Alignment and strategic change: a challenge for marketing and human resources.
Increasing alignment with customers and alignment of employees with the strategy is a goal of many change efforts. Two functional areas that can make contributions to change programs are marketing and human resources (HR). Within a company, these two functions are uniquely positioned to deal with issues of market alignment. But we believe this potential has been underutilized. Creating the leadership to understand and proactively build this relationship can make an important contribution to company success. We suggest that our model and tools can help forge the bridge.
The role for strategic marketing is to gather, integrate and design winning marketing strategies for products and services in the marketplace and even to provide "intelligence development" (Deschamps and Nayak, 1995). A central and strategic function of a company's people (HRM) systems is to ensure alignment. As Becker et al. (1997) state, the "tangible evidence of an HR manager's focus on the human capital elements of important business problems (e.g. those problems likely to impede growth, lower profitability, and diminish shareholder value) is an internally coherent, externally aligned, and effectively implemented HRM system" (emphasis added).
Not all HR practitioners are prepared for their emerging strategic role. Retooling HR to become a strategic business partner "at the table" is receiving considerable current attention (Ulrich, 1997). Growing evidence suggests that people systems, or human resource management systems, play a significant role in creating success for companies. Data that supports the business case for HR as a competitive advantage is receiving intense attention (Becker et al., 1997; Huselid et al., 1997). Paradoxically, many observers have been noting that the HR function is in crisis. One reason is that the traditional role of HR is not equipped to be in the position of strategic business partner. At the same time, more traditional HR functions are being automated and/or outsourced. The role is being eroded with less clarity about how to replace it. While there are numerous exhortations for HR practitioners to transform themselves into strategic business partners, the ways to change this role and attendant tools are not well defined.
We believe that one way to accelerate organization change is for both marketing and HR functions to relinquish some parochial turf-based perspectives, join in collaborative effort, cross functional boundaries and seek common ground to focus on market (customer-employee) alignment. While Schneider and colleagues have been urging this for a number of years (Schneider and Bowen, 1985), it is only recently that they have been able to cite a clear success story. Schneider reports that their work in a large insurance company exploring the relationship between employee attitudes and customer satisfaction led to the formation of cross-functional (marketing and human resources) corrective action work groups to focus on region-specific improvements (Schneider et al., 1996). They also noted an overall "cross functional integration of marketing and human resources management which these findings have stimulated" (p. 704).
Developing the partnership for alignment assessment between HR and marketing will not be easy. In many instances with which we are familiar, the two functions directly concerned are not only not integrated but in fact rarely talk to each other. They might even claim to not understand each other. There are significant barriers which keep the two functions apart. Nevertheless, both functions deal with customers - internal ones as well as external ones - and both functions share some overlapping technologies, e.g. focus groups, surveys, interviews.
In this paper, we offer a rationale as well as some tools with case examples that we believe can help the marketing and HR functions migrate to a collaborative business partnership role by becoming champions of market alignment. As part of this effort, we think that HR can reap additional benefits by learning more about the marketing of services including the marketing of their own services to their internal customers. HR skills and knowledge should flow to marketing as well.
In our experience, four interlocking elements must be considered to successfully build HRM systems that are internally coherent and externally aligned. These are:
1 tools to measure and map both customers and employees on common dimensions to make customer-employee alignment part of a balanced scorecard;
2 a conceptual understanding of the process of building alignment with the market - a model of the dynamics and the total system;
3 cross-functional integration, especially between marketing and HR; and
4 leadership that is capable of leading cross-functionally through all the steps of the alignment process.
Here, we suggest a model that can be used to think through alignment issues to make them actionable; and we describe some powerful tools to measure, map and make visible the degrees of alignment. Several company examples illustrate the benefits and challenges.
The alignment challenge: an illustration
Although the following case may seem somewhat dated, we believe that it represents a good illustration of the overlap between marketing strategy and HR, as well as conflicts that continue to recur.
