1. MKT3125: Services Marketing Management
Lecture 9
Managing Service People

2. Where are we?

3. Objectives
Discuss the importance of leadership and motivation of service employees in delivering excellent operations performance
Describe the pressures on service providers
Describe a number of means by which operations managers can manage and motivate their staff
Describe how customer can be managed to fulfil their roles and display the ‘right’ behaviour

4. The pressures on service providers
The organization is a source of pressure for service employees; requiring them to deliver to certain levels of quality and productivity.
Customers are a source of potential pressure for all service providers: through unrealistic expectations, customer incompetence and anxiety.
These pressures may lead to issues of motivation, poor customer relationships, anxiety and stress.

5. Pressures on service providers
Organisational pressures
Nature of the task
Service design, processes and resources
Performance objectives and targets
Reward and appraisal systems
Service providers
Customer pressures
Customer expectations
Intensity of contact
Mood and anxiety
Customer competence
Johnston & Clark, Service Operations Management, © Pearson Education Limited

6. The many roles of the service provider
Order Taker
Advice giver
Image maker
Service deliverer
Complaint handler
Therapist
Trainer
Coach
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7. Pressures on service providers: issues and outcomes
Organisational pressures
Nature of the task
Service design, processes and resources
Performance objectives and targets
Reward and appraisal systems
Service providers
Customer pressures
Customer expectations
Intensity of contact
Mood and anxiety
Customer competence
Potential outcomes
Increased costs
Poor industrial relationships
Low morale
Ill health
Psychological damage
Learned helplessness
Poor service
Issues
Motivation
Role clarity and fit
Relationships
Risk
Stress
Johnston & Clark, Service Operations Management © Pearson Education Limited

8. Pressures on service providers: providing protection
Managing providers
Providing inspirational leadership
Harnessing the power of teams and teamwork across the organisation
Clarifying the roles of service providers
The appropriate use of scripts
Defining and enabling appropriate levels of employee discretion
Establishing effective communication to employees
Involving employees in performance improvement
Encouraging service employees to ‘own’ processes and customers
Organisational pressures
Nature of the task
Service design, processes and resources
Performance objectives and targets
Reward and appraisal systems
Potential results
Inspired and involved employees
Responsive and responsible employees
Process and customer ownership
Employee commitment and retention
Enjoyable work
Effective and efficient delivery systems
Business improvement
Service providers
Customer pressures
Customer expectations
Intensity of contact
Mood and anxiety
Customer competence
Johnston & Clark, Service Operations Management © Pearson Education Limited

9. Providing inspirational leadership: Bennis’ 4 Competencies of Great Leaders
The management of attention – to capture the hearts and mind of people through communicating a focus on commitment and a compelling vision
The management of meaning – importance of bringing substance to the vision to make it clear to those following
The management of trust – leader’s reliability, give a level of security to followers, a line of action with words
The management of self – knowing own strength and weakness, not defeated by mistakes or problems nor starts blaming staff

10. Harnessing the power of teams and teamwork across the organisation
Facilitating complimentary skills and experience of a team exceeds that of any individual.
When teams work together to develop clear goals, improve the process, improve communication; this helps in responding to customers
Teams can overcome significant challenges, build trust in one another and in each other’s capabilities which then contributes to a more effective delivery system
Teams working closely and collaboratively enjoy their work and have more fun than others.
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11. Clarifying the roles of service providers
The following should be minimized
Role conflict: when there are many responsibilities to be carried out at the same time, happens when the basic service design is in error, or if there is a conflict between the demands of a job and the individual’s own view of it (Call center agent)
Role ambiguity: When the person is unsure of the requirements of the role, lack of clarity
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12. The appropriate use of scripts
To assist the service employee to find out what the customer wants or needs.
To control the customer
To establish historical routines that may be relevant to the service encounter
To facilitate control of workers
To legitimatize organizational actions
To serve as analogies
To facilitate organized behavior
To provide a guide to behavior
To buffer or exacerbate role conflict
To provide a basis for evaluating behavior.
To conserve cognitive capacity
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13. The challenges in the use of scripts
They maybe too inflexible
They may lead to customer perception of robot-like behavior.
They may lead to defensive behavior

14. Employee discretion Adapted from Kelly (1993)
Perceived individual employee discretion
Low
High
Organisation style
Rigid
(imposed)
Fluid
(empowered)
Leadership style
Facilitating
Directive
Type of employee discretion
Creative
Routine
COMPLIANT
ADAPTIVE
Johnston & Clark, Service Operations Management © Pearson Education Limited

15. 3 Types of Employee Discretion (Kelley)
Routine discretion – employee has discretion regarding HOW the task is performed (ex. Investment advisor)
Creative discretion – exercised by those who develop both WHAT and HOW they do things (ex. Creative team in new product development)
Deviant discretion – takes action generally not approved by the organisation (ex. Retail staff giving refund to customer against policy)

16. Key dimensions of employee discretion cont’d.
Organisational Style (Fluid or Rigid) - Fluid organisations change their structure/process relatively frequently (e.g. consultancies, project-based orgs.). Needs to adapt processes to ‘fluid’ situations.
Rigid organisations have clear operating procedures that requiring compliance (ex. Retailers, Insurance companies)
Perceived Individual Employee Discretion – the degree to which the employee ‘feels’ of the amount of discretion they have or are capable of.

