Upload
vsdange
View
619
Download
11
Tags:
Embed Size (px)
Citation preview
Human Sigma[Managing the Employee-Customer Encounter]
S.Sankar
Excerpts from the book “Human Sigma”
by John H. Fleming & Jim Asplund
The Terminator, the science fiction
Skynet, the machineswith advanced form of artificial
intelligence, accidentally becomes self-aware
decides to erase humans from the face of the planet as they are perceived not to be adding value in their vision of the future
“Terminator School of Management views people as a necessary evil – breed inefficiency, cost, and errors”
Six Sigma approach
It has had a better staying power than the other quality initiatives like SPC, TQM, etc.
At its core, it works on reducing variability in the processes through the analysis of root causes of quality defects: Machines Materials Measurement Methods
Another root cause of people, is mostly ignored here
“Perfectly designed process is only as good as
the human being who uses it”
Human Sigma Approach
The most volatile and valuable assets are your customers and employees – the people
Human sigma approach helps in Measuring, Managing and Improving the performance of these valuable assets
Paradoxically, this does not rely on reducing the variability in how employees are managed or how they serve the customers but likely to increase the variability
Human sigma approach starts by accepting human nature and then uses it to manage employees, motivate them, accelerate their development, and customer’s emotions
Contrary to popular wisdom, emotional traits are quite predictable
By individualizing the approach, you’ll unlock the maximum potential and your maximum profitability
“Quality has to be caused, not controlled” – Philip Crosby
“Equifinality – Though the end remains constant, the means to achieve that end will inevitably vary from individual to individual” – Fritz Heider, German social psychologist
Great managers follow Socrates’ logic – They legislate goals, not steps
When you stifle human interaction by attempting to legislate the steps to service, you sacrifice the real quality – genuine human interaction – in favor of control
Vital Signs in Human Body & the Organization Circulatory system and respiratory system are
two vital functions that determines whether your body will survive and flourish or wither and possibly die
Blood pressure reflects how well the two systems are working together
Organizational perspective Customer relationships ≈ Circulatory system Employee relationships ≈ Respiratory system Financial vitality ≈ Blood pressure
“These are only the first-line indicators and does not provide the complete picture of the health”
Feedback systems
It is impossible to hold your breath until you die – because brain sends out signal to lungs to breathe when you experience overwhelming air hunger
Unfortunately organizations do not have self-regulating signals
Generally people are bad at recognizing when they are bad at something. Therefore feedback is necessary
If customer or employee relationship starts to deteriorate, there is no sensor in company’s brain that screams, “Fix it now!”
“Deployment of right performance monitoring and feedback system in organization is necessary”
Leading indicators
According to Kaplan and Norton The so called “hard” financial data are the lagging
indicators of the organizational performance. They lag behind the organizational activities that produce them Executives who monitor them, can only react to the events that
already happened Non-financial, human performance metrics are leading
indicators They help in taking corrective action before decline in financial
performance occur
“Not everything that can be counted counts”
– Albert Einstein
First rule of Human sigma Management
E Pluribus Unum. You can’t measure and manage employee and customer
experiences as separate entities; they must be managed together under a single
organizational entity
“E pluribus unum, Latin for "Out of Many, One"
Perception is realityThe irrationality of everyday life A person’s definition of the situation – that is, how they
perceive that situation and what they define to be true about it – determines how he or she will react to it Like a rubber band, the sense of time stretches and shrinks
depending on the circumstances and the context. It is not exact amount of time but how long it felt.
