Do you believe that the willingness and ability of your employees to deliver high quality service affects the sales growth and profit of your business? If not, you might want to pay attention to the findings of a recent study entitled “The Consequences of Human Resource Stocks and Flow: A Longitudinal Examination of Unit Service Orientation and Unit Effectiveness” by R.E. Ployhart, J.A. Weekley, and J. Ramsey.
This study of 114,198 applicants hired by a retail department store chain headquartered in the US demonstrated that changes in the effectiveness of a unit (store productivity, profit, and percentage of sales growth) was significantly influenced by the flow of human capital through the unit over time. They measured human capital by developing a measure of the service orientation of a unit. The service orientation of a unit was the aggregate of the service orientation of the individuals in the unit, which was measured with a standard service orientation battery completed by all applicants in the study. Bottom line: the service orientation of a unit matters, and it’s the flow of service orientation over time, more than the stock at any given time, which will affect the growth of a unit.
You have to have a critical mass (stock) of high quality employees in order to deliver service that gets results. That’s difficult in service industries that are typically (and unfortunately) characterized by high turnover. If your HR strategy is simply to find the “cheapest way of getting warm bodies,’ this study suggests you are making a big mistake. (p. 1011). Your management policies and practices must maintain a consistent flow of high quality employees over time if you want to have any hope of growing sales and profit.
Here is the “resource-based view” theory that was partially tested in this study:
Human capital is valuable when it contributes to a unit’s core capabilities. It contributes to competitive advantage when it is also rare – that is, not equally held by competitions; it may become a basis for sustained competitive advantage if it is also inimitable; and it may be inimitable because of the unit’s path dependency (performance trajectory over time) and unique history (e.g. the business unit has been the preferred employer and hence highly attractive to applicants), causal ambiguity (uncertainty over which specific combination of practices builds the stock of human capital), or social complexity (interpersonal relationships between coworkers, or between coworkers and customers). An additional requirement for sustainability is that human capital may be nonsubstitutable with alternative resources. (p. 997)
It pays to be very interested in the service orientation of your employees. Your employees affect your ability to grow your business. You should have a system to select not just any employee you can get, but only those most likely to have a service orientation. Once you have them onboard, you need to have more systems to develop them, support them, and impress them in the same way you want to impress your customers. If you earn a reputation as a good place to work, you are more likely to ensure a flow of good employees over time. To the extent you can do that, you will have an engine of competitiveness not held by your competitors, and one they will find hard to copy.
In an economy where too many companies have the attitude that their employees are just lucky to have a job, you can easily differentiate yourself by deploying a competitive strategy of putting employees first. Employees will notice, your customers will notice, your competitors’ customers will notice; however, your competitor will likely not notice until it’s too late to climb out of the hole they dug for themselves.
Related Posts:
Personality And Employee Engagement
Customer Encouragement: The Cycle Of Success Spiral In Action
United Airlines Inconsistent Service: System Or People Problem?
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