People in Service OperationsProf. Matti Vartiainen 14.09.2016

The target of this lecture

• Shortly show the need for people in service operations

• What is the place of HRM and leadrship in organization

strategy

• Main practices of HRM in organizations

• Preparation of students for the course

New systems, structures and operations

In 2030 in Finland:

• Service and product business in networks

• Co-operation within organizations and networks

• Service development (co-development) with customers

• Customer-tailored services

(Alasoini et al. 2012, Freeman & Luoca 2001)

1910 1950 2000 2030

Mass production Human and solution oriented

service society

Time

Future digitalization of services

4

(Based on prof. Taija Turunen)

Technological drivers

1. Mankind’s ability to produce, store, process, and transmit

digitally coded information has grown exponentially in the last

few decades Moore’s Law (ability to pack transistors ever more

densely) and similar “laws”.

2. There are three important phenomena that were virtually unknown

just a decade ago: big data and cloud computing, mobile internet,

and social media.

3. The digital revolution and Internet of things: Robotics with better

senses (sensors) and much more intelligence (software

algorithms, processing capacity), 3D printing or additive

manufacturing.

Pajarinen, Mika, Rouvinen, Petri & Ekeland, Anders (22.4.2015). Computerization Threatens One-Third of Finnish and

Norwegian Employment. ETLA Brief No 34. http://pub.etla.fi/ETLA-Muistio-Brief-34.pdf 5

6

Citizens

Robotics

Microprocessors

Replacing cognitive skills

• An Internet bot, also known as web robot, WWW

robot or simply bot, is a software application that

runs automated tasks (scripts) over the Internet.

• Chat bots are computer programs that mimic

conversation with people using artificial

intelligence.“At a conference on March 30th Microsoft

showed off several prototypes. It will be a

while before anyone trusts such services, however.

A few days earlier one of Microsoft’s bots, “Tay”,

designed to impersonate a millennial, started

parroting racist language it had learned from

users on Twitter. “Tay” had to be sent to

her digital room.”Economist

April 9th 2016

Watson• IBM Watson is a technology platform that uses

natural language processing and machine

learning to reveal insights from large amounts of

unstructured data

• What Watson can do?

– Analyzes unstructured data: Uses natural language

processing to understand grammar and context

– Understands complex questions: Evaluates all

possible meanings and determines what is being

asked

– Presents answers and solutions: Based on

supporting evidence and quality of information found

How Watson learns: https://youtu.be/ymUFadN_MO4

Watson and scaling expertise: https://youtu.be/lYxJlFL2opo

Service and its value

(Christian Gröönroos 29.08.2011)

In the contemporary management and marketing literature,

there is an almost complete agreement that value is

- created by the customer during usage as Value-in-Use

- determined by the customer alone, based on experiences

with resources (goods, services, information, etc.) used

In contrast to a previously dominating view that value

- is created (and determined) by the firm (supplier, service provider),

- and exchanged for money with the customer as Value-in-Exchange

Ideation

Divergence-convergence, Fuzzy front-

end of innovation and the process

Koen, P. a, Ajamian, G. M., Boyce, S., Clamen, A., Fisher, E., Fountoulakis, S. & Seibert, R. (2002). Fuzzy Front End: EffectiveMethods, Tools, and Techniques. In Bellviav, P., Griffin, A. andSomemeyer, S. (eds.) The PDMA Tool-Book for New ProductDevelopment (pp. 5–36). New York: John Wiley & Sons.

Brown, T. (2011). Why Social Innovators Need Design Thinking. Stanford Social Innovation Review. Retrieved August 8, 2016, from http://ssir.org/articles/entry/why_social_innovators_need_design_thinking

Creative process, divergence &

convergence

Sawyer, K. R. (2006). Explaining Creativity: The Science of Human Innovation. New York: Oxford University Press.

What is service work?

• Intangibility: ”more slippery to measure than the

physical dimensions of a product”

• Perishability: the temporary specific nature of service

work (it is hard to store)

• Variability: because of customer actions and

perceptions, there is more scope forvariability

• Simultaneous production and consumption: service

as interaction of a producer and a consumer

(Korczynski, M., 2002, Human Resource Management in Service Work.

Palgrave macmillan, pp. 4-6)

Types of capital in an

enterprise• Financial and

material capital

• Intangible or

intellectual

capital

(Antti Lönnqvist, Tampere University of Technology, 2007)

Intangible capital and resources in

company book and market values

Market

value

Intangible factors

Tangible factors

Book value

Tangible

assets

Own &

outside

capital

Intangible

assets

IPR

Developmemt

projects

Business value

Investments

Inventories

Financial

assets

Company

resources

Machines

financial

Social

(relational)

Structural

Human

Types of knowledge and

intangibles in organizations

Innovations

Brand

Customer relations

Experience

Immaterial rights

Knowledge systems

Partnerships

Organization cultureProcesses

Collaboration models

Practices

Knowhow

Organization structuresNetworks

Networks

Intangible or intellectual

capital as resources

Human-

capital

Structural

capital

Social capital

Competences

and professional

skills

Physical

and mental

health

Work

arrangements

Occupational

safety

Knowledge

flow

Networks

Work relations

Customer relationships

Partner relationship

Supplier relationships

Imago

Brand

Health services

Organizational climate

Enterprise culture

Leadership and

managementCompensation and

reward systems

Information

systems

Competence

Development

systems

Values

and internal

motivation

”Flow”

Owner relationship

Emotional

intelligence

(Otala ja Ahonen 2003, s. 65)

Definitions:

• HR strategy: A firm´s use of human resources to reach organizations vision. It should fit to system components:– organizations strategy, characteristics (structure and processes) and

capabilities and needs of personnel as well as environment (Figure 1.)

