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Managing People for
Service Advantage
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People – The Key to a Service Business
Service is a People‟s Business
Direct Interaction with Customers-unlike shopfloorworkers
Thus the Extra „P‟ for People
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Service Personnel: Source of Customer Loyalty and
Competitive Advantage
Customer’s perspective: Encounter with service staff ismost important aspect of a service
Firm’s perspective: Frontline (Boundary spanners) is an
important source of differentiation and competitive
advantage.Boundary spanners are:
A core part of the product
the Service firm
The brand Frontline is an important driver of customer loyalty
Anticipating customer needs
Customizing service delivery
Building personalized relationships
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Frontline Work IsDifficult and Stressful
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The concept of ―emotional labor ‖ Customers range from nice to nasty, and a range of
emotions come into play every time the worker
deals with a set of customers.
constant interaction with (and scrutiny by)
customers can be very stressful
―The act of expressing socially desired emotions
during service transactions‖ is referred to as
emotional labor (Hochschild, The Managed
Heart*)
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Role Stress in Frontline Employees
Three main causes of role stress:1. Person versus Role: Conflicts between what jobs
require and employee’s own personality and beliefsOrganizations must instill “ professionalism” in frontlinestaff
2. Organization versus Client: Dilemma whether tofollow company rules or to satisfy customer demands
This conflict is especially acute in organizations that are
not customer oriented
3. Client versus Client: Conflicts between customers thatdemand service staff intervention
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Customer’s Experience
In a hotel, everybody except the cook directly interacts
with the guests in some way or the other-this includes
parking attendants, doormen, lift attendants, front office
staff, maids or cleaning personnel, laundry and
housekeeping staff, and room service personnel.
The quality of all these people will determine the
service experience for a typical customer of the hotel.
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Organization personnel involved in service
product performance and delivery
Contact with
client
Non-contact
with the client
Visible to theclient
Waitress,Service
engineers
Cook in restaurantwith see through
kitchen,
Computer operator
Not visible to
the client
Telephone
operator,
Airline Pilot
Maintenance
worker
Accountant
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Cycles of Failure,Mediocrity, and Success
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Cycle of Failure
Source: Schlesinger and Heskett
Customer
turnover
Failure to developcustomer loyalty
No continuity in relationship for
customer
Customer dissatisfaction
Employees can’trespond to customer
problems
Employeesbecome bored
Employee dissatisfaction;poor service attitude
Repeat emphasis onattracting new customers
Low profitmargins Narrow design of
jobs to accommodatelow skill level
Use of technology
to control quality
High employee turnover;poor service quality
Payment of low wages
Minimization of selection effort
Minimizationof training
Emphasis onrules rather than service
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The employee cycle of failure
Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
The customer cycle of failure
Managers’ short-sighted assumptions about
financial implications of low pay, high
turnover human resource strategies
Cycle of Failure
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Costs of short-sighted policies are ignored Loss of expertise among departing employees
Disruption to service from unfilled jobs
Constant expense of recruiting, hiring, training
Lower productivity of inexperienced new workers
Loss of revenue stream from dissatisfied customers who goelsewhere
Loss of potential customers who are turned off by negative
word-of-mouth
Higher costs of winning new customers to replace those lost—more need for advertising and promotional discounts
Cycle of Failure
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Cycle Of Mediocrity
Good wages/benefitshigh 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 environmentof mediocrity
Narrow design
of jobs
Success =
not making
mistakes
Complaints met byindifference or
hostility
Employeedissatisfaction
(but can’t easily quit) Emphasis on rules
vs. pleasing customers
Promotionand pay
increases based on longevity,
lack of mistakes
Initiative isdiscouraged
Jobs are boring andrepetitive; 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 dissatisfactionSource: Heskett and Schlesinger
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Most commonly found in large,
bureaucratic organizations
Service delivery is oriented toward
Standardized service
Operational efficiencies
Prevention of employee fraud and favoritism
toward specific customers
Cycle Of Mediocrity
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Job responsibilities narrowly and
unimaginatively defined
Successful performance measured by
absence of mistakes
Training focuses on learning rules and
technical aspects of job — not on
