A STUDY OF CUSTOMER-ORIENTED SERVICE ENHANCEMENT SYSTEM(COSES) FOR THE PUBLIC SECTORChi-Kuang Chen*,Chang-Hsi Yu* and Hsiu-Chen Chang** *Department of Industrial Engineering and Management, Yuan Ze University, Taiwan.**Department of Management, National Kaohsiung First University of Science andTechnology, Taiwan.ABSTRACTThe objective of this paper is to develop a customer-oriented service model for the public sector. Despite customer orientation having become popular since 1980, we found most studies were done for the private sector only. In addition, they placed much emphasis on service operation management rather than system design. In this paper, we propose a customer-oriented service enhancement system (COSES) for the public sector, which employs two dimensions: (1) customer-oriented service system design and management, (2) organizational culture fostering. In terms of COSES model, the best practices of public agencies were empirically examined in what and how the customer-oriented service activities were developed.Keywords: Public Management, Public Service, Customer-Orientation, Service System1.INTRODUCTIONCustomer orientation has become a popular slogan, taking pride of place in the strategic statements of many public and private sector organizations. In the UK, for example, an increasing number of public-sector organizations are demonstrating that customer orientation is no longer the exclusive preserve of the private sector (Nwankwo and Richardson, 1994). It is the same situation in USA. This concept was emphasized in the National Performance Review Project entitled ‘Putting Customers First’ (Gore, 1993). The terminology of customer orientation is usually described as an organizational culture that stresses the customer as the focal point of strategic planning and execution (Deshpande et al., 1993; Jaworski et al., 2000; Steinman et al., 2000).Despite the prevalence of customer orientation, we found most studies were done for private enterprise rather than the public sector (e.g., Deshpande et al., 1993; Nwankwo, 1995; Yasin and Yavas, 1999; Brown et al., 2002). Many studies suggested that there are differences between the private enterprise and the public sector (e.g., Wamsley, 1990; Carnevale, 1995; Mintzberg, 1996; Zeppou and Sptirakou, 2003). A way of doing things in private enterprises may not be suited for the public sector. The public service encountered more challenges in meeting the customer needs than the private enterprise. In particular, fairness and justice are the ultimate principles of the public sector. From a scientific standpoint, it is necessary to further investigate the customer orientation and its influence on the public sector.In addition, we found a bunch of action plans in promoting customer orientation generally place much emphasis on service operation management rather than service system design. Brady and Cronin (2001) indicated that there is still a lack of research in regard to how suchan orientation system is developed. Studies on this topic were either related to the evaluation of employee service performance and physical goods, or examined the effects of organizational quality, customer satisfaction, value attribution and outcome behaviors.In view of above argumentation, we suggest that a comprehensive service system should not only focus on service operation management, but also need to trace its original core concept to precede management from a system design viewpoint. In this paper, we intend to empirically examine the best practices of public agencies in Taiwan by using a two-dimensional model. The two-dimensional model includes: (1) system design and management, (2) organizational culture fostering. The purpose of this paper is to examine in what and how the customer-oriented service activities were developed in the public agencies. 2.LITERATURE REVIEWBefore figuring out the conceptual framework of this study, it is necessary to review the previous literature regarding to concepts and models of customer-oriented service management and customer orientation in public sector.2.1. Concepts and Models of customer-oriented service managementThe terminology of customer-orientation originated from Total Quality Management (TQM). This means that satisfying customer needs is a high level organizational objective (Oakland, 1993; Price, 1991). Customer orientation has been defined in different ways (e.g., Kohli and Jaworski, 1990; Narver and Slater, 1990; Webster, 1988). It is usually associated with other terminologies, such as market orientation, customer focus, customer driven, and customer centered. According to Webster’s definition (1994), customer orientation is the business of putting the customer first in everything the company does and organizing all activities around the basic objective of delivering superior value. Beyond this, some authors assert that the center of strategic focus remains putting customers first, a major plank of marketing (e.g., Felton, 1959; Payne, 1988; McGee and Spiro, 1988). It has also become a general concept that organizations should be more customer orientated to deliver better service quality and to enhance customer satisfaction (Hartline et al., 2000).Based on the relevant literature published in the last decade, we found a couple of models and instruments tried to deliver this concept. In the following, we summarize these models into three types: (1) the conceptual model; (2) the scale construct model; and (3) the cause-effect model.The conceptual modelThis model attempts to develop a conceptual framework to deliver customer orientation. For example, Nwankwo (1995) provided a framework to guide organizational management through the process of building a customer-driven philosophy. It contained four elements: (1) definition; (2) sensitivity; (3) measurement; and (4) implementation. Yasin and Yavas (1999) proposed a practical framework that integrated some tools to enhance the efficiency and customer orientation of service delivery systems. It consisted of: (1) root cause analysis; (2) benchmarking; (3) process reengineering; and (4) continuous improvement. Jiang