Ten Years on From the Service Profit Chain

How different would your organization be if you perceived customers and employees as owners? Employees as owners may not at first glance appear radical. Organizations use share ownership to engage employees by giving them a sense of ownership. But, this is a different form of ownership we are talking about here.

It’s ten years since the publication of The Service Profit Chain, the book that arose out of the Harvard Business School research of James Heskett, Earl Sasser and colleagues into the connection between employee satisfaction, customer satisfaction and profit.

Now known in its latest incarnation as The Value Profit Chain, the Harvard work essentially showed that happy employees lead to happy customers who come back repeatedly, becoming loyal and generating higher profits.

The US retailer Sears was one of the Harvard case studies that showed how an increase in employee satisfaction acts as a precursor to a measurable increase in customer satisfaction and then in profit. As we all know, the link between satisfaction and profit is a tenuous one, however, only becoming noticeable at highly satisfied levels.

We can translate the findings into customer experience terms: you need to create a compelling employee experience before your employees can create a compelling customer experience. Sir John Sainsbury, of the Sainsbury supermarket chain family, neatly summed up the learning point in five short words last century, decades before the Service Profit Chain work at Harvard gave us the academic backing to support his words:

“They serve like we lead”, he said.

There’s more on the ten year anniversary of the book over on the Harvard Business School website in a Q & A with Jim Heskett. In the interview, Heskett explains his latest ideas about customers and employees as owners. He also mentions our own Joe Wheeler, smith+co senior partner. Joe has great depth of knowledge and experience in how to put the Service Profit Chain to work, and we apply that to our customer experience work with client companies.

Posted by
Shaun Smith
On behalf of
Smith+co