Tuesday, October 16, 2007

Firms Rise to their BoD's Level of Incompetence

by Ken Houghton

Via Felix, a piece in New York magazine on Citigroup Chair Chuck Prince gives us this gem:
As for the board, well, it will support Prince, as they say, until it doesn’t. It’s a board, it should be noted, that gave Prince a 13 percent pay raise, to $26 million, in 2006, a year during which Citi’s profits fell 12 percent and the company lost market share on several fronts. Says one former executive, “A different board would have thrown Sandy out. So it’s kind of strange to expect it would do something with Chuck. And many of them have faced the same issues as Chuck. Dick Parsons [of Time Warner] had Carl Icahn. Alain Belda [of Alcoa] has been criticized. And everybody knows what Mike Armstrong did to AT&T. With the exception of George David [of United Technologies], who is a rock star, none of them have distinguished themselves of late. It’s hard to imagine this group will take any action.”

One of my B-School professors, Jeff Netter, recently wrote a Working Paper in which he found that Directors are being compensated more generously in the post-SOX world. Unfortunately, this doesn't mean that their demonstrated governance abilities have improved.

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A Holiday Customer Disservice story

Thinking about buying one of those big rear projection flat screen TVs Best Buy has on sale for Christmas? You might want to think twice before you get rid of your old single tube set.

When Best Buy first opened in Baton Rouge 5 years ago, Mari and Hector Presedo , who needed a new sound system, saw an ad for offering a Sony home theater system for roughly $400 and decided to give the mega store a try. They walked out with the sound system, a brand new Toshiba HD 50 inch flat screen which cost $2053.93, the cable surge protector for 71.99 and a four year warranty protection for $299.99, plus the home theater system. Not including the sound system, the sale totaled $2679.23.

Over the years, the Presedos, like many Baton Rouge families have spent thousands of dollars at the electronics giant, but for now - in this season which is turning out to be not so jolly, it’s all about the TV.
The TV protection plan ran out in 2006 and the Presedos chose not to renew the plan because they thought if something happened at that point, they could simply pay for the repairs.

Fast forward to early October 2007 and the picture on the Toshiba 50 inch is beginning to look wobbly at the top of the screen. Because one can find the answer to almost anything online, they Googled the model number and checked the forums for the symptoms. Apparently, it was a well documented symptom. The faulty part appeared to be the PCB hyper-module part # 23148024. There were also numerous posts on how to replace the faulty capacitors yourself, since the part appeared to be discontinued. Since neither of the Presedos are television specialists, they thought it best to have their diagnosis confirmed by the pros, so they called Best Buy. Best Buy scheduled someone to come out a week and half later.

On October 17, 2007, Best Buy service tech #1815 came out and confirmed their diagnosis. He keyed something into his laptop and looked up, “This part appears to out of stock. But don’t worry, I’ll put in the work order and we’ll get back to you as soon as we have a replacement part.”
Mrs. Presedo voiced her concern, “I was looking online and some of the forums say the part is no longer being made. If you don’t think you can’t fix this in a timely manner, please tell me so I can find someone who can.”

The tech was undaunted, “Ma’am, I’m certain we can take care of this. We’ll give you a call back.” He gave them a receipt for the $109 diagnostic fee and work order number I18-1518555 and with that he left their home.

Mrs. Presedo still had her doubts so she went online and straight to the Toshiba web page. She tried to find the part, but found that as a consumer, she didn’t have access to that information, so she called Toshiba. After explaining her dilemma for the millionth time, the customer service rep assured her that yes, they made the part still, and it was backordered but they were expecting it in the end of October. “Just have your vendor place an order for the part, and we’ll get it out to them.”

Meanwhile, almost as Presedo hung up the phone with Toshiba, Best Buy called to say the part was discontinued. Presedo got on the phone and said, “I just got off the phone with Toshiba and they said to place the order. The part is being manufactured and they will have it by the end of the month.”

“You spoke with Toshiba?”

“Yes, I just hung up with them. Please let me know f you are able to do this because if you can’t, I don’t want to spend the holiday without a TV. I will try to find another source.”

“No, ma’am, if the part is still being manufactured, we can get it. I will leave this order as is and advise my supervisor.”

