The importance of a people-centred culture
Chris Humphrey and Emma Macdonald, July 23, 2018
Design cultures that embed goals and values in such a way that employees are consistently customer focused
Informed by data, businesses appear to understand their customers better than ever. But do they really? Facebook is one example of an organisation tripped up by its treatment of customers not as real people, but as a resource to be mined and exploited. In its drive for accelerated growth the essential vision and values of the organisation have become muddled, leading to a need to re-build trust in leadership among both customers and employees.
Our work on ‘culture by design’ looks at the importance of a people-centred culture in a digital age. We have drawn on our combined 30 years’ experience at the Walt Disney Company, alongside our work with Cranfield University’s School of Management, to explore how best to design a culture that inspires employees to create exceptional customer experiences.
The findings highlight the ways in which a people-centred organisational culture can be translated into what is seen and felt by customers, and the pivotal role for HR in making it happen.
There is a good deal of work on what makes for a ‘good’ organisational culture. But how to harness this on behalf of customers is rarely identified or explicitly addressed in practical ways. There is a vague and general acceptance that if employees are happy this will translate into a better experience for customers. But the big opportunity for enduring wealth creation is to overtly connect employee engagement with customer value creation.
Cranfield has experience of engaging with hundreds of organisations attempting to become more customer-centric. Processes and systems can be changed; but if leaders don’t bring people along on the journey then change won’t endure. And if people do not have a common understanding of what their customers expect then the business will fail to flourish.
This work builds on insight and experience from The Walt Disney Company. Disney is unusual in having a specific methodology to instil a customer-led culture, launched in 1955 when Walt Disney expanded his film studio into a highly-complex global business – including theme parks, hotels, shops and restaurants – and needed to systematise his vision.
Digital technologies have multiplied the different interactions between businesses and their customers, making them much more complex and fragmented. At the same time, market maturity and globalisation have driven up standards and customer expectations, so organisations are increasingly struggling to co-ordinate everybody around a common customer agenda.
Micro-managing every detail of how employees should behave is demoralising, inefficient and impossible. A culture is needed that gives people the clarity to stay on the same course, and also empowers them to take spontaneous, creative and flexible decisions. Although the commitment required to change culture should not be underestimated, conscious design of culture is possible. Culture embeds a group’s explicit or implicit goals, so in a customer-led organisation it must be designed intentionally to keep everybody focused on customers.
In its report into the Disney culture, management consultancy McKinsey tells the story of a young girl and her mother visiting a Disney theme park. The little girl threw Belle, her favourite Disney doll, into a fenced-off building site area and when staff retrieved the doll later it was spattered with mud, the dress was torn and the hair was a mess. Staff tried but couldn’t find a replacement. So, accompanied by a photographer, the bedraggled doll was taken to a make-up artist who styled her hair, then to the wardrobe department who made a new dress, and finally to a ‘party’ with other Disney princesses. Later Belle was returned to her owner, together with a photo album showing what a great time she’d had during her ‘makeover’. The girl’s mother sent a thank-you note describing the moment of Belle’s return as “pure magic”.
From such stories it is clear that the final outcome is not just the result of a single employee’s effort. A team of people worked seamlessly together but didn't consult a script or check with their managers – a spontaneous, flexible and personalised response is essential. The trick is how to guide this improvisation so that it adds up to the experience customers want, while avoiding the dehumanising tendency for tight scripting and the equally ineffective customer experiences that come from a free-for-all. Employees are too often neither empowered nor equipped to make good, consistent and customer-led decisions, leading not only to unhappy customers but also to unhappy employees.
The organisation must define its purpose, encapsulating precisely what it does for its customers. It should not be a fluffy statement that is divorced from customer needs or the reality of what an organisation can deliver. Rather, a well-designed brand purpose should articulate what a customer is really seeking.
Disney takes the view that families want to have a happy time together, so its purpose is ‘We create happiness’. Premier Inn’s purpose of making guests ‘feel brilliant through a great night’s sleep’ gives it the focus to excel in areas that customers value such as Hypnos beds, good-quality showers and a hearty breakfast, instead of gyms, luggage porters or fine dining.
