The employee-customer-profit chain at SEARS

Abstract

It is no longer news that over the past five years. Sears, Roebuck and Company has radically changed the way it does business and dramatically improved its financial results. But the Sears transformation was more than a change in marketing strategy. It was also a change in the logic and culture of the business. Led by CEO Arthur Martinez, a group of more than 100 top-level Sears executives spent three years rebuilding the company around its customers. In rethinking what Sears was and what it wanted to become, these managers developed a business model of the company--the employee-customer-profit model--and an accompanying measurement system that tracks success from management behavior through employee attitudes to customer satisfaction and financial performance. The basic elements of the model are not difficult to grasp. In retailing, there is a chain of cause and effect running from employees' behavior to customers' behavior to profits, and it is not hard to see that behavior depends primarily on attitude. Still, implementing the model is not easy. One problem is measuring such soft data as customer and employee "satisfaction." Not surprisingly, many companies do not have a realistic grasp of what their customers and employees actually think and do. By means of an ongoing process of data collection, analysis, modeling, and experimentation. Sears does. Moreover, the work of creating the model and the measures has made such demands on managers that it has changed the way they think and behave. And now that cultural change is spreading throughout the company. INSET: A NEW DAY ON RETAIL STREET. [ABSTRACT FROM PUBLISHER] Harvard Business Review Notice of Use Restrictions, May 2009Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for the private individual use of authorized EBSCOhost users. It is not intended for use as assigned course material in academic institutions nor as corporate learning or training materials in businesses. Academic licensees may not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by any other means of incorporating the content into course resources. Business licensees may not host this content on learning management systems or use persistent linking or other means to incorporate the content into learning management systems. Harvard Business Publishing will be pleased to grant permission to make this content available through such means. For rates and permission, contact permissions@harvardbusiness.org. (Copyright applies to all Abstracts.)