Managing Customer Services: Human Resource Practices, Turnover, and Sales Growth

This study examines the relationship between human resource practices, employee quit rates, and organizational performance by drawing on a unique nationally representative sample of 354 customer service and sales establishments in the telecommunications industry. Multivariate analyses show that quit rates are lower and sales growth is higher in establishments that emphasize high skills, employee participation in decision-making and in teams, and HR incentives such as high relative pay and employment security. Quit rates partially mediate the relationship between human resource practices and sales growth. These relationships also are moderated by the customer segment that frontline employees serve

Outcomes of Self-Directed Work Groups in Telecommunications Services

[Excerpt] The purpose of my presentation is to consider whether the use of self-directed teams enhances competitiveness in services. In the context of heightened competition brought about by deregulation and the internationalization of service markets, do team-based work systems produce higher quality service and customer satisfaction? Do workers benefit as well? Should unions as well as management support this innovation? If so, under what conditions and why? This presentation complements that of the other panelists in this session in important ways. First, while Verma provides an overview of the array of workplace innovations being introduced in telecommunications firms (from joint labor-management consultation to total quality and self-management), I focus on a more detailed quantitative assessment of use of one of those innovations—self-directed work groups. Second, I consider the ways in which the introduction of self-managed teams differentially affects the job characteristics of two of the groups identified in Herzenbergs typology of work systems in services: the semiautonomous groups (represented by customer service representatives in telecommunications) and the autonomous groups (exemplified by network field technicians)

The Economic Costs and Benefits of Self-Managed Teams Among Skilled Technicians

This paper estimates the economic costs and benefits of implementing teams among highly-skilled technicians in a large regional telecommunications company. It matches individual survey and objective performance data for 230 employees in matched pairs of traditionally-supervised and self-managed groups. Multivariate regressions with appropriate controls show that teams do the work of supervisors in 60-70% less time, reducing indirect labor costs by 75 percent per team. Objective measures of quality and labor productivity are unaffected. Team members receive additional overtime pay that represents a 4-5 percent annual wage premium, which may be viewed alternatively as a share in the productivity gains associated with innovation or as a premium for learning skills

From Bureaucracy to Enterprise? The Changing Jobs and Careers of Managers in Telecommunications Service

This paper analyzes how organizational restructuring is affecting managerial labor markets. Drawing on field research from several Bell operating companies plus a detailed survey of managers in one company, this paper considers how organizational restructuring affects the employment levels, the nature of work, and the career trajectories of lower and middle level line managers. Does restructuring lead to a loss or managerial power and a convergence in the working conditions of managerial and nonmanagerial workers? Or, conversely, do managers stand to gain from the flattening of hierarchies and devolution of decision-making to lower organizational levels? The paper\u27s central argument is that a new vision of organization has taken hold – one that replaces bureaucracy with enterprise. This vision, however, entails sharp contradictions because it relies on two competing approaches to organizational reform: one that relies on decentralizing management to lower levels to enhance customer responsiveness; the other that relies on reengineering and downsizing to realize scale economies. While the first approach views lower and middle managers as central to competitiveness, the second views them as indirect costs to be minimized. The central question is whether or how the two approaches can be reconciled. The evidence from this case study shows that restructuring has had the unintended consequence of creating new organizational cleavages: between lower and middle level managers on the one hand, and top managers on the other

Changing Internal Labor Markets in Service and Sales Occupations

[Excerpt] In this paper, I address the question of how deregulation in the telecommunications industry has altered the internal labor market structure of clerical and sales jobs—that is, the traditionally female-dominated operator, service, and sales jobs in the industry. This question is important for several reasons. First, from the perspective of the internal labor market literature, the Bell System represented a classic example of a highly developed and stable system. Given growing conventional wisdom that internal labor markets are disintegrating, the telecommunications industry provides a useful case for examining the extent to which corporate responses to deregulation have led to an erosion of the prior system. Second, from the perspective of women and the labor market, the highly unionized telecommunications industry was one of the few service industries in which women found high-skilled, high-pay jobs, with long career ladders. Do these jobs continue to be high-skilled and to provide women with opportunities for career development and income growth? Compared to other service industries, for example, wage levels and union density among women in telecommunications were over twice as high as the average in all other service industries (Batt and Strausser 1998). Third, from a management perspective, the importance of these jobs has increased dramatically since deregulation. Customer service and sales occupations represent the face of the corporation to the customer, and with dramatic increases in competition, companies have come to view these operations much more strategically than in the past (Batt and Keefe 1999). They have also shifted the workforce from service into sales to compete in deregulated markets. Between 1983 and 1996, for example, employment in low-skilled clerical positions fell by 38%, due largely to the increased use of information technology and process reengineering; employment in sales, however, increased by 105% (CPS merged annual earnings files)

[Review of the books \u3ci\u3eManaging the Human Factor: The Early Years of Human Resource Management in American Industry and \u3ci\u3eHired Hands or Human Resources? Case Studies of HRM Programs and Practices in Early American Industry\u3c/i\u3e]

[Excerpt] Bruce Kaufman has produced two volumes on the early development of human resource (HR) management that should become mainstays in undergraduate and graduate courses in the fields of HR studies and industrial relations. Not since Sandy Jacoby\u27s pathbreaking book on the development of personnel management has such careful attention been paid to the inner workings of American corporations\u27 personnel policies a century ago (Employing Bureaucracy: Managers, Unions and the Transforming of Work in American Industry, 1900-1945, 1985). Unlike Jacoby, who specifically analyzed how and why companies developed these policies in response to union movements and external pressures, Kaufman\u27s purpose is to show that the roots of modern HR management can be traced to the late nineteenth and that “strategic” HR is not new

Update: Are Lower Private Equity Returns the New Normal?

