More Than Just the Right Thing to Do

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Increasingly, companies are realizing that taking care of their employees as

people is not just the right thing to do, it’s also good for business. In the

past decade, an overwhelming body of evidence has accumulated showing

a strong connection between treating people right and business profitability.

James Heskett, Earl Sasser, and Leonard Schlesinger, in their book, The

Service-Profit Chain, persuasively diagrammed the links in the chain that

leads from a starting point of internal quality of work life, to employee

productivity, loyalty, and satisfaction, to quality customer service, to customer

satisfaction, to customer loyalty, ultimately resulting in greater revenues

and profits (see Figure 9-1).16

In his book, Treat People Right! How Organizations and Individuals Can

Propel Each Other into a Virtuous Spiral of Success, Edward Lawler presents

evidence strongly supporting the logic of these links, but also makes an

astute observation: ‘‘At the core of many people’s concern about the wisdom

of treating people right is the belief that there is an irreconcilable

conflict between what is good for the business and what is good for employees.’’

Some business leaders have been reluctant to embrace the idea that

benevolent people-management practices can be a driver of profits. They

know that treating people well is a good thing, but also believe that nice

guys finish last, that the toughest and meanest survive, and that if employees

Figure 9-1.

Links in the service–profit chain.

Employee

Satisfaction

External Service

Value

Customer

Satisfaction

Customer

Loyalty

Revenue

Growth

Profitability

Internal Quality

of Work Life

Employee

Satisfaction

Employee

Productivity

don’t like it, they can leave. I once worked at a company where the vice

president of manufacturing, when asked if he was stressed, responded, ‘‘I

don’t get stress, I give stress.’’ For such individuals, caring for people as a

business strategy seems weak and soft-headed.

There is a fast-growing information systems company that once made

Fortune’s top 100 employers list, but fell off it largely because of its demand

that employees work 60 to 80 hours per week. There seems to be no

shortage of young professionals who are attracted to working those hours

in exchange for rapid advancement and good pay. A woman who worked

there told me that, when she told this company she wanted to work parttime,

the employment representative responded, ‘‘a part-time job in this

company is 40 hours per week.’’ In spite of this, young, talented professionals

continue to be drawn to this company, attracted by the fast-track

experience. They generally stay a few years and move on. The company

has a good product and is profitable. But the question remains—are they

building the kind of employment brand that will serve and sustain their

business interests long-term?