Service Master Has a Family of Brands

Service Master has a family of brands that consist of companies that deliver services to home and businesses include pest control, maid service, landscaping and other services. The company has a high dependence on labor, and this labor must not only be professional in demeanor (quality service) but it must be well-trained and able to deliver the service to a high standard. There are two factors that could potentially increase the company's demand for labor. The first is a growth in the business. There is little opportunity to scale up this business, so any increase in demand equates to an increase in demand for labor at ServiceMaster. It should be noted that a growth in the business can also be met without increasing staff, should staff improve efficiency. Given the nature of the service, it is unlikely that ServiceMaster, if operating at capacity, will be able to improve efficiency much.

Another factor that can impact on the firm's demand for labor is turnover/retention. The more employees that leave, the more than need to be replaced. Mueller and Wohlford (2005) note that the state of the job market in general affects turnover rates as employees in good job markets feel more comfortable moving around, whereas in tight job markets they are less apt to quit. In addition, increasing the retention ratio, the firm is likely to experience some productivity increases as well. This is because new workers are less efficient and more experienced worker will on average be able to perform tasks more quickly than their younger counterparts.

All other things being equal, if the market price for the services that ServiceMaster delivers, this should decrease the demand for labor. The reason is that customers are to some extent price sensitive, so aggregate demand is expected to fall if the price of the service increases. If that occurs, the firm will need fewer professionals to perform the services, assuming that the decrease in business is viewed by the firm as permanent. If it views the decrease in business as temporary, it may retain its staff for a while. Demand for ServiceMaster is governed by the concept of marginal utility. Performing these tasks oneself is annoying, but at some point the customer will prefer to do it his or herself rather than pay ServiceMaster for the service. Alternately, there are competitors that could undercut ServiceMaster if the company increases its prices. The marginal utility to the consumer will dictate how much business is lost. If the ServiceMaster price increase is small enough, demand for its services and therefore its demand for labor may not actually change.

I believe that the workers should have a few different skills. The first set of skills is the functional skills. For each company in the group, the employees perform a specific set of roles for the customer. The workers will need to be experts in their particular profession, so that they provide service that is superior to that of the competition. By providing additional utility compared to the competitors, the workers at ServiceMaster will help the company to thrive in the market.