1. Chapter 11:
Managing People for
Service Advantage

2. 1. Importance of Service Employees

3. Service Personnel: Source of Customer Loyalty and Competitive Advantage
Frontline is an important driver of customer loyalty
Anticipating customer needs
Customizing service delivery
Building personalized relationships
Customer’s perspective: Encounter with service staff is the 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

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. 2. Frontline Work Is Difficult and Stressful

6. 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

7. Boundary Spanning Roles
Consider management expectations of service staff:
Delight customers
Be fast and efficient in executing operational tasks
Do selling, cross selling, and up-selling

8. Work Stress

9. 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  Role Conflict
Client versus Client: Conflicts between customers that demand service staff intervention

10. Emotional Labor

11. Emotional Labor
“The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)
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

12. 3. Cycles of Failure, Mediocrity, and Success

13. 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
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

14. 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
Source: Heskett and Schlesinger

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
Employee
Cycle
Above average
Extensive
wages
training
High customer
Intensified
satisfaction
selection effort
Customer
Cycle
Source: Heskett and Schlesinger

16. 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

17. 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

18. The Services Marketing Triangle

19. Marketing Strategies for Service Firms
Internal marketing means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter External marketing means marketing to the end-users performed to capture their attention and arouse interest in the service.