Management and Leadership Paper

MGT/330

Management and Leadership Paper
The Better Business Bureaus are private, nonprofit membership organizations that attempt to resolve consumer complaints with businesses. They also publish consumer protection warnings and histories of unresolved complaints against companies. BBB member companies must meet certain requirements and agree to work with their local bureaus to resolve consumer disputes; however, BBBs issue complaint reports on both members and nonmembers.
This is the main function of the BBB’s management and primary duties of the employees that work for the organization. This is a very simplistic function and will explore the effectiveness today as opposed to their humble beginnings.
The BBB started by the early 1920s, the Associated Advertising Clubs of the World took a major step toward the development of the modern BBB with its book Truth in Advertising — The Better Business Bureau Movement to Protect Reader Confidence. Back then, there were 32 BBB offices operating from coast to coast. Today, the bureaus number about 175, with dues-paying members in all walks of business handling some 11 million consumer questions yearly. (Unknown)
The structure of this nonprofit has a president/CEO, officers and, board of directors from the business community that serve on the board for an undetermined amount of time. The goal is serving good of the community and the business owners that subscribe to the service which has an annual fee. Stating the BBB’s mission is to be the leader in advancing marketplace trust. BBB accomplishes this mission by: * Creating a community of trustworthy businesses * Setting standards for marketplace trust * Encouraging and supporting best practices * Celebrating marketplace role models, and; * Denouncing substandard marketplace behavior
Seeing trust as a function of two primary factors – integrity and performance. This is expanded to the value system that include:
Excellence:
Strive to do our very best. Be accountable to the general public, our members, and to each other for everything we do. Commit to providing the highest quality service with excellence and consistency everywhere we operate.
Integrity:
Be honest and ethical in all of our business activities. Treat everyone with integrity, keeping our promises and learning from our mistakes. Have the courage to hold fast to our professional convictions.
Teamwork:
Communicate, cooperate and collaborate freely across organizational and territorial boundaries, and work as one team to fulfill our mission.
Trust:
Trust in our colleagues throughout the BBB system and in ourselves. Say what we mean and mean what we say. Communicate with honesty and candor.
Respect:
Treat everyone with respect and dignity, valuing individual and cultural differences. People are our fundamental asset. We will empower them to develop and use their talents and capabilities to the fullest.
(Better Business Bureau, 2010)
The corporate culture with such high standards and with an overseeing governing board is no guarantee for success as nonprofits also have to make a profit. Conflicting interests have a very fine line which the BBB tries to balance by not damaging the paying members reputations with bad reports attempting to keep them in step with the mission statements.
The BBB has experienced missteps in its past with the closure of the Miami-Dade office in 1997. The bureau, which served Dade and Broward counties and an area extending west to Fort Myers, closed July 25 after being evicted from its NW 57th Avenue office for $22,000 in unpaid rent. Four days later the national council booted the bureau from its ranks, citing poor management and financial insolvency.
The bureau was at least $416,000 in debt, with the largest chunk of it, $236,461, owed to former chief executive Jim Stanley for unpaid salary and loans to cover payroll and bills.
The bureau's 15,000 reports on companies remain in limbo.

