Focusing HRM strategies toward service market segments: A three factor model

This study explores a service quality strategy framework which focuses on market segment expectations via alignment of human resource management (HRM) practices and employee role behaviors. Specifically, the present research proposes a three factor model which segments a service industry into customer market segments based on the nature of three functional service quality dimensions. The service quality dimensions are customers' expectations for: (1) speed of service, (2) tender loving care in the service, and (3) customization of service. It is hypothesized that using the service strategy of focusing on a particular market segment (as defined by the above three facets of service quality) would yield increased organizational effectiveness (defined here in terms of customer ratings of service quality). Further, it is proposed that focusing on a market segment could be achieved by aligning HRM practices and employee role behaviors to the market segment targeted.; Data were collected from fifteen restaurants in three market segments (fast food, diners, and fine restaurants) in the restaurant industry. Results revealed that market segments were distinguishable on the three dimensions of service quality as perceived by different perspectives (managers, employees, customers). Interestingly, customers were found to be the most sensitive in noting differences between market segments. Further, the results revealed that closer congruence between market segment served and HRM practices emphasized correlated with higher service quality. However, closer correspondence between market segment served and role behaviors expected did not yield greater service quality. Lastly, HRM practices that were emphasized were found to be related to respective role behaviors employees described were expected of them.; Overall, the results lend support to the focus or falter service strategy suggesting that because there are different market segments with differing expectations, providing focused service (through what is emphasized in HRM practices) yields superior service quality as viewed by customers. Possible explanations for the results, thoughts for future research, and implications of the results are explored.