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The purpose statement that powers growth

Ask any business leader today what the purpose of their business is, and you may get a range of replies.

Some might reply that it is to maximise profit for shareholders. Others might say that it is to create value for all stakeholders, including customers, employees, suppliers and local communities, as well as shareholders. In some cases, they might even refer to a higher purpose – to find solutions to human needs – from which they believe customers and profits will follow as a natural result. Defining common purpose is a key task of leadership.

So what purpose should you decide on to maximise your business success?

When I researched my book, People with Purpose, I found that leaders who put customers at the centre of their endeavours, with the aim of making customers’ lives better, were more likely to inspire truly customer-centric staff, who worked hard to keep those customers coming back, thus driving growth.

To do this, they articulated their purpose as a customer-focused benefit – describing why they exist as a clear added value to their target customers.

Only by starting with the needs of the customer will you then fulfil the wider purpose of creating value for all stakeholders.

Here’s what my research tells me are the six steps to successful customer focus.

Focus on making customers’ lives better

This shared goal resonates more than the profit motive with both consumers and employees and helps companies to outperform their competitors. By increasing customer centricity, you are more likely to build purchase intent, driving business growth. The purpose of improving people’s lives is the only sustainable way to recruit, unite and inspire all the people a business touches, from employees to customers.

Taking customer focus to a new level is the key to success, not just because it resonates with customers and emphasises the importance of serving those customers (and understanding their needs), but because it puts managers and employees into customers’ shoes. This attitude is powerful because it shows ‘we are doing something for someone else’.

Make serving customers exciting to your employees, too

The purpose of your company has to be made personal to every individual within it, and enable them to see how they are improving lives outside the business. You cannot articulate a purpose that resonates with customers but fails to excite employees. Employees need to feel excited by the purpose, because it does good for others and makes them feel worthy. A purpose that is explicitly about serving shareholders can turn people off.

Steve Hood, chairman of TrustFord Retail Group, agrees that you need to articulate your purpose in a way that works across the organisation as a whole – it has to be versatile and applicable to everyone: ‘It’s all about relevance – to the employee and to the customer. If it’s not relevant to every job role and every layer of the organisation, if you can’t articulate it clearly and simply, then I think your purpose is wrong. It has to be able to help you to steer every decision you make.’

He describes the modern consumer as buying into a brand’s values and purpose. They make decisions based on whether they trust the brand and whether they think the company cares about them. To earn that trust everyone in the organisation has to understand what the company’s purpose means and why it is so important.

Measure all performance against the customer purpose

Leaders who transparently measure performance against customer purpose enable individuals throughout the company to take action and responsibility for delivering the purpose.

Make the Customer Experience come to life for every member of staff

Creating value for customers is the only way to create value for shareholders and other stakeholders. No company can be a force for good for all of its stakeholders unless it makes a profit. Serving customers better than your competitors helps to keep your business in existence, give employment, hire suppliers and provide value to local communities.

If every person in the organisation knows and understands exactly who the customer is, what their needs are and what they are trying to do, it shifts the emphasis from an inside-out focus to an outside-in one. By bringing the customer to life in these ways, companies stand a better chance of driving greater engagement inside and outside the organization, and improving trust and reputation.

Stay ruthlessly true to the customer purpose

Leaders are guardians of the purpose and have to be ruthless about ensuring that teams deliver it. Julie Dean and her mother Freda Thomas founded The Cambridge Satchel Company in 2008. Julie’s vision was simple: to revive the traditional British leather satchel. Julie was determined that she would produce all products in Britain, and ensure they were made with care and expertise by skilled craftspeople.

With the business now worth more than £50 million, Julie is still fiercely committed to preserving British manufacturing and, in spite of enormous pressure to satisfy demand with an overseas production model, she has ensured that each stage in producing every bag takes place on British soil. She now has more than 150 people working in her company, and their devotion to the purpose of producing authentic British satchels, she says, is admirable.

Julie believes her Cambridge satchels have become a truly inspirational global brand because she has stayed rigidly true to her purpose – to make authentic British satchels, which have enormous appeal with customers.

Express your purpose as a benefit to customers

Take care to express your customer purpose as a benefit those customers value. It is essential that your core purpose must be focused on your customer. Your wider purpose, to create value for all your stakeholders, is better placed in your vision statement – either long-term or near-term. Employees will then take pride from the purpose, and align with the good you do for the people you serve, helping you to create value for all.

