Employees or Customers First? The Surprising Key to Business Success

Who Matters More: Employees or Customers?
Should you put employees or customers first?

It is a longstanding business debate. Both employees and customers are essential to sustainable success, yet few organizations have unlimited resources, leadership attention, or investment capacity. Strategic choices require priorities.

So where should your organization place its greatest emphasis?

The better question may not be simply employees or customers first, but which stakeholder must be prioritized to best execute your specific business strategy.

Employees or Customers First? The Surprising Key to Business Success

The Case Putting Employees First
The employee-first argument is straightforward: engaged employees are more likely to exert discretionary effort, advocate for the company, remain with the organization, and create better experiences for customers.

Our organizational culture assessment research reinforces the connection between a strategically aligned workplace culture and business performance.

Two areas of research help make the case.

• The Service-Profit Chain
  Harvard researchers James Heskett, W. Earl Sasser, and Leonard Schlesinger developed the Service-Profit Chain linking internal service quality and employee satisfaction with customer value, customer loyalty, revenue growth, and profitability. The premise is powerful: create a healthy and high performance environment for employees, and they are better positioned to create exceptional experiences for customers.
• Employee Engagement Research
  According to four recent studies and our own Best Places to Work research, stronger employee engagement is consistently linked to important business outcomes, including productivity, retention, profitability, and customer loyalty. The implication is not that happy employees automatically create business success. It is that high-performance cultures enable people to perform at their peak in ways that matter to customers and the business.

Companies that Put Employees First

• W. L. Gore & Associates
  W. L. Gore & Associates, best known for GORE-TEX, has long been recognized for an unconventional culture built around trust, collaboration, empowerment, and relatively flat organizational structures.

  The philosophy is simple: create an environment where talented people can contribute, innovate, and succeed together. Rather than treating culture as an employee perk, Gore has historically treated it as an operating system for performance.

• Southwest Airlines
  Southwest Airlines provides another classic example. The company became famous for emphasizing employees as the foundation of the customer experience.

  The logic is compelling. When frontline employees feel valued, trusted, and empowered, they are better equipped to make customers feel the same way. In a service business where employees directly shape the brand experience, putting employees first can effectively become a strategy for putting customers first.

The Case for Putting Customers First
The opposing argument starts with an equally powerful premise: without customers, there is no business.

Customer-first organizations design their strategies, operating models, investments, and cultures around understanding and delivering what their ideal target customers value most.

• Amazon
  Amazon is perhaps the most famous example. The company has built its strategy around what it calls customer obsession rather than simply watching competitors.

  That philosophy has driven innovations around selection, convenience, delivery speed, pricing, and the overall purchasing experience. The strategic advantage comes from continually asking: What would make this easier, faster, or better for the customer?

  The potential danger arises when relentless customer demands create an employee experience that becomes difficult to sustain. A customer-first strategy cannot consistently succeed if the people responsible for executing it cannot or will not deliver.

• REI
  REI illustrates a more targeted approach to customer centricity. Rather than trying to serve everyone, the company has historically focused on understanding outdoor enthusiasts and creating products, expertise, experiences, and services aligned with what those customers value.

  That is an important distinction. A customer-focused culture is not about giving every customer everything they request. It is about understanding your target customers well enough to make deliberate strategic choices about where you can create differentiated value.

So, Employees or Customers First?
The answer depends heavily on your strategy.

If your competitive advantage depends primarily on highly engaged employees delivering differentiated expertise, innovation, relationships, or service, an employee-first orientation may make the most strategic sense.

If competitive advantage depends primarily on relentless convenience, responsiveness, product innovation, price, or customer intimacy, customer obsession may deserve greater emphasis.

But there is an important caveat: prioritization should never become neglect.

An employee-first company that loses sight of customers will eventually struggle. A customer-first company that burns through employees will eventually compromise execution.

The Bottom Line
When deciding whether to put employees or customers first, do not treat it as a philosophical popularity contest. Treat it as a strategic alignment question. Determine what matters most to executing your strategy, then ensure that your workplace culture reinforces those priorities. The highest-performing organizations create a virtuous cycle in which the right employee experience produces the desired customer experience — and customer success strengthens the business enough to continue investing in its people.

To learn more about purposefully building a culture that supports your strategy, download The Proven Blueprint for Aligning Your Workplace Culture with Your Business Strategy

by Tristam Brown: CEO

Tristam Brown is an executive business consultant and organizational development expert with more than three decades of experience helping organizations accelerate performance, build high-impact teams, and turn strategy into execution. As CEO of LSA Global, he works with leaders to get and stay aligned™ through research-backed strategy, culture, and talent solutions that produce measurable, business-critical results. See full bio.