CASE 11 & 12 & 13

CASE 11 - DR. MAHALEE GOES TO LONDON

OVERVIEW Dr. Mahalee, a wealthy Asian businessman comes to London on a trip that combines business and family matters. Nearing retirement age, he hopes to sell his company to the existing employees, but he needs to find an international bank that will loan them the necessary funds for a buyout. At the same time, he needs to review his estate plans in the light of the money that he will receive from selling the company. Sophia Costa, a senior account officer at the London office of Global Private Bank has been asked to step in at the last minute to meet this client. How should she proceed?

STUDY QUESTIONS 1.

Prepare a flowchart of Mahalee’s service encounters.

2.

Putting yourself in Mahalee’s shoes, how do you feel (both physically and mentally) after speaking with the receptionist at Global? What are your priorities right now?

3.

As Sophia Costa, what action would you take in your first five minutes with Mahalee?

4.

What would constitute a good outcome of the meeting for both the client and the bank? How should Costa try to bring about such an outcome?

ANALYSIS 1.

Prepare a flowchart of Mahalee’s service encounters

Mahalee’s activities can be broken down by day as follows: Before leaving Tailesia •

Talks to Li Sieuw Meng, his financial advisor, who refers him to The Trust Company and Miguel Kim at Global Private Bank (GPB)

Wednesday •

Arrives in London

•

Calls Kim’s office to arrange an appointment for “mid-morning” on Friday

Thursday •

Friday

Visits The Trust Company (nice people, very knowledgeable about managing estates, less experienced in business credit)

•

Breakfasts with daughter, Leona; arrange to meet at 1:30 p.m. at Savoy Hotel prior to attending the violin concert of his grandson, Anson, at 2:00 p.m.

•

Buys necklace as anniversary present for wife at Mappin & Webb (famous London jewelers)

•

Has problems getting taxi in unexpected snow, arthritis acts up

•

Arrives at Global Bancorp at noon

•

Enters retail branch by mistake, redirected by security guard to Global Private Bank offices*

•

Arrives at reception of GPB reception at 12:15 p.m.

•

Greeted by Kim’s secretary, learns that Kim is out to lunch, has arranged for him to meet Sophia Costa instead*

(*denotes critical incidents)

2.

As Mahalee, how do you feel (both physically and mentally) after speaking with the receptionist at Global? What are your priorities right now?

Mentally, Dr. Mahalee is probably feeling embarrassed and annoyed with himself for arriving late, as well as disappointed (and perhaps irritated) that Kim is not there to meet him. The good mood he felt earlier after buying the emerald necklace for his wife has likely evaporated. Physically, he is probably feeling flustered, tired, and in some pain from his arthritis. He may also be feeling hungry and thirsty. He will have realized that he needs to be back at the Savoy Hotel by the time Kim returns from lunch at 1:30pm. He is probably starting to think about his grandson’s afternoon concert and worrying about making sure that he returns to the hotel in time to meet Leona, just 75 minutes from now.

3.

As Sophia Costa, what action would you take in your first five minutes with Mahalee?

Costa has never met Mahalee and knows very little about him, except that he is a wealthy Tailesian businessman planning his retirement. It is possible that she does not know that he holds a PhD from the London School of Economics (a very prestigious institution) and has also been a professor of international trade and a government trade negotiator. Hence, he is sophisticated, both analytically and practically, well informed, and potentially an interesting client for GPB. These are all pieces of information for her to glean as she establishes rapport that will help her to tailor her style and presentation. Basically, Costa has two choices. She can either be all business and focus immediately on determining Mahalee’s financial needs or she can focus on making him physically and make him socially comfortable first. On meeting him, the only additional facts available to her are that he is an older man, Asian, wealthy, and has arrived late. Common sense and observation of Mahalee’s body language should lead her to recognize that he needs to be put at ease first before beginning any business discussion. Her own prior experience of visiting Tailesia should have given her some sense for the culture. After greeting him and apologizing again for Kim, she needs to establish how much time he has available. As soon as he mentions the 1:30 p.m. meeting at the Savoy, she should get the receptionist to arrange a taxi (or even a corporate limousine) to take him there. This will help to set his mind at ease. She should then offer to obtain some refreshments

for him if he is hungry or thirsty (a private bank often has its own in-house catering service). Only when Mahalee is comfortable and starting to relax, should she turn the conversation toward business matters.

4.

What would be a good outcome of the meeting for both the client and the bank? How should Costa try to achieve this?

Costa should encourage Mahalee to talk about his financial situation, gently building her own credibility as a skilled senior account officer in the process. Because Mahalee sought the meeting in the first place, he will presumably be willing to lay out the basic situation and to outline his needs. Costa should try to get a sense of the amount of money required and the type of business involved, identifying GPB’s expertise at relevant points. If Mahalee seems comfortable speaking with her, Costa may be able to ask if he has any existing arrangements with financial institutions in London (perhaps he will mention his visit to The Trust Company). Recognizing that he will receive substantial funds from sale of the business and is old enough to be thinking about estate planning, Costa may want to probe gently for information about his family (he may already have mentioned his daughter and grandson). She also needs to determine whether or not Kim has an existing relationship with Mahalee or whether he was simply a recommended name. If the former, then Costa would simply be holding the fort for her colleague, but otherwise, Mahalee has the potential to become her client. A good outcome for Mahalee would be to feel, after about a half-hour of discussion, that GPB is more knowledgeable than The Trust Company on business credit and also in a position to help him find solutions to his estate management needs, that he is comfortable talking with Costa, and that he would like to return later for more detailed discussions. For GPB, the ideal outcome would be to win Mahalee as a client for both business credit (to finance the employee buyout) and estate planning. If all goes well in the brief meeting with Costa, Mahalee will see her as both knowledgeable and sympathetic and will want to do business with her—feeling that he is beginning to establish a relationship—rather than with Kim (whom he has never met and who was simply a recommended name described by his Mr. Li, his advisor in Tailesia, as “I’ve never done any business with him but he did seem quite competent.”)

