Business Psychology - Latest Findings




Article No. 321
Supervision Findings, by James Larsen, Ph.D.

Ability, Permission, and Profit

New research explores customer service performance and profit outcomes.

In the realm of customer service, researchers at Oklahoma State University recently explored three questions of interest to business owners. First, do employees vary in their ability to provide customer service? Second, if employees have the ability to provide good customer service, do they provide it? And third, is there a profit advantage in enabling high ability employees to provide high quality customer service? Jerry Grizzle recently completed a study of these questions in the restaurant industry and made several interesting findings.

Employees do vary in their ability to provide customer service. Some people can get customers to talk about their service needs, problem solve with them, and keep their customersí best interests in mind. They smile easily, remember customersí names, empathize with customers, and enjoy making customers happy. These are high-ability customer service people, but itís tough to identify them in a job interview. Grizzle used a survey to measure this quality. His survey focused on two broad characteristics. Keeping these qualities in mind can guide interviewers as they try to identify people with high ability. The first broad characteristic identifies the importance people feel that customersí needs be identified and met. The second identifies the pleasure people feel in working with customers. Interview questions in these areas will help you identify people with strong ability.

The second question Grizzle investigated was the actual performance of customer service behaviors. Armed with a measure of customer-service ability, Grizzle could now ask if high-ability people acted on this potential. He found that the answer was ďit depends.Ē Low ability customer service employees donít provide high quality customer service, but high ability employees also donít provide it unless they have permission to do so, and that doesnít always happen. An obvious factor that would obstruct high ability employees from acting on their ability is the climate for service that exists in their work setting, and Grizzle studied one feature of this climate that business owners control: the importance managers seem to place on customersí needs being satisfied.

At first glance, this seems obvious, but it isnít. Managers do vary, and employees are sensitive to differences. High ability employees need to feel encouraged to provide superior customer service. They need permission because support for high quality customer service doesnít come from co-workers with low ability. It comes from other high-ability co-workers and from managers who chose to give this permission. Grizzle has several suggestions for business owners who want to provide this permission for high quality customer service.

Regularly assess customer satisfaction. Think of the customerís point of view when making big decisions. Express a desire to keep your business ahead of competitors by understanding the needs of customers, and focus business objectives around customer satisfaction. Finally, he suggests you organize your place of business to serve the needs of your customers.

Prudent business owners will recognize that following these suggestions will have cost implications. You canít encourage people to meet customer needs without recognizing that doing so will spoil some carefully laid plans for standardizing service offerings to control costs. Will cost control be compromised with a focus on customer service? Will costs get away from you and bankrupt you? These are serious concerns, and they were the focus of the last question Grizzle investigated in his research.

Grizzle examined the customer service performance of 671 employees and the financial performance of the 38 full service restaurants where they worked. He found two clear relationships. Increased performance of customer service behaviors that were supported by a strong customer-service management climate led to increased sales. Increased sales led to increased costs and increased profits. You canít increase sales in a restaurant without increasing costs. Two hundred steaks cost more that twenty. Controlling for this kind of cost increase, Grizzle found that increased performance of customer service behaviors significantly increased profits. His conclusion was clear. A focus on customer service, at least in the hospitality industry, will lead to improved profits.

If you want the profits, you need two things. You need high ability employees, and they need permission to act on their inclinations to provide high-quality service. You canít just decide to have high-quality service today and implement it when you get to work. Youíve got to have the right people, and they need to feel encouraged to provide high-quality service. You must have both. High-quality customer service is a challenge and an opportunity.

Reference: Grizzle, Jerry, Alex Zablah, Tom Brown, John Mowen, and James Lee (2009) Employee Customer Orientation in Context: How the Environment Moderates the Influence of Customer Orientation on Performance Outcomes. Journal of Applied Psychology, 94(5), 1227-1242. www.businesspsych.org

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