PAUL GEMMEL BART VAN LOOY ROLAND VAN DIERDONCK SERVICE MANAGEMENT THIRD EDITION An Integrated Approach SERVICE MANAGEMENT An Integrated Approach Third Edition Service Management An Integrated Approach Edited by Paul Gemmel Bart Van Looy Roland Van Dierdonck Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearson.com/uk First published in Great Britain in 1998 Second edition published 2003 Third edition published 2013 © Financial Times Professional Limited 1998 © Pearson Education Limited 2003, 2013 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6−10 Kirby Street, London EC1N 8TS All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners Pearson Education is not responsible for the content of third-party Internet sites ISBN 978-0-273-73203-7 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book is available from the Library of Congress 10 16 15 14 13 Typeset in 9.5/12.5pt Charter ITC Std by 35 Printed by Ashford Colour Press Ltd., Gosport Brief Contents Contents List of figures List of tables List of exhibits About the authors Preface Acknowledgements Publisher’s acknowledgements vii xiii xvi xviii xx xxiv xxvii xxviii Part One Defining services 1 The nature of services The nature of service management 23 The service concept 37 Part Two Designing services 53 Service process design 55 Designing human resources practices that matter for service organizations 75 (Information) technology and services 105 The role of facilities management in designing the service experience 135 Service branding and promotion 158 Pricing services 174 Part Three Delivering services 199 10 Capacity management 202 11 People practices that enable delivery 246 12 Customer attitudes and behaviours towards service firms 280 13 Performance measurement systems in service firms 303 14 Service guarantees and service-level agreements 338 v Brief Contents Part Four Developing services 15 Managing innovation in a service environment 361 16 Developing sustainable strategies 387 17 Managing services across national boundaries 411 18 Servitization: or why services management is relevant for manufacturing environments 430 Technical notes Appendix Index vi 359 443 490 492 Contents List of figures List of tables List of exhibits About the authors Preface Acknowledgements Publisher’s acknowledgements xiii xvi xviii xx xxiv xxvii xxviii Part One Defining services Bart Van Looy, Paul Gemmel The nature of services Steven Desmet, Bart Van Looy, Paul Gemmel, Roland Van Dierdonck Objectives Introduction The growing importance of services Services: what makes them special? A closer look at services The role of service classifications Conclusion Review and discussion questions Suggested further reading Notes and references The nature of service management 3 10 15 20 20 21 21 23 Paul Gemmel, Bart Van Looy Objectives Introduction The nature of service management The nature of the interaction The nature of the interaction and service management The interaction between employees and customers in the service chain Conclusion Review and discussion questions Suggested further reading Notes and references The service concept 23 23 24 25 27 30 34 35 35 36 37 Paul Gemmel, Bart Van Looy Objectives 37 vii Contents Introduction Why we need a service concept? How to define the service concept Implementing the service concept Conclusion Review and discussion questions Suggested further reading Notes and references 37 39 42 43 50 50 51 51 Part Designing services Paul Gemmel, Bart Van Looy Service process design 55 Paul Gemmel Objectives Introduction Defining the service process Designing the service process Conclusion Review and discussion questions Suggested further reading Notes and references Designing human resources practices that matter for service organizations 55 55 57 62 70 72 72 72 75 Bart Van Looy, Koen Dewettinck, Dirk Buyens, Walter Stevens, Dries Faerns Objectives Introduction The nature of services Human resource management for services Competencies for service organizations Role stress among front-line employees Relevance of role stress for the service encounter Role stress defined Handling role stress for