Employee and Customer Management Processes for Profitability The Case of Hewlett-Packard India = Vinnle Jauhari Abstract This paper attempts to give an insight into the customer relationship management processes at Hewlett Packard India (HP). The company strongly believes that there is a strong relation- ship between employee satisfaction, customer satisfaction and market share, This paper at- tempts to study the employee management processes at HP. It also tries to map the customer management processes at HP. The employee satisfaction processes include the HR initiatives taken within the organization, measures taken by the top management lo sustain a suitable climate within which innovation thrives and concern for emplayee welfare and develop- ment becomes extremely important. The customer management processes include creation of databases, managing the call centre, ensuring skill and knowledge upgradation by tbe engineers and service providers in touch with the end consumer. The organizations should Socus on customer loyalty rather than just attempting to achieve customer satisfaction. Cus- tomer loyalty in the long run acts as a source of profitability for the firm. Key Words: Customer Relationship, Employee Satisfaction, Customer Satisfaction, Customer Loyalty 0 INTRODUCTION This paper attempts to map the customer relationship management processes at Hewlen- Packard India. Customer relationship management refers to those processes which aim to build a life long relationship with customers. It is a long term approach concemed with Jong term profitability. The case study of Hewlett-Packard (HP) has revealed that customer relationship management has number of dimensions rather than just customer satisfaction. This study particularly focuses on the employee satisfaction and customer satisfaction proc-Employee and Customer Management Processes for Profitability 247 esses initiated at Hew!ett-Packard India. The study was conducted by carrying out indepth interviews with the senior managers at Hewlett-Packard including their ex CEO Suresh Rajpal Hewleu-Packard's operations in India include Delhi based HP India (sales, support & PC configuration), HP India Software Operation and Verifone which has a software R&D lab. HP India employs 240 employees. The software operation employs 1000 employees and YVerifone employs 210 employees. The head office of HP is located in New Delhi, The sales and support is offered at Delhi, Bangalore, Hyderabad, Chennai, Mumbai and Calcutta. In 1994, HP India had achieved sales to the tune of $75.4 million. In 1999, the sales had increased to $231.5 million It won Cll Exim Award for Business excellence (the first com- pany in India to receive the award since its institution). In 1997-98, in ISCW User Opinion Poll HP India was declared the no. 1 [T company in India as per the Information Systems Computer World User Opinion Poll. According to the Dataquest it was declared the top multinational vendor for the year 1997-98 and the top printer vendor in 1997-98. According to the PC Quest it was the winner of User's Choice 2000 for best inkjet and laser printers, scanners and workstations. It was rated at No. 5 in the A&M Marg Poll in the year 1997-98. © RELATIONSHIP BETWEEN EMPLOYEE SATISFACTION, CUSTOMER SATISFACTION & MARKET SHARE HP's operations in India started in the year 1988 under the leadership of Suresh Rajpal. According to Suresh Rajpal, the making of an excellent organisation consists of two very imponant aspects—employee satisfaction and customer satisfaction. Traditionally the lit- erature has pointed out very strongly towards customer satisfaction. However in HP it has been a belief that customer satisfaction is not possible without employee satisfaction. The following paradigm is proposed for a growth in the market share. For an employee to be satisfied, job satisfaction is extremely important. To achieve job satisfaction one must have the right skills and the other factor that becomes important is Fig 1. Relationsbip between Employee Sattsfaction, Customer Satisfaction and Market Share248 implementing CRM the satisfaction with the job. If the score on satisfaction with the job and satisfaction with the right skills is high, then it would contribute to an enhanced employee satisfaction. When employee satisfaction is high, the productivity is high and the cost of quality is low. When the satisfaction level is high, it would lead to an enhanced market share which further reinforces employee satisfaction. ‘The figure 2 indicates the trend in the growth of the market shares, employee satisfac- tion and the customer satisfaction over the five years in Hewlett Packard. The graph indi- cates a similar trend in all the three cases. The data taken for this graph is only for the medical equipment division. 190080 ioe —=«N BST =e (=) Ge) Fig. 2 © INITIATIVES FOR EMPLOYEE SATISFACTION To satisfy employees, HP has taken a number of steps. There is a proactive HR Depart- ment, which treats all the other departments as its internal customers. The HR division has identified for itself a mission statement that it would promote innovation and a feeling of competitiveness in its employees to enhance their performance while contributing to or- ganization goals. There are five values, which are considered to be sacrosanct. These are trust, teamwork, integrity, innovation and high achievement. The objectives that are desir- able to be attained are profitability, employee care and customer care. Not only are these values treasured but the element of institutionalisation is very high through the deploy- ment of different strategies in different areas. This is achieved through the communication of these values to the employees and demonstration of these values in the day to dayEmployee and Customer Management Processes for Profitability 249 behaviour of the employees. When the new CEO Carly Fiorina took charge of HP in July 1999, she drove the new HP Invent global campaign. This consists of a charter called, “The Rules of The Garage” which has been circulated to every employee and is before his eyes all the time so that there is a constant drive towards achievement and a culture of entrepre- neurship is created in an organization. The behavior is reinforced by linking the perform- ance of an individual to his growth in the organization. Every