For example, 10 minute wait at a hotel lobby may be exasperatingly long, whereas 30 minute wait for a roller coaster may be blessedly short
It’s worth noting that non-rational considerations shape a significant proportion of our behavior, from deciding whether we will wear seat belts, to which appliances to purchase, and to the kinds of coffee we drink
“It is much easier for emotional responses to influence our thinking than for rational responses to temper our emotions”
- Joseph LeDoux, a neuroscientist in New York University
A new perspective on “Cutomer’s Requirements”
Traditional assessment relies on “conformance to requirements” as a generic measure of customer satisfaction
But executives and managers struggle to understand why customers who appear to be satisfied still defect to competitors
Merely satisfying customer’s rational requirements represents a minimum point of entry in today’s business
“Customers want more than transactions –
they want relationships”
Emotional advocates
Customers who are extremely satisfied can be classified into two distinct groups Rationally satisfied: They are also extremely satisfied with
products and services but lack the emotional connection Emotionally satisfied: They are extremely satisfied with products
and services but also have a strong emotional attachment. They are the strong advocates for your company
The strength of positive emotional connection ultimately determines customers’ future behaviors
“Rationally satisfied customers, behave no differently than the customers who are dissatisfied. Emotionally satisfied
customers bring huge financial benefit”
Second rule of Human sigma Management
Feelings are facts, and emotions frame the employee-customer encounter
CONFIDENCE
INTEGRITY
PRIDE
PASSIONCan't imagine a world withoutPerfect company for people like me
Treats me with respectFeel proud to be customer
Fair resolution of any problemsAlways treats me fairly
Always delivers on promiseName always I can trust
Four Dimensions of Customer's Emotional Attachment
“Passionate customers are customers for life and are worth their weight in gold”
CONFIDENCE
INTEGRITY
PRIDE
PASSION
Confidence
For customers, the consistency between what a company promises and what it actually delivers is key to building confidence
Great companies always keep their promises Always is a difficult standard to live up to, but it’s the gold
standard; customers expect nothing less Sometimes, usually, or occasionally just won’t cut it
“Confidence is the bedrock upon which higher levels of emotional attachment is built”
Integrity
It is an essential dimension of equitable treatment Three types of fairness
Distributive: addresses how resources are distributed Procedural: covers processes and systems that are used to
determine how resources are allocated Interactional: encompasses how people are treated at an
individual level
“Integrity - Quality of being honest and upright in character”
Distributive fairness
Equity – company should reciprocate and distribute resources to me based on what I have invested in the relationship. Example – Frequent flier jumping the queue
Equality – company should distribute resources equally among all the customers. Example – Leisure travellers considering previleges to frequent flier as unfair
Need – company should distribute resources to me based on my individual needs. Example – Delayed passenger wanting to jump the queue
Procedural fairness
Is the game played according to rules?Are the rules fair?From the customer’s perspective, any
process or system whose primary purpose is to solve a business problem rather than a customer concern is unfair
Interactional fairness
When your employees interact with customers, Do they always treat them honestly and with
respect? Are the employees polite and courteous? Are they able to give customers their undivided
attention, or are they multitasking?
Moments of truth – An untapped opportunity
Problems happen It is an unfortunate and unavoidable fact of life But to build integrity, it is important how a company
responds to product or service failures Customers do not expect that a company will resolve all
their problems to their liking, but they do expect the company to handle them in a exemplary way
“Emphasis is on how the company handled the problems, and not how it was resolved ”
Six-step approach to problem resolution Acknowledge the problem – customers want the company to hear
their concerns and not to be challenged Apologize for the problem – by owning and apologizing, it
validates customer’s decision to trust the company in first place Take ownership of the problem and follow up, even if the
problem is unresolved – keep communicating with the customer while the problem is being fixed
Handle problems on the spot – customers hate to be handed over to someone else
If you can’t resolve the problem immediately, quickly escalate the problem to supervisor or manager – delays cause frustration
Leave the customer better off than before the problem – an agreeable solution reassures customers that company can see his needs and meet them
Final note on integrity
Strong emotion introduces a positive elasticity into customers’ perceptions and interpretations of their experiences with a company
Customers who are fully engaged will grant that company a state of grace – or an unconditional pardon
Pride
It is a sense of positive association and identification with a company
The most powerful relationships customers have with companies are those that make them feel good about themselves.
A key element of that feeling is customers to feel competent and in control. Example – Uniform ATM design helps in easy understanding and execution
BRIGing (Basking in Reflected Glory) – people generally like to be associated with winners, even when that association has little to do with them personally
CORFing (Cutting Off Reflected Failure) – people actively try to distance themselves from entities that would reflect badly on them
Passion
A passionate customer uses expressions like “It’s irreplaceable” “It’s a perfect fit for me”
Passionate customers look to your company to set standard for other to follow
They are truly committed “ambassadors” of your brand and hold keys for building greater levels of passion throughout your customer population
Self-fulfilling prophecy
People’s beliefs and desires have tremendous power to make those beliefs and desires to come true
When your company creates strong emotional connections with your customers, they internalize a self-fulfilling prophecy that leads them to interpret all aspects of your business more positively
Emotionally engaging the customers initiates an upward spiral of positivity that becomes self-reinforcing
Failing to engage them, however, initiates a downward spiral that can be difficult to counteract
Six principles for engaging customers Satisfying customers is not enough – it is only the cost of entry. It will not
differentiate the good from the great Emotion frames the relationships. You must honor and strengthen these
bonds Engagement = Health. Quality of emotional relationship with the customers
determines your long term financial success You never step into same river twice. Every time your company interacts
with customers, they become a little more engaged or a little less enagaged. No interaction produces a neutral result
Variance hurts your business. Variability in quality of the customer experience from unit to unit within your company
All politics are local. Organizations can’t dictate strong customer relationships from the top; people and work units create them, and companies must manage them locally
“Engaging customers means effectively addressing their functional requirements and their emotional needs ”
Metric for employee – customer encounter: Three criteria
It must incorporate a way to assess the rational and the non-rational or emotional dimensions of the customer relationships
It must provide reliable and demonstrable links to financial performance outcomes
It must readily lend itself to meaningful improvement efforts at the local and enterprise levels
Employee Engagement
The job of the manager is an enabling, not a directive job
Coaching, and not direction is the first quality of leadership now
Get the barriers out of the way to let people do the things they do well
“No problem can be solved from the same consciousness that created it. We must learn to see the world anew”
- Albert Einstein
Robert Noyce: In 1968
By the age of 40, earned a doctorate degree from MIT, co-invented the integrated circuit, made several other groundbreaking research contributions in solid-state physics, and risen to executive position in Fairchild Camera and Instrument, a profitable maker of semiconductors and technical instrumentation
He was a successful man but still felt miserable as Fairchild didn’t sufficiently appreciate the Semiconductor division’s contribution
Noyce decided to start his own company He convinced his co-worker Gordon Brown to join him in his new
venture
“Did the new venture work?
