Chapter – 7

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Service Management (5e) Operations, Strategy,
Information Technology By Fitzsimmons and
Fitzsimmons

• Chapter 7
• The Service Encounter

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Learning Objectives

• Use the service encounter triad to describe a
  service firms delivery process.
• Discuss the role of organizational control
  systems for employee empowerment.
• Prepare abstract questions and write situational
  vignettes.
• Discuss the role of customer as coproducer.
• Describe how elements of the service profit chain
  lead to revenue growth and profitability.

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The Service Encounter Triad

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Continued.

• Service manager wants efficiency in service
  delivery to increase profits. They will impose
  rules and procedures on contact personnel
  (service provider) to bring standardization,
  which may result in dissatisfied customers.
• Alternatively, service provider wants to control
  the behavior of the customer to make their own
  work manageable and less stressful.
• However, the customer wants to control the
  service encounter to derive the most benefit from
  it.
• Ideally,, all three should work together to
  create a beneficial service encounter.

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Encounter dominated by the service organization

• To achieve efficiency and follow a cost
  leadership strategy, an organization may
  standardize service delivery by imposing strict
  operating procedures and limit the discretion of
  contact personnel, example, McDonalds.
• Success here can come from teaching the customer
  what not to expect from their service.

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Contact personnel-dominated encounter

• Service personnel attempt to limit the scope of
  the service encounter to reduce their own stress
  in meeting demanding customers.
• The customer is expected to place considerable
  trust in the contact persons judgment because of
  the service providers perceived expertise.
  Example doctor-patient.

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Customer-dominated encounter

• In standardized service, self-service is an
  option that gives the customer complete control
  over the limited service that is provided.
  Example, gas station that is equipped with a
  credit-card reader, the customer need not
  interact with anyone.
• The result can be very efficient and satisfying
  to the customer who needs or desires very little
  service.

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Balance of control

• A satisfactory and effective encounter should
  balance the need for control by all three
  participants.
• The organizations need for efficiency can be
  satisfied when contact personnel are trained
  properly and the customers expectations and role
  in the delivery process are communicated
  effectively.

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The Service Organization

• Culture
• Empowerment
• Control Systems

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Culture

• Interaction between customer and contact
  personnel occurs within the context of an
  organizations culture and physical surroundings.
  
• For example, Disneys culture affects their
  interaction with customers. In other words, an
  organizations values when consistently
  communicated by management, permit contact
  personnel to act with considerable autonomy,
  because their judgment is based on shared set of
  values.
• Definition of culture
• Schwartz and Davis (1981) - Culture is a pattern
  of beliefs and expectations shared by the
  organizations members.
• Mintzberg (1989) - Culture is the traditions and
  beliefs of an organization that distinguish it
  from others.
• Hoy and Miskel (1991) - Culture is shared
  orientations that hold the unit together and give
  a distinctive identity.

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Empowerment

• The discretion of contact personnel is limited by
  procedures and design. The organizations
  structure is a pyramid-shaped, with layers of
  supervision to ensure consistency of service
  delivery across all locations.
• A new model supported with technology has
  inverted T organizational structure, where
  layers of supervision are significantly reduced
  because contact personnel are well trained,
  motivated, and supplied with timely information.
• People want to do good work if they are given
  the opportunity. Therefore
• Invest in people (training)
• Use IT to enable personnel
• Recruitment and training is critical
• Link compensation to performance

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Control systems

• Table 7.1 describes four organizational control
  systems to encourage creative employee
  empowerment
• Belief system articulated through
  organizational culture
• Boundary defines limits to employee initiatives
• Diagnostic defines measurable goal to achieve
  performance
• Interactive pressures from customers for
  creative solutions

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Contact Personnel

• Ideally , customer contact personnel should have
  personality attributes that include
• Flexibility
• Tolerance for ambiguity
• An ability to monitor change
• Empathy for customers

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Continued

• Selection 1. Abstract Questioning 2.
  Situational Vignette 3. Role Playing

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Continued.

• Training
• Unrealistic customer expectations
• Unreasonable demands
• Demands against policies
• Unacceptable treatment of employees
• Drunkenness
• Breaking of societal norms
• Special-needs customers
• Unexpected service failure
• Unavailable service due to failure
• Slow performance (capacity issues)
• Unacceptable service (low standards)

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The Customer

• Every interaction is important for the customer,
  but is routine for the service provider.
  Therefore, the attitude and expectations maybe
  different.
• Expectations and Attitudes
• Economizing customer
• Customer wants to maximize the value obtained for
  his or her expenditures of time, effort, and
  money.
• Loss of these customers is an early warning of
  potential competitive threats.
• Ethical customer
• Patronize socially responsible firms

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Continued.

• Personalizing customer
• These customers want interpersonal gratification
  such as recognition, respect, etc.
• Convenience customer
• These customers have no interest in shopping for
  the serive convenience is most important.

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Customer as Co-Producer

• Both customer and service provider have role to
  play in transacting the service.
• Customers role maybe defined by societal norms or
  implied by the particular design of the service
  offered. If and when these roles change due to
  re-design and/or technology then there is
  resistance.
• See figure 7.2 it presents some success factors
  for categories of service encounter, where the
  service provider could be a machine serving a
  human being (ex. ATM machine), or a machine
  serving another machine (ex. EDI), or a human
  being serving a machine (ex. Elevator repair).

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Continued.

• Study of the bank revealed
• When employees perceive a strong service
  orientation, customers report superior service
• Customers perceived better service in branches
  where employees were more enthusiastic, good
  training of tellers, well maintained equipment,
  service is considered important.
• After a bank employee gets to know the customer,
  the cost of serving that customer decreases
  because time is saved in identity verification
  and the customer needs can be better anticipated.

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Satisfaction Mirror
 
          
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Service Profit Chain
                                       
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Topics for Discussion

• How does the historical image of service as
  servitude affect todays customer expectations
  and service employee behavior?
• What are the organizational and marketing
  implications of considering a customer as a
  partial employee?
• Comment on the different dynamics of one-on-one
  service and group service.
• How does use of a service script relate to
  service quality?
• If the roles played by customers are determined
  by cultural norms, how can services be exported?