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From Dr. Scott Sampson's Understanding Services Businesses Book (click for table of contents)
SBP 8b: Culture Compensation⇐Prior —[in Unit 8: Human Resources Management]—

SBP 8c: Who is in Control

With services, the production process can be controlled by the organization, the employees, or the customers, depending on who is qualified to meet the company objectives. Nevertheless, the customers and employees need to buy into this.

Why it occurs

This principle occurs because the presence of varying customer inputs and nonstandard production sometimes necessitates divergence (see SBP: The Choice of Employees), which is the need for employees to modify the process as conditions require. In some cases, it is the customer who handles the divergence and specifies adjustments to the service process, which is justified by the significant presence of customer inputs.


John Bateson described a “service encounter triad” which depicts the relationships between the service organization, the service employees, and the customers. [Bateson, John E. G., “Perceived Control and the Service Encounter,” in J. A. Czepiel, M. R. Solomon, and C. F. Suprenant (eds.), The Service Encounter, Lexington Books: Lexington, Mass., 1985, p. 76.] Any of the three can control the course of the service process, depending on the particular service situation. Bateson points out that the three may have potentially conflicting objectives: The service organizations generally want efficiency, which is the ability to produce at a reasonable cost. The service employees often want autonomy, or a liberty to exercise some degree of discretion. The customers want satisfaction, which is that their needs and expectations for the service be fulfilled. Conflicts can occur when these objectives clash:

  • Efficiency versus autonomy. As was discussed in SBP: The Choice of Employees, divergence in processes can be very costly and limit efficiency. Employees may be frustrated in their ability to provide the appropriate service under constraints of company policy. For example, Health Maintenance Organizations (HMOs) want doctors to follow certain patient treatment procedures which control costs, which often does not bode well with the doctors who prefer to “call the shots.” The HMO will refuse to process payment for procedures which do not meet company guidelines (such as exploratory or experimental procedures).
  • Efficiency versus satisfaction. Customers often want to be satisfied regardless of the cost to the company. This means being able to meet needs of specific customers as a result of specific customer-inputs. The company also wants the customer to be satisfied, but under the constraints of reasonable expenditures of time and other resources. For example, a business case describes an overnight delivery company which misrouted a customer's package that contained materials for an important presentation. When the package did not arrive the morning of the presentation (as expected and needed), the customer demanded that the company hire a helicopter to fly the package from the misrouted location to the correct location. The justification was that the company's failure to satisfy the need would result in an important audience staring at a blank screen. (And, what do people pay the high prices for overnight delivery for anyway?)
  • Autonomy versus satisfaction. When the service organization controls the service process, service employees presented with potentially unreasonable customer demands have an “easy out”–to defer to company policy. That way the customer just leaves mad, but only blames the employee for not making an exception to policy. However, when the employee is given autonomy to make such decisions, customer demands can cause much anxiety for service employees. You just have to work as a waiter or waitress in a restaurant to realize this! In many restaurants, the waiters are given the autonomy to do what is appropriate to provide good service. However, some customer want the restaurant process to be a bit more complex than the employee thinks it should be. For example, the customer might demand the disproportionate attention of the waiter, causing the waiter to neglect his other customers.

Whether the company, the service employee, or the customer should direct the service process is very situational. Nevertheless, if the arrangement is not acceptable to customers, then problems and complaints are sure to occur, since customer do not want to be directed unless they believe it is necessary or in their best interest. The arrangement should also be acceptable to employees, to avoid frustration and deteriorating attitudes.

How it effects decisions

The company must decide the degree to which the organization (i.e. policy), the service employee, and the customer is allowed to control the service process.

What to do about it

In each situation there will be an appropriate balance between the three. Rather than expound on determining the appropriate balance, we will focus on how to effectively implement a balance:

If it is decided that the service organization should dominate, then employees and customers need to be selected accordingly. Selecting customers? How could that be? Don't we want everyone to be a customer? The answer is, companies cannot afford some types of customers. For example if a Motel-6 customer demands the service of a Ritz-Carlton–rejecting assigned rooms because of stains on the carpet, expecting delivery of extra pillows and tissue boxes, demanding extra room cleaning throughout the day, check-out at 3:00 p.m., etc.–the Motel-6 manager will probably feel a little put out.

How does a company select customers? The wrong way is to select them after they are already customers. This means telling the demanding customer “Sorry, but we cannot serve your needs and expectations.” Thus the customer departs angry. The better way is to adequately communicate the service process limits to the customer. Discount motels do this by posting signs by the check-in desk describing company policies. Retail stores do this by putting “receipt required for return or exchange” signs by cash registers. Fast food chains do this by providing consistent service at all locations. This communicates to potential customers what to expect from the service provider, and that they must go elsewhere if the needs are beyond the scope of the service that is offered.

