Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6!

Chapter "" # "

Chapter 11:
Managing People for
Service Advantage
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 2
Overview of Chapter 11

Service Employees Are Crucially Important

Frontline Work Is Difficult and Stressful

Cycles of Failure !ediocrity and Success

"uman #esources !ana$ement% "ow to &et It #i$ht'

Service (eadership and Culture

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # $
Service )ersonnel% Source of Customer
(oyalty and Competitive Advanta$e

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 advanta$e+ It is%

A core part of the product

the service firm

The brand

Frontline is an important driver of customer loyalty

Anticipating customer needs

Customizing service delivery

Building personalized relationships

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # %
Frontline in (ow,Contact Services

!any routine transactions are now conducted without

involvin$ frontline staff e+$+

ATMs (Automated Teller Machines)

IV (Interactive Voice esponse) systems

!ebsites for reservations"ordering# payment# etc$

-hou$h technolo$y and self,service interface is .ecomin$

a key en$ine for service delivery frontline employees
remain crucially important

/!oments of truth0 drive customer*s perception of the

service firm
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # &
1oundary Spannin$ #oles

1oundary spanners link inside of or$ani2ation to outside

world

!ultiplicity of roles often results in service staff havin$

to pursue .oth operational and marketin$ $oals

Consider mana$ement e3pectations of service staff%

%elight customers

Be fast and efficient in e&ecuting operational tas's

%o selling# cross selling# and up(selling

)nforce pricing schedules and rate integrity

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 6
#ole Stress in Frontline Employees
-hree main causes of role stress%

)erson versus #ole% Conflicts .etween what 4o.s

re5uire and employee*s own personality and .eliefs

*rganizations must instill +professionalism, in frontline staff

Or$ani2ation versus Client% Dilemma whether to follow

company rules or to satisfy customer demands

This conflict is especially acute in organizations that are not

customer oriented

Client versus Client% Conflicts .etween customers that

demand service staff intervention
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 7
Emotional (a.or

/-he act of e3pressin$ socially desired emotions durin$

service transactions0 6"ochschild The Managed Heart7

-hree approaches used .y employees%

-urface acting.simulate emotions they don/t actually feel

%eep acting.psych themselves into e&periencing desired emotion#

perhaps by imagining ho0 customer is feeling

-pontaneous response

)erformin$ emotional la.or in response to society*s or

mana$ement*s display rules can .e stressful

&ood "# practices emphasi2e selective recruitment

trainin$ counselin$ and strate$ies to alleviate stress
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # '

-he employee cycle of failure

1arro0 2ob design for lo0 s'ill levels

)mphasis on rules rather than service

3se of technology to control 4uality

-he customer cycle of failure

Managers/ short(sighted assumptions about financial

implications of lo0 pay# high turnover human resource
strategies
Cycle of Failure 687
65ig 66$7)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # (

Costs of short,si$hted policies are i$nored

8oss of e&pertise among departing employees

%isruption to service from unfilled 2obs

Constant e&pense of recruiting# hiring# training

8o0er productivity of ine&perienced ne0 0or'ers

8oss of revenue stream from dissatisfied customers 0ho go

else0here

8oss of potential customers 0ho are turned off by negative

0ord(of(mouth

9igher costs of 0inning ne0 customers to replace those lost.

more need for advertising and promotional discounts
Cycle of Failure 697
(5ig 66$7)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "0

!ost commonly found in lar$e .ureaucratic

or$ani2ations

Service delivery is oriented toward

-tandardized service

*perational efficiencies

:revention of employee fraud and favoritism to0ard specific

customers
Cycle Of !ediocrity 687
65ig 66$7)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # ""

:o. responsi.ilities narrowly and unima$inatively

defined

Successful performance measured .y a.sence of

mistakes

-rainin$ focuses on learnin$ rules and technical

aspects of 4o.;not on improvin$ interactions with
customers and co,workers
Cycle of !ediocrity 697
65ig 66$7)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "2

(on$er,term view of financial performance< firm seeks

to prosper .y investin$ in people

Attractive compensation packa$es attract .etter 4o.

applicants

!ore focused recruitment intensive trainin$ and

hi$her wa$es make it more likely that employees are%

9appier in their 0or'

:rovide higher 4uality# customer(pleasing service

Cycle of Success 687
65ig 66$;)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "$

1roadened 4o. descriptions with empowerment

practices ena.le frontline staff to control 5uality and
facilitate service recovery

#e$ular customers more likely to remain loyal .ecause%

Appreciate continuity in service relationships

9ave higher satisfaction due to higher 4uality

Cycle of Success 697
65ig 66$;)
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "%
"ow to !ana$e )eople for
Service Advanta$e'

9ire the right people

)nable these people

Motivate and energize your people

Staff performance involves .oth a.ility and motivation

"ow can we $et a.le service employees who are

motivated to productively deliver service e3cellence'
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "&
#ecruitment