Ford Retail Group operates as Trust Ford at over 65 sites in the UK and sells more than 100,000 vehicles per annum. With more than 3,000 staff, the total turnover of the group exceeds £1.5 billion a year. Their expressed purpose is ‘to drive the standard in customer care’ – not simply to provide a good product range, but also to wrap around that very good service from highly engaged employees who care about their customers and the brand.

As chairman Steve Hood says: “As part of an exercise when we considered how to sustain our growth and profitability, we had a huge debate about whether or not our purpose was to make a profit for our shareholder. The overwhelming view was that profit was not sustainable without good customer satisfaction and only that would drive loyalty, which would drive a sustainable business.’

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How to be a more charismatic manager

Inspiring managers are passionate, which makes them charismatic. Being around them motivates others to act, because strong emotions are contagious. Link that passion to a cause and some stretching goals, and you have a powerful multiplier effect – and you have great leadership.

However, too few managers have thought about their own strengths, beliefs and values – the source of their passion. And even fewer have linked those beliefs to their company’s purpose and values.

When they do, they think, act and converse in a way completely in line with their corporate purpose, which provides the meaning employees crave.

When you are passionate about your purpose, you become charismatic and your passion is contagious. (People really do catch the emotions of others. Just think about people you’ve had to work with who have been constantly negative, and reflect on whether you became more pessimistic around them?)

Being around someone who is passionate and optimistic is a far better place to be. Every leader should aspire to create a positive and optimistic aura. When leaders talk about ideas that are bigger than themselves, something they care about deeply, they are inspired by that idea and it is the cause that animates them.

We spend so much of our lives at work. The average person is going to spend between 80,000 and 90,000 hours at work. That’s a huge chunk of time to spend on something you don’t love, or don’t care about.

The problem is a huge number of managers do exactly that.

They are not really engaged with their work, and they don’t bother to ensure their employees are engaged either. Day in, day out, managers are tasked with engaging employees, but, according to research by Gallup, an American performance management company, a distressingly high number of managers have “checked out”, meaning they care little about their job and their company.

In a research project entitled “The State of the American Manager”, Gallup found that, across 190 diverse industries, only 35% of managers were actively engaged. 51% were not engaged, with 14% actively disengaged.

It goes without saying that this creates a cascade effect – because a manager’s engagement or lack of engagement has a direct effect on employees, with dire consequences. Employees supervised by highly engaged managers were 59% more likely to be engaged and high performing. Of course, the opposite is true, as well. And levels of disengagement are staggeringly high. Studies of global engagement levels suggest that on average of a third or more workers are not engaged!

Until organisations can increase their percentage of engaged managers, they have little hope of increasing their percentage of engaged employees.

So, if you are a manager or aspire to be one, where do you start? I believe that as a leader you have to manage who you are being not just what you are doing.

This was one of the key pieces of advice that I have received from the 120 CEOs I’ve interviewed. If you manage both who you are being and what you’re doing, this will help you to inspire, engage and enable people by consciously developing the right mind sets and behaviours not only in yourself, but also in your team.

Whether you lead a team of leaders at the top of business, or a team operating at the front line, it seems crucial to your effectiveness that you properly define the purpose of the team, within the context of the organisational purpose. Understanding your own purpose then helps you to speak passionately to both the team’s purpose and the organisation’s purpose, because it unlocks your passion and enables you to deliver it without having to think about it.

Defining your own values and using those to guide and articulate the values of your team, enables everyone to understand how to work together and how to behave with everyone they come into contact with. It will also tell them what they can expect of you and how to generate the trust that is so crucial to effective teamwork. When you’ve have engaged yourself in purpose and values, you are far more easily able to engage everyone else.

Charismatic managers are passionate, and they are passionate because they unlock their own sense of purpose and believe passionately in their values. Just remember, your real purpose comes from who you are, and who you are comes from the things you believe truly matter. Define those, and you are on the path to being a whole lot more charismatic.

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Never disrespect your customers

More respect for customers = more value. For everybody.

Last week The Social Market Foundation (a British think tank) issued a report saying a lack of competition in key markets in the UK was causing consumers to lose faith in business and in capitalism.

The picture was bleak, The Foundation said, Many big companies were treating us with contempt, because they were simply not worried about losing us as customers.

Scott Corfe, the Foundation’s chief economist, commented that big companies in sectors such as broadband, mobile telephony and banking did not face enough competition and were able to charge more while investing less.

