Wanna Make Money? First Make Your Employees Happy
Posted: December 15, 2010, 6:20 p.m., EDT
As mentioned in a prior blog, Fritz Wood, CPA*, CFP*, recently gave a presentation in King of Prussia, Penn., on “Surviving and thriving in this economy.”
He mentioned the “service-profit chain” concept, created by the Harvard business school. This chain links excellent service to profit. Fritz Wood refers those who think profit is a dirty word to a quote by Jim Collins, author of the excellent best seller book “Built to last”:
“Profitability is a necessary condition for existence and a means to more important ends, but it is not the end itself…
Profit is like oxygen, food, water, and blood for the body. They are not the point of life, but without them, there is no life.”
But back to our service-profit chain. It looks like an inverted pyramid:
Great client service
What does it all mean?
Let's pretend that employees of hospital A are miserable. I know, this hardly ever happens, but let's pretend, just to make a point. Employee unhappiness will likely lead to high turnover.
Employees may leave the hospital before they are fully trained and become valuable to the practice. Untrained staff members with bad attitudes will do little to educate clients and make them happy. Therefore clients, unhappy with the abysmal service they receive, may very well leave the hospital A to check out hospital B. This will clearly affect the bottom line of hospital A.
Moral of the story: unhappy employees lead to unhappy clients which lead to loss of revenue.
On the opposite, the leaders at hospital B strive to keep their employees happy. Respect, education, team work are not just words, they have become a reality. This happy environment encourages employees to stay onboard for years, if not decades.
Therefore, staff members become knowledgeable and are eager to educate and please pet owners. Going the extra mile is not a chore or a requirement, it’s a way of life. Clients, overwhelmed by the outstanding client service they receive, logically tend to stay around for years, if not decades. Loyal clients are obviously a good thing for the health of their pets… and the financial health of the clinic.
Hopefully this little demonstration leads to one obvious conclusion: to increase profits, make sure that your employees are happy.
* Certified Public Accountant and Certified Financial Planner