LECTURE – 2

PEOPLE MANAGEMENT IN SERVICES

Learning objectives

• To appreciate the activities required to manage people in

services
4.3 People management in services

After the selection of employees in any organization following activities are

undertaken by human resource management

• Training & Development

• Rewarding employees
• Managing teams
• Effective communications, empowerment & motivation

Training

A systematic method of changing an employee’s behavior or to prepare the

employee for a job or upgrade/enhance the employee’s performance on the job.

Development

Prepare a person for broader responsibilities & higher level positions within the
company. Training must be planned with clearly stated measurable objectives:
ending with evaluation & effectiveness of training

4.3.1 Different forms of Training and Development in

services

• Training and development programme provided by different service

organization depends on the type of service organization, size of the
company and the degree of attention given to training.
• Some service organizations like to hire specialists who are already trained,
certified or licensed like doctors and pilots. In such services little training is
provided about the procedures and services of the organization.
 • Training required is very different in the companies where unskilled
employees are hired at the entry level. They get on the job training by their
fellow employees for example in retail stores.
• Training in some of the service organizations is so rigorous that companies
take commitment in the form of contracts from the employees to serve
organization for some particular number of years. The contracts mention the
reimbursement of training expenses by the employees if employee leaves the
organization before the contract period like in Information Technology
enabled services.

Training can be provided at different levels as shown in Figure 4.4.

Provide particular skills which makes

the service distinctive

Entry level Transmit vision of the service concept

Communication skills
Manage unrealistic customer expectations using
scripts for each anticipated situation

At every Provide training at various levels of skill

level in the
organization Provide teamwork, motivation & interactive skills

Empathy which leaves memorable experience

FIGURE 4.4: DIFFERENT LEVELS OF TRAINING

4.3.2 Training and development in services

Due to low barriers in entry, the technical aspects of any service can be easily
copied. The only aspect which any service organization can leverage on
competition is the set of soft skills people acquire in an organization.

Examples:

1. Disney provides orientation to the employees regarding the emotional

aspects of the job.
2. In hotel industry employees are trained on each aspect of serving a customer.
3. To improve technical and interactive skills Mc Donald sends employees to
‘Hamburger University’.

Training also helps employees perform at the desired level of

expectation. Example: Employees will provide uniform service across all the
outlets or branches such as Citibank.

Training can be provided in different ways like

• Send employees to universities for different programmes.

• Encourage employees to enroll for distance learning programmes.
• Courses and seminars transmitted through satellite linkages and video
conferencing.
• Self-directed learning where individuals take initiatives to formulate
learning goals by diagnosing specific learning needs.

4.3.3 How to develop successful training programme?

• For each level of employee in organization, identify and then focus on a

particular skill required which makes the service distinctive.
 • Each and every employee in a service organization should be treated as
potential career employee.
• Spend time and money generously on training because any unsatisfied
customer due to unexpected service can be great loss to the service
organization.
• Inputs of employees seeking training is very important as they can better
suggest the learning needs from training programmes as they may have the
first hand information regarding customer requirements.
• Each training programme should be considered as an opportunity to discuss
and impart vision of the service concept.

The most important point to be considered here is to evaluate the effectiveness of

training programme as shown in one of the model presented in Figure 4.5.

4.3.4 Rewarding employees

• Rewards can be given in financial forms & non-financial forms.

• The more content of discretion in services than prescribed content (widely
seen in manufacturing) poses challenge to measure the effort put by
employee in services.
• Rewarding systems are the best initiatives to retain employees.
• To introduce the right reward system a service organization must have clear
performance measures in place with fair appraisal system.
• Small scale service organization may not be able to give financial rewards
hence face difficulties in retaining employees.
 Level 1
Reaction towards the training programme
• What was the trainee’s response to the
programme?
• Did the trainees find the useful?

Level 2
Learning from the training programme
• Did the trainees learn what they should have
learnt?

Level 3
Transforming learning into job behavior
• Does the trainee use what was learned in training back on
the job?
• Measure the trainee’s on-the-job behavior

Level 4
Translating the implemented learning into organization’s
effectiveness
• Has the training improved the organization’s effectiveness
• Assess the organization for effectiveness, efficiency and
profitability
(Source: Kirkpatrick 1994)

FIGURE 4.5 EVALUATION OF EFFECTIVE TRAINING PROGRAMME

Example: Discretionary content in services

In hospitals we found that nurses are treating different patients with human touch
which varies from one nurse to the other. The patients might have different
expectations based on their illness and recovery. In such situation it is very
difficult to measure the efforts of nurses to reward them.

