Customer Focused Leaders

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How do you get senior managers to live and breathe the customer?  Sarah Cook and Steve Macaulay explain how a framework devised by management consultants McKinsey can help focus the minds of top managers

Learning Points

Senior managers are often pre-occupied with other influences such as competitors, shareholders, The City, government and regulatory bodies.  Customers compete against these other preoccupations for their share of airtime and often lose.

The 7 'S's diagnostic framework, developed by management consultants McKinsey, provides a useful perspective on why enthusiasm for customer experience is not enough and focuses attention on the actions leaders need to take. The Seven 'S's are:

1 Structure
2 Strategy
3 Shared values
4 Style
5 Staff
6 Skills
7 Systems

About the Authors

Sarah Cook is Managing Director of customer experience and culture change specialists, The Stairway Consultancy.  Steve Macaulay is a Client Service Director at Cranfield School of Management, Cranfield University.

Successful customer-orientated leaders not only have a passion for customers, but they live the passion and make it work by:

• Knowing customers? needs and anticipating their future requirements.  This demands an intimate, first-hand
understanding of the customer
• Keeping in regular touch with the customer as needs change and develop
• Leading and mobilizing the entire organization?s capability to deliver to the customer

Senior managers are often pre-occupied with other influences such as competitors, shareholders, The City, government and regulatory bodies.  Customers compete against these other preoccupations for their share of airtime and often lose.

Senior managers can all too easily become cocooned in a world far removed from the customer and the company people who work at the sharp end.  One acid test of how removed your senior people may be from customers is: Who replies when a customer writes to the CEO?

This remoteness frequently leads managers to:

• Become hooked into the internal politics of the organization
• Shut off from honest feedback
• Rarely see the customer face-to-face, instead making do with second-hand, filtered reports.

This can all add up to management decisions which are far from customer-friendly such as rules and regulations that work well for the organization but not the customer.

Herb Kelleher at Southwest Airlines, Jack Welch at General Electric, Carl Sewell at Sewell Village Cadillac are examples of leaders with a genuine customer obsession which has enlivened and enriched their businesses.

How can we understand what they do to keep themselves and their organizations close to the customer?  The 7 'S's diagnostic framework, developed by management consultants McKinsey, provides a useful perspective on why enthusiasm for customer experience is not enough and focuses attention on the actions leaders need to take.

1. Structure

Many layers of hierarchy can block a leader's access to customers and vice versa.  Middle managers may 'filter' reality and present leaders with the picture of customer satisfaction which they wish them to see. The result of this is not only leaders who lack customer focus, but also employees who are fearful of 'stepping out of line' or taking responsibility for the customer.

On staying several nights recently in a well-known hotel chain, one of the authors returned to her room at 7 p.m. to discover that it had not been made up. With the maid waiting beside her, the guest had to speak to both the front of house and the housekeeping manager before eventually she was asked to pass on their permission to the maid to clean the room.

Another indication of customer focus is whether (if at all) customer experience management is represented at the top table.  This is a telling indicator of the likelihood of closeness to the customer.

2. Strategy

Many organizations adopt a strategy of customer focus.  Compare most businesses in many market sectors: retail, finance, leisure and airlines for example, and the majority have produced a mission statement which says they are customer focussed.  This is often an empty 'me too' gesture because it is not translated in to actions.

In the UK at Cranfield School of Management, a program has been devised called 'Implementing Service Strategy'.  It has attracted senior delegates from a very wide range of organizations.  Program Director Graham Clark stresses: 'Fine words alone in a customer strategy are just empty.  We help senior managers put together action plans to firm up exactly what needs to be different.  We emphasize the leader's role in culture change and monitoring and measuring service performance.  What senior managers do is critical.'

3. Shared values

If you discover the passion of the CEO, you will discover the organization's real priorities.  Is there fundamental passion towards
- making money?
- staff relationships?
- customer orientation?

These are important issues to get to the bottom of. A senior manager who lives and breathes the customer will not get much of a hearing where the bottom line predominates above all else.