By early 1991, Pepsi-Cola had a new strategy firmly in place and had a clearly articulated vision to accompany it. Franchise bottlers, formerly Pepsi's customers (numbering 600 in the early 1980s) had been acquired. Pepsi's new customers now were the former customers of the bottlers - supermarkets, restaurants, theaters (numbering 600,000 by 1990). The cornerstone of the vision was "the right side up" company. Pepsi used an inverted triangle (now "right side up") as a symbol for its new customer focus. The concept was similar in design and intent to Nordstrom's. Executives were still at the apex, but now that was rotated 180 degrees. The pinnacle of the traditional organizational pyramid moved to the bottom of the page - supporting both middle management and the pyramid's base - the front line workers at the top. In the Pepsi design, the largest number of the organization's people were positioned at the base, directly interfacing with customers at the top of the page. Pepsi-Cola's slogan became "the customer is why." The goal was alignment with new customers in the market. A different and greatly expanded customer base required new employee behaviors throughout the organization.
Vigilant attention to alignment is a leadership process absolutely essential for major cultural change of an organization. Craig Weatherup, Pepsi-Cola's president, said he was the "chief aligner." He set out to align the company's culture and the behavior of its employees with the strategy. Weatherup's goal, as quoted in Fortune, was "to fill every employee with his vision of a new, customer-driven organization and the tools they would together use to build it...Pepsi-Cola would become an organization focussed on customer needs and filled with employees who know how to reengineer the processes by which they do their work." Weatherup was out to change employee mindsets.
Yet, in the fall of 1991, the Dallas Morning News, as reported by American Public Radio's Marketplace show, ran an article which reported behavior at variance with the strategy and the supporting HR initiatives: San Antonio based Pizza Management, Inc., which operates 240 Pizza Hut franchises, will serve Coke instead of Pepsi. The franchise owner charges that while Pepsi has tried to run him out of business by attempting to yank his franchise deal, Coca-Cola has helped strengthen his business.
What was happening here? For starters, Pepsi lost a customer. Clearly something in Weatherup's quest for customer and market alignment had gone awry even in Pepsi's home turf of Pizza Hut. The incident illustrates the potential for missteps and failure in large scale strategic and culture change. It was an alignment problem.
Tichy, a leading organizational theorist concerned with change and change management, made alignment the foundation of the analytic framework in his book, Managing Strategic Change (Tichy, 1983). He stated, "The strategic change management task is to keep the organization internally aligned and aligned with its external environment" (p. 117). Tichy focused primarily through the lens of internal alignment - the technical, political and cultural systems. Rather than viewing the market environment as a separate system, Tichy considered it as part of the central three. Today, with the intense focus on markets and customers, it helps to consider the relationship between internal systems and external markets somewhat differently.
Market alignment is key to ensure growth, to create added customer value and to increase customer retention. Whether called quality function deployment or market alignment, achieving synchrony between the organization and its environment is a high priority for leaders of strategic change in many companies. It is an especially daunting challenge as the pace of change increases and as the competitive forces that drive alignment - the need to increase "customer intimacy," to optimize product realization and enhancement time, and to decrease cycle time intensities. The business climate of the late 1990s and beyond demands that companies pay continuous and sustained attention to alignment between their external environment - their customers (in different markets and different market segments) - their strategy and their employees at multiple levels, as well as the structures, systems and processes that determine alignment capability.
Recently a number of observers - theorists and researchers alike - have focused renewed attention on issues of alignment with customers and the marketplace (e.g. Burke and Borucki, 1995; Cespedes, 1995; Cobb and Olivier, 1995; Gale, 1994; Gouillart and Kelly, 1995; Rucci, 1995; Schneider and Bowen, 1995; Ulrich and Lake, 1990). Relevant issues include: how do you define alignment? How do you measure it? How do you increase alignment? And, how do you insure that you stay aligned?
Continuous assessment of alignment is a critical activity. This involves examining and measuring both the outside of the organization and its inside. Assessing the environment requires careful, refined market segmentation - understanding the characteristics of individual market segments - to accurately determine what customers and potential customers need and expect. Internal assessment and change are equally important. Companies need to ensure that internal systems and people - their mindsets and behaviors - are synchronized across units and with customers and can rapidly adapt to changing markets and customer needs. This involves creative uses of such assessments as organization surveys and tailored, 360 degree feedback.
