Give it five minutes

Today I came across a post by Jason Fried (37Signals.com) on their Signal Vs Noise blog that was an eye opener for me. You can read the post here.

Do read the wonderfully written post if you work in a team and effective communication is an important skill to succeed (which covers almost all roles of the modern organization).

Hope you learn as much as I’ve learned from the post.

Why promoting your people is a bad idea

It is that time of the year, when most of the organizations are conducting their annual performance review and hand out the rewards (promotions, bonuses, share options, etc). Employee promotions play a very important part in the entire cycle. This is how, companies recognize and reward high performers. This is how people move up the ladder in organizations.

Early in the 20th century, most of the labor was physical and repetitive and was individual in nature. It was in this era that rewarding individual performance was a way to improve organizational productivity.

Then came an era where team work started to become an important factor for success. Now, we live in an era where, it is a challenge to even keep up with the pace of change around us. The work is getting more and more intellectual and needs high levels of team work. Still, we are stuck with the rewards policies which reward individual performances.

In today’s environment, rewarding individual performance by promoting your people has become a systemic issue within organizations causing tremendous amounts of stress, reducing organizational productivity and lowering employee satisfaction.

This environment is not conducive for high performers You can only find high performers scattered over the different teams surrounded by average  or sub-average performers.  It is very rare to find a team comprising mostly of high performers. This is directly as a result of the rewards and recognition.

Recognizing individual performance by promoting your people is not a good idea because:

1. Individual Promotions create a culture of individual high performance when organizations are striving to create high performing teams.
2. Promotions create organizational bureaucracy. In order to continue to offer promotions, organizational structures are modeled to have multiple layers and with this comes bureaucracy.
3. Promotions could even kill organizations. We have known organizations that go bust either because they did not read the market signals or could not change fast enough with the market changes. This could be due to the fact that with so many layers in the middle, the top management sometimes loses touch of reality. Also, this layers of middle management make it really difficult for an organization to change course quickly as each layer of management is trying to protect its own turf.
4. Promotions hurt the bottom-line in more ways than we can imagine. They result in increased costs due to a long and complex budgetary cycle. It is known that once a budget has been created and approved, most managers find it imperative to go out and spend the budget (even if they could get by without spending it). This is to ensure that they continue to get the budget for the next year.
5. Promotions within a team are not fair to the high performers. I’ve seen this in almost every organization that I’ve worked for. Promotions are announced in each team and usually there are limitations on how many people a manager can promote in a year. So, if you happen to be working in a large team, with a lot of average performers, your chance of getting promotions and better rewards are much higher than if you are in a high performing small teams. This when it has already been proven that smaller teams usually tend to out-perform large teams in all dimensions. So, a high performer in a high performing team is penalized as his manager can’t recognize the performances of all the team members.

So, what should organizations do?

In my opinion, organizations should stop promoting individuals and start promoting teams. Rewards and recognitions should be aligned to team performance only. The best performing teams should get the most rewarded.

Take the analogy of any team sports. Its always the team that wins and not an individual. The team can still pick an individual as its star performer but the rewards and recognition is always for the entire team.The entire team gets promoted instead of an individual.

Recognizing & rewarding high performing teams is a good idea because:

• This will create pressure on all the individuals to pull their weight for team success. If they are not doing their bit and the team suffers, the other members of the team will either fill-in of him or replace him.
• Everyone in the team is only focused on increasing the performance of the team as their reward is linked to the team performing well.
• This will eliminate the need for creating artificial org levels within the organizations there by enabling them to stay lean, which in-turn enables the organization respond to change much faster.

This is a radical approach to rewards and recognition, but one whose time has come.

Whether you like this approach or not, please do let me know by leaving your comments. I would be more than eager to know your thoughts and connect.

 

My adventures in buying a dining table and lessons for retailers

Recently, me and my wife decided that it was time to buy a dining table.

My wife always wanted to buy a 6 seater wooden dining table. I wanted chairs without any cushions. We had a budget in mind (INR 20K).

Now, if you have bought a dining table in Bangalore anytime in the recent past, you would know that it is near to impossible to get a dining table which met all the three conditions above.

Still, we visited a lot of stores just like other married couples. After having seen what’s on offer almost in all the shops that we could find, we finally had to compromise and decide on a 4 seater dining table that met our expectations all but in the number of seats. We debated but decided to go for it.

