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1. Achieving service excellence - measuring the impact of leadership and senior management commitment 1

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Achieving service excellence - measuring the impact of leadership and senior management commitment
Author: Prabhu, Vas B; Robson, Andrew Publication info: Managing Service Quality 10.5 (2000): 307-317. ProQuest document link Abstract: This paper considers the relationship between leadership strategy and practice and operational performance within the service sector, identifying significant associations between various measurements with respect to an organization's theoretical world class status. The paper identifies business-wide strengths in practice and performance and areas where across-the-board improvements can be made. Full text: Vas B. Prabhu: Newcastle Business School, University of Northumbria at Newcastle, Newcastle upon Tyne, UK. Andrew Robson: Newcastle Business School, University of Northumbria at Newcastle, Newcastle upon Tyne, UK. ACKNOWLEDGMENT: The competitiveness project (Ref. 196/90/11) was a three-year project (1996-98), 50 per cent funded through the European Regional Development Fund and led by the Northern Development Company. Introduction It is a well-established belief among both academics and business practitioners that effective leadership implemented via a "senior management commitment" is one of the most crucial factors in the implementation of change within an organisation, and without such a positive commitment, it is arguable that any strategy for change is likely to fail. In particular, the existence of effective leadership and the commitment of senior management are essential in the implementation of total quality management (TQM) programmes (Oakland, 1993; Zairi, 1995; 1999). However, while best practice has been illustrated and described for a number of world class organisations, there is little evidence regarding the extent to which these practices identified have or have not been implemented across the business sector. Moreover, from the discussion that has taken place with respect to these practices, there could be an expectation that best practice may have become commonplace in many businesses. In this paper, the authors will examine the extent to which the concept of "best practice" has been implemented within the service sector. This has been made possible through the existence of a region-wide benchmarking study which has taken place in the North East of England between 1996 and 1998, in which nearly 450 service organisations have participated. The benchmarking database provides an indication of how extensive the implementation of best practice has been, the extent to which those participating organisations have attained good standing in operational performance and have developed into organisations which can be described realistically as "world class". It is hoped that the results provided from this survey data will help to identify the key indicators of leadership among the service sector organisations. The data has been analysed by considering three attributes from the participating organisations: the respondent's theoretical world-class status, the organisation size and their business sector. The measurements of leadership to be considered look at indicators of senior management commitment and leadership, employee-related practices and indicators of operational performance. Comparison is also possible between the service sector in the North East of England and its manufacturing counterpart, and for completeness these results will be also described briefly later in the paper. The benchmarking database 07 September 2013 Page 1 of 8 ProQuest

This benchmarking project represented co-operation within a consortium of about 20 organisations, including the region's five universities, five local authorities, TECs and business links from the North East of England. This partnership formed part of a larger, regional development project whose objectives included strengthening the capability of the support offered to the region's businesses. For those organisations participating in the project, an evaluation was made regarding both their practices and performances. The participating organisations were by invited by the various regional TECs and their membership in the benchmarking survey combined to form a quota sample of companies from the region as a whole. The final sample of organisations was seen to be reasonably representative in terms of business sector, organisation size (i.e. micro, small, medium and large) and location within the region. With regard to the participating organi-sations, an assessment was made regarding both their practices and performances and a significant number of the variables which comprise this data from the analysis presented later in the paper. With regard to this exercise, a diagnostic benchmarking methodology called PROBE ("PROmoting Business Excellence"), administered by the Confederation of British Industry, was considered to be a useful starting point by the research team. The PROBE tool emerged from various "made in Europe" studies and associated research concerning best practice in both the manufacturing and service sectors, results of which have been extensively published (Hanson et al., 1994, 1996; Voss et al., 1997, 1998). However, the "terms of reference" of the research commission required mass participation, and as such, a degree of simplification and adaptation of the PROBE methodology was required. In doing this, the research team developed a questionnaire-based tool called PILOT. The type of question used exclusively to collect the data considered in this paper is a rating scale. Using this scale, the responding organisation rates the various practice and performance measures on a scale from 1 to 5, as shown for a sample of specific questions by Figure 1. The statements associated with each of the 59 questions in the service questionnaire reflected the range of possible performance for each characteristic, considering a combination of management theory and the expertise of the designers, Voss and Hanson. One over-riding consideration of using data from a mass participation survey is that of data integrity and consistence. This issue was addressed through a combination of questionnaire presentation and supporting participating workshops. The data collected has also been analysed to determine whether any significant differences which appear based on the method of company response (i.e. responses generated by an individual, primarily by an individual but with support or via a team) has been compared with data collected from a similar benchmarking exercise conducted elsewhere in the UK. These considerations have helped us to be reasonably confident regarding the reliability and inter-organisation consistency of the data generated (Robson and Yarrow to be published in 2000). Based on the scores achieved for operational "practice" and "performance", the responding organisations in the survey were categorised into one of the following six groups, based on the definition of Hanson et al. (1994): (1) World class (WC). The companies which achieved high scores in every aspect of practice and performance. (2) Potential winners (PW). Those who are similar but not as good as the WC respondents. (3) Vulnerable (VULN). Companies which have attained good performance but have weak underlying practice. (4) Promising (PROM). Those companies whose practices are good, but their performance measures are weak. (5) Room for improvement (RFI). Those who are relatively weak in both practice and performance. (6) Could do better (CDB). Similar to RFI, but poorer in both areas. The profile of the 448 service organisations that responded to the benchmarking survey is displayed in Figure 2. In terms of the analysis to be presented in this paper, the authors are interested in identifying and measuring 07 September 2013 Page 2 of 8 ProQuest

