(photo credit: Kylan Robinson)
Yesterday I reported the results of a well done research study that suggests the growth and profitability of a business unit over time is contingent upon the flow of valuable employees through the unit over time. The specific employee value the study focused on was the willingness and ability of employees to deliver high quality service to customers.
I love the resource-based view (RBV) of competitive strategy this study was based on because it emphasizes the importance of the human resource. The concept of stocks and flows is central to the RBV. The “bathtub metaphor” is an excellent way to understand stocks and flows.
The stock of the resource is represented by the amount of water in the tub at any given time. Importantly, there must be a critical mass of the resource stock for it to influence unit effectiveness (i.e., too little water in the tub makes it impossible to get clean). The flows of the resource are represented by the water coming into the tub through the faucet and out of the tub through the drain. Flows influence the stock of a resource and whether a critical mass is achieved and maintained…Thus, the stock of a resource at a given time is important, but the flows of the resource determine whether it produces a change in unit effectiveness. (Ployhart, et al. p. 1000)
I would extend the metaphor by suggesting that the temperature matters just as much as the level of the water in the tub. A tub full of water too hot or too cold to stand is about as useful as one without enough water to do the job.
Your business needs a steady flow of service oriented employees in order to grow and remain profitable over time. Not just any employee will do – they have to be good ones. But they don’t all have to be star service providers. You are going to hire some folks that turn out not to be as good as you thought they were. They key will be to have a system in place to identify those folks early and guide them to making alternative career choices.
But even more important than identifying the employees that don’t measure up will be identifying the employees that do. You need to have management systems in place that identify those folks and provide them strong encouragement to stay with you and your business. Your goal is to achieve and maintain a critical mass of those folks in your business at all times.
Don’t miss the connection between cash flow and the flow of good people through your business. Keep your tub filled with warm water.
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Service System Failure: A Tale Of Two Hotels
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