13 Feb 2012
Top-down management structures have worked for centuries, but are struggling more and more in today’s business environment. With the advent of 21st century technology, businesses are becoming flatter in structure and also because today’s younger employees (generation Y) are demanding more participation and less blind following. Leonard A. Schlessinger and James L. Heskett describe this a “service-driven” approach or a service-driven company; however, the emphasis is not so much on the service itself, but what management can do to create an environment whereby great service happens naturally.
For years, frontline workers have been “talked up but trod down,” in other words, while these are the people with the most impact on a company’s customers and are a company’s public image, they are often the lowest-paid and most poorly trained of all its employees. Companies try to make these positions idiot-proof, taking away all decision-making and lowering performance expectations until it is clear to the employees concerned that their jobs have no real value. Of course, a direct result of that process is frequently poor customer service, upset customers, high employee turnover and falling profits.
To turn this around, Schlessinger and Heskett proposed turning the old top-down model on its head and designing the business around those with direct customer contact. This involves putting service first by instilling customer-service values in employees from day one, providing initial and on-going training and using modern technology to provide a range of support options to front-line employees. Further, the service-driven model links compensation to performance at all levels of the organisation and requires upper management and executives to focus some of their attention on the employees with direct impact on brand recognition and opinion.
Metrics, such as the cost of employee turnover, return on investment of training options and the incremental profits derived from loyal customers, have all demonstrated that this model can and does work to create higher corporate profits. The authors argue that applying production-line values and planning to service-oriented companies is an outmoded concept that can carry a company only so far. Eventually customers become disengaged or angry, as their needs are not met. Competitors will begin to appear, offering similar products and excellent service, and customers will leave. They will go to a service-driven company because they are able to speak to an educated employee, who understands not only the product or service, but how it can benefit the customer and it is that same employee who will have the ability to close the sale.
This approach also harnesses the power of today’s technology to support front-end employees. Since most new starters are familiar with and comfortable using the latest technology, this is a natural fit that can create a symbiotic relationship in which younger employees can make a company aware of ways to leverage new technology for the good of the company.
Schlessinger and Heskett argue that in today’s faster-paced business environment, a focus on the customer and on providing all employees with the training and skills necessary to satisfy their needs will go a long way toward improving their company’s profitability.