Managing employee – customer relations

Scientist and author Dr John Fleming shares his views on getting the most out of the employee-customer encounter.

“Quality” is easy to measure and manage in some contexts, and extremely difficult in others. Businesspeople have a pretty good idea how to judge the manufacturing process that yields a snazzy new handheld device, for example. But what about the retail employee’s attempts to sell the gadget? Or the call centre employee’s effort to help the customer navigate its eccentricities?

Businesses, including small and medium-sized businesses in Australia, aren’t especially good at measuring and managing the quality of those processes – in particular the engagement of employees and customers at all levels of the business.

Yet it’s essential that organisations learn to measure and manage quality in all kinds of business settings. In manufacturing, value is created on the factory floor. In sales and service organisations, and in many professional service firms, value is created when an employee interacts with a customer. Indeed, the employee-customer encounter is the floor of sales and services. If these organisations are going to achieve meaningful operational and financial improvements, the employee-customer encounter must be managed with great care.

Quality improvement methodologies such as Six Sigma are extremely useful in manufacturing contexts, where ingredients with predictable properties are repeatedly combined in the same ways, but they are less useful when it comes to the employee-customer encounter, with its volatile human dimensions. To address this problem of fit, we’ve developed a quality improvement approach that we call Human Sigma. Like Six Sigma, Human Sigma focuses on reducing variability and improving performance. But while Six Sigma applies to processes, systems, and output quality, our approach looks at the quality of the employee-customer encounter, weaving together a consistent method for assessing it and a disciplined process for managing and improving it.

As we developed our thinking about Human Sigma, we arrived at several core principles for measuring and managing interactions between customers and employees:

  • It’s important not to think like an economist or an engineer when you’re assessing the employee-customer interaction. Emotions, it turns out, inform both sides’ judgments and behaviour even more powerfully than rationality does.
  • The employee-customer encounter must be measured and managed locally, because there are enormous variations in quality at the work-group and individual levels.
  • It’s possible to arrive at a single measure of effectiveness for the employee-customer encounter; this measure has a high correlation with financial performance.

Human Sigma grew out of a multi-year, research-based initiative designed to map the terrain of the employee-customer encounter. We identified ways to measure the effectiveness of the encounter, explored how those metrics could best be used, and assessed the benefits that could result from their application. This work was based on direct experience with hundreds of large, medium and small companies and millions of customers and employees. We then tested and cross-validated our findings in 1,979 business units involved in financial services, professional services, retail, and sales – within 10 companies. The 10 companies, all of which have applied the best-practice principles for managing the employee-customer encounter, together outperformed their five largest peers during 2003 by 23 percent in gross margins and by 85 percent in sales growth.

We can’t guarantee readers comparable results, but we believe that closely monitoring the health of a firm’s employee-customer relationships will result in dramatic performance improvements.

Dr John H Fleming is chief scientist at Gallup (www.gallup.com) and co-author of Human Sigma: Managing the Employee-Customer Encounter, published in April and available in all good book stores nationally.

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