Gale (1994) presents three criteria to assess what he calls "comprehensive alignment." He suggests asking questions about each group within an organization to determine how well the organization is aligned. The first is a measure of internal consensus or dispersion of perceptions about customers: "Are the people within the group closely aligned with each other in their ideas [of what customers want] ... or are their ideas widely dispersed?" The second is a measure of how closely the group average agreement comes to customers' actual views: "Is the group's consensus idea of how customers make a selection decision aligned with the real desires of customers in the targeted market?" The third is a judgment about intended action; in his view the group is not aligned until it has a plan of action to increase alignment: "Do people in the group know what they have to do to enable the organization to accomplish what they believe the customer wants?" (p. 351).
Once assessment is done, alignment is measured, diagnoses are formulated and a plan of action decided, the next step is implementation. Key to building alignment is changing organizational and employee behaviors (the province of HR) in coordination with an in-depth understanding of changes in a dynamic, global marketplace (the province of marketing). Changing behavior takes the HR practitioner into the increasingly familiar arena of competencies and competency assessment - both organization competencies and individual competencies - comparing capability that is needed with the capabilities the organization already has (Cobb and Gibbs, 1990).
When a new, customer driven or market oriented strategy involves reengineering or otherwise requires employee behaviors that are at variance with an organization's dominant culture, there can be strains, missteps and extreme pain. A large retailer wants to transform its culture from being operations driven to being sales driven; a semiconductor manufacturer needs to eliminate functional stovepipes to create cross-functional teams with multiple customer contacts; a chemical company wants to reengineer its scheduling department into a comprehensive materials management team that is self-managed; a regulated utility company wants to transform itself into a nimble and lean player in the newly deregulated power environment. These situations are not simply changes in strategy driven by new interpretations of market forces; they require wrenching changes in organizational structure, culture and employee behavior. These attempts at change are often not well thought through, costly and are subject to crippling resistance.
For example, an American Management Association survey of Fortune 500 companies found that no more than one-quarter of the surveyed organizations achieved their change management goals (American Management Association, 1994). The major contributing factors often lie in the people systems and the accompanying communications and training elements found in typical change management programs. Research evidence suggests that many reengineering efforts - one type of change program - fall short of their goals for similar reasons (Grover et al., 1995). Reengineering practitioners - including Hammer, reengineering's leading thinker - estimate that 70 percent or more of all reengineering initiatives fail to achieve their objectives.
We believe that both marketing and HR can play a leading role in anticipating problems and devising solutions - to measure acceptance and resistance and also design change interventions that work.
In our practice of market alignment consulting, we have developed a model that first describes steps for increasing alignment and second a set of additional tools for measuring and tracking customer and employee mindsets and competencies. The model details and simplifies processes critical to alignment building and strategic change. The tools facilitate discovery, measurement, analysis and display of misalignment. The focus, in the broadest sense, is market alignment - aligning the inside of an organization with its external customers and suppliers in the value chain. But, the approach is useful with all aspects of internal alignment as well - from strategy to company policy to employee attitudes. For example, to what extent do employees buy into a company's health, safety and environment policy? Are employees in the company behaving in ways consistent with the company's customer focus values statements? Can marketing reduce the tension and disconnects between sales and customer service by encouraging alignment through cross-training? Can HR re-frame what once was a traditional training needs analysis as a true alignment challenge where the task is alignment of learning systems with the real needs of the customers?
Using system oriented tools at the front end of a comprehensive, customer-driven reengineering effort, we can devise interesting measures and ask "What are customers really looking for when they telephone the call center for customer service? What do customer service representatives think? How much alignment of mindsets is there?" Asking these and similar questions is important because excellent service to customers in one market segment may be a disservice to customers in another; relevant, timely training for one segment may be irrelevant and time wasting in another.
The model and other tools enable companies and their HR and marketing departments to tackle market alignment problems systematically. Alignment can be measured in both qualitative and quantitative terms. Using the tools can uncover and diagnose sources of misalignment and point to practical, mid-course corrections needed to bring companies into alignment. They also enlarge the potential for action by allowing strategists to map customers and employees on to the same visual space.
A model for building market alignment: a tool for strategic change
Our model for building market alignment is a systems oriented, analytic tool for strategic change. It is divided into 12 sequential steps grouped into four distinct phases: Market, Strategy, Implement, Monitor [ILLUSTRATION FOR FIGURE 1 OMITTED]. Each step considers relevant elements, important actions and significant questions to move the change process along. We take the position that alignment assessment is not a one-time event but should be continuous and considered in all four phases; each step is critical. The model acknowledges prominent roles for both marketing and HR as important strategic partners through all phases of the alignment building process.
