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.

Quiet quitting: how companies can capitalize on the employee trend

As shared in the previous post here (Quietly quitting the rat race to live life on their own terms), Gallup’s latest engagement survey says at least 50% of employees fall into the disengaged category. Disengaged is where Gallup puts the “quiet quitters.” We prefer to call them Rat Race Rebels.

As discussed previously, the Rebels do their jobs. No less and no more. They set boundaries and won’t work beyond forty hours for free. Elise Freedman, Senior Client Partner at Korn Ferry, says quiet quitters decided, “I want to prioritize my well-being overall and things outside of work." (Source: CBS MoneyWatch)

They quit the rat race of working extra hours for free in the hopes of being promoted up the career ladder someday. And, they’ve been warned in recent years that there is no career ladder. It’s more of a lattice now, but they’ve been pushed and pressured to keep working long hours anyway. They have opted out.

Another interesting point from Gallup’s September 6, 2022 survey is the cause of increased disengagement. Gallup says employees are more disengaged since the pandemic because they do not have…

1️⃣ Clarity of expectations

2️⃣ Opportunities to learn and grow

3️⃣ Feelings of being cared about by the company

4️⃣ A connection to the organization's mission or purpose

People don’t want to sacrifice their health and personal lives and feel used just so upper management gets its bonus or so the business owner can send demanding emails from another exotic vacation. They don’t want to come in on Sunday to create the unnecessary TPS cover sheets! (Office Space reference, anyone?)

That makes sense. Doesn’t it?

Everyone cheered when Peter and his colleagues took out their frustration about the corporate coldness on the copier in the movie Office Space because we could relate. Finally, someone rejected the ridiculous and offensive. That’s what the Rebels are doing now. Well, they’re being quieter than beating up the copiers.

The gigantic problem is: many companies and leaders make people feel used. People are rejecting that treatment in 2022.

We have been talking about the importance of expectations, opportunities, care, and purpose for twenty years! Companies and leaders who focus on those four things make sure employees do NOT feel used.

Thankfully, many companies cared about their people and culture long before the pandemic. They showed it when the pandemic began by prioritizing employee health and safety over all else right away. Those companies are listening to employees and being as flexible as possible to accommodate schedule and location preferences.

Other companies are just starting to recognize the importance of seeing employees as people and seeing the bigger picture of all the people together.

What caused this newly found interest in people and culture?

The sudden interest was caused when turnover and time-to-hire reached levels that seriously jeopardize financials. The combination of the Great Resignation and quiet quitters broke the system that companies relied upon for years.

The fact is, many companies depend on the free labor the Rebels are no longer donating to their employers. Companies plan project timelines, budgets, and client deliverables around free labor they do not have access to now.

What can companies do now? Can companies inspire the Rebels back to their old productivity levels?

Probably not.

However, companies can capitalize on the phenomenon so it works better for the company and the employees. It cannot be one-sided in favor of the company. If you truly care about your people, you can execute the five actions below genuinely.

Here are five actions companies can take to capitalize on the Rat Race Rebel phenomenon:

ACTION #1: Re-engage managers. Managers have borne the brunt of the pandemic inside most companies. They had to figure out new processes, systems, and communications. Plus, they had to deal with the emotional and physical toll of the pandemic on employees. All while taking care of themselves and their own loved ones health and needs. It was a lot. Managers are burned out. Re-engage them. Show you appreciate them by listening to their needs and suggestions.

ACTION #2: Clarify manager responsibilities. The managerial role is likely different now than it was pre-pandemic. The workflow, schedules, and location of workers may have caused the need for managers to shift how they plan, organize, and lead. Clarify the company’s expectations of them, and be sure they have the resources needed to succeed.

ACTION #3: Outline a vision. There are two parts to this one. First, for the company: Be sure there is a short-term and long-term vision for the company. Ensure everyone knows how their role contributes to it. Second, for individuals: Invite employees to create a vision for their own lives. Thinking through short-term and long-term aspects of life like financials, for example, may inspire some Rebels to boost engagement. They won’t work twenty hours extra weekly for free, but they may work five and ask for a training course if they envision a career path for themselves. (Tools leaders can use with their teams for this vision exercise were shared with Voyage VIPs this week. If you would like the resource also, please click here to join as our guest.)

ACTION #4: Boost accountability. Everyone should understand the work contract and agree to it. Train managers on delegation, expectations, and communication so accountability is possible. This is key to helping the company benefit from the gifts the Rebels bring to their work.

ACTION #5: Teach managers to coach. Coaching is a new hat managers need to wear now, and it takes practice. One thing managers need to coach people on is the impact of being a Rat Race Rebel.

For example, if someone opts to work from home every day while everyone else on the team chooses to come into the office, they choose to miss daily interactions with coworkers, spur of the moment invitations, and informal mentoring, which may lead to being less prepared for more responsibility, job changes, or promotions. Managers should coach people so they know the consequences of their choices and so managers can support their choices. Lack of coaching can be perceived by the employee as disinterest, which leads to greater disengagement and turnover.

Many managers have given up on the Rebels, but the Rebels could benefit the company. They bring more outside experiences, greater creativity, emotional stability, and less stress. It’s worth it to re-engage managers and help them engage the Rebels and everyone else.

