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Issue of Customer Satisfactions in Multinational Companies

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 5423 words Published: 2nd Jun 2020

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The Problem Itself

This paper addresses the problem of customer satisfaction in companies with multinational service units. Multinational units are the departments of organizations that include international locations and therefore different cultures, within the same department. These cultural differences play a big role in the root cause of the problem itself.

Poor customer service is more likely to occur when problems are handled by multiple groups, especially when they are at different country locations within an organization and thus is adding to correlated decrease in profitability (Zeelenberg & Pieters, 2004). Additionally, the authors’ evidence highlights the crucial role consistent information provided to customers plays into customer satisfaction. A lack of consistency is particularly dissatisfying to customers when they learn that the information given to them by the organization varies by the geographical business units (Walsh & Mitchell, 2010).  This problem is important to address because customer satisfaction is directly tied to the customer loyalty towards the organization and therefore to the profitability of the multinational service unit (Kandampully & Suhartanto, 2000).

Organizational Context

Founded in Germany in 1951 (and still headquartered there today), ABC is the Talent Management software market leader in German-speaking DACH (Germany, Austria, and Switzerland) countries. “ABC” is used as a pseudonym in this study to protect the identity of the organization throughout the paper.

Four years ago, ABC decided to expand globally, and their reach now includes the U.S., all of Europe, and parts of Asia. However, the market demand itself, including customer satisfaction, has gone through some “rollercoaster”-like phases where global customers did not feel ABC was ready to enter a global market.

Today, ABC’s customer satisfaction is measured by calculating the Net Promoter Score (NPS). This NPS is an index ranging from -100 to 100 that measures the willingness of customers to recommend ABC’s products and/or services to others by asking them to rate on an 11-point scale the likelihood of recommending the company or brand to a friend or colleague (Medallia, 2018). The resulting range for any company’s overall NPS is -100 to 100. Based on the global NPS standards, any score above 0 would be considered “good”, 50 and above being “excellent” while 70 and above is considered “world class.”  Simply put, any positive score means that a company has more promoters, and hence, advocates willing to recommend them than detractors, and thus, unhappy customers and potential negative word-of-mouth recommendations (Promoter, 2018).

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ABC’s net promoter score is -30 and when digging deeper into the lack of trust customers have in ABC’s ability to provide the service necessary and the associated customer dissatisfaction that has resulted from it, the common denominator seems to be the inconsistent practices in processes and procedures of their global offices. Today, ABC runs a centralized model for global operations where all technical support employees report back to one business unit regardless of their location. Germany, Switzerland, and the United States each have one home office in their respective country with each having a team lead supervising the operations in the particular country but then feeding into one global Director of Technical Support. The supervision and associated authority and responsibility lay with the country lead in regards to process and procedures. ABC has several metrics in place including time spent on customer/turnaround time standard, resolution percentage (success rate to resolve customer’s issue), time to answer ticket (how long was a customer ticket in the queue before it was picked up by a technician), and of course customer satisfaction upon closing of the ticket. For the latter and for every service unit, the system automatically triggers a survey to be sent to the customer to rate the technician’s performance and overall satisfaction with the service provided. The NPS for ABC is a performance indicator for long-term financial sustainability because ABC’s business model is based on long-term recurring revenues per customer thus customer retention is significantly more important than new customer acquisition.

ABC runs a centralized model with loose standards and processes at their country representations. Those inconsistent practices have led to customer confusion and consequently customer dissatisfaction or a negative NPS.

Solution 1: Centralize the service units’ leadership and create accountability from top to bottom

The first step in creating a proper structure for the entire department. A simple organizational chart may suffice. This can help with the proper alignment regarding responsibilities with the Director of Technical Support and the components that make up the Technical Support department. All three country site managers’ report directly to him and thus it is a crucial part of the process to ensure he is not only equipped with the right resources but also motivated to solve the organizational dilemma. The director of technical support needs to have some form of performance measurement associated with the overall performance of his entire unit including the actual alignment of their processes. ABC will set goals with the director that are directly related to the process and procedure synchronization of the country units and make it part of his performance appraisal to ensure that he is measured against it and motivated by its success.

