Failing to Understand Internal Customers – An All Too Common Phenomena

Understanding the needs of both external and internal customers is crucial for the success of any organisation.

External customers are those who purchase the company’s products or services, while internal customers are typically the employees or departments within the organisation that rely on each other to complete their work.

Despite the emphasis on customer satisfaction for external customers, the needs of internal customers are often overlooked, leading to several issues within an organisation.

When internal customers are misunderstood or neglected, it can result in a monopolistic type of behaviour by internal functions. This means that certain departments or units within the organisation might prioritise their own goals and objectives over the needs of other departments.

For instance, an IT department may focus on implementing new technologies to meet their key performance indicators (KPIs), without fully considering how these changes affect other departments or whether these changes meet the actual needs of these internal customers.

Negative Organisational Impacts

Such behaviour can have detrimental effects on the organisation, including:

1. Reduced Efficiency

When departments operate in silos, focusing solely on their objectives without considering the impact on other departments, it can lead to inefficiencies. Processes might be duplicated, or time might be wasted on activities that do not add value to the internal customers, ultimately affecting the organisation’s overall productivity.

2. Lower Employee Morale

Ignoring the needs of internal customers can lead to frustration and decreased morale among employees. If employees feel their needs are not being met or that their input is not valued, it can lead to disengagement and a decrease in job satisfaction.

3. Impaired Innovation

Innovation often requires cross-functional collaboration. When departments do not understand or meet the needs of their internal customers, it can hinder the exchange of ideas and collaboration necessary for innovation. Each department might only focus on its immediate tasks without considering how collaborating with others could lead to better solutions.

4. Detrimental Impact on External Customers

Ultimately, the negative effects of not understanding internal customer needs can spill over to external customers. Inefficiencies, lower employee morale, and a lack of innovation can lead to poorer quality products or services, longer response times, and decreased customer satisfaction.

Strategies for Combatting Internal Customer Neglect

To combat these issues, organisations can adopt several strategies:

Promote a Culture of Collaboration

Encouraging departments to work together and understand each other’s roles and challenges can foster a more collaborative environment.

Implement Internal Customer Service Training

Training employees on the importance of internal customer service can help raise awareness and shift the focus towards meeting the needs of internal customers.

Establish Clear Communication Channels

Creating effective communication channels between departments can facilitate the exchange of feedback and ensure that the needs of internal customers are heard and addressed.

Align KPIs with Internal Customer Satisfaction

Including metrics related to internal customer satisfaction in the KPIs of departments can ensure that meeting the needs of internal customers is seen as a priority.

By focusing on the needs of internal customers, organisations can create a more integrated, efficient, and positive working environment, which ultimately benefits both internal and external customers.

How Business Planning Can Drive Siloed Behaviour

The phenomenon of siloed thinking within organisations often stems from how business planning and objective setting are structured, emphasising individual departmental achievements without adequately accounting for the interdependencies between different functions.

This can inadvertently encourage departments to operate in isolation, focusing on their specific objectives and key performance indicators (KPIs) at the expense of broader organisational goals and the health of internal customer-supplier relationships.

The Impact of Siloed Objectives

Siloed objectives can lead to a number of challenges:

Limited Perspective – When departments focus solely on their siloed objectives, they may miss opportunities for improvement or innovation that could be realised through cross-departmental collaboration.

Resource Inefficiency – Duplication of efforts and resources can occur when departments do not share information or coordinate their activities.

Decreased Employee Engagement – A lack of understanding and appreciation for the contributions of other departments can lead to decreased morale and engagement among employees.

Poorer Overall Performance – Ultimately, the organisation as a whole can suffer, as the lack of cohesion and alignment can lead to suboptimal performance in meeting external customer needs and achieving overall business goals.

Suggestions for Business Planning Improvement

To mitigate the effects of siloed thinking and promote a more integrated approach to achieving organisational objectives, several strategies can be employed:

1. Integrate Cross-Functional Goals – Business planning should include goals that require cross-functional collaboration, ensuring that departments have aligned objectives that contribute to the organisation’s overall success.

2. Implement Balanced Scorecards – Balanced scorecards that include metrics related to internal customer satisfaction and inter-departmental collaboration can help align individual department goals with the broader organisational objectives. This ensures that departments are recognised not just for achieving their own targets but also for how they contribute to the success of other departments and the organisation as a whole.

