EP # 185 - Building Your Service Business Machine: The Path to Operational Excellence

In this value-packed episode, discover how to maintain and improve service quality while scaling your business. Learn about the three essential pillars that create operational excellence: People, Processes, and Systems.

Key Highlights:

• Why service businesses face unique challenges in maintaining quality during growth
• How to achieve 95-98% service excellence through systematic approaches
• The four critical elements of successful hiring in service businesses
• Why common sense is an overlooked but crucial hiring criterion
• Tips for effective employee training and development
• The importance of investing in middle management
• How to create and improve business processes
• Selecting and implementing the right systems for your business size
• Tips for tracking KPIs and detecting problems early

Key Takeaways:

1. People come first - invest in hiring, training, and developing your team
2. Processes should be documented early and continuously improved
3. Systems should empower people, not restrict them
4. Balance standardization (80-95%) with customization (5-20%) for scalability
5. Track the right metrics to detect and prevent problems early

Ready to scale your business sustainably without overwhelm? 
Book a free consultation with Maggie through the T.O.P. CEO Continuous Success Recipe to transform your business into a sellable asset.

Transcript

[00:00:00] Hello, my dear listeners to Diamond Effect Podcast. Welcome to episode 185. And today we'll talk about achieving operational excellence, which is key when you're growing and scaling your business, because just think about it. As you scale, how do you maintain the high quality of service to your clients and even keep improving it when you are no longer the one delivering it?

The employees that you hire to deliver service to the customers become the representation of your brand. 

In the service business, we're in a unique situation where what we offer to our clients, it's heavily dependent on humans. There's a human factor. You and then your employees delivering service to your clients and then clients receiving that service and as humans, we're not as [00:01:00] predictable as machine means we're more complex and there's more to it.

Like if you think about a product business. There is a product that is created by mostly machines. Yes, we humans program how the product needs to be created, what needs to go into it, and so on. But then machines turn that product out, and the accuracy of creating the same thing over and over for the customers is way higher than in a service business where you can't program humans. We interpret policies, procedures, and so on in our own way, and there's more factors that go into it.

So after this introduction, you might be thinking, okay, Maggie, scaling a service business and maintaining high quality service, it's impossible. And I want to say, no, not true. It's possible. And not only [00:02:00] possible to maintain high quality service, but actually raise it where it's 95, 98%. Now, you'll never be 100 percent because it's humans who are not perfect.

And if you think about it, even machines create defective products, right? So they're not 100 percent perfect, but you can be Excellent in what you do, you can be best in class, best in industry with the things that I'm going to teach you today. Today we're going to talk about three things. People, processes, and systems.

Those three things are key to success. in any business, but especially in service business. They all complement each other and when they work together in harmony, that's when you achieve operational excellence. And we're going to start with people because People first, always. Your business is [00:03:00] there to serve your clients, other humans.

Your team and your people will always be the most important part of your business. And I think it was Sir Richard Branson who said that when you take care of your team members, they will take care of your clients.

And that's a very important principle for any service business. Just last week in the episode 184, I did talk about how to create highly performing teams and some key components of highly performing teams. I highly recommend after listening to this episode, to go and listen to 184 as well.

Today, I will focus on other things that are important in your business for your people that maybe I did not mention in the previous episode. And that relates to hiring. [00:04:00] Your business cannot scale. without you hiring people. And any operational excellence in a service business starts with great people.

And there's four key things that I want you to think about and incorporate in your hiring process if you don't have it yet. One is of course technical skills. So hiring people who are great and what you need them to do. If you have an contracting business, maybe HVAC or electricians and you're hiring more electricians and or HVAC mechanics, of course they need to have a skill set and certification in that area to help your clients. 

If you're a spa owner and you're looking to hire nurses or other professionals who are licensed to, let's say, do injections, they need to have those licenses. [00:05:00] If you're a restaurant and you're looking for staff in your kitchen, you want People who've been educated and have skillset in cooking delicious food.

The second part is soft skills. And I find that many businesses actually either overlook that part or undermine that part. And by soft skills, I mean customer service. Excellent communication, teamwork, and all those things. Yes, those are skills that you can teach. However, they take longer time to develop, and especially if you're looking for somebody to jump in and help you, you might not have time to do that.

Those are very important skills that are actually Harder to teach than a technical skill. If you are a service business where maybe technical skills don't require licensing, there may be things you can teach your employees quite fast. But [00:06:00] if they don't have that customer service orientation and they don't interact well with people, they lack in communication, it's going to be very hard for you to have them as high performing employees.

