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spike bullet February 2004 - Corporate Integrity & Credibility: Why it is so important

Trust or Bust
Build Trust, Build the Company; The Risks of Not Building Trust
Where to Begin?
The Customer Centric Corporation Model; Some Challenging Questions
Resources (links, books, articles, humor)

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color bulletCorporate Integrity & Credibility

This month, in this year of truth, we offer an article by Ronnie Stronge, Director of Transform People International, a UK-based management and training consultancy working globally with some of the world’s leading corporations.

Trust or bust?

In the last three years, companies throughout the Western world have once again gone through a period of extreme difficulty.  Following the events of the TMT [1] bubble and then of 9/11 [2], sales have plummeted, profits have declined, unemployment has grown considerably in many sectors and the pressure has increased on businesses everywhere.  

Corporate scandals around the world have destroyed confidence and amply illustrated that survival is not compulsory.  

Lose trust and you can go bust.

[Editor’s notes: TMT = Telecommunications, Media & Technology Industries; 9/11 =  September 11, 2001 attack on the World Trade Centers in New York City, US.]

Loyalties have been severely tested between companies and their suppliers on the one hand and their customers on the other.  Investors get burned when a company turns from trusted to mistrusted.  It all begs the question as to what does it take to survive in these difficult times and thrive during the good days.

Trust is at the heart

Time and time again the message that comes through is that issues around Trust are at the very heart of survival and growth.  At the very basic level, all businesses have to deliver a fundamentally better product or service just to be in the game these days. 

Having good quality products and services on their own is not sufficient difference to make a difference.  As one of my friends told me recently with a hint of a profound statement coming my way there are no bad cars any more.  We reflected on the frequent feeling of adventure when undertaking a long journey even as little as 20 years ago.

So, what’s the point?

The point is that we need to trust in the basic functionality of a product or service, but we have come a long way past that.  Now, in a world where standards of basic performance are high, the market place more competitive and increasingly little difference between products and services, you had better gear up your organization to understand that there is a whole new level of trust demanded if you are to stand out from the crowd.  

If it’s basic product or service you offer, then price will be the differentiator.  But if you want to make a real difference, then you need to find the keys to earning trust at a much higher level of tangible and emotional engagement and to do that you need a whole new level of customer centricity at the heart of your business.

graphic: employee satisfaction, brand equity, customer satisfaction pointing to operating margin, revenue growth, profit

Figure 1. Pathway to profit and stakeholder value

Build trust, build the company

Logically, there are 3 key components for successful financial performance in any business.  

  1. Business success comes from successfully building brand equity loyalty from customers so that they are loyal to your brands and are advocates for you. 
  2. To get to that point you have to reach new heights of customer satisfaction to build trust between you and your customer.  
  3. To get to that, you need competent well-motivated employees, properly supported with the right resources, and at the heart of this is building trust within the company at all levels.  

It’s chicken and egg!

Research proves the obvious point that well-motivated staff are much more likely to want to improve customer service and deliver high levels of customer satisfaction than those who lack trust.

Building a successful business that achieves its financial goals demands that management builds trusting behaviors and actions that are customer centric, with everyone in the business understanding that they have to go much farther these days than the base line of the past.  

The goalposts in terms of customer expectations keep moving to new levels that are harder to achieve for many brands.  People need to be united in their commitment to process and performance improvements that can only be achieved by working with trusted leaders, trusted managers, trusted teams and trusted individuals.

The one constant ingredient in the mix is customer centricity as the engine for growth.

Graphic: same as #1, separating non-financial vs financial factors

Figure 2. Trust levels and the pathway to stakeholder value creation

The risks of not building trust

Sometimes the risks are blindingly obvious.

It would be a fatal mistake to think of your people as a production line where instructions are given and demands made and that they will automatically be grateful and deliver what you need.  There is now a greater awareness of the sophistication of people with an innate desire to be listened to rather than be talked at.  If you do not engage properly with your people, you will not build trust.

