MIT Sloan Management Review

Operations Management and Research, Service and Quality

Breaking the Cycle of Failure in Services

By Leonard A. Schlesinger and James L. Heskett

April 15, 1991

MOST MANAGERS recognize that good service is a direct result of having effective, productive people in customer contact positions. You need winners at the front lines, not just warm bodies. But most service companies perpetuate a cycle of failure by tolerating high turnover and expecting employee dissatisfaction. Schlesinger and Heskett explore the reasons that so many managers have trouble breaking this cycle. They spotlight a number of companies that are developing winning customer service teams, including one that pays twice the industry average to its frontline employees while its sales and profits have soared. Instead of submitting to the cycle of failure, they argue, managers should take advantage of ways to break it, and get their organizations onto the cycle of success.

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DOES THIS SOUND familiar? A large retail company (or bank or fast food chain) designs its customer contact positions to be filled by people who are willing, at least temporarily, to work for wages marginally above statutory minimums. It simplifies the jobs, reducing them to a series of repetitive, boring tasks that require minimal training. It makes little effort to develop either dedication to the work or loyalty to the company. The results of this strategy are quite predictable: inordinately high employee turnover and increasing customer dissatisfaction.1

Unfortunately, traditional management responses to this scenario only exacerbate the problem. High turnover reinforces the wisdom of decisions to minimize efforts in selection, training, and commitment-building activities. “After all,” most managers say, “why invest in people who aren’t going to stay with you? There are plenty of bodies available to fill these jobs.”

This cycle produces indifferent attitudes toward customers and poor service, which translate into poor perceptions of service by the customer and lower sales. Customer dissatisfaction fuels further decreases in employee satisfaction, thus encouraging turnover. High turnover further deteriorates service, particularly where the continuity of the customer-servicer relationship is important. With the departure of each frontline employee comes the arrival of another who, at best, is just as inept. Or in tight labor markets, the customer is often greeted by a help wanted sign... To read the complete article, login or sign-up using the form below.

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