POPin Blog

Leadership Is Communication

Sandhill.com recently published an article on the Service Profit Chain. For those that missed it there you can check it out here today: One of the most fascinating management theories is known as the service-profit chain, which holds that profitable growth is closely linked to employee engagement. The service-profit chain was first proposed in a seminal 1994 paper titled Putting the Service-Profit Chain to Work by James Heskett and his colleagues at the Harvard Business School. Based on studies of service industries, the Harvard researchers found that profits and growth are stimulated primarily by customer loyalty, and customer loyalty is a direct result of employee engagement. Think of it this way: Engaged employees are satisfied employees. Employee satisfaction drives employee retention which increases employee productivity, which in turn drives service value. With service value comes customer satisfaction, leading to customer loyalty. Over time, customer loyalty drives greater profits and growth. Put simply, engaged employees create loyal customers who generate increased profits. Based on these direct chain links, it’s clear that successful leadership depends on employee engagement. To truly engage employees, managers must first offer a clear vision of where they want the team to go. But vision alone is not enough. Leaders must also articulate their vision clearly and persuasively. And they must demonstrate consistent behaviors in their daily activities. In other words, leadership is all about communication, not only in how one speaks and writes but also in how one acts and behaves. Effective communication is a skill that must be nurtured and developed. Many managers downplay the importance of communication because they consider it to be a “soft” skill that can’t be measured. They fail to recognize that communication is perhaps the most valuable tool managers have to drive organizational performance. After all, what could be more important than giving people the information and instructions they need to succeed? Tackling this problem involves the use of appropriate communication channels. New crowdsourcing software can help managers identify organizational concerns. Mobile crowdsourcing apps allow employees to vote on shared priorities and solve problems together. In this way, workers feel they have more of a say in decision-making, rather than just taking orders from the boss. In addition, business collaboration tools can increase buy-in by aligning the team around shared solutions. Effective communications have a powerful impact on employee morale and engagement. New software platforms provide a framework to increase communications that align personal and organizational objectives to unleash the full power of your people. To achieve the benefits of a service-profit chain, leaders should emphasize the importance of effective communications for engagement. This includes regularly holding direct communications with employees to understand their concerns. The main takeaway here is that leaders who focus on employee engagement can position their companies for more profitable growth, which ultimately is the main goal of shareholders too. Building engagement requires strong communications. The service-value chain model shows that leaders who communicate well can align the best interests of all stakeholders – including customers, employees, managers and investors – so that everybody wins.