Second, ABC will focus on training its Technical Support employees as one big unit and create responsibility measurements based on key performance indicators that are clearly measurable. In the past, the Country Team Leads were responsible for the training of their employees and ran it independent of the other locations. In order for ABC to create an accountability system at the core level of the Technical Support department – its employees which is also the direct point of contact to the customers, ABC needs to establish one unitary professional development plan together with all the site units participating in it. The action item here is to get all unites together and do a “zero measurement” of the employees’ knowledge status quo. That way ABC can have a base line. Then the departments have to establish a desired knowledge standard together and measure the delta between the status quo and the standard including measurable items to bridge the gap. Establishing a common standard for technical support together, regardless of the site location, will help everybody understand the bigger picture and align the department.

Lastly, ABC should tie part of the Technical Support employees’ site managers’, and the Director of Technical Support’s bonus compensation to the improvement of the Net Promoter Score. Marsh and Hamilton (2006) found that there is a strong motivation to use data. They claim thatthe intrinsic desire to evaluate and improve one’s practice and performance contributes strongly to the willingness to use data in individuals. In several studies, self-described “data- driven” practitioners attributed their use of data to internal motivation to reflect and improve on their craft (p. 8).

If properly executed, using incentives as one part of an integrated customer advocacy program can yield extremely positive results and can create a steady quarter-after-quarter improvement in NPS itself (Kane, 2010). Kane states that it should go without saying that if front-line employees have customer experience measures integrated into their compensation package, so too should all levels of their particular management.

Kane claims that organizations that are integrating customer feedback into their incentive systems are paving the way for the next decade, and these market leaders are increasingly committed to competing not just through their sales process but through the quality and effectiveness of their overall customer engagement. ABC should not include all the bonus compensation to the NPS and also needs to ensure that the expectations set upon the employees are clear and the bonus (motivation) is properly aligned with the effort required to achieve it. This would include an NPS improvement plan that is set up over the next 3-5 years with incremental improvement steps year over year. While there may be some initial ramp-up period for the technical support department to achieve or even exceed their bonus, they will be directly involved of first reaching and then maintaining it, which creates motivational components but also an accountability system for the staff ABC can measure them on.

A cost-benefit budget analysis is an evaluation of alternative proposals to help determine which option provides the highest value for the same (amount or effort of) investment. The Cost-benefit analysis involves a comparison of outcome, results of the proposed intervention, and costs, the value of all resources utilized to implement the proposed intervention (Levin, McEwan, Belfield, Bowden, & Shand, 2018).  Costs associated with option one are limited, as indicated previously.  They would include staff time to effectively communicate opportunity and access to the resources and educational programming provided by the university.  An estimate of the annual costs for human capital to manage outreach and education effort is $500. Potential outcomes or benefits with this option would include any program or activity toward which ABC could apply this estimated cost of options two or three instead.  The sum of $500 is of limited value as far as alternative opportunities for use. The return on investment would likely plateau around years four or five due to the average college student lifecycle and the limited impact from communicating the same information each year. Additionally, the benefits of education efforts that don’t take into account the unique experience and identity of the student-athlete and the Athletics community are somewhat limited. Table 1 demonstrates a ten year cost-benefit analysis for option one with ABC.

Year Cost Benefits Benefits-Cost
1 500 100 (400)
2 500 200 (300)
3 500 300 (200)
4 500 400 (100)
5 500 400 (100)
6 500 400 (100)
7 500 400 (100)
8 500 400 (100)
9 500 400 (100)
10 500 400 (100)
Sum 5000 3400 (1,600)

Table 1. Cost-benefit analysis of option one.

Discount Rate Costs Benefits Benefits – Costs Benefit to Cost Ratio
0.50% 4,865.21 3,297.13 (1,568.08) 0.68
1.00% 4,735.65 3,198.37 (1,537.28) 0.68
1.50% 4,611.09 3,103.54 (1,507.55) 0.67
2.00% 4,491.29 3,012.45 (1,478.84) 0.67
2.50% 4,376.03 2,924.92 (1,451.11) 0.67
3.00% 4,265.10 2,840.79 (1,424.32) 0.67
3.50% 4,158.30 2,759.89 (1,398.41) 0.66
4.00% 4,055.45 2,682.09 (1,373.36) 0.66
4.50% 3,956.36 2,607.23 (1,349.13) 0.66
5.00% 3,860.87 2,535.19 (1,325.68) 0.66
5.50% 3,768.81 2,465.84 (1,302.97) 0.65
6.00% 3,680.04 2,399.05 (1,280.99) 0.65
6.50% 3,594.42 2,334.73 (1,259.69) 0.65
7.00% 3,511.79 2,272.74 (1,239.05) 0.65
7.50% 3,432.04 2,213.00 (1,219.04) 0.64
8.00% 3,355.04 2,155.40 (1,199.64) 0.64
8.50% 3,280.67 2,099.86 (1,180.81) 0.64
9.00% 3,208.83 2,046.28 (1,162.55) 0.64
9.50% 3,139.40 1,994.58 (1,144.82) 0.64
10.00% 3,072.28 1,944.68 (1,127.60) 0.63

Table 2. Impact of alternative discount rates with option one.

