Abstract
Abstract
The creation of value for customers depends significantly on the knowledge, skill and motivation of service employees. Heskett, Sasser and Schlesinger (2003, The value profit chain. New York, NY: The Free Press) argued that customer value is created by satisfied, productive and loyal employees. This indicates that the company must first provide value to employees. What has not sufficiently been analysed is how to and who should provide value to employees. We verified that not only the company provides value through its policies or systems, but also through those managers who lead at middle level. They play an essential role in creating value for employees when guiding them consistently through specific behaviours that promote value for customers. Our research has focused on developing specific middle managers’ behaviours in order to create a climate focused on service that contributes to enhancing employee value in the commercial unit of a leading insurance company in Peru. The literature explains the need of a generic climate (GC) as a foundation for focused climates, but it has not been demonstrated how to link these climates through the leadership of middle managers. We applied a model of service leadership that facilitates this link, emphasizes excellence in service and enhances employees’ value.
Organizational Climate and Service Climate
Companies usually are trying to foster a positive internal environment that drives the performance of managers and employees and facilitates interpersonal relationships. It is not common to observe specific behaviours that are properly aligned with strategic goals, operational processes and cultural aspects. This alignment requires a more careful preparation in order to obtain the goals that generate value to stakeholders and favour a positive learning. To achieve this, in addition to build a positive generic climate (GC) or also called molar, it is necessary to create an environment that more accurately guides the behaviour of employees. It has been noted by Reichers and Schneider (1990) that ‘A sole focus on molar climate and its generic dimensions is not very useful for promoting change in organizations toward the accomplishment of specific strategic goals’. Although having a positive environment is necessary in every company, it is not enough to aim precisely to strategic goals it is also relevant to generate effective learning that is vital for the future of the organization. A generic organizational climate can also be called a climate of well-being, and specific organizational climate is also called focused climate. We have started by improving the GC and then following a concrete way to create an environment that promotes excellence in service. For this, we have guided the middle managers in the strengthening of their service leadership. In many organizations, managers are not aware about the connection that exists between a climate of well-being and a focused climate in this case we refer to a climate focused on service. Macey, Schneiner, Barbera and Young (2009) clarified that ‘A general climate provides a basis for employees to be willing to adopt the strategic approach promoted by specific policies, practices and procedures’. Thus, a GC is necessary but it is not enough to achieve specific goals and foster specific learning. Also it has been verified by Schneider, Ehrhart, Mayer, Saltz and Niles-Jolly (2005) that ‘In order to maximize the likelihood of achieving the organization’s process and outcome performance goals, it is essential to consistently and forcefully promote a positively focused climate’. We verified that middle managers play a key role to promote both generic and focused climate, and to do that they need an adequate preparation.
To understand the idea of organizational climate, we must refer to the experiences that employees have in the organization, and the meaning they relate to those experiences. In these experiences, although several factors intervene, we have focused on the leadership factor, because it is crucial to influence the meaning that employees consider to various events. There are several studies sustaining that leadership focused on service predicts service climate, but what has not been analysed is how to develop a service leadership specifically at middle level.
The climate occurs in the natural course of the interactions in each unit or in the organization therefore, it is shared among the members. We have taken the climate definition by Ehrhart et al. (2013) that includes relevant aspects: ‘the shared meanings organizational members attach to the events, policies, practices and procedures they experience and the behaviors they see being rewarded, supported, and expected’. Thus, our task has been to develop interpersonal skills in middle managers in order to help them for cultivating a terrain that facilitates the service orientation. With this effort, we have had a healthy environment and a consistent direction in this unit that contribute to the improvement of the GC and the creation of a service climate, which, in turn, favours the delivery of value to employees and customers. The improvement of this GC encouraged behaviours that were the foundation of positive interpersonal relationships for promoting specific behaviours to serve internal and external customers. These are the generic competencies we included: positive communication, emotional intelligence, teamwork, conflict management, empowerment, coaching and integrity.
