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

This conversation follows on from where the previous conversation left off.  Specifically, I intend to share with you the theory behind the shaping the work context approach to changes organisational behaviour. And the limitations of using the traditional tools: hard and soft.  Let’s begin.

It occurs to me that the fundamental assumption is that human behaviour is always functional. Which is to say that there is correlation between the human behaviour that occurs in a work context and how that work context shows up for the human beings who find themselves there in that context.  Put differently, there is an ongoing dance between context and behaviour: each is influenced by the other on an ongoing basis.  From this flows the following ‘advice’ from the authors of Six Simple Rules:

1. Human Beings As Purposeful Actors Making Use Of Resources And Dealing With Constraints

Human behaviour can be understood in terms of three elements. First, the goal/s, the towards-which the human being ‘moves’.  Second, the resources-tools that are at hand to help ‘move’ towards the goal. Third, that which shows up as an obstacles-hindrance.  Collectively, these three elements in their unity (as one) constitute the work context as lived-experienced. Here is what the authors say:

Understanding what people do and why they do what they do is so utterly fundamental that it is our simple rule. Before you, as a manager, do anything to solve a performance problem, you can save yourself a lot of time and money by first applying this rule.

2. Understand How The Organisational Elements Affect-Shape The Work Context

Do organisational structures, processes, procedures, and systems matter? Do they affect-shape human behaviour?  Yes, they do affect behaviour and performance. But not in the simplistic way that most of us assume.  According to the authors (bolding is my work):

Their impact depends on how they combine with each other to shape the goals, resources and constraints  to which people adjust their behaviours.

If you do any cooking you will get that the impact that any one ingredient has depends on the other ingredients that constitute the recipe. If you manage stocks you will understand that it is not the risk of the individual stock that primarily matters – it is the impact of that stock on the risk profile of your portfolio.  Hopefully you get the idea.

3. Be Wary of Taking The Hard (Scientific Management) And Soft (Human Relations) Approaches To Improving Organisational Performance

Let’s consider each of these approaches to understand why it is that the authors advise caution in automatically and mindlessly adopting one or both of these approaches as the silver bullet for dealing with organisational challenges.

The Hard Approach And Its Limitations

Why is there is much emphasis in the hard approach on clarity – clearly specifying the rules of the game, the roles and responsibilities of the actors, the boundaries, the rewards and punishments….? Is it because the hard approach takes it for granted that performance is a direct consequence of what people are instructed and rewarded-punished for doing?  Let’s listen to the authors:

Structure defines the role, processes instruct how to perform it, and incentives motivate the right per on in the right role to do it. From this perspective, if there is a performance problem, then it must be because some key organisational element is missing or not detailed enough. So companies jump straight from identifying a performance problem to deploying new structures, processes or systems to resolve it. This error dumps a first layer of complicatedness into the organisation.

Let’s make this real by revisiting InterLodge. What did management do at the beginning? Did it not resort to restructuring and reengineering without actually looking into the work context that shaped behaviour?  And when management did look at the front line what did it conclude?

Receptionists were not selling rooms to latecomers. They were not engaging the customers in a way that made customers satisfied. They were not charging the right room rate.

If you focus on what your people are not doing does this help you understand what it is that they are doing and what leads them to do what they do? Clearly not. So the authors advise the following (bolding is my work):

Performance is what it is, because people do what they do, not because of what they don’t do. People do what they do precisely because of the organisational elements already in place (not because of the ones that are missing)…… 

The authors go on to provide what I consider the most valuable and most neglected insight into human behaviour in organisational contexts (bolding is my work):

Organisational elements do not combine with each other in the abstract, based on their supposed intrinsic pros and cons.…. It is only by considering the work context, and their effect in this context, the organisational elements can be appropriately analysed and designed.  The effect …….. depends on how people deal with these elements as resources or constraints. 

What did the receptionists do with the “guest engagement” skills that they honed during the mandated training course?  They used these skills as a resource. But a resource for what?  A resource for their goal: avoiding stressful encounters with angry customers:

 … they used their skills not to meet the target price point but to proactively offer rebates and refunds. What’s more, their new skills combined with their clarified roles in an unexpected way that also provided new resources to the receptionists……: some receptionists used their newfound interaction skills to explain clearly to guests that their responsibilities stopped at the front desk and did not include back-office activities…

Now you know why I am not a fan of worshipping at the altar of lean, six sigma, process and reengineering. And in the world of consulting, the anal retentive fixation on methodology. I learned the hard way: spending years doing it and seeing the meagre and often counterproductive results.

The Soft Approach And Its Limitations

As this post is already long I recommend that you get hold of a copy of the Six Rules for a fuller-deeper picture. For my part I leave you with the following:

…. the soft approach views performance as a by-product of good interpersonal relationships. But this view confuses people getting along with genuinely productive cooperation. Real cooperation is not fun and games….. it always involved adjustment costs.

Indeed, the better the feelings among individuals in a group, the more people are likely to avoid straining the relationship by bearing adjustments costs themselves or by imposing them on others …. So they will avoid cooperation and make third parties bear the consequences, or they will compensate with extra resources to remove interdependencies… the extra resources teak the form of …. excess inventory stocks, time delays, interfaces and committees, and customer requirements unmet….

Here I draw your attention to the never ending challenge that almost every large organisation has in getting just the folks in marketing (advertising, website, email, direct…) to work together – cooperate. Or the bigger challenge of getting the folks in marketing, sales and service to cooperate to generate a joined up and attractive customer experience.

If you wish to learn more but do not wish to read the book then I recommend the following TED Talk by one of the authors of the Six Simple Rules:





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.