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Q: Some business leaders believe that the customer should always come first, while others argue that employees should come first, because they bring in customers. So who should come first: employees or customers?
- Eden Kironde, Uganda
A: Conventional wisdom holds that companies should see to their shareholders' needs first, their customers' second and their employees' last. I have always done the opposite, and so has the rest of our team. At the Virgin Group, our employees come first, then our customers, then our shareholders. It's simply common sense: If your workforce is happy and motivated, your customers are more likely to be happy as well—which means there's greater chance that your business will see strong sales and good profits, generating the results your shareholders demand.
We stumbled on this formula when we were launching our record store business in the late ‘60s. We decided to look for employees who were passionate about music because we thought their enthusiasm and knowledge would be as important a draw as the beanbag chairs, coffee and listening posts we planned to feature in our first stores—and that turned out to be correct. Our employees were able to help music aficionados find new bands, and to assist customers new to the music scene to develop and expand their tastes.
When we launched Virgin Records a couple of years later, it naturally followed that the staff should be equally as passionate as those at our other businesses. We put a lot of effort into finding and hiring the right people, and then we made sure that they felt empowered to run the business as they saw fit—that's what we had hired them for. This approach helped us attract and keep great talent. Those employees found and signed the artists that soon made Virgin Records the world's largest independent label, attracting a generation of fans.
It can be difficult to ensure that this focus on employees continues across an organization, especially as your business grows and diversifies, but it is worth the effort. Virgin has launched 400 businesses in more than 40 years of expansion; our focus on our employees is one of the main reasons for our success. We maintained a common culture that unites our businesses and ensures that we retain a strong, loyal following among our customers. You can see it in every employee's can-do, blunt, slightly irreverent attitude.
If you decide to take your business down this path, you'll need to find great business leaders who are great communicators, or develop these skills yourself. As CEO, you must be able to gauge the mood of your workforce. Are your employees interested and creative, or are some of them uncommunicative or withdrawn? If you sense a problem, you must uncover any underlying rivalries or resentments and defuse tensions quickly, before they impact morale. In the service industry, it is crucial to get this right, as nothing will ever mask a staff member's surliness.
Do your employees feel that their voices count? If an employee spots a problem, does he have the tools to fix it? If another has a good idea, does she have a venue for sharing it? This is the other aspect of communication that you must master: making sure that front-line employees are able to contact you so that you and your team can act on their information. I recommend giving out your e-mail address and phone number to all employees—they will only use it if they need to.
When a CEO has created clear channels of communication throughout his company, front-line employees are more likely to feel positive, empowered and able to make a difference. Customers will know the difference—and love it.
When we took over the West Coast Main Line in 1997, a British rail franchise, we also took over management of its crumbling infrastructure, its aging fleet of trains and its staff. On the day we relaunched the rail service, the passengers saw almost no difference, except for a splash of Virgin red paint. Today, we have achieved a passenger approval rating of more than 90 percent, and our trains carry more than twice as many passengers. We have won market share from the airlines and have changed the public's perception of train travel.
Some of the expansion can be attributed to a track upgrade and our new fleet of high-speed trains, but much of our success is due to chief executive Tony Collins and his team. He chose people for his team who had energy and imagination, and who worked tirelessly to relay our vision to the staff and instill a strong sense of Virgin culture and pride—as you can see from the results.
A CEO is a mentor, a manager, and at the same time, deeply involved in the day-to-day workings of the business. Your energy will fire up the staff, and with a truly engaged workforce maintaining and protecting your brand, you will find daily management of the business much easier.
Some people might see Virgin's 50,000 employees as a cost to be managed, but I see 50,000 potential passionate brand ambassadors.
Questions from readers will be answered in future columns. Please send them to BransonQuestions@Entrepreneur.com. Please include your name and country in your question.