People, Service and Trust Links in the Public Sector Value Chain

In private sector management literature, there is a concept developed by Professor James Heskett at the Harvard Business School called The Service Profit Chain. This is used by many service sector companies to achieve three related outcomes: “Happy Staff, Happy Customers, and Happy Shareholders” as SouthWest Airlines explains in their core management framework. (https://hbr.org/2008/07/putting-the-service-profit-chain-to-work)

The basic concept is that satisfied and engaged employees provide better service, and that good service drives better bottom-line profitability, as well as long term customer loyalty. 

The Service Profit Chain model sparks two interesting questions for public managers. First, do relationships like these exist in public sector organizations? Second, what might our “bottom line” be, if not profitability?  Professor Ralph Heintzman and I proposed some years ago that perhaps good service to citizens might increase public trust, and so we began some empirical research to determine if a  “Public Sector Service Value Chain” like this existed in public sector organizations:

Through the Citizens First national surveys, we were able to determine that good service is indeed one of the main drivers of citizens’ trust in public organizations. Then we wanted to determine if satisfied and engaged employees produce better service and improve citizen satisfaction with public sector services. To test that notion, we first asked the SQM Group which works with and benchmarks call centres across North America, whether they could analyze their database and tell us if employee satisfaction was a driver of client satisfaction in public sector call centres. The answer came back a resounding yes! In fact, the SQM President reported that: “in every case of high client satisfaction we always also see high employee satisfaction”.  So we had our first real evidence that “link one” in the Chain did indeed exist.

Moreover, the data analysis showed that a two-point increase in employee engagement scores correlated with a one percent improvement in citizen satisfaction scores.

Based on a further search, and the articles we published about the Public Service Value Chain, a number of public organizations like Peel Region, Waterloo Region,  and Service BC adopted the Public Sector Service Value Chain as their core management framework. Service BC explained their use of the Public Sector Service Value Chain as part of their IPAC Victoria YouTube presentation on how they maintained their high client satisfaction and public trust levels during the pandemic. 

Other public organizations like the New Zealand Police have now applied the Canadian Public Sector Service Value Chain research to successfully improve their employee satisfaction, service satisfaction, and public trust scores. 

Thus, the Public Sector Service Value Chain management model, and the underlying Canadian research on the drivers of the key performance outcomes, is helping a number of public organizations to significantly improve their performance in the eyes of employees, clients, and citizens.