the extent to which certain practice and performance attributes discriminate between the two polarised groups of organisations. That is, focus will be primarily (although not exclusively) placed on significant differences between the PW/WC who perform well and have strong underlying practices and RFI/CDB whose practices and corresponding performance are relatively weak. It is hoped this analysis will identify not only where the former are particular strong, but also the areas of operational practice and performance where improvements can be made irrespective of an organisation's WC status. To ensure that the profile of organisations by WC status is realistic, comparisons have been made between this data and other published surveys. The sample of data used would appear when compared to similar UK studies to have a smaller proportion of potential winners and a greater proportion of companies classified as vulnerable or RFI/CDB (Voss et al., 1997). Additionally, the authors will also consider what differences in these measures can also be explained by company size and sector. The size of each organisation has been defined by the number of employees and falls into one of four categories: micro (up to 20 employees), small (21-50 employees), medium (51-200 employees) and large (201 or more employees). The breakdown of the respondents is shown in Figure 3. Moreover, the respondents have been categorised into eight different categories, as indicated by Figure 4. Initial analysis has indicated no significant association between sector and WC status. However, WC status is related to company size, at the 0.1 per cent level, this association being explained by a greater than expected number of micro and medium companies falling into the PW/WC category, a greater than expected number of small companies being categorised as vulnerable and a greater than expected number of large companies being in the promising and RFI categories. Gauging leadership commitment - identifying the measures We can judge in a number of different ways the impact senior management has on the adoption and successful implementation of business excellence practices. Senior management can develop and implement strategies to achieve these goals, they can adopt specific management practices, and implicit within such practices is a management desire for business excellence to prosper. In turn, these strategies and practices can influence performance with respect to certain operational activities, and the success of these activities can provide a measure of how successful senior management strategies and support have been. To identify the various inter-relationships suggested above, a number of "leadership" measures have been selected from the PILOT survey (University of Northumbria, 1999) and for the purposes of the analysis, the authors have identified three main groupings for the chosen measures: (1) Senior management commitment and leadership. Practices that are strategic and would be implemented at a senior management level. (2) Employee-related practices. Practices which represent the outcomes of senior management strategy and are associated to leadership within the organisation. (3) Operational performance. These are performance measures within the organisations which are related to various strategic and operational practices. The variables selected in each of the three groups are listed in Table I. As indicated earlier in the paper, individual responses to the measures is on a scale from 1 to 5. In each case, scores of 1 and 2 represent a weak practice or performance indicated and has been described in the subsequent analysis as a "low" score. In contrast, scores of 4 and 5 represent "good to best" practice or performance for the chosen indicators and have been labelled as "high" scores, while a score of 3 represents a median level of attainments and has been labelled as "medium". Research findings The results of the research will be presented in three main parts: (1) A comparison of leadership attainment by the service companies with respect to their WC status. (2) A comparison of leadership attainment by the service companies with respect to their size (as defined by number of employees) and service sector. 07 September 2013 Page 3 of 8 ProQuest