TEACHING SUGGESTIONS This compact and engaging case can be taught in 30–50 minutes. Role playing could extend the duration. An optional (B) case—reproduced at the end of this note—can be handed out to students to read in class (no more than 10 minutes will be required—and taught in 20–30 minutes. So the entire package will fit well within a 75–90 minute period. Because it focuses on service encounters and includes flowcharting, the Dr. Mahalee case could be paired with Chapter 2. Alternatively, it works well later in the course with Chapter 12, Managing Relationships and Building Loyalty. If teaching it then, you can make reference to the elements of drama—see Chapter 2 and Chapter 8--involved in Dr. Mahalee’s first visit to GBP. The case describes the initial acts of what may never get beyond a tragedy if Sophia Costa doesn’t improvise her role well and achieve a successful denouement!

It’s important for the instructor to introduce this case as being about personal encounters and relationships. Write the list of characters portrayed on the board: •

Kadir Mahalee, wealthy Tailesian businessman, about to retire

•

Li Sieuw Meng , his trusted financial advisor in Tailesia (referred to later as “Mr. Li” because in Asia family names of Chinese origin usually precede Chinese given names)

•

Officers at The Trust Company (a competitor of GPB)

•

The security guard at Global Retail Bank

•

The receptionist at GPB

•

Miguel Kim’s secretary

•

Sophia Costa

“Offstage” are (1) Miguel Kim (GPB account officer, recommended to Mahalee but out to lunch), and (2) Mahalee’s family members, including wife, son Victor (too unwell to take over the firm), daughter Leona (resides in London), two other children—presumably adults, and ten grandchildren (of whom several, including Anson, are attending college in Britain). The next step is to lay out the flowchart of Dr. Mahalee’s recent activities, getting students to identify the appropriate starting point (most but not all will suggest the meeting with Mr. Li in Tailesia) and subsequent events. I usually draw the boxes horizontally across the board, organizing them by day, with more detail for Friday. It’s important for students to recognize Mahalee’s dual financial needs: 1. Arrange a large loan for his employees, so that they can buy the business from him. The employees will then have to repay the loan over a period of years, with repayments presumably financed primarily by profits from the business. 2. Invest the significant funds that he will receive from the sale. As an older man with a large family, will want to develop plans for his estate—(e.g., an income stream for his wife if he predeceases her, trust funds for his children and grandchildren)—depending on how much other money he has, he may or may not need to invest money in ways that will yield an income for living expenses during his lifetime. Thus, Mahalee offers GPB at least two potential ways to earn money: from interest payments and fees. Some students will rush to judgment on this case. Potential traps include: •

Failing to note Mahalee’s positive experience at the competing Trust Company

•

Failing to identify Mahalee’s physical and mental feelings on arrival at GPB

•

Suggesting that Costa should move straight to business rather than attending to Mahalee’s other needs in hospitable fashion

•

Failing to determine Mahalee’s schedule for the afternoon (and thus the time frame available for discussion at GPB); also, failing to seize the initiative and arrange a limo or taxi to take him to the Savoy

•

Assuming that Kim already “owns” Dr. Mahalee as a client and that Costa is merely a stand-in

•

Suggesting that Costa should just continue to engage in social niceties rather than steer the conversation toward business once Mahalee seems comfortable

•

Assuming that an older Asian man will, “of course,” want to do business with a male account officer. Although this is conceivable, there’s certainly no evidence in the case to this effect and we don’t know anything of “Tailesian” (disguised country) culture. Is the fact that she is probably about the same age as his daughter, Leona, advantageous? Possibly.

CLOSING COMMENTS Sophia Costa is about to have a critical encounter with Dr. Mahalee (who has already had three setbacks today—having trouble getting a taxi, going into the wrong bank entrance, and being told that Mr. Kim has gone for lunch). How she handles the first five minutes may well determine whether or not there is any chance of GPB developing a relationship with this wealthy potential client. Although Sophia doesn’t yet know what has happened to make him late, the more she can try to identify (and empathize with) his initial feelings and attend quickly to his immediate priorities, the better her chances of getting him to open up on his business concerns and lay a preliminary foundation for a future relationship. Global Private Bank is partly responsible for some of the problems encountered by Dr. Mahalee, resulting from poor communications: 1. Kim allowed Mahalee to be rather too vague about his arrival time at the bank (“about midmorning” is not very precise and may mean something different in Tailesian culture than British culture). At a minimum, Kim should have specified that he would only be free until 11:45 a.m. 2. Kim failed to learn more about Dr. Mahalee in advance of his visit—why didn’t Kim establish that it was thanks to his own meeting in Tailesia with Mr. Li (Mahalee’s financial advisor) that the businessman had contacted GPB? If he had, then he could have contacted Li to identify Mahalee’s situation and needs in greater detail, and would then have been much better informed and able to give Costa a better briefing. 3. A small but not insignificant point—poor signage may have led Mahalee to enter the retail bank rather than going directly to the private bank entrance. Fortunately, the security guard was able to redirect him.

