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Creating Value—Whose Job Is It, Really?

Let me share a client experience with you.

A hospital system had a brilliant and focused CEO. One of his major projects was improving doctor satisfaction with the hospital; he wanted more patients in the beds. But as much as he drilled his staff on the need for doctor satisfaction and criticized his staff (who, in his mind, just couldn’t get the job right), doctor satisfaction remained low. Not only that, the morale of his staff was plummeting. He asked me for advice. Here’s what we did.

I asked this CEO to participate in a game of telephone, where people attempt to relay a message down a line by whispering it to the next person. Typically, each person makes a slight error, and the message emerges unrecognizable at the end. In my version, I asked each person to criticize the next person until it got to the CEO, whose job was then to turn to me as a “doctor” and be pleasant and engaging. After one round, the light bulb went on in the CEO’s head.

“I get it,” he said. “How I treat my people is how they tend to treat the doctors.”

He was absolutely right.

The lesson here is that leaders need to focus on where value comes from. Let me explain.

Where does “Value” come from?

Have you ever had an “a-ha” moment from reading something? A moment where the dots finally connected?  Most of us have.  I had one of those moments in the late ‘90s when I read the book The Service Profit Chain.

The key concept in this book is exactly what the title suggests: a chain reaction that traces profit and growth all the way back to the employees. Here’s how it works:

  • Profit and growth are stimulated by customer loyalty.
  • Loyalty is a direct result of customer satisfaction.
  • Customer satisfaction is influenced by the value of services provided.
  • The value of the services provided is created by engaged, loyal and productive employees.

Looking back at the CEO of the hospital, it’s clear that he had the model backwards; he was effectively trying to create a valuable service by focusing exclusively on the doctors. If he had focused instead on the source of value and addressed the morale of his workers directly, stopped being hypercritical, he would have been leading in a way that would have positively impacted customer satisfaction.

What does this mean for leaders?

Since reading The Service Profit Chain and realizing that valuable services start with engaged employees, this idea has been central to the way I lead and coach leaders. I take a holistic approach, and I call it Value Creation Leadership.

Value Creation Leadership is exactly what it sounds like: it’s a kind of leadership that focuses on the people responsible for creating value. Specifically, it’s leadership that fosters employee engagement, productivity and loyalty as well as an instinctive focus on customer satisfaction.

How simple employee appreciation can save the customer experience

A great example of Value Creation Leadership in action is something that happened with one of my clients, the CEO of a commercial restoration company, when he almost lost two valuable employees over a simple misunderstanding. Here’s what happened.

The two employees, Henry and Todd, were having some issues that were causing friction in their day-to-day work. They had brought their complaints to the CEO before, but the CEO dismissed the issues as “petty.” The problems didn’t go away, and Henry and Todd let another senior leader, Bill, know that they were seriously considering another job offer.

There’s an old saying that “problems seldom exist on the level at which they are expressed.” And thankfully, Bill understood that. When Bill began to look deeper he realized the root of the problem: Henry and Todd didn’t feel appreciated. They did excellent work, but they felt as if the CEO gave them nothing but criticism.

Bill explained this to the CEO and that there was a risk of losing Henry and Todd. The CEO came to me for tips on how to show appreciation. I gave him some pointers, and—thanks to a sincere effort on his part—he was able to show Henry and Todd that they were valued members of the company.

As a result of that simple gesture of appreciation, Henry and Todd decided not to leave, and customers still love them today.

If you’re a Leader, lead with appreciation.

It is important to understand where value is created. When the day-to-day work experience of your employees, the people who create value, is poor, research shows that it will likely have a negative impact on customer satisfaction. So, here’s the bottom line:

Employee experience = customer experience.

As a leader, you can impact the value your customers receive—and the profit satisfied customers produce—by taking actions that foster engaged and loyal employees.  One simple action, as we saw above, is just expressing appreciation. As Jim Rohn observed, “Success is nothing more than a few simple disciplines practiced every day.”


Are you ready to help your executives and managers maximize their leadership potential? I’m ready to start that conversation today. Let’s talk!

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