Blanchard LeaderChat

The average organization is losing an amount equal to 7% of their annual sales because of poor leadership practices. That’s the surprisingly large amount of money identified by companies who completed the Blanchard Cost-of-Doing-Nothing online calculator. 

In the December issue of the Blanchard Companies Ignite newsletter, I discussed some of the initial findings from an analysis of the 200+ companies that shared their current and desired levels for customer satisfaction, employee retention, and employee productivity in their organizations.

That analysis found a 14-point customer satisfaction gap, a 16-point employee productivity gap, and a 45-point employee retention gap which translates into over $1 million dollars for the average organization.

The role of leadership

Strong leadership and management practices can close the gap in all three of these areas.  Academic research has established a strong correlation between employee satisfaction scores and subsequent customer satisfaction scores and in both cases these have been tied back to leadership practices. The bottom line is that leadership practices matter. Companies that have good leadership practices outperform companies that don’t.

Organizations that do not address leadership practices suffer a persistent drag on performance that keeps results down. When times are good, this drag on performance can be manageable, but when times are tough, it’s critically important that everyone perform at their best—especially in terms of creativity, innovation, and breakthrough thinking.

Join me for a webinar on December 7

On December 7, I am going to be presenting a more in-depth look at the Cost of Doing Nothing analysis and sharing some strategies for addressing it.  This is free webinar courtesy of Cisco WebEx and The Ken Blanchard Companies.  Over 500 people are registered and I hope you’ll join us also. You’ll see some information about the webinar below.

PS: If you would like to read more of the Blanchard article, Don’t Underestimate the High Cost of Poor Leadership, just click here.  (You’ll see my recommendation for a first step that all leaders can take right away.)

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The High Cost of Poor Leadership: The three performance gaps you have to address Wednesday, December 7, 2011, 9:00 a.m. Pacific, 12:00 p.m. Eastern, 5:00 p.m. UK and GMT

Poor leadership practices cost companies millions of dollars each year by negatively impacting employee retention, customer satisfaction, and overall employee productivity. In this Webinar, Blanchard Program Director David Witt helps you take a closer look at the effect that leadership has in each of these three areas and what you can do to improve performance.

You’ll learn that

• Less-than-optimal leadership practices cost the typical organization an amount equal to as much as 7% of their total annual sales
• At least 9% and possibly as much as 32% of an organization’s voluntary turnover can be avoided through better leadership skills
• Better leadership can generate a 3 to 4% improvement in customer satisfaction scores and a corresponding 1.5% increase in revenue growth
• Most organizations are operating with a 5 to 10% productivity drag that better leadership practices could eliminate

Drawing on proprietary original research, you’ll learn which management techniques generate the best results and also look at some of the common cultural roadblocks that keep companies from implementing them. You’ll also learn how to overcome these obstacles and make the shift from knowing to doing.

Organizations need to make sure that they are getting the best out of their people by providing strong, consistent, and inspiring leadership. Don’t miss this opportunity to learn how to evaluate and improve leadership practices throughout your organization.

Register today! http://www.webex.com/webinars/The-High-Cost-of-Poor-Leadership-The-three-performance-gaps-you-have-to-address

A new white paper from The Ken Blanchard Companies shows that poor leadership is costing the average company an amount equal to 7% of their annual revenue. That’s over a million dollars a year for any organization with $15 million dollars or more in annual sales.

 The three big culprits? 

1. Employee turnover.  Poor leadership is responsible for up to 30% of the reasons why people leave their organizations according to exit interviews conducted by The Saratoga Institute.
2. Customer turnover. Poor leadership negatively impacts employee satisfaction, which in turn negatively impacts customer satisfaction and retention. Research published in Harvard Business Review calculated that every 5 point change in employee satisfaction scores caused a 1.3 point change in customer satisfaction scores.
3. Employee productivity.  Poor leadership leads to poor employee productivity.  Research from Blanchard shows that direct report productivity can be improved 5-12% through better management practices. 

