10. The Tangible and Intangible Costs Employees Pay – Lead With Your Customer, 2nd Edition:Transform Culture and Brand into World-Class Excellence


The Tangible and Intangible Costs Employees Pay

Now that we’ve explored the initial promise made to your employees and the people, place, process, and product that deliver the experience to them, we need to look at whether it will all be worth the price they pay.

Organizations often talk about the price of employee turnover. Looking at the costs of hiring new employees plus the costs of training and getting them up to speed is a factor that we should not overlook. But the emphasis here is on being proactive—keeping great employees by making it worth their price. The key consideration, of course, it to ensure that they are receiving superior value at the end of the experience.

The Price Employees Pay

Smart organizations consistently attack the challenges employees face and work to reduce the sacrifices they make, to ultimately ensure working there is “worth it.” Again, the same Six Ps Customer Formula applies:

Promise < People + Place + Process + Product > Price

Consider the topics we’ve outlined in the previous chapters:

• compensation

• benefits

• a supportive work environment

• the behaviors of those around you

• how you are treated as an employee

• how you are made to feel special or important

• how you and others around you were selected

• the orientation and onboarding process you went through

• the training and development you receive

• succession opportunities

• the way you are rewarded and recognized

• how much teamwork exists

• the organizational structure’s effectiveness

• whether there is a culture for taking risks and learning from one’s mistakes

• how long it takes to get the answers you need

• how much decision making is in your hands

• how often you are waiting for others.

These are only a sample of the experiences employees receive. When it’s worth the price, employees are more engaged, more committed, and more in a position to achieve results. And employees pay both tangible and intangible prices. Let’s look at each type.

The Tangible Price Employees Pay

The tangible price is more physical, more quantifiable. It shows up largely in the time and effort an employee expends on the job. This factor includes both time at work and absences.

Time at Work

How much time does an employee work? If employees are in a wage-paying position, are they being compensated with overtime pay? If they are in a salaried position, are the hours justifying the compensation received? In terms of time, employees need to consider the following:

• working during breaks

• working before or after hours

• working on off days

• working while others are asleep

• working while others are playing—such as during holidays.

The United Services Automobile Association (USAA) was a leader many years ago when it created a four-day workweek. This is much more common these days, especially given ever-increasing operating costs, which contribute to the price employees ultimately pay.

There are many research studies that tout the benefits of having extended time off every week, indicating that employees are more focused and productive when they have time to improve their work-life balance. According to an employee survey about benefits published in the Harvard Business Review, “more flexible hours” tied for the most responses at 88 percent. One example of an organization that is aligning with this philosophy is Basecamp, a fast-growing online software company that provides a platform for clients to streamline how their workforce communicates and shares information. CEO Jason Fried is a big believer in flexible work schedules, stating that better works gets done in four days rather than five.


Time and absences from family and friends are two different issues. Some employees work a lot of overtime but do it at home. Others work a 40-hour week but pay a premium in time getting to and from work. Still others travel extensively, which creates additional absences. Excessive absences from their personal life creates an unbalanced situation, which can lead to burnout, dissatisfaction, and poor performance.

The Intangible Price Employees Pay

In defining intangible, we mean those things that aren’t easily measured. Aspects of intangible price include the culture, your associates, organizational performance, and the right fit.

The Culture

Are employees at odds with the mission or values of your organization—do they feel they do not align with the company’s practices? Is the atmosphere too formal or too controlled? People are willing to work, and even sacrifice, for organizations with which they feel aligned. This is why you’ll find the crew at Southwest Airlines pitching in and helping out, especially at check-in. It also explains why their deplane, clean, and loading turnaround times are often less than half the industry average.

Your Associates

Are your associates great to work with? Do you pay the price of having to put up with others? How about your supervisor? Upper management as a whole? The employees who report to you? There is an intangible price related to everyone with whom you work.

Organizational Performance

Does the success of the organization matter to the bottom-line price employees are willing to pay?

