Of all the decisions an executive makes, none is as important as the decisions about people because they determine the performance capacity of the organization.

Of all the decisions an executive makes, none is as important as the decisions about people because they determine the performance

capacity of the organization.— PETER DRUCKER

Learning Objectives:After studying this chapter, you should be able to

learn:

How important the employees are for the organisation from customer service perspective.

About the requirements of keeping the workforce in good faith with the organisation especially in the issue of customer service.

The process of Employee Relationship Management.

The employees' customer orientation.3

Introduction Globalization and free trade have drastically changed the

business environment and led to intense competitive industry structure. There is hardly any company that rejects the notion that to stay afloat in turbulent dynamic business environment wherein even distinctive competencies are easily copied by its rival customer is the key to sustainable leadership. According to Gursoy and Swanger (2007) the ability to respond quickly and effectively (time-based competition) and to satisfy customer needs has become a defining characteristic of competitiveness and of success for many companies.

Great companies listen to their employees and teach them to listen to customers. Companies need to take extra care in hiring people for the organisation. It is because whatever strategy the company's management designs it is to be actually carried out by the people, i.e. the employees. There has to be willingness on the part of the employees to practise the policies and the procedures set by the management and also in its true spirit. Such performance and the consequent result cannot be extracted by force and it needs detailed study and analysis.

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Employee-Organisation Relationship The employees play a very vital

role in the growth of the organisation also as they are the ones who actually buy the service organsation's business concept and concretise it by providing their knowledge, skill, effort and time. They interact with all other stakeholders and satisfy the interest of each of the stakeholders.

The bank, in turn, fulfils the employees' physiological, security, and social needs. They also inherit several attributes of customers and, hence, are called as internal customers. If the customer is the purpose of the business, employees are the means to achieve the purpose.

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Figure 9.1

Role of Employee Satisfaction on Customer Satisfaction “Companies with strong consumer branding

outperform Standard’s and Poor’s index .It’s a lesser known fact that companies with a high rating from both consumers and employees double that return”- Carol Parish at Enterprise Global Brand Agency

“If you want to be customer-focused, start by focusing on your employees. Give them the go-ahead to meet your customers' needs. That's the lesson we've learned during the past three years at Guest Quarters suite Hotels”

- John J. Weaver6

Role of Employee Satisfaction . . . Contd. Satisfying customers only may not lead to desired results unless

employees are also satisfied and motivated. There is wide acceptance to the idea that energized and engaged employees produce the most satisfied and loyal customer base. Disgruntled staff is unlikely to cultivate a satisfied customer base which thumps the very foundation of the organization. Thus employee satisfaction is inevitable for organizational growth and success. Employee satisfaction leads to customer satisfaction (Spinelli and Canavos, 2000; Wu, 2007).

Satisfied employees are motivated enough to deliver adequate effort and care. Satisfied employees are empowered i.e. they have required resources, training and responsibilities to serve the needs and demands of the customer. Satisfied employees can provide customers with interpersonal sensibility and social account (i.e., adequate explanations for undesirable outcomes). It has been suggested that these components of interactional justice (i.e., quality of interpersonal treatment provided in a negotiation/exchange) have a significant impact on customer satisfaction.

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Researchers View : Employee Satisfaction & Customer Satisfaction Numerous empirical studies show

a strong positive relationship between employee satisfaction and customer satisfaction (e.g., Schneider, White, & Paul, 1998; Schneider, Ashworth, Higgs, & Carr, 1996 Johnson, 1996; Wiley, 1991). As suggested by this wealth of findings, positive changes in employee attitudes lead to positive changes in customer satisfaction. Heskett et Al. (1994) developed a model referred as service profit chain which identified the link between Employee and Customer Satisfaction. Internal-service quality drives Employee satisfaction, which enables the delivery of High-value service resulting in Customer satisfaction, leading to Customer loyalty, which, in turn, produces profit and growth.

The literature on service-quality has established a link between employee satisfaction and customer satisfaction (Bitner1992; Hartline et al., 2000; Loveman, 1998; Schneider and Bowen, 1993). In a large study of 1,277 employees and 4,269customers, Schlesinger and Zornitsky (2007) have found that employee satisfaction was positively related to customer satisfaction. These empirical studies have confirmed the maxim of the founder of the Marriott hotel chain: “You can’t make happy guests with unhappy employees” (quoted in Hostage, 1975).

