Mike Hohnen

Coaching for personal growth, change and development

Service Profit Chain

A Managers Guide to a Dream Team

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DreamTteam

The Service Profit Chain is a well-documented concept.

Since the original research was published in 1989, hundreds of articles have promoted the original findings which essentially boil down to the fact that happy employees create happy customers – and the happier the customers you have, the more money you make –
Yes, I know that was a very simplified version.

What not so many people talk about, or even document, is that this concept of ‘happy employees’ is not so much a question of employee satisfaction but, to a much higher degree, a question of employee engagement.
So, what are the steps to producing a high level of engagement on a service team?
According to the original research in The Service Profit Chain, there 8 steps in a self-reinforcing cycle called the dream team cycle.
Look closely and you will recognize that this is exactly what the best high profile service companies do:

The Right Team
Careful selection of new recruits. Hire for attitude. Train for skills.Coach for performance and that includes dealing with the bad apples.
Continuous Improvement
Best in class training and development at all levels in the organization. Continuous improvement is considered one of the great benefits of the job. “In this job, I grow”…
Great Support Systems
Service is not just something the frontline does for our customers. Service is our culture. Employees and managers who do not have customer contact service the employees that do. (Our IT department is not the IT-Police – it is an internal service department that supports the frontline in getting the job done.)
Empowerment
The best service employees take pride in solving the problem on the spot. So the freedom to act is hugely motivating. Southwest Airlines famously tells its employees, ”You may do anything you are not uncomfortable doing to solve a passengers problem.”
Clear Expectations
In the same way that anyone who has made it to a great sports team knows what is expected of them, employees in the best service organizations also know what is expected of them. It is part of their motivation to be part of a team that is not afraid to set the bar high.
Appropriate Rewards and Recognition
Focusing on what works, celebrating success, and acknowledging each others contributions makes work meaningful.
High Levels of Satisfaction and Engagement
As a result of Steps 1-6, we generate not just higher levels of satisfaction, but also real engagement – Service work becomes fun and meaningful.

Employees Recommend New Employees
When we need to recruit new team members, our best employees recommend friends and previous colleagues from other organizations because these are the people they would like to work with. Gradually we become the preferred employer in our region – which means we get the pick of the crop.

And that takes us back to Step 1 – The Right Team.
Done consistently this 8-step cycle become a self-reinforcing process that propels our service delivery capacity to higher and higher levels – and we all know what that does for our customer satisfaction and loyalty.

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Building a great service business begins with understanding the Service Profit Chain framework. In my view, that is the foundation. Check out my free introduction here

Management Team or Just Heads of Tribe?

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Headsoftribe.002

Often when I work with a GM and the department heads, I will start by asking each of them to write down the name of a person on their team – just the first name that comes to mind.  Then I ask them who in the group has written the name of a person who is in this room now on their piece of paper. And invariably, it will always be only the GM who raises his hand. The GM sees the other people in the room as his team. But, the department heads seldom see each other as the team.

Department heads tend to see themselves as Indian chiefs. Each represents his or her tribe; and when they meet, it is about defending territory and resource allocation, not about collaboration.

Two Different Cultures:  Taking Responsibility and Being held Responsible –

They key to understanding why department heads end up as heads of a tribe and not as the team we dream about has to do with how we work with responsibility.
If we spend our time at management meetings trying to identify who was responsible for ‘That’ when something goes wrong, then each department head learns that the only way you can play that game and not get hurt is to create clear boundaries. ‘This is what I am responsible for – and that is what you are responsible for. Just make sure you don’t cross that line.’
The savviest department heads also learn not to stick their necks out and take on more responsibility than they need to.

Responsibility means trouble.

So, over time leaders  (and their teams)  become more and more passive and reactive.

But, we all know that being passive/reactive is not what gets us raving customer reviews. In order to rise to the top in our category, we need to be proactive. Managers and their teams need to take initiatives and anticipate needs in order to delight customers.

But, they will only do that if:
a) it is accepted that boundaries between departments are soft and
b) that we do not ‘punish people’ for taking initiative even when they are not successful.
That means a different culture.

Taking Responsibility

The alternative to being held responsible is to develop and encourage a culture where we take responsibility.

But that is a completely different culture; because, if you think about it, no department is an island. The boundaries we have created between departments are, in reality, just here for our own sake so that we can organize stuff in a meaningful way. From the customer’s viewpoint, these boundaries should be invisible.
The customer is looking for a total experience – the whole.
And because no department is an island, when something goes wrong, in most cases it goes wrong for a number of reasons – not just for one reason.

So, the question we need to always ask ourselves when something goes wrong is: “What could WE have done to prevent this happening?” Then, maybe department head A immediately jumps in and says: “That was my fault. I screwed up, and I will do my best not to make that mistake again.”  Case closed and we can move on to the next item on the agenda.

If that does not happen, we need to analyze what happened, not to place the blame, but to learn how we could have prevented this… most probably, with better collaboration at some level.
Because – if you remember – the definition of a team is:

A group of people with a common goal and who feel mutually responsible for reaching that goal.

Feedback Drives our Behavior.

Everything that we do is based on our previous experiences or our beliefs about what an experience will be. So, as the leader, your feedback to your team governs their behavior, and over time they become a reflection of your feedback.

And, they will either become a team or they will default to heads of tribe – it’s up to you.

 

Building a great service business begins with understanding the Service Profit Chain framework. In my view, that is the foundation. Check out my free introduction here:

Customer centric – do you get it?

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Walt on legs

In my view there are basically 3 kinds of hotels.

Hotels that just don’t get it. The law of supply and demand eventually takes care of them.

