A framework for controlling quality of services

Adam Hershauer, and Ruch (1978) have proposed a process for developing standards and measures of quality in services and have applied it in banking. Their approach provides a framework ad a process for creating a unique set of measures for each service within each organization. It assumes that the knowledge needed to create a measurement system exists within the minds of current system managers. The group processes involved are designed to coalesce from the managers the definition of the system from a quality point of view, the specific kinds of deviations from accepted norms that affect quality and ways of measuring each specific deviation.

A shirt laundering service is used as an example to explain their process to system managers. Shirt laundering involves operations that are simple and well understood.

The major steps in the process are as follows:

1. Define unit operations: A unit operation is associated with an identifiable change in state in the processing that occurs. For example in the shirt laundering service, the unit operations are (1) receive and tag, (2) wash and clean, (3) dry and press, and (4) package and deliver. The unit operation that results from the process is defined by the managers through a carefully designed group process.
2. Generate key quality deviations: Deviations represent technical system requirements that are subject to variability and that need to be controlled. Through carefully designed group processes, the mangers generate what and where in the process deviations may occur. A second step in the process is to distill from the deviations list the key quality deviations. Compared with the industrial quality control key quality deviations are equivalent to the dimensions and attributes that need to be controlled because they affect product performance and quality. The key quality deviations are caused by the nature of the items being processed (at entry, in process, or at output) or by the nature of the processes used. In the shirt laundering example, the key quality deviations and the unit operation location where they occur (in parentheses ) are as follows:

(a) Number, type, and size of stains in shirts (input, wash and clean)
(b) Number of buttons missing (input, wash and clean , dry and press)
(c) Item identification missing (receive and tag, wash and clean, dry and press)
(d) Wrong availability (package and deliver)
(e) Days until delivery (wash and clean, dry and press, package and deliver).

3. Generate measures: Using the key quality deviations as a basis, the managers develop related measures through group processes. For example for the deviation “number, type, and size of stains” the measures were as follows:

(a) Stain complaints per customer
(b) Worker hours expended removing stains.
(c) Cost of shirt replacement divided by standards for replacements.
(d) Number of shirts with a stain divided by total number of shirts received

4. Evaluation of measures: As a basis for finalizing the measures developed in step 3, participants are asked to rate each measure in terms of its value in the outcome of the deviation and to rate the strengths of their convictions of that ratings. Only measures whose average rating is above a certain threshold are retained in the measurement system.

Applications in banking:

The system for developing quality measures was applied to check processing and to the personnel function in three banks.

For check processing, seven unit operations were defined in two banks as the following:

1. Receipt of transfer documents
2. Preparation for processing.
3. Processing
4. Reconciling and settlement
5. Preparation for dispatch
6. Dispatch
7. Post processing

In bank C, 93 deviations were defined and were reduced to seven key quality deviation, sixty measures were then defined to the key deviations. These measures were evaluated by executives in the organization through the rating process, and a final list of 25 measures was retained. In addition to the more detailed measures, five system wide measures for check processing were accepted at bank A:

1. Percentage of error-free outgoing cash letters divided by total worker-hours in check processing.
2. Dollar amount of “as of” adjustments divided by total dollars processed.
3. Percentage of error free outgoing cash letters divided by cost of 1000 letters.
4. Total dollar expense of adjusting key deviations divided by total dollar expense in check processing.
5. Total worker-hours in adjusting key deviations divided by total worker-hours in check processing.

For the personnel function, five unit operations were defined in two banks:

1. Recruit and employ staff
2. Evaluate employee job assignments
3. Compensate employees: review and adjustment for wages, salaries, and benefits
4. Train
5. Administer personnel services to employees and the public.