If you only see business as a numbers game, then at its worst (as it would appear happened with Enron, Andersen, or WorldCom), your manipulation of the financials may sooner or later lead to dramatic failure.  

It’s the human aspects of issues that matter.

The challenge

The real challenge in the new world is the same as it was in the old but with a need for greater speed of action.  The bottom line is how do you take the new demand for an even higher level of trust with customers and trust internally and build it into the business on a daily basis?  

How do you take what for many is the "soft stuff" and make it tangible?

The essential combination

As stated before, business performance derives from the essential combination of strong brand equity, demonstrable high levels of satisfaction and loyalty with customers, plus trusted and trusting employees at all levels.  This has led to our 3-tier model for Trust building:

  1. The Trusted Organization
  2. Trusted teams
  3. Trusted and trusting individuals.

In this article, I deal principally with the first with only a passing reference to the other two.  But clearly, whatever has to happen to build a trusted organization requires trust-building collaborative teamwork of the highest order.  It needs a committed workforce whose individual values and behaviors work well together to communicate well, build relationships well and consistently use their combined skills to achieve the business goals.

Where to begin?

The one consistent theme that we have seen as a fundamental for building trust in companies large and small is behaving like a truly Customer Centric Company.  Everybody tells you that they are customer centric but the reality is very often far from this because management teams fail to correct process failings that go beyond the basics.

In the smaller company, with senior management engaged with customers and listening to their workforce, it is easier for them to see the disconnects that can exist and work to put them right.

For the larger organization, the challenges are multiplied dramatically.  

The biggest challenge is often the development of functional silos where the disease of silositis can breed unchecked unless management and the workforce are very careful.  Barriers of language, different interpretations of customer needs and behaviors, displays of a differing sense of urgency and lack of trust are all too common in organizations where the focus on true customer needs is weak.

This chart illustrates the challenges often faced.

Figure 3.  Customer focus and the silo challenges

Figure 3.  Customer focus and the silo challenges

Impact of a focus on customers

It can be quite difficult to find hard evidence of the impact that customer centricity has as a lever on building business success.  It is a complex mix with a lot of variables.  However, there are a number of studies that all seem to confirm that customer centricity is the key, and employee attitudes and satisfaction are pivotal in delivering this.

A recent Gallup survey showed that the most engaged workplaces are:

  • 50% more likely to have lower staff turnover
  • 56% more likely to have higher than average customer loyalty
  • 38% more likely to have above average productivity, and 
  • 27% more likely to report above average profitability.

The chart below summarizes findings at Sears in the US that measured how every 5% increase in employee satisfaction leads to a 1.3% improved customer impression which in turn drives a 0.5% profit growth.  

Replicate that and see the difference to your bottom line. It made $200 million a year difference at Sears.

It is all about building trusted relationships and behaviors up and down the line in companies and a focus on customers at the heart of the business.

Figure 4.  The Employee-Customer-Profit chain at Sears
(Source: Rucci, Kim and Quinn, Harvard Business Review)

Figure 4.  The Employee-Customer-Profit chain at Sears

All of this seems to be focused on employees?

Of course, this is where it all matters but we believe that to deliver a new order of trust we need a new level of analysis of what it means to be truly customer centric.  There is a need for a new disciplined analysis of where companies have to move from and to.

Clearly, it is important to have as much information as possible about customer perceptions of your products and services and their attitudes overall towards your business.  

Companies that take customer centricity seriously regularly survey their customers and spend time and money collating data from internal and external sources to add to their understanding to the highest degree possible.

What research usually does is identify key processes that need to be improved.  Asking the right questions and actually listening to customers’ responses inevitably identifies some core areas for action that would dramatically improve customer trust and would lead to improved performance.

In our experience, a commitment to real change only takes place with the rigorous assessment by management of their role in leading change.  They need to "walk the talk " and demonstrate customer centric behaviors both as individuals and in their leadership of teams if they are to engage the whole organization effectively.