The research finds that all too often, the markets that matter most to consumers are concentrated in the hands of a small number of large companies. That’s bad for customers and bad for the wider economy: where companies don’t have to fight hard to win and keep their customers, they face less pressure to reduce prices and to increase quality, to invest and to innovate.

The UK’s economic status quo is at a critical juncture, says the Foundation. Faith in a largely “free market” settlement is increasingly in doubt, as household incomes are squeezed and many fail to see economic growth translating into an improvement in their day-to-day lives. In this environment, it is more important than ever that consumer markets work well and deliver good outcomes for households. If they don’t, warns the Foundation, markets risk being replaced with state ownership as the electorate loses faith in private enterprise.

This report really hit home for me, having written recently about how powerful respect was as a mobilising force among employees. The truth is, it is just the same among consumers.

Creating value for customers is the only way to create value for shareholders and other stakeholders. No company can be a force for good for all of its stakeholders unless it makes a profit. Making good profits enables you to do good. Serving customers better than your competitors do helps to keep your business in existence, give employment, hire suppliers and provide value to local communities. In a world of connected consumers, whose publicly stated views on brands are far more powerful than any direct advertising a brand might do, resonance is everything. How you make them feel is critical to your success.

That is why I hear more and more leaders becoming obsessive about customer centricity, and ensuring that their purpose reflects this. Sadly, the big companies without competition may care less about it. They pay lip service, but do little to ensure it is embedded throughout their businesses.

But what is customer centricity? To me, it means knowing exactly who the customer is, what their needs are and what they are trying to do. If every person in the organisation knows and understands this, it shifts the emphasis from an inside-out focus to an outside-in one. It can help to make you more human, because everyone in the organisation thinks of the customer as a human, thus developing far greater empathy and respect for customers. Being able to do that brings huge dividends. By bringing the customer to life in these ways, organisations stand a better chance of driving greater engagement inside and outside the organisation, and improving trust and reputation.

Customers want to be respected

In 2014, Good Relations, part of Chime Communications (a global sport, entertainment and communications business) conducted research with more than 12,000 consumers in the UK to find out which brands they really loved, and why. As relationships with customers are, in particular, such a valuable asset, Good Relations asked themselves if they could create a way to truly understand the nature of relationships with customers, studying and contrasting the best- and the worst-performing brands to understand the key drivers of quality relationships today.

They created ‘Triple G’, a groundbreaking study that measured how good a business is in the eyes of the UK public. Where a Triple A rating in the City of London is used by the investment community as an aggregator of an organization’s ‘hard capital’ or financial performance, the Triple G rating scores a company’s ‘soft capital’. Soft capital does not appear on a company’s balance sheet, but reflects how ‘good’ a company is seen as being by the public – a true indicator of a company’s sustainability and future performance.

Relationships are a consequence of ‘what you do, how you engage with people, and then what they say about you’, which in turn determines your reputation. Good Relations, using Chime’s Insight and Engagement research division, asked consumers to score each brand on those three elements. They asked the 12,000 consumers about 120 brands and focused on:
1.good actions: ‘what the business does when no one else is looking’;
2.good engagement: how well the business communicated and listened to their consumers;
3.good recommendations: how strongly respondents were prepared to recommend the brand to friends, family and colleagues.

Brands that scored highly on all three dimensions included John Lewis Partnership, Amazon, Waitrose, Samsung, Asda, Kellogg’s, Cadbury, Virgin Atlantic and Johnson & Johnson. Out of the 120 brands tested, just 16 were awarded the Triple G rating for good actions, good engagement and good recommendations. The brands that did not do so well were – as the Social Market Foundation found – the mobile phone, utility, and banking sectors. Worst on the list was RyanAir – where consumers felt they were overtly disrespected.

An emotional bond is your Teflon layer

The research proved that creating an emotional connection of mutual respect with people offers a huge competitive advantage to brands. The Triple G research showed that brands that do this effectively show they share a customer’s values, generating a sense of closeness and real empathy. Today, consumers want to look behind the image and seek more substantial ways of choosing who to align with. Brands that create great relationships of respect with their customers create a Teflon-like ability to withstand uncomfortable scrutiny.

The research also showed that you need to give respect to get respect. Surprisingly, companies do not do this enough. Brands that performed well in the Triple G survey all showed respect and care for their customers in everything they did and said. And brands that achieved the highest Triple G ratings did this really well. They managed to convey that they really care, and created a mutual relationship that worked effectively for both parties.

