Analysis of Internal Service Quality

Analysis of Internal Service Quality Internal Service Quality is a visible expression of an organizations culture and it can be thought of as the quality of work life. It is about the workplace design, job design, employee selection and development, employee rewards and recognition and tools for serving customers. Service Quality: Services are intangibles and it is more difficult to measure it physically as compared to the products. Service quality is delivery of superior services to their customers according to their desires and expectations. (Zeithaml V.A and M.J.Bitner, 1996) In todays fast-paced and increasingly competitive market, the bottom line of an organisations strategies and tactics is to make profits and contribute to the growth of the company. Customer satisfaction, quality and retention are global issues that affect all organisations. Many companies are interested in studying, evaluating and implementing strategies that aim at improving both internal and external customer retention. Internal Service Quality in Mauritius is starting to emerge in the fast expanding economy in order to add a competitive edge to both our public and private sector. In the tourism sector, hotels are starting to apply Internal Service Quality. In this competitive environment, organisations believe that they have to maintain the quality of products to sustain, survive, leading the market and achieving the competitive advantage which depends on organisational valuable assets, that is, employees. The quality of the services or products can be judged by its customers perceptions and expectations about that services or products (Parasuraman et al.1991). External customer loyalty and satisfaction strongly depends on internal customers. Employees satisfaction is directly related to superior services. The strong relationship between an organisation and an employee leads to a real improvement in the services provided to customers (Scheinder and Bowen, 1995) 1.1 Background of Tourism Sector in Mauritius The hotel sector, being an important pillar in the Mauritian economy has to provide first class service to their clients in order to maintain level of competition with other reputed touristic venues across the world. Since 2005, the tourism sector has averaged a growth of approximately 5 % (www.gov.mu) from arrival of tourist in Mauritius. This growth is encouraging but at the other end other sectors, such as the textile or sugar industry sector has gone on decline following open trade treaty in 2005. As a result of that, our economy is dependent on the Tourism Sector and in order to attract more tourists to Mauritius, the Internal Service Quality must be enhanced to improve our service to clients in hotels. Legends Hotel provides Internal Service Quality since year 2002. Internal service quality forms part of the Human Resource strategies to attract and retain both internal and external customers. One among many strategic examples at Legends Hotel, employees are empowered with more training and development programs so that they can better handle customers queries. 1.2 Problem Definition At Legends, Internal Service Quality has been more or less beneficial to the company as a whole. However, some key areas within the business still need consideration. First and foremost, communications within different departments and teamwork among employees are not that effective. There are always complaints about employees not cooperating while performing their job or information is not well communicated. Effective communication within a business is considered as a vital tool in the day to day management of an organisation and improper communication can lead to decline in the performance both in terms of customer satisfaction and in managerial perspective as a whole. Moreover, remuneration is another important factor that affects the performance of employees. The latter consider that they could get better remuneration for similar work performed elsewhere. Hence attitude and behaviour towards providing dedicated service to clients and the organisation are somewhat affected. And since a fierce competition exists among hotels in Mauritius, it is very important for management to provide good internal service quality for survival of the organisation as it has a direct impact on profitability and customer loyalty. 1.3 Aims and Objectives: The effectiveness of Human Resources Practises in delivering Internal Service Quality. The effectiveness of the SERVQUAL Model using Internal Service Quality battery. To provide an insight into the process of improving Internal Service Quality. 1.4 Outline of Chapters Chapter 1: Introduction It provides a general outline of the project, with the different sections included and the objectives of the study. Chapter 2: Legends Hotel This chapter consists of a brief overview of the company and the structure of the organization. Chapter 3: Literature Review This chapter consists of the different theories used in the dissertation together with background study of the subject. Chapter 4: Methodology and Research This chapter includes the hypothesis of the study as well as sampling and questionnaire design utilized during the project survey. Chapter 5: Results and Analysis This chapter comprises of the analysis of data obtained during the questionnaire survey followed by discussion on the results obtain. Again, appropriate statistical tools, such as the SPSS technique was used for the analysis of results. Chapter 6: Conclusion and Recommendations It deals with the conclusion of the main findings and based on them, it puts forward some recommendations in order to have an effective Internal Service Quality. 