People want clarity, growth opportunities, connection to meaningful purpose, and to know you care. The five actions shared here will help companies and leaders show people they matter more than management’s bonus. When you move the needle of engagement, you capitalize on the quiet quitter trend other companies resent. While your competitors are holding meetings about how to get back at the Rebels, you’re figuring out how to meet them where they are. You will win.

New employee habits call for new management practices. The same old ones won’t work anymore.

(If your company needs a management skill refresh to meet needs of today’s employees, we’ve got you covered. Click here to schedule a call to learn more.)

Beware! Your top people are being poached!

The issue most on the minds of leaders I have heard from lately is the "Great Resignation." Leaders are afraid their top performers will leave, and they have run out of ideas to inspire them to stay.

Of course, leaders always worry about their top performers, but lately that fear is reasonable. People changed during the past two years, and what entices them to choose a workplace is different for many now. On top of that change, strategies companies are using to fill vacancies have changed too.

The latest strategy to fill all those empty spots across organizations is poaching. Perhaps you have experienced it or even recommended the strategy to your company's recruiters? Going after top talent gainfully employed by a competitor used to be a subversive maneuver. Not anymore.

Now, recruiters pursue top performers like a high school kid asking a date to the prom.

There are big gestures and lots of woo'ing over time.

Poaching entices relatively happily employed people to leave for greener pastures, even when their current pasture is pretty green already. People are flattered by being pursued, and they have more confidence to speak up about what would make them leap firms. People are stating their demands, and companies are delightfully meeting them. Everything from location to hours to salary to equipment to team members and more—it’s all on the table.

Poaching is on the rise, so watch out before it’s too late.

The best thing you can do to prevent poaching is make your top performers less susceptible to poachers. Keep woo'ing them throughout their employment journey.

Companies make a gigantic mistake when they stop woo'ing people once they are on board.

Someone told me recently about her experience with her new employer. Four people who love the company were on the interview team that took her to lunch. They talked about being on her team and working with her. It turned out they are on the company team but not her immediate team. They were on the interview team because of their acting skills and exaggerated the role they would play in her job. Figuring that act out a few days into the job made her question her decision to join the company.

Another recent example was that a manager in a mid-sized company was not ready for the new hire, so the new employee sat in the lobby for an hour waiting for his boss to arrive. The manager said, “I forgot you were starting today.” In the interview, however, the manager spoke about how much he cares about his team.

Those two examples were of companies abandoning their woo practices on day one. That’s when it is most egregious and hard to overcome. It also happens when the business landscape changes and leaders are challenged. Some panic and stop taking care of their people out of fear for their own jobs.

The smart leaders have figured out they need to keep woo'ing after day one for people to stick around.

To identify opportunities to engage with employees, outline your employees' journey. Armed with an understanding of their journey, identify where you can beef up intentional connections. Where along the journey can you offer professional development (which people crave!), skill development opportunities in the work, networking opportunities, and opportunities to contribute to the local community?

Be intentional about your connection and engagement. Tie your actions to what they want.

The Platinum Rule is more important here than the Golden Rule. While the Golden Rule tells us to treat people how we want to be treated, the Platinum Rule is to treat people how they want to be treated. Put the Platinum Rule into effect in good times and bad. People really notice how you treat them when times are tough for the company or for them personally. For example, your company policy may allow for one week of leave for new fathers. How do you handle the new father whose baby needs extra medical attention at birth, so one week with the family is not enough? People > policy. Treat people with care, especially when they need help.

That's the secret to retention: care. It is really hard for a poacher to compete against a genuine relationship of care.

Is consensus over-rated?

Consensus is great, right? Building consensus leads to better ideas, work efficiencies, and higher morale. Consensus is so important, there are courses taught on the subject and consultants earn big bucks when they facilitate consensus-building sessions for companies across the globe.

When there’s consensus, everyone is happy with the solution or action. Everyone buys in when they have contributed, which leads to higher productivity. Plus, there is a sense of camaraderie as people work together on the shared goal.

But there is a downside to consensus.

The most significant downside to consensus-building is the time it takes. It takes time in meetings, whether one-on-one or with groups, to build consensus. But, even beyond that, keeping the consensus as solutions are implemented is time-consuming. I wonder if too much time is spent here on reaching consensus.

Who says we have to be 100% happy with every solution we have to implement?

Can’t we implement solutions even when they are not our idea or preference? Is the expectation of joy for every minute of our day too high?

When too much time is spent gaining agreement for too many solutions, consensus can prevent accountability.

For example, let’s say two technical staff members explore an idea for a new product your company could offer. They do the relevant market research, calculate forecasts, and build the prototype that gains approval of their director to proceed. If the product fails or succeeds, the buck stops with the two staff members. Accountability doesn’t mean they get fired if it doesn’t work. It means they need to explain where the research and forecasts erred. They don’t get to say, “Well, it failed but Bob approved it!” On the other hand, if the product is a wild success, accountability means they get rewarded for success.

Consensus is not needed for everything it is used for all the time. Don’t use it to get out of making decisions that are your responsibility. Instead, get ideas and input from others, then make the decision. Also, resist the temptation to insist on consensus when you are invited to give input and ideas. Feel free to share then let our colleague decide.

When consensus leads to lack of accountability and to procrastination, the good part of it is lost.