Table 2 demonstrates the potential impact of alternative discount rates to the proposed option one.  The net present value is illustrated in the discounted value of benefits minus the discounted value of costs (Levin, McEwan, Belfield, Bowden, & Shand, 2018). For option one, the net present value remains negative for each of the discount rates.  The benefit to cost ratio column demonstrates that none of these discount rates would permit the benefits to exceed cost, as the ratio value never reaches or exceeds one.  Based on this analysis, it would appear that option one is likely not an ideal course of action to appropriately address the need for inclusive programming at UCI.

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Solution 2 Leadership by authority. Command them to do what the company demands.

A fairly simple yet often effective solution here may be management by delegation or simply put “command and control”. The senior executive team could set up the organization where everybody has to follow particular rules and objectives that leave little space for self- interpretation. Cultural and conventional differences will be disregard for the sake of following one process at all locations of ABC.  Setting up a department or an organization may have several advantages as the top-down management is the most common management style. Top-down management is also called autocratic leadership and provides for a process of upper management reaching independent conclusions that change or improve the workplace or business systems. These conclusions are then handed down to employees, who work to accomplish the goals on their own or with other employees. Some lower-level managers may have input into how to accomplish the end goal, but they may not have much authority to change policies without approval from the highest level of management. Making decisions from the top allows leaders to be clear on goals and expectations. It also gives employees more time to focus on work duties instead of attending meetings discussing the potential directions of the company. When a strong leader is at the forefront, managers can quickly and effectively take charge, assign tasks to teams or employees, and establish solid deadlines (Harper, 2015). Brandon Gaille (2018), lists multiple advantages to autocratic leadership styles in his article “11 Autocratic Leadership Advantages and Disadvantages”. Autocratic leadership gives companies a drive that they might not have otherwise. Top-down decisions are often successful when they are highly researched and truly evaluated by the leadership. All aspects must be taken into consideration, especially how a decision will affect employees. This is why autocratic leadership is especially beneficial to organizations with talented and knowledgeable leaders. Following are some of Gaille’s advantages of autocracy in leadership:

  • It allows for fast decisions to be made – When there is an autocratic leadership established within any organization, there are fewer levels of administration and thus redtape, that must be kept informed of each decision. There is also less feedback from various levels of management which must be processed before actual decisions are being executed. That is because there is one person and they are in charge of all arrangements. This improves the speed of decisions because only one person is weighing the pros and cons of each choice, not an entire team.
  • It often improves overall communication – When there are multiple levels of leadership within an organization, a command from the top often becomes like a childhood game of telephone, where the original message is often changes entirely over the course of the game. Each level of management can inadvertently (or deliberately) put their own spin on the communication come from the leadership. By the time the information reaches the front-line employees doing most of the work, the entire original message could be lost. Autocratic leadership eliminates this issue because the command goes straight to the workers involved.
  • It improves productivity – Autocratic leaders are often able to move information throughout an organization quickly, therefore, there are fewer delays in productivity. Employees are less likely to stop their projects or ask for later deadlines because they receive timely decisions and communication from their leadership. That creates a positive impact on the work environment, which leads to more accurate work and consistent production. It also creates a mechanism for less blame on the employees because they are simply executing an order.
  • It handles crisis situations effectively – Autocratic leaders are able to handle a crisis situation easily because they are the ones who are in charge. If there is a short-term problem, the expertise of the leader can be used to create a solution. For long-term issues, the autocratic leader can direct issues in specific ways with more efficiency than larger leadership teams, creating solutions that can quickly move an organization out of a troublesome state.
  • It reduces employee stress – Although an autocratic leader can have a challenging personality, most employees prefer to work in an environment where there are clear expectations set for them. Even employees who like to explore creative solutions do not mind an autocratic manager when they are allowed to suggest new ideas or offer an alternative decision based on their personal experience. At the end of the day, the autocratic leader is like the captain of a ship and every decision is a weight on their shoulders and they are ultimately responsible for what happens.
  • It counters team inexperience – If an autocratic leader is put in charge of an inexperienced team, or a newly assembled team, they will be able to get the job done by outlining specific instructions to follow. Employees can benefit from the competencies offered by their manager, replicating productivity by using the leader’s knowledge and experience as a workplace asset. When there is not enough time to learn something new or a project must be completed rapidly, this type of leadership may provide the best option.