employee has to demon- strate these key values and the performance measurement system does track down all these aspects. The culture in the organization is very open. The communication systems are open. The sitting spaces are open and there are glass panels and there are instances when call escalations could reach the CEO Carly herself. That is the extent of reach to the top. Whenever a new employee joins the organization, the values are communicated to him at the time of induction within the organization. The HR manager views each of the busi- ness areas as an Account. He maintains an ongoing dialogue with the different accounts and identifies their needs and reverts back to them after getting the expert's advice. The vision of the HR department is to achieve a higher level of employee satisfaction, higher level of satisfaction with the HR department and decline in the attrition rate of the organi- zation. ‘A demotivated, unenthusiastic and unhappy employee will never care for the customers Also organizations willing to spend money when they are doing well should spend on employees more rather than less when things get bad. An employee satisfaction survey is carried out regularly on an ongoing basis. In the employee satisfaction survey, input on number of parameters is ken such as management, supervision, communication job, recognition, pay, and worklife among other factors. Out of a number of issues, the top three/five issues are identified which are critical and also the three least scoring areas. The least scoring areas are then assessed for their criticality. Then those critical areas after being identified are then passed on the owners of the problem. They then prepare a HOSHIN Plan for that particular area which consists of objectives, precise goals, and strategy and performance measures. So each of the critical area is addressed in all the areas - be it HR, finance, production, Sales support. Hoshin Plans are made so that the performance im- proves considerably. After the implementation, again when the survey is carried out, it can be seen whether there is an improvement in the score on a particular parameter. For every employee training needs are continuously assessed. Assessment is made on which training programs are essential to do the current job well, which programs are essential to grow to the next level and what are the unique strength of an individual which could be deployed usefully by the organisation, Every six months the employee survey is conducted which is kept confidential. The questionnaires are filled and sent to the corpo- rate HQ directly. The feedback is also given regularly to the employees about the steps, which are being taken to check the discrepancies if there are any.250 Implementing CRM Some of the initiatives taken by the top management are: Right Genetic Code Itis an organization whose genetic code is right. This means that the value system is in place and there is a shared vision. Even the mail room boy knows about his operational ‘objectives. Every employee's performance is measured and is synchronized with the or- fanization’s performance. The yardstick for performance measurement is absolutely fixed and one knows at the end of the year how ones performance is going to be measured at the end of the year. Every individual within the organization knows about his growth path ata particular level. He is even aware of skills and knowledge base required to move at the next level Balance between work and private lite ‘The workplace has to be a funplace. One would enjay work only if there is an element of fun. Drawing an analogy of a three-legged stool, he says that one leg should reflect excel- lence in the current job, the next leg should be the continuous learning and the third should be having lot of fun. All the three components need to be balanced to be a success- ful person. The CEO practices the concept of Management by Walking Around. Everyday in HP, Suresh Rajpal would spend 40-45 minutes walking around the office, calling people by first names and exchanging greetings. The end result was amazing. In an industry characterized by an attrition rate of 25% , HP had an attrition rate of about 3.8%. HP even has a programme by the name of Alumini targeted at people who have left for greener Pastures. They are invited over at HP panties and are told about the current achievements of HP. Eighty percent of people want to come back. They are still considered to be a part of HP family. Doing the right things One should know what to speak at an appropriate time, One should not tell people to do right things but to find people doing the right things, thank them and congratulate them. The bottleneck in the most organizations is not people but the leadership Making the workplace a funplace One needs to reinvent things to make the workplace a fun place. One way of getting lot of ideas is to reward people who generate these ideas. HP capitalises on these ideas and rewards employees who make these useful contributions. Creating positive surprises for the customers To create special surprises for the employees, every engineer, manager and functional manager is given a certain amount every month to surprise others, For instance Suresh Rajpal volunteered to surprise his employees by booking the entire theatre screening Ti- tanic for the weekend and handing out four tickets to each employee. The result was that every one in the HP Family was overwhelmed by the gesture and the CEO was flooded.by thankyou mails and with compliments that the family was proud of the fact that someone in their family was working for HP.. Employee and Customer Management Processes for Profitability 251 Life made easy 7 Another aspect that is very unique is learning from ones mistakes and not looking at the things in a conventional manner. One should not just be satisfied with one best answer but ‘one must continue with the quest for the next best answer. Most people stop thinking when they arrive at the first best answer. There is a flexibility given to the employees so that they could work at the hours of their choice but put in requisite number of hours at the workplace. Productivity is not measured by the number of hours that one puts in the workplace but by the actual contributions made by the employee. To ensure that the employee does