The model rests on several basic assumptions. First, a thorough understanding of customers and the market should drive strategy. Second, strategy has to take into account not only the marketplace but also the organization, its capability and its employees. Third, the business strategy must have an accompanying, integrated HR strategy to ensure its implementation. Fourth, optimal execution of the business strategy depends on implementation of the HR strategy. Finally, monitoring and evaluating the effectiveness of the business strategy and the HR strategy are necessary, ongoing processes to provide feedback for continuous improvement. The phases and steps of our model are shown in Table I. Market and intra-organizational alignment can be measured as an organization or its units move through the cycle. The relevant measures and dimensions on which to chart alignment will vary in individual cases.
The model serves as a diagnostic tool - a checklist for identifying steps (or whole phases) that have not been adequately addressed. Just determining in which quadrant of the cycle one is, in relation to other quadrants and their relevant, strategic questions, can yield insights. For example, one client company, a highly successful training enterprise, was interested in expanding its offerings. It wanted to look at potential, new buyers. What should the company do to align with the needs of these new customers/prospects? To answer this question, they turned to market research, an activity of Phase 1, Market. Because this was not a start up situation, however, the client was also persuaded to take a systematic look at the immediately adjacent, but preceding quadrant in our model - satisfied users in Phase IV, Monitor. We discovered that the company was collecting very little and hardly adequate customer satisfaction data to help them evaluate outcomes and effects. Using our model, with Phases I and IV adjacent to each other, we illustrated a close connection between the two. From innovative, in-depth, follow-up inquiry with a sample of satisfied customers, the company was able to discover some important elements residing in the marketplace that could be used for significant marketing and program modifications, including the identification of a major source of referrals for future business.
The model suggests looking at the relationship between suppliers and customers in each phase, not only in the Market Phase. In two representative cases where we were consulting to HR groups, we encountered company HR departments who had focussed their attention on Step 8 - high leverage jobs (and their attendant competencies) in Phase III. Because we were interested in alignment and external customers as well as internal ones, we suggested that the clients broaden their perspective and initiate studies with customers of the outputs of these jobs - people in the supply chain, not just the job incumbents. In one sense, we were asking our HR clients to consider market research questions. In our inquiry with customers, ostensibly about competencies, we uncovered serious misalignments and incomplete work on HR strategy which is required in Phase II, Step 7. In both examples, we observed HR practices that were not aligned with the business strategy.
In the first instance with a major computer company (that subsequently was brought almost to its knees by their lack of market awareness), in-depth interviews revealed that, contrary to the company's announced strategy of selling solutions not hardware, salespeople in the field were behaving in exactly opposite ways from the strategy. As a frustrated principal from one of the company's software partners (an intermediate customer in the supply chain) observed in describing a critical situation which involved a joint sale: the salesperson was running out the door. He couldn't stick around to talk to the strategic account manager because he had to get a box sale before the end of the quarter to make the numbers ... The metrics drive the ... salespeople to not even think about solutions because they are metrically driven on short-term delivery. And that's a mindset that I am up against in partnering with them. It clearly hurts me and it hurts their company.
Tools for measuring and displaying alignment: market alignment profiles - MAPs
Along with our model, we have developed three additional tools for studying alignment: market alignment profiles, focussed dialog and computer aided text analysis. Market alignment profiles (MAPs) are used to visually display different parts of the organization and its customers on common dimensions that are salient to both groups. There we can apply a concept applicable to alignment or "goodness of fit" - congruence versus gaps. Gaps can be measured. We have found quantitative methods useful for charting our analyses of market segments - the tool of market maps - to draw alignment profiles and calculate the gaps. Here, our concepts resemble Gale's (1994) measurement approach described earlier, but our survey instruments use open-ended questions and we display our data visually in alignment profiles.
For example, Figure 2 shows a serious problem of misalignment - groups out of synchrony with each other and out of alignment with customers. The company is pictured in Phase I of the market alignment process. Sales had fallen 200 million dollars in 18 months. We sought answers to questions about customer expectations from each of the major groups - customers, the salesforce and management. For the two employee groups management and salesforce - we used what was essentially an interview-based, issue-specific employee survey with the important instruction to respond to certain questions as "your best customer would."
Analysis and scoring of responses resulted in the three groups being clustered into different areas of the same space. The relevant dimensions defining the space and common to the responses of all three groups are on the x axis (east-west: strong need for partnership versus no need for partnership) and y axis (north-south; high versus low focus on internal problems). The display makes the size of the gaps clear and dramatic; the dimensions (only a few are shown here) facilitate the diagnosis. Whereas customers voiced the need for a "partnership" relationship with the company as being far more important than any internal problems, the salesforce and management were divided on this issue. Management stressed both internal problems and the need for partnership as the major areas for immediate attention. The sales group appeared almost oblivious to that aspect of customer needs. They were more focussed on internal issues of poor communication and lack of cooperation. Sales was out of alignment with management and, more importantly, with customers. Systemic breakdowns in communication were evident. Now that both marketing and HR questions had been brought to bear, the picture was clear-customers and employee groups in the same visual display of mind-set space. The way was opened for the internal OD consultant to address these different and opposing perspectives with quick action.
Tools for in-depth inquiry: focussed dialog
While our MAPs provide the visual display of alignment elements, it is the focussed dialog that provides the organization-specific dimensions for the MAPs. This approach does not rely on the usual, close-ended market and employee survey questions which presume response dimensions in advance. We use open-ended questions and respondent-dependent probes to enlarge the potential for dialog with our samples. This enables us to ask not only "what" but also "why" - why does the person think the way they do and tend to act the way they do? These dialogs, for the most part conducted on the telephone by trained interviewers, are transcribed and subjected to computer aided text analysis. The open-ended dialog affords numerous opportunities for the emergence of common dimensions without forcing them; and the text analysis quantifies the themes discovered.
One frequently used variant of the focussed dialog is the critical incident technique. Originally developed for human factors and organization research and subsequently for individual competency studies, it has recently been applied in marketing inquiries about service encounters (Keaveney, 1995). Table II illustrates portions of representative, focussed dialog questionnaires in which market research and organization behavior research questions were combined. In the example, a sample of customers and a sample of front line, field service people of a large computer service company were asked to describe critical service situations where the outcomes had been particularly satisfactory and again where there had been significant frustration.
Much contemporary research suggests that surveys are more than close-ended questions; they are dialogs (Tanur, 1992). If so, why impose the constraints of answers conceived in advance? Dialogs permit us to engage in a give-and-take of ideas and information. The open-ended interview permits in-depth exploration of what is significant and the reasons behind it. Our approach enables the dialog to flourish to find out what is really going on behind the mask of numbers. In addition, as suggested by Ford and Ford (1995), the focussed dialog can be crafted as an integral part of the change process.
The argument put forward by McKenna (1995) regarding dialogs with customers can be applied equally to employees. McKenna argues:
companies can start real-time dialogues with their customers ... Marketing's traditional connections to customers are no longer sufficient in a real-time world. Focus groups, market research, consumer surveys, and other tools for probing the consumer's wants and needs are - and always have been - limited.
McKenna urges using new methods to truly engage the voices of customers, and we would add, employees.
Customer retention and employee retention are often inextricably linked. For example, Reicheld (1993) observes that exactly when a company may be increasing its understanding of its customers (for example, as McKenna suggests) it may be losing key employees at the customer interface. For this reason, we would argue that dialog must take place with employees as well as customers. Berry (1981) underlined the importance of parallel dialog when he discussed treating employees as customers. He suggested companies should approach their employees with the same empathy and concern for satisfying their needs as the employees themselves are expected to display when dealing with external customers. Why? Because employees respond to company policies and practices in ways similar to customers; customer retention and employee retention should be examined together. Schneider and Bowen (1995) have consistently demonstrated a strong relationship between employee satisfaction and customer satisfaction in multiple studies. They found that when employees thought well of a company's HR practices, customers rated service quality high. Just as it is important to retain loyal customers, so too is it important to retain knowledgeable, high performing employees, (Grant and Schlesinger, 1994). And, just as we do market surveys with customers, we do corresponding employee surveys with the workforce. Dialog is important in both instances.
