Tuesday, February 14, 2012

Employees Are Giving Away the Store In Freebies

Is the phrase "Oh don't worry, it's on me" silently hurting many a corporate bottom line? Yes, according to a new study.

Researchers at Michigan State University and Florida State University surveyed roughly 800 employees working in a variety of customer service fields and found upwards of three-fourths (70%) are giving away the proverbial store by shelling out millions and millions annually in sweetheart deals (a.k.a. "It's on the house, you're so welcome!") the boss doesn't know anything about. Shh! A full 67% of employees in the survey said they have "sweethearted" a customer within the last eight weeks hoping for something in return (for themselves and not so much the company, if it's not obvious). You scratch my back and I'll scratch yours.

Other studies have estimated that 40% of the $200 billion lost to employee theft each year is due to sweetheart deals. Take it away, Red Hot Chili Peppers!

Now you'd almost expect this behavior from restaurant employees hoping for bigger tips and repeat business, but it turns out that insurance agents, for example, are also into sweethearting. I'll trade you a discount on your policy for a hotel upgrade, or something like that? The possibilities are endless, really. According to the study's press release:
"I was surprised by how pervasive this behavior was across a wide range of service industries," [MSU Marketing Professor Clay] Voorhees said. "I fully expected to see this behavior in bars and restaurants, but I was surprised at how prevalent it was in industries like retail, sports and recreation, and even with insurance claims."

The researchers say employers can stem a lot of these deals through better hiring processes -- e.g., questionnaires that assess risk-taking behaviors, how far applicants tend to go in seeking social acceptance, and so forth.

Before managers start clamping down on their freewheeling staffs, however, they might want to think about the downsides of doing so. If employees are no longer able to make decisions in the moment when dealing with customers and have to run EVERY SINGLE THING past a manager...well, you don't need me to tell you what a productivity and morale drain that would be for everyone involved. The line forms to the right, and please don't crowd.

No, employees need a little autonomy to make decisions on the job because no one likes working for a freaked-out micromanager. Managers are better off setting ground rules up front and rehashing the no-nos of this business practice: What is allowed, what is not allowed, what can get you fired, and how excessive sweethearting can damage the bottom line (and hurt jobs). Keeping better track of bottom line expenditures helps too, of course.

Of course, hostile employees who hate their co-workers they might not care what management says. Giving out freebies might finally get my annoying co-workers fired? Well then, it's totally on me! Or maybe the boss is the biggest sweetheart wheeler-dealer in the office and doesn't exactly set a good example. I don't know where I'm going with this post any more. Happy Valentine's Day.

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