Happy Employees Boost Customer Satisfaction AND Bottom-Line

You could say Edward Kopko was ahead of his time. Five years ago, the CEO of technical services firm Butler International began a series of initiatives designed to enhance employee satisfaction. He believed (and still believes) that there is a high correlation between contented employees and satisfied customers-which in turn translates to shareholder value.

"[Kopko] has always taken a holistic approach to quality," explains Robin Uhl, director of marketing for Montvale, NJ-based Butler. "He believes we have to keep all of our constituencies happy-employees, customers and shareholders.

We're only as strong as our weakest link." Another signal Butler is serious about customer and employee satisfaction: The company publishes satisfaction data in its annual report, alongside its financial highlights. "We're saying, this information is as important as our financials. We want it right out there for everyone to see," Uhl says. "Our vision is to be the number one customer-rated company in the industry."

As part of Kopko's vision, Butler embarked two years ago on a study, called a value gap analysis, to measure customer and employee satisfaction. Professionals from an outside firm interviewed customers about their experiences with Butler. Uhl recalls some of her colleagues were less than enthusiastic when management announced the project in 1998.

"There were people who really didn't think it would be worth the effort. The biggest concern was that we would be imposing on customers to ask them to take three hours out of their busy schedules," recalls Uhl. As a result of the study, Butler senior sales staff created unique action plans for each customer. "A senior manager went out to personally deliver the action plan to each customer," says Lisa Spiech, a Butler marketing manager. The customer value gap analysis is now an annual phenomenon, with last year's study focusing on e-business customer value.

Listen to employees, too Butler employees were also given comprehensive surveys. Butler conducts an annual survey of its employees to determine their attitudes on everything from benefits to improving business processes. The marketing staff personally calls every employee who participates to thank him or her for their time. But there are many more avenues for employee feedback. For example, employees are encouraged to be part of cross-functional teams that work to improve business processes.

One Butler program, called Free-Up, concentrates on cutting down on paperwork.

"These teams have the freedom to change business process. They're empowered to make changes, and that improves morale right there," says Spiech. It's even harder for Butler to ensure its employees are happy, because it has no control over most of the employees' work environments. Five thousand of the 6,000 employees work out in the field at the 1,600 client sites. "It's challenging to keep them motivated and feeling a connection with Butler," says Uhl.

To combat this situation, Butler launched a program in which "Employee Service Representatives" travel to client sites once a week to personally deliver paychecks and check in with the field employees. "The ESRs ask everything from, 'Is the information on your paycheck correct?' to 'Is the work environment good?'" says Uhl. If the IT consultant is not happy at a particular client site, Butler takes steps to move that person to another engagement.

The payoff of such efforts to cultivate happy customers and employees can be seen in the survey results. Over 90% of staff employees are satisfied-mirrored by customer satisfaction levels of 91%. Employee retention rates are good, which is especially important given the chronic nationwide shortage of IT talent. Best of all, Butler has continued to post impressive growth rates-its stock achieved five-year compound annual growth of 22% in 1999.

Follow the leader With all these positive developments, it's not surprising the rest of the world has begun to catch on to Kopko's ideal of fulfilled workers making for loyal customers.

Butler was a 1999 Arthur Andersen Global Best Practices winner in the category of motivating and retaining employees. And early last year, the American Productivity and Quality Center (APQC) named Butler a leading innovator in its "Using What Customers Value to Guide Your Business" study.

A recent study confirms the soundness of Butler's approach. According to a December 2000 Unifi Network (a subsidiary of PricewaterhouseCoopers)/Roper Starch survey of more than 3,000 consumers, customers are directly affected by high rates of employee turnover in six different industries (personal computing, banking, retail, telecommunications, investment management, insurance).

"We knew consumers were aware of high turnover at their service providers, but we had no idea how irritated they were by it. We found consumers were universally lowering their expectations because of it," says Tom Casey, a partner and leader of the Talent Management Practice for Unifi.

Ultimately, understanding and responding to the link between employee well-being and customer satisfaction has a profound impact on the way companies such as Butler do business. "Rather than creating policies and imposing processes on our customers and employees, we develop those based on customers' and employees' needs. Our employees are just as important as our customers," says Butler's Uhl.

And with the labor market expected to remain tight in coming years, Unifi's Casey believes companies that succeed in retaining the best workers will be able to distinguish themselves from their competitors-and increase customer value. "We predict high employee retention rates will be a huge differentiator," he says.

Used with permission of Peppers and Rogers Group.