and Chen (2002) proposed a customer-oriented service model for the public sector. It contains a five-stage sequence of system design and management: (1) customer identification; (2) customer needs survey; (3) service system design; (4) service delivery; and (5) service recovery. Jiang and Chen suggested that the five-stage model can be used to examine the organizational strategic planning, system design and operational management for promoting customer-oriented services.The scale construct modelThe scale construct model attempts to measure customer orientation directly at the individual level. For instance, Saxe and Weitz (1982) proposed a 24-item scale that was designed to measure how a salesperson seeks to increase long-term customer satisfaction. The other example of this type, proposed by Lozano (2000), is a checklist to measure the status of customer orientation of a library toward its market.The cause-effect modelThe scale cause-effect model attempts to investigate influential factors and their relationships to customer orientation. For example, Brady and Cronin (2001) investigated the effects of being customer oriented on service performance perceptions and outcome behaviors. Responses from 649 consumers indicated that customer orientation was directly related to customers’ evaluations of employee service performance, physical goods, and servicescapes. Indirect effects included organizational quality, customer satisfaction, value attributions, and outcome behaviors. Brown et al. (2002) investigated the mediatory role of customer orientation in a hierarchical model of the influence of personality traits on self-rated and supervisor-rated performance. The results support a partially mediated hierarchical model.According to above literature, several findings can be summarized: (1) customer orientation has become a customer-centered philosophy for an excellent organization, however the empirical study was rare; (2) most of the models were developed for the private sector rather than the public sector; (3) many studies merely focused on the management of service operations, however the issues of service system design were lack of investigation; (4) the importance of the organizational culture fostering in developing the customer-oriented service system was often neglected. In the following, we further review the literature regarding to the customer-oriented service in the public sector.2.2 Customer-orientation in the public serviceThe concept of customer-orientation in the public service was raised several decades ago. For example, Appleby (1992, p. 147) pointed out that the governmental characters in 1945 has been stated the necessity of customer orientation in the public sector. However, this concept in 1990 has had a different manner from the former. Learning from private enterprise becomes the main stream. For example, Clinton, ex-president of USA, signed the executive order 12826 in 1993 to request federal government to promote standards for serving American people. This executive order is: (1) identify the customers; (2) survey the customer needs; (3) post service standard and measure results; (4) benchmark customer service against the best practice; (5) survey front-line employee on barrier; (6) provide customer with choice; (7) make system easily accessible; (8) provide means to address complaints (Gore, 1997, pp. 10-12).In Australia, the Capital Territory Government of Canberra proposed the “customer service standard” of the ACT public service. It is composed of the following nine items (Australian Capital Territory Government, 1999): (1) know your customer base; (2) focus on customer needs; (3) use a can-do approach; (4) customer friendly staff; (5) customer-focused public contact area; (6) comprehensive complaints handling process; (7) customer value performance measures and targets;(8) telephone and counter techniques; (9) continue improving.Besides USA and Australia, many countries have proposed the similar reform projects to enhance the quality of public services. Taiwan launched the Total Service Quality Management Project in 1997.According to Osborne and Gaebler’s viewpoint, a customer-oriented public agency can benefit (Osborne and Gaebler, 1992, pp. 181-186): (1) customer-driven systems force service providers to be accountable to their customers; (2) customer-driven systems depoliticize thechoice-of-provider decision; (3) customer-driven systems stimulate more innovation; (4) customer-driven systems give people choices between different kinds of services; (5) customer-driven systems waste less, because they match supply to demand; (6) customer-driven systems empower customers to make choices, and empowered customers are more committed customers; and (7) customer-driven systems create greater opportunities for equity.Despite the popularity of the concept in public sector, Weissman (1991, p. 296) argued that some provisions are needed before carrying out a customer orientation project: (1) organizations and their stakeholders share common values about ends; (2) rationality is the single factor that determines the structure of programs in agencies. Status and power are not determining factors. There is no limit on rationality; (3) organizations and programs can and will tolerate, as well as adjust easily to, attacks on themselves and their survival; (4) the structure and reward systems of a government agency support change and adjustment, innovations and alteration; (5) there is a willingness on the part of public agencies to accept limitation on their autonomy, to yield power to the less powerful.Besides the provisions, some problematic issues were found in carrying out such a projects. For instance, the projects generally placed too much emphasis on the service operation management rather than service system design. This means that the way of how to develop a customer-oriented public service system is still not found. In addition, an empirical study by Chao (2003) found that the change of organizational culture is one of the issues that is hard to achieve. In this study, we intend to use a scientific