This report updates a version released in June 2016.U.S. private equity fundraising had its best year ever in 2015 -- raising $185 billion. But is the enthusiasm of investors warranted? Do PE buyout funds deliver outsized returns to investors and will they do so in the future? This report answers this question by reviewing the most recent empirical evidence on buyout fund performance; the answer is no. While median private equity buyout funds once beat the S&P 500, they have not done so since 2006 -- despite industry claims to the contrary

A Primer on Private Equity at Work: Management, Employment, and Sustainability

Private equity, hedge funds, sovereign wealth funds and other private pools of capital form part of the growing shadow banking system in the United States; these new financial intermediaries provide an alternative investment mechanism to the traditional banking system.2 Private equity and hedge funds have their origins in the U.S., while the first sovereign wealth fund was created by the Kuwaiti Government in 1953. While they have separate roots and distinct business models, these alternative investment vehicles increasingly have been merged into overarching asset management funds that encompass all three alternative investments. These funds have wielded increasing power in financial and non-financial sectors -- not only via direct investments but also indirectly, as their strategies -- such as high use of debt to fund investments -- have been adopted by investment arms of banks and by publicly-traded corporations

Human Resource and Employment Practices in Telecommunications Services, 1980-1998

[Excerpt] In the academic literature on manufacturing, much research and debate have focused on whether firms are adopting some form of “high-performance” or “high-involvement” work organization based on such practices as employee participation, teams, and increased discretion, skills, and training for frontline workers (Ichniowski et al., 1996; Kochan and Osterman, 1994; MacDuffie, 1995). Whereas many firms in the telecommunications industry flirted with these ideas in the 1980s, they did not prove to be a lasting source of inspiration for the redesign of work and employment practices. Rather, work restructuring in telecommunications services has been driven by the ability of firms to leverage network and information technologies to reduce labor costs and create customer segmentation strategies. “Good jobs” versus “bad jobs,” or higher versus lower wage jobs, do not vary according to whether firms adopt a high- involvement model. They vary along two other dimensions: (1) within firms and occupations, by the value-added of the customer segment that an employee group serves; and (2) across firms, by union and nonunion status. We believe that this customer segmentation strategy is becoming a more general model for employment practices in large-scale service | operations; telecommunications services firms may be somewhat more | advanced than other service firms in adopting this strategy because of certain unique industry characteristics. The scale economies of network technology are such that once a company builds the network infrastructure to a customer’s specifications, the cost of additional services is essentially zero. As a result, and notwithstanding technological uncertainty, all of the industry’s major players are attempting to take advantage of system economies inherent in the nature of the product market and technology to provide customized packages of multimedia products to identified market segments. They have organized into market-driven business units providing differentiated services to large businesses and institutions, small businesses, and residential customers. They have used information technologies and process reengineering to customize specific services to different segments according to customer needs and ability to pay. Variation in work and employment practices, or labor market segmentation, follows product market segmentation. As a result, much of the variation in employment practices in this industry is within firms and within occupations according to market segment rather than across firms. In addition, despite market deregulation beginning in 1984 and opportunities for new entrants, a tightly led oligopoly structure is replacing the regulated Bell System monopoly. Former Bell System companies, the giants of the regulated period, continue to dominate market share in the post-1984 period. Older players and new entrants alike are merging and consolidating in order to have access to multimedia markets. What is striking in this industry, therefore, is the relative lack of variation in management and employment practices across firms after more than a decade of experience with deregulation. We attribute this lack of variation to three major sources. (1) Technological advances and network economics provide incentives for mergers, organizational consolidation, and, as indicated above, similar business strategies. (2) The former Bell System companies have deep institutional ties, and they continue to benchmark against and imitate each other so that ideas about restructuring have diffused quickly among them. (3) Despite overall deunionization in the industry, they continue to have high unionization rates; de facto pattern bargaining within the Bell system has remained quite strong. Therefore, similar employment practices based on inherited collective bargaining agreements continue to exist across former Bell System firms

Telecommunications: Collective Bargaining in an Era of Industry Reconsolidation

[Excerpt] In this paper, we examine the reconsolidation of the industry, between 1995 and 2001, focusing on the merger, acquisition, and business strategies of the major corporate players; union responses to those strategies; and the resulting evolution of union-management relations and collective bargaining outcomes. We argue that the nature of the industry and technology, coupled with its institutional legacy, provides incentives for consolidation and recentralization of the ownership structure. In this process over the last decade, former Bell affiliates have sought union support before regulatory commissions, and the unions have leveraged their political power to make important gains in collective bargaining and in organizing new members. As a result, the outcomes for union members and prospects for union institutional viability are more positive than they otherwise would have been