Challenges facing HRM in service sector

Critically discuss particular challenges facing the management of people and how these challenges may be overcome in the service sector.

‘People and how we manage them are becoming more important because many other sources of competitive success are less powerful than they once were.’ (Pfeffer, 1994).

With the rise in service sector industries all around the world, Human Resource managers need to step up to the role in this fast – paced world. This essay will focus on interactive service work of the service sector. Interactive service work has drawn a lot of debate because it is considered to be work ‘without technical or knowledge’ skills. On the contrary interactive service skills are needed for the smooth and effective running of an organisation. Employees who possess the right ‘people skills’ are bound to make a positive impression on the client which in turn encourages them to conduct more business. With the growth and rise in technology and world interconnectedness, the service sector employs a large number of people in most economically developed countries. There is a slow shift occurring from the ‘knowledge based economy’ to a ‘service based economy’. The service sector encompasses financial services, service in restaurants and generally any kind of service that requires face to face contact with clients or customers.

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This essay will be focusing on the frontline interactive service jobs as seen in the hospitality industry and the retail industry. It is worth mentioning that the service sector involves tangible and intangible services. To get the effectiveness of an intangible service like customer satisfaction, there is a need for efficient customer service which is an intangible service. The role of skills in the service industry has been up for debate recently and this has posed a lot of questions for managing people in the service sector. Frontline staffs are the first contact clients have with an organisation and it is important that they are effective in handling face-to-face situations.

Bateson cited in Singh describes frontline service jobs as “a three-cornered tight.” in which the customer (demanding attention and service quality) and the organization (demanding efficiency and productivity) are at the two ends and the FLE is “caught-in-the-middle.” (Singh, 2000). Frontline services can be described as customer – facing roles. Inefficient frontline employees give the organisation a bad impression.

2.0 Background and Discussion

2.1 What is the Service Sector?

The service sector can be described as the part of the economy that includes individuals and businesses that produce services rather than goods. The service sector is one of the fastest growing sectors of the world economy. It includes education, finance, communications, health care, utilities, wholesale and retail trade, and transportation. Producing these services as a whole tend to require less natural capital and more human capital.

Korczynski list five attributes that make the service sector different from other sectors. These are intangibility, perishability, variability, simultaneous production and consumption, and inseparability. (Korczynski, 2002). Services provided cannot be seen but produce an end product. They usually last for a moment and cannot be separated. For example, a customer being satisfied with an employee is satisfied for that moment.

The service sector of an economy is also known as the tertiary sector and the service industry. Although the service sector comprises of both tangible and intangible services, it is thought to comprise only of intangible service and is now referred to as the “quaternary sector”. The quaternary sector encompasses knowledge based work. Kenessey places retail under the tertiary or service sector and activities such as insurance and real estate under quaternary services. (Kenessey, 2005). This is because they involve the use of pure service not necessarily resulting in an end product like the restaurants.

It can be rightly said that the service industry involves more contact with people than the other sectors of the economy for example the primary sector like manufacturing. The service industry involves the day to day dealing with customers and clients alike. With the huge role the service industry plays, it is necessary to for the organisations to know how to manage people to get efficient and orderly service.

The graph below shows the rise in the service sector over the years. Developed countries including the EU have a high percentage of people working in the service sector.

http://www.esf.be/new/wp-content/uploads/2009/09/world-economy.png

http://www.esf.be/new/statistics/

2.2 Challenges

2.2.1 Recruitment and Selection

‘The recruiter has to be effective in the highly specialised interaction of the selection interview, where the task is to find out the relevant information about an applicant on which to base a judgement as to whether or not that person would match the skills, experience and attitudes required in the job to be filled’. (Torrington et al, 2008. pp 94)

One issue that comes to the forefront in managing people in the service sector is the recruitment and selection of staff. Managing people in the service sector is becoming more challenging as organisations have to look for the right people who possess not just qualifications but the right ‘attitude’ and ‘people skills’. There is a rise in the demand of ‘social skills’ and ‘personal characteristics’ in the frontline service. Recruitment and selection in this context relies heavily on social skills rather than technical skills as there is a need for employees to interact well with the clients to fulfil the demand of the business. It has become increasingly important for managers seek to get the right person that will ‘fit the part’. Not necessarily based on experience but also on personality traits.

Getting the right applicant for the job consumes time and costs a lot. For example, in the 2009/2010 IRS survey into graduate recruitment, employers listed poor quality of applicants as one of the major setbacks in recruitment.

