Category Archives: Employee Engagement

How To Cause Customer-Centricity By Shaping The Work Context (Part 2 of 3)

Recap: Where We Are At

If you took part in the previous conversation you will have a good grasp of the work context that led to the receptionists running to-fro from the front desks to the problem rooms, seeking to keep rooms in reserve so that they were in a position to placate angry customers by moving them to a different-better room, and using their newly acquired guest engagement skills to negotiate with customers – offering them refunds, room rate reductions and/or vouchers.

What Is The Core Challenge Here?

So I ask you what needs to happen for InterLodge to generate its desired outcomes: higher occupancy rates, higher price points per room, higher levels of customer satisfaction, and ultimately a higher share price?  Let’s make this question simpler, what is the challenge here?  Have a go, formulate an answer to that question.

Isn’t the challenge to shift the work context so that it calls forth, naturally and by default, the kind of behaviour that will result in guest rooms being fit for guests, leading to happy customers, leading to less rooms being kept aside by receptionists and no need for the receptionists to offer discounts-refunds on the room rates?

Now look further-deeper, go into the heart of the matter. Venture into territory that few venture into: think!  Keep peeling the onion.

What is the core challenge when it comes to doing that which needs to be done in order to craft-deliver the kind of customer experience (end to end) that causes happy customers?  Isn’t it cooperation? Cooperation between all the organisational actors who directly-indirectly influence the customer experience. Is it not your experience that the bigger the organisation, the higher the importance of cooperation, and the lower the likelihood of finding genuine cooperation?

What Steps Did InterLodge Take To Shift-Shape The Work Context?

According to the authors of the Six Simple Rules, InterLodge took the following three steps:

  1. Did away with the organisational elements that were useless and/or counterproductive.  For example, they did away with the financial incentives which were supposed to motivate the receptionists to improve room occupancy. And they stopped the soft skills “guest engagement” training program.

  2. Made managerial promotion dependent on having worked in multiple functions. Why? To encourage and ensure that managers had a lived-experiential understanding of the work of each function and how it related to the work of other functions.

  3. Changed the work context so that cooperation was called forth between Housekeeping, Maintenance and the Front Desk (receptionists).

Let’s dive into point 3 shifting the work context to cause cooperation as the default behaviour. Imagine that is your challenge.  What specific action/s would you take to shift the work context and call forth cooperation between Housekeeping, Maintenance, and the Front Desk (receptionists)?

What Actions Did InterLodge Take To Generate Cooperation Between The Multiple Actors?

Before I share the answer with you, I invite you to listen to the authors of Six Simple Rules:

Their [receptionists] work put them in the closest contact with customers, and they were the most directly penalised when customers were unhappy. They had an interest in cooperation but had not way to influence the behaviour of other groups – specifically, the housekeeping and maintenance staff.

So the clue is there: find a way to directly expose the housekeepers and maintenance staff to the wrath of unhappy customer/s.  Did management pursue this option?  No. Why? Because the did not find a practical way to expose these folks to the wrath of the customer. The customer was most likely to be angry in the evening when s/her checked into or returned to her room. And this is exactly when the housekeepers and maintenance were not at work.

What did InterLodge do?  Management give the receptionists a say in the performance evaluation of the folks in housekeeping and maintenance.  Did it work? Yes. Why? Because the Receptionists had a say and their say mattered. This is how the authors put it (bolding is my work):

In the past, it had always been enough for these employees [housekeeping, maintenance] to fulfill the criteria and meet the targets of their individual function. Now, people in the the two back office functions were also being evaluated on how effectively they cooperated with each other and with the receptionists, and it was the opinion of the receptionists themselves that carried special weight…. After all, their careers and the possibility of promotion were on the line

Was it as simple as that. Not quite, this change had to work in conjunction with the other big change:

When this change in how personnel in back-office functions were evaluated was combined with the new cross-functional rotation of managers (which gave managers more of an appreciation for the interdependencies among the various functions), the nature of work changed rapidly at the hotel.

How exactly did the nature of the work change?  By this expression the authors are pointing out, in particular, how the way the folks in housekeeping and maintenance ‘showed up and travelled’. Let’s listen once more to the authors:

The housekeepers checked the equipment in the rooms when they cleaned and let the maintenance groups know immediately when something needed attention. What’s more, the two back office functions were a lot more responsive when someone from reception would call asking for help to resolve a customer problem.

