Employees in Services - The Most Valuable Asset?

Before going on to discuss the employees role in services, we feel it is important to differentiate between products and services. Services in most simple terms are deeds, processes and performances. Services may also be defined as any activity or benefit that one party offer to another that is essentially intangible and does not result in the ownership of anything [1]. These simple definitions give us good idea about what services are. We can give examples of a barber, a tailor, or a restaurant as services. Products on the other hand are offerings that are tangible in nature like for example a car.

In today's world, services are becoming more and more significant in any country's economy. As Louis V. Gerstner said in 2001 "Services are going to move in this decade to being the front edge of the industry". This quote comes from the former CEO of a company which claims to be the world's largest service business in the world, IBM. The importance of services in today's world can be further emphasized by the fact that services comprised of almost 80% of United States of America's Gross Domestic Product in 2003 [2].

If we talk in Pakistani context we can see that the structure of the Pakistani economy has changed from a mainly agricultural base to a strong service base. Agriculture now only accounts for roughly 20% of the GDP, while the service sector accounts for 53% of the GDP with wholesale and retail trade forming 30% of this sector [3]. This fact also demands that more work should be done on services marketing for proper growth of the sector.

Now that we know about the difference and importance of services, we would like to shed some light on the difference between marketing of products and marketing of services. Marketing for services is thought to be different from that of a product by a lot of experienced marketers. This was found out by Gary Knisely, a principal of the consulting firm Johnson Smith and Knisely, in 1979 when he interviewed several high-ranking marketing executives who had all gone to work in consumer services industry after extensive experience in the consumer packaged goods industry. There are generally 4 Ps considered in packaged goods marketing namely Product, Price, Place and Promotion. But when we talk about services, it is believed that there are three additional P's that should be considered for services marketing namely People, Process and Physical evidence [4].

The fifth P i.e. People include both employees and customers as customers also play an important role in the service delivery process. But we are going to focus on employees as far as this article is concerned. From the above discussion it is obvious that employees play an important role in the services marketing because of the vary reason that employees are involved in the process of delivery of any service e.g. a waiter in a restaurant is actually the conductor of all the process related to the customers. So it is of great importance that he gives the right image to the customer otherwise the customer might never return. So those employees that are a part of service delivery, we can call them customer-contact service employees, play an absolutely crucial role in building a repute for any service.

The importance of customer-contact service employees can be understood because of the following statements, which will also show that why employees may be the most valuable asset of a services organization. Customer-contact service employees are very important because:

o They are the service

o They are the organization in the customer's eyes

o They are the brand

o They are marketers [4]

In many cases, in a service, there is just the employee and nothing else i.e. employee is the service e.g. hair cutting, physical trainers, legal services etc. This means that the service being offered by the business is the employee. Thus, investing in the employee is same as investing in the manufacture of a product.

A customer-contact service employee may reflect the image of the service organization even if he or she is not directly providing the required service. If you enter a hospital, every employee that you encounter from the receptionist to the clerk might influence your opinion about that organization. Thus, employees sometimes do become the organization in customer's eyes.

Employees also become the brand for a service. A very good example can be of a university which is well reputed amongst students. The quality of most universities is judged by the caliber of the teachers that are teaching there. When a student interacts with a professor, he has positive emotions about the university only when he feels that the teacher is knowledgeable and understanding and has complete control over his subject. We can say that one reason, among others, LUMS is thought to be better than other universities is due to the perception that its faculty contains more PhDs than anybody else, hence having better educational quality than others. Thus, an employee also becomes the brand for a service.

Because contact employees represent the organization and can directly influence customer satisfaction, they perform the role of marketers. They physically embody the service and are walking billboards from a promotional point of view [4] If we are on the road and we see a person sitting on a motorcycle, going to deliver a free delivery, or to deliver letters or documents, you can tell from their appearance, clothing or even kind of vehicle that which organization they belong to. So, even when the service employees are just doing their duty, they are acting as marketers for their organization.

Here we would like to refer to Mr. Dennis Harting who says "What is the most valuable asset that a company has? Is it the name, customers, goodwill, physical resources, or product line? The answer is that it is none of these. A company's most valuable resource is its' employees. Any organization will go only as far as the people who are driving it. In fact, a company is really just a group of people who interact for a common purpose. They are the ones who make up the organization." [5].

