Pulling the Pieces Together: World Class Service Culture Chapter 15 Pulling the Pieces Together: World Class Service Culture

Chapter Objectives Compare and contrast the concept of seamlessness to departmentalization and functionalism. Describe how a service firm’s internal logics impacts its service culture. Understand the fundamental difference between tow philosophical approaches embraced by many service firms – the industrial management approach vs the market-focused management approach. ©2011 Cengage Learning. All rights reserved.

Chapter Objectives Explain the concept of organizational culture and describe observational and indirect questioning approaches for assessing the organization’s current culture. Explain the basic components of a service audit. Discuss four fundamental strategies that facilitate cultural change. ©2011 Cengage Learning. All rights reserved.

Opening Vignette: Google’s Google – Y Culture Google-y employees are described as flexible, adaptable, not focused on job titles and hierarchy, and able to get stuff done. The company has spent a lot of effort on developing programs and activities centered around employee career development and growth. ©2011 Cengage Learning. All rights reserved.

Seamless Service Service that occur without interruption, confusion, or hassle to the customer. Ritz-Carlton’s Gold Standards clearly articulate the dedication not only to its guests, but also to its own personnel. ©2011 Cengage Learning. All rights reserved.

Obstacles to World Class Service: Internal Logics Operations logic stresses cost containment and reduction through mass production Marketing logic stresses providing customers with options that better enable the service offering to meet individual needs Human resources logic stresses recruiting personnel and developing training to enhance the performance of existing personnel ©2011 Cengage Learning. All rights reserved.

Figure 15.2: Three-Cornered Fight for Control Marketing Operations Human Resources ©2011 Cengage Learning. All rights reserved.

Business Philosophies Industrial Management Model Verses Market-Focused Management Model ©2011 Cengage Learning. All rights reserved.

Figure 15.3: Services Triangle ©2011 Cengage Learning. All rights reserved.

Developing a Service Culture Culture: the shared values and beliefs that drive an organization’s overall service philosophy Assessing the Current Culture: Observation and Indirect Questioning Service Audit ©2011 Cengage Learning. All rights reserved.

Observational Techniques Observe the current culture as an impartial observer Gauge employee emotions Observe objects and artifacts Observe what is missing Go for a culture walk Conduct culture interviews and surveys ©2011 Cengage Learning. All rights reserved.

Service Audit: Profit and Growth Component 1. How does the firm define customer loyalty? 2. Does the firm measure profits from referrals? 3. What proportion of the firm’s development funds are spent on retaining customers as opposed to attracting new ones? 4. When customers do not return, do we know why? ©2011 Cengage Learning. All rights reserved.

Service Audit: Customer Satisfaction Component 5. Is customer satisfaction data collected in a systematic manner? 6. What methods are utilized to obtain customer feedback? 7. How is customer satisfaction data used? ©2011 Cengage Learning. All rights reserved.

Service Audit: External Service Value Component 8. How does the firm measure value? 9. How is information on customer perceptions of the firm’s value shared within the company? 10. Does the firm actively measure the gap between customer expectations and perceptions of services delivered? 11. Is service recovery an active strategy discussed among management and employees? ©2011 Cengage Learning. All rights reserved.

Service Audit: Employee Productivity Component 12. How does the firm measure employee productivity? ©2011 Cengage Learning. All rights reserved.

Service Audit: Employee Loyalty Component 13. Does the firm actively pursue strategies to promote employee loyalty? 14. Does the firm set employee retention goals? ©2011 Cengage Learning. All rights reserved.

Service Audit: Employee Satisfaction Component 15. Are employee satisfaction measures linked to customer satisfaction measures? 16. Are customer and organizational needs considered when hiring? 17. Are employee reward programs tied to customer satisfaction, customer loyalty, and quality of employee performance? ©2011 Cengage Learning. All rights reserved.

Service Audit: Internal Service Quality Component 18. Are employees aware of internal and external customers? 19. Do employees have the support necessary to do their jobs? ©2011 Cengage Learning. All rights reserved.

Service Audit: Firm’s Leadership Component 20. Does the firm’s leadership help or hinder the service delivery process? 21. Is the firm’s leadership creating a corporate culture that helps employees as they interact with customers? ©2011 Cengage Learning. All rights reserved.

Service Audit: Measurement Relationship Component 22. How do the preceding measures of service performance in the service audit relate to the firm’s overall profitability? ©2011 Cengage Learning. All rights reserved.

Figure 15.5: Cultural Framework ©2011 Cengage Learning. All rights reserved.

Strategies that Facilitate Cultural Change Changing Culture through Structure utilizing the marketing department as change agents restructuring around the customer experience real danger associated with this approach Changing Culture through Systems Reward structures Marketing planning Certainly useful to start with Can become a “mind-numbing exercise” ©2011 Cengage Learning. All rights reserved.

Strategies that Facilitate Cultural Change Changing Culture through People Bringing in a Champion Changing Culture Directly Mixed groups are Cross-sectional Family groups are Departmental Low empowerment is the ability to change individual behavior High empowerment is the ability to change the organization ©2011 Cengage Learning. All rights reserved.

Figure 15.6: Categorizing Culture Change Initiatives EMPOWERMENT GROUP MIXED FAMILY Low “Putting the customer first” “Orientation Change” High “Change the way you work” “Change the way we work” Source: John E. G. Bateson, Managing Services Marketing: Text and Readings, 3rd ed. (Fort Worth, TX: The Dryden Press. 1995). ©2011 Cengage Learning. All rights reserved.

Copyright © 2011 Cengage Learning. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Cengage Learning.  ©2011 Cengage Learning. All rights reserved.