Holding clients hostage without realizing it.
Providers working in service-based industries with misaligned incentives are likely to unconsciously behave in a manner than benefits them more than the client they are serving, even to the point of causing a disservice. When faced with accusations or internal realizations of said behaviors, they find ways to justify their behavior in order to continue it without reputation loss or mental turmoil.
The only way to prevent this is to align both the client and provider's incentives with each other, i.e., the provider's benefits scale with the client's. I use five examples—therapists, realtors, personal trainers, dating coaches, and consultants—to illustrate the issues, provide explanations for why this happens, and offer an alternative model that better align each party's incentives.
I
Therapists claim their goal is for the client to "graduate" from therapy by resolving the issues that initially led them there or developing tools to help alleviate the issues. "Progress" is made during each appointment as the client gets closer to satisfying the graduation criteria.
But the client graduating means one less paying client, and while some therapy practices have a waitlist, others don't, resulting in lower revenue.
What if, instead of pushing hard to graduation for the client's mental (and financial, depending on price per session) health, therapists slightly delayed progress? Or new issues were opened up that didn't necessarily slow or halt progress in one area, but started at ground zero in another, prolonging the relationship?
II
Realtors claim their goal is for the client to find the home of their dreams. Together they tour many properties, discussing the pros and cons of each based on the client's desires. Once a home is identified, the negotiations between the two agents (representing the clients, of course) begin, a constant back-and-forth checking what each party is willing to concede to find a deal both are satisfied with.
But the client getting a good deal means money is taken out of the buyer's agent's pockets since their commission is based on the selling price.
What if, instead of trying to get the lowest possible price based on true market value, realtors kept home prices artificially high in order to maximize commissions for both sides? The buyer's agent is happy, the seller's agent is happy, the seller is happy, and the buyer doesn't know much better, saving the realtor's reputation.
III
Personal trainers claim their goal is for the client to achieve their health-related goals through exercise, dieting, lifestyle changes, or some combination thereof. Comprehensiveness depends on the trainer and service level paid for: lower-tier clients may only get 1:1 time a few times a week, while higher-tier clients receive an entire exercise and meal plan "customized" for their goals, history, lifestyle, and genetics.
But the client achieving their health goals means one less paying client, and while some personal trainers have a waitlist, others don't, resulting in lower revenue.
What if, instead of pushing hard for the client to progress and ultimately achieve their goals in a shorter, yet reasonable time period, the trainer preyed on the ignorant to slow progress without making it obvious? The client may not notice, attribute the lack of progress to something they were doing wrong, or assume that getting fit just takes a really long time (hint: it doesn't). The trainer can then continue to have consistent clients for a longer time than necessary.
IV
Dating coaches claim their goal is for the client to end up in a happy, healthy relationship. They approach the issue in a variety of ways: from wardrobe and grooming to conversation and body language to texting and date planning strategies. Feedback is provided on the client's after-action date report to allow them to tweak certain behaviors for the next date, be it the same person or a different one.
But the client getting into a relationship means one less paying client, and while some dating coaches have a waitlist, others don't, resulting in lower revenue.
What if, instead of giving feedback they know would be helpful, the coach intentionally neglected to provide necessary criticism on their poor dress choices ("you dress fine with the cargo shorts and fedora, that's your personal style and the other person should appreciate that!"), their poor conversational skills ("just keep talking about yourself since you're so interesting"), and their poor sex appeal ("potential partners probably find your lifestyle of watching Netflix and playing video games super cool!"). The client chooses to believe them since they're the professional and have had much success with other clients in the past. They assume that something's wrong with the person sitting across the table because how could anything be wrong with them? The coach said they were a catch!
V
Consultants claim their goal is for the client to improve their business. They keep track of their billable hours and charge the client accordingly at the end of the project, whether or not actual, tangible improvements were made (sure, short-term improvements can be measured, but what about long-term? I suppose the market would decide the firm's fate if they never brought long-term value, but irrationality exists even where it shouldn't).
But the client improving their business potentially means they no longer need the consultant, resulting in lower revenue for the firm.
What if, instead of trying to minimize working hours while maximizing potential profits and quality of work, the consultant intentionally slows down their work, creating more billable hours for them and their firm and retaining the client for even longer. The client assumes the consultant is working hard given their reputation, while switching costs may prevent switching to a competitor.
Money and lack of objectivity are the two common themes: providers both want and need money and aren't always held accountable when goals aren't achieved in a timely manner.
Money can cause people turn a blind eye to their morals and justify behaviors they previously considered unethical. Accepting money from the client provided they aren't harmed is easily explained away using mental gymnastics.
Financial insecurity has been found to shift moral standards (Sharma et al. 2014, Kouchaki et al. 2013). Given how potentially insecure some of these roles are, it makes sense to keep a known-good source of money coming in.
Timelines can't always be objective, especially when involving genetic or external factors that are out of either party's control. Clients lose weight at different paces, market dynamics change home prices quickly, both sides in dating have preferences in partners. These hazy timelines allow the provider to justify taking longer than normal to accomplish the agreed-upon goal if their efficacy is questioned by the client. Combine this being said by the supposed expert with the ignorance of the client and the claim is much more believable, prolonging the predation.
The client wants alignment for obvious reasons, but it is also the provider's moral imperative to align incentives because the entire purpose is providing a quality service (satisfies completion criteria in a timely manner), whereas misalignment puts that objective at risk.
Below is a non-exhaustive list of alignment options for both clients and providers.
Incentives are almost always aligned when a single person is involved. Most providers are hired due to their supposed expertise and the client lacking time/energy/ability to do the work themselves.
In other words, get some agency. Comparative advantage is predicated on the opportunity cost being lower, but doesn't apply here if the supposed stallings are great enough in time or magnitude; people are better off picking up/finding/reading/learning/collecting themselves than they would be going to so-called experts that take advantage of them.
Some go-it-alone options for each example:
Service-based jobs are better when they're completed faster without sacrificing quality because the purpose is the destination, not the journey. Faster does not come without costs; work needed must be more intense and more frequent to achieve similar results. However, compressing work in constant time may also be more efficient to the provider by reducing switching costs.
If the job type is scalable in both time (more time spent on task per unit time) and intensity (more focus spent per unit time), then timelines can potentially be defined to hold the provider accountable. Note these all require effort by both parties: the client can't sit around and expect the provider to get them results without them also working.
Options that clients can ask providers to implement:
Reviews generally improve performance by exposing the provider's efficacy to the public eye, effectively handing over the choice to the market given the information. Clients should leave comprehensive reviews as often as possible to help others make their choice. Reviews are still subject to false positives in the form of ignorant clients who could have made more progress.
Providers can also drop clients, and should for moral and reputational reasons if progress is lackluster. If someone isn't progressing towards their goal under the provider's guidance despite substantial time, effort, and various methods, then that partnership may not be the best for the client (don't you remember the provider said they wanted what's best for you?).
Charging flat fees per session can lead to promoting more sessions being booked: simply slow down progress during the first session so a second session is likely to be booked.
Charging for the final result is a gamble on both parties' parts, incentivizing the provider to charge on the higher side to hedge against long timelines even if it's expected to be short. Providers can give average timelines of previous clients, but that further misaligns each person!
Establishing a governing body and a corresponding code of ethics probably doesn't work (see the NAR scandal and their code of ethics as just one obvious example). As described before, ethics and morals take a backseat when money comes a'knocking.
My solution to all of this is a simple market-based approach:
The beauty here, like all free markets, is choice. The provider can guarantee results by implementing draconian measures, but the client can just go to someone else; too strict and they don't get chosen, too lenient and the goal is never reached.
A few considerations: