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Shareholders, Customers or Employees. Who Matters Most?

By Ryan Rieches

“Who’s your most important audience?” I ask this question to each client during the course of our brand development process. The reality is that at first, this question is difficult to answer, with the most common reply being, all of them. Yes you have to satisfy the needs of each, but I believe that if you truly decide how to prioritize these audiences, it can lead to significant clarity, decision-making and empowerment throughout the company. Let’s take a look at each of these audiences individually.

Your Shareholders
This group assumes financial risk as the investors funding the company. And in the case of smaller businesses, the founders have risked their entire financial net worth. The goal of investing in, or starting a business is clear – to make significant ROI. If the business can’t run at a profit, there is no financial return and ultimately the future of the business is threatened.

Public companies face even more pressure to reward their shareholders, often making decisions for short-term gains, which can alienate customers or penalize employees. Take Bank of America for example. Due to government restrictions on the way banks charge customers, a significant amount of its revenue was eliminated. In turn, it instituted a monthly fee of $5 for debit card usage to make up for lost revenue. This slap in the face of its loyal customers completely backfired and was the primary force behind widespread grassroots movements such as ‘Fire Your Bank Day’. B of A eventually withdrew this plan, but at significant cost to the bottom line and a lasting brand image problem. In this case, focusing on the shareholder at the expense of the customer clearly wasn’t in the best interest of the company.

Your Customers
It’s a fairly easy argument to claim that the customer should come first. As Peter Drucker said, “The purpose of a business is to create a customer.” You can’t make a profit without customers. It’s customers who contribute the revenues. If you have happy customers, you will likely be making money to support your employees and reward your shareholders.

Enterprise Rent-A-Car’s founder Jack Taylor had a customer-first mentality. “You put customers first because if they are satisfied, they’ll come back. Then come the employees. By making sure they are happy, well informed, and part of a team atmosphere, they will provide the best service possible. If you put the customers and employees first, the bottom line will happen.”

Your Employees
Unfortunately, employees are too often left at the bottom of the priority list. I think this is a mistake and the primary reason why many companies fail to realize their potential. It makes common sense that an unhappy or unmotivated work-force could lead to poor customer service, teamwork, productivity and ultimately poor sales and profitability. On the other hand, if employees are treated as a priority, the organization is likely to attract top performers, a culture of teamwork can be established and empowerment can lead to increased productivity and profit.

An example of this philosophy is Southwest Airlines. In the fiercely competitive airline industry, customer satisfaction is critical. On-time departures are a significant component of customer satisfaction and a measurement within the industry. So how does Southwest lead in both of these areas? By placing the employee first. Founding CEO, Herb Kelleher had a unique philosophy, “If the employees come first, then they’re happy. A motivated employee treats the customer well. The customer is happy so they keep coming back, which pleases the shareholder. It’s not one of the enduring green mysteries of all time, it’s just the way it works.”

If you’ve been on a Southwest Airlines flight, you can feel the difference from the first experience. Their corporate culture is very powerful. You can sense that employees love their jobs. Through training and clear direction, they’re empowered to make decisions on the spot with their actions supported by management. To illustrate this, I remember a Southwest employee telling the story of a passenger who wrote a letter complaining to Herb Kelleher. The letter stated that she didn’t feel a commercial flight was the appropriate place for a flight attendant’s attempt at humor and that she demanded a reply on what he was going to do about it. Herb reportedly received hundreds of letters each month and was famous for his personal replies. In this case, his reply was brief and profound. He simply said, “We will miss you.” As you can imagine, this story quickly spread throughout the organization and created incredible pride amongst employees – reinforcing that if their actions were appropriate, they would be supported.

With happy, smart, and empowered employees, customers are better served. Satisfied customers are loyal and less price sensitive, which leads to better sales and increased profit, thus rewarding the shareholders.

Putting your employees ahead of customers and shareholders may feel unnatural at first, but when properly managed and communicated, the results can be very powerful.