The Real Cost of Catering to Toxic Clients: A Culture Perspective

Culture Matters, the monthly forum that tackles topics that impact company culture, tackled toxic customers in the conversation held last Friday, October 18, 2024.

Toxic customers, while rare (hopefully!) have a ripple effect on the company, people involved, and people who see the toxic behavior tolerated. The company can be impacted financially by scope creep, depleted morale, disengagement, turnover, and damaged reputation. Employees can be impacted when customers berate them, disrespect boundaries, and demand services beyond what is agreed upon.

When leaders allow disrespectful customers to continue treating employees poorly, they send the signal that their people do not deserve respect.

We have not had toxic clients in recent years, but some clients have. One executive client, Pam, shared about the client point person, Dwight, being so toxic that no one else will deal with him. Pam (names changed, obviously) said Dwight is rude, belittles the women account leaders, and demands they are available 24/7. No one wanted to work with Dwight, but his account brought in decent revenue. His account landed with Pam’s team because she was thick-skinned and could handle him.

And, she could. She did not take his treatment personally. The interesting thing Pam noted, however, was that her bosses would not speak with Dwight about how he treated their colleagues. Their lack of courage showed a side of leadership that discouraged her, and she lost respect for them saying, “They don’t respect me very much either.”

The Culture Matters conversation included a discussion around how to recognize the toxic behavior early so we can head it off before it gets out of hand. A few things to watch for…

◼️ Natural stages in the client relationship (i.e., new point people, account changes)
◼️ Consistent disrespect, boundary violations, or manipulation
◼️ Missed or constantly late deadlines, payments, meetings

To prevent toxic relationships, prevent them from occurring in the first place by onboarding clients to your company’s way of working. Include communication styles and expectations, boundaries (i.e., emails are read between 9am and 6pm), workflow, and confirming project scope.

 Seek to bond with clients early and often so communication is clear all along and relationships don’t have time to sour.

Here are a few other things discussed in this month’s Culture Matters:

◼️ Examples of Toxic Client Behaviors: Participants shared examples of toxic behaviors, including constant disrespect, unreasonable demands, aggressive communication, arguments about fees, and manipulative tactics.

◼️ What Non-Leaders Can Do: It’s important for employees to document interactions, escalate issues when necessary, and maintain professionalism while protecting their well-being.

◼️ What Leaders Can Do: Leaders have a responsibility to set boundaries, provide support to employees, and take decisive action when a client relationship becomes untenable. Discern how the values of the company align with the behavior you are tolerating.

The company culture will become the worst behavior you tolerate, so be careful what you expect your employees to accept. Be intentional about the behavior you accept.

 One of the worst statements in the history of business is: the customer is always right. They are not always right, and the pressure of that expectation contributes to toxicity. While there’s no need to be harsh when a client is wrong, bending over backwards for clients who are not only incorrect but also toxic goes beyond what’s reasonable for any company or employee to endure.

If you take care of your employees, they will take care of your customers. The Ritz Carlton, known for exceptional customer service, has this philosophy nailed.

"We are superior to the competition because we hire employees who work in an environment of belonging and purpose. We foster a climate where the employee can deliver what the customer wants. You cannot deliver what the customer wants by controlling the employee." 

Horst Schulze, Former Ritz Carlton President

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Join the Next Culture Matters Session!

Register for our next Culture Matters discussion on November 15, 2024, where we'll dive into “How to Boost Your Culture After a Setback.” It’s a perfect follow-up to this month’s conversation, offering strategies to rebuild and boost culture after challenging times. We look forward to seeing you there!

5 Ways to Create a Winning Culture from Day One

Managers are often so excited when their new team member’s start day finally arrives, that they cut out one of the most important things they could do: onboarding about the culture. They have been down a person, probably doing that job in addition to their own, so they are in a hurry to get the new person up to speed as quickly as possible.

Instead of onboarding about the company culture, managers bombard new employees with HR-related admin paperwork and hours of boring SOPs.

Nearly 88% of U.S. employees give their onboarding experience a failing grade. (source)

The same thing happens when a new customer chooses to work with the company. The company is so excited to begin the work, they dive in head first without setting the foundation for the relationship.

Those first few days are THE prime opportunity to build the bond between the new person and the company. It’s a bond that can pay off for a long time in big ways for the company, employee, and customer.

Benefits to the Company

1. Consistency and Alignment: Onboarding ensures that all new employees and customers understand and align with the company’s mission, values, and goals. This alignment is crucial for maintaining a unified direction and purpose.

2. Increased Productivity: Providing clear guidelines and expectations during onboarding reduces confusion and errors, leading to higher efficiency and productivity.

3. Enhanced Brand Reputation: A cohesive and positive onboarding experience strengthens the company’s brand by creating a consistent and favorable image.

4. Employee Retention: A well-structured onboarding process increases job satisfaction and retention by making employees feel valued and informed from the start.

5. Customer Loyalty: Effective onboarding builds strong relationships and trust, making customers feel like a part of the company community, which can lead to repeat business and referrals.

Benefits to the Employee

1. Clear Understanding of Role: Onboarding helps new employees understand their responsibilities and how their work contributes to the company’s goals.

2. Better Integration into the Team: By introducing new hires to the company culture and their colleagues, onboarding facilitates smoother integration and stronger team dynamics.

3. Increased Job Satisfaction: Feeling supported and valued from day one boosts morale and job satisfaction.

4. Access to Resources and Support: Onboarding provides employees with the necessary tools and resources to succeed in their roles.

5. Opportunities for Growth: A comprehensive onboarding process often includes training and development opportunities that set the stage for long-term career growth.

Benefits to the Customer

1. Enhanced Experience: Customers who are properly onboarded have a better understanding of how to use products or services, leading to a more positive experience.

2. Trust and Confidence: Onboarding builds trust and confidence by demonstrating the company’s commitment to customer success.

3. Personalized Support: Tailored onboarding processes cater to the specific needs of customers, enhancing satisfaction and loyalty.

4. Reduced Frustration: Clear instructions and support during onboarding reduce the likelihood of misunderstandings and frustration.

5. Long-Term Relationship: Effective onboarding fosters a strong, long-term relationship between the company and its customers, promoting loyalty and repeat business.

Onboarding is the critical process because it sets the foundation for a successful relationship between a company and its new employees and customers.

By investing in a comprehensive onboarding process, companies can enhance engagement, productivity, and loyalty, fostering a positive and cohesive organizational culture. Invest in a thorough process, and you can customize it for the needs of each division, product line, or operation.

Below are 5 strategies for onboarding employees and customers.

5 Ways to Onboard New Employees

1. Welcome Package: Provide new hires with branded materials and key information about the company that they can’t get from the website.

2. Orientation Sessions: Conduct sessions that introduce the company’s history, mission, and values. Tell a few relevant, heartfelt stories to help them connect with the company and feel proud to work there.

3. Mentorship Programs: Pair newcomers with experienced employees who can guide them through their initial days.

4. Regular Check-Ins: Schedule frequent touchpoints to address questions and concerns during the onboarding process and early months.

5. Team-Building Activities: Organize social events to help new employees build relationships and integrate into the company culture.
   

5 Ways to Onboard New Customers

1. Customer Onboarding Portal: Create an online resource with tutorials, FAQs, and key information.

2. Personalized Onboarding Plan: Develop a tailored onboarding plan that addresses the specific needs of each customer including needs related to their project and communication preferences.

3. Interactive Training Sessions: Offer live or recorded training sessions to help customers understand how to use products, tools, or resources effectively.

4. Regular Check-Ups: Schedule check-ups at reasonable intervals to assess the customer’s progress and address any issues. The key is to schedule these in advance rather than wait until there is an issue.

5. Feedback Mechanisms: Encourage customers to provide feedback on the onboarding process to continually improve it. Integrate feedback mechanisms into your project plan so they are used to giving it in a timely manner.

Use those actions consistently to engage with your new employees and customers, and they will bond better than if you leave them to view the intranet site alone for two or three days.

When a company neglects the onboarding process, it is likely to face several costly consequences that can take years to repair.

Impact of Neglecting Onboarding

1. Misalignment: Without onboarding, employees and customers may not fully understand or align with the company’s values and goals, leading to disjointed efforts and strategies. Disjointed efforts and strategies lead to more meetings, higher costs, and mistakes.

2. Decreased Productivity: Lack of clear guidelines and support can result in lower productivity, increased errors, and depleted morale.

