Managing
People for
Service
Advantage
Importance of Service
Employees
Service Personnel: Source of
Customer Loyalty and Competitive
Advantage
Frontline is an important driver of customer
loyalty
Anticipating customer needs
Customizing service delivery
Building personalized relationships
Customer’s perspective: Encounter with service
staff is most important aspect of a service
Firm’s perspective: Frontline is an important
source of differentiation and competitive
advantage. It is…
A core part of the product
the service firm
The brand
Frontline in Low-Contact Services
Many routine transactions are now conducted
without involving frontline staff, e.g.,
ATMs (Automated Teller Machines)
IVR (Interactive Voice Response) systems
Websites for reservations/ordering, payment, etc.
Though technology and self-service interface is
becoming a key engine for service delivery,
frontline employees remain crucially important
“Moments of truth” drive customer’s
perception of the service firm
Frontline Work Is
Difficult and Stressful
Boundary Spanning Roles
Boundary spanners link inside of organization to
outside world
Multiplicity of roles often results in service staff
having to pursue both operational and marketing
goals
Consider management expectations of service
staff:
Delight customers
Be fast and efficient in executing operational tasks
Do selling, cross selling, and up-selling
Enforce pricing schedules and rate integrity
Role Stress in Frontline Employees
Three main causes of role stress:
Person versus Role: Conflicts between what jobs
require and employee’s own personality and
beliefs
Organizations must instill “professionalism” in frontline staff
Organization versus Client: Dilemma whether to
follow company rules or to satisfy customer
demands
This conflict is especially acute in organizations that are not
customer oriented Role Conflict
Client versus Client: Conflicts between customers
that demand service staff intervention
Emotional Labor
“The act of expressing socially desired emotions
during service transactions” (Hochschild, The
Managed Heart)
Performing emotional labor in response to
society’s or management’s display rules can be
stressful
Good HR practices emphasize selective
recruitment, training, counseling, and strategies
to alleviate stress
Cycles of Failure,
Mediocrity, and Success
Cycle of Failure
Customer
turnover Repeat emphasis on
attracting new customers
Failure to develop
customer loyalty
Low profit
margins Narrow design of
jobs to accommodate
low skill level
High employee turnover;
poor service quality
No continuity in Use of technology Emphasis on
relationship for to control quality rules rather
customer Employee dissatisfaction; than service
poor service attitude
Payment of
low wages
Employees
become bored Minimization of
Customer selection effort
dissatisfaction Minimization
of training
Employees can’t
respond to customer
problems
Source: Schlesinger and Heskett
Cycle of Failure
The employee cycle of failure
Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
― Question: Labor Cost and Labor Rate
The customer cycle of failure
Managers’ short-sighted assumptions about
financial implications of low pay/high turnover
human resource strategies
Cycle of Failure
Costs of short-sighted policies are ignored
Loss of expertise among departing employees
Disruption to service from unfilled jobs
Constant expense of recruiting, hiring, training
Lower productivity of inexperienced new workers
Loss of revenue stream from dissatisfied customers who
go elsewhere
Loss of potential customers who are turned off by
negative word-of-mouth
Higher costs of winning new customers to replace those
lost—more need for advertising and promotional discounts
Cycle of Mediocrity
Customers trade
horror stories
Other suppliers (if any)
seen as equally poor
Employees spend
working life
in environment
Employee of mediocrity
dissatisfaction
(but can’t easily quit) Emphasis
on rules
Narrow design vs. pleasing
of jobs
customers
No incentive for Complaints met by
cooperative relationship Training emphasizes
indifference or Success =
to obtain better service hostility learning rules
not making
mistakes
Service not focused
Jobs are boring and on customers’ needs
repetitive; employees
unresponsive Good wages/benefits
high job security
Resentment at inflexibility and
lack of employee initiative; Promotion
and pay
complaints to employees Initiative is
increases based discouraged
on longevity,
lack of mistakes
Source: Heskett and Schlesinger
Customer dissatisfaction
Cycle of Mediocrity
Most commonly found in large, bureaucratic
organizations
Service delivery is oriented toward
Standardized service
Operational efficiencies
Prevention of employee fraud and favoritism
toward specific customers
Cycle of Mediocrity
Job responsibilities narrowly and
unimaginatively defined
Successful performance measured by absence
of mistakes
Ex) South Korean Army
Training focuses on learning rules and
technical aspects of job—not on improving
interactions with customers and co-workers
Cycle of Success
Low
customer
turnover Repeat emphasis on
customer loyalty and
retention
Customer
loyalty
Higher
profit
margins
Broadened
Lowered turnover, job designs
high service quality
Continuity in
relationship with Train, empower frontline
customer Employee satisfaction, personnel to control quality
positive service attitude
Above average
Extensive wages
training
High customer Intensified
satisfaction selection effort
Source: Heskett and Schlesinger
Cycle of Success
Longer-term view of financial performance;
firm seeks to prosper by investing in people
Attractive compensation packages attract
better job applicants
More focused recruitment, intensive training,
and higher wages make it more likely that
employees are:
Happier in their work
Provide higher quality, customer-pleasing service
Cycle of Success
Broadened job descriptions with
empowerment practices enable frontline staff
to control quality and facilitate service
recovery
Regular customers more likely to remain loyal
because:
Appreciate continuity in service relationships
Have higher satisfaction due to higher quality
Human Resources
Management— How to Get It
Right?
