Chip Conley, the CEO of the Joie de Vivre chain of hotels, has a great blog post about loyalty in the workplace and how to inspire loyalty in employees, customers and investors. He takes his inspiration from Maslow’s hierachy of needs:
What Abe Maslow helped me realize is that a great business leader deeply understands the motivations of their employees, customers, and investors. And, from that I started to realize that there was a Hierarchy of Needs pyramid for employees, customers, and investors.
But, unfortunately, most companies get so caught up with the base survival needs in these relationships that they lose track of the higher needs of each of these three groups. Business has a natural tendency toward the tangible which impedes many companies from moving to the priceless (to use a MasterCard word) intangible elements at the peak of the employee, customer, or investor pyramids.
This is not just a lot of fun, it’s also darn good business:
[one study] found that a 5 percent increase in customer retention rates led to increased profits between 25 and 95 percent depending upon the industry.
Also Joie de Vivre has an employee turnover rate that is one-fourth the hospitality industry average – imagine how much money that saves them in recruitment and training costs.
One way Chip creates loyalty is to look at the ratio between positive and negative interactions:
Psychologist John Gottman created a landmark study on marriage and found that successful relationships averaged a 5 to 1 ratio of positive to negative interactions. Other studies in the business world have put this ratio at 3 to 1 with respect to what drives productivity in employees. If your workplace is more focused on giving feedback only when something is going wrong, as opposed to celebrating what’s going right, you may end up with a high divorce rate with your employees…
These same ratios can also apply to your relationships with your customers, and, miraculously to your investors too (although I know many of you don’t believe a human Hierarchy of Needs may have anything to do with the Return on Investment Robots we call investors).
Another is to create peak experiences for employees and customers – or even for complete strangers. In another great post, Chip explains how his company invited a bunch of strangers to a party:
…recently, we created a peak experience for a bunch of strangers – albeit strangers who had something in common with each other and the company. To celebrate the 20th anniversary of Joie de Vivre, we invited 10,000 people (I’m assuming mostly women) from the state of California with the name “Joy” to a JOY PARTY at our luxurious Hotel Vitale on San Francisco’s waterfront.
we ended up with a roomful of joy (or Joys) — 125 women sharing the name with dozens and dozens of husbands, significant others, friends, children and even a few media there to capture the occasion.
How cool is that! It’s an expression of joy, it’s quirky, it fits great with the company’s brand AND it’s a wonderful example of the abundance mentality at work.
I stand in awe of this approach to running a business – and it only confirms what I always say: That happy companies are way more efficient than unhappy ones. Their ability to inspire loyalty in employees, customers and investors is just one reason.
And that’s why the future belongs to the happy!
Chip has explained his ideas in his new book Peak: How Great Companies Get Their Mojo from Maslow, which went into my shopping basket at Amazon… [click] …right then.
A great big thank you to Simon White for telling me about Chip’s excellent posts!
3 thoughts on “Loyalty and happiness at work”
Very interesting statistics. In a age of free agents in the workplace, thoughts on loyalty and happiness at work are refreshing.
Terry L. Sumerlin
I agree completely
I regularly work with clients who discover the joy of finding the right job which equates to happiness. Unlocking the knowledge for my clients to achieve this is the right job for me.
I should add that when running my own organisation, a print operation, my experience was that having a good atmosphere in the workplace had a beneficial ripple effect that conveyed itself to the customers who reponded by being happy and loyal customers over many years. Customer retention was actually reinforced by running an operation with which they personally enjoyed dealing – obviously the quality and level of service played a part, but thesefactors were, in turn, reinforced by having a workforce who enjoyed coming to work.