When you're looking for great people, you want to have people who have a good balance in technical skill and soft skill. And I'll give you some anecdotes from my corporate world where sometimes we had technicians who really got technically. They knew the equipment, how to maintain it, they could solve any problem, and yet they were not great at communicating with the clients.

And sometimes those technicians then received more complaints from the clients than the ones that weren't as great technically, but could communicate well. Just imagine, you know, a technician goes into a building, they do their work. But never communicates with the client that they've done. [00:07:00] And then the client doesn't necessarily see the difference in how the building operates right away.

And they're thinking like, oh, nobody came. Like, what's going on? They get all upset and riled up. They call to place a complaint with you. In the meantime, the issue is resolved. As opposed to, there might be technicians who are not as great. It takes them a couple of trips to solve something that could be done in one trip, but if they're communicating well with the client and they are great at building relationships, they can actually get away with it.

I've seen it happen, so that's why, and I'm not saying hire, you know, team members who are not good in your technical skills, but that's why that balance is so important. The third consideration in your hiring is always a cultural fit, so fit within your Mission, vision and values what the company stands for, because that really will [00:08:00] influence how the team is working together.

It will influence how people get engaged. into what you're trying to achieve, how much on board they will be with you, and how committed they will be to the business growth. And it doesn't mean, that you are hiring the same people over and over. That you end up with a team of Maggies. That's not what it is.

Think about it as a Everybody's different. Everybody brings a little bit different things to the table, even though they might have similar technical skills, but their soft skills were different. Their approaches will differ. So everybody's a unique piece of the puzzle, but together they make this beautiful picture. Uniform picture. That's what you want in your business. That uniform picture is you achieving your vision, your business achieving the [00:09:00] mission. So the puzzles, even though each individual one is different, need to work well together. So it's important to screen for that and have people who have that cultural fit.

And one last thing that I always teach my clients. I bet you haven't thought about and you don't even scream for it in your hiring process is common sense. And why? Because 1. Common sense is not as common, but also people with common sense can adapt. Two situations: so they will take a process that you give them, and they will apply it, but it will apply it in a logical way.

The thing with service businesses is that you can't possibly script every single situation that might happen with a customer while you're delivering the service. [00:10:00] So people who think very black and white are inflexible. They will either Overdo it or underdo it. And very often you might encounter customer complaints because they cannot adapt.

People with common sense can use and follow the process guidelines and yet adapt to the situation properly so the customers served and the business goals are met as well. Think about it this way, processes in service businessare guidelines. There might be some strict guideline that you will include there, depending on, you know, your industry, the laws that regulate that industry, the contracts you have with your clients and things like that.

But there will be things that will give flexibility for your employees for interpretation and kind of customization to each situation. And people who cannot do that lack common [00:11:00] sense. It's important. It's key. You cannot have people in your service business who can just follow instruction one by one by one, and if a situation is tiny different, they get lost.

We're not building Ikea furniture here or anything like that. We're actually dealing with human beings. We're delivering service to them. Then before we move into processes, there's a couple more things I want to talk about in the people departments. Once you hire great people, it does not mean you don't invest in their training and development.

Actually, great people will love to learn. They will love to grow, and usually most humans do. That's our primary needs, growth. So invest. in training your people and train them in multiple aspects, not all at once, right? Because it might be too much for them. And from the budget reasons in your business, that might be too much. [00:12:00] But have a plan.

One is of course staying on top of of their technical skills and learning about new advancements in whatever industry you're in. Two, the soft skills. Even if somebody's a great communicator, they can always improve their customer service or communication, never so good that we can't improve or learn more.

Also, in your processes and technology, whenever you're implementing new process, you want to train your team. And not only once, but sometimes recurring training is needed. Or if you're implementing new technology, or a change to technology, those trainings need to happen.

It's very important. Very important because you can have greatest people on earth, but if they don't understand your processes properly, or if they don't know how to use your technology properly, they're not going to be effective. They're going to make more mistakes and that will [00:13:00] lead to customer dissatisfaction.

And those are simple things you can do to empower your people to be the best they can be. That's in your business's best interest. The second part that I want to mention is managers. In the beginning, when your business grow, you might have 3, 4, 5 employees, 10 employees who deliver the service and as the business owner and the CEO, you will be their direct manager, their direct leader, and that's great.