The salesman saw what we were doing and came over. He explained a bit more about this particular piece of furniture. He said that the table and chair were made of solid Sheesham wood and went on to explain the properties of Sheesham wood and how long the piece of furniture would last. The price – INR19999/- (You see, the piece was on a discount sale. Original price was at least about 40% more).

We finally decided to buy the piece. As a global citizen of the 21st century, I took out my Platinum Credit Card and got it swiped for the said amount. We felt really happy! We were excited! We were told that the furniture will be delivered in the next few days as they need to get it from the warehouse.

So, we came back home (after having a pizza party at Pizza Hut).

Next day, my wife wanted me to go out and check out the accessories that we will need to go with the dining table. So, I went to a shop which also sells furniture accessories.

As soon as I entered this shop, I was in for a surprise. The dining table that I had bought (same brand, same piece) just a day before, was here available for the same price (but with 6 chairs). When I spoke to the sales man, he also mentioned that the wood is not Sheesham but was Mango. The life of the furniture doesn’t change drastically due to this simple fact. This store was the primary manufacturer and it had a shop-in-shop at the store where I had bought the furniture from.

Now, I was really upset about this. I felt cheated! However, I wanted to know this was a mistake. I hoped this was a mistake. So, I went to the store and told them that the same piece of furniture was available at the other store at the same price with 2 additional chairs and that the case of the kind of wood used.

I had hoped that the store would check this out with their supplier (which owns the other store) and deliver the furniture with 6 chairs and the matter would end there.

Again, I was in for a surprise. Firstly, the salesman got really defensive. He straight ahead came out and said that if I am getting a better price at a different store, then I should go ahead and buy it from there instead. He denied having given the wrong information about the wood.

I decided that it was time to speak to someone senior at the store. I asked to speak to the store manager.

I was then introduced to the head of the furniture section. Let’s call him Shyam (name changed). He was not willing to accept that there could be a difference in the price between their store and the other store. Finally, I convinced him to talk to his supplier and check if there was any difference in price and if they could give me the same price. He said that he will check with the supplier and call me back the next day.

I waited for the call till evening. I finally went to the store on my way back. I was told that Shyam was on his weekly off and that he will be in office the next day. I got the folks from the customer service desk to call him and check on the status. He said that he was unable to check as it was his weekly off and that he will call me the next day for sure.

The next day passed. I did not get the call. I called the store but was unable to get through to Shyam via their store phone number. Again, I visited the store on my way back home. He said that he had checked with his supplier and they had assured him that there was no price differential. By then, I was loosing patience and decided to cancel my order. I asked them to cancel my order. I was told that the order will be cancelled and they will issue me a cheque for the amount. I will need to come back to collect the cheque the next day as the finance team had already left.

I did not want to go back to the store again and waste a few more hours in the process. So, I instead asked them to cancel the credit card transaction and I would not have to go back to their store. They checked internally and agreed to do so the next day.

I got an email from the accounts team addressed to their bank asking them to cancel that particular transaction.

I went to the furniture manufacturers store and found that the same piece was still available for the same price. I decided to wait for the re-fund before placing an order with them.

The same evening, I got a call from Shyam. He said that they are now willing to offer me the same price that the manufacturer was quoting and wanted to know if I would like to still take delivery. Since, I had invested so much time and effort with Shyam, I said that it was ok and that he could deliver. He asked me if I would like to pay fresh or would like to cancel the request to the bank. I said that I would pay fresh.

The same evening, I was in for another surprise. I got an email from their finance team asking the bank to stop the cancellation. I thought that we should let this go.

So, we waited for the furniture to be delivered. Three days passed with no news about when the furniture was going to be delivered. Now, I got really angry at the way the store was treating me.

I called Shyam and he said that he will ask the manufacturer to call me and confirm when he will deliver the furniture. I got a call the next day that they will deliver the furniture next day.

The furniture was delivered the next day evening. When I got home, I found that one of the chair was damaged. As it was already late in the evening, I sent an SMS to Shyam indicating so. I got an response saying that he shall get the same replaced as soon as possible.

Then, I did not hear back from Shyam for the next couple of days. I really got angry and visited the store on my way back home. I demanded to see the store manager and was introduced to him.

