Did Restoration Hardware CEO’s customer service rant go too far?

Discussion
Mar 03, 2016
Tom Ryan

About a month before reporting fourth-quarter results that were well below plan, Gary Friedman, Restoration Hardware’s CEO, wrote a searing memo to employees comparing its operations to a burning building and threatening to fire employees who didn’t raise their commitment to customer service.

The e-mail — obtained by Bloomberg and confirmed by Mr. Friedman — followed a meeting by the CEO with executives and vendors over customer service issues and late deliveries. Beyond its aggressive tone and dire imagery, the memo stood out for its use of all-caps.

Among his statements:

  • “We were sitting there discussing how the building caught on fire, why the building caught on fire, how long we expected the building to continue burning, NO ONE WAS FOCUSED ON THE PEOPLE IN THE BUILDING WHO WERE ON FIRE. THEIR CLOTHES BURNING, AND MANY OF THEM DYING. WE HAVE LET CUSTOMERS DIE.”
  • “WE CANNOT AFFORD TO LOSE ONE SINGLE CUSTOMER. NOT ONE. YOU WILL NEVER GET IN TROUBLE FOR MAKING A DECISION TO DELIGHT OUR CUSTOMERS. YOU WILL, HOWEVER, LOSE YOUR JOB IF YOU DON’T.”
  • “We need a MASSIVE CHANGE IN OUR CULTURE AND ATTITUDE RIGHT NOW. THE GOAL IS DELIGHT.”

In an interview with Bloomberg, Mr. Friedman said he frequently sends companywide messages to avoid communicating “through 15 layers of management” and said the urgent tone was designed to empower employees. He said, “We have a leadership culture, not a followship culture.”

Writing for The Washington Post, Jena McGregor seemed to find the memo refreshing, noting that CEOs typically use “euphemistic lingo” full of opaque initiatives and “MBA-approved phrases” to address staff during tough times.

Restoration Hardware blamed its quarterly shortfall, announced Feb. 25, in part on the impact of the weak stock market on high-end spending, poor economies in oil-dependent states, and product delays. But Mr. Friedman also announced several internal initiatives Restoration Hardware is taking to “strengthen” operations, including elevating the customer experience.

Photo: Restoration Hardware

DISCUSSION QUESTIONS: Did Gary Friedman go too far in his memo to employees? For you, who stands out as a model for the way CEOs should best communicate with employees?

Braintrust
"Welcome to the Trump-ification of America. There’s nothing "refreshing" about it. As far as I can tell, Tony Hsieh is the best model for communicating with everyone."
"I don’t find Mr. Friedman’s note refreshing. I appreciate its candor, but not its tone. It belittles employees and denigrates their efforts. As to the method of communication, direct email is fine. I wonder if he’s open to direct feedback."
"The guy is obviously upset with the way his business is going. So he yells at his employees? Maybe they do need shaking up, but the tone and direction and company culture is set from the top on down, (i.e., rolls downhill) and not the other way around."

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30 Comments on "Did Restoration Hardware CEO’s customer service rant go too far?"

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Paula Rosenblum
BrainTrust

Welcome to the Trump-ification of America. There’s nothing “refreshing” about it.

As far as I can tell, Tony Hsieh is the best model for communicating with everyone. And Frank Blake from Home Depot was always great at thanking his employees for delivering a good quarter, and taking the blame himself for a weak one.

Perhaps he ought to find out who is responsible for sending out those 600 page product catalogs to people who have never shopped at his stores. That has to be the single biggest waste of money and natural resources I have ever seen. And I got one two years in a row!

Chris Petersen, PhD.
BrainTrust

Research shows that there are several types of leadership styles.

But God had a plan, he gave everyone two ears and two eyes — but just one mouth.

In the case of “burning issues” it would seem that effective leadership requires much more than just the use of one mouth to shout FIRE.

Bob Phibbs
BrainTrust

Call it the Trump phenomenon. Over-the-top ALL CAPS represents passion. Maybe. But the way you deliver the message carries the meaning. “Heads will roll” might have worked with Boomers in the ’70s but I’m not sure how many Millennials would take that as a rallying cry to do better.

Such a public crying out deflects the real issues. What should we be doing to improve order cancellations, customer service, etc?

You get one shot to pull a carrot out of the ground and put it back. This was his. I hope it does the trick but it is a slippery slope to continued berating where employees feel even more disempowered as less customers come in the doors and the stock price sinks further.

Max Goldberg
BrainTrust

I don’t find Mr. Friedman’s note refreshing. I appreciate its candor, but not its tone. It belittles employees and denigrates their efforts. As to the method of communication, direct email is fine. I like that Friedman communicates directly, and wonder if he’s open to direct feedback.

