When working like the highly oiled pistons of a high performance engine, organisational culture can transform companies, but this isn’t always the case. Joe España, MD of Performance Equations exposes the reasons why mergers and business strategy often fail because of culture.
There are a number of inter-related performance factors in a company’s operating style/culture (the way things are done) that can significantly influence its organisational effectiveness. Poor execution caused by organisational issues is held responsible for over 50% of corporate failures to fully deliver business strategy. Moreover, at least 60% of company mergers fail to realise their anticipated pre-acquisition values, and approximately 75% of all change programmes are unsuccessful. Why? Because organisational culture can secretly conspire against these efforts.
Cultural clashes mean that what looks on paper to be a sensible restructuring solution often doesn’t work in reality unless potential incompatibilities of organisations and units during merger integration are addressed. Discovering cultural differences too late can prove costly, time consuming and hugely frustrating.
What is organisational culture?
Many books, filling plenty of library shelving, give us all sorts of statements and descriptions characterising organisational culture. Organisational psychologists talk of the values, assumptions, behavioural patterns, style, climate, atmosphere, norms, and observable attributes that we associate with a particular organisation or group. Put more simply, it’s “the way things are done around here.”
Employees soon learn the ropes about the organisation’s culture by experiencing how people behave towards one another and about the ‘rules of the game’ through what is paid attention to. These behavioural norms may or may not be aligned with the company’s stated values or conducive to the achievement of its stated strategy.
Examples abound. The CEO who is adamant about the need for entrepreneurial creativity and innovation as a strategic imperative, and whose senior manager’s immediate response to any volunteered creative idea is: “It won’t work.”
The corporate centre that entreats frontline staff at a bank to engage in more consultative (and time consuming) dialogue with customers, only to have the branch manager quietly mouth “hurry up” from behind the customer queue. The FMCG leadership who extol an end to bureaucracy, encouraging operational slickness and efficiency while at the same time demanding the 27 monthly reports, 50% of which nobody reads.
What type of culture is best?
These might all be examples of potential misalignment between organisational behaviours and the view from the top, but they illustrate reality for many employees in UK Plc.
What these examples don’t really tell us and what many organisational culture diagnostics fail to uncover is what the “right” culture to have is. Even the grandfather of organisational culture gurus, Dr Roger Harrison, couldn’t get us past the strengths and limitations of his model of four organisational cultures: Power, Role, Achievement, and Support. It has still been left to organisations to try to fathom out what type is best for them.
Ultimately, why organisational cultures secretly conspire against what a company is trying to achieve is because they are by their very nature so difficult to pin down. Virtually intangible, organisational culture has been notoriously difficult to describe in terms of how it operates and its concrete impact on organisational performance, even despite the plethora of stories and examples.
Luckily for us the 1980’s and ‘90’s saw an advent in corporate UK of organisational culture change initiatives with a strong emphasis perceiving them as the key mechanism to organisational effectiveness and performance. A focus was given to answering questions including: What type of culture do we need? What is the relationship between culture and performance?
What has to be changed to modify the culture? Recent writers including Collins & Porras, Hesketh and Kotter have found positive relationships, in terms of process, between organisational culture and organisational performance. Models such as the European Foundation for Quality Management’s Business Excellence Model also provide some hooks to be able to understand and measure the impact of “the way we do things here.”
With these frameworks for measuring and monitoring how the way things are done influence an organisation’s performance outputs, we can begin to develop an answer to not only how “the way things are done around here” helps or hinders our organisational strategy, but also allows for a definition of the type of culture that is needed to achieve strategic goals.
So how does organisational culture help or hinder?
The body of research into this field of organisational performance seems to have certain common themes. There are be two discrete and independent scales or dimensions of organisational culture that work with each other to help to describe a number of combined organisational characteristics.
The first of these two dimensions provides a picture of whether an organisation tends to be orientated more towards tasks, processes and quantitative goals rather than people, relationships and qualitative goals. The second dimension describes an orientation either towards collaboration, slower timelines, and considered responses or more towards competition, faster timelines and pro-activity.
