Online citations, reference lists, and bibliographies.
← Back to Search

Cutting Corners And Working Overtime: Quality Erosion In The Service Industry

Rogelio Oliva, J. Sterman
Published 2001 · Economics, Computer Science

Cite This
Download PDF
Analyze on Scholarcy
Share
The erosion of service quality throughout the economy is a frequent concern in the popular press. The American Customer Satisfaction Index for services fell in 2000 to 69.4%, down 5 percentage points from 1994. We hypothesize that the characteristics of services--inseparability, intangibility, and labor intensity--interact with management practices to bias service providers toward reducing the level of service they deliver, often locking entire industries into a vicious cycle of eroding service standards. To explore this proposition we develop a formal model that integrates the structural elements of service delivery. We use econometric estimation, interviews, observations, and archival data to calibrate the model for a consumer-lending service center in a major bank in the United Kingdom. We find that temporary imbalances between service capacity and demand interact with decision rules for effort allocation, capacity management, overtime, and quality aspirations to yield permanent erosion of the service standards and loss of revenue. We explore policies to improve performance and implications for organizational design in the service sector.
This paper references
10.1002/SDR.4260010105
Worker burnout: A dynamic model with implications for prevention and control
J. Homer (1985)
Exploration and exploitation in organizational learn
M. Masuch (1991)
10.2307/2393920
Problems and Paradoxes in a Model of Punctuated Organizational Change
M. Sastry (1997)
10.1037/10319-006
Level of aspiration.
K. Lewin (1944)
10.1287/MNSC.44.7.910
Toward a Theory of Continuous Improvement and the Learning Curve
W. Zangwill (1998)
Catalyzing systems thinking within organizations. F. Masaryk, ed. Advances in Organizational Development
P Senge (1990)
Service Sector Productivity
McKinsey Global Institute. (1992)
10.1287/MNSC.31.7.900
Rationality in the Analysis of Behavioral Simulation Models
J. Morecroft (1985)
10.1287/MNSC.41.11.1750
The Acquisition, Transfer, and Depreciation of Knowledge in Service Organizations: Productivity in Franchises
Eric D. Darr (1995)
Managing Quality for Higher Profits
R. Broh (1982)
10.2307/2392308
Judgement and choice: The psychology of decision
R. Hogarth (1980)
10.2307/2089392
"Models of Man"@@@Models of Man: Social and Rational. Mathematical Essays on Rational Human Behavior in a Social Setting.
F. Mosteller (1957)
Service Sector Productivity, McKinsey&Co
Mckinsey Global (1992)
10.1037/0021-9010.70.3.423
Employee and customer perceptions of service in banks: Replication and extension.
B. Schneider (1985)
Verification of computer simulation mod
R. Oliva (1967)
Service quality and profits: Can you have your cake and eat it, too?, Human Res
B. Schneider (1991)
Judgment and Choice: The Psychology of Decision, Wiley, New York, 1980. Homer, J.B., "Worker Burnout: A Dynamic Model with Implications for Prevention and Control,
Association (1980)
Why is service so bad? Pul-eeze! Will somebody help me? Time (Feb
S. Koepp (1987)
10.1108/01437729410053590
Measuring Workers′ Burnout and Intention to Leave
J. Weisberg (1994)
10.2307/2283171
A Behavioral Theory of the Firm.
M. Shubik (1965)
Quality Management in Service Organizations, International Service Quality Association
E Gummesson (1993)
10.5860/choice.28-0390
Delivering quality service : balancing customer perceptions and expectations
Valarie A. Zeithaml (1990)
PSYCHOLOGY OF PREFERENCES
Student (1982)
10.1016/0377-2217(89)90059-3
Multiple tests for validation of system dynamics type of simulation models
Y. Barlas (1989)
10.1016/0377-2217(92)90011-W
Systems thinking and organizational learning: Acting locally and thinking globally in the organization of the future
P. Senge (1992)
Macroeconomics of Unbalanced Growth
W. Baumol (1967)
Tests for building confidence in system dynamics models
P. Senge (1980)
Vicious cycles in organizations
M. Masuch (1985)
Tolerance zones in perceived service quality
T. Strandvik (1994)
10.2307/2392809
Vicious circles in organizations.