The end of October, rolled around without a call from Best Buy. Mrs. Presedo called Best Buy’s customer service number and realized she probably wasn’t going to get satisfaction when the automated phone system choices said, “If you are calling about a Sony TV press 1. For all others press 3.”

Finally someone answered and she explained her dilemma.
“Ma’am, your work order is still active and we have our parts research team working on it. “

“What do you mean parts research? Toshiba HAS the part now as we speak. Toshiba says the part is available. Can you please tell your vendor to call them at the following number? 800-345-9785. They can order the part.”

“Ma’am, let me check on this and l’ll get right back to you.” A few days passed and again no call from Best Buy, so Presedo called Toshiba.

This time her call was transferred to someone named Myrna.

“I called a few weeks ago to see if a part was in stock because we bought a TV from Best Buy which needed a replacement part and I was told the part would be in stock by now. Best Buy says they don’t have it yet. Can you tell me if the part has been manufactured?”

Again she was transferred to Myrna, “Ma’am, the part is in stock right now. If Best Buy places the order we can get it out to them now.”

She called Best Buy back and repeated what she had been told. The Best Buy rep assured her they were getting the part to sit tight and wait.

On the Monday before Thanksgiving, the phone rang. It was someone from Best Buy. “I’m calling to give you an update. Your part is scheduled to come in on the 22nd.”

“Great! But you realize that the 22nd is Thanksgiving, don’t you? When can we realistically expect the part?”

“Well, we’ll call you as soon as the tech has it and we’ll schedule delivery, ma’am.”

“Can’t I just make an appointment now?”

“No, ma’am. It doesn’t work like that. We’ll call you.”

Thanksgiving came and went and on Friday, Best Buy still hadn’t called. Saturday morning, as the last grandchild finally left, Michael, the tech from Best Buy called to tell them the part wasn’t available. Unfortunately, they didn’t get to the phone on time and they weren’t able to speak to him. Mari called Best buy customer service. She explained about the phone call the preceding Monday and the call from Michael that day. “Is our part being shipped or not?”

“Ma’am, I don’t know who you spoke to last Monday but it wasn’t from our department. We don’t have your part yet. Our parts research team is still working on it. Our vendor said the part is not available, so we are trying someone else.”

Presedo called Toshiba again and again she was told the part was available, so she asked the young man on the phone if he could check to see who had placed the orders. He said he couldn’t divulge that ,but his buddy in the department could at least see if any orders had been placed locally. She held and when he returned he said, “We are at minus 1 status now and nobody from Louisiana has an order pending.”

“What does -1 mean?”

“Well, it means this part is built to order and we have to have x number of them on order before we manufacture. If your order is placed when we are at -1 you are the first one out. If your order is placed when we are at -6, then yours is the 6th one out.”

Presedo called Best Buy again, “I just spoke with Toshiba and they told me the part has not been ordered by anyone in Louisiana, but the tech can order the part. Would it be possible to call the repair man myself ?”

“I’m sorry, we’re not able to give out that information, but your order is pending and we ARE working on it, ma’am. I will check on this and get back to you tomorrow.”

Presedo hung up and dialed *69. “The last number of your incoming call is 404-597-7297.” She dialed the number and got Michael’s voice mail. “This is Michael from best Buy. I’m not able to take your call right now but leave me a message and I will return your call as soon as possible.”

Presedo left him a message relating her call to Toshiba and to please return her call.
Presedo called Best Buy back and advised them to please note on the account that she had left messages for both Michael and a supervisor to call her back so they could get her parts dilemma straightened out.

Two more days passed and still no news so Presedo called Best Buy again and asked to speak to a supervisor. She got Amanda. After explaining her situation to Amanda and being put on hold, Amanda came back and said, “Ma’am, I checked on your order and our parts research department is still working on this.”

“What parts research? I already FOUND the part. It is in stock and Toshiba is waiting for the order!”

“Ma’am, we don’t order from Toshiba. We order from a vendor. But apparently your vendor isn’t ordering the part. Can’t you order the part for me? I will pay you for it right now!”

“Ma’am, we can’t order from Toshiba directly. We have to order through our vendors. We don’t have an account with Toshiba.”

