HRM practices for managerial and hourly employees in service based and manufacturing ferms

The U.S. economy can be carved into a large number of industry sectors, but
the distinction between manufacturing-based and service-based industries is
one of the most basic. Service organizations have been described as differing
from manufacturing organizations in three ways: (1) their "products" are
intangible rather than tangible; (2) customers are actively involved in the
production of services; and (3) the consumption of services occurs
simultaneously with their production (Bowen and Schneider 1988; Daft 1986;
Mills and Margulies 1980; Mills and Moberg 1982; Larsson and Bowen 1989).
The intangible nature of services means that performance is difficult for
supervisors to monitor directly, so employees must be trusted to monitor their
own performance. The fact that customers are actively involved in the service
production process means service providers must be sensitive to clients' needs;
they must monitor these needs and use the cues they receive from clients to
guide their job behaviors. Because of these characteristics of service jobs, service
organizations should be more likely than manufacturers to include both
employee input and client input as sources of performance appraisal
information (Mills and Morris 1986).
The simultaneity of the production and consumption processes also has
implications for HRM practices (Schneider and Schecter 1991). For example,
quality control cannot be achieved by the inspect-and-correct method
commonly used in manufacturing plants. Instead, quality control occurs at the
point of service delivery (Gronroos 1990; Heskett, Sasser and Hart 1990). In
order to maintain control over quality, service organizations are likely to seek
ways of controlling the process of service production rather than the outputs
(Mills and Moberg 1982). They may invest more resources to train new recruits,
with the objective of socializing them to be effective monitors of their own
service production behaviors (Bowen and Schneider 1988). They could also
revise their personnel selection system (Schneider and Schecter 1991). Another
way to gain more control over performance would be to use performance
appraisal results in making compensation decisions. Job design practices could
also be used to enhance service quality. Enriched jobs should encourage selfmonitoring
because employees then feel a greater sense of responsibility for
their performance and they are more aware of their significance to the firm
(Hackman and Oldham 1980).
This line of reasoning implies that the following practices would be more
prevalent in service-based firms:

Job designs that are "enriched," in that they are characterized by
autonomy, variety and interdependence;
Employee input into performance appraisals;
Client input into performance appraisals;
Use of performance appraisal results to assess training needs;
Extensive training of new employees, with emphasis on performance on
their current jobs; and
Use of performance appraisal results in determining compensation.
It should be noted here that in comparing service-based and manufacturing
firms, these predicted differences would be found for both managerial
employees and lower-level employees. However, the differences are likely to
be greater for lower-level employees whereas differences in the tasks performed
by service-based employees and manufacturing employees are particularly
pronounced.