Rather than providing strict labels of organisational culture, they offer typical behavioural patterns depending on their combination. The research also identifies a number of internal performance factors directly linked to and influencing business performance and other outcomes. What all the research points to is that there are a number of very discernable, inter-related organisational performance factors in a company’s operating style/culture (the way things are done) that can significantly influence its organisational effectiveness.
These factors, processes, ways of working and behaviours, clearly influence the psychological contract between company and employee and ultimately how it performs in the market. They include the extent to which the strategy is clearly communicated and understood and is in keeping with organisational values; the extent to which goals are clear at the individual and team level and have an explicit fit with one another and the organisations overall business objectives.
They include the extent to which leaders and managers operate in ways that are consistent with the stated vision and values of the organisation, providing psychological reward and recognition over and above the financial aspects, and engendering employee participation and cooperation across the business. They also include the extent to which the business is generally structured and organised to facilitate decision-making, autonomy and control dispersed at the appropriate levels in the organisation and freed from layers and bureaucracy.
What research has gone on to demonstrate is a correlated relationship between these organisational factors and levels of employee satisfaction and morale; the levels of willingness and ability to initiate and manage change successfully; the extent to which employees feel personal responsibility and accountability for customer service and business performance; the effectiveness of internal communications, cross-functional collaboration and ultimate organisational performance effectiveness.
The perennial ‘problem’ with organisational culture has always been the difficulty of pinning it down so that something tangibly could be done about improving or changing it. With these performance drivers it is much easier to identify what exactly is operating in the organisations style that is influencing the results it sees. With some regressional analysis of the co-relation and relationship between these behavioural norms and the organisations resulting effectiveness, it is possible to address the root causes rather than the symptoms.
These performance factors in an organisation’s style or culture are so powerful that they can make all the difference to the successful delivery of business strategy and execution of business plans. They represent the glue that creates engaged, highly committed workplaces. And when working like the highly oiled pistons of a high performance engine, organisational culture can transform companies, as Collins describes, “From Good to Great.”
about the author
Joe España is Managing Director of Performance Equations, a specialist organisational development and change consultancy. Performance Equations helps companies and individuals become more competitive by directly linking strategy to people and business performance. Their areas of focus are: Organisational culture & change, Leadership development, Team development and Service excellence. Joe and his team provide measurable solutions that are bespoke to particular needs, and that deliver performance where it matters most; the bottom line.
For a free information pack call +44 (0)1252 545171. Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit www.performance-equations.co.uk.
Tuesday, February 05, 2008
Customer Experience: Everything is an emotional buy
Satisfying customer expectations no longer provides a competitive advantage. Nowadays, companies have to connect at a different level. Joe España, MD of Performance Equations ponders on making the emotional connection.
Everything is an emotional buy; everything. Whether buying a cup of coffee, a holiday, a car, or a house. Our emotional reaction to a service transaction is the fundamental driver of the purchasing decision. But more importantly, it’s a determining factor in customer retention and loyalty. More that satisfaction, customer emotion is the underpinning factor in the customer experience; what it’s like to do business with the product or service provider.
Yes of course rational thought, reflection, consideration of pros and cons may be part of the buying decision, but an emotion definitely will be. One’s feeling, sense, intuition, gut reaction and experience of the interaction will play a significant part in the buying decision.
This example illustrates the point. I was walking through a shopping centre with a colleague recently. We walked passed a well known coffee shop and I suggested we stopped and had a coffee. My colleague immediately responded with a suggestion that we should go further into the shopping precinct and around the corner to his favourite coffee shop. “I like it there,” he said. Not, they do better coffee, it’s less expensive, or I have a loyalty card, but “I like it there”. In fact he liked it so much that he was willing to take us out of our way in order to get that cup of coffee. This was an emotional reaction. No rational and logical weighing up taking place; a simple instinctive response.
Why is this important?
