Leadership

You can tell the quality of a company by those leaving

We continue to see organizations trying to survive by cutting expenses. Executive leadership coach John M. McKee says that won't provide long-term success and here's why.

When great talent is leaving an organization, it's a strong signal that the company doesn't feel they have anything of value to contribute. Conversely, when brown-nosers and politicos are being promoted, you have a culture with the wrong value system. The importance placed on customers is a key measure.

December 2007 was the official start date of the U.S. Great Recession. Most of the Western world has felt the effects. Every day we all read about countries and organizations that are in trouble or going under. It's common knowledge that business isn't as easy as it once was.

So why is it that very few corporate leaders are making important decisions for the long-term success of their organizations?

Isn't it simple common sense that any leader would want to do all that he or she could to encourage the growth and ongoing success of the organization? Yet, almost weekly, we hear stories about another business leader who has decided that customer care isn't the greatest priority.

All the evidence says this is a simple choice: For growth, provide customer service. Or die.

Case study

An executive I know works at a large cable company based in Florida. He's in charge of customer service, but he's also one of the best customer advocates I've ever come across. (Not all customer service executives are, by the way.) The cable industry has a reputation for crappy service, but this guy is good and his customers agree that they get great service according to all the surveys they run.

Customer service is, for him, a real passion. It's not just a job. He's the kind of guy who buys the famous Zappos book for all his team supervisors and then has an offsite meeting to discuss with everyone about how to treat customers like people you care about. During that meeting, which I was invited to attend, he made this point:

Customers aren't just outside the company. We have internal customers too. Everyone who relies on you or your team to do their job is a customer. It's critical that we treat all our customers well.

I'm certain that if there were more executives like him in charge of decisions affecting customers we'd be doing much better as a country.

Unfortunately, most executives don't get it. Or -- perhaps worse -- they do get it, but they don't want to invest in it.

These bosses try to "save their way to success." As a result, they're causing some great organizations to become failures.

Noodle about the airlines today: Once-solid organizations are now just hollow marketing messages. For example, take Delta Air -- they seem to be running a huge increase in their ad spending year over year to tell everyone about their new dedication to customer care. Everyone except their own team leaders that is.

Or consider HP, once the premier leader in looking after their clients and, at the same time, fostering innovation and calculated risks. They've been in a tailspin since 1999 when marketing guru Carley Fiorina was brought in to head it up.

Subsequent leaders have continued to strip the "care" out of that organization, and the results show it.

Here's the lesson for anyone who makes any kind of decision in any organization:

If you want to change the trajectory of a sinking organization, first treat your clients and your employees with respect. Then encourage great relationships with both. You'll be amazed at the power you harness.

The alternative is to wait for the economy to turn around -- and how's that working for you?

John

Leadership Coach

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

24 comments
birumut
birumut

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lawtd
lawtd

customer focused & market driven

biancaluna
biancaluna

And cut staff to cut cost, or they think they cut cost until their business processes start to tank and remediation is more expensive due to the increases in defects and rework. If you want to save money, do something about your business processes. If you want to increase customer service, do something about your business processes. HP is a shocker, I thought they would have learned something from the Compaq transition debacle but 3 years after taking over EDS, they are stil in a mess. They have cut services, systems and people to the point where there is not much left but frustration. CSC did the same, oh dear are they a mess internally and therefore externally. HP has such shoddy systems they are not paying their vendors on time. The trouble with HP is every layer is so focussed on making a buck, they make bucks over each other's backs internally. Ludicrous. The thing is, the worm always turns. Treating your employees shoddy and your customers with disdain is not a wise move. The worm always turns. I do not believe the best and the worst employees are always forced out, I know a lot of stellar employees who are still left at HP and hope for better times. Sometimes all you end up with are the yes men, and that is dangerous. Just look at EDS. For many decades certain behaviours have been rewarded, leaders have hired mirror images of themselves and made very silly decisions. The trouble Qantas in Australia is in is an example.. Some leaders are not found out until they leave a company - Ansett is a prime example. HP with Mark Hurd, EDS with Dick Brown, Telstra with Sol Trujilo. Only time will tell, ain't that the truth.

g01d4
g01d4

Unfortunately it seems to work rather well. Many companies are sitting on cash piles blaming government stalemate. Not a long term plan mind you but one that keeps the shareholders happy.