(3) A comparison of the above with analysis of the North East of England manufacturing sector. WC status For each of the measures listed in Table I, significance of association was tested between the score attained and WC status, with significance (if applicable) at the 5 per cent, 1 per cent or 0.1 per cent being noted. Table II presents the significant differences for the three groups of measures. This table indicates significant associations between all of the leadership measures and WC status, the vast majority being at the 0.1 per cent level. Moreover, the table also suggests that for a high proportion of the measures, the companies categorised as PW/WC attain high scores for the bulk of these characteristics, while the organisations identified as RFI/CDB attain low scores for most of the measures selected. Table II also indicates the extent to which the vulnerable companies have poor attainment with regard to certain underlying leadership practices, while in contrast, the promising participants are moving in the right direction with respect to these practices. The results suggest that a greater than expected number of PW/WC organisations have strategies in place in which top management visibly promotes and participates. These strategies involve ensuring that customers are at the centre of any business planning and that their expectations are measured. By doing this, strategies are in place to ensure that there is a clear vision of the services to be provided in which market information is used effectively. This delivery is underpinned by a total quality mindset and the practices employed are formally benchmarked against established WC standards. In contrast, an organisation that is significantly below WC in its operations tended to have no such leadership strategies. These companies have no clear concept of customer service, have little understanding of market positioning and tend to solve customers' problems reactively. In terms of the outcomes of the strategies described, a number of positive practices emerge among a significant proportion of the PW/WC organisations. These practices cover the organisation, its interface with the customer and its delivery strategies. In terms of the organisation, the PW/WC companies are more likely to encompass quality values in their mission statement and a vision of quality is implemented which involves all staff. This is supported by practices which ensure that employees are highly involved, the company has established plans for staff training and that both informal and formal mechanisms are in place for staff. Such mechanisms are also in place in such companies in order to identify customer expectations, with visible service standards and multiple measures of performance employed. In order to ensure effective deliveries strategies are in place, the PW/WC organisation has comprehensive quality frameworks that are supported by a flexible workforce who are empowered to resolve problems. Such staffs are seen to go out of their way in response to the customer and the latter is able to deal both quickly and effectively with the relevant staff. In contrast, the poorer performing organisation tends to make little investment in staff development, and in turn, there is often a lack of flexibility in terms of the staff roles. In terms of dealing with customer problems, a "crisis mindset" prevails and often the organisation is slow in responding to the customer. The strategies employed above have a potential impact on the operational performance of the organisation. This impact can be seen in a number of ways. Impact is visible in terms of staff morale, the range of service, customer perception and by formal performance measure. The companies who are performing well tend to have a turnover of staff that is low by industry standards and a staff that are both optimistic and confident. This contrasts with the poorer performing organisation who suffer both in terms of staff turnover and morale. The PW/WC organisations are also more likely to produce results that meet customer expectations, and in turn, have a reputation for excellence in their market where their products are perceived to offer high value. Such companies have taken care in identifying the level of customer satisfaction by using a range of measurements. These organisations have also achieved relatively high levels of performance in terms of increasing market share, return on net assets and overall productivity and have relatively low operating costs. In terms of explicit performance, the opposite is true among a significant proportion of the RFI/CDB companies. These 07 September 2013 Page 4 of 8 ProQuest

