The Service Encounter

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 Definition: Service recovery refers to the actions taken by a
service provider to rectify a service failure and restore
customer satisfaction. Effective service recovery can turn a
negative experience into a positive one, often leading to
Service increased customer loyalty.
Recovery
Tax, S. S., & Brown, S. W. (1998). "Recovering and
Learning from Service Failure." Sloan Management Review,
40(1), 75-88.
JUSTICE THEORY IN SERVICE
RECOVERY
Justice theory revolves around three primary dimensions—distributive justice,
procedural justice, and interactional justice—which can collectively address
customer concerns after a service failure.
Distributive Justice: This dimension focuses on the outcomes of the recovery
process, specifically what the customer receives as compensation or reparation
for the service failure. Customers expect fair compensation relative to the
inconvenience or loss they’ve suffered, which can be financial (refund, discount)
or non-financial (apology, corrective actions).
Procedural Justice: This aspect deals with the fairness and transparency of the
recovery process. Customers value consistent, timely, and clear procedures in
resolving their issues. Service providers should aim to create processes that are
prompt, accessible, and flexible, allowing customers to voice
JUSTICE THEORY IN SERVICE
RECOVERY
Interactional Justice: This dimension concerns the way employees
communicate with customers during the recovery process. Customers expect to
be treated with respect, empathy, and politeness.
The Service Encounter Triad

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 1. Service Encounter Dominated by the Service
Organization

For cost leadership strategy , an organisation might standardize service delivery.

o McDonald’s operates with strict standardization and a controlled service process across all
outlets. From order-taking to food preparation, every step is governed by the organization’s
systems and procedures.
o Impact: The focus is on efficiency, speed, and consistency. Employees have limited
autonomy as they must follow the organization’s predefined processes
o The service organization dominates the interaction. The customer and the employee work
within the boundaries of the system, ensuring uniformity in service delivery across
different locations.
 2. Service Encounter Dominated by the Contact Person
(Employee)

At Taj Hotels, frontline staff, such as concierges and hotel managers, are empowered to make
decisions to enhance guest experiences. Employees can upgrade rooms, offer personalized
services, or arrange special experiences without requiring constant approval from the
organization

Impact: The employee has significant autonomy and can directly influence the service encounter
based on customer needs and preferences. This empowerment allows employees to tailor
services, which can enhance the customer’s experience.

The contact person (employee) dominates the service encounter. They act as the primary
interface between the customer and the organization, using discretion to meet or exceed customer
expectations
3. Service Encounter Dominated by the Customer
In food delivery services like Swiggy or Zomato, the customer largely controls the service
encounter. They choose from a wide variety of restaurants, customize orders, specify delivery
preferences, and even give real-time instructions to the delivery personnel through the app.

The customer has substantial control over the service experience, from selecting the product to
customizing it according to their preferences. The contact person (delivery agent) and the
organization (platform) act as facilitators to ensure the customer’s demands are met.

the customer dominates the service encounter. The organization provides the platform and the
employee delivers the service
 The Service Organization
Culture

◦ Traditions and beliefs of an organization that distinguish it from other

organizations and infuse a certain life into the skeleton of structure. / system of
shared orientations that hold the unit together and give a distinctive identity.

◦ TVS Group

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 The Service Organization
Empowerment
Empowerment does not begin with delegation, but by trusting unconditionally
the inherent power within employees to evaluate choices and competently
execute creative decisions.
How to go for it:
◦ Invest in people
◦ Use technology to support contact personnel vs. monitor or replace
◦ Recruitment and training of contact personnel critical firm’s success
◦ Link compensation to performance for employees at all levels

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 The Service Organization
CONTROL SYSTEM :

