Chapter 7 The Service Encounter

2 1. Use the service encounter triad to describe a service firm’s delivery process. 2. Discuss the role of organizational control systems for employee empowerment. 3. Prepare abstract questions and write situational vignettes. 4. Discuss the role of customer as coproducer. 5. Describe how elements of the service profit chain lead to revenue growth and profitability. Learning Objectives

3 Service Organization Efficiency versus satisfaction Efficiency versus autonomy Customer Contact Personnel Perceived control The Service Encounter Triad

4 The Organizational Chart

5 Customers CEO Contact Personnel Middle Management Upper Management Middle Management Contact Personnel SAS

6 Culture Values ServiceMaster (Service to the Master) Behaviors Disney (Choice of language) Culture Values ServiceMaster (Service to the Master) Behaviors Disney (Choice of language) Empowerment Invest in people like investing in equipment Use IT to enable personnel customer history Recruitment and training match to firm’s CSF Anchor performance recognition and reward Empowerment Invest in people like investing in equipment Use IT to enable personnel customer history Recruitment and training match to firm’s CSF Anchor performance recognition and reward The Service Organization

7 Culture is a pattern of beliefs and expectations shared by the organization’s members. Schwartz and Davis (1981) Culture is a pattern of beliefs and expectations shared by the organization’s members. Schwartz and Davis (1981) Culture is the traditions and beliefs of an organization that distinguish it from others. Mintzberg (1989) Culture is the traditions and beliefs of an organization that distinguish it from others. Mintzberg (1989) Culture is shared orientations that hold the unit together and give a distinctive identity. Hoy and Miskel (1991) Culture is shared orientations that hold the unit together and give a distinctive identity. Hoy and Miskel (1991) Definitions of Culture

8 Culture The shared beliefs and values of an organization that guide employee decision-making and behavior in the firm.

9 Corporate Culture Behavior Reward

10 Corporate Culture Values and beliefs Values and beliefs Strong systems Strong systems Weak systems Weak systems History History Rituals Rituals Symbols Symbols Communications Communications Storytelling Storytelling Rewards and recognition Rewards and recognition

11 Rewards That Encourage Behavior Pay Pay Promotion Promotion Recognition Recognition A Piece of the Action (Ownership) A Piece of the Action (Ownership) Company Information Company Information Freedom (Being Your Own Boss) Freedom (Being Your Own Boss) Personal Growth Personal Growth Fun Fun Celebrations Celebrations "Thank You" "Thank You"

12 Corporate Culture Reward Service Organization Efficiency versus satisfaction Efficiency versus autonomy Customer Contact Personnel Perceived control

13 Empowerment Providing contact personnel with the training and information to make decisions for the firm without close supervision.

14 Organizational Control for Employee Empowerment

15 Contact Personnel Attributes Flexibility Flexibility Tolerance for Ambiguity Tolerance for Ambiguity Ability to Monitor and Change Behavior on the Basis of Situation Cues Ability to Monitor and Change Behavior on the Basis of Situation Cues Empathy for Customers Empathy for Customers

16 Selection 1. Abstract Questioning “From your past experience, …” 2. Situational Vignette ability to “think on their feet” in substance and delivery 3. Role Playing requires careful scripting and customer actor rehearsal Training 1. Technical Skills 2. Unrealistic customer expectations 3. Unexpected service failure Contact Personnel

17 1. Unreasonable demands I want to take all my luggage on board 2. Demands against policies I have to smoke 3. Unacceptable treatment of employees You’re an idiot employees You’re an idiot 4. Drunkenness Hey, where’s my drink? 5. Breaking of societal norms I like to sunbath nude 6. Special-needs customers Why don’t you understand English? Unrealistic customer expectations

18 Unexpected Service Failure 1. Unavailable service Why isn’t the ATM working? 2. Slow performance Why hasn’t our plane arrived? 3. Unacceptable service There’s a fly in my soup.

19 Training on Unrealistic Customer Expectations and Unexpected Service Failure A prescribed response to a any given situation A prescribed response to a any given situation “I am very sorry, but federal safety regulations permit a passenger only two carry-on pieces small enough to be stored under the seat or overhead. May I check your larger pieces all the way to your final destination?” Anticipate the types of exchange they might encounter through role playing Anticipate the types of exchange they might encounter through role playing

20 Shopping attitudes 1. Economizing customer compares value with competition 2. Ethical customer moral obligation (Ronald McDonald House) 3. Personalizing customer know your name 4. Convenience customer pay extra for hassle free service Customer as Co-Producer 1. What is their role? 2. How to train? 3. When to retrain? The Customer

21 Service Encounter Success Factors

22 Terrible Outstanding Employee Perceptions of Customer Service at a Branch Bank

23 Higher Customer Satisfaction More Familiarity with Customer Needs and Ways of Meeting Them Greater Opportunity for Recovery from Errors Higher Employee Satisfaction Higher Productivity Improved Quality of Service More Repeat Purchases Stronger Tendency to Complain about Service Errors Lower Costs Better Results Satisfaction Mirror

24 Internal Operating strategy and service delivery system Service concept Target market Service value Customers Loyalty Productivity & Output quality Service quality Capability Satisfaction Employees SatisfactionLoyalty Revenue growth External Profitability Customer orientation/quality emphasis Allow decision-making latitude Selection and development Rewards and recognition Information and communication Provide support systems Foster teamwork Quality & productivity improvements yield higher service quality and lower cost Attractive Value Service designed & delivered to meet targeted customers’ needs Solicit customer feedback Lifetime value Retention Repeat Business Referrals Service Profit Chain

25 Is attitude emphasized? Are job previews utilized? Are customers screened? Are employees encouraged to refer friends? Are referrals from the “best” employees given priority? Is satisfaction measured periodically? Are measurements linked to other functions on the cycle? Careful Employee and Customer Selection (and Self-selection)) High- Quality Training Well-Designed Support Systems  Information  Facilities Greater Latitude to Meet Customer’s Needs Clear Limits on, and Expectations of, Employees Appropriate Rewards and Frequent Recognition Satisfied Employees Employee Referrals of Potential Job Candidates Is training for job and life? Is it an important element of quality of work life? Do they reflect needs of the service encounter? Are they designed to foster relationships? Does it reflect top management “talk”? Is it enough to allow delivery of results to customers? Do they limit the “right” risks? Are they logical to employees? Cycle of Capability Are they linked to service objectives? Are they balanced between monetary and non-monetary?

26 Empowerment Control Exercise Comes up with an example from each of the four organizational control systems (i.e., belief, boundary, diagnostic, and interactive) for: 1.Bank Teller 2.Bartender 3.Ski Lift Operator 4.University Advisor 5.Company Receptionist 6.Automotive Repairperson 7.Restaurant Waitperson 8.Financial Planner 9.Hotel Desk Clerk