Satisfaction guaranteed?

Far from focusing their business to the customer, firms try to tailor the customer to them,

One of the few things that everyone seems to agree about is that we are in the era of the customer and that focusing management attention and organisational resources on customer satisfaction is vital to success - in achieving total quality, and in delivering service to achieve competitive differentiation, to sustain competitive advantage through relationship- building, and to be market-oriented and market-led.

As well as affecting how we do business in the marketplace, it is equally clear that customer focus has to change the way we run things inside our organisations. Achieving and sustaining this focus on customer satisfaction generally means measuring the satisfaction of customer groups with what we do, and using this insight to run the business - ie to evaluate and reward the people in the organisation, and to recruit and develop people in ways that sustain our market performance.

The result has been, on the one hand, that customer satisfaction measurement has been a major growth product for the market research industry, while at the other extreme, major corporates have been inviting customer representatives to participate in decision making in recruitment and selection, and employee appraisal and reward, to drive the customer view through their businesses. One way or another, major organisations of many different types have been struggling with the issue of building and sustaining customer focus.

However, what also seems to be true is that following this apparently obvious and unchallengeable advice may lead to human and organisational consequences that, far from improving customer satisfaction and customer focus, may in fact undermine attempts to achieve competitive advantage through superior attention to customer demands.

In a recent survey of UK manufacturing organisations, we have examined the process of measuring customer satisfaction and its use by management, to track some of the effects that it may have inside the organisation, that impact on what we do outside the organisation. What we have found suggests major barriers to building external customer focus which arise from the internal customers - ie the managers and employees inside the organisation whose evaluations and rewards are to be influenced by external customer judgements.

We found that planners had quite appropriately linked customer satisfaction and its measurement to their market strategies - knowing customer satisfaction performance is critical to sustaining strategies of service, quality and competitive differentiation. Here there was no real problem.

However, it seems that when managers use customer satisfaction measurement to evaluate staff and managers, and to influence their promotion, training and development, then they face a range of internal process barriers, of which they had no warning whatsoever.

These barriers come from beliefs, attitudes and behaviour inside the organisation which we grouped into the following types:

lInternal Politics - customer satisfaction results are about sharing "blame" between departments and internal "politicking".

lMarket Simplification - customer satisfaction is generally believed to be "irrelevant" in "our" market.

lCustomer Fear - evaluating customer satisfaction is seen just to invite unwarranted complaints.

lCorporate Culture - customer satisfaction is perceived by people as "not relevant to how we run things here".

lMarket Complacency - employees and managers believe they already know what matters in this market, and anyway it is not what customers think (because they are not the "experts").

lResources/Capability - people generally believe that measuring customer satisfaction and using it to change things is just an expensive waste of time.

lLogistics - people feel we cannot ask the "real" customers because we have distributors and retailers between us and the end-user, so the whole thing is meaningless.

lCost Barriers - people reason that it costs too much to do it properly, so why bother at all?

lPerceived Market Drivers - managers and employees argue that in their business the only things that matter are price and technical specifications, not customer satisfaction.

lCredibility - people argue that no one believes the results, so why should anyone take them seriously?

Our results suggest that these internal barriers stand between the use of customer satisfaction evaluations by an organisation to change its operations and the successful implementation of the market strategies pursued, and yet they are almost totally ignored when companies attempt to improve their customer satisfaction performance.

Our conclusion is that companies with a strategic imperative of improved customer satisfaction need to think very carefully about the relationship between the internal market (our managers and employees) and the external market (our distributors and end-users). Anything less than this runs the risk of just paying lip-service to customer focus and losing the competitive advantages which we seek. Indeed, there is evidence that we may actually reduce our competitiveness by mismanaging the customer satisfaction issue. For example, we have identified possible company scenarios that include the following:

lSynergy - high levels of satisfaction are achieved inside and outside the company and they become self-sustaining, and we achieve competitive advantage through our enduring customer relationships. This is clearly the ideal situation.

lAlienation - we end up with low satisfaction levels inside and outside (employees resent criticisms from customers and this impacts on the service they provide), and the company cannot deliver its promises of quality and service. This is the worst possible situation.

lCoercion - we achieve high external customer satisfaction by control and direction inside the company, but this ultimately reduces internal employee satisfaction and lowers our ability to sustain our strategies of service and quality.

lInternal euphoria - we have highly satisfied employees but it never pays off in external customer satisfaction, because we do not direct employee enthusiasm towards the areas that matter most to our external paying customers.

The challenge to managers is to consider which of these scenarios best describes their own company's situation, and to draw the appropriate conclusions about what needs to change to take customer satisfaction seriously inside and outside the company. At the extreme, the problem may actually be "marketing" our customers to our employees and managers, and feeding this into our organisational development and human resources practices. Quite simply, if our employees are not recruited, trained and developed with customer focus in mind, we should hardly be surprised if we end up with an organisation staffed by people who do not share customer-related values.

The broader implication is that achieving customer focus in the competitive marketplace may rely on a partnership between human resource management and business strategy, which in our study does not appear to be happening in British companiesn

Nigel Piercy is a professor at Cardiff Business School and Neil Morgan is from Cambridge University's Judge Institute.