What Results Showed Up At InterLodge?

According to the authors:

… InterLodge hotel business unit’s gross margin increased by 20 percent within eighteen months. The rapid improvement in margins allowed the company to … nearly triple it [stock price] in just two years.

If you want to understand the logic behind this then I recommend buying-reading the Six Simple Rules.

What Is The Core Insight-Lesson For Those Working On Customer Experience And Customer-Centricity?

The core insight-lesson is spelt out rather pithily and it is one with which I am in full agreement.  The lesson is so obvious and yet neglected.  Why? Because it involves taking the “road less travelled”. What is this central insight-lesson:

To achieve customer-centricity make the organisation listen to those who listen to customers. Changing interaction patterns among functions is much more powerful than creating a dedicated customer-centricity function.

There you have it.  The challenge of customer-centricity is that of disrupting, shifting, and shaping interaction patters so that transformed work context calls forth the requisite degree of co-operation from-across-amongst all organisational actors which directly and/or indirectly affect the customer experience. And the authors have shared how this was done at InterLodge. And they give other examples in their book, which is well worth reading.

Enough for today. In the next and last part of this conversation I will lay out for you (and comment upon) the sociological theory behind tools for shaping the work context. And why it is that the standard-commonplace approaches (hard, soft, hard+soft) to organisational change and customer-centricity do not work. Like they did not work for InterLodge.

Thanks for listening, I hope you got value out of the conversation.

 

 

 

 

How To Cause Customer-Centricity By Shaping The Work Context (Part 1 of 3)

The Challenge

Imagine that you are the CEO of InterLodge. You face a big problem: your share price has been falling for some time. You need to do something to deal with the issues of high costs and low profitability. You find that the occupancy rate and the average price point per room are too low. And the surveys suggest that Interlodge’s customer satisfaction levels are well below where they should be.

Over to you. What are you going to do about this? What approach will you take?  What levers will you use to address the issues?

What Did The Top Management Team Do? 

The management team did what most management teams do? It restructured and reengineered. Specifically:

  • It created a shared service initiative to serve groups of hotels by region.  Why? To cut costs and drive up quality.

  • It redefined roles & responsibilities of hotel employees. Why? To improve productivity and focus resources on driving up quality.

  • It rolled out a new computerised yield management system. Why? To improve the occupancy rate.

Did the desired outcomes show up?  No. The authors of Six Simple Rules state:

A year later, none of these changes had produced any of the improvements the management team sought …… The share price continued to slide.

What Did Top Management Do Next?

Top management took a bold step. InterLodge’s management committed, via a public announcement, to doubling its share price within three years.  Why did management do this? Clearly to support-boost the share price and at the same time to energize the hotel employees. Did it work?  The authors say that it had a powerful effect on InterLodge employees.  The opposite of what management intended: terrified rather than energised. Why?

Because these hotel managers were expected to increase occupancy rates, raise the average price point, and improve customer satisfaction whilst working within the parameters set by the centralised yield management system, the shared services offer, the organisational design and staffing levels set by the centre.

So the hotel managers acted on the one measure that they felt they could make an impact on: customer satisfaction levels.  They acted on the hotel receptionists. Why? Because they came to the conclusion that: the hotel receptionists were young and didn’t care about doing a good job; they lacked the right customer handling skills; and they were not selling rooms to travellers who arrived late in the day even when rooms were available.

So what did the hotel management do?  Three things. One, they clarified roles, processes and scorecards. Two, they  put the receptionists through a soft skills training course to improve their communication and guest engagement. Third, they set up an incentive plan to motivate the receptionists to sell more rooms and increase the occupancy rate.

Did it work?  Here’s what the authors of Six Simple Rules say:

Six months later, however, the problems remained. In fact things had gotten worse. The occupancy rate had dropped further. Average price point was down. Customer surveys showed lower levels of satisfaction. Receptionist turnover had risen.

So what did management do next?  It looks like they hired a bunch of smart consultants. What did these smart consultants do.