Then there are hotels, who get it, or should I say they think they get it. They are the hotels who continually ask themselves: how could we get more money out of each guest by providing more options, loops and hops they must jump through?

– so they have complex internet packages, like lousy internet for free, decent internet at a price – cheaper if you take the full 5 day pass etc.
– or when you walk into the room the television screen is blaring at you suggesting all the films that are on offer – at a price – and it takes you 10 minutes to workout how to turn the dam thing off or find the news.

Then there is the third category .

These are the hotels that ask themselves: What is it like to be on the road, away from home? What does one need, what is annoying, troublesome, irritating? How can we create a service that would make life better, easier, smoother or more fun for our guests and what would we need to charge to make that possible.

From a guest point of view this kind of hotel has a very different feel from the former. The final guest experience is totally different because that basic intent ‘to serve’ comes out in everything they do.

And when you experience that it is such a pleasure because you feel like a welcome guest and not like a ‘wallet on legs’.

10 leadership traits that people adore

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Great Boss?

Many books have been written about what leadership is – but what is it from a followers perspective?
This is what respondents reply when asked to list the characteristics of leaders they admire:

  1. Has a clear vision of how people’s work meets the leader’s expectations.
  2. Provides timely, clear, constructive feedback.
  3. Expresses appreciation and gives credit where credit is due.
  4. Actively listens and answers questions.
  5. Treats others with respect and kindness.
  6. Consistently fair in their treatment of others.
  7. Trains, develops, and grows their people.
  8. Willing to jump in and help out when things become difficult.
  9. Has an open door policy and is available.
  10. Supportive and protective of their people when things go wrong.

 
Source: SmartBlog on Leadership

So, all you need to do now, is rate yourself on a scale of 1 to 10 according to how well you doing on each of those points – and if you are honest with yourself you will have a very practical and workable t-do list on what needs working on.

If you are courageous you could even ask one or two close collaborators that are not afraid to give you honest replies to review the evaluation you made of yourself and give you some honest feedback.

Welcome back from summer…

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It time to roll up our sleves and get cracking again…

As Joyce Hostyn writes on her blog :

“Beauty is an outcome of a focus on the human side of business. Of a deep understanding of people’s dreams, desires and search for meaning. Of a pursuit of a higher purpose.”

Watch her inspiring presentation here:

Ready? Let go to work…

A culture of doing stuff

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Dialog drives culture-2

“Only the leader can set the tone of the dialogue in the organization. Dialogue is the core of culture and the basic unit of work. How people talk to each other absolutely determines how well the organization will function. Is the dialogue stilted,politicized, fragmented and but covering ? Or is it candid and reality-based, raising the right questions, debating them, and finding realistic solutions. If it’s the former as it is in all too many companies, reality will never come to the surface.

You cannot have an execution culture without robust dialogue, one that brings reality to the surface through openness, candor and informality.”

Execution, the Discipline of Getting Things Done, Larry Bossidy (CEO Honeywell Int’l) and Ram Charan with Charles Buck.

Without trust no engagement…

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Employee engagement seems to be the new buzzword.

Everybody understands that it is important but there seems to be quite a lot of confusion about how one gets to full engagement.

Each year the Gallup organization pours more oil on that fire when they publish their Employee Engagement Overview.

Year after year we see that somewhere between 60 and 70% of the workforce is not particularly engaged. And only somewhere between 15 and 20% depending on the region are actively engaged.

Apart from the fact that it means that a lot of people are leading lives that could be so much more fun, it is also problem seen from productivity point of view.

Engaged employees are anywhere between two and ten times more productive than employees that are not engaged.

From a service point of view there is also a world of difference between the service that a fully engaged employee will give a guest and what that same guest will receive from an employee that is more or less indifferent.

We have all tried both – and we all know what a difference it makes.

So understandably most companies would like to raise their engagement levels.

However in my view lack of engagement is just a symptom. The problem is trust or more correctly lack of trust.

It is great to be fascinated by customer loyalty and the net promoter score – as long as we understand what really drives that metric.

This is also why when we want to implement the concept of the service profit chain we can’t just focus on attracting loyal customers, however tempting that may be. We must start out by examining our own culture.

So how do we create trust

And James L. Heskett makes this point very clearly here:

Managers do what they say they will do. Make few promises and keep them all. Setting and meeting expectations is critical to creating high levels of trust

Simon Sinek says it all boils down to this:

whether a leader puts themselves or their people first, determines if they are worthy of our love and loyalty.

In his book Why Leaders Eat Last he makes this point brilliantly.
in the book he also demonstrates what it really takes to develop trust

There is also an interesting article on trust here:

Great leaders build a culture of courage in a climate of fear

A great manager is a rare bird…

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According to a recent blog post on HBR Gallup has found that one of the most important decisions companies make is simply whom they name manager. But mostly they get it wrong. In fact, Gallup finds that companies fail to choose the candidate with the right talent for the job 82% of the time.

Gallup finds that great managers have the following talents:

They motivate every single employee to take action and engage them with a compelling mission and vision.
They have the assertiveness to drive outcomes and the ability to overcome adversity and resistance.
They create a culture of clear accountability.
They build relationships that create trust, open dialogue, and full transparency.
They make decisions that are based on productivity, not politics.

But…

Very few people are able to pull off all five of the requirements of good management. Most managers end up with team members who are at best indifferent toward their work — or are at worst hell-bent on spreading their negativity to colleagues and customers.

However, when companies can increase their number of talented managers and double the rate of engaged employees, they achieve, on average, 147% higher earnings per share than their competition.

Read the full article on HBR her