1. Ashesi University COURSE TITLE : SERVICES MARKETING
SEMESTER : SECOND, 2009/2010
MODULE 8: Service Delivery II: Managing People for Service Advantage
Lecturer: Ebow Spio

2. Learning Outcomes
Appreciate that service staff is crucially important to the success of a service firm
Understand that the work of service staff can be demanding, challenging, and difficult
Understand the cycles of failures, mediocrity, and success in HR for service firms
Appreciate the role of human resource management in helping firms operate in the Cycle of Success
Understand the role of service culture and service leadership
This module examines the role of human resource management in achieving service excellence. It reviews HR tasks especially relevant to services, ranging from hiring, to training, and motivation of the front line, showing how these relate to the task of moving a firm from the Cycle of Failure to the Cycle of Success. It also covers various types of conflicts faced by staff. It also highlights the role of a strong service culture and the need to establish value-driven leadership.

3. Service Employees Are Crucially Important : Service Personnel: Source of Customer Loyalty and Competitive Advantage
Customer’s perspective: Encounter with service staff is most important aspect of a service
Firm’s perspective: Frontline is an important source of differentiation and competitive advantage. It is:
A core part of the product
the service firm
The brand
Frontline is an important driver of customer loyalty
Anticipating customer needs
Customizing service delivery
Building personalized relationships
The service level delivered and the way the service is delivered can be an important source of differentiation and competitive advantage. Service staff is the most visible element of the service and the component that significantly delivers service quality. As the service staff represents the company in its interactions with the customers and delivers the brand promise, the service staff are also very much the service firm (from the customers’ point of view) and the brand. Highly motivated service staff plays a key role in anticipating customer needs, building personalized relationships with customers, and thus building customer loyalty. Other than being an invaluable asset in high-contact services, front-line staff are also crucial in low contact services where technology is largely commoditized. The firms’ differentiation will then rest on these few moments of truth whether it is through the phone, or face to face.

4. Frontline in Low-Contact Services
Many routine transactions are now conducted without involving frontline staff, e.g.,
ATMs (Automated Teller Machines)
IVR (Interactive Voice Response) systems
Websites for reservations/ordering, payment, etc.
Though technology and self-service interface is becoming a key engine for service delivery, frontline employees remain crucially important
“Moments of truth” drive customer’s perception of the service firm

5. Frontline Work Is Difficult and Stressful: Boundary Spanning Roles
Boundary spanners link inside of organization to outside world
Multiplicity of roles often results in service staff having to pursue both operational and marketing goals
Consider management expectations of service staff:
Delight customers
Be fast and efficient in executing operational tasks
Do selling, cross selling, and up-selling
Enforce pricing schedules and rate integrity
Front-line staff are boundary spanners, as they operate at the boundary of the company, linking and transferring information from the inside of the organization to the outside world. As such, they often have conflicting roles particularly in areas such as service quality, productivity, and sales, as they have to fulfill both operational and marketing goals.

6. Role Stress in Frontline Employees
Three main causes of role stress:
Person versus Role: Conflicts between what jobs require and employee’s own personality and beliefs
Organizations must instill “professionalism” in frontline staff
Organization versus Client: Dilemma whether to follow company rules or to satisfy customer demands
This conflict is especially acute in organizations that are not customer oriented
Client versus Client: Conflicts between customers that demand service staff intervention

7. Emotional Labor
“The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)
Three approaches used by employees:
Surface acting—simulate emotions they don’t actually feel
Deep acting—psych themselves into experiencing desired emotion, perhaps by imagining how customer is feeling
Spontaneous response
Performing emotional labor in response to society’s or management’s display rules can be stressful
Good HR practices emphasize selective recruitment, training, counseling, and strategies to alleviate stress
Emotional labor is a very real problem faced by front-line staff and arises when there are discrepancies between the way the front-line staff feel inside and the emotions that they are expected to portray in front of customers.

8. Source: Schlesinger and Heskett
Cycles of Failure, Mediocrity, and Success :Cycle of Failure (1) (Fig 11.4)
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
Use of technology
No continuity in
Emphasis on
relationship for
to control quality
rules rather
customer
Employee dissatisfaction;
than service
poor service attitude
Payment of
Cycle of Failure (Figure 11.4) begins with employee cycle of failure due to narrow job design, low wages, minimal training, and overemphasis on rules. This failure results in customer cycle of failure, which emphasizes attracting new customers, as the old customers are dissatisfied due to poor employee performance.
low wages
Employee
Cycle
Employees
Minimization of
become bored
Customer
selection effort
dissatisfaction
Minimization
of training
Employees can’t
respond to customer
Customer
Cycle
problems
Source: Schlesinger and Heskett

9. Cycle of Failure (2) (Fig 11.5)
The employee cycle of failure
Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
The customer cycle of failure
Managers’ short-sighted assumptions about financial implications of low pay, high turnover human resource strategies