First, Seek To Understand The Work Context At The Concrete (Lived-Experienced) Level

The consultants sought to understand the work context of the receptionists at InterLodge.  Please note that the work context is not the objective situation. By work context I am pointing at the work-context as experienced-lived.  How does one get to terms with the work context? In this case, the consultant spend a month observing and talking with receptionists at various hotels. What did the consultants uncover?

  1. The most difficult, most unpleasant, part of the job for the receptionists was dealing with angry customers;

  2.  The receptionists had to deal with angry customers on their own – by the time customer’s rang down to complain the maintenance folks had gone home; and

  3.  The maids cleaning the rooms were best placed to spot problems and alert maintenance. Yet, they did not do so due to the silo based performance metrics to which they were held accountable – productivity in cleaning rooms.

What is the insight that eventually hit the consultants?  Here it is in their words:

the goal of the receptionists was not to earn a financial incentive by improving the occupancy rate. No, the goal of the receptionists was to avoid the unpleasantness of dealing with unhappy customers.

How did the receptionists deal with the situation that they found themselves in?

  1. The younger receptionist sought to fix the problem themselves. This meant they found themselves running back and forth between their front desk and the problem rooms.  This behaviour didn’t work for the customers who arrived at the front desk and found nobody there. And so had to wait.

  2. They kept rooms in reserve so that they could placate customers. Why? Because even if the new room wasn’t so much better, angry customers appreciated the receptionist who went out of his/her way to help.

  3. They adjusted the room rate downwards.  The customer harnessed their new found guest engagement skills to negotiate a refund, rebate, or voucher to deal with angry customers.

What Can We Learn From This Understanding of The Work Context?

The authors have something powerful to say and I urge you to listen, really listen:

… the young receptionists were forced to bear the adjustment cost caused by the behaviour of the back-office functions [Housekeeping, Maintenance]. They had little choice in the matter, somehow, they had to deal with the angry customers. The adjustment costs they suffered were simultaneously financial (they didn’t achieve their bonus), emotional (they were blamed by both managers and customers), and professional (at a certain point they would become so burned out that they would quit….).

But customers were also bearing adjustment costs in the form of poor hotel experience. And of course, so were the shareholders in the form of declining returns….

Receptionists could never fully compensate for what the back-office functions [Housekeeping, Maintenance] could have achieved had they been cooperating with each other

Once the management team took time to understand the context of the work in its hotels, it came to realise that the problem was not that the receptionists were badly trained, or had some psychological issue or attitude problem, or needed more incentives. Rather, their behaviours were rational solutions to the problems they faced.

What actions did the InterLodge management take to shift-shape-transform the work context?  And what kind of results showed up?  I will share these with you in the next post.

How Not To Go About Effecting Behavioural Change And Moving Towards Customer-Centricity

Let’s assume that for the purposes of this conversation that when I use the term customer-centricity I am pointing towards a specific behaviours which show an organisation as being attuned and responsive to the needs of their customers – their core customer base.

How should you go about effecting change in the behaviour of your people, your teams, your functions, your business units, your entire organisation so that your organisation shows up as customer-centric?  The authors of Six Simple Rules point out that managers go about effecting change by typically taking a hard approach (strategy, structure, process). And when this fails or to make it more appealing they introduce elements of the soft approach (training, team building, affiliation events). How well do these approaches – hard, soft, hard+soft – work?

In the last post I illustrated what tends to happen when managers take the hard approach: set direction, communicate direction, set metrics to hit, change the bonus system.  What about taking the soft approach? How does that tend to work out?  Lets return to David K. Hurst’s experience at Hugh Russel:

The top management team emerged from Hugh Russel as a “band of brothers” ….. we found we could “read ” situations better … “contextual intelligence” seemed to be an important feature of our newfound skills.  So, after our near death experience, we set out to create an educational experience that would nurture the spirit of commitment, excitement, and engagement we had seen at the senior level of the organisation….

