this process a shared language and framework for how to think and talk about alignment occurs among the team/department enabling them to match their behavior to a set of commonly understood goals and actions. To create focus on the truly critical goals to your team and the company, apply the following questions as a litmus test to each of the existing goals: 

  • What is its economic impact? – How will this goal contribute to company performance?
  • Is it aligned with the company’s strategy?
  • How will it satisfy stakeholders?
  • What is my level of passion, talent, and energy for it?
  • Do we have the resources? 

If people in the organization don’t understand how the company is supposed to be different and what opportunities they are to pursue, how can they make the tough choices that they have to make every day? (Porter, 1980)

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One 3-Letter Word You May Want to Rethink

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Let’s talk about a word we probably all use frequently—it’s a very powerful word, but not in the way you might think.   It’s the word TRY.  How often do we use that word in the context of something we are doing, a goal we are setting, an objective we are reaching for?  It’s hard to even write that last sentence without using “try,” as in “something we are trying to do, an objective we are trying to achieve.”

“Try” has become part of our vocabulary, but it limits our abilities to focus on a goal and commit completely to achieving something.   As a way to illustrate this, let’s do a quick activity.  If you are sitting down, stand up.  Are you standing?  Now … try to sit back down.  No, don’t sit down, TRY to sit down.  How did that work?  What do you notice?   The bottom line:  You can’t try to sit down – you either sit down or you don’t. 

Is that same principle not also true of goals or something we set our minds to – that we either do them or we don’t?  We either accomplish or don’t accomplish what we set out to do.  In a take-off from what Tom Hanks said in the movie League of Our Own,  “there’s no trying in life.”  (Well, he actually said, “there’s no crying in baseball,” but you get the point!)

The point is that you can’t try to achieve whatever you set out to achieve – ultimately, you either achieve it or you don’t.  Consider how often we either hear others say “try” or we say “try” ourselves.   How much more powerful and accomplished might we be if we took that pesky three-letter word out of our vocabulary?  Here are some examples across a wide spectrum of areas:

  • Your kids:  from “Yes, Mom, I’ll try to get my homework done before dinner,” … to … “Yes, Mom, I’ll get my homework done before dinner.”
  • In a meeting at your workplace:   from “I’ll try to talk with them about the project,” … to … “I’ll talk with them about the project.” 
  • With your wife/husband/significant other:  from “Let’s try to spend more time together on the weekends,” … to … “Let’s spend more time together on the weekends.” 
  • In your life:  from “I’m trying to exercise three times a week,” … to … “I am exercising three times a week.”

Do you notice the difference in how the statements above sound when the word try is in them or not in them? 

So, here is your challenge:   For the next week, don’t just try to do whatever you are focused on – do it without the “try” in your sentence.  Catch others in the act too – have them try to sit down to illustrate your point.  And as always, let me know how it goes!   

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DON’T Use Business Metrics…At Your Own Peril

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They say what you don’t know won’t hurt you, but nothing could be further from the truth when you run a small business. If you operate based on “gut instinct,” or you make assumptions on how your business is performing without knowing the facts, you can run into problems quickly. Fortunately, there is a simple solution. By monitoring a few key business metrics, you can quickly gain a handle on your business and start on the path to improving your profitability.

Business Metrics
Business metrics, or measurements of business activity, have long been seen as the exclusive tool of the pure number cruncher, the bookkeeper, and the statistician. That’s no longer the case. In today’s increasingly flooded marketplace, the mantra must be: “You can’t manage it if you can’t measure it.” By defining the metrics that are important to your business and monitoring them closely, you gain three key benefits:

– Focus. Defining the metrics that are most important to your business allows you to tune out everything that isn’t related to those key measurements. As a result, you’ll find that you and your business are much more efficient.

– Better Vision. Companies that monitor metrics can spot threats and opportunities faster than companies that don’t. Your metrics will give you keen insights into what’s happening within the four walls of your business as well as overall trends in your industry.

– Better Decisions. Metrics provide a framework for making business decisions. With the numbers in black and white, you can make well-reasoned decisions on how to proceed. If it improves your key metrics, consider it. If not, move on.

Implementing Metrics
Getting started with metrics is easier than you might think. Many small business owners don’t understand how simple it can be to collect and analyze these important numbers. A simple seven-step process gets you started.
1. Define Your Goals. Make a list of business goals. Goals might include sales objectives, target profit margins, or success at signing up new customers.
2. Define the Metrics. For each business goal on your list, write down a metric that will help you track your progress to success. For example, if your goal is signing up new customers, your metric might involve stating the number of meetings you will have per week with perspective customers.
3. Benchmark Current Status. Now that you established your metrics, you need to measure them. You must determine exactly how your business is doing, even if the truth is hard to swallow. By establishing the current value of each metric, you will be able to track your improvements in the future.
4. Put in Place a System to Monitor and Report Metrics. You may need to add new business processes that will help you calculate and report your metrics. For example, is the number of your customers who view your customer service as being “excellent,” then you may want to survey your customers every month and ask them how you are doing.
5. Communicate Metrics with Employees. Once you’ve defined the key metrics that are important to your business, be sure to let your staff know. Then, everyone can make decisions that help improve the metrics.
6. Review the Metrics and Make Decisions. With your metrics in place, you have greater insight into which strategies work and which don’t. Review the metrics and take steps to improve your results.
7. Promote Successes. When your metrics improve, let your staff know and reward everybody that helped make things better.

