Mike Hohnen

Coaching for personal growth, change and development

engagement

Great cultures are created with principles not rules

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Source: Netflix -https://www.slideshare.net/reed2001/culture-1798664

‘Another, customer complaint!’ thought the manager. ‘And what a stupid one at that. Some of our people just don’t get it. We will have to create a new rule for this kind of situation.’ And so he does. Up goes the memo on the information board, where it joins quite a few other new rule memos.

But rules only work when we can clearly define the situation and set clear boundaries. However, what we are looking for in our customer experience is personalisation. We want employees who are flexible in their approach and who can think on their feet. And with as few boundaries as possible… If there is one thing a customer hates, it is hard boundaries. ‘Sorry, sir that is not my section. Please ask your waiter.’

When we analyse why we create rules, it is not because we have a problem with the top performers. The top performers use their own good judgment to solve situations, which are typically also the situations that lead to praise and four-star reviews on social media. It’s the bottom 30% of the crew who need rules.

The more rules we create, the less room there is for good judgment.

The solution to the customer complaint is not to create another rule. It’s performance management, but not in the form of making a note for the yearly appraisal meeting, but here and now feedback and coaching. And, ultimately, if we have team members who don’t get it, they should not be on the team.

We can never create enough good rules to cover every situation. And even if we could, that would still not be the solution. Because top performers hate rules. What drives their engagement is autonomy, being able to use their own good judgement from situation to situation. And if you take that away, they will find somewhere else to work, a business where good judgement and personal initiative are appreciated.

But how will new employees know what good judgement looks like in our context?

This is where principles come in. Principles are the fabric of a great service culture. Principles frame what we believe around here. Principles are the foundation for our decision. Nordstrom, the US retail giant, has a very simple approach:

“Use your best judgment in all situations. There will be no additional rules.”

Southwest Airlines tell its employees: “You may do anything you are not uncomfortable doing in order to solve a passenger’s problem.”

Obviously, some people have better judgment than others. But that means that performance management is not about enforcing the rules but about helping people make better decision – and ultimately weeding out those who just don’t get it.

Get rid of the rule book and start thinking more about what  should be the guiding principles.

This spring we ran a series of blog posts around development, developing yourself and others. We have collected and edited those blog posts into a simple e-book that you can download below if you would like to explore this subject further.

If you would like to change your culture, start a new conversation

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Often teams say to me: “We need to change the culture around here.” And they often have a point, because toxic cultures are very powerful and can often destroy all sort of great initiatives – and as we have seen in a previous post, culture is a huge part of engagement. But it also easily becomes a fluffy excuse for not doing anything. It’s another drama triangle where the big villain is the culture and we are just the victims of this culture. “Well you know, that is just the culture around here. There’s not much we can do about it.”

But how does culture emerge? What creates the culture?

If you use the four quadrants we introduce in this blog post, then culture is influenced by:

– The attitude and behaviour of each individual

– The system or physical setting that we operate in.

If you are having a meeting with someone, the physical set-up has an influence on how the meeting unfolds. We could have the boss behind a desk looking down on the other party, or we could move to a sofa or we could even go for a brisk walk around the park. Each of these physical systems would obviously create a different feeling in that meeting. And if we run most of our meetings in a certain way … that creates a culture.

(I am known for insisting on having round tables or just circles of chairs for my workshops, and some people think I am being a bit silly in insisting ad nauseum about this. But I know from my 15 years’ experience that the setting creates a different feeling. It sets the tone. And when I am with a new group for the first time, this is the first step in creating a culture. A culture of conversations.)

Another aspect of culture is that, at the end of the day, our culture is the sum of the attitudes and behaviours that are present in our group over time. So first of all, each person needs to ask themself a crucial question: “In what ways am I contributing to this culture that I possibly don’t like?”

Secondly, how does each person behave? What they do and how they do it contributes to the culture. The more dominant or influential someone is in a group, the more their behaviour influences the common culture. This means that top management is key to the culture. After a few years, the culture becomes a mirror or reflection of the values and behaviour of the top person or the top management team.

So what can you do as a management team to influence the culture?

First, be very aware of your behaviour, including what you focus on, what you notice and comment on etc. All these things are cues that the organisation picks up and uses to try to decode what the culture is.

Secondly, change your conversations. More than anything, our culture becomes what we talk about. Take a look at your meeting agendas (and meeting formats) and think carefully about the conversations that you participate in during the day. What are we talking about?

