Chapter 11

Managing People for Service Advantage

Slide ©2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

11 - 1

Frontline Service Personnel: Source of Customer Loyalty and Competitive Advantage

 Frontline is an important source of differentiation and
competitive advantage. It is:
 a core part of the product  the service firm  the brand

 Frontline also drives customer loyalty, with employees
playing key role in anticipating customer needs, customizing service delivery and building personalized relationships

Slide ©2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

11 - 2

Boundary Spanning Roles  Boundary spanners link the inside of the organization to the outside world  Multiplicity of roles often results in service staff having to pursue both operational and marketing goals  Consider management expectations of restaurant servers:  deliver a highly satisfying dining experience to their customers  be fast and efficient at executing operational task of serving customers  do selling and cross selling.3 . “We have some nice desserts to follow your main course” Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .g. e.

Customer: Conflicts between customers that demand service staff intervention Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .Role Stress in the Frontline 3 main causes of role stress:  Person vs. Role: Conflicts between what jobs require and employee‟s own personality and beliefs  Organization vs. Customer: Dilemma whether to follow company rules or to satisfy customer demands  Customer vs.4 .

5 .Emotional Labor  “The act of expressing socially desired emotions during service transactions” (Hochschild. The Managed Heart)  Three approaches used by employees  surface acting  deep acting  spontaneous response  Performing emotional labor in response to society‟s or management‟s display rules can be stressful  Good HR practice emphasizes selective recruitment. counseling. strategies to alleviate stress Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . training.

6 . Mediocrity and Success Too many managers make short-sighted assumptions about financial implications of:  Low pay  Low investment (recruitment. hiring & training  Lower productivity & lower sales of new workers  Costs of disruptions to a service while a job remains unfilled  Loss of departing person‟s knowledge of business and customers  Cost of dissatisfied customers Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . training)  High turnover human resource strategies Often costs of short-sighted policies are ignored:  Costs of constant recruiting.The Cycles of Failure.

11.Cycle of Failure (Fig. customer poor service attitude Narrow design of jobs to accommodate low skill level Use of technology Emphasis on to control quality rules rather than service Payment of low wages Minimization of selection effort Minimization of training Customer dissatisfaction Employees become bored Employees can’t respond to customer problems Source: Schlesinger and Heskett Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . poor service quality No continuity in relationship for Employee dissatisfaction.7 .1) Customer turnover Repeat emphasis on attracting new customers Failure to develop customer loyalty Low profit margins High employee turnover.

8 . Waiters spilling soup onto laps.g. Chef occasionally purposefully slowing down orders Sporadic-Public Service Sabotage e.g.g. gravy onto sleeves. Waiters serving smaller servings. 11-A) Routinized „Normality‟ of Service Sabotage Behaviors „Openness‟ of Service Sabotage Behaviors Covert Overt Customary-Private Service Sabotage e.Service Sabotage (Fig. Talking to guests like young kids and putting them down Sporadic-Private Service Sabotage e. bad beer or sour wine Customer-Public Service Sabotage e.g. or hot plates into someone‟s hands Intermittent Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .

pleasing customers Jobs are boring and repetitive. employees unresponsive Resentment at inflexibility and lack of employee initiative.2) Customers trade horror stories Other suppliers (if any) seen as equally poor Employees spend working life in environment of mediocrity Narrow design of jobs No incentive for cooperative relationship to obtain better service Complaints met by indifference or hostility Employee dissatisfaction (but can’t easily quit) Emphasis on rules vs. 11.9 . complaints to employees Training emphasizes Success = learning rules not making mistakes Service not focused on customers’ needs Good wages/benefits high job security E Promotion and pay increases based Initiative is on longevity.Cycle of Mediocrity (Fig. discouraged lack of mistakes Customer dissatisfaction Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .

high service quality Continuity in relationship with customer Employee satisfaction.10 .3) Low customer turnover Repeat emphasis on customer loyalty and retention Customer loyalty Higher profit margins Broadened job designs Lowered turnover.Cycle of Success (Fig. 11. empower frontline personnel to control quality High customer satisfaction Extensive training Above average wages Intensified selection effort Source: Heskett and Schlesinger Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . positive service attitude Train.

How can we get able service employees who are motivated to productively deliver service excellence? 1.How to Manage People for Service Advantage? Staff performance is a function of both ability and motivation. Motivate and energize your people Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . Enable your people 3.11 . Hire the right people 2.