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The Service Organization
CONTROL SYSTEM
Belief systems are the core values, mission, and vision that an organization communicates to its
employees to inspire and motivate them. These systems influence how employees approach their work and
interact with customers, shaping service culture. /
Example: Taj Hotels and its belief system is rooted in "Atithi Devo Bhava" (the guest is God), which
emphasizes providing exceptional, personalized service to guests.
Boundary systems set limits on employee actions by outlining what they are not allowed to do, usually
through rules, policies, and codes of conduct. These controls ensure compliance, mitigate risks, and
prevent undesirable behaviour.
Example : HDFC Bank provides strict boundary systems in financial services through regulations and
policies. For example, employees are not allowed to disclose customer-sensitive information and must
follow strict procedures.
The Service Organization
Diagnostic control systems measure and monitor performance through key performance indicators (KPIs)
to ensure organizational goals are being met. These systems track employee performance, customer
satisfaction, and financial outcomes.

Example : Indigo Airlines uses diagnostic controls like on-time performance (OTP), customer satisfaction
ratings, and cost efficiency metrics. Employees are evaluated based on meeting these targets.
 The Service Organization
Interactive control systems encourage open dialogue, collaboration, and flexibility,
enabling employees to respond creatively to challenges. These systems foster
continuous learning

Example : Infosys/ Consultancy Organisations uses interactive controls to allow

its teams to collaborate with clients and internal stakeholders to co-create innovative
IT solutions. Employees have the flexibility to engage with clients, gather feedback,
and iteratively improve the service
Customer Relationship Management (CRM)
CRM systems offer the following capabilities:
◦ Providing employees with the information and processes necessary to know their
customers; understand and identify customer needs; and effectively build relationships
among the company, its customer base, and distribution partners.

◦ Assisting the organization to improve sales management by optimizing information

shared by multiple employees, preparing metrics on sales effectiveness, and monitoring
social media sites as a vehicle for crowd-sourcing solutions to client-support problems.

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 Contact Personnel
Personality attributes should include:
1. Flexibility
2. Tolerance for ambiguity
3. Ability to monitor and change behavior on the basis
of situational cues
4. Empathy for customers
(Service Orientation )

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Contact Personnel
Key Factors
A. Selection Process:
Interviewing techniques used :
1. Abstract Questioning / 2. Situational Vignette/ 3. Role Playing
B. Training :
Training should also focus on difficulties with interactions between customers
and contact personnel which includes:
1.Unrealistic customer expectations / 2. Unexpected service failure
C. Creating an Ethical Climate

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Useful Theories
The Dual-Process Theory of Thinking—which describes the
interaction of System 1 (fast, intuitive thinking) and System 2
(slow, analytical thinking)—is highly applicable in service
operations management, especially in environments where
employees need to respond quickly to customer needs while also
making strategic decisions to improve service processes.
Ex:
“A bat and a ball cost $1.10 in total . The bat costs $1.00 more
than the ball. How much does the ball cost?”

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Sytsem 1 and System 2 Thinking
System 1 Thinking System 2 Thinking
Unconscious , automatic , effortless Conscious , deliberate and effortful
Fast Slow
Without self-awareness or control With self awareness and control
98% of our thinking 2 % of our thinking
Influenced by experiences, emotions and memories Influenced by facts, logic and evidence
Can be overridden by System 2 Used when System 1 fails
 DISOLVING
PROBLEM :
“You are the owner of an office building, and your tenants are complaining about
the elevator. It’s old and slow, and they have to wait a lot. Several tenants are
threatening to break their leases if you don’t fix the problem.”
Someone has already framed it for you: “the problem is that the elevator is slow.”
Solution : 1. Improve the algorithm? 2. Do we need to install a new elevator? 3.
Upgrade the motor
Reframing the problem : “The waiting is annoying”
Elegant solution: “Put up mirrors next to the elevator”
“people tend to lose track of time when given something utterly fascinating to
look at—namely
themselves”
 OTHER THEORIES
Servant Leadership Theory : This theory suggests that individuals who naturally prioritize the
needs of others and focus on helping others succeed are service-oriented.

Social Exchange Theory : This theory suggests that people engage in service-oriented behaviors
when they perceive a positive exchange or reward from the interaction. This could be an emotional
reward (feeling good about helping someone) or a social reward (receiving recognition).

