Accomplish Your Human Sigma by John H. Fleming, Curt Coffman, and James Harter

 

Accomplish Your Human Sigma by John H. Fleming, Curt Coffman, and James Harter

"Quality" is easy to mount and manage in some settings but extremely difficult in others. For example, business people have a good idea of how to judge the manufacturing process that produces, say, a fancy new handheld device. But what about the retail worker's attempts to sell the machine? Or with the call center employee's efforts to help the customer operate the device? Companies could be better at measuring and managing the quality of these processes - or most of the work done by non-manufacturing companies and departments.

Yet companies must learn to measure and manage quality across all business areas. In manufacturing, value is shaped on the factory floor. In distribution, service, and many professional service businesses, value is created when a worker interacts with a customer. The employee-customer encounter is at the heart of sales and services. If these organizations are to achieve speaking working and financial developments, the employee-customer meeting must be managed with great care.

Quality improvement methods like Six Sigma are instrumental in manufacturing, where ingredients with predictable characteristics are combined in the same way over and over again. Still, their unstable human dimensions are less valuable regarding the employee-customer encounter. To solve this fit problem, we have developed an approach to quality improvement called Hominid Sigma. Like Six Sigma, Hominid Sigma focuses on reducing variability and improving performance. However, while Six Sigma addresses processes, systems, and the quality of the outcome, our approach addresses the quality of the employee-customer encounter by developing a consistent method for assessing it and a disciplined process for managing and improving it.

In developing our thinking about Human Sigma, we have arrived at several core principles for measuring and managing customer-employee interactions:

It's imperative to think differently than an economist or an engineer when evaluating employee-customer interactions. Emotions have been found to influence the judgments and behavior of both parties even more than rationality.

Employee-customer encounters must be measured and managed locally because there are enormous differences in quality at the workgroup and individual levels.

It's possible to find a single measure of employee-customer encounter effectiveness; this measure has a high correlation with financial performance.

It's possible to find a single measure of the effectiveness of the employee-customer encounter; this measure has a high correlation with financial performance.

To improve the quality of employee-customer interactions, companies must implement short-term, transactional measures (e.g., coaching) and long-term, transformational measures (e.g., changing hiring and promotion processes). In addition, the company's organizational structure often needs to be adjusted to manage the employee-customer encounter holistically.

Human Sigma grew out of a multi-year, research-based initiative to map the terrain of the employee-customer relationship. We identified ways to measure the success of the encounter, explored how best to use these metrics, and evaluated the benefits that could accrue from their application. This work drew on direct understanding with hundreds of businesses and millions of customers and employees. We then tested and validated our findings in 1,979 business units of ten companies in the financial services, professional services, retail, and distribution sectors. The results to date are extraordinary. For example, the ten companies, all of which applied the best practice principles for managing the employee-customer encounter, outperformed their five largest competitors by 26% in gross margins and 85% in revenue growth in 2003. Of course, we cannot guarantee readers comparable results, but we believe that close monitoring of the health of a company's employee-customer relationships will lead to dramatic performance improvements.

Emotions shape the encounter

Six Sigma processes are data-driven, rational, and analytical. They focus on conformance to requirements, generally specified in functional terms. For example, does the product have any defects? Are its parameters within specified manufacturing tolerances? Is it delivered on time? The widespread application of Six Sigma and TQM methodologies has significantly improved product quality over the past two decades.

These improvements have inspired companies to apply Six Sigma principles to sales and service operations. In the initial attempts, researchers and managers assumed that customers in these areas were as concerned about compliance as engineers on the factory floor. If this were the case-if, customers would be rational beings who judged their interactions with company representatives by rigorous, analytical standards-simple. Perfection on the company's part would have resulted in content, profitable, lifelong customers.

But nothing human is ever that simple. People may think their behavior is purely rational, but it rarely is. Twenty years of research in two very different fields- neuroscience and behavioral economics- have shown that people base their decisions on a complicated mix of emotion and reason. Moreover, recent work suggests that emotions may play a more significant role than analysis.

Customer loyalty.

Research on customer satisfaction and loyalty confirms this work from neuroscience and behavioral economics. The results of a large and growing number of case studies suggest that "delighted" customers (i.e., customers who report the highest overall satisfaction with a company's products and services) can be divided into two distinct groups: those who have a strong emotional attachment to the company and those who do not. When examining customer behavior indicators (such as attrition, frequency of use, total sales, and total spending), a clear and striking pattern emerges. Emotionally satisfied customers donate far more to the bottom line than rationally happy customers, even if they are equally "satisfied" In fact, the behavior of rationally happy customers is no different from that of dissatisfied customers. The pattern in the figure "Emotional satisfaction matters most" has been evident in every study we have examined.