Monday, December 6, 2010

Challenges of Managing Services

Managing a service based business is complicated through a variety operational characteristics. In this post I wanted to discuss why and how managing services is challenging.

Compared to their counter part services are much harder to manage and much harder to keep consistent productivity and quality levels.

Input and Output Variability

Input and output variability is higher and less stable than a typical manufacturer operation.

Loosely Structured Job Duties

Service jobs are often less structured than manufacturing jobs. This is for several reasons. One big one is the sales aspect of service orientated operations. both the typical pay structures as well as the nature of the agents responsibility lend them selves to flexible and agile activity structures.

Customer Relations

Customer contact is higher. Typically services orientated operations have to "court" or service the customer from time to time.

High Employee Turn Around

Services hire many entry-level workers. This is because the employee turnover seems to be much higher then a manufacturing job. Employees burn out and move on. Many new employees just are not cut out for the work. But there is often no clear way to screen applicants so companies need to constantly subsidize the folks leaving with new employees. This is amplified during a growth period for a service orientated firm.

Service performance can be affected by worker’s personal factors. Because employees must often play a part that requires them to be engaged and also deal with customers that are not happy or high maintenance yet the agent must maintain the image that best represents the company. This can be difficult if the agent is having a period of depression or if they are sick or just having a bad day.

Finance and Profitability Variations

The service industry experiences large fluctuations in demand and profitability which are some times not anticipaited. This makes it hard to deal with complicaited financial decisions.