front-line employees Conclusion Review and discussion questions Suggested further reading Notes and references (Information) technology and services 75 75 77 78 89 92 93 93 96 100 101 102 102 105 Bart Van Looy, Wilfried Grommen, Wim Grielens, Niels Schillewaert, Pedro Matthÿnssens Objectives Introduction viii 105 105 Contents The network era – Where we stand? The impact of IT developments on service encounters Action strategies for the new media Conclusion Review and discussion questions Suggested further reading Notes and references The role of facilities management in designing the service experience 106 111 125 130 131 131 132 135 Paul Gemmel, Roland Van Dierdonck, Steven Desmet Objectives Introduction The nature of facilities management in services Back office versus front office Location Designing the servicescape From facilities management to service experience design Conclusion Review and discussion questions Suggested further reading Notes and references Service branding and promotion 135 135 137 138 141 147 153 154 155 155 155 158 Paul Gemmel, Patrick De Pelsmacker, Joeri Van Den Bergh Objectives Introduction Service branding Promoting services Conclusion Review and discussion questions Suggested further reading Notes and references Pricing services 158 158 160 162 171 171 172 172 174 Marion Debruyne Objectives Introduction Developing a framework for pricing decisions Pricing objectives Pricing strategies Pricing structure Pricing levels and tactics Conclusion Review and discussion questions Suggested further reading Notes and references 174 174 175 177 179 191 195 196 197 197 198 ix www.freebookslides.com Part Three Delivering services A well-designed complaint management system allows for service recovery, and service recovery in itself is a big opportunity to make customers even more loyal than those consistently satisfied with the firm’s service Customer retention through effective complaint management creates more value than attracting new customers Customers who not complain cannot be recovered (see also Chapter 12) These customers tell everyone how bad the service is, and it is these customers who can deeply damage the business In Technical note we show how a complaint management system can be set up As already stated, the different types of customer feedback give service managers many gems to improve their system and recover from service problems In other words, setting up a performance measurement system to capture customer feedback will only pay off when this performance information leads to actions to improve and recover the services (see Chapter 12) Customers and employees interact with each other during the process of service delivery It is quite clear that the performance of the service delivery process will strongly influence the satisfaction (and hence retention) of customers and employees Therefore, it is important to measure and assess the process performance Assessing process performance Employees perform activities that constitute the service process It is clear that the performance of the processes is determined by the performance of the employees in this process However, focusing on the individual employees is not enough: organizations should also consider how people interact in the process This is also a function of the other resources: tangible resources, such as equipment or building, but also the information provided It is also a function of the way the various activities interact, how the processes are designed, and how the processes are perceived by the customers The design of processes has been discussed in Chapter A well-accepted framework to evaluate processes and operations recognizes five performance objectives: quality, cost, speed, dependability and flexibility17 (see Figure 13.5) We will discuss each of these performance objectives in a service context Figure 13.5 Five operational performance measures Source6ODFN1&KDPEHUV$DQG-RKQVWRQ5 Operations ManagementWKHGLWLRQ3HDUVRQ(GXFDWLRQ/WG  www.freebookslides.com Chapter 13 Performance measurement systems in service firms As speed and dependability are time-related performance