Read more: Dade chambers move to resuscitate ruined BBB - South Florida Business Journal

This business model has reached across country borders to Canada using a service model designed with the United States benchmarks. The Canadian Council of Better Business Bureaus(CCBBB), established in June of 1966, is the coordinating and licensing body for fourteen Canadian BBBs that serve communities and marketplaces across Canada. (www.bbb.org/canada/about-us, 2010)
The reason for additional countries not subscribing to BBB is a cultural issue as well as economic. The chapters are managed and run locally with guidelines relating to the north american mentality in mind. This service could be adopted and modified to make it applicable to the businesses and consumers. Overall this disconnect may well be to other countries probably aren’t as litigious as the United States as a whole. The BBB has many strategies that are in place to make it adept with their clearly-stated goals, when you are most likely to turn to the BBB as a consumer. The two occasions when this is most likely: (1) When you want to find out more about the reputation of a company before doing business with them. (2) When you have done business with a company and would like to file a complaint against them. Consumers are provided with access to a "Reliability Report". This report includes the following key elements: (a) Whether or not the company is BBB accredited, (b) The BBB rating Contact information and basic description of business, (c) A count of the number of complaints consumers have filed with the BBB, including basic categorization and status of complaints, (d) Any known government actions or advertising reviews.Companies with various ratings, the scoring is a follows, A+ (the best rating) to F (the worst rating). Describing this system as representing the degree of confidence they have in the business operating in a trustworthy manner and making "good faith" efforts to resolve customer complaints. They add the disclaimer,however, that "The rating is not a guarantee of a business' reliability or performance". The BBB is secretive about the exact calculation of the rating, citing "a proprietary formula", but they provide the categories that are assessed and the range of points that can be awarded for each category.
It is important to note at this point that, unlike quality standards such as ISO9000 and CMM (Capability Maturity Model), the BBB standard is assessed purely based on information the company provides and the company is only asked for descriptive information, such as location, description of services, licensing information, number of employees, etc. Nobody from the BBB visits companies that are accredited and the BBB does not require the business to document how it operates; to operate consistently; to operate in accordance with its own procedures; to be well managed; or to be financially stable. None of these areas are verified by BBB and none are included in the categories that comprise the rating system. I was told by a BBB representative that "The BBB relies on the voluntary cooperation of businesses" - hence the above disclaimer!
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1 of 3 7/25/2010 12:34 AM
The rating system is based on scoring a maximum of 90 points. The management of complaints (filed with the BBB) covers between -40 and 73 points of this scale. This is clearly the core of the rating system. 41 points of this spread are based on "unanswered complaints". This refers to complaints where the business has not answered the BBB, who are following up on the customer's complaint. The business does not have to resolve the complaint; just answer the BBB. There are a range of other complaint factors, including severity of complaints, complaint volume, etc. that are clearly subjective and also assessed on the basis of communication between the business and the BBB. There is an interesting quirk to the scoring system that does not allow any business to get the A+ rating unless they are BBB accredited, i.e. they are paying business members of the BBB community. It is a common misconception that a non-profit organization is not driven by financial goals. Although not allowed to distribute profit to individuals or shareholders, non-profit organizations operate similar to "for-profit" organizations in that they may grow their organizations or increase their employee and executive compensation with surplus earnings. The BBB clearly understands where its revenue comes from. As well as making payments to the BBB, an accredited company undergoes a little more scrutiny from the BBB than one that is not accredited and may be asked to provide further information to demonstrate proper licensing and accuracy of financial status, for example. The BBB description of the accreditation standards sounds wonderful, describing at length the standards of trust the BBB expects, including honesty, integrity, transparencymand a separate code of advertising. Unfortunately, adherence to the standard is not monitored or enforced by the BBB. Businesses must agree to meet and abide by the BBB standards, but without checks and balances it is a self-regulating honor system. If a company is genuinely good and honest, this works fine. However, if a company is untrustworthy in the first place, the BBB system does not help weed out these companies.
The current BBB rating system would make more sense if they correctly measured the number of complaints and only changed their status to "resolved" when the originating complainant agrees that it is resolved. Some complaints do not get recorded in the numbers because they are not considered issues that the BBB has power to act upon.
The BBB may respond to your complaint with something like "We apologize we cannot assist you on this occasion as the information provided is beyond our scope of authority". In these cases, the complaint just dies with the BBB and the business can retain its A+ rating.
It seems many people have had success using the BBB as an arbitrator in getting refunds from businesses. In these types of cases, where the consumer has been unfairly charged or misled over a service in some way, the BBB will step in and bring about a resolution without the need for legal action. This situation helps the business much more than the consumer because in these cases the situation is clear cut and the consumer could have won in a legal battle, which would have caused more damage to the business.