10. Cycle of Failure (3) (Fig 11.5)
Costs of short-sighted policies are ignored
Loss of expertise among departing employees
Disruption to service from unfilled jobs
Constant expense of recruiting, hiring, training
Lower productivity of inexperienced new workers
Loss of revenue stream from dissatisfied customers who go elsewhere
Loss of potential customers who are turned off by negative word-of-mouth
Higher costs of winning new customers to replace those lost—more need for advertising and promotional discounts

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

12. Cycle Of Mediocrity (1) (Fig 11.5)
Good wages/benefits
high job security
Other suppliers (if any)
seen as equally poor
Customers trade
horror stories
Service not focused
on customers’ needs
Employees spend
working life
in environment
of mediocrity
Narrow design
of jobs
Success =
not making
mistakes
Complaints met by
indifference or
hostility
Employee
dissatisfaction
(but can’t easily quit)
Emphasis
on rules
vs. pleasing
customers
Promotion
and pay
increases based
on longevity,
lack of mistakes
Initiative is
discouraged
Jobs are boring and
repetitive; employees
unresponsive
Resentment at inflexibility and
lack of employee initiative;
complaints to employees
No incentive for
cooperative relationship
to obtain better service
Training emphasizes
learning rules
Customer dissatisfaction
Cycle
Customer
Cycle of Mediocrity (Figure 11.5) occurs in large bureaucratic organizations (e.g. state monopolies) which offer adequate pay and job security, but little scope for personal initiative. There is little incentive for the customers to cooperate with the organization to achieve better service. Customers are frustrated and resent the bureaucratic approach and lack of service flexibility.
Source: Heskett and Schlesinger

13. Cycle Of Mediocrity (2) (Fig 11.5)
Most commonly found in large, bureaucratic organizations
Service delivery is oriented toward
Standardized service
Operational efficiencies
Prevention of employee fraud and favoritism toward specific customers

14. Cycle of Mediocrity (3) (Fig 11.5)
Job responsibilities narrowly and unimaginatively defined
Successful performance measured by absence of mistakes
Training focuses on learning rules and technical aspects of job—not on improving interactions with customers and co-workers

15. Cycle of Success (1) (Fig 11.6)
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
personnel to control quality
customer
Employee satisfaction,
positive service attitude
Cycle of Success (Figure 11.6) is the integrative employment cycle that managers should work toward. This cycle takes into account the long-term financial performance of the company and seeks to prosper through investment in their staff. Attractive compensation packages, broadened job designs, training, and empowerment practices help in keeping employees happier and in turn delight customers.
Employee
Cycle
Above average
Extensive
wages
training
High customer
Intensified
satisfaction
selection effort
Customer
Cycle
Source: Heskett and Schlesinger

16. Cycle of Success (2) (Fig 11.6)
Longer-term view of financial performance; firm seeks to prosper by investing in people
Attractive compensation packages attract better job applicants
More focused recruitment, intensive training, and higher wages make it more likely that employees are:
Happier in their work
Provide higher quality, customer-pleasing service

17. Cycle of Success (3) (Fig 11.6)
Broadened job descriptions with empowerment practices enable frontline staff to control quality and facilitate service recovery
Regular customers more likely to remain loyal because:
Appreciate continuity in service relationships
Have higher satisfaction due to higher quality

18. Human Resources Management— How to Get It Right
Human Resources Management— How to Get It Right? : How to Manage People for Service Advantage?
Staff performance involves both ability and motivation
How can we get able service employees who are motivated to productively deliver service excellence?
Hire the right people
Enable these people
Motivate and energize your people
Recruitment, selection, training, motivation, and retention of employees are the main functionalities of human resource management. These functions are critical for services, because customers tend to remember the role played by front-line employees better than any other aspect of the operation

19. The Wheel of Successful HR in Service Firms (Fig 11.7)
Leadership that:
1. Hire the
Right People
Focuses the entire organization on supporting the frontline
3. Motivate and Energize Your People
Be the preferred employer & compete for talent market share
Fosters a strong service culture with passion for service and productivity
Utilize the full range of rewards
Service Excellence
& Productivity
Intensify the selection process
Drives values that inspires, energizes and guides service providers
2. Enable Your People
Empower frontline
Build high performance service delivery teams
Extensive training

20. Hire the Right People “The old saying ‘People are your
most important asset’ is wrong.
The RIGHT people are your
most important asset.”
Jim Collins

21. 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
Match personalities, styles, energies to appropriate jobs

22. 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
Focus on recruiting naturally warm personalities for customer-contact jobs

23. Select and Hire the Right People: (2) How to Identify 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 are given group tasks
Conduct personality tests
Willingness to treat co-workers and customers with courtesy, consideration, and tact
Perceptiveness regarding customer needs
Ability to communicate accurately and pleasantly

24. Select and Hire the Right People: (3) Identifying Best Candidates
Employ multiple, structured interviews
Use structured interviews built around job requirements
Use more than one interviewer to reduce “similar to me” biases
Give applicants a realistic preview of the job
Chance for candidates to “try on the job”
Assess how candidates respond to job realities
Allow candidates to self select themselves out of the job
Manage new employees’ expectation of job

