Employee Happiness isn’t enough for customers

To win customers? hearts, a service business needs engaged employees who actively transmit their enthusiasm to customers. The idea that employee satisfaction simply rubs off and benefits the company is wishful thinking.

The assertion that happy workers equal happy customers pops up in the marketing and mission statements of a lot of service providers, from big government agencies to small start-ups. It has been advocated by high-profile chief executives, including Gordon Bethune, the former CEO of Continental, an airline that has won numerous best-employer awards. Many managers we?ve interviewed believe in the causal link or feel obliged by their bosses to accept it. At least some of this thinking stems from a much-quoted 1994 HBR article, ?Putting the Service-Profit Chain to Work,? and a subsequent book, by James L. Heskett and colleagues.

But we haven?t seen any hard data supporting the idea. Our own surveys of the customers and staffs of 49 business units of 13 service organizations in the U.K., in fields ranging from financial services to retailing, failed to confirm that service businesses with more-contented staff also have more-satisfied customers. In fact, we found a positive correlation between the two at only one firm, where the business units with happier customers had higher employee satisfaction. At two other firms, we found a negative correlation: We observed that factors that increased customer satisfaction decreased employee happiness.

Satisfying customers is crucial to a business ? there?s a great deal of evidence for a causal link between happy customers and higher profits. And satisfying employees is a worthwhile aim in itself for many reasons. To link the two, engage employees by giving them both reasons and ways to please customers; then acknowledge and reward appropriate behavior. Simply being served by a satisfied employee isn?t enough to win customers? loyalty.

Copyright 2009 New York Times Syndicate