Human Resource Management in

the Service Sector

Introduction to the service sector
Nick Kinnie

Objectives
Outline the importance of the service sector
in modern economies
Identify the key characteristics of service work
and the areas of the sector for detailed study:
knowledge intensive work
Outline the research in the area
Introduce the HRM challenges posed by
knowledge based service sector working
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Introduction
Service sector dominates employment in advanced
industrial societies
Consequence of the move towards the postindustrial society
Around three quarters of employment in this sector
and evidence of fast growth in recent years
Major employers in this area with important
influence on the global economy
However, the concepts and metaphors of much of the
debate in the area are based around the
manufacturing sector
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Employee-employer
customer/client interactions
Customer/client
Often direct interaction
between the employee
and the customer/client
Adds to the traditional
relationship between
employer and employee
In manufacturing
Employer
Employee
often buffers

Classic definition of service work

Intangibility
Perishability
Variability
Simultaneous production and
consumption
Inseparability - co-production between
employee and customer
(Korczynski (2002:5-7))

Limitations of this definition

Not all service work has all five characteristics
Back office jobs no customer contact and nonperishable products
Administrator in a hospital separate from
patients
Sales work presence of a physical product

Manufacturing work often involves working on

services and customers
Differences between manufacturing and
services are eroding extent to which they
are based on knowledge
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Previous research in the field

New service management school the customer-service-profit
chain (Schlesinger and Heskett (1992) Schneider and Bowen
(1995))
Links between management of employees and customers
perception of service
Advocate the deindustrialisation of service work and the
empowerment approach
Critical perspectives MacDonalization of society (Ritzer
(1999))
Customer service work as fake, invasive, emotionally
draining, demeaning, routinised and alienating
Much of this is based on traditional views of service work (retail,
hospitality, health care etc)

Alternative approach what are the basic means

of production the key assets upon which the
firm depends?

Types of organisations
Knowledge
intensive
organisations

PSFs

Products

NonPSFs

Labour
intensive
organisations

Services

Products

Physical
capital
intensive
organisations

Services

Products

(Suddaby and Greenwood (2006:7))

Knowledge-based view of the

firm
Firms compete principally on the basis of
their knowledge both individual and
collective
Valuable, rare, inimitable and nonsubstitutable
Ability to grow this knowledge and to grow it
quickly can be a key source of competitive
advantage in fast moving environments
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Types of knowledge and implications

for knowledge management and
HRM
Explicit knowledge know what can be codified
and written down tends to be associated with
knowledge management systems often IT based
collecting information together and exploiting it
Tacit knowledge know how difficult to codify and
write down in peoples heads/ socially constructed
personalised and culture based knowledge
management systems
If knowledge takes these forms highlights the
key role played by managing knowledge and
managing knowledge workers
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Converting Human Capital into

Intellectual Capital
Human
HumanCapital
Capital

Conversion
Process

Employee
Knowledge
Skills
Experience

Intellectual Capital
Products
and
services
which have
market value

Role of HR
practices in this
conversion process
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Implications for HRM

Nature of Work

Managerial problem

HRM issue

Intangible

Measurement

Performance
management/reward

Knowledge
based

Renewal

Training and
Development

Customised

Standardisation

Staff
allocation

Professional

Organisational
commitment

Recruit and retain

(Drawn from Suddaby and Greenwood (2006) Maister (2003) and Batt (2006))

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Preparation for next week

Drawing on a knowledge intensive
service firm with which you are familiar
consider:
What are the key resources upon which the
success of the firm is based? (consider
those in addition to the knowledge and
skills of employees)
How does this firm use HR practices to try
to manage these resources?
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