1. Managing People for Service Advantage
Chapter
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)
Emotional labor or emotion work is a requirement of a job that employees display required emotions toward customers or others.More specifically, emotional labor comes into play during communication between worker and citizen and between worker and worker. This includes analysis and decision making in terms of the expression of emotion, whether actually felt or not, as well as its opposite: the suppression of emotions that are felt but not expressed.

6. Roles that have been identified as requiring emotional labor include but not limited to those involved in public administration, flight attendant, daycare worker, nursing home worker, nurse, doctor, store clerk, call center worker, teacher,social worker, as well as most roles in a hotel, motel, tavern/bar/pub and restaurant, as well as jobs in the media, such as TV and radio. As particular economies move from amanufacturing to a service-based economy, many more workers in a variety of occupational fields are expected to manage their emotions according to employer demands when compared to sixty years ago.
Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress

7. 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

8. Source: Schlesinger and Heskett
Cycle of Failure (Fig. 11.1)
Customer
turnover
Failure to develop
customer loyalty
No continuity in
relationship for
customer
dissatisfaction
Employees can’t
respond to customer
problems
Employees
become bored
Employee dissatisfaction;
poor service attitude
Repeat emphasis on
attracting new customers
Low profit
margins
Narrow design of
jobs to accommodate
low skill level
Use of technology
to control quality
High employee turnover;
poor service quality
Payment of
low wages
Minimization of
selection effort
Minimization
of training
Emphasis on
rules rather
than service E m p l o y e C c u s t r
Source: Schlesinger and Heskett

9. Service Sabotage (Fig. 11-A)
‘Openness’ of Service Sabotage Behaviors
Covert
Overt
Routinized
Customary-Private Service Sabotage
Customer-Public Service
Sabotage
e.g. Waiters serving smaller
servings, bad beer or sour wine
e.g. Talking to guests like
young kids and putting them
down
‘Normality’ of Service Sabotage Behaviors
Sporadic-Private Service Sabotage
Sporadic-Public Service
Sabotage
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
Intermittent

10. Cycle of Mediocrity (Fig. 11.2)
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 E m p l o e C c u s t r
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

11. Train, empower frontline personnel to control quality
Cycle of Success (Fig. 11.3) C y
Low
customer
turnover
Customer
loyalty
Continuity in
relationship with
High customer
satisfaction
Extensive
training
Employee satisfaction,
positive service attitude
Repeat emphasis on
customer loyalty and
retention
Higher
profit
margins
Broadened
job designs
Lowered turnover,
high service quality
Above average
wages
Intensified
selection effort E m p l o e c u s t r
Train, empower frontline
personnel to control quality
Source: Heskett and Schlesinger

12. 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?
Hire the right people
Enable your people
Motivate and energize your people

13. 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

14. 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
Fit personalities, styles, energies to the appropriate jobs

15. 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

16. 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

17. 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

18. 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
Staff’s product knowledge is a key aspect of service quality
Staff need to be able to explain product features and to position products correctly

19. 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

20. 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 organizational direction (e.g. quality circles, self-managing teams)
Source: Bowen and Lawler

21. Levels of Employee Involvement
Suggestion involvement
Employee recommendation
Job involvement
Jobs redesigned
Employees retrained
Supervisors facilitate
High involvement
Information is shared
Employees skilled in teamwork, problem solving etc.
Participate in decisions
Profit sharing and stock ownership

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

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

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