All organizations have three groups of people that they need to keep happy—customers, employees, and shareholders. It can be a real juggling act at times trying to balance the needs and desires of all three groups—especially when important decisions need to be made. How does your company rank order these three groups of stakeholders?
At Southwest Airlines, (NYSE stock symbol LUV) the rank ordering may surprise you. Employees are first, Customers are Second, and Shareholders are third. The reasoning behind this is based on the Golden Rule—do unto others as you would have done unto you.
Treat your people right, and good things will happen
As Colleen Barrett, president emeritus at Southwest, explains in her new book, Lead with LUV: A Different Way to Create Real Success, “When we talk to our People, we proudly draw a pyramid on the chalkboard and tell them: You are at the top of the pyramid. You are the most important person to us. You are our most important Customer in terms of priority.”
As a result, managers at Southwest are expected to spend approximately 80 percent of their time treating employees with Golden Rule behavior and trying to make sure that employees have an enjoyable work environment where they feel good about what they do, about themselves, and about their position within the company.
But this managerial focus on employees also sets an expectation that employees will demonstrate the same behavior with customers. As Barrett goes on to explain: “But if I do that, what I want in exchange is for you to do the same thing by offering our Passengers—who are our second Customer in terms of priority—the same kind of warmth, caring, and fun spirit.”
At Southwest, the belief is that if leaders take care of their people, then their people will take care of their customers. This in turn will create a loyal customer base which comes back often and recommends Southwest to other travelers which pleases the third Customer—shareholders.
What’s your ranking?
At Southwest, leaders put their employees first, their customers second, and their shareholders third. It’s a winning formula that has resulted in superior customer satisfaction ratings and financial performance in a notoriously competitive industry. How does your top management prioritize these three groups of people? Could your company benefit by creating a high support, high expectations “Golden Rule” environment for employees?
PS: To learn more about the benefits of putting people first, be sure to check out Barrett’s new book (coauthored with Ken Blanchard) Lead with LUV: A Different Way to Create Real Success. Also check out a free webinar she is conducting together with Ken Blanchard on January 26. Over 1,400 people have registered for this complimentary event, but online seats are still available.
It is important for companies to put employees first so that they will put customers first. Companies like Starbucks do this as well and it has worked well for them as well.
I’ve heard that IBM, at their very best historically speaking, put customers first, employees second and shareholders third.
IBM also has great history and great results in the market historically if not recently.
That said, it seems that the order of the first two priorities don’t matter as much as making sure the shareholders are the last priority.
Putting shareholders first or second results is short term thinking, crappy products, bad customer service, etc.,… – because they all ‘cost’ the shareholders money in the short term. It means that either employees or customers come last. It’s supply side economics at it’s worst and look what that has done to the economy over the last 30 years.
Also over the last 30 years of catering to the shareholder first has resulted in the coining of terms like “Human Resources” and “Human Capitol”. How DE-humanizing can one get? “Customers” doesn’t really exist in practice, people are only considered “consumers” with some sort of divine obligation to purchase goods – as if that’s the only reason to exist. Result: Low moral, resentment and zero motivation from the employees. Dissatisfaction from and a bad reputation in the eyes of customers.
How’s that doing for you compared to Southwest and IBM mr(s). shareholder?
It seems to me that as long as you put those that have a direct stake in the game first (customers, employees – not including execs or the board), you do ok LONG TERM. The alternative looks good on a 3 month spreadsheet but not so much long term.
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Employees first to put customers first. This clearly states that customers r always first.
Who pays for the business ? without customers neither of the two i.e. shareholders and employees survives.
Both survives on customers’ money.