Studies conducted by Moira Clark of Cranfield University in the UK indicate that ‘the intangible nature of services greatly relies on employees’ behavior in shaping customers’ perceptions of the service.’ Some have even likened the relationship between employee satisfaction and customer satisfaction to a ‘Satisfaction Mirror,’ explaining the idea that a company’s success stems from employee satisfaction, which in turn reflects on customer satisfaction, as elucidated by James L. Heskett of Harvard University, who introduced the Service-Profit Chain model to illustrate the relationship between employee satisfaction and customer satisfaction.

Variable Related to Employees:

  • Employees’ perception of the quality of internal service provided by the company.
  • Employee satisfaction.
  • Employee loyalty.

Variables related to customers include:

  • Customers’ perception of the quality of service received from employees.
  •  Customer satisfaction.
  • Customer loyalty.

As the model shows, variables related to employees influence variables related to customers and, consequently, the company’s profitability. Therefore, Heskett formulates this relationship as follows: ‘Profit and growth are primarily stimulated by customer loyalty, which is directly a result of customer satisfaction. Customer satisfaction, in turn, is greatly influenced by the value of the service provided to the customer. This value is created by satisfied, loyal, and productive employees, with employee satisfaction primarily stemming from the company’s high-quality support services and policies, enabling them to deliver results to customers.’

Moreover, numerous studies, including those by Professor Jeanne Liedtka of the University of Virginia, who had the honor of being one of her students in the Design Thinking course, similarly confirm the direct impact of employee satisfaction on customer satisfaction.

These results are further validated through direct observation and logical deduction. How can an angry, stressed, and pressured employee provide exceptional customer service? It’s astonishing that some administrations still believe that the management style…”

“The Dictatorial Approach and Constant Pressure on Employees, Ignoring Their Concerns, Is the Right Management Style to Ensure Higher Productivity”

Some still believe that management’s role is solely to provide a monthly salary, absolving themselves of any further responsibilities towards employees. During a training session I conducted for branch managers at a bank, one of the managers told me during the break, ‘You know, Mr. Waheed, I’ve been in this bank for twenty years, and I’ve never once smiled at an employee.’ Surprised, I asked why, and he replied, ‘If you smile at them and treat them kindly, they think you’re weak and rebel against you.’ I told him that what he said contradicted most scientific research. Most studies focus on how the relationship quality between a manager and an employee significantly contributes to the employee’s productivity and motivation, and vice versa. He replied, ‘That might be the case abroad, but not here.’

This example is a model of the managerial mindset that still clings to the idea of management through pressure and intimidation. I believe the only obstacle preventing a manager from thinking like our friend here is their personality. Those who resort to managing through fear are individuals with low self-esteem who believe they don’t deserve their managerial position or aren’t competent enough to keep it. Therefore, they fear their employees and worry that a more competent employee might replace them. On the other hand, a manager with a strong personality and high self-esteem considers their team’s strength and efficiency as their strength. Thus, they focus on enhancing their team’s strength, providing support, and leading them towards success and achievements.

As discussed in the research, customer satisfaction is directly linked to employee satisfaction. Surveys indicate that 73% of customers say their commitment to a company is primarily due to friendly customer service. When asked about the most significant factor influencing their loyalty to a company, 38% of customers said it was friendly customer service. Similarly, 75% of customers base their purchasing decisions on good customer service. Another statistic reveals that 70% of a consumer’s purchasing experience depends on how they are treated by company employees.

Based on the above, the direct impact of employees’ behavior and attitudes on the customer experience and the importance of this for the company are evident. Therefore, there is no choice for any company that aims to develop and build a base of loyal customers who act as ambassadors and marketers for its products except to work diligently to achieve employee satisfaction as it strives to achieve customer satisfaction. This can be summarized by the famous quote from the great writer Stephen R. Covey: ‘Treat your employees the way you want your most important customers to be treated.

But the critical question is: How do we achieve employee satisfaction?

Several factors must be provided to obtain employee satisfaction, including:

  •  Core values governing the company’s work, believed in by all and adhered to in all circumstances.
  • Long-term vision: a genuine vision, not just a phrase written on a board hanging on a wall, believed in by all, and worked towards achieving.
  •   Availability of effective and fair work policies, procedures, and systems.
  • Respect for employees: Employees should feel that their managers respect and appreciate their work.”
  • Listen, then listen again to employees: Listen to their suggestions, questions, and complaints.
  • Address their daily problems and alleviate them as much as possible, such as issues with equipment or the unavailability of necessary supplies and tools at work, including stationery, ink, printers, computers, and more.
  • Accept their mistakes: Remember that everyone makes mistakes occasionally, so you should accept employees’ mistakes and help them learn from them to avoid repeating them.
  • Provide a climate of transparency: Keeping employees informed about what’s happening around them and the decisions made gives them a sense of respect and importance. Of course, we’re talking here about matters that can be shared and don’t carry a confidential nature.
  • Provide space for creativity: Allow employees to execute tasks in their way; don’t impose your way on them.
  • Develop skills and provide training: Training and skill development are crucial for organizational development, and good managers believe in professional development.
  • Create a great work environment, Including offices, furniture, spaces, ventilation, lighting, and other factors that directly impact the work environment.
  • Provide financial incentives: Financial rewards are one important incentive that should be included in the company’s incentive system fairly and transparently.
  • Provide promotion opportunities: Having a clear career path and opportunities for competition for positions within this path gives employees goals to strive for, thus generating motivation for work.
  • Encourage relationship-building among employees.
  • Treat employees with respect.
  • When an employee does something exceptional or creative, acknowledge and thank them materially and morally.
  •   Avoid micromanaging: Don’t manage the team in a micromanagement style.
  • Offer guidance and support to employees.
  • Don’t publicly belittle any employee, whether in front of colleagues or, worse, in front of customers.

These are the factors that achieve employee satisfaction in ordinary times, but can employee satisfaction be achieved in times of economic crises that companies may go through?

In one of Joseph Folkman’s important articles on behavioral statistics, he identified seven factors that, if present in the company during crises, significantly contribute to increasing employee satisfaction, as listed below:

  •  Consistency with company values in all circumstances: Employees notice in some companies that company leadership abandons the company’s core values during economic downturns. This affects the credibility of company leadership among employees and their satisfaction. Therefore, leadership’s adherence to the company’s core values in all circumstances is one of the important factors in achieving job satisfaction and peace of mind.
  •   Focus on the long-term vision: Especially during tough times, employees will endure the difficult circumstances the company is currently facing if they believe the future will be better.
  • Direct leadership: Companies realize that their direct manager is the primary source of employee satisfaction or dissatisfaction. Therefore, companies striving to achieve employee job satisfaction evaluate each manager’s satisfaction level and make it the manager’s responsibility to find ways to improve employee satisfaction.
  • Continuous communication with employees, especially during times of hardship for the company, because sharing information with employees is crucial in dispelling rumors and complaints.
  • Creating a collaborative environment among employees and work teams within the company and continuously encouraging it through resource sharing and working together to reduce expenses and increase efficiency.
  • Providing development opportunities: It may seem strange to discuss employee development during crises, but research conducted by Folkman has shown that companies that develop their employees during crisis periods by giving them tasks they weren’t accustomed to before or through internal and external training significantly contribute to maintaining a high level of satisfaction.
  • Speed and agility: With budget cuts, work speed becomes essential for resource conservation. Agility in decision-making and avoiding bureaucracy leads employees to feel that the company is progressing, giving them a sense of security and satisfaction.

The Service-Profit Chain is a theory and business model evolved by a group of researchers from Harvard University (James L. Heskett, W. Earl Sasser, and Leonard A. Schlesinger.). In their book The Service Profit Chain—How Leading Companies Link Profit and Growth To Loyalty, Satisfaction, and Value, they prove the direct link between superior service experiences, customer loyalty, and financial performance (profit and growth).