It pays to care

It constantly amazes me how invaluable knowledge is concealed from decision makers.

It constantly amazes me how invaluable knowledge is concealed from decision makers across organisations around the world.

I came across a case the other day. A friend of mine was telling me a story about how quite a few of the employees of his company left and set up their own operation. The company was owned by those extremely bright people, “private equity investors” whose ability to borrow money often exceeds their ability to invest it prudently.

Anyway, these guys left; set up their own business and the private equity owned company sued them for breaching their contract of employment. These ex employees were critical to the financial success of the company, and so the conventional theory is to stop them from doing damage and take them to court.

Rarely have I come across people who maintain any fondness for those parties who sue them and take them to court. If there is any element of goodwill left before legal proceedings, it evaporates and turns into antipathy with great speed once proceedings are commenced.

In the end, the company was unsuccessful in its court case and so it was out on the proverbial with no hope of resurrecting any goodwill with its departing personnel. If the management of the company had only been aware of a simple statistic that has been constantly reaffirmed over years of research!

Now, don’t forget this because it is critical to survival and growth.

“Of all the customers who defect to another business and of all the employees who leave a business of their own accord, 70% do so because they believed that the company didn’t care about them.”

I have never met the guys who left and were sued, but I know that the likelihood of them being fed up with their employer is extraordinarily high. The old theory that you pay someone so much and they will do so much work for what they are paid is still alive and kicking today, despite the fact that it was proven false in the Hawthorne experiments in Chicago between 1928 and 1932. It has been replaced in research circles (and in better run companies) with the approach that customers and employees want to feel important and that they are valued.

Then I came across another story this week about a company of which I had some knowledge (once again owned by private equity) that had a contract of some substance with the government expiring this year.

The company complied with the terms of the contract, did what was necessary, sent its bill each month and was paid. No one in the private equity group knew where this government facility was located, let alone anything about is operations. It was a statistic and the two parties went about their business as though it was all automatic and programmed.

A Christmas card at Christmas time! Heavens, that is not in the contract! A regular meeting between directors and senior executives of the government institution to say g’day and “what can we do for you to make the service better” or “we just wanted to tell you that we appreciate your business”. Goodness, you don’t do silly things like that when you have a contract.

Guess what! They won’t have a contract next year. Why? Because they didn’t let the customer know that they cared; they didn’t make the customer feel that it was valued. A few million down the drain for want of a cup of coffee.

Despite the fact that we say that employees and customers are important, there is this persistent tendency in many organisations to look more at financial KPIs in the belief that these can be managed, whereas in fact, those KPIs are history books written by employees and customers.

The next time a business loses a customer or an employee, the likelihood is that they felt they were not valued. Rather than examine the KPIs provided by the accounts department, just take a breath and examine what policies and procedures are in place to ensure that you let your customers and employees know how much they are valued.

In doing so, don’t fall into the trap of believing that the incentive payments and bonuses are a way of expressing your gratitude or the message that people are value. What might be more important is how often you tell an employee that they have done a fantastic job or how often you have told a customer that only for him or her, you wouldn’t be in business.

Louis Coutts left law and became a successful entrepreneur. His blog examines the mistakes, follies and strokes of genius that create bigger, better businesses. Click here to find out more.

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