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Industrial Engineering, January sample essay

Recent studies commissioned by the Quality Research Institute (QRI), a partnership between Philip Crosby Associates Inc. and The Gallup Organization, reveal a startling gap between business executives and customers and their perceptions of quality and customer satisfaction. While a decisive majority (73 percent) of CEOs believe American business is committed to quality, QRI found that consumers overwhelmingly (84 percent) disagree.

Similar discrepancies showed up when industry managers and end-user customers from three specific industries — retail, hospitality and utilities — were interviewed to compare their perceptions of overall customer satisfaction. These studies point to a flaw in how businesses define and measure quality, a flaw destined to hurt bottom-line profits. Quality, in the final analysis, is defined by customers. They must be satisfied and remain satisfied if a company is to prosper. As long as corporate performance is measured only in financial terms, quality will continue to suffer.

To offset this problem, more and more companies are turning to independent quality audits, and they are reporting the results alongside financial reports to demonstrate success in achieving both profits and quality goals. Problems and opportunities The 1993 survey, Profits Versus Quality, illustrated both problems and opportunities in customer perceptions of quality. In this national survey, most consumers said they believed business was more concerned with profits than with delivering quality products or service. They also criticized business leaders for a lack of focus on quality workplaces.

Most striking, however, was the widely held belief that business leaders who do not put quality ahead of profits are missing a big opportunity. Almost ninety percent of American employees said they would feel more committed to achieving their company’s financial goals if their managers were more concerned with delivering quality to the customer. The three industry studies offer more detailed insight. In these surveys, executives were found to seriously overestimate the overall level of satisfaction even their best and most loyal customers have with their services.

For example, more than 60 percent of retail executives believed quality of service had improved, while fewer than 30 percent of their customers bad noticed service quality improvements. In the hospitality trade, 70 percent of the hotel/motel executives in the study believed their hotels met customer expectations “all the time” or “almost all the time. ” Only about 40 percent of customers agreed. The results in the utility industry were even worse. While 64 percent of electric utilities executives said quality has improved, only 9 percent of their customers agreed.

QRI’s surveys show clearly that relying on experience and “gut feeling,” do not work. Companies must determine what really matters to customers and act accordingly. A well-managed Quality of Service Audit (QSA) can identify and define customers’ real requirements, including those attributes such as trust and confidence, that lead to preference and loyalty. Regular customer measurements also can point out problem areas so corrections can be made before they have a negative financial impact. In addition, QSAs complement total quality management techniques by bringing customers into the quality loop.

Since quality efforts eventually are reflected in profits, companies which take quality seriously should report QSA results alongside standard financial reports to shareholders. Thus, quality must be monitored as accurately, objectively and in as much detail as the company’s finances. An effective QSA also should be based on the highest quality standards, including those specified by ISO 9000, as well as the criteria for the Malcolm Baldrige National Quality Award and the European Quality Award.

Measures developed by such quality gurus as Crosby, Deming, and Juran also should be considered. In all cases, the quality audit must address all the product and service attributes that communicate value to the customer, lead to customer satisfaction, and affect customer preference. Figure 1 breaks out dissatisfiers versus satisfiers in the customers’ hierarchy of needs. Designing a useful quality audit To maintain the integrity of the audit, it must be done according to a strict process. Each research project is unique, but certain general guidelines always apply.

Clear goals must be defined, and these goals must be incorporated into each phase of the audit, from questionnaire and sample design through data collection and analysis, if the results are to be accurate and projectable. Before the audit survey can be designed, serious consideration must be given to specific QSA goals and their relationship to larger organizational goals. In this phase, the company also should define the target population, identify specific concepts to be measured, and develop a general structure for the analysis.

At this stage, it is important to get input from the kinds of people to be surveyed. Do the concepts to be measured make sense to the people who will be asked to provide service quality feedback? Is the domain to be evaluated (e. g. , client satisfaction and service excellence) adequately covered, or has something been overlooked? Are questions phrased in language that respondents use spontaneously when evaluating service excellence? This information will help pave the way for questionnaire construction.

Particular care must be taken in this phase to ensure that issues of data completeness, response rates, and reliability are balanced with cost and time constraints. Data can be collected in several ways — telephone, face-to-face interviewing, or self-administration by respondent — each with different ramifications. For example, interviewer-administered surveys are more expensive, but usually have higher levels of cooperation, which, in turn, are essential to the reliability and projectability of survey conclusions.

When designing the questionnaire itself, be careful that the order and wording of questions do not bias responses. In addition, the basic form of each question must be tailored to project goals. Also, should “open” questions be used to gain richer insights and identify new issues, or should response formats be standardized to facilitate statistical analyses? Once a questionnaire has been drafted, a pre-test should be completed to verify that the questions are easily understood and that interviews can be administered readily within a suitable length of time.

With an appropriate questionnaire developed and pre-tested, the next phase is to select a representative sample from the target population identified earlier. Many statistical issues related to sample size and suitability must be considered. Random selection is just the beginning. The sample also must be tailored to meet the needs of the research goals. Dividing the sample into subgroups and sampling these subgroups separately helps enforce representativeness, and thereby improves the statistical efficiency of the overall sample.

Stratification, in effect, reduces the “margin of error” statisticians calculate to allow for the possibility of uncontrollable error in the random selection process. Measurement frequency also must be considered. A survey designed to measure service quality, if it is to be linked to an action plan, begs for periodic measurement to assess whether the action plan is working. Turning reliable data into results All efforts to this point will be worthless if the people in the sample do not respond to the questionnaire.

Gaining the cooperation of respondents is crucial because high rates of completion are one of the few ways to ensure the final survey results are not biased. Telephone interviewing is particularly well-suited to service quality measurements where the target population consists of professionals and executives. It provides for flexible cal1-backs to fit interview appointments into busy schedules. Non-response tends to be a much more serious problem in a self-administered survey because interviewers cannot intervene to expedite cooperation.

Self-administered questionnaires require special attention to issues of clarity and ease of administration, as well as to devices that will help encourage cooperation. Once data are collected, the results must be analyzed in keeping with the initial research goals. The list of analytical tools available are a statistician’s fantasy. Options include cross-tabulation, correlation and regression, including the multivariate version of each; many variations on factor and cluster analysis; multiple discriminant analysis; conjoint analysis; perceptual mapping; LISREL analysis; logistic regression analysis; log-linear modeling and on and on.

Analytic methods should be chosen for their ability to provide precise answers to the research questions that have driven all the earlier phases of the research design. It is worth noting that a survey designed to provide an assessment of service excellence encompasses two related ideas by separate analytical tasks: understanding the dynamics of satisfaction and service excellence, and the relatively simple reporting of service quality measures developed in the course of this investigation. Practical and useful quality information

Quality has become a strategic factor in the marketplace. Perceptions of poor quality service will ultimately be reflected in a corporation’s profit-and-loss statement. By measuring what customers really think about quality, QSAs can provide clear, practical, and useful information that will prove indispensable in the design of a program to achieve and maintain quality and service excellence. Jacques Murphy is senior vice president, managing director southeast division, of the Gallup Organization, Atlanta, Ga. J. A. Taylor is director of marketing for the same organization.

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