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Service quality
Chapter 5
Service quality Introduction It is widely acknowledged that efforts to define and measure the quality of products have proved more successful than the definition and measurement of service quality. The characteristics of services have made the determination of what constitutes quality more difficult and hence its measurement less than comprehensive. To increase our understanding and to enable practical steps to be taken, two things need to be attained: 䊉 䊉
Specification of the determinants of service quality Measurable quality standards.
Achievement in these two areas will vary depending on whether the focus is: 䊉 䊉
A low-contact or a high-contact service, e.g. fast-food outlet versus an education course Process or output.
Determining the process and output quality of a fast-food restaurant is arguably more straightforward than an education course. Whatever the service, it is useful to bear in mind the following questions when it comes to quality: 䊉 䊉
What is the service supposed to do? What does the service actually do?
Quality then refers to the extent to which a service is what it claims to be and does what it claims to do. It must not be confused with grade. For example, the quality of a library cannot be judged in an abstract way by, say, counting the number of Shakespeare volumes possessed and subtracting the number of light romances. Instead the prime aspect of quality is whether the library provides people with what they want – it is a good library if it does and a bad library if it does not.1
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One eminent spokesman in the quality business over many years is Philip Crosby. In an update2 of his most famous book Quality is Free he berates the army of bandwagoneers for having made a good living out of quality by reducing a profound idea to a set of box-ticking exercises such as ISO 9000 or the criteria for entry for quality awards. These, he claims, just encourage the notion that quality is about techniques and systems. ‘But techniques and systems don’t accomplish anything by themselves’, claims Crosby. ‘Management has to do that’. Management’s preference for dealing with money rather than people (customers and employees) goes some way to explaining their obsession with ‘ritualistic stuff’ like ISO 9000 and TQM – ‘trivializing quality management’ as he describes it. For Crosby ‘quality is conformance to requirements, and reliability is conformance to requirements over time’.
The impact of service quality Quality needs to be understood and managed throughout a service organization. Four areas in particular may serve as an arena within which the question of quality can be addressed (Figure 5.1). Service encounter – the customer interacts with animate (the service employees) and inanimate objects (the physical evidence, e.g. an information sign). 䊉 䊉 䊉 䊉
How knowledgeable and courteous is the service employee? How effective is the sign in terms of visibility, information provided, postioning? How can the customer contribute to the quality of the encounter? What contribution do script theory and role theory make?
Service design
Service encounter
Quality
Service productivity
Figure 5.1 The impact of quality
Service organization and culture
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Service design – the customer goes through a process to obtain a service. 䊉 䊉 䊉 䊉
How well designed is the process? Is there a blueprint/flowchart of the process? To what extent is there flexibility in the system? Does the process require customization or standardization?
Service productivity – there is a relationship between the quantity and quality of goods or services produced and the quality of resources used to produce them. 䊉
䊉
What are the possible relationships between changes in quality and changes in quantity? If quantity increases (number of patients seen by a general practitioner), what effect could that have on the quality of service? What role should the customer play in the productivity equation?
Service organization and culture – the culture of an organization and the way it is organized can affect the quality of service. 䊉 䊉
How do the various organizational cultures (power, role, achievement and support) act as a key to understanding the kind of service produced? What characteristics/features of an organization enable it to respond positively to customer needs and deliver a quality service?
Another way to consider quality and its impact throughout an organization is to put the customer at the centre of the process and highlight the number of encounters, or ‘moments of truth’ he or she may have with the organization. Consider the case of a student in an educational institution (Figure 5.2). Expectations of both the educational
Post course evaluation
Visit by institution to school
Prospectus
Graduation
Student as consumer
Open day
Assessment
Facilities: library, catering, sport
Lectures/ tutorials
Figure 5.2 Student contact with service
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institution and potential student can be determined at the beginning. We can then compare these expectations with the perceptions of students and staff during and at the end of the course. This kind of exercise can be undertaken with any service organization. The benefit of doing so is that it disciplines the service provider to think of how all aspects of the organization contribute to service quality. The customer can be asked how important each part of the service is and how well the organization performs on each aspect.
A model of service quality To enhance knowledge of service quality and encourage investigation of the key issues, a model has been developed3 (Figure 5.3). Its key features are: 䊉 䊉 䊉
The identification of key attributes of service quality from a management and consumer perspective Highlighting the gaps between consumers and service providers with particular reference to perceptions and expectations Understanding the implications for service management of closing the gaps.
The most important insight obtained from the research on the service quality model was that: A set of key discrepancies or gaps exist regarding executive perceptions of service quality and the tasks associated with service delivery to consumers. These gaps can be major hurdles in attempting to deliver a service which consumers would perceive as being of high quality. The following is a brief account of the gaps: Gap 1 – it states that many service organizations just do not understand what customers expect and what really matters to them. This gap can only be bridged through customer research. Gap 2 – even where customer expectations are understood, management experiences difficulty in translating that understanding into service quality specifications. This exists because: 䊉
Management may believe that customer expectations are unreasonable or unrealistic
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Past experience
Personal needs
Word-of-mouth communications
Expected service Gap 5 Perceived service Consumer Marketer Service delivery
Gap 4
External communications to consumers
Gap 3 Translations of perceptions into service quality specs Gap 1 Gap 2 Management perceptions of consumer expectations
Figure 5.3 Service quality model. Source: Parasuraman, Zeithaml and Berry (1985)3 䊉 䊉
Management may believe that the degree of variability inherent in service defies standardization There is an absence of wholehearted management commitment to service quality.
Gap 3 – even when formal standards or specifications for maintaining service quality are in existence, the delivery of a quality service is by no means certain. This is caused by poor, inadequately deployed resources in terms of people, systems and technology. Gap 4 – advertising and other forms of communication by a service organization can affect consumer expectations. The danger is that promises made are not kept. Many service organizations use the brochure or prospectus (some very glossy) for communicating with potential customers. It should be a statement of what the customer will receive, not an attractive set of promises that cannot be delivered.
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Gap 5 – this gap represents the key challenge. To ensure good quality the provider must meet or exceed customer expectations. Perceived service quality is the result of the consumer’s comparison of expected service with perceived service delivery.
What to measure Service quality is viewed as a multidimensional concept. Consumers assess and evaluate a number of factors or dimensions. Clearly the question of what to measure will vary from one service to another, but a list of dimensions by which consumers judge quality has been developed.4 The appropriateness of these dimensions has been tested in a variety of service industries. Consequently they appear applicable to most services. The dimensions are: Reliability – the ability to perform the promised service dependably and accurately. It is regarded as the most important determinant of perceptions of service quality. This dimension is particularly crucial for services such as railways, buses, banks, building societies, insurance companies, delivery services and trade services, e.g. plumbers, carpet fitters, car repair. Responsiveness – the willingness to help customers and to provide prompt service. This dimension is particularly prevalent where customers have requests, questions, complaints and problems. Assurance – the employees’ knowledge and courtesy, and the ability of the service to inspire trust and confidence. This dimension may be of particular concern for customers of health, financial and legal services. Empathy – the caring, individualized attention the service provides its customers. Small service companies are better placed for treating customers as individuals than their larger invariably standardized counterparts. However, relationship marketing is designed to offer a more individualistic approach for customers of large organizations! Tangibles – the appearance of physical facilities, equipment, personnel and communication materials. All of these are used in varying degrees to project an image that will find favour with consumers. Tangibles will be of particular significance where the customer’s physical presence at a service facility is necessary for consumption to occur e.g. hair salon, hotel, night club. To apply these factors to a particular service organization will require definition in specific and behavioural terms. For example, what does
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Procedure
Procedure
Four service arenas
Conviviality The ‘freezer’ service characteristics: Procedural slow inconsistent disorganized chaotic inconvenient
Conviviality The ‘factory’ service characteristics: Procedural timely efficient uniform
Convivial insensitive cold or impersonal apathetic aloof uninterested
Message to customers: ‘You are a number. We are here to process you’
Procedure
Procedure
Message to customers: ‘We don’t care’
Convivial insensitive apathetic aloof uninterested
Conviviality The ‘friendly zoo’ service characteristics: Procedural slow inconsistent disorganized chaotic inconvenient
Convivial friendly personable interested tactful
Message to customers: ‘We are trying hard, but we don’t really know what we’re doing’
Conviviality The ‘full balance’ service characteristics: Procedural timely efficient uniform
Convivial friendly personable interested tactful
Message to customers: ‘We care, and we deliver’
Figure 5.4 Four arenas of service quality. Source: Martin (1986)7
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reliability mean in Service A as distinct from Service B? How does an organization show responsiveness? How does assurance differ between Service A and Service B? What can an organization do specifically to demonstrate empathy? For the five determinants of service quality already mentioned, a multiple-item scale called SERVQUAL has been developed.5 It aims to measure customer expectations and perceptions and the gaps as described in the service quality model. Measurement is done through a Likert scale in which respondents are required to indicate their strength of agreement/ disagreement to statements about the delivery of service quality (see Chapter 12). On a more general level it has been argued that service organizations should be subject to a quality audit as well as the legally required financial audit. Generally accepted service principles (GASP)6 would provide service organizations with explanations of upward and downward trends in quality, just as companies explain good and bad trends in terms of sales and profits. It would be an index of customer satisfaction, measuring all the activities and attributes that affect customer satisfaction. The findings of a service quality audit may be portrayed as in Figure 5.4 and it might prove quite revealing to ask your customers ‘Of the four, which one best reflects your perception of us?’
