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

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 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 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 EmployerEmployee

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 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 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 Types of organisations Knowledge intensive organisations Labour intensive organisations Physical capital intensive organisations PSFs Non- PSFs ProductsServicesProductsServicesProducts (Suddaby and Greenwood (2006:7))

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

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 WorkManagerial problemHRM issue (Drawn from Suddaby and Greenwood (2006) Maister (2003) and Batt (2006))

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?