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Chapter 11 : Managing people for service advantage

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<ul><li>Nine rules of success </li></ul><ul><ul><li>Treat customers like family – don’t let customers feel like strangers, smile, chat, involve everyone, respect everyone (even children) </li></ul></ul><ul><ul><li>Listen first - develop exceptionally good listening skills (example Cora never writes orders) </li></ul></ul><ul><ul><li>Anticipate customer’s wants – provide timely, well managed customer service, anticipate needs and provide the customers what they want without them having to ask </li></ul></ul><ul><ul><li>Simple things make the difference – take care of things, however small they might seem. Example cleanliness, placement of cutlery, keeping children busy etc. </li></ul></ul>Core Griffith – the outstanding waitress

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<ul><ul><li>Work smart – look for opportunities to combine tasks, be organized, keep in touch with the big picture </li></ul></ul><ul><ul><li>Keep learning – try and improve existing skills and learn the new ones </li></ul></ul><ul><ul><li>Success is where you find it – be content and satisfied with your work, optimistic attitude -> positive force in restaurant </li></ul></ul><ul><ul><li>All for one, one for all – work in a team, support the team in whichever manner possible, appreciate them </li></ul></ul><ul><ul><li>Take pride in your work – work wholeheartedly in whatever you’ve chosen to do, give it your best </li></ul></ul>Core Griffith – the outstanding waitress (2)

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<ul><li>Frontline jobs -> most demanding </li></ul><ul><li>Employees are expected to be fast, efficient in executing operational tasks, courteous, helpful </li></ul><ul><li>Frontline employees -> key input for delivering service excellence and competitive advantage </li></ul><ul><li>Behind successful organizations ->firm commitment to effective management of human resources </li></ul><ul><li>Realization of economic payoff from investing in people </li></ul><ul><li>Successful organization characterized by distinctive culture of service leadership and role modeling by top management </li></ul>SERVICE EMPLOYEES ARE CRUCIALLY IMPORTANT

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<ul><li>Encounters of exceptionally bad or exceptionally good service experience </li></ul><ul><li>Prominent feature -> service personnel </li></ul><ul><li>The most important aspect of service -> encounter with service staff </li></ul><ul><li>Service level + way service is delivered -> important source of differentiation </li></ul>Service personnel as a source of Customer Loyalty and Competitive Advantage (1)

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Service personnel as a source of Customer Loyalty and Competitive Advantage (2) <ul><li>Frontline employees play a key role in anticipating customers’ needs, customizes service delivery, builds personal relationships with customers </li></ul><ul><li>Highly motivated people are the core of service excellence </li></ul>

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<ul><li>The service profit chain </li></ul>Service personnel as a source of Customer Loyalty and Competitive Advantage (3)

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<ul><li>Growing trend across all types of services toward low contact delivery channels (call centers, self service options) </li></ul><ul><li>Routine tasks conducted without frontline staff - interactive voice response (IVR), ATMS </li></ul><ul><li>However, quality of frontline employees still remains imperative </li></ul><ul><li>Occasional service encounters are most critical in developing customer perception -> Moments of Truth </li></ul>The frontline in low contact services

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<ul><li>The main reasons why service oriented jobs are most demanding </li></ul><ul><ul><li>Boundary spanning </li></ul></ul><ul><ul><ul><li>Service employees are referred to as boundary spanners. </li></ul></ul></ul><ul><ul><ul><li>They link inside of the organization to the outside world, operate at the boundary of the company. </li></ul></ul></ul><ul><ul><ul><li>Multiplicity of roles in service jobs leads to conflicts. </li></ul></ul></ul><ul><ul><li>Sources of conflict </li></ul></ul><ul><ul><ul><li>Organization/ client conflict </li></ul></ul></ul><ul><ul><ul><li>Person/ role conflict </li></ul></ul></ul><ul><ul><ul><li>Inter client conflict </li></ul></ul></ul>FRONTLINE WORK IS DIFFICULT AND STRESSFUL

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<ul><ul><ul><li>Emotional labour </li></ul></ul></ul><ul><ul><ul><ul><li>Coined by Arlie Hochschild </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Emotional labour arises when a discrepancy exists between the way frontline staff feel inside and the emotions that management requires them to show in front customers </li></ul></ul></ul></ul><ul><ul><ul><li>Service sweat shops </li></ul></ul></ul><ul><ul><ul><ul><li>Deployment of new technology and methods can dramatically change the nature of work environment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Jobs redefined, relocated </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Growing shift from high to low contact services </li></ul></ul></ul></ul><ul><ul><ul><ul><li>These jobs place employees in an electronic equivalent of a sweat shop </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Stress </li></ul></ul></ul></ul>Frontline work is difficult and stressful (2)

