Report: Cutting internal and external customer service affects employees most

American Society for Quality

Of the many actions taken by companies in the past few years to bulk up the bottom line and fight the recession, cutting internal and external customer service could cause the most damage. That’s according to a new ASQ (American Society for Quality) and Metrus Group national survey on how a number of recession-survival tactics impacted employees. The respondents rated the seriousness the various actions had on the three core "people equity" factors of employee alignment, engagement and capabilities to meet customer expectations. Those companies that kept the focus on employees outperformed those that did not.

The full survey findings and accompanying article "Power to the People" can be found in the April issue of ASQ’s flagship publication, Quality Progress (QP) (

"The major finding that cutting customer service has the greatest adverse affect on people equity comes as a surprise," said William A. Schiemann, Ph.D., coauthor of the study and CEO of Metrus Group. "It’s a significant finding, given the empirical evidence from this and other studies that alignment, engagement and capabilities link directly to bottom-line performance. To move beyond the recession, senior executives must rethink their recession-fighting tactics, especially those that impact internal and external customer service."

Process Improvement Has Positive Impact
People equity was positively impacted by those companies that improved processes to fight the recession. The article states, "Companies that used this tactic reported a strong positive impact on alignment and engagement, and a moderate positive impact on capabilities. This tactic likely maintains consistency with prerecession goals. Therefore, looking within the organization to collaboratively make improvements and reduce costs actually increases alignment."

"Member engagement and customer service are key areas of focus for ASQ so the survey results reinforce our goal of ensuring employees can provide superior service," said Paul Borawski, ASQ executive director and chief strategic officer. "It’s also a win-win situation when organizations apply process improvements to help move past the recession, which is a strategy we’ve strongly promoted since the onset of the economic downturn."

The survey of 2,100 U.S. companies turned up several surprises:

  • Unexpectedly, the most damaging strategy was not layoffs. While layoffs are undoubtedly traumatic for those let go and those who remain, survey respondents said that they had only a moderately negative impact on engagement, alignment and employees’ sense of capabilities.
  • Pay cuts, pay freezes and reductions in benefits also had a moderate negative impact on employee engagement, which came as no surprise, but these cuts had no significant impact on alignment or capabilities. It is possible that these actions, while not welcomed, are more likely to be viewed as rational and acceptable: sharing the pain through lower profits for the company and lower rewards for staff.
  • Mandatory furloughs also had no impact on alignment and capabilities, but unlike other methods of reducing compensation, they had no affect on engagement. Perhaps that is because unlike the other actions, a furlough may be viewed as somewhat more equitable: You do not get paid, but neither are you required to work.
  • The tactic that had the greatest negative impact on employees was reduced service to customers. Whether customers are internal or external, putting employees in the position of providing poorer service lowers engagement. There is also an inherent alignment conflict when a company’s stated values emphasize service, but company actions undercut those values.

About ASQ
The American Society for Quality (ASQ) has been the world’s leading authority on quality for more than 60 years. With more than 85,000 individual and organizational members, the professional association advances learning, quality improvement and knowledge exchange to improve business results and to create better workplaces and communities worldwide. As a champion of the quality movement, ASQ offers technologies, concepts, tools and training to quality professionals, quality practitioners and everyday consumers. ASQ has been the sole administrator of the prestigious Malcolm Baldrige National Quality Award since 1991. Headquartered in Milwaukee, ASQ is a founding sponsor of the American Customer Satisfaction Index (ACSI), a prominent quarterly economic indicator, and also produces the Quarterly Quality Report.

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