Service-Profit Chain Questions

The Service Profit Chain involves the belief that there is a specific, direct, step by step link towards achieving greater revenue for the company. The link starts at policies that reward employees in order to drive up satisfaction, which leads to greater customer satisfaction and loyalty, which in turn leads to profits. There is a step in the middle of the service profit chain that is rarely addressed – how to ensure that there is high employee satisfaction. Many companies understand that employee satisfaction is important, but their methods of addressing satisfaction – especially as it relates to the service profit chain – are often inaccurate.

According to the chain, employee satisfaction is supposed to generate high productivity and bring value to the customer. Happy employees are expected to bring high value to the customer, either in product quality (which would be measured in productiveness) or customer interaction (which would relate to how friendly the employee is to the customers). Also according to the chain, employee satisfaction is based on having policies in place that reward or benefit employees.

Taking these two factors into account a relationship can be assumed – employees should be rewarded for their contributions in both productivity and bringing customer value . This will address the steps before and after employee satisfaction in the service profit chain, and should improve employee satisfaction which will keep the chain strong.

Many companies believe that they are rewarding only the employees that bring customer value, but they base these assumptions on subjective assessments, such as asking management who the most productive or friendly employees are. Yet if the Service/Profit Chain is to be believed, rewarding based on subjective assumptions is a dangerous game to play. If the managers are incorrect in their assessments, the chain will grow weaker, as the best employees will not be rewarded in favor of worse employees that appear to bring more value in the eyes of management.

If anything is to be taken from this, it should be that policies and rewards that lead to greater employee satisfaction should be provided to those that truly bring the customer value that is expected from them. The only way to gauge this correctly is to find a measurement system that isn’t influenced by management subjectivity. That way you can gauge the employees that truly deserve the rewards, leading to greater satisfaction and continued production of quality services and value.