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Cycle of Failure 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 E m p l o y e e C y c l e C u s t o m e r C y c l e Source: Schlesinger and Heskett

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<ul><li>The employee cycle of failure </li></ul><ul><ul><li>Narrow job design for low skill levels </li></ul></ul><ul><ul><li>Emphasis on rules rather than service </li></ul></ul><ul><ul><li>Use of technology to control quality </li></ul></ul><ul><li>The customer cycle of failure </li></ul><ul><ul><li>Managers’ short-sighted assumptions about financial implications of low pay/investment (recruitment, training) /high turnover human resource strategies </li></ul></ul>Cycle of Failure (2)

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<ul><li>Costs of short-sighted policies are ignored </li></ul><ul><ul><li>Loss of expertise among departing employees </li></ul></ul><ul><ul><li>Disruption to service from unfilled jobs </li></ul></ul><ul><ul><li>Constant expense of recruiting, hiring, training </li></ul></ul><ul><ul><li>Lower productivity of inexperienced new workers </li></ul></ul><ul><ul><li>Loss of revenue stream from dissatisfied customers who go elsewhere </li></ul></ul><ul><ul><li>Loss of potential customers who are turned off by negative word-of-mouth </li></ul></ul><ul><ul><li>Higher costs of winning new customers to replace those lost—more need for advertising and promotional discounts </li></ul></ul>Cycle of Failure (3)

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Service Sabotage (Insight 11-1) Customary-Private Service Sabotage Sporadic-Private Service Sabotage Customary-Public Service Sabotage Sporadic-Public Service Sabotage ‘ Normality’ of Service Sabotage Behaviors Routinized Intermittent e.g. Waiters serving smaller servings, bad beer or sour wine, slowing service for getting overtime payments e.g. Talking to guests like young kids and putting them Down, time consuming credit card veracity confirmation e.g. Chef occasionally purpose fully slowing down orders , hygiene issues, quality, misread orders, gross misconduct e.g. Waiters spilling soup onto laps, gravy onto sleeves, or hot plates into someone’s hands ‘ Openness’ of Service Sabotage Behaviors Covert Overt

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Cycle of Mediocrity y Good 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) Emphasis on rules vs. pleasing customers E m p l o y e e C c l e C u s t o m e r C y c l e Promotion and pay increases based on longevity, lack of mistakes Initiative is discouraged Jobs are boring and repetitive; employees unresponsive Resentment at inflexibility and lack of employee initiative; complaints to employees No incentive for cooperative relationship to obtain better service Training emphasizes learning rules Customer dissatisfaction

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<ul><li>Most commonly found in large, bureaucratic organizations </li></ul><ul><li>Service delivery is oriented toward </li></ul><ul><ul><li>Standardized service </li></ul></ul><ul><ul><li>Operational efficiencies </li></ul></ul><ul><ul><li>Prevention of employee fraud and favoritism toward specific customers </li></ul></ul>Cycle of Mediocrity (2)

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<ul><li>Job responsibilities narrowly and unimaginatively defined </li></ul><ul><li>Successful performance measured by absence of mistakes and not productivity or service </li></ul><ul><li>Low flexibility & initiatives; adequate pay/benefits </li></ul><ul><li>Training focuses on learning rules and technical aspects of job—not on improving interactions with customers and co-workers </li></ul>Cycle of Mediocrity (3)

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Cycle of Success Source: Heskett and Schlesinger C y 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 margins Broadened job designs Lowered turnover, high service quality Above average wages Intensified selection effort E m p l o y e e c l e C u s t o m e r C y c l e Train, empower frontline personnel to control quality

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<ul><li>Longer-term view of financial performance; firm seeks to prosper by investing in people </li></ul><ul><li>Attractive compensation packages attract better job applicants </li></ul><ul><li>More focused recruitment, intensive training, and higher wages make it more likely that employees are: </li></ul><ul><ul><li>Happier in their work </li></ul></ul><ul><ul><li>Provide higher quality, customer-pleasing service </li></ul></ul>Cycle of Success (2)

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<ul><li>Broadened job descriptions with empowerment practices enable frontline staff to control quality and facilitate service recovery </li></ul><ul><li>Regular customers more likely to remain loyal because: </li></ul><ul><ul><li>Appreciate continuity in service relationships </li></ul></ul><ul><ul><li>Have higher satisfaction due to higher quality </li></ul></ul>Cycle of Success (3)

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<ul><li>Hire the right people </li></ul><ul><li>Enable your people </li></ul><ul><li>Motivate and energize your people </li></ul>How to Manage People for Service Advantage? 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?