“You DON’T have an account with Toshiba? How can you sell a product which you can’t get parts for? What would you have done if I still had a warranty on this? Are you serious in telling me that you sell the product but you DON’T have an account for replacements?”

“Not a parts account, ma’am.”

“This is inconceivable. Amanda, I appreciate your situation and essentially your company is hanging you out to dry, so instead of wasting your time can you let me speak to someone above you? “
(Click.) Amanda hung up on her.

The astonished wife said to her husband, “Maybe we should go to the store in person and talk to someone.”

That evening at 6, the Presedos braved frenzied Christmas shoppers to go to Best Buy. They asked for the store manager thinking that it would be more difficult to ignore someone in person. A polite young man by the name of Kenny came to assist them. Kenny had been with Best Buy since the store opened and his position was Customer Experience manager or something to that effect. Kenny spent three hours on the phone with the Presedos standing in front of him, getting the same evasion tactics they had received and at 9:30 PM, he finally gave up. “I will try to get someone to at least repair your set. I’ll have my boss call you tomorrow.”

The Presedos were skeptical, but they thanked him for his efforts and left. The next day there was no call from Kenny and Mari again called Best buy and asked for a customer service supervisor above Amanda. A woman named Kathy who is based in Florida answered the call. Again, Presedo explain everything to her and told her of their efforts the night before and asked who could help her. The customer service repeated her mantra, “We have your part on order and our parts research team is working on location a part.”

“Kathy may I have a number for the corporate office?

“I’m sorry ma’am, but for security reasons we can’t give that out.”

Not to have another Amanda incident, Presedo asked, “May I have your last name at least?”
“No ma’am, I can’t give you that for security reasons.”

“But Kathy, you have all of my personal information – credit cards, social security, home address , phone numbers, marital status—I just want to document this properly in case I need to call back.”
“Well, we don’t do that, ma’am.”

“Can I have a number for your supervisor?”

“I am the top supervisor, ma’am. There is no one above me.”

“Kathy, surely you aren’t telling me you sign your own check.”

“We have your part in our parts research. Is there anything else I can do for you today?”

Presedo decided to try something else. She called the authorized repair centers in the area and explained her situation.

All of them replied with a similar answer. “Ma’am if my system shows it is NLA, it won’t let me order the part.

Presedo would patiently explain each time that the part would always show NLA because it was only made when there was an order for it so the vendor would have to place the order and the part would then be manufactured for that order.

“I’m sorry, ma’am. The system won’t let me do it.”

“You mean someone can’t just pick up the phone and CALL Toshiba?”

“ No ma’am, that not how we do it. Parts have to be ordered through the system.”

“But the system is not working for this instance, what do you do then?”

“Well, ma’am, I find them on the side of the road sometimes and just grab the capacitors for parts. It fixes the problem.”

“”Well, I’m sure it does, but I really don’t want a rebuild if the part is available.”

“Well, ma’am, that’s all I can offer at this time.”

Presedo called Toshiba and explained that she was having difficulty finding someone to order the part for her and could she get it directly? A nice young man by the name of Bradley told her they couldn’t sell to her but he could try to locate a vendor for her. He also made an account with a case number for her in case she had to call back. (In all the contacts with Toshiba, he was the first one to suggest this.) At that time she asked what the status on the part was and Bradley told her he didn’t have access to that information but he used to work in that department so, “Let me call my buddy Pete.”

He came back on the line and told her it was at -1 status and he would try to find a vendor to order the part for her and get back to her.

Mari Presedo thanked him but she was desperate by then. She called her friend Robin Hyde who owned Compu-Cure and had an account with Toshiba. She spoke to Monica, her office manager and asked if Monica could order the part. Monica explained that she couldn’t order the TV part because they only had a computer and parts account but to call Vance Baldwin Electronics and they would order the part for her. Presedo called Vance Baldwin and after explaining to situation with the NLA status to Michael Mc Dermott, he took her credit card number, gave her a total and told her he would check with Terry Avery, his parts person, and get back to her with a confirmation .

Meanwhile, Best Buy called to let them know they were trying to locate the part and none of their vendors were having any luck yet. They didn’t know that Amanda had hung up on Mrs. Presedo or that the Presedos had spent three hours one evening with a customer service manager trying to find the part.