The little company they founded was INTEL!”
WHAT DO I GET?
WHAT DO I GIVE?
DO I BELONG?
HOWCAN WE GROW?
Opportunities to learn and growProgress in last six months
Best friendCoworkers committed to quality Mission/Purpose of the companyMy opinions count
Encourages developmentSupervisor/Someone at work caresRecognition last seven daysDo what I do best every day
Materials and equipmentI know what is expected of me at work
Four Dimensions of Employee Engagement
“As the world shifts from an industrial to knowledge-based economy, in many countries today employer needs the
employee more than the other way around”
WHAT DO I GET?
WHAT DO I GIVE?
DO I BELONG?
HOW CAN WE GROW?
What do I get?
An organization that does not meet the basic needs like clear expectations at workplace and the materials required to do the job will have no credibility with its employees
“Organizations have largely ignored these basic tools in all the mumbo jumbo surrounding initiatives like Kaizen
disciples, Six Sigma black belts”
What do I give?
Employees need to experience success in their performance
It is important that employees feel that they are contributing to the organization and those contributions are valued
Frequent and immediate recognition for good work also creates beneficial positive emotions
The right recognition reinforces authentic success by cementing the memory of what the employee did right and encoding that memory with positive emotions and make it more powerful and meaningful
Do I belong?
Do I have any friends here? Does anyone listen to me or care what I have to
say? The best leaders realize that employees won’t
commit body and soul to any endeavor that doesn’t seem to be worth the risk
The secret of unleashing innovation in any company is as simple as engaging every employee
“Even the best processes and systems are only as effective as the people driving them”
How can we grow?
A psychologically committed employee in an engaging work environment is primed for innovation and growth
ROAD warriors – workers who are Retired on Active Duty. This is when employees are physically present but psychologically absent. They are an insidious source of lost productivity
Engaged employees are much less likely to become ROAD warriors
Engaged workgroups are
18% more productive 12% more profitable 12% better at engaging customers 51% less likely to leave the organization (low-turnover
companies) 31% less likely to leave the organization (high-turnover
companies) 62% less likely to be involved in an accident on the job 27% less prone to absenteeism 51% less likely to be source of inventory shrinkage
“Engaged workgroups are also more effective at engaging the customers they serve”
Engaging your employees
It is one thing to know that engaged employees are more productive
It is another thing to make an employee more engaged
Is that possible? Answer is YES
Four core principles of employee engagement Manage by outcomes and not behaviors – conforming
and executing the steps of the job the right way is not sufficient
Liberate don’t legislate – dramatic increases in productivity occur when companies allow workgroups to choose their own initiatives and focus on them
Engagement is for everyone – Almost every employee can become more engaged (in the right circumstances)
All politics is local – companies can’t dictate employee engagement from on high; from the boardroom to the mailroom, everyone is responsible for quality of his or her workplace
The scourge of local variation
A major airline industry touts itself as an industry leader in on-time performance and has data to prove it But within same airline, some flights are never on time; and
some are Studies depict that best performer’s performance is 3.5
times strong as the poorest performer’s From the customer’s perspective, this is critical because
they are experiencing variation and not average Business must focus on reducing variability in local
“people” processes (the “who” and “how” of implementation)
“Think globally, act locally.”
