Dancing with Stakeholders: Balancing customer and employee needs
The dance is real. Leading an organization is a constant dance. The type of dance may vary day to day yet every day you will need to move your feet. One of the dances I’ve been fascinated by is the one where we balance the needs of the customer and the needs of your employees. In my experience there is tension between these two stakeholders.
I have danced along with this tension for my entire career as an employer. Ideally there would simply be happy customers and happy employees; I believe many business owners will tell you that this sounds easier than it is. I have felt the needs of these two groups in conflict, real or perceived. I have yet to find a clear “How To” manual on dancing with this tension.
If you read business books on building a great company you will often find one of two assertation:
The best organizations in the world put their customers first.
The best companies in the world put their people first.
Which is true? I’ve learned that both and neither are true. Managing the tension between these two stakeholders is a dance that leaders must manage, even if it means stepping on a few toes now and again.
I have been left to ponder this apparent inconsistency around a philosophy of leadership. What is the purpose of an organization? Where should an organization place it’s priorities? There appears to be a tension in a differing approach to how an organization treats its customers, its employees, which ultimately impacts all of the stakeholders in the organization.
I have read that an organization should prioritize its employees as the first priority. “If you take care of your people, your people will take care of your organization” is a phrase that I have seen a few times.
In other cases I have seen the prioritization placed on the customer: “If you take care of your customers, they will take care of you and your team.”
When a team prioritizes the employees first, you can create a place where people want to work, yet that can lead to a culture of “our way or the highway”. The good news is that the team is excited to build and deliver your product or service. The bad news is that customers may not be excited to receive those products and services; particularly if it’s not what they asked to have delivered to them. Poor customer experiences can develop from this type of focus.
Poor customer service leads to lower repeat business, lower sales and eventually lower revenue.
On the other hand, there's the approach that 'customers come first' that companies like Amazon, Walmart, etc. espouse. They focus obsessively on how they can drive the most value for their customers by improving selection, offering lower prices, or creating more convenient experiences.
A team that prioritizes the customer first could end up with happier customers or increased revenue in the short run, but may end up with employees who feel that their concerns or needs are not met. The message of ‘customer needs first’ can be heard as ‘your needs come second’. A result of this type of conflict can be that the organization experiences higher attrition / turnover.
Higher attrition is experienced then that will lead to higher training costs for the organization and ultimately put customer service at risk, creating a cycle that is dangerous and difficult for the organization to break.
I have landed on the following conclusion: Your organization should prioritize the well being of the employees and the customers, ideally at the same time. I also believe that if you have two top priorities then you have no top priorities. So how do I think this paradox should be managed?
I believe that there’s two different roles that come into play in your organization. The first is the leadership of the organization (founder, ED, board or leadership team) - or simply those in the organization that lead. The second role is the organization responsible for delivering value to customers.
I believe that the leadership team has two critical functions:
To provide the guiding principles for the organization (vision, mission, core values)
Take care of the employees
I believe that the delivery roles has two critical functions as well:
Deliver value to the customers
(by) Following the guiding principles of the organization
I think that the only way to manage the tension between internal vs. external focus is to have some role structure around who does what and why. The customer facing delivery parts of the organization (sales, customer service, operations, etc) should be empowered to take care of the customer. The delivery team should understand that by taking care of the customers that the leadership will have the resources to take care of the employees.
The leadership of the organization should be focused on taking care of the employees, with the implicit understanding that by doing so, they are also helping the organization’s customers (as an engaged and empowered delivery team is going to produce better results).
The leadership or the organization has the challenge of managing any conflicts that come up between the desire to take care of the team and the desire to take care of the customer. My experience has led me to the conclusion that if you have a team that is empowered and engaged this happens rarely; and if it does happen it’s a red flag that the leadership of the organizations should take very seriously.
At the center of this is trust. Leadership must trust that the delivery team will take care of customers; and employees must trust that Leadership will take care of them. I will tackle lack of trust in a future post.
I am still continuing to figure this dance; would love to hear your thoughts on my latest dance moves. Is there another way to consider this tension between the needs of these two important stakeholders? If so please drop a comment below! I’d love to hear from you.