An hour and half later she received an e-mail confirming the order and giving her an ETA of December 9, 2007. It was November 27th. The Presedos were elated. They had found a part and all the y would have t do was schedule a repairman to install it. Piece of cake, they thought.

Immediately, Mari called Toshiba back to advise them to notate that she Vance Electronics had ordered her part and to give Toshiba the order number so they would expedite it and thank Bradley for his help.
ON December 2nd, Best Buy called to say that none of their vendors could order this part and parts research was still trying to locate the part. Hector took the call this time and he explained to the woman that we had located a part and we would need someone to come out and repair it. At some point the woman told him, “The TV IS already 5 years old,” as if throwing out a $2,000 TV is common practice. (The Presedos have a 15 year old 27” JVC and an 18 year old Sony 13” that still work perfectly in the spare rooms- of course, un- wiring everything these days is not a simple thing and they have been trying to avoid doing that.

With the part on order, you would think the story ends well at this point. But as it turned out, Toshiba is turning out to not be a whole lot better than Best Buy.

On December 3rd, the Presedos received a message from Myrna at Toshiba which contradicted her order status from Baldwin. Even though Toshiba had alternate numbers, they never tried them. It was becoming obvious that everyone seemed to be avoiding direct contact with them.

Presedo decided to check on the status of her order and she called Baldwin back. Michael said he hadn't received anything to the contrary from Toshiba and all he did was place an order – when it was fulfilled he would let us know. If Toshiba changed anything , he wouldn’t know that.

Presedo called Toshiba again. This time, Morris took her call, “I’m sorry, ma’am, but all I have here is that you called us on the 27th about a part that is on backorder and that Vance Electronics is ordering this part for you. I don’t have any other information.”

Patiently, Presedo retold her story and explained that this had been going on for 7 weeks now and all she needed was a straight answer. She wanted an honest ETA and status of the part.

Morris carefully documented everything and put her on hold. When he returned, he said, “You aren’t going to like this, but we are at -6 now and I’m not sure how much longer we have to wait for delivery on this part.”

“Will it be this year?”

“Honestly, I don’t think so.”

“Can you please have a supervisor who has access to this information return my call?”

“Of course, I will and I have carefully documented everything you told me including Baldwin’s order number so we can expedite this for you.”

On December 4th, a supervisor from Toshiba named David called the Presedos. In spite of having had all of this information in front of him, David had only skimmed the notes, so he was unprepared for the questions Mari asked, saying he didn’t know/didn’t have access to any of the information.

“Well, why are you calling me then?”

“Because I had a note that you wanted a supervisor to call you.”

“But didn’t you read the notes?”

Yeah, it says here you called us on the 27th of last month about a part that Vance Baldwin ordered for you.”


“That’s it, I mean there’s a lot of stuff here but that’s the main thing.”

Trying not to blow up, Mari stated, “I wanted someone to call me back with the status of my part and an ETA. I think Myrna is the one following up on this and I have spoken to her before. Can you call her and get the information from her or ask her to call me?”

“Unfortunately, I can’t do that.”

“But I have been transferred to her twice before, and you are a supervisor. You’re telling me you don’t have the same capabilities as your team?”

“Ma’am, I don’t know who did that or who you spoke with but I don’t have that information and I can’t get it and I CAN’T transfer you to Myrna.”

Calmly, she repeated all her information and her initial questions “When the order was placed the part was at -1. Yesterday it was at -6. How many have to be ordered before any of them go out? And can you give me a best guess as to when that will happen?”

“Ma’am, like I said, I don’t have that information and I can’t get it and Myrna is working on it.”

“Thank you, David.”

Is it now 2:PM on December 4th and it doesn’t look like the Presedo Christmas will be very jolly. They aren’t adverse to having their TV rebuilt now, but Vance Baldwin won’t return their cal so they can cancel the order, they are unsure as to how to proceed. Toshiba still isn’t talking and Best Buy called again to say they still hadn’t located a vendor. If anyone out there happens to have one laying around, give the Presedos a call or e-mail them at maripresedo@cox.net.
Ho, ho , ho.
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