ASSESSMENT AND DESIGN OF SERVICE SYSTEMS:MANAGEMENT OF SERVICE QUALITY

MANAGEMENT OF SERVICE QUALITY

Service Quality Models

ISO 8402 defines quality as ‘‘the totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs.’’ The standard explicitly applies to services, too, but it leaves space for interpretation. Therefore, some different notions of quality have emerged, depending on the sci- entific discipline or practical objective under consideration. Those notions can be grouped into five major approaches (Garvin 1984) and can be applied to goods as well as to services:

• The transcendent approach reflects a ‘‘common sense’’ of quality, defining it as something that is ‘‘both absolute and universally recognizable, a mark of uncompromising standards and high achievement’’ (Garvin 1984). Therefore, quality cannot be defined exactly, but will be recog- nized if one experiences it.

• The product-based approach links the quality of an item to well-defined, measurable properties or attributes. Therefore, it can be assessed and compared objectively by comparing the values of those attributes.

• The user-based approach focuses exclusively on the customer’s expectations and therefore de- fines quality as the degree to which a product or service satisfies the expectations and needs of an individual or a group.

• The manufacturing-based approach derives quality from the engineering and manufacturing processes that deliver the product. Quality equals the degree to which a product meets its specifications.

• The value-based approach relates the performance of a product or service to its price or the cost associated with its production. According to this notion, those products that offer a certain performance at a reasonable price are products with high quality.

While the relevance of the transcendent approach is only theoretical or philosophical, the other approaches do influence quality management in most companies. Normally, they exist simultaneously in one organization: while the marketing department applies a user-based approach to quality, the manufacturing and engineering departments think of quality in a product- or manufacturing-based manner. The coexistence of the two views carries some risk because it might lead to diverging efforts in assuring product quality. On the other hand, today’s competitive environment requires a combi- nation of the different definitions (Garvin 1984) because each of them addresses an important phase in the development, production, and sale of a product. First, expectations and needs of the targeted customers have to be analyzed through market research, which requires a customer-based approach to quality. From those requirements, product features have to be derived such that the product meets the customers’ expectations (product-based approach). Then the production process must be set up and carried out in a way that ensures that the resulting product in fact bears the desired characteristics. This implies that the production process should be controlled with respect to quality goals and therefore a manufacturing-based approach. Finally, the product is sold to its customers, who assess it against their expectations and express their satisfaction or dissatisfaction. The product specifications will eventually be modified, which again calls for a customer-based approach.

Because most definitions of service quality are derived from marketing problems, they reflect more or less the customer-based approach or value-based approach. There are several reasons for this one-sided view of service quality. In general, services do not bear attributes that can be measured physically. Furthermore, the customer is involved in the service-delivery process, so process standards are difficult to define. Additionally, the understanding of quality has moved from the product- and process-based view towards the customer- and value-based view in almost all industries, equaling ‘‘quality’’ and ‘‘customer satisfaction.’’ Therefore, the customer- and value-based approach has been used predominantly in recent research on service quality.

The most fundamental model for service quality that influences many other approaches is derived from Donabedian’s dimensions, namely structure, process, and outcome (Donabedian 1980). Quality of potentials includes material resources and people, for example, the capability of customer agents. Process quality includes subjective experiences of customers (e.g., the friendliness of employees) during the service-delivery process, as well as criteria that can be measured exactly (e.g., the time needed for answering a phone call). In comparison to manufacturing, process quality has an even greater impact for services. A service-delivery process that is designed and performed extremely well ensures, as in manufacturing, the quality of its final outcome. Additionally, to the customer, the process is part of the service because the customer may observe it or even participate in it. The quality of the outcome of a service is the third component of service quality. It reflects the degree to which the service solves the customer’s problems and therefore satisfies his or her needs and expectations.

Many models for service quality are derived from the concept of customer satisfaction. According to this notion, service quality results from the difference between the customers’ expectations and their experiences with the actual performance of the service provider. If the expectations are met or even surpassed, the quality perceived by customers is good or very good, otherwise the customers will remain dissatisfied and rate the service quality as poor.

Based on this general assumption, several approaches to service quality aim at explaining the reasons for customer satisfaction (and therefore for service quality). This provides a basis for mea- suring the outcome quality of a service. Unfortunately, there are hardly any concepts that link the measurement of customer satisfaction or service quality to methods that influence it during service design or delivery. A first step towards this connection is the gap model, developed by Parasuraman et al. (1985) based on results from empirical research. The gap model identifies five organizational gaps within the process of service design and delivery that cause deficits in quality, leading to dissatisfied customers. The gaps occur in the following phases of the process:

• Gap 1 results from the fact that the management of the service provider fails to understand the customers’ expectations correctly.

• Gap 2 denotes the discrepancy between management’s conceptions of customers’ expectations and the service specifications that are derived from it.

• Gap 3 is caused by a discrepancy between service specifications and the performance that is delivered by the service provider.

• Gap 4 consists of the discrepancy between the delivered perfomance and the performance that is communicated to the customer.

• Gap 5 is the sum of gap 1 through 4. It describes the discrepancy between the service the customer expected and the service that he or she actually experienced.

According to Parasuraman et al., customer satisfaction (i.e., gap 5) can be expressed in terms of five dimensions: tangibles, reliability, responsiveness, assurance, and empathy (Parasuraman et al. 1988). These dimensions are the basis for the SERVQUAL method, which is an well-known method for measuring the quality of services through assessing customer satisfaction. The following section addresses different approaches for measuring service quality.

