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The Employee is the New Customer!

by Jan 10, 20192 comments

Our understanding of the role of corporations has moved through a series of evolutions. It was generally accepted 50 years ago that the main purpose of a corporation was to increase shareholder wealth. Economist Milton Friedman cemented this thinking in our culture with his famous 1970 New York Times article announcing that the social responsibility of a corporation was to increase its profits, and, as a result, shareholder primacy became widely accepted as the primary engine of commerce. Over the next 25-30 years, the public’s perception of the role of business evolved to include a greater awareness and service to customers. As a result, the mantra for business theorists and academics has more recently focused on a doctrine of meeting customer needs as a vehicle for increasing shareholder wealth. From this perspective was generated an entire body of business, compensation, human resource management and leadership theories.

But something changed.  The labor market tightened up so much that employees chose to leave whenever they didn’t feel appreciated and replacement employees became scarce. Corporate America fell out of favor with career-seeking millennial’s.  Baby boomers, feeling burned out and frustrated with corporate bureaucracy, cost-cutting and greed, decided to retire early. These developments called for a rethink of employee recruitment, retention and talent management.  Additionally, contemporary employees yearn to be treated as fully functional human beings, who derive a significant sense of purpose, meaning, fulfillment and joy from their work, instead of being treated as a metric, or a “human resource”, and sites like offered hard, transparent data about corporate reputations and reviews by employees. As a result, the emphasis shifted from constantly recruiting “bodies” in order to meet corporate goals, to a greater awareness and emphasis on inspiring and retaining employees. This new reality calls for fresh leadership approaches.

So, the new reality is that,

The employee is the new customer.

It’s a very simple – if radical – theory: treat employees as the most precious resource in the organization and do everything possible to inspire them – all the time.  As I have shown in the research from my latest book, The Bellwether Effect, inspired employees are 2 1/2 times more productive than “satisfied” employees and 70% more productive than “engaged” employees. Most employees do not need any lessons on how to wow customers – they know how to do this – but often, they just don’t want to.  More customer service training won’t change that, but a renewed focus on employee well-being – in all its facets – will generate higher levels of customer service, which will result in increased shareholder wealth. Southwest Airlines, America’s most successful and consistently profitable airline, has it right: “We believe that if we treat our employees right, they will treat our customers right, and in turn that results in increased business and profits that make everyone happy”. (Watch the video below of a Southwest employee creating customer loyalty and therefore shareholder wealth).  This is how we build great organizations – the employee is the new customer!

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