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Ever since a group of researchers at Harvard University released the ‘Service-Profit Chain’ theory in the 1990s, organisations have accepted that profit and growth are stimulated primarily by customer loyalty.
Before this theory was accepted, management focused on setting profit goals and building market share, but there wasn’t much emphasis placed on the motivational impact an organisation’s culture or working environment could have on people – i.e. the ones expected to drive this profitability, growth and market share.
Forbes explains, that for years, “We believed that an offer of employment equated to an exchange of service for compensation.” Yes, of course, people have always wanted to get paid a decent salary for what they do, but it led to many organizations becoming stuck in old-school rhetoric whereby, “Employees were treated like cogs in a machine whose sole purpose was to operate mechanically and routinely to produce results.”
I’ve always been a little dismayed by the term ‘Human Resources’ – implying that people are mere resources or ‘factors’ of production, with the purpose of the organisation being to turn them into units of measurable profit. I think Karl Marx had something to say on this too.
As new studies were released through the 1990s relating to the economics of service, a new perspective emerged, one which focused on the correlation between improved employee satisfaction, loyalty and productivity on the one side, and customer satisfaction, loyalty, and the corresponding impact on profitability and growth on the other.
This is what became known as The ‘Service-Profit Chain’, as defined by the Harvard Business Review: “Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.”
In the same article, the HBR also explained that the service-profit chain also resulted from a special kind of leadership – a leadership style that genuinely realised the role both employees and customers play in this ‘chain’ but specifically realised that people were the heart of any business.
It’s interesting looking at this 30 years later. In 2022, themes like ‘human-centric’, ‘customer-experience’ and ‘UX’ are are all commonly used measures of an individual’s personal experience with a product or service.
In the last 20 years, we’ve come to accept that people are the most powerful force for innovation in any organisation. But if people truly are at the ‘heart’ of the work we do, what does that actually mean, in practice, for a modern organisation looking to develop a dynamic workplace for its team?
From a purely humanist perspective, it obviously starts with connecting with and knowing your people and how they operate, interact, communicate and collaborate on a daily basis. From a technology point of view, it then means empowering them with the things they need to do all the above in the most enjoyable, effortless and productive way possible.
“When you put your people first, they are empowered to show up as their best selves and are supported to maximise their potential and excel in their roles. You as a leader will become more effective by understanding who your people are, what they need, and what support they require from you.”
So what exactly do your people want from you? We believe that people want to be able to seamlessly traverse between physical and digital spheres and enjoy the experience across their devices, wherever they are – in the office, at home, or anywhere in between the two. They expect these experiences to be seamless and the process of connection to be effortless.
A recent MYOB-commissioned research paper compiled by Forrester Consulting puts this quite bluntly: “Complicated solutions negatively impact employee productivity. Still, 40% of midmarket decision-makers indicated that their current business and people management solutions were not user-friendly or intuitive. As a HR business partner from a New Zealand manufacturing company described: “User experience is one of our biggest challenges at the moment. It frustrates users and negatively affects productivity.”
Research shows that on a biological level, positive user experiences produce the surges in dopamine and oxytocin the brain needs to experience the attraction towards an environment to keep people satisfied and committed. This isn’t about tying people to their desks or devices (as it may have been before the 70s or 80s) it’s now about delivering truly enjoyable experiences to people in their workplaces that allow them to experience happiness, motivation, and concentration – all of which build our confidence, self-esteem and wellbeing.
By doing this, we fulfil the premise of the Service-Profit Chain, i.e. “employee satisfaction… results primarily from high-quality support services and policies that enable employees to deliver results to customers.”
From a customer perspective, the same principle applies. Customers who receive consistently satisfying experiences from a business or brand continue to make purchases, and soon become loyal and committed advocates, openly sharing their experiences with colleagues, peers, friends and family. You can read more about this in our accompanying Intelligent Automation blog.
In any situation, when the fusion between digital, physical and biological happens in balance and harmony, successful user experiences can persuade, motivate, and engage. They encourage engagement and purpose, they affect sentiment and influence behaviour. This is why a people-first approach to technology and the experiences it delivers are so important to modern dynamic businesses.
Our assessment follows 3 Steps:
Empower your people, while protecting your business-critical data, and your hard-earned reputation.
The 3 Game-Changing management and technology initiatives that will drive your continuous innovation and growth.
