Factors Affecting the Performance of a Service Organization

 

The performance excellence of a service organization and its continuation has become a great challenge for the management. The availability of research articles on performance measurement of a manufacturing organization is very large in comparison to the service organization. However, some research articles on the performance of service organizations have also been published such as Husgafvel et al. (2014) has given more stress on the social sustainability of the process industry. Similarly, Hussain et al. (2016) has focused their attention on supply chain sustainability in the service industry.

The performance management of a service organization has been a challenging task due to the involvement of human psychology and the self-satisfaction of producers and consumers in service production and consumption. The term performance measurement can be defined as the quantification of the efficiency and effectiveness of action (Neely et al., 1995), where the effectiveness is the extent of satisfaction of the customer’s need and efficiency is the rate of economically using the corporation’s resources in service production. For better performance management, some approaches have been proposed in the literature. 

Kaplan and Norton’s (1993) proposed a balanced scorecard for performance measurement, considering all the perspectives such as internal customer, financial, customer and stakeholders, and learning and growth of the organization. Dixon et al. (1990) utilized their Performance Measurement Questionnaire (PMQ) to recognize the qualities and failings in the execution. Shieh et al. (2020) measured the efficiency of the life insurance companies using a four-stage Data Envelopment Analysis (DEA).

It has been observed that the design of performance measures is very poorly defined in many companies creating a lot of confusion and misunderstanding. According to Bourne et al. (1998),

a performance measure record sheet is used to record the definition of the performance measure. Once the information is collected regarding each measure, four tasks are to be completed which are, data creation, data collection, and data analysis and information distribution.

Most of the performance measures used are quantitative which may fit in the manufacturing industry, but for the service industry, many performance measures are qualitative. The decision about the service quality is very subjective, it must include the wellness of customers, employees, and society. It depends on many factors such as top management vision and leadership (Arshida & Agil 2013), corporate social responsibility (Hopkins, 2012), respect for the rules of law (Zurn et al., 2012), and transparency in dealing (Rawlins, 2009).

Very few researches have addressed these issues which lead to word of mouth for the appreciation of the services and the organization. The Top management commitment is considered an important success factor for the performance improvement of the organization. The main direction of the organization regarding the operations of various activities is based on the policy of the top management consisting of the vision and mission of the organization.

Service quality is one of the parameters of the performance of the organization. Responsiveness, Tangibility, Assurance, Empathy, and Reliability are picked as free factors while consumer loyalty and customer satisfaction are considered as needy factors (Masrurul, 2019). However, in the present study, the responsiveness of the service provider toward customer complaints regarding services gives more importance than the other service parameters.

Customer satisfaction and customer loyalty are the important parameters to judge the service performance. However, considering financial success, customer loyalty, and customer satisfaction are not always related closely (Williams & Naumann, 2011). There are various reasons and factors such as product, market segment, and price that can influence customer behavior. Some of the important references for the various factors considered in the performance analysis in the paper are summarized in Table 1.

Source: SAGE Journals 

It can be observed that the existing literature does not give the proper weightage to the employee satisfaction and welfare for performance measurement of the organization. In this study, customers’ and employees’ satisfaction with service cost and quality, e-commerce, transparency in dealing, corporate social responsibility, respect for the rule of laws are kept in the center to measure the performance of the organization. Following research gaps are identified based on the literature review:

1. Most of the measures identified for the performance measurement of service organizations are quantitative. The qualitative measures are also to be incorporated.
2. Very few research highlighted the factors having subjective, such as respect for the rule of law; corporate social responsibility, that is, well-being of broader society employee empowerment; employee participation; and satisfaction.
3. There is a lack of studies on the causal relationships among the factors influencing the performance of service organizations.

References

Ariani, D. W. (2015). Employee satisfaction and service quality: Is there relations. International Journal of Business Research and Management, 6(3), 33–44

Beamon, B. M., Balcik, B. (2008). Performance measurement in humanitarian relief chains. International Journal of Public Sector Management, 21(1), 4–25

Dess, G. G., Lumpkin, G. T., Eisner, A. B. (2010). Strategic management: Test and cases. McGraw Hill/Irwin Press.

Karakas, F. (2010). Spirituality and performance in organizations: A literature review. Journal of Business Ethics, 94(1), 89–106.

Williams, P., Naumann, E. (2011). Customer satisfaction and business performance: A firm-level analysis. Journal of Services Marketing, 25(1), 20–32.