During the ‘80’s and ‘90’s customer satisfaction was king. It was based on research suggesting that continued improvement in product and service quality would mean corresponding increases in satisfaction, and customer satisfaction was going to ensure a returning purchase. What further academic research and empirical evidence now shows is that companies who followed this guideline were surprised to find that even high scores in customer satisfaction did not guarantee loyalty. Companies have discovered that loyalty, not satisfaction, drives profits. The economics are very compelling. As little as a 5% decrease in customer defections can mean a doubling of profits. Why? Because loyal customers are not only repeat purchasers, and are more likely to buy other products and services, they become advocates of the company. It is nine times cheaper to keep an existing customer than acquire a new one. The unit operating costs of servicing repeat purchasers is also reduced. Advocates become the ‘virtual’ marketing function of the product or service provider, recommending it potential new buyers amongst family, friends and colleagues.
But there are other reasons based on service recovery. No product or service operation is flawless. Though a company may want to diminish the incidence, it is almost inevitable that something will go wrong sometime, however small the error. When customers are positively disposed and emotionally engaged to service providers, they will be more willing to tolerate a whole range of service or quality shortfalls. The coffee not quite as tasty or as frothy as last time, the delayed flight or the clothes shop that has sold out of the garment you particularly wanted. Customer satisfaction surveying doesn’t quite get to grips with the emotional effect of the service interaction or the value that customers perceive from it. Satisfaction in many respects is an outcome. Something happened that created that sense of satisfaction. And that ‘something’ is the experience itself. Satisfaction, or dissatisfaction for that matter, is the result of what it felt like for the customer in being dealt with by the service provider. Satisfaction somehow seems such an inappropriate and often inadequate description of what the customer is experiencing.
Doing business at the emotional level
Recently I went along to my nearest toy retailer to browse for a suitable gift for my eight year old son and witnessed the sheer joy and marvel experienced by a small toddler being given a replacement cuddly toy. The parent had gone to the toyshop to ask if a toy that had not even been purchased at that particular outlet could be replaced because it had been given as a gift to her two year old, was one in a series, and the child already had it. The customer service agent said it wasn’t their policy, but left her counter, went to the appropriate shelving to retrieve the entire set of toys for the child to choose the one she wanted. The shop lost £3.99 and gained an overjoyed child, an appreciative parent and a story that will be repeated several times as an example of superior service. Neither the child nor the mother were merely satisfied with how they had been treated. The broad smiles on both their faces gave a real sense of the appreciation and happiness felt (as well as giving a clue of the potential sense of relief in the mother in not having to deal with a disappointed child). Even I walked out of the shop with a bit more of a skip in my step than I had walked in with.
By contrast, a colleague told me of his less that satisfying flight to a client meeting in which he stupidly (his words) packed all the materials he needed for his presentation in his checked-in luggage. On arrival the surly lost baggage clerk explained that his luggage was still at his departure point and that it would not be with him till later in the afternoon and that if he had needed all the material then it was his own fault for having checked it in. My colleague explained to me later that neither dissatisfied or extremely dissatisfied, were words that accurately described his feelings about the treatment he had received. Incandescent with fury were probably closer adjectives to the truth of his emotional reaction.
So it all seems to rest on the emotional experience. How the engagement with the service provider leaves us feeling – about them, the transaction and the company as a whole. And even when the system - the procedures and protocols the service provider is sometimes required to follow - get in the way, (as they often do in financial services), appreciation and handling of the customer at the emotional level can make all the difference.
