KeFactors Friday: What’s Your Emotional Capital?

If you attended our Relationship-building Strategies webcast series in 2010, you know Linda Bishop (www.thoughtransformation.com) and I talked a lot about trust and how customers equate value with care. Trust, value, and care carry an emotional charge. Now consider the consequences of ignoring that. The following is based on an actual organization:

Twenty years ago, XYZ began with a groundswell of public and private support, answering a real need for international insights and services. As a 501(c)3, it occupied a crucial niche in the hearts and minds of its constituencies, and relied on their financial support as well. But despite this promising start, over time XYZ believed its press and fell victim to its own complacency.

Captains without a compass. The board and management believed themselves to be experts, so customers became characterized as whining loons. Board members micromanaged daily activities. Management treated themselves to generous pay hikes and travel opportunities, but cited operating-budget shortfalls as justification for rate increases. Not surprisingly, XYZ’s board and management disallowed anything they deemed “negative”: their communications were self-congratulating, and only the most positive customer reviews were published.

Customer service…? Minor customer questions and complaints were treated dismissively while potentially more threatening issues were listened to with perfunctory attention—but then left unresolved. Increasingly, mistreated customers scoffed at any positive news released by XYZ or reminders of its original charter. Its culture became famous for dysfunctional relationships — expressed by the number of litigations brought against XYZ by staff and customers. The company sought to suppress negative PR by presuming to put customers under a gag order.

Silent complicities. Roles and protocols became murky: employee relations with customers were marked by constant strife or, at best, the sort of cooperation brought on by an informal and inappropriate system of personal favors.

Consequences. XYZ embarked on an expansion campaign requiring new capital. Customer queries re: this new expense were never adequately answered. Demoralized staff either left or stayed long enough to undermine such initiatives. Customers also defected. Those who did remain were treated no better than staff.

At this point, XYZ’s leadership is baffled. They blame the U.S. recession and a broad customer base for diminished donations, resorting to an ad hoc “strategy” of relying on large single donors versus a coherent case statement and mass appeal to its publics. Its board and management continue to be coddled while staff and customers remain unheard.

What began with a few routine customer complaints — easy to fix; opportunities for forging deeper bonds with customers — has become a ship that’ll need to turn on a dime in order to survive, much less thrive.

And yet it’s not really about the money, which is only a symptom of the emotional capital XYZ squandered over the years—by proving themselves to be uncaring, untrustworthy, and ultimately of diminishing value.