What is valued or important in an organization can promote or undermine its service strategy.  For example, one retail business was trying to increase its customer satisfaction ratings.  Although outwardly it promoted openness and responsibility, in practice managers throughout the organization were highly autocratic, secretive and reluctant to delegate.  Little wonder that when the CEO announced that in an effort to be customer focussed, all employees were empowered, no one was prepared to take up the challenge.  It takes a lot of honesty and tenacity for senior managers to recognize the real values of the organization and to tackle any negatives.

4. Style

How leaders behave influences the behaviours of their staff.  The most effective leaders are those who are sensitive to people's needs.  When senior managers' career paths have been via specialist or technical functions, for example, they may well fail to appreciate the need for a holistic approach to measuring customer experience. Typically where this style prevails, quantitative measures are set for service delivery e.g. the number of calls taken per call centre per day.  Little attention is paid to the qualitative aspects of service such as creating rapport and being empathetic to the customer.

The new style of leadership that appears most effective has become known as the 'Servant-Leader', who aims to deliver the necessary environment, resources and motivation to enable front line people to deliver extraordinary service.

Employee suggestion programs can send very positive messages to staff and give valuable ideas to senior management.  Unfortunately these schemes can fall in to disrepair unless regularly publicized and  top managers are seen to be enthusiastic.

5. Staff

We are increasingly engaged within organizations to move front-line employees from a dependent, compliant and rule-bound style towards one where they freely take risks and confidently exercise discretion.  The answer frequently starts with the very senior managers who bemoan the lack of initiative in their staff.  People working for 'task-master' style managers who are directive and autocratic develop into cynics - reluctant or resistant to change, or spectators - who take a back seat when it comes to resolving a customer problem.  This is because people often become resentful or discouraged to take initiative when they are constantly told what to do and when the only feedback they receive is negative.

Organizations such as the restaurant chain TGI Friday operate rigorous recruitment policies to ensure their people exude customer focus.  They also recognize the power of management by example through active coaching and role modelling.  New recruits soak up culture like sponges: they may have been recruited for their winning qualities, but they are influenced strongly by other's behaviours.

6. Skills

Customer orientated organizations such as Nordstrom emphasize the attitude and interpersonal skills needed to interact effectively with customers.  Role, skills and knowledge can be taught, whereas many of the less tangible, empathetic interpersonal skills involve being able to create vital rapport with customers.  Nordstrom recruit only self-starters - a high commission system helps deselect others.  Each of Nordstrom's 35,000 staff effectively runs their own business (within limited rules).

So what skills do senior managers need to foster this customer orientation?

Listening and empathy are core leadership competencies, just as they are for service people.  These skills are needed to work successfully within the organization.  Another key competency is the willingness to confront tough issues, both business and personal. This will help promote:

- feedback and dialogue, encouraging the free-flow of information
- a broad, not narrow perspective so that people see beyond their particular specialism
- teamwork, not disruptive, competitive 'beat thy neighbour' behaviour, so that people gain support in serving the customer
- change and improvement, so that the organization is adaptive to customer needs and takes a longer term, not defensive short term perspective.

All too often, customer strategies and policies are made hollow by unspoken disagreements among colleagues which no one wishes to confront.  For example, the Finance Director undermines the Service Director because he or she resents what they perceive to be wasteful expenditure on customers.

Tackling these debilitating management behaviours and attitudes is challenging.  It often requires the help of a skilled facilitator to ensure that uncomfortable personal feedback is taken on board and that difficult issues, which inhibit working together, are brought out into the open.

Sometimes senior managers cannot or will not change.  Despite feedback and coaching, the production manager in an engineering company refused to see how his shortsighted attitude to his own activity was under-mining top-team harmony and ultimately the customer was suffering.  Finally he was fired. Boardroom warfare go on for years and it is often at the expense of the customer.

7. Systems

The systems, which organizations use to interact with their customers, need to be designed with the customer in mind.  The authors were reminded of this when travelling recently overseas.  They used an airline which advertised: 'electronic ticketing ' no documents needed!'  Having duly turned up at departure without a ticket, they were told they could not check in until they produced one!

Reward systems are a prime means of encouraging positive customer behaviour at every level. Federal Express has developed nine Service Quality Indicators, all tied to customer expectations.  Staff bonuses are linked to the overall performance of these indicators.  This promotes an all-round customer culture.