Only a couple of weeks ago I called by business bank early on a Monday morning to check that they had reissued and sent a replacement to my business card that was about to expire. Confirming that they had, I explained that I was about to leave on a business trip and that I had not yet received it. Straight into automatic mode, the call centre operator informed me that they would have to cancel the card that was lost in the post and reissue a new card. This would take between 3 and 5 working days. Too late, I advised, as I was leaving on my business trip over the weekend, needed the card, and my existing card would expire mid week. Can’t help you they said. I suggested that rather than relying on the postal service, they should courier a replacement card and I would sign for it. This seemed a viable possibility, except they added that in cancelling the lost card on the Monday would also automatically cancel my existing card which was still valid till the Thursday. Increasingly angry and frustrated, I suggested that they should not cancel a card that was still valid and usable, and enquired how they could creatively suggest some options to deal with the presenting problem. None were available. After much haggling and finding I was getting no where with the ‘system’, I begged that they please ensure that the card was delivered in the minimum amount of time. This they assured me they would do. Frustrated, manacled by their procedures and feeling completely undervalued, I agreed. Unfortunately, insult was further heaped on a far from satisfying experience. A very pleasant voice called about an hour later to say that I could collect my card from my local bank branch at the end of the week. The communication within the system had obviously not understood my earlier point about being busy and the inconvenience of the situation. The rising tied of indignation, frustration, helplessness and seething venom was far too great to contain, and the unfortunate caller received a tirade describing their incompetence, insensitivity and inability to organise an escape from a wet paper bag.
What is the point of this?
What the customer feels or doesn’t feel at every single encounter with a service provider is directly related to the service providers ability to manage the totality of the experience and customers expectations. Customer experience is not simply about smiling sweetly, or keeping an even tone when handling an irate customer. It is about creating, operationally, transactionally and behaviourally an emotional connection with the customer that leaves them feeling – no matter what – that they are the most important person in that moment in time. Addressing the emotional needs, desires expectations of fickle - I want it now and I’m not going to wait - customers is difficult and can’t be left entirely to the great customer service skills of the individual. Defining the goal of the intended customer experience, so that it is differentiated, intentional supports the brand promise and adds real value to the customer requires a whole company approach which goes beyond procedural quality standards and protocols.
Before a product or service provider can determine the best way to manage their customer experiences it has to define and articulate exactly the emotional reaction they want to create in the customer at every point of contact. Arguably customer satisfaction surveying and market research will provide the data required in order to do so. This seems very logical except for the fact that customer satisfaction measures very often don’t give enough, if any, data about drives satisfaction or indeed loyalty at the emotional level.
Customer experience management requires much greater insight into the drivers of satisfaction and loyalty. That insight is very likely to demonstrate that a whole package of different factors lead to a sense of satisfaction and loyalty, based on a mixture of expectations, needs and reactions to the organisation and the perceived value received by the customer.
Managing the customer experience, then moves critical elements such as product and service quality, and perceptions of value-for-money, beyond merely hygiene factors – the minimum requirements needed to be seen as a ‘player’ in the market – to fundamental delivery mechanisms in creating the sort of personal, deep seated emotional and psychological connections with the customer that enable them to feel themselves satisfied and loyal. A consistent, differentiated, valued and completely intentional approach to managing the customers emotional response to doing business with the company is the only way of dealing with the irrational, illogical, intuitive and feelings based drivers that underpin every buying decision.
Now then, about that coffee I was going to have.
about the author
Joe España is Managing Director of Performance Equations, a specialist organisational development and change consultancy. Performance Equations helps companies and individuals become more competitive by directly linking strategy to people and business performance. Their areas of focus are: Organisational culture & change, Leadership development, Team development and Service excellence. Joe and his team provide measurable solutions that are bespoke to particular needs, and that deliver performance where it matters most; the bottom line.
For a free information pack call +44 (0)1252 545171. Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit www.performance-equations.co.uk.
Everything is an emotional buy; everything. Whether buying a cup of coffee, a holiday, a car, or a house. Our emotional reaction to a service transaction is the fundamental driver of the purchasing decision. But more importantly, it’s a determining factor in customer retention and loyalty. More that satisfaction, customer emotion is the underpinning factor in the customer experience; what it’s like to do business with the product or service provider.
Yes of course rational thought, reflection, consideration of pros and cons may be part of the buying decision, but an emotion definitely will be. One’s feeling, sense, intuition, gut reaction and experience of the interaction will play a significant part in the buying decision.