I narrated the entire story to him and asked him if this is how his store treates their customers. He tried to pacify me. Took me for a cup of coffee and spent sometime with me talking about different things. He said that he will take care of the replacement.

Since then, I got calls from the store continously keeping me updated on when the replacement will be made. Once it was done, I got another call asking if everything was well.

Finally, we had our dining table complete with all 6 chairs.

Now, there are a lot of things that the store did should have been avoided:

• The salesman needs to be trained better so that they know about their products and do not give out wrong information.
• The situation could have been handled as soon as it was brought to their notice. Instead of haggling with their supplier and the customer back and forth, they could have sent someone over to the store that I was referring to validate my claim. If true, they should have simply offered me the same price, close the sale and then deal with their supplier. Do not let the customer wait or suffer.
• Shyam knew that the next day was his off. He should not have committed to get back the next day. Clear communication was the key. It was missing in the entire interaction.
• Mistakes happen. One needs to own up to it, apologize and figure out a way to correct the mistake quickly. In such cases, speed matters.
• Also, when you’ve put your customer through such a process, go beyond what is expected. Replace the damaged chair and more. They could have provided a gift voucher to be used against my next purchase at the store. This would also increase the chance that I will shop there again and give them an opportunity to improve my shopping experience.
• The store had an opportunity to convert a bad experience into a wow experience multiple times in the entire interaction but missed it every time.
• The store could have thanked me (or rewarded me ;-)) for bringing the anomaly to their notice. There could have been other customers that the store would have lost due to this differential pricing. Also, this brought out the weakness in their supply chain which need to be corrected immediately to avoid any further issues.

The manufacturer made a mistake by having differential pricing at his store and other stores. This only leads to confusion and in this case, resulted in their customer (store) losing trust.

PS: I bought the furniture from Home Stop. The manufacturer was Mother Earth (Future Group)

And here we talk about the Future of retail –

This only goes on to tell how far this future is in India.

What the hell is RoE?

Today, I read the blog post by David Johnson titled – “Forget About RoI, start thinking about ROE”. The title intrigued me and I read his post.

Basically, he argues that it is time we started thinking about customer engagement in terms of Return on Experience rather than the traditional RoI.

His idea is to find ways to “Enchant” a few customers while dealing with them, thus providing enough fodder for them to start talking about their great experience online (and offline).

I think this is a great idea for any organization that serves consumers.

He argues that if an organization starts to provide exceptional service to all their customers, all the time, the bar is raised and the customers start expecting such a service all the time. Hence, the company should strive to provide such exceptional service sporadically, enough to enchant a few customers everyday. This will continue to make the customer who recieve such service loyal and also enable conversations about your organization, which in-turn could lead to lower customer acquisition cost.

Unselling – To sell more, stop selling

Today, I read the book – “Unselling – Sell less to win more” by Peter Bourke.

In the book, he argues that selling does not work anymore as people get defensive whenever someone tries to sell something to them.

He also goes on to argue that the alternative is to “Unsell”.  He also provides examples of situations where you can use the concept of unselling principles.

All-in-all, I think that the book is an interesting read, if only to get some interesting situational ideas.

I had also written a blog post about the same concept in Dec 2010 titled – “To sell more, stop selling”

I would think that this book is an old wine, re-packaged, re-branded in a new bottle.

I should admit, his analogy of Unselling to the Uncola was very interesting. I did some search about the Uncola campaign and found it extremely interesting case of product differentiation.

Some of the Uncola ads (for 7Up) that I liked are as below:

 

 

Hope you enjoyed the commercials as much as I did (and learnt a thing or two). That, I think is material for another post.

 

 

 

 

Very interesting piece on how Amazon is able to capitalize on the launch of iPad 3 by offering to buy old iPads at price more than any other vendor does.

Best Customer Service Story in the World!

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via Best Customer Service Story in the World!.

This is an interesting story of a barber who goes the extra few miles in taking care of his customer. I think there is a lesson or two for us all from this story.

1. Small acts of kindness on a daily basis are more important in keeping your customers happy, than anything else you could do.
2. Customer service does not only include doing things that your customers can see and experience. There are other things that you could do which they may not see but will affect them and their lives in a positive way.
3. Genuine concern about your customer is the most important trait a customer service professional could have. So, it’s so important to hire and retain such people.

I pray for the well being of the old man helped by Joe and wish all success to Joe, for he comes as a great person!