Medibank Icehouse - Customer Expectations - Case Study Example

Total Quality Management Student Name Institution Executive Summary The service industry accounts for more than 65 percent of the Australian economy (Abs.gov.au, 2015). The quality of service offered by any company is of key interest to customers. Medibank Icehouse offers ice skating services to its customers ranging from children to groups of adults. The paper identifies a problem in the quality of service rendered to customers. It further identifies service quality gaps in the provision of skating services by Medibank Icehouse while highlighting the zones of tolerance by customers. Further, the paper discusses in detail the adoption of a total quality management (TQM) system to address the problem. Finally, the paper discusses the application of best practice and quality management principles by the company in the attempt to better services rendered to customers. Table of contents Executive Summary 2 Table of contents 3 Problem Definition 4 Customer Expectations 4 Gap1: Expected service between Company perceptions of consumer expectations. 5 Gap3: Service delivery between customer-driven service designs and standards. 5 Gap5: Expected Service between Perceived Service by the customer. 6 Zones of Tolerance 6 Management Plan to Resolve the Problem 8 Policy Statement 8 Stage 1: Planning 9 Stage 2: Implementation 10 Stage 3: Performance appraisal 10 Application of best practice and quality management principles 11 Best practice management practices 11 Quality management principles 12 Customer focus 12 Continuous Improvement 12 Involvement of people 13 Process management 13 Conclusion 13 References 14 Problem Definition Facility maintenance as an operational activity refers to undertaking activities such as the keeping structures, spaces and infrastructure in the proper condition for operation. These activities are carried out in a routine and scheduled fashion to prevent degradation and failure. The Medibank Icehouse offers a range of skating services including skate hire and helmet services. It offers skating services to different categories of people such as child, adult, family, single family and spectator as well as groups. An appraisal of the maintenance operational activity that involved an appraisal of ice skaters and ice skateboard revealed that the skating service offered was below standard. The company has failed in its maintenance operational activity. It ought to ensure that the skating surfaces are smooth and safe for all groups of skaters (Icehouse.com.au, 2015). Also, the company should employ professionals to check the surfaces at intervals of two to three hours. However, the skating surfaces on both the ice skates and skateboards are not as smooth and soft as expected. The surface of the edge of the ice rink is not smooth. The rough and rugged surface makes it easy for new players and amateur players to fall. The ice skating service, therefore, fails to meet customer expectations creating service quality gaps. Customer Expectations Maintenance of skating facilities by Medibank Icehouse is wanting. An appraisal of the installation has revealed numerous flaws in the quality of the skating service offered. The skating surfaces on the ice rink are rough and rugged, for example. The inefficiency of the maintenance activity is discussed on the basis of the service quality gaps model below, as suggested by Parasuraman et al. (1985). The following service quality gaps can be identified. Gap1: Expected service between Company perceptions of consumer expectations. This gap mainly results from an inadequacy of a marketing research orientation, too many layers of management and inadequate management communication (Brogowicz et al., 1990). It is represented by discrepancies between the expectations of the customer and the perception of the management concerning those expectations. The inadequacy of the maintenance of skating surfaces in the case of Medibank Icehouse has had adverse effects on the quality of service that the company offers to the customers. Insufficiency in marketing research by the business possibly explains the failure of the company to perceive the effect inadequate maintenance on the quality customer of customer service (Parasuraman et al., 1985). The customers expect quality skating service, as represented by smooth, safe and well maintained skating surfaces. On the contrary, the company continues to offer services that do not meet the customer expectations. Gap3: Service delivery between customer-driven service designs and standards. The gap arises as a result of ambiguity and conflict in roles, inadequate supervisory control systems. It also arises due reduced technology-job fit, poor employee job fit, lack of teamwork and lack of perceived control (Brogowicz et al., 1990). The gap represents a failure of the company to tailor services offered to meet the specifications and expectations of the services provided. As a result, the company ends up allocating resources inappropriately, including personnel. The rugged nature of the skating surfaces and the lack of a team of employees dedicated to the maintenance of the surfaces amounts to the gap described. The management of Medibank Icehouse has failed in the allocation of resources to meet the standards customer-driven service delivery design. The inadequacy in the maintenance is a result of the inappropriateness of the supervisory control systems of the company. Gap5: Expected Service between Perceived Service by the customer. The gap arises resulting from the influences coming from the client side and the service gaps on the part of the service provider. This is the case where customer expectations are affected by the extent of past service experience, personal needs and word of mouth recommendation (Parasuraman et al., 1985). From Medibank Icehouse client side, the gap arises from individual needs. New and amateur skaters need well maintained, smooth and safe skating surfaces to guarantee their safety. However, the surface of the ice rink is not smooth, especially on the edge of the ice rink. Moreover, since the surface is rugged, new and amateur players who would like to grasp the handle to