| p>Introduction | | | | which are of no value to the customer or to achieving |
| U.S. service firms have been hit hard by the current | | | | the strategic goals of the organization. |
| downturn in the economy. Business slowdown in the | | | | Getting Focused |
| service sector, combined with increased deregulation | | | | I use a four step proven approach for getting focused |
| and foreign competition, has created a fiercely | | | | on process improvement. |
| competitive environment. Many service industries have | | | | Step 1: Prepare |
| experienced difficulty in responding to these new | | | | In this step senior management and mangers organize |
| circumstances. The magnitude of the problem is | | | | and create a Leadership Team and develop a |
| indicated by the wave of savings and loans closures, | | | | compelling vision, mission and set of values. They |
| financial services bankruptcies, downsizing of real | | | | identify critical success factors and key organizational |
| estate organizations, and banking mergers now | | | | processes, prioritize those processes, and conduct an |
| occurring. | | | | assessment of the organization to determine the |
| One of the reasons service firms have been | | | | current state and what the future state looks like. |
| particularly hard hit stems from their dismal lack of | | | | The importance of this step cannot be overlooked |
| competitiveness. In the recent past, growth in demand | | | | because facilitative leadership is required to create a |
| for services was so strong; it gave the impression that | | | | culture that encourages and rewards continuous |
| service industries were "recession proof." Toiling under | | | | process improvement. Strong leadership from |
| this false notion, service firms focused on increasing | | | | management is a crucial determinant for maintaining |
| capacity to satisfy rising demand. They paid very little | | | | process improvement. |
| attention to improving quality and productivity. During | | | | Step 2: Plan |
| the 1980s, while productivity in the manufacturing | | | | The second step is creating a strategic continuous |
| sector was growing at a rate of almost 4 percent per | | | | improvement plan based on the results of the |
| year, service sector productivity grew less than 1 | | | | organizational assessment completed in step one. This |
| percent per year. | | | | plan has two components a process improvement |
| Failure to improve quality and productivity has left | | | | plan so that those key processes important to the |
| many service firms unable to compete in today's | | | | customer can be improved, and an organizational |
| economic environment. Mergers and downsizing are a | | | | improvement plan to prepare the organization for the |
| short-term response to improving a service firm's | | | | future. |
| competitiveness. With the new competitive | | | | The process improvement plan is designed to close |
| environment expected to continue indefinitely, these | | | | the gap between current and future states and is |
| changes may be a prelude to a massive shakeout | | | | used to select major improvement opportunities and |
| within the service sector, similar in size and scope to | | | | form process improvement teams to improve the |
| the restructuring that occurred in the manufacturing | | | | processes by eliminating non-value -added activities |
| sector. | | | | and closing performance gaps. |
| Further exacerbating their woes, U.S. service firms | | | | The organization improvement plan is a roadmap for |
| need to drastically improve the quality of their outputs | | | | establishing training, rewards and recognition, |
| and outcomes just to maintain the status quo. Foreign | | | | communications, and measurement programs that |
| competitors are making inroads into previously | | | | support the process improvement initiative. |
| untapped markets (financial services, airlines, retailing, | | | | Incentive and pay structures for motivating behavior |
| hospitality) based on their ability to produce high-quality | | | | and performance under continuous process |
| products and services. They have proven that there is | | | | improvement systems are purposely designed to |
| nothing mysterious about identifying customer needs, | | | | encourage group team-building behavior and |
| wants, and desires. To the chagrin of their U.S. | | | | performance rather than individual effort/output. |
| counterparts, foreign firms are consistently delivering | | | | Rewarding non-group behavior tends to be |
| service levels that meet or exceed customer | | | | counterproductive because financial rewards for |
| expectations. | | | | individual performance send the wrong message to |
| Consequently, service managers need to recognize | | | | employees, who in turn will undermine the |
| that "trimming the fat" and emphasizing "lean and | | | | process-oriented or team approach. |
| mean" policies are only short-term, knee-jerk reactions | | | | Training refers to the skill building and staff |
| to a lack of competitiveness. Actions such as these | | | | development that is required for continuous process |
| do not contribute to high quality, nor do they enhance | | | | improvement. New capabilities are necessary if |
| productivity. In fact, if nothing more substantial is done | | | | employees are to identify and solve problems as a |
| to improve quality and productivity within the services | | | | team. If any of these elements are missing, the change |
| sector in the U.S., there will be even more rounds of | | | | process will break down. Therefore, as employees |
| downsizing or mergers in response to declining | | | | engage in continuous improvement, they need to |
| competitiveness. | | | | acquire additional skills or be cross-trained to perform |
| Continuous Improvement Strategies | | | | new or expanded roles and jobs. |
| To enhance their competitiveness, service firms need | | | | Step 3: Execute |
| to embrace systems such as Lean, Six Sigma and | | | | Once the process improvement teams have been |
| practical problem solving, within their organizations to | | | | formed and trained it is time to execute-actually |