• Human (people) Recourses: people that are involved in service process– Employees

– Customers

– Co-workers in the business network

• HRM (Human Resource Management) is the process of acquiring, training/development, appraising/evaluate, compensating employees/rewarding and of attending to their labor relations, health and safety, and fairness concerns by leaders and HR staff– Various concepts, terms used

Effective HR Strategy

Formulation and Implementation

Organizational

Strategies

Environment

HR Strategies

Organizational

Characteristics

Organizational

Capabilities

Fit Fit

Fit Fit

Consistency

Consis

tency

Co

nsis

ten

cy

Consistency

Improved

Firm

Performance

Goals

Aims

HRD in service firms across cultures

Bella L. Galperin and TerriR. LituchyHuman Resource Development Review 2014 13: 336-368.

HRD managers in service firms should understand the role of national culture

and organizational culture when implementing HRD

Developing intangible or

intellectual capital as resource

Human-

capital

Structural

capital

Social capital

Competences

and professional

skills

Physical

and mental

health

Work

arrangements

Occupational

safety

Knowledge

flow

Networks

Work relations

Customer relationships

Partner relationship

Supplier relationships

Imago

Brand

Health services

Organizational climate

Enterprise culture

Leadership and

managementCompensation and

reward systems

Information

systems

Competence

Development

systems

Values

and internal

motivation

”Flow”

Owner relationship

Emotional

intelligence

(Otala ja Ahonen 2003, s. 65)

e.g.

Building

social media

platform to

enhance

communication

e.g.

Informal

meetings to

develop trust

e.g.

Developing

cultural

knowledge

to enhance

collaboration

HRM in practice

What is Human Resource Management

(HRM) inside a service company

HRM is the process of acquiring, training,

appraising, compensating employees and

of attending to their labor relations, health

and safety, and fairness concerns

copyright Juhani Kauhanen

2010

Proposed ”best HR practices” system

Theriou, G.N. & Chatzoglou, P.C. (2007) Enhancing performance through

best HRM practices, organizational learning and knowledge management

A conceptual framework. European Business Review Vol. 20 No. 3, pp. 185-

207.

What do employers want?

• Motivation and commitment

• Competences

• Flexibility (tasks, time, place etc.)

• Productivity

• Employee satisfaction

• Good employer image

What do employees,

individuals want?

• Meaningfulness job

• To be heard, to be seen

• Good leadership and open communication

• Joy of co-operation

• Fair play, transparent practices – e.g. in rewarding

• Possibility to learn new and to develop own work

• Job and leisure balance

• Clarity and empathy

People are everywhere In day-to-day leadership as well as in HR processes and practices

• Day-to-day leadership in all organizational levels

– It is not only the line managers who are responsible on leadership – everyone how is responsible on implementing tasks with others people need leadership skills

– Selecting people, setting targets, leading day-to-day, Appraising, Rewarding

• HR processes and practices managed and implemented partly by HR specialists e.g.– HR Planning and Resourcing– Leadership development– Performance management– Competence Development– Employee Relations– Rewarding and compensation– Welfare/occupational health care – Retirement and layoffs

Role of Leaders and HR staff

Managers

• Performance Planning and setting

objects

• Coaching and motivation

• Performance review

• Face - to - Face , Day - to - Day

HR Staff

Strategic and operative partner of

managers in all levels

Administrative expert

Change agent

(Strategic) HRM

consists of a series of processes:– Acquiring Human Resources/Resourcing: HR planning,

recruitment and selection.

– Rewarding Human Resources: job analysis and design, compensation, benefits, performance evaluation.

– Developing Human Resources: training and development, career planning, competence management.

– Maintaining and protecting Human Resources: labourrelations and collective bargaining, health and safety, evaluation.

(Ivancevich, 2003)

e.g. Resourcing

To identify, attract, recruit the people essential for their

organisations' success:

• What kind of people we need?

– Desired competence and qualifications?

– Desired values and attitudes?

• What kind on people are interested in our branch and

company?

• How perfect is the matching of labour supply and

demand?

• What kind of actions are needed?

Means of Increase Organizational Competences

• Buy: purchase competences from outside the firm or from another firm

• Build: train and develop own competences by instruction, job rotation, challenging jobs and action learning

• Borrow: collaborate with those outside the firm: for example, consultants, customers, suppliers - “build networks”

• Bounce: remove those, who do not update their competences

• Bind: hold on your key persons

(Ulrich, D. Intellectual Capital = Competence x Commitment.

