The Failure of a Profit-Centered Focus

You may be aware of the recent events that have led to the damaged reputation of United Airlines. The story was told: United had to randomly select four passengers to alter their travel plans to make room for four United employees. A video of police officers dragging a passenger from the plane went viral. United CEO Oscar Munoz’s, initial reaction was, “They [employees] followed proper procedures and had no choice but to call authorities and remove the man.” After the public’s outrage and media muck, Munoz changed his tone by stating, “[the incident] has been a humbling experience, and I take full responsibility. This will prove to be a watershed moment for our company, and we are more determined than ever to put our customers at the center of everything we do.”

About four years ago, a friend of mine was working as a personal banker at a large financial company. He told me he was going to quit because his bonus, reviews and future advancement was based solely on production of new credit cards and checking accounts, not long-range financial planning for his clients or customer satisfaction. A former branch manager I know commented on such production goals, “If you do not make your goal, you are severely chastised and embarrassed in front of 60-plus managers in your area by the community banking president.”

Shortly after my friend quit his job, the Los Angeles Times reported that his bank was forced to pay a $185-million fine the prior year. The company reported that CEO wasn’t “fired”, he wasn’t just asked to leave. Although he did not receive any severance, he was able to retain over $100 million in vested stock and pension benefits. How sad! On his watch, employees created as many as 2 MILLION accounts without client authorization.

Recently, my friend who had quit his bank job was having coffee with his former vice-president. She urged him to come back to his old job, and reported, “Our new focus is on customer satisfaction, not production. New credit card apps are down 42% and new checking accounts down 35%!” She also said the bank is making more money now that they are customer focused.

Imagine that…take care of the customer and your frontline workers and profitability will increase. What a novel idea! Why does a CEO have to endure, a “humbling experience” as Munoz claimed, or get slapped with a multi-million dollar fine to remember that the customers pay the wages? Customer-centric organizations such as Four Seasons, Southwest Airlines, and of course Disney, never forget this!

Will United really begin to put customers at the center of everything they do? And, will the bank continue to be customer-centered? Only time will tell.  Is it simple to develop a culture in which customers and employees are the focus, not profits.  Simple or not, it is the ONLY way to long-term success!

 

 

 

 

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