SATISFACTION GUARANTEED.

About five years ago, the PNC Financial Services Group was embarking on its transformation from a regional commercial bank to a national diversified financial services organization. As it evolved from a structure of centrally managed geographic regions to a portfolio of autonomous businesses, PNC also recognized the need to manage the evolution of its culture.

"We had some people from Harvard talk to us about the correlation between employee satisfaction and customer satisfaction," says James E. Rohr, Pittsburgh-based PNC's president and CEO. "The bottom line was, when employee satisfaction is high, so is customer satisfaction -- and satisfied customers tend to do more business with you and recommend you to other customers."

To gauge its own status, PNC conducted a survey covering a broad spectrum of the relationships its employees had with the company and with their customers. The results were troubling, Rohr says, because they indicated a downward trend in employee satisfaction. A follow-up effort involving more than 4,000 employees at all levels identified specific areas of concern. PNC found that three types of improvement were needed: customer-focused teamwork to make it easier to do business with PNC, better communication from management about performance expectations and how they would be measured, and a systematic way of making employees feel valued for their contributions.

To address those concerns, PNC formed several cross-functional managerial teams, beginning what would become the company's Employee Satisfaction Improvement Process (ESIP). Eventually, every manager and every employee got involved in ESIP through managerial meetings, departmental discussions and ongoing surveys. "We implemented at least 80 percent of the recommendations that emerged from ESIP," Rohr says.

The next step was to bring employees into discussions defining a corporate vision based on seven core values: performance, customer focus, respect, integrity, diversity, teamwork and quality of life. The bank developed service standards based on ESIP findings and increased opportunities for reward and recognition. Other changes included establishing a dedicated Work/Life department, initiating flexible work arrangements and a casual dress policy, and developing innovative child-care initiatives.

"The effort has dramatically increased employee satisfaction and PNC's customer satisfaction," Rohr says, pointing out that the percentage of employees rating the company as an "above average" or "one of the best" places to work is up more than 25 percent since 1995. The turnover rate has remained flat, but the percentage of turnover controlled by PNC has quadrupled.

The process has made Rohr a believer in the message delivered by the visitors from Harvard. "There is a strong relationship between employee and customer satisfaction and our company's performance, he says. With employee morale up, sales up and PNC's stock the number-one performer in the financial services sector last year, it would be difficult to prove him wrong.