What did this senior leadership do?  They organised a series of 3 day retreats ["core samples"] where 50 people drawn from all levels of the company (truck drivers, salespeople, branch managers, vice presidents) were invited to a “lovely old cottage”.  What happened on the retreat?  The participants hung out together doing team exercises, case studies, got feedback on their behavioural styles, and discussed the issues that the Hugh Russel was facing.  How did it go? The senior leadership were delighted with the results:

Discussion at the meetings was open and honest, the behaviours observed were cooperative, and the feedback from the participants was excellent..…… our local branch managers, who nominated most of the attendees, told us that they saw changes in the behaviour of those who had come to the session, even staunch union members. We were very pleased.

The soft approach works!  If you take folks from all levels of your organisation to a three day retreat, at a nice place, educate them, teach them, develop them, give them feedback, and allow them to hang out with another then you are well on your way to being customer-centric. Or are you?

Then, over time, the feedback from the managers became less positive…..  after awhile back at work, the participants began to revert to their old dysfunctional habits. Many of them who had been cooperative and open during the core samples became surly and aggressive again after a few weeks back at work.

Slowly it dawned on us that we had completely misunderstood cause and effect….. We thought we were teaching them new behaviours, which they could practice back in the workplace. But they knew these behaviours already since they were the ones the workers used in friendly environments, like their homes or bowling alleys or golf clubs. The open environment of the development sessions evoked those social behaviours.

Please make note of the line that I have put in bold. The behaviour that was being taught was behaviour that the folks already had in their very being: cooperation is intrinsic to us. In infant never makes it past infanthood unless it arrives and is nurtured in a cooperative context.  So if cooperation is not showing up in the work context then it is because non-cooperation is the functional behaviour in the work context. And cooperative behaviour is dysfunctional in that work context.  What can we learn from David K. Hurst?

We had misunderstood the power of context over our people’s desire and even their ability to practice these behaviours back at work. The closed work setting was completely different from that of the country estate …..

Martin Heidegger was on to this phenomenon back in the 1920’s almost a hundred years ago. Most managers are yet to get it: when you ‘deworld the world of its worldhood’ you are in the land of theory. And what is theory? Theory is derived from the Greek word: theoros. What does theoros signify? Spectator.  And if you follow that which I speak here on this Blog, you may have gotten the profound difference between “being in the stands and being in the arena”.

Let’s continue listening to David K. Hurst:

…. we weren’t teaching them soft skills that they didn’t already know; we weren’t conveying any hard skills that might have been helpful to them; we weren’t using live company cases or confronting real issues…… our management development program had some of the ingredients of a behavioural trap – short term rewards and a long terms waste of resources.

How does David K. Hurst conclude this story? With a profound lesson for anyone seeking to effect behavioural change that lasts:

This is a perennial problem with development programs, especially those that depend upon a radical change in context to produce their effects. Climbing a challenging mountain peak or whitewater rafting can certainly build temporary espirit de corps in a team. However, the challenge is not to take the skills learned in those challenging contexts back to the workplace but to create challenging workplace contexts that evoke those desirable behaviours. The development sessions should deal with the constraints that prevent an organisation from creating challenging work environments where learning and teamwork are a natural response….

– David K. Hurst, The New Ecology of Leadership

I say:

1 – That the challenge of showing up as a customer-centric organisation is one that involves a radical change in context to produce the kind of behavioural change that is needed from just about every person in your organisation;

2 – The central task of any leadership team is to get to grip with the existing work context – to understand what it is about the context that generates the behaviour that is generated today; and

3 – Using this insight to nudge-influence-shape the work context (made of up many micro work contexts) such that the only functional way for your people to show up is as being attuned to and responsive to customers.

What Does It Take To Generate “Total Customer Satisfaction”?

Let’s assume that you are a member of the leadership team for your organisation. Circumstances are such that you decide that your organisation needs to focus on customers and generate “total customer satisfaction” on the assumption that satisfied customers buy more of your stuff at higher prices thus generating higher profits.  How would you go about it?  What approach would you take?

The Default Organisational Change Approach: “Analyse-Think-Change”

The default, dominant – almost exclusive, approach has been labelled as “analyse-think-change” by John Kotter.  What kind of results does this generate?  Let’s explore this through the experience of David K. Hurst as recounted in his book The New Ecology of Leadership:

For the pilot program we decided to measure “on time delivery” as a proxy for customer satisfaction; that is, did the customer get the steel on the day we promised it? ….