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Researchers View . . . Contd. Some investigations have

explicitly proved relationship between employee satisfaction and customer satisfaction. Brooks (2000) reviewed the relationship between financial success and customer and employee variables (e.g., customer satisfaction, employee satisfaction, etc.) and found that, depending on market segment and industry, between 40 and 80 percent of customer satisfaction and customer loyalty was accounted for by the relationship between employee attitudes and customer-related variables.

Crosby et al. (1994) pointed out: “If employees are truly motivated by a desire to do quality work that meets customer needs, then achievement of that outcome (customer satisfaction) should contribute to their own satisfaction as well.”So, compelling evidence shows that there is a strong linkage between employee satisfaction and customer satisfaction. Hartline et al. (2000) opined that in many industries Customer Satisfaction is dependent on customers’ perceptions of the performance quality of service employees.

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Researchers View . . . Contd. A meta analytic investigation

(Harter, Schmidt, & Hayes, 2002), based on 7,939 business units in 36 companies, found generalizable relationships between Employee Satisfaction and Customer Satisfaction. Karl and Peluchette (2006) in a study of service sector found that satisfied employees create satisfied customers.Schlesinger and Zornitsky (2007) in study of 1277 employees and 4269 customers of a personal Lines Insurance Company found that employee satisfaction was positively related to customer satisfaction.

Berhardt, Donthu, and Kennett (2000) measured the relationship between employee satisfaction, customer satisfaction, and profit longitudinally showing that, although the effects of employee satisfaction and customer satisfaction on business profit at a given point in time might not be detectable, they become visible and prominent over time. Specifically, these researchers found a positive relationship between change in customer satisfaction and change in profit/sales, a positive relationship between change in employee satisfaction and change in business profit, and a strong relationship between employee satisfaction and customer satisfaction at any point in time.

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Researchers View . . . Contd. Satisfied employees deliver

the company’s promise and create a favorable image by striving to provide a better service than competitors (Malhotra & Mukherjee, 2004; Schneider & Bowen, 1985). Gronross (1983) found that when managers treat their employees well, employees in turn treat their customers well. Schneider’s (1980) study said that Job Satisfaction is the primary reason why employees deliver good service to customers..

Rucci et al (1998) in analysis of employee satisfaction and customer satisfaction at Sears Roebuck and Co. found that as employee satisfaction increased by 4 percent, customer satisfaction also increased by 4 percent resulting in an extrapolated potential increase in revenues of $200 million. Schneider et al. (1980, 1998) showed a similar finding where aggregated employee perceptions of the “climate for service” were significantly related to customer experiences in banks

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Researchers View . . . Contd. Bitner et al., (1990) suggested

that low job satisfaction has the potential of causing low quality service encounter performances on the part of the employee. This inferior performance will lead to customer dissatisfaction, firm switching and negative word-of-mouth communication on the part of the customers about the employee and the firm. In a longitudinal study involving a fast food chain, with responses from both customers and employees, Bernhardt, Donthu, and Kennett (2000) found that job satisfaction is positively correlated to customer satisfaction.

A recent study by Gelade and Young (2005) in the retail banking sector reported weak linkage between Customer Satisfaction and Employee Satisfaction. In an examination of a UK grocery “superstore” retailer, Silvestro and Cross (2000) and Silvestro (2002) found the link between employee satisfaction and business performance (as measured by store-level profitability) actually to be negative. In a later study using data from 75 stores of a UK home improvement store chain, Pritchard and Silvestro (2005) found little support for the proposed linkages.

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Implications of the Employee Customer LinkageSeveral big organizations

have well internalized the role of employee satisfaction on satisfaction and gratification of its customers. These include Bank One, Intuit, SouthWest Airlines, Service Master, USAA, Tacobell and MCI.The leaders have experienced and learned the role of employee satisfaction on customer satisfaction.

Radclyffe group conducted a study of call centers and found that “satisfied contact center employees make for satisfied and loyal customers ……customers decide whether or not to make future purchasing decisions with a company, or to recommend its services to others , as a direct result of their experiences with a contact center representative ……..”.

