HFT Exam 2 Study Guide Discovering the Soul of Service Values driven leadership 04 02 2014 o Humane organizational values sustain human excellence People are an essential part of the product in labor intensive service companies organizational values that enable people at work to realize their full potential as individuals and as members of the organizational community create product strength for customers The core values of the sample companies excellence joy innovation teamwork respect integrity and social profit generate compelling value inside and outside these companies o Strong values depend on strong leaders Values driven leaders articulate the company s reason for being define the meaning of organizational success live the company s values in their daily behavior cultivate the leadership qualities of others in the organization assert core values during difficult times continuously challenge the status quo and encourage employees hearts with caring involvement participation opportunity fairness and recognition Permeate the organization o Stable leadership stabilizes values o Values driven leadership propels all other success sustainers The company s soul its value system is its foundational center inner core Sustaining successful human enterprise derives from human values and inspired leadership o Constancy of purpose leads customer value creation A clear value system paved the way to clear strategy Sustainable service success requires a core strategy a definition of the business that focuses organizational attention guides business decisions channels execution and galvanizes the human spirit o High purpose motivates Strategic focus a clear mission of high purpose guides AND motivates o Strategic focus inspires innovation Effective strategy involves knowing what to change and what not to change true innovation comes from focusing on the customer rather than the competitor Executional Excellence o A well executed strategy diminishes opportunity for competitors Great service companies not only have focused strategies they also focus on execution o Attracting great people is the first rule of execution The sample companies do not just recruit employees they compete for talent This is one of the study s most important lessons humane values power excellent service companies and these companies insist on hiring people with these values to stay excellent Control of Destiny o Pursue success on your own terms The companies featured in this book not only have brilliant strategies they are pursuing these strategies unfettered o Great service companies control their destiny by Continually raising the bar of excellence and generating competitive differentiation and customer loyalty as a result Expanding and growing within their capabilities Staying focused on what targeted customers truly value and giving it to them through perpetual innovation and investment Acting like a private company regardless of whether they actually are or not Investing for long term strength in the business serving all stakeholders and prizing the creation of social profit in addition to economic profit Controlling processes that directly affect customers perceptions of quality and value o Sustaining service success means sustaining control of the business Trust Based Relationships o Sustaining service success requires trust Trust comes from perceptions of past perceptions of past performance from an assessment of the other party s competence ability to keep the promise and fairness willingness to keep the promise o A service company s future is measured by the strength of its relationships relationships Trust is the foundation of mutual commitment and Trust binds the parties together in a complex and turbulent market environment trust generated loyalty because when people find trust they are reluctant to relinquish it The highest level of relationship commitment is ownership a bond so intensely felt by customers employees and business partners that they feel the company belongs to them Competence is instrumental in establishing customer trust o Perceived Fairness Competence and fairness contribute directly to trust which leads to loyalty Trust is the basis for all significant relationships for it counterbalances risk and vulnerability Two conditions are necessary to elicit positive or negative fairness perceptions the individual feels vulnerable and the company s behavior triggers a fairness or unfairness perception Intangibility intensifies purchase risk These norms can be best understood through a language of justice developed by social psychologists Distributive justice refers to the outcome of a decision Procedural justice concerns the process used to determine the outcome and the interpersonal treatment of individuals during the process o St Paul Saints Our job is to provide a fun fan friendly personalized atmosphere that encourages their collective personality to come out Reasonable prices for parking tickets concessions and merchandise Artwork in the foyer band playing at front gate bubble machine on field autograph session on field sumo wrestling nuns who give neck massages pig delivering baseballs By empowering the fans by giving them a voice in key decisions affecting them by offering them abundant value in exchange for their money and time o Family behaviors underlie the internal company trust found in this study o Family gatherings Enterprise brings together its managers for an annual meeting that is as much a rally and celebration as it is a conference The purpose is to reinforce the company s culture values and sense of family Charles Schwab includes every single employee in its annual town hall meeting Ukrop s hold an annual picnic for associates at the farm of the company founders Joe and Jacqueline Ukrop roundtable meetings 4 to 6 times a year for managers to discuss leadership business and personal issues o Family Familiarity The leaders are accessible approachable and caring Relationships are personalized o Family Fairness Mutual respect is abundant Organization trust is nurtured Sample companies are ALL first name organizations call managers by their first name Dana Commercial Credit Ed Shultz hosts lunch with Ed sessions to give small groups of Dana people the opportunity to question him about the company s strategy or anything else Fairness consistency and even handedness are all hallmarks of strong families and high trust companies Companies build organizational trust through equal