But maybe more importantly, what do we never or very rarely talk about?

I spoke to a manager the other day who had just joined a large service organisation. He told me that when he was recruited, he was told all about the very customer-centric values the company has and how “we always put the customer at the centre of what we do”. “But,” he said, “I have been here for 6 months now and I have not had one single conversation about the customer experience. Every meeting is about financial KPIs. That is all we talk about.”

So, what do we need to introduce into our conversations if we would like to shift the culture? Where and when are we going to make the time and space for that conversation? Those are the crucial questions.

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This spring we ran a series of blog posts around development, developing yourself and others. We have collected and edited those blog posts into a simple e-book that you can download below if you would like to explore this subject further.

The employee experience needs to adapt to the employee life cycle

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The classical way to define the employee life cycle is: attract, recruit, onboard, develop, retain and transition. But that is the HR perspective, not the employee’s perspective. And as good service designers, we know that we need to consider the perspective of the ‘customer’ or user if we are going to be successful with our journey/experience design.

The life cycle will vary from industry to industry and of course from employee to employee. So good experience design would require that we do more research on this, in order to understand what it looks like in our case.

But here is what it might look like from an employee’s perspective.

Is this for me?
Attracted to a job proposition and wondering if it is for me.

Will I make it?
Entering into the application, selection, interview, and final negotiation process.

I made it!
The excitement of being chosen and starting the new job. Flooded with new impressions and ‘firsts’.The lunch canteen is amazing. Loving the attention I get as a newbie. (Or so one hopes.)

Am I good enough for this?
The first feelings of being overwhelmed. Am I good enough for this? Imposter syndrome. Do I belong here? Is this really for me? Feeling very much outside my comfort zone. Should I bail out and limit the damage?

Challenging but do-able
Feeling more secure in the saddle. Challenged and on the edge of my comfort zone, but in an exciting way. Giving the job everything that I have, and enjoying it.

Cruising – no sweat
The daily routine sets in, and most of what I do is well within my comfort zone. (Canteen is not nearly as nice as when I started.) Engagement may start to regress, through lack of challenges.

Is this it?
The first doubts start creeping in. I am always well within my (now shrinking*) comfort zone. This is no longer meaningful for me

From here there are two options: change your job or stagnate completely.

Experiences are all about managing customers’ emotions, as we have seen in previous blog posts on the subject of Service Design Thinking. The same principle applies to employee experience design. We need to understand the emotions that the employee is going through at each stage of the cycle.

When we review the above life cycle it becomes clear that the overall principle we need to look at is where people are in terms of comfort zones. Growth and development are keys to engagement and enthusiasm. But learning and growth happen just outside our comfort zone. We have the misconception that if we do the same thing for a long time we will get better and better at it. Not true. Research shows that, if anything, we stagnate or regress*. (Could you pass a driving test today? Probably not. See what I mean?) In order to get better we need to challenge ourselves and make a deliberate effort to improve. On the other hand, if we get too far outside our comfort zone we trigger fear, and then all learning and development stops as we move into “fight or flight” mode.

Engagement is essentially the product of the accumulated emotional experience. It is what we in a service profit chain terminology would call content. It is different from context (environment, salary and work conditions), which forms the basis of satisfaction but does not produce engagement. We can all have tricky and less than satisfying days, just as we can have fabulous days. But over time the key to engagement is: is this meaningful for me overall? Do I regularly find that I am at the edge my comfort zone, in a constructive and challenging way?

So the key to engagement and retention is to create an environment where the employee can safely switch back and forth between “challenging but do-able” and “cruising, no sweat” modes.

When looking at the employee life cycle in this way, it also becomes clear that as a manager you have a huge responsibility to know where your employee is in the cycle, and to do what you can to support that person in the best possible way. And that may even include helping an employee to move on to a new and more challenging position, if you have no more challenges to offer.

 

Why culture is not enough to save your employee experience

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The four quadrants of the employee experience

Last week I argued that culture is an often overlooked and important part of the employee experience – and it is.

However, having a great culture is only part of the story – as we all well know, we can’t suboptimise ourselves to greatness.

A great employee experience is not about how high a fuzzy-feel-good factor you can score. It’s about sense making and meaning. Is this meaningful to me or not?

When things are meaningful, we thrive; when things become meaningless, we suffer.

When you look at it this way, it becomes clear it is not enough to make part of the employee experience pleasant. It is not about the free fruit or great lunch service. That is also important, but it’s also just another part – the same way that our culture is only a part of the whole experience.

