I ask who is responsible for the company's culture, the person almost overwhelmingly says “human resources.” This is the first problem I have with many organizations and the people running them today – they are leaving the task and responsibility of employee attitude up to a single person or team, when, in fact, it is everyone's responsibility. As HR expert Michelle Crosby recently stated on our Culture Hacker podcast, “Culture needs to be owned by leaders at every level. Human resources has to play a role as a facilitator of that process, but not the owner of that process.”13 So with HR acting as the facilitator, everyone else must take on the responsibility of creating, supporting, and delivering an employee experience that instills a positive mindset, a delight in serving others, and a desire to make things happen.
Now, if you are an HR manager or, in fact, any manager who views culture as a priority, you may be nodding your head in agreement, but I bet you are also thinking about those owners, executives, or managers around you who need some convincing. So let's consider in more detail the three areas where I think culture is most strongly impacting your business's profitability and performance today: your customer experience, how much effort your people put into their work every day, and your ability to retain your best and brightest people.
How Culture Determines the Customer's Experience
As you read in the introduction, I wrote this book because of the lack of service and consideration offered to customers by so many organizations today. Obviously, I want to make sure this point is front of mind. Now, I have sat with managers who plainly told me they are not a service-based organization, so maybe these rules do not apply. My response was simple: “Do you have customers?” Their response, of course, was yes. I continued on to say that in today's world, you need to start thinking of your business as a service-based organization, no matter your product or industry, because customers, regardless of what you are providing them, expect service, a great experience, or even just appreciation in return for their business. Also, when it comes to customers, you must understand that organizations have both internal and external customers. Although some of your staff members will not deal with external customers, they work either directly or indirectly with other employees, or internal customers, who do. So when we talk about delivering a great customer experience or service, we also want to consider how staff members work with each other to deliver the products and services of the organization.
We know attitude is critical in customer interactions, both internally and externally. There is an old hospitality axiom that says “Those with a good attitude always provide great service. Those with a poor attitude always provide poor service.”14 This truth of hospitality is important in all industries, because it reminds us that the mindset and attitude of your staff members is probably the single most important aspect of making your internal or external customers feel good and of making your company successful. This line of thinking is not new. It was documented and demonstrated in the 1998 Harvard Business Review article “The Employee-Customer-Profit Chain at Sears,” wherein the authors demonstrated that employees' attitudes led to a better customer experience and, in turn, better profits.15
So attitude, or how your employees feel about their jobs, defines the service and experience each customer receives. Every business owner and manager needs to be considerate of their employees' mindset when it comes to customer experience because those attitudes determine how your customers are treated, and how you treat your customers is what they talk about and share with their family, friends, and acquaintances, both in person and online. And specifically, what is being shared online is currently defining your reputation and brand more than any advertisements or marketing initiatives can do today. Mercedes-Benz CEO Steve Cannon said it best: “Customer experience is the new marketing.”16 Customer experience is being defined by how your employees feel, and it indirectly tells us a lot about how you treat your employees. As Michelle Crosby said on the podcast, “The customer experience is a reflection of what is happening inside the organization, whether the organization intends or wants it to. What you reap on the inside is what you sow on the outside.”17 What is happening inside every organization is some type of employee experience. And that experience is manifesting itself in how your employees feel about coming to work, which in turn is defining how your customer feel after every interaction.
Every interaction with your customer counts, whether to increase customer loyalty or customer spend. Lowe's Home Improvement provides compelling findings regarding the impact of employee engagement and customer satisfaction and sales. By quantifying the relationship between employee engagement and sales (starting in 2007), Lowe's found that a conservative difference between the highest- and lowest-engaged stores was more than $1 million in sales per year.18
We have worked with the automotive industry for a number of years, and our work with dealerships, which are either small, one-off businesses often run by a family or centers that are part of larger automotive groups, has reinforced our belief that a focus on the employee experience leads to better customer experiences and profits, due to increased market share. What is most interesting about automotive dealers is that the majority of their revenues come from servicing a vehicle, not selling it, yet many consumers view the process of taking their car in for service as not unlike going to the dentist – very painful. When car dealerships emphasize customer service in the scheduling, drop-off, pickup, and follow-up process, they delight their customers and build not only a strong, loyal customer base, reflected in repeat sales, but also a strong word-of-mouth reputation for service reliability around their community or town. And those touchpoints are all influenced and defined by the interactions customers have with and the attitudes of staff members. Your employees' mindsets definitely impact the loyalty of your customers and the financial position of your company.
Zappos CEO Tony Hsieh's quote, used to introduce this chapter, is a great line to remember. It basically says your brand is a reflection of your culture, not the other way around as most business people would have you believe. It highlights just how important culture is when it comes to a brand, and it reinforces why, for owners, executives, and managers, culture might be the most important area of focus today in terms of customer service and experience.
How Culture Determines Employee Performance
Great customer service and experience requires a lot of effort, and effort is the result of the energy someone directs toward a task. But a focus on culture is not just about better customer service; it applies to all tasks, roles, and jobs. You have to invest in your culture to ensure that your employees give their best and perform at their best.
A big part of the difference among average, good, and great is the attitude or mindset that people have. Attitude affects energy levels, cognitive ability, and how people feel. Although you cannot guarantee or expect that everyone will be positive and happy all the time, you want to ensure that you are not causing undue stress or negativity and that, for the most part, the experience of working at your company supports a positive disposition. A study by economists at the University of Warwick in England found that happiness led to a 12 % spike in productivity while unhappy workers proved 10 % less productive. As the economists put it, “Human happiness has large and positive casual effects on productivity. Positive emotions appear to invigorate human beings.”19
The impact of a positive mindset cannot be downplayed in the work environment. Renowned sports psychologist Jim Taylor said:
Negative emotions can also hurt you mentally. Your emotions are telling you that, deep down, you're not confident in your ability to perform well and achieve your competitive goals. Your confidence will decline and you will have negative thoughts to go along with your negative emotions. Also, since your negative emotions are so strong, you will likely have difficulty focusing on what will help you to perform well; the negative emotions draw your attention onto all of the negative aspects of your performance. Finally, negative emotions can hurt your motivation to perform because you just don't feel good and it's no longer fun.20
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