SEQUEL CASE—DR MAHALEE GOES TO LONDON (B) The (B) case—reproduced at the end of this note—is set two years later. Because it is only two and a half pages long, it can be read in under 10 minutes. It will appeal particularly to students with an interest in international finance, but the concepts are simple enough to be accessible to most others. So if you wish to use this case, it can be distributed in class for immediate follow-on discussion.

ANALYSIS 1.

Evaluate Sophia Costa’s Performance

Although we don’t learn what transpired at the initial meeting with Dr. Mahalee, we do know that Costa succeeded in winning the buyout business and making the necessary loan (although not in winning the task of investing the subsequent proceeds, which went to the competing bank, The Trust Company. She has clearly built a good relationship with a demanding, sometimes testy, secretive client, and also has related well to his daughter, Leona and her family in Britain. Costa is now moving to a new job in New York. The unit manager, Peter Ormerod, must select a new account officer to take over Mahalee’s account. The (B) case adds several new players to the known cast of characters in Dr. Mahalee’s extended and widely dispersed family: •

Leona’s husband, a successful international lawyer, and their other three children, all students (Anson is now a professional violinist with the prestigious London Symphony Orchestra).

•

Son, Vijay, now on his third marriage with four children and recently moved to Toronto

•

Daughter, Desi, an aid volunteer in Africa

•

Twin 28-year-old grandsons of the now deceased Victor, who have co-invested with their grandfather in a Philippines-based company

2.

What key things have happened in the past two years? •

GPB has helped Mahalee arrange an employee buyout of his company, providing $25 million in credit to the buyers in Tailesia and another $5 million to minority investors in London and New York.

•

However, Mahalee selected The Trust Company (TTC) to arrange his estate planning and create large trust funds for each of his four children.

•

Mahalee is believed to have a total net worth (excluding landholdings, jewelry and art) of U.S. $50–60million.

•

He currently has about $30 million in financial assets under management by GPB: $25 million in pledged assets from the buyout and $5 million recently transferred from a large Swiss bank.

3.

•

As the loan to the buyers is paid off over a period of five to ten years, the collateral from the pledged assets will no longer be needed and there is a possibility that Mahalee may choose to transfer at least some of these freed-up assets to TTC

•

TLC has established a large trust fund for each of Mahalee’s four children (one of whom has since died). The family, which includes ten grandchildren, is dispersed among several countries in addition to Tailesia, including the United Kingdom, Canada, and Africa. Two 28-year-old grandsons have retained GPB’s Zurich office to manage their $5 million in liquid funds. Separately, they have co-invested with their grandfather in a Philippines-based start up.

•

Costa seems to have got along well with Dr. Mahalee, who comes to London about three times a year and always visits her on those occasions. She has also formed a good relationship with his daughter, Leona, in London.

•

Although Dr. Mahalee has proved a stickler for detail and gets upset when even minor errors are made, he seems pleased with the way his account has performed.

•

Dr. Mahalee is somewhat cautious in his dealings. Although he lives in Tailesia, he seeks to minimize financial contact there. Mail from his adviser, Mr. Li, bears a Singapore postmark and GPB is required to send mail for Mahalee care of his daughter in London.

•

Costa has learned that despite Mahalee’s stated preference for a relatively conservative wealth progression strategy, he has applied as much as a quarter of his assets ($10–15 million) to venture capital activities on four continents.

•

Mahalee often transfers large sums through Banque Etrangère de Paris (BEP), making extensive use of their worldwide electronic network and investment banking contacts. Costa has tried several times to persuade him to use Global for funds transfers, but he always declines, citing a bad experience that a friend had with Global’s investment bank several years earlier.

What are your quick reactions to five questions raised by Peter Ormerod?

Here are some of the points students are likely to raise: 1) Getting a greater share of Mahalee’s business -

Would like to secure management of some of his investable funds as Dr. Mahalee receives payments from proceeds of the buyout—can GPB argue that it can do a better job than The Trust Company?

2) Selecting a suitable person to succeed Costa and arranging the transition -

Should be reasonably senior and have the personality and expertise to relate well to Dr. Mahalee and his family Act quickly so that Sophia can introduce him/her to the family and build their confidence and trust in the new account officer

3) Frequency and method of contact with Mahalee

-

When it suits Dr. Mahalee on his visits to London—typically about three times a year; elsewhere only if requested

4) Winning business from other members of the Mahalee family -

-

Leona and her husband are obvious targets for management of their own financial assets, as there are the trust funds for their children, who may need direct advice when they become eligible to make independent decisions on their share of the inheritance The twin sons of the late Victor Perhaps Desi, the unmarried daughter who works in aid in Africa

5) Deciding what operational tasks at GPB need work to maintain and enhance the relationship -

Accuracy of account transactions and information Get it right first time, all the time Training of account managers to be precise and unambiguous in their communications with prospective and current clients Gather and document as much information as possible about prospective clients Understand client preferences for nature, location, and frequency of contact and honor these