Sectors and companies that either mindfully or inadvertently disrespected customers set up a cycle of destructive disrespect, creating high numbers of detractors, who we all know are more active than happy customers. Close analysis of more than 50,000 verbatim comments from the 12,000 consumers researched, showed that the three key lessons of the highest-rated brands were quality, respect and relevance.

First and foremost, a great product or service was the foundation for a great relationship. If it answered consumer needs better than anyone else, the brand was already at an advantage. Second, those brands that demonstrated active care and attention that went beyond expectations, and showed they respected their consumers, were able to capitalise on a good product and service and cement the relationship for the long term. Finally, those brands that did both the above well, and also constantly showed their compelling relevancy to their audiences, whether it was through products that answered needs or through being a force for good, had the highest rating of all.

I believe this is the best way for business to help increase prosperity and enable people to live well… and also maintain trust in capitalism!

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GIVE IT TO GET IT – HOW RESPECT DRIVES PERFORMANCE

In a world obsessed with reputations, we seem to have forgotten one of the most powerful enablers of good reputations.

We hear about the importance of trust, about the need for integrity and ethical behaviour.

What we don’t hear enough about is the need to give people respect.

A recent report by Maitland, one of Europe’s leading financial and corporate communications consultancies, found that 83 of the FTSE 100 businesses in the UK declared a set of values on their website or in their annual report. The most commonly expressed values were integrity, respect and innovation.

So leaders acknowledge that respect is a crucial attribute, but do they really give it, consistently, especially to their employees?

Recent research among 1800 managers and 2,200 employees in the UK, by online polling company YouGov, identified that 66 per cent of managers and 65 per cent of employees regarded making employees feel important and appreciated as the top attribute of high performing managers. This was by some way ahead of all other attributes.

The research was done for me for my new book, People with Purpose, which examines how managers can create super performance from their teams by creating a shared sense of purpose, commonly held values and aligned and stretching goals.

However, while managers and employees both know that being respected is important, all too often we see the exact opposite taking place. Managers either show disrespect to their employees, or allow employees to show disrespect to each other.

This can have devastating consequences.

“Employees are less creative when they feel disrespected, and many get fed up and leave. About half deliberately decrease their effort or lower the quality of their work. And incivility damages customer relationships. Our research shows that people are less likely to buy from a company with an employee they perceive as rude, whether the rudeness is directed at them or at other employees. Witnessing just a single unpleasant interaction leads customers to generalize about other employees, the organization, and even the brand.”

Christine says that she and her research team have interviewed employees, managers, human resource (HR) executives, presidents and CEOs: ‘We know two things for certain: incivility is expensive, and few organizations recognize or take action to curtail it.’

So, no surprise there then.

Well, yes, actually.

If both managers and employees regard respectfulness as the most important attribute in a manager, why is there still such a large gap in perceptions about being respected at work? In the YouGov survey, 73 per cent of managers felt they made their employees feel respected at work (a curious 4 per cent admitted they did little to respect their employees). However, only 40 per cent of employees said their bosses regularly made them feel respected.

Ouch.

That is 60 per cent of employees feeling undervalued and underappreciated, a lot of the time. Imagine the level of negative neurotoxins at work in their brains!

What effect would greater feelings of respect have on employee willingness to give of their discretionary effort?

The YouGov research shows that if managers could move their performance here from poor to good (not outstanding, just good) the payback would be a 36 per cent jump in discretionary effort, according to the employees we surveyed.

A 36 per cent improvement in productivity, by simply showing more respect! Imagine the impact of that on productivity, costs, innovation, customer satisfaction, profitability?

As Christine Porath says: “Feeling cared for by one’s supervisor has a more significant impact on people’s sense of trust and safety than any other behaviour by a leader. Respect also had a clear impact on engagement. The more leaders give respect, the higher the level of employee engagement: people who said leaders treated them with respect were 55 per cent more engaged.”

Whether you lead a major organization or a small team, my focus has been on trying to understand what you need to do to bring out the very best in other people. After five years of research, I have now interviewed more than 120 CEOs, surveyed 3,000 managers and 6,000 employees, and read just about every book there is on leadership and communication.

I am convinced that giving respect is a crucial element in building engaged employees, and winning and keeping loyal customers.

Instead of focusing on how to get a good reputation, focus on how to ensure every person on your team gives respect to each other and everyone else they deal with.

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