Most senior executives instinctively know that leadership impacts the bottom line, but quantifying that impact has been a challenge in the past.  This new white paper (and the free online calculator that the information is drawn from) is a great way for leaders to put some facts behind their suspicions. 

You can download a copy of this new white paper, Making the Business Case for Leadership Development: The 7% Differential here.  If you are interested in calculating what poor leadership practices might be costing your organization, also check out Blanchard’s free online Cost of Doing Nothing Calculator.  This is the same free online calculator used by survey respondents in the white paper.

In a recent article entitled Waging the War for Shoppers’ Wallets, researchers at Gallup have identified that the victors in retail will be the ones who create an engaging customer experience.  Their research shows that fully engaged customers spend $20 more per transaction than average customers at the same stores. A retailers’ most effective strategy for fending off competitors is focusing on creating an emotionally engaging experience for their customers.

This past weekend kicked off the official holiday shopping season in the United States.  Over 138 million people in the U.S. alone set out to do some shopping.  I know I did, maybe you did too. All told, I visited twelve different retailers over the past three days and each store had a chance to make an emotional connection with me.  Most offered good service, but nothing beyond what you would expect–the place I bought my Christmas tree, the place I bought gas, the online purchase I made, and the book store I visited, for example.  Some got close–the place I bought coffee, the place I bought groceries, and the place I had lunch. And two stood out for me—the place I picked up my dry cleaning and the place I shopped for a present for my father-in-law. I want to highlight those two stores as examples of how easy it is to create a connection with customers and also celebrate and recommend them both to you. 

• The first is Town Center Cleaners in San Diego.  How do they create a connection? Through customer intimacy.  They know who their customers are and they demonstrate it on a daily basis.  For example, they are already hitting the button to pull up my shirts the minute they see me getting out of the car.  They always have a friendly greeting, check on how your day is going, and always make sure that Wednesday is okay for getting my shirts back.  (And they never ask how I like my starch because it’s all listed on the customer record.)  They do it so well, every  time, that it has just become a welcome part of my Saturday routine. 
• The second example is a little more subtle.  My wife and I were checking out at a local sporting goods chain after looking for some running apparel for my father-in-law.  (We didn’t buy anything for him, but I snapped up a great deal on a golf bag and umbrella.)  As we were checking out, the cashier, an assistant manager filling in during lunch break asked us if anyone helped us with our purchase.  My wife indicated that Sunny had helped us.  Pretty standard except for what the assistant manager did next which was compliment Sunny on the good work.  It was a genuine expression of appreciation and it made me feel good about the assistant store manager and the store itself.  Way to go, Sports Authority in Carmel Mountain!

What was your experience shopping this weekend?  Did anyone create an emotional connection with you?  Tell me, and the rest of the world, by adding a comment to this post.  Let’s catch people doing things right today! 

PS: Everyone who posts by the end of the day today will automatically be entered for a raffle to win a personally autographed copy of Raving Fans, Ken Blanchard’s classic customer service book, or an advance copy of Lead with LUV, Ken’s new book with Colleen Barrett of Southwest Airlines coming out next month. I’ll announce the winner first thing tomorrow morning.

Employee engagement is a popular topic these days and a whole industry has sprung up around helping managers identify people’s strengths, discover their motivations, and provide the tools and resources people need to succeed.  The goal is to create a high-energy work environment where people want to come to work and be their best.

But do high employee engagement levels translate into better bottom line performance?  Not necessarily.  There is one additional component that has to be in place in order to drive bottom line impact. Read more…

“Love” as the key ingredient to business success?  Ken Blanchard and Colleen Barrett make a convincing case in their new book, Lead with LUV: A Different Way to Create Real Success.  I received an early manuscript of this new book (due out in January) after attending Barrett’s keynote address at The Ken Blanchard Companies annual client summit in San Diego last month.  Their basic formula is simple: Southwest succeeds because it treats employees with respect, practices The Golden Rule, and loves people for who they are.  In return, the company asks employees to treat customers in a similar manner.

