Who's your master?

I once had a boss at a bank that made a big deal about the fact that we, the managers served three different groups, the shareholder, employees, and the customer, and theoretically we were to serve all of them equally. You may imagine the looks of disbelief that we got when we tried to sell this to our associates. They knew that the only constituency that really mattered in this company was the shareholder, and if we could keep the shareholders happy, then management would see to it that the employees were kept happy, or at least, employed. As for customers, as long as we made our numbers, we could maintain the image that they were a priority. If we didn’t, well, then they would carry the burden in the form of lessened service and higher cost.

No matter where you work, or what you do, it’s hard to serve more than one master, and if there’s a choice, you’ll serve the group that has the greatest power over your destiny. So, the big question is if you have a choice from these groups, who do you serve, the shareholder, your employees, or your customer?

The July 7 edition of TIME Magazine has a column by Justin Fox on two guys who decided early on that the employee is the master, and they’ve built really strong businesses around that idea. Kip Tindell built The Container Store, and John Mackey built Whole Foods. To quote the article “The idea is that happy, empowered employees beget happy customers. Happy suppliers help too. All this stakeholder joy eventually redounds to the benefit of shareholders – but the magic fades if shareholders become the focus.”

In my view, this doesn’t mean that a business needs to be an employee utopia of kindness and support, although it’s a lot more pleasant to work in a company that has those values. Instead, what it means is that no value can be added anywhere in a company without competent people who clearly know what it is that they are supposed to do and do it well. Automated functions can displace a lot of the face to face interaction, but there are very few (are there any?) companies that don’t need to provide some form of customer support somewhere along the line. Even pure tech companies need people who are motivated to deliver a quality product or service to someone.

Any company’s value proposition depends on its people to deliver it. So, if delivering value to customers is the source of revenue and profits for a company, then the people who deliver it is the constituency that matters most. The employee, not the customer and not the shareholder, comes first, everything else follows.

In difficult economic times, priorities can appear to be quite different, particularly when CEOs are losing their heads and shareholders are more than a little grumpy. The reality is that no matter what’s going on with the economy, employees make value happen and they need to be the priority.

Who’s your master?