So, if we recapitulate.

We are striving for high levels of engagement. Engagement emerges from an individual feeling of motivation, enthusiasm – call it what you like – but it is something that starts on the inside of an individual and it is influenced by the three other parts: culture, physical environment (system) and the job that we get to do (and how we are allowed to do it).

This is the very simple explanation why it is so incredibly difficult to achieve consistently high levels of engagement. If you are not hitting all the elements more or less perfectly, there is no engagement.

We can have exciting challenging jobs, but in a horrible culture that is not meaningful for very long. We can work in the loveliest of cultures, but where ‘nothing seems to really work around here’. That is also not meaningful. And, finally, we can build these beautiful work environments with lovely cultures, but everything is so controlled, right down to how I am supposed to do every little detail, and that is not meaningful either.

And, to top it off, we must, of course, mention the fourth variable – the individual. None of this works the same for everyone. Each individual has their preferences and their ideas of what is meaningful to them.

So, if you have a day where you feel frustrated that you have tried everything to create a great workplace, don’t despair! Getting it right is really hard, but if you manage to do so, the pay-off is amazing.

How is that for a meaningful challenge?

If you are interested in exploring what it takes to develop engagement you are welcome to download my free e-book here

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Your customer experience will never be better than what your employee experience was designed to deliver.

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Service Design Thinking is a fantastic toolkit for improving our customer service experiences. Mapping out customer journeys, identifying touch points and understanding different customer personas is going mainstream as everyone chases the elusive super loyal customer.

But did we get the wrong end of the stick?

Let just backtrack for a moment and ask ourselves the fundamental question: why are we so focused on the ‘experience’?

Because in order for something to qualify as service, it has to fulfill two criteria.

It needs to deliver a certain result and there needs to be a positive experience.

If you walk into your favourite coffee shop and they serve you a horrible wishy-washy cup of latte, the setting may be nice and the lady may be ultra friendly but your basic result was not delivered.

Or the other way round.

The coffee is great, but the place is filthy and noisy, the lady is rude. The result was delivered but the experience was horrible. You could just as well have made that cup of coffee at home and saved yourself quite a few bucks. When you opted for going to the coffee shop, you were looking for a service, not just a product.

Ok so far so good. Sometimes it can be sobering to get back to basics.

So assuming that you know how to deliver the result part of whatever service you offer,  let’s examine the experience part. As Seth Godin says, customer service is all about changing feelings. Experiences are emotions in action. No emotions, no experience. How was your train commute to work today compared with the same day last year? Ehhh?? Most probably you can’t remember because if it was just the way it always is, there was no emotion. You have not stored it in your memory as ‘an experience’ (Technically everything is an experience but we only retain in our memory the positive and the negative ones, the rest is auto-deleted).

“The only purpose of customer service is to change feelings.”
– Seth Godin

So as you look at your customer journey and map out the touch points, it’s a good idea to also map the emotional highs and lows. You can start out by estimating them but eventually, you will need to research and confirm your assumptions.

Let’s map a simplified example of a customer journey most of us can relate to, the airport check in: Arrive at airport, check in on the touch screen, walk through security, walk to the gate, board using automated boarding card verification, greeted by stewardesses, Settle into a seat.

What are the potential emotional highs and lows that we could work on to ensure that we maximise the experience? The touch screen provides no emotion unless it is not working, so it is just a negative risk. Walking the hallways can at best be neutralised by making the walk pleasant on the eye and informative. Boarding card verification is again automated. The automated or physical parts of the journey we can work on to eliminate negative emotions but they are hard to turn into over the top emotionally positive experiences.

The the two touch points that have the potential to provide emotional highs are the security check and the welcome onboard greeting by the hostess. The critical variable in achieving this is obviously the human being involved in these two touch points. The customer experiences are in their hands and totally dependent on how they feel (Technically we call that engagement, but that is actually just a fancy word for their feelings toward the job.) If they feel anything less than enthusiastic, they will deliver the minimum required to keep the job.

But, you may say,  we give them a service manual and they get the onboarding service course, they know what they are supposed to do. Yes, they know, but knowing and doing is not the same thing.  They will do or not do depending on how they feel.

In order to understand what drives their emotions, we need to map their employee experience. What is it like to be an airport security agent or a flight attendant? How does their employee journey unfold on a daily basis? What are the emotional highs and lows? Do we know and what can we do to maximise the highs and eliminate or neutralise the lows? (In a Service Profit Chain context, we would call this improving internal quality.)

