Managing People

for Service Advantage

Hire the Right People

The
Theold
old saying
saying People
Peopleare
areyour
your most
most
important
important asset
assetis
iswrong.
wrong.
The
TheRIGHT
RIGHT people
people are
areyour
your most
most
most
most important
important asset.
asset.
Jim Collins

The Cycles of Failure, Mediocrity and Success

Too many managers make short-sighted assumptions about
financial implications of:
Low pay
Low investment (recruitment, training)
High turnover human resource strategies

Often costs of short-sighted policies are ignored:

Costs of constant recruiting, hiring & training
Lower productivity & lower sales of new workers
Costs of disruptions to a service while a job remains unfilled
Loss of departing persons knowledge of business and customers
Cost of dissatisfied customers

Cycle of Failure
Customer
turnover

Failure to develop
customer loyalty

Repeat emphasis on
attracting new customers

Low profit
margins

High employee turnover;

poor service quality

Use of technology Emphasis on

to control quality rules rather
than service
Payment of
low wages

No continuity in
relationship for
Employee dissatisfaction;
customer
poor service attitude

Customer
dissatisfaction

Employees
become bored

Narrow design of
jobs to accommodate
low skill level

Minimization of
selection effort
Minimization
of training

Employees cant
respond to customer
problems

Source: Schlesinger and Heskett

Employee cycle of failure

Begins with a narrow design

of jobs to accommodate low skill levels, an

emphasis on rules rather than service and the use of technology to
control quality

Strategy of low wages is accompanied by minimal effort on selection of

training

Consequences include bored employees who lack the ability to respond

to customer problems,become dissatisfied and develop a poor service
attitude.

Outcomes for the firm are low service quality and high employee
turnover

Because of weak profit margins, the cycle repeats itself with the hiring of
more low paid employees to work in this unrewarding atmosphere

Customer cycle of failure

Begins with repeated emphasis on attracting new customers

Become dissatisfied with employee performance and the
lack of continuity implicit in continually changing faces

These customers fail to develop any loyalty to the supplier

This requires an ongoing search for new customers to
maintain sales volume.

Cycle of Success
Low
customer
turnover

Customer
loyalty

Higher
profit
margins

Lowered turnover,
high service quality
Continuity in
relationship with
customer Employee satisfaction,
positive service attitude

High customer
satisfaction

Repeat emphasis on
customer loyalty and
retention

Extensive
training

Broadened
job designs

Train, empower frontline

personnel to control quality

Above average
wages
Intensified
selection effort

Source: Heskett and Schlesinger

Strategies for managing people

The Wheel of Successful HR in Service Firms

Leadership that:
1. Hire the
Right People

Focuses the entire organization

on supporting the frontline
Fosters a strong
service culture with
passion for service
and productivity
Drives values that
inspire, energize
and guide service
providers

3. Motivate &
Energize Your People
Utilize the full
range of rewards

Be the preferred
employer & compete
for talent market share

Service Excellence
& Productivity

Intensify the
selection
process

2. Enable Your People

Empower Frontline
Build high performance service
delivery teams
Extensive Training

Recruitment

The right people are a firms most important asset: take a

focused, marketing-like approach to recruitment

Clarify what must be hired versus what can be taught

Clarify nature of the working environment, corporate values
and style, in addition to job specs

Ensure candidates have/can obtain needed qualifications

Evaluate candidates fit with firms culture and values
Fit personalities, styles, energies to the appropriate jobs

Select And Hire the Right People:

(1) Be the Preferred 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

Select and Hire the Right People:

(2) How to Identify the Best Candidates

Observe Behavior
Hire

based on observed behavior, not words you hear

Best predictor of future behavior is past behavior
Consider

group hiring sessions where candidates given group 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

Select and Hire the Right People:

(3) How to Identify the Best Candidates

Employ Multiple, 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

Enable your people

The Organizational Culture, Purpose and Strategy

Promote core values, get emotional commitment to strategy
Get managers to teach why, what and how of job.

Interpersonal and Technical Skills

Both are necessary but neither is sufficient for optimal job

performance

Product/Service Knowledge
Staffs product knowledge is a key aspect of service quality
Staff need to be able to explain product features and to position

products correctly

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

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, like working with others, and

are good at group processes

Motivate and Energize the Frontline

Use the full range of available rewards effectively,
including:

Job content
Feedback and recognition
Goal accomplishment

The Inverted Organizational Pyramid

Customer Base
Top
Mgmt

Frontline Staf

Middle
Mgmt

Legend:

Frontline
Staf

Middle Mgmt
& Top Mgmt
Support Frontline

Traditional
Organizational Pyramid

Inverted Pyramid with a

Customer & Frontline Focus

= Service encounters, or Moments of Truth.

Service-Profit Chain Model

Most applicable to service environments.
Model is based on a set of cause and
efect linkages between internal and
external performance, and defines the key
performance measurements on which
service-based firms should focus.

The Service-Profit Chain Model

Source: Adapted from J. L. Heskett, T. O. Jones, G. W. Loveman, W. E. Sasser, Jr., Jr., and L. A. Schlesinger,
Putting the Service-Profit Chain to Work, Harvard Business Review, MarchApril 1994, pp. 164-174.

Causal Links in the Service Profit Chain

Customer loyalty drives profitability and growth

Customer satisfaction drives customer loyalty
Value drives customer satisfaction
Employee productivity and retention drive value
Employee loyalty drives productivity
Employee satisfaction drives loyalty and productivity
Internal quality drives employee satisfaction
Top management leadership underlies chains success