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The Service-Profit Chain model, developed by James Heskett, Earl Sasser, and Leonard Schlesinger, theorizes that organizations need to focus on providing what their employees, customers, investors, suppliers, and others value most. Driving value for these stakeholders will lead to maximum profitability.

By focusing on value, we will bring about necessary organizational change. Tying our organization to the most valued needs of our customers will make us more responsive to our markets. Also, giving employees what they appreciate in an organization will make them more productive and decrease the costs of employee turnover.

The Service-Profit Chain framework acknowledges the importance of the behaviors of a company's 3 key constituent groups:

1. Customers
2. Employees
3. Investors

This value-driven approach will result in greater organizational effectiveness and profitability. The spectrum of firms that benefit from the Service-Profit Chain model is wide. It includes small and large organizations, public and private organizations, and profit and non-profit organizations.

The Service-Profit Chain, developed from analyses of numerous successful service organizations, puts "hard" values on "soft" measures.

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Source: Service-Profit Chain PowerPoint document

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Tag(s): Customer Satisfaction Leonard Schlesinger Service-Profit Chain James Heskett Earl Sasser Customer Loyalty Employee Productivity Employee Retention

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