Do Happy Employees Really Make Happy Customers? By Vijay Dandapani Saturday, 16th June 2007

The Financial Times has an interesting article entitled "In the pursuit of happiness" that questions what has long been received wisdom - that happy employees make for happy customers - an axiom that has divine status in the hospitality industry.

Rosa Chun, a professor of business ethics and corporates social responsibility at the Manchester Business School (UK) interviewed 10,000 people (half were customer-facing staff, half were customers) at 13 UK retail organisations in financial services, food retailing, telecommunications and insurance (interestingly she did not include the hospitality industry in her sample set) and asked "how satisfied they were, whether they would recommend a friend to work for the company or buy its products, and so on".

The FT article notes how "Some business units revealed a positive correlation between happy staff and happy customers. But there were others where staff were happy but customers unhappy, or where customers were happy but staff were not. "Most managers believe the link because they have read some books," Prof Chun says. "But when you dig into their actual experience, they have very little evidence."

And then goes on to comment on how "Companies have invested vast amounts of time and money over the past decade on the assumption that it is true. Team-buildingexercises, employee empowerment initiatives, "live-the-brand" campaigns, culture change programmes and perks such asat-work massage or ping-pong tables - has all this effort and expense been squandered? .

The cause-and-effect relationship between employee loyalty, productivity and customer satisfaction "was never as strong as we hoped", adds his co-author and fellow HBS professor James Heskett."

The research appears to stand on its end the old notion that employee satsifaction led to employee loyalty and then up the chain to customer satisfaction and loyalty - a nice linear relationship that fitted well with most managers across service industries.

All of the above appears to have hastened if not intensified the search for the link between employee and customer satisfaction with new research centered on how "Successful companies focus with "laser precision" on the staff behaviours that customers want and give their employees a sense of "ownership" (as distinct from satisfaction, loyalty, commitment or engagement) so they can demonstrate "latitude within limits" when dealing with customers".

In other words, organizations are focussing on the process that leads to satisfaction of customers rather than merely making employees happy with a view to osmotically having that transmitted to the customer.

Some of the "new" findings may not be entirely new to the hospitality industry. The industry has, for long, focussed on guest needs as a basis for the CRM and then tailoring training programs for employees to optimize that - the issue always was how to make the employee gain the most of that and derive enjoyment while carrying out that process. Anticipating guest needs and communcating it to employees thereby, taking away the (nasty) surprise element surely brings about happy employees.

At any rate, hotel companies too ought to take a look at the relationship to see whether there indeed is a link between a happy cow and high quality milk.

Vijay is Chief Operating Officer and part-founder of Apple Core Hotels- a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.Member of the board of Directors - Hotel Association of New York.

www.vijaydandapani.com