The service climate concept proposed by Schneider, White and Paul (1998) is: ‘the sense that people within the organization develop and share about policies and practices and the expected, supported and rewarded behaviours that emphasized excellence in service’. It can be noted that GC does not focus on a specific issue, but refers to behaviour in general, for example, a generic item might read: ‘the manager of my unit provides us the support we need to do our work’. On the other hand, an item focused on a specific outcome might read: ‘the manager of my unit provides us with tools, equipment and resources we need to provide excellent service to customers’ (Ehrhart, Schneider, & Macey, 2013, p. 86). Our contribution has been to prepare middle managers for linking both climates to handle effectively the following situations: (a) collaborate with colleagues of other units that speak other languages, applying generic competencies, (b) incorporate coherently other practices, as empowerment, teamwork, etc., considering the service orientation as imperative, and (c) promote, support and reward employees´ behaviour focused on excellence in service.
How to Create a Service Climate
To create a service climate, top management must establish policies and practices that define the way to deliver service quality to customers, internal and external, and especially to orient the specific behaviours of those who guide employees: the middle managers. Thus, service climate is analysed according to how top managers are defining and communicating policies and practices, and how middle managers are assuming and implementing these in their units. The purpose of this climate is to encourage service-oriented behaviour in the work environment, not only to execute processes for achieving strategic goals, but also to generate a continuous employees’ development and learning that contributes to enhance value for employees. In this line, we identified three steps for the creation of a service climate: (a) definition and communication of the strategic elements of service (policies, goals) by top managers, (b) development of service capacity (processes to generate the orientation and learning of employees) by middle managers, and (c) service delivery through the company’s service style by top managers, middle managers and employees according to each role. We recommended top managers to review their policies and communicating them with emphasis according to a service orientation for promoting commitment and satisfaction of internal customers. This was an essential step to give credibility to the process. But, mainly we have strengthened the service capacity of middle managers to improve motivation, learning and personal development of employees when executing different operational processes. In addition, we have oriented middle managers to provide positive experiences for employees because this is a crucial requisite to build great customer experience as an important study (Mears, 2004) have described. We have focused on how middle managers can provide these experiences through the development of competencies and behaviours that facilitate them to adapt their style according to each situation.
To create a climate of service following the three steps mentioned earlier, it is fundamental to analyse the interpersonal relationships among people of the different organizational levels. In the relationship between top management and middle managers, it is necessary that top managers according to their main assumptions convince middle managers about the strategic elements to guide in that direction the people of the following levels. This is a critical relationship to achieve the right implementation of the policy focused on service, based on the essence of the organizational culture. The communication of policies and tasks is not enough; it is required argumentation and conviction to ensure that middle managers understand guidelines and assumptions of top managers. As Schein (2010) has argued, basic assumptions from top management are a main factor to influence within the organization. An important issue that top managers expect from middle managers is their commitment. We have verified that the commitment of these managers is a crucial aspect for assuming their service orientation. For this purpose, Lescano Duncan (2012) has argued that top managers must support and facilitate the development of middle managers’ service leadership. In other words, when middle managers receive consistent support for the development of their leadership from top management, they show a commitment to the company’s goals and strategy.
The relationship between middle managers and their colleagues emphasizes that to serve customers employees of the commercial unit require efficient help from other units, that is, administration, legal, etc., because they have to respond quickly and solve customer problems; therefore, they need information and opportune help. Employees expect their co-workers to be highly prepared and to perform efficiently. Hence, the internal service is relevant because it encourages collaboration for delivering service quality to customers. The relevance of internal service as several works demonstrated (Hallowell, Schlesinger, & Zornitsky, 1996) that it is essential to address the needs of internal customers in order to deliver service quality to satisfy external customers. We have verified that when only some middle managers perform consistently according to the service orientation but their colleagues from other units do not understand that orientation there is little collaboration among employees, affecting the delivery of service to customers.
The relationship between middle managers and their subordinates should allow increasing employees’ motivation and their willingness to learn and adopt service behaviours. We have taken the set of service behaviours that Schneider et al. (1998) proposed, and we have slightly modified them according to our application. We verified that when middle managers applied generic competencies, the general climate of the unit improved, and when these managers applied specific service behaviours, it was possible to create a service climate. The behaviours we included are as follows: (a) to promote continuous operational learning and innovation about both the insurance sector and service quality, (b) to forge teamwork for delivering superior service quality, (c) to empower team members for solving customers’ problems and to obtain feedback (measure and track service quality indicators), (d) to communicate service quality focus consistently within the informal environment, (e) to distribute clearly and fairly tasks and resources for delivering superior service quality, (f) to support constantly employees’ effort for delivering superior service quality, (g) to give special recognition to employees who provide exceptional service quality and (h) to give positive feedback to every team member for improving his service performance. Middle managers incorporated practices as empowerment, teamwork, according to service focus, and promoted a positive employees’ learning and development.
Case Study
Our case study was focused on the commercial unit of a leading insurance company in Perú. The main problems we found are as follows: (a) managers–subordinates relationship characterized by a strong pressure to obtain economical results. So, the predominant style of managers was to force employees for achieving goals without a consistent guidance to execute processes and without a clear message and high motivation. There was a lack of focus on creating positive experiences for employees. Then, employees were not prepared to create positive experiences for customers and showed poor service employees’ performance, (b) middle managers–colleagues relationship was rigid only focused on internal tasks without cooperation. So, there was an inefficient internal service among units. This environment was usually characterized by conflicts and pressure to obtain information or collaboration, (c) top managers–middle managers relationship was tense, focused mainly on economical results without a connection with human resources policies and leadership style. As a result, middle managers were not prepared to guide and develop employees and were not ready to maintain a positive atmosphere. These managers were oriented to make money without a solid customer focus and an efficient internal service. Then, the company had big obstacles to realize its promise: ‘We focused on excellence in customer service’. There was a big gap in customer service management as the type of service quality they were delivering was not adding value to customers. For example, we saw a lack of rapidity to attend customers’ needs and requirements, a lack of preparation for explaining services and benefits to customers, a lack of skills and attitude for personalizing experiences to customers, a lack of teamwork to deliver service, etc.
According to the functions of a commercial unit, this is characterized by a strong orientation to sales. But, to ensure that the sales force is prepared and motivated to achieve that goal and also a continuous learning that allows focus effectively on customers, it is essential to develop a focus on service leadership. So, it will be possible to create and maintain an environment where the needs and expectations of internal customers are addressed. As we develop this leadership of middle managers, it has been possible to eradicate the authoritarian styles which affected employees’ motivation and produced low performance and defensive behaviours without a positive learning. In order to help middle managers to reorient their management style and focus on employees with a new vision, we have used the Styles of Thinking Model that Benziger (2000) has proposed. The predominant style of managers in this unit was authoritarian focused on sales results, then, they pressured constantly subordinates for achieving that. Our effort was focused on the development of generic competencies and specific behaviours that contributed to the reorientation and improvement of their style. Thus, the coaches that participated in this process for middle managers sought the development of generic competencies that facilitated first a positive relationship with their subordinates and then the specific orientation to achieve positive results and generate effective learning about service behaviours. Along these lines, we have conveniently reoriented the actions of these managers according to their functions: customer focus, commercial vision, planning processes, staff recruitment/selection, staff training and management of the service quality for internal and external customers. In Figure 1, we show the service-oriented leadership model that we used to design and execute the programme for middle managers’ development.
Heskett et al. (2015) argued that service starts with the front-line employees and therefore, the leading service companies hire them for their attitude and train them in skills. These are the employees who contact directly with customers and interact with them to provide the service they require, and thus participate in the creation of value. The idea that service starts in the front line should not be taken rigidly, since this will depend on the type of analysis that is carried out. We have verified that if middle managers are prepared with a solid focus on internal and external customer service, they guide and support employees to generate customer satisfaction and thus contribute to the creation of value, for both employees and customers. Likewise, in order to promote an internal and external customer service, top management must establish an appropriate strategy through coherent policies, and middle managers must apply them consistently when guiding employees. In this case, top managers redefined their strategy and several policies in order to facilitate a new service orientation. Lescano Duncan (2012) found that middle managers contribute to create a climate of service that fosters service orientation and employees’ satisfaction and commitment. Schneider et al. (2005) found that leadership is a key factor for the creation of a service climate and to communicate high levels of service quality. So, our priority was to develop a service leadership especially for middle managers of this unit.