2.0 legends hotel 2.1 Company Overview Legends Hotel, set up in 2002, is a 5 star hotel located at Grand Gaube and it consists of 198 rooms. It forms part of the Naiade Group which owns hotels like Le Tropical, Les Pavillons, Beau Rivage, Merville Beach, Ile des Deux Cocos, Tamassa, Hotel Le Recif (Reunion Island), Grand Hotel du Lagon (Reunion Island) and Dive in Maldives. The five core values at Naiade are Guests, People, Leadership, Responsibility and Excellence. Guests are to be put at the forefront of everything, People are the employees who are provided with opportunities to grow within the business, Leadership is about fast management reaction to secure maximum advantage of changes, Responsibilities to recognize and honour investments of shareholders and Excellence is about building competitive edge on superior innovation and customer responsiveness. Naiades vision is to be an international hotel group offering wide range of product in all market segments of leisure in the hospitality industry. It wants to be recognized as the business community leader, continuously improving share holder value and welfare of staff whilst fulfilling corporate social responsibility. The purpose of Legends is to help people enjoy good times together, to celebrate life. The five beliefs at Legends are consideration for people, serving with passion, insistence on integrity, responsibility of leadership and entertaining with creativity. If we quote the Mission Statement of Legends Hotel, it can be seen that they view customer satisfaction in different perspective. Mission Statement: we are unforgettable, passionate team committed to provide outstanding personalised service through our unique concept of fengshui, the art of living in harmony Employees are provided with several benefits such as pension plan, medical cover, naiade home loan scheme, discretionary bonus, hotel stays at preferential rates, Naiade fun day, kids and team member party and star team member of the month and year. 2.2 Organisation Structure Legends Hotel is administered by a General Manager and a Resident Manager, who are responsible for the day to day management of the affairs of the organisation. Legends Hotel is structured with several departments, each headed by a Head of Department. These departments are then sub-divided into a number of divisions which are each under the direct responsibility of a Supervisor. The different departments as well as the divisions are illustrated hereunder. For ease of understanding each department constituting the hotel has been illustrated in the diagram. As far as Internal Service quality is concerned, it is directly related to the Human Resource Department which is constituted of the HR Manager, the Personnel Manager, Assistant HR Manager and HR coordinator in the frontline of this department. The table below shows the number of staffs per department at The Legends Hotel. Table 2.1: No. of Employees at Legends Hotel S/No Department No. of Employees (Population) 1 Human Resource 5 2 Kitchen 77 3 Spa 15 4 Entertainment 18 5 Food Restaurant 125 6 Front Office 20 7 Security 30 8 Finance 15 9 Housekeeping 118 10 Quality and Events 2 11 Maintenance 25 Source: Human Resource Management Department, Legends Hotel Figure 2.1: Structure of Functional Organization Chart Assistant HR Manager NAIADE BOARD OF DIRECTORS LEGENDS GENERAL MANAGER LEGENDS RESIDENTMANAGER HOUSEKEEPING DEPARTMENT- Linen Laundry and Floor Valet Front Office Department reception, guest relation officer quality and events department food and beverages department- Restaurant, room service, bar Beach Entertainment department Kitchen department pastry, main kitchen, stewarding spa department maintenance department security department finance department Human Resource department HR MANAGER HR Coordinator Personnel Manager Source: Human Resource Management Department, Legends Hotel 3.0 Literature review 3.1 What is Internal Service Quality? Quality is defined in ISO 9000:2000 as the degree to which a set of inherent characteristics fulfils requirements. Degree means that quality can be used with adjectives such as poor, good and excellent. Inherent is defined as existing in something, especially permanent characteristics. Characteristics can be quantitative or qualitative. Requirement is a need or expectation that is stated; generally implied by the organisation, its customers both internal and external and other interested parties. Internal service quality is measured by the feelings that employees have towards their jobs, colleagues and companies. It points to the ability and authority of service workers to achieve results for customers. Internal quality is also characterised by the attitudes that people serve each other inside the organisation (David, 1988) According to Grà ¶nroos (1988), service quality is commonly defined as a discrepancy between the service quality that is delivered by the organization and the service performance that employees expect. Conceptually, service quality is defined as global judgment or attitude relating to the overall excellence or superiority of the service (Parasuraman et al., 1988). 3.2 Importance of Internal Service Quality Delivering quality service is considered to be an important strategy for success in todays competitive environment. Since the 90s many service companies have pursued to enhance their performance and effectiveness in search of achieving differentiation in the market. An example of that is the attempt to convince customers that their quality is superior to the competitors. In addition, the importance of service sector has sharply increased in both developed and developing countries. The Service Profit Chain establishes relationships between profitability, customer loyalty and employee satisfaction, loyalty and productivity. Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal and productive employees. Employee satisfaction results primarily from high quality support services and policies that enable employees to deliver results to customers. This is demonstrated in the diagram below. Figure 3.1: The Links in the Service-Profit Chain Source: Putting the Service-Profit Chain to Work (James L. Heskett et al., 1994) Employee Satisfaction is the individual employees general attitude towards the job. It is also an employees cognitive and affective evaluation of his or her job. It is an important factor in determining service quality (Zeithaml et al., 1990). Satisfied employees are more committed to continuous improvement and quality, thus they are also more committed to delivering quality service. Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Employee loyalty is synonymous with achieving a balance that brings feelings of connection along with a commitment to produce. Ultimately, loyal employees can bring some big benefits. Economists define employee productivity as the output per worker or output per hour. With the increase in part-time employment and temporary and contract workers, many businesses use hours worked rather than output per worker to measure productivity. External Service Value- Value is a function not only of costs to the customer but also of the results achieved for the customer. It is based both on perceptions of the way a service is delivered and on initial customer expectation. Customer Satisfaction is the degree to which customer expectations of a product or service are met or exceeded. Corporate and individual customers may have widely differing reasons for purchasing a product or service and therefore any measurement of satisfaction will need to be able to take into account such differences (Pugh et al, 2002) Customer Loyalty is used to describe the behaviour of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favourable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers (Gursoy and Swanger, 2007) 3.3 Internal Service Quality in Tourism Sector In tourism sector, delivering quality across tangibles and intangibles elements represented a departure from conventional manufacturing oriented approaches to Total Quality Management At the heart of Quality Service is the difficulty in ensuring consistency due to the variability of human element. Lewis (2000) argues that As the 21st century unfolds, it is clear that people accept that service will play an increasingly important part in the economy. Customer perception of service delivery will be imperative and will shape the choice of service provider (Norma Dannunzio-Green et al., 2005) In the age of service competition, the customer comes first. Such is the power of customers that the term service management is increasingly used to emphasised management imperatives in this age of service competition and market forces. Managing quality is an integral part of service management and internal development of personnel and reinforcement of its commitment to competitive goals and strategies are strategic prerequisites for success. Does quality pay? This is one of the key contemporary issues that attract attention from practitioners. The role of quality in the overall performance of service business starts right from strategic level down to the implementation details. Improved service quality and customer satisfaction lead to higher productivity, increased loyalty, lower transaction cost and customer retention. It is popularly believed that better service leads to improved performance for a service firm. Today service organizations are concerned in the delivery of quality service and the building of loyalty among employees and customers. If employees are not happy with the work, they are more readily to quit their jobs than satisfied employees. Researchers have found that satisfied employees are more likely to improve their job performance (Judge et al., 2001), be creative and cooperate with others because satisfaction is the inner force that drives employee behaviour. Previous studies have suggested that loyal employees are more willing and capable of delivering a higher level of service quality. According to Schneider and Bowen (1985; 1993) the efforts to promote service quality must be based on managing employee behaviours and training them in interpersonal skills in order to exhibit a true customer focus. Bitner et al. (1990) observed that in service encounters, employee behaviour will impact on the customer perceptions of service quality. Zeithaml et al. (1990) argue that employ ees who are not suited to their jobs will not be able to deliver quality service (Ramseook, P. et al., 2010) 3.4 Measuring Internal Service Quality Measuring the quality of internal services is relevant since an external-customer support requires internal systems aligned with external customer expectations, including each internal subsystems adding value to others systems within the organization (Gilbert, 2000). Since years ago, researchers (Reynoso and Moores, 1995; Caruana and Pitt, 1997) have pointed out that there is a positive correlation between internal service quality, business performance and services delivered to customers, motivating some efforts to measure internal service quality by applying the SERVQUAL instrument. (Miguel Cauchick et al., 2006) SERVQUAL is the most widely utilized tool for measuring service quality (Parasuraman et al., 1988; 1994; Sureshchandar et al., 2001; Chiu, 2002) and its application continues to increase in different service setting such as banks, hospitality industry, health sector, education and travel and tourism. The five dimensions of SERVQUAL are as follows: Tangibles (physical facilities, equipment, and appearance of personnel) Reliability (ability to perform the promised service dependably and accurately) Responsiveness (willingness to help customers and provide prompt service) Assurance (knowledge and courtesy of employees and their ability to inspire trust and confidence) Empathy (caring, individualized attention the firm provides its customers). The present investigation can also be considered an attempt to use it for measuring internal-service quality, which is the service provided by Legends Hotel. 