| ensure continuous process improvement. These | | | | improving the process. Process improvement teams |
| systems are capable of providing individual providers | | | | examine the process to understand how the process |
| with the opportunity to meet and then surpass the | | | | works. They spend time analyzing data to determine |
| challenge of competitors. A philosophy of continuous | | | | how the process is actually working and measure its |
| process improvement enables a service firm to | | | | current performance. The next step is to decide how it |
| cultivate a process-oriented way of thinking and | | | | can be improved and then test the improved process. |
| developing strategies that assure continuous | | | | Improvement may require refining, redesigning or |
| improvement involving people at all levels of the | | | | reengineering the process. Based on their results the |
| organizational hierarchy. Such a system requires a | | | | team makes recommendations for approval and |
| new organizational culture that considers change, | | | | implementation. |
| rather than complacency, the norm. | | | | Step 4: Sustain |
| In a change environment, continuous process | | | | The final step is to sustain a process improvement |
| improvement by all employees is repeatedly | | | | culture. This step makes process improvement a way |
| emphasized and supported by senior management. | | | | of life in the service organization. It demands carefully |
| Service firms need to redesign their existing structure | | | | managed change to ensure the cultural shift from fire |
| to develop multi-skilled employees, and establish team | | | | fighting to continuous process improvement. |
| processes for continuous improvement. | | | | Sustainability only occurs when all employees not just |
| Implementing a Process Improvement Strategy | | | | process improvement teams have the necessary skills |
| A burning platform for implementing a continuous | | | | and the authority to do what is required to fix |
| improvement system is widespread dissatisfaction | | | | processes and make lasting improvements. |
| with the current way in which the organization | | | | A key element of sustain is employee empowerment. |
| functions. In the case of profit-making service | | | | The main drivers behind continuous process |
| organizations, dissatisfaction is heightened by red ink or | | | | improvement mean that employees are increasingly in |
| lost market share. However, with respect to non-profit | | | | need of a broader and richer skill set along with the |
| service organizations such as government, education, | | | | authority and responsibility to make customer-facing |
| and utilities, these kinds of competitive pressures are | | | | decisions. Job skills must be expanded to include not |
| largely absent. Therefore, organizational dissatisfaction | | | | only the basic work tasks, but also the problem-solving |
| must be created from within by the leadership team. | | | | skills necessary to change the way in which |
| Top management must provide leadership by | | | | organizational work is performed. This enables them to |
| establishing a vision for a better organization. This | | | | respond to various demands. In other words, they |
| vision must then be communicated to all employees. | | | | must be empowered. |
| Only by creating a high "discomfort index" can | | | | Employee empowerment means that a firm entrusts |
| non-profit service organizations hope to create a | | | | decision-making authority to frontline workers in |
| desire, and thereby garner the necessary support, for | | | | situations where such authority traditionally resided |
| organizational change. To sustain continuous | | | | solely with management. It is important to note that |
| improvement initiatives, top management should be | | | | empowerment cannot be mandated from senior |
| aware of the crucial role it plays in helping to formulate | | | | management. To feel empowered, a number of |
| the vision, mission and values of the organization. In this | | | | preconditions must be in place: (1) a shared vision and |
| regard, the role of senior management must change | | | | a common set of values must exist organization-wide; |
| from providing solutions to empowering others within | | | | (2) individuals must be properly trained; (3) benefits |
| the organization. | | | | must be fairly and equally distributed; (4) managers |
| A Focused Approach to Process Improvement | | | | must have faith and confidence in their employees; and |
| Service organizations should consider a focused | | | | (5) the overall culture of the organization must support |
| approach to process improvement because a | | | | risk-taking and not pointing blame. |
| disciplined, management led, focused approach is | | | | Summary |
| essential if process improvement efforts are to | | | | The service sector of the U.S. economy is undergoing |
| succeed. The approach must be targeted at improving | | | | a significant transformation. In its wake, traditional |
| the key business processes that provide a service to | | | | methods like restructuring and reorganizing are stop |
| a customer. Most key business processes are | | | | gap and fleeting solutions. Methods that were popular |
| cross-functional in nature which means they must be | | | | in the early 1980s (downsizing and mergers) no longer |
| managed across all the functional areas that play roles | | | | ensure long-term competitiveness, nor do they remedy |
| in delivering the services. | | | | the inconsistencies caused by knee-jerk reactions. A |
| Tightly focused process improvement initiatives | | | | more focused approach for improving quality and |
| produces results and enhances performance. In the | | | | productivity has to be found. One such alternative for |
| end, the focus should be on the things that are most | | | | increasing competitiveness is to introduce a focused |
| important to the organization, but are not being done | | | | approach to continuous process improvement into |
| well. Many times service organizations focus on the | | | | service organizations. |
| wrong things-the things that waste time and effort, | | | | |