There is a natural link between middle managers and front-line employees, considering that these managers have the greatest impact on employee behaviour due to their closeness and relationship within the organizational structure. Although soldiers are the ones who shoot guns and fight the battle, it is the captains as Simon (1962) noted who indicate where and how soldiers should aim their weapons. Those who lead at the middle level exert a decisive influence on the environment that is created in each unit and therefore, it is necessary to understand their role and prepare them according to the organizational strategy and policy. Middle managers should encourage the specific performance and consistent behaviour of employees in order to serve the customer. But they must do so by generating their satisfaction and development, that is, by providing them the value they expect. As Heskett et al. (2003) explained, the capability to deliver results and the opportunity for personal development represent results that employees expect, but also they expect fairness of leadership, recognition of accomplishments, co-workers winners on the team, and continuity in the life and leadership of the organization.
Our model shows that it is necessary to begin with the guidelines of top management: strategic goals, organizational policy, basic assumptions and values, conveyed with conviction to middle managers. Thus, they are able to assume their role, which implies: understanding and adopting these guidelines to implement operational service processes. So, they can achieve the proposed goals and lead their subordinates promoting a positive learning that favours the improvement of service quality to be delivered to internal and external customers. For this, managers need to develop generic competencies that facilitate the preparation of a fertile terrain as a basis to create a climate focused on service. Managers also have to develop specific behaviours in order to boost the service capacity, service style and service identity of the company. This way, they consolidate their service-oriented leadership that contributes to creating a service climate.
The service climate, in turn, favours the specific orientation of employees to observe specific behaviours that, in turn, encourage positive experiences when interacting with internal and external customers. By being prepared for this, employees perform efficiently and interact in a healthy way with their colleagues and customers, obtaining positive results for the company. All this generates employees’ satisfaction and commitment, key factors for delivering value to customers. This value is expressed at the end of the model, through the results for customers, that is, all the tangible and intangible benefits they receive from service employees. In short, through this leadership, middle managers support service employees, treat them with fairness and attend their needs to boost their motivation and strengthen their commitment. That is the way to generate the value that employees expect.
Our model was applied to three groups of 25 middle managers each, total 75 managers in the commercial unit of the company. For each group, we delivered 64 hours of training. Likewise, we conducted coaching sessions for these managers to strengthen their service leadership and boost the value to employees. In this sense, we designed a programme for the development of a group of generic competencies and specific service behaviours for middle managers. In this way, it was possible to improve the GC and create a service climate, validating the leadership model used. In addition, we spent 14 hours for special tasks with middle managers by groups of five members each, and 16 hours for coaching sessions individually. Ten participants were unable to complete the programme for different reasons.
Results
The main results obtained from the survey of 65 middle managers participating at the end of the programme are the following:
1. The programme in which I have participated has been very useful to develop my skills and I feel prepared to maintain a climate focused on service:
96 per cent totally in agreement 2 per cent neutral 2 per cent totally in disagreement 2. The main generic competencies that I have developed to promote a positive climate in our unit are:
98 per cent coaching 90 per cent teamwork 87 per cent active listening 84 per cent conflict management 82 per cent empowerment 80 per cent emotional intelligence 78 per cent integrity 3. The weakest aspects of top management that affect the creation of a service climate are:
60 per cent their rigid style and poor effort to contribute to internal service among units 57 per cent lack of effort to solve problems and remove obstacles to deliver superior service 50 per cent lack of recognition to middle managers and employees who deliver an exceptional service 4. What actions do I expect from top management as guidelines and support to create a service climate? The free answers obtained from more than 80 per cent of respondents are:
to promote a strong philosophy for customer focus and service orientation to support continuously the efforts of middle managers to improve service operational processes to give recognition for high performance and establish training process for middle managers and employees, both in the technical field of insurance and service quality.
