Human Resource Management - Service Sector - Essay Example

HRM-Service sector The service sector is growing through almost revolutionary change, which dramatically affects the way in which we live and work. The challenges are great for today's service organizations, but the opportunities for those who master the science of leadership in the service sector are also tremendous. The common denominator is the focus on assuming a leadership role-either as a company in the marketplace or as an individual within the organization, regardless of formal authority or power (Grnfeldt and Strother, 2006). New services are continually being launched to satisfying our existing need and to meet need that we did not know we had. Considering the views of physical nature of activities for products, it is easier to define product rather than the services. Services generally embrace a huge diversity of activities and involve many intangible inputs and outputs. The services may be treated as an economic activity that creates value and provides benefits by bringing about a desired change in or on behalf of the recipient of the service. Services have in general four characteristics which have the potential to have impact on marketing program. These four characteristics are Intangibility, inseparability, Heterogeneity and variability. All services often include important tangible elements. Useful way to distinguish between goods and services was first suggested by Lynn Shostack (1977). In the absence of significant tangible elements, marketers may find it useful to employ physical images and metaphors to demonstrate the competencies of the service firm and to illustrate the benefits resulting from service delivery. Services are delivered in real time. In that sense, service providers become an integral part of services. So services are inseparable because they are produced and consumed at the same time unlike goods. Service marketers need to understand customers' time constraints and priorities (lovelock and Wright, 2002). People can be part of the service itself and this can be advantage of services marketers. Many services require customers to participate in creating the service product. For most of the service customers can be thought of as partial employees, and services firms have much gain from trying to train customers to make them more competent and productive (Canziani, 1997). Basically the services offerings are unique in nature and it only exists ones and so never exactly repeated. So services firms need to devote special care to selecting, training and motivating those employees who will be serving customers directly. In addition to possessing the technical skills required by the job, these employees also need to possess good interpersonal skills. Service marketers need to think carefully about whether it is a good idea to mix several segments together in the same service facility. This is how heterogeneity in variability could be dealt with. Finally, service is a deed or performance it is ephemeral transitory and perishable and so cannot usually be stocked in inventory after being produced. Although facilities, equipment and labor can be held in readiness to create the service these elements simply represent productive capacity, not the product itself. If there is no demand during a given time period unused capacity is wasted. Apart from these above four characteristics perhaps the key distinction between goods and services lies in the fact that customers usually drive value from services without obtaining ownership of any tangible elements. The marketing strategy defines what should happen and why. It has been argued that a combination of appropriate/inappropriate strategy and good/poor implementation will lead to various business outcomes (Jobber and Fahy, 2006). The marketing mix is not a theory of management that has been derived from scientific analysis, but a conceptual framework which highlights the principal decisions that marketing manager's make in configuring their offerings to suit customers' needs. The tools can be used to develop both long term strategies and short term tactical programs. The list of mix elements has a lot of everyday practice value because it provides headings around which management thoughts and actions can be focused (Palmer, 2005). Strategies to market manufactured goods, marketers usually address four basic strategic elements; product, price place (or distribution) and promotion (or communication) collectively, these are often referred to as the 4p's of the marketing mix. To capture the distinctive nature of service performances, we can modify the terminology and extending the mix by adding three elements associated with service delivery; physical environment, process and people. Physical environment provide the tangible aspect of the services. Services need to manage physical evidence carefully, as it can have a profound impact on customer impressions. Process is all about creating and delivering product elements to customers require the design and implementation of effecting process. From designing just the product, companies are moving towards designing the product, process and service interface and moving towards 'whole life design' as a method for adding value and maximizing profit throughout the value chain right through to disposal. This places a greater emphasis on the post-production stage of products, distribution, marketing, customer and