Best Practices by bKA8Sb3


									A Survey of Some
“Best Practices”

              Leadership at
            Southwest Airlines

On the busiest airline travel day of the year (“Black
Wednesday” – the day before Thanksgiving) co-
founder Herb Kelleher often worked a full shift
loading luggage onto planes.

            Leadership at
         Ritz-Carlton Hotels

Horst Schulze, former president of Ritz-Carlton
(which is now owned by Marriott), grew up in a
German town so small that it had no hotel.

When president, he would open each new hotel by
staying 10 days.

              Leadership at
             Baptist Hospital

At Baptist Hospital in Pensacola, Florida, the
president described his vision for a TQM Program
as follows:
  “We had to create the type of environment
  where people drive by two other hospitals
  to get here.”
Baptist Hospital was a recipient of both the 2000
RIT/USA TODAY Quality Cup and the 2003 Baldrige
Award in Health Care.
        Hiring at Nordstrom

Nordstom believes in
  “Hiring the smile and training the skill.”

When asked once about who trains his salespersons,
then co-chairman Bruce Nordstrom replied,
  “Their parents.”

  Hiring at Southwest Airlines

Herb Kelleher, co-founder of Southwest Airlines,
stated, “The hardest thing for a competitor to do is
copy our people.”

Very rarely does Southwest open a new city with
only local employees.
Current employees get first bid for new positions at
any new location.
Southwest hand-picks about a dozen of its very
best employees to go as a team to assist the set-up
of a new location.
    Hiring at Southwest Airlines
For public-contact jobs, Southwest conducts group
interviews with 30-50 persons in a group.

For example, each member of the group might be
asked to give a 5-minute presentation about

The audience includes not only other job applicants but
also some of Southwest’s frequent flyers.

Southwest judges not only the presenter but how the
audience reacts to the presentation.
Applicants who listen attentively and even cheer on
others have a much higher chance of getting hired than
applicants who ignore their fellow presenters and look
over their own notes.                                  7
       Importance of Location to
     Lands’ End Customer Service

Lands’ End located its “call center” in the Midwest
in the middle of a 40-acre corn field in Dodgeville,
Wisconsin, where there are “down-to-earth”
people with a strong work ethic.

   Employee Loyalty at Staples

Staples rewards an employee who has contributed a
great idea with shares of Staples stock – not cash.
Why is this a “best practice”?

  The employee becomes an “owner”.

  Employee Loyalty at Staples

Many companies recognize an “Employee of the

The reward for being an “Employee of the Month” is
often only a picture on the bulletin board in the staff
lounge, a picture on a the store’s wall, or a picture
in the company’s promotional magazine.

At Staples, a frequent recipient of a store’s
“Employee of the Month” gets to choose a Staples
store anywhere in the United States and travel to
that store and spend a day “shadowing” the store’s
general manager.                                  10
     Hiring at Charles Schwab
Example 1. When hiring, Charles Schwab looks
for evidence of community service and charitable

Example 2. In the past, orientation of new
employees focused primarily on procedures and
Now, procedures and regulations are posted to the
Now, there is much more emphasis on helping new
employees understand what the company stands for
and how it expects an employee to treat another
employee and to treat a customer.               11
              Training at
           Southwest Airlines

At Southwest, anyone with a “Manager” title or
higher must perform at least 4 “field visits” per
year in departments other than his/her own.

  The “Value” of a Customer of
       Southwest Airlines
Southwest found for 1994 that that a flight became
profitable only after the 75-th passenger and that
its flights averaged 80 customers.
So, only 2.5 million of the 40 million passengers
accounted for Southwest’s 1994 total profit of about
$180 million.
Southwest concluded that losing just 1 passenger
per flight because of bad service would reduce
profits by 20%.