The Wheel of Successful HR in
Service Firms
Leadership that:
Focuses the entire 1. Hire the
organization on Right People
supporting the
frontline 3. Motivate and Be the preferred
Energize Your People employer & compete
Fosters a strong for talent market share
Utilize the full
service culture with
range of rewards
passion for service Service Excellence Intensify the
and productivity selection
& Productivity
process
Drives values
that inspires,
energizes and
2. Enable Your People
guides service Empower frontline
providers Build high performance service
delivery teams
Extensive training
1. Hire the Right People
“The old saying ‘People are your
most important asset’ is wrong.
The RIGHT people are your
most important asset.”
Jim Collins
Recruitment
The right people are a firm’s most important asset: Take
a focused, marketing-like approach to recruitment
Clarify what must be hired versus what can be taught
Clarify nature of the working environment, corporate
values and style, in addition to job specs
Ensure candidates have/can obtain needed qualifications
Evaluate candidate’s fit with firm’s culture and values
Match personalities, styles, energies to appropriate jobs
“If people come for money, they will leave for money”
- James Treybig (CEO of Tandem Computers)
Select and Hire the Right People:
(1) Be the Preferred Employer
Create a large pool: “Compete for Talent
Market Share”
What determines a firm’s applicant pool?
Positive image in the community as place to work
Quality of its services
The firm’s perceived status
There is no perfect employee
Different jobs are best filled by people with different skills,
styles, or personalities
Hire candidates that fit firm’s core values and culture
Focus on recruiting naturally warm personalities for customer-
contact jobs
Select and Hire the Right People:
(2) How to Identify Best Candidates
Observe behavior
Hire based on observed behavior, not words you hear
Best predictor of future behavior is past behavior
Consider group hiring sessions where candidates are given
group tasks
Conduct personality tests
Willingness to treat co-workers and customers with courtesy,
consideration, and tact
Perceptiveness regarding customer needs
Ability to communicate accurately and pleasantly
Select and Hire the Right People:
(3) Identifying Best Candidates
Employ multiple, structured interviews
Use structured interviews built around job requirements
Use more than one interviewer to reduce “similar to me”
biases
Give applicants a realistic preview of the job
Chance for candidates to “try on the job”
Assess how candidates respond to job realities
Allow candidates to self select themselves out of the job
Manage new employees’ expectation of job
2. Train Service Employees
Service employees need to learn:
Organizational culture, purpose, and strategy
Promote core values, get emotional commitment to strategy
Get managers to teach “why,” “what,” and “how” of job
Interpersonal and technical skills
Both are necessary but neither alone is sufficient for optimal
job performance
Product/service knowledge
Staff’s product knowledge is a key aspect of service quality
Staff must explain product features and position products
correctly
Is Empowerment Always
Appropriate?
Empowerment is most appropriate when:
Firm’s business strategy is based on competitive
differentiation and on personalized, customized service
Emphasis on extended relationships versus short-term
transactions
Use of complex and nonroutine technologies
Business environment is unpredictable, consisting of
surprises
Managers are comfortable letting employees work
independently for benefit of firm and customers
Employees seek to deepen skills, like working with others,
and are good at group processes
Control versus Involvement Model
of Management
Control concentrates four key features at top
organization,
involvement pushes them down
1. Power to influence work procedures and organizational
direction (e.g., quality circles, self-managing teams)
2. Information about operating results and measures of
competitive performance
3. Rewards based on organizational performance (e.g.,
bonuses, profit sharing, stock ownership)
4. Knowledge/skills that enable employees to understand and
contribute to organizational performance
Levels of Employee Involvement
Suggestion involvement
Employee make recommendation
through formalized programs
Job involvement
Jobs redesigned
Employees retrained, supervisors
reoriented to facilitate performance
High involvement
Information is shared
Employees skilled in teamwork,
problem solving etc.
Participate in management decisions
Profit sharing and stock ownership
Build High-Performance Service
Delivery Teams
The Power of Teamwork in Services
Facilitate communication among team members and
knowledge sharing
Higher performance targets
Pressure to perform is high
Creating Successful Service Delivery Teams
Emphasis on cooperation, listening, coaching and
encouraging one another
Understand how to air differences, tell hard truths, ask
tough questions
Management needs to set up a structure to steer teams
toward success
3. Motivate and Energize the
Frontline
Use full range of available rewards effectively,
including:
Job content (Job Design)
People are motivated and satisfied knowing they are doing
a good job
Feedback and recognition
People derive a sense of identity and belonging to an
organization from feedback and recognition
Goal accomplishment
Specific, difficult but attainable and accepted goals are
strong motivators
Service Leadership and
Culture
Service Leadership and Culture
Service culture can be defined as:
Shared perceptions of what is important
Shared values and beliefs of why they are important
Shared Accountability
Charismatic/transformational leadership:
Change frontline’s values, goals to be consistent with firm
Motivate staff to perform their best
Internal Marketing:
Play a vital role in maintaining and nurturing a corporate
culture
Help ensure service delivery, working relationships,
employee trust, respect, and loyalty
The Inverted Organizational
Pyramid
Fig 11.11
Customer Base
Top
Mgm Frontline Staff
t
Middle
Mgmt
Middle Mgmt
Frontline And Top Mgmt
Staff Support Frontline
Traditional Inverted Pyramid with a
Organizational Pyramid Customer and Frontline
Focus
Legend: = Service encounters, or “Moments of Truth”