Organizing and Implementing: Service Organizations

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Organizing and Implementing Service Organizations
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Learning Objectives

• AFTER FINISHING THIS CHAPTER, YOU SHOULD BE ABLE
  TO
• Identify different elements contributing to the
  success of a service organization.
• Identify elements of successful implementation of
  a plan.
• Appreciate that expenditures on human resources
  should be seen as an investment that will pay
  dividends, rather than a cost to be minimized.
• Understand the strategic importance of
  recruitment, selection, training, motivation, and
  retention of employees.
• Recognize how the culture of a company impacts
  the service received by customers.

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Service Profit Chain

• 1. Customer loyalty -gt profitability and growth.
• 2. Customer satisfaction -gt customer loyalty.
• 3. Value -gt customer satisfaction.
• 4. Employee productivity -gtvalue.
• 5. Employee loyalty -gt productivity.
• 6. Employee satisfaction -gt employee loyalty.
• 7. Internal quality -gt employee satisfaction.
• 8. Top management leadership underlies chains
  success.

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Service Profit Chain

• Internal quality
• Employee satisfaction
• Employee loyalty
• Employee productivity
• Value
• Customer satisfaction
• Customer loyalty
• profitability and growth

Top management leadership underlies chains
success
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The service management trinity
Operations
Marketing
management
management
Customers
Human
resources
management
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Marketing Function

• Evaluate select Market segment.
• Research customer needs preferences.
• Competitive analysis.
• Design core product - match it with needs.
• Select and establish levels for supplementary
  elements.
• Set prices.
• Make locational and scheduling decisions.
• Develop communication strategies and plans.
• Develop performance standards.
• Creat programs for rewarding reinforceing
  loyalty.

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Operations Function

• Still dominant.
• But needs to work with other two areas for total
  product/service delivery,
• Customer evaluates a firms total servive/product.

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Human Resources Function

• Human resource flow - right number of people and
  mix of competencies issues relate to
  recruitment, training, career development,
  promotion.
• Work systems - arranging people, information,
  facilities, technology to keep the firm
  functioning.
• Reward systems - send a powerful message to
  employees in terms of desired attitudes and
  behaviors.
• Employee influence - employee inputs on business
  goals, pay, working conditions, career
  progression, employement security, the design
  and implementation of work task.

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Inter-functional Conflict

• Revenue versus cost orientation.
• Different time horizon
• Perceived fit of new products with existing
  operations- compatibility
• The three imperetive - marketing, operations,
  human resources.
• These three should be compatible and mutualy
  reinforcing.

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Inter-functional Conflict Reduction

• Transfer and cross training.
• Creating cross functional task force.
• New tasks and new people.
• Process management teams.
• Institution gain sharing programs - stock option
  programs.

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Key Marketing Oriented Tasks

• Develop marketing orientation at the field level-
• decentralized revenue responsibility, control
  by procedure manuals.
• Internal marketing -
• workbooks or training, marketing innovations to
  employees, and internal communication.
• Planning as an integrated activity -
• developing a marketing plan and effective
  implementation (set up organization, define
  responsibility, procedures and control systems,
  continuity and flexibility, coordination,
  communication).

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Key Marketing Oriented Tasks

• Assigning responsibility -
• breakdown the required activities,
• assign responsibility by name,
• Make activity schedules in milestone format,
• detail tangible and intangible results from each
  activity.

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Elements of Implementation

• Developing a marketing organization structure -
• staff (advertising PR, marketing research,
  corporate planning, product development.,
  specialits actvities, internal marketing
  training, some pricing decisions) versus line
  (SBU level planning, execution of decisions
  regarding marketing or service mix elements,
  customer service, franchisee development and
  recruitement) functions.
• Focussing the marketing effort - along five
  dimensions (functions, product or brand, process,
  geography, markets).

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Elements of Implementation

• Re-evaluate the customer service function.
• Examine marketing activities at different levels
  in the organization and determine their effect on
  customer service function.
• Centralization versus delegation.
• Technology and its effect on organization
  structure, reporting system, decision making and
  control mechanism.

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Elements of Implementation

• Technology and its impact on other functions
• Human resources - performance evaluation and
  allocation of reward (who sells what, which
  outlets, when etc.).
• Marketing - What sells, where, when, in what
  volume, what price, under what marketing mix
  conditions.
• Account management - Who buys what, when, where,
  related trends.
• Accounting - revenue and audit trail.
• Manufacturing - production and inventory
  planning.
• Logistics - scheduling of shipments, vehicle
  allocations, cargo space, reservations etc.

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Guidelines for Effective Implementation

• Recruitment and Training
• Education (customers and employees)
• Efficiency first - be nice second??
• Efficiency versus effectiveness!
• Standardisation of response
• Pricing issues
• Outsourcing
• Be proactive and Evaluate performance regularly
• Acknowledge good work
• Act on defective work

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Special Characteristics in Recruiting and
Training High Contact Service Personnel

• Interpersonal skills
• Personal appearance and grooming
• Knowledge of the product and operations
• Selling capabilities
• Skills in co-production
• Self-monitoring behaviors

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Job Design
Server
Emotional Labor Empowerment Enablement
Service Firm
Customer
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Control Model of Management key features
concentrated at top

• Information about organizational performance
• Rewards based on organizational performance
• Knowledge that enables employees to understand
• and contribute to organizational
  performance
• Power to make decisions that influence
• work procedures and organizational direction

• Levels of
• Employee
• Involvement
• Suggestion Involvement
• Job Involvement
• High Involvement

Involvement Model of Management key features
pushed down through organization
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Factors Favoring Employee Empowerment

• Competitive differentiation personalized service
• Extended relationships with customers
• Complex and non-routine technologies in use
• Unpredictable business environment
• Managers comfortable with offering employees
  autonomy for benefit of organization customers
• Employees have strong need to grow and deepen
  skills in work environment

Source Bower Lawler, 1992. The Empowerment of
Service Workers What, Why, How and When, Sloan
Management Review, Spring, 32-39.
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