The Pursuit of Quality at AT&T Universal Card Services - Essay Example

06 November 2006 A Measure of Delight: The Pursuit of Quality at AT&T Universal Card Services I. Overview The AT&T Universal Card Services Corporation is recognized as a pioneer in the highly competitive credit card business. With its commitment of providing maximum customer satisfaction, it has been in the forefront of creating a combined credit card and calling card. The business organization attracts customers by lifting the first year annual membership fee and charging lower interests than the prevailing market rates. Complementing this innovative product is AT&T's dedication of providing excellent customer service by establishing a highly motivated and empowered workforce. In order to monitor the performance of employees in dealing with the customers, the business organization has set up a unique and multifaceted measurement system. With these thrusts, the company is seen to surpass the industry standards. The creation of a process measurement system enables AT&T "to locate problem processes; to promptly address any problem discovered; to constantly asses how well customers are being served; and to reward exceptional performance" (Rosegrant 3). It should be noted that AT&T's motivation technique is primarily through the use of monetary benefits. Customer service representatives who are in forefront of the company's operations and are directly dealing with AT&T's customers are given financial incentives like bonuses if they achieve the goal set by the management. In order to monitor performance, managers, team leaders, and top executives are tasked to listen to the telephone associates' conversation with the customers in varying degrees. AT&T also conducts daily meetings in order to discuss the daily performance of the customer service representatives. This becomes the important venue for the discussion of how service quality can be continuously improved. The product offered by AT&T in the market together with the company's extension of exceptional customer service has gained it the largest market share in the credit card industry. AT&T has become the youngest business organization to be awarded the sought after Malcolm Baldrige National Quality Award. Despite this success however, both external and internal pressures are forcing AT&T to institute changes in its business operation. II. Statement of the Problem Looking at the external environment, competitors have recognized the huge profit potential in the market served by AT&T. The product which was pioneered by AT&T has become common in the market. New players have tried to offer their own no-fee, low interests credit card making it difficult for AT&T's product to stand out. Thus, the business organization opts to emphasize its thrust of providing above industry standard customer service. With this, AT&T's executives are faced with the challenge of identifying the ways on how to boost and enhance customer service provided by their telephone associates. This is even worsened by the fact that the company growth has slowed down and will not be able to accommodate the ascent of telephone associates to the corporate ladder. Externally, there is a strong pressure for managers to take the quality measurements a step further. The current system fails to correctly indicate customer satisfaction. It has been found out that the telephone associates' performance is not directly correlated to the quality of the service extended as perceived by the customer. There has been a consensus that the current system is not adequate to meet the more intense rivalry in the market: "Moreover, the current measurements no longer seemed to be driving the quest for improvement, and Davis and others had become convinced that it was time to retool a system that no longer fits the needs of the company" (Rosegrant 12). However, there is no consensus on what ought to be done in order to improve the process. Changing the process will also post problems within the workforce. It has also become apparent that changing the system will be met by resistance from customer service representatives because it will require them to realign their goals and strategies as well as jeopardize their compensation. Thus, AT&T is faced with the challenge of maintaining its current position amidst the intense market rivalry and the entry of new competitors. The company has opted to stress its commitment to service excellence yet it has no specific plan on how to enhance its service quality. It should also be noted that changing the current system which has become the pillar of the AT&T's success can be detrimental to the employee's perception. The problem of AT&T then is the installment of changes in the way it extends service to the customer in order to efficiently compete in the marketplace. It should be added that the new system should also be in line with the organization's commitment of having a well-motivated and empowered workforce who are willing to do their best to satisfy the customers. III. Objectives of the Company In general, the company's objective is fourfold consisting of service excellence, market leadership, profit, and employee commitment. Service Excellence. AT&T differentiates its product offering in the market by complementing its product by unparalleled customer service. In fact it can be seen that the key success factor in its operation is service quality. Even though competitors successfully duplicated AT&T's product offerings, it is almost impossible to match the company's above industry standards customer service. Market Leadership. Since its establishment in 1990, it can be seen that AT&T is striving to gain a strong foothold in the credit card industry. With the numerous challenges in the competitive arena, the company's move of evaluating its current strategy reflects its commitment to market leadership. Profit. As with any business organization, AT&T's business operation is motivated by profit objective. The company needs profit in order to finance its growth, create value for its shareholder, and provide the required resources to attain other company objectives. Employee Commitment. AT&T recognizes that employees' commitment to the business organization is instrumental in achieving its objectives of profit, service excellence, and leadership. Telephone associates are at the forefront of providing customer service and create the most profound effect on the company's day to day business operation. Being in direct contact with the customers, customer service representatives solely create the image of AT&T in the mind of the customers. Thus, it is AT&T's desire to maintain a highly motivated and empowered workforce who will convey outstanding customer service. With this commitment, AT&T motivates its employees through monetary rewards. IV. Alternative Courses of Action and their Consequences This section will look at the various alternative courses of action that AT&T can take in order to improve the quality of the services that it offers. It should be noted that the first two alternatives has already been suggested in the case study. Customer-Centered Measures (CCM) . The idea of installing customer-centered measures originates from the