There is an ongoing, fundamental flaw with the Service-Profit Chain, not surfaced with much attention when the concept was first introduced, or given any examination frequency since that time. Its foundation of employee satisfaction is built on shifting sand. Namely, the connection between satisfaction and behavior, whether by customers or employees, has been challenged and largely refuted in study upon study.
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Here\u2019s a summary which encapsulates the difference between satisfaction and loyalty as metrics, expressed by Susan Wyse of Snap Surveys in a June, 2012 post: \u201cCustomer Satisfaction is a measurement of customer attitudes regarding products, services, and brands. Customer Loyalty on the other hand has two definitions. Customer Loyalty consists of loyalty behavior (also referred to as customer retention<\/a>) which is the act of customers making repeat purchases of current brands, rather than choosing competitor brands. Secondly, Customer Loyalty encompasses loyalty attitudes which are opinions and feelings about products, services, brands, or businesses that are associated with repeat purchases.\u201d<\/p>\n So the key takeaways from Ms Wyse\u2019s summary is that satisfaction principally measures attitudes, which are passive, reactive, and tactical, and that this metric has little connection to value-related behavior. Adding to the shortcomings of this metric, it also tends to be what is known as a \u201clagging indicator\u201d, which will often drop faster following a negative experience than it will improve following a positive one.<\/p>\n What\u2019s true for customer attitudes relative to behavior can also be applied to employees. Industrial psychologists and organizational behaviorists have been studying employee satisfaction for over 30 years, assuming that the level of staff satisfaction correlates with impact on measurable results. However, as one major study concluded: \u201cResearchers have been unable to confirm a relationship between employee satisfaction and business performance.\u201d<\/p>\n This is almost identical to the oft-proven determination, of which Susan Wyse\u2019s explanation is one example, that a high level of customer satisfaction has relatively little bearing on loyalty behavior. And, for purposes of this discussion, it is the influence of employee satisfaction attitudes on customer behavior which is at the core of the Service-Profit Chain\u2019s claimed linkage. Going the next step, beyond employee satisfaction, does their engagement profitably drive customer behavior?<\/p>\n First, what does employee engagement, which has been around for over twenty years, actually mean? Kevin Kruse, a former VP of Kenexa (now part of IBM) and a leadership contributor to Forbes magazine, defined employee engagement as \u201cthe emotional commitment the employee has to the organization and its goals.\u201d Coincidentally, this definition was also done in a June, 2012 article. Note that Kruse\u2019s concept, like other ways that engagement is understood within HR circles, does not include any mention of customers, customer experience<\/a>, or value delivery.<\/p>\n His perception of employee engagement, though it recognizes the power of emotional commitment, is simply another iteration of many seen over the past two decades. They are all about alignment and productivity, and all make assumptions about the influence of engagement on customers.<\/p>\n Since first entering active HR use, employee engagement has had many meanings and interpretations, but relatively little of it has to do, by conceptual definition, specifically with impact on customer behavior. Thorough analysis conducted by The Conference Board in 2006 showed that, among twelve leading engagement research companies, twenty-six key drivers of engagement could be identified, of which eight were common to all:<\/p>\n \u2022 Trust and integrity \u2013 How well do managers communicate and \u2018walk the talk\u2018? Again, typically, there is little or no mention\/inclusion of \u2018customer\u2018, \u2018customer focus\u2019, or \u2018customer value\u2019 elements either in measurement or analysis of employee engagement. Though it is recognized that customer experience, and resultant behavior, can often be impacted by engagement, it is more tangential and inferential than purposeful in nature.<\/p>\n Kruse, whose definition of engagement comes close to the \u2018line of sight\u2019 driver identified above, has created his own version of the Service-Profit Chain, as applied to employees, i.e. the Engagement-Profit Chain. He believes that engaged employees care more, are more productive, and use discretionary effort on behalf of the company\u2019s goals, which leads to:<\/p>\n \u2013 higher service, quality, and productivity, which leads to\u2026<\/p>\n \u2013 higher customer satisfaction, which leads to\u2026<\/p>\n \u2013 increased sales (repeat business and referrals), which leads to\u2026<\/p>\n \u2013 higher levels of profit, which leads to\u2026<\/p>\n \u2013 higher shareholder returns (i.e., stock price)<\/p>\n It\u2019s all very linear and very assumptive. In the article, Kruse flatly states: \u201cEngaged employees lead to better business outcomes.\u201d Over 250,000 people have viewed his article, so it has had broad coverage. Like the Service-Profit Chain, the core flaw in the concept Kruse put forward in his thesis is that higher satisfaction, and even higher emotional commitment, by one stakeholder group, in this case employees, will drive the behavior of another stakeholder group, in this case customers. Unless the employee\u2019s emotional commitment is focused on customers, customer experience optimization, and product or service value delivery, there is likely to be only marginal influence on customer behavior.<\/p>\n You Also Might Like…<\/p>\n<\/div>\n Republished with permission from CustomerThink.com
\n\u2022 Nature of the job \u2013 Is it mentally stimulating day-to-day?
\n\u2022 Line of sight between employee performance and company performance \u2013 Do employees understand how their work contributes to the company\u2019s performance?
\n\u2022 Career growth opportunities \u2013 Are there opportunities for growth within the company?
\n\u2022 Pride about the company \u2013 How much self-esteem do the employees feel by being associated with their company?
\n\u2022 Coworkers\/team members \u2013 How much influence do they exert on the employee\u2019s level of engagement?
\n\u2022 Employee development \u2013 Is the company making an effort to develop the employee\u2019s skills?
\n\u2022 Relationship with one\u2019s manager \u2013 Does the employee value relationship(s) with manager(s), and is there trust and credibility between the levels?<\/p>\n
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