Staff Turnover and Customer Retention

I received a request for advice from the owner and manager of a salon and spa on ways of managing in situations where staff leave, taking their clientele with them. A little later David Maister received a similar but more detailed request that he has put up on his blog for reader comment. As always, David's readers have responded with some useful thoughts.

The case is quite an interesting one for two reasons.

First, staff retention is a common problem in certain industries. Secondly, while the request to David is very similar it contains additional information that changes the focus to some degree, leading to some differences in responses. Proper definition of the problem is always a key issues in consulting.

I will give the request I received first with some editing to remove personal details and then my short response. A link to to the post on David's blog is included at the end to allow you to compare the cases.

The Request

"I own and manage a salon and spa. I am faced with employees (Stylist and other technicians) that feel they are independent now that they have an established “clientele” or “following”. The implementation of new strategies for the good of the company is met with resistance because the employees threaten to leave and take clients with them. This is a long standing issue in the industry. New stylists or those new to an area will work at a salon or spa to build a clientele and leave to rent a small space once their income base is established. Owners have traditionally given in and offer bonuses or high commissions to the stylist to get them to stay. All to the detriment of the salon and owner. Salon cannot operate with payroll above 45%- 48% yet many pay 55% - 60%.

I began to think of how this is handled in other industries like Law firms, Medicine, Accounting firms, etc. when key people try to leave with clients. There must be more than non-compete agreements. How can I change or establish a culture that binds the client and employee to “The Company”. If the client can realize that their experience and service is the product of more than just the single stylist, then some of the power would be shifted."

My Response

Accepting that there are no easy answers, the following suggestions may help your thinking.

1. Market Positioning

1.1 Be clear as to where you want to stand in the marketplace, how you want to be seen in the mind of your clients. This may not stop customers leaving, but may help to replace them.

2. Keeping Customers

2.1 Ensure that your customer lists are up to date so that you know what you have. Without being too obvious about it, protect the lists so that departing staff can’t simply copy to take with them.

2.2 Keep in regular touch with your customers. Look for some form of added value over and beyond the straight service (s). Funny stories, information and hints, special offers. Consider your own blog.

2.3 If a customer does leave, see if you can keep them in your loop. They may want to come back later, may buy other things.

2.4 Listen to your customers, see what they want.

2.5 Look at their experience with you, what can you do to make it more enjoyable?

3. Reducing Dependence

3.1 Look at your service/product mix. Are there ways of adding, combining, representing so that you help customers while at the same time reducing dependence on particular key individuals?

4. Retaining Staff

4.1 Look at the way you are presently managing your people. Can you improve this?

4.2 Fiddle around with your financial models to see how much flexibility you have with different types of payment structures.

4.3 In conjunction with 2, consider new types of arrangements for selected key individuals. Shareholding, bonus arrangements, profit shares, self employed contractors, businesses within businesses. Things that will motivate, increase the cost of leaving, but not destroy financial viability.

5. Budgeting

5.1If you are going to lose some staff regardless, then budget for this at least in contingency terms (income lost, replacement costs) so that you build in a buffer.

David's Case Study

David's similar case study together with reader responses can be found here.

Managing the Media - how to communicare your message

Every so often we need to tidy up. This is especially important where, like me, you work mainly from a home office.

A number of years ago we, our company, paid for my wife to go on a media training course run by Peter Thompson. Peter was one of Australia's leading radio journalists.

Ever since then, I have carried round one of his card setting out his media hints. I know the hints and was going to throw the card out as part of my latest tidy up. Then I thought, why not share them with you first?

1. Before the Interview

1.1 Research the purpose and likely duration of the interview - think about your audience

1.2. Decide whether you should agree to the interview - will it serve your interests?

1.3. Develop one message for a news interview and up to three agenda points or messages for a longer interview - write them down.

1.4. Write one key argument for each point or message.

1.5. Anticipate the most difficult questions - how would you answer them?

1.6. Rehearse with colleagues.

1.7. Practice relaxation and voice warm up exercises.

2. During the Interview

2.1. Be positive - particularly when you are on the defensive.

2.2. Remember Q = A + 1. Answer the question and use it as a springboard to raise your agenda points. Do not just be reactive to questions.

2.3. Use the formula: Point, Supporting Reason, Evidence.

2.4 Come alive - animate your face and voice. Be passionate. Smile and lighten up - enjoy it.

2.5. Keep your answers short.

2.6. Communicate person to person - your audience is no bigger than a few people in one place.

2.7. Be an anecdote machine - use parables, anecdotes, metaphor's and draw on personal experiences.

3. After the Interview

3.1. Analyse whether you communicated your key messages.

3.2. Critique your performance and draw lessons for future reference.

3.3 Audit radio and television programs - learn to model the behaviour of effective communications.

Reader Interests - a short note

I have been trying to work out from referrals and pages visited just what thing most interest my readers. My thinking here was that I could use this to help me better target some of the things that I write about.

The process is not an easy one because of the limits of the free version of the stats package that I have on the site. For example, I have to manually check and record individual searches to see just what phrase brought people to the site.

I am still in the early days of the process, but thought that it might be of interest if I provided some initial comments.

To begin with a disappointment. I get very few hits on training or training related questions. This is a particular interest of mine because I believe that improved training at firm level is critical to improved firm performance. I am also very interested in ways of improving professional education and training in general.

Now it may be that the limited number of hits reflects the way I have used headings etc, that the search engines are not picking things up properly. I can test this by representing material - there are a fair number of training posts in the almost 100 posts written since we started this blog. However, I am left with the feeling that training as such does not rank high on priority lists.

On the other side, there does appear to be a fair bit of interest in practical ways of improving management measured by the number of hits on earlier posts on common management problems.

This nuts and bolts focus also comes through in search patterns on people topics, example, there is a steady stream of hits on performance appraisal. However, like training, the total number of hits on people management topics in general is not high outside common management problems, performance appraisal and remuneration.

By far the largest number of hits in all link in some ways to the commercial and financial aspects of practice management. Practice sale, treatment of good will, pricing, financial metrics all attract steady hits.

As I said, my analysis of traffic patterns is still in its early stages. However, it points to a need for me to balance my interest in broader topics such as my current discussion on evidence based medicine with my reader's interest in more nuts and bolts topics.

Lessons for the Professions from Evidence Based Medicine 1

In my last post in the Towards a Discipline of Practice - Evidence Based Medicine series I looked at some of the problems associated with evidence based medicine. In my second post in the series I quoted the definition of evidence based medicine supplied by the Centre for Evidence Based Medicine:

Evidence-based medicine (EBM) is the integration of best research evidence with clinical expertise and patient values ... When these three elements are integrated, clinicians and patients form a diagnostic and therapeutic alliance which optimizes clinical outcomes and quality of life. Centre for Evidence Based Medicine

I suggested that this quote captured four key elements relevant to all professions and professionals.

The first element was research evidence, essentially what works and why.

The second element was professional expertise, our capacity to understand and apply our professional knowledge in the circumstances of the particular case.

The third element was the patient or client, each with their specific attitudes and needs.

The final element was the integration of the first three elements - the diagnostic and therapeutic alliance - to provide the solution that best meets client needs.

Using these four elements as a framework, I now plan over forthcoming posts to extend my analysis by looking at some of the lessons from evidence based medicine for professional practice in general.

Contracting Woes - a new series

Having just finished the project management for professional series on the Ndarala Group blog, we have started a new series, Contracting Woes.

This new series will look at the often vexed relationships between contractors and consultants on one side, both groups and clients on the other. This is an area on considerable interest to Ndarala because so many of our members are self-employed professionals.

I would like to encourage you to follow and to contribute to the discussion.

Towards a Discipline oF Practice - Evidence Based Medicine 3

In my last post on evidence based medicine, I suggested that professional training focused on the transfer of existing knowledge and skills to the new professional, knowledge and skills that the professional then applied. The professional subsequently built on this base through practice, at the same time using various professional development activities to try to keep in touch with new developments.

I then posed the question what happens if that existing knowledge base is in fact wrong, looking briefly at the reasons why this proved to be the case in medicine, a discovery that had led to the development of evidence based medicine. I concluded that, as with any other approach, evidence based medicine had its own methodological problems. However, it also had important lessons for other fields of professional practice.

The Quality Movement and Quantification

In a series of posts on my personal blog I explored some of the changes that had taken place in public administration since the war, looking at the influences on those changes.

In one of those posts I looked in part at the way in which standards, the Quality Movement and the importance of measurement had become major global influences. I also suggested that the outcomes here had not always been positive.

Evidence based medicine forms part of the global standards and quantification revolution and suffers from some of the same weaknesses. These weaknesses need to be recognised.