Having a clear organisational purpose is immensely valuable. But on its own knowing that our job is to ‘create happiness’ can leave employees feeling short of guidance on how to behave.
Fundamental to Disney’s consistent customer experience and sustained commercial success is having a small but defined set of standards and behaviours that give employees the next level of detail about their customers’ expectations. These standards and behaviours should be observable, measurable and coachable.
For example, an airport with safety, comfort, ease and speed as its standards has ‘I pick up rubbish’ and ‘I report an area that needs attention’ as behaviours associated with ‘comfort’. Similarly the behaviour ‘I display a calm tone of voice’ is associated with ‘ease’.
Another invaluable element of the Disney approach is to prioritise standards in a non-negotiable hierarchy that acts as a tiebreaker when decisions conflict. So at Disney safety trumps courtesy: if you have to shout to stop someone going somewhere unsafe you do so.
All this clarity helps empower employees to act freely when the unexpected happens. They know that as long as they are aiming towards the organisation’s purpose, and working within the clear boundaries of its standards and behaviours, they will be backed by their management for doing their best.
Santander UK’s considerable improvement in customer satisfaction, for example, is the result of a programme around three standards expected by customers from banking: ‘Simple, personal, fair’.
HR’s essential role
To achieve a customer-led culture it is crucial to use each and every HR mechanism to reinforce it.All too often HR focuses only on hygiene factors: decent working conditions, humane management practices, fair pay and conditions, and so on. These are indeed essential to ensuring employees are happy, and unhappy employees create unhappy customers. But for a truly customer-led culture all HR practices must reinforce the brand purpose and standards.
Cranfield research consistently shows that organisations with a clear purpose that also engage all their employees in creating value for their customers have higher levels of customer satisfaction. Employees who are clear about customer expectations and equipped and engaged, will be willing to do more. And crucially will focus more precisely on what is important.
From research to reality
The outer circles in the diagram below summarise the aspects of HR that must be intentionally designed to reinforce the brand purpose and standards.
Firstly, recruitment must ensure that applicants whose personalities naturally fit these standards are excited to join, and that those with the wrong fit have an early opportunity to opt out. Disney structures its recruitment advertising explicitly to showcase customer expectations. Metro Bank overtly appeals to applicants with a customer service ethos. It recruits to stores not branches ‘because we want them to think like retailers’, and if ‘you don’t smile during the first job interview you’re out’.
Secondly, the brand purpose and standards need to be internalised in both initial induction and all subsequent learning and development activities. Many customer experience leaders use roleplay for this, helping people develop their improvisational skills while still adhering to the standards. First Direct develops its staff by listening in on calls, as is common with call centres. Not so common though is that staff are evaluated qualitatively on ‘First Directness’: the extent to which employees live up to the firm’s six brand values, including respect, responsiveness and openness.
Thirdly, internal communication needs to reinforce and bring to life the brand purpose and standards. All too often communication focuses only on financial results, rather than framing these results as the product of how well we create value for customers.
Fourthly, continuing staff reward and recognition forms another powerful lever that can emphasise the customer-led message – or conversely dilute it with mixed messages as to what is important. Disney, for example, has a programme called The Four Keys Fanatic that encourages ‘cast members’ (as employees are called to emphasise the standard of ‘show’) to recognise each other for exceptional behaviour. But it does not reward just any behaviour; only those behaviours that specifically relate to safety, courtesy, show and efficiency – the four standards or ‘keys’ as they are called. To nominate a colleague you have to say which of these four the individual demonstrated excellence in.
Culture is all around us, influencing our ideas, customs and social behaviour. And, as Facebook discovered, it exists within an organisation whether we are conscious of it or not. Leaders must reflect on how culture can be explicitly designed with HR support to create an integrated system that engages staff, delivers superior value for customers and creates sustainable value for shareholders.
Chris Humphrey is a managing partner at the Pelorus Jack consultancy and former head of UK marketing and customer strategy for Walt Disney World in Florida, Disney Cruise Line and Disneyland Paris. Emma Macdonald is professor of marketing and joint director of the Cranfield University School of Management’s Customer Management Forum