‘The customer is always right,” a phrase attributed to Marshall Field who reportedly said it when interviewed for the Boston Herald in 1905[7]. But if he saw how people use the phrase today, would he still agree with it? Should Brad from the bike shop agree with it when his own manager said it? The customer wants no aesthetic changes to the bike, but the brake cables are faulty. Brad knows he can correct the problem. Should he fix it though? What would the three theories of corporate social responsibility say to do? How does trust come into play? How does the Ford Pinto relate to Brad’s story?
Milton Friedman was a proprietor of the Economic Model of CSR. This model states that the social responsibility of managers within a firm have a duty simply to pursue profits within the law. Under this model Brad would likely not inform the customer of the defect in the brake cables. His manager wants him to get the job done quickly and efficiently so they can get done with this project and continue to the next for more profits. Under this model if a person wants to do any sort of voluntary action, they must do it outside of the firm. If Brad has a strong incantation to fix this bike, he should call or e-mail the customer on his own time and tell him of the problem. He can also volunteer to fix it on his own time and maybe have the customer pay for the parts that it would take to upgrade the brakes. Ultimately this may make Brad look like a good bike repairman and the customer may continue to go to Brad. Hopefully the customer would learn their lesson and maybe talk to a professional first before making demands to fix a bike.
The next model of CSR is based on the works of R. Edward Freeman, called the stakeholder model. The stakeholder model is based on the statement that a firm’s responsibility is to its stakeholders. At first glance, Brad’s situation only appears to have two stakeholders- Brad and the Customer. However, there are many more hidden stakeholders. One hidden stakeholder is the company owner. When Brad informs the customer of the potential dangers of the low-quality brakes the company owner looks informed by proxy. Other company workers are hidden stakeholders because if Brad doesn’t inform the customer of the problem, the other employees may also look deceitful by proxy. Next, potential customers are hidden stakeholders.
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If Brad informs the customer of the brakes, more customers may come to Brad and the bike shop for his expert opinions on their bikes. When Brad doesn’t inform the customer, other customers may become distrustful of the firm and may not come to seek the firm’s services. The last hidden stakeholder is the government. In the case where Brad does not inform the customer of the low-quality brakes the brakes may malfunction in a dangerous situation. The customer may be harmed by Brad’s negligence and choose to sue, which uses governmental courts. However, using this model Brad would likely ignore his managers statement and try to fix the bike situation with the customer.
When Brad informs the customer of the problem with the bike, he should handle this situation very carefully in order not to upset the customer. There are several steps he should take in order to do that. The first is for Brad to communicate to the customer as clearly and effectively as he can. Brad’s customer is entitled to their opinions on the bike’s repairs, so Brad should not tell the customer that they are wrong from the beginning. Brad should try to point out the customers good opinions first in order to get the customer to let their guard down. Next, Brad should voice his concerns with the bike’s brake design to the customer. He should do this slowly but strongly in order to get his point across. Lastly, after he does this, he needs to back up his concerns with actual evidence. Brad should go online and come up with some numbers about the low-quality material that the brakes are made from.
The numbers should support his expert opinion that the low-quality material is not a suitable material to be used for bike brakes. If the customer is particularly obstinate, he could find videos of similar bikes with low quality material being used and the situations that arise when the brake cables snap. The videos should portray the dangerousness of the low-quality material being used for brakes. The customer should understand Brad’s desire to put a better-quality material in for the brakes after this process. Brad needs to be firm with the customer during this process. Brad should remind the customer that he is the expert when it comes to bikes and because of this the customer should trust his opinions.
Lastly, there is the integrative model. The integrative model describes that a firm’s social responsibilities are integrated into their mission statement and the overall purpose of the firm. A firm shouldn’t have to worry about profits when using this model because profits come from doing good in the community. When a firm helps people within a community not only does it generate profits, its also helping the firm with its brand image and reputation. Using this model Brad would definitely tell the customer about the problem with the low-quality material being used in the bike. He would do this because it would help spread good within a community and help the bike shop gain a respectable reputation.
In order for the customer to truly change their mind, they need to trust Brad. The dictionary defines trust as “firm belief in the reliability, truth, ability, or strength of someone or something.” Trust can play a big role in any business situation. Trust is a glue that holds businesses together. Trust leads to a stronger reputation. When a company has a good reputation built on trust, customers aren’t only going to become repeat customers, they are going to tell their social circle about the good service they received. More customers mean more revenues generated for the company.
Trust isn’t only important for business to customer relationships. Employer to employee relationships are also affected by trust. The more trust an employee has for their employer, the more likely they are to stay at the company. Most customers are not necessarily trusting the company but the employees that they deal with. Customers who build relationships with employees are happy when employees stay with the company for long periods of time.
If Brad chooses to tell the customer that the bike has a serious design flaw, the customer may be mad at first but ultimately Brad is building trust with that customer. This is because Brad is trying to keep the customer safe, potentially risking his job in the process. Brad’s manager is not being trustworthy in this case. His manager wants Brad to get the bike done possibly only to get it out of the shop quickly, so they can start working on the next project. This is not a way to build trust with the customer. The manager is choosing profits over trust, which is exactly what Lee Iacocca tried to do in the 1970’s.
Lee Iacocca was the president of Ford back in the 1970’s when the Pinto program came into fruition. Ford was trying to compete with Japanese car companies which produced small, light and fuel-efficient cars that consumers wanted at the time. Iacocca was desperate enough to compete that he forced the project through quickly and demanded almost impossible designs. He demanded the Pinto be less than 2000 pounds and cost no more than $2000, and wanted the Pinto designed and built within 25 months. As time went on and the Pinto became closer and closer to being done, a problem was discovered with the fuel tank design.
The design had placed the fuel tank new the real axle of the car and was easily puncturable. However, because Iacocca wanted the Pinto out on the sales floor as soon as possible, he ignored the design flaw and green-lighted the Pinto to be sold across the country. In the first year of its life, the Pinto was quite popular. Consumers liked its small stature and great fuel economy. Over 328,275 cars were sold. However, the Pinto’s popularity was short lived. News started spreading about the Pinto and its faulty fuel tank. Any sort of rear-end collision caused the Pinto to leak out all its fuel, and in some instances, the car even exploded. Over 900 people were killed or mutilated because Iacocca was in a hurry to make some profits.
Many people never imagined that something like this could happen. Why? Because they well and truly trusted Ford. Consumers had put their safety in Ford’s hands for years until that point. Many people in the United States owned Ford vehicles and didn’t explode when they drove those vehicles. Then, after a particularly bad incident involving the Pinto, Ford was taken to court on charges of homicide. They were ultimately convicted of the crime, which was almost unheard of. Ford’s reputation at that time was in tatters, and it took many years for them to build consumers trust once again.
Brad’s case is similar to Ford’s. Ford could have spent a mere $11 extra to prevent such disasters from happening. [5] If Brad fixed the breaks without using a better material, he is no better than Ford. The customer could potentially be severely hurt and even killed if the low-quality breaks fail at a crucial moment. By just spending a little extra time and effort talking to the customer about the problem and fixing the breaks Brad could prevent this disaster from happening.
So, what is Brad’s duty in this situation? I believe that Brad should spend some time talking to the customer about the design flaw. If the customer chooses to listen to Brad, then he can fix the bike with little extra effort. Doing this ultimately will benefit the company due to Brad building trust with the company’s customer base. More trust equals more customers, and more customers means more profits! Lastly, in my opinion, the customer is almost never right.
