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If there’s one constant in any business today it’s pressure. There’s pressure to compete, to grow revenues, and most of all to find the next big idea. Pressure can be the force that drives innovation and corporate excellence, or it can
be the force that cracks a leadership team. Dealing with pressure can also lead managers toward the temptation of taking complete control. The old adage “if you want to do something right, do it yourself” might start to sound attractive. But in today’s customer-driven marketplace, tighter control on customer-facing employees may not be the best way to grow. A
restrictive grip, in fact, may have the opposite effect. Implementing a strict set of policies and procedures across all customer-facing functions often stifles the one element that enables companies to break away from the pack and grow profitably and consistently. That element is employee-driven innovation. Simply stated, innovation no longer emanates solely from the CEO’s office. It exists on the front lines where your workforce interacts directly with customers, partners, and competitors. And the only way to harness it is to empower your frontline workforce.
In many customer situations, an empowered, engaged employee is a more productive and profitable one, as this white paper will show. Part of the process is a strategic, top down commitment to changing the culture of a company. “The way things get done,” as one expert has described corporate culture, needs to be inclusive, creative, considerate of employee wellness, and rewarding. In short, an empowered employee works within a business democracy. “Companies value their customer relationships, in business there are both simple and complex relationships. CRM must empower users to work above and beyond the traditional application boundaries and do the right thing for customers,” says Anthony Lye,
Senior Vice President, CRM Solutions at Oracle Corp. There is a strong technology element to employee empowerment. All levels of management and customer-facing employees need to be empowered to serve the company on one hand, and the customer on the other. Databases and customer relationship management solutions must enable these types of “ad hoc,” collaborative interactions to serve customers, but also the process-driven, transactional interactions that serve the needs of the organization. Empowering front-line employees makes financial sense. In 2005 the research firm ISR studied the impact of employee engagement on the bottom line for hundreds of companies. It found that in companies with high levels of employee involvement in processes of innovation and planning, operating income improved by 19.2 percent over
12 months. In companies with low levels of engagement it declined by 32.7 percent. But many businesses have used the pressures of modernday business as a clarion call to tighten, not loosen, their control over employees. They cite centralization as a way to maintain cost efficiencies, thus maximizing profits and keeping shareholders content.
Don Peppers, co-founder of Peppers & Rogers Group, calls it a “crisis of short-termism.” While the crisis is easy to identify, it’s difficult to resolve. Those short-term pressures are real. They force executives to choose between containing costs and investing in innovation. The pace of change, however, has made innovation and competitive differentiation more of an imperative than ever. “The bar is being raised all the time. Organizations are always getting better, but so is the distance to their version of nirvana,” says Jennifer Rosenzweig, Global Employee Practice Leader at Carlson Marketing. “You continually need to innovate or you’ll never reach the finish line.” Not convinced? Consider the lessons from Home Depot. When Robert Nardelli took over as CEO in December 2000, he instituted a rigid command-
and-control structure – a far cry from the decentralized environment that founders Bernie Marcus and Arthur Blank had cultivated in building Home Depot into a retailing juggernaut in the 1990s. For a while, Nardelli’s strategy worked, as
Home Depot revenues grew from $46 billion in 2000 to more than $81 billion in 2005. But problems lurked. Staff turnover skyrocketed, particularly among managers. Home Depot’s customer satisfaction scores fell (in the University of Michigan’s American Customer Satisfaction Index, the company scored lowest among major U.S. retailers in 2005). Some staffers described a “culture of fear” that left managers more concerned with making their plan than serving customers.1
With Home Depot’s stock price stagnating (and amidst an uproar over Nardelli’s exorbitant compensation package), the board of directors replaced the CEO in January 2007 with Frank Blake. One of Blake’s first moves was to redistribute copies of the company’s historical hierarchy.
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