Service Industy Working

1. Human Resource Management
in the Service Sector
Introduction to the service sector
Nick Kinnie

2. 2
Objectives
• Outline the importance of the service sector in
modern economies
• Identify the key characteristics of service work
and the areas of the sector for detailed study:
knowledge intensive work
• Outline the research in the area
• Introduce the HRM challenges posed by
knowledge based service sector working

3. 3
Introduction
• Service sector dominates employment in advanced
industrial societies
• Consequence of the move towards the ‘post-
industrial society’
• Around three quarters of employment in this sector
and evidence of fast growth in recent years
• Major employers in this area – with important
influence on the global economy
• However, the concepts and metaphors of much of the
debate in the area are based around the
manufacturing sector

4. 4
Employee-employer–
customer/client interactions
• Often direct interaction
between the employee
and the customer/client
• Adds to the traditional
relationship between
employer and employee
• In manufacturing –
often buffers
Customer/client
Employer Employee

5. 5
Classic definition of service work
• Intangibility
• Perishability
• Variability
• Simultaneous production and
consumption
• Inseparability - co-production between
employee and customer
(Korczynski (2002:5-7))

6. 6
Limitations of this definition
• Not all service work has all five characteristics
– Back office jobs – no customer contact and non-
perishable products
– Administrator in a hospital – separate from
patients
– Sales work – presence of a physical product
• Manufacturing work often involves working on
services and customers
• Differences between manufacturing and
services are eroding – extent to which they
are based on knowledge

7. 7
Previous research in the field
• New service management school – the customer-service-
profit chain (Schlesinger and Heskett (1992) Schneider and
Bowen (1995))
– Links between management of employees and customers’
perception of service
– Advocate the deindustrialisation of service work and the
empowerment approach
• Critical perspectives – ‘MacDonalization of society’ (Ritzer
(1999))
– Customer service work as fake, invasive, emotionally
draining, demeaning, routinised and alienating
• Much of this is based on traditional views of service work (retail,
hospitality, health care etc)
• Alternative approach – what are the basic means
of production – the key assets upon which the
firm depends?

8. 8
Types of organisations
Knowledge
intensive
organisations
Labour
intensive
organisations
Physical
capital
intensive
organisations
PSFs
Non-
PSFs
Products Services Products Services Products
(Suddaby and Greenwood (2006:7))

9. 9
Knowledge-based view of the
firm
• Firms compete principally on the basis of
their knowledge – both individual and
collective
• Valuable, rare, inimitable and non-
substitutable
• Ability to grow this knowledge and to grow it
quickly can be a key source of competitive
advantage in fast moving environments

10. 10
Types of knowledge and implications
for knowledge management and
HRM
• Explicit knowledge – ‘know what’ – can be codified
and written down – tends to be associated with
knowledge management systems – often IT based –
collecting information together and exploiting it
• Tacit knowledge – ‘know how’ – difficult to codify and
write down – in people’s heads/ socially constructed
– ‘personalised’ and culture based knowledge
management systems
• If knowledge takes these forms – highlights the
key role played by managing knowledge and
managing knowledge workers

11. 11
Converting Human Capital into
Intellectual Capital
Human Capital
Employee
Knowledge
Skills
Experience
Conversion
Process
Intellectual Capital
Human Capital
Role of HR
practices in this
conversion process
Products
and
services
which have
market value

12. 12
Implications for HRM
Intangible
Knowledge
based
Customised
Professional
Measurement
Standardisation
Performance
management/reward
Training and
Development
Recruit and retain
Staff
allocation
Renewal
Organisational
commitment
Nature of Work Managerial problem HRM issue
(Drawn from Suddaby and Greenwood (2006) Maister (2003) and Batt (2006))

13. 13
Preparation for next week
• Drawing on a knowledge intensive
service firm with which you are familiar
consider:
– What are the key resources upon which
the success of the firm is based? (consider
those in addition to the knowledge and
skills of employees)
– How does this firm use HR practices to try
to manage these resources?