An engaged work force produce loyal customers which makes the company profitable. Constructing this three story building may take some time, but that is generally how we describe the Service Profit Chain. But you can reverse this chain. Disappointed people can frustrate customers and kill profitability real fast.
I read an article about America’s 10 most hated companies. (in Swedish) A one eyed focus on profitability can really destroy things very rapidly!
The people working at American Airlines are often referred to as the unfriendliest crew in America. That title is a heavy burden to bear. The constant cuts are no surprise. 11 000 jobs since September of 2012 and a constant balance act on the edge of non existence. The merger with US Airways is more of a life boy than something to be excited about. The providers with the poorest service loose out in a shrinking market.
JC Penney was established over a hundred years ago with the ambition of taking Jesus’ golden rule to shopping: Treat others as you want them to treat you. That made customers love JC Penney. But that is not recent history. Recent history is that of a grey and unglamorous company that got a new president a couple of years ago. He hiked prices. Now they are an unglamorous company with high prices. That cannot fly. Sales dropped like a plain without fuel and the share holders rage. Only companies with enthusiastic customers can raise their prices.
I see companies as a three story building. People are the first floor. Customers are the second floor and profitability is the third. If you want to live fashionably on the third floor you have a vested interest in maintaining the load-bearing walls on the first and second floor. American Airlines and JC Penney show what happens if you do not.