If you are really serious about delivering best in class customer experiences, you need to start at the other end and look at what kind of employee experience you are providing that is your foundation.  Great service design pasted on top of mediocre employee experiences is like trying to paint over the rust spot on a used car.

You can download the Dream Team Checklist below and benchmark yourself!

 

 

What do you need to focus on if you in order to create a dream team?

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Dream Team

In my view, the three cornerstones in the thinking behind the concept of the Service Profit Chain are:

  1. Customer Loyalty – as the key objective
  2. Value – understanding the true need of the customer
  3. Dream Team – the people that actually make it happen

We have already looked at Loyalty and Value in the previous post.

In this post, I would like to explain the 6 key ingredients in creating a dream team:

The Right People

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/autonomy

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 passenger’s 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 organisations 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. Candour is a key element of high-performing teams.

Appropriate Rewards and Recognition

Focusing on what works, celebrating success, and acknowledging each other’s contributions makes work meaningful.

The principles are not complicated. There is no magic  involved. But it requires commitment and persistence to get it right. When you do, the benefits are amazing.

You can download the Dream Team checklist below and benchmark yourself!

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Dream Team Questions

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This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future’s posts, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.

What is the difference between satisfaction and loyalty?

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Loyalty and Satisfaction

In a world of abundance, too much of everything, what we also sometimes describe as hyper-competition, understanding the difference between satisfaction and loyalty is also the key to profits and growth.

There are many different ways of defining loyalty out there but this is my favourite one (not one invented but I can’t for the life of me remember where I found it): A loyal customer is someone who is willing to pay a bit more for your service than they would have to pay somewhere else for a similar experience.

Think about that for a moment…

If they are paying the same price to you as they would pay anywhere else, they are not loyal. It is just convenient for them to do business with you. And if they are paying less, you have just bribed them to stay with you.

So there you have it, satisfaction is manly about avoiding dissatisfaction: Delivering on the primary results in a consistent and reliable way, what Tom Peters so famously called Ho-Hum.

There is no loyalty in satisfaction. It is just Ho-Hum.

Loyalty is about a connection. Loyalty is emotional, not rational. Loyalty is Wow! You have this ‘feeling’ about a place, a product.

Just think about all the stuff that you own. Of all the things in your possession, which ones are in your eyes brands and what are just products?

It’s quite simple: A product or service becomes a brand when you have a feeling for it.

And then we are back full circle to the Service Profit Chain because things do not create emotions, people do. When I think of a certain hotel or café that I am very fond of, it’s the people. They have some people who have made an effort and established a connection with me, and yes I will gladly pay a premium for that emotional connection. It makes my day.

This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future post, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.

 

Why the Service Profit Chain concept is more important now than ever before?

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Service Business

Check out Google trends, the interest in customer service and customer experience is steadily rising year by year and has been for the past 5 years.

Why?

Because we live in an age of abundance – this is one of my key points when I give live presentations. By abundance I mean that there is too much of everything. There are more hotel rooms, restaurant seats, cars for hire or consultants etc. than the market actually needs. So we are all trying to survive in a hyper-competitive environment.

In a hyper-competitive environment, it is not enough to try and compete on product specifications. Because within a given price bracket, the specifications for most product are more or less identical. So in order to differentiate, we need to look at the experience and that typically means that we add some service components.

On top of that, we are rapidly moving away from products and into services (Just think cars, in a few years when cars become self driving, they will no longer be products but we will see them as a service). So society is moving to service dominant logic. And when products are turned into services, the focus shifts, it is not about the product spec but the customer need.

If we want to compete on experience and service, we need to focus on the interaction between the frontline staff and the guest/customer – what we also call the touch points. That is the critical interface – that interaction can lift what is otherwise just a bland run of the mill experience into a memorable experience. And when that happens, we create loyalty. High customer loyalty is the key profits a growth.

So some companies launch major initiatives around creating loyalty. They see that as their main objective.

But that is only because they are not paying attention to the principles of the Service Profit Chain – in a sense they have got the wrong end of the stick.

There is no shortcut to the profits and growth. You need to take the long haul and that starts with creating an inspiring and engaging workplace, and that is what the concept of the Service Profit Chain can help you do – and that is why understanding this key framework is the best way to survive in a hyper competitive environment.

Check our my course The Service Profit Chain explained!

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This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future post, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.