How a business rewards its employees has a direct impact on the quality of customer service. Duncan Brown reveals how successful organisations motivate their staff to provide the best possible service

The next time you experience appalling customer service, get your own back by asking the offending pushy sales assistant or bored call centre agent how they are paid. Beneath all the business hype about customer delight and world class service, how an organisation rewards its employees proves whether it is really putting its money where its mouth is.
The services sector contributes an estimated 70% of European GDP growth. The fastest-growing areas of employment in the UK are all in customer service roles such as hairdressing and personal and healthcare services. The Department of Trade and Industry is therefore rightly concerned about our poor national reputation and performance in these sectors, and the need to move away from the low base pay/low skill model.
A number of studies, most notably at US retailer Sears, have revealed powerful relationships between how staff are managed, their level of satisfaction and the quality of service they deliver. A 10% increase in employee satisfaction was associated with a 2.5% increase in customer satisfaction and a 1% rise in sales. But what are the best ways to manage and reward staff to deliver high levels of customer service on the front line?
The Chartered Institute of Personnel and Development has studied the practices of 22 UK organisations, from charities and leisure centres to hotels, utilities, insurance and telecommunications companies and even public libraries. Five excelled according to our measures of customer service and satisfaction. A number of management and reward practices differentiated these organisations, which included Torfaen County Borough and Kent County Councils and Scottish Water, from some of their larger, better-known counterparts.
Despite the poor reputation of sales commission schemes, the five organisations use individual performance-related pay for customer-facing staff. But they all judge performance against customer satisfaction, not just productivity, targets. They also use team-based communications, reward and recognition schemes, regarding team working as a powerful lever to improve customer service.
Torfaen’s call centre, which won the Institute of Customer Services’ Frontline Team of the Year Award, presents a variety of internal cash and gift team recognition awards and holds regular team meetings. According to the council’s Gloria Evans: “Through their teams, all staff have input into our customer service plan, allowing them to take ownership of it. The weekly team meetings are an open communications process and all staff suggestions are considered.”
The level of lost calls in the council’s call centre has fallen from 66% to 4%, and the level of staff turnover has declined almost to zero.
Similarly, at student accomodation provider Unite Group, staff feel fairly treated and rewarded, as well as empowered in the effort to deliver excellent service. All have bonus targets linked to customer satisfaction. Unite’s Shane Spiers says: “We used to have different holiday allowances for managers, but we realised that as everyone is working hard to improve customer performance, we should all have the same benefits.”
The high performers also universally provided company pension plans.
Understanding the relationship between meeting employees’ and customers’ needs also helps to explain the greater use of family-friendly and work/life balance policies by the high performing organisations. Three-quarters of the 580 staff surveyed in our study were female, with an average age of 32. So flexible working, crèches and childcare provision had major benefits in terms of enhanced staff retention and performance.
A retail car dealership I once worked for learnt about this relationship the hard way. Declining levels of customer repurchase rates were linked to the behaviour of sales staff. With low pay levels, no benefits and high revenue-based commission, sales staff were, as one told me, being encouraged to “screw the customer”. Subsequent reforms led to improvements in base pay, training and benefits and the replacement of individual commission by a bonus scheme incorporating team and customer service performance criteria.
So the message from this new CIPD research is reward and service your staff well, and they’ll do the same for your customers, who’ll ensure you do the same for your directors and shareholders.
n Duncan Brown is assistant director general at the Chartered Institute of Personnel and Development