not feel harassed to pay off the bills or go in for pollution checks the ‘organization has arranged for all these services by charging nominal amount of money. All the bills can be paid, repairs can be got done, food could be ordered, clothes could be laundered by just picking a phone and assigning the responsibility to an individual Cll Excellence Award HP India got the Cll Business Excellence Award for the year 1997. The employee satisfac- tion in HP was 82% whereas the norm in Asia was 50%, The award is given after tracking the performance of the organization for five years on different parameters each of which carries certain number of points. These parameters are divided into Enablers & Results Enablers comprise of © Leadership © People Policy Deployment Resources & Partnership *- Processes ‘The results include parameters such as ¢ Employee satisfaction ‘© Customer satisfaction © Society © Business Results © CUSTOMER MANAGEMENT PROCESSES The customer care model has witnessed a lot of changes over the years, moving from a negligible pan of after-sales to special service packages developed to meet the specific needs of the customer. A call center is one such model that has been developed to handle customer query instantly. It is fast emerging as a front end for many customer-care and service centers set up by the companies. 0 INTERACTIONS WITH THE CUSTOMER The customer life cycle with HP typically follows the following cycle (Figure 3) :252 Implementing CRM as Fig. 3 Customer Life Cycle with HP Evolving business paradigm at HP | 1980-1996 | 1996-2000 2000- Box Approach Convergence of technologies Solutions The solution oriented approach & value for money would be the key drivers of success for the organisation. There is a rolling survey, which is carried out for resellers and customers. The customer loyalty index is tracked. The customer loyalty index tracks the existing customer on vari- ous parameters and puts them into four caiegories: © At risk # Vulnerable # Favorable @ Loyal HP sells its products through its channels. Whenever the customer purchases a product, and there is an issue to be resolved, the point of contact is the Front Line Team. It handles the usage-related issues. The application related, the real product related and the backend team handles upgradation issues. The partners provide the hardware support. The salesEmployee and Customer Management Processes for Profitability 253 and services are provided by DPSP’s and the ASP's are only authorised to provide service. Typically in a month, the total number of customer calls logged in at HP are 21,000 out of which 4600 are through web support, 1270 emails and 15,000 telephone calls. They use automated call distribution software, which also enables to track history of a particular customer. The service providers are assessed continuously. It is a challenge to motivate engineers who are the employees of the service providers and are not HP employees. The engineers/service providers’ performance is monitored on ¢ Tumaround time Number of parts requested per call (Multiple part consumption) © Closing the call * Customer satisfaction © Repair rate « Effective handling of customer escalations HP has allocated points for each of these parameters for partner performance measure- ment. In case the partner performance falls below the desired level of points, then there would be deduction in the reimbursements of that reseller. However if he exceeds the given point scale then he qualifies for additional reimbursements which are offered 2s rewards. The organisation is very careful about choosing it resellers. They have to undergo an accreditation process and have to meet certain standards such as amount of office space, level of investments, qualifications and level of training required. Each partner is made to undergo training in both technical skills and soft skills like customer handling, customer intimacy, customer orientation - resolving difficult problems and so on. The reseller is then made to undergo a test and has to qualify it before being certified. The reseller has to constantly upgrade his skills so that at all points of time there is resonance with the HP values and the objective of customer relationship is achieved. The quality of repair is also monitored through India Rolling survey. In this a mailer is sent to each and every customer who has contacted HP through its service network for repair. All the customers, who are not happy with the service, are then contacted by HP and through the partners it is attempted that certain steps are taken so that the customer is happy. The training programme for partner is also regularly revived. The partners are given lot of technical and training suppor. The documents are regularly updated and pocket references are regularly circulated. There is a magazine, which is brought out for partners and every quarter about 500 copies of that are circulated which contain regular updates on technologies and new policies. The engineers working with the partners are expected to keep themselves updated on all these developments. To ensure compliance every engi- neer has to answer a quiz based on the magazine and has to send it back to the support department. If the score is low and one does not respond, it leads to the loss of bonus points which reflects a loss in profitability in terms and reimbursement to these service providers. So linking the knowledge update with performance of a reseller ensures that there is no complacency at their end.254 Implementing CRM There is also a Reward 1000 plus program where there are points awarded. There are points for various aspects such as training, quiz bulletin, customer feedback, customer service, re-repair rate. The top contributors among the resellers are identified and are sent for training or entertainment apart from monetary incentives. Customer Orientation is primarily achieved by 1. Managing the customer contact 2. Management of the resellers © Training Management of Processes e Linking Rewards with Productivity 3. Making use of customer histories to bring about improvements in the product. Anempes ane being matte to prepare record of every customer who buys a HP prod- so at HP, there is a synchronisation of the employee satisfaction and customer satisfac- tion process to ensure a higher market share.