Blinded by Company Loyalty

I recently did some work for one of SA’s top retailers on a senior management development programme. Many of the managers had been working in the company for twenty years and more, and most had literally started at the bottom, and risen steadily through the ranks.

The HR director briefed me for the training, and I also interviewed many managers, employees and customers in the business. Quite frankly, the company was doing really poorly. Sales were down from the previous decades, competitors were undercutting them on price and also beating them on service, their “loyalty programme” had cost more than a billion rand to get going, and was quietly considered to be an expensive disaster. Customers’ and staff’s attitudes were, at best, indifferent.

But what hit me like a whack on the side of the head was when the HR director said to me, “Go easy on them, please. They don’t take well to criticism.”

I couldn’t believe my ears! Here was a company in some trouble, profits were down, with many unhappy stakeholders, and the senior management team didn’t want to hear negative comments about their company? It was obvious to me that complacency had caused many of their problems, and their rivals had taken advantage of that.

Of course, I didn’t let his comments take me away from my focus. After all, they paid me an obscene amount of money to help them, and I needed to share with them some home truths. But the HR director was right: When the delegates submitted their action assignment, (a project that was focused on making suggestions for improving the company’s customer loyalty and customer care in some meaningful way,) the quality was poor, and a few of them told me I had been too harsh on the company.

The complacency trap is one that many organisations fall into rather easily. It seems we are so busy with our priorities that we forget that our main priority should be to give customers what they want, and more. The resentment and resistance happened because they thought I was setting fire to their platform, and I would then climb into a helicopter and leave.

Why does complacency happen? I think there are probably a handful of reasons:

  • There is no visible and dramatic crisis that immediately endangers the company – and my job. But holes in a boat will sink that boat, no matter what side they are on. It’s naïve to think that people who are critical of your business – particularly unhappy customers – do so because they are nasty. They don’t care about how hard it is to serve them, especially when they go elsewhere and have better experiences. Like the heirs of wealthy people, the managers in this business were living off past success and a good reputation, even while the company’s “wealth” was being eroded. (Of course it didn’t help that the business was displaying all the ostentatious signs of success, like really regular golf days, really plush offices, expensive art purchases, hiring private jets, and so on. The message is clear: “We are successful, we are rich, so don’t worry.”)
  • Standards of performance are old and are no challenge to achieve. Everyone can look good and successful. One delegate told me they can’t fire even poor performing employees because the unions are so powerful, and head office says they must be compassionate. Others shared how difficult it is to get things right, even as customers became increasingly more demanding and fussy. But they were completely mystified when I asked how their competitors managed to get it right.
  • The measures emphasised are all internal measures, and all goals are internal goals. Feedback is couched in diplomatic terms, because nobody wants to hurt the bosses’ feelings. Euphemisms are used to describe negative performance, and there are lots of patronising platitudes repeated as mantras over and over again. (“Take care of the company and the company will take care of you.”) Only activities are emphasised and celebrated – not results. And of course, everyone else is blamed for problems: other departments, customers, competitors, suppliers, the unions, even the government. One example: “My job was to interview 25 possible candidates for a new position. Unfortunately, the salary we offered was too low so we couldn’t find the right calibre of person.”
  • Crises are expected and then everyone climbs in to clean up the mess. Unfortunately, no-one asks how the crisis can be prevented from going wrong in the first place, nor what we did (or didn’t do,) that allowed this to happen in the first place.

How can this business – or any other business suffering from complacency – resolve these issues? It’s a hard question to answer, but I wouldn’t be buying their shares right now. Nevertheless, I think there are some good possibilities:

  • Stop the denial. Look out the window and see what is going on in your industry, and what’s happening with your customers. Listen to comments and criticisms from external people rather than become defensive.
  • Publicise failures and customer complaints, look at the lessons, and refuse to accept mediocrity. Expose all staff to unhappy customers, suppliers, shareholders and other stakeholders. Share frank and truthful information about customer loyalty, financial performance and other aspects of business, and trust employees to take care of them. Stop the “happy talk” that so many senior managers insist on sharing.
  • Immediately increase all standards of performance for every employee. Set high targets that cannot be achieved by doing business as usual. Reward those that achieve extraordinary performance, rather than everyone benefiting from the success of the few.
  • Eradicate and reject all obvious examples of corporate excess. The message must be clear: “We will celebrate when we are number one again.”

If your business looks like it’s going in the direction of complacency, you need to take urgent action. Have the courage to kill complacency – before it kills you.

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