It’s an approach that allows Southwest’s leadership to expect more—and receive more—from their people than other airlines.  Because employees know that leadership is on their side, leaders can confidently challenge and hold people accountable for meeting expectations.  It’s a business version of tough love that only works when employees know you care.

Interested in trying a little leadership love at your organization?  Here are three tips for getting started:

1. Communicate your organizational mission and vision. Barrett explains that at Southwest, they are first and foremost in the customer service business—they just happen to express that service by providing airline transportation.
2. Define the values that will guide behavior. At Southwest values start with safety and practicing the golden rule–treating people as you would like to be treated–as a foundation.  Three additional values of Warrior Spirit, Servant’s Heart, and a Fun-LUVing Attitude guide employee behavior on a day-to-day basis.
3. Combine caring with high expectations. Leaders at Southwest treat their people with respect, strive to bring out their best, and love their people for who they are.  In return, employees are expected to buy into the company’s mission, and to practice the company’s values with each other and customers.

What’s the level of leadership love in your organization?  Do employees know that leaders truly care about them?  It’s an essential ingredient at Southwest that has helped to create long-term success and a fun-loving culture in a challenging industry.  What could it do for you?

Win an Advance Copy of Ken and Colleen’s New Book!

Would you like to get a sneak peek at the unbound manuscript version of Bringing LUV to Leadership?  Rarely made public, we have a small number of extra copies from the proofing and review process that we are giving away this Friday.  To be entered into the drawing, just sign on as a fan at Ken Blanchard’s new Facebook Fan Page by 12 noon Pacific Time, Friday, April 9.  Everyone who is signed up as a fan by that time will automatically be entered into the drawing.  Good luck!

Most executives instinctively know that strong leadership is essential for overall organizational success. However, in most organizations, there is a lack of urgency to improve leadership skills driven by a belief that an organization’s current leadership capacity—and subsequent performance—is good enough. 

But is it? 

A new white paper entitled The High Cost of Doing Nothing: Quantifying the Impact of Leadership, shows that this is a misguided assumption.  According to Blanchard research, most organizations are operating with a million dollar drag on performance that better leadership can resolve.  As organizations look for ways to improve engagement, productivity, and satisfaction, it is important to remember the pivotal role that day-to-day leadership plays. 

Here are the three areas that the paper looks at along with some initial ideas on what managers can do to improve the situation. Think about your own organization as you review the three areas identified in the new white paper. 

Employee Productivity—Consistently identified as the largest financial drain in most organizations, poor leadership costs the average company 5-10% of potential performance. When employees do not receive the direction and support they need to accomplish their key tasks successfully, the result is wasted time, substandard results, and costly rework. 

Leaders can make the situation better by asking questions.  Does the employee understand the goal and have a clear plan for accomplishing it?  Do they have the knowledge and skill set to be able to perform this task without a lot of supervision or direction?  What is their motivation to work on this?  If managers ask the right questions up front, they can find out very quickly what a direct report needs. 

Customer Satisfaction—Even with all of the recent emphasis on having a customer focus, most organizations still only achieve a 75% satisfaction rating according to national customer service indexes. This translates into hundreds of thousands of dollars in lost revenue growth for the typical company.  How does leadership impact customer service?  By making sure that everyone in the organization is focused in the right direction—towards the customer.  In too many organizations, employees are looking up the organizational chart instead of in the direction of the customer.  Leaders can redirect this attention toward the customer by asking, “What can I do to help you in your job so that you, in turn, can better serve our customers?” 

Employee Retention—A third area where organizations typically see a drain on performance is through the loss of high potential employees. While today’s economic slowdown has dramatically reduced voluntary turnover in most organizations, it’s important that organizations not become complacent. Just because people can’t switch jobs right now doesn’t mean you can neglect people—especially high performers. Good people are always in demand, and you want your best people to know that you value them and want them to work for you.  Leaders can reduce unwanted turnover by 10-30% by checking in with high performers on a regular basis, expressing appreciation, and providing growth opportunities. 