Causes of service quality problems Several reasons have been put forward as explanations of poor service quality.8
Inseparability of production and consumption and labour intensity The provision of service, as distinct from the manufacture of goods, occurs in the presence of customers. Inevitably as with any human encounter, problems do arise. The service employee may exhibit poor presentational skills, conduct himself improperly and dress inappropriately. All of these and others may influence the customer’s perception of service quality. The intensive involvement of humans in service delivery will always have the potential to pose problems for quality.
Inadequate services to intermediate or internal customers The frontline employee is by definition at the ‘sharp end’ of the service delivery system. To execute the service effectively, the employee requires proper support from further back in the organization (Figure 5.5)
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Management Operations Marketing Human resources
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Service employee as intermediate customer
Customer
Figure 5.5 The importance of employee support in the execution of effective service
The support will emanate from the main management functions (operations, marketing and human resource) and involve: 1 Equipment e.g. tools, materials, uniforms 2 Skills training 3 Information e.g. of a new service launch’s operating procedures.
Communication gaps Good communication is the life-blood of a healthy organization, and its contacts with customers. However, it is a problem of some magnitude and manifests itself in the following ways: 1 2 3 4
Failure Failure Failure Failure
to to to to
deliver promises made keep a customer informed communicate in a manner the customer can understand listen.
Viewing customers as statistics For a service organization there are often compelling reasons for offering a standardized service, not least of which are the efficiencies to be gained from treating a large number of customers in a standardized manner. For the customer, this approach to service delivery is often welcomed. By contrast, customization of the service seeks to recognize the particular needs of individual customers. Service organizations should be sensitive to how their customers feel about how they are treated. A remark made by a student perhaps exemplifies the issue. He said ‘In my two years at college, not once did a lecturer recognize me by name’.
Short-run view of the business Organizations in general, and particularly in the UK, take a short-run view of the business when it comes to performance evaluation. Management
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are frequently required to meet targets on a yearly basis. The obsession inevitably becomes one of cost reduction and productivity increases to meet a profit target. This is understandable but detrimental to building a quality service in the longer term.
How to improve service quality Improving service quality is certainly not a simple, straightforward exercise. It will have implications for the whole culture of the organization. Some ideas put forward are worthy of consideration.8
Identifying primary quality determinants Knowing what determines quality is, of course, crucial. However, consumers and producers of services do not necessarily perceive service quality on common dimensions and even when they do hold common dimensions, they evaluate them differently.
Managing customer expectations To attract custom, organizations are often tempted to raise customer expectations. Companies make promises to consumers on aspects of their business that they think the customer will value in order to give the organization a competitive advantage. However care must be exercised in making promises to customers. For example, consider the following sample taken from the Yellow Pages Directory: ‘Nobody does it better’ ‘The very best of care’ ‘Immediate delivery from stock’ ‘On time – every time’ ‘You can’t beat our service’ They are both difficult to measure and raise consumer expectations unrealistically. As a rule it is better to exceed customer expectations than to let the customer down.
Managing evidence The ‘evidence’ from the viewpoint of a service organization includes many things and consumers look to these as an indicator of what the service might be like (pre-service expectation) and what, in fact, the service was like after using it (post-service evaluation).
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Physical and human evidence play a significant part in image formation. Retailers are interested in several aspects relating to architecture and design for promoting an image. Similarly, atmosphere influences image. The term ‘atmospherics’ has been coined to define the conscious design of space to influence buyers. The atmosphere influences the buyers’ expectations and perceptions of the service. For example lawyers’ offices and banks are designed to communicate confidence. Various factors such as colours, music, furnishing, space etc. can evoke a variety of feelings about the service organization, e.g. friendliness, austerity, sobriety, authority, rationality, stability, flexibility. One author stresses that it will be the physical aspects of a service that will allow us to make sense of it and we expect the physical signs to be in tune with the nature of the service. Incongruity can make us uncertain and uncomfortable.
Educating consumers about the service Helping the customer to understand the service would appear to be a sine qua non for dispensing a quality service. However, for many services, e.g. garage repair business, professional services, the challenge can be a daunting one and one that perhaps they are not willing to confront. Equally, the willingness of the customer ‘to be educated’ requires evaluation along with their capacity to assimilate the nature of the service being delivered.
Developing a quality culture Quality is not delivered in a vacuum but through an organization with all its imperfections. Commitment to quality must pervade the whole organization. A number of institutional factors can either help or hinder the provision of quality service. They are:9 1 Human – job descriptions, selection, training, rewards, career path. 2 Organization/structure – integration/coordination of functions and reporting structure. 3 Measurement – complaint and customer satisfaction tracking and performance evaluation. 4 Systems support – technical, computers, databases. 5 Services – value added, range and quality, standards of performance, satisfying needs and expectations. 6 Programmes – complaint management, sales/promotional tools, management tools.
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7 Communication (internal) – policies and procedures, feedback within the organization. 8 Communication (external) – consumer education, creation of expectations, image. A useful tool for identifying the causes of poor service quality is the fishbone diagram. All that is required is the identification of a poor output and then work backwards in order to attribute the cause(s). It is versatile in that it can be applied to a range of situations. When several such analyses are conducted, a distribution of the causes can be plotted on a Pareto histogram (see ‘Tools of quality’).
Automating quality The variability in quality service emanating from human inadequacy can be avoided through automation. Before such a decision is made, research needs to establish which parts of the service require the human touch and which require automation. The danger is that automation takes over for reasons other than automation.
Following up the service Organizations need to continuously monitor their performance by contacting customers to determine their view of the service delivered. More recently, organizations have been asked to consider five imperatives for improving service quality.10 1 Define a clear service role and standard for service employees and communicate and reinforce these standards. 2 Compete for talent – allocate people to jobs according to ability and aptitude and give them more flexibility and control to do the job. The problem with this is that many service jobs are by nature narrow in scope and perceived as ‘dead end’. 3 Emphasize service teams – getting people to work as a team is an attractive proposition and potentially very effective for delivering quality. However, entrenched attitudes (negative) to work and strong personalities can quite easily prevent the development of a team spirit. The action (or inaction) of management is crucial here. Good employees need to see management doing something about the members of the team who are simply not pulling their weight. 4 Go for reliability – at the heart of excellent service is reliability and it is argued that nothing less than 100 per cent reliability is acceptable:
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Think for a moment about what it would mean in our daily lives if people got things right only 99 per cent of the time: at least 200,000 wrong prescriptions would be processed every year; there would be nine misspelled words on every page of a magazine; we’d all have unsafe drinking water; there would be no telephone service for fifteen minutes every day.10 Reliability has been defined as the ‘ability to perform the promised service dependably and accurately’.11 䊉 䊉
When an organization says it will call you back within fifteen minutes, does it do so? Is your bank statement free of errors? Is your plumbing repaired correctly the first time?
Service organizations should strive towards achieving 100 per cent reliability. However, the existence of certain conditions often impede the service organization in pursuit of that goal, e.g. lack of resources, unpredictable swings in demand levels. 5 Be great at problem resolution – service organizations cannot avoid things going wrong for a customer but it is their reaction to this that is critical. Their response can make things better or very much worse. Customers need to feel that actions are being taken to try to resolve the problem. For large service organizations client dissatisfaction of attempts at problem resolution is a real issue. Customers are categorized and treated by the application of general, abstract rules, without regard for individual needs and situations. The depersonalized behaviour is considered functional because it prevents emotional involvement with the customers’ problems and tends to promote consistency in behaviour throughout the organization. Also, the careful and thorough establishment of rules by the organization makes it possible to delegate substantial authority to people far down in the organization structure. In effect, complex problems can be routinely handled by a person with relatively little training or commonplace ability.
Tools of quality A commitment to quality is enhanced through the use of a range of tools designed for monitoring its delivery and acceptability. The following discussion outlines the most frequently mentioned tools.
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Flowchart Flowcharting is perhaps the simplest yet the most helpful in terms of overall service process improvement. The easiest and best way to understand a process is to draw a picture of it – that’s basically what flowcharting is. It presents information that allows management to analyse the way a service is being delivered. As the format, in terms of the picture, becomes more elaborate, reference is made to a service blueprint or service map (see Chapter 3).
Cause and effect diagram ‘Quality begins with education and ends with education’. These words, attributed to the late Kaoru Ishikawa sum up a principal philosophy of quality. To improve processes, one must continuously strive to obtain more information about those processes and their output. One unique and valuable tool for accomplishing this goal is the cause and effect diagram. The diagram’s purpose is to relate cause and effect. It is also known as the Ishikawa diagram and the fishbone diagram because it resembles the skeleton of a fish.
Other
Equipment
Personnel
Effect
Material
Procedure
Figure 5.6 Cause and effect diagram
All that is required is the identification of an effect and then work backwards in order to attribute the cause(s). The diagram (Figure 5.6) helps managers to focus on a specific problem faced in a quality management context, e.g. late deliveries and to identify the factors contributing to that problem. The versatility of the cause and effect diagram means the words in each box will vary depending on the situation. Consider the case of a service/distribution business that has determined five areas as the main potential causes of dissatisfied customers (Figure 5.7).
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Product quality
Order processing system
Service
Customers are dissatisfied
Order fulfilment
Distribution system
Figure 5.7 The main cause headings. Source: Sarazen (1990)12
After these areas were determined, the next step was to brainstorm all the possible causes of problems in each of the major cause categories. These ideas are captured and applied to the diagram as subcauses. Figure 5.8 shows the completed portion of the diagram for one of the main causes: service. The company identified reliability issues, carrier issues (e.g. a trucking company), poor communications, and lack of, or poor training. The next level of causes was identified by asking the question ‘What would cause a problem in these areas?’ In the case of the poor communications, the company focused on functions and jobs – sales people, field representatives and managers – as potential causes. It can be seen that lack of knowledge of the customer can cause managers to communicate poorly. Subsequently it can be seen that inexperience and
Managers
Service
Inexperience Knowledge of customer
Handling
Training Poor communications
Carrier Sales Contract
Field reps Product
Reliability Training Clear instructions Input errors
Training Phone Customers are dissatisfied
Figure 5.8 A detailed look at the main cause. Source: Sarazen (1990)12
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training can be two key contributors to a manager’s lack of customer knowledge. Thus, there are six levels of causes in this example. Three points should be borne in mind in respect of a cause and effect analysis: 䊉 䊉 䊉
Where difficulties are experienced in creating a diagram for a specific situation, use should be made of the generic diagram (Figure 5.6). All employees with an involvement in the problem should be party to identifying the causes and suggesting solutions. The objective of cause and effect analysis is to determine which of the causal factors are major influences on results. To illustrate this we need a Pareto chart.
Pareto chart The Pareto principle is named after Vilfredo Pareto, a nineteenth-century Italian economist who found that a large share of the wealth was owned by relatively few people. It came to be known as the 80/20 rule which suggests that 80 per cent of any problem or phenomenon is often due to 20 per cent of the possible causes. Therefore, around 80 per cent of most companies’ sales are produced by about 20 per cent of its products. Similarly, in a service context, 80 per cent of service failures may be accounted for by only 20 per cent of causes. A study done for a pizza parlour experiencing problems with its home delivery service revealed possible causes of failure and their contribution in not meeting target response times (Table 5.1). A Pareto chart (Figure 5.9) can be constructed from the survey. It shows three factors (d, f and e) which together account for 70 per cent of the causes. Table 5.1 Causal factors with a Pareto distribution Causes
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Giving order to kitchen Shortage of drivers Slowness in preparation of pizzas Drivers unfamiliar with faster route Breakdowns in delivery vehicles Traffic congestion Weather conditions Slowness in boxing cooked pizzas Extent of catchment area
% contribution to failure in meeting target response times 3 8 3 30 15 25 6 3 7 100
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97 100%
Contribution to failure (%)
40
30
20
10
0 d
f
e
b
i
g
a
c
h
Figure 5.9 Pareto chart – causal factors
Histogram A histogram can also be used to illustrate variations. It is a distribution showing the frequency of occurrences between the high and low range of data. Figure 5.10 shows two histograms illustrating times taken by two organizations to perform a particular service. From the histograms it is clear that the variation of company A’s service process is smaller than B’s. (b) 50
50
40
40
30
30
Frequency
Frequency
(a)
20
10
20
10
0
0 0
10
20 Time (minutes)
30
40
0
10
20
30
Time (minutes)
Figure 5.10 Time taken by two organizations to perform a particular service
40
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The question is why the quality of A’s service performance should be much better than B’s. Possible reasons are better equipment, better trained employees and more effective procedures.
Control charts Variation is a fact of life. In our personal life we are often surprised when the mail does not arrive at the same time every day, complain when the weather forecast is inaccurate and become frustrated when our train does not leave or arrive on time. All processes vary to some extent, e.g. a machine will never give precisely the same result each time it is used: materials will vary a little, operator performance will differ marginally, the environment in which the process takes place will vary. Variations which derive from these common causes can never be entirely eliminated (although they can be reduced). Common cause variation occurs in processes which are essentially stable. A stable process such as order processing time displays a random pattern and its future behaviour is predictable. How much common cause variation occurs will depend on the circumstances. However, the question that needs to be asked is ‘Is this variation in the process performance acceptable? The answer will lead to the determination of what is often called a tolerance or specification range. In other words, an upper and lower control limit will be set within which performance will be allowed to vary and be deemed acceptable. The control chart displays this performance over time against specific quality criteria. Not all variation in processes is the result of common causes. Something may be wrong with the process which is assignable to a particular and ‘preventable’ cause. The causes of such variation are called assignable or special causes. It will appear on the control chart as a point outside the upper or lower control limits. Whereas common cause variation focuses on improving the system, special cause variation requires a problemsolving approach of finding the cause and developing solutions to prevent its recurrence. The upper and lower limits on the control chart usually represent three types of value: 䊉 䊉 䊉
Measurable data, e.g. time spent in a service or time spent waiting for service, order processing time Percentages, e.g. the percentage of orders delivered late or the percentage of customers complaining Counting data, e.g. the number of mistakes in an order, number of complaints
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Number of complaints
Each of the above types of value is represented on the vertical Y axis and the horizontal X axis represents a period of time, e.g. a week, month, year. An example of a control chart for stability testing of customer complaints is shown in Figure 5.11. 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Week
Figure 5.11 Testing for stability: statistical control chart for customer complaints, July–December. Source: Cravens (1988)13
The figure indicates that the process is out of control. First, the number of complaints for week 20 is outside the upper control limit. Second, eight observations beginning in week 17 on the top side of the central time indicate a statistically significant non-random shift in the process average. The control chart upper and lower limits are established by calculating above and below the grand mean. Determining whether or not the process is stable is an essential step in the quality improvement process. Attempting to correct an unstable process provides no assurance that corrective action will improve the process because of the possible counter effects of the variables causing the process to be out of control. In the control chart of Figure 5.11 it was noted that the customer complaint process was out of control. The control chart in Figure 5.12 covers the six month period after correction of the causes of the out-of-control process. The process is now under control, and the average number of complaints has been reduced from 11.3 (Figure 5.11) to 5.7 (Figure 5.12). Also note that the variability of the process has been reduced. This can be
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Number of complaints
11 10 9 8 7 6 5 4 3 2 1 0 1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Week
Figure 5.12 Customer complaints: process under control, January–June. Source: Cravens (1988)13
seen by comparing the upper and lower control limits for Figures 5.11 and 5.12. Before control of the process was accomplished the span between the upper and lower limits was 21; after control the span was reduced to 13. It should be remembered that careful consideration needs to be given to the presentation of key performance indicators to ensure that the results are easily interpreted and not misleading. For example, look once again at Figure 5.11. Although it appears that the number of complaints has increased over the period analysed, the information must be taken in context. The graph would have been a much more useful performance indicator if the number of complaints had been presented in relation to the number of customers taken on over the period. Without an understanding of the customer numbers, we are not in a position to determine whether the rise in customer complaints, as represented in the graph, is a worrying trend or not.
Scatter diagrams In many situations we may come across two sets of data which seem related. These relationships can be non-mathematically evaluated by using a scatter diagram, the Y axis is usually reserved for the characteristic
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No. of complaints
Y
X No. of service failures
Figure 5.13 Scatter diagram: strong positive relationship
we would like to predict (the dependent variable) and the X axis for the variable that we are using to make the prediction (the independent variable). Figure 5.13 does seem to show a clear relationship between number of service failures and number of complaints. It could be argued that one would reasonably expect there to be quite a strong relationship between number of service failures and number of complaints, though not always so. Figure 5.14 shows a situation where evidence of a strong relationship is not quite so clear-cut. Factors other than length of service may be better predictors of productivity levels, e.g. willingness to work, financial incentives, competency, etc.
Average productivity
Y
X Length of service
Figure 5.14 Scatter diagram: weak relationship
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Tallies or check sheets A tally or check sheet is perhaps the most commonly used method for collecting and compiling data. A computer will normally do the counting. When working by hand the task can be eased by using the ‘five-bar’ technique.
Method 䊉 䊉 䊉
List the possible categories. Work through the column of data systematically, putting a stroke next to the appropriate category. Every fifth mark should go diagonally across the previous four, as on a gate, to make counting the marks at the end very easy.
Table 5.2 illustrates a tally or check sheet recording the incidence of complaints by subject. Table 5.2 Tally/check sheet Subject of complaint
Number of complaints
Delivery times Installation Company personnel Product
/IIII /IIII /IIII /IIII /IIII /IIII I /IIII III /IIII /IIII
Total II
22 11 8 10 51
Once you have your tally, look at it to see what it tells you. Consider: 䊉 䊉 䊉
Whether the counts are what you expected Which are the most frequently occurring categories Whether looking at percentages would be a good idea
Percentage tallies Table 5.3 Percentage tallies Subject of complaint
Count
Percentage
Delivery times Installation Company personnel Product
22 11 8 10
43 (22/51 ⫻ 100) 21 16 20
51
100
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Cost of quality The cost of quality can be defined as the total of all resources spent by an organization to assure that quality standards are met on a consistent basis.14 Quality costs are grouped into two broad categories with two types in each: 1 Costs of maintaining good quality (a) Prevention costs – the costs incurred to prevent errors from occurring. These are said to include the time and effort spent in recruiting, training and reviewing performance of employees along with determining customer requirements and establishing quality standards. Of the types of quality costs, prevention costs are viewed as of central importance but they have been regarded as double counting because prevention is a normal aspect of any manager’s responsibility. (b) Appraisal costs – costs incurred from inspection, testing and auditing aimed at identifying non-conforming aspects before a service or product is delivered. Prevention and appraisal costs are incurred because poor quality of conformance can exist. 2 Costs of poor service quality (a) Internal failures – these are errors and defects that are caught before they reach the customer. (b) External failures – these are problems identified by the customer and the cost may include any refunds or additional services provided at no cost to the customer. Failure costs are incurred because poor quality of conformance does exist. Cost of quality should be continuously monitored through making use of, amongst other things, the tools of quality. Above all organizations should perform a cost of quality audit which is designed to identify:14 䊉 䊉 䊉
The circumstances, events, activities, and problems that occur within the organization that fall within the categories already mentioned. The frequency with which these circumstances occur. The resources (time, materials, money) devoted to these circumstances and events.
Of course, it has to be remembered that cost of quality was originally developed for a manufacturing context. Transferring it to the service sector is not devoid of problems. However, there are still many aspects of service that can be subjected to a cost of quality analysis. This is particularly true the more standardized the service is as the operating conditions are similar to a manufacturing facility.
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As to what can be done, the following example illustrates cost of quality in a service environment. A large hotel where the average rate is £80 and length of stay is two days undertook a cost and performance review of its front-desk operation. Specifically, the focus was on transactions at the front desk, primarily registration and checking-out procedures. The information was obtained from employee observations. A range of errors was considered in terms of their occurrence and cost (Table 5.4). Table 5.4 Cost of quality calculation. Adopted from Luchars and Hinkin (1996)15 Error type
Hourly wage
Time spent fixing error (hours)
Error occurrence per day
Cost over the year (£) (365 days)
1 When guests check out extra charges on the bill are incorrect
£6
0.085
70
13 030
2 Specific information about a reservation has not been entered into the computer
£6
0.15
25
8 212
3 The reservation for an arriving guest cannot be found in the computer
£6
0.12
15
3 942
4 Guest registers and is not given the requested room type
£6
0.2
3
1 314
5 The guest is checking out and the receptionist cannot find the registration card
£6
0.165
3
1 084
The table reveals that errors 4 and 5 individually are relatively minor. Errors 1 and 2 together comprise nearly 80 per cent of the year’s cost and therefore merit close attention. A Pareto chart (Figure 5.15) can be constructed from the data. These errors are largely external failures as they have not been caught before they reach the customer. External failures can be reworked as is the case in manufacturing industry. For example, a customer can demand warranty repairs on a faulty car. Services are not so amenable to rework as evidenced by a faulty ATM or a bad haircut. Where rework is not possible, some form of compensation may be given. The appraisal costs of inspection and testing are of fundamental importance in manufacturing. Services can equally be inspected and tested prior to consumption. However, the service as experienced by the customer cannot obviously be pre-tested or inspected. Customers, themselves, may
Service quality
105 100
14 000
90 12 000 80
Year cost (£)
10 000
70 60
8 000
50 6 000
40 30
4 000
20 2 000 10 0
0 1
2
3
4
5
6
Errors
Figure 5.15 Pareto chart: error/cost analysis
actually share responsibility for the quality and hence the cost of service. Where a service is one of high contact, customer involvement and uncertainty can impact on cost of quality (see Chapter 1).
Business excellence model In early 1992, the UK Quality Award (UKQA) Committee was established ‘to consider and report . . . on the feasibility of developing a new prestige award for British business’. The proposals were to be in a form suitable for self-assessment, in harmony with the European Quality Award (EQA), launched by the European Foundation for Quality Management (EFQM) in 1992, and incorporate the lessons learnt from the Malcolm Baldridge National Quality Award (MBNQA). The EQA model had been developed from the MBNQA, with the active involvement of UK organizations: to have developed an alternative model for the UKQA could have undermined the worldwide TQM development process. The EQA model with its emphasis on self-assessment and improvement planning was therefore accepted by the committee.16 However, the European award process was not seen as a catalyst to inspire nationally focused businesses, small and medium-sized UK organizations, regional or locally based UK businesses, or the public and voluntary sectors, and therefore there was a need for a new UKQA. This model is now known as a Business Excellence Model, and experience of using the model in a wide range of commercial organizations has shown that it is widely applicable both as a means of assessment and as the basis for planning improvements. The model is
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based on the premise that customer satisfaction, people (employee) satisfaction and impact on society are achieved through leadership driving policy and strategy, people management, resources and processes, leading ultimately to excellence in business results (Figure 5.16). People satisfaction 9%
People management 9%
Leadership 10%
Policy and strategy 8%
Resources 9%
Enablers 50%
Processes 14%
Customer satisfaction 20%
Business results 15%
Impact on society 6% Results 50%
Figure 5.16 The Business Excellence Model. Source: British Quality Foundation, London, 1995
Each of the nine elements of the model is a criterion used to assess an organization’s progress towards excellence. The percentages shown are those used for the purposes of the UK and European Quality Awards. Both the model and the relative weightings were developed following a wide consultation exercise across Europe, and they are annually reviewed for continuing relevance, criterion and subcriterion definition/deletion/ expansion and relative importance. The model is split on an equal basis between the 䊉 䊉
Enabler criteria, concerned with how an organization approaches its business in each of the areas described by the criteria and subcriteria. Results criteria covering what an organization has achieved and is achieving.
The model criteria 䊉
䊉
Leadership. This criterion relates to the behaviour of all managers in as much as how the executive team and all other managers inspire, drive and reflect total quality as the organization’s fundamental process for continuous improvement. Policy and strategy. This criterion reviews the organization’s mission, values, vision and strategic direction. How the organization’s policy and
Service quality
䊉
䊉
䊉
䊉 䊉 䊉 䊉
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strategy reflect the concept and principles of total quality are used in the formulation, deployment, review and improvement of policy and strategy. People management. This criterion studies the management of the organization’s people and how the organization releases the full potential of its people to improve its business and/or service continuously. Resources. This criterion refers to the management, utilization and preservation of resources and how the organization’s resources are effectively deployed in support of policy and strategy. Processes. This criterion analyses the management of all value-adding activities within the organization, how processes are identified, reviewed and revised to ensure continuous improvement of the organization’s business and/or service. Customer satisfaction. Examines what the organization is achieving in relation to the satisfaction of its external customers. People satisfaction. Investigates what the organization is achieving in relation to the satisfaction of its people. Impact on society. Probes what the organization is achieving in satisfying the needs and expectations of the community at large. Business results. Reviews what the organization is achieving in relation to its planned business and/or service objectives and in satisfying the needs and expectations of everyone with an interest in the organization.
A full exposition of the model can be found in the Guides to Self-assessment published by the British Quality Foundation (1995).
Summary Customers desire a quality service but few can agree on a definition. It expresses itself in the service encounter, service design, service productivity and throughout the organization and culture. A model of service quality has been developed to increase our understanding. It states that gaps exist between the service provider and the customer over expectations and perceptions of quality. The message for management is one of managing customer expectations as well as ensuring that what is promised in respect of quality is actually delivered. Apart from the contribution of the model, a good place to start is isolating the causes of poor quality. This will then serve as a basis for taking action to improve it. Improvements will be more detectable if steps are taken to set standards and measure performance against these standards. Monitoring the delivery and acceptability of service quality is now regarded as very important and a range of tools is available for that purpose.
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Equally, organizations are increasingly concerned about the cost of delivering quality. For services this kind of exercise offers up a challenge. The importance attached to the delivery of quality in all kinds of organizations and activities has given rise to a number of awards, in particular the European Quality Award.
References 1. Measuring Up (1986) Public Libraries Paper 3. National Consumer Council, London. 2. Crosby, P. (1996) Quality is still free. McGraw-Hill, New York. 3. Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1985) ‘A conceptual model of service quality and its implications for future research’, Journal of Marketing, 49, Fall, 41–50. 4. Zeithaml, V. A., Parasuraman, A. and Berry, L. L. (1990) Delivering Service Quality, Free Press, New York. 5. Ibid. 6. Liswood, L. (1989) Serving Them Right, Harper & Row, New York. 7. Martin, W. B. (1986) ‘Defining what quality service is for you’, The Cornell HRA Quarterly, February, 32–38. 8. Berry, L. L., Zeithaml, V. A. and Parasuraman, A. (1985) ‘Quality counts in services, too’, Business Horizons, May–June, 44–52. 9. Goodman, J. A., Malech, A. R., Bargatze, G. F. and Ledbetter, C. (1988) ‘Converting a desire for quality service into actions with measurable impact’, Journal of Retail Banking, X(4), 14–22. 10. Berry, L. L., Zeithaml, V. A. and Parasuraman, A. (1990) ‘Five imperatives for improving service quality’, Sloan Management Review, Summer, 29–38. 11. Ibid. 12. Sarazen, T. S. (1990) Quality Progress, July. 13. Cravens, D. W. (1988) ‘Marketing’s role in product and service quality’, Industrial Marketing Management, 17. 14. Bohan, G. P. and Horney, W. F. (1991) ‘Pinpointing the real cost of quality in a service company’, National Productivity Review, Summer. 15. Luchars, J. Y. and Hinkin, T. R. (1996) Cornell Hotel and Restaurant Administration Quarterly, February. 16. Henderson/Quality Award Committee (1992) Report on the Feasibility of a New UK Total Quality Award, DTI.
Service quality Introduction It is widely acknowledged that efforts to define and measure the quality of products have proved more successful than the definition and measurement of service quality. The characteristics of services have made the determination of what constitutes quality more difficult and hence its measurement less than comprehensive. To increase our understanding and to enable practical steps to be taken, two things need to be attained: 䊉 䊉
Specification of the determinants of service quality Measurable quality standards.
Achievement in these two areas will vary depending on whether the focus is: 䊉 䊉
A low-contact or a high-contact service, e.g. fast-food outlet versus an education course Process or output.
Determining the process and output quality of a fast-food restaurant is arguably more straightforward than an education course. Whatever the service, it is useful to bear in mind the following questions when it comes to quality: 䊉 䊉
What is the service supposed to do? What does the service actually do?
Quality then refers to the extent to which a service is what it claims to be and does what it claims to do. It must not be confused with grade. For example, the quality of a library cannot be judged in an abstract way by, say, counting the number of Shakespeare volumes possessed and subtracting the number of light romances. Instead the prime aspect of quality is whether the library provides people with what they want – it is a good library if it does and a bad library if it does not.1
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One eminent spokesman in the quality business over many years is Philip Crosby. In an update2 of his most famous book Quality is Free he berates the army of bandwagoneers for having made a good living out of quality by reducing a profound idea to a set of box-ticking exercises such as ISO 9000 or the criteria for entry for quality awards. These, he claims, just encourage the notion that quality is about techniques and systems. ‘But techniques and systems don’t accomplish anything by themselves’, claims Crosby. ‘Management has to do that’. Management’s preference for dealing with money rather than people (customers and employees) goes some way to explaining their obsession with ‘ritualistic stuff’ like ISO 9000 and TQM – ‘trivializing quality management’ as he describes it. For Crosby ‘quality is conformance to requirements, and reliability is conformance to requirements over time’.
The impact of service quality Quality needs to be understood and managed throughout a service organization. Four areas in particular may serve as an arena within which the question of quality can be addressed (Figure 5.1). Service encounter – the customer interacts with animate (the service employees) and inanimate objects (the physical evidence, e.g. an information sign). 䊉 䊉 䊉 䊉
How knowledgeable and courteous is the service employee? How effective is the sign in terms of visibility, information provided, postioning? How can the customer contribute to the quality of the encounter? What contribution do script theory and role theory make?
Service design
Service encounter
Quality
Service productivity
Figure 5.1 The impact of quality
Service organization and culture
Service quality
83
Service design – the customer goes through a process to obtain a service. 䊉 䊉 䊉 䊉
How well designed is the process? Is there a blueprint/flowchart of the process? To what extent is there flexibility in the system? Does the process require customization or standardization?
Service productivity – there is a relationship between the quantity and quality of goods or services produced and the quality of resources used to produce them. 䊉
䊉
What are the possible relationships between changes in quality and changes in quantity? If quantity increases (number of patients seen by a general practitioner), what effect could that have on the quality of service? What role should the customer play in the productivity equation?
Service organization and culture – the culture of an organization and the way it is organized can affect the quality of service. 䊉 䊉
How do the various organizational cultures (power, role, achievement and support) act as a key to understanding the kind of service produced? What characteristics/features of an organization enable it to respond positively to customer needs and deliver a quality service?
Another way to consider quality and its impact throughout an organization is to put the customer at the centre of the process and highlight the number of encounters, or ‘moments of truth’ he or she may have with the organization. Consider the case of a student in an educational institution (Figure 5.2). Expectations of both the educational
Post course evaluation
Visit by institution to school
Prospectus
Graduation
Student as consumer
Open day
Assessment
Facilities: library, catering, sport
Lectures/ tutorials
Figure 5.2 Student contact with service
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institution and potential student can be determined at the beginning. We can then compare these expectations with the perceptions of students and staff during and at the end of the course. This kind of exercise can be undertaken with any service organization. The benefit of doing so is that it disciplines the service provider to think of how all aspects of the organization contribute to service quality. The customer can be asked how important each part of the service is and how well the organization performs on each aspect.
A model of service quality To enhance knowledge of service quality and encourage investigation of the key issues, a model has been developed3 (Figure 5.3). Its key features are: 䊉 䊉 䊉
The identification of key attributes of service quality from a management and consumer perspective Highlighting the gaps between consumers and service providers with particular reference to perceptions and expectations Understanding the implications for service management of closing the gaps.
The most important insight obtained from the research on the service quality model was that: A set of key discrepancies or gaps exist regarding executive perceptions of service quality and the tasks associated with service delivery to consumers. These gaps can be major hurdles in attempting to deliver a service which consumers would perceive as being of high quality. The following is a brief account of the gaps: Gap 1 – it states that many service organizations just do not understand what customers expect and what really matters to them. This gap can only be bridged through customer research. Gap 2 – even where customer expectations are understood, management experiences difficulty in translating that understanding into service quality specifications. This exists because: 䊉
Management may believe that customer expectations are unreasonable or unrealistic
Service quality
85
Past experience
Personal needs
Word-of-mouth communications
Expected service Gap 5 Perceived service Consumer Marketer Service delivery
Gap 4
External communications to consumers
Gap 3 Translations of perceptions into service quality specs Gap 1 Gap 2 Management perceptions of consumer expectations
Figure 5.3 Service quality model. Source: Parasuraman, Zeithaml and Berry (1985)3 䊉 䊉
Management may believe that the degree of variability inherent in service defies standardization There is an absence of wholehearted management commitment to service quality.
Gap 3 – even when formal standards or specifications for maintaining service quality are in existence, the delivery of a quality service is by no means certain. This is caused by poor, inadequately deployed resources in terms of people, systems and technology. Gap 4 – advertising and other forms of communication by a service organization can affect consumer expectations. The danger is that promises made are not kept. Many service organizations use the brochure or prospectus (some very glossy) for communicating with potential customers. It should be a statement of what the customer will receive, not an attractive set of promises that cannot be delivered.
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Gap 5 – this gap represents the key challenge. To ensure good quality the provider must meet or exceed customer expectations. Perceived service quality is the result of the consumer’s comparison of expected service with perceived service delivery.
What to measure Service quality is viewed as a multidimensional concept. Consumers assess and evaluate a number of factors or dimensions. Clearly the question of what to measure will vary from one service to another, but a list of dimensions by which consumers judge quality has been developed.4 The appropriateness of these dimensions has been tested in a variety of service industries. Consequently they appear applicable to most services. The dimensions are: Reliability – the ability to perform the promised service dependably and accurately. It is regarded as the most important determinant of perceptions of service quality. This dimension is particularly crucial for services such as railways, buses, banks, building societies, insurance companies, delivery services and trade services, e.g. plumbers, carpet fitters, car repair. Responsiveness – the willingness to help customers and to provide prompt service. This dimension is particularly prevalent where customers have requests, questions, complaints and problems. Assurance – the employees’ knowledge and courtesy, and the ability of the service to inspire trust and confidence. This dimension may be of particular concern for customers of health, financial and legal services. Empathy – the caring, individualized attention the service provides its customers. Small service companies are better placed for treating customers as individuals than their larger invariably standardized counterparts. However, relationship marketing is designed to offer a more individualistic approach for customers of large organizations! Tangibles – the appearance of physical facilities, equipment, personnel and communication materials. All of these are used in varying degrees to project an image that will find favour with consumers. Tangibles will be of particular significance where the customer’s physical presence at a service facility is necessary for consumption to occur e.g. hair salon, hotel, night club. To apply these factors to a particular service organization will require definition in specific and behavioural terms. For example, what does
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87
Procedure
Procedure
Four service arenas
Conviviality The ‘freezer’ service characteristics: Procedural slow inconsistent disorganized chaotic inconvenient
Conviviality The ‘factory’ service characteristics: Procedural timely efficient uniform
Convivial insensitive cold or impersonal apathetic aloof uninterested
Message to customers: ‘You are a number. We are here to process you’
Procedure
Procedure
Message to customers: ‘We don’t care’
Convivial insensitive apathetic aloof uninterested
Conviviality The ‘friendly zoo’ service characteristics: Procedural slow inconsistent disorganized chaotic inconvenient
Convivial friendly personable interested tactful
Message to customers: ‘We are trying hard, but we don’t really know what we’re doing’
Conviviality The ‘full balance’ service characteristics: Procedural timely efficient uniform
Convivial friendly personable interested tactful
Message to customers: ‘We care, and we deliver’
Figure 5.4 Four arenas of service quality. Source: Martin (1986)7
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reliability mean in Service A as distinct from Service B? How does an organization show responsiveness? How does assurance differ between Service A and Service B? What can an organization do specifically to demonstrate empathy? For the five determinants of service quality already mentioned, a multiple-item scale called SERVQUAL has been developed.5 It aims to measure customer expectations and perceptions and the gaps as described in the service quality model. Measurement is done through a Likert scale in which respondents are required to indicate their strength of agreement/ disagreement to statements about the delivery of service quality (see Chapter 12). On a more general level it has been argued that service organizations should be subject to a quality audit as well as the legally required financial audit. Generally accepted service principles (GASP)6 would provide service organizations with explanations of upward and downward trends in quality, just as companies explain good and bad trends in terms of sales and profits. It would be an index of customer satisfaction, measuring all the activities and attributes that affect customer satisfaction. The findings of a service quality audit may be portrayed as in Figure 5.4 and it might prove quite revealing to ask your customers ‘Of the four, which one best reflects your perception of us?’
Causes of service quality problems Several reasons have been put forward as explanations of poor service quality.8
Inseparability of production and consumption and labour intensity The provision of service, as distinct from the manufacture of goods, occurs in the presence of customers. Inevitably as with any human encounter, problems do arise. The service employee may exhibit poor presentational skills, conduct himself improperly and dress inappropriately. All of these and others may influence the customer’s perception of service quality. The intensive involvement of humans in service delivery will always have the potential to pose problems for quality.
Inadequate services to intermediate or internal customers The frontline employee is by definition at the ‘sharp end’ of the service delivery system. To execute the service effectively, the employee requires proper support from further back in the organization (Figure 5.5)
Service quality
Management Operations Marketing Human resources
89
Service employee as intermediate customer
Customer
Figure 5.5 The importance of employee support in the execution of effective service
The support will emanate from the main management functions (operations, marketing and human resource) and involve: 1 Equipment e.g. tools, materials, uniforms 2 Skills training 3 Information e.g. of a new service launch’s operating procedures.
Communication gaps Good communication is the life-blood of a healthy organization, and its contacts with customers. However, it is a problem of some magnitude and manifests itself in the following ways: 1 2 3 4
Failure Failure Failure Failure
to to to to
deliver promises made keep a customer informed communicate in a manner the customer can understand listen.
Viewing customers as statistics For a service organization there are often compelling reasons for offering a standardized service, not least of which are the efficiencies to be gained from treating a large number of customers in a standardized manner. For the customer, this approach to service delivery is often welcomed. By contrast, customization of the service seeks to recognize the particular needs of individual customers. Service organizations should be sensitive to how their customers feel about how they are treated. A remark made by a student perhaps exemplifies the issue. He said ‘In my two years at college, not once did a lecturer recognize me by name’.
Short-run view of the business Organizations in general, and particularly in the UK, take a short-run view of the business when it comes to performance evaluation. Management
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are frequently required to meet targets on a yearly basis. The obsession inevitably becomes one of cost reduction and productivity increases to meet a profit target. This is understandable but detrimental to building a quality service in the longer term.
How to improve service quality Improving service quality is certainly not a simple, straightforward exercise. It will have implications for the whole culture of the organization. Some ideas put forward are worthy of consideration.8
Identifying primary quality determinants Knowing what determines quality is, of course, crucial. However, consumers and producers of services do not necessarily perceive service quality on common dimensions and even when they do hold common dimensions, they evaluate them differently.
Managing customer expectations To attract custom, organizations are often tempted to raise customer expectations. Companies make promises to consumers on aspects of their business that they think the customer will value in order to give the organization a competitive advantage. However care must be exercised in making promises to customers. For example, consider the following sample taken from the Yellow Pages Directory: ‘Nobody does it better’ ‘The very best of care’ ‘Immediate delivery from stock’ ‘On time – every time’ ‘You can’t beat our service’ They are both difficult to measure and raise consumer expectations unrealistically. As a rule it is better to exceed customer expectations than to let the customer down.
Managing evidence The ‘evidence’ from the viewpoint of a service organization includes many things and consumers look to these as an indicator of what the service might be like (pre-service expectation) and what, in fact, the service was like after using it (post-service evaluation).
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91
Physical and human evidence play a significant part in image formation. Retailers are interested in several aspects relating to architecture and design for promoting an image. Similarly, atmosphere influences image. The term ‘atmospherics’ has been coined to define the conscious design of space to influence buyers. The atmosphere influences the buyers’ expectations and perceptions of the service. For example lawyers’ offices and banks are designed to communicate confidence. Various factors such as colours, music, furnishing, space etc. can evoke a variety of feelings about the service organization, e.g. friendliness, austerity, sobriety, authority, rationality, stability, flexibility. One author stresses that it will be the physical aspects of a service that will allow us to make sense of it and we expect the physical signs to be in tune with the nature of the service. Incongruity can make us uncertain and uncomfortable.
Educating consumers about the service Helping the customer to understand the service would appear to be a sine qua non for dispensing a quality service. However, for many services, e.g. garage repair business, professional services, the challenge can be a daunting one and one that perhaps they are not willing to confront. Equally, the willingness of the customer ‘to be educated’ requires evaluation along with their capacity to assimilate the nature of the service being delivered.
Developing a quality culture Quality is not delivered in a vacuum but through an organization with all its imperfections. Commitment to quality must pervade the whole organization. A number of institutional factors can either help or hinder the provision of quality service. They are:9 1 Human – job descriptions, selection, training, rewards, career path. 2 Organization/structure – integration/coordination of functions and reporting structure. 3 Measurement – complaint and customer satisfaction tracking and performance evaluation. 4 Systems support – technical, computers, databases. 5 Services – value added, range and quality, standards of performance, satisfying needs and expectations. 6 Programmes – complaint management, sales/promotional tools, management tools.
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7 Communication (internal) – policies and procedures, feedback within the organization. 8 Communication (external) – consumer education, creation of expectations, image. A useful tool for identifying the causes of poor service quality is the fishbone diagram. All that is required is the identification of a poor output and then work backwards in order to attribute the cause(s). It is versatile in that it can be applied to a range of situations. When several such analyses are conducted, a distribution of the causes can be plotted on a Pareto histogram (see ‘Tools of quality’).
Automating quality The variability in quality service emanating from human inadequacy can be avoided through automation. Before such a decision is made, research needs to establish which parts of the service require the human touch and which require automation. The danger is that automation takes over for reasons other than automation.
Following up the service Organizations need to continuously monitor their performance by contacting customers to determine their view of the service delivered. More recently, organizations have been asked to consider five imperatives for improving service quality.10 1 Define a clear service role and standard for service employees and communicate and reinforce these standards. 2 Compete for talent – allocate people to jobs according to ability and aptitude and give them more flexibility and control to do the job. The problem with this is that many service jobs are by nature narrow in scope and perceived as ‘dead end’. 3 Emphasize service teams – getting people to work as a team is an attractive proposition and potentially very effective for delivering quality. However, entrenched attitudes (negative) to work and strong personalities can quite easily prevent the development of a team spirit. The action (or inaction) of management is crucial here. Good employees need to see management doing something about the members of the team who are simply not pulling their weight. 4 Go for reliability – at the heart of excellent service is reliability and it is argued that nothing less than 100 per cent reliability is acceptable:
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Think for a moment about what it would mean in our daily lives if people got things right only 99 per cent of the time: at least 200,000 wrong prescriptions would be processed every year; there would be nine misspelled words on every page of a magazine; we’d all have unsafe drinking water; there would be no telephone service for fifteen minutes every day.10 Reliability has been defined as the ‘ability to perform the promised service dependably and accurately’.11 䊉 䊉
When an organization says it will call you back within fifteen minutes, does it do so? Is your bank statement free of errors? Is your plumbing repaired correctly the first time?
Service organizations should strive towards achieving 100 per cent reliability. However, the existence of certain conditions often impede the service organization in pursuit of that goal, e.g. lack of resources, unpredictable swings in demand levels. 5 Be great at problem resolution – service organizations cannot avoid things going wrong for a customer but it is their reaction to this that is critical. Their response can make things better or very much worse. Customers need to feel that actions are being taken to try to resolve the problem. For large service organizations client dissatisfaction of attempts at problem resolution is a real issue. Customers are categorized and treated by the application of general, abstract rules, without regard for individual needs and situations. The depersonalized behaviour is considered functional because it prevents emotional involvement with the customers’ problems and tends to promote consistency in behaviour throughout the organization. Also, the careful and thorough establishment of rules by the organization makes it possible to delegate substantial authority to people far down in the organization structure. In effect, complex problems can be routinely handled by a person with relatively little training or commonplace ability.
Tools of quality A commitment to quality is enhanced through the use of a range of tools designed for monitoring its delivery and acceptability. The following discussion outlines the most frequently mentioned tools.
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Flowchart Flowcharting is perhaps the simplest yet the most helpful in terms of overall service process improvement. The easiest and best way to understand a process is to draw a picture of it – that’s basically what flowcharting is. It presents information that allows management to analyse the way a service is being delivered. As the format, in terms of the picture, becomes more elaborate, reference is made to a service blueprint or service map (see Chapter 3).
Cause and effect diagram ‘Quality begins with education and ends with education’. These words, attributed to the late Kaoru Ishikawa sum up a principal philosophy of quality. To improve processes, one must continuously strive to obtain more information about those processes and their output. One unique and valuable tool for accomplishing this goal is the cause and effect diagram. The diagram’s purpose is to relate cause and effect. It is also known as the Ishikawa diagram and the fishbone diagram because it resembles the skeleton of a fish.
Other
Equipment
Personnel
Effect
Material
Procedure
Figure 5.6 Cause and effect diagram
All that is required is the identification of an effect and then work backwards in order to attribute the cause(s). The diagram (Figure 5.6) helps managers to focus on a specific problem faced in a quality management context, e.g. late deliveries and to identify the factors contributing to that problem. The versatility of the cause and effect diagram means the words in each box will vary depending on the situation. Consider the case of a service/distribution business that has determined five areas as the main potential causes of dissatisfied customers (Figure 5.7).
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Product quality
Order processing system
Service
Customers are dissatisfied
Order fulfilment
Distribution system
Figure 5.7 The main cause headings. Source: Sarazen (1990)12
After these areas were determined, the next step was to brainstorm all the possible causes of problems in each of the major cause categories. These ideas are captured and applied to the diagram as subcauses. Figure 5.8 shows the completed portion of the diagram for one of the main causes: service. The company identified reliability issues, carrier issues (e.g. a trucking company), poor communications, and lack of, or poor training. The next level of causes was identified by asking the question ‘What would cause a problem in these areas?’ In the case of the poor communications, the company focused on functions and jobs – sales people, field representatives and managers – as potential causes. It can be seen that lack of knowledge of the customer can cause managers to communicate poorly. Subsequently it can be seen that inexperience and
Managers
Service
Inexperience Knowledge of customer
Handling
Training Poor communications
Carrier Sales Contract
Field reps Product
Reliability Training Clear instructions Input errors
Training Phone Customers are dissatisfied
Figure 5.8 A detailed look at the main cause. Source: Sarazen (1990)12
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training can be two key contributors to a manager’s lack of customer knowledge. Thus, there are six levels of causes in this example. Three points should be borne in mind in respect of a cause and effect analysis: 䊉 䊉 䊉
Where difficulties are experienced in creating a diagram for a specific situation, use should be made of the generic diagram (Figure 5.6). All employees with an involvement in the problem should be party to identifying the causes and suggesting solutions. The objective of cause and effect analysis is to determine which of the causal factors are major influences on results. To illustrate this we need a Pareto chart.
Pareto chart The Pareto principle is named after Vilfredo Pareto, a nineteenth-century Italian economist who found that a large share of the wealth was owned by relatively few people. It came to be known as the 80/20 rule which suggests that 80 per cent of any problem or phenomenon is often due to 20 per cent of the possible causes. Therefore, around 80 per cent of most companies’ sales are produced by about 20 per cent of its products. Similarly, in a service context, 80 per cent of service failures may be accounted for by only 20 per cent of causes. A study done for a pizza parlour experiencing problems with its home delivery service revealed possible causes of failure and their contribution in not meeting target response times (Table 5.1). A Pareto chart (Figure 5.9) can be constructed from the survey. It shows three factors (d, f and e) which together account for 70 per cent of the causes. Table 5.1 Causal factors with a Pareto distribution Causes
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Giving order to kitchen Shortage of drivers Slowness in preparation of pizzas Drivers unfamiliar with faster route Breakdowns in delivery vehicles Traffic congestion Weather conditions Slowness in boxing cooked pizzas Extent of catchment area
% contribution to failure in meeting target response times 3 8 3 30 15 25 6 3 7 100
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97 100%
Contribution to failure (%)
40
30
20
10
0 d
f
e
b
i
g
a
c
h
Figure 5.9 Pareto chart – causal factors
Histogram A histogram can also be used to illustrate variations. It is a distribution showing the frequency of occurrences between the high and low range of data. Figure 5.10 shows two histograms illustrating times taken by two organizations to perform a particular service. From the histograms it is clear that the variation of company A’s service process is smaller than B’s. (b) 50
50
40
40
30
30
Frequency
Frequency
(a)
20
10
20
10
0
0 0
10
20 Time (minutes)
30
40
0
10
20
30
Time (minutes)
Figure 5.10 Time taken by two organizations to perform a particular service
40
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The question is why the quality of A’s service performance should be much better than B’s. Possible reasons are better equipment, better trained employees and more effective procedures.
Control charts Variation is a fact of life. In our personal life we are often surprised when the mail does not arrive at the same time every day, complain when the weather forecast is inaccurate and become frustrated when our train does not leave or arrive on time. All processes vary to some extent, e.g. a machine will never give precisely the same result each time it is used: materials will vary a little, operator performance will differ marginally, the environment in which the process takes place will vary. Variations which derive from these common causes can never be entirely eliminated (although they can be reduced). Common cause variation occurs in processes which are essentially stable. A stable process such as order processing time displays a random pattern and its future behaviour is predictable. How much common cause variation occurs will depend on the circumstances. However, the question that needs to be asked is ‘Is this variation in the process performance acceptable? The answer will lead to the determination of what is often called a tolerance or specification range. In other words, an upper and lower control limit will be set within which performance will be allowed to vary and be deemed acceptable. The control chart displays this performance over time against specific quality criteria. Not all variation in processes is the result of common causes. Something may be wrong with the process which is assignable to a particular and ‘preventable’ cause. The causes of such variation are called assignable or special causes. It will appear on the control chart as a point outside the upper or lower control limits. Whereas common cause variation focuses on improving the system, special cause variation requires a problemsolving approach of finding the cause and developing solutions to prevent its recurrence. The upper and lower limits on the control chart usually represent three types of value: 䊉 䊉 䊉
Measurable data, e.g. time spent in a service or time spent waiting for service, order processing time Percentages, e.g. the percentage of orders delivered late or the percentage of customers complaining Counting data, e.g. the number of mistakes in an order, number of complaints
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Number of complaints
Each of the above types of value is represented on the vertical Y axis and the horizontal X axis represents a period of time, e.g. a week, month, year. An example of a control chart for stability testing of customer complaints is shown in Figure 5.11. 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Week
Figure 5.11 Testing for stability: statistical control chart for customer complaints, July–December. Source: Cravens (1988)13
The figure indicates that the process is out of control. First, the number of complaints for week 20 is outside the upper control limit. Second, eight observations beginning in week 17 on the top side of the central time indicate a statistically significant non-random shift in the process average. The control chart upper and lower limits are established by calculating above and below the grand mean. Determining whether or not the process is stable is an essential step in the quality improvement process. Attempting to correct an unstable process provides no assurance that corrective action will improve the process because of the possible counter effects of the variables causing the process to be out of control. In the control chart of Figure 5.11 it was noted that the customer complaint process was out of control. The control chart in Figure 5.12 covers the six month period after correction of the causes of the out-of-control process. The process is now under control, and the average number of complaints has been reduced from 11.3 (Figure 5.11) to 5.7 (Figure 5.12). Also note that the variability of the process has been reduced. This can be
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Number of complaints
11 10 9 8 7 6 5 4 3 2 1 0 1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Week
Figure 5.12 Customer complaints: process under control, January–June. Source: Cravens (1988)13
seen by comparing the upper and lower control limits for Figures 5.11 and 5.12. Before control of the process was accomplished the span between the upper and lower limits was 21; after control the span was reduced to 13. It should be remembered that careful consideration needs to be given to the presentation of key performance indicators to ensure that the results are easily interpreted and not misleading. For example, look once again at Figure 5.11. Although it appears that the number of complaints has increased over the period analysed, the information must be taken in context. The graph would have been a much more useful performance indicator if the number of complaints had been presented in relation to the number of customers taken on over the period. Without an understanding of the customer numbers, we are not in a position to determine whether the rise in customer complaints, as represented in the graph, is a worrying trend or not.
Scatter diagrams In many situations we may come across two sets of data which seem related. These relationships can be non-mathematically evaluated by using a scatter diagram, the Y axis is usually reserved for the characteristic
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101
No. of complaints
Y
X No. of service failures
Figure 5.13 Scatter diagram: strong positive relationship
we would like to predict (the dependent variable) and the X axis for the variable that we are using to make the prediction (the independent variable). Figure 5.13 does seem to show a clear relationship between number of service failures and number of complaints. It could be argued that one would reasonably expect there to be quite a strong relationship between number of service failures and number of complaints, though not always so. Figure 5.14 shows a situation where evidence of a strong relationship is not quite so clear-cut. Factors other than length of service may be better predictors of productivity levels, e.g. willingness to work, financial incentives, competency, etc.
Average productivity
Y
X Length of service
Figure 5.14 Scatter diagram: weak relationship
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Tallies or check sheets A tally or check sheet is perhaps the most commonly used method for collecting and compiling data. A computer will normally do the counting. When working by hand the task can be eased by using the ‘five-bar’ technique.
Method 䊉 䊉 䊉
List the possible categories. Work through the column of data systematically, putting a stroke next to the appropriate category. Every fifth mark should go diagonally across the previous four, as on a gate, to make counting the marks at the end very easy.
Table 5.2 illustrates a tally or check sheet recording the incidence of complaints by subject. Table 5.2 Tally/check sheet Subject of complaint
Number of complaints
Delivery times Installation Company personnel Product
/IIII /IIII /IIII /IIII /IIII /IIII I /IIII III /IIII /IIII
Total II
22 11 8 10 51
Once you have your tally, look at it to see what it tells you. Consider: 䊉 䊉 䊉
Whether the counts are what you expected Which are the most frequently occurring categories Whether looking at percentages would be a good idea
Percentage tallies Table 5.3 Percentage tallies Subject of complaint
Count
Percentage
Delivery times Installation Company personnel Product
22 11 8 10
43 (22/51 ⫻ 100) 21 16 20
51
100
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Cost of quality The cost of quality can be defined as the total of all resources spent by an organization to assure that quality standards are met on a consistent basis.14 Quality costs are grouped into two broad categories with two types in each: 1 Costs of maintaining good quality (a) Prevention costs – the costs incurred to prevent errors from occurring. These are said to include the time and effort spent in recruiting, training and reviewing performance of employees along with determining customer requirements and establishing quality standards. Of the types of quality costs, prevention costs are viewed as of central importance but they have been regarded as double counting because prevention is a normal aspect of any manager’s responsibility. (b) Appraisal costs – costs incurred from inspection, testing and auditing aimed at identifying non-conforming aspects before a service or product is delivered. Prevention and appraisal costs are incurred because poor quality of conformance can exist. 2 Costs of poor service quality (a) Internal failures – these are errors and defects that are caught before they reach the customer. (b) External failures – these are problems identified by the customer and the cost may include any refunds or additional services provided at no cost to the customer. Failure costs are incurred because poor quality of conformance does exist. Cost of quality should be continuously monitored through making use of, amongst other things, the tools of quality. Above all organizations should perform a cost of quality audit which is designed to identify:14 䊉 䊉 䊉
The circumstances, events, activities, and problems that occur within the organization that fall within the categories already mentioned. The frequency with which these circumstances occur. The resources (time, materials, money) devoted to these circumstances and events.