market support - the service end of the process - as well as corporate development. As a result, more emphasis will be applied to service design (Hollins and Shinkins, 2006). Badly designed processes often lead to show bureaucratic and ineffective service delivery and results in dissatisfied customer. Finally many services depend on direct interaction between customers and firms employees. Service quality is often assessed based on customers' interaction with front - line staff and successful service firms devote significant effort to recruiting training, motivating these employees. Other than these specialized 3P's for service marketing the remaining 4P's i.e. Product, Place, Price and Promotion are little bit different for services. Managers need to be attentive to all aspects of the service performance that have the potential to create value for customers. Firms may deliver service directly to customers or through intermediary organizations. Speed and convenience of place and time for the customer are becoming important determinants in service delivery strategies. Promotion of a product needed effective communication. Promotion provides the needed information, advice persuading the target customers but in services marketing much communication is educational in nature. Companies may need to teach their customers about the benefits of the services, where and when to obtain it and how to participate in service processes. The pricing component in service marketing strategy is not limited to the traditional pricing tasks to determining the selling price to customers, setting margins for any intermediaries and establishing credit terms. Marketers must understand and where feasible, seek to minimize other outlays that customers are likely to incur in purchasing and using a service. As discussed above, elements of 7P's model marketing cannot operate successfully in isolation from other functions in a service business. Three management functions play central and interrelated roles in meeting customer needs namely marketing, operations and human resources. Service firms must understand the implications of the seven components of the service marketing mix in order to develop effective strategies. For any service organization, matching customers needs to firms capabilities in vital. Six customer service representative (CSR) characteristics and their influences on customer satisfaction and service representatives contribute to customer satisfaction more when they exhibit the characteristics of thoroughness, knowledgeableness, and preparedness, regardless of the richness of the medium used. Surprisingly, while three other CSR characteristics studied (courtesy, professionalism, and attentiveness) are traditionally believed to be important in face-to-face encounters, they had no significant impact on customer satisfaction in the technology-mediated (Froehle, 2006). Managers must think carefully about how customer needs relate to such operational elements as speed and quality, the times when service is available, the firms capacity to serve many customers simultaneously and the physical features and appearance of service facilities. Frederick Reichheled (2001) said that "the result should be win-win situation where profits are earned through the success and satisfaction of customers and not at their expenses." Relationship customers are by definition not buying commodity services. Acquiring the right customers can bring in long term revenues continued growth from referrals and enhanced satisfaction from employees whose daily jobs are improved when they can deal with appreciative customers. So service marketers must understand the power of relationship management. Many firm have large numbers of customers, may have different touch points, at different geographical locations. From a customer perspective, well implemented CRM systems offer a unified customer interface, which means that at each transaction, the relevant account details, knowledge of customer preferences and past transactions, or history of a service problem are at the finger tips of the person service the customer. This can result in a vast service improvement. From company perspective, customer relationship management, (CRM) systems allow the company to better understand, segment and lies its customers base, better target promotions and cross selling; and even implement churn alert system that signal whether a customer is in danger of defecting (Quiring and Mullen, 2002). Now from the firm's perspective, service staffs are crucially important, as they can be a key determinant of customer loyalty (or defections) and therefore play an important sole in the service profit chain. From the customer's perspective, the encounter with service staff is probably the most important aspect of a service. The service levels and the way service is delivered by the frontline can be an important source of differentiation as well as competitive advantage for the organizations. In addition, the strength of the customer / frontline staff relationship is often an important driver of customer loyalty (Bove and Johnson, 2001). Service staff is so important to customers and the firms competitive positioning because the frontline is a core part of the product; is the service firm; is the brand. Furthermore frontline staffs play a key role in anticipating customer's need, customizing the service delivery and building personalized relationship with