-he ri$ht people are a firm*s most important asset% -ake a

focused marketin$,like approach to recruitment

Clarify what must .e hired versus what can .e tau$ht

Clarify nature of the workin$ environment corporate values

and style in addition to 4o. specs

Ensure candidates have=can o.tain needed 5ualifications

Evaluate candidate*s fit with firm*s culture and values

!atch personalities styles ener$ies to appropriate 4o.s

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "6
Select and "ire the #i$ht )eople%
617 1e the )referred Employer

Create a lar$e pool% /Compete for -alent !arket Share0

What determines a firm*s applicant pool'

:ositive image in the community as place to 0or'

<uality of its services

The firm/s perceived status

-here is no perfect employee

%ifferent 2obs are best filled by people 0ith different s'ills# styles#
or personalities

9ire candidates that fit firm/s core values and culture

5ocus on recruiting naturally 0arm personalities for customer(contact

2obs
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "7

O.serve .ehavior

9ire based on observed behavior# not 0ords you hear

Best predictor of future behavior is past behavior

Consider group hiring sessions 0here candidates are given group

tas's

Conduct personality tests

!illingness to treat co(0or'ers and customers 0ith courtesy#

consideration# and tact

:erceptiveness regarding customer needs

Ability to communicate accurately and pleasantly

Select and "ire the #i$ht )eople%
687 "ow to Identify 1est Candidates
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "'
Select and "ire the #i$ht )eople%
697 Identifyin$ 1est Candidates

Employ multiple structured interviews

3se structured intervie0s built around 2ob re4uirements

3se more than one intervie0er to reduce +similar to me, biases

&ive applicants a realistic preview of the 4o.

Chance for candidates to +try on the 2ob,

Assess ho0 candidates respond to 2ob realities

Allo0 candidates to self select themselves out of the 2ob

Manage ne0 employees/ e&pectation of 2ob

Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # "(
Service employees need to learn%

Or$ani2ational culture purpose and strate$y

:romote core values# get emotional commitment to strategy

=et managers to teach +0hy#, +0hat#, and +ho0, of 2ob

Interpersonal and technical skills

Both are necessary but neither alone is sufficient for optimal 2ob
performance

)roduct=service knowled$e

-taff/s product 'no0ledge is a 'ey aspect of service 4uality

-taff must e&plain product features and position products correctly

-rain Service Employees
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 20
Is Empowerment Always Appropriate'
Empowerment is most appropriate when%

5irm/s business strategy is based on competitive differentiation and

on personalized# customized service

)mphasis on e&tended relationships versus short(term transactions

3se of comple& and nonroutine technologies

Business environment is unpredictable# consisting of surprises

Managers are comfortable letting employees 0or' independently

for benefit of firm and customers

)mployees see' to deepen s'ills# li'e 0or'ing 0ith others# and are
good at group processes
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 2"

Su$$estion involvement

)mployee ma'e recommendation

through formalized programs

:o. involvement

>obs redesigned

)mployees retrained# supervisors

reoriented to facilitate performance

"i$h involvement

Information is shared

)mployees s'illed in team0or'# problem

solving etc$

:articipate in management decisions

:rofit sharing and stoc' o0nership

(evels of Employee Involvement
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 22
1uild "i$h,)erformance Service Delivery
-eams

-he )ower of -eamwork in Services

5acilitate communication among team members and 'no0ledge

sharing

9igher performance targets

:ressure to perform is high

Creatin$ Successful Service Delivery -eams

)mphasis on cooperation# listening# coaching and encouraging one

another

3nderstand ho0 to air differences# tell hard truths# as' tough

4uestions

Management needs to set up a structure to steer teams to0ard

success
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 2$
!otivate and Ener$i2e the Frontline
>se full ran$e of availa.le rewards effectively includin$%

:o. content

:eople are motivated and satisfied 'no0ing they are doing a good
2ob

Feed.ack and reco$nition

:eople derive a sense of identity and belonging to an organization

from feedbac' and recognition

&oal accomplishment

-pecific# difficult but attainable and accepted goals are strong

motivators
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 2%
#ole of (a.or >nions

Challen$e is to work 4ointly with unions reduce

conflicts and create a service climate

(a.or unions and service e3cellence are sometimes seen

as incompati.le

?et many of the world*s most successful service

.usinesses are hi$hly unioni2ed 6e+$+ Southwest
Airlines7

!ana$ement consultation and ne$otiation with union

representatives are essential if employees are to accept
new ideas
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 2&
Service (eadership and Culture

Service culture can .e defined as%

-hared perceptions of 0hat is important

-hared values and beliefs of 0hy they are important

Charismatic=transformational leadership%

Change frontline/s values# goals to be consistent 0ith firm

Motivate staff to perform their best

Internal !arketin$%

:lay a vital role in maintaining and nurturing a corporate culture

9elp ensure service delivery# 0or'ing relationships# employee trust#

respect# and loyalty
Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter "" # 26
Customer Base
Middle Mgmt
And Top Mgmt
Support Frontline
-he Inverted Or$ani2ational )yramid
5ig 66$66
Frontline
Staff
Top
Mgmt
Middle
Mgmt
Legend) * Service enco+nters, or -Mo.ents o/ 0r+th1
Traditional
Organizational Pyramid
Inverted Pyramid with a
Customer and Frontline
Focus
Frontline Staff