This example illustrates the point. I was walking through a shopping centre with a colleague recently. We walked passed a well known coffee shop and I suggested we stopped and had a coffee. My colleague immediately responded with a suggestion that we should go further into the shopping precinct and around the corner to his favourite coffee shop. “I like it there,” he said. Not, they do better coffee, it’s less expensive, or I have a loyalty card, but “I like it there”. In fact he liked it so much that he was willing to take us out of our way in order to get that cup of coffee. This was an emotional reaction. No rational and logical weighing up taking place; a simple instinctive response.
Why is this important?
During the ‘80’s and ‘90’s customer satisfaction was king. It was based on research suggesting that continued improvement in product and service quality would mean corresponding increases in satisfaction, and customer satisfaction was going to ensure a returning purchase. What further academic research and empirical evidence now shows is that companies who followed this guideline were surprised to find that even high scores in customer satisfaction did not guarantee loyalty. Companies have discovered that loyalty, not satisfaction, drives profits. The economics are very compelling. As little as a 5% decrease in customer defections can mean a doubling of profits. Why? Because loyal customers are not only repeat purchasers, and are more likely to buy other products and services, they become advocates of the company. It is nine times cheaper to keep an existing customer than acquire a new one. The unit operating costs of servicing repeat purchasers is also reduced. Advocates become the ‘virtual’ marketing function of the product or service provider, recommending it potential new buyers amongst family, friends and colleagues.
But there are other reasons based on service recovery. No product or service operation is flawless. Though a company may want to diminish the incidence, it is almost inevitable that something will go wrong sometime, however small the error. When customers are positively disposed and emotionally engaged to service providers, they will be more willing to tolerate a whole range of service or quality shortfalls. The coffee not quite as tasty or as frothy as last time, the delayed flight or the clothes shop that has sold out of the garment you particularly wanted. Customer satisfaction surveying doesn’t quite get to grips with the emotional effect of the service interaction or the value that customers perceive from it. Satisfaction in many respects is an outcome. Something happened that created that sense of satisfaction. And that ‘something’ is the experience itself. Satisfaction, or dissatisfaction for that matter, is the result of what it felt like for the customer in being dealt with by the service provider. Satisfaction somehow seems such an inappropriate and often inadequate description of what the customer is experiencing.
Doing business at the emotional level
Recently I went along to my nearest toy retailer to browse for a suitable gift for my eight year old son and witnessed the sheer joy and marvel experienced by a small toddler being given a replacement cuddly toy. The parent had gone to the toyshop to ask if a toy that had not even been purchased at that particular outlet could be replaced because it had been given as a gift to her two year old, was one in a series, and the child already had it. The customer service agent said it wasn’t their policy, but left her counter, went to the appropriate shelving to retrieve the entire set of toys for the child to choose the one she wanted. The shop lost £3.99 and gained an overjoyed child, an appreciative parent and a story that will be repeated several times as an example of superior service. Neither the child nor the mother were merely satisfied with how they had been treated. The broad smiles on both their faces gave a real sense of the appreciation and happiness felt (as well as giving a clue of the potential sense of relief in the mother in not having to deal with a disappointed child). Even I walked out of the shop with a bit more of a skip in my step than I had walked in with.
By contrast, a colleague told me of his less that satisfying flight to a client meeting in which he stupidly (his words) packed all the materials he needed for his presentation in his checked-in luggage. On arrival the surly lost baggage clerk explained that his luggage was still at his departure point and that it would not be with him till later in the afternoon and that if he had needed all the material then it was his own fault for having checked it in. My colleague explained to me later that neither dissatisfied or extremely dissatisfied, were words that accurately described his feelings about the treatment he had received. Incandescent with fury were probably closer adjectives to the truth of his emotional reaction.
So it all seems to rest on the emotional experience. How the engagement with the service provider leaves us feeling – about them, the transaction and the company as a whole. And even when the system - the procedures and protocols the service provider is sometimes required to follow - get in the way, (as they often do in financial services), appreciation and handling of the customer at the emotional level can make all the difference.