Federal Express group which has also been awarded the Malcolm Baldrige National Quality Award. The main goal of this alternative is the reduction of the process measures and to communicate them in a language which can be clearly understood by the customer. With this alternative, AT&T will revise its process measures selecting only those which are most significant to customer satisfaction. The company will then report its finding by giving the nominal number than the percentage. For example, instead of stating that 98% of cardholders are accurately billed, AT&T will report that 613 customers did not get a correct bill. The main advantage of employing a CCM is that it enables AT&T to "more concretely and powerfully express how the company is serving cardholders by stating their performance in terms of customer impact" (Rosegrant 12) It should be noted that giving the exact numbers of the customers affected by errors and shortcomings will be easier than taking them all as a whole. This will benefit AT&T because a mere 1% of its total market represents a large number of customers. Knowing the exact number of customers will enable them to assess the impact of the associates' performance. However, the reduction of the process measurements will be a challenge to AT&T. In order to do this, the company will be faced with the challenge of eliminating the less significant measurements. This is not an easy task because it requires data gathering on which process measures contribute to over all customer satisfaction. Also, the company needs some time to cope with the new process. Even though stating the results in nominal terms will be more convenient, it will be hard for managers to initially separate the components from the whole. Managers will also be faced with the challenge of identifying the range of customers where errors are significant or not. In the point of view of associates, tying the new set of process measurements to compensation will be most welcome. However, it should be noted that their might be some resistance on the reduction of measures especially if the management chooses to eliminate those which the telesales associates are deemed important. The reduction of measures might be detrimental to customer service representatives as this will mean a realignment of their goals and priorities. Statistical Process Control (SPC). Statistical process control, on the other hand, recognizes the need of the company to adopt a more long term outlook in quality measurement. It should be noted that there has been a lack of data analysis including "determining out of control processes, identifying special or common causes, to prioritizing improvement opportunities" (Rosegrant 13). The use of statistical process control will give the company a better way to analyze the data derived from each performance measure, revealing the significant trends and cause and effect relationship. The use of SPC will communicate the commitment of AT&T to long term service excellence. It will also enable the business organization to evaluate its historical performance measures which will enable it to determine out of control processes, identify special or common causes and prioritize improvement opportunities. With this, telephone associates will be able to see the impact of one of their action to the others. However, the use of SPC is currently impossible to service companies like AT&T at the moment. Should the business organization decide to pursue utilizing SPC to measure its processes, it will be faced by the challenge of adapting it to the service industry. It is also debated whether SPC will be valuable in measuring non-quantitative data such as courtesy and professionalism. Focus on Customer's Perception. In one of its studies, it has been revealed that the result of the performance measures are not often in line with customers' perceived quality. This alternative then recommends not to focus on the specific performance measures preset by the business organization but emphasize on how the customer perceive the service rendered by the company. It is irrefutable that the success of a business organization is highly dependent on its customers. Recognizing the value of customer loyalty, the business arena is currently evolving to market-driven and customer-centered. With this, linking customer perception with process measurement will be essential in knowing how a process adds to customer satisfaction. The process of generating customer perception is very tedious. It will entail the daily gathering of data from customer as performance evaluations are also done on a daily basis. This process is expected to be very costly and time consuming. AT&T will also be dealing with resistance from customer in giving their much needed feedback. V. Recommendation After considering the alternatives reviewed above, it is recommended that AT&T choose to employ the statistical process control system. This paper believes that this course of action will best solve the problem currently faced by the business organization. However, it should also be added that the SPC should also be coupled with the focus on customers' perception. This paper believes that the financial costs of developing an SPC which is specially designed to meet the needs of service companies like AT&T is less than the benefit that it will generate for the business organization. With this, AT&T will also communicate its commitment of pioneering value adding services to its target market. This effort is also most likely to benefit AT&T in the long run by helping the business organization determine areas for correction and identify correlation among the process measurements. It should be noted that statistical analysis will transform the raw data held by AT&T into information which can significantly help the business organization in competing in the business arena. The use of SPC will not in any way detrimental to the company's workforce. In fact, the results of the SPC will be useful to them in improving their performance. The company can still be paid their respective bonuses should they be able to reach the preset standards. It should be noted that the processed data will be essential to them as it will reveal how the different processes can be improved. As stated above, the company should couple SPC with focus on customer perception. Though the process of generating data from customer will be tedious, it will be very much significant for the company. AT&T needs to align customer perception with its process measurements. It should thoroughly identify what processes adds value to the customer experience. VI. Conclusion Business organizations need to evolve in order to respond to the different changes and trends in their external environment. For AT&T more intense competition requires its further emphasis on service excellence. In order to do this, the company needs to install a system in order to enhance service quality. This paper shows how SPC and focus on customer perception will aid AT&T in its quest to efficiently compete on its hypercompetitive market. Works Cited Rosegrant, Susan. "A Measure of Delight: The Pursuit of Quality at AT&T Universal Card Services." Harvard Business School Publishing: Boston. 1993 Read More