Chart 4

High recruitment costs are part of the issues that managers have to constantly tackle with as it takes constant time and effort to get the right candidate for the job. It is important for managers to discern how to choose the right people to avoid a high turnover.

Rise in the Demand of Aesthetic skills

One of the most fundamental changes that has taken place in the last two decades has been the growing tendency to label what in earlier times would have been seen by most as personal characteristics, attitudes, character traits or predispositions as skills. (Warhurst et al, 2004 )

Soft skills such as personality traits and general people skills are becoming increasingly important. Frontline staffs need effective soft skills to relate with clients. This is a challenge in the service sector because such skills are hard to pick. There is a need for constant skill development as the change in the service sector. The search for the right person for the job has led to the rise in the demand for aesthetic skills. Frontline employees’ appearance is now an integral part of an organisation as they are the first point of contact between the client and the organisation. Frontline service industries tend to rely more on aesthetic skills today that in the past years. John Philpott a Chief economist with CIPD (Chartered Institute of Personnel and Development) puts it this way, “In such a jobs market, the way people look, dress, behave and present themselves joins the long-list of ‘soft skills’ employers require. Some economists have coined the phrase ‘aesthetic labour’ to describe workers hired primarily for their image – and advocate ‘style training’ to ensure jobseekers can match the expectations of employers and customers”. (Personnel Today, 2002).

Controversial Issues

Lookism

The Merriam Webster dictionary defines lookism as “prejudice or discrimination based on physical appearance and especially physical appearance believed to fall short of societal notions of beauty”. Research has shown that employers are apparently more concerned about the way an employee looks and behaves than the qualifications they have. Employers have stuck to interviews as this gives them a chance to observe a potential employee. Job specifications regarding frontline service usually have words in the advertisement that suggest what the employers are looking for. Looks/physical appearances have taken front place over the years and employers need to be careful in their advertisements more work is being done on ‘lookism discrimination’. (Tietje et al).

Diversity

In recruiting and selecting people for frontline service work, the need to ‘speak right’ is essential for some employers. This has created the concept of the ‘style labour market’. (Nickson et al, 2004). However, the interconnectedness of the world through globalisation and free movement of people across borders mean that people from different nationalities might apply for a specific job. Managers have to be cautious to avoid any form of discrimination based on race. In this context, sticking to qualifications can form a good base for indiscrimination.

2.2.2 Emotional labour

‘… part of the job is to disguise fatigue and irritation, for otherwise the labor would show in an unseemly way, and the product…….would be damaged’. (Hochschild, 1983)

Managing emotional labour in frontline service is crucial for the success of an organisation. Employees who cannot put their feelings under check put the organisation at risk. Though emotional labour is crucial in frontline service, it can cause problems if not handled properly.

Hochschild describes three forms of jobs involving emotional labour. They are those that require face to face or voice to voice contact with the public, require the worker to produce an emotional state in another person and the jobs that allow employees to exercise a degree of control over their emotional activities. This can lead to emotional exhaustion and stress. (Hochschild,1983). According to Grandey, emotional labour is a form of emotional regulation wherein workers are expected to display certain emotions as part of their job, and to promote organizational goals. The intended effects of these emotional displays are on other, targeted people, who can be clients, customers, subordinates or co-workers. (Grandey, 2000). Having a form of control over one’s emotions is considered to be skilled work. Nicky James, in a stimulating essay dedicated to “emotional labour”, defines it as, “the work involved in dealing with other peoples’ feelings, a core component of which is the regulation of emotions” (James, 1989:15).

Emotional labour can often lead to stress when employees are constantly required to sometimes act against how they feel. Emotional labour has led to work related stress in many organisations with employees taking days off work which impact on the organisation by the loss valuable time and money. When frontline staff feel overloaded with tasks, this can lead to stress and inefficient work. Stress related issues have led to high turnover rates which employers have to deal with. The constant demand for a routine followed service can take its toll on employees.

There should be channels for frontline staff where they are able to talk about their emotional needs and how they feel about a particular job tasks. Employees need to be seen and regarded as assets not liabilities. Another way to assuage stress related issues is through job flexibility. The work-life balance concept has been on the rise and organisations are seeing the benefits of having an efficient workforce.

To manage stress related issues, managers need to day offs, job sharing or part time work. In the long run this will be a benefit to the organisation and the employees would not have to take so many days off work because of stress. The rise of work – life balance is crucial in today’s fast paced world and it takes the employers to see the need for this in their organisation to reduce absences and save money.

