Profitability Is In The People

As senior vice president of global communications for Starbucks Coffee Co. in Seattle, Wanda Herndon was determined to challenge employees in her department to work more efficiently and, as a result, improve customer service. Herndon relied on the educational program Coffee Master — established by Starbucks in 2000 — which demonstrated that employees excited about their jobs relay that excitement to customers and positively affect the company’s bottom line.

In the Coffee Master program, employees (Starbucks refers to them as partners) who have already completed the standard training are eligible to take additional instruction in the pursuit of coffee mastery, whether they work in retail or in the office. These employees are educated on the nuances of coffee-making, such as aroma, body, acidity, and flavor. Starbucks rewards employees for completing the program, but that isn’t the only benefit. By creating more sophisticated, knowledgeable employees who are more engaged in the business, Starbucks sets itself apart from the competition in an increasingly crowded marketplace and maintains customer loyalty to those famous $5 cups of coffee.

Customers are willing to pay more for the Starbucks brand not only because of its gourmet appeal but because of the positive associations and experiences they have in each retail store. Last October, Starbucks sales increased 10% year-to-date, marking the 14th consecutive year of growth at 5% or greater.

It doesn’t surprise James Oakley, assistant professor of marketing at Purdue University’s Krannert School of Management, that the Coffee Master program worked. Oakley is co-author of a study released last year that found employees who were satisfied with their jobs had a direct, positive impact on a company’s bottom line, regardless of whether they had direct contact with customers. According to the study, “there is a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance.”

There were several other findings in the study:
Employee satisfaction is a key antecedent to employee engagement. Interaction between managers and employees, with regard to supportiveness, goal-setting, and job design, were also key drivers of employee engagement.

Organizational culture was another significant driver of employee engagement, where employees are expected to cooperate and work together and also take charge and provide a voice for the customer within the organization.

When individuals and teams compete to implement the optimal behaviors oriented to the market and its customers, such competition can work to the advantage of both the organization and its customers.

Organizations with engaged employees have customers who use their products more, and increased customer usage leads to a higher level of customer satisfaction.

“The best tool managers have for improving employee satisfaction is communication,” says Oakley. “A strong communication system that allows information to flow up and down the organization is the critical driver of employee satisfaction according to our study.”

Oakley contends that it may be difficult to make inroads in a company that has a poor system of communication. But it is possible. Managers must use the financial evidence that engaged employees can improve customer service to encourage superiors to make necessary changes in