Of course, it has to be remembered that cost of quality was originally developed for a manufacturing context. Transferring it to the service sector is not devoid of problems. However, there are still many aspects of service that can be subjected to a cost of quality analysis. This is particularly true the more standardized the service is as the operating conditions are similar to a manufacturing facility.
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As to what can be done, the following example illustrates cost of quality in a service environment. A large hotel where the average rate is £80 and length of stay is two days undertook a cost and performance review of its front-desk operation. Specifically, the focus was on transactions at the front desk, primarily registration and checking-out procedures. The information was obtained from employee observations. A range of errors was considered in terms of their occurrence and cost (Table 5.4). Table 5.4 Cost of quality calculation. Adopted from Luchars and Hinkin (1996)15 Error type
Hourly wage
Time spent fixing error (hours)
Error occurrence per day
Cost over the year (£) (365 days)
1 When guests check out extra charges on the bill are incorrect
£6
0.085
70
13 030
2 Specific information about a reservation has not been entered into the computer
£6
0.15
25
8 212
3 The reservation for an arriving guest cannot be found in the computer
£6
0.12
15
3 942
4 Guest registers and is not given the requested room type
£6
0.2
3
1 314
5 The guest is checking out and the receptionist cannot find the registration card
£6
0.165
3
1 084
The table reveals that errors 4 and 5 individually are relatively minor. Errors 1 and 2 together comprise nearly 80 per cent of the year’s cost and therefore merit close attention. A Pareto chart (Figure 5.15) can be constructed from the data. These errors are largely external failures as they have not been caught before they reach the customer. External failures can be reworked as is the case in manufacturing industry. For example, a customer can demand warranty repairs on a faulty car. Services are not so amenable to rework as evidenced by a faulty ATM or a bad haircut. Where rework is not possible, some form of compensation may be given. The appraisal costs of inspection and testing are of fundamental importance in manufacturing. Services can equally be inspected and tested prior to consumption. However, the service as experienced by the customer cannot obviously be pre-tested or inspected. Customers, themselves, may
Service quality
105 100
14 000
90 12 000 80
Year cost (£)
10 000
70 60
8 000
50 6 000
40 30
4 000
20 2 000 10 0
0 1
2
3
4
5
6
Errors
Figure 5.15 Pareto chart: error/cost analysis
actually share responsibility for the quality and hence the cost of service. Where a service is one of high contact, customer involvement and uncertainty can impact on cost of quality (see Chapter 1).
Business excellence model In early 1992, the UK Quality Award (UKQA) Committee was established ‘to consider and report . . . on the feasibility of developing a new prestige award for British business’. The proposals were to be in a form suitable for self-assessment, in harmony with the European Quality Award (EQA), launched by the European Foundation for Quality Management (EFQM) in 1992, and incorporate the lessons learnt from the Malcolm Baldridge National Quality Award (MBNQA). The EQA model had been developed from the MBNQA, with the active involvement of UK organizations: to have developed an alternative model for the UKQA could have undermined the worldwide TQM development process. The EQA model with its emphasis on self-assessment and improvement planning was therefore accepted by the committee.16 However, the European award process was not seen as a catalyst to inspire nationally focused businesses, small and medium-sized UK organizations, regional or locally based UK businesses, or the public and voluntary sectors, and therefore there was a need for a new UKQA. This model is now known as a Business Excellence Model, and experience of using the model in a wide range of commercial organizations has shown that it is widely applicable both as a means of assessment and as the basis for planning improvements. The model is
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based on the premise that customer satisfaction, people (employee) satisfaction and impact on society are achieved through leadership driving policy and strategy, people management, resources and processes, leading ultimately to excellence in business results (Figure 5.16). People satisfaction 9%
People management 9%
Leadership 10%
Policy and strategy 8%
Resources 9%
Enablers 50%
Processes 14%
Customer satisfaction 20%
Business results 15%
Impact on society 6% Results 50%
Figure 5.16 The Business Excellence Model. Source: British Quality Foundation, London, 1995
Each of the nine elements of the model is a criterion used to assess an organization’s progress towards excellence. The percentages shown are those used for the purposes of the UK and European Quality Awards. Both the model and the relative weightings were developed following a wide consultation exercise across Europe, and they are annually reviewed for continuing relevance, criterion and subcriterion definition/deletion/ expansion and relative importance. The model is split on an equal basis between the 䊉 䊉
Enabler criteria, concerned with how an organization approaches its business in each of the areas described by the criteria and subcriteria. Results criteria covering what an organization has achieved and is achieving.
The model criteria 䊉
䊉
Leadership. This criterion relates to the behaviour of all managers in as much as how the executive team and all other managers inspire, drive and reflect total quality as the organization’s fundamental process for continuous improvement. Policy and strategy. This criterion reviews the organization’s mission, values, vision and strategic direction. How the organization’s policy and
Service quality
䊉
䊉
䊉
䊉 䊉 䊉 䊉
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strategy reflect the concept and principles of total quality are used in the formulation, deployment, review and improvement of policy and strategy. People management. This criterion studies the management of the organization’s people and how the organization releases the full potential of its people to improve its business and/or service continuously. Resources. This criterion refers to the management, utilization and preservation of resources and how the organization’s resources are effectively deployed in support of policy and strategy. Processes. This criterion analyses the management of all value-adding activities within the organization, how processes are identified, reviewed and revised to ensure continuous improvement of the organization’s business and/or service. Customer satisfaction. Examines what the organization is achieving in relation to the satisfaction of its external customers. People satisfaction. Investigates what the organization is achieving in relation to the satisfaction of its people. Impact on society. Probes what the organization is achieving in satisfying the needs and expectations of the community at large. Business results. Reviews what the organization is achieving in relation to its planned business and/or service objectives and in satisfying the needs and expectations of everyone with an interest in the organization.
A full exposition of the model can be found in the Guides to Self-assessment published by the British Quality Foundation (1995).
Summary Customers desire a quality service but few can agree on a definition. It expresses itself in the service encounter, service design, service productivity and throughout the organization and culture. A model of service quality has been developed to increase our understanding. It states that gaps exist between the service provider and the customer over expectations and perceptions of quality. The message for management is one of managing customer expectations as well as ensuring that what is promised in respect of quality is actually delivered. Apart from the contribution of the model, a good place to start is isolating the causes of poor quality. This will then serve as a basis for taking action to improve it. Improvements will be more detectable if steps are taken to set standards and measure performance against these standards. Monitoring the delivery and acceptability of service quality is now regarded as very important and a range of tools is available for that purpose.
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Equally, organizations are increasingly concerned about the cost of delivering quality. For services this kind of exercise offers up a challenge. The importance attached to the delivery of quality in all kinds of organizations and activities has given rise to a number of awards, in particular the European Quality Award.
References 1. Measuring Up (1986) Public Libraries Paper 3. National Consumer Council, London. 2. Crosby, P. (1996) Quality is still free. McGraw-Hill, New York. 3. Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1985) ‘A conceptual model of service quality and its implications for future research’, Journal of Marketing, 49, Fall, 41–50. 4. Zeithaml, V. A., Parasuraman, A. and Berry, L. L. (1990) Delivering Service Quality, Free Press, New York. 5. Ibid. 6. Liswood, L. (1989) Serving Them Right, Harper & Row, New York. 7. Martin, W. B. (1986) ‘Defining what quality service is for you’, The Cornell HRA Quarterly, February, 32–38. 8. Berry, L. L., Zeithaml, V. A. and Parasuraman, A. (1985) ‘Quality counts in services, too’, Business Horizons, May–June, 44–52. 9. Goodman, J. A., Malech, A. R., Bargatze, G. F. and Ledbetter, C. (1988) ‘Converting a desire for quality service into actions with measurable impact’, Journal of Retail Banking, X(4), 14–22. 10. Berry, L. L., Zeithaml, V. A. and Parasuraman, A. (1990) ‘Five imperatives for improving service quality’, Sloan Management Review, Summer, 29–38. 11. Ibid. 12. Sarazen, T. S. (1990) Quality Progress, July. 13. Cravens, D. W. (1988) ‘Marketing’s role in product and service quality’, Industrial Marketing Management, 17. 14. Bohan, G. P. and Horney, W. F. (1991) ‘Pinpointing the real cost of quality in a service company’, National Productivity Review, Summer. 15. Luchars, J. Y. and Hinkin, T. R. (1996) Cornell Hotel and Restaurant Administration Quarterly, February. 16. Henderson/Quality Award Committee (1992) Report on the Feasibility of a New UK Total Quality Award, DTI.