Chapter 11.managing People For Competitive Advantage

CHAPTER 11
Managing People for
Service
Lovelock, Wirtz and Chew 2009
ADVANTAGE
Essentials of Services Marketing
Chapter 1 - Page 1
Overview of Chapter 11
1. Importance of Service Employees

2. Nature of Frontline Work
3. Cycles of Failure, Mediocrity, and Success in HR
4. Human Resources Management How to get it right?
5. Service Leadership and Culture
Chapter 1 - Page 2
1. Importance of
Service Employees
Chapter 1 - Page 3
Importance of Service Personnel

Help maintain firms positioning. They are:
A core part of the product
The service firm
The brand
Frontline is an important driver of customer loyalty

Anticipate customer needs
Customize service delivery
Build personalized relationships
Key driver of productivity of frontline operation

Generate sales, cross-sales and up-sales
Chapter 1 - Page 4
Singapore Airlines
Chapter 1 - Page 5
The Singapore Girl
The Singapore Girl makes customers feel cared-for

and special . and thus willing to pay high prices
Chapter 1 - Page 6
Front Line in Low-Contact Services
Many routine transactions are now conducted without

involving front-line staff, e.g.,
ATMs (Automated Teller Machines)
IVR (Interactive Voice Response) systems
Websites for reservations/ordering, payment etc.
Though technology and self-service interface is becoming

a key engine for service delivery, front-line employees
remain crucially important
Moments of truth affect customers views of the
service firm
Chapter 1 - Page 7
Some examples of low-contact services
SSTs
Chapter 1 - Page 8
2. Nature of Frontline
Work
Chapter 1 - Page 9
Frontline demanding jobs
Frontline work is difficult and stressful
Boundary Spanning and role stress
Emotional labour
Chapter 1 - Page 10
Boundary Spanning and Role Stress
Frontline employees are referred to as boundary spanners.

Boundary spanners link inside of organization to outside world and
often experience role stress from multiple roles they have to perform
3 main causes of role stress:
Organization vs. Client: Dilemma whether to follow company rules or to satisfy
customer demands
-This conflict is especially severe in organizations that are not
customer oriented
Person vs. Role: Conflicts between what jobs require and employees own
personality and beliefs
Client vs. Client: Conflicts between customers that demand service staff
intervention
Chapter 1 - Page 11
Emotional Labor
The act of expressing socially desired emotions during

service transactions (Hochschild, The Managed Heart)
Occurs when there is gap between what employees feel
inside, and emotions that management requires them to
display to customers
Chapter 1 - Page 12
Emotional labour
A flight attendant was approached by a passenger:

lets have a smile. She replied: Okay. Ill tell you
what. First you smile and then Ill smile, okay? He
smiled. Good, she said. Now hold that for 9
hours, and walked away.
Chapter 1 - Page 13
Notes: Cultural differences

In Moslem cultures, smiling can be a sign of sexual
interest and women are encouraged not to smile
socially at men. American service with a smile is
appropriate in this context.
Chapter 1 - Page 14
What do you think?
Chapter 1 - Page 15
3. Cycles of Failure,
Mediocrity and Success
Chapter 1 - Page 16
Big picture
Let us look at the big picture how service firms set

up their frontline employees for failure, mediocrity or
success
Chapter 1 - Page 17
Cycle of Failure (1)

(Fig 11.6, p. 282)
Chapter 1 - Page 18

(Fig. 11.6, p. 282)
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
Dissatisfied with poor service attitude
Low service quality
High employee turnover
Chapter 1 - Page 19

(Fig. 11.6, p. 282)
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
Chapter 1 - Page 20

(Fig. 11.6, p. 282)
Costs of short-sighted policies are ignored

Constant expense of recruiting, hiring, 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 go
elsewhere
Loss of potential customers who are turned off by negative wordof-mouth
Chapter 1 - Page 21
Food for thoughts
When there is an abundance of cheap labor, such a

cycle may seem acceptable. But as we enter an era of
slowed labor market growth, dramatic increases in
the demand for service workers, tightened
immigration policies, and increasing consumer
demands for improved service, the business
consequences of the failure cycle are increasingly
untenable!!!
Chapter 1 - Page 22
Cycle Of Mediocrity (1)

(Fig. 11.8, p. 283)
Chapter 1 - Page 23
Cycle Of Mediocrity (2)

(Fig. 11.8, p.283)
Most commonly found in large, bureaucratic

organizations
Service delivery is oriented towards
Standardized service
Operational efficiencies
Promotions based on long service
Successful performance measured by absence of mistakes
Rule-based training
Little freedom in narrow and repetitive jobs
Chapter 1 - Page 24
Cycle of Mediocrity (3)

(Fig. 11.8)
Customers find organizations frustrating to deal with

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
Chapter 1 - Page 25
How do you feel doing the same routine every

day?
Chapter 1 - Page 26
Cycle of Success (1)

(Fig. 11.9, p.284)
Chapter 1 - Page 27

(Fig. 11.9, p.284)
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
Chapter 1 - Page 28

(Fig. 11.9, p.284)
Broadened job descriptions with empowerment practices

enable front-line staff to control quality, facilitate service
recovery
Regular customers more likely to remain loyal because:
Appreciate continuity in service relationships
Have higher satisfaction due to higher quality
Chapter 1 - Page 29
Food for thoughts!
Chapter 1 - Page 30
4. Human Resource
Management How to
Get It Right?
Chapter 1 - Page 31
The Service Talent Cycle for

Service Firms (Fig. 11.11, p. 285)
Chapter 1 - Page 32
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
(Author of BUILD TO LAST)
Chapter 1 - Page 33
Hiring the Right People (1)