Problems with Evidence Based Medicine: Perception Bias

The first problem can be called simply perception bias.

In another post on my personal blog on science and political correctness I looked at ways in which dominant views acted to exclude alternatives.

Evidence based medicine is neither value nor perception free. The questions selected for test and evaluation, a process that can be very expensive, are influenced by prevailing views. Valuable alternatives may be excluded simply because they fall outside conventional wisdom. As evidence based medicine becomes the dominant mode, the effect may, as it has been in other areas, to actually narrow fields of investigation and action.

This links to a second problem, one that I have discussed before, the tendency for all professions to see answers within a frame or world view set by their profession.

A lawyer will give you a legal answer to a problem, a doctor a medical answer. If you have a back problem and see a surgeon, he/she is likely to think about surgical solutions. Go to a chiropractor with the same problem and he/she is likely to recommend spinal manipulation. So professional background helps determine the way the problem is defined, the solution applied.

This flows through into the application of evidence based approaches because the things tested are generally set within the frame of the tester. So evidence based medicine focuses on the efficacy of medical treatment and may leave non-medical alternatives aside.

Problems with Evidence Based Medicine: Causation

As part of my history honours year in my first degree I studied philosophy of history under Ted Tapp. Ted was a reflective man who required us to think about, to debate, the philosophical underpinnings of science and scientific method.

One core problem was the difference between correlation (a and b) as compared to causation (if a then b).

This problem applies in evidence based approaches. Just because a study shows an apparently strong relationship between a treatment and positive patient outcomes does not necessarily say anything about the causal relationship between the two. This has to be deduced and further tested.

Problems with Evidence Based Medicine: Problems of Epidemiological Studies

The problem of correlation vs causation links to another group of problems with evidence based medicine.

By its nature, evidence based medicine deals with large groups, populations.

As trials become larger and more complex, it becomes more difficult in statistical terms to establish significant relationships, to separate the effects of different variables.

This creates another problem, the establishment of a clear relationship between the outcomes of trials at population level and subsequent application at individual level.

As the Wikipedia article notes:

Critics of EBM say lack of evidence and lack of benefit are not the same, and that the more data are pooled and aggregated, the more difficult it is to compare the patients in the studies with the patient in front of the doctor — that is, EBM applies to populations, not necessarily to individuals.

This can create very real difficulties for individual clinicians, leading Tonelli to argue in The limits of evidence-based medicine that:

the knowledge gained from clinical research does not directly answer the primary clinical question of what is best for the patient at hand.

Tonelli concludes that proponents of evidence-based medicine discount the value of clinical experience (source Wikipedia).

Problems with Evidence Based Medicine: Impact of the Observer

Another problem with evidence based medicine, one often seen in all evidence based approaches, is the way the observer affects the observed. This happens at several levels.

The first problem is that the simple act of participation in the trial may have some and not clearly seen impact on individual outcomes. In medicine, this is usually managed by use of a control group using a placebo. The efficacy of the treatment is then measured by the difference in outcomes between the control group and those receiving the treatment.

A second linked problem is the impact on patient behaviour of the trial itself. By their nature, clinical trials are closely managed. This means that patient compliance with the treatment routine is likely to be high.

This need not hold in subsequent clinical use since ordinary patients are more likely to fail to follow treatment processes by, for example, failing to take medication exactly as prescribed. This means that actual patient outcomes may not be as good as the trial results.

Problems with Evidence Based Medicine: Limitations in Application

A further problem is that the most rigorous gold standard approaches dictated by evidence based medicine can only be applied in narrowly defined circumstances, leaving a range of medical approaches that have to be tested by less rigorous means.

This should not matter so long as the limitations are recognised. In practice, it risks introducing two distinct distortions into the medicine and the health system.

The first is the risk that investigation may be biased towards those things that can be measured through more rigorous techniques, reducing thought and investigation in areas less amenable to measurement.

The second related risk is that treatment itself may become biased.

At clinician level, this links back to my earlier point about perception bias. Doctors trained in evidence based medicine may, consciously or unconsciously, come to focus in treatment terms on those things that can be measured, ruling out other less easily measured options.

This tendency may be reinforced by actions from those managing or funding the provision of health care services who may refuse to allow/pay for certain types of services notwithstanding the views of individual clinicians.