However, as you start scaling and maybe now you have 20 people, 30, 50, 100, you won't be able to directly lead and manage them all. You will need some middle ground. Managers in place those people you need to equally higher rate people like that and invest in them. What I found, especially in corporations, sometimes the direct managers, the line managers [00:14:00] are overlooked by the companies and there are not invested in as much as they should. 

Studies show that the satisfaction of a manager and the skills of a manager has a direct correlation of the engagement and happiness and performance of the direct report. So if you don't empower and grow your managers, no matter how great you are as a leader, no matter how great your processes are and your technology, your employees are not going to be the best they can be.

 In the beginning, that's probably not as complicated but that's your business skills and you have more layers in your organizational chart than sometimes those direct managers could be overlooked. Talking from experience, and then what happens is they're the ones who are held accountable for the performance of their teams and the growth and the leadership and [00:15:00] management, but then is there somebody who is leading them and ensuring that they're growing and they're being treated like, you know, valued employees the same way field staff or the stuff that directly deal with customers is, it's very important.

Okay, a little bit about processes. You want to document them as soon as possible, as early as possible, and in detail. So well documented processes not only help current employees to understand, what's required of them. How do we deliver service? What are the standards? Also, what are the contract requirements?

But also it helps with training new employees. Now, the more service lines you have and the more clients you have, especially when you're a business that deals with other businesses and there's like more complex contracts in place, then [00:16:00] you want to standardize your internal processes of service delivery as much as possible.

And again, depending on your business, what type of customers you have in an industry, you might be able to do it 95 percent of the time, but don't go below 80. Okay. If you Customize too many things too much and everything is for your employees to remember nothing can be documented or not even systemized because you can document a custom process on paper, But then if there is, everything is custom, it's very hard to then put it into a system and technology, and it's not effective, it's actually not scalable.

So as you create those processes, you start documenting it, think about them as you're building. Best practices. And if it's in your client's best interest to use those best practices, sometimes our clients [00:17:00] with want customizations because they don't understand the effectiveness of what we already deliver of our best practices.

But if you can communicate that to the customer, sell it that way. And most customers will be okay. And then the customizations are anywhere from 20 to 5%. Which is normal, and that is scalable.

Documenting where processes will allow you to then understand what can be streamlined. So what can be put in the technology and automated. If there's some repetitive tasks that are being done manually by your employees, it will also help you identify improvements. So for example, if you have two different people doing the same thing because your company grew and you didn't even realize, documenting the process will unveil that and you will be able to find deficiencies just by looking and documenting the process.

Another [00:18:00] thing about processes is that they should be continuously Improved. And there's two aspects of it. So the first aspect is, if you're seeing, let's say you're getting a customer complaint in one part of the service delivery over and over and over, no matter which person delivers the service, it's not a people problem.

It's a process problem. If those people are following the process and somehow customers are complaining, there must be a portion of the process that isn't working. And when you discover it, which you want to do as soon as possible, and we'll talk about it in systems, is you need to adjust the process as soon as possible.

Continuous improvement, it's about not thinking that once you document the process, it will be there forever and will never change. There will be things that will demand process changes throughout the year, so proactive and reactive process [00:19:00] changes. Reactive is more, okay, there's customer complaint, more than once, it's happening no matter who delivers it, there is a problem we need to fix.

Proactive continuous improvement of a process is you re-looking at the process on a regular basis. At least once a year. If you can do it more often, amazing. And walking through that, having a customer hat on, so through customer's eyes and thinking, where is the process clunky for the customer?

Where is it not easy and simple for them to go through? Where we can elevate their experience and then Implementing the improvements that you came up with that customers haven't even suggested or complained about. Now, we got to move on to systems.

So the third part of operational excellence, people, processes, and systems, let's talk about systems.

[00:20:00] Systems and processes, for that matter, are there to help your people be the best they can, right? To deliver the best service to your clients. They're there to empower your people, not the other way around. Your people are not there to first follow the process and use the system. Your people are there to deliver excellent service to the clients. And processes and systems help them and empower them.

And if there is a moment where that's not happening and you switch the perspective, you've got this wrong. It's a very common trap that can happen when you get into implementing processes, implementing a new system so that you never forget that. It's a very important part of excellent operations and high [00:21:00] level of service delivery.

When we talk about systems, we can think about in many different ways. A system, it's a group of processes, That can work together with minimal technological support, or it can be a whole technological system where you input sort of all your processes, all your operations, and you support your business and your people that way.

