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  1. 1. Managing Peoplefor Service Advantage
  2. 2. 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
  3. 3. The Cycles of Failure, Mediocrity and SuccessToo many managers make short-sighted assumptions about financial implications of:  Low pay  Low investment (recruitment, training)  High turnover human resource strategiesOften 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
  4. 4. 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 qualityNo continuity in Use of technology Emphasis onrelationship for to control quality rules rather customer Employee dissatisfaction; than service poor service attitude Payment of low wages Employees Minimization of become bored selection effort Customer dissatisfaction Minimization of training Employees can’t respond to customer problems Source: Schlesinger and Heskett
  5. 5. Employee cycle of failure Begins with a narrow design of jobs to accommodate low skill levels, an emphasis on rules rather than service and the use of technology to control quality Strategy of low wages is accompanied by minimal effort on selection of training Consequences include bored employees who lack the ability to respond to customer problems,become dissatisfied and develop a poor service attitude. Outcomes for the firm are low service quality and high employee turnover Because of weak profit margins, the cycle repeats itself with the hiring of more low paid employees to work in this unrewarding atmosphere
  6. 6. Customer cycle of failure Begins with repeated emphasis on attracting new customers Become dissatisfied with employee performance and the lack of continuity implicit in continually changing faces These customers fail to develop any loyalty to the supplier This requires an ongoing search for new customers to maintain sales volume.
  7. 7. 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
  8. 8. Strategies for managing people
  9. 9. The Wheel of Successful HR in Service FirmsLeadership that:Focuses the entire organization 1. Hire the on supporting the frontline Right PeopleFosters a strong 3. Motivate & Be the preferred service culture with Energize Your People employer & compete passion for service and productivity for talent market shareDrives values that Service Excellence Intensify the Utilize the full selection inspire, energize range of rewards & Productivity and guide service process providers 2. Enable Your People Empower Frontline Build high performance service delivery teams Extensive Training
  10. 10. 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
  11. 11. Select And Hire the Right People:(1) Be the Preferred EmployerCreate 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  Differentjobs 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
  12. 12. Select and Hire the Right People:(2) How to Identify the 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 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
  13. 13. 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
  14. 14. Enable your people 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
  15. 15. 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
  16. 16. Motivate and Energize the FrontlineUse the full range of available rewards effectively,including: Job content Feedback and recognition Goal accomplishment
  17. 17. The Inverted Organizational Pyramid Customer Base Top Mgmt Frontline Staff Middle Mgmt Middle Mgmt Frontline & Top Mgmt Staff Support Frontline Traditional Inverted Pyramid with a Organizational Pyramid Customer & Frontline FocusLegend: = Service encounters, or „Moments of Truth.‟
  18. 18. Service-Profit Chain Model• Most applicable to service environments.• Model is based on a set of cause and effect linkages between internal and external performance, and defines the key performance measurements on which service-based firms should focus.
  19. 19. The Service-Profit Chain ModelSource: Adapted from J. L. Heskett, T. O. Jones, G. W. Loveman, W. E. Sasser, Jr., Jr., and L. A. Schlesinger,“Putting the Service-Profit Chain to Work,” Harvard Business Review, March–April 1994, pp. 164-174.
  20. 20. Causal Links in the Service Profit Chain Customer loyalty drives profitability and growth Customer satisfaction drives customer loyalty Value drives customer satisfaction Employee productivity and retention drive value Employee loyalty drives productivity Employee satisfaction drives loyalty and productivity Internal quality drives employee satisfaction Top management leadership underlies chain‟s success