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Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 - 1

Chapter 11

Managing People

for Service Advantage


Frontline Service Personnel: Source of Customer Loyalty and Competitive Advantage

Frontline is an important source of differentiation and competitive advantage. It is: a core part of the product the service firm the brand

Frontline also drives customer loyalty, with employees playing key role in anticipating customer needs, customizing service delivery and building personalized relationships


Boundary Spanning Roles

Boundary spanners link the inside of the organization to the outside world

Multiplicity of roles often results in service staff having to pursue both operational and marketing goals

Consider management expectations of restaurant servers:

deliver a highly satisfying dining experience to their customers be fast and efficient at executing operational task of serving

customers do selling and cross selling, e.g. “We have some nice desserts to

follow your main course”


Role Stress in the Frontline

Person vs. Role: Conflicts between what jobs require and employee’s own personality and beliefs

Organization vs. Customer: Dilemma whether to follow company rules or to satisfy customer demands

Customer vs. Customer: Conflicts between customers that demand service staff intervention

3 main causes of role stress:


Emotional Labor

“The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)

Three approaches used by employees surface acting deep acting spontaneous response

Performing emotional labor in response to society’s or management’s display rules can be stressful

Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress


The Cycles of Failure, Mediocrity and Success

Too many managers make short-sighted assumptions about financial implications of: Low pay Low investment (recruitment, training) High turnover human resource strategies

Often costs of short-sighted policies are ignored: Costs of constant recruiting, hiring & training Lower productivity & lower sales of new workers Costs of disruptions to a service while a job remains unfilled Loss of departing person’s knowledge of business and customers Cost of dissatisfied customers


Cycle of Failure (Fig. 11.1)

Customer turnover

Failure to develop customer loyalty

No continuity in relationship for

customer

Customer dissatisfaction

Employees can’t respond to customer

problems

Employees become bored

Employee dissatisfaction; poor service attitude

Repeat emphasis on attracting new customers

Low profit margins Narrow design of

jobs to accommodate low skill level

Use of technology to control quality

High employee turnover; poor service quality

Payment of low wages

Minimization of selection effort

Minimization of training

Emphasis on rules rather than service

Empl

oye e Cyc

le

Customer C

ycle

Source: Schlesinger and Heskett


Service Sabotage (Fig. 11-A)

Customary-Private Service Sabotage

Sporadic-Private Service Sabotage

Customer-Public Service Sabotage

Sporadic-Public Service Sabotage

‘Openness’ of Service Sabotage Behaviors Covert Overt

‘No

rmal

ity’

of

Ser

vice

Sab

ota

ge

Beh

avio

rs

Rou

tiniz

edIn

term

itten

t

e.g. Waiters serving smaller servings, bad beer or sour wine

e.g. Talking to guests like young kids and putting them down

e.g. Chef occasionally purposefully slowing down orders

e.g. Waiters spilling soup onto laps, gravy onto sleeves, or hot plates into someone’s hands


Cycle of Mediocrity (Fig. 11.2)

yGood wages/benefits high job security

Other suppliers (if any) seen as equally poor

Customers trade horror stories

Service not focused on customers’ needs

Employees spend working life

in environment of mediocrity

Narrow design of jobs

Success = not making mistakes

Complaints met by indifference or

hostility

Employee dissatisfaction

(but can’t easily quit) Emphasison rules

vs. pleasingcustomers

Employee

C cle

Customer

Cyc

le

Promotion and pay

increases based on longevity,

lack of mistakes

Initiative is discouraged

Jobs are boring and repetitive; employees

unresponsive

Resentment at inflexibility andlack of employee initiative;complaints to employees

No incentive for cooperative relationship to obtain better service

Training emphasizes learning rules

Customer dissatisfaction


Cycle of Success (Fig. 11.3)

Cy

Low customer turnover

Customer loyalty

Continuity in relationship with

customer

High customer satisfaction

Extensive training

Employee satisfaction, positive service attitude

Repeat emphasis on customer loyalty and

retention

Higher profit

marginsBroadened job designsLowered turnover,

high service quality

Above average wages

Intensified selection effort

Employe

e cle

Custom

er Cycle

Train, empower frontlinepersonnel to control quality

Source: Heskett and Schlesinger


How to Manage People for Service Advantage?

1. Hire the right people

2. Enable your people

3. Motivate and energize your people

Staff performance is a function of both ability and motivation. How can we get able service employees who are motivated to productively deliver service excellence?


Hire the Right People

“The old saying ‘People are your most

important asset’ is wrong.

The RIGHT people are your most

most important asset.”

“The old saying ‘People are your most

important asset’ is wrong.

The RIGHT people are your most

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

Fit personalities, styles, energies to the appropriate jobs


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


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 given group tasks

Personality Testing

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:(2) How to Identify the Best Candidates


Select and Hire the Right People:(3) How to Identify the Best Candidates

Employ Multiple, Structured Interviews

Use structured interviews built around job requirements Use more than one interviewer to reduce similar to me effects

Give Applicants a Realistic Preview of the Job

Chance to have “hands-on” with the job Assess how the candidates respond to job realities Allow candidates to self select themselves out of the job


The 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 is sufficient for optimal job

performance

Product/Service Knowledge Staff’s product knowledge is a key aspect of service quality Staff need to be able to explain product features and to position

products correctly

Train Service Employees


Factors Favoring Employee Empowerment

Firm’s strategy is based on competitive differentiation and on personalized, customized service

Emphasis on long-term relationships vs. one-time transactions

Use of complex and non-routine technologies

Environment is unpredictable, contains 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 vs. Involvement Model of Management

Information about operating results and measures of competitive performance

Rewards based on organizational performance (e.g. profit sharing, stock ownership)

Knowledge/skills enabling employees to understand and contribute to organizational performance

Power to influence work procedures and organizational direction (e.g. quality circles, self-managing teams)

Source: Bowen and Lawler

Control concentrates 4 key features at top of organization; Involvement pushes them down:


Suggestion involvement Employee recommendation

Job involvement Jobs redesigned Employees retrained Supervisors facilitate

High involvement Information is shared Employees skilled in teamwork,

problem solving etc. Participate in decisions Profit sharing and stock ownership

Levels of Employee Involvement


Motivate and Energize the Frontline

Job content

Feedback and recognition

Goal accomplishment

Use the full range of available rewards effectively, including:


The Inverted Organizational Pyramid (Fig. 11.5)

Frontline Staff

Top Mgmt

Middle Mgmt

Legend: = Service encounters, or ‘Moments of Truth.’

Traditional Organizational Pyramid

Inverted Pyramid with a Customer & Frontline Focus

Customer Base

Frontline Staff

Middle Mgmt & Top Mgmt

Support Frontline


The Wheel of Successful HR in Service Firms (Fig. 11.6)

Leadership that:

Focuses the entire organization on supporting the frontline

Fosters a strong service culture with passion for service and productivity

Drives values that inspire, energize and guide service providers

1. Hire theRight People

3. Motivate & Energize Your People

2. Enable Your People

Be the preferred employer & compete for talent market share

Intensify the selection process

Empower FrontlineBuild high performance service

delivery teams Extensive Training

Utilize the full range of rewards

Service Excellence& Productivity

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