objectives, we discuss them together under the label ‘time-based performance’ As cost is related to productivity, we will focus on service productivity Quality: doing things right Service quality and the measurement of service quality has been one of the most researched and discussed topics in service management Service quality as perceived by the customer may differ from the quality of the service actually delivered A patient can be very dissatisfied about a visit to a doctor because he felt that the doctor did not spend enough time communicating the diagnosis of a fatal disease The patient could not understand how the doctor could take only two minutes to give a lifechanging diagnosis Nonetheless, from a medical point of view, the diagnosis was totally correct This leads to the distinction between technical quality, or ‘what’ is perceived by the customer, and ‘functional’ quality, or ‘how’ a service is provided: Ł7KHODWWHU>IXQFWLRQDOTXDOLW\@LVWKHPRVWFULWLFDODVSHFWDQGLVFRQFHUQHGZLWKWKHSV\FKRORJLFDO LQWHUDFWLRQWDNLQJSODFHGXULQJWKHH[FKDQJHWUDQVDFWLRQ,WLVEDVHGRQWKHFXVWRPHUłVSHUFHS WLRQ DQG LV WKHUHIRUH H[WUHPHO\ VXEMHFWLYH DQG HQFRPSDVVHV DOO WKH FXHV WKDW WKH FXVWRPHU SLFNVXSGXULQJWKHWUDQVDFWLRQł These cues not only emanate from the server but are also based on perceptions of the whole service environment (see Chapter 7) Passengers on the Titanic were delighted with the ship’s accommodation If the ship had reached its destination, many passengers would have been satisfied customers But, as we all know, the ship sank due to the crew’s lack of competence in navigating such a large ship through an ocean full of icebergs If nothing had happened, this lack of competence (an aspect of technical quality) would never have been perceived by the customer Therefore, it is argued that measuring service quality cannot end with measuring customer satisfaction Technical quality, which is based on the ability of people and the service system to deliver good (professional) quality, must also be monitored In the manufacturing industry, monitoring process capability is one of the oldest basic principles of quality management In the service industry, process capability is considered in a very limited way due to the fact that the variability of processes is taken for granted Nevertheless, we believe that technical quality is a major issue in many service environments, and we have therefore spent a separate chapter on designing processes (see Chapter 4), and have emphasized the role of employees in realizing a service quality experience The distinction between customer satisfaction and service quality is a very important one Service quality is a form of attitude representing a long-run, overall evaluation, whereas satisfaction represents a more short-term, transaction-specific judgement The level of customer satisfaction is the result of a customer’s comparison of the service quality expected in a given service encounter with perceived service quality This also means that satisfaction assessments require customer experience while quality does not.19 Many researchers have tried to discover which dimensions influence the quality, as perceived by the customers Not only did they try to identify these dimensions, but they also tried to assign relative weights to these dimensions In an ideal model, the various dimensions should be a comprehensive set: it should be possible to explain differences in quality perceptions as a result of differences in one or more quality dimensions The model should also be universal – that is, the various dimensions should be valid, albeit with different weights, across a wide spectrum of services The dimensions should further be independent,   www.freebookslides.com Part Three Delivering services or at least measure different aspects of service quality perception They should also be homogeneous and unambiguous Finally, the number of dimensions should be limited We have to admit from the start that the ideal model meeting all these criteria does not exist yet; however, we shall describe one model that seems to be widely accepted: the servqual model The Servqual model was