Creating a Culture of Excellence in the Luxury Industry: The Importance of Onboarding and Recruiting.

?Science has proven, many times over, that a first impression is created within seconds of meeting a person. In a little over a blink of an eye, human beings determine whether the person in front of them is trustworthy, attractive, worth listening to, worth being followed, dominant or passive, and the list goes on.

Many scientists also agree that a child’s subconscious mind, and with it the way she or he perceives the world, is “programmed “until the age of 6, when the brain still produces mainly theta waves (the frequency at which adult brains vibrate during sleep) and is more receptive to external stimulus. From six onwards, most of the child’s beliefs and world’s view are written, and it’ll take hard work to change them.

In a more empirical fashion, think of the very beginning of a romantic relationship. Here, the initial memories a couple makes together, the first love words they exchange, the very emotions they feel, will last long, and are likely to determine the development of the relationship.

If the above is true, as it’s true, why things would be different when an employee joins a company?

Recruiting and onboarding.

Not a day goes by without a book, an essay, an article, or a post is being published about customer and employee experience.

“They are our #1 priority,” many corporate leaders say, “and they are embedded in our culture”.

Well, if that were the case, we wouldn’t witness today’s great resignation.

In a report published by Gallup and titled State of the Global Workplace, employee engagement in 2022 was as low as 21%.

Disengaged, which also means unhappy, employees produce less, up to 21%, than engaged employees. They also tend to leave their job more often which, again, affects productivity and increases employment costs.

“Replacing just one employee can?cost from 90% to 200% of their annual salary” (The Economic Impact of Employee Behaviours on Organisational Performance from the book America at Work by Wayne F Cascio).

The Luxury Industry, unfortunately, makes no exception.

While there are a few companies that stand out for their employee experience, many others, perhaps too many, do not.

And to add insult to injury, they expect their employees to deliver the memorable experience luxury clients legitimately expect.

Many observers claim customer experience is, and can only be, a reflection of employee experience.

Based on my research, I can say that, despite the strong correlation, the customer experience oftentimes exceeds the employee experience and this this happens mainly because of three factors:

1.?The tools used to receive and serve customers (from real estate to props) and the quality of the goods and services sold play a significant part in the customer experience

2.?The brand’s marketing creates high expectations, and the customer’s brain tends to match the experience with the expectations (when this doesn’t happen, though, things can go south very quickly)

3.?Many employees, as disengaged as they may be, have the common sense, and the communication ability to create pleasant moments for their customers.

Undoubtedly, as consumers become more sophisticated, and their expectations keep growing, companies won’t be able to deliver a memorable and meaningful CX with a disengaged workforce.

And employee engagement starts from onboarding. Or even better, from recruiting.

“If you don’t welcome new employees like rock stars, the experiential disappointment could start them off on an emotionally slippery slope, leading to low engagement and seeking out a new opportunity”, says Gallup.

But why is it so important for the relationship between employer and employee to start with the right foot? Here are some HR statistics:

• Great employee onboarding can improve employee retention by 82%. Research by Brandon Hall Group found that organisations with a strong onboarding process improve new hire retention by 82 per cent and productivity by over 70 per cent.
• Gallup found that only 12% of employees strongly agree their organisation does a great job at onboarding.
• HCI found that more than half of organisations focus their employee onboarding on processes and paperwork. Furthermore, 1/3 said their onboarding program was informal, inconsistent, or reactive, based on paperwork, not on people.
• 1/3 of global employees strongly agree with the statement, “The mission or purpose of my organization makes me feel my job is important.” By moving that ratio to eight in 10 employees, business units have realized a?51% reduction in absenteeism, a 64% drop in safety incidents and a 29% improvement in quality.
• New team member productivity hovers around 25% during the first 30 days. That number then increases to 50 percent in their second month of work and 75 percent in their third month on the job. In fact, Gallup finds that new team members typically take around 12 months to reach peak performance potential.
• Soliciting new hire feedback improves your relationship by 91%. Only 26%?of new employees recall being asked for feedback on their candidate journey and the hiring process before their start date.
• 70% of team members who had exceptional onboarding experiences say they have “the best possible job”.
• Investing more in communication and engagement during the pre-boarding process can improve the onboarding experience by 83 percent.
• Managers should stay in frequent contact with their new hires throughout the onboarding process, checking in on days 1, 7, 14, 30, 60, and 90, at a minimum. When the manager takes an active role in onboarding, team members are 3.4 times as likely to feel like their onboarding process was successful.
• According to Automatic Data Processing, Inc. (ADP),?60% to 70% of all employee turnover?is voluntary. This means that with the right focus, most turnover can be avoided. Understanding the influences that factor into a new employee’s decision to stay is crucial.

Employees are human beings with their loads of expectations and emotions. The more a company promotes itself as “just”, “cool”, “prestigious”, “innovative”, “culturally relevant”, “ground-breaking” or whatever other objectives, definitions and mission statements, the more candidates and new hires expect to experience the same.

I’ve seen long lines of candidates waiting in a corridor to be interviewed by a company that prides itself on a “tailored customer experience”.

