A classic Sloan Management Review article by Schlesinger and Heskett, titled, "Breaking the Cycle of Failure in Services" teaches us that customer satisfaction depends on a number of things, including employee satisfaction! They basically say, if you were smart to be selective in hiring, and you try to enrich your employees by training them well, and keep them happy by paying them well and giving them other perks, they'll stay with your fi rm. Their staying is important because they know the company and the brand, and whenever customers have questions, the employees can answer them fully. Similarly, if the customer has a problem, the employees are better able to help the customer and fi x the problem. The customer service is good, and the customers go away happy, which also makes the employees happy, etc. In contrast, imagine a "cycle of failure." If you hire people without much screening, and train and pay them minimally, they're not likely to give a hoot about your brand or customers. The customers will pick up on this attitude. The employees are also going to be less likely to be motivated to "go above and beyond the call" to make the customers happy, and, indeed, the customers are likely to leave being dissatisfied, or at least unimpressed. Here's the tricky part. What if you are in such a cycle of failure? How do you break it? Imagine you are the CMO for a chain of department stores whose reputation for service is, well, shy of Nordstrom's. How do you intervene? Do you start paying your people more, hoping to make them happy? (But they were hired haphazardly and may not be "worth" it.) Do you fi re your current employees in order to start over? (Can you spell "lawsuit"?) Here is a simple version of the cycle. Where would you break in to fix it?

Cycle of Employee-Customer Satisfaction

Employee Satisfaction

Employee Training Good Customer Service

Employee Selection Customer Satisfaction

Customer Loyalty