Strategic segmentation in front-line services: matching customers, employees and human resource systems

This paper examines variation in the use of high involvement work practices in service and sales operations. I argue that the relationship between the customer and front-line service provider is a central feature that distinguishes production-level service activities from manufacturing. In particular, through strategic segmentation, firms are able to segment customers by their demand characteristics and to match the complexity and potential revenue stream of the customer to the skills of employees and the human resource system that shapes the customer–employee interface. Unlike manufacturing, where high involvement systems have emerged in a wide variety of product markets, therefore, service organizations are likely to use high involvement systems only to serve higher value-added customers because of the high costs of these systems and the labour-intensive nature of services. Data from a nationally random sample of 354 call centres in US telecommunications documents this pattern: from classic mass production approaches for back office workers and increasingly for front office residential service agents, to greater involvement for small business service providers and high involvement practices for middle-market service agents.

[1]  John C. Haughey.  The Loyalty Effect , 1997, Business Ethics Quarterly.

[2]  Sue Fernie,et al.  (Not) Hanging on the Telephone: Payment Systems in the New Sweatshops , 1998 .

[3]  J. Hlavacek,et al.  Market Driven Management: Prescriptions for Survival in a Turbulent World , 1988 .

[4]  Computer Staff,et al.  The Machine That Changed the World , 1992 .

[5]  James L. Heskett,et al.  Service Breakthroughs: Changing the Rules of the Game (Прорыв в сфере услуг: изменение правил игры) , 1990 .

[6]  B. Keltner,et al.  Segment Strategies and the Resource-Based View of the Firm , 1999 .

[7]  John T. Dunlop,et al.  Diffusion and Performance of Modular Production in the U.S. Apparel Industry , 1996 .

[8]  David Finegold,et al.  Adding Value in Banking: Human Resource Innovations for Service Firms , 1996 .

[9]  George S. Day,et al.  Market Driven Strategy: Processes for Creating Value , 1990 .

[10]  B. Gerhart,et al.  The Impact of Human Resource Management on Organizational Performance: Progress and Prospects , 1996 .

[11]  James L. Heskett,et al.  The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value (Цепочка создания прибыли в сфере услуг: как ведущие компании связывают прибыль и рост с лояльностью, удовлетворением и ценностью) , 2014 .

[12]  Thomas G. Cummings,et al.  Service Management Effectiveness: Balancing Strategy, Organization and Human Resources, Operations, and Marketing , 1990 .

[13]  Howard Wial,et al.  New Rules for a New Economy: Employment and Opportunity in Post-Industrial America , 1998 .

[14]  Gil A. Preuss.  LABOR, SKILLS, AND INFORMATION IN SERVICE DELIVERY: AN EXAMINATION OF HOSPITAL CARE. , 1997 .

[15]  P. Kotler.  Marketing Management: Analysis, Planning, Implementation and Control , 1972 .

[16]  Benjamin Schneider,et al.  Winning the service game , 1995 .

[17]  Allan Bird.  Remade in America: Transplanting and Transforming Japanese Management Systems , 1999 .

[18]  B. Keltner.  Relationship Banking and Competitive Advantage: Evidence from the U.S. and Germany , 1995 .

[19]  C. Lovelock,et al.  Managing services : marketing, operations, and human resources , 1988 .

[20]  Karen Shire,et al.  On the Front Line: Organization of Work in the Information Economy , 2001 .

[21]  Rosemary L. Batt,et al.  Work Organization, Technology, and Performance in Customer Service and Sales , 1999 .

[22]  P. Kotler,et al.  Marketing management : analysis, planning, and control , 1973 .

[23]  A. Parasuraman,et al.  Delivering quality service : balancing customer perceptions and expectations , 1990 .

[24]  David E. Bowen,et al.  Managing customers as human resources in service organizations , 1986 .

[25]  T. Burrow.  The human equation. , 1941 .

[26]  P. Osterman.  How Common is Workplace Transformation and Who Adopts it? , 1994 .