Joy Chen
BrainTrust

Effective communication needs to be consistent with company culture, company size and issue at hand. In this case, maybe this type of communication is effective at Restoration Hardware. However, if the goal is to fix customer service long-term, it may need other fixes beyond communication which may include organizational structure change and incentives.

I don’t have a standout model of CEO communication because it really depends on the issue being addressed and company culture. Usually, communication through fear is not motivating enough to incent the right action.

Ian Percy
BrainTrust

I think Friedman has a real shot at being a motivational speaker once his employees abandon him even further and he no longer has a job. (Is there a emoji for sarcasm?)

That was not about “empowering” anyone, it was a foolish attempt to control. The absence of even basic psychological insight on the part of some CEOs astounds me. He said only one accidentally insightful thing: “We need need a MASSIVE CHANGE IN OUR CULTURE AND ATTITUDE RIGHT NOW. The goal is delight.” I wonder how delighted his employees are. It starts with LEADERSHIP.

Cathy Hotka
BrainTrust

Why talk when you can YELL? Trumpification indeed.

Restoration Hardware’s price points are high enough that customer expectations will be high too, and I have no issues with the company’s desire to re-orient staff toward a common goal. It’s the age of the Internet, though, and a leader’s over-the-top warning to staff is certain to appear on Reddit. Savvy leaders will appeal to civility.

Tom Redd
BrainTrust

Come on — are the press people soft? He is the CEO and no matter what people think it is his choice. Are employees so soft today that they cannot get yelled at in their electronic medium (email)? The spoiled kids, treat them with special gloves? GO GARY! Time to get some people serious about their jobs and leave less room for slack! Get the Trump-ification of retail started! Come on Paula!

Gene Detroyer
BrainTrust

Friedman is right.

From my own experience, the people at Restoration Hardware don’t even know the meaning of customer service. Our last experience there was awful. So bad we would not ever give them a second chance. Trying to return a significant purchase that was clearly not as advertised met with arrogant attitude and bureaucracy. For example, in returning it to the store, they wanted us to pay for over $60 for the freight for them to return it to the warehouse. The delivery fee to our home was only $12. When we finally settled everything, with a smile, they assured us that we would get the credit to our card in 60 days (YIKES!). When we didn’t get it in 60 days, we contacted them and the warehouse “had no record of the return.” Fortunately we had plenty of paperwork from the store. Net-net, we got our money. Net-net, they lost a customer forever and boy did we enjoy telling this story.

My only question regarding Friedman’s rant is, what took him so long?

gordon arnold
Guest
6 months 22 days ago

Owners and executives do not need permission from anyone to set customer service levels of commitment. Employees are obligated to provide any and all levels of legal and moral obligation expected. In this discussion we see an executive that is self mandated to terminate himself. The reasoning being the immediate need to terminate is simply that employees are customers too. I sincerely hope that the ownership of this company is in the process to comply with their own rules or they will suffer the consequences of this foolishness.

Ryan Mathews
BrainTrust
So it seems to me there are two issue here: style and substance. I think we can all agree that Brother Friedman might need some serious executive coaching on style points. The whole “all caps” thing is so JUNIOR HIGH SCHOOL OMG!!!! DID YOU SEE HIM/HER????????????!!!!!!!!!!!!!!!!! Seriously, he should give that a rest. Ditto with the hyperbolic metaphors. The image of burning clothes and seared flesh is clearly, equally over the top. But the message, well, let’s no rush to judgment on the message. If we can analyze it in a lower-case manner for a moment, what exactly is Friedman telling his people? Let’s see: we are in serious trouble; it is going to take all of us to right the ship; this is the most important thing to me and — therefore by extension — to you; the customer is key and must be preserved at all costs; I, the CEO, empower you to do anything necessary to hold our customer count; we need to reorient ourselves and our culture and we need to do it now. I’m not sure (style aside) there is a lot to quibble about in terms of content. This may be a case where the message… Read more »
Tim Moerke
Guest
Tim Moerke
6 months 22 days ago

This not the communication of an effective, competent CEO, this is the communication of someone flailing around in desperation, and it’s only going to make the already sinking ship sink faster. Speaking to employees directly is great, but this sort of unhinged rant is not. People don’t want to work for jerks, and if you threaten employees like this they’re just going to go work for competitors that will treat them better.

Peter Fader
BrainTrust

Let’s put aside his ridiculous style — ’nuff said about that.