The bank employees have discretion to suggest the clients for different financial
portfolios, investment schemes and or interest rates. The employees can use their
own judgment and knowledge about competition to propose different portfolios to
the clients. Such discretion is very difficult to measure and hence makes rewarding
a challenging task for a service organization.

4.3.5 How to reward & compensate employees?

Monetary Terms

• Compensate by commission.
• Reduce cost of employment for the worker such as providing uniforms,
reimbursement of petrol expenses, providing car to commute to office.

Environment

• Flexible working hours

• Good working office facilities
• Introduce service design approaches which increase the productivity of
service such as encourage self-service technology

Job Related

• Allow participation of employees in giving suggestions.

• Create good image of organization so that workers should feel proud in
working with the organization.
 • Proper match of employee skill & job requirement.
• Structure jobs in such a manner that employees are encouraged to have
control over their work and responsibilities.

4.3.6 Managing Teams

In any organization teams are a group of people

• Who work together and willing to form self-directed teams

• Exhibit complementary skills
• With varying experience
• Agree on common set of goals
• Set performance measure
• Mutually accountable for performance

Teamwork in services

Services can be seen as

• Service product ITES software

• Call center based or after sales service
• Personalized service consulting

In all above services the end service product or service delivery system involves
more than one human being or one expert.

Service team should be built to provide right judgment, best solution, and
innovative product involving team of experts.

When team work is appropriate

• Complex process which requires expertise across different areas

• A typical problem and consequential, having impact on more than one part
of an organization
• Challenges in team work such as globalization leads to challenges in
managing virtual & multi-cultural teams
• When sufficient support is there through organizational policies and culture
• Many financial service organizations have restructured their customer facing
activities in such a way that a team handles all the transactions from sales to
service. This has led to increase in both quality of service and productivity
because team members develop a greater ownership of customer and
delivery process.
ANIMATION FOR TEAMWORK
4.3.7 Manage and motivate employees

• Inspire employees with good leadership by communicating the vision in

such a way that people get motivated to perform beyond expectations
• Leadership should bring substance to the vision. The employee should
understand that it is not only the number of service products to be sold but to
create a successful customer experience.
• It is organization’s responsibility to provide security to the employees with
reliable leadership aligning words with actions.
• Enabling employees listen to customer complaints and institute non-
defensive recovery routines.
• All employees would like to have clear understanding of role free from
conflict and ambiguity and procedure of assessment
• Role conflict: arises when an employee is supposed to perform more than
one role at a same time. For example a call center executive is supposed to
minimize the queue length of calls but at the same time it is expected from
same executive to persuade customers to purchase more services. The
second role demands for more time of executive which is in conflict with
his/her first role.
• Role ambiguity: Sometimes due to poor leadership leading to lack of clarity
about guiding philosophy an employee is confused of the requirements of
the role
• Empowerment: Employees should be empowered enough or have some
flexibility in deviating from set rules. There can be a situation when while
serving customers, the service gets disturbed due to technology failure or
some electricity faults. In such situation, service provider should be
empowered enough to handle the customer due to unplanned event occurred.
4.3.8 Empowerment

• Almost all services has personalized component in which customer may

expect a totally different and very rare kind of service. Such expectation may
or may not be a part of standard rules of service delivery system of any
service organization. Meeting such expectation may help in gaining
customer’s confidence in service organization. Whereas, losing customer
can result in huge cost to organization.
• Based on above situation, empowerment comes as a rescue process for many
service organizations, where decision making authority is distributed to
lowest level of the organization by liberating the employees from
standardized and mechanized processes.
• By empowering employees service organizations can tap intellectual
potential and knowledge of employees which improves productivity and
enhances innovation. Employees are given leeway to evolve their own roles
as dictated by the situation by utilizing their creativity for problem solving.
It helps in service improvements especially in case of service failure
recovery and customer satisfaction.
• It is the responsibility of service organization to provide sufficient
knowledge, tools and information utilizing which employees can take
decisions under special service requirements of customers. At the same time
ensure that employees know the boundaries between where to act on their
own and where to not.
• Different levels of empowerment can be seen in Figure 4.6.
Advantages of empowerment

Empowerment can result in fast and quick responses to customer needs or

requirements by not wasting time in asking supervisor for the suggestions. It also
helps in taking quick actions on service recovery after the service failure.