crick616
crick616

The heart of this whole article is this quote: ???If you want to change the trajectory of a sinking organization, first treat your clients and your employees with respect. Then encourage great relationships with both. You???ll be amazed at the power you harness.??? This is totally true and it contains a clue that reveals how upside-down and backwards our whole financial world has become. Here???s what I mean??? Virtually all businesses depend on 3 interest groups: customers, employees, and investors. All 3 are very important, however I don???t believe they are of equal importance. I listed them in their proper order of importance. Customers are obviously the highest priority group because there is no reason to be in business at all without customers. Employees are a close second in importance because they can make or break a company depending on their engagement with the company and its mission. Of course, other factors may contribute to success or failure, but those factors trail behind customers??? and employees??? ability to make a business successful. I can already hear the cries of derision about leaving investors in 3rd place behind employees. But I???m convinced this is for everyone???s best interest (including investors). That???s because customer and employee interests are more closely aligned with long-term thinking and company survival, while investors increasingly favor short-term thinking even to the point of scuttling a company to plunder the carcass. Most of our country???s economy is ruled by the question, ???What will our investors think???? That???s a huge mistake. It should be, ???What will our customers and employees think???? We have it backwards people. The three interest groups are NOT equal and investors have now become so short-sighted that their interests are often opposite the other 2 groups??? interests. Here???s a little piece of trivia I find shocking??? most people (I have no references to support this, but conduct your own informal survey and you will find it is true) believe a company makes (or loses) money if the company stock price rises (or falls). Of course, the only time a company makes or loses money on their own stock is when they first issue the stock for sale. After that, it???s the stockholders who make or lose money as they trade the stock. Companies make their money selling goods and services, not their stock. They sell stock at specific times to raise money for specific initiatives (like starting business or expansion and development). After that, they are not directly involved in trading their own stock until they offer more new shares of stock to the market. Don???t misunderstand??? I???m not saying stock performance has no importance at all. I???m saying its importance is out of alignment. It has become paramount to the point it encourages decisions and behaviors detrimental to customers and employees. And that???s bad for everyone, even investors. I would not worry the least bit about investors avoiding a company with priorities as described in the article above. Those companies would inevitably enjoy above-average success and smart investors would flock to them for their solid returns and growth. Easy? Nope. But it WILL work with proper care and management.

sissy sue
sissy sue

The customer is king. Everything that a business does should be geared toward customer satisfaction. And the best customer is the repeat customer. If you have employees who share that vision, treat them like the assets that they are. Reward loyalty with loyalty, because people respond in kind to the way in which they are treated.

brian98102
brian98102

I used to be a big HP fan for desktop hardware and have used it as the corporate standard for quite a while. I recently switched to Dell because they offer my tech resources to make imaging and deploying Dell PC's quick and efficient. I much rather pay my techs to support my customers than hunting for drivers, extracting drivers from individual files, and doing other tedious tasks to do something that should be simple and straight forward. Dell gained a customer by providing something that should be expected. HP lost a customer because they made being their customer more work.

robinfgoldsmith
robinfgoldsmith

The best go because they can. The worst go because pushing them out is what passes for management in many organizations. Most organizations rely on the remaining mediocrity, both in management and workers; and the organizations??? continuing decline shows it. The very few truly effective organizations have leadership that the best employees want to stay and work for; and that same true leadership helps the poorer employees become more valuable contributors, so fewer of them leave either. That???s what a lot of caring is about.

4rd4fun
4rd4fun

I was taught early on that the people you supervise made or broke you and I feel it is still true. You treat your team like they are important and they are important (and you look good as a bonus). Treat them poorly and suddenly you don't look so good. Things don't get done or they get done poorly. My team is awesome, we cover each other, we work out problems together, we are a team. We treat our users as more important than we are and they (our users) appreciate that. Why can't most management teams see the value in "valueing" (ok not a real word) people other than them selves?

blarman
blarman

...and they will take care of you. I appreciated the author's comments on HP. To expound a bit, here are some of the things HP did for it's people in the past: 1) Guaranteed health insurance for life if one retired from HP. 2) Quarterly profit sharing that meant a check in the pocket of every HP worker down to the janitors. 3) Annual company-sponsored picnics with games, prizes, food, and ice cream. 4) Company-sponsored relocation plans. When the Disk Memory Division was shut down, HP relocated ALL those employees within the company at their cost. 5) Employee-purchase program, where employees could buy (at cost) HP-built equipment for themselves. What did HP get? Year after year of stock splits and productivity. The highest quality products in the industry and a loyal customer base. Their own employees advertising personal confidence in their products. When they moved away from taking care of their employees by limiting profit-sharing to managers and then VP's, by canceling the annual picnics, mass layoffs, and elimination of the employee purchase program, they told their employees that they were no longer special and lost their loyalty. Great lessons can be learned here.

SHCA
SHCA

Couldn't agree more. Where are our Business Schools in teaching leadership? Anybody can run a successful operation in boom times, but when the crunch hits, MBAs tell us to cast overboard everything that's not serving the dwindling revenue stream. The companies that come out the other side are the ones that INVEST in new ways to win. Just ask Intel.