2.2.3 Training and Development

A critical issue in service organizations may be to retain service employees in general, and specifically those employees who are talented in working with customers and delivering excellent service quality. (Slatten, 2011).

After the recruitment and selection process, managers are faced with the task of retaining the best employees. They have to retain them by constant training and development Can soft skills which are needed for the frontline service be trained? Frontline service industries require ‘people skills’ and employers are faced with the dilemma of training people for frontline service. With the rise in the use of aesthetic skills, managing the frontline workforce is proving more demanding. Employers feel the pressure not only is selecting and recruiting the right employees for the job but to keep on training them. There is a need for organisations to invest in training for their front-line employees as these are the first people customers or clients come in contact with.

Soft skills can be learnt and require practice and confidence in the job specification. For example, an employee who has no knowledge of working in a café is clumsy for the first few days or weeks but eventually gets comfortable with the work after serving customers on a daily basis. There will be no need for constant supervision after that. This also applies to an employee working in an organisation.

In examining training and development in the service sector, a concern worth mentioning is in role clarity. An employee might not perform a specific task well because of uncertainty. Slatter explained this clearly in stating that “when an employee receives and understands clearly the information required to do the job, there will be a positive effect on employees’ perceived service quality” (Slatter,2011). No two service interactions are the same and this gives rise to uncertainty in the service delivery process. If an employee is sure of what to do they will be confident in delivering effective service. On the other hand, uncertainty gives rise to poor service delivery. It is an employer’s duty to state the correct job specifications and give the employee a vision of the goals set and where they expect to be in the future.

Frontline employees in service organizations are required to interact with customers and are expected to deal with a number of requests (Karatepe and Uludag, 2008). Managers are equally responsible for empowering and training frontline employees to provide a service that reflects the company. The questions posed to manager are can the skills that are required for frontline service be developed, trained or learnt?

This is where the issues of best fit and best practice come in. This means that training practices will be different across various service sectors. For example, branded services such as McDonalds ensure that employees follow a routine to ensure uniform quality.

Best Fit versus Best Practice

The skills that matter most are dependent on the kind of service sector and the level of discretion given to the worker. The principle of ‘best fit’ versus ‘best practice’ has to be applied here. Employers are listing personal characteristics among the skills they are seeking for. There is now a trend of ‘looking good’ and ‘sounding right’. Best practise is usually a way of adopting rules that have worked for some organisations. It is a standard way of practice. Best practice is not always feasible as what works for one organisation might not work for another organisation. It is important to adopt skills that fit an organisation.

In branded service industries, organisations seek to control all the aspects of frontline staff by setting up rules of what they should do and say at every moment. This gets to the point of being a robotic form of work. Organisations need to figure out the level of discretion needed for a job specification before recruiting. They need to consider to what extent the employees will have a say in a given situation.

Best practices are not always best for the organisation. Employees acting on routine based worked are often left confused when faced with a situation or query from a customer which is not in the ‘handbook’. There are pros and cons to both best fit and best practice so managers need to invest in proper training for the employees and encourage them to use discretion when necessary. Acting on discretion requires quick on-the-spot thinking which cannot be determined by a thirty minute interview with an employee. It is relevant to note that no best practice remains best for long as in this fast paced world, people are looking for better ways to do things.

Best practice is based on uniformity which can be a danger to employees as they lose their voice. Pfeffer identified sixteen practices for ‘competitive advantage through people’. Best practice is not suitable for all situations. (Pfeffer,1994.) Pfeffer mentions seeing the workforce as an asset not an expense. Best fit on the other hand is moulded around the environment of business. It is style of management that is created specifically for a particular work environment. For example, Lockyer et al point out that best practice does not always work in the recruitment and selection of frontline staff with a focus on hotel staff because most qualities needed for relating with customers is more of soft skill rather than hard technical skills. Having a qualification does not mean that an employee has the right people skill in relating with customers. In the selection and training of frontline employees, Schneider makes it clear using the restaurant example that there are different “selection and training of employees for restaurants in different market segments”. (Schneider, 1994).

It is the employer’s responsibility to increase the motivation of employees by guiding them through the organisations’ vision and long term goals. There should also be a chance for career development. The need for excellent customer service for the success of the organisation should be outlined effectively. There is a need to invest in staff training and development. The employees should be given a chance to make decisions regarding their service to customers. Having a robotic form of work does not motivate the employees to put in their best effort. Reward systems to keep the best employees.

3.0 Conclusion