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Factors Affecting Employee Behaviour towards Customers:Overwork: It has been

realised that many of the organisation leave no room for the employees to settle in their day’s schedule and this effect poorly in their customer interface. When the employees are occupied with excess work, their behaviour towards the customers is not always in conformance with the company’s laid down processes and procedures.

Fatigue: The nature of the job also effects employee’s performance. Doing the same work continuously over a period of time in a routine fashion creates fatigue among the employees. This fatigue does not permit them to create any service innovation. Employees cannot function to their full capacity only on orders. Under the circumstances, they would merely conduct the transactions they were trained to do- but they will not care.

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Factors Affecting . . . Contd. Freedom: Organisations rarely

are of the nature of granting enough of freedom to the employees to initiate something new towards superior customer service. In most of the cases they are of the view that the employees should strictly do what they are asked to do. Many a time this liberty and freedom is considered as threat to discipline and challenge to authority.

Interpersonal Issues: People working in the organisation do get trapped in some interpersonal issues quite often. If these issues are not resolved timely and effectively, it spoils the work environment of the organisation and subsequently affects the employee’s performance.

Mutual Trust: Organisations need to understand and assimilate the employee’s needs, develop a programme that would ensure total participation from all employees. For, mutual trust between the company and the employees is a must.

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Factors Affecting . . . Contd.Role in Decision Making: Lower level employees, who

actually are responsible for implementation of the CRM programs and practices, are rarely taken into confidence and are encouraged to provide their suggestions. While they are the ones, who actually interact with the customers and have huge bearing of the final customer experience with the company. If managements factor in relationship management practices that engage people in the change process, they can circumvent significant resistance and actually speed up implementation of corporate goals.

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Essentials of Building Relationship with Employees through Employee Relationship Management:

Since the employees are the pillars for the companies building of relationship with the customers, a deliberate and well thought out initiative is required by the companies to build foundation for strong relationship of employees with the organisation. The steps may be as follows:

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Recruitment and Selection

•Recruitment strategy from customer perspective •Finding persons of customer first orientation

Recruitment and Selection

•Recruitment strategy from customer perspective •Finding persons of customer first orientation

Employee Motivation•Building Employee Customer Parity•Sharing Customer Profile•Directing to remain focused

Employee Motivation•Building Employee Customer Parity•Sharing Customer Profile•Directing to remain focused

Training & Development•Training with Customer first approach•Training to listen to the customers•Training to build empathy with customers

Training & Development•Training with Customer first approach•Training to listen to the customers•Training to build empathy with customers

The pillars to build strong relationship of employees with the organisation are as follows: Finding right person of

customer first orientation: The process of getting closer to the customers starts with the company management and builds with every employee across the organisation. Superior service is crucial to customer satisfaction, but it comes back to the people hired. This approach has forced companies incorporate personality tests in the hiring process. There is an imperative to hire the right temperament for the job, for the company culture and also for the mix of clients.

Establishing employee-customer parity: There are companies who request their valued customers to help them hire right kind of employees. It is all about matching up the right employees with the right customers and the right job. To get fruitful results, the company may provide a forum for employees and customers to get mutually acquainted.

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The pillars . . . Contd. Designing recruitment

strategy from customer perspective: The quest to match the employees to the best customers is critical in building customer Relationship Management. It may at times require revamping the recruitment strategy from the customer perspective

Imbibing empathy for customers: To help build empathy for customers,people working in whatever department can be made to experience the environment and the conditions which the customers undergo.

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Training the employees with customer-first approach: Hiring customer-oriented employees is important from the perspective of strong Customer Relationship Management. But the organisation also needs to provide staff with training and support so that they make good decisions, ask good questions in a nice manner, give customers satisfying answers, be courteous in behaving with the employees and most of all readily present themselves before the customers to address their problems.

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The pillars . . . Contd.Sharing the customer

profile with the employees: Communicating employees about the profile of the best customers is best because segmentation is a key in implementing CRM programme. So, the employees must be aware of who "butters their bread" and need to reciprocate accordingly. Along with the company, the employees should also be actively engaged in exploring the characteristics of the top customers.

Directing employees to remain focused: Mere hiring of good employees or teaching and training them to be customer-oriented would not suffice. As one moves further in the job, the work environment, be it monotony or any other thing, distracts them from the focus that generated initially. It is a difficult task to keep that focus alive and sustained.