customers which ultimately lead to customer loyalties. So it's very necessary and important for the service organizations to adopt such HR strategies, which can help them to move in the direction of success. To be the organization of best service provider, Organizations need to be preferred employer & select the right people. Excellent service firms use a number of ways to identify the best candidates in their application pool. They observe behavior, conduct personality tests, interview applicants and provide applicants with a realistic job preview. Training and learning professionalize the frontline staff and moves them away from the common (self) image of being in low end jobs. The women front office staffs were therefore engaged in a ritual of placating guests by absorbing their anger, while all the while looking 'presentable' and sounding 'professional'(Watt, 2007). Advocates claim that the empowerment approach is more likely to yield motivated employees and satisfied customers than is the production line. Once a firm has hired the right people, trained them well empowered them and organized in effective service delivery teams now companies have to target staff motivation level because staff performance is a function of ability and motivation. Hiring, training, empowerment and team give companies the able people and reward systems are the key to motivation. Service staff must get the message that providing quality service holds the key for being rewarded. Motivating and rewarding strong service performers are two of the most effective ways to retaining them. Receiving a fair salary is a hygiene factor as discussed by Hertzberg rather than motivating factor. Paying more than what is seen as fair has only short term motivation effects and wears off quickly. Bonuses which are contingent on performance on the other hand, have to be earned again and again and therefore tend to be more lasting in their effectiveness. Other, more lasting rewards are the job content it self, recognition and feedback and goal accomplishment. If the employees do not have highest level of motivation he/she tends towards job hopping. Nowadays especially for service organizations, higher turnover rate is some what very common. Job content is one of the long lasting motivational factors which have been in the list of motivation factors identified by Hertzberg. People are motivated and satisfied simply by knowing that they are doing a good job. They feel good about themselves and like to reinforce that feeling. This is true especially if the job also offers a variety of activities, requires the completion of whole and identifiable pieces of work and recognition is seen as significant in the sense that it has an impact on the lives of others. Goals are also effective motivators. Successful service organizations are committed to effective management of human resources. Top and middle management continuously rein force a strong culture that emphasizes service excellence and productivity. Employees understand and support the goals of an organization, and a value-driven leadership inspires and guides service providers and brings their passion for serving to the full and gives them a fulfilled working life. Their long-term strategy must be a continuous and iterative process that provides some competitive advantage (Johnston and Clark, 2005).The market and financial results can be phenomenal and often lead to a sustainable competitive advantage. It is probably more difficult to duplicate high - performance human assets than any other corporate resource. References: 1. Shostack, G. Lynn, (1977), "Breaking free from product marketing," Journal of Marketing, April. 2. Canziani, Bonnie Farber, (1997), Leveraging Customer competency in service firms, International journal of service industry Management 8, No.1: 5-25. 3. Quiring, Kevin N. and Mullen, Nancy K., (2002), More than data warehousing; an integrated view of the customer, in the ultimate CRM handbook- strategies and concepts for building Enduring customer loyalty and profitability, ed. John G. Freeland (New York: McGraw Hill, 102-108). 4. Bove, Liliana L. and Johnson, Lester W., (2001), customer relationship with service personnel: Do we measure closeness, quality or strength Journal of Business research, 54:189-197. 5. Reichheled, Frederick, (2001), Loyalty Rules-How today's leaders build lasting relationships, Boston: Harvard Business school press, 45, 84-85. 6. Palmer, A., (2005), Principles of Services Marketing, 4th Edition, McGraw Hill. 7. Johnston, R. and Clark, G. (2005), Service Operations Management, 2nd Ed, Pearson Education: Harlow, UK. 8. Jobber, D and J. Fahy, (2006), Foundations of Marketing, 2nd edition, London: McGraw-Hill. 9. Hollins, B & S. Shinkins, (2006) .Managing Service Operations: Design and Implementation, Sage, 10. Gronfeldt, S. and Strother, J. (2006). Service Leadership. The quest for competitive advantage. Sage, London, UK. 11. Lovelock, C., Wright, L. (2002), Principles of Service Marketing and Management, 2nd ed., Prentice-Hall, New Jersey, NJ. 12. Watt, P. (2007) "I Need People that are Happy, Always Smiling: Guest Interaction and Emotional Labour in a Canadian Downtown Hotel" Just Labour, Vol 10, Spring: 45-59 (http://www.justlabour.yorku.ca/volume10/pdfs/04WattPress.pdf). 13. Froehle, C. (2006) "Service personnel, Technology and their Interaction in Influencing Customer Satisfaction" Decision Sciences, 37, 1: 5-38 Read More