Viewpoint: Should You Let Employees Break the Rules to Make Customers Happy?

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Organizations are increasingly relying on technology to deliver simple transactions in a standardized way—things like self-order kiosks at McDonald's, bank mobile apps for check deposits, and FAQ chatbots that enable consistent and efficient service delivery to customers. Most day-to-day service encounters, from mobile ordering for a cup of coffee to returning products online, are relatively simple and straightforward.

However, not all customer needs and wants can be met in these ways. Despite the widespread use of technology, frontline employees continue to play an important role in delivering quality customer service, especially when automation cannot help solve complex customer problems. For example, when support from a virtual agent does not help with their issue, customers call in and receive tech support from a live agent.

Furthermore, customers' needs, problems or demands are often unique, distinct, complex or irregular. As a result, employees sometimes encounter challenging situations where it may be difficult for them to successfully help or satisfy a customer when they try to work within the bounds of their organization's rules. In fact, service employees may be faced with a dilemma: What should they do in situations where providing an excellent customer experience and ensure satisfaction requires them to break, bend or deviate from an organizational rule or procedure?

We refer to such behaviors as pro-customer rule-breaking, and it often involves adapting service delivery, communicating information differently than parameters or scripts allow, or using resources in ways that defy prescribed rules or expectations set by their organization. Examples include a retail employee granting extensions to a customer requesting product return that is a few days beyond the 15-day return policy, a salesperson arranging for the product to be repaired free of charge when a warranty has expired, and an airline employee helping passengers who missed their flight rebook another flight service at no extra cost.

Does rule-breaking by frontline service employees help build a genuine relationship with customers by adding a human touch to service? And can it ultimately be a key differentiator at your organization and enhance customer loyalty?

Why Employees Should (Sometimes) Break the Rules

Marketing research sheds light on the positive customer outcomes of pro-customer rule-breaking. Bank employees, for example, are required to follow a clear and well-established set of standard procedures and processes for most of their retail banking services, including personal loans, merchant services and payment services. Thus, customers tend to recognize even small rule-breaking or deviating behaviors from their bank's service providers. In a survey, retail bank customers reported feeling indebted when their service provider, for example, skipped unnecessary paperwork in order to serve them in an efficient manner or waived small bank fees that unfairly penalized them.

Customer indebtedness in turn was positively associated with something called "service friendship"—friendship between customer and service provider—which improves customer commitment, satisfaction and loyalty. Customers also perceive pro-customer rule-breaking as employees' sacrificial behaviors to help them, which creates a sense of imbalance in their exchange relationship with employees. This generates customers' sense of obligation to repay for a bank employee's favor, like buying more products and continuing their business with the bank in the future.

Similarly, while employees in the luxury hotel industry are supposed to provide consistent service, they strive to leave a good impression with their customers by tailoring to individual preferences and delivering personalized service at the same time. A survey of employee-customer pairs at a luxury hotel restaurant found that customers felt more grateful, loyal and satisfied when, for example, their service provider, despite the "no free food" policy, offered free desserts or drinks that pair nicely with the main dish to help enhance customers' dining experience.

How Employees Feel About Breaking the Rules

As supported by marketing research findings, customers clearly recognize when employees take risks to be helpful, and research shows that pro-customer rule-breaking has desirable customer outcomes. But how do employees feel who are breaking or deviating from rules to better serve customers? Does pro-customer rule-breaking only elicit guilt in employees, given the rule-breaking? Or could it also have a beneficial impact on employee outcomes?

We found that rule-breaking highlights employees' prosocial intention to help or better serve customers. By attempting to problem-solve for customers in challenging service encounters, pro-customer rule-breaking can positively impact employees themselves through fulfilling their basic psychological needs for autonomy, competence and relatedness.

Across two studies we found that employees who broke a rule in this manner felt more autonomous, competent and connected to their customers. These employees were less emotionally exhausted, more satisfied with their job and were more likely to share with their organizations their concerns, ideas and suggestions to improve existing rules and practices for customer service. While some research has found that employees feel guilty breaking the rule, in ours, participants who engaged in pro-customer rule-breaking did not report experiencing more guilt compared to those who did not engage in it.

How can your organization put these findings into practice? We offer three suggestions.

Use caution in evaluating employee rule-breaking behaviors.

Managers and organizations often view pro-customer rule-breaking as negative employee behavior that needs to be discouraged. In performance appraisals, for example, managers may evaluate employee rule violations negatively and assume that they occurred exclusively out of an employee's self-interest or malicious intent to cause harm. However, this may not be the case. Therefore, rule-breaking behaviors in serving customers should be evaluated with caution.