• Employees feel sense of ownership of their jobs and hence achieve higher
productivity. Employees like their jobs which reduces turnover and
improves customer satisfaction.
• Ownership of job will help employees to generate more ideas from their
experiences in service encounter. It will help either in developing new
services or improving old services provided with job security by service
organization.
• Happy employees will serve the customer with more warmth and enthusiasm
by providing right service and make the customers satisfied. Satisfied
customers will be a source of revenue generation because they will pass
good word-of-mouth among other customers.

Suggestion • Lowest level of empowerment where employees

participate in giving suggestions and ideas only
• For example Big Mac in Mc Donald was developed based
involvement on employees suggestion

Job • Employees in this level handle whole identifiable piece of

work with greater control of that work.
involvement • Mostly seen in jobs undertaken in a team

High • Employees at all levels participate in decision making.

Rewards and information sharing is encouraged.
• Teams in most of ITes companies work independently on
involvement projects with full autonomy
 FIGURE 4.6: LEVELS OF EMPOWERMENT

Disadvantages of empowerment

• The selection and training process for employees who can be empowered for
various service decisions is investment intensive. A good amount of time,
effort and money has to be spent to find the right employee equipped with
right skills.
• To retain employees with special and specific skills service organizations
have to pay good salary and attractive rewards.
• Special requirements of different customers may lead to inconsistent and
time consuming service performance.

4.4 HR strategy and service operations

We know that service organizations offer customized services or standardized

services. The HR strategy must fit with the service delivery system. Also service
operations are devised based on the discretion available to employee, control of
organization and commitment of employees towards organization. By looking at
all these factors, HR strategy can be designed in four quadrants (Lashley, 1998) as
shown in figure 4.7.

 The involvement style

 The professional style
 The command and control style
 The participative style
 The Involvement Style The Professional Style

• Brand identity: • Brand identity:

tangibles/intangibles intangibles/dominant
• Moderate predictability/market • Low Predictability
change • Low volume
Customized • Moderate/high volume • Complex tasks
offer • Simple/expanding tasks • High discretion
• Low discretion • Responsible autonomy
• Ask permission, share • Power to shape objectives
information • Moral involvement,
• Task specific power psychological needs
• Calculative commitment • Trust culture
• Moderate control culture
The Command and Control Style The Participative Style

• Brand identity: • Brand identity:

tangibles/dominant tangibles/intangibles
• High predictability • High Predictability
Standardized • High volume • Moderate volume
offer • Simple routine tasks • Simple routine tasks
• Low discretion • High discretion in intangibles
• Ask permission • Autonomy within limits
• Task specific power • Role-specific power
• Calculative involvement • Moral involvement
• Control culture • Moderate trust culture

External Control Internal Control

FIGURE 4.7: APPROACHES TO THE MANAGEMENT OF HUMAN

RESOURCES IN A SERVICE ORGANIZATION
4.5 CASE EXAMPLE

Human resource management in Indian railways

Indian Railways

Railways are the cheapest and fastest means of transport to move passengers and
bulky goods for longer distance through 7030 railways stations. The work force
employed Indian railways is 13.86 lakhs(2008-09).The human resource cost to the
total cost in Indian Railways is at 55%.Indian railways recruit human resources
into four groups; group A & B consists of Office Cadre and group C & D as non
officer cadre.

HR Planning

HR Planning is done to have the right size of employees. While matching the
supply of human resources with that of demand considering the reduction of
human resource cost, Indian railways has reduced 19% of the human resources
strength from year 1950-51 to 2008-09.It has reduced the total cost to Rs 3273.46
crores (Right size of HR * Average HR cost)

Recruitment & Selection:

Group A & B office cadre is recruited by UPSC Group C & D is recruited by

Railways recruitment board

Training & Dev

Group A & B office cadre HR gets training from railway staff college and from 6
centralized training institutes for their development into world class executives
Group C & D staff members gets training from Zonal railway institutes.
Reward Management

Aims at to retain and sustain employees with pay as the prime motivation for
employees which is received by pay commission once is a decade. Group C and D
staff also get productivity linked bonus (PLB).

The AIRF (All India Railway men’s Federation) and NFIR (National Federation of
Indian Railways) are the recognized unions, which addresses the grievances of
employees. AIRF and NFIR ensure cordial relations between employees and
employee which enhances the productivity of Indian Railways.