In: Sloan Management Review Winter 1998)

E.g. Competence management

Example: Aalto HR-development plans 2011Status Timetable Responsible

Strategy and road maps Ongoing Personnel/ action plan

2011-2020 – autumn 2011

Management team, especially

school Deans

Induction/ Orientation Ongoing project Processes and materials

ready autumn 2011

HR, Communication &

Development teams

Development of academic leadership and

managerial/ supervisory work

Piloting of portfolio Portfolio will be tested by

the end of 2011

Lead by Aalto HR management

team

Evaluation of matrix leadership Dates set up Autumn 2011 Rector, Deans, HR

Reward planning and development Ongoing analysis Plan ready by 12/2011 HR

Aalto management attending school events Ongoing Ongoing (constant) Deans

Development of occupational health care –

preventive measures

First phase planned Wellbeing campaign

autumn 2011

HR

Development of communication practices and

Aalto management team working methods

First management team

development process started

Plan ready autumn 2011 Deans and Heads of

Departments – HR supporting

Support with retirement plans Planning stage Support package ready

Spring 2012

Aalto Management team

Establishing correct processes and resources

for main tasks

Included in resource dialogues and

personnel planning

Autumn planning round

2011

Deans and Heads of

Departments – Finance,

Development and HR team

supporting

Example: Development of Competence

Development Practice

Analysis of competenceneeds in work, and theirevaluation and design

Development of a competence model and

detailed analysis

Design of developmentprograms

Design of training and development

Evaluation

Strategic goals and plans

What managers should know?

• Understand organizational behavior

• Know the people (subordinates, co-workers, followers)

– Competence

– Values

– Motivation

– What they want?

• ’Job-Life’ balance

• Career

• Other desires

• Know essential labour legislation and collective

agreements

copyright Juhani Kauhanen

2010

Customer and service providerService development (co-development) with customers

What do they want?

Customer:

– Tailored

– Right-timing

– Quality

– Different level of expectation

Service provider:

Productization “mass

production”

Customers problems, which they

can solve

Satisfied customers

Course

Organization providing Services

Customers

Sub-contractor

Service business process

Feedback

Joint VenturesJoint VenturesJoint Ventures

Joint Ventures

HRM processes and

activities

Innovation process

Co-development

People’s roles

in service processes

Pair discussion

• Pair up with someone you don’t know beforehand.

• Introduce yourself and tell briefly your background to

each other.

• Tell what are your expectations of the course.

• Use approximately 5 minutes for this.

Writing abstracts• A total of 10 articles during the course, each of the lecture

having two articles.

• Articles are used for bringing up ideas and questions for the

company visits.

• Questions are discussed in groups and compiled in the

beginning of next lecture.

• Instructions for the abstracts are as follows: • Read the articles from the Materials.

• One-week time to finish the assignment!

• Write a short 1-page abstract (summary) of each article

• Submit the abstracts in pdf-format before next lecture: deadline is in the

evening before at midnight.

• Each abstract is evaluated by 1 (accepted, 1 point) or 0 (not accepted,

not done properly).

Assignment and visits to

companiesContent

• Analysis and evaluation of human resources management strategy and practices in

three companies providing services based on lectures and literature.

• Assignment is done in teams, three to four students together

• The output of the assignment is an essay (about 15 pages)

Schedule

• Detailed instructions are given in October

• Three visits to organizations providing services in the beginning of November.

– Company 1, 09.11. klo 14 – 16.30

– Company 2, 16.11. klo 14 – 16.30

– Company 3, 23.11. klo 14 – 16.30

– Closing seminar 07.12.

Info and instructions will be up-dated constantly and are found in MyCourses/ Assignment

Frames to analyse intangible

assets in assignment

Information

systems

Emotional

intelligence

Human -

capital

Structural

capital

Social capital

Competences

and professional

skills

Physical

and mental

health

Work

arrangementsOccupational

safety

Knowledge

flow

Networks

Work relations

Customer relationships

Partner relationship

Supplier relationships

Imago

Brand

Health services

Organizational climate

Enterprise culture

Leadership and

managementCompensation and

reward systems

Competence

Development

systems

Intangible

Capital

Values

and internal

motivation

”Flow”

Owner relationship

Purpose

Vision

Goals

(Otala ja Ahonen 2003, s. 65)

Evaluation

1. Participation in lectures 1 p x 6 = 6 p

2. Article summaries (see guidelines) 10 articles x 1 p = 10 p

3. Company assignment (see guidelines): 42 p (min 21 p),

Criteria:

- Objectives of the essay (clarity, ambition, relevance) (max 5 points)

- Use of the literature sources (max 10 points)

- Credibility of the argumentation and results, evidence shown (max 10 points)

- Production and argumentation of own ideas /viewpoints as development proposals (max 12 points)

- Style, design, layout (max 5 points)

Total: max 42 points (all writers in a group get the same points).

4. Filling evaluation of the course extra 2 p

Max 60 p (min 30 p)

Grade: 1 = 30-36, 2 = 37-42, 3 = 43-48, 4 = 49-54, 5 = 55-60