Happy employees = happy customers.
It’s become a business bumper sticker.
“If you treat your staff well, they will be happy,” says the Virgin Airlines website. “Happy staff are proud staff, and proud staff deliver excellent customer service, which drives business success.”
Zappos once ran an advertising campaign with the theme “Happy People Making People Happy.”
“We built the Starbucks brand first with our people, not with the consumers,” said CEO Howard Schultz. “Because we believed that the best way to meet and exceed the expectations of our customers was to hire and train great people, we invested in employees.”
“The formula is simple: Happy employees equal happy customers,” asserted an article last fall in CEO Magazine. “Similarly, an unhappy employee can ruin the brand experience for not just one, but numerous customers.”
“Happy employees = happy customers” works. It’s a fantastic sentiment. It’s the right strategy. It is miles ahead of and far more on course than the assertions of the anti-happiness crowd. And if you need to boil down to a few words the connections between employee experience and customer experience, run with it.
But if you have responsibility for the “customer value proposition” or its increasingly parallel discipline, the “employee value proposition,” it’s important to know how the two are actually wired together. While the connections are definite, they are not simple. Ignorance of how this crucial aspect of the unwritten social contract plays out can lead to confusion, incentives that backfire, or unintended consequences when the data don’t line up with preconceived notions.
The most serious myth, ironically, is the first corollary to the equation. If happy employees make for happy customers, then unhappy employees must make for unhappy customers. Those who are “actively disengaged . . . are more or less out to damage your company,” Gallup claims. “Not only are they unhappy at work, but they are intent on acting out their unhappiness. They monopolize managers’ time and drive away customers. Whatever engaged employees do – such as solve problems, innovate, and create new customers – actively disengaged employees will work to undermine.”
These assertions are wrong. The vast majority of unhappy employees are demoralized or frustrated, not vindictive. Sabotage is exceptionally rare. Employees’ intention to deliver for customers is among the outcome variables least sensitive to levels of happiness and engagement. Happy employees try to make customers happy, but so do large proportions of unhappy employees.
The proportions of employees intending to give great service do vary by happiness level, but not by that much. Even among the unhappiest employees, a majority will go to great lengths for customers.
Of the 8% of American workers in BI Worldwide’s most recent study who “strongly disagree” they are happy with their current jobs, a majority (55%) agree or strongly agree they are “willing to work especially hard for my organization’s customers.” That proportion grows to 87% among those who are happiest with their jobs, easily creating a statistically significant connection between happiness and customer focus, but a far less powerful correlation than is commonly assumed.
Why would someone who is poorly managed still give great customer service? Several reasons emerge in the interviews my colleagues and I have conducted. First, from a practical level, many people don’t want to get fired before they line up another job and are prepared to quit. Second, many have a greater sense of integrity and professionalism than the Gallups, BlessingWhites, Globoforces, and Aon Hewitts of the world give them credit for. For many people, it would feel wrong not doing right by their customers.
And third, workers who are starved for recognition from their managers often find it from their customers. “I love my clients,” said one employee of a firm that decimated its culture. “It’s my company I can’t stand.” In a similar vein, a Connecticut state park ranger said the best thing about his job is “meeting great people and working out in the field.” Staying outside minimizes his time with “bullying, sociopathic managers,” he wrote.
This is not to say there aren’t some unhappy workers who give lousy service. We’ve all got stories. But the frequency of take-out-my-bad-job-on-you interactions seems larger because most are so memorable. The odds of finding an employee who refuses to go the extra mile for customers is only 7 out of 100, and most of them will give at least passable service.
Some of the upside of employee happiness evidences itself only years later, when the best managed companies somehow find themselves with more breakthrough products.
The strongest links between employee happiness and business outcomes occur over the long term and behind the scenes. Innovation, for example, is a fragile thing; it flourishes in supportive, transparent, healthy, cool, high-recognition environments. The correlation between employee happiness and innovation is nearly twice as strong as the correlation with customer focus. Only 6% of those who strongly disagree they are happy in their current job say it brings out their best ideas. Among those happiest at work, the proportion spikes to 82%.
Innovation is exceptionally difficult to track and to match up with the scores of traditional employee engagement surveys. But when holding a new iPhone or any other technological marvel, does anyone doubt he or she is looking at the end result of years of unleashed creativity and employee happiness on the job? Conversely, when a company miscalculates, basing every decision on short-term returns on investment, is it any wonder that its stream of new discoveries or products comes to an end?
Similarly strong wiring connects happiness to other hard-to-track outcomes such as an employee’s interest in wearing clothes with the company logo, feeling energized by the job, and willingness to recommend the company as a great place to work. All of these, and others, combine to create that amorphous quality we call 'company culture” over which enlightened CEOs obsess and miscalculating ones dismiss for lack of evidence.
The one easily tracked behind-the-scenes connection between happy employees and happy customers is turnover. A frustrated frontline associate will usually give good customer service and will often go to great lengths to create the right experience. But eventually, given options, she’ll resign. Who could blame her?
While a majority of unhappy employees will give great customer service, a larger majority want out. That turnover ultimately affects the customer experience.
While 55% of the employees who are unhappiest with their jobs say they’ll go to great lengths for their customers, 88% wish they were working somewhere else and 62% are, in fact, planning to leave in the next 12 months, according to the BI Worldwide research.
Put aside for a moment the high costs of turnover – overtime, rehiring, orientation training – that could be spent on improving the customer’s experience. High turnover changes much of what the customer sees in the employees. They are newer, of course. They are less knowledgeable, both because of their shorter tenure and because companies that lose people at a fast clip are less likely to invest in training for them.
What’s the equation for this? Something such as, “Happy employees = longer tenure = consistent training = employee expertise = happy customers.” It’s much harder to work into a speech. So is “Happy employees = more good ideas = breakthrough products = happy customers.” So are all the other complicated backchannel connections between how employees feel and how customers end up feeling.
But their complexity makes them no less real, worth a tremendous amount to the performance of the enterprise. Put enough of them together and they do, in fact, have the fate of the company in their hands.
Which could pretty much justify asserting, after all, that “Happy employees = happy customers.”