” Jim Collins Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .12 . The RIGHT people are your most most important asset.Hire the Right People “The old saying „People are your most important asset‟ is wrong.

corporate values and style. energies to the appropriate jobs Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . in addition to job specs  Ensure candidates have/can obtain needed qualifications  Evaluate candidate‟s fit with firm‟s culture and values  Fit personalities. styles. marketing-like approach to recruitment  Clarify what must be hired versus what can be taught  Clarify nature of the working environment.13 .Recruitment  The right people are a firm‟s most important asset: take a focused.

Select And Hire the Right People: (1) Be the Preferred Employer Create a large pool: “Compete for Talent Market Share”  What determines a firm‟s applicant pool?  Positive  Quality image in the community as place to work of its services  The firm‟s perceived status  There is no perfect employee  Different  Hire jobs are best filled by people with different skills.14 . styles or personalities candidates that fit firm‟s core values and culture on recruiting naturally warm personalities Services Marketing 5/E  Focus Slide ©2004 by Christopher Lovelock and Jochen Wirtz 11 .

not words you hear predictor of future behavior is past behavior group hiring sessions where candidates given group tasks  Consider  Personality Testing  Willingness to treat co-workers and customers with courtesy.15 .Select and Hire the Right People: (2) How to Identify the Best Candidates  Observe Behavior  Hire  Best based on observed behavior. consideration and tact regarding customer needs  Perceptiveness  Ability to communicate accurately and pleasantly Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .

Structured Interviews   Use structured interviews built around job requirements Use more than one interviewer to reduce similar to me effects  Give Applicants a Realistic Preview of the Job   Chance to have “hands-on” with the job Assess how the candidates respond to job realities  Allow candidates to self select themselves out of the job Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .Select and Hire the Right People: (3) How to Identify the Best Candidates  Employ Multiple.16 .

“what” and “how” of job.  Interpersonal and Technical Skills  Both are necessary but neither is sufficient for optimal job performance  Product/Service Knowledge  Staff‟s product knowledge is a key aspect of service quality  Staff need to be able to explain product features and to position products correctly Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .17 .Train Service Employees  The Organizational Culture. Purpose and Strategy  Promote core values. get emotional commitment to strategy  Get managers to teach “why”.

Factors Favoring Employee Empowerment  Firm‟s strategy is based on competitive differentiation and on personalized. customized service  Emphasis on long-term 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. and are good at group processes Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .18 . like working with others.

Involvement Model of Management Control concentrates 4 key features at top of organization.Control vs. quality circles.g. self-managing teams) Source: Bowen and Lawler Services Marketing 5/E    Slide ©2004 by Christopher Lovelock and Jochen Wirtz 11 .g. profit sharing.19 . Involvement pushes them down:  Information about operating results and measures of competitive performance Rewards based on organizational performance (e. stock ownership) Knowledge/skills enabling employees to understand and contribute to organizational performance Power to influence work procedures and organizational direction (e.

20 .  Participate in decisions  Profit sharing and stock ownership  Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .Levels of Employee Involvement  Suggestion involvement  Employee recommendation  Job involvement Jobs redesigned  Employees retrained  Supervisors facilitate   High involvement Information is shared  Employees skilled in teamwork. problem solving etc.

Motivate and Energize the Frontline Use the full range of available rewards effectively.21 . including:    Job content Feedback and recognition Goal accomplishment Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 .

‟ Services Marketing 5/E Slide ©2004 by Christopher Lovelock and Jochen Wirtz 11 . or „Moments of Truth. 11.5) Customer Base Top Mgmt Middle Mgmt Frontline Staff Frontline Staff Middle Mgmt & Top Mgmt Support Frontline Inverted Pyramid with a Customer & Frontline Focus Traditional Organizational Pyramid Legend: = Service encounters.22 .The Inverted Organizational Pyramid (Fig.

Enable Your People  Empower Frontline  Build high performance service delivery teams  Extensive Training Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 11 . energize and guide service providers 1. 11. Motivate & Energize Your People  Utilize the full range of rewards Service Excellence & Productivity 2.6) Leadership that:  Focuses the entire organization on supporting the frontline  Fosters a strong service culture with passion for service and productivity  Drives values that inspire.23 . Hire the Right People  Be the preferred employer & compete for talent market share  Intensify the selection process 3.The Wheel of Successful HR in Service Firms (Fig.