Senior managers should be part of this process too, not just given a blanket bonus for profitability.  Also sound systems need to be set up to ensure top managers are involved first-hand in customer feedback. In the UK, financial service organization, Barclays Bank, for example, bases its rewards to managers on comprehensive feedback from colleagues, staff and customers.

Learning Points

Senior managers are key influencers of behaviours in an organization and so how they spend their time and what they do counts. In order to develop a customer-focused organization, leaders with a true passion for customers ensure that all seven Ss are given attention and are aligned. Best practice shows that effective leaders:

• Create a vision for the organization
• and share this effectively with their employees by ensuring their active involvement.

In the UK Carphone Warehouse has been acclaimed as the premier retailer of mobile phones. The CEO, Charles Dunstone, remains passionate about the original aims - to put the customer first and to ensure employees share in the success.  This vision has helped the company to excel in satisfying its customers winning many awards along the way.

• Spend time with the customer and see the organization from the customer's perspective: by experiencing the service and ensuring the structure, systems and procedures make the organization easy to do business with.  One international airline set up a special program of visits where their senior executives accompanied their top customers on business trips using the airline.  This was to allow senior managers to experience the service from the customer's perspective.

• Encourage an external perspective and use it to embrace change: by benchmarking against best practice, attending customer service conferences and belong to a benchmarking forum.  Award winning Brazilian industrialist, Ricardo Semler, President of Semco S/A consults with many major companies to compare effectiveness and believes that the main lesson businesses can learn is not to fear innovation but to lead change.

Recognize that good internal care results in good external care, so spend time getting the people side of things right.   At Merrill Lynch Credit Corporation senior managers set the direction and tone for the company.  They arrange quarterly meetings with all their employees (called partners) and support regular training and continuous interaction with partners at all levels.

• Be visible and accessible. Spend time with teams; hold open forums; welcome feedback; work at the sharp end.  Senior managers in organizations such as Marriott Hotels regularly spend time working in the hotels.

• Openly support customer care initiatives: by making money available to them, attending events, leading improvement groups, making sure that customer care is on every management agenda.  When one retail chain set out to improve its customer experience, senior managers took an active role in developing the program and visiting stores to offer encouragement.  The result was that employees knew that customer care was being taken seriously and that their contribution mattered.  This led to a marked improvement in customer focus.

• Measure and monitor levels of customer satisfaction, using feedback to take corrective action. Be accountable for this too.   At Chubb Group of insurance companies a variety of customer feedback programs plays a key role in balancing business success with a feeling of personal accomplishment.

• Recognize and reward excellent service.  In the UK hi-fi retailer Richer Sounds has a customer experience competition each month and the winning three branches get to use a Bentley car for the month.  They have seven holiday homes for people to use completely free of charge, irrespective of length of service or seniority.  All senior managers are an integral part of this service reward process.

Do you measure up?

Do customers lose out in the clutter of other priorities facing your senior managers?  Test your senior management team (and yourself) to find out?

Honestly rate customer contact against your other priorities: financial; shareholders; regulatory external; internal stakeholders. How would you rank these, in order?

1.
2.
3.
4.
5.

When did you last speak to a customer?

Did you implement what you learnt?

How do you know what problems your people encounter when dealing with customers?

When did you last update this knowledge?

What is the gap between your organization's intended service strategy and how you really deal with the customer?

Have you reviewed your organizational structure specifically for its customer orientation?

Where do customer-facing employees sit in the hierarchy?

What messages does your leadership style send to the customer and the rest of the organization?

What feedback have you to support this?

How do you support and strengthen your staff's abilities to deal successfully with customers?

Are your skills in giving and receiving feedback up to scratch?

Do you use them regularly?

Are you willing to tackle your colleagues about difficult issues which impede customer experience?

Are the systems you operate likely to encourage customer satisfaction?

Are reward and motivation systems linked up correctly with this aim?

Original article © Sarah Cook and Steve Macaulay.

First published in Customer Service Management magazine.

This edited version published in eCustomerServiceWorld.com

Sarah Cook and Steve Macaulay.

Steve is a Management Development Consultant at Cranfield School of Management.
Sarah is Director of customer care specialists, The Stairway Consultancy Ltd.  Sarah can be contacted on 01628 526535

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