Attribution Theory : This theory suggests that individuals make sense of events by attributing
causes to them. In a service orientation context, people who attribute customer dissatisfaction or
problems to external factors (e.g., system errors) might be less service-oriented than those who take
personal responsibility (internal attribution) and see it as their duty to resolve the issue.
Challenges Facing Customer Contact Personnel

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Contact Personnel
Training
◦ Unexpected customer service failure
1. Unavailable service
2. Slow performance
3. Unacceptable service

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Table 4.4: Examples of Unethical
Behaviors in Customer-Contact Settings

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 The Customer
Expectations and Attitudes
◦ Service customer classifications
1. Economizing customer
2. Ethical customer
3. Personalizing customer
4. Convenience customer

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 The Customer
Role of Scripts in Coproduction
◦ Both the provider and the customer have roles to play in transacting the service
◦ Society has defined specific tasks for service customers to perform
◦ Problems arise is customers abuse their script – employee must do the task

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ROLE OF SCRIPT
A 3rd Party Logistics (3PL) company, QuickMove Logistics, has made a serious mistake by
delivering the wrong consignment to a client, Elite Manufacturing Co., and delivering it late. The
client, Mr. Rajesh Malhotra, is unhappy as the delay has caused disruption in their production
process. Furthermore, the incorrect consignment received adds to the frustration, jeopardizing
the business relationship. Mr Malhotra wants QuickMove Logistics should at any cost deliver the
consignment by today afternoon.
Objective of the Role Play:
The logistics company representative Mr Sharma must manage the client’s anger, understand
the situation thoroughly, offer a resolution, and work to repair the relationship by offering a
practical solution.
SERVICE PROFIT CHAIN
1. Internal Service Quality drives Employee satisfaction
2. Employee satisfaction drives retention and productivity
3. Employee retention and productivity drives service value
4. Service Value drives customer satisfaction
5. Customer Satisfaction drives Customer Loyalty
6. Customer Loyalty drives profitability and growth
The Service Profit Chain

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Case 4.1: Amy’s Ice Cream
1. Describe the service organization culture at Amy’s Ice Cream.
2. What are the personality attribute of the employees who are
sought by Amy’s Ice Cream?
3. Design a personnel selection procedure for Amy’s Ice Cream
using abstract questioning, a situational vignette, and/or role
playing.

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 AMY’S ICE CREAM
Abstract Questions
What was your most rewarding past experience and why?
What are you looking for in your next job?
What have you done in the past to irritate a customer?
What flavor of ice cream best describes your personality?

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 AMY’S ICE CREAM
Situational Vignette

A particular customer has the irritating habit of always showing up about

two minutes before closing and staying late. Often this occurs on the night
when weekly store meeting are held after closing time. This delays starting
the meeting and furthermore employees are on the clock waiting for the
customer to leave. What would you do?

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 AMY’S ICE CREAM
Situational Vignette
As a new employee at a busy store, you have been routinely performing clean-up tasks
(garbage removal and restroom cleaning). Company policy dictates that these are tasks to be
shared. It has become clear that two employees consistently avoid these jobs in favor of more
pleasant duties.
How would you handle this situation?

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The Ordinary Heroes of Taj
THE ORDINARY HEROS OF TAJ
1.How would you describe the responses of the Taj Mumbai Hotel staff to guests
during the 26/11 crisis?
2.Do you think a similar response from employees could have happened at
another hotel in Mumbai or in a different hospitality setting you've experienced?
3.Could you summarize the key concepts from the chapter “Service Encounter,”
including Service Organization elements (such as culture, empowerment, control
systems, and customer relationship management) and Contact Personnel aspects
(like selection, training, and fostering an ethical climate)? How do these concepts
relate to the Taj Hotel's approach to customer service? Additionally, how can the
service profit chain be illustrated in the context of the Taj Hotel's practices?
4.How can a leaders develop a customer centric organisation?