An example of the payoff for in-depth, focussed dialog with customers is cited by Heskett et al. (1994), "Currently, the weakest measurements being used by the companies we have studied concern customer satisfaction." These authors list causes of weak measurements including the lack of in-depth questions combined with inadequate quantitative measures: scales simply cannot capture complex information rigorously. They cite the case of Xerox (pp. 165-6). A secondary, in-depth analysis into the relationship between satisfaction scores and customer retention revealed significant differences between 4s (satisfied) and 5s (very satisfied). Customers giving Xerox 5s were six times more likely to repurchase Xerox equipment than those giving 4s!
New, on-line, intranet based approaches to employee surveys (Prudential Communications Group, 1995) can be combined with powerful systems of analysis of free response text to help transform scale dominated surveys into rich dialog conveying much more information. The focussed dialog approach also encourages thoughtful responses to "what if" questions that can point in clear, actionable directions. In one example with which we are familiar, this "marketing" approach, if adopted by HR, could have avoided a costly redesign of an employee health plan. A large oil company was in the process of redesigning its health care package. The company spent considerable time and effort in structuring the package and the accompanying communications. A high degree of employee acceptance was anticipated. However, the response to the new plan when rolled out was described by one senior HR manager as, "euphemistically, total revulsion." The entire plan had to be re-designed, this time with major employee input. If the company had used a well designed focussed dialog survey from the beginning and "tested the market" including pre-testing alternatives, it could probably have had a health plan aligned with employee needs on the first try, with attendant savings in money and employee confidence.
In several applications of focussed dialog using a "what if" approach and opportunities for suggestions, we have seen recommendations for action emerge quickly and clearly. In one assignment, the management of a cellular phone company was apprehensive that introducing cross-training between in-store sales and customer service might meet with strong resistance. A focussed dialog survey of a sample of employees in both groups included such questions as, "How could communication between the two departments be improved?" "What steps would you recommend to solve the problems you have mentioned?" Management was surprised when they found that not only were both groups in relatively good alignment but also enthusiastically recommended cross-training and role sharing. Focussed dialog enabled their own words to be used as the employee-derived "language for change." Results from this tool facilitated the roll out of the change; it was almost as if the change were "pulled through" by the employees.
Tools for quantifying qualitative data: computer aided text analysis
Open-ended interviews do not provide HR practitioners with a panacea. Focussed dialog interviews can last as long as an hour (and even longer in detailed descriptions of critical situations investigating employee competencies). With large numbers of respondents, the total page length of transcripts is formidable. However, our computer aided text analysis allows us to capture, remember, count and analyze all the ideas from many respondents and get quick turnaround on strategic questions. Codes are developed to quantify and compress the ideas. The codes are then used in our segmentations. Factor analysis aids the discovery of dimensions common to both employee groups and market respondents - illustrated in market alignment profiles. At the same time, our techniques allow us to retain and easily retrieve the actual quotations - the heart of the dialogue.
An example of the utility of our combined tools illustrated by market alignment profiles is provided in the case of a large yellow page division of a Baby Bell. The company was experiencing a flattening of advertising revenues due to customer defections. The client's strategic planning and marketing groups wondered if its salesforce was truly addressing customers' needs in its selling efforts. They suspected misalignment.
To test this, the client asked us to conduct focussed dialogs with a sample of salespeople as well as a large sample of customers Yellow Page advertisers. Customers were asked about their decision process regarding yellow page advertising. Among the queries directed to salespeople was one in which we, again, asked for responses "in the way your best customer would." Analyzing the responses, we identified some common dimensions and important starting assumptions, (see Figure 3 for display of the existing, "as is" state). Analyzing what Gale (1994) calls the supplier selection decision, we found that the best customers (those spending the most on Yellow Page advertising) were renewing annually on a routine basis without engaging in analysis. However, salespeople were assuming that all customers were conducting annual cost benefit analyses before deciding to renew. In fact, by approaching all customers with the assumption that cost benefit comparisons were necessary, salespeople were actually defeating themselves encouraging customers to question the efficacy of Yellow Page advertising. During the sales process, a number of major accounts were finding reasons to curtail their advertising spending. Some important customer mindsets were not being addressed in either sales training or in the company's marketing efforts. There were flaws in the company's training and HR strategy.