DR MAHALEE GOES TO LONDON (B) “We’ll be sorry to lose you, Sophia,” declared Peter Ormerod, unit manager at Global Private Bank’s London offices. He was meeting with Sophia Costa, a senior account officer at GPB, who was about to transfer to the New York offices of Global Investment Bank. Since a junior officer was replacing Costa, they were reviewing her client list with a view to determine which senior officers should take over her major clients. “I’ve identified my top twenty clients,” said Costa. “So why don’t we just start at the beginning and work our way through? The first is Dr. Kadir Mahalee of Eximsa in Tailesia. He’s been a client of ours for two years. The initial contact was through Miguel Kim, who left us last year, but we agreed that Mahalee would become my client.” Costa made sure Ormerod was up to date on Dr. Mahalee. GPB had enabled Mahalee to arrange an employee buyout of his Tailesian export company, providing a total of US $20 million in credit to the buyers in Tailesia, as well as a further $5 million for minority investors in London and New York. The arrangement, secured by liquid offshore assets, was structured to be paid off in five to ten years. However, Mahalee had chosen to use one of Global’s major competitors, The Trust Company, to arrange his estate planning. He had established large trust funds for each of his four children, Victor, Leona, Vijay, and Desi, giving them lifetime incomes from the capital at his death, with the funds being distributed on their own deaths to each of their children. The trusts were partially funded now, but as the loan facilities from the buyout were paid off, Mahalee planned to transfer additional funds into the trusts. Dr. Mahalee’s eldest child, his son Victor, who had managed the family firm’s trading office in Europe, had died soon after his trust was established. The latter’s twin sons, aged 28, had elected to have their current liquid assets, totaling around $5 million, managed by Global’s Zurich office. They had also managed to persuade their grandfather, Kadir, to advance them the funds to invest about one-third of their inheritance in a Philippine-based electronics company start-up. Their grandfather held an additional 30 percent share in the business, which was already proving quite successful. The second son, Vijay, had recently moved to Toronto with his third wife and their four children, aged three to seventeen. Mahalee’s daughter, Leona, to whom he was especially close, lived in London with her husband and four children. The younger, Desi, who was single, was a foreign aid volunteer working in Africa. Sophia Costa told Ormerod that she estimated Mahalee’s total net worth at U.S. $50–60 million, excluding landholdings, jewelry, and artworks but including the $25 million in pledged assets— mostly time deposits and fixed income securities—used to secure the buyout facilities. Mahalee currently had financial assets of about $30 million under management by Global: the $25 million in pledged assets and another $5 million that had been transferred within the past year from a large Swiss bank. Almost half of these assets were in a discretionary fixed income-portfolio (U.S. dollar bonds) and the balance in euro time deposits at various maturities. The accounts were held at a large Swiss bank in the joint names of Mahalee and his wife. Almost half of these assets were in a discretionary fixed income-portfolio (U.S. dollar bonds) and the balance in euro time deposits at various maturities. But Costa was not sure how many of these assets would move to The Trust Company in the future, as the loans financing the buyout were paid off and collateral was no longer needed.

Mahalee had told Global that he sought a relatively conservative wealth progression strategy, but Costa had learned that he had applied as much as a quarter of his assets to venture capital activities on four continents, and knew that he often transferred large sums through the offices of Banque Etrangère de Paris (BEP), making extensive use of their worldwide electronic network and investment banking contacts. She had tried several times to persuade Dr. Mahalee to use Global for funds transfers, but his answer had always been the same: Mahalee spent the bulk of his time on his estate in Tailesia, visiting London about three times a year and always dropping by Global’s offices on those occasions. Costa had called on him twice on her business trips to Southeast Asia, but had the feeling that he felt more comfortable discussing business when he was outside his own country. Most written communications came from Li Sieuw Meng, Mahalee’s trusted financial advisor in Tailesia, but letters always bore a Singapore postmark or email address. Mail to Mahalee was sent in care of his daughter, Leona, at her townhouse in Chelsea, an exclusive London neighborhood. He rarely telephoned from abroad, except when he had a complaint. Mahalee had proved to be a stickler for detail and had expressed displeasure on several occasions—either when his instructions were not followed to the letter, or when there were errors in his account. He had once complained angrily to Sophia Costa’s assistant of a $0.50 error on his statement, but then called the next day to apologize, saying that he had been feeling unwell. Although there had been occasional incidents, Costa’s relations with Mahalee had generally been cordial. In fact, he had complimented her on the stability and growth of his account relative to the market in general. Sophia Costa told her colleague Peter Ormerod that she was optimistic that Global could win more of the Mahalee family business. She had lunched a couple of times with Leona at her country house in the Cotswolds, where she had met Leona’s husband, a successful international lawyer, and their youngest child, Mireille, now in private school. Their three older children were no longer at home: One son was at college in the United States, a daughter was at medical school in Edinburgh, and the eldest, Anson, was now a violinist with the London Symphony Orchestra. Ormerod Reviews the Account That weekend, Peter Ormerod went over his notes on each of Sophia Costa’s clients and began to ask himself the following questions about Global’s relationship with Dr. Mahalee: •

Of Mahalee’s total offshore investments, it appears that we have about half of his assets (based on the collateral we are managing while the loan facilities are in place), and none of the assets held in the trusts he established. How much more of his business can GBP reasonably target, knowing his strong connections with The Trust Company, BEP, and a relationship with at least one Swiss bank?