        Service Recovery at
         Southwest Airlines
Employees are told that, when recovering from a
service glitch, never use rules and regulations as a
Employees are told that no employee will ever be
punished for using good judgment and common

          Corporate Culture at
           Southwest Airlines
At Southwest, there is a Culture Committee with 100+
members to reinforce the culture by:
 Planning celebrations.
 Ensuring that new employees understand the
  airline’s “underdog” origins.
 Passing on to all employees extraordinary
  customer service by an employee that captures
  the “spirit” of Southwest. Stories about
  organization heroes are easier to remember than a
  lecture about 10 points of service excellence.
        Customer Retention
        at Charles Schwab
Example 1. At Charles Schwab, an employee’s
bonus depends not only on the dollar volume of new
customers but also on the dollar volume of
RETAINED customers.
Example 2. As a measure of the effectives of
responses to complaints, Charles Schwab tracks
how much business a customer does 6 months after
a complaint versus 6 months before the complaint.
Example 3. Charles Schwab has a Service
Enhancement Team (“Barrier Bashers”) to change
internal policies and procedures that get in the way
of excellent customer service.                    16
  Reinforcement of Customer Service
       Philosophy at Lands’ End

When an issue arises at Lands’ End, a frequent first
question is,
   “How will this affect our customers?”
   “What will our customers think of this?”.
The feeling at Lands’ End is that, if managers get in
the habit of asking such questions, it will “trickle
down” to all employees.

     Creating Customer Loyalty
       at American Express
AmEx recognizes that the merchants at which its
cardholders do business play a key role in how its
cardholders feel about AmEx. AmEx realizes that its
customers are not only its cardholders but also the

AmEx’s “Express Rewards” offers its merchants an
opportunity to make a customer feel special.
For example, after a cardholder makes a predetermined
number of visits to the same restaurant and uses his/her
AmEx card to pay each check, the restaurant’s cashier
will see a “VIP symbol” appear when clearing the card
and can offer a predetermined award (e.g., “You’re
bottle of wine tonight is on the house!”).             18
  Reinforcement of Customer
      Service at Staples
Staples wants to its employees to understand:
 Customer service at Staples.
 Customer service at Staples’ competitors.

     Reinforcement of Customer
     Service at Staples (continued)
Understanding Competitors’ Customer Service
Each morning, the store’s general manager holds a “Rally
Meeting” to discuss any customer service problems that
occurred on the previous day.
Sometimes, she gives $20 to an employee (say, John) and
instructs John to go immediately to a competitor’s store, make
a difficult purchase, and report at the next day’s Rally Meeting.
At the next day’s Rally Meeting, the group listens to John’s
report about his evaluation of the competitor’s customer
service during his purchase. After John’s report, the general
manager turns to another employee (say, Anne) and says,
    “OK, Anne, now you go to the competitor’s store and try
    to return John’s purchase without a receipt.”               20
  Reinforcement of Customer
  Service at Staples (continued)
 Understanding Staples’ Customer Service
Staples has a “Mystery Shopper” program.
Staples contracts with an external company.
Each month, this company sends to each Staples’ store a
“mystery shopper” who pretends to be a real customer.
Staples receives from the company reports that are:
 Reviewed by senior management to determine “problem”
 Reviewed by each store’s general manager at a Rally Meeting
  with the store’s employees.
 Used by a store’s general manager in 1-on-1 counseling with
  “problem” employees.                                    21
 Customer Loyalty at Staples

Staples calls its top customers once per year.

The calls are made by managers.

The manager:
 Thanks the customer for his/her business.
 Asks the customer for suggestions on how to
  improve Staples’ customer service.

Staples’ Recognition of Who the
      Customer Really Is
Staples sells office supplies not only to individual
customers at its retail store but also to corporate clients
over the phone or the Internet.
Staples realizes that the customer is not just a
corporate client’s Director of Purchasing.
The “roots” of Staples’ customer relationship with the
corporate client are …
the client’s employees who submit to the Director
of Purchasing an order for 6 red pens, 1 box of
folders, and a stapler.
As much as possible, Staples tries to have personal
contacts with these customer “roots”.                    23
       Customer Loyalty
     at Ritz-Carlton Hotels
Ritz-Carlton keeps an extensive database of guest
preferences and problems.

As examples,
 If a guest orders “rocks in his pillows” in Sydney
  and his next stay is in Boston, then he will find
  rocks in his pillows in Boston.
 If a guest in Sydney has a problem with room
  service problem just before check-out and her next
  stay is in Boston, then, at check-in at Boston, the
  front-desk clerk will acknowledge the problem in
  Sydney and offer a complimentary meal.              24
       Customer Service
     at Ritz-Carlton Hotels
Ritz-Carlton Hotels teaches an employee that, if
he/she sees a problem, he/she owns the problem
until it is solved or clearly accepted by another
employee better suited to solve the problem.