approach to deal with these problematic issues.3.RESEARCH FRAMEWORKBased on the review of the literature, we realized that customer orientation has become crucial for a successful service organization. However, it still exists that there are many problems at the current time. In this study, we intend to propose a comprehensive model to examine the issues involving what and how the best practices of customer-oriented activities in the public sector were developed. In the comprehensive model, a two-dimension approach rather than the single-dimension approach in previous studies is employed. The two dimensions are: (1) system design and management, (2) fostering organizational culture (see Figure 1).Figure 1 Conceptual research frameworkThe comprehensive model is called customer-oriented service enhancement system. Here, we take the acronym of customer-oriented service enhancement system as COSES. COSES indicates ‘coze’ or ‘cose’, which implies to treat, or to talk with, customers in a warm and cozy manner. The reason we employ an additional dimension is that it has been widely acknowledged in the literature that a successful organization always has an embedded customer-oriented organizational culture (e.g., Houston, 1986; Parasuraman, 1987; Shapiro, 1988; Webster, 1988; Deshpande et al., 1993; Athanassopoulos, 2000). Figure 1 presents the conceptual framework of COSES model. The meanings of this conceptual framework are further described in the following.First of all, the box of organizational vision, policy, and strategy is placed on the left-hand side of Figure 1. It indicates the driven force to direct an organization to develop and to manage a customer-oriented service system.Second, the dot-line box of Figure 1, which is the kernel of this study, indicates a customer-oriented service enhancement system (COSES) for public sector. In COSES model, we develop a five-stage of service system design and management. These comprise: (1) customer identification – the public agency recognizes its customers; (2) customer needs survey – the public agency focuses on customer needs and customer voice; (3) service system design – the public agency develops the service system and process to meet the customer needs; (4) service delivery – the employees in a public agency deliver service to customers; and (5) service recovery – the public agency has an effective mechanism to deal with the customer complaints. The other dimension of COSES model is organizational culture fostering, which is located in the bottom of the dot-line box. In this dimension, we propose a three-layer model: (1) basic assumptions – employees recognize the importance of public service; (2) organizational values – provision of high quality public services has become the common belief all over an organization; (3) system and behavior – the organizational structure, system, regulation, standard operation process, and other behaviors have been well established.Third, service quality and customer satisfaction are placed on the right-hand side of Figure 1, which indicate the outcomes of service. It has been empirically proved that the morecustomer orientation organization is followed by the better service quality and customer satisfaction (Hartline et al., 2000; Jiang and Chen, 2002).4.RESEARCH DESIGNThis section presents research subject, interview outline design, procedure, and data analysis scheme. To achieve the research objective, the method of multiple-case study is chosen in this study. Further, in-depth interview and content analysis are used in research data collection and analysis.4.1. Research subjectsIn light of recruiting the appropriate research subjects in a multiple-case study, Markus (1989) suggested two principles: (1) subjects should include critical and crucial cases; (2) subjects should include typical and representative cases. Based on the two principles, we firstly chose three public agencies as research cases. The three public agencies are the Land Department of Taipei County (Case I), the Health Department of Taipei County (Case II), and the Social Affairs Bureau of Kaohsiung City (Case III). They received National Public Service Awards of Taiwan in 2002. We then invited the executive leaders of TQM projects as research subjects for interviews. Table I presents the details of three public agencies. Their efforts in enhancing customer-oriented service activities are briefly described in the following.Table I Research subjectsCasePublic agency Interviewee Customer-oriented service activities No.I Land Department of Taipei County Director Service process reengineeringII Health Department of Taipei County Director Comprehensive citizen’s needs surveyIII Social Affairs Bureau of Kaohsiung City Chief of staff Innovative public servicesCase1: In order to serve citizens in the most convenient way, the executives in case I took a great deal of effort in reengineering the procedures in regard to the various license application. They integrated the traditional bureaucratic operational approach to offer one-stop service, which is the typical customer-oriented service. Further, they built the service network to promote administrative efficiency by using information and communication technologies (ICTs).Case2: In order to understand citizen needs rapidly and precisely, the executives in case II are active in collecting media information, surveying customer satisfaction, and they periodically convene a news conference to ensure that citizen needs are communicated effectively. They not only have a routine problem solving mechanism to serve citizen needs, but also a follow-up and auditing system to review service quality. Their distinguished performance resulted in successfully overcoming Severe Acute Respiratory Syndrome (SARS), the fatal contagious disease that invaded Taiwan in 2003.Case3: In order to deliver high quality social welfare services, all staff in case III was involved in a total quality management project to promote continuous improvement of the various social welfare programs. In particular, they proposed many innovative services, such as for poverty, the aