How Customer Value is created within the organization?

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How Customer Value is created within the organization?

Most of the studies on how customer value is created have focused on the performance of front-line employees, in addition to the unquestionable role of top managers.  There are a few studies that address the role of middle managers in creating customer value and how to carry out this task. Therefore, in this article we ask especially: what is the role of these managers to fulfill the crucial mission of generating value in the organization?

The first thing to keep in mind is that organizations have to create several types of value. It is necessary to start with the effective management of the business, for which the objective is to create economical value that allows satisfying the material needs of those who participate in the production process of the company and those who are related to it. We have to continue with the ability to learn and innovate continuously its operational processes efficiently, and in this field the goal is to create social value that contributes to meet the needs and expectations of customers and employees. On the other hand, we have to refer to the ability to generate identification with the organization, for which the objective will be to create moral value in the members of each team that encourages their commitment to an external mission, in front of the customers, and an internal mission, in front of the collaborators of the organization. The creation of value in these three levels, economical, social and ethical, will generate benefits that will be convenient, attractive and personalized for customers. For this, the requirement will be to previously generate similar benefits for employees, and thus provide value for all involved: the stakeholders. In this sense, how do middle managers influence these fundamental tasks: create value for employees and value for customers?

The value for customers, which is critical for generating value for all those involved with the company, can be understood as all the results or benefits that the customer receives in exchange for a price and also additional efforts or costs (Lescano Duncan, L., 2014). The benefits are tangible as intangible, and in the current global competition, although the tangible is important and in many cases a prerequisite, the way to add more value and make a difference is in the capacity to provide the intangible benefits. In this field, the main issue will be to meet special requirements for customers, know how to solve problems and customize the service provided. In short, in the intangible benefits or results is now the strongest competitive advantage, including the experience that customers have to receive or obtain those benefits. All what customers receive in exchange for a price and additional efforts that can be required to customers when employees delivering those benefits. Among these may be: generate a longer time than promised for a customer to receive a service, ask new actions or additional efforts to customer for solving a problem or situation, such as a complaint or a prize obtained for their loyalty, etc.  It is important to take into account that the intangible benefits for customers and the additional efforts requested are directly connected to the talent, performance and behavior of front-line employees-in contact with customers- who also need the internal service and support from their peers from the same unit or from other organizational units. Undoubtedly, it will be necessary that these employees, who are in contact with customers and who support them, have the resources, systems and technology to facilitate their work. But beyond that, the value they can add to customers will come mainly from their expertise, attitude and commitment. We believe that, as these employees add more value based on these factors, it will be possible to sustain a competitive advantage and win the battle against the competitors. Thus, it is easy to realize that the better and differentiated benefits, tangible and intangible, and the lower efforts or additional costs, at a convenient price, the greater value will be for the customers, which will lead to their greater satisfaction and loyalty. Therefore, we are in agreement with Heskett, Sasser and Schlesinger (2003) who argue that customer value is created by productive, satisfied and committed employees. However, the questions we have to ask now are: how can employees be able to develop their expertise, positive attitudes and commitment to generate customer value? How can the organization get productive, satisfied and committed employees?  And, specifically, what employees are we referring to?

Let´s start with the latter, the cited researchers only indicate that it is the employees who generate customer for customers but do not make a specific differentiation of roles among them. For example, we are interested in identifying the role that the middle managers have in this creation of value. In another study, Heskett, Sasser and Schlesinger (2015) propose that the service begins with the front line employees therefore the leading service companies hire them for their attitude and train them for skills. We believe that this assertion should not be taken outright, since the beginning of the service approach will begin according to the type of analysis we are doing. For example, the vision and service strategy are the first elements to develop and this must be done in the top management. Likewise, management of the service processes is required to implement the strategy and it depends on the action of middle managers. And to achieve the proposed objectives it is necessary that front-line employees execute their tasks and provide the services offered to customers, with the help of employees from other units. But, for this purpose, the employees, both those in contact with customers and those who support them, need the guidance and support of their bosses: the middle managers. Thus, we consider that in order to establish a service orientation, the organization requires the fulfillment of clear roles at each level. Although each one has a specific responsibility, the truth is that there is a real interdependence between top management and middle management, and between middle management and the front-line and back-office employees.