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Initiatives by the service companies for Employees Relations Management:Employee referrals in

recruitment: Banks have started preferring the candidates referred by their existing employees in selections. The rationale behind this has been alluded that the existing employees are fully aware of the work condition, job description, and job specification. And, above all, the managers have to extract work from the employees, so why not recruit the staff they are most comfortable with.

Employee's participation in decision-making: Gone are the days when bosses used to decide and pass it on to the employees spread across the country for implementation. Employees, especially of the knowledge economy, are not ready to accept things at face value. Their participation is a must for real success of the plan because they are the people entrusted with the responsibility of execution.

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Initiatives . . . Contd. Proper communication

about the strategic views of the management: Employees should be tried to be updated and informed about the strategic intent of the management. This gives them a clearer picture of the programme to be implemented and the benefit the organisation may accrue out of that. Thus, proper and timely communication leads to greater and willing acceptability by the employees and reduces resistances.

Making customer satisfaction as a parameter in employee's appraisal: Feedback system is prevalent with almost all service providers. Railways, post offices, public and private sector banks, courier companies, automobile service centres etc. have a customary feedback form and a drop box. Either the forms are not available or no one ever bothers to open the drop box. Even if, in some cases, the feedback forms are to be shown to higher officials or to be sent to head offices, they are mostly fake or manipulated.

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Initiatives . . . Contd. Motivating them for

innovating with customer service: Modern businesses do not function on the typical top-down approach. It is the era of initiations and innovations. Knowledge and skill do not just get confined to a few seled people sitting on top. Modern companies recognise the talent and give it due recognition. This often results in coming up with various schemes for the rewarding employees to innovate and initiate newer customer service forms. These schemes are meant to motivate employees and give them a sense of belonging.

Providing them amp le learning opportunity: To actually invite deliberate participation from the employees, the most ideal form is to educate and train them. This is possible only through constant learning either through senior company officials or industry experts or through both.

Carving out a proper growth path: To enable the employees to be enthused and enthralled about the customer service, organisations need to keep them motivated.

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Employee's Customer Orientation

To check the effectiveness of the employees in managing the customer relationship, banks may conduct regular surveys of their employees on several parameters. A questionnaire is as follows to check their understanding of the customers. It may provide an opportunity to the banks to assess customer orientation towards and correct if need be.

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QUESTIONNAIRE Employee's Customer Orientation:1. Do you know who your customers are and

how many customers doyou have?

2. Do you listen effectively to all your customers?

3. Do you regularly make up an inventory of all the needs andexpectations of your customers?

4. Are complaints replied within a day and solved within a day or two?

5. Do you make recommendations to customers about the productsand services that best suit their needs?

6. Do you know what the costs are when you lose a customer?

7. Do you regularly organise meetings with customer groups to learnabout their needs, wants, ideas and complaints?

Leadership's Approach Towards Customers:

1. As a manager, do you know how many complaints are receivedweekly/monthly?

2. Is there commitment at top management for customer orientation?

3. Does management set a good record with regard to customer-friendly behaviour?

4. Is management available at all times to the customer?

5. Does customer satisfaction also belong to the evaluation criteria ofmanagement?

6. Does top management also handle complaints of customerspersonally?

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ConclusionCustomer Relationship Management is not all about

schemes and techno logies. It is the people who are the most important factor in effective and successful CRM programme implementation, because they are the ones who actually have to carry out the plans designed by the management. People or the employees need to be handled with care because there are so many factors that creep into the system of human. They need to be motivated such that they are themselves interested in their dealing with the customers and an external system for watching the activities is not at all required. Hence, the real and the modern buzzword is Employee Relationship Management.

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Project AssignmentAs branch manager of a bank, you realised that the employees are not cooperating enough to implement the programme designed by the top management towards customer relationship. What would you do? Enlist the complete set of activities and explain how you would carry it out?

REVIEW QUESTIONS

1. How important are the employees in an organisation from the perspective of CRM implementation?

2. What practices can be adopted by the service organisations to keep the employees motivated towards implementation of the CRM programme?

3. How can the employee's orientation towards customer be checked?

4. Employees Relationship Management (ERM) is a new buzzword after Customer Relationship Management (CRM). Comment

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