ABC’s leadership team has a proven track record and thus could lay out the process and procedures and demand it to be enforced at all site locations. If employees do not follow the process, they get reprimanded. The Country Team Leads’ would receive clear expectation from the senior leadership team including consequences and key performance indicators. Basically, the established of measurable goals and objectives that each employee will be measured against. These should be the same for all employees and once set will be strictly enforced by the CTLs. The employees and CTL’s compensations will be directly tied to the rules set in place and the performance of the department. When cultural and conventional differences in interpretation of the process and procedures occur then the senior executive teams decide at will what should be done, and then that particular case will set precedence for future cases. There will be a disregard of these cultural differences when setting the rules, processes, and procedures and the employees will simply be forced to follow them. Over time the CTLs and the employees will be used to the new rules and they become easier to follow and thus a consistency in service delivery amongst all service units will be established. This is turn leads to less confusion on the customers’ side and also more consistency amongst all the country locations of ABC.

A cost-benefit analysis for option two includes a significant increase in costs as compared to option one.  These costs, ranging from an estimated $2000 annually to $10,000 annually, include workshops or training events, a web based education platform, an annual speaker event, as well as the human capital associated with administration and communication of this program for ABC.  Benefits associated with option two include social and economic benefits that present a challenge in establishing a dollar value.  Some examples include improved graduation rates for student-athletes, increases in employee retention within the athletics department, enhanced notoriety for ABC’s best practices and strategies to support inclusion in higher education campus communities.  Additional benefits may be associated with the improved graduation rates in the form of financial awards from the NCAA for establishing a single year academic progress score, demonstrating that student-athletes are remaining eligible for NCAA competition each term and they are persisting to graduation.

While establishing a projected benefits dollar amount over a ten year period, it is also important to recognize that should ABC choose to address the topic of inclusion exclusive of the resources and programming offered by the university there will likely be a negative backlash as a result of duplicated efforts.  Federal, state, and UC System requirements establish minimum standards for resources and programming that must be provided to students, staff, and faculty.  These are mandated on a variety of timelines, some based on the student’s year in school and only offered once, or mandatory for all employees on a two year cycle.  It can be challenging to enforce such education and programming, and should ABC choose to duplicate such efforts, there is a high likelihood of negative response resulting in a cap in potential beneficial outcomes.  Furthermore, similar to option one, there is an anticipated plateau of potential benefits once the first class of student-athletes, which make up the majority of the athletics department population, have received all of the four years of training and programming. Table 3 outlines the estimated costs and benefits of this option over a ten year period.

Year Costs Benefits Benefits – Costs
1 18,500 2,500 (16,000)
2 18,500 5,000 (13,500)
3 18,500 7,500 (11,000)
4 18,500 10,000 (8,500)
5 18,500 10,000 (8,500)
6 18,500 10,000 (8,500)
7 18,500 10,000 (8,500)
8 18,500 10,000 (8,500)
9 18,500 10,000 (8,500)
10 18,500 10,000 (8,500)
Sum 185,000 85,000 (100,000)

Table 3. Cost-benefit analysis of option two.

Discount Rate Costs Benefits Benefits – Costs Benefit to Cost Ratio
0.50% 180,012.62 82,428.19 (97,584.43) 0.46
1.00% 175,219.13 79,959.35 (95,259.79) 0.46
1.50% 170,610.41 77,588.58 (93,021.83) 0.45
2.00% 166,177.82 75,311.26 (90,866.56) 0.45
2.50% 161,913.18 73,123.00 (88,790.19) 0.45
3.00% 157,808.75 71,019.64 (86,789.11) 0.45
3.50% 153,857.20 68,997.27 (84,859.93) 0.45
4.00% 150,051.57 67,052.15 (82,999.42) 0.45
4.50% 146,385.29 65,180.76 (81,204.53) 0.45
5.00% 142,852.10 63,379.75 (79,472.35) 0.44
5.50% 139,446.08 61,645.96 (77,800.12) 0.44
6.00% 136,161.61 59,976.37 (76,185.24) 0.44
6.50% 132,993.36 58,368.13 (74,625.23) 0.44
7.00% 129,936.26 56,818.53 (73,117.73) 0.44
7.50% 126,985.50 55,325.00 (71,660.50) 0.44
8.00% 124,136.51 53,885.09 (70,251.41) 0.43
8.50% 121,384.94 52,496.49 (68,888.45) 0.43
9.00% 118,726.67 51,156.98 (67,569.68) 0.43
9.50% 116,157.76 49,864.48 (66,293.29) 0.43
10.00% 113,674.49 48,616.97 (65,057.52) 0.43

Table 4. Impact of alternative discount rates with option two.

