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Home Qittitut resources Challenges in HR Who Comes First - Customers or Employees

By Bill Thomas
OE&D Practice Leader
Qittitut Consulting, LLC

All in favor of employees, say "Aye"

icon_pdfIn a recent presentation to a group of HR leaders, I ended my session with the comment, "If you take care of the ­customer, everything else takes care of itself." My reasoning was that if you focus on the customer, your revenues and profits will grow, enabling you to invest money back into your business and hopefully back into your people in the form of rewards and growth opportunities. I also believe that companies who have satisfied customers are more likely to have satisfied employees. Nobody likes working for a company that's getting constantly hammered by its customers over price, quality, service or other issues. When customers hold a company in high regard, it's much easier to nurture employee loyalty and a spirit of winning.

Nonetheless, one member of the audience came up to me after the session with his own spin: "If you take care of your employees, they will take care of everything else." Those who were still in the room looked at him, smiled and then applauded his comment. When the ovation was over, everyone awaited my reaction. I ­politely smiled back, sat down and invited them all to join me for five more minutes on why his approach—as noble as it sounded—fails nine times out of ten.

The soft stuff can be a hard sell

I say this for several reasons. One is that an employee-first model usually only works with a highly enlightened senior management team. Most HR leaders, however, aren't that fortunate and have to work really hard to sell their ideas to upper management. If you're one of the fortunate ones, go for it. If not, my suggestion is to think about ways you can impact your company's external customers through the things you do internally with your HR practices.

For example, HR teams in companies with sizable call center operations are actively engaged in strategies to turn their support- or complaint-based customer call centers into revenue-generating operations. Employee skills, ­management practices and organizational capabilities—thus HR—are at the heart of those business strategies.

Other companies are coming out of this economic downturn with new sales and marketing approaches that focus on solving customer problems and providing total solutions as opposed to pushing specific products into their various sales channels. HR teams for some of these firms are similarly at the forefront in helping reorganize, retool, recruit and reward a more consultative sales force. Still other companies are focusing on innovation and product development to offer new or better value propositions to their customers. Here, HR teams can and are playing an active role in helping their companies streamline and ­better focus their business processes. All these are examples of HR focusing on HR processes—not for the sake of happier employees, but for the sake of the business.

Measure not what you can, measure what matters

The second reason for my "customer-first" mantra is that if you're making an HR pitch to the CEO in today's ­environment, it better be one based on a tangible business issue, not one based on employee advocacy. If you go to your CEO with ideas for creating a more satisfied and committed workforce, you may or may not be heard. But if you go in with specific ideas for driving customer satisfaction and retention, account growth and thus revenue growth, I'll bet you get their attention!

This also extends into the way HR teams measure their contribution. Most measure what they can, instead of measuring what matters. I've read numerous recent examples of HR teams in leading companies who are trying to automate and perfect their capture and reporting of HR metrics. But I'm continually surprised at how many are still focusing on HR process or expense metrics such as turnover rates, time to fill, cost per hire, per capita training costs, benefit costs as a percent of payroll, percent of ­performance appraisals completed and so on.

These measures aren't without value. They do help to track the progress of improving the return on HR investments and institutionalizing certain HR practices. But HR teams would be hard pressed to use these metrics to show how they affect the top line or improve the company's ­performance in the marketplace. More meaningful metrics would be to show how a particular HR activity has increased average revenue per sales maker by X number of dollars; or how it has helped reduce new product launch times by Y number of days; or to what it extent it has ­lowered customer complaints by Z percentage points. These are the kinds of things that get management's ­attention—and quickly.

HR focus on the top line

Lastly, a customer-first HR strategy stands a far better chance of more quickly impacting business results—both top and bottom line. An employee-first approach takes time to demonstrate its financial impact (especially any top line impact) and may well run out of support before it runs its course. But focusing on customer-driven HR practices can have a more immediate and meaningful impact.

For example, at one company, new sales hires took an average of 6 months to reach 75% of their target sales ­quotas. HR was able to show that by using different recruiting and selection criteria and installing a new sales training program, new sales hires could reach 75% of their quota in 4 months and hit 100% in 6 months. This return was clear evidence of how the changed impacted the top line.

Another company's customers were complaining that their coastal operations were learning about product ­quality problems much later than their mainland operations were. The reason was traced back to the way the ­supplier company was training its customer service reps and field techs. Relying on classroom training took an average of six weeks to get all CSRs and techs across the country up to speed on diagnosing and fixing a product bug. Once HR introduced an e-learning solution for new product launches and problems, the coast-to-coast learning time was cut to 10 days, resulting in significant improvement in customer complaints and resolution time.

And at another company, key customers were going to competitors because the company was continuously missing its product delivery dates. HR teamed with the engineering and manufacturing departments to help them analyze the way the departments were staffed and organized and how they interacted with each other. A reorganization of both departments, as well as several changes in their resource mix and project management approach, helped reduce their product delivery time by more than 40%, thus avoiding additional missed targets and lost customers.

Now what?

Few companies have escaped the challenges and dis­appointments of the past three years. Some have gone through bankruptcy reorganizations while others have ­significantly scaled back their operations. Some have ­managed to survive with minimal loss while others have actually grown. And still others have had mixed results but have taken the time to regroup and refresh their focus. Regardless of their status, these companies may or may not emerge with a renewed concern for their employees. But I'll bet every one of them will be paying attention to their customers.

In recent interviews with 200 senior executives, their top strategic priorities for operating performance included

  • Improving workforce performance
  • Changing organizational culture and employee ­attitudes
  • Improving customer care and service.

And in the Conference Board's 2003 Survey on Management Issues, customer loyalty ranked first among CEOs' concerns. The directive for HR leaders couldn't be more clear and compelling.

So who really comes first? Who cares? The question is circular. The answer is both. You can't expect a customer-first strategy to go anywhere if your employees aren't inspired, equipped and shown how to make the strategy work. But focusing on employees first may or may not get you better performance in the marketplace. The key for HR teams is to identify ways they can simultaneously and favorably impact both employees and customers. I hope my examples have shed some light on ways to do just that.

  • We hired Qittitut to help us develop and implement a Customer Excellence strategy designed to measure, improve and leverage the satisfaction and loyalty of our customers—and further differentiate us in the marketplace. Their expertise in this area and their ability to quickly understand our industry and culture were invaluable to our efforts. I would highly recommend them to any company seeking to take their customers’ experience to the next level.

    Director of Customer Excellence, Gas Pipeline Company

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