If you have a complaint that is not financial in nature, maybe reporting a lack of transparency, failure to follow theBBB's code of advertising or not adhering to warranty terms, the BBB is likely to tell you they cannot help. I was told by a BBB representative that "The BBB does not process complaints regarding disputes concerning a company's policy and procedures", even if those same policies and procedures (or lack of) relate directly to the code of standards that the BBB has accredited the business for, apparently.
Even if the BBB decided that there was sufficient evidence of a consistent lack of ethics within a company with regard to their advertising standards and honesty, only a maximum of 4 of the 90 points on their rating scale would be affected. They could only remove these 4 points by denying accreditation, which would also mean a loss of revenue to the BBB. It is clearly much easier to state that complaints in this area are beyond their scope of authority.
By this stage you are probably thinking that I am opposed to the BBB. I am certainly not opposed to what the BBB tries to do. I believe their goals (as stated) are honorable and helpful. However, I do not believe their execution is effective. I think they need to either amend (and simplify) their stated mission or make changes to their rating system and process of monitoring businesses and handling complaints to better support their mission.
There are many criticisms of the BBB to be found around the web, often with specific anecdotes of why the BBB was 'useless' in a particular case. Often those criticisms point to the BBB having a 'lack of teeth' when dealing with the businesses. I do not believe this is the problem. If the BBB was truly respected as an accurate measure of the quality and integrity of businesses, consumers would rely on the BBB more and businesses would be desperate to obtain and improve their BBB ratings. If the BBB was to then act with the integrity it espouses, it would 'have teeth'; it would be able to fairly explain to a business what must be changed in order to merit a higher rating or maintain a current rating. Today, by failing to push businesses to operate to the standards the BBB asks for, consumers lose faith in the BBB and their influence over businesses declines, leading to further misleading ratings and further dissatisfied consumers.
I believe if the BBB is to maintain its current mission statement, values and standards; it needs to devise a rating system capable of measuring a business against these values and standards.
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2 of 3 7/25/2010 12:34 AM
Alternatively, the BBB could simply acknowledge that it does not have the depth and breadth to meet its current mission statement and accept that it will focus on being a very good B2C arbitrator, representing the consumer in financial disputes with registered businesses and helping provide mutually satisfactory resolutions without necessitating legal action.
In conclusion, as a consumer the BBB can probably help you resolve obvious financial-related complaints without resorting to legal action, but are of little real benefit in assessing the integrity of companies any more than superpages.com, Amazon or any of the other online sources of company/product information and review.
From the perspective of a business, the BBB can remove much of the burden of dealing with dissatisfied customers, reduce the likelihood of legal disputes with customers and provide marketing benefit through the use of their logo on your website and other marketing materials.
(Laws, 2010)
Robert Laws sums up the BBB in a very educated manner unmatched by many that have attempted prior. The BBB is a poor example to use as an international company and the management is not led by an individual’s but by many in hundreds of chapters. Singling out a figurehead that is more notable would enable a diagnosis of management style and leadership due to ample information published.
Our business had a BBB rating but that meant nothing when the Mortgage industry collapsed as we were all branded thieves very quickly no matter of the intensions. Free services such as Angies List are probably more effective and have a more streamlined focus on how to market to the public. The BBB site itself offers very modest amounts of information on how they can be utilized by the comsumer as they have the problem of staying in business or holding business feet to the fire that violate their lofty standards.
Better Business Bureau. (2010). Vision, Mission and Values. Retrieved July 26, 2010, from BBB website: www.bbb.org
Laws, R. (2010). What the Better Business Bureau can do for you . Retrieved July 26, 2010, from Helium: http://www.helium.com/items/1576705-what-the-better-business-bureau-can-do-for-you
Unknown. (n.d.). Reference for Business. Retrieved July 26, 2010, from Reference for Business: http://www.referenceforbusiness.com/encyclopedia/Assem-Braz/index.html www.bbb.org/canada/about-us. (2010). Retrieved July 26, 2010, from BBB Canada: http://www.bbb.org/canada/about-us/