Identify Your Bank's 'Holy Grail'.

• Author: Motley, L. Biff

A recent article in Investor's Business Daily made the point that a company's profitability is directly correlated to the satisfaction measures of both its employees and its customers. Some call this concept the "value chain" in that the well-being of all three of a company's major constituencies--customers, employees and stockholders--are interconnected. We have talked about this issue in prior columns.

The case of Continental Airlines

It seems that in the days before Continental Airlines was one of the top two most profitable carriers (along with Southwest), it suffered not only poor financial performance but also very low customer and employee satisfaction scores. In 1994, there was a management shake-up. The new bosses left their ivory tower and, after talking with hordes of customers and employees, discovered that the major problem was flight delays. The vicious cycle worked like this: When planes left the gate late, they often caused customers to miss their connection at the next "hub" airport. This caused their baggage to become lost in the system.

Customers were unhappy. They took it out on employees, who blamed "management" and felt powerless to solve the problem. Most employees in most organizations come to their jobs with a natural desire to help customers, but, when conditions beyond their control prevent this, or they are improperly trained, their morale plummets. This attitude is transmitted to customers in a multitude of ways. The result is a downward cycle of satisfaction, revenue and profits.

Continental's new management devoted themselves to solving the on-time problem. They introduced new equipment, procedures and management practices. It became the "Holy Grail" at Continental. Careful monitoring of daily departures and arrivals led to a score-keeping system that rewarded every employee $65 per month if performance targets were met. It wasn't a huge amount of money, but it was a measure of success.

Soon enough Continental planes were on time. Bags were not...