Mgw 3352 - Service Operations Management

THE SERVICE ENCOUNTER

As previously mentioned, one of the unique characteristics of service delivery is the active participation of customers in the service delivery process.  Every service encounter involves some sort of interaction between the service organization, the service provider and the customer.  The service encounter triad is a mechanism which can be used to identify the relationships that exist between these entities in a service encounter (Fitzsimmons, 2004).  If an encounter is dominated by the service organization, the discretion of contact personnel is likely to be limited in order to standardize the service (e.g. McDonalds).  When a service provider dominates an encounter, the customer generally has no control and is completely dependant on the provider (e.g. doctor / patient relationship). The third situation has two possible variations and occurs when an encounter is dominated by a customer.  A customer may solely control the situation (e.g. withdrawing cash from an ATM) or they can instruct the service provider as to the direction in which they wish to proceed (e.g. selecting model of house for builder to construct). Ideally, a service encounter should have a balance of control evenly distributed amongst the three entities.  While each entity has different requirements, each can be achieved if they operate as a cohesive unit instead of trying to dominate each other.  The service encounter triad is particularly useful for a manager when determining the level of customer participation in the service delivery process as it can establish the individual role each customer is required to fulfill.                    

PARTICIPATION AND ROLE OF CUSTOMER

Traditionally, customer participation has been measured on the relevance of the service to the consumer and not how the consumer can contribute to the process (Hsieh, 2003).  However, a better accepted view is that customer participation is a behavioural concept that refers to the information, knowledge and physical labour that a customer can contribute to the process of service delivery (Hee Yoon, 2004).  Customer participation can be broken down into three broad dimensions: information sharing, personal interaction and responsible behaviour (Ennew, 1997).  Service providers are required to provide customers with information as a basic necessity of their role and more importantly, customers are required to share information with the service providers to ensure their needs are met.  The second element to participation is personal interaction which is a broad concept which encompasses issues such as trust, reliability, flexibility and commitment (Ennew, 1997).  The third component to participation is responsible behaviour, which is essentially the notion that both service providers and customers share responsibilities to each other within the scope of their relationship.  This point leads into the argument that customers should be viewed as “partial employees” in the service delivery process as they can supply labour and knowledge to the service creation process (Hsieh, 2003).        

Customers are frequently active participants in the service process and are often required to either physically be present or provide information as a precursor to the event (Hsieh, 2003).  Some customers are prepared to play just a physical role such as filling up at the petrol station whereas others interact personally with employees and other customers.  The level of activity can vary greatly from customers who simply turn up and that is the extent of their participation, to customers who become actively involved as co producers (Claycomb, 2001). When customers become physically involved, they take over roles that were previously carried out by the service provider and can reduce the perceived workload in the process.  This belief is supported by Lovelock and Young (1979) who suggested that if customers could assume a more active role in the service delivery process, they would essentially remove some of the labour from the organization.  

Service organizations that utilize customers as co producers can gain competitive advantages such as increased efficiency, increased customer satisfaction, reduced marketing costs through positive word of mouth publicity and greater sales volume.  As a consequence of co-production, customers who choose to have a reduced level of participation can have a negative impact on the service delivery (Claycomb, 2001).  An example of this would be shareholders at a board meeting not putting their views forward and their opinions being overshadowed as a result.  Ultimately, the level of participation customers provide influences the service outcomes that are important to them and the organization.  However, in order for this participation to occur, an organization must adequately train their customers to act in a manner which will be beneficial to both parties.  This is a key element in the following section which discusses the design implications a service organization must consider when increasing employee participation.

ORGANISATIONAL DESIGN CONSIDERATIONS

The design of a service delivery process is the most important aspect of an organization’s drive for increased customer participation.  Progressive service operation managers can design and manage services to account for customers own efforts and forms of service participation aimed at maximizing customer satisfaction (Youngdahl, 2002).  Most firms in the modern economic environment provide “service packages” which include a mixture of physical items, explicit services and implicit services (Murdick, 1990).  These “service packages” can be integrated into the planning stage of the design process.  The key to the effective design of a service delivery process is to identify the needs of the customer and the capacity of the service providers.  This process can be simplified into four basic steps: accumulating information, developing conceptual alternatives, designing and testing prototypes and developing final design (Murdick, 1990).  The accumulation of information can come from internally or customers providing knowledge and opinions.  The second step is the development of conceptual alternatives which are essentially ideas that have not yet been implemented.  An example of this would be to have automatic check-in tellers at airports so passengers could check themselves in without requiring service providers.  The third step involves design and testing of the concepts to determine their likelihood of success.  The final step is the design and specifications of the service delivery process.  

The level of customer participation at different stages can have a significant effect on the efficiency of the process.  For example, when a customer takes part in the design process, the service provider is likely to offer a range of services to the customer who in turn will determine the services he or she will receive.  When the customer only participates in the delivery of the service, the provider normally provides a standard design which is aimed at providing a number of customer’s with similar experiences.  The final and most effective way to increase customer participation is to involve the customer in both the design and the delivery of the service.  This would allow both parties to interact together and work towards a united goal that satisfies the desires of the provider and the customer.  

When considering the design of a service delivery process, it is worthwhile taking into consideration that in order for customers to effectively increase their participation, they must be adequately trained and possesses the skills, knowledge and attitudes that will allow them to interact in any service encounter (Claycomb, 2001).  Broderick (2002) identifies that an organization must actively encourage customers to learn firm-specific values, develop knowledge and skills and acquire knowledge that will enable them to interact with other service providers and customers.  An example of this would be information sessions to inform members of a gym of the new facilities on offer.  As a result of this training and personal attention, customers will have a clearly defined role in the process and will be more inclined to participate in the service delivery process.  

NEGATIVE RESEARCH FINDINGS

The biggest issue an organization may face with an increase in customer participation is the difficulty in trying to manage it as well as the uncertainty it provides service providers (Hsieh, 2003).  Customers may not have the necessary skills and knowledge to effectively participate in the service process which could have an adverse effect on the organization.  If service providers have to spend more time with customers re-educating them, it may disrupt normal organizational procedures as well as decreasing the efficiency of the process.  We have mentioned previously that as a result of customer participation, duties that were previously performed by service providers are reallocated to customers.  However, service providers may have to spend added time on jobs that are not adequately completed by customers, which will increase the provider’s workload.  This inference suggests that an increase in customer participation may actually increase the service provider’s workload as a result of the increase in psychological burden (Hsieh, 2003).  In conjunction with this, because the characteristics of the service industry and manufacturing are so different, service providers have lower physical workloads than employees of the manufacturing industry (Hsieh, 2003).  As a result, service providers perceived workload is clearly more important than the physical nature of it.  This issue can be addressed by ensuring the role of each party is clearly identified and the amount of control each participant has.  Westwood (1999) suggests in her study that the mutual understanding between customers and service providers increased satisfaction and was more likely to occur if both parties had a clear understanding of what was expected of them.      

CONCLUSION

There is much to suggest that service organizations can benefit from an increase in customer participation in service delivery.  We have seen that an ideal situation would occur when the service encounter triad is balanced and all three entities have an equal distribution of control.  While customers can have an active role in the service process, the service provider and customer must interact with each other so that there is a clear understanding of the role each has to play as well the expectation of the final outcome.  This is further supported by the suggestion that it is critical for the customer to have a working knowledge of the organization so that their contributions can be a positive addition to the organization.  While there are obviously potential negative aspects to an increase in customer participation, these can be addressed by managing the level of participation so that it fits within the goals and objectives of the service organization.                    

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