Next Post

I have focused in this post on problems associated with evidence based medicine. In my next post I will look at the lessons of evidence based medicine for other professions.

Previous Posts in the "Towards a Discipline of Practice" Series

• 21 September 2006 Towards a Discipline of Practice
• 22 September 2006 Role of the diagnostic in professional practice - medicine vs law
• 8 January 2007 Reflections on Professional Practice and Practices
• 16 January 2007 Towards a Discipline of Practice - Evidence Based Medicine 1
• 22 January 2007 Towards a Discipline of Practice - Evidence Based Medicine 2

Towards a Discipline Of Practice - Evidence Based Medicine 2

Evidence-based medicine (EBM) is the integration of best research evidence with clinical expertise and patient values ... When these three elements are integrated, clinicians and patients form a diagnostic and therapeutic alliance which optimizes clinical outcomes and quality of life. Centre for Evidence Based Medicine

While this quote focuses on medicine, it also captures four key elements relevant to all professions and professionals.

The first element is research evidence, essentially what works and why.

The second element is professional expertise, our capacity to understand and apply our professional knowledge in the circumstances of the particular case.

The third element is the patient or client, each with their specific attitudes and needs.

The final element is the integration of the first three elements - the diagnostic and therapeutic alliance - to provide the solution that best meets client needs.

In my brief introductory post on the case of evidence base medicine, I suggested that my instinctive first reaction on hearing about evidence based medicine was to say that's odd, I thought that all medicine was evidence based. I also suggested that this has proved, in fact, to be far from true.

Before continuing my analysis I should note that the Australian Broadcasting Corporation's Radio National has just completed a rather good two part series - Facing the Evidence - on evidence based medicine. The first part is already available in transcript and pod cast. The second will be available shortly.

Returning to my theme, when you look as I did in my last post at the standard way all professionals are trained, you can see that that training focuses on the transfer of existing knowledge and skills to the new professional, knowledge and skills that that professional then applies. The professional then builds on this base through practice, at the same time using various professional development activities to try to keep in touch with new developments.

But what happens if that existing knowledge base is in fact wrong? How might this arise? To quote from the first part of the ABC program:

Every day doctors and other health professionals use treatments that are harmful, or fail to use therapies that have been proven to work. In the US there is so much medical error that Congress has directed the Institute of Medicine to develop a strategy to improve the quality of care. In its initial report the Institute noted perhaps as many as 100,000 Americans die every year from medical errors, including the use of inappropriate treatments. That's much more than from car accidents, breast cancer or AIDS. Many more suffer side effects and unnecessary costs

How could this happen?

Part of the problem here lies simply in the placebo effect, that fact that patients respond just to the fact of treatment. So the treatment appears to work, thus supporting the original judgment.

Part of the problem also lies in the fact that individual outcomes can be affected by so many variables and over a considerable time horizon so that the fact of adverse outcomes may not be clear in an individual case or, if clear, may be due to a whole variety of factors external to the treatment itself. There is a linked issue here that relates to the size of the population.

Given that individual outcomes vary greatly, the fact that there is a problem and its scale and scope may only become clear if you look at a population as a whole. That is, the individual professional may have no easy way of detecting the problem in his/her individual cases.

A further problem lies in the nature of the models used.

All professions use models to try to explain a complex world. In economics, for example, models are a common method used to analyse economic behaviour and to suggest possible responses at firm and public policy levels. In the case of medicine, biological models are common.

The problem with all models is that they involve selection of key variables and the specification of relations between those variables. Get either wrong, and outcomes may be very different from those projected by the model.

Doctors have always been concerned about adverse or unexpected outcomes.

In 1972 Professor Archie Cochrane, a Scottish epidemiologist published Effectiveness and Efficiency: Random Reflections on Health Services. This plus Cochrane's subsequent advocacy caused increasing acceptance of the concepts behind evidence-based practice. Cochrane's work was honoured through the naming of centres of evidence-based medical research — Cochrane Centres — and an international organisation, the Cochrane Collaboration.

The explicit methodologies used to determine "best evidence" were then largely established by the McMaster University research group led by David Sackett and Gordon Guyatt. According to the Wikipedia article on evidence based medicine, the term "evidence-based medicine" itself first appeared in the medical literature in 1992 in a paper by Guyatt et al. (Guyatt G, Cairns J, Churchill D, et al. [‘Evidence-Based Medicine Working Group’] "Evidence-based medicine. A new approach to teaching the practice of medicine." JAMA 1992;268:2420-5. PMID 1404801)

From this point, the spread of the concept and its subsequent inclusion in professional training was rapid.