Only a couple of weeks ago I called by business bank early on a Monday morning to check that they had reissued and sent a replacement to my business card that was about to expire. Confirming that they had, I explained that I was about to leave on a business trip and that I had not yet received it. Straight into automatic mode, the call centre operator informed me that they would have to cancel the card that was lost in the post and reissue a new card. This would take between 3 and 5 working days. Too late, I advised, as I was leaving on my business trip over the weekend, needed the card, and my existing card would expire mid week. Can’t help you they said. I suggested that rather than relying on the postal service, they should courier a replacement card and I would sign for it. This seemed a viable possibility, except they added that in cancelling the lost card on the Monday would also automatically cancel my existing card which was still valid till the Thursday. Increasingly angry and frustrated, I suggested that they should not cancel a card that was still valid and usable, and enquired how they could creatively suggest some options to deal with the presenting problem. None were available. After much haggling and finding I was getting no where with the ‘system’, I begged that they please ensure that the card was delivered in the minimum amount of time. This they assured me they would do. Frustrated, manacled by their procedures and feeling completely undervalued, I agreed. Unfortunately, insult was further heaped on a far from satisfying experience. A very pleasant voice called about an hour later to say that I could collect my card from my local bank branch at the end of the week. The communication within the system had obviously not understood my earlier point about being busy and the inconvenience of the situation. The rising tied of indignation, frustration, helplessness and seething venom was far too great to contain, and the unfortunate caller received a tirade describing their incompetence, insensitivity and inability to organise an escape from a wet paper bag.
What is the point of this?
What the customer feels or doesn’t feel at every single encounter with a service provider is directly related to the service providers ability to manage the totality of the experience and customers expectations. Customer experience is not simply about smiling sweetly, or keeping an even tone when handling an irate customer. It is about creating, operationally, transactionally and behaviourally an emotional connection with the customer that leaves them feeling – no matter what – that they are the most important person in that moment in time. Addressing the emotional needs, desires expectations of fickle - I want it now and I’m not going to wait - customers is difficult and can’t be left entirely to the great customer service skills of the individual. Defining the goal of the intended customer experience, so that it is differentiated, intentional supports the brand promise and adds real value to the customer requires a whole company approach which goes beyond procedural quality standards and protocols.
Before a product or service provider can determine the best way to manage their customer experiences it has to define and articulate exactly the emotional reaction they want to create in the customer at every point of contact. Arguably customer satisfaction surveying and market research will provide the data required in order to do so. This seems very logical except for the fact that customer satisfaction measures very often don’t give enough, if any, data about drives satisfaction or indeed loyalty at the emotional level.
Customer experience management requires much greater insight into the drivers of satisfaction and loyalty. That insight is very likely to demonstrate that a whole package of different factors lead to a sense of satisfaction and loyalty, based on a mixture of expectations, needs and reactions to the organisation and the perceived value received by the customer.
Managing the customer experience, then moves critical elements such as product and service quality, and perceptions of value-for-money, beyond merely hygiene factors – the minimum requirements needed to be seen as a ‘player’ in the market – to fundamental delivery mechanisms in creating the sort of personal, deep seated emotional and psychological connections with the customer that enable them to feel themselves satisfied and loyal. A consistent, differentiated, valued and completely intentional approach to managing the customers emotional response to doing business with the company is the only way of dealing with the irrational, illogical, intuitive and feelings based drivers that underpin every buying decision.
Now then, about that coffee I was going to have.
about the author
Joe España is Managing Director of Performance Equations, a specialist organisational development and change consultancy. Performance Equations helps companies and individuals become more competitive by directly linking strategy to people and business performance. Their areas of focus are: Organisational culture & change, Leadership development, Team development and Service excellence. Joe and his team provide measurable solutions that are bespoke to particular needs, and that deliver performance where it matters most; the bottom line.
For a free information pack call +44 (0)1252 545171. Joe can be contacted by email at info@performance-equations.co.uk. To find out more about Performance Equations and how they help organisations achieve better results, visit www.performance-equations.co.uk.
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