“We don’t do that anymore.” This is what a hotel desk clerk told me when I asked to charge some bottles of water to my guest room account. One of the hotel’s amenities was a lobby kiosk which offered takeaway coffee, sundries, packaged snacks and bottled beverages for sale. Being unable to charge to the room was a slight pain in the neck because, like many other guests, I had come down to the lobby with no wallet or cash.
Contributed by David Richey, Metis, San Francisco
“Why is that?” I asked. The clerk explained that a couple of months ago some kids charged a few snacks and candy to their room without their parent’s permission. The parents complained.
The manager’s decision was to block all room charges… forever… for everyone.
The manager didn’t want to deal with the issue of unauthorized charges, so he elected to inconvenience thousands of future guests. Here are the downstream results:
- This occurred during the COVID crisis when most businesspeople were exploring contactless services. Requiring cash payment changed the interaction from no contact (room charge) to greater contact (exchange of currency and coins).
- Each interaction took additional process time from the busy desk clerk, who usually manned the desk alone. A room charge requires a couple of keystrokes on the computer, as opposed to cash collection and change-making
- It placed clerks in the awkward position of explaining the policy over and over again to irritated customers
- It may have decreased sales on the occasions when the guest might have bought more items than they happened to have cash in their pocket. What about recent foreign arrivals who only have euros or yen? Does the clerk now have to do a foreign exchange?
Why do some managers make such incredibly flawed decisions?
With this example, it’s easy to see a few components of terrible decision-making.
1. The belief that every problem has an administrative or policy solution. If your only tool is a hammer, then every problem looks like a nail. As managers, we like permanent, guaranteed solutions so we don’t have to deal with the same issue repeatedly. Strict policies do that. The only problem is that they are incredibly blunt instruments laden with unintended consequences.
2. Distance between the maker of the decision and the employees who must implement it. Writing up a new policy in the executive or accounting office is a sanitized affair. It’s clean, simple, and the can has been kicked down the road to other departments. It’s easy for corner-office dwellers to dismiss the aggravation and lost time suffered by people on the front line.
3. Flawed risk-reward analysis. In the instance above, even if the “unauthorized charge” scenario happened once a month, it would probably amount to less than a hundred bucks a year in customer refunds. On the other hand, beyond the cost of labor inefficiency, some sales were surely lost from customers who didn’t have much cash in their pockets, or who didn’t want to trudge back and forth to their room to fetch their wallet… just too much trouble for that candy bar or takeaway coffee. And perhaps some customers might choose a different hotel next time just because they were rather annoyed (like me). A single lost room night would more than pay for a year of customer refunds.
Of course, at the heart of this decision lies the fact that the manager appears not to care much about their own customers. The manager who made this decision probably thought it was a good move. After all, the problem didn’t reoccur, did it? And the thousands of dollars that might be lost? Well, no one will ever count it.