We didn’t know whether to laugh or cry when the first measurement showed that ….. 53% of the step was delivered on time.  Shocked, we decided to feature on-time delivery as a significant part of a new bonus system, allowing branch managers and their people to earn up to 25% of their bonus for on-time delivery.

What kind of results showed up?  Did treating human beings as purely economic beings yield a step change in one-time delivery?

To our delight the results started to improve immediately, climbing quickly to 75% across the system, and some branches even headed into the 80-90% range.

It works, it is as simple as that! Sit in the executive suite, decide to become customer oriented, find a lever that represents customer orientation, measure it, bonus people on improving that measure, and soon you find that your organisation is customer oriented.   If that is what you are finding in your organisational change / customer-centricity efforts then take a break from celebrating and listen some more:

We had hardly finished congratulating ourselves … when one of the senior team had a disturbing experience. While walking through a branch, he overheard a salesman on the phone to a customer. “We can’t get it to you on Tuesday,” said the salesman. “How about Friday?”……. The executive saw the salesman go back to the on-time delivery screen and record the new promised date as Friday ….….

Was this salesman just an isolated ‘rotten apple’?  I say that where there is a so called ‘rotten apple’ there is a structure that generates rotten apples.  Think back to the last post where I shared Robert Fritz’s insight: structure determines behaviour. Let’s listen to David K. Hurst again:

Further investigations revealed that the improvement in on-time delivery that had earned bonus for all was largely an illusion created by our people, who gamed the quirks in the measurement system. The actual delivery processes in the organisation remained unchanged, and the customers were seeing no difference in our performance. Our analyse-think-change approach had rendered the organisation mindless by focusing exclusively on outcomes and ignoring processes….

“See-Feel-Change”: A More Effective Approach to Organisational Change and “Total Customer Satisfaction”?

So what did David and his colleagues do? How did they go about orchestrating “total customer satisfaction” through “on-time delivery”? Let’s listen once more:

We realised that we had to dig deeper to get into the “habit systems,” the processes our people were using, by repeatedly asking why. The top seven reason for the late deliveries were instructive:

1. Salespeople promised the steel early so that they could get the order.

2. The credit department could not approve the credit in time.

3. The processing department couldn’t make the schedule.

4. The quality of the product was not up to standard.

5. We were unable to locate the product in our inventory.

6. The trucks were unable to deliver on schedule.

7. A third party (usually a steel mill) let us down.

Take a look, a deep look, at these reasons. What do you see? I see issues in the product, in the manufacturing of the product, in the management of the inventory, in sales, in finance, in logistics….. In short, just about every function in the organisation is involved  in the work that has to come together in order to generate “total customer satisfaction”.

David and colleagues tackled the challenge because they had to – the survival of their employer was at stake:

We formed teams to look at each of these reasons and to search for the systemic causes behind them, drilling down into the bowels of the system. Reason 1 was no surprise ….. the disconnection between sales incentive schemes and factory production systems is a major obstacle to effective performance.

Reason 2 (credit delay) did surprise us -surely credit approval was a mechanical, by the numbers job,. How could it be a major source of delay?  ….. investigation revealed that the problem lay with the large number of smaller orders. Now small orders were part of our overall strategy, and for years we had encouraged the taking of smaller orders…   Margins on small orders were high, so, as far as we were concerned, the more we had the better.

…. another team working in the warehouse on reason 3 (production delay) found that the primary cause of production delay was the time spent waiting for cranes. After another investigation a team of warehouse people found that the main reason was …. small orders……..   Management was stunned – our small order strategy had been an article of faith throughout the corporation. Yet here it was creating a fundamentally unprofitable operation for systemic reasons that we had never understood. 

There is a profound insight and truth here. And it is one that is neglected. It is this: organisational policies and leadership-management practices are the real source of most organisational dysfunction including a lack of attunement-responsiveness to customer needs.  I say this as a statement of fact, not as blame.  What does David K. Hurst say on the matter:

Now, the reader may feel that management must have been asleep at the switch to miss something as obvious as this. However, the logic of complex systems is neither obvious nor intuitive, and it becomes clear to us only in hindsight. Even then it was the people who worked in operations every day who had to point to us that the real cost drivers on the warehouse floor are finding and handling the product. It’s a common problem in large organisations. The people on the front lines have all the answers, but senior managers seldom ask them the questions, at least in a form … that they can understand.