•

What kind of characteristics should we look for in an account manager to assign to Mahalee? How should the transition be arranged?

•

How frequently should this client be contacted, and through what method(s)?

•

How can we expand business with this client and—where relevant—with other members of the client’s family?

•

What operational tasks do we need to work on to maintain and enhance Global’s relationship with this client?

CASE 12

MENTON BANK

OVERVIEW A large regional bank seeks to develop a stronger customer orientation and deliver more services through electronic technology instead of human tellers. Three branches have been selected as test sites for a new customer service program. Tellers, whose job was previously defined in operational terms, are now known as customer service representatives (CSRs) and are expected to engage in limited selling of the bank’s growing array of services. This move to a selling role has been resisted by one CSR, Karen Mitchell, who is outstanding at the operational aspects of her job. When she applies for the position of head CSR, management must decide how much emphasis to place on selling versus operational skills, since another candidate is outstanding at selling.

STUDY QUESTIONS 1.

Identify the steps taken by Menton Bank (MB) to develop a stronger customer orientation in its retail branches.

2.

How would you compare and contrast the jobs of CAR and CSR? How important is each to (a) bank operations and (b) customer satisfaction?

3.

Evaluate the strengths and weaknesses of Karen Mitchell and other candidates for head CSR.

4.

What action do you recommend for filling the head CSR position?

ANALYSIS 1.

What steps has Menton Bank taken to develop a customer orientation in its branches?

Students must distinguish between new financial products (not describe specifically in the case) and new or improved delivery systems designed to reach out to customers. Delivery Improvements, Innovations •

Remodeling and renovation of “new look” branches

•

Counters redesigned to provide full/express service

•

Staffing levels varied to match variations in demand for service by customers

•

Customer service information desks located near entrance

•

Touch-screen information terminals installed near entrance, remodeling, and renovation of “new look” branches (“friendly yet professional”)

•

Introduction of advanced model ATMs with color touch screens, capable of broader array of transactions in multiple languages

•

Number of ATMs in branches has been tripled

•

Access to several ATM networks with numerous convenient locations

•

Automated 24/7 telephone banking

•

Automated telephone banking available 24/7 for some services.

•

Central customer service office can be reached by phone weekdays 8 a.m. to 8 p.m. and Saturdays 8 a.m. to 2 p.m., possibility of expansion to 24/7

•

Home banking by Internet provides online access to accounts via bank’s Web site, newly redesigned to be the region’s most “user friendly,” testing use of web-enabled services for customers with digital cell phones

•

Issuing new credit cards with RFID which allows customers to wave cards near special readers rather than insert them in slot, thus saving time and effort

Staff Innovations •

New training programs for staff to generate improved product knowledge, selling skills, greater professionalism

•

New staff job titles signal changes in approach

•

New job descriptions signify much increased emphasis on high quality service recognizing customer needs, cross selling, maintaining good customer relations

•

Use of both “carrot and stick“ approaches to motivate CSRs to engage in consultative selling (i.e. referrals to CARs)

•

Plans to close smaller branches, however will not be seen as user friendly by all customers

Compare and Contrast the Jobs of CAR and CSR. [A supplementary question: How Have the Jobs Changed?] can be assigned or raised in class. You may wish to ask students to compare and contrast the old and new job descriptions in the Appendix to the case, pp. 574–576. Tellers have always had a marketing role, but it was never explicitly recognized as such. We can examine this in marketing mix terms: Product. Tellers/CSRs are part of the service experience for the customer, but an operational imperative may have made some clerks insensitive to customer needs and concerns. New training programs try to achieve more professional appearance/behavior. In the meantime, the new job title may raise service expectations.

Distribution. The teller was previously the key element in service delivery for retail branches, but now customers have the option of using ATMs/telephone banking (and even home banking in some cases) for a growing array of retail transactions. Customers who use CSRs are more likely to prefer human interactions to machines or require a more complex service that they perceive the ATM as unable to deliver reliably. (Note: CSR performance standards, such as transactions completed per hour, will need to be adjusted downward to reflect the fact that more complex tasks will take longer to complete). Communication. CSRs have received training about new and existing retail bank services, therefore are more knowledgeable about bank services, and better able to offer information and advice. They have also been trained to take the initiative in recognizing sales opportunities and to undertake consultative (referral) selling. Finally, they have been trained to improve their listening and observational skills and to present themselves in a more professional manner. 2.

Compare and contrast the jobs of CAR and CSR? How important is each to (a) bank operations and (b) customer satisfaction?

Students should be able to draw useful comparisons, not only from information in the text, but also from comparing the job descriptions in the Appendix. •

CAR job is oriented to prospects interested in starting a relationship with the bank and existing customers who have problems to resolve or who need new services. It’s very important from a marketing perspective but operationally is limited to ensuring that new accounts are set up properly and that customers know how to use different service delivery options and resolving operational mistakes that have upset customers.

