(Mt) – HMD 253 Empowerment a Critical Concept in Any Organization Discussion

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Managing and Engaging Employees in Service Organizations Chapter 8 • Setting the Benchmark People are a service organization’s key ‘asset’ – they are paramount to the provision of quality service outcomes • • Engaged, committed, cared-for workers don’t get that way by accident! There is a myriad of challenges associated with managing individuals – but, it can be done! • The world’s best service organizations emphasize the importance of the front-line worker and invest time, effort and resources to bring out the best in their workforce • Hospitality organizations may have a statement or motto that explicitly displays the importance the company places on its workers o e.g.Ritz Carlton – ’We are Ladies and Gentlemen Serving Ladies and Gentlemen’ Organizational Psychology Define Organizational Psychology Closely connected to HRM, it is the field of study and practice that investigates and seeks understanding about the impact that individuals, groups and structures have on behavior in the workplace. • Organizational psychology has its roots in psychology (the study of the mind and human behaviour) – it transforms psychology at the individual level to the group and employee level in the study of workplace • The principle focus is on how to improve organizational outcomes by understanding the psychology of the workforce • This is achieved via a series of constructs and measures, such as: o Motivation o Organizational commitment o Absenteeism o Job satisfaction o Employee citizenship behavior o Teamwork • These constructs help measure and then influence the right workplace attitudes and environment Human Resource Management (HRM) Define Human Resource Management (HRM) Concerned with the design of formal systems and continual proactive measures to ensure the effective and efficient use of a firm’s people to accomplish organizational goals. • HRM is a term often used to represent those parts of an organization’s activities that are concerned with the sourcing, maintaining, management and development of its employees • A strategic approach to HRM sees employees as valuable assets to be ‘invited in’ and ‘developed’ rather than hired and trained o Employees are assets that require investment and ongoing attention, rather than costs to be controlled • HRM responsibilities fit somewhere on a continuum from strategic to operational and administrative • HRM in a Service Context There are some important differences when managing service employees (Bowen #038; Ford, 2002): o Co-production employees must engage with and involve customers in the process of service delivery o Hiring for attitude employee selection and recruitment must focus on customer-relationship skills and place more emphasis on personality, energy and attitude than on education, training and experience o Managing employee actions organizational norms and values are needed to guide behavior o Emotional labor service employees have to exert labor beyond just physical and mental labor; the required emotions for different service positions can vary o Part-time marketers employees are expected to perform a marketing function as they coproduce the service experience Why is HRM Important? Emotional Labor Define Emotional Labor The work service employees perform that goes beyond physical or mental duties, when they are required to demonstrate an emotion. • Employees are required to demonstrate particular emotions – such as care, enjoyment, concern and happiness – because customer perceptions of service quality rely on a number of important factors, including empathy • Difficult to manage as it draws on front-line employees’ feelings and they must often conceal their real emotions to ‘act’ in a positive and welcoming • Emotional dissonance occurs when an employee is asked to display a set of emotions that conflict with their current real feeling Why is HRM Important? The Internal Work Environment • Every organization, whether intended or not, has a culture of some kind • Organization culture describes the specific collection of values and norms that are shared by people in an organization and that control the way they interact with each other and with stakeholders outside the organization • In a service business, organizational culture has the ability to fill the gaps between: o What the organization can anticipate and train its people to deal with o The opportunities and problems that arise in daily encounters with customers • Important for service organizations to develop a predominating norm of behavior that is customer-centric and focused on service quality Organizational Culture • Edgar Schein (2009) suggested that there are three basic levels of organizational culture, which refer to the degree to which culture is ‘visible’ (see diagram) • Managers can easily affect the physical elements and can, to some extent, influence the stories of success that circulate, but they have limited direct access to the conscious knowledge of employees Organizational Culture and Service Culture • Service organizations need to create and foster a strong service culture with a particular focus on customer satisfaction and outstanding service • A strong culture is said to exist where staff respond to stimuli because of their clear and non-ambiguous alignment to organizational values • Strong cultures help firms operate like well-oiled machines Benefits of developing a strong culture: • High employee motivation, engagement and loyalty • Increased team cohesiveness