He also states that "It is important that managers and owners begin to realize that the employees are the most valuable asset any organization can have. Those who accept this new business model will structure their compensation and bonus program to reflect this belief."

Above discussion only points to one thing, generally for every business, and particularly for any services business, employees are definitely the most valuable assets. We personally feel that in Pakistan employees are still not given the right place and importance. One feels that more and more attention should be paid to role of employees in services and investments should be made to improve the most valuable asset of services.

By:
Junaid Ahmad*

References:
1. Principles of Marketing Philip Kotler, Gary Armstrong, 11th Ed, p 232.
2. Inside Sam's $100 billion growth machine, by David Kirkpatrick, Fortune, June 14, 2004, p86.
3. http://en.wikipedia.org/wiki/Pakistan
4. Services Marketing Integrated Customer Focus Across the Firm by Valarie A. Zeithaml, Mary Jo Bitner, and Dwayne D. Gremler.p28, p 354-355.
5. http://www.articlesbase.com/leadership-articles/employees-are-your-most-valuable-asset-328247.html
* MBA Student, COMSATS Institute of Information Technology, Lahore

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Your Business's Reputation: An Invisible (yet essential) Asset

If you were to ask your employees or your customers what they thought

of your business, what do you think they would say? Do you think they

would be as positive if they were asked the same question by a stranger

who happens to be a potential buyer of your business?

Not knowing the kind of reputation your business has can come back to

bite you when you decide to sell. Most people interested in buying a

small business (or even a large one) will do some investigating into the

reputation of your business. Of course they won't ask you - they'll ask

your employees, your vendors and suppliers, your customers, your

competitors, and local community.

Maintaining your business's reputation should be a priority for any

business owner, and not just because of the impact it can have on a

sale. Your business's image can attract or repel customers, too.

Here are some of the things that can negatively affect your business's

reputation, and some tips to improving a tarnished reputation when it

comes time to sell.

Relationships That Matter

Your customer is #1, right? Pleasing customers is a primary objective for

most businesses, whether the customer is a family seeking quality and

budget-friendly meals in your restaurant, or a large contractor who

purchases supplies from your manufacturing facility.

But the customer isn't the only important relationship in business. The

way you interact with your own vendors, your business location's

landlord, the local government, your utility companies, your competition,

and the bank is just as significant.

These business relationships are essential to developing a good

reputation. Do you pay your vendors on time? Do you pay your rent and

utilities on time? Are you in frequent rifts with local government or other

local businesses? How do you treat your competitors? Do you talk badly

about them?

Don't Try to Sweep Things under the Rug

Just because it didn't make the front pages of the local paper doesn't

mean an informed buyer can't find out about any lawsuits or customer

complaints levied against your business. For a small fee, the public can

find out a great deal about a business through a business background

check. Though a person won't be able to find out everything, he or she

can easily discover enough to change their mind about purchasing.

If scandal or damage to your business's reputation has prompted you to

sell, it will likely be reflected in your asking price, but that doesn't mean

you shouldn't be up front with an informed buyer who asks for this

information.

A truly motivated buyer may not be fazed by a few nicks and cuts to your

business's reputation, and in some cases, hearing your side of the story

can help to improve it. But when it comes to more serious issues, such

as a lawsuit or scandal that has noticeably affected your customer base,

it will show in your financials, so it's best to just come clean.

In some cases, it may be in your best interests to hire a publicist or

public relations firm to help manage the fallout of a scandal or lawsuit,

especially if you have time before the information gets to the public.

Crisis management is a key area of expertise for most publicists.

Treat Employees Well

Some industries are naturally more disposed to heavy turnover of

employees. Businesses that generally hire people who are looking for

part-time work, or are satisfied with minimum wage pay (such as

teenagers and college students) are going to see workers come and go.

Knowing that an employee isn't going to make a career working in your

convenience store doesn't mean you should disregard him or her, or

treat him or her any differently than long-term or "white collar"

employees.

People like to talk about their jobs - especially if they aren't happy. If

you've ever treated employees unfairly, people are going to hear about

it, and even this can damage your business's reputation.