Conclusion

How does David K.Hurst end his story? What does he conclude?

We had experienced the benefits of drilling deep down into operations, into the processes that produced the outcomes that we were trying to change. John Kotter calls this kind of change “see-feel-change”. That phrase neatly captures a sensual aspect of change – you see a truth and it changes how you feel – it is timely, specific, visceral feedback. Also, it’s compelling for other operators to see it because they can study the action required at the fine grained levels at which they are going to have to implant the changes in their own operations……. First, you go deep on a narrow front, and only after that do you go horizontally, rolling out a program in depth from unit to unit….. This perspective also suggest that huge benefit of pilot programs that develop working prototypes of how a proposed change will actually function….

What is my take? David is sharing and advocating the road less traveled. It is less travelled because it is not quick. It is not cheap. And it is not painless. Yet, it occurs to me that this is the road that has to be travelled to generate the insight-motivation-action that is needed to effect deep change in the behaviour of the organisation. And shift it towards generating-delivering “total customer satisfaction”.

 

 

 

Mazism 2: It Comes Down To People And Relationships!

This conversation follows on from an earlier conversation: Mazism 1: There Is Always A Price, It Is Always Paid.  

What lies at the source of organisational effectiveness? Is is strategic planning in the guise of strategy?  Is it process standardisation / reengineering in its many disguises?  Is it restructuring the business, offshoring and outsourcing?  Is it about embracing and making good use of the latest information technology?  Is it about embracing the latest management fashion: customer-centricity, customer experience, digital business?  Is it leadership? Or organisational learning?

After 25+ years spent engaged in the challenge of improving organisational effectiveness and business performance, I am clear that the access to organisational effectiveness and superior performance does not lie in any of these domains. Why?  Because they do not get to the heart of the matter: of what is actually so about organisational life and the game of business.  What is so?

I am clear that organisational effectiveness (team, function, business unit, corporate) comes down to the people and their relationships with one another.  By ‘relationships’ I mean the communicating-relating that has occurred and is occurring between people.  If the job of ‘leaders’ is to cultivate organisational effectiveness then it occurs to me that leadership involves-requires a focus on people and relationships. I invite you to read-consider the following passage (bolding is my work):

The lone warrior myth of leadership is a sure route to heroic suicide. Though you may feel alone at times with either creative ideas  or the burden of final decision-making authority, psychological attachments to operating solo will get you into trouble. You need partners. Nobody is smart enough or fast enough to engage alone with the political complexity of an organisation or community when it is facing and reacting to an adaptive challenge. 

Relating to people is central to leading and staying alive. If are you are not naturally a political person, then find partners who have that ability to be intensely conscious  of the importance of relationships in getting challenging work done. Let them help you develop allies. Then, beyond developing your base of support, let them help you relate to your opposition, those people who feel that they have the most to lose with your initiative. You need to stay close to them to know what they are thinking and feeling, and to demonstrate that you are aware of their difficulty. Moreover, your efforts to gain trust must extend beyond your allies and opposition, to those folks who are uncommitted. You will have to find appropriate ways to own your piece of the mess and acknowledge the risks and losses people may have to sustain. Sometimes you can demonstrate your awareness by modelling the risk or the loss itself…..

- Ronald A. Heifetz and Marty Linksy, Leadership On The Line

Time after time I have witnessed promising ‘strategies’ and plans come to nothing during the implementation phase because those leading change have been blind to the importance of people and relationships – during the strategy development phase, the implementation phase, and/or the post implementation phase.  

I say look at any effective organisation (team department, business unit, corporate, society) and you will find healthy communicating-relating occurring between the people who collectively constitute that organisation. And healthy communicating-relating occurring between members of that organisation and the people who they interact with in the broader environment in which that organisation organises and executes its work.

I continue to be amazed that some Tops and Middles want to work on improving customer relationships and the Customer Experience. Why? Because they and their organisations have little appreciation-consideration-feeling for the quality of communicating-relating that is occurring in the organisation. And no lived experience nor appreciation of the the Employee Experience: whether on the front line or the back office.

 

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