improving interactions with customers and
co-workers
Cycle of Mediocrity
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Cycle of Success Low
customer turnover
Customer loyalty
Continuity in relationship with
customer
High customer satisfaction
Extensivetraining
Employee satisfaction,positive service attitude
Repeat emphasis oncustomer loyalty and
retention
Higher profit
margins Broadened
job designsLowered turnover,high service quality
Above average
wages
Intensifiedselection effort
Train, empower frontline
personnel to control quality
Source: Heskett and Schlesinger
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Longer-term view of financial performance;
firm seeks to prosper by investing in people
Attractive compensation packages attract better
job applicants
More focused recruitment, intensive training,
and higher wages make it more likely thatemployees are:
Happier in their work
Provide higher quality, customer-pleasing service
Cycle of Success
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Broadened job descriptions with empowerment
practices enable frontline staff to control quality
and facilitate service recovery
Regular customers more likely to remain loyal
because:
Appreciate continuity in service relationships Have higher satisfaction due to higher quality
Cycle of Success
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Human Resources Management—
How to Get It Right?
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How to Manage People for
Service Advantage?
Hire the right people
Enable these people
Motivate and energize your
people
Staff performance involves both ability and motivation
How can we get able service employees who aremotivated to productively deliver service excellence?
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The Wheel of Successful HR in
Service Firms Leadership that: Focuses the entire
organization on
supporting the
frontline
Fosters a strongservice culture with
passion for service
and productivity
Drives values
that inspires,
energizes andguides service
providers
1. Hire the
Right People
3. Motivate and
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 rewardsService Excellence
& Productivity
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Hire the Right People
“ The old saying „People are yourmost important asset‟ is wrong.
The RIGHT people are yourmost important asset.”
J im Collins
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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 etc
Ensure candidates have/can obtain needed qualifications
Evaluate candidate’s fit with firm’s culture and values
Match personalities, styles, energies to appropriate jobs
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Select and Hire the Right People: Be the Preferred
Employer
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 for customer-contact
jobs
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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 are
given group tasks
Conduct personality tests
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:
How to Identify Best Candidates
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Select and Hire the Right People:
Identifying Best Candidates Employ multiple, structured interviews
Use structured interviews built around job requirements
Use more than one interviewer to reduce ―similar to me‖ biases
Give applicants a realistic preview of the job
Chance for candidates to ―try on the job‖
Assess how candidates respond to job realities
Allow candidates to self select themselves out of the job
Manage new employees’ expectation of job
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Service employees need to learn:
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 alone is sufficient for optimal job performance
Product/service knowledge Staff’s product knowledge is a key aspect of service quality
Staff must explain product features and position productscorrectly
Train Service Employees
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Service Orientation
Service employees need the right attitude towards
service.
Service is not being “servile”
In fact, service jobs provide a lot of enriching
experiences as well, and a lot of customers are
very understanding, well-behaved and courteous
under normal situations.
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How FedEx Keeps Employees :
Motivated to Deliver
Fedex, the courier and supply chain company in India does it by--
By clearly outlining their roles
Providing Learning Opportunities to all employees
Giving them dignity
Guaranteeing a fair hearing without retaliation for any
concerns of employees
Creating a regular interaction among employees at
different hierarchical levels
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People are Your Brand
Ambassadors
Once you view people as brand ambassadors for
your service brand, a lot of thinking falls into
place, ranging from recruitment, training,
motivation, to making the best use of the human
resources, while keeping them happy.
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The BPO Sector – Challenges of Retaining Employees
The problems are two-fold. One, graduates may feel
like going for a post-graduate degree, and leave to
pursue it.
Second, there is boredom induced by the repetitiveness
of their job
How do Companies tackle this issue?
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