CHAPTER 11

Managing People for

Service ADVANTAGE

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Overview of Chapter 11

 Service Employees Are Extremely Important

 Frontline Work Is Difficult and Stressful
 Cycles of Failure, Mediocrity, and Success
 Human Resources Management – How To Get It
Right?
 Service Leadership and Culture

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 Service Employees
Are Extremely
Important

Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page
Importance of Service Personnel

 Help maintain firm’s positioning. They

are:
 A core part of the product
 The service firm
 The brand
 Frontline is an important driver of
customer loyalty
 Anticipate customer needs
 Customize service delivery
 Build personalized relationships
 Key driver of productivity of frontline
operation
 Generate sales, cross-sales and up-
sales
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Front Line in Low-Contact Services

 Many routine transactions are now conducted without

involving front-line 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, front-line employees
remain crucially important
 “Moments of truth” affect customer’s views of the
service firm

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 Frontline Work Is
Difficult and
Stressful

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Boundary Spanning and Role Stress

 Boundary spanners link inside of organization to outside

world and often experience role stress from multiple roles
they have to perform
 3 main causes of role stress:
Organization vs. Client: Dilemma whether to follow company rules
or to satisfy customer demands
- This conflict is especially acute in organizations
that are not customer oriented
Person vs. Role: Conflicts between what jobs require and
employee’s own personality and beliefs
Client vs. Client: Conflicts between customers that demand
service
staff intervention

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Emotional Labor

 “The act of expressing socially desired

emotions during service transactions”
(Hochschild, The Managed Heart)
 Occurs when there is gap between what
employees feel inside, and emotions that
management requires them to display to
customers
 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
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m/reel/DGiUCfWvm Chapter 1 - Page
 Cycles of Failure,
Mediocrity and
Success

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Cycle of Failure (1)
(Fig 11.6)

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Cycle of Failure (2)
(Fig. 11.6)

 The employee cycle of failure

Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
Bored employees who lack ability to respond to customer
problems
Dissatisfied with poor service attitude
Low service quality
High employee turnover

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Cycle of Failure (3)
(Fig. 11.6)

 The customer cycle of failure

Repeated emphasis on attracting new customers
Customers dissatisfied with employee performance
Customers always served by new faces
Fast customer turnover
Ongoing search for new customers to maintain sales volume

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Cycle of Failure (4)
(Fig. 11.6)

 Costs of short-sighted policies are ignored

Constant expense of recruiting, hiring, training
Lower productivity of inexperienced new workers
Higher costs of winning new customers to replace those lost—more
need for advertising and promotional discounts
Loss of revenue stream from dissatisfied customers who go
elsewhere
Loss of potential customers who are turned off by negative word-
of-mouth

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Cycle Of Mediocrity (1)
(Fig. 11.8)

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Cycle Of Mediocrity (2)
(Fig. 11.8)

 Most commonly found in large, bureaucratic

organizations
 Service delivery is oriented towards
Standardized service
Operational efficiencies
Promotions based on long service
Successful performance measured by absence of
mistakes
Rule-based training
Little freedom in narrow and repetitive jobs

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Cycle of Mediocrity (3)
(Fig. 11.8)

 Customers find organizations frustrating to deal with

 Little incentive for customers to cooperate with
organizations to achieve better service
 Complaints are often made to already unhappy
employees
 Customers often stay because of lack of
choice

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Cycle of Success (1)
(Fig. 11.9)

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Cycle of Success (2)
(Fig. 11.9)

 Longer-term view of financial performance; firm

seeks to prosper by investing in people
 Attractive pay and benefits 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

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Cycle of Success (3)
(Fig. 11.9)

 Broadened job descriptions with empowerment practices

enable front-line staff to control quality, facilitate service
recovery
 Regular customers more likely to remain loyal because:

Appreciate continuity in service relationships

Have higher satisfaction due to higher quality

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 Human Resource
Management – How to
Get It Right?

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The Service Talent Cycle for
Service Firms (Fig. 11.11)

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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

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Hiring 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

 Select the right people

 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
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Tools to Identify the Best Candidates (1)

 Observe behavior
Hire based on observed behavior, not words you hear
Best predictor of future behavior is past behavior
Hire those with service excellence awards and complimentary
letters

 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

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Tools to Identify the Best Candidates (2)

 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

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Train Service Employees Actively

Service employees need to learn:

 Organizational culture, purpose and strategy
Get emotional commitment to core strategy and core values
Get managers to teach “why”, “what” and “how” of job

 Interpersonal and technical skills

Both are necessary but neither alone is enough for performing a
job well

 Product/service knowledge
Staff’s product knowledge is a key aspect of service quality

Staff must explain product features and help consumers make the
right choice

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Is Empowerment Always Appropriate?

Empowerment is most appropriate when:

Firm’s business strategy is based on personalized, customized
service and competitive differentiation
Emphasis on extended relationships rather than short-term
transactions
Use of complex and non-routine technologies
Service failures are non-routine and cannot be designed out of
the system
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
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Chew 2009interpersonal and
Essentials group
of Services process skills
Marketing Chapter 1 - Page
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

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Build High-Performance Service Delivery Teams

 Many service require cross-functional coordination for

excellent service delivery
 Teams, training and empowerment go hand-in-hand
 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 towards
success

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Motivate And Energize The Frontline

Use full range of available rewards effectively, including:

 Job content
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 achievement
Specific, difficult but attainable and accepted goals are strong
motivators

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 Service
Leadership
and Culture

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Service Leadership and Culture

 Charismatic/transformational leadership:
Change front line’s values, goals to be consistent with firm
Motivate staff to perform their best

 Service culture can be defined as:

Shared perceptions of what is important
Shared values and beliefs of why they are important

 A strong service culture focuses the entire

organization on the frontline and top management is
informed and actively involved

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The Inverted Organizational Pyramid (Fig. 11.24)

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 QnA

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