Measuring Service Quality

Methods for the measurement of service quality are used during and after the delivery of a service in order to assess the customer’s satisfaction and quality perception. They can be compared to quality tests in manufacturing, but there are some significant differences: service quality cannot be assessed by measuring physical attributes, and therefore some immaterial criteria that are related to quality have to be defined. Furthermore, if defects are detected, they generally cannot be ‘‘repaired’’ as can be done in case of material goods, since the customer normally participates in the service delivery process and therefore witnesses defects as they occur. Therefore, the main objective of measuring service quality is improving it on a mid- or long-term base rather than detecting and repairing defective units.

Depending on the chosen approach (see Section 3.1) service quality can be measured from the customer’s and the service provider’s point of view. Measuring from the service provider’s point of view involves gathering data that are internally available, such as performance measures or quality cost (Eversheim 1997). They can be analyzed using well-known methods from quality management in manufacturing processes, such as statistical process control (Gogoll 1996). In addition, service quality can be assessed indirectly by an overall analysis of the quality system, which is done by a

quality audit or quality assessment. Those provide information regarding the capability of a service provider to deliver quality services rather than information about the quality of a specific service. Therefore, they are based on the assumption that there is a correlation between the quality of the structure and processes, on the one hand, and the outcome, on the other hand.

There are two basic approaches for measuring service quality from the customer’s point of view. Both of them are based on assessing customer satisfaction.

Multiattribute methods are based on the assumption that the quality perception of customers is determined by assessing distinctive attributes of the particular service. With regard to each attribute, the customer compares the expected and the received quality. The overall judgment then results from a weighted addition of those comparisons. The most prominent example of this type of method is SERVQUAL (Parasuraman et al. 1988), a multiple-item scale consisting of 22 items grouped into five dimensions.

Another group of methods uses the assessment of service encounters or moments of truth (i.e., the contact between customers and the service provider) for measuring service quality. An example of those methods is the critical incident technique (Bitner et al. 1990). This method uses structured interviews to gather information about customers’ experiences that have roused either very negative or very positive emotions. From those interviews, the most relevant problem areas are determined. This type of method allows the customer to describe the service encounter from his or her point of view instead of assessing it by predefined criteria. The method normally leads to the most significant causes of service failures.

Besides those activities that are initiated by the service provider, systematic analysis of customer complaints yields valuable information about quality problems. Typically, only a very small per- centage of dissatisfied customers do complain, while most of them just buy from a competitor without further notice (Heskett et al. 1997). Effective complaint management therefore requires that the cus- tomer be encouraged to complain and that communication between customer and service provider be facilitated as much as possible. Customers whose complaints are treated in a satisfying manner often reward the service provider with increased loyalty (Reichheld 1997). Therefore, defective ser- vices can be ‘‘repaired’’ to a certain degree, which is normally described by the concept of service recovery (Heskett 1997)

Design of Service Processes

In addition to customer satisfaction, the process dimension of service quality has been addressed by numerous researchers and practitioners.

An important tool for service process design and management is the service blueprinting method, originally described in Shostack (1984). Service blueprinting subdivides each process into process steps, which are perceived by the customer directly, and supporting activities, which are necessary to deliver the service but are only perceived indirectly. The two areas are separated by a ‘‘line of visibility.’’ This differentiation is extremely important for customer-oriented service development processes because it permits concentration on the design of the customer interface at a very early stage. Service blueprinting was subsequently modified and named ‘‘service mapping’’ (Kingman- Brundage 1995). This method most notably includes two new lines of interaction. The first of these, the line of external interaction, subdivides the process as perceived by the customer into activities that are performed by the customer personally and activities in which the customer participates but which are in fact performed by the employees of the company offering the service. The second line, the line of internal interaction, differentiates between processes delivered by the supporting ‘‘back office’’ and those provided either by other companies or by other departments in the same company. Service blueprinting and service mapping are especially useful for service planning because they help identify potential errors very early on. Furthermore, they can be used as training material for em- ployees and customers. Figure 3 shows an example of a service blueprint.

Resource-Related Quality Concepts

Approaches to service quality that apply to the structure dimension can be subsumed under the heading ‘‘resource concepts.’’ These include, most importantly, human resources concepts (especially qualification concepts), as well as the infrastructure necessary to deliver the service and service- support tools in the form of suitable information and communication technologies. The analysis of customer–employee interaction is crucial to enable appropriate recruiting and qualification of the employees who are to deliver the service.

Two questions arise immediately in regard to human resource management in services.

• There is an ongoing debate on whether the knowhow required for running a service system should be put into people or into processes. The job enlargement approach requires significant effort in recruiting, training, and retaining the kind of employees who are able to ensure high

quality through personal effort and skills. The production line approach tries to ensure service quality by elaborated process design, therefore calling for lower requirements from the work- force involved.

• The management of capacity is crucial in services because they cannot be produced ‘‘on stock.’’ This calls for concepts that enable a service provider to assign the employees in a flexible way.

Role concepts are one way to deploy human resources during the service-delivery phase (Frings and Weisbecker 1998; Hofmann et al. 1998) that addresses both questions described above. ‘‘Roles’’ are defined groups of activities within the framework of a role concept. The roles are then linked to employees and customers. It is possible for several employees or several customers to perform one and the same role and for one employee or one customer to perform several different roles. Role concepts are a particularly useful tool for simplifying personnel planning, for instance in connection with the selection and qualification of the employees who will later be required to deliver the service. Most importantly, potential bottlenecks in the service-delivery phase can be identified extremely early on and suitable action taken to avoid them. Moreover, role concepts provide a starting point for formulating tasks in the area of work planning and enable customer behavior to be analyzed and planned prior to the service-delivery process. Finally, the use of roles does not imply any direct relationship to fixed posts or organizational units, and the concept is thus extraordinarily flexible.