•

CSR job is oriented toward conducting transactions with existing customers (although they may get some walk-in business for one-time transactions). CSRs have a boundaryspanning role, (see Chapter 11, p. 313) which requires speedy operations but also good skills in relating to customers. Slow transactions and charmless service will lead to customer dissatisfaction. CARs encounter customers/prospects needing information and assistance on a service that they may be poorly informed about. Some may need help defining what their needs really are and in evaluating alternative solutions. A customer visit with a CAR may last 10–20 minutes as alternatives are explored, the customer supplies personal data, and forms are completed.

•

Generally, customers visiting a CSR know what they want and present a transaction for execution (an operational task). The proportion needing information or assistance is small compared with CARs. An express transaction may take 30 seconds; a full-service window transaction will tend to take less than five minutes in most instances. Customers may deal with a CSR on a regular basis for years (if the CSR sticks around); with CARs, the customer may pay several visits in a short period of time to arrange a particular service, but may not need to visit the platform staff again for a year or more thereafter. CARs, seated at a desk with a customer also seated, have time to probe for customer needs and to engage in proactive selling. For security reasons, CSRs are separated from customers (who are standing) by a high level counter (and possibly, although the case doesn’t say, a grill). Because speedy transactions are necessary to keep the line moving,

they do not have time to spend time on probing or selling unless there is nobody else in line. Their only direct selling is products like traveler’s checks; all other selling through referral to CARs. CARs can expect to get a lot of prospects from response advertising, direct mail, and referrals by other customers, bank officers, CSRs, etc. Hence, the prospect may already be in a buying or information-seeking mode. CSR customers by contrast will tend be in a transaction mode. The Customer Service Director position is designed to both manage and integrate CAR and CSR work •

Finally, the CSR job is more at risk of replacement from automation. Although there will be some new positions created as telephone banking reps, these may require a different type of skill (less need for ability to move quickly on physical tasks, more need for good voice presentation).

Nature of the Job: A coordinating position rather than a managerial one (see pp. 570). Key elements of what the job entails are: •

Allocation of work assignments

•

Scheduling of part-time CSRs

•

Consulting on, and where possible, resolving problems at the teller stations

•

Handling large cash deposits and withdrawals by local retailers

Management of CSRs (and CARs) is in the hands of the Customer Service Director, David Reeves. No Extra Marketing Responsibilities attached to the head CSR position (beyond those that the individual would perform when serving customers behind the counter). The head CSR then, needs to be: •

Good at human interactions

•

Very knowledgeable about aspects of CSR work

•

competent at helping less experienced CSRs solve problems

•

A good organizer

•

Able to deal with large sums of money for retailers in a trustworthy, professional manner

•

A good role model who commands the respect of other CSRs (but that respect is likely to come from perceived operational competence and personal empathy, rather than being seen as a super salesperson. However the head CSR still needs to be able to convincingly show how to sell.

•

3.

A final point is that the head CSR is a front-line supervisor who acts as a bridge between management and a key group of customer-contact personnel. In addition to being able to command the respect of fellow workers, management may be looking for an individual whom they can trust to support company policies to set an example in implementing bank strategy.

Evaluate the strengths and weaknesses of Karen Mitchell and other candidates for the job of head CSR?

Karen Mitchell Strengths •

Excellent track record of high performance on operational criteria—consistently No. 1 in ratings

•

Fast and accurate

•

Presents smart and professional appearance

•

Well liked by customers and fellow CSRs

•

Says she loves being able to help customers

•

Has been with bank three and a half years since graduating from junior college

•

Interested in making a career in banking and has previously applied for head teller (CSR) position

•

Says she is eager to take on further responsibilities

Weaknesses •

Ranks fourth out of seven tellers on new scoring due to poor performance on selling effectiveness elements (see Case Exhibit 1)

•

Appears to resist bank policies on selling (a cornerstone of the bank’s new marketing strategy) and chooses to define her job the way she thinks it should be rather than the way management does

•

Desire to help customers is not the same as the desire to sell something to a customer; they reflect different personality traits

Jean Warshawski Strengths •

Ranked ahead of Mitchell (second on overall scores) with two years experience at branch

•

Very successful on consultative selling (ranks No.1 on selling effectiveness)

•

Excellent on customer relations: cheerful, good memory for faces

•

Excellent at identifying prospects for sales pitches

•

Well organized in her work

•

Quick to help fellow CSRs, especially new hires

•

Older (more mature?), motivated by desire to save for sons’ college education

Weaknesses •

Past evaluations (operationally based) not as good as Mitchell’s; not as fast—too chatty

•

Somewhat untidy (less professional appearance)

•

Room for improvement on accuracy

•

Has often been late for work and reprimanded for this

•

If motivated by money, may conclude she can earn more in a sales position elsewhere

Curtis Richter Strengths •

Prior experience as head CSR of a small Menton Bank branch where he supervised three CSRs

•

Seeking more responsibility

•

Excellent evaluations in current head CSR position

•

Move to complete degree suggests ambition

•

Appears personable and intelligent

•

Experienced in CAR work

Weaknesses •

Not previously exposed to consultative selling program nor to ATM banking environment

•

Longmeadow is an example of the type of branch the bank probably wants to close

•

Doesn’t know current CSRs at Federal Square

•

4.

Will appointment of “outsider“ cause resentment among CSRs?

What action do you recommend for filling the Head CSR position?

There are four basic approaches that can be taken, each with associated alternatives: •

Appoint Mitchell as head CSR Rationale: Job requires professionalism, operational skills, and ability to supervise others. Let her play to her skills and not have to do as much selling as before. Perhaps should consider Smith for CAR position if available.

