I agree that it’s refreshing to see companies respecting their employees just as much as they at least say they do their customers/clients.  The first example that comes to mind is the Google- and Facebook-like companies where food is abundant for the employees at “no cost.”  Employees like it because it’s one less thing to think about on a daily basis and they can often boast to their friends or former classmates about the perks of their job.  When recruits come, they also get to enjoy the free food and word like that spreads like wildfire, creating hype for prospective employees and I think there was even news coverage of the matter so that the “rest of the world” could hear about how awesome these companies are.

1. Several companies pre-authorize front line employees to spend a capped amount to fix customer problems. Swisscom has a system in place where each employee is pre-authorized to spend up to $1,000 to solve a customer’s problem. Employees at the Ritz-Carlton Hotel are empowered to spend up to $2,000 per incident to fix guest grievences. They also have the capacity to break their routines for as long as it takes to satisfy the customer. Xerox authorizes frontline service employees to replace up to $250,000 worth of equipment if customers are not getting results.

The principle behind this is that customers are more satisfied with their encounter if the first person they contact about a problem takes the initiative to fix things without having to send the request up the chain to their manager. It lets employees focus on solving problems.

But it only works with certain types of businesses. For example: When IBM Canada introduced a policy that allowed customer reps to write checks to satisfy customer problems, it failed. Despite the program’s stated purpose, most IBM employees remained convinced the overriding IBM culture would ensure that they got punished for spending that money.

2. Lots of negative examples of empowerment gone awry in Simons “Control in an Age of Empowerment” in HBR April 1995. Some misguided actions by employees and some straight-up fraud.

Other odd examples might include the Pan Am ticket agent back in the 1970s who sent a late passenger through the baggage conveyer system (!) so they wouldn’t miss an important flight. Or the doorman at a Four Seasons Hotel who left work and took a flight to return a briefcase left by a guest. Of course sometimes that level of extravagance can be the right call, depending on the context. Southwest provides examples of trust in that vein.

Jan Carlzon from Scandinavian Airlines System summed it up nicely when asked if there is a danger that empowered employees can spend too much money rectifying a problem. His response: “What’s the danger of giving away too much? Are you worried about having an oversatisfied customer? That’s not much of a worry. You can forget about an over-satisfied customer, but an unsatisfied customer is one of the most expensive problems you can have… the danger is not that employees will give away too much. It’s that they won’t give away anything—because they don’t dare.”

Love the Nordstrom ‘employee handbook’ reference.  I recently read our Sales and Service manual and it had lots of great fodder for synchronization between digital and physical, and ensuring the trust and authenticity throughout the channels and different service touchpoints.

REI has a 100% Satisfaction Guarantee, and you could argue that people ‘abuse’ it. Just this weekend a friend told me about returning an item she used at a once a year race; blogs and message boards often brag about people returning heavily used hiking boots.

But for us, like Nordstrom, this kind of guarantee and trust in our customers is part of our brand and we think is a differentiator for our company.  If anything, we are talking about ways to better message our guarantee to all of our customers.

Great post Peter. TD Bank is another example of empowered frontline employees.  They have to get permission to say “No.”  Yes is the default, and they can spend up to $50 to make a situation right with a customer.  If they would have to spend more than that, or if they think they should probably say “No”, they have to first double-check with their supervisor, and bring them in to the situation.