17. Key dimensions of employee discretion cont’d.
The Compliant Organisation – frequently found in high-volume, low-variety matrix (Commodity)
Focus is on consistent delivery across multiple locations with many servers
Well developed process documentation, with training of employees on how to behave in each situation
High volumes and consistent processes lead to automation and/or low cost of labour
Performance measure relates to short-term (e.g. response time, orders taken)

18. Key dimensions of employee discretion cont’d.
The Adaptive Organisation – frequently found in high-variety, low-volume matrix (Capability)
Ex. Management consultants, legal advisors
High degree of creative discretion
Dependence of key skill/s and knowledge of individual
Resistance to generating standard processes
Emphasis on innovation
R&D are focused on professional development of people
Management style is facilitative
Performance measures are like more long-term

19. Employee discretion: Managing Transitions
Perceived individual employee discretion
Low
High
Organisation style
Rigid
(imposed)
Fluid
(empowered)
COMPLIANT
ADAPTIVE
Leadership style
Facilitating
Directive
Type of employee discretion
Creative
Routine
ANXIOUS ZONE
FRUSTRATED ZONE
Johnston & Clark, Service Operations Management © Pearson Education Limited

20. Source: Bowen and Lawler
Employee involvement
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 enabling employees to understand and contribute to organizational performance
Power to influence work procedures and organizational direction (e.g. quality circles)
Source: Bowen and Lawler
139

21. Employee involvement High involvement Suggestion involvement
employee recommendations
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, stock ownership
140

22. Empowerment Climate Competence Commitment
organisational style and culture
resources
opportunity
Climate
capabilities
employee development
matching employee and job
Competence
rewards and recognition
achievement orientation
corporate consciousness
Commitment

23. Factors Favoring Empowerment
Firm’s strategy is based on competitive differentiation and on personalized, customized service
Emphasis on long 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
141

24. Cycle of Success Employee cycle Customer cycle Low customer turnover
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
Train, empower frontline
personnel to control quality
(Schlesinger and Heskett, 1991, cited in Lovelock and Wirtz, 2011, p.312)
Employee cycle
144

25. Cycle of Failure Employee cycle Customer cycle High 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
(Schlesinger and Heskett, 1991, cited in Lovelock and Wirtz, 2011, p.309)
Customer cycle
Employee cycle
Employee Cycle of Failure – starts with narrow design of jobs, to employ only low skill levels, rules rather than service is emphasized, use of technology to control quality
Customer Cycle of failure – starts with organisation emphasis on attracting new customers, who then become quickly dissatisfied with employee performance and high attrition leads to lesser customer loyalty, high customer attrition as well
142

26. Cycle of Mediocrity Customers trade horror stories
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
Example. Monopolies, industrial cartels, regulated oligopolies
(Schlesinger and Heskett, 1991, cited in Lovelock and Wirtz, 2011, p.311)
143

27. The Service Talent Cycle
(Lovelock and Wirtz, 2011, p.313) 27

28. Managing the workforce
MATCH THE WORKER AND THE JOB
DEFINE RESPONSIBILITIES
SET STANDARDS OF PERFORMANCE
COMMUNICATE & INVOLVE
TRAIN
ENSURE GOOD SUPERVISION
REWARD PERFORMANCE
Source: Schroeder, 1989

29. Managing Customers
Like Employees, customers are often service providers:
- Service provider (e.g. supermarket shopping, buffet)
- Service specifier (e.g. clinics, salon)
- Quality inspector (e.g. focus groups, feedback forms)
- Trainer/role model (e.g. queueing in an orderly fashion, talking to other customers who may be new to the service)

30. Benefits of Customer Involvement
Inclusion: resulting in an increased sense of loyalty
Resource Productivity: If customer is carrying out some of the tasks less resources are required
Customer Control: they may feel they have more control on what happens to them

31. Customer management issues
Defining customer competence
Customer selection
Customer training
Customer motivation (some incentives or penalties for customers)
Customer removal

32. Service Profit Chain (Heskett et al., 1994) Workplace Design
Profitability
Revenue
Growth
Employee
Productivity
Retention
External
Service
Value
Internal
Service
Quality
Employee
Satisfaction
Customer
Satisfaction
Customer
Loyalty
Workplace Design
Job Design
Employee Selection & Development
Employee Rewards & Recognition
Tools for Serving Customers
Service Concept
Service designed
& delivered to meet
customers’ needs
Retention
Referral
Repeat Business
(Heskett et al., 1994)

33. Image Source: https://pathwriter.wordpress.com/tag/calvin-hobbes/
Any Questions?
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