M. Masuch (1985)
Macroeconomics of Unbalanced Growth: Reply
W. Baumol (1972)
Appropriate summary statistics for evaluating the historical fit of system dynamics models
J. Sterman (1984)
10.2307/1058186
Economic Issues of the Eighties
C. Goodwin (1980)
A dynamic theory of service delivery : implications for managing service quality
Rogelio Oliva (1996)
Managing Service Industries
P. Mills (1986)
10.1057/JORS.1966.38
Problems in industrial dynamics
J. Hofer (1966)
10.1057/palgrave.jors.2600961
Introduction to System Dynamics Modeling with DYNAMO
G. Richardson (1981)
Service Sector Productivity
Mckinsey Global (1992)
10.1111/J.1475-4991.1992.TB00456.X
Productivity and American Leadership
R. Rowthorn (1992)
10.1287/opre.29.4.698
The Customer Contact Approach to Services: Theoretical Bases and Practical Extensions
R. Chase (1981)
Products get better markets than service
(1998)
10.1016/0190-7409(83)90039-7
Stress and burnout in the human service professions
B. Farber (1983)
10.1146/ANNUREV.PS.32.020181.000413
BEHAVIORAL DECISION THEORY: PROCESSES OF JUDGMENT AND CHOICE
H. Einhorn (1981)
10.1177/002224379303000102
A Dynamic Process Model of Service Quality: From Expectations to Behavioral Intentions
William Boulding (1993)
This paper was with the authors 5 months for 2 revisions
Linda Accepted (1999)
Why is service so bad? Pul-eeze! Will somebody help me?,
S. Koepp (1987)
10.2307/3439127
Applied Economic Forecasting
H. Theil (1966)
Service Quality and Profits: Can you have your cake and eat it, too?
B Schneider (1991)
10.1061/(ASCE)0733-9364(1992)118:1(60)
Effects of scheduled overtime on labor productivity
H. R. Thomas (1992)
Service quality and management practices: A look at employee attitudes, customer satisfaction and bottom-line consequences
W. W. Tornow (1991)
10.1287/MNSC.43.4.503
Unanticipated side effects of successful quality programs: exploring a paradox of organizational improvement
J. Sterman (1997)
Managing quality for higher profits: A guide for business executives and quality managers
Robert A. Broh (1982)
American Customer Satisfaction Index American Society for Quality
(1998)
Industrial Dynamics An alternative approach to economic policy: Macrobehavior from microstructure
J Forrester (1961)
Why is service so bad? Pul-eeze! Will somebody help me? Time (Feb. 2) 46
S Koepp (1987)
MACROECONOMICS OF UNBALANCED GROWTH: THE ANATOMY OF THE URBAN CRISES
W. Baumol (1967)
Problems in Industrial Dynamics
W. Jarmain (1963)
10.1287/MNSC.38.5.623
Aspiration Level Adaptation: An Empirical Exploration
Theresa K. Lant (1992)
10.2307/2392454
Employee and Customer Perceptions of Service in Banks.
B. Schneider (1980)
Products get better markets than service Quality 37(1) 18. van Horn, R. 1971. Validation of simulation results
(1998)
10.1007/978-94-007-0753-5_103371
Quality of working life
I. Svetlik (1996)
Appropriate Summary Statistics for Evaluating the Historical Fit of System Dynamics Models," Dynamica
J. D. Sterman (1984)
10.1287/MNSC.14.2.B92
Verification of Computer Simulation Models
T. Naylor (1967)
Productivity and American Lead
S. Blackman (1991)
Products get better markets than service,
U.S (1998)
10.2307/2523037
Employee turnover : causes, consequences, and control
W. Mobley (1983)
Catalyzing Systems Thinking within Organizations Advances in Organizational Development
P M Senge (1990)
10.1016/0167-2681(81)90012-3
A model of adaptive organizational search
D. Levinthal (1981)
Measuring worker's burnout and intention to leave. Quality of Working Life
J Weisberg (1994)
10.5860/choice.31-4457
A New American Tqm: Four Practical Revolutions In Management
司馬 正次 (1993)
10.1287/MNSC.17.5.247
Validation of Simulation Results
R. L. Horn (1971)
10.1177/0092070393211001
The nature and determinants of customer expectations of service
V. A. Zeithaml (1993)
10.1126/science.247.4945.920
Learning Curves in Manufacturing
L. Argote (1990)
Catalyzing systems thinking within organizations
P. Senge (1990)
An alternative approach to economic policy : Mac - robehavior from microstructure
R. H. Day (1979)
Multiple tests for validations of system dynamics