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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 most important asset.” Jim Collins

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The Wheel of Successful HR (Fig 11.5) Leadership that: <ul><li>Focuses the entire organization on supporting the frontline </li></ul><ul><li>Fosters a strong service culture with passion for service and productivity </li></ul><ul><li>Drives values that inspires, energizes and guides service providers </li></ul>1. Hire the Right People 3. Motivate and Energize Your People 2. Enable Your People <ul><li>Be the preferred employer & compete for talent market share </li></ul><ul><li>Intensify the selection process </li></ul><ul><li>Empower frontline </li></ul><ul><li>Build high performance service delivery teams </li></ul><ul><li>Extensive training </li></ul><ul><li>Utilize the full range of rewards </li></ul>Service Excellence & Productivity

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<ul><li>The right people are a firm’s most important asset: take a focused, marketing-like approach to recruitment </li></ul><ul><li>Clarify what must be hired versus what can be taught </li></ul><ul><li>Clarify nature of the working environment, corporate values and style, in addition to job specs </li></ul><ul><li>Ensure candidates have/can obtain needed qualifications </li></ul><ul><li>Evaluate candidate’s fit with firm’s culture and values </li></ul><ul><li>Fit personalities, styles, energies to the appropriate jobs </li></ul>Recruitment

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<ul><li>Create a large pool: “Compete for Talent Market Share” </li></ul><ul><li>What determines a firm’s applicant pool? </li></ul><ul><ul><li>Positive image in the community as place to work </li></ul></ul><ul><ul><li>Quality of its services </li></ul></ul><ul><ul><li>The firm’s perceived status </li></ul></ul><ul><li>There is no perfect employee </li></ul><ul><ul><li>Different jobs are best filled by people with different skills, styles or personalities </li></ul></ul><ul><ul><li>Hire candidates that fit firm’s core values and culture </li></ul></ul><ul><ul><li>Focus on recruiting naturally warm personalities </li></ul></ul>Select And Hire the Right People: (1) Be the Preferred Employer

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<ul><li>Observe Behavior </li></ul><ul><ul><li>Hire based on observed behavior, not words you hear </li></ul></ul><ul><ul><li>Best predictor of future behavior is past behavior </li></ul></ul><ul><ul><li>Consider group hiring sessions where candidates given group tasks </li></ul></ul><ul><li>Personality Testing </li></ul><ul><ul><li>Willingness to treat co-workers and customers with courtesy, consideration and tact </li></ul></ul><ul><ul><li>Perceptiveness regarding customer needs </li></ul></ul><ul><ul><li>Ability to communicate accurately and pleasantly </li></ul></ul>Select and Hire the Right People: (2) How to Identify the Best Candidates

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<ul><li>Employ Multiple, Structured Interviews </li></ul><ul><ul><li>Use structured interviews built around job requirements </li></ul></ul><ul><ul><li>Use more than one interviewer to reduce similar to me effects </li></ul></ul><ul><li>Give Applicants a Realistic Preview of the Job </li></ul><ul><ul><li>Chance to have “hands-on” with the job </li></ul></ul><ul><ul><li>Assess how the candidates respond to job realities </li></ul></ul><ul><ul><li>Allow candidates to self select themselves out of the job </li></ul></ul>Select and Hire the Right People: (3) How to Identify the Best Candidates

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<ul><li>The Organizational Culture, Purpose and Strategy </li></ul><ul><ul><li>Promote core values, get emotional commitment to strategy </li></ul></ul><ul><ul><li>Get managers to teach “why”, “what” and “how” of job. </li></ul></ul><ul><li>Interpersonal and Technical Skills </li></ul><ul><ul><li>Both are necessary but neither is sufficient for optimal job performance </li></ul></ul><ul><li>Product/Service Knowledge </li></ul><ul><ul><li>Staff’s product knowledge is a key aspect of service quality </li></ul></ul><ul><ul><li>Staff need to be able to explain product features and to position products correctly </li></ul></ul>Train Service Employees