25. Train Service Employees
Service employees need to learn:
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 alone is sufficient for optimal job performance
Product/service knowledge
Staff’s product knowledge is a key aspect of service quality
Staff must explain product features and position products correctly

26. Is Empowerment Always Appropriate?
Empowerment is most appropriate when:
Firm’s business strategy is based on competitive differentiation and on personalized, customized service
Emphasis on extended relationships versus short-term transactions
Use of complex and nonroutine technologies
Business environment is unpredictable, consisting of 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

27. Control versus Involvement Model of Management
Control concentrates four key features at top organization,
involvement pushes them down
Power to influence work procedures and organizational direction (e.g., quality circles, self-managing teams)
Information about operating results and measures of competitive performance
Rewards based on organizational performance (e.g., bonuses, profit sharing, stock ownership)
Knowledge/skills that enable employees to understand and contribute to organizational performance

28. Levels of Employee Involvement
Suggestion involvement
Employee make recommendation through formalized programs
Job involvement
Jobs redesigned
Employees retrained, supervisors reoriented to facilitate performance
High involvement
Information is shared
Employees skilled in teamwork, problem solving etc.
Participate in management decisions
Profit sharing and stock ownership

29. Build High-Performance Service Delivery Teams
The Power of Teamwork in Services
Facilitate communication among team members and knowledge sharing
Higher performance targets
Pressure to perform is high
Creating Successful Service Delivery Teams
Emphasis on cooperation, listening, coaching and encouraging one another
Understand how to air differences, tell hard truths, ask tough questions
Management needs to set up a structure to steer teams toward success

30. Motivate and Energize the Frontline
Use full range of available rewards effectively, including:
Job content
People are motivated and satisfied knowing they are doing a good job
Feedback and recognition
People derive a sense of identity and belonging to an organization from feedback and recognition
Goal accomplishment
Specific, difficult but attainable and accepted goals are strong motivators

31. Role of Labor Unions
Challenge is to work jointly with unions, reduce conflicts, and create a service climate
Labor unions and service excellence are sometimes seen as incompatible
Yet many of the world’s most successful service businesses are highly unionized (e.g., Southwest Airlines)
Management consultation and negotiation with union representatives are essential if employees are to accept new ideas

32. Service Leadership and Culture
Service culture can be defined as:
Shared perceptions of what is important
Shared values and beliefs of why they are important
Charismatic/transformational leadership:
Change frontline’s values, goals to be consistent with firm
Motivate staff to perform their best
Internal Marketing:
Play a vital role in maintaining and nurturing a corporate culture
Help ensure service delivery, working relationships, employee trust, respect, and loyalty
A strong service culture is one where the entire organization is focused on the front line. All levels of hierarchy understand that tomorrow’s revenues are largely driven by what happens during the service encounters today (see the Inverted Organizational Pyramid in Figure 11.11). To do this, top management should show their commitment by being actively involved (e.g., regularly talking to front-line staff and customers), and by paying attention to the finer details of the service offering and not just the big picture. Leaders should bring out the passion for serving. A value-driven leadership (values found in excellent service firms include excellence, innovation, joy, teamwork, respect, integrity, and social profit) inspires and guides the service provider; taps the creativity of service providers, nourishes their energy and commitment, and gives them a fulfilling working life. A strong communications effort to shape the culture and get the message to the front line is also crucial. Multiple tools are used. Some examples include training, core principles, company events, and celebrations.

33. The Inverted Organizational Pyramid Fig 11.11
Customer Base
Top Mgmt
Frontline Staff
Middle Mgmt
Middle Mgmt
And Top Mgmt
Support Frontline
Frontline Staff
Traditional Organizational Pyramid
Inverted Pyramid with a Customer and Frontline Focus
Legend: = Service encounters, or “Moments of Truth”

34. Key Points Source of customer loyalty and competitive advantage
Service employees are crucially important to firm’s success
Source of customer loyalty and competitive advantage
Low-contact situations are the “moments of truth” in the occasional encounter
Frontline work is difficult and stressful: Employees are boundary spanners, undergo emotional labor, face a variety of conflicts
Person/role conflict
Organization/client conflict
Inter-client conflict
Understand cycles of failure, mediocrity, and success
Know how to get HRM aspects right
Hire the right people

35. Identify the best candidate Train service employees actively
Key Points
Understand role of service culture and service leadership in sustaining service excellence
Know how to get HRM aspect right
Hire the right people
Identify the best candidate
Train service employees actively
Empower the frontline
Build high-performance service delivery teams
Motivate and energize people
Unions have a role to play

36. Tutorial
Discuss the role service personnel play in creating or destroying customer loyalty.
What is emotional labor? Explain the ways in which it may cause stress for employees in specific jobs. Illustrate with suitable examples.
What are the key barriers for firms to break the Cycle of Failure and move into the Cycle of Success? How should an organization trapped in the cycle of mediocrity proceed?
List five ways in which investment in hiring and selection, training, and ongoing motivation of employees will pay dividends in customer satisfaction for such organizations such as: (a) a restaurant, (b) an airline, (c) a hospital, and (d) a consulting firm.