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Lean Drives Engagement and Engagement Drives Retail Sales

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Numerous studies of buyer behavior have shown conclusively that there is a very strong correlation between employee engagement and customer engagement. Here are six steps that a company can take to drive engagement and increase productivity and profitability.
What drove the dehumanization of work that occurred early in the Twentieth Century? Legions of experts developed work processes with little or no regard for individual workers' insights and creativity. The result was "experts know, managers and supervisors tell, and workers do." The early twentieth century mass production operations based on this approach worked, but were also self-limiting as they created dehumanized workplaces, filled with workers who took little pride in craftsmanship.
Lean thinking and Lean work processes can transform "mass production" workplaces into environments where employees take high degrees of pride in the work they do. They are also workplaces with high degrees of employee engagement. When this happens, the payback to the company is significant. Companies with the highest percentage of engaged employees increased operating income 19% and earnings per share 28%, year-to-year. During the same time frame, companies with less engaged employees experienced declines of 33% year-to-year and 11% in earnings. Here are six steps that a company can take to drive engagement and increase productivity and profitability.
Duration: 13:09 Audio MP3
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Transcript

Last week's podcast on the use of Lean work processes to drive retail sales concluded with a description of a delightful, sales-building encounter I had with a retail store employee whose behavior I described as being evidence that she was having a "whooshing" experience. For those of you who may have missed last week's podcast, the term "whooshing" comes from a widely acclaimed book just written by Sean Kelley of Harvard University and Herbert Dreyfus of the University of California - Berkeley, entitled "All Things Shining."

In their very provocative and insightful examination of the ways in which human beings find meaning in their lives, Kelley and Dreyfus, observe that one of the most crucial characteristics of work, pride in individual craftsmanship, is missing in almost all twenty-first century workplaces. Unlike, for example, a nineteenth-century wheelwright who would take great personal pride in the quality of his product, most twenty-first century work is, in effect, dehumanized.

What drove the dehumanization of work that occurred early in the Twentieth Century? Frederick Taylor's theories of scientific management did much to dehumanize work. Taylor's thinking regarding the ability of workers comes across very clearly in this statement he made before a congressional committee, "I can say, without the slightest hesitation, that the science of handling pig-iron is so great that the man who is physically able to handle pig-iron and sufficiently stupid to choose this for his occupation is rarely able to comprehend the science of handling pig-iron."

Taylor's followers used legions of experts to develop work processes into which workers could be inserted with little or no regard for their individual insights and creativity. It was assumed that workers were too stupid to think of ways to improve work processes. Given this view of the ability of line workers, Taylor's world - and the world of mass production - operated on the basis of these ground rules: "experts know, managers and supervisors tell, and workers do."

The fact that these assumptions are perfectly tailored to the creation of a dehumanized workplace, filled with workers with little pride in craftsmanship and, as a result, little to no engagement in the work they were doing seemed to elude the practitioners of this dehumanizing philosophy of work and management. In "All Things Shining," Kelley and Dreyfus comment on the impact of this mindset: "One cannot expect every moment of one's existence to be a sacred celebration of meaning and worth. But to endure the absence is one thing, to embrace it another. If we are to be human beings at all, we must distinguish ourselves from others; there must be moments when we rise up out of the generic and banal and into the particular and skillfully engaged."

In my personal experience as a Lean consultant, I've seen dramatic evidence of the impact of Lean on the thinking and acting of employees. I'll never forget an encounter I had with a line worker in a plant that manufactured parts for the auto industry. Following a team meeting during which we were discussing ways of improving work processes, he told me with tears in his eyes that it was in this meeting that for the first time in twenty-five years with the company he had been asked the question, "What do you think?" What an incredible waste of this individual's knowledge and creativity! And what a loss to his company that their management practices drove this intelligent human being into a state of disengagement from work.

Back to Kelley's and Dreyfus' observation that "there must be moments when we rise up out of the generic and banal and into the particular and skillfully engaged;" let's consider again just why employee engagement is so important - and such an absolutely critical component of any retail organization's drive to stay competitive in its marketplace.

