Happy Employees and Happy Customers Aren’t Mutually Exclusive

There is a disturbing trend among employers that has been going on for some time. In the last 12 months, thanks to the recession, I have seen this trend steadily worsen, and I believe it is almost at critical mass…I’m referring to a trend I’ll call Retail-itis.

Retail-itis happens when a business is vastly more concerned about the happiness of their customers than they are about the happiness of their employees. This is a fundamental flaw in many businesses, and one that if fixed would literally change the entire face of business as we know it.

Let us examine a few examples of this problem. I’ll start with my least favorite company in the world, Walmart.

Negative Example #1 – Walmart

Once upon a time, I worked at a Wal-Mart in American Fork, UT. At this particular Wal-Mart, while I was there, our employee turnover rate was over 90%. The highest I remember seeing it was like 95%. I remember being told that it cost between $3,000 and $4,000 to train a new employee, and there were roughly 500 employees in this particular store. Taking 95% and $4,000 and 500 employees, that comes out to just shy of $2,000,000 being lost each year to employe turnover. Ouch!

So the question is, why was turnover so high at this store? Because of the mentality of the management team. First, let me explain a few things. Salaried managers at Wal-Mart are paid pretty hefty bonuses if they reach certain revenue goals, giving the greedy managers very strong motivation to sell sell sell.

This translates into a slave driver mentality, where everyone beneath you becomes a means to your financial end, nothing more than tools. This was amply evident at this particular store. If my memory serves me right, our store manager, with his bonuses, was making roughly $300,000/yr. The Co-Manager was about half that. The average overnight employee, on the other hand, the best paid hourly workers at this store, were making around $20,000/yr.

Yet, in spite of this, this particular Wal-Mart store was growing significantly year over year, and was one of the highest revenue generating stores in the region last I heard. Unfortunately, this type of result tends to reinforce to management that what they are doing is both right and effective. Alas, what they were really getting was a “false positive”. Sure, the store was doing well financially, but the employee turnover was sky high, and both efficiency and morale were way down.

The reality is that by paying the hourly employees just a little bit more, combined with more positive reinforcement and less negativity from the managers, turnover would have decreased, efficiency and loyalty would have improved, and the store would have actually done even better financially, perhaps significantly so. Happy employees do SO much more for a company than the average company realizes. Unfortunately, few managers understood this, and so nothing was done to fix the problem.

Negative Example #2 – Teleperformance USA

Lets look at another example. I am acquainted with a supervisor at a local Teleperformance USA call center. They handle customer service calls for Verizon FIOS. The contract that this call center is under stipulates that they are paid only for the first eleven minutes and fifteen seconds of a call. Anything over that, and they are not making any money.

So, naturally, there is an EXTREME push for low call times. If an employee is on a call that is going too long, their name is written on a board, called out loud to the other employees, and otherwise criticized and publicly humiliated. This is supposed to help them improve. What this actually creates is an extreme conflict of interest.

It is now, under the above circumstances, in the employees best interest to cut their call times down. However, many of the calls at this center are very complex, and CAN NOT be handled in the allotted time.

The result of this is that the employees are coming up with creative ways to cut their call times, but at the expense of customer service. They will, as often as possible, refer the caller to their manufacturer, or transfer the call, or just plain drop the call, all to make sure they get yelled at less and have a higher chance of being promoted to a less stressful position.

This problem is not an employee training issue, but a management training issue. As far as I know, there is not a single employee there whose call time is under the limit who is not cutting corners. From what I was told, the very best employees there, those who don’t cut corners and are extremely good at their jobs, hover closer to 15 minutes per call, and are harassed continually about it, in spite of the fact that their customer satisfaction and first call resolution are very, very high. That is a serious problem.

In this particular instance, the real problem is that the contract between the call center and Verizon needs to be renegotiated. Go the Verizon and say, despite our extensive training, even our very best employees can not meet this call time limit without cutting corners and skimping on customer service. Here is the data to back this up. We need to negotiate a longer call time limit. Simple enough. It is in Verizons best interest to retain as many customers as possible, which they cannot do if the customers are getting poor customer service.

On top of this, the managers at this call center need to be taught some serious people management skills. Negative reinforcement is their tool of choice, and obviously it doesn’t work. You cannot tell an employee to do something that is literally not possible, and tell them their job and pay hangs in the balance, and expect honesty and effective work from that employee. Desperation does not a happy employee make. It just won’t happen.

In addition to that, everything at this call center is always in a rush. Everything is urgent, must happen right now, hurry hurry hurry. This reeks of poor time management skills, and an inability to plan properly and set realistic expectations. No surprise that this call center is one of the worst call centers this company owns.

I could go on and on about companies showing perfect examples of Retailitis, but that is not the point. The point is, how do you fix and/or avoid this problem? Simple! Put your employees well being ahead of your customers/clients. Sounds counter intuitive, right? Well, it isn’t. It works perfectly, and I’ll prove it.

Lets take a look at Zappos, and online shoe company, headed by The Wizard of Happiness, Tony Hsieh.

Good Example #1 – Zappos

At Zappos, happiness is at the heart of everything. Tony, the founder and CEO, want BOTH employees and customers to be happy, and has organized his company accordingly. For example, new hire training at Zappos is a multi-month affair, to make sure that everyone understands the culture and nature and mission of Zappos. At the end of the training, these new employees are offered $2,000 to quit, right then and there.

Most businesses would look at this as crazy, but it is anything but. Though many employees think they want great pay, what most really want is to be appreciated and work in a positive environment. Tony understands this, and employees at Zappos are both well paid and appreciated. By offering people money to quit, Tony makes sure that the employees are more interested in the culture and environment than the money. Zappos wants employees for who their work is more than just another job.

Beyond that, everything at Zappos is structured to make employees happy, from the work environment to the perks. Employees are authorized to transfer this happiness to the customers, which they do in abundance. Zappos is a billion dollar company largely because of repeat customers, which they have in droves thanks to their incredible customer service, a result of happy employees.

I could give more examples, but why bother? Zappos does it perfectly…just model after them 🙂

So How Do I Apply This to My Company?

Easily! For a business to reach it’s full potential, the happiness of employees needs to be a company’s highest priority. When your employees are happy at work, they become loyal and efficient. Efficiency is money. On top of that, of all the forms of marketing, word of mouth is still the most powerful, and is particularly meaningful when it comes from a happy employee who is sharing the joy not because they have to, but because they WANT to. Happy employees, when coupled with a good business model and a great product or service, will inevitably lead to happy customers, and long term profit and growth.

Do not give in to Retail-itis! Regardless of whether your business is doing well or poorly, take a close look at your employee morale. Encourage an open door policy, where employees can discuss concerns with you without consequence to them. Keep your eyes and ears open. If you find that your employees are not happy, fix it! In this economy above all, nothing will provide a bigger boost for your bottom line than happier, more efficient employees.