Particularly we are interested in analyzing how the middle management has to manage this interdependence and specifically with employees in order that they be able to generate value for customers. We agree that it will be useful to hire employees for their attitude, and then train them for skills. However, we consider that this practice is not enough. It will also be necessary to maintain that attitude in the environment of each unit. For this purpose, the leaders of each unit will play a crucial role. It is important to be aware that positive attitude of the newcomers can change and become negative if there is not a healthy internal atmosphere.

Service employees can generate customer value if they develop an expertise in two areas: 1) the technical operation according to the sector of the company and within their functional unit, and 2) the delivery of superior customer service, internal and external. Likewise, they must show a set of attitudes that are aligned to the style and service climate desired in the company. To orient rightly this expertise they must believe and behave according to moral and corporate values that demonstrate their commitment to the institution, their team and themselves. Therefore, the generation of customer value for intangibles depends on how much the employees develop their operational expertise, their service attitude and their service identity (Lescano Duncan, L., 2014). The middle managers who guide these employees will have a decisive role to promote this expertise, attitude and identity. And they will be able to fulfill it as long as they develop a service leadership that generates a climate and culture of service. These will be the key dimensions to get satisfied, committed and service oriented employees (Lescano Duncan, L., 2017).

Then, we can argue that to create customer value, first, value for employees must be created, for the front-line and back-office, as they are the ones who, in turn, contribute to generate value for customers. Those who must create this value for employees are mainly the middle managers in charge of each unit. It is true that top management has to define policies and facilitate resources that contribute to this task, but beyond that, it is the referred managers who have the biggest responsibility. In that sense, it is useful the value for employees that specifies what they expect to receive in the organization: a) opportunity to solve customer problems, b) opportunity for personal development, c) recognition for their work, d) the fairness of my boss, e) working with winners, which means working with colleagues with high performance, with service skills. And this value equation is completed with the appropriate compensation and the organizational ability to attract and retain talent (Heskett, Sasser, Schlesinger, 2003). It can be clearly seen that in the evolution of these employees’ expectations what the manager does and does not will be crucial. Although there must be adequate policies of human resources like compensation, line of career, and especially training and development, basically each middle manager must know how to guide the talent and learn to foster it as a factor of motivation and satisfaction for employees. And above all, every manager must show essential qualities of leadership: fairness and recognition of employees’ contribution, and at the same time, enthusiastically encouraging commitment and identification of each member of his team. This will bring as a consequence the increasing of the employees’ capacity for delivering benefits and results for customers within a positive environment. Thus, employees who receive value in their organizational unit are disposed to contribute for generating value for customers, which leads to the creation of value for stakeholders. But to generate this value for employees, middle managers must develop their service leadership that promote a climate focused on service and help to consolidate the organizational culture. This task, often neglected or weakened becomes the pillar to achieve not only the strategic objectives but to keep the talent identified and committed to the mission of the company.

Each organizational level has an important role for creating customer value, but there is a need to better understand the role of middle managers for this great task. For this purpose, it is necessary to reorient the work of these managers for creating value for employees in each unit. Without this reorientation it will not be possible to increase and maintain the value for customers. So, middle managers require a specific attention which means to provide them with the value they expect. In that sense, top management has an imperative task.

References:

  • Lescano Duncan, Lucio (2014), “La Disciplina del Servicio”, Colombia, Editorial de la U.
  • Heskett, J., Sasser, W., Schlesinger, L. (2015), “What Great Service Leaders Know and Do”, U.S.A., BK Books.
  • Heskett, J. Sasser, W., Schlesinger, L. (2003), “The Value Profit Chain”, U.S.A., The Free Press.
  • Lescano Duncan, L., (2017) “Líderes de Servicio”, Alemania, EAE.
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