Why Putting Employees First is Profitable

Placing the focus on employee satisfaction over customer satisfaction can yield happier, more loyal customers.
September 26, 2012

I’ve been exploring what trends are on the horizon when it comes to generating excellent customer service strategies in 2013. It looks like the tide is shifting away from putting the focus on the customer, to putting it on the employee who delivers that experience.

That may sound counterintuitive, but it was the obvious answer for Vineet Nayar, CEO of HCL Technologies and the author of the 2010 book, Employees First, Customers Second. His logic is fairly straightforward. In an interview with Forbes, he says: “Your employees are the gateway to customer satisfaction, and if they aren’t happy, the customer isn’t going to be happy."

Implement an Employee-First Culture

Implementing an employee-first customer service strategy is not for everyone. Here are things you need to do to make it work.

Build trust. Putting employees first isn't always where management defaults, and employees are distrustful of management. You will have to work on building trust inside your organization. Don't expect to implement this kind of strategy in the short term. Make it part of your employee culture first, then it can become part of your customer service strategy.

Make management accountable. Management needs to be as accountable to employees as employees are to management. This could be a tough pill for many to swallow. It’s a radical change for most management teams. One way to put this into practice is to use a 360 degree evaluation tool. This review process includes feedback from peers, managers and employees.

Elevate employee enabling departments. In many smaller businesses departments such as HR are often not given as much power at the decision-making table as say finance or operations. Giving departments that are close to employees a voice will help you get further in this process.

Benefits of Employees First

If you are part of a more traditional customer-first organization, then you may have dismissed all of this as useless drivel. So here are some general benefits experienced by companies that run an employee-first organization.

Increased retention.  Finding and keeping good employees isn’t easy no matter what the employment rate is. The going rate for replacing a mid-level management employee is about 150 percent of their salary. Entry-level employee replacement costs are anywhere from 30 percent to 50 percent and specialized employees can cost 400 percent of their salary to replace. 

Engaged employees. The Gallup organization has been measuring employee engagement for many years, and found that the level of engaged employees a company has is directly proportional to their profitability levels.

Loyal, profitable customers. Customers who receive great customer service are more loyal, they become fans and advocates of the company which in turns decreases the amount of money spent on marketing and putting out fires and increases profitability.

Is It for Everyone?

I realize that an employee-first strategy isn’t for everyone. At first it can sound risky and seem like you’re focusing all your energy inside the company instead of with the customer. Yet, all the data shows that companies who take the plunge are not only rewarded financially, but they have more fun as well.

Read more about how to boost employee loyalty. 

photo: Thinkstock