developed by Parasuraman, Zeithaml and Berry,20 and has been presented as a service quality measurement instrument Originally, these researchers listed ten determinants or dimensions of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding/knowing the customer and tangibles Exhibit 13.1 defines each of these dimensions and gives some examples This list was drawn up as a result of focus group studies with service providers and customers Later, the researchers found a high degree of correlation between communication, competence, courtesy, credibility and security and, therefore, merged them into one dimension, which they called assurance Similarly, they found a high correlation between access and understanding, which they merged into empathy Exhibit 13.1 Ten components of service quality 5HOLDELOLW\LQYROYHVFRQVLVWHQF\RISHUIRUPDQFHDQGGHSHQGDELOLW\,WDOVRPHDQVWKDWWKH ILUPSHUIRUPVWKHVHUYLFHULJKWWKHILUVWWLPHDQGNHHSVLWVSURPLVHV6RPHVSHFLILFH[DP SOHVLWPD\LQYROYHDUH ● DFFXUDF\LQELOOLQJ ● SHUIRUPLQJWKHVHUYLFHDWWKHGHVLJQDWHGWLPH 5HVSRQVLYHQHVVFRQFHUQVWKHZLOOLQJQHVVRUUHDGLQHVVRIHPSOR\HHVWRSURYLGHVHUYLFH ,WPD\LQYROYH ● PDLOLQJDWUDQVDFWLRQVOLSLPPHGLDWHO\ ● FDOOLQJWKHFXVWRPHUEDFNTXLFNO\ ● JLYLQJSURPSWVHUYLFHHJVHWWLQJXSDSSRLQWPHQWVTXLFNO\  &RPSHWHQFH PHDQV SRVVHVVLRQ RI WKH VNLOOV DQG NQRZOHGJH UHTXLUHG WR SHUIRUP WKH VHUYLFH,WLQYROYHV ● NQRZOHGJHDQGVNLOORIWKHFRQWDFWSHUVRQQHO ● NQRZOHGJHDQGVNLOORIRSHUDWLRQDOVXSSRUWSHUVRQQHO ● UHVHDUFKFDSDELOLW\RIWKHRUJDQL]DWLRQ $FFHVVLQYROYHVDSSURDFKDELOLW\DQGHDVHRIFRQWDFW,WPD\PHDQ ● WKHVHUYLFHLVHDVLO\DFFHVVLEOHE\WHOHSKRQH ● ZDLWLQJWLPHWRUHFHLYHVHUYLFHLVQRWH[FHVVLYH ● FRQYHQLHQWKRXUVRIRSHUDWLRQDQGFRQYHQLHQWORFDWLRQRIWKHVHUYLFHIDFLOLW\ &RXUWHV\LQYROYHVSROLWHQHVVUHVSHFWFRQVLGHUDWLRQDQGIULHQGOLQHVVRIFRQWDFWSHUVRQ QHOLQFOXGLQJUHFHSWLRQLVWVWHOHSKRQHRSHUDWRUVHWF ,WLQFOXGHV ● FRQVLGHUDWLRQIRUWKHFXVWRPHUłVSURSHUW\ ● FOHDQDQGQHDWDSSHDUDQFHRISXEOLFFRQWDFWSHUVRQQHO 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7DQJLEOHVLQFOXGHWKHSK\VLFDOHYLGHQFHRIWKHVHUYLFH ● SK\VLFDOIDFLOLWLHVDQGDSSHDUDQFHRISHUVRQQHO ● WRROVRUHTXLSPHQWXVHGWRSURYLGHWKHVHUYLFH ● SK\VLFDOUHSUHVHQWDWLRQVRIWKHVHUYLFHVXFKDVDSODVWLFFUHGLWFDUG Source%XWWOH)UDQFLV Ł6HUYTXDOUHYLHZFULWLTXHUHVHDUFKDJHQGDłEuropean Journal of Marketing 9RO1RSSŋ This has led to the well-known and widely used five dimensions of service quality, the so-called RATER dimensions: ● Reliability – consistency of performance and dependability This means that the firm performs the service correctly the first time and that the firm honours its promises ● Assurance – knowledge and courtesy of employees and their ability to inspire trust and confidence ● Tangibles – the appearance of physical facilities, the personnel, the tools or equipment used to provide the service and communication material ● Empathy – caring, individualized attention to customers ● Responsiveness – the willingness to help the customer and to provide prompt service The researchers claimed that the dimensions were sufficiently generic that they could cover a wide spectrum of service sectors Since this pioneering work, many others have tried to duplicate these findings in a variety of service settings Some researchers have confirmed these findings and, therefore, the model; however, most failed to so It was particularly difficult to find the same five generic quality dimensions – that is, the various sub-dimensions did not aggregate as in the Parasumaran et al studies Furthermore, the comprehensiveness of the five dimensions could not always be supported In other words, it was doubted whether the service quality construct could be   www.freebookslides.com Part Three Delivering services composed of five dimensions One study suggests that the Servqual dimensions are likely to be industry specific.21 The criticism voiced of the Servqual dimensions was also related to more fundamental methodological issues and even conceptual issues, such as the presence of conceptual inconsistency in the dimensions ‘Tangibles’ and ‘responsiveness’, for instance, are entirely different concepts Tangibles are part of the service package but are not a quality dimension The ‘quality’ of the tangibles (their appearance, availability, operating characteristics such as comfort, etc.) no doubt influences the perceived quality just as much as the ‘quality’ of the personnel (their appearance, competence, care, etc.) Like personnel, tangibles are not a quality dimension but an important quality-determining element influencing dimensions such as reliability, credibility and others Another conceptual problem is related to the homogeneity of the generic dimensions For instance, it is difficult to understand how ‘factors’ like courtesy and competence would always correlate and, therefore, be grouped into one category, as they are both such different concepts.22 Another important comment about the Servqual tool is that expectations can mean many different things to customers Customers who have experienced the service in the past believe (predict) what actually will happen in their encounter (‘predictive expectations’); other customers expect a minimum level of performance they are willing to accept (‘adequate expectations’); still others expect the service to be delivered on a level equal to that of an excellent organization (‘excellence expectations’) These different kinds of expectation make it difficult to analyse the Servqual results in an unambiguous way One outcome of this discussion is the development of ‘a performance-only’ survey, which only measures perceptions (the so-called Serperf measures).23 One study, comparing the Servqual and Servperf scales, draws attention to the importance of recognising the most suitable method for a service-specific research question rather than imposing a well-known measurement scale or technique that may not suit the purpose.24 Although researchers disagree about the manner in which service quality perceptions should be measured, they seem to agree that service quality is a multi-dimensional higherorder construct comprising several overarching service quality domains such as technical quality, functional quality and environmental quality.25 Notwithstanding its many criticisms, the Servqual tool has been adapted to measure service quality in a variety of service settings such as healthcare, retail chains, banks, fastfood restaurants, etc Exhibit 13.2 shows one example of an adaptation of the Servqual tool to measure service quality in an ambulatory care (outpatient) nuclear medicine clinic Exhibit 13.2 Measuring service quality at an outpatient nuclear medicine clinic $ VXUYH\ FRPSULVLQJ  TXHVWLRQV ZDV WDNHQ WR PHDVXUH SDWLHQWVł SHUFHSWLRQ RI VHUYLFH TXDOLW\RQDSRLQWVFDOH7KHVXUYH\ZDVEDVHGRQWKHRULJLQDO6HUYTXDOLWHPV$OWRJHWKHU  SDWLHQWV UHFHLYHG WKH TXHVWLRQQDLUH RI ZKLFK  ZHUH FRPSOHWHG DQG UHWXUQHG UHVSRQVHUDWH 8VLQJIDFWRUDQDO\VLVLWEHFDPHFOHDUWKDWWKHLWHPVFRXOGEHJURXSHG LQWR ILYH GLPHQVLRQV 7DEOH  VKRZV WKHVH GLPHQVLRQV WKH GLIIHUHQW LWHPV DQG WKH DYHUDJHDQGWKHVWDQGDUGGHYLDWLRQRIWKHLUVFRUHVRQWKHGLPHQVLRQV)RXULWHPVZHUHQRW UHWDLQHGLQWKHDQDO\VLVGXHWRDODUJHQXPEHURIPLVVLQJYDOXHV  www.freebookslides.com Chapter 13 Performance measurement systems in service firms Table 13.1 The results of a Servqual perception measurement in a nuclear medicine clinic Item analysis of patients’ service quality perception Item in each dimension Mean and standard deviation (SD) of patients perceptions Tangibles-Assurance +DVXSWRGDWHHTXLSPHQW 3K\VLFDOIDFLOLWLHVDUHYLVXDOO\DSSHDOLQJ (PSOR\HHVDUHQHDWLQDSSHDUDQFH 3K\VLFDOIDFLOLWLHVLQDFFRUGDQFHZLWKVHUYLFH 6KRZVVLQFHUHLQWHUHVWLQVROYLQJ\RXUSUREOHPV (PSOR\HHVFDQEHWUXVWHG )HHOVVDIHLQ\RXULQWHUDFWLRQZLWKHPSOR\HHV 6' 6' 6' 6' 6' ...SERVICE MANAGEMENT An Integrated Approach Third Edition Service Management An Integrated Approach Edited by Paul Gemmel Bart Van Looy Roland Van Dierdonck Pearson Education... Capacity management 202 Roland Van Dierdonck, Paul Gemmel Objectives Introduction Capacity and capacity management Planning capacity Scheduling capacity Managing the demand side The psychology and managerial... Competence Management Research Centre at the Vlerick Leuven Ghent Management School and is preparing a Master’s Programme on European human resource management Roland Van Dierdonck is a civil and industrial