[27]  P. Bain,et al.  ‘An assembly line in the head’: work and employee relations in the call centre , 1999 .

[28]  Danuta A. Nitecki,et al.  The dynamics of service: Reflections on the changing nature of customer-provider interactions , 1996 .

[29]  John A. Czepiel,et al.  The Service encounter : managing employee/customer interaction in service businesses , 1985 .

[30]  B. Joseph Pine,et al.  Making mass customization happen: Strategies for the new competitive realities , 1993 .

[31]  Rosemary L. Batt,et al.  Human Resource and Employment Practices in Telecommunications Services, 1980-1998 , 1999 .

[32]  C. Bell.  The service edge: 101 companies that profit from customer care, by Ron Zemke with Dick Schaaf. (1989). New York: New American Library. 584 pp., $19.95, cloth , 1990 .

[33]  Thomas A. Kochan,et al.  What works at work : overview and assessment , 1996 .

[34]  E. Lawler,et al.  Empowering Service Employees , 1995 .

[35]  W. H. Davidow,et al.  Total customer service : the ultimate weapon , 1989 .

[36]  T. Davenport,et al.  Case Management and the Integration of Labor , 1994 .

[37]  Thomas O. Jones,et al.  Why Satisfied Customers Defect , 1996 .

[38]  Erik Brynjolfsson,et al.  Information Technology and Productivity: A Review of the Literature , 1996, Adv. Comput..

[39]  K. Albrecht,et al.  The Service Advantage: How to Identify and Fulfill Customer Needs , 1989 .

[40]  B. J. Pine,et al.  Making mass customization work , 1993 .

[41]  M. Y. Sabolo,et al.  The Service Industries , 1975 .

[42]  C. Whalen,et al.  The New American Workplace: Transforming Work Systems in the United States , 1995 .

[43]  Leonard A. Schlesinger,et al.  Breaking the Cycle of Failure in Services , 1991 .

[44]  Peter K. Mills,et al.  Motivating the client/employee system as a service production strategy. , 1983, Academy of management review. Academy of Management.

[45]  S. Jackson,et al.  Linking Competitive Strategies with Human Resource Management Practices , 1987 .

[46]  R. Leidner.  Fast Food, Fast Talk: Service Work and the Routinization of Everyday Life , 1993 .

[47]  Paul Osterman,et al.  Work Reorganization in an Era of Restructuring: Trends in Diffusion and Effects on Employee Welfare , 2000 .

[48]  P. Wright,et al.  Theoretical Perspectives for Strategic Human Resource Management , 1992 .

[49]  James Kohnen,et al.  Creating High Performance Organizations: Practices and Results of Employee Involvement and Total Quality Management in Fortune 1000 Companies , 1996 .

[50]  Richard C. Whiteley,et al.  The Customer-Driven Company: Moving from Talk to Action , 1991 .

[51]  L. Schlesinger,et al.  Job Satisfaction, Service Capability and Customer Satisfaction , 1991 .

[52]  F. F. Reichheld,et al.  Zero defections: quality comes to services. , 1990, Harvard business review.

[53]  V. Caron,et al.  United states. , 2018, Nursing standard (Royal College of Nursing (Great Britain) : 1987).

[54]  S. Roach.  Services under siege--the restructuring imperative. , 1991, Harvard business review.

[55]  H. Katz,et al.  Converging Divergences: Worldwide Changes in Employment Systems , 1999 .

[56]  E. Lawler,et al.  The empowerment of service workers: what, why, how, and when. , 1992, Sloan management review.

[57]  Lynda Gratton,et al.  Strategic human resource management: a conceptual approach , 1994 .

[58]  H. Katz.  Telecommunications : restructuring work and employment relations worldwide , 1998 .

[59]  Joan Greenbaum,et al.  Windows on the workplace : computers, jobs, and the organization of office work in the late twentieth century , 1995 .

[60]  Casey Ichniowski,et al.  The Effects of Human Resource Management Practices on Productivity , 1995 .

[61]  Karen Shire,et al.  Beyond bureaucracy? Work organization in call centres , 1998 .