3.5 HR Implications on Internal Service Quality Human Resource Management can be essentially seen as an employee centred approach to management, although there is lots of definition of the term. Its an essential part of every managers responsibilities, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently. To the modern management theory, the employee satisfaction is considered one of the most important drivers of quality, customer satisfaction and productivity. Success of any organization depends on its valuable human resource. Achieving service quality through valuable human resource strongly depends upon the organizational culture and working environment. To deal with the attitude and behaviour of the human resource, HRM best practices and quality principles play an important role to motivate, train, develop, retain and satisfy their valuable human resource. When the internal customers are not satisfied with the practices of the management, they not only are unlikely to continue their service but also to share their unfavourable service experiences to others resulting in decreased motivations and financial performance of organization. Globalization has augmented competitive pressures to help improve the quality of services provided by the tourism sector. There is the need to enforce compliance with internal services quality regarding human resource management as many researchers are of the view that the whole development in the organization is due to the potential human resource, it is therefore call of the time to the employee in the centre of development of all process to enhance the sense of ownership and hidden assets for the effective employee job satisfaction. Berry (1994) found that a several beneficial organizations competed by hiring, rewarding, training and retraining a frequent error that organization made was to look at human resources skills and knowledge development as an experience which they had acquired during their working with the organization rather than a continuing process. He further added that, even if employees received training, it was either deficient, not on time, or not the actual type of training they needed or rather it was in general not specific.(Khan,2010) It was found that that human resource management practices as actual, tangible practices were designed to develop commitment. Along with a variety of human resource management practices, it had been found that rewards and recognition had a greater influence on the organizational commitment found relationships between specific practices, such as performance evaluation, promotion policies, compensation, and benefits, and affective commitment. (Ogilvie, 1986) Moreover employee satisfaction was considered to be one of the most important drivers of quality of services, customer satisfaction and productivity. In his study he investigated an important driver of employee satisfaction. He argued that interpersonal trust (trust in management and trust in peers) robustly influenced employee satisfaction and, employee loyalty as an end result (Matzler et al., 2004) Also, associations between employees commitment to their organizations and satisfaction and argued that still there seemed little conformity about the fundamental associations between these two significant employee attitudes. Understanding these approaches was important because they had significant consequences on business performance, and these approaches could be influenced by human resource strategies and practices (Rayton, 2006) The modern management must also focus these factors which were very important to enhance the profitability in the new paradigm of service that organization not only invested in employees to enrich their knowledge skill abilities through extensive training programs but also to provide them with required technological support to manage the customers. They must reconsider their recruitment process, training methodologies and implementation of fair system of pay for performance, conducive environment and job definition. Recruitment Selection The goal of recruiting is to generate a large pool of applicants and to provide enough information for individuals to self select out the process. The Selection process on the other side follows a standard and systematic pattern beginning with an initial screening interview and concluding with the final employment decision. The recruitment and selection process demands lots of interpersonal skills and management must be very careful while selecting the right candidate for the job (Decenzo and Robbins, 2005) Training and Development It forms an important part of an organization overall HRM strategy. It implies transition in skills, knowledge, attitudes and social behavior. (Cascio, 1982).Organisations are investing to train their workforce and develop it for future so that they can perform their job efficiently and effectively and therefore it is expected that training has a positive impact on both employees motivation and commitment. Reward and Recognitions Employees reward and recognition includes focusing on employees input and peer recognition by using multiple layer methods within a system to recognize individuals and teams in accordance with the established practices and the rewards must be on the basis of their performance even tangible rewards along with an intensive communications strategy with accepted and integrated accountability systems (Khan, 2010) Job Design It has a significant and positive effect on client satisfaction which, in turn, significantly affected organizational performance and it leaded the organizations goals accomplishment