Questionnaire designed and applied by Lucio Lescano Duncan to Middle Managers Participants at the end of the Training Programme, 2015
On the other hand, 6 months later, subordinates of middle managers were surveyed. Out of a total of 114 (100%) subordinates, a survey was applied to 76 employees (66% of the total), chosen by random method. Here, the main results are listed:
My boss has strengthened his leadership with a clear orientation to service quality:
86 per cent totally in agreement 12 per cent neutral 2 per cent totally in disagreement
In relation to the GC, we analysed and compared the main results of 2014 (before the process) and 2015 (after the process). Refer Figure 2.
The indicators in Figure 2 were improved by the development of the competencies of middle managers according to the programme delivered. It can be noted, for example, that communication improved eight points, collaboration and teamwork improved by seven points, support and empowerment by six points and integrity by seven points. It is a significant improvement in GC that fostered a healthy environment for interpersonal relations between bosses and subordinates. Also, we obtained positive comments from more than 70 per cent of subordinates: ‘we have the opportunity to solve problems for customers, opportunities for personal development, and fairness and integrity of our bosses’, which are crucial aspects to enhance value for employees.
What we have to emphasize is that through the selected generic competencies managers were able to incorporate other practices for improving employees’ performance, and through specific service behaviours they developed a service leadership, which in turn, helped them to avoid conflicts and contradictions between the imperative of excellence in service and the other practices.
Finally, after 6 months of completing this process, a survey was applied to top managers related to this unit, total two respondents. Here, the main results are listed:
The middle managers who have participated in this process have visibly improved their leadership with a strong focus on service quality: 100 per cent totally in agreement The behaviours observed with greater consistency by middle managers are as follows:
leadership focused on internal and external customers better communication with customers and subordinates visible teamwork for delivering superior service greater motivation and support for subordinates The indicators of service quality and customer satisfaction have improved significantly after the process. There are improvements in rapidity to attend customers, communication (explaining benefits of services) and courtesy. What actions do I expect from middle managers to continue strengthening service climate and the creation of value for employees and customers? 100 per cent of the answers indicate:
To maintain a solid customer focus To continue improving communication and support their subordinates for achieving results and get positive learning To give continuous and effective feedback to team members in order to improve customer service.
Conclusions and Implications
The comparative of the GC results (2014–2015) showed an important improvement. The generic competencies that middle managers developed let them to reorient their management style for preparing the terrain to create a service climate. They learned how to incorporate different practices as teamwork, empowerment, innovation, etc., that can cause conflicts or contradictions and orient them through the service focus for creating value.
The middle managers showed consistency when applying service behaviours. Their subordinates confirmed that they have developed a leadership focused on service. This leadership contributed to enhance value for employees especially by training and preparing subordinates to solve customers’ problems and also including new actions to motivate them not only for achieving results but also for getting positive operational learning and personal development.
The employees’ value enhanced by middle managers increased employees’ satisfaction and commitment and boost their performance, which favoured customer value. Top managers confirmed that main customer satisfaction and service quality indicators were improved. We have not included details about this issue as our research was not focused on this.
As the climate of well-being has improved and the service climate has been created through the reorientation of middle managers’ leadership, our model has been validated. This case shows us that the role of middle managers and their leadership is a crucial factor to harmonize different climates through the imperative the company needs to implant.
Middle managers were willing to better coordinate with colleagues of other units, so the internal service between the commercial unit and others began to improve. However, the responses of colleagues have been variable, so there is not a homogeneous internal service. There is a need to develop the right competencies of managers of other units in order to continue improving coordination.
It is a common issue for middle managers in commercial units to be exposed to a high pressure that cause stress and poor motivation affecting their performance for adding value to employees and customers. Therefore, it is important to analyse the type of relationship between top and middle managers for creating focused climates that enhance value for employees. Also it is relevant to determine the thinking style of those who guide at the middle level to help them for adapting their style and leadership according to the focused climate the unit needs to create. At the same time, it is necessary that top management dedicates efforts to create positive experiences for middle managers. Thus, middle managers can be consistent with the strategic goals, operational processes and corporate values. In this way, the improvement in service capacity, service style and service identity of these managers could be favoured, and they could be able for guiding employees through this way.
As this is a case in a big company, we cannot get conclusions related to other type of organizations. It would be necessary more research about the role of middle managers and how they can connect different climates for enhancing employee value in other type of organizations.