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Tue April 17, 2012
Dr. Derek Avery, Temple University – Diversity and Customer Satisfaction
In today’s Academic Minute, Derek Avery reveals how customer satisfaction can be tied to the diversity of a retail outlet’s workforce.
Derek Avery is an associate professor in Temple University’s Fox School of Business where his research examines how gender, race, and ethnicity affect employee recruitment, retention, engagement, performance and absenteeism. His work as appeared in journals such as the Journal of Applied Psychology, Personnel Psychology, the Journal of Management and the Journal of Business and Psychology. He holds a Ph.D. from Rice University.
Dr. Derek Avery – Diversity and Customer Satisfaction
It’s a commonly held notion that matching the demographics of employees and customers makes sound business sense. But academic literature on the effectiveness of employee-customer similarity has been riddled with conflicting findings. Does similarity, in fact, sell? According to a nationwide study we conducted of a major U.S. department store, the answer is yes. Representativeness – which compares the level of diversity of store personnel to that of customers – appears to increase customer satisfaction. And profit.
In our study of 739 stores, those outlets with higher representativeness boosted productivity by $625 per employee. Such an increase amounts to about $94,000 per store – or a total of $69 million across the company. Representativeness is both functional and symbolic. It conveys that a company does not discriminate in its hiring and provides a clue to customers that store personnel are apt to provide equitable service. This effect is more pronounced for stores with minority customers, who seem to be more aware of matching cues when choosing a store to patronize.
Representativeness can also elevate a workforce’s willingness and ability to meet the needs of their clientele.
It encourages employees to treat all customers with courtesy and respect, resulting in a better customer experience. High representativeness also provides customers who prefer to work with similar salespeople the opportunity to do so. But while racioethnic matching is profitable, it is also perilous.
Companies that engage in concerted employee-customer matching efforts – such as illegal hiring quotas – put themselves at great risk.
Instead, organizations should regularly assess their representativeness through several key factors, including whether the applicant pool looks like its customer base. The success of programs like affirmative action and diversity management are contingent upon organizations keeping track of levels of representation among their personnel. An organization that is oblivious to representativeness may also be unaware of the inadvertent signals its customers are receiving.