Costs vs Services in the Company’s Focus

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The contemporary world is highly competitive at different levels, i.e. individual, social, business, political, etc. Competitiveness in the business world is a topic of heated debate at present. Bolman and Deal (2008) note that organizations need people to prosper and people need companies to get the necessary goods and services. The relationship between organizations and people is seen as one of the core elements of organizational success.

Therefore, it is commonly known that organizations strive to provide better services at lower prices to turn potential customers into loyal clients. However, organizations often focus on the cost rather than the services provided. Thus, companies are facing loads of financial constraints due to recent global financial crises and increasing competition. They seek for options to reduce costs to maintain their profits. Admittedly, this can seem a logical and rather simple way to save money and get more profit. However, the focus on costs often leads to deterioration of services. For instance, Chrysler endured severe financial constraints in the 1970s and they decided to reduce costs (Bolman & Deal, 2008). They did not invest in the employee’s training and they even decided to reduce salaries. This led to the deterioration of services provided and they nearly went bankrupt.

Chrysler is not the only company that focused on costs at a certain period. Companies resort to this way in several ways. For instance, organizations tend to reduce benefits for employees. They also often reduce salaries or introduce fines. However, one of the most common and dangerous ways to focus on costs is to reduce investment into the employees’ training. Thus, managers consider training to be a superfluous perk that can be skipped at the period of financial problems (Kotter & Cohen, 2002). Managers often ignore the importance of training and fail to notice when problems start.

Employees who do not get training often lack essential skills to address clients’ needs. Employees fail to develop proper relations with clients. They can even become unable to provide high-quality services. This is one of the biggest mistakes some companies make. Managers do not invest in staff development. At the same time, organizations provide a variety of services and some of these services change and transform. It is but natural that employees should understand the peculiarities of the new services and be able to provide them to the customers. Nonetheless, lack of training makes it impossible.

This is one of the reasons why customers would not buy from the company a second time. A customer who got inadequate service would try to go to another place to get a better service. Luckily for the customer, there are plenty of companies that offer similar services. There is one more reason why customers do not become loyal to an organization. They can get poor treatment. Poorly-trained employees often lack the necessary communication skills. Managers often fail to understand the importance of investing in this area and this is why customers never return (Kotter & Cohen, 2002). This was the case with the company Chrysler in the 1970s.

Of course, there is another potential threat to gaining loyal customers. Increasing prices can make the customers look for another provider of the same services at lower prices. Admittedly, people are also facing a lot of financial problems and try to minimize their expenses.

However, managers should bear in mind that this is only the third reason for ‘losing’ customers. People are ready to pay a little more money if they know that they can get high-quality services and they get appropriate treatment. People always try to remain on the safe side and they start looking for something better if they are unsatisfied with something.

Therefore, managers should take into account the threats the focus on costs poses. Admittedly, people, as well as organizations, are often unprepared for the change (Bolman & Deal, 2008). However, it is possible to consider some creative ways to get a service focus into an organization’s vision. In the first place, it is important to make sure the company’s leaders are well-informed and understand the importance of taking into account all possible details. Bolman and Deal (2008) provide several examples when ignorant leaders (being high-profile professionals in business) let their organizations deteriorate.

To understand whether a leader is ready to implement the change, it is possible to test this person with the help of the Emotional Intelligence Test (Anonymous, 2009). This test reveals emotional intelligence, i.e. the ability to become an inspiring leader who takes into account every meaningful detail. Admittedly, the leader should understand the importance of the focus on the service.

The leader can employ several options to change the organization’s vision. It is possible to use the eight-step process (Kotter & Cohen, 2002). This process includes creating the need for the change, creating a team of inspirational employees, create the vision, communicate the vision, empower employees, create short-term victories, maintain momentum and, finally, ensure the new culture persists. These steps can help the organization change the vision.

It is also possible to use certain kinds of research. Thus, customers can be asked to fill in a brief questionnaire where their expectations and needs will be reflected. Admittedly, the quality of service will be one of the customers’ priorities. Each employee, as well as management, will understand the importance of service. Employees should also be aware of the services provided by the organization’s competitors. This will encourage employees to focus on the services they provide.

It is also possible to run certain workshops where trainers will show that service is before cost. For instance, role-play activities can be exploited. Employees can sell to each other and buy from each other. They will be made to notice their focus on service. Such activities will inspire employees to be more conscious about the service. Thus, each employee will try to contribute to the development of services provided. It is crucial to make employees aware of the new vision as it can help change the organization’s vision.

In conclusion, it is possible to note that many organizations make similar mistakes as they focus on costs rather than the services provided. Organizations tend to reduce costs, which often leads to deterioration of the services provided. This, in its turn, makes customers look for better offers. Therefore, organizations should change their focus to remain competitive. Inspirational and well-informed leaders can help organizations change the vision. Of course, one of the most effective ways to change the vision is to make employees aware of the importance of the change and to inspire them to focus on services and development.

Reference List

Anonymous. (2009). Institute for health and human potential: Emotional intelligence test. Web.

Bolman, L. G. & Deal, T. E. (2008). Reframing organizations: Artistry, choice, and leadership. San Francisco, CA: Jossey-Bass.

Kotter, J. P. & Cohen, D. S. (2002). The heart of change: Real-life stories of how people change their organizations. Boston, MA: Harvard Business School Press.

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Costs vs Services in the Company’s Focus

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