organisations tend to have a relatively poor record for quality and have a customer base whose level of expectation is often not met and who feel let down. Looking at the polarisation of attainment even further between PW/WC and RFI/CDB, Table III shows in detail the relative strengths and weaknesses of both groups within the three sets of measures. The results are interesting because while they show clear differences in attainment for the two sets of organisations, they also imply that while PW/WC are well on their way to achieving WC status, there are certain areas of leadership in which there is collective room for improvement. These areas fall into two categories: "Measurement and reporting" attributes and 'Staff development". From the survey data, the former category includes "Benchmarking", "Performance measurement and reports", "Quality procedures and frameworks" and "Customer satisfaction measurement". In addition, the latter considers attributes such as "Problem solving culture", "Shared vision", "Recognition", "Number of innovations and development of new ideas" and "Employee satisfaction". Moreover, when a comparison is made between the PW/WC and RFI/CDB groups, it is evident for the areas of practice and performance in which the former are clearly strong and are collectively performing well, the proportion of the latter performing badly is small. Moreover, where only a minority of the former are actually performing well (as indicated by the named measures above), a clear majority of the RFI/CDB are performing badly. In other words, the relative strengths and weaknesses of the two groups are quite similar. In Table IV, additional measures of association between the indicators of senior management commitment and the other two sets of attributes are displayed. The associations identified indicate a strong general association between the senior management commitment and employee-related measures, arguably providing an indication of the influence leadership commitment and strategy can have on operational practices. The level of significance is also noticeable between these senior management strategies and the operational performance of the companies. In the same way, the employee-related practices are also seen to demonstrate significant association with operational performance (Table V). In terms of the association between senior management strategies and the employee-related practices which have been set up, the significant associations reported can be explained as a positive relationship between the two leadership indicators. That is, a company that has implemented the formal strategies described, is more likely to have encompassed the associated practices than those companies without the leadership commitment. In the same way, there is also a positive association between senior management initiatives and operational performance and also between the employee-related practices and organisational performance. Again, if strategies and practices are formally in place, the organisation is much more likely to have attained a high level of performance. Size and sector differences Further to the results presented, significant differences in leadership attainment were also evident across the size bands and services provided. Table VI indicates where significant differences exist between companies within these various groups for the chosen leadership measures. With regard to the significant differences due to size, large companies have performed in greater than expected numbers with regard to "Skill and job training and education", "Quality procedures and framework", and "Benchmarking". The remaining significance can be explained by a better than expected performance among the micro-sized participants, with the exception of "Quality values" and "Quality procedures and framework". In contrast, poorer than expected performance among those measures where significance has occurred have been split among the three non-micro-sized categories of respondents. In the same way, all of the significant differences due to sector can be explained to some extent by a greater than expected number of "Professional" companies scoring highly. In addition, the respondents from the 07 September 2013 Page 5 of 8 ProQuest

"Education" sector have scored well on the employee-related measures to "Skill and job training and education", "Listening to staff" and "Day-to-day teamwork". In contrast, weaknesses in these measures can be explained to a great extent by a greater than expected number of "Public services/utilities". Where significance has occurred in the senior management commitment, employee-related practices and operational performance areas, these organisations have tended to score poorly. To a lesser extent, the "Industrial services" sector has demonstrated a particular weakness in the measures of employee-related practices. Leadership characteristics from the manufacturing sector As well as analysing data from the service benchmarking exercise, the authors have also had exposure to survey data from a similar survey in which about 300 manufacturing organisations participated. From the manufacturing analysis, it was also found that the relative strengths and weaknesses within the respective PW/WC and RFI/CDB cohorts were similar, as described earlier for the service organisations. Likewise, there was also sector-wide room for improvement within specific areas of senior management-led strategies and operations (Prabhu and Robson, to be published 2000). In particular, only a minority of the PW/WC cohort scored highly with regard to less established practices such as "Benchmarking", "Shared vision", and "Employee involvement", and as a consequence, showed similarity with the results provided by the service sector analysis. Conclusions The results described in the paper indicate that for practically all of the practice and performance characteristics identified from the benchmarking survey, significant association exists between the attribute score and the WC status of the responding service organisation. Moreover, this significance can be explained by a greater than expected number of organisations classified as PW/WC scoring highly on each attribute and a greater than expected number of organisations classified as RFI/CDB registering poor scores for the selected measures. In addition, there are significant differences in scores between organisations in relation to organisation size (measured by number of employees) and also by service sector, although the explanation for the differences is less clear cut and regular with respect to both of these characteristics. However, there are a number of microsized (i.e. less than 20 employees) "Professional" companies who have "across the board" good performance characteristics supported by a range of equally good employee-related practices. With regard to the differences between PW/WC and RFI/CDB classified companies, there is great variation within the two cohorts regarding the extent to which the former score highly and the latter score poorly for the considered measures. Specifically, a large proportion of the former score highly for established strategic practices and operational performance measures. These attributes include "Customer orientation", "Role of leadership in developing a service culture", "Staff responsiveness", and "Real time handling of service problems". While, the RFI/CDB are relatively poorer both in terms of practice and performance compared to this group, it is only a minority of the latter cohort who actually score poorly with regard to these established attributes. However, with regard to less established strategies and related performance characteristics, there is significant scope for improvement not only within the RFI/CDB, but also across the service sector as a whole. These areas include practice and performance measurement, which have been indicated by groups of attributes that can be categorised as "measurement and reporting" and "staff development". In short, PW/WC are collectively performing well with respect to a number of characteristics than have employee-related practices which are superior to those demonstrated by RFI/CDB but the relative strengths and weaknesses of the two groups show great similarity. The conclusions drawn here have also been recognised within the manufacturing sector, after analysis similar to that presented in this paper was undertaken on data generated from a parallel benchmarking survey. Again, the same well-established practices and related performance measures are seen as relative strengths within the two polarised categories of organisation. However, with regard to more recent developments in business 07 September 2013 Page 6 of 8 ProQuest

excellence and best practice, both cohorts have collective room for improvement. References 1. Hanson, P., Voss, C.A., Blackmon, K. and Claxton, T. (1996), Made in Europe 2, An Anglo-German Design Study, IBM UK/London Business School, Warwick/London. 2. Hanson, P., Voss, C.A., Blackmon, K. and Oak, B. (1994), Made in Europe, A Four Nations Best Practice Study, IBM UK/London Business School, Warwick/London. 3. Oakland, J.S. (1993), Total Quality Management, 2nd ed, Butterworth-Heinemann, Oxford. 4. Prabhu, V.B. and Robson, A.J. (2000), Impact of Leadership and Senior Management Commitment on Business Excellence: An Empirical Study in the North East of England, Fifth World Congress for Total Quality Management, Sheffield, (forthcoming). 5. Robson, A.J. and Yarrow, D.J. (2000), Getting to the Facts: Issues in Data Collection and Consistency, OR Insight, (forthcoming). 6. Voss, C.A, Blackmon, K., Caglanio, R., Hanson, P. and Wilson, F. (1998), Made in Europe 3: The Small Company Study, IBM UK/London Business School/W. London TEC, Warwick/London/London. 7. Zairi, M. (1995), "Leadership in TQM implementation: Some case examples", American Journal of Management Development, Vol. 1 No. 1, pp. 37-44. 8. Zairi, M. (1999), "Managing excellence: leadership", The TQM Magazine, Vol. 11 No. 4, pp. 215-20 9. University of Northumbria at Newcastle (1999), Service Pilot (Benchmarking for the North East) Questionnaire, University of Northumbria at Newcastle, Newcastle upon Tyne. 10. Voss, C.A., Blackmon, K., Chase, R., Rose, B. and Roth, A.V. (1997), Achieving World Class Service: An Anglo-American Benchmark Comparison of Service Practice and Performance, Severn Trent, Birmingham. Illustration Caption: Table I; Variables identified from the North East Practice Survey; Table II; Significant differences by WC status; Table III; A comparison of scores by question category; Table IV; Significant levels for association between senior management commitment and leadership measures and with employee-related practices and operational performance measures; Table V; Significant levels for association between employee-related practices and operational performance measures; Table VI; Significant differences by company size and business sector; Figure 1; Examples of how score relates to attainment; Figure 2; World class status of participating organisations; Figure 3; Size of responding organisation (number of employees); Figure 4; Responding organisation by service sector Subject: Service industries; Performance management; Quality of service Classification: 8300: Service industries not elsewhere classified; 5320: Quality control Publication title: Managing Service Quality Volume: 10 Issue: 5 Pages: 307-317 Number of pages: 0 Publication year: 2000 Publication date: 2000 Year: 2000 Publisher: Emerald Group Publishing, Limited

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Place of publication: Bedford Country of publication: United Kingdom Publication subject: Business And Economics--Production of Goods And Services ISSN: 09604529 Source type: Scholarly Journals Language of publication: English Document type: Feature ProQuest document ID: 198175079 Document URL: http://search.proquest.com/docview/198175079?accountid=136238 Copyright: Copyright MCB UP Limited (MCB) 2000 Last updated: 2010-06-06 Database: ABI/INFORM Global

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