Frank J. Navran - Society of Corporate Compliance and Ethics

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y Frank J. NavranThe King is dead.Long live the King!»»To focus exclusively on return on investment, or any other single key success indicator, creates a blind spot.Focus on all the measures of long-term, sustainable success.»»Nothing happens in business until somebody buys something, so attracting and retaining customers should bea prominent focus of any organization.»»Those who use our work product as input to their part of the chain of events that produce the final “product/service”are our internal customers.»»Our goal should be more than the mere absence of complaints. It should be a level of service that createsfiercely loyal customers—both internal and external.»»Integrity is the key to customer loyalty and building trust. Return on Integrity emerges as King. Long Live the King!NavranLe Roi est mort, vive le Roi!, was firstdeclared upon the coronation ofCharles VII following the death of hisfather Charles VI in 1422. In France, the declarationwas traditionally made by the Ducd’Uzès, a senior Peer of France, as soon asthe coffin containing the remains ofthe previous king descended intothe vault of Saint Denis Basilica. Thephrase arose from the law of le mortsaisit le vif—that the transfer of sovereigntyoccurs instantaneously uponthe moment of death of the previousmonarch. “The King is dead” is theannouncement of a monarch who has justdied. “Long live the King!” refers to the heirwho immediately succeeds to a throne uponthe death of the preceding monarch. 1For most of my 40+ years of experiencein the business world, I have been held to avariety of standards as indexes of my successand components of the formula by which thatsuccess was measured and rewarded. I’m fortunatethat for much of my corporate careerI was in a staff position where revenue andreturn on investment did not apply to how mysuccess was defined. Yet, in 35 years of consulting,nearly every client has been in exactlythe position where their single most significantmeasurement of success, the most equalof equals, was financial success. Return oninvestment (ROI) was king and created a blindspot in nearly every organization. And, formany, the return itself was too often viewedas being more important than the means bywhich that return was generated.Mid-way through my corporate career, Iwas given the opportunity to manage a groupof about 75 employees and a $5 million budget,serving a customer base of about 500,000. Priorto that, my experience in the company hadbeen as a staff manager. In my staff functions,I managed projects with relatively modestbudgets and very few, if any, tangible measurableoutcomes. My performance was moreabout the processes I employed and my abilityto meet project deadlines, than the more traditional,objective measurements that people inline positions usually faced.But, when I became a line manager, itwas all about the bottom line. The singlemost important measurement for me, andCompliance & Ethics Professional July/August 2012+1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 55
Compliance & Ethics Professional July/August 2012the people working for me, was work unitsper hour. We knew the cost and the marketvalue of hours worked. The key was to ensurethat the cost of performing our work was sufficientlybelow the price we charged for thatwork to allow us to make a profit. The bottomline was in fact “the bottom line”—a positivereturn on our investment.There were other objectives. We had toperform the work safely. We had to performthe work properly. But, when you cut to thechase, the motives for safety included both ourcare for the well-being of our employees andthe costs of lost time: having an employee onthe payroll being paid and producing nothing.And our concern for quality was also informedby concern for the bottom line. If we did not dothe work well, we had to go back and do it overor we created a maintenance nightmare thatrequired us to continually go back and fix whatwas wrong. And that costs money.The lesson I learned as a manager is that,while I was “leading” people, I was “managing”the bottom line. The investment in peopleand material and all the other things we didas leaders was only justified when the moneycoming in exceeded the money going out, sothat we could give an appropriate return toour shareholders on their investments. Returnon investment—in business shorthand, ROI.My position as a line manager was thelast time I had that level of responsibilityfor direct reporting employees and budgetmanagement. My next assignment was as aninternal consultant to the same organization.That led to my current role as an independentconsultant, focused on issues relating to ethicsand leadership.As an entrepreneur, I still keep an eye onmy costs and I still am concerned that revenuesexceed costs. But, of necessity, my focushas been on a different aspect of how successis measured—customer satisfaction or, to bemore precise, “customer loyalty.” Customersatisfaction may sometimes seem more difficultto quantify and evaluate than ROI. Butmy investment in customer loyalty does in factprovide a return, specifically, repeat businessthat lowers my marketing costs, reduces thetime spent trying to develop new business,and allows for a more efficient relationshipwith clients where we can spend more timeaddressing the immediate concerns and lesstime having to establish a relationship, learneach other’s idiosyncrasies, and build trust.To be clear regarding terminology, it maybe useful to borrow some language developedby a colleague of mine, Dr. Scott Simmerman. 2Scott was a consultant brought into a projectwhere the client needed some expertise inthe area customer service. Scott’s unique contributionwas to characterize three levels ofcustomer service:1. Process and handle—which he characterizedas the mechanics of a transaction.Consider the behavior of a typical checkoutemployee while you go through the processof finalizing your purchase. Scan-beep,scan-beep, scan-beep, all the while stuffingyour purchases into the iniquitousplastic bags. When all is said and done,the employee may or may not recite theprescribed, “Thank you for shopping at(insert store name here).” My local big boxhardware store has taken “process andhandle” to a new level. They have installedself-scanning stations where customersscan their selections, swipe their own creditcards, and bag their own purchases. Oneemployee can monitor four scanning stations,resulting in reduced costs while stillensuring that customers pay for every itemthat leaves the store.2. Customer service—where “process andhandle” is supplemented with a modicumof politeness, friendliness, and courtesy.56 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977
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