Lin Fitzgerald

Towards a Classification of Service Processes

Over the years manufacturing managers have been unified by their acceptance of certain terminology to describe generic production processes. This has facilitated the sharing of ideas and management techniques and the development of our understanding of process choice implications on manufacturing strategies. In the service literature, no process model has been so powerful or pervasive as the manufacturing model. Postulates that a service typology which transcends narrow industry boundaries may lead to some cross‐fertilization of ideas and to an understanding of the management methods and techniques appropriate to each service type. Proposes a model analogous to the production process model, which has achieved such universal recognition in the world of manufacturing. Just as production volume is used in the latter model to integrate a wide range of production process dimensions, so suggests that the volume of customers processed per business unit per day correlates with six classification dimensions develo...

'Good enough' performance measurement: a trade-off between activity and action

Performance measurement systems along the lines of the EFQM and the balanced scorecard have developed rapidly in recent years, and now occupy much management time and effort. There is limited evidence that performance improvement has received proportionate attention. Six organisations selected for their success were studied using a grounded theory approach based on interviews with management accountants and operations managers in each of the organisations. It is clear that they are all making strenuous efforts to use their performance measurement systems but with a focus on the ‘good enough’ rather than the detail. This gave managers in these organisations the time and space to concentrate on the use of performance measures on forward looking relevance, understanding and action, rather than retrospective and detailed control. This approach was promoted by senior managers and was based on their ability to see the business in simple terms and their understanding of the key drivers of business performance.

Product costing in service organizations

Conventional wisdom and empirical evidence suggest that in manufacturing businesses product costs are used for various purposes, including inventory valuation, product pricing and mix decisions and for management planning and control. In this paper the validity of these three specific uses in the service sector are explored in five large for profit service organizations. The first of our three conclusions is that inventory valuation was not a major issue in these five service organizations, as the inherent perishability of their services mean that they cannot be stored. Second, only two of the five organizations used full product costs for pricing decisions. Third, in all five organizations costs were planned and controlled via responsibility centres linked to functional activities rather than products/services, which did not seem to be a useful unit of analysis. This paper suggests that a closer alignment of a service organizations responsibility centres with its value chain might be a source of competitive advantage, and that more case study research is needed in this area.

Quality Measurement in Service Industries

A number of writers in the service management literature have observed that because service quality is difficult to measure there is a danger that service organisations will neglect to measure it, despite the fact that service quality is often critical to their competitive business success. The results of an empirical research project investigating the quality measurement systems of six multi‐site UK service organisations, all of which consider themselves to differentiate on the basis of service quality, are described. Two of the organisations were found to have very few quality measures and recognised that this was a major gap in their performance measurement systems. Two had developed a range of customer‐based measures of service quality which were reported regularly and widely in the organisations. The other two companies had developed a wide range of internal and external, hard and soft quality measures. These companies used managers as well as customers to measure both tangible and intangible aspects...

The involvement of management accountants in operational process change

This paper suggests that there is a natural tension between operations managers and management accountants. This tension is particularly evident when decisions are being made about process change. Semi‐structured interviews with 40 operations managers revealed that accountants were only involved in about half of change processes. Surprisingly this proportion was the same for both continuous and radical change programmes despite the latter involving greater risk and capital investment. Six case studies were then used to identify the factors which underpin the degree of involvement where there was close interaction between accountants and operations managers. The paper concludes with a discussion of the implications for operations managers and some suggestions for further research.

Target setting for evolutionary and revolutionary process change

Considers the relationship between the types of targets or benchmarks used and reward structures adopted in two contrasting performance improvement strategies – continuous improvement and radical change. Hypothesises that the process of target setting and the reward structures adopted will be different between the two strategies. The propositions are that organisations involved in continuous improvement of a process will base their performance targets on past performance and internal benchmarking, arrived at through consultation and with a mixture of financial and non‐financial rewards for achieving targets. For processes involving radical change, targets will be based on external benchmarks imposed by senior management, with financial rewards for their achievement. The findings from a semi‐structured questionnaire conducted in 40 UK service organisations reveal that most continuous improvement targets were based on past performance and that processes undergoing radical change made limited use of external benchmarks. In the majority of cases, targets were imposed by managers without consultation, with rewards linked to theachievement of those targets. Financial rewards, particularly financial bonuses, predominated in both improvement strategies. The implications are that the potential benefits of adopting process changes are being constrained. In continuous improvement the lack of participation in target setting could be undermining the team‐based empowerment philosophy of the strategy. The aim of radical change is to achieve a paradigm shift involving revolutionary rather than evolutionary change which is less likely to be fulfilled with targets based on past performance.

Pluralistic views of performance

Regulatory efforts within the UK water industry in recent years have been predominated by the concern for measuring the cost efficiencies of the privatized companies. More recent regulatory work, however, has moved away from the assessment of performance on the strict basis of financial indicators to a multidimensional perspective that includes quality concerns, combining the interests of management, shareholders and consumers in the assessment procedures. This study adopts a similar perspective, describing a multi‐stakeholder performance model for UK water companies, which develops an understanding of performance improvement in financial and quality terms. Thus, the interests of shareholders and consumers are addressed – and differentiated – within a single performance frontier framework. The ways in which one approaches different regions of the frontier characterizes the different stakeholder perspectives, entertains the possibility of trade‐offs between them, and provides the basis of determining “bala...