Friday, May 23, 2008

It's so easy, just look at Southwest and a few others.

There is no secret to running a business well. Many managers, academics and thinkers have identified them. It is well known that delivering an excellent product to consumers is one of the keys. Procter and Gamble realized this well over a century ago. In the case of a service industry, Jan Carlzon defined the "moment of truth" as that time when an employee has contact with a customer. Southwest Airlines has always believed that if you treat employees well, they will treat customers well. Fred Reichheld proved that customer loyalty is directly correlated to employee loyalty.

Since all of this is known and proven, why would the management of any company treat its employees badly? Employee theft, or "shrinkage," at Wal-Mart is higher than at Costco. Again and again we see that companies which treat employees well prosper as a result. While this is only one of many issues, it shows that management continues to make predictable and known mistakes.

Incidentally, Southwest is one of the only airlines which has consistently hedged against rising fuel costs even though increases in fuel prices have long been predicted.

1 comment:

Amy Madsen said...

Thanks for an interesting post. If any of your readers are interested in more from Fred Reichheld, here is a link to his Net Promoter blog: