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.