3. Higher Turnover Rates: New employees who feel unsupported and disconnected are more likely to leave, increasing recruitment and training costs.

4. Customer Dissatisfaction: Customers who do not receive proper onboarding may feel neglected and frustrated, leading to dissatisfaction and loss of business. They may impact your reputation in the industry too.

5. Negative Impact on Team Dynamics: Lack of onboarding can hinder team cohesion and collaboration, as new employees may not understand their role within the team.

Clearly, there are many benefits to a thoughtful onboarding practice, and the consequences of skipping it are costly. Financially, disengaged employees cost companies approximately 18% of their salary, according to Gallup.

Investing in a comprehensive onboarding process is essential for the success of any company. It ensures that employees and customers are aligned, engaged, and supported, leading to a winning organizational culture that enables companies to accomplish their mission for the long-term.

How real is your purpose?

People are more motivated to work when a company's purpose is meaningful and aligns with them. Just know this: you can't trick your people for long.

For example, if you work for a tech company in the health and wellness space, your company's purpose is probably something related to better living or longevity.

You would expect to serve people, thus, generate revenue related to better living or longevity. Right?

But, if revenue is generated not by providing valuable resources but by annoying customers to death with pop-up ads, so they sign up for premium accounts just to stop pop-ups, is that really in alignment with the purpose?

If your company can't make money at its proclaimed purpose, maybe there is no market for it. Or, perhaps, something else is wrong.

In the tech health company example, if they can't make money helping people live better or longer, and they spend resources on algorithm maneuvers instead of building expert reputations, the purpose is not real.

The employees know it.

They won't fall for gut-wrenching speeches about how much you care about your customers, when all you're doing is minimal service then badger customers to get them to subscribe.

The employees see it, and it won't take long before customers see it too.

So, if you wonder about mediocrity or employee engagement, here is one thing to assess: How real is your purpose?

3 lessons for leaders from the toxic culture of The Tonight Show

Jimmy Fallon finally gets it: culture matters.

On September 7, 2023, Rolling Stone issued this report about The Tonight Show, headed by Fallon:

Chaos, Comedy, and ‘Crying Rooms’: Inside Jimmy Fallon’s ‘Tonight Show’

The report referred to experiences like...
💥 Show staff joked about killing themselves because of how they are treated
💥 They cry in the guest dressing rooms so often, they refer to the rooms as "crying rooms"
💥 High turnover of showrunners (the production executive) because of Fallon's erratic behavior

On the show, in other media, and on SNL, Fallon is an affable guy. He has a positive public reputation and was surprised by the results of the report.

The day the report was published, Fallon and Chris Miller, current showrunner, had a call with all employees. Fallon apologized to staff for the show's unhealthy environment.

Fallon and Miller indicate they want an inclusive, fun environment. It sounds like they get it and will seek to improve.

Here's what stood out to me in the Rolling Stone article:

Rolling Stone contacted more than 80 The Tonight Show employees, past and present, for the study of The Tonight Show. Not one spoke on the record or said anything positive about working on The Tonight Show.

Not a single one.
Out of 80.

None of the nine showrunners since 2014 would comment on the record either. Not one of them said anything positive about Fallon.

So what does this have to do with business leaders?

Business leaders and owners, here are a few things to learn from this:

◼️ Fix problems early. Fallon’s and the show's have been going on for 14 years. It would have been more efficient to fix these issues before it took a humiliating report full of dirty laundry.

◼️ Set high standards for all and live them. It is confusing when the boss gets away with treating people differently than you would allow others. Or, when the best biz dev person gets to treat people poorly because they bring in revenue. The mental gymnastics required of staff to accommodate for the incongruent standards leads to distrust, bur out, and turnover.

◼️ Assess your culture now. Here is a quick way to learn what your employees think: a word cloud. Invite your employees to share the seven words they would use to describe your company. The words will give a glimpse into what is happening and whether it aligns with what you think and want.

Stay on top of your company's culture before high turnover, poor behavior, or rumors prompt an external investigation. How would it serve your company to be in Rolling Stone like Fallon's show?

Don't assume everything is fine unless you hear about it.

Culture matters, and it will damage your company and reputation if you take it for granted. The good news, however, is that it also contributes to company success.

If you need help, let us know. We can help you nourish your culture so it builds your revenue, retention, and reputation.

The #1 reason the RTO mandates fail and what to do about it

When asked nicely a year ago to return to work in person (RTO), many employees complied. Companies promised employees coming back to the office benefits of spontaneous conversations, teambuilding, collaboration, and mentoring,

Although skeptical that all of those things require being in person, people packed up their laptops at home, dressed in hard pants and shoes, made the commute, unpacked in their corporate offices, and got to work. Every once in a while, they ran into someone, but for the most part, people drove all the way to the office just to work the same way they did from their home offices.

They were alone in an office attending virtual meetings.

Promises made about how great it will be when everyone returns to the office were not reality. Yes, there were fun and games and free pizza lunches; however, those things do not make a culture.

⚫ Their bosses were not there to stop by or mentor. Top leaders weren’t making the same effort to be in the office, so why should everyone else, people wondered.

⚫  There were few in-person development opportunities because most were one-offs or online. Bosses were not inviting them to in-person meetings to learn or contribute something special.

 ⚫ There were very few useful team meetings or brainstorms for valuable purposes. Those are planned so people can prepare, research, bring ideas, and think about next steps.

After a few weeks, people resisted coming in to the office.

Why make the effort to haul the laptop in, suffer the commute, and wear hard pants all day, for an hour of phony teambuilding games and free pizza? Then to work the same way they would at home?

Employees want to come into the office when there is something scheduled and work from home the other times.

That spurred some companies to track employees’ work time, monitor computer usage, require login times, and threaten termination.

Some leaders took up the RTO battle so forcefully, it became the priority blinding them to other issues.

Recently, Salesforce, the $31.4 billion CRM company with 79k employees (Source: Forbes), tried a different tactic: emotional manipulation. For ten days starting this past Monday, the company would donate $10 for every day any employee came to the office.

Those mandates and manipulations are missing the boat.

Employees would want what was promised about RTO: mentoring, learning opportunities, engagement with leaders and each other (for the most part), team building, and brainstorms with purpose.

They do not want to be treated like children. The oversite that comes with being in person is stifling and insulting, yet many managers reverted back to old-fashioned micromanagement as soon as the pandemic ended.

People have changed. Management needs to change too.

No thirty-year old wants to ask permission to go to the dentist or justify leaving early to coach their kid’s soccer game.

Picture the conversation:

• Employee: “Can I leave an hour early next Monday to go to my kid’s soccer game across town?”

• Manager: “Sure. Are you going to skip lunch or come in an hour early that day to make up the time?”

• Employee: “Well, I worked late every day last week on the Travis project.”

• Manager: “Yeah, but how will you make up the time next week?”

Employees recognize that level of micromanagement as distrust.

It disconnects them from the manager, team, and company. A few of those incidents among the team prompt resume updates. It leads to disengagement and departures.

Don’t get it wrong.

People do not mind advising coworkers and managers that they will arrive late or leave early. Professionals from shift workers to customer service reps to HR generalists and accountants understand the need to get the work done and to be there for the team.

It’s the asking for permission part that feels intrusive and childish to grown adults.

When you want people to RTO, update your management style and make it worth it.

Here are three actions you can take to make RTO worthwhile for your people:

1.  Be there too. Be in the office, get your coffee in the break room, grab a group to go out for lunch, and talk to people when you see them around.

2.  Get to know the people you see. Walk around, ask about their day and work. Engage in small talk to show you care, build your network, and identify ways to help people.

3.  Connect people to opportunities. As you engage in small talk and get to know people, you will be able to identify work, learning, and networking opportunities that will be valuable to them. Seek opportunities to connect people so they can contribute, grow, and help others.

The more you are present, engage, and connect others, the better you can inspire people to want to be in the office. You can help create the sense of belonging and purpose people desperately seek right now. (Source: Mayo Clinic)

Inspiring will yield better results for the company than threats of termination will. It will improve your influence as a leader too.

 
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Sources:
Forbes.com Profile: Salesforce.com
https://www.forbes.com/companies/salesforce/?sh=6483e83e7a2b

 Is having a sense of belonging important?
Mayo Clinic Health System
December 2021
https://www.mayoclinichealthsystem.org/hometown-health/speaking-of-health/is-having-a-sense-of-belonging-important