How should a CEO talk to employees? 10 retail experts weigh in
Does an all-caps rant from top brass inspire employees, or just come across as bullying?
When we first heard about Restoration Hardware CEO Gary Friedman’s ALL-CAPS RANT to employees, we had to chuckle, going on to include it in our weekly roundup of retail oddities. With the message (first reported by Bloomberg) chock full of hyperbolic phrases like “WE HAVE LET CUSTOMERS DIE” and “WE CANNOT AFFORD TO LOSE ONE SINGLE CUSTOMER. NOT ONE,” how can you not giggle?
Friedman sent out the staff memo after a meeting with executives and vendors discussing customer service and late deliveries. He likened the retailer’s operations to a building on fire, with people inside burning and dying. Friedman went on to say that a dramatic change is needed at Restoration Hardware, both in its culture and attitude, in order to successfully delight (or “DELIGHT”) the customer.
Beyond entertainment value, the memo brings a larger issue into the spotlight: corporate communication. There are many ways CEOs choose to disseminate messages to their staffs, including memos, meetings and videos. But is there a right method?
Following the news, RetailWire asked its BrainTrust panel of retail experts the following questions:
- Did Gary Friedman go too far in his memo to employees?
- For you, who stands out as a model for the way CEOs should best communicate with employees?
Here are 10 of the best comments from that discussion. Comments have been edited by Retail Dive for content and length.
1. Honey, not Vinegar
Paula Rosenblum, Managing Partner, RSR Research: As far as I can tell, Tony Hsieh [Zappos CEO] is the best model for communicating with everyone. And Frank Blake from Home Depot was always great at thanking his employees for delivering a good quarter, and taking the blame himself for a weak one.
Perhaps [Friedman] ought to find out who is responsible for sending out those 600-page product catalogs to people who have never shopped at his stores. That has to be the single biggest waste of money and natural resources I have ever seen. And I got one two years in a row!
2. “The Trump phenomenon”
Bob Phibbs, President/CEO, The Retail Doctor: Call it the Trump phenomenon. Over-the-top ALL CAPS represents passion. Maybe. But the way you deliver the message carries the meaning. "Heads will roll" might have worked with Boomers in the '70s but I'm not sure how many Millennials would take that as a rallying cry to do better.
Such a public crying out deflects the real issues. What should we be doing to improve order cancellations, customer service, etc?
You get one shot to pull a carrot out of the ground and put it back. This was [Friedman's]. I hope it does the trick but it is a slippery slope to continued berating where employees feel even more disempowered as less customers come in the doors and the stock price sinks further.
3. Whatever works
Tom Redd, Global Vice President, Strategic Communications, SAP Global Retail Business Unit: Come on—are the press people soft? He is the CEO and no matter what people think it is his choice. Are employees so soft today that they cannot get yelled at in their electronic medium (email)? The spoiled kids, treat them with special gloves? GO GARY! Time to get some people serious about their jobs and leave less room for slack! Get the Trump-ification of retail started!
4. Talking vs. depreciating
Max Goldberg, President, Max Goldberg & Associates: I don't find Mr. Friedman's note refreshing. I appreciate its candor, but not its tone. It belittles employees and denigrates their efforts. As to the method of communication, direct email is fine. I like that Friedman communicates directly, and wonder if he's open to direct feedback.
5. Bigger issues at hand?
Joy Chen, Chairman & CEO, H2O+ Beauty: Effective communication needs to be consistent with company culture, company size and issue at hand. In this case, maybe this type of communication is effective at Restoration Hardware. However, if the goal is to fix customer service long-term, it may need other fixes beyond communication which may include organizational structure change and incentives.
6. Leadership in the Internet age
Cathy Hotka, Principal, Cathy Hotka & Associates: Restoration Hardware's price points are high enough that customer expectations will be high too, and I have no issues with the company's desire to re-orient staff toward a common goal. It's the age of the Internet, though, and a leader's over-the-top warning to staff is certain to appear on Reddit. Savvy leaders will appeal to civility.
7. "What took so long?"
Gene Detroyer, Professor, Independent: Friedman is right.
From my own experience, the people at Restoration Hardware don't even know the meaning of customer service. Our last experience there was awful. So bad we would not ever give them a second chance. Trying to return a significant purchase that was clearly not as advertised met with arrogant attitude and bureaucracy.
My only question regarding Friedman's rant is, what took him so long?
8. Style vs. Substance
Ryan Mathews, Founder, CEO, Black Monk Consulting: So it seems to me there are two issues here: style and substance.
I think we can all agree that Brother Friedman might need some serious executive coaching on style points. The whole "all caps" thing is so JUNIOR HIGH SCHOOL OMG!!!! DID YOU SEE HIM/HER????????????!!!!!!!!!!!!!!!!!
Ditto with the hyperbolic metaphors. The image of burning clothes and seared flesh is clearly, equally over the top.
But the message, well, let's not rush to judgment on the message.
If we can analyze it in a lower-case manner for a moment, what exactly is Friedman telling his people? Let's see: we are in serious trouble; it is going to take all of us to right the ship; this is the most important thing to me and—therefore by extension—to you; the customer is key and must be preserved at all costs; I, the CEO, empower you to do anything necessary to hold our customer count; we need to reorient ourselves and our culture and we need to do it now.
I'm not sure (style aside) there is a lot to quibble about in terms of content.
9. The whole message is tired
Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania: Let's put aside [Friedman's] ridiculous style—'nuff said about that.
More importantly, the substance of his message is just plain wrong. The notion of "delighting every customer" is naive, inefficient and not the best way to build a sustainable customer-centric business at scale.
We really need to get past that tired notion and start getting smarter about the best ways to manage our customer relationships.
10. You build it, you manage it
Christopher P. Ramey, President, Affluent Insights: Some companies are managed by fear, employees get used to it. Perhaps this is the only way to get [Friedman's] employees to respond. He knows his culture better than those of us on the outside.
He built it, he can manage it the way he sees fit or however it is necessary to be effective. The ramifications of such behavior are his cross to bear.