Also, if the service organization is chosen to dominate the service process, employees who buy into this should be chosen. Prospective employees should be given a realistic picture of the extent of company policies and procedures prior to their joining the company. Mrs. Field's Cookies was previously cited as an example (under SBP: Technological Depersonalization) of technology that controlled the day-to-day functions of the store manager. When business management students are asked if they would like to work as a Mrs. Field's Cookies store manager, they generally say “no”–the company controls all of the usual management functions. The appropriate instructor response is “good, since Mrs. Field's would not want to hire you as a store manager–you demand too much autonomy!” Mrs. Field's wants store managers who would rather chat with customers than fill out work schedules, and their hiring process looks for such propensities.


Successful hotel companies also implement selection techniques for the low-autonomy position of housekeeping staff member. Most hotels prefer employees who (a) like housekeeping, and (b) are capable of doing it according to company procedures. Direct questioning such as “Do you like to clean your own house?” and “Do you clean your house according to a regular procedure?” can do much to communicate the expectations and abilities for the position.

If it is decided that the service employee should dominate in the control of the service process, then employees need to be instructed in the appropriate way to exercise their autonomy and judgment in denying unreasonable customer requests. It is not ethical to “defer to policy” when in fact no policy exists. Instead, the employee might be trained to “bail out” and refund the customer's money at appropriate times and ways (attempting to minimize the overall damage). Also, the adverse affect of demanding customers on employee autonomy can be mitigated by allowing employees to turn difficult cases over to a manager or designated employee who is trained in tact and discretion. (Ways for handling when things go wrong with the service process will be covered later in the Service Recovery unit.)

If it is determined that the customer should be allowed to dominate the control of the service process, then employees should be given incentive to heed customer requirements. If it is a self-serve process, then the customer is acting as the “production employee,” so this is not a problem. However, if company employees need to continually deal with demanding customers, they need to be encouraged to “buy in” to this arrangement. For example, a major purpose of the large tips paid in fancy restaurants is to motivate the waiters and waitresses to heed a wide range of customer demands. In some situations, employees can be compensated by the company according to their ability to satisfy a wide range of customer demands. For example, a major automotive service chain paid its manager and employee bonuses partially based on various customer satisfaction measures.

For example

Examples of companies in which the service organization dominates control of the process is McDonald's, Jiffy Lube (quick oil change), and H&R Block (standard tax preparation). These companies are very efficient, having well-defined standard operating procedures.

The service employees tend to dominate technical, highly-divergent services such as medicine, law, and education. In each case, the course of the service process is dictated by the judgment of the trained service employee.

Customers are often in control of loosely defined self-service processes such as retail. A customer entering a department store can view products in most any way she cares to and can ask questions and compare options as she desires. In many such cases, the only policies to restrict customers control are those to prevent customers from damaging products which they do not purchase. It is assumed that most customers will exercise good judgment in executing their shopping process.

My airline example

With an airline, we can consider who dominates control at various process segments.

The process of checking baggage is primarily controlled by the airline. Policy prevents the customer or the employee from checking things that are improperly packaged, baggage that is unacceptable proportioned, or items that are potentially unsafe. Airlines have instructions on ticket jackets and signs near the baggage check-in to communicate baggage policies to customers.

The process of flying the aircraft is clearly dominated by the pilots. Nevertheless, the customer needs to buy in to this. In particular, if the pilot is taking action to avoid turbulence or other weather patterns, it is a good idea to communicate the actions and intentions to the customers over the aircraft speaker system.

What process segment of the airline process might the customer dominate? Probably the process of reading, sleeping, etc. on the plane. This is a “self-serve” process that the customer is left to control (unless it interferes with other passengers or with flight safety).

How manufacturing differs

With manufacturing, engineers are hired to determine product and process specifications, and general customer involvement is restricted to selecting and consuming the output (“Custom manufacturing” was described as an exception in SBP: The Custom-Manufacturing Oxymoron.)

Analysis questions

  1. What are the objectives of (the organization, the employees, and the customers) in the service process?
  2. Who thinks they control the service encounter process?
  3. Who actually controls the service encounter process?
  4. If a shift in control is desired, how might customer and employee buy-in be established?

Application exercise

For your service business process, identify whether the organization, the service employee, or the customer should dominate the control of the progression of the service process. Develop a plan for employee “buy-in.” How can expectations be communicated to prospective employees during the hiring process? What employee incentives are necessary to encourage employees to allow the process to be controlled as decided upon? Indicate how you would promote customer “buy-in.” When and where should information be communicated to customers about the limits of the service process? (You might redraw your service process flowchart, and note the types of information that would be presented to customers at various points in the process.) For example, would it be appropriate to place a sign at the service location for customers to see? If so, draw such a sign.

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