Be the Preferred Employer
Create a large pool: Compete for Talent Market Share
What determines a firms applicant pool?
-Positive image in the community as place to work
-Quality of its services
-The firms perceived status
Chapter 1 - Page 34
In the USA
Chapter 1 - Page 35
In Vietnam
Chapter 1 - Page 36
Hiring the Right People (2)
Select the right people
There is no perfect employee

-Different jobs are best filled by people with different
skills, styles or personalities
-Hire candidates that fit firms core values and culture
-Focus on recruiting naturally warm personalities for
customer-contact jobs
Service attitude cannot be taught it has to be hired
Chapter 1 - Page 37
Tools to Identify the Best Candidates (1)

Observe behavior
Hire based on observed behavior, not words you hear
Best predictor of future behavior is past behavior
Hire those with service excellence awards and complimentary
letters
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
Chapter 1 - Page 38
Tools to Identify the Best Candidates (2)
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
Chapter 1 - Page 39
Train Service Employees Actively

Service employees need to learn:
Organizational culture, purpose and strategy
Get emotional commitment to core strategy and core values
Get managers to teach why, what and how of job
Interpersonal and technical skills

Both are necessary but neither alone is enough for performing a job
well
Product/service knowledge
Staffs product knowledge is a key aspect of service quality
Staff must explain product features and help consumers make the
right choice
Chapter 1 - Page 40
Is Empowerment Always Appropriate?

Empowerment is most appropriate when:
Firms business strategy is based on personalized, customized
service and competitive differentiation
Emphasis on extended relationships rather than short-term
transactions
Use of complex and non-routine technologies
Service failures are non-routine and cannot be designed out of the
system
Business environment is unpredictable, consisting of surprises
Managers are comfortable letting employees work independently
for benefit of firm and customers
Employees seek to deepen skills, like working with others, and
have good interpersonal and group process skills
Chapter 1 - Page 41
Levels of Employee Involvement

Suggestion involvement
Employee make recommendation
through formalized programs
Job involvement
Jobs redesigned
Employees retrained, supervisors
reoriented to facilitate performance
High involvement
Information is shared
Employees skilled in teamwork, problem
solving etc.
Participate in management decisions
Profit sharing and stock ownership
Chapter 1 - Page 42
Build High-Performance Service Delivery Teams
Many service require cross-functional coordination for

excellent service delivery
Teams, training and empowerment go hand-in-hand
Creating Successful Service Delivery Teams
Emphasis on cooperation, listening, coaching and encouraging
one another
Understand how to air differences, tell hard truths, ask tough
questions
Management needs to set up a structure to steer teams towards
success
Chapter 1 - Page 43
Motivate And Energize The Frontline
Use full range of available rewards effectively, including:

Job content
People are motivated and satisfied knowing they are doing a
good job
Feedback and recognition

People derive a sense of identity and belonging to an
organization from feedback and recognition
Goal achievement
Specific, difficult but attainable and accepted goals are strong
motivators
Chapter 1 - Page 44
Example The HongKong and Shanghai hotels

Ltd
Chapter 1 - Page 45
5. Service Leadership
and Culture
Chapter 1 - Page 46
Service Leadership and Culture
Charismatic/transformational leadership:
Change frontlines values, goals to be consistent with firm
Motivate staff to perform their best
Service culture can be defined as:

Shared perceptions of what is important
Shared values and beliefs of why they are important
A strong service culture focuses the entire

organization on the frontline and top management is
informed and actively involved
Chapter 1 - Page 47
The Inverted Organizational Pyramid
(Fig. 11.24,
p.298)
Chapter 1 - Page 48
Example Qantas Airlines
Chapter 1 - Page 49
Example Nordstrom - upscale department

store chain in the US
Chapter 1 - Page 50
Example FPT Telecom
Chapter 1 - Page 51
Summary of Chapter 11
Managing People for Service Advantage (1)
Service employees are extremely important to firms

success
Help maintain firms positioning
Source of customer loyalty
Drive productivity of frontline operation
Generate sales
Low-contact situations are the moments of truth in the

occasional encounter
Chapter 1 - Page 52
Front-line work is difficult and stressful; employees are
boundary spanners, undergo emotional labor, face a
variety of conflicts
Person/role conflict
Organization/client conflict
Interclient confict
Understand cycles of failure, mediocrity, and success
Chapter 1 - Page 53
Know how to get HRM aspect right

Hire the right people
Identify the best candidate
Train service employees actively
Empower the front-line
Build high-performance service delivery teams
Motivate and energize people
Understand role of service culture and service leadership in

sustaining service excellence
Chapter 1 - Page 54
Next class
Chapter 12: Managing Relationships and Building

Loyalty
Chapter 1 - Page 55

Chapter 11.managing People For Competitive Advantage

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CHAPTER 11

Managing People for

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

1. Importance of Service Employees

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Importance of Service Personnel

Frontline is an important driver of customer loyalty

Key driver of productivity of frontline operation

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

The Singapore Girl

The Singapore Girl makes customers feel cared-for

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Front Line in Low-Contact Services

Many routine transactions are now conducted without

Though technology and self-service interface is becoming

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Some examples of low-contact services

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Frontline demanding jobs

Frontline work is difficult and stressful

Boundary Spanning and role stress

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Boundary Spanning and Role Stress

Frontline employees are referred to as boundary spanners.

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

The act of expressing socially desired emotions during

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

A flight attendant was approached by a passenger:

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Notes: Cultural differences

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

What do you think?

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Let us look at the big picture how service firms set

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Cycle of Failure (1)

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing

Cycle of Failure (2)

The employee cycle of failure

Lovelock, Wirtz and Chew 2009

Essentials of Services Marketing