skate, easily fall. From the company’s side, the maintenance of the ice rink is not often done. The inadequate maintenance causes the ice to thaw when the players touch the surface. The ultimate outcome of the inadequacy in the maintenance of the skating surfaces is that customer expectations about the quality of skating service offered by the company are not met. What they perceive is a below-standard service that cannot respond to their specifications and personal needs (Brogowicz et al., 1990). Zones of Tolerance While the quality of the service offered by Medibank Icehouse does not meet customer expectations, there exist zones of tolerance between the assumptions the client is making the service quality and the satisfaction he gets. The following factors affect the range of expectation between adequate and desired service boundary by the customers. First, explicit service promise, which is derived expectations from another person or a group of people gives the customer a premeditated expectation about the service (Johnston, 2010). Most new and amateur players visit Medibank Icehouse through referral by friends and relatives. As such, they already have expectations of the desired skating service. Such customers have narrower zones of tolerance and are, therefore, highly susceptible to being disappointed in the quality of service offered by the company. The company must ensure that the skating surfaces are maintained as smooth and soft to meet customer desired service (Zeithaml et al., 2013). Secondly, implicit service promises are customer expectations arising from either personal needs or promises about the service given by the service provider. On the side of the individual needs, customers generate expectations about desired service based on their desired physical and psychological needs to be satisfied (Zeithaml et al., 2013). New and amateur skaters need well maintained skating surfaces to guarantee their safety. Their zone of tolerance is, therefore, very narrow. Rough and ruddy skating surfaces are unacceptable because they jeopardize their satisfaction from skating experience. Also, the promise that Medibank Icehouse makes about the quality of service offered through adverts has a substantial effect on the expectations of the customer service. When customers get a below standard skating experience because of the poorly maintained skating facilities, their zone of tolerance is exceeded. Such experiences have the potential of destroying the customer base. The company management must, therefore, act promptly to rectify the current situation. Thirdly, word-of-mouth from friends and veteran customers of Medibank Icehouse affects the new customers’ expectation of desired service from the company. When the new players visit the facility for the first time, they already have expectations about the quality of skating service they are likely to get from the company. Poorly maintained skating surfaces would mean that the word-of-mouth passed to new and prospective customers discourages them from visiting the facility (Zeithaml et al., 2006). The management of Medibank Icehouse must ensure that the rough surfaces and the ice rink are smoothened and properly maintained at all times. Experience about the service offered by the company also affects the breadth of the boundary of the zones of tolerance. Customers of Medibank Icehouse who have had better experiences with the enterprise in the past have already created expectations about desired service. When the quality of surface diminishes as a result of poor maintenance, their zones of tolerance are easily exceeded pushing them away (Johnston, 2010). Also, past experiences by customers from other companies offering skating services make their boundaries of zones of tolerance fragile. Management Plan to Resolve the Problem Policy Statement To provide continuous improvement in the providence of outstanding ice skating service through maintenance of world-class ice skating facilities tailored to customer specifications and needs to keep them coming for more. The company’s aim is to see to it that the skating service it provides to customers is maintained at world-class standards. To maintain such a level of service quality, the company must maintain skating facilities including skating surfaces and ice rinks in the condition expected by customers. The management must draw a strategy to see to it that this standard is achieved and maintained. Attainment and sustenance of world-class quality ice skating service by Medibank Icehouse necessitate the adoption of a Total Quality Management (TQM) system. A TQM system is an overall change management system as opposed to departmental changes involving given processes (Samson & Terziovski, 2009). Every stakeholder in the organization has responsibilities to undertake. The management must ensure that resources necessary for the TQM system are availed and allocated accordingly. The TQM system is discussed below in terms of responsibilities, procedures, processes, training and resources needed to implement the system. Stage 1: Planning In this phase of the system, the management of Medibank Icehouse must come up with the approach to be adopted. Possible approaches in this stage include The TQM element approach, the guru approach, the organization model approach, the Japanese total quality approach and the award criteria approach. Further, the management must define the objectives of the TQM system that must be set in consultation with all stakeholders including employees. The management of Medibank Icehouse will need to redefine the mission and vision of the company to the employees. The redefinition will be done through seminars and staff meetings in every department. The top management will also print flyers and pamphlets to be distributed to all employees. These print outs will contain information on the responsibilities of each employee towards the success of the TQM (Douglas & Judge, 2011). Training of workers is also undertaken at this stage. Supervisors are solely responsible to implement the TQM in their departments. They carry the responsibility to teach their employees the philosophies of the TQM. The training will be aimed at creating experts in