Your business's reputation can be affected by more than just former

employee complaints. Senior staff members, who you trust to do the

business's accounting, handle invoices, and pay bills are going to know

what's happening financially. This goes back to the issue of vendor and

supplier relationships. If your vendor and supplier relationships are

poor, the staff members who deal with those people are going to know it,

and they could talk about it - even just with friends or family in the

community.

Treat your employees well and don't expect internal blemishes to

remain internal.

Word on the Street

Your customers are sort of your unpaid representatives in the field. If

they've had a great experience with your business, they'll probably tell a

few people. This referral system is called "viral marketing," and is one of

the most effective ways businesses gain new customers.

In contrast, a customer who has had a bad experience with your

business will probably tell a lot more people. This is human nature,

which is why it is imperative that your customer service be equipped to

handle complaints expertly.

You aren't going to be able to please everyone, and when you are

confronted with a customer who has been dissatisfied for some reason

(no matter how silly it may seem to you), treat them the way you'd want

your mother to be treated if she were in their place.

You can turn around a customer's negative experience by going out of

your way to "make it better." When people are treated like a V.I.P. in

regard to a complaint, they'll probably tell even more people. And, it

demonstrates how important your customers are to you. They'll

appreciate it, and you won't have to worry what the locals say if a

potential buyer holds a street survey (and they do).

Competitors aren't Enemies

Being part of an industry puts you in a network of business people just

like you. It's true, everyone is looking out for their own bottom line, but

camaraderie among competitors helps to strengthen an industry, which

benefits everyone involved.

Speaking badly about a competitor is not just in poor taste, but can be

against the law, too. Slander is a real offense recognized by the courts. If

you think it will help your restaurant to instigate a rumor about a

neighboring café's poor cleanliness, or if you purposely (and falsely)

mention a competitor's struggling financials to anyone who'll listen, you

could be liable for causing damage to another business's reputation

(and it doesn't do much for yours, either).

Laws affecting libel and slander are found in a state's business code

under Deceptive Trade Practices. Every state has a law on this, and

though penalties may differ from one state to the next, the context of the

law is basically the same: "disparaging the goods, services or business

of someone else by false or misleading representation," is prohibited.

Take advantage of the wealth of experience and business wisdom that

exists within your community or your industry. Burning bridges among

competitors can do nothing but harm to your business's reputation.

Repairing a Damaged Reputation

Like a person's reputation, a business's reputation develops over time.

And, just as you can't improve your own 'name' overnight, it takes a

considerable amount of time to repair a business's poor reputation.

Unfortunately, businesses with poor reputations do not often have the

luxury of time to fix things prior to a sale. If you're a business owner and

you haven't been paying bills on time, and haven't treated your

customers or your employees very well, you may have a hard time

selling the shop without some carefully planned renovations - to your

business's image.

There are plenty of things you can do to improve the look of your

business, but changing the minds of the vendors, suppliers, lease

owners, employees, and customers takes time and effort. This means

that when you come to the decision to sell, you can't realistically expect

to sell for a decent price within a few weeks. You must prepare to sell by

taking steps to improve fractured business relationships.

Give yourself a year to begin paying bills and invoices on time and

improve your customer and employee relations. Twelve months of effort

won't take your business's reputation to the absolute top, but it will leave

a positive impression with the people you work with (vendors, etc.).

You've poured time, money, and effort into your business. When it

comes time to sell, you want to be able to get enough out of the sale to

make your investment worthwhile. Keeping your business's reputation

in good standing is a must. If you've suffered a blemish here or there,

take the time necessary to repair damaged relationships and improve

your business's good name before you place it on the market.

Failing to do so could represent a significant difference between what

you wanted to sell your business for and what any knowledgeable buyer

will be willing to pay.

Karen Torbett is founder of Venture Point, LLC (http://www.VenturePointOnline.com). She spent almost a decade running someone else?s company before she achieved her goal of business ownership. Now, Karen helps entrepreneurs like her seeking to buy or sell a business on their own. Check out Karen?s informative blog at http://www.VenturePoint.WordPress.com and contact her at: Karen@venturepointonline.com.

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