CX Lessons from Michael Scott... and McKinsey and Bain
“A good manager doesn't fire people. He hires people and inspires people.” That quote from the bumbling but successful manager at Dunder Mifflin, Michael Scott in NBC’s “The Office” does seem to have merit as it is mirrored in numerous articles from McKinsey to Bain & Company and beyond. Companies with excellent reputations engage not just their customers but also their employees in a sustainable manner, as reported by these firms.
As Michael says, good managers reduce turnover. According to a Gallup article, disengaged employees are incredibly expensive and affect a company’s bottom line. “Actively disengaged employees (24%) outnumber engaged employees (13%) by nearly 2-to-1, according to Gallup...Consistently low engagement can have a negative effect on company success. Teams with low engagement are less productive, less profitable, and less likely to be loyal.” The article continues by saying that turnover “can cost businesses approximately 1.5 times the annual salary of every person who quits.”
Ultimately, retention and engagement improve the overall customer experience, or the culmination of touchpoints with a brand from a customer’s perspective. Gallup noted that “engaged teams show 24% to 59% less turnover, 10% high customer ratings, 21% greater profitability, 17% higher productivity, 28% less shrinkage, and 41% less absenteeism.” McKinsey advises companies to reward engaged and innovative frontline employees financially and emotionally to create a culture of engagement. Both Bain articles indicate that positive customer experience is partly a byproduct of employee engagement and is an ongoing sustainable effort, not an overnight success. As Allen et. al indicate, frontline employees are more likely to be the least respected or empowered employees in a company. This seems odd to me considering these employees have undoubtedly the most interaction with customers and the most valuable information about customer touchpoint experiences in a company.
Actively engaging employees, especially those working in the frontline with customers is a major factor in the success of a company’s customer experience strategy. Valuable customer experience through transformative services isn’t only produced top-down or easily won. Take for instance the South Korean skincare brand, Inisfree, who employed one frontline employee who individually advocated for and implemented a new color-coded shopping basket system in the store where they worked. Dark green baskets and bright orange baskets were for individuals who wanted to be left alone and assisted, respectively. It was a hit with customers and was soon operationalized throughout the entire company. Sephora Europe introduced the concept, and it went viral in 2019 by receiving acclaim from accessibility advocates, customers, and sales staff alike who were frustrated with seemingly intrusive sales staff. This innovation was not directly the result of a marketing team or a senior executive. Rather, it was an enterprising frontline sales staff person and indirectly a culture that celebrated innovation in the company regardless of where it came. This model of operationalizing innovation is also being deployed at the Veteran’s Health Administration through what it calls its Innovation Ecosystem by over 25,000 employees. The organization has created a culture and a formal pipeline where staff can create, prototype and test their ideas, which could be operationalized through offices, hospitals, or through the entire VHA. Their efforts affect more than 1 million veterans and reduce costs for the VHA to the tune of $40M+.
While discussions about the customer experience continue, it is important to remember that touchpoints customers encounter are facilitated by employees at every level within the organization. A unified vision across a company and employee engagement are essential to a company’s bottom line. Actively engaging employees leads to better retention and decreased costs to companies. Better engaged employees provide more innovative and personalized service to customers who return the favor with increased loyalty and referrals.