Our Customer Centric Corporation™ model

This model identifies 8 key areas [leadership, motivation, measuring & managing, innovation & learning, communication, teamwork collaboration & diversity, organizational design, empowerment] for detailed assessment that managers typically go through to rate current against desired performance.  It takes them further in their thinking about customer centricity and highlights what improvements in management behaviors and actions employees would see if they genuinely become more customer centric.

This is where we connect with those attitudes and behaviors that lead to improved processes that are vital to deliver superior customer satisfaction and loyalty.  But it is more. 

It addresses the intangibles of leadership and empowerment, motivation, innovation and communication that gets out in the open the issues that have to be addressed to make a real difference.

Figure 5.  The Transform People International Customer Centric Corporation™ model

Figure 5.  The Transform People International Customer Centric Corporation™ model

Some challenging questions

Revelation comes for management teams when they sit down to examine their behaviors on issues that directly affect customer centricity.  

Among the tough questions are:

  • Does customer centricity get quality time on the management agenda with a sense of urgency to identify priorities for process and behavioral change? 
  • Does the leadership team inspire the entire workforce by walking the talk on customer issues, particularly when difficult choices have to be made that affect Trust?  
  • Do they engage with teams and individuals to help remove the barriers that stand in the way of improved customer service?
  • Do people throughout the company feel able to make decisions for the good of the company and its customers by feeling empowered rather than being afraid to take action for fear of being punished?
  • How good is communication throughout the company?  
  • Does the top team recognize that good communication on a personal and team level is vital? 
  • Is there a "one company" culture rather than myriad silos getting in the way of change?  
  • Do the people inside the company see cross-functional barriers being broken down?  
  • What needs to be done to generate greater openness and less fear for people to take initiatives that build trust?
  • To what extent does bureaucracy stand in the way of delivering high quality customer service?  
  • How much encouragement is given to people to innovate and learn new ways of performing their jobs for the ultimate benefit of the customer?

These are just some of the difficult questions that good companies ask as they develop action plans that directly impact on customers and the level of trust they have in the business.

It is simply the start point.  But it is an important start point because from that follows the understanding of how important trust building is in other areas of the business. 

Transformation of an organization from self-centered to customer centered is a journey where change cannot be achieved alone by a brilliant single leader or even a great management team.  All the teams in the organization need to examine the degree of collaboration that exists right across any enterprise if they are to improve behaviors that build trust amongst customers and by implication, trust amongst themselves and across functions

It is also a matter of individual trust.  Again, integrity and ethics, values and attitudes lie at the heart of what builds up to the customer’s perception of a trusted organization.  

There are many lessons to be learned that lead to an entire workforce having a better understanding why customer centricity matters and its implications for trust and all that that implies for the growth of their company.

Like many aspects of management, this is not rocket science.  If you accept that being a trusted organization is vital for survival and growth in these difficult times, then you also have to accept that the challenge is to go beyond the generic understanding of trust and rigorously examine in detail what it means to your business, your customers and the marketplace.

Trusted brands, trusted teams and trusted and trusting individuals don’t happen by accident.  

Leaders and managers have a whole new ballgame if they are to go beyond the basics and find out how to generate trust so that people externally and internally see the difference that makes the difference.

Ronnie Stronge, Director, Transform People International.  

  © 2003  Transform People International Ltd. [Article used by permission of author.] 
1 The Square, Ramsbury, Wiltshire, SN8 2PE, UK
tel.: +44(0)1672 520003 

World Wide Web graphic  Internet Resources

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  • There's No Such Thing As "Business" Ethics: There's Only One Rule For Making Decisions.  John C. Maxwell. 2003, Warner Faith. ISBN: 0446532290
  • The Transparency Edge: How Credibility Can Make or Break You in Business.  Barbara Pagano, Elizabeth Pagano, 2003, McGraw-Hill.  ISBN: 0071422544 

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