Process for dealing with a bad haircut:
1. Let the barber know they screwed up, but politely.
2. Pay for the service, but don't tip.
3. Let the manager of the shop know you did not like your haircut, etc.
4. Next time, ask to see a different barber within the same shop or visit a separate shop. (Skills amongst barbers vary between individuals, not shops, and yes, you can ask to see a specific barber. Any shop that says you cannot is a shop you should not be visiting.)
When an individual barber receives enough complaints, they are eventually removed from the shop, as they are losing the shop customers. Operations vary from shop to shop, but overall when someone is getting enough complaints, they are let go, just like any other business.
Now, as far as the argument of paying/not paying goes, haircuts are a vary vague concept, and there is NOT a universal standard amongst barber tools. What is a "5" in length for one barber is a "3" for another, which is part of the reason so many people stick with a single barber they like. Koggit's paint argument does not hold here, as we all have universal standards for what "red" and "blue" are. Whereas we do not have universally recognized standards for haircuts.
When selecting a barber, you are actually developing a business relationship, not just paying for a service. Having a barber that knows exactly what you want every 3-6 months is worth much more than the $15-20 you pay each time. Just as in dating, you may decide at the end of the first date that you never want to see this person again, but you'll still pay for their dinner (unless you're a real dick

).
~HotShotX