3. Encourage Regular Cross-Functional Meetings – Regular meetings between different departments can facilitate better understanding and communication. These meetings can be used to discuss ongoing projects, share updates, and identify opportunities for collaboration.

4. Promote an organisational Culture of Unity – Leadership should work to promote a culture that values the organisation’s collective success over individual department achievements. This can involve recognising and rewarding teamwork and collaboration.

5. Utilise Integrated Planning Software – Technology can play a crucial role in breaking down silos by providing platforms for shared planning and performance tracking, ensuring visibility across departments.

6. Adopt Customer-Centric Metrics – Including metrics that measure the impact on external customer satisfaction as a result of internal collaboration can ensure that departments prioritise activities that enhance the customer experience.

7. Leadership Training and Development – Training for leaders on fostering collaboration and managing cross-functional teams can equip them with the skills needed to navigate and break down silos within the organisation.

By adopting these strategies, organisations can foster a more collaborative, integrated approach to business planning and objective setting.

This not only helps to break down silos but also enhances the organisation’s ability to meet the needs of both internal and external customers, leading to improved performance and competitive advantage.

The SIPOC Approach: A Tool for All Department Managers

The SIPOC tool, an acronym for Suppliers, Inputs, Process, Outputs, and Customers, is a fundamental tool in Six Sigma methodology for process improvement.

It provides a high-level overview of a process, starting from the suppliers and inputs needed for the process, through to the outputs produced and the customers who receive these outputs.

Utilising a SIPOC diagram can help department level managers understand and improve their processes by focusing on each element’s requirements and how these elements interrelate, fostering a customer-centric approach even within the organisation.

The Value of SIPOC in Building Internal Customer-Supplier Relationships

1. Clarifies Process Boundaries – By defining the start and end points of a process, a SIPOC diagram helps managers understand the scope of their department’s responsibilities and how their work fits into the larger organisational workflow.

2. Identifies Key Stakeholders – It clearly identifies the internal customers (the next process in the chain) and the suppliers (the previous process in the chain), facilitating a better understanding of who relies on the outputs of the department and whose inputs are crucial for the department’s operations.

3. Improves Communication – Utilising SIPOC encourages open dialogue between departments. Engaging with the next-line customers to understand their requirements can lead to more tailored services and outputs that directly meet their needs, thereby improving satisfaction and efficiency.

4. Enhances Quality of Outputs – By focusing on the requirements of the internal customers, departments can improve the quality of their outputs. This not only benefits the immediate customers but also positively impacts the final product or service delivered to external customers.

5. Promotes a Customer-Centric Culture – Adopting SIPOC diagrams across departments encourages a shift in perspective, from focusing solely on departmental objectives to considering the impact of outputs on internal customers. This can help foster a culture of collaboration and customer orientation within the organisation.

6. Facilitates Continuous Improvement – The SIPOC tool can also be used as a starting point for identifying areas of improvement. By understanding the current state of the process and its impact on customers, departments can implement changes aimed at enhancing efficiency, reducing waste, and improving the overall service quality.

Implementation Considerations

For the SIPOC approach to be effective in establishing strong internal customer-supplier relationships, several considerations should be kept in mind:

Regular Review and Update – Processes and requirements evolve over time. Regularly reviewing and updating the SIPOC diagrams ensures that they remain relevant and accurately reflect the current business environment.

Cross-Functional Engagement – Effective use of SIPOC requires active participation from all stakeholders involved in the process. This includes not just the immediate suppliers and customers but also other departments that might be impacted by changes in the process.

Leadership Support – Leadership should endorse the use of SIPOC and other Six Sigma tools as part of the organisational culture. Providing training and resources to managers can facilitate the adoption and effective use of these tools.

Final Thoughts

Employing the SIPOC tool at the departmental level can significantly contribute to building and maintaining strong internal customer-supplier relationships.

By fostering a better understanding of processes, clarifying expectations, and encouraging collaboration, SIPOC can help organisations achieve higher levels of efficiency and customer satisfaction, both internally and externally.

More Information

This article was written by George Lee Sye, author of PROCESS MASTERY WITH LEAN SIX SIGMA – the best lean six sigma text book in the world today.