- Rene Dubos
Third rule of Human sigma Management
Think globally, measure and act locally: You must measure and manage the employee-
customer encounter locally
Partially optimized Optimized
Not-optimized Partially optimized
1.7
Quadrant III
3.4
Quadrant I
1.0
Quadrant IV
1.7
Quadrant II
Employee Engagement
LOW HIGH
Em
plo
yee E
ngagem
ent
LO
WH
IGH
Impact coefficients for Humansigma quadrants
“Better financial results were coming when employee and customer engagement were optimized than highest score on
individual metric”
41
1.81.0
3.8
2.5
5.2
4.5
Performance Multipliers
Humansigma performance bands
“The single score summarizes the overall effectiveness of the employee-customer encounter that is reliably related to
unit’s overall financial vitality”
325
19
29
1
14
% of units within each band
“Employees learn when they are provided with clear feedback and when they are held accountable for their mistakes. Organization in turn can achieve significant
performance improvement”
Feedback and consequences
Perfect Noisy
Pressure for valid strategies - good
strategies can emerge
Quality of Feedback
Consequence o
f E
rrors
Sm
all
Larg
e
Learning New Strategies
Difficult for valid strategies to emerge
Little pressure for valid strategies - good and bad strategies can
coexist
Superstitious learning quite likely
Decentralised decision making process of Bees
It is a method used to select a site for a new colony When honeybee hive outgrows its existing home,
reconnaissance bees fly in many directions to find a suitable place to build a new one
When the recon bees come back, they describe their observations by means of a “waggle dance”
Over a couple of days, the bees hammer out a consensus and a new site is chosen
Just how do they do this? Individual bees gradually stop dancing until one waggle
dance survives
“The swarm is able to evaluate all the possibilities with a high degree of accuracy by listening to what each scout bee
has to say”
The economic imperative
Think about the variability and risk inherent in any business planning and how little control organizations have over most of it. These include Microeconomic conditions Currency fluctuations Product cycles New market entrants or departures Local demographic shifts Weather Variable productivity across employees Variable profitability among customers
“Can your business reduce its exposure to any of these forms of risks?
Sure “YES” is only for the risks associated with employees & customers”
Fourth rule of Human sigma Management
There is one number you need to know: We can quantify and summarize the
effectiveness of the employee-customer encounter in a single performance metric –
the HumanSigma metric – that is powerfully related to financial performance
Organizations whose leaders are afraid to unleash the skills and talents of their employees are likely to wind up in history’s dust bin
“Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity” – U.S. Army General George S. patton
The strategy and tactics
You can’t lower your cholesterol simply by having it checked on a regular basis
“Well begun is half done” – Aristotle Although this is important, but follow-through is
essential for success
It is essential to pay attention to three inter-related activities: Evaluation Intervention Encouragement
Fifth rule of Human sigma Management
If you pray for potatoes, you better grab the right hoe. Improvement in local
HumanSigma performance requires deliberate and active intervention through attention to a combination of transactional and transformational intervention activities
“You cannot manage what you cannot measure” - unknown
Change is possible “A journey of a thousand miles begins with a single step”
– Lao Tzu What does not destroy you will make you stronger New testament: And only that, but we also boast in our
sufferings, knowing that suffering produces endurance, and endurance produces character, and character produces hope, and hope does not disappoint us
GALLUP’s CE11
– Customer EngagementAttitudinal loyalty Overall how satisfied are you with [Brand]? How likely are you to continue to choose/repurchase/repeat (if needed)
[Brand]? How likely are you to recommend [Brand] to friend/associate?Emotional attachment items [Brand] is a name I can always trust [Brand delivers on what they promise [Brand] always treats me fairly If a problem arises, I can always count on [Brand] to reach a fair and
satifactory resolution I feel proud to be a [Brand] [customer/shopper/user/owner] [Brand] always treats me with respect [Brand] is the perfect [company/product/brand/store] for people like me I can’t imagine a world without [Brand]
5-point scale rating: Ranging from “extremely” (5) to “not at all” (1)
GALLUP’s Q12
– Employee Engagement Do you know what is expected of you at work? Do you have the materials and equipment you need to do your work right? At work, do you have the opportunity to do what you do best every day? In the last seven days, have you received recognition or praise for doing
good work? Does your supervisor, or someone at work, seem to care about you as a
person? Is there someone at work who encourages your development? At work, do your opinions seem to count? Does the mission/purpose of your company make you feel your job is
important? Are your associates (fellow employees) committed to doing quality work? Do you have a best friend at work? In the last six months, has someone at work talked to you about your
progress? In the last year, have you had opportunities at work to learn and grow?
5-point scale rating: Ranging from “extremely” (5) to “not at all” (1)