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Is Empowerment Always Appropriate? <ul><li>Empowerment is most appropriate when: </li></ul><ul><ul><li>Firm’s business strategy is based on competitive differentiation and on personalized, customized service </li></ul></ul><ul><ul><li>Emphasis on extended relationships versus short-term transactions </li></ul></ul><ul><ul><li>Use of complex and nonroutine technologies </li></ul></ul><ul><ul><li>Business environment is unpredictable, consisting of surprises </li></ul></ul><ul><ul><li>Managers are comfortable letting employees work independently for benefit of firm and customers </li></ul></ul><ul><ul><li>Employees seek to deepen skills, like working with others, and are good at group processes </li></ul></ul>

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<ul><li>Production Line Approach – well established control model. Clearly defined roles, top down control systems. </li></ul><ul><li>Empowerment in contrast is an involvement method: assumes employees can help in decision making </li></ul><ul><li>Information about org. performance </li></ul><ul><li>Knowledge enabling understanding </li></ul><ul><li>Power to make decisions </li></ul><ul><li>Rewards </li></ul>Control Vs Involvement

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<ul><li>Suggestion Involvement to make recommendations </li></ul><ul><li>Job Involvement to enable the use of wider array of skills </li></ul><ul><li>High Involvement gives lowest level of employees a sense of involvement </li></ul>Levels of Empowerment

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<ul><li>A team is “a small number of people with complementary skills committed to a common purpose” </li></ul><ul><li>Service departments need to create cross functional teams with the authority and responsibility to serve customers </li></ul>Building High-Performance Service delivery teams

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<ul><li>Teams, training and empowerment go hand in hand </li></ul><ul><li>Team facilitates communication among team members and sharing of knowledge </li></ul><ul><li>Operating small, independent units service team take more responsibility </li></ul>Power of Teamwork in Service

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<ul><li>An owner </li></ul><ul><li>A leader who monitors team progress and process </li></ul><ul><li>A quality facilitator – someone who knows how to make team work and who can remove barriers to progress </li></ul>Creating successful service delivery teams

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<ul><li>Hiring right people </li></ul><ul><li>Training them well </li></ul><ul><li>Empowering them </li></ul><ul><li>Organizing them into effective service delivery teams </li></ul><ul><li>Staff motivation is function of ability and motivation </li></ul>Motivate and Energizing People

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<ul><li>People are motivated just by knowing that they are doing a good job </li></ul><ul><li>They feel empowered when they know that they are making a difference in the overall picture </li></ul><ul><li>They spread positivity and align their commitments to the needs to the job itself </li></ul>Job Content

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<ul><li>Human Beings are social animals </li></ul><ul><li>They derive sense of identity and belonging to an organization from the recognition and feedback from people in their work envrionment </li></ul>Feedback and Recognition

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<ul><li>Goal’s help in focusing people’s energies </li></ul><ul><li>Goals that are specific, difficult yet attainable and accepted by the staff are strong motivators </li></ul>Goal Achievement

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<ul><li>Labor Unions and service excellence do not gel </li></ul><ul><li>Power of organized labor is cited as an excuse for not adopting new approaches in both service and manufacturing </li></ul><ul><li>Contrary to the aforesaid most successful service oriented companies across the globe are highly unionized </li></ul>Role of the Labor Unions

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<ul><li>A string service culture helps in attaining a successful strategy </li></ul><ul><li>Service Culture can be defined as: </li></ul><ul><li>Shared perceptions of what is important in an org </li></ul><ul><li>Shared values and beliefs of why those things are important </li></ul>Service Leadership and Culture

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<ul><li>In addition to a strong leadership that focuses on the frontline, it takes strong communications effort to shape culture and get the message to the troop </li></ul><ul><li>Internal communications from senior managers to their employees plays a vital role in maintaining and nurturing a corporate culture </li></ul><ul><li>Efficient internal communication helps ensure efficient and satisfactory service delivery; achieve productive and harmonious working relationships; building employee trust </li></ul>Internal Marketing

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<ul><li>Quality of a service firm’s people – especially those in customer positions – plays a crucial role in determing market success and financial performance. </li></ul>Conclusion

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<ul><li>  Thank you!!!   </li></ul>