Managing People for Service Advantage

1. Chapter 11
Managing People
for Service Advantage

2. 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

3. 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”

4. Role Stress in the Frontline
3 main causes of role stress:
 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

5. 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

6. 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

7. Cycle of Failure (Fig. 11.1)
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 quality
No continuity in Use of technology Emphasis on
relationship 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

8. Service Sabotage (Fig. 11-A)
‘Openness’ of Service Sabotage Behaviors
Routinized
Covert Overt
‘Normality’ of Service Sabotage Behaviors
Customary-Private Service Customer-Public Service
Sabotage Sabotage
e.g. Waiters serving smaller e.g. Talking to guests like
servings, bad beer or sour wine young kids and putting them
down
Sporadic-Private Service Sporadic-Public Service
Sabotage Sabotage
e.g. Chef occasionally e.g. Waiters spilling soup onto
purposefully slowing down laps, gravy onto sleeves, or hot
Intermittent
orders plates into someone’s hands

9. Cycle of Mediocrity (Fig. 11.2)
Customers trade
horror stories
Other suppliers (if any)
seen as equally poor
Employees spend
working life
in environment
Employee of mediocrity
dissatisfaction
(but can’t easily quit) Emphasis
Narrow design on rules
of jobs vs. pleasing
customers
No incentive for Complaints met by
cooperative relationship Training emphasizes
indifference or Success =
to obtain better service hostility learning rules
not making
mistakes
Service not focused
Jobs are boring and on customers’ needs
repetitive; employees
unresponsive Good wages/benefits
high job security
Resentment at inflexibility and E
Promotion
lack of employee initiative; and pay
complaints to employees increases based Initiative is
on longevity, discouraged
lack of mistakes
Customer dissatisfaction

10. Cycle of Success (Fig. 11.3)
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

11. 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?
1. Hire the right people
2. Enable your people
3. Motivate and energize your people

12. 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

13. 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

14. 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

15. 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

16. 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

17. Train Service Employees
• 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

18. 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

19. Control vs. Involvement Model of
Management
Control concentrates 4 key features at top of organization;
Involvement pushes them down:
• 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

20. Levels of Employee Involvement
• Suggestion involvement
– Employee
recommendation
• Job involvement
– Jobs redesigned
– Employees retrained
– Supervisors facilitate
• High involvement
– Information is shared
– Employees skilled in

21. Motivate and Energize the
Frontline
Use the full range of available rewards effectively, including:
• Job content
• Feedback and recognition
• Goal accomplishment

22. The Inverted Organizational
Pyramid (Fig. 11.5)
Customer Base
Top
Mgmt Frontline Staff
Middle
Mgmt
Middle Mgmt
Frontline & Top Mgmt
Staff Support Frontline
Traditional Organizational Inverted Pyramid with a
Pyramid Customer & Frontline Focus
Legend: = Service encounters, or ‘Moments of Truth.’

23. The Wheel of Successful HR in
Service Firms (Fig. 11.6)
Leadership that:
Focuses the entire organization on 1. Hire the
supporting the frontline Right People
Fosters a strong service 3. Motivate & Energize Be the preferred
culture with passion for
Your People employer & compete for
service and productivity
talent market share
Drives values that Service Excellence Intensify the
Utilize the full range selection process
inspire, energize and of rewards & Productivity
guide service
providers
2. Enable Your People
Empower Frontline
Build high performance service
delivery teams
Extensive Training