SM: Session 11 People in Service

" The old adage People are your most important asset is wrong. The right people are your most important asset" – Jim Collins

People in Services Marketing Mix

People or employees are the key to a service business. Most services are people’s business. The service encounter between employees and the customers is very important for the service organizations. From the customer's perspective also the service staff is an important aspect of the service. In the services where there is direct interaction with customers, it is an important point of differentiation for the service firms. For them, service personnel are the source of customer loyalty and competitive advantage.

Employees as Differentiators

• they are a core part of the product 
• they represent the service firm 
• they are responsible for keeping the brand promise
• they are crucial for generating sales, cross selling and up-selling.
• they also determine productivity. 

Employees as an important driver of Customer Loyalty

• they anticipating customer needs
• they customize service delivery as per requirements
• help the firm build long term personalized relationships

The employees are more visible in high contact services. Though there is an increase in self service technologies and other internet enabled features, it is very difficult to replace it with the quality of frontline employees.

Emotional Labor 

In services, customers range from nice to nasty, and a range of emotions come into play every time the worker deals with a set of customers. Constant interaction with (and scrutiny by) customers can be very stressful for the employees.

The word emotional labor  was coined by Arlie Hoshschild, it is defined as - “The act of expressing socially desired emotions during service transactions”. 

Frontline employees are expected to be cheerful, genial, compassionate, sincere or even self-effacing. To convey all these the employees need to maintain their facial expressions, gestures, tone of voice and words. This would result in extra pressure and stress. 

To manage emotional labor many firms check the emotional ability of the employees and if required provide them adequate training. They are required to take following steps:

1. Provide training in emotional management skills and teaching them importance of being courteous to the customers.
2. Carefully fashioning  the servicescape and other elements of work environment.
3. Allow employees to take out their frustrations in their group.
4. Give employees adequate break from work.

Role Stress in Frontline Employees

There are three main causes of role stress:

Person versus Role Conflict

This is the conflicts between what jobs require and employee’s own personality, self-perceptions and beliefs. Organizations must instil “professionalism” in frontline staff. Employees with high esteem are likely show more warmth and friendly personality.

Organization versus Client Conflict

This is the situation of 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

This is the conflicts between customers that demand service staff intervention. Issues are smoking, jumping queues, talking loudly, taking in movie theater are very common areas for such conflicts.

Cycle of Failure, Mediocrity and Success

These cycles are diagrammatic representation of how poor, mediocre and successful service firms set up their frontline employees for failure, mediocrity or success. 

The Cycle of Failure

In some services there is no importance given to the role of employees. They hire less expensive people with little or no training. These are the firms where the employees are suppose to do routine tasks, for example, call centers, restaurants and retail store. The cycle of failure brings out the implications of two sides of such failures - employee cycle of failure and customer cycle of failure.

The employee cycle of failure

It begins with narrow job design to accommodate low skill levels. The firm emphasis on rules rather than service  and they use of technology to control quality. The payment given to employees is low and no efforts are taken in hiring good employees. Lack of training and skills results in boredom. Such employees have poor service attitude. The firm is not careful about the employees and high turnover results in further poor service quality and low profit margins.

The customer cycle of failure
Managers’ short-sighted assumptions about financial implications of low pay and high turnover human resource strategies results in less number of returning customers. This customer turnover requires them to attract new customers all the time. The customers remains dissatisfied by such service providers and do not patronize them.

In the cycle of failure , costs of short-sighted policies are ignored. The employee hiring and firing leads to loss of expertise among departing employees,  disruption to service from unfilled jobs and firm needs to constantly spend on recruiting, hiring, training them. The new employees are initially low on productivity as they are inexperienced. Due to this there will be loss of revenue stream from dissatisfied customers who go elsewhere and loss of potential customers who are turned off by negative word-of-mouth. The firm then needs to put money in advertising and sales promotion to win new customers to replace those lost.

The Cycle Of Mediocrity

This type of cycle is most commonly found in large, bureaucratic organizations. In such firms service delivery is oriented toward

• Standardized service
• Operational efficiency
• Prevention of employee fraud and favoritism toward specific customers

Job responsibilities narrowly and unimaginatively defined and successful performance measured by absence of mistakes. The training focuses on learning rules and technical aspects of job—not on improving interactions with customers and co-workers

Cycle of Success

This cycle represents longer-term view of financial performance, a situation where firm seeks to prosper by investing in people. Attractive compensation packages are given to attract better job applicants. The firms are more focused recruitment, intensive training, and higher wages make it more likely that employees are:

• Happier in their work
• Provide higher quality, customer-pleasing service