Effective use of business metrics can have a profound impact on your business. As you gain a better understanding of your business and move closer to achieving important goals, your day-to-day work will become easier and your staff will be more accountable to the metrics that matter. You’ll make better decisions, based on data, and you will have a powerful new tool for managing your business.

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The Biggest Killer of Business Growth

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Last week I asked a friend of mine about his business. He told me that he’d had a pretty good year so far but felt frustrated. For the third year in a row, he’s falling short of his annual goals but feels complacent since he’s still doing okay financially.  That complacency has lead to him making fewer calls, having fewer meetings and doing less business than he’d like.

What’s the biggest killer of business growth? It’s not lack of skills or talent; it’s not a poor business plan or even the economy.

The biggest killer of business growth is COMPLACENCY.

How do you know complacency is killing your business growth?

  • You know what to do to grow your business but, for some reason, you’re just not doing it.
  • You’ve lost the excitement you used to have for your business
  • You seem to constantly hit a plateau in your business but can’t get to that next level of growth
  • You set the same goals every month or every year without challenging yourself to get your business to the next level

The antidote for complacency is PASSION. Here are some steps that will help you to get passionate about your business again:

1. Create a 3-year vision for your life in the 6 areas of the life wheel below.

Don’t get too detailed. Spend about 90 minutes and create a compelling future by writing a paragraph or two for each area.

2. Rate yourself in each area. Where are you compared to your vision on a scale of to 100%? If you’re at 80% or above in each area, it’s time to create a new, more compelling vision.

3. Define 1-2 goals in each area that would get you closer to your vision. Goals should be SMART (Specific, Measurable, Achievable, Realistically high and Time targeted).

4. Document your emotional “why” for the highest priority 2-3 goals on this list. Your “why” should include how your life will change if you accomplish the goal. What are the rewards of achieving the goal? What are the benefits of not achieving the goal?

5. Create a detailed plan for the top 2-3 goals. This plan should include specific action steps and target dates.

6. Read your 3-year vision daily to keep your excitement about the new, compelling future. Find other ways to keep the vision in front of you.

7. Update this vision annually.

8. Update your goals as needed.

Have you been complacent and found some ways to regain your passion? If so, I’d love to hear how you did it.

Are you complacent now? I’d love to hear how it’s impacting your business and/or what you plan on doing about it.

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Satisfied Customers or Loyal Customers…Is There a Question?

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According to author, Jeffrey Gitomer…”Customer Satisfaction is Worthless, Customer Loyalty is Priceless” –

Apparently companies like Costco understand the difference…They have been recognized as the leader in customer loyalty among warehouse retailers, rocketing from start-up to Fortune 50 status in less than 20 years, while spending next to nothing on advertising and marketing because of word of mouth referrals. They know that companies with the highest customer Loyalty typically grow at more than twice the rate of their competition. And, by Raising Customer retention rates by 5% it is possible to increase the value of an average customer by 25% to 100% (The Loyalty Effect, F. Reichheld, 2006).  Rather than spending time trying to remember if you’ve ever seen a Costco advertisement, lets talk behavior and why emotions matter in the customer experience.

Regardless of how high a company’s satisfaction levels may appear, satisfying Customers without creating an emotional connection with them has no real value. This should be a red flag issue, especially when you consider that it’s reported that 90 to 96% of customers won’t complain. They simply walk away. Emotions Matter…because customers and staff are always emotional, and in service industries because it is so personal and stressful, the emotions are more intense.  A healthy way to view emotions is not as a problem But as the basis for forming relationships – This is how we develop Loyalty!

As a coach and consultant who works with business organizations to help improve their performance. Our work often starts with a discussion about the vision of the company. If it’s written, you can usually find a statement about customers under glass on a conference room wall. It often goes something like this…” We believe Customer Satisfaction is our #1 Priority.” But when you ask people inside the organization what that statement really means and how it’s measured, the silence is often deafening. If the people in the organization don’t have a clear definition of what you mean by customer satisfaction, then how do they convey it to your customers?

I have come to the realization that “Customer Loyalty is all that matters,” especially when you define loyal customers as people who will do business with you again, tell others about you without hesitation, and refer people they care about to do business with you. Hugh McColl, referred to as the greatest banker of all time, founder of North Carolina National Bank, that ultimately became Bank of America had a simple philosophy: “I take care of my people, my people take care of my customers, my customers take care of my shareholders.” He never said, “I want to be the number one bank on the planet.” Loyalty is earned…it stems from actions that are taken and the words that are spoken by employees. It’s not just business as usual …

Do you have any horribly disappointing or pleasantly suprising customer service stories?