Chapter 8: Manage and involve employees in service organizations

Question 1

I. Relevance of personnel management

What is Personal management?

Answer 1

• People are the most important resource in service companies (service interaction).
• Successful service companies invest time, effort, and financial resources to bring out the strengths of their front-line employees (key asset).

- Organizational psychology investigates the impact of the behavior of individuals, groups and structures on workplace
Determinants / challenges:
-	Motivation
-	Absenteeism
-	Citizenship Behavior
-	Organizational Commitment
-	Job satisfaction
-	Teamwork

• Human resources management is the design of formal systems and proactive measures to ensure the effective and efficient use of a people to achieve their organizational goals.
• It includes both strategic and operational responsibilities.

Question 2

Five reasons for the special meaning of the Personnel management in service companies

Answer 2

1. Co-production with the customer (explain norms, wants/needs to customers and turn satisfied customers into loyal ones)
2. Hiring of adequate personalities (who have cust. relationship skills)
3. Management of employee actions based on organizational norms and values (strategies to manage employees are service climate and service culture, which generate passion for service)
4. Emotional labor (management of emotions to produce intended facial and body gestures with customers)
5. Employees as part-time marketers (explain details about products, services)

Question 3

Emotional labor

Answer 3

• Emotional work is part of working as a service person and goes beyond physical and mental work (show an emotion that even though they do not feel it).
• Empathy in service provision (e.g. caring, joy, interest, happiness) influences the service quality perceived by the customer
• Emotional dissonance arises when the feelings to be shown are in conflict with the employee’s real feelings

Question 4

Internal work environment

Answer 4

• Organizational culture describes the specific set of values and norms shared by people within an organization that determine how people interact with each other and with external stakeholders
• In service companies, organizational culture can fill the gap between
  (1) what the company can anticipate and train its employees to deal with it
  (2) opportunities and problems that arise daily with customers:
  • Customer focus
  • Focus on service quality
• Three levels of organizational culture:
  • Artifacts and behaviors (Attributes that can be seen, felt and heard)
  • Supporting values (The professed culture of an organization’s members, mission, slogans)
  • Shared assumptions (The attitudes and beliefs which are deeply embedded, often tacit, unconscious assumptions). The core.

Question 5

Service culture and service climate

Answer 5

Service culture:

• Service companies need a strong service culture that focuses on customer satisfaction and service excellence
• The expression of a strong service culture is when people know how to react in certain situations based on clear and unambiguous organizational values
• Advantages of a strong service culture: high employee motivation, commitment and loyalty; cross-departmental group cohesion; increase efficiency

Service Climate:

• Service climate describes the perception of practices and processes in the company by the employees
• Service climate includes the extent to which all activities, policies and practices are focused on service quality
• Identify the service climate through surveys that measure employee perceptions of their work environment

Question 6

II. Employee empowerment

Personnel management strategy of Employee empowerment

Answer 6

• Employees must be empowered to solve situations on their own responsibility in order to meet the expectations of the customers
• Service companies need unbureaucratic and employee-oriented systems and processes that do not restrict employees
• Employee empowerment creates an environment that is characterized by commitment and ownership
• Employees should be given the same respect by management for the employees themselves
• Excellent service results from the fact that employees can show initiative in a trusting working environment and that management plays a supporting role

Advantages of employee empowerment for:
. Management (good relationship between manager, employees, and customer)
. Employee (motivation, easy to find a solution for customers)
. Customer (satisfy with a solution in the moment)

Question 7

Effective employee empowerment depends on the Corporate governance

Answer 7

Different views of management on employees:
Theory X (managers assume that employees are lazy, atmosphere of mistrust and negativity)
Theory Y (positive view of managers about employees)

Effective employee empowerment equation multiplies four factors (when one factor is missing, the empowerment do not work at all):
Empowerment = Power (make decision) x Information (customer expectations) x Knowledge (policies) x Rewards (profit sharing plans)

Question 8

III. Benefits of effective HR management

Commitment and organizational commitment of Employee

Answer 8

Engagement of the employees:

• Involvement and enthusiasm of the employee
• Positive influence on organizational targets (e.g. customer satisfaction, customer loyalty, reduction of employee turnover, return on investment, profitability)
• Demarcation of employee engagement (full use of competences and skills of employees) and job satisfaction (the company takes care of the employees)

Organizational commitment of employees:

• Psychological connection of the employee to the company as employer
• Positive influence on organizational targets (e.g. employee loyalty, Citizenship Behavior, employee engagement)

Question 9

Service Profit Chain

Answer 9

The service profit chain shows the connection between employees, customers and company performance

Conceptual and empirical evidence of the importance of proactive HR management
Relationships in the Service Profit Chain:
- Sales growth and profitability arise primarily through customer loyalty
- Customer loyalty arises through customer satisfaction
- Customer satisfaction arises from the value of the service perceived by the customer
- The perceived value of the service comes from satisfied and productive employees
- Satisfied and productive employees are created through internal service quality

Question 10

Summary of Manage and involve employees in service organizations

Answer 10

Human resources management deals with the design of formal systems and continuous proactive measures to ensure the effective and efficient use of a company’s employees to achieve their organizational goals; it includes both strategic and operational responsibilities

Two peculiarities of working in service companies relevant to human resource management are (1) emotional work and (2) internal work environment (service culture and environment)

Employee empowerment is an effective HR management strategy that brings benefits to management, employees and customers

The equation of effective employee empowerment multiplies the four factors (1) power, (2) information, (3) knowledge, and (4) reward

Effective HR management has a positive impact on employee engagement and organizational commitment

The service profit chain shows the relationship between employees, customers and company performance and provides conceptual and empirical evidence for the importance of proactive HR management