Think about it this way. It's not only technology. It's also processes working together, but when we think about technology, a couple of tips that I have for you is this. When your business has grown big enough where whatever you have is not enough anymore. The manual work becomes too cumbersome and you need to automate things.

Don't always go for latest and greatest and shiniest tool out there. You need [00:22:00] to pick a tool that will solve your business problems. That will serve your team to deliver amazing customer service. Of course, do your research, do the requirements mapping, and then the research of what's out there in the market.

It's kind of like, you know, when you are buying a TV for your house and you have a wall, that can only accommodate 60 inches TV, you're not going to put a hundred inches TV in there because it's going to be clunky. It's not going to work. So if you have a business that's still rather small or medium, you might not need 60 inches TV.

This huge system that large corporations use because it's just too powerful. It's financially not optimized and you're not gonna use its full capacity. It's might be even too complex and too clunky for your team to use. So [00:23:00] instead of them being more effective, they'll become less effective.

 You want to balance. Your need for current need, of course, future growth and what's out there. Yes, when you implement technology, you want to think about not only what I need right now, but also how am I growing and what are you going to need in the next 5,6,7 years. It does not always have to be the latest and greatest, especially that latest and greatest technology, very often it's not proven.

There's a lot of bugs and gems and so on. So sometimes actually a proven technology that's been there out in the market creates less issues when implementing it and it's more robust and better working. Another thing that you want to pay attention to as you implement the system and you start streamlining things is how do you gather data and can you easily extract that data [00:24:00] in a form of reports that give you insights into your business.

Can I track key performance indicators in my operations? For example, customer satisfaction being one of them. Another thing is, effectiveness of productivity of your employees. Another thing is if you have certain milestones each month or each year that you need to meet, especially if you're a business to business and you have certain things in the contract.

Can you easily track that? Gathering data is one thing. It's important because that will give you potential ability to draw very powerful insights in your business. But if you don't have a way to then transform it into visual indicators of what's going on in your business, then it might be not enough, right?

You need reports, you need dashboards and things that will Help you, A, [00:25:00] detect certain problems early in, you know, when they're happening and also draw conclusions for improvement. And here, it's a big topic, but it just quickly, how do you detect problems early? It's all about what you track. Do you have an ability to tracking the right things?

And with the right frequency that needs to be adjusted to your business and the growth, what needs to be adjusted to your business and how fast it grows and also the size and industry will help you see very early if there's opportunities to tweak something, switch something, or avoid problems from compounding.

A very quick example for that was in my previous career, we had kind of a contracting business. In our contract with clients, we did [00:26:00] preventative maintenance on building equipment and by law and through the contract, we had certain percentage of preventative maintenance having to happen each month or each quarter.

So us tracking the completion of those maintenance Tickets that the technicians were receiving throughout the month, not only once a month and then be surprised that we didn't meet the KPI, but throughout the month, daily, on a regular basis, allowed us to see the patterns and also the progress of completion.

So we were never surprised. We could always react early if we were seeing that the progress wasn't what it needed to be for us to meet the KPIs, and we could readjust our scheduling, our workforce and all those things. So when you track the right things, you can see the problems early and then avoid the disaster, but also you can learn from them [00:27:00] and adjust for the next time.

And then one last thing I wanted to say about people, processes, and tools resistance is that when there's a change in one of them, very often a change will be required either in the other two or at least One. So let's say if you're changing a process substantially, then if that process is inputted into a technological system, you might need to change certain data points in there, or the workflow. Even if an employee changes, and let's say the way we had technicians, we had their profiles in their technology, so then they can receive their work through technology. 

Always think about it. If you're changing one thing, think about, is there any changes required in the other two? 

Now, if you're going through a growth and scaling of your business and you're like, Maggie, I know you can help me, but I still don't know how. [00:28:00] Let's talk. 

Through my T.O.P. CEO Continuous Success Recipe. I help my clients scale and grow their business into sellable assets, and we do it customized to what they need to get there. To their business, in their industry, the level of growth. And we do it in a very doable chunks. And then I act as a coach and consultant when I give you specific things that you can work on, you can improve, and I help you with my expertise as well.

Reach out to me, book an initial consultation. They're free. Let's talk about how I can help you scale sustainably without overwhelm and set up your business as a sellable asset. Thank you very much. Talk to you next week.