Others having to wait hours after the scheduled interviewed time because the unapologetic leader of a “open door” organisation was busy elsewhere.

I’ve recently come across a case that left a bitter taste in my mouth and triggered the urge to write this blog post.

A client of mine, Anna, an experienced and passionate top manager I’ve been knowing and coaching for years, was recently offered a job by one of the world’s leading luxury retail organisations.

The role, which includes managing a large team and regularly meeting VIP customers, involved an intercontinental relocation which, inevitably, entails a high personal cost.

While she says the several remote interviews went on average well, the following process was, to put it mildly, less than exciting. Here’s what happened:

After the final interview, the company disappeared for several months, only to leave the candidate wondering what could have possibly gone wrong.

To her polite follow-up emails (two, to be precise) the recruiter always answered "We're still thinking about it", which, once again, didn’t trigger many positive emotions, if any.

A few months later, they finally sent her an offer. Generous, yet with room for improvement.

Since time had passed, my client had already received an offer from another company. A competitive one, complemented by a much more exciting, and prompt communication. The people there really wanted her onboard and had not been hesitant to show her.

With two offers to evaluate, she didn’t know what to do.

The first job, and the possibility to move to a new continent, was appealing to her, but the experience prior to the offer had been poor, and she wondered what kind of corporate culture she would find.

The second job, while less exciting, was complemented by the great enthusiasm of her stakeholders, and she could really see herself being part of the team.

After a rigorous thinking process we put in place during our coaching sessions, she decided the first offer was the one worth being pursued, and that a little financial improvement would have given her the confidence to close the deal and move her family to “the other side of the world”.

And so she started negotiating her package. With the flair and the class, one would expect from a seasoned luxury professional like her.

From that moment onward, an already poor experience became one to forget.

Not only all her requests were rejected, but the answer was also always the same: “This is what we offer for the role, and there is no room for negotiation”.

Nothing like a bureaucratic approach kills enthusiasm, especially in an industry that relies on personal touch, to elevate customer experience.

While I understand the people in that company could have real budget constraints, or lacked the authority to negotiate, they could have done much better in terms of employee experience.

At a minimum, they could have:

1. Negotiated internally alternative ways to improve the compensation. Cash is not the only tool to motivate an employee. The list of benefits that can make a package attractive are endless, many of which have an asymmetric cost (for the employer) / benefit (for the employee) ratio.

?2. Complemented the offer with a detailed and clear career path. By giving her a glimpse of the future, she could have felt accepting the job was a smart investment.

?3. Communicated warmly and enthusiastically. What’s the point of being so formal, bureaucratic and, ultimately, cold with someone you’re going to work with shortly? A sentence like “I wish we had more financial resources to attract an incredible talent like you. However, should you decide to join us, everyone here, will do their best to help you succeed. We’d really love to have you onboard!”.

?None of the above is rocket science, and yet nothing was tried.

Anna politely refused the offer and is now happily working with the second company.

Recruiting is important, and so is onboarding.

I’ve talked to countless people who told me: “Before joining the company, they treated me like a resource. From the minute I joined, they started treating me as a cost”.

There are still many companies in the luxury industry and not only that show a wide gap between the way they present themselves, and the way they act behind closed doors.

With it, I am not saying employees should get free Dom Perignon at work if this is what the company offers to its customers, but not even the cheapest soluble coffee.

There must be a certain level of coherence between the way a company wants to be perceived by the external world, and the world it creates internally.

Ultimately, employee experience is the output of corporate culture.

“Culture eats strategy for breakfast”, once said management guru Peter Drucker.

As per the Harvard Business Review, “Strategy?offers a formal logic for the company’s goals and orients people around them.?Culture?expresses goals through values and beliefs and guides activity through shared assumptions and group norms.

Strategy provides clarity and focus for collective action and decision making. It relies on plans and sets of choices to mobilise people and can often be enforced by both concrete rewards for achieving goals and consequences for failing to do so. Leadership goes together with strategy formation, and most leaders understand the fundamentals. Culture, however, is a more elusive lever, because much of it is anchored in unspoken behaviours, mindsets, and social patterns.”.

CONCLUSIONS

21% employee engagement is not acceptable in the Luxury Industry, nor in any other in 2022.

The cost companies will pay for such disengagement is much higher than the investment needed to engage them more. And it all starts from recruiting and onboarding.

“Treat employees like rock stars” is a good idea, and easy to understand.

Make sure your corporate values are TRUE and clear, and rather than expecting your employees to learn them by heart, let them experience them!

Customer facing employees, in particular, are the ones struggling the most when the internal life clashes with the 'facade' the company offers to its customers.

How can a three-Michelin star restaurant expect their team to serve the world’s finest wines and foods to the most discerning clientele, if they have never tried them? (Luckily, in three-Michelin restaurants, they do, but in many others, although expensive, they don’t).

To conclude, I invite entrepreneurs and top executives to reflect on the cost of providing their employees with a great experience. Many of them will realise the financial cost is reasonable, but there is something else they must give up. Their ego and their avidity.?

To your success!

Carlo Pignataro