There’s been lots of chatter lately about Dell’s demise. The company has displeased analysts working on Wall Street by missing sales or earnings projections three times in the last five quarters. And Dell has also displeased customers living on Main Street by producing boring computers and by failing to give prompt, proficient, and enthusiastic customer service.
Writing in today’s Wall Street Journal, Christopher Lawton breaks down the Dell breakdown (free article access here). One breakdown area I found most interesting is where Dell’s desire to gain financial efficiencies resulted in displacing full-time workers in its call centers with less expensive part-time and temporary workers. Lawton explains …
”As the tech downturn ended around 2003, Dell continued cutting costs and focused on being efficient. Around that time, Dell executives decided to hire temporary workers to man their five U.S. call centers, rather than recruit more-expensive full-time staff. By 2005, 75% of Dell's call-center staff -- those who take calls from customers wanting to buy a PC -- were temporary workers. Three years earlier, the majority of those staffers were full-time employees.The move backfired. By late 2005, Dell noticed its U.S. consumer sales were flattening. Ro Parra, a Dell senior vice president who was asked to look into the problem, pinpointed call-center problems as one cause. He discovered that the temporary call-center workers who wanted full-time jobs weren't being promoted. Turnover in the centers had soared to 300% a year from 30% in 2002.”
Oh my! Turnover rates jumped from 30% to 300% in Dell's call centers. Oh my, oh my, oh my!!!
Dell is learning the hard way that “The Employee Experience Matters.”
John - every year the Fortune 100 winners get recognized, and every year the ones that treat their employees BEST are ranked among the top. No wonder, huh?
Posted by: Phil Gerbyshak | August 30, 2006 at 11:27 PM
That was a great article.
Treating employees well is only one piece of the puzzle. What about making decisions based on treating customers well in stead of hitting BPI efficiency goals? This attitude:
We'll cut this corner and the customer will never notice. We'll change prices multiple times a day and the customer will never figure out how to get the best deal. We'll treat customers differently depending on what channel they approach us through. We'll hire under-prepared reps and customers will take it. We'll just keep running the same play and the market will fall in line. We're right, everyone else is wrong.
I believe that, unless you are a monopoly, underestimating the customer's intelligence or refinement will backfire.
Posted by: VeeDub | August 31, 2006 at 09:43 AM
Phil ... yep, it is amazing how businesses practicing the GOLDEN RULE adage of "treating others like you would like to be treated" get rewarded while those that don't get punished.
VeeDub ... I wholeheartedly agree that if companies treat customers living on Main Street with passion and precision ... success will follow. And that success will have the analysts working on Wall Street taking notice. Dell has many issues to course-correct and their competitive drive will surely have them back on their "true north" path.
Posted by: johnmoore (from Brand Autopsy) | August 31, 2006 at 11:09 AM
By doing our homework we learn that the smart and great businesses build brand from the inside/out. What does that mean: Employees come first, not shareholders, not customers.
Why? Because employees are the face of the Brand, and when they come first, they are more likely to love what they do and display that passion in their customer interactions. And then both employees and customers come first and shareholders benefit.
Posted by: Lewis Green | August 31, 2006 at 11:55 AM
That article was definitely a worthwhile read. I've worked for companies that have been all over the spectrum as far as how they treat employees, and the ones that value their workers are much better off in nearly every respect than the ones that don't. In order for Dell to turn things around, they ought to start with focusing on their employees.
Posted by: RisingSunofNihon | August 31, 2006 at 11:26 PM
John, it's just as important for small business owners to realize how important it is to treat employees well. Maybe even more so. I manage a dental practice with 1 dentist and 5 staff members. If those staff members decide they are going to revolt, things are going to take a rapid and nasty nosedive. Employees are the soul of a business, their abilities are the heart, the owner may be the brain but if that brain isn't thinking right, the heart and soul can find a new brain. Basically, treat employees right because you understand they are important to your business, big or small and the rest is much easier. Loved this article!
Linda
Posted by: Linda Curtis | September 03, 2006 at 10:55 AM
Well said Linda. Thanks for sharing.
Posted by: johnmoore (from Brand Autopsy) | September 03, 2006 at 10:46 PM