As with any other approach, evidence based medicine has its own methodological problems. However, it also has important lessons for other fields of professional practice.

Previous Posts in the "Towards a Discipline of Practice" Series

• 21 September 2006 Towards a Discipline of Practice
• 22 September 2006 Role of the diagnostic in professional practice - medicine vs law
• 8 January 2007 Reflections on Professional Practice and Practices
• 16 January 2007 Towards a Discipline of Practice - Evidence Based Medicine 1

Towards a Discipline of Practice - Ndarala Case Study

One of the reasons why I and my colleagues are so interested in concepts such as a discipline of practice are the challenges we have faced in trying to build Ndarala as a multi-profession network of independent management related professionals and professional practices.

For that reason I thought that it might be of interest if I posted a story on our experiences on the Ndarala Group blog as a case study. While I think that we have some some pretty good things, the story also provides a frank assessment of some of the difficulties we have faced.

Towards a Discipline of Practice - Evidence Based Medicine 1

Evidence-based medicine (EBM) is an attempt to more uniformly apply the standards of evidence gained from the scientific method, to certain aspects of medical practice. Specifically, EBM seeks to apply judgements about the inductive quality of evidence, to those aspects of medicine which depend on rational assessments of risks and benefits of treatments (including lack of treatment). According to the Centre for Evidence-Based Medicine,"Evidence-based medicine is the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients."[1] Cited from Wikpedia.

In this post I want to continue my discussion on the development of a discipline of practice, a discipline focused on the way professionals practice their profession, by introducing in a preliminary way the case of evidence based medicine.

I first came across the concept in 1998 when I started as CEO of the Royal Australian (now Australian and New Zealand) College of Ophthalmologists. My instinctive first reaction was to say that's odd, I thought that all medicine was evidence based. In fact, that's far from true.

To understand this, we need to look at the way in which doctors are trained, as well as the way in which new medical approaches develop.

As with all professions, training starts with the previous body of knowledge relevant to that practice. For practical reasons, much of this has to be taken for granted. The trainee professional simply has to learn those elements required to begin practice.

The trainee then has to learn to apply that knowledge in practice. In the case of medicine this is done especially in hospitals working under the supervision of a qualified doctor who passes his/her knowledge and experience onto the trainee while checking their application. Again, the trainee is acquiring the current wisdom.

These broad processes continue throughout a professional training that can, in the case of medical specialists, extend as long twelve or thirteen years.

Once the doctor begins practice, he/she continues to learn from experience with patients. Doctors also learn through contact with other doctors and are expected to maintain a program of continuing professional education to keep them in touch with latest developments. Similar approaches and programs apply in other professional areas.

None of this will seem strange to any professional from any discipline. Yet in the case of medicine the process has proved to be seriously flawed. Evidence based medicine attempts to address these flaws.

Previous Posts in this Series

• 21 September 2006 Towards a Discipline of Practice
• 22 September 2006 Role of the diagnostic in professional practice - medicine vs law
• 8 January 2007 Reflections on Professional Practice and Practices

Teleworking - a Questionnaire

Several years ago I made a personal decision to work mainly from home. I did so for family reasons because I wanted to play a more active role with my girls while they were growing up. There have been costs, but also enormous personal gains.

Last November I wrote a story on the Ndarala Group blog looking at some of the issues involved in teleworking from a personal perspective. I have now been approached by Andrew Buckland seeking help on his Masters thesis.

Andrew is reading an MSc in Facilities and Asset Management at Edinburgh's Heriot-Watt University. His related dissertation centres on establishing if home working is a viable alternative to the modern office environment. As part of this, he has developed a short questionnaire to gather information from people who have experienced working from home. His focus is on those who have worked from home but who are not self-employed.

I know that a number of people in professional services do work in whole or part from home, a trend that has been increasing in part because of the steady increase in the proportion of women in the professional work force. Given this, I thought that some of my readers might be able to help Andrew by filling out the questionnaire. He can be contacted via email - andrew@ascb.eclipse.co.uk.

For the benefit of my international readers, the Australian Government's Australian Telework Advisory Committee (ATAC) has been investigating the teleworking option. The Committee's report plus supporting reports and submissions (here) contains a range of useful information on teleworking.