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Executive Interviews: Interview with Richard B Chase Building trust
February 2011 - By Dr. Nagendra V Chowdary

Richard B Chase
Richard B Chase
is considered the founder of
the field of Service Operations Management.

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  • One often successful way of building trust is to offer a service guarantee such as pioneered by FedEx and Domino's Pizza. What this does is to signal to the customer that the organization will go out of its way to fulfill the promise that is being made by a guarantee. When I was teaching at USC, I frequently offered the following service guarantee for my MBA service operations course: "If you are not satisfied with the quality of the course, I will refund the cost of your books and cases and $250 of your course fees." Here I showed the students that I was dedicated to providing an outstanding classroom experience. This had a marketing impact by increasing my enrollment from 30 students prior to it being

    offered to 85 afterward. The trust generated here was that I would do my best and that I would trust students to be honest in their evaluation. After all, no one would want to spend a semester in a lousy course, and I would certainly not want to pay out a large amount of money. (For the record, nobody requested a refund, even though they could collect the same after the final grades were posted. The only requirement was that students must tell me before the end of the semester if they were unhappy so I could make adjustments.)Recent research, by the way, suggests that having a guarantee is almost always better than no guarantee.

  • Can you give a few definitive and illustrative examples of best practices that have reigned in extraordinary trust, may be in workplaces, in customers, in citizenry, etc?
    In a recent MIT Sloan Management Review article, "Designing the Soft Side of Customer Service," (Fall 2010) my colleague, Sriram Dasu and I suggest that companies that are willing to "take the high road" can enhance trust. The reason is that in most service situations, the service provider has the upper hand in terms of power and/or information and the customer or client is at a disadvantage. We contend that trust increases significantly when the dominant party signals that it will not exploit the other's vulnerability. For example, when I returned a car to Hertz Rental Car in Hawaii, it had three quarters of a tank of gas even though I paid extra for a full tank option at the time I picked the car up. Essentially, I had paid twice for the car. Recognizing this, the agent who checked in the car credited my credit card account for the price of the remaining gas. He didn't have to do this, but his not taking advantage of the situation made me a dedicated customer of Hertz.

  • To what extent do you think the mandatory governance practices - corporate governance codes, internal audit processes, board structures, etc - would help fostering trusted companies, trusted employees?
    The most important thing other than having senior management model honesty and fairness is to modify reward systems so that they don't drive employees towards shoddy practices. It also helps to have regulators do their jobs of providing real oversight, which was not the case in the US financial crisis.

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