which employed new service standards and customer systems. It can be said that job designs could provide high levels of control on employee also offered augmented chances for the growth and implementations of employees skills. Hackman Oldham proposed the Job Characteristics Model, consisting of skill variety, task identity, task significance, autonomy, and feedback (Hackman and Oldham, 1976) Job Definition The job definition is basically arrangement or rearrangement of work with the motive to facilitate their employees and overcoming job frustration and enable them to be more productive, comforter while discharging their duties. It can be argued that defining the job of the employee helped the manger as well as the employee in decision making. The manger could get help regarding the decision whether the employee is the right person for promotion (Khan, 2010) 4.0 Methodology 4.1 Materials and Methods The purpose of this chapter is to outline the research methodology and processes undertaken to collect information for the report. A research is an organised inquiry which seeks to find explanations and to clarify doubtful facts so as to reach a conclusion. There must be ways of producing and analysing data so that the theories can be tested, accepted or rejected. (Clover and Balsley, 1979) defines research as the process of systematically obtaining accurate answers to significant and pertinent questions by the use of scientific method of gathering and interpreting information. 4.2 Purpose and Design of Survey A survey is a fact finding study. It is a method of research involving collection of data directly from a population or a sample thereof at particular time. For the purpose of this study, a survey was carried out to assess the status of Internal Service Quality on a sample of workers of different departments at Legends Hotel. The prime aim of the survey was to assess the following: The effectiveness of Human Resources Practises in delivering Internal Service Quality. To measure employees expectations and perceptions of service quality based on SERVQUAL model. To examine service quality dimensions in predicting satisfaction and loyalty among employees at Legends Hotel. To assess on the above, the design of the survey was very important. The survey design depends on the subject of the survey, the amount of time and the accuracy required. In effect, all depends on the proper design of the questionnaire in order to gather the appropriate information in a reasonable time frame. 4.3 Questionnaire Design A survey is a fact finding study. It is a method of research involving collection of data directly from a population or a sample thereof at particular time. For the purpose of this study, a survey was carried out to assess the status of Internal Service Quality on a sample of workers of different departments at Legends Hotel. The prime aim of the survey was to assess the following: The effectiveness of Human Resources Practises in delivering Internal Service Quality. To measure employees expectations and perceptions of service quality based on SERVQUAL model. To examine service quality dimensions in predicting satisfaction and loyalty among employees at Legends Hotel. To assess on the above, the design of the survey was very important. The survey design depends on the subject of the survey, the amount of time and the accuracy required. In effect, all depends on the proper design of the questionnaire in order to gather the appropriate information in a reasonable time frame. 4.4 Pre Testing However, before proceeding with the survey, it was important to undertake a pilot survey so as to test the efficiency of the questionnaire. Firstly, the questionnaire was circulated among five staffs of different grades and with varied academic background such as valet de chambre, security officer, chef de cuisine, assistant finance officer and front office manager. Since a face to face interview technique was used mainly for staff of lower grade, the concept of the questionnaire was clearly understood and all were able to make sense of the questions 4.5 Sampling Technique Used To conduct the survey, the target population was divided into eleven categories encompassing the different departments existing at Legends Hotel as more fully illustrated in Chapter 2. As the target population was quite large, a sample had to be used. The sampling size was determined using the stratified sampling technique. A stratified sample is obtained by taking samples from each sub-group of a population. It was required that the proportion of each stratum in the sample is the same as the population. At first a sample size of 100 questionnaires were distributed among the employees of the hotel. But during administration of the survey, employees were unfortunately reluctant to complete the questionnaire. The murder of an Irish tourist on the hotel premises in January 2011 gave rise to substantial trauma at different levels. As a result of that, employees had access to counselling, but still, there is still some sign of disturbance amongst them. Of the 100 questionnaire distributed, only 50 was collected which was fully answered following face to face interview with the employees. Due to time constraint, it was decided that the sample size of 50 was a good representative of the population size of 450 employees. Table 4.2: Sampling of Employees at Legends Hotel S/No. Department No. of Employees (Population) No. of Employees (Sample for 100 Employees) No. of Employees (Sample for 50 Employees) 1 Human Resource 5 1 1 2 Kitchen 77 17 8 3 Spa 15 3 1 4 Entertainment 18 4 2 5 Food Restaurant 125 28 14 6 Front Office 20 4 2 7 Security 30 7 3 8 Finance 15 3 2 9 Housekeeping 118 26 13 10 Quality and Events 2 1 1 11 Maintenance 25 6 3 Source: Computed Expected Results The study will reveal the present status of Internal Serv