For example, suppose a guest asks an electrician
working in the hallway where the ice machine is.
Instead of describing how to get to the ice
machine, the electrician will stop working and walk
the guest to the ice machine.

 Customer Satisfaction at USAA
  (United Service Automobile Association)
Example 1. To deal with NEW customers, USAA has at
its “call centers” agents specially trained to make an
excellent “first impression”.
Example 2. USAA values customer service practices
even if a particular practice might go unnoticed by the
For example, USAA has a “Survivor Team” that each
morning alerts all areas of the company about a
customer who has experienced a death in the family.
This alert ensures that, for some specified period of
time, the customer will not be bothered with
unimportant mail or phone calls from USAA.              26
     Employee Satisfaction
     at Ritz-Carlton Hotels

At Ritz-Carlton Hotels, an important component of
employee satisfaction is empowerment.

As examples, at a Ritz-Carlton Hotel,
 A housekeeper can make a decision to order new
  washing machine.
 To resolve a guest’s complaint, a front-desk clerk
  can deduct up to $1000 from a guest’s bill
  without asking for authorization.
   Customer Loyalty at USAA
USAA increased its profits by expanding its services from
just insurance.

Example 1. USAA insured a boat and then realized it could
profit from arranging the financing of the purchase of the
customer’s next boat.

Example 2. USAA realized it could profit by giving a
customer who filed a claim for damaged personal property the
option of obtaining the replacement item directly from USAA
instead of waiting for the claim to be paid and then shopping
at a retailer.
Later, USAA realized it could profit by allowing customers who
had not incurred a insurance loss to use USAA’s buying service
via catalog sales.                                          28
         “Growing” Business
            at MacIsaac

MacIsaac Products for the Office increased its
profits by realizing that, while one of its truck was
delivering office supplies to a customer, it could
also deliver janitorial (custodial) supplies.

          Customer Service at
            Baptist Hospital
 Arriving visitors find huge signs directing them to
  FREE valet parking.
 After cleaning a room, a custodian asks the patient,
  “Is there anything else I can do for you? I have some
  time to help you.” Many patients ask the custodian to
  close window shades, shut doors, or lower the TV’s
  volume. There are two benefits: happy patients and
  lower costs, since calls to nurses to do such things fell
  by 40%.
 Nurses carry cell phones so that doctors can contact
  them without paging them over the intercom system,
  thereby reducing noise and allowing the patients to
  rest better.
         TQM Reduces Costs
          at Baptist Hospital
Baptist Hospital’s TQM Program reduced costs in
three ways:
 Because word of the TQM Program spread through
  the media and through happy patients, the
  hospital reduced its marketing budget by 20%.
 Improved employee morale led to lower turnover
  which in turn led to lower training costs.
 Because patients are better satisfied with the care
  they received, the number of malpractice claims
  decreased significantly.
   Customer Service at
 Omni Hotels & Wingate Inns
 Under Omni’s Select Guest Program, a guest entering
  his room for the first time after check-in will find that
  the room has a radio station tuned to his/her preferred
  style of music, has copies of his/her favorite
  magazines, and has complementary items ordered
  from the mini-bar during previous stays. And, a guest
  automatically receives his/her preferred room type:
  smoking or non-smoking, king- or queen-size bed, and
  low or high floor.

 Under Wingate Inns’ U1 Program, a guest accessing
  the Internet from a hotel room will have a personalized
  “My Wingate” home page that will provide personalized
  information like the weather in the guest’s home city
  and local restaurants with the guest’s preferred     32
      “Breakthrough Service”
          at Granite Rock

At Granite Rock in Watsonville, California, loading
rock into a dump truck is as easy as withdrawing
$20 bills from a bank’s ATM.
Granite Rock operates a 24-hour ATM-like
automatic system that dispenses a quarry’s rock.
Granite Rock’s system resulted in a 70% reduction
in a truck’s average loading time, thereby
providing significant savings to its customers
(where operating a truck costs over $1 per
       “Breakthrough Service”
           at ANA Hotels
At the ANA Hotel in Tokyo, I was was “blown away”
by the bathroom mirror that would not fog up
during a hot shower.


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