Personnel-based Measures for Customer Orientation

Satisfied Employees as the Basis for Customer Orientation

Countless studies verify that only universal internal employee orientation within the company can lead to lasting external customer orientation, and thus to a competitive advantage.

The basis is the implementation of a customer-oriented company structure in the minds of the employees. However, this is not achieved merely by anchoring customer orientation in the goals and in the guiding principles of the company. This is of course a good first step.

Still, experience shows that this remains ineffective when the employees are not really convinced, and do not really ‘live’ customer orientation. (Homburg & Werner, 1998, p. 174).

To what extent this is the case can be measured by how many employees can generate interest in the wishes of the customers—in other words. How friendly are the employees to the customers?

In businesses with personal customer contact like the financial services industry or the supermarket industry, successful customer orientation is only possible as a result of the permanent performance efficiency and commitment of the employees.

Between employee orientation on the one hand and customer orientation on the other, the following connection can be derived:

• Employees who are satisfied with the quality of internal cooperation, and who are satisfactorily supported in their customer-oriented tasks, are more likely to be able to generate interest in the external quality being presented to the customer.
  
  
  Successful internal cooperation can be recognized by answering in the affirmative to the following questions:
  – How well do different departments cooperate?
  – Is customer orientation on the part of the management encouraged and supported?
  – In what way are the employees given the opportunity to include themselves and their readiness to serve in the company?
• Employees who are rewarded for high-quality work with incentives (praise from customers and management, bonus pay due to customer satisfaction, customer-oriented remuneration, etc.) are more motivated. This recognition affords the employees with an experience of success, which in turn enhances employee satisfaction and the willingness to commit.

Customer-oriented Remuneration System

The realization that employees can be guided toward certain behavior, in that their purchasing power is made dependent on such behavior, is also playing an increasingly important role in the area of customer orientation.

Traditional systems of remuneration are in the case only applicable in a limited way. They are often based on ‘tougher’ criteria like sales or profit, and can, for example, lead to serious consequences for employees with strong customer orientation (Homburg & Werner, 1998, S. 172):

• The employees concentrate on the attractive, star or big profit customers. Customers with a lot of potential but with less promise of immediate profit are given less attention.
• In striving to make as many sales as quickly as possible, less consideration is given to the nature of the customer relationship and to the long-term profitability of the customer. The employee only reserves a small amount of time for the customer. Also customers who, upon more careful inspection, would be seen to be uninteresting for the company, are courted.

On the other hand, what is more potentially successful in the area of customer orientation is remuneration, which brings in more qualitative aspects of customer orientation.

This has the motivating effect of making it once again clear to the employees that in the end it is the customer who pays them. A suitable measure of these qualitative aspects hinges on customer satisfaction.

The demands that such a customer-oriented remuneration system has to fulfill are listed below (Homburg & Werner, 1998, S. 201):

• Influence: Within the pay cycle the employee has to have had measurable influence on customer satisfaction.
• Accountability: There needs to be a correspondence between the system of reference of the calculated customer satisfaction value, and the organizational unit to be assessed. For example, the sales force should be judged on the overall customer satisfaction and relationship profitability rather than on a volume basis.
• Motivational Effect: The remuneration system must be designed such that it succeeds in providing additional incentives for desirable behavior, and especially in assuring a balanced incentive structure.
• Flexibility: The remuneration system must be able to adapt to changing organizational goals and employee behavior stemming from prevailing circumstances.

• Transparence: The remuneration system needs to be transparent and comprehensible.
• Acceptance: The elements of the remuneration system have to be accepted and thought of as fair and reliable by all participants.

In addition, there is the decisive condition that this remuneration system, based on the measuring of customer satisfaction, be carried out systematically, regularly, and with discrimination.

The implementing of a customer-oriented remuneration system is a sensitive and critical undertaking, even despite observing the above-mentioned requirements, which such a system needs to fulfill.

Many employees are skeptical at first, because they fear that they will end up worse off in a system of compensation that rests in part or to a large extent on the satisfaction of customers.

It is therefore important to involve the employee. It is also very important that superiors take on the task of motivating and encouraging the employees by providing them with non-monetary incentives like praise, recognition, or through giving them additional responsibility (Homburg & Werner, 1998, S. 172).

Customer-oriented Selection of Personnel, Assessment, and Development

While the professional knowledge and abilities of applicants can be thoroughly checked during the course of the selection process by reviewing the résumé, to come up with statements about behavior of future employees, structured interviews and assessment centers are good methods.

It is of central importance in a customer-oriented organization to analyze aspects like team orientation, customer orientation, quality awareness and communicative qualities of potential employees.

In order to check these factors when preparing for a job interview, specific questions should be developed which seek to reveal what kind of behavior the person would display in different situations:

• Customer orientation: How did you handle the last customer complaint you received?
• Team orientation: Describe some positive and negative experiences you had during the course of your last team project.

The goal should be to get the applicants to make statements that shed light on real situations or tasks, and which clearly reveal their behavior. The so described behavior can then be assessed together with the professional knowledge and skills of the applicant (Gresch, 1997, S. 10).

Flexibility of Employees in Dealings with Customers

In order for employees to behave appropriately and be able to react to individual customer wishes, a certain measure of independent, responsible action is a prerequisite.

The goal here is for employees to be capable of making decisions right on the spot. This way, customer problems are solved quickly, and as much as possible, customer satisfaction is achieved. This thoughts form the basis of the following considerations (Homburg & Werner, 1998, pp. 208 – 209):

• Between the company, the superiors, and employees, a basis of trustOpens in new window needs to be achieved, which encourages readiness to make efforts and to take responsibility. This includes a certain amount of tolerance for error.
• The employees must be given the opportunity for independent and responsible action. A too all-embracing control should, where possible, be avoided.
• Companies and superiors should help enable employees to independently and responsibly fulfill their tasks. To that end, focused employee training needs to be carried out.
• Employees need to be prepared to accept responsibility, and superiors need to learn to let go of responsibility.