•

Appoint Warshawski as head CSR Rationale: Show that success in selling is rewarded by promotion. Use her as role model and coach to help other CSRs. If Mitchell is really upset about the decision, offer to help her get head CSR job at ‘traditional“ branch. (But what will happen when that branch adopts the new selling orientation or, worse, is slated for closure?)

•

Appoint Richter as head CSR ( at Federal Square branch) Rationale: First, however, put him through a training program similar to those experienced by CSRs in the test branches to give him the same skills and frame of reference as the CSRs that he will be supervising. Transfer Richter to the head CSR position at the small Longmeadow branch. (It will probably be low on the list for conversion to the new selling approach, but may even be closed). Take no action on Warshawski or consider offer of CAR position if one opens up.

•

Recommend to head office that the bank should abolish the Head CSR position Rationale: Divide this job’s responsibilities among several experienced CSRs (who might be given a new title of “Senior Customer Service Representative” and receive an extra increment in salary). Appoint both Mitchell and Smith to this position, plus perhaps one other existing CSR at Federal Square (Mary Bell would be good if she would accept the promotion). Apart from the head CSR hiring decision, the bank should seek to help CSRs to sell by encouraging customers to ask CSRs about specific bank services. For instance, freestanding signs near the teller windows could remind customers of specific bank services and CSRs could all be issued large lapel buttons reading “Ask me about [product].” Buttons and signs could be changed periodically to feature different services.

CLOSING COMMENTS •

More and more service organizations are finding that the contact points between service personnel and customers represent “moments of truth” in the customer’s appraisal of the service experience.

•

As top management attempt to develop a stronger marketing posture for the organization, they find that implementation of such a strategy often requires making significant changes at the point of interface between customers and service personnel. Making such changes means adding a marketing component to what has previously been an operations task.

•

Linking marketing and operational responsibilities may enrich the job but they also complicate it and add potential for friction. A further problem is that there may be an element of luck to referrals, because such opportunities constitute only a small proportion of all transactions handled by a CSR.

•

Employees who are good at operations tasks may lack the personal skills needed for dealing with customers and resist the addition of selling activities to their job definitions.

•

Successful implementation requires human resource managers to develop appropriate training programs to give workers the skills they need; changes in evaluation and remuneration will probably be necessary to motivate the desired new behavior.

•

First-line supervisors and their managers will also find their environments changing, requiring training and motivational programs at other levels in the organization.

•

In the long run, redefined jobs will require redefined recruitment criteria. In the short run, the issue is which employees will respond to “retooling” and which will have to be reassigned to other areas or even terminated.

Menton Bank is a disguised name. Hence, there is no web site to visit. To get a sense of Internet banking, consider a visit to the Web sites of banks known for their use of Internet channels.

CASE 13 RED LOBSTER

OVERVIEW A waitress at a chain restaurant has been fired after 19 years of service for allegedly stealing a critical comment card completed by a dissatisfied guest. Rather than appealing her dismissal through a legal suit, the waitress requests a peer review, seeking to recover her job and three weeks of lost wages. After hearing evidence from the restaurant manager, the waitress, and a hostess, the peer review panel has to decide what action to recommend. STUDY QUESTIONS 1.

What are the marketing implications of this situation?

2.

Evaluate the concept of peer review. What are its strengths and weaknesses? What type of environment is required to make it work well?

3.

Review the evidence. Do you believe the testimony presented?

4.

What decision would you make and why?

ANALYSIS 1.

What are the marketing implications of this situation?

A customer, dining with another guest, has been disappointed in her meal (the core product) and complains that the prime rib is both fatty and not cooked “well done” as she had instructed. Service recovery has been attempted not once but twice, and both times unsuccessfully: •

The waitress explains that prime rib always has some fat and the meat was cooked some more, but the guest is still displeased and won’t eat it all

•

A free dessert is offered but declined

Dissatisfied with both the food and the service (a waitress whom they perceived as “uncooperative”) the unhappy guests complete a comment card and drop it in the box. Somehow, they later learn—perhaps one of them followed up with a call to the manager when they received no response to their comments—that the waitress had removed the card from the box. The caller complains angrily to the manager that she feels violated because her card was removed and her complaint ignored. One can infer that it is unlikely that either guest will ever return and there will be probably negative word of mouth which could negatively affect the brand’s reputation and thus other restaurant units in the chain as well “You won’t believe what happened to me at a Red Lobster restaurant last week…awful food and outrageous service…” The manager feels that she needs to set an example to the other staff members of what constitutes unacceptable behavior and fires the waitress for violating company policy.

2.

Evaluate the concept of peer review. What are its strengths and weaknesses? What type of environment is required to make it work well?

Peer review strengths •

Easing workplace tensions by constructively channeling the pain and anger felt by employees after being disciplined by their managers

•

Protecting valuable employees from unfair dismissal

•

Reducing racial tensions (in situations where unfair treatment may reflect racial prejudice)

•

Saving on corporate legal expenses by reducing the incidence of lawsuits (Darden says that of the hundred disputes each year that go to peer review, only ten subsequently result in lawsuits)

•

Giving employees the option of “being judged by people who know how things work” in their particular workplace environment—in this case, “a little restaurant”

Peer review weaknesses •

The risk that individual panel members will tend to identify with the protagonists according to their own job situation (note the initial response of the hourly workers on the panel to support Mary Campbell, the waitress, and the managers to support Jean Larimer, the restaurant manager).