Leadership makes a difference. In the average organization, this translates into over $1 million dollars of bottom-line impact on an annual basis.  As you look for ways to improve performance in your own company, don’t underestimate the impact that day-to-day leadership has on productivity, customer satisfaction, and retention. 

To access a copy of the complete paper, click here. 

If you’d like to try the calculator that the paper is based on, it is also available online at www.costofdoingnothing.com  It’s free, it only takes a few minutes to complete, and you get access to a complete personalized report immediately.

Join The Ken Blanchard Companies’ Kathy Cuff and David Witt for a live, online chat today at 10:05 a.m. Pacific Time. Cuff and Witt will be answering questions immediately after their webinar on The High Cost of Doing Nothing: Quantifying the Impact of Leadership on the Bottom Line.  Cuff and Witt will be exploring how leadership impacts employee productivity, turnover, and customer satisfaction levels. The webinar is free and is a part of The Ken Blanchard Companies monthly webinar series co-sponsored with Cisco Webex.

To participate in the online discussion, stop by www.leaderchat.org  beginning at 10:05 a.m. Pacific Time.

Instructions for Participating in the Online Chat

If you have a question that you would like to ask Kathy Cuff or David Witt, just click on the COMMENTS link above.  Then post your question and push SUBMIT COMMENT.  Kathy and Dave will answer as many questions as possible during the 30-minute online Q&A.  (Be sure to press F5 to refresh your screen occasionally to see the latest responses.)

If you can’t stay for the entire 30-minute chat, but would like to see all of the questions and responses, you can always stop by later.  You can also click on the RSS FEED button in the right-hand column to receive updates automatically through email.

In a column for Fast Company, Paul Worthington describes the impact that consumers can have on the image, reputation, and sales of your company’s products and services.  As Worthington explains, “Consider for a moment that the humble Amazon product review can nullify millions of dollars of ad spend, that a search for “best razor” on Google can route around all of Gillette’s best efforts to communicate the “best a man can get,” and that a “hate Comcast” group on Facebook has the power to drive a consumer straight into the arms of DirectTV.” 

Now, more than ever, the amplified internet soap box makes it essential that companies go out of their way to create “Raving Fans” – people who are so excited about your products and services that they tell others.  At the very least, you want to limit the number of people who become raving foes –same idea, but on the negative side. 

Here’s three ways to get started. 

1. Set a clear vision based on the customer experience.  What should the customer expect when he or she uses your product or service?
2. Be consistent.  Make sure that your product delivers on that promise every time.  Nothing creates a raving foe faster than inconsistent experiences.
3. Deliver +1%.  Give the customer a little more than they expected.  This is the secret of creating a raving fan.  What’s the extra touch that shows you care and makes people want to share their experience with others. 

The internet gives consumers a loud voice in the marketplace.  Make sure that it is a positive voice.  If you are looking for more ideas, check out Creating Devoted Customers from our Ignite newsletter archives.

Maintaining the status quo costs more than you think.  In fact, in the average organization it costs over $1,000,000 dollars a year according to The Ken Blanchard Companies new Cost of Doing Nothing Calculator.  The calculator which was just released on the company’s web site identifies three potential drains on performance—employee turnover, customer satisfaction, and employee productivity.   

Using formulas based on independent research the calculator helps executives identify what excessive employee turnover costs a company when good people with developed skills leave an organization, what dissatisfied customers cost a company, and how less than optimal employee productivity numbers translate into bottom line impact.   

The overall result?  A shocking $1,000, 000 dollars or more in most cases.   

Interested in finding out what your Cost of Doing Nothing might be?  You can check out the Cost of Doing Nothing Calculator for free at www.costofdoingnothing.com or by clicking here to access The Ken Blanchard Companies web site.