A study of 90,000 workers in 18 countries conducted by Towers Perrin on the impact of employee engagement states the following: "firms with the highest percentage of engaged employees collectively increased operating income 19% and earnings per share 28% year-to-year." Companies with employees who were less engaged experienced operating income declines of 33% year-to-year and 11% in earnings." Their study also states, "It's impossible to overstate the importance of an engaged workforce on a company's bottom line. The study demonstrates that, at a time when companies are looking for every source of competitive advantage, the workforce itself represents the largest reservoir of untapped potential."

Finally, studies by The Allegiance Group have shown that there is a strong relationship between employee engagement and customer engagement, a phenomenon that Allegiance refers to as the "Spillover Effect." A report on a study conducted by the Gallup organization entitled Manage your Human Sigma, published in the Harvard Business Review in 2005, shows conclusively that those companies that perform best financially are companies with very high levels of both employee and customer engagement.

Separate from any studies, you and I know from experience that when we encounter engaged retail store employees who provide us with buying experiences that are so good they are indelible, that we're much more loyal to - that is engaged in - the companies for whom they work.

Lean beliefs and Lean work processes enable employees to "rise out of the generic and into the particular and skillfully engaged." By doing this they have given us the ability to greatly increase the productivity and profitability of twenty-first century workplaces, of all types, definitely including retail work environments.

As reflected in the title of this podcast: Lean drives engagement and engagement drives retail sales.

Knowing this, how can your work environment be transformed into one that drives high levels of both employee and customer engagement? I'd suggest that this is a good list of the basics that need to happen:

  1. All of your employees need to believe what Henry Ford said 90 years ago, "It's not the employer who pays the wages - the employer only handles the money. It's the customer who pays the wages."
  2. Your managers and supervisors need to understand, they need to believe, and they need to know how to act upon, this basic truth, the most important employees are those whose work directly impacts the customer and the role of all other managers and supervisors is to support their work. I recommend Toyota's "servant leadership" model, discussed in an earlier podcast, as a good way of getting this point across.
  3. Your managers and supervisors need to practice "genchi gembutsu," being where the action is, and they need to participate in the action. By doing "front line" work, managers and supervisors send a strong signal to all employees that says "I can do the work I'm asking you to do."
  4. Your managers and supervisors need to use the "standing in a circle" exercise described in earlier podcasts, an exercise that will give them insights into ways to improve performance that they probably wouldn't have otherwise been aware of.
  5. All employees need to be continually asked "What do you think?" and their insights into ways to improve work processes collected, evaluated, acted upon, and recognized. The IdeaBoard also described in earlier podcasts is, in my experience, a tremendously effective tool to use to really drive employee engagement of this sort.
  6. Supervisors and managers need to know what kinds of specific behaviors drive the creation of indelible impressions and they need to both model these kind of behaviors themselves as well as reward and recognize your retail sales associates when they spot them exhibiting these behaviors.

I began this series of podcasts on the ways in which Lean thinking and Lean work processes could dramatically improve retail sales and profitability with a description of an experience my wife, Dolores, and I had that really illustrates, in a very dramatic way, I believe, the look of employee engagement and the way in which it drives indelible impressions. I'd like to end this series of podcasts with the same story.

About a year ago, my wife, Dolores, and I drove up to a local grocery store a couple minutes after seven in the evening to buy some flowers for a dinner party we were having the next day. Dolores walked up to the door, tried to open it and found it locked. The store manager saw her, opened the door, and asked, "What is it you want? We closed at seven." Dolores replied, "Oh, we got here just a little bit too late. We wanted flowers for our dinner party." The manager replied, "Our registers are locked for the night. Come in and pick out the flowers you would have gotten. They're on us - and they'll look great on your dinner table."

I'm convinced that this absolutely terrific demonstration of how to drive customer loyalty was, for this manager, a "whooshing" moment. I'm convinced that the smile Dolores saw on his face was a result of him thinking, "Doing something this close to perfect feels just great. And it's really helping my store." I have to confess that it also felt great to Dolores, the customer. We'll be back and we'll spend more money in this store. Whooshes capture customers. This one of captured us.

We can partner with you in making whooshes happen on your sales floor. We can partner with you in driving on your sales floor the kind of indelible impressions that strengthen customer loyalty and build sales. Your company can benefit right now from the power of Lean thinking and Lean work processes. We can provide training and consulting services that will make this happen. Let's talk soon. Call me, George Friesen, at 314-303-0612. Have a good day and let's get together soon to put the power of Lean to work for you. Why wait for increased profits? Now's the time to act.