•

Reaching consensus requires reaching a solution. In other words, no hung jury. So there’s a risk that panelists will agree to a common decision as a result of exhaustion or frustration, rather than conviction. The easy way out in such circumstances will probably be to find in favor of the employee (after all, the panelists don’t have to live with the decision).

•

The process, while cheaper than a lawsuit, is not without costs. These include: o o o

Peer review training Wages plus travel expenses Inconvenience for the restaurants or offices where the panelist would normally be working

For the process to work well, the following elements should be in place: •

A clear understanding of the process and how it works plus a belief that it is impartial, on the part of the petitioner and the panelists.

•

The ability to proceed quickly once the petitioner requests a hearing, including convening a panel, conducting a hearing, and coming to a conclusion.

•

A reasonably large pool of panelists (suggesting a big company) so that there will not be difficulties in finding panelists from a cross section of jobs at relatively short notice.

•

The panelist’s chosen should not know the petitioner.

•

All parties should perceive the process as fair, take it seriously, and be committed to trying to make it work. In particular, the company must be willing to accept findings in favor of the petitioner.

It is worth noting that in a unionized environment, there will usually be procedures for an employee to request formal grievance hearings in which he or she will be represented by the union. However, these hearings are likely to be more adversarial than peer review. 3.

Review the evidence. Do you believe the testimony presented?

Mary Campbell has been fired for allegedly stealing a guest comment card from the box. The guests had complained on two counts: (1) the prime rib was undercooked; and (2) their waitress was “uncooperative.” Somehow the guests learned about their comment card being removed and complained to Jean Larimer. (Perhaps another guest who knew the couple witnessed the incident, saw Campbell open the box and take the card, and subsequently informed the couple). Larimer’s testimony is straightforward. She fired Campbell after one of the guests complained angrily. Taking the card was “removal of company property” which is forbidden by company rules. Note that Campbell is one of a hundred full and part-time employees supervised by Larimer. There is no mention of previous problems concerning Campbell’s work—no prior warnings, for instance. Campbell, in her testimony, does not dispute that she took the card after obtaining the key to the box from the 17- year-old hostess, Eve Taunton. She explains the circumstances of the guests’ dissatisfaction with the food (requested “well done” but delivered undercooked and fatty). There is no particular reason to dispute her account of events, including her attempt to make amends. What we don’t know is the manner in which she dealt with the complaining customers—for instance, was she rude and offhand to them? On the other hand, if she was really just interested in the cooking procedures for prime rib at the restaurant, all she had to do was to tell Larimer about the incident and mention that the guests had completed a comment card on the topic. Her claim to be “consumed by curiosity” as to the contents of the card may reflect a worry that their criticisms of her “uncooperative” behavior would get her into trouble. She may be lying when she says she intended to give the card to Larimer (why not just put it back in the box instead of pocketing it?) and then accidentally (on purpose?) throwing it out. Taunton’s testimony confirms that Campbell did, in fact, ask for the key. However, her remarks suggest that: (1) she hadn’t been properly trained that it was against company policy to let employees take cards from the box (“I didn’t think it was a big deal to give her the key”); and (2) this was not an isolated incident (“A lot of people would come to me to get it.”) She could be lying to protect Campbell, but why? It seems unlikely since she was only a summer employee and the case suggests that she no longer works at Red Lobster. 4.

What decision would you make and why?

No one disputes that Campbell took the card from the box and never returned it. The incident is serious in terms of the impact on the two guests who feel “violated.” At issue, however, is whether the policy of forbidding removal of company property was ever specifically linked to guest comment cards, so that Campbell knew it to be a serious offence that might be punished by dismissal. Larimer can certainly be faulted for neither preventing nor putting a stop to the practice of asking the hostess for the key and examining comment cards—if nothing else, one must question why, in the first place, a 17-year-old hostess would have access to the key to the comments box, since the completed cards are supposed to be confidential comments to management.

Is it worth making an example of a long-term employee over this issue? It’s not quite the same as a misbehavior like stealing restaurant equipment for personal gain. On the other hand, if dismissal is too harsh a penalty, would returning Campbell to her job with full back pay be letting her off too lightly?

What Happened? The panel agreed that Campbell should be reinstated but should not recover the three weeks lost wages.

CLOSING COMMENTS No well-managed firm wants to unfairly fire or discipline employees. Such events are bad for morale, can lead to expensive lawsuits, may result in the loss of valuable expertise, and implicitly represent incompetent or unethical behavior on the part of the supervisor who made the decision. Even when prejudice and unfairness are not present, many alleged employee transgressions involve shades of gray: Was it made clear in advance that certain behavior was unacceptable? Was the employee properly trained as well as fully informed? Was he or she under unreasonable pressure? Were there extenuating circumstances? More and more employees are filing lawsuits when they feel that they have been unfairly treated. These actions can be divisive, time consuming, and very expensive to resolve. Peer review, like other forms of mediation, offers a simpler, cheaper, and generally faster process for obtaining the facts and coming to what is, hopefully, an impartial resolution. This procedure also elevates the role of employees, placing trust in their good judgment and getting away from a "them” versus “us” environment.