Utsav Mahendra : Managing People for Service Advantage


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Managing People
for Service Advantage

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Utsav Mahendra : Managing People for Service Advantage

  1. 1. Chapter 11 Managing Peoplefor Service Advantage
  2. 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. 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. 4. Role Stress in the Frontline3 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. 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. 6. 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
  7. 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 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
  8. 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. 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 securityResentment 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. 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 inrelationship 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. 11. How to Manage People for Service Advantage?Staff performance is a function of both ability and motivation. Howcan we get able service employees who are motivated to productivelydeliver service excellence?1. Hire the right people2. Enable your people3. Motivate and energize your people
  12. 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. 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. 14. 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 – Different jobs are best filled by people with different skills, styles or personalities – Hire candidates that fit firm’s core values and culture
  15. 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. 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. 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. 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. 19. Control vs. Involvement Model of ManagementControl 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. 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. 21. Motivate and Energize the FrontlineUse the full range of available rewards effectively, including:• Job content• Feedback and recognition• Goal accomplishment
  22. 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 FocusLegend: = Service encounters, or ‘Moments of Truth.’
  23. 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