maintenance for Medibank Icehouse (Terziovski et al., 2007). Stage 2: Implementation At this phase, the management makes available the resources needed for the change management. These resources include machines to keep the ice rink surfaces up to standard as well as professionals to monitor the condition of the services rendered to the customer. The main process in this phase is interpretation and actualization of tools used to define the TQM system. Such tools include flowcharting, Pareto analysis and statistical process control (SPC) as well as employee and customer surveys (Spencer, 2014). Medibank Icehouse should capitalize on employee and customer surveys and statistical process control for continuous improvement. The implementation phase will also involve the creation of teams to ensure the success of the TQM. Three types of teams will be adopted. Quality improvement teams (QITs) also called excellence teams will be responsible for specific recurrent problems in the skating facilities. They will be maintained on a temporary and cyclical basis. Employees in all departments will be involved. Secondly, Problem solving teams (PSTs) will handle solving problems arising in the facilities. They will also identify and address the causes of such problems. They will last two weeks. Finally, Natural work teams (NWTs) will be formed. These teams will include small groups of skilled workers sharing responsibilities and tasks (Sun, 2000). They will be the general overseers of the TQM process. Stage 3: Performance appraisal The management, as well as employees of Medibank Icehouse, will make an appraisal of the TQM system to measure its effectiveness. It is advisable to hire the services of an external body to measure the efficiency of the TQM system. An essential component of this phase is recognition (Krajewski et al., 2012). It will be undertaken at both individual and team level. The supervisors will handle detecting and recognizing contributors. Recognition will be done immediately after the employee has done something worth recognizing. It will be done through awarding trophies, and letters in front of top management and performance boards. Application of best practice and quality management principles Best practice management practices The best practices required for the quality management system of Medibank Icehouse will be divided into three types namely: strategic planning, measurement, and compensation. Strategic planning will involve formality in developing the strategic objectives and plans. It will also involve the involvement of subordinates in the quality management process (Becker & Gerhart, 2006). The level of participation and the formality of the development of the strategic objectives will constitute the indicators for this type of best management practice. Medibank Icehouse targets to formalize fully the process of developing the strategic objectives as well as to ensure full participation of subordinates in the process. Secondly, measurement systems will be used for decision making as well as control. The indicator for decision making will be how well Medibank Icehouse management uses information in the identification of problems and providing solutions to these problems. On the other hand, the indicator for control will be how well Medibank Icehouse management uses the information to influence organizational behavior. The success in the use of information will be measured through performance variables such as correct deviations from targets. The company’s target is optimum use of information for decision-making and control (Li et al., 2003). Finally, compensation will involve setting importance on performance-based remuneration for the subordinates. Medibank House will compensate employees based on their performance in providing excellent customer service. The indicator for how well employees will offer services to customers will be the number of customers who lodge complaints concerning the quality of service rendered in a given department (Douglas & Judge, 2011). Quality management principles Customer focus Customer focus refers to the principle that underscores the dependence of an organization on its customers. It requires the organization to have an understanding of current and future needs of customers. Also, it places a duty on the organization to ensure that customer requirements are not only met but also exceeded. Under this concept, Medibank Icehouse must strive to identify and meet customer needs. The management must dedicate enough resources to market research that will define the nature of maintenance of skating facilities desired by the customers (West, 2010). A group of well trained and experienced employees must be dedicated to this task. Continuous Improvement The principle requires continual improvement of the overall performance of an organization to be an organization’s permanent objective. Maintaining ice skating facilities in the condition satisfactory to customers does not give Medibank Icehouse the guarantee of sustaining the customer base. The only way to ensure that the quality of service continuously meets the ever-changing customer needs is through continuous improvement of skating equipment (Becker & Gerhart, 2006). Involvement of people The principle refers to the inclusion of people at all levels in order to tap into their abilities for the benefit of the organization. Medibank Icehouse management must ensure that the quality management system encompasses, as an integral part, employee empowerment. Employees must be provided with necessary equipment (such as machines) to identify and correct any quality problems in the facility. Process management Process management refers to the identification, understanding and management of interrelated processes that form the organization’s system. The management, as well as employees of the company, should integrate quality into the process of service delivery (West, 2010). Quality problems in the process such as poorly maintained skating surfaces must be identified and corrected. Conclusion The quality of skating service offered by Medibank Icehouse has been found not to meet customer expectations. 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