The study necessitated changes. Among those were changes in HR strategy. We recommended and then helped implement new instructions and training materials for the salesforce using approaches discovered in the research. Processes were changed so that customers were screened and segmented by their likely responses to different selling efforts. For example, the most profitable customers were classified by their probable decision to renew their ads automatically. Sales people were instructed to treat that segment's decision to continue Yellow Page advertising as routine unless otherwise indicated by the customer. The direct contact with this segment was modified to focus on telephone and mail-in requests. Other segment-specific changes were made so that customers were categorized on research-based dimensions more relevant to the selling process than traditional demographic similarities used in the past. Face to face calls were made more appropriately and more cost effectively [ILLUSTRATION FOR FIGURE 4 OMITTED]. Sales training was modified accordingly. As a result the company realized growth in revenues as well as significant cost savings. While we might have been able to compare superior and average performing sales representatives using a more traditional HR centered competency study design, we would not have discovered the psychographic segments of customers - based on their decision-making criteria. By using tools that added the customer-focused marketing perspective the importance of HR strategy was highlighted and demonstrated tangible value.
Although alignment and its complement, gap analysis, are important concepts for diagnosis and strategic change interventions, there are few simple, step-by-step approaches to building, improving and sustaining it. Our model is an attempt to address this. The model is directed toward interventions to change employee behavior. The tools of focussed dialog and computer-aided text analysis are particularly well suited to probe in depth, discover and quantify subtleties in organizational behavior.
But, even before the tool set is employed, an analytic framework can be used to guide a team through a fast-moving, two-day diagnostic session in which the implications of the future, desired state of increased alignment is envisioned in multiple scenarios. This exercise allows a team to get a jump start on alignment, if they haven't started, a chance to take stock before continuing, if they are already well on their way and an opportunity to construct an overview of action steps needed - before committing to next steps.
Then, the tools enable discovery and refinement of common dimensions of alignment - behaviors and mindsets - between customer segments, between different employee groups and between customers and employees. Computer aided text analysis and visual display facilitates quantifying and organizing the themes. Results, summarized as market alignment profiles, or simply alignment profiles, can elucidate gaps and dramatically pose the challenge of how to close them - how to move from the "as is" to the "should be." Interview questions can be posed in ways that make the research results quickly actionable.
In order to increase their ability to function as strategic business partners, the HR and marketing functions should play a significant, collaborative and coordinated role in the alignment building process. Frequently, HR's role is ignored or not followed through completely. This seems short sighted especially since recent commentators have pointed out that in service industries employee behavior is the service (Heskett et al., 1997). Telephone customer service is one obvious example. In less obvious, but equally important ways, service bundled with the product is becoming "the" differentiator in many industries.
We have suggested HR's allying with strategic marketing. This may appear difficult in that each function deals in different language and with different domains. However, both use similar tools - interviews, focus groups and surveys. Earlier, Schneider and Bowen (1985), having noted correspondences between organization behavior literature and consumer behavior/marketing literature, suggested closer collaboration between the two functions. Subsequently, Schneider and colleagues over at least the past decade have explored the data-based potential for this relationship. In his recent insurance company case, described above, he reported an organizational linking of the two functions.
Our model and additional tools are suggestions for ways in which HR and marketing can champion market alignment by crossing functional lines and allying with each other to become more capable as strategic partners with a systems view of the business. At the same time they can learn about ways in which introducing change can be made to more closely resemble the new product development process. In any case, building alignment is a carefully planned trek, not a sprint.
A model for building market alignment
1 Get close to your customers
Build a comprehensive picture of your customers' needs, wants, attitudes, beliefs and motivations. Construct a needs-based segmentation that differentiates people by their mindsets
2. Understand the marketplace
Build a comprehensive picture of the market - including noncustomers' needs, wants, attitudes, beliefs and motivations. Broaden the needs-based segmentation that differentiates people by their mindsets. Look at competitors
3. Survey employee mindsets in relation to customers
Identify important customer-employee interfaces. Develop a comprehensive picture of key employee attitudes, beliefs and behaviors
4. Model your customer activity
Look at how your customers' behavior and demographics attach to psychographic characteristics. Model customer activity to forecast market direction and anticipate changes in customer behavior based on modeling past behavior. Analyze competitors
5. Shape a strategy to meet and anticipate customer needs
Draft a customer-driven strategy to meet the needs of your market. Increase customer retention and acquisition through identifying most profitable segments and segments that hold the greatest opportunity for growth
6. Explore alignment of customer and employee mindsets with strategy
Examine how employees' behavior, organization level and function relate to psychographic characteristics. Use Market Alignment Profiles to map employees, customers and marketplace in the same space on key dimensions. Explore alignment of employee mindsets with strategy. Identify disconnects. Study relationships between customer retention and employee retention
7. Develop a customer-driven HR strategy
Create or refine your HR strategy to align the organization with new definitions of customer-driven and new understandings of market segments. Build organizational capability. For example, what will it take to create the "right-side up" organization? What kind of leadership is necessary to create market alignment and "shared mindsets" between a unit's customers and employees? What are the competencies that will achieve the "seamless" organization? What will it take to sustain an entrepreneurial culture? What will it take to build partnership relationships with customers?
