Tuesday, January 29, 2013

The consequences of oversimplifying organizational solutions

Journalist David Weinberg covered a story today regarding the CEO of Bank of America spending nearly $100,000 in postage.  The CEO wanted to send a personal letter to every one of his employees stressing the need to improve customer service because Bank of America scored the worst of the four major banks in something called the American Customer Satisfaction Index. I was listening to the story in my car.

Weinberg had an expert to comment on the news.  In the studio was Colin Shaw, a customer service consultant.  He made a comment criticizing the lack of customer service incentives at the bank: 

"If all of the senior execs and all of the senior managers had 100 percent of their bonuses built around the achievement of customer satisfaction, do you think that customer satisfaction would increase? Of course it would."

He is right in that customer satisfaction may increase, but my question is "what else would happen if they made customer satisfaction 100% of the bonuses?"

The term unintended consequences comes to mind.  To make customer satisfaction 100% of the incentive would do so at the expense of other organizational success components. The Galbraith image at the top of this post demonstrates all of the moving parts of a functional organization.  

Changing one piece affects all the pieces - no component of organizational success works in a vacuum.  It would be nice to just be able to focus on customer service with everything else remaining constant.  But that is not realistic.  I think the comment rubbed me the wrong way because the United States culture is one where most believe in the "one right answer … every problem has a solution."  Unfortunately, this type of thinking is commonplace in many organizations.  

The solution often causes more problems than it solves.  

Another, more specific to customer service example, comes from Heskett (an update to his model from the early 70s):

He makes a pretty convincing argument that customer satisfaction is much more than just the result of leadership bonus.  Customer satisfaction is one part of the equation with causes and consequences.  Incentives are only one of the many causes.

Bank of America needs to think about customer satisfaction, but also how this piece fits with the other components of organizational success. 

What do you think?


Weinberg, D. (Tuesday, January 29, 2013). Bank of America to its 270,000 employees: Be nice. 
Marketplace segment on NPR.

Galbraith, J. R., & Kates, A. (2010). Designing Your OrganizationUsing the STAR Model to Solve 5 Critical Design Challenges.  San Francisco, CA:  John Wiley & Sons.

Heskett, J. L., Jones, T. O., Loveman, G. W., Sasser, J., & Schlesinger, L. A. (2008). Putting the Service-Profit Chain to Work. Harvard Business Review, 86(7/8), 118-129.


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