Managing People for Service Advantage Chapter Managing People for Service Advantage

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

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”

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

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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