Customer Satisfaction and Profitability: Case Study 1 of 2

Customer Satisfaction and Profitability

Profitability is the cornerstone of a fruitful company.  A business that isn't profitable won't be a business for much longer. Customer satisfaction is directly linked to profitability. You won't be profitable if your customers dislike the business or its products.

Inclusion has been proven to increase both of these areas. Studies have shown that organizations who enforce inclusion see a 27% profitability increase and a 39% growth in customer satisfaction. The case study below highlights how inclusion benefits these two essential KPIs.

Related: Benefits of Diversity and Inclusion in Your Supply Chain 

Case Study: International Business Machines (IBM)

IBM has been a long-time supporter of inclusion and diversity, starting their inclusion efforts way back in the 1990s. The technology company has operations worldwide in over 170 countries. Since the 90s, the company has seen unprecedented results affecting their revenue.

IBM's inclusion strategy all started with Lou Gerstner.  He looked at his senior executive team and realized it didn't reflect their customers or their market. To solve this problem, Gerstner established a diversity task force initiative in 1995, which has become a staple is the business's HR strategy.


Educational Resources Supply Chain Error Reduction

Included in this initiative were eight task forces. Each force focused primarily on a different group—women, Members of visible minority communities, the LGBTQ community, Aboriginals, Persons with Disability, Youth, and Mature Workers. The initiative required significant support from senior level management, and so 15 to 20 senior managers were present on each task force. These senior managers came across business units. To be eligible, they had to have executive rank and represent the group of that specific task force. In addition to senior managers, each force had sponsors, co-chairs, members, HR employees, and a lawyer for legal counsel. The broader goal of the initiative was to understand and uncover differences among these diverse groups and how to appeal to a wider range of employees and consumers.

The initiative officially rolled out. Emails were sent to engage employees outside the task forces asking staff to provide suggestions on how IBM could be more inclusive. The emails gathered over 2,000 responses, which helped narrow the focus of the task forces. As a result, they focused on evaluating and improving communications, staffing, external relations, advertising, employee benefits, training and education, and workplace flexibility.

After evaluating the issues, many task forces recommended creating diverse employee network groups. Today, these networks are established across each identified diverse group, allowing employees to discuss prevalent issues that affect them.

These task forces have since been deemed effective in increasing IBM's diversity and their bottom line. According to the Harvard Business Review, "the number of female executives worldwide has jumped by 370%, the number of ethnic minority executives born in the U.S has risen by 233%, the number of self-identified gays, lesbians, and transgendered individuals has increased by a whopping 733%, and the number of executives with disabilities has more than tripled." IBM's inclusion efforts have more than paid off. They now have more equal representation from minority groups in various positions.

IBM's bottom line also saw a significant impact. The company extended their diversity strategy to their suppliers. They increased their interactions with small to midsize businesses owned by females and minority groups. "In 2001, the organization's activities accounted for more than $300 million in revenue compared with $10 million in 1998." Acting on a recommendation from the disabilities task force, the company focused on making products more disability friendly after new legislation was implemented. IBM projects this effort to produce more than a billion dollars in revenue within the next five to ten years.

IBM's success story has not been easy, nor has it been short; the company has spent years evaluating and gathering data. The initiative was even first met with skepticism, which has since vanished. Due to Gerstner's decision, IBM has become a huge, diverse company, which reflects its customers. Their bottom line has also seen significant improvements due to the input of underutilized employees. IBM's inclusion story is a dream for other companies. It only takes a small idea to gain big results.


Educational Resources Supply Chain Error Reduction