8. Determine key leverage points
Focus on jobs or organizational units that are pivotal for implementing the strategy. For example, a part of the salesforce that concentrates on one industry may be key to achieving market share in the fastest growing segment
9. Identify gaps at key leverage points
Assess your human resources at the key leverage points. Use high performance models. Describe and analyze the gaps between the best and the rest. Do you have the leadership required for achieving market alignment? Benchmark and determine what top performers - internal and external - are doing/should be doing. Systematically assess strengths and weaknesses
10. Bridge gaps
Increase organizational capability by designing and instituting HR interventions to close the gaps and increase market alignment. Examples include: recruiting, restructuring, reengineering, training, large scale culture change
11. Track your customers/evaluate interventions
Keep your finger on the pulse of your customer base. Monitor changes in the attitudes and beliefs of the marketplace. Test new product and service concepts on an ongoing basis. Evaluate effectiveness of organizational interventions and/or applications. Reevaluate performance metrics. Continue to survey employee mindsets. Build a learning organization
12. Maintain a dialog with your customers
Hardwire the voice of the customer into all functions of the company. Establish the structure to collect, disseminate and integrate customer needs data across the company to human resources, product development, quality and strategic planning
Example from a focussed dialog questionnaire
Think back on some recent situations where you were directly involved in working with external support service personnel. I want you to briefly explain the situation and then I'll ask you a few more details. Again the situations don't have to involve (company name)
Let's start with a recent situation where you considered customer support to be essential. Briefly summarize the situation: who was involved, what the support people did, and other details.
(Probe examples: what was going on in your mind when that happened? What did you do? Then what did you say?) Given your knowledge of other vendors, do you think other vendors would have handled the situation differently? Now let's discuss another situation, this time one that involved a recurring problem that was especially difficult to diagnose. You may need to think a second about that but if you could, again, briefly describe the situation and what happened.
(Probe examples: what did the customer actually do in this case? What could (company name) have done better in this instance?)
To customer service engineers:
Think of a situation where you serviced a customer and felt it was particularly challenging and you felt pleased with the outcome. Describe the entire situation in detail including what led up to it and what you did, what you said and what you thought about at each step along the way. And finally, how the situation turned out.
(Probe examples: what were you thinking at that point? What did you do? Then what did you say?)
Now think of a situation where you serviced a customer and felt frustrated that the situation did not turn out as you wanted. Again, describe the entire situation in detail including what led up to it and what you did, what you said and what you thought about at each step along the way. And finally, how the situation turned out.
(Probe examples: what was going on in your mind when that happened? What did you do? Then what did you say?)
American Management Association (1995), "Corporate surveys can't find a productivity revolution, either", Challenge, November-December.
Becker, B.E., Huselid, M.A., Pickus, P.S. and Spratt, M.F. (1997), "HR as a source of shareholder value: research and recommendations", Human Resources Management Journal Vol. 31 No. 1, pp. 25-41.
Berry, L. (1981), "The employee as customer", Journal of Retail Banking, March, pp. 33-40.
Burke, M.J. and Borucki, C.C. (1995), "Does a climate for service matter?", paper presented to American Academy of Management, Vancouver, August.
Cespedes, F. (1995), Concurrent Marketing: Integrating Product, Sales, and Service, Harvard Business School Press, Boston, MA.
Cobb, J.C. and Gibbs, J. (1990), "A new competency-based, on-the-job programme for developing professional excellence in engineering", The Journal of Management Development, Vol. 9 No. 3, pp. 60-72.
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|Author:||Cobb, J.C.; Samuels, C.J.; Sexton, M.W.|
|Publication:||Leadership & Organization Development Journal|
|Date:||Jan 1, 1998|
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