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Monday, April 25, 2011

Does a company's executive pay impact the service experience?

Executive pay has been in and out of the headlines for some time now, but is there a consumer impact for companies involved?

Attention and public outcry peaked when executives of some of the financial industry companies bailed out by the U.S. government were treated to pay increases and large bonuses, even as millions were being put out of work throughout the rest of the US economy.

That outrage sparked change in the form of legislation, granting shareholders a larger hand in determining CEO pay through an up-or-down vote. While many are adopting the new standards (and many still have not) it is still being debated whether the shareholder say in CEO pay will have the desired effect.

These measures are interesting from a shareholder’s rights & corporate governance perspective, but I’m interested in executive pay from another angle.

As a consumer of service experiences, does CEO pay factor into your decisions to support or not support a business?

If you knew that CEO A received total cash compensation of 6.5M, while CEO B was paid one dollar, would it affect your brand choice if the service experience was the same?

If the company with the high CEO pay was a worse service provider than the one with low pay, does that increase your level of frustration with the brand / make you less likely to tolerate failure?

Theoretically, it shouldn’t.

The pay of a company’s CEO is not an experiential aspect of a company’s offering.

But does it enter into an evaluation of value when our sense is that an organization with a sub-par experience takes for itself through rich pay before it gives to customers through a rich experience?

Open question. I'm interested in whether this topic impacts our behavior as consumers.

Friday, April 22, 2011

The service quality air travelers refuse.

When traveling, accompanying business associates tolerate my travel habits as much as I tolerate theirs.

See, most of my travelling companions are prototypical business pros when it comes to travel. You know the ones. You see them moving through the terminal like a mule train, with oversized laptop cases perched atop oversized carry-ons.

When I pick up my checked bags on arrival, they always grouse about the delay in getting to the rental car shuttle quickly. It’s about that time that I remind them that it was they, along with 50 similarly-intentioned travelers, who, in trying to fit a steamer trunk into the overhead bins, backed up the loading of the plane while they tetrissed their luggage into position, warped bin doors closed or had to have them gate-checked, inevitably making the plane late for departure.

Checking luggage is my own social contract. We can all take off & land on time much more frequently if we let airlines do a better job separating the loading of luggage from the loading of people.

Don’t believe me?

Check out this video from IBM about the baggage operation at schiphol airport in Amsterdam. 140,000 bags per day. 21km of conveyors. In-transit tracking. 50 million bags / year, expected to increase 40%. Runs like a Swiss clock.

Engineered service systems like this are making service processes more efficient while they are improving the likelihood of positive outcomes. Yes, this is an extreme example, but it has been years since I’ve had a bag misplaced or delayed. My track record for on-time flights is nowhere near as stellar.

You may not change your behavior (airlines imposing baggage fees are doing their best to make sure their operations continue to run as inefficiently as ever) but the next time you see a business traveler fight their carry-on for 3 minutes, only to give up and gate check, walking back up the plane aisle past 30 passengers waiting to board and unable to proceed to their seats, perhaps you’ll think about miles of conveyors and systems designed for the movement and loading of bags onto planes.