among the company’s various departments and divisions • Shaping employee behavior at work, enabling the organization to be more efficient Organizational Climate and Service Climate • Similar to culture, organizational climate is defined as employee perceptions of the practices and procedures in the organization • A service climate represents the degree to which all of the firm’s activities, policies and practices are focussed on service quality • An assessment of climate is usually obtained via a survey that measures respondent perceptions of what goes on around them (e.g. of organizational events, policies, practices, expectations, etc.) Exle service climate questions: • Rate the efforts to measure and track the quality of service in your business? • Rate the recognition and rewards employees receive for the delivery of superior service? • Rate the overall quality of service provided by your business? Effective HRM Practices: Empowerment • • Employees need to be empowered to read situations and act as necessary in order to meet or exceed customer expectations The guiding philosophy of empowerment is non-bureaucratic and employeeoriented o Service organizations must evolve systems and processes so as not to restrict employees • Empowerment fosters an environment of commitment and ownership • Employees should receive the same sort of respect as they are expected to offer to their customers • Superior service comes from employees showing initiative in a trusting work environment in which management assumes a supporting role • Empowerment in Practice The effective implementation of empowerment into an organization depends on managers and leaders • Theory X and Y attempts to explain the way employers view employees o In Theory X, managers assume employees inherently dislike work and are generally lazy o In Theory Y, managers assume employees may be ambitious and selfmotivated and generally will work well • Most managers fall somewhere in between these two extremes, but to empower employees to act without the need to ask managers requires a significant change in philosophy for many managers • Empowerment sounds logical, but creating a truly empowered workforce is far from simple! • It takes structures, practices, policies and consistency in order to send the empowerment message across the organization • The empowerment equation (shown on next page) uses multiplication rather than addition signs to indicate that if any of the elements are zero, empowerment cannot occur effectively Benefits of Effective HRM Practices Employee Engagement • Positive link between employee engagement and important organizational outcomes such as customer satisfaction / loyalty, reduced turnover, return on assets and profitability • Important to distinguish between engagement and job satisfaction: job satisfaction relates to what a company is doing for its employees (e.g. benefits and opportunities for advancement), while engagement is concerned with the full utilization of an employee’s skills and abilities (i.e. alignment between individual and organizational objectives) Organizational Commitment • Relates to an individual’s psychological to their employer (rather than the job itself) • Known to predict other work variables such as retention, citizenship behaviors and engagement with affective commitment leading individuals to work harder toward the attainment of the organizational goal. Links Between People, Customers and Firm Performance • Strong conceptual and empirical evidence that supports proactive and positive people management practices • The service-profit chain proposes the following vital connections in a successful service organization: 1. Profitability and revenue growth is caused primarily by customer loyalty 2. Customer loyalty comes from consistently satisfied customers 3. Satisfied customers are those who perceive value in purchasing from a firm 4. Value is created by satisfied, committed and productive employees 5. Satisfied and productive employees are created by sound internal organizational practices (internal service quality) The Service-Profit Chain and Internal Service • The service-profit chain proposes that successful service firms place predominant effort inside the organization rather than focusing directly on revenues and profits • Recently, a progression from the original premise of the service-profit chain on employee/customer satisfaction to employee/customer commitment, engagement and even ‘ownership’ • Internal service quality is seen as the ‘spark’ that sets off the chain reaction • It consists of a combination of (depending on context and service type): tools, policies and procedures, teamwork, management support, goal alignment, training, communication, and rewards and recognition • Employees who feel that their employer cares for them tend to go the extra mile Summary • Employees, and how they are managed, can often be the difference between success and failure in a service organization • In order to ensure high service quality and customer loyalty, service businesses need to nurture service culture and service climate • Great service organizations position people and people management processes central in their strategies and actions – they invest time and resources into ensuring that employees are engaged, passionate and committed • In doing so, employees are more likely to respond positively and be more inclined to deliver excellent service • People represent a remarkable asset and can provide a company with a unique competitive advantage

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