How easy it is for Airlines to transplant their service culture and values around the world?

20110709_bbp001I recently read a fairly esoteric research piece by Brouthers, Brouthers and Werner (BBW 2008) from the Journal of Management from 2008 called Resource Based Advantages in an International Context? for a research project I am working on with colleagues in Trieste and it got me thinking about how international airlines manage to maintain a consistent service culture across many countries with differing service cultures and values.

BBW 2008 argue that resources or capabilities that are valuable in one market environment (or country) may not be necessarily easy to transfer and maintain their value in another market (or country) because the basis for the underlying value of those capabilities are the national institutions and cultures of the home country. So for example, efficiency in online check-in may work in one country compared to another because access to IT infrastructure may be better in the first country.

So I got thinking about how service excellence is deeply embedded in a national set of institutions and national culture and so even if airlines train their staff in their particular organizational service culture, the absence of a flourishing service culture in the country where they operate will trump their internal training efforts. In other words, are the key sources of competitive advantage for an airline such as service quality transferable across borders when the basis of service quality is a broader national culture of service excellence?

How do we define service excellence? Of course this is a partially subjective construct – everyone has a different view on what is excellent. However, there are some common vectors that contribute to service excellence:

  • The consistent delivery of a valuable experience irrespective of who operates the front lines of the delivery process.
  • It is also the systematic output of a service model that is designed explicitly to produce it.

Service excellence cannot be haphazard i.e. that the customer is lucky enough to have a particularly committed employee on a particular day. This is clearly not service excellence.

So if we define service excellence this way, our questions become

  • What impediments may make it more difficult for airlines to to provide a consistent and systematic service across borders?
  • Does variation in institutions and cultural values regarding the importance of service  excellence impact these efforts?
  • What can airlines do to minimize this impact?
  • Are there trade-offs between cost control (through outsourcing) and service excellence?

As an aside, these very real problems also cause dissonance for the marketing message for airlines. If an airline is claiming that ‘wherever you go’ there is a consistent service level but passenger experience suggests that this is quite the opposite, it directly and starkly undermines the value proposition.

The single biggest impediment to service excellence across borders is the variance in value attached to  service in different countries by people. We all know that some cultures are more service oriented than others – which is a result itself of a complex set of historical, economic and national cultural characteristics. The most effective way to illustrate this is by way of example. East European countries have been historically underdeveloped economically and then suffered through almost half a century of central planning. Before mass industrialisation during communism, many of the societies were agrarian where the demand for sophisticated experience based services were not available to the majority of the population. Fast forward to the 21st century where more than 60-70% of these economies are service based yet cultural attitudes towards serving the customer remain largely based on a combination of pre-industrial agrarian and “egalitarian” principles established through central planning. Absent from these principles were the idea that services should provide valuable and profitable experiences for the consumer and supplier respectively.

The result is that when an airline with a track record of providing service excellence enters a market characterised by an absence of history of service excellence, inconsistencies emerge in the service experience.

For airlines the pressure points typically occur at the interface of ground services and onboard service. While the flight attendants typically are more imbued with the values of service excellence brought by the airline (often through intensive training efforts), the ground services are either outsourced to a local partner (not sharing the same values as the airline) or the staff wearing the uniform of the airline are neither incentivised nor trained to replicate service quality onboard. Again by way of example, a customer of an airline is not the customer of a ground services company contracted to run a check-in facility. The outsourcing partner only indirectly responds to pressures for service excellence. It is highly unlikely that an airline will cancel a service contract on the basis of customer complaints about poor service on the ground. After all, the main reason why airlines outsource is largely for cost control.

So the ideal situation for an airline would be where the country where they are operating would have similar service cultures and institutions embedded in their national culture and institutions. The worst case would be where there is a significant (negative) difference between the service culture of the airline and the country where they are operating.

When we think about airlines in the world today, we often identify Singapore Airlines, Qatar Airways and Emirates as the benchmark for service quality and excellence. In fact the Skytrax annual passenger surveys consistently place these airlines at the top when it comes to service quality. Without doubt the excellence they achieve is driven by their intensive training efforts of their staff. Yet, I also believe that the national origins of the staff onboard also have a profound impact. The fact that these three airlines employee a large number of Asian staff on board helps them achieve their service proposition. Asian cultures are famous for their dedication to serving customers and in this way, these airlines can reinforce their organisational commitment to service excellence by matching it with employees whose national culture and practices also promote service excellence.

So what are the implications for airline management?

  • In countries that have a lack of service culture embedded in the national institutions and culture, airlines have to intensively train their staff to overcome this void. This applies especially to ground services – I have frequently observed huge variations in the excellence of ground services compared to onboard mainly because the ground staff comes from national cultures who don’t value service compared to the lufthansa trained flight attendants (think checking in in Budapest for a flight to Frankfurt).
  • If airline management is committed to service excellence, they should demonstrate that commitment by minimising outsourcing in customer facing service environments – especially in countries that lack a sophisticated service culture. I don’t know how many times I have boarded a flight in East Europe and former USSR countries and been confronted with rude, unhelpful and unorganized (sometimes outsourced) ground services. I contrast that with check in experience in Shanghai and Bangkok.
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