Table 4 demonstrates the potential impact of alternative discount rates to the proposed option two.  For this proposal, the net present value remains negative for each of the discount rates.  The benefit to cost ratio column demonstrates that none of these discount rates would permit the benefits to exceed cost, as the ratio value never reaches or exceeds one.  Option two also presents a much greater loss overall than option one, demonstrating a scenario where doing almost nothing is a better choice than doing too much.  Based on this analysis, it would appear that option two is not a fiscally responsible course of action to appropriately address the need for inclusive programming at ABC.

Solution 3 De-centralizing by location

The solution to decentralize the business units seems like a fairly straight forward answer.

Decentralization is a type of organizational structure in which daily operations and decision-making responsibilities are delegated completely to the particular country sites. Decentralization offers several advantages, though relinquishing control may be difficult for a manager accustomed to making all the decisions (Joseph, 2019). Here, employees and Country Team Leads can be empowered by having more autonomy to make their own decisions, giving them a sense of importance and making them feel as if they have more input in the direction of the organization. It also allows them to make better use of the knowledge and experience they have gained and implement some of their own ideas. Additionally, a decentralized department is able to make decisions more quickly than one with a centralized structure. A manager often can make a decision without having to wait for it to go up a chain of command, allowing the organization to react quickly to situations where fast action can mean the difference between gaining and losing a customer. For a growing business, decentralization can facilitate the process of expansion. For example, if expansion results in opening a new business unit in a different geographic area, decentralization allows the new unit to operate as an independent entity, meaning it can react more easily to the specific needs of the area, such as deciding to sell products that appeal to the local market (Joseph, 2019).

Currently ABC has their Technical Support locations in Germany, United States, and Switzerland. ABC’s customers are also globally positioned and located so the geographic areas could be divided by a variety of factors such as simply the geographic area where each country sites takes a certain region, or by actual customer where e.g. Germany takes customer 1, 2, 3, the US. 4, 5, 6 et cetera. It can be further broken down by customer headquarter location, customer largest call volume/employee presence, time zones et cetera.  It would be fairly simply to open new decentralized operating units (locations) if the market demanded it and the same would count for shutting them down if economical or other factors would demand it of ABC.

The expenses related to option three are very similar to that of option two with respect to speaking arrangements, a web training platform, and in person workshops.  There will be less funding required for administration since it will involve a shared responsibility with campus, however some human capital will be necessary to determine what areas of inclusion are appropriately provided for by campus and what areas need support from ABC.  In total, annual costs are estimated slightly less than option two.

Benefits demonstrate a significant difference than the other options.  Initial benefits will be somewhat limited as time is necessary to truly gain traction from the shared resources and expertise of this department and campus collaboration. Based on a four to five year cohort, program specific benefits will likely plateau at this time. It is estimated that within five years, this program will have a significant impact on the retention and academic success of ABC.  For this reason, it is believed that a substantial benefit could be attainable.  The NCAA has established an “Academic Unit” program whereby Division I institutions may be able to qualify for substantial funding on an annual basis.  The requirements to qualify for this fund are based entirely on the academic performance of the student-athletes. Additionally, this fund is scheduled to increase on an annual basis as well, as it relates to the NCAA’s CBS contract.  This is a brand new program so long term estimates are largely conjecture.  An average of $75,000 annually from the NCAA was chosen for the purpose of this analysis.

Year Costs Benefits Benefits – Costs
1 17,750 5,000 (12,750)
2 17,750 7,500 (10,250)
3 17,750 10,000 (7,750)
4 17,750 12,500 (5,250)
5 17,750 60,000 42,250
6 17,750 75,000 57,250
7 17,750 100,000 82,250
8 17,750 100,000 82,250
9 17,750 100,000 82,250
10 17,750 100,000 82,250
Sum 177,500 570,000 392,500

Table 5. Cost-benefit analysis of option three.

Discount Rate Costs Benefits Benefits – Costs Benefit to Cost Ratio
0.50% 172,714.81


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