For example, managers could speak to employees with an open mind and genuine interest to find out why they engage in and how they feel about their rule-breaking. As demonstrated by our research, employees who break rules for pro-customer reasons tend to be fulfilled and gain positive feelings about their job, despite their seemingly deviant behavior. Also, if possible, customer feedback should be solicited when evaluating employees' rule-breaking to better understand the nature of the interaction. All of this highlights that employees' customer-oriented prosocial intention in breaking rules needs to be carefully considered.

Make customer service-related rules flexible and empower employees.

Organizations should acknowledge that for service employees, sometimes rules may be at odds with trying to fulfill both the organizations' expectations for appropriate employee behavior and customers' expectations for exceptional service. Companies could make certain rules flexible to accommodate different customer needs or redesign jobs so employees can have greater autonomy in how they serve customers.

Some organizations are known for empowering their employees in these ways. For instance, employees at Southwest Airlines are encouraged to deviate from the service script sometimes and offer a personalized experience to their customers. And every employee at Ritz-Carlton can spend up to $2,000 per guest, per day, without asking permission from a supervisor, to resolve a problem and create a memorable experience for their guests. Empowering employees and equipping them with the right resources may help prevent employees feeling that breaking rules is the only way to serve customers in dynamic situations.

Listen to frontline employees to make changes in service-related procedures.

Employees serving customers on the frontline have ample opportunities to observe changing customer needs and preferences and to detect when organizational rules and procedures may no longer be effective or appropriate. They can be a key driver of innovation in customer service. Information collected from employees about their rule-breaking incidents may signal to managers that a certain rule currently in effect may need to be revisited; this is particularly the case when the same rule has been repeatedly violated by different employees for pro-customer reasons. For example, when the 15-day return policy is deemed unreasonable and contributing to customer dissatisfaction and operational inefficiency, employees may suggest a 30-day return policy.

Above and beyond having post-hoc conversations, managers may consider making it a routine practice to chat with frontline employees about the challenging service situations they have experienced and how they have managed them. This will encourage employees to share any unpleasant experiences on the frontline, disclose their rule-breaking behaviors and their intent behind them, or voice disagreements or concerns about established rules and procedures.

When Rule-Breaking Backfires

Of course, we are not encouraging employees to always break the rules in serving customers. In our research, potential negative implications of rule violation as reported by participants were relatively minor. However, in settings where potential negative implications of rule violation are severe (for example, safety-related rules in health care), organizations should clearly communicate to their employees why and how their rules are important for organizational effectiveness. Without this, employees may break an essential organizational rule, sometimes for prosocial reasons, as they feel that this rule is inadequate or inappropriate to ensure good customer service. Therefore, clear communication and education about organizational rules should help reduce the possibility that employees break rules due to inaccurate or insufficient understanding of the rationale underlying them.

Another setting that warrants special attention is when service employees find themselves being pressured by some customers and go above and beyond—but only for these customers. That is, employees may be forced to engage in rule-breaking in response to entitled customers who demand preferential rewards, special treatment and extra consideration, in order to avoid customer complaints, which are usually an important measure of job performance for service employees. Different from pro-customer rule-breaking primarily driven by one's own prosocial intent, rule-breaking primarily due to customer pressure but against employees' discretion can add stress to service employees and threaten their well-being. Thus, manager support is critical in serving entitled customers. Having conversations with employees about their rule-breaking incidents can also reveal details of such situations, helping managers learn when their employees may need their support and how.

Breaking or deviating from organizational rules to go above and beyond in challenging service encounters certainly places more demand on service employees, as it requires extra effort and courage. However, as much as customers benefit from pro-customer rule-breaking, service employees can also benefit from being motivated and having an enhanced sense of accomplishment. Employees' deviant-but-constructive behavior can help transform problems into compelling experiences for customers and employees, and can be a vital strategy for achieving exceptional performance in customer service and maintaining a competitive edge.

Su Kyung (Irene) Kim, Ph.D., is a Lecturer/Postdoctoral Research in the Organizational Behavior and Human Resources Division at the University of British Columbia Sauder School of Business. Yujie Zhan, Ph.D., is an Associate Professor of Organizational Behavior and Human Resource Management in the Lazaridis School of Business and Economics at Wilfrid Laurier University.

This article is adapted from Harvard Business Review with permission. ©2023. All rights reserved.