Session 7
Session 7:
Managing People for
Service Advantage
Overview of Chapter 7
Service Employees Are Crucially Important
Factors Contributing to the Difficulty of Frontline Work
Cycles of Failure, Mediocrity, and Success
Human Resources Management – How To Get It Right?
Service Leadership and Culture
Service Employees Are
Crucially Important
Service Personnel: Source of Customer
Loyalty & Competitive Advantage
Customer’s perspective: encounter with service staff is
most important aspect of a service
Firm’s perspective: frontline is an important source of
differentiation and competitive advantage
Frontline is an important driver of customer loyalty
anticipating customer needs
customizing service delivery
building personalized relationships
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.
However, frontline employees remain
crucially important
“Moments of truths” drive customer’s
perception of the service firm
Factors Contributing to the
Difficulty of Frontline Work
Boundary Spanning Roles
Boundary spanners link the 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
enforce pricing schedules and rate integrity
Role Stress in Frontline Employees
Organization vs. Client: Dilemma whether to follow
company rules or to satisfy customer demands
This conflict is especially acute in organizations that are not customer-
oriented
Person vs. Role: Conflicts between what jobs require and
employee’s own personality and beliefs
Organizations must instill ‘professionalism’ in frontline staff
Client vs. Client: Conflicts between customers that demand
service staff intervention
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 practice emphasizes selective recruitment, training,
counseling, strategies to alleviate stress
Cycles of Failure, Mediocrity,
and Success
Cycle of Failure
Cycle of Failure
The employee cycle of failure
Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
Bored employees who lack ability to respond to customer
problems
Customers are dissatisfied with poor service attitude
Low service quality
High employee turnover
Cycle of Failure
The customer cycle of failure
Repeated emphasis on
attracting new customers
Customers dissatisfied with
employee performance
Customers always served by
new faces
Fast customer turnover
Ongoing search for new
customers to maintain sales
volume
Cycle of Failure
Costs of short-sighted policies are ignored:
Constant expense of recruiting, hiring, and training
Lower productivity of inexperienced new workers
Higher costs of winning new customers to replace those lost—
more need for advertising and promotional discounts
Loss of revenue stream from dissatisfied customers who turn to
alternatives
Loss of potential customers who are turned off by negative word-
of-mouth
Cycle Of Mediocrity
Cycle Of Mediocrity
Most commonly found in large, bureaucratic organizations that
are frustrating to deal with
Service delivery is oriented towards
Standardized service Successful performance
Operational efficiencies measured by absence of
Promotions with long service mistakes
Rule-based training
Narrow and repetitive jobs
Little incentive for customers to cooperate with organizations to
achieve better service
Complaints are often made to already unhappy employees
Customers often stay because of lack of choice
Cycle of Success
Cycle of Success
Longer-term view of financial performance; firm seeks to
prosper by investing in people
Attractive pay and benefits attract better job applicants
More focused recruitment, intensive training, and higher
wages make it more likely that employees are:
Happier in their work
Provide higher quality, customer-pleasing service
Cycle of Success
Broadened job descriptions with empowerment practices
enable frontline staff to control quality, facilitate service
recovery
Regular customers more likely to remain loyal because
they:
Appreciate continuity in service relationships
Have higher satisfaction due to higher quality
Human Resources
Management –
How to Get it Right?
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
The Inverted Organizational Pyramid