Y. Barlas (1989)
10.1057/palgrave.jors.2600946
Industrial Dynamics
J. Forrester (1997)
10.1287/MNSC.35.3.321
Misperceptions of Feedback in a Dynamic Decision Making Experiment
D. Sterman (1989)



This paper is referenced by
Investigating overtime management practices at a selected gold mine in the Witwatersrand Basin
F. S. Mokheseng (2019)
10.1057/DDDMP.2009.12
Examining the future of retail banking: Predicting the essentials of advocacy in customer experience
S. Rabino (2009)
Does learning to reflect make better modelers
J. Slinger (2008)
10.2139/ssrn.2951959
Pooling Queues with Discretionary Service Capacity
M. Armony (2017)
THE USE OF TEMPORARY WORKERS AS A RESPONSE TO WORK PRESSURE IN SERVICE OPERATIONS
L. E. Lopez (2015)
10.1111/poms.13145
Capturing the Benefits of Worker Specialization: Effects of Managerial and Organizational Task Experience
J. M. Madiedo (2020)
10.1504/IJTPM.2006.010912
Unfolding the learning disabilities using qualitative analysis: the two-wheeler service sector in India
Virupaxi Bagodi (2006)
An Empirical Study of the Spillover Effects of Workload on Patient Length of Stay
Jillian A. Berry Jaeker (2012)
10.1287/mnsc.2016.2512
Gatekeepers at Work: An Empirical Analysis of a Maternity Unit
Michael Freeman (2017)
10.1007/S11628-018-00390-1
Work pressure and burnout effects on emergency room operations: a system dynamics simulation approach
DongHyun Choi (2018)
10.2139/SSRN.1256143
Preventing Accidents and Building a Culture of Safety: Insights from a Simulation Model
J. Lyneis (2008)
Clustering as a pattern of expansion within and across industries
Thomas Hutzschenreuter (2007)
Diversification: A Strategic Option to Survival of Micro-Finance Banks in Imo-State, Nigeria
Nwaiwu Blessing (2014)
10.1109/SCC.2007.19
A Services Theory Approach to Online Service Applications
C. Pinhanez (2007)
10.1287/msom.2016.0589
How Do Customers Respond to Increased Service Quality Competition?
Ryan W. Buell (2016)
Death Spirals and Virtuous Cycles Human Resource Dynamics in Knowledge-Based Services
Rogelio Oliva (2010)
10.1016/j.ijpe.2019.107590
Workforce production planning under uncertain learning rates
Rossana Cavagnini (2020)
10.2139/ssrn.3071668
Supply Chain Tsunamis: Research on Low Probability High Impact Disruptions
H. Akkermans (2017)
10.1080/09537320902969190
Life cycle profit – reducing supply risks by integrated demand management
G. Reiner (2009)
10.1007/978-3-319-34043-2_4
Higher Order Models
J. Duggan (2016)
10.1002/SDR.402
System Dynamics and Strategy
M. Gary (2008)
The Impact of Conformance and Experiential Quality on Healthcare Cost and Clinical Performance
Claire Senot (2014)
10.1016/J.EMJ.2008.04.003
On value and value co-creation: A service systems and service logic perspective
Stephen L. Vargo (2008)
10.1080/14783363.2017.1350096
Appropriateness of cellular operations in information-intensive services
V. Gliatis (2019)
10.1016/j.cppeds.2019.100662
Selecting physician well-being measures to assess health system performance and screen for distress: Conceptual and methodological considerations.
K. J. Brady (2019)
10.1287/mnsc.1040.0283
50th ANNIVERSARY ARTICLE: Organizational Behavior, Strategy, Performance, and Design in Management Science
J. Boudreau (2004)
10.12816/0045546
Factors influencing operations management practices for Islamic banks in Bangladesh
Rezbin Nahar (2016)
10.1111/POMS.12237
Estimating the Impact of Understaffing on Sales and Profitability in Retail Stores
V. Mani (2015)
10.1109/ICMIT.2012.6225865
The R&D talents development of high-tech industries in Taiwan
H. Huang (2012)
10.21427/D7TF1H
An Integrated Framework for Staffing and Shift Scheduling in Hospitals
W. Rashwan (2017)
10.1080/1051712X.2012.647797
Separate or Integrate? Assessing the Impact of Separation Between Product and Service Business on Service Performance in Product Manufacturing Firms
Rogelio Oliva (2012)
10.1002/joom.1084
Improving customer routing in contact centers: An automated triage design based on text analytics
N. Ilk (2020)
See more
Semantic Scholar Logo Some data provided by SemanticScholar