Englebert
Englebert

When executives are commanding multi-million dollar compensation, one would expect them to provide the kind of leadership that would result in strong, stable, reputable, lasting institutions. Instead, paradoxically, the curve has gone the other way, seeking out quick and dirty short term results. The more they are paid, the worse their leadership is. Why should they care about their employees, shareholders, customers when their future is comfortably secured ?

aeiyor
aeiyor

Good Day All. John McKee, Fantastic and wonderful article. YES definitely agree to your points you bring up. In fact, I would like to meet and get to know some of people examples you shared. Those people sound exactly of similar mind and perspective. A lot has gone by the wayside especially customer service. Voice messaging systems... Outsourcing help to other countries that you can't really understand when you reach them by phone... often unable to help because you need to really reach the people in the USA... neglecting workers/employees health and care and living situations -- not properly compensating... increasing efficiencies at the cost of quality and service. Remember the saying "You get what you pay for..." If you aren't willing to pay/buy the quality then you get exactly what you put into it. I have always believed strongly in customer service - you treat people like friends and family. You handle not just clients but the people around you with that attitude and service and you get a lot out of work and life. I believe there's a threshold you can achieve the balance of quality products and service for the efficiencies, technologies and cost. Yes some people may abuse the service but then you put into place appropriate polices to refer those folks. On the whole, I feel most people appreciate being treated with respect, kindness and friendliness. There's so much to add but suffice it to say -- when company's lose focus of both external AND internal customers -- they begin a spiral of break downs which eventually handicap and destroys the company. Sincerely, Satori.

alv002
alv002

Definitely agree with this article. Just left a company that is now trying to save its way to success and instead it is turning a once iconic company into a mediocre one at best.

ewi3020
ewi3020

The REAL problem becomes when all your company's management team becomes so heavily compensated with stock options that they become more of an investor than a manager/employee. As long as top management in companies are so compensated, the company stock price and the companies relation to investors will always be #1.

JakeRader
JakeRader

The truth is that any publicly traded company is run for the benefit of the large shareholders such as investment firms, hedge funds, and pension plans. And all of these are interested in just one thing: short-term investment returns. I used to work for one of the largest government pension plans in the country and sat through many a board meeting listening to detailed reports of money manager's investment performance. This one issue consumed 99% of the board's attention. Why? Because the better the investment performance, the lower the employer's contribution rate. And the lower the contribution rate, the less pressure on the employer's budget and the more funds that will be available for other purposes. And who were these employers? The state and all the local government entities in the state. Cities, towns, counties, police and fire departments, schools and libraries; all faced with ever increasing public demands for services without raising taxes (Who says there ain't no such thing as a free lunch?). So, in a sense, we're all responsible for the miserable state of the economy.

G-Diggety
G-Diggety

Good point! I would just say that satisfied customers are important, but if your employees are miserable and/or wage/health insurance indentured servants then you won't have those customers for long. But going out of business is also a business decision.

sissy sue
sissy sue

You said "I was taught early on that the people you supervise made or broke you and I feel it is still true." You need look no further than a retail store, locally owned. A store owner can work his butt off, but if his employees are undermining him the minute his back is turned, it can all come to naught. Customers remember bad service, and are sure to tell everyone about it. A bad experience with an apathetic, careless, or rude employee can cancel out an employer's best effort to attract and keep customers.

ultimitloozer
ultimitloozer

when you look at what they are casting overboard, many times it is exactly what they need to be retaining. A look into the boardrooms and at those MBAs making these decisions will quickly show you what is (generally) not serving the revenue stream.

MalcolmCrowe
MalcolmCrowe

The IT Leadership is the Main Cause for the Decline. When you have Supervisiors, Managers, Directors and even the VP of the IT department not being in touch with reality. Our VP says we pay what we pay and if you don't like it leave.Our application support team is the worse I have ever seen in my 11 years in this field. The helpdesk application (Altiris 7) is a joke and makes everyones job difficult, this has been one of the gripes I have heard. The amazing thing is that our best people are leaving for better wages and benefits in this economy. Like the saying goes "You are only as strong as your weakest link." In our case the IT Leadership at our company is our weakest link and the tools we are provided to perform our jobs with our customers/clients.

tbmay
tbmay

....contradict each other. "You get what you pay for." Good customer service is like anything else of quality. It ain't cheap. Our culture has adapted an "everything is disposable" attitude. The two don't mesh.

aeiyor
aeiyor

Good Day all. tbmay, If you are referring to the sentiment that I address about the quality and the you get what you paid for - they actually go hand in hand. If you don't invest properly to pay for the quality then you get what you paid for... lower quality. The investment is in the people, what they deserve to be paid and what they have earned. If you cover them in compensation and benefits, they perform better... feel better about the company... which translates into a better working environment -- employee retention, employee participation and that enhances the productivity. Sincerely, Satori.

tbmay
tbmay

....but what is forgotten is this usually translates in to a higher price for the customer too. That's right. Collectively, the customers are responsible for any lack of customer service they might get. After running my own tech business for 3 years, I got a first hand look at the number of people who want premium service at the cheapest rates available. We all know that if a market is there, someone will fill it if there's a profit to be had. That market is for dirt cheap tech. If the market for dirt cheap tech outweighs the market for good customer service, it's not rocket science to figure out which one will win, and which one executives will choose. Everything else is empty rhetoric. My answer....I'll give you great service with a smile, but it's going to cost more than the crap service. Most people decide to go with the crap service, then complain about it.