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Cycle of failure

Customerturnover

Failure to developcustomer loyalty

No continuity inrelationship for

customer

Customerdissatisfaction

Employees cantrespond 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 technologyto control quality

High employee turnover;poor service quality

Payment oflow wages

Minimization ofselection effort

Minimizationof training

Emphasis onrules ratherthan service

Source: Schlesinger and Heskett

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Cycle of Mediocrity

Good wages/benefits

high job security

Other suppliers (if any)seen as equally poor

Customers tradehorror stories

Service not focused

on customers needs

Employees spendworking life

in environmentof mediocrity

Narrow designof jobs

Success =

not making

mistakes

Complaints met byindifference or

hostility

Employeedissatisfaction

(but cant easily quit)Emphasison rules

vs. pleasingcustomers

E

Promotionand pay

increases basedon 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 dissatisfaction

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Cycle of success

Lowcustomerturnover

Customerloyalty

Continuity inrelationship with

customer

High customersatisfaction

Extensivetraining

Employee satisfaction,positive service attitude

Repeat emphasis oncustomer loyalty and

retention

Higherprofit

marginsBroadenedjob designsLowered turnover,

high service quality

Above average

wages

Intensifiedselection effort

Train, empower frontline

personnel to control quality

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Quick facts of cycle of success

It is a continuous process.

Interdependent on customers and employees.

Facilitated by strong and growing economy.

Means to achieve the orgnisations long term

objectives.

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HIRING THE RIGHT PEOPLE IS NECESSARY TOMANAGE PEOPLE FOR SERVICE ADVANTAGE

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BE THE PREFFERED 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

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

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HOW TO IDENTIFY THEBEST

CANDIDATE

Observe Behaviour

Hire based on observed behavior, not words you hear

Best predictor of future behavior is past behavior

Consider group hiring sessions where candidates givengroup tasks

Personality Testing

Willingness to treat co-workers and customers with

courtesy, consideration and tact Perceptiveness regarding customer needs

Ability to communicate accurately and pleasantly

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HOW TO IDENTIFY THEBEST

CANDIDATE

Employ Multiple, Structured Interviews

Use structured interviews built around jobrequirements

Use more than one interviewer to reduce similar tome 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 thejob

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TRAIN SERVICEEMPLOYEES

The Organizational Culture, Purpose and Strategy

Promote core values, get emotional commitment tostrategy

Get managers to teach why, what and how of job.

Interpersonal and Technical Skills

Both are necessary but neither is sufficient for optimal jobperformance

Product/Service Knowledge

Staffs product knowledge is a key aspect of service quality

Staff need to be able to explain product features and toposition products correctly

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Factors Favoring Employee Empowerment

Firms strategy is based on competitive differentiation

and on personalized, customized service

Emphasis on long-term relationships vs. one-time

transactions

Environment is unpredictable, contains surprises

Managers are comfortable letting employees work

independently for benefit of firm and customers Employees seek to deepen skills, like working with

others, and are good at group processes

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Control vs. Involvement Model of Management

Control concentrates 4 key features at top of organization;Involvement pushes them down through the organization.

Power to make decisions

Information about organizational performance

Rewards based on organizational performance

Knowledge enables employees to understandand to contribute to organizational performance

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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.

Participate in decisions

Profit sharing and stockownership

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The Traditional Organizational Pyramid versus

The Inverted Organizational Pyramid

Frontline

Staff

TopMgmt

MiddleMgmt

Legend: = Service encounters, or Moments of Truth.

Traditional Organizational

Pyramid

Inverted Pyramid with a Customer

& Frontline Focus

Customer Base

Frontline Staff

Middle Mgmt& Top Mgmt

Support Frontline

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The Wheel of Successful HR in Service Firms

Leadership that: 1. Hire theRight People

3. Motivate &

Energize Your People

2. Enable Your People

Be the preferred

employer & competefor talent market

share

Intensify the

selection

process

Empower Frontline

Build high performance service

delivery teams

Extensive Training

Utilize the full

range of rewards

Service Excellence

& Productivity

Focuses the entire

organization on

supporting thefrontline

Fosters a strong

service culture with

passion for service

and productivityDrives values that

inspire, energize and

guide service providers

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