Employees first: Strategies for service

The customer is king, an old service mantra says. But today a few industry leaders argue the employee, not the customer, is most important. "Take great care of your employees and they will take great care of your customers," said Mike Jannini, Executive Vice President of Marriott International, at the "Creating Value Through Service" symposium. The event was organized by the W. P. Carey School's Center for Services Leadership and the Center of Service Marketing and Management at Fudan University.

The customer is king, an old service mantra says. But today a few industry leaders argue the employee, not the customer, is most important. "Take great care of your employees and they will take great care of your customers," said Mike Jannini, Executive Vice President of Marriott International, at the "Creating Value Through Service" symposium.

The event was organized by the W. P. Carey School's Center for Services Leadership and the Center of Service Marketing and Management at Fudan University. Companies like Marriott International and Southwest Airlines practice the golden rule of service — treat employees as you want your customers to be treated — through specific recruitment, training and retention strategies. The processes pay off: both companies enjoy extremely low staff turnover, world-class customer service and consistent profitability.

Internal responsibility

Taking great care of employees begins at the recruitment and hiring stage. Marriott and Southwest differ from other companies by choosing applicants on attitude not skill. "We are not that fussy about hiring for technical skills but we are very careful about attitudes and the natural characteristics of the people we hire," said Jannini. Marriott's vetting process, developed by behavioral scientists, screens people based on their natural inclination to help others and a sense of "internal responsibility."

This careful strategy means incoming staff are friendly, hard-working individuals in step with the company's "spirit to serve" culture. "If you're not motivated to be service-oriented, skills are useless," Jannini said. Southwest's "right kind of people" are positive team players, employees that jive with the company's quirky underdog company culture. Instead of a scientific survey, applicants are observed in group interviews.

Those who seem to cheer and encourage their fellow applicants are hired while those who sit back are passed over. Once selected, Southwest employees face a rigorous probation period with frequent evaluations. Southwest's fun-loving and motivated employees respond well to the stresses and challenges of the competitive air travel industry. In the late 1970s, Southwest executives asked staff to cut plane turnover time to an unprecedented 10 minutes.

The staff succeeded and profits soared. In Marriott and Southwest terms, employees are brand ambassadors, embodying the spirit of the company rather than its functions. Critics may argue that prioritizing attitudes over skills means more training, and that may be true. But carefully vetted employees respond better to training and adapt more quickly than applicants chosen only by skill. At Marriott, all employees receive ongoing company-wide and departmental training courses both in operations and in career development.

"Our work force spans different demographics than our customers. The frontline personnel might be working class, urban and they are trying to meet the needs of a high-income global traveler. So we have to bridge that gap not only by choosing great people with a natural inclination to service but also with education and training," Jannini said.

Southwest's training courses, held at the airline's University for People, is an important tool in teaching corporate culture. Over 10,000 participants enroll in courses every year in leadership, software, career and personal development. All classes discuss Southwest's history and values.

The eight training centers display colorful murals depicting corporate successes and company leaders — a few schools also showcase a collection of gravestones carved with the names of failed airlines. These fun-loving centers reinforce company culture and for returning students, act as an important touchstone of company values.

Retaining the best

Many companies shy away from substantial training programs in fear of the cost and that once experienced and knowledgeable, trained staff will take a better job in another company, but exceptional benefit packages help retain trained staff. Starbucks, for example, combated high staff turnover by offering health care benefits and 401K packages to its part-time workers — the first U.S. company to do so.

Despite an estimated annual cost of $1500 per year per part-time employee on health benefits, a cost most companies avoid, happier workers save the global coffee chain training costs for new staff and enables the company to develop and hire managers internally. Starbucks enjoyed a 13 percent staff turnover last year, extremely low for the industry. Younger companies, like Google, have shown there is more to employee benefits than health care and vacation time.

The Internet giant offers free meals, shuttle buses, in-house doctors, 24-hour gym, massage service, and dry cleaning to its more than 12,000 employees, earning Fortune Magazine's distinction of the best company to work for in 2008. Google's "fringe benefits" may appear superficial, but effectively eliminate distractions from work, thus increasing productivity and creative thinking.

Despite the training, the benefits, and the careful selection of individuals inclined to like their jobs, how do companies really know they are taking good care of their employees? Annual evaluations or irregular check-ups are insufficient. Marriott, a world leader in consumer tracking and satisfaction measurements, charts employee satisfaction from day one. "We measure employee satisfaction very closely.

A minimal scoring of employee satisfaction is demanded from every hotel, every department," Jannini said. Marriott managers are then held accountable for low employee satisfaction. Marriott's high employee satisfaction standards resulted in an 18 percent turnover rate in 2007, one of the lowest in the hotel industry. Marriott also remains the only non-unionized international hotel chain in the world.

Crowning the employees

Just as Marriott applies the same guest satisfaction process to employee satisfaction, corporations should evaluate benefits and experiences they extend to customers — comment cards, loyalty rewards, corporate discounts, community-building activities — and ask if the same can be done for employees.

"There is no point in trying to achieve customer loyalty, if you can't achieve loyalty with your service work force," Jannini said. Both Marriott and Southwest prove that embodying "the employee is king" reaps benefits in staff retention, customer service, and profitability. Marriott continues to grow at an amazing 20 percent annual growth rate and Southwest remains the only U.S. airline to post a profit every year for the last 25 years.

Employee-centric companies should carefully select employees based on corporate values, provide opportunities for personal and professional development, innovate around employee benefits and keep a constant check on employee satisfaction. "Companies that focus on the employee and consider their work force a huge asset have found phenomenal success," Stephen Brown, executive director of W. P. Carey School's Center for Service Leadership said.

Bottom Line:

• Employee first, customer second is a powerful driver of success for companies like Marriott and Southwest Airlines.
• Employee-centric businesses utilize carefully crafted recruitment, training and retention processes.
• A recruitment and hiring process that chooses employees based on attitude not skill brings in staff that develop, learn and adapt faster.
• Younger companies are developing unconventional benefit packages that boost productivity and efficiency.
• Tracking employee satisfaction decreases problems and opens communication channels between employees and employers.

The W. P. Carey MBA-Shanghai, launched in 2003, is an accelerated executive program for CEO-level participants and top government officials. The vision of the program is to cultivate world-class executives for China's state-owned enterprises and to advance Sino-U.S. trading relationship.