One growing trend is companies looking for creative ways to reduce payroll costs while retaining exceptional employees. According to 2017 research by survey firm Qualtrics and venture capital firm Accel Partners (Overfelt 2017), Millennials responded as follows:

“I would take a salary cut of 6 percent to 12 percent to work for a firm that:

• offers long-term job security (38 percent)

• offers flexible hours (37 percent)

• offers good mentorship opportunities (30 percent)

• is growing very rapidly (30 percent)

• only employs extremely talented and smart people (26 percent).”

Commonly mentioned “surface perks” like free food and dry cleaning soon become seen as a novelty that wears off. Cultural benefits that support and develop employees are what matter for the long term and are often the backbone of proven world-class organizations (Overfelt 2017). Clearly, employees are willing to be paid less for the opportunity to work for an organization where they can be successful. On the other hand, how many times have you heard someone say, “You can’t pay me enough to ever work for that place!”

The Right Fit

Are employees doing what they love? Are they simply putting in the hours? Are they frustrated because they don’t see themselves as adequate for the position, or because they feel that the position is beneath them? Given these circumstances, they may not be willing to pay the price.

Leading Example: The JetBlue Call Center

It’s not difficult to imagine making an airline reservation and thinking that the agent with whom you are speaking is lost in a sea of cubicles, but JetBlue took a different approach to showing up at work. It found a willing workforce in Utah ready to work from home.

The advantage for JetBlue was that it could reduce office overhead while finding an educated, capable workforce at a reasonable price. After receiving initial orientation and training, agents are equipped with a home computer. They must create a dedicated workspace that helps them to be productive from their remote location. This scenario allowed 1,500 workers to process up to 35,000 customer calls a day. The most senior 25 percent were able to choose all their own shifts, and an automated system allowed agents to even trade shifts.

Although JetBlue made every effort to find personable, amiable agents, having people work at home does come at a price. Supervisors contact their employees every couple of days, by phone or email, in addition to standard monitoring, but working at home does not provide the kind of one-to-one contact that such personalities require. JetBlue has had to introduce a number of interactive technologies so that agents can have the opportunity to associate with each other. These technologies are shown within the context of the Six Ps Customer Formula in Table 10-1.

Despite its unique challenges, JetBlue maintains a low single-digit turnover rate compared with the rate of nearly 50 percent for call centers elsewhere. In fact, the demand to work for JetBlue is often so high that the application process is only opened once a year for a 24-hour period—when JetBlue typically receives 1,200 to 1,400 applicants. Agents love that they can skip the travel to and from work, all the while staying close to family. It’s clearly a case of understanding the employee promise and creating an experience that engages agents at a price they are very willing to pay.

Table 10-1. JetBlue’s Call Center Experience in the Context of the Six Ps

P Description
Promise Fun, professional opportunity in a flexible, work-at-home environment
Exceeded by …
People Working virtually with people—blogging becomes the new “water cooler”

• Get to work at home

• Must provide office within your home

• Must live within an hour of the JetBlue University office


• Automated shift trading

• Virtual communication vehicles for associating with others

• Agents may bid for six- to eight-hour shifts


• Benefits from working with a major corporation

• Free travel

All of which is greater than …

• Willing to work for a lesser price than found in other major call center markets

Summing Up

There are both tangible and intangible reasons to continue doing business with you as an employer. The employee decides the value of their employment. Listening and understanding employees’ perspectives (the Customer Compass; see chapter 2) and implementing the actions that make the biggest difference to them will determine whether the “price” of doing business with you is too high or a “fair deal”—just as it is with your external customers.

Now that we have explored the strategies and tactics world-class organizations focus on for your internal customers (employees), we are going to transition to an in-depth review of the external customer—and how to use the six Ps to consistently exceed expectations.

Next Steps for Building the Culture Through Price:

What intangible price do your employees pay?

What tangible price do your employees pay in terms of time at work or absence from others? Are there other tangible costs?

What price is your employee willing to pay for intangible and tangible benefits?

How can you add further value so that your products and services are worth the tangible and intangible price employees pay?