More importantly, the substance of his message is just plain wrong. The notion of “delighting every customer” is naive, inefficient and not the best way to build a sustainable customer-centric business at scale.

We really need to get past that tired notion and start getting smarter about the best ways to manage our customer relationships.

Brian Kelly
Guest
6 months 22 days ago

Yes. I guess Mr. Friedman and his team didn’t make it to the TED talks.

I think it is inappropriate for leadership to deliver that message via email. Beyond tone and manner, there is “the medium is the message” to consider.

It is much more effective to deliver it in person, via home town meetings where there is an opportunity for questions and answers to set up an ongoing process that encourages organizational change.

Front-liners need to be the brand promise. Restoration Hardware is primarily a consultative sell which requires listening and nurturing along with a sales orientation. People make retail brands different from CPG brands. The all-critical retail brand experience happens because of people. Friedman has to get that right.

As we like to say, “retail ain’t for sissies.”

Karen McNeely
Guest

I don’t understand the comparison to Trump (of whom I’m definitely NOT a fan). He didn’t treat people disrespectfully or call them losers although I suppose some could argue he acted as a bully.

Bullying was not his intent though. He was looking at his analogy as a wake up call of how important the culture of excellent customer service is. As long as this is not a frequent occurrence (at which point it becomes demoralizing and ineffective) and the move forward is in a calm and productive manner, I think it did an excellent job of drawing attention to the main point and hopefully refocusing his staff.

If he truly is correct about having a leadership culture versus a follow-ship culture the best from his ranks should rise up.

Shep Hyken
BrainTrust

Maybe the analogy to a burning building was a little far fetched. But what wasn’t far fetched was the concept of saving every customer — and action taken, as in firing, if you don’t. Now comes the hard part: training employees to that concept.

How far can an employee go without getting into trouble? According to Mr. Friedman, there is no line. However, common sense prevails and there has to be a line. The Ritz-Carlton empowers the housekeeping staff to spend $2,000 on a guest who has a bad experience. If I found a spot on one of the towels hanging in the bathroom, that obviously doesn’t warrant a $2,000 payout. The staff knows where the line is and how far to go in different situations.

So, Mr. Friedman and his leadership team have to support the training that goes into making this initiative a reality. Do that and the employees will know this wasn’t a one-time shout-out for great customer service.

P.S. I love Restoration Hardware and enjoy many of their products. I’ve also been impressed with their people who help me. They deliver furniture — and great customer service.

Ed Rosenbaum
BrainTrust

Trumpification. The newly coined word to describe bullying, yelling and demeaning those one thinks are below his social and intellectual status. I do not think this was what Mr. Friedman had in mind, though it did seem to be the result. I do not know Mr. Friedman’s management style. But one must think he has been doing many things right to get Restoration Hardware to this point of expansion. Sometimes fear needs to be added to the communication equation to be sure the message conveyed sinks in. That said, there are other meaningful, successful ways to convey a message. I hope Mr. Friedman gets the message through the feedback he is being bombarded with.

Stephen Spencer
Guest
Stephen Spencer
6 months 22 days ago

For me, the question is not “Did he go too far?” but “What impact will his message have?” It’s absolutely right to focus on the customer experience, however the way the message is delivered is likely to cause fear at worst, cynicism at best.

If Mr. Friedman is going to turn his direct and unequivocal message into a lasting culture change, then he needs to roll out a program — by next week (or at least heavily trailed) — that will focus not just on “customer delight” but also “team delight.” Currently the team is notionally empowered but empowerment cannot live in a culture of fear.

If Restoration Hardware has such a program in place already then it isn’t working. So to adapt Mr. Friedman’s phrase, either change the program or change the people responsible for the program.

Gary White
Guest
6 months 22 days ago

Way too far! There is an old saying: “When the class is failing, one should look at the teacher.” Massive threats never are effective. The best employees look for other work and the under performers say, “Who, me? I’m not the issue.”

The best CEO communicators are at Starbucks and Costco.

Frank Poole
Guest
6 months 22 days ago

“15 layers of management.”

There’s your problem. Right there.

Ken Morris
BrainTrust

Ok, maybe Gary was a bit over-the-top with his communications. However, I bet everyone in the company now understands the importance of delighting customers! Sometimes we have to take unconventional or uncomfortable approaches to get people to understand and respond.

I have to give Gary credit for his passion for customer service and lighting a fire under his team. Many retailers, or a good share of their employees, have lost their focus on customer service. It has gotten so bad at some stores where when I enter the store or approach a sales associate, they treat me like I am an inconvenience. Really?

I love their Restoration Hardware gallery approach of beautiful showrooms in major cities throughout the U.S. (like the Boston location at Newbury and Berkeley). These guys get the unified commerce approach and I wish Restoration Hardware the best of luck and hope we all benefit from their renewed focus on customer service!

Phil Rubin
BrainTrust
6 months 21 days ago

There are HUGE and OBVIOUS differences between leading, being direct and SHOUTING at your employees.

Steve Kohler
Guest
Steve Kohler
6 months 21 days ago

Bad approach. I suspect he will lose valuable employees.

Lee Peterson
BrainTrust

Love the passion. I’d work for him in a second (or two). Overall, we’re too soft in the workplace. The “everyone gets a trophy” mentality has slipped into a lot of modern business. Let’s face it, every once in a while, as a leader, you have to get everyone’s tails back in gear. And you need be passionate about it. You need to mean it.

Amazon is getting dinged for the same thing, but if you’re the fastest growing retailer and you’re constantly kicking the rest of the world to the curb, you want to keep that momentum and you only want people who will give their all. Which is exactly why they’re the best! Hope they both keep it up, it’s refreshing.

Naomi K. Shapiro
Guest
Naomi K. Shapiro
6 months 21 days ago

The guy is obviously upset with the way his business is going. So he yells at his employees?

Maybe they do need shaking up, but the tone and direction and company culture is set from the top on down, (i.e., rolls downhill) and not the other way around.

So if the employees are not performing properly, spend more time showing and teaching them how. Simple management 101, eh?

Ken Goldberg
Guest
Ken Goldberg
6 months 21 days ago

We can all agree that the use of caps is not a great style choice. The words, however, were well-chosen and thoughtful. Everyone has a different style, and clearly Friedman had critical points to make that he thought were consistent with the culture. Meanwhile, the silly comparisons to Trump do not hold water, belie the commenters’ political motivations and don’t belong in this forum.

John Lingnofski
Guest
John Lingnofski
6 months 21 days ago

There is never any excuse for a leader to lose his temper in front of the people for whom he is responsible. You give up many of your rights — including temper tantrums — when you become responsible for people. It’s called servant leadership.

Christopher P. Ramey
BrainTrust

Some companies are managed by fear, employees get used to it. Perhaps this is the only way to get his employees to respond. He knows his culture better than those of us on the outside.

He built it, he can manage it the way he sees fit or however it is necessary to be effective. The ramifications of such behavior are his cross to bear.

William Hogben
BrainTrust
His rant went too far — but not in that it was too candid or enthusiastic — it went too far in that its style is distracting us from its content. We’re writing in these comments discussing whether this is the “Trumpification” of America when we should be discussing the intent: how to motivate staff to provide better customer service. In our business, customer service is central to everything we do. We genuinely empathize with our customers, do everything in our power to help them and follow up to ensure they’re happy — and it serves three purposes: 1) We are able to expand our audience beyond techies to people who are apps for the first time. Through customer service we flatten the learning curve and give “newbies” the confidence they need to become digital natives. 2) We become human in our customers’ eyes. Every customer service interaction is a chance to demonstrate our empathy and integrity and earn our customer’s trust and preference. 3) Most importantly, customer service puts a spotlight on what areas of the product need improvement. Every issue that comes to us has both a specific cause and a systemic cause. Identifying systemic causes allows us to improve our… Read more »
Bill Hanifin
BrainTrust

I applaud Mr. Friedman for the straight talk, though I don’t endorse his style in communicating his message. Using all caps is bad Facebook behavior and muddies the message. The least he could have done here is to take a bit more time to write a crafty but direct message, not just scream at everyone.

That said, and based on his method of communication, I would bet the accused malaise of employees is influenced from the top. Rather than scream at his employee “children,” I wonder if Mr. Friedman could find some answers by a close review of this senior leadership team, even himself.

Note that I do not have any familiarity with their situation and do not have in-depth info on their management style, I just think this is a solid and basic assumption to make. You’ve heard it before: when you point fingers at someone, there are four pointing back at you.

wpDiscuz
Braintrust
"Welcome to the Trump-ification of America. There’s nothing "refreshing" about it. As far as I can tell, Tony Hsieh is the best model for communicating with everyone."
"I don’t find Mr. Friedman’s note refreshing. I appreciate its candor, but not its tone. It belittles employees and denigrates their efforts. As to the method of communication, direct email is fine. I wonder if he’s open to direct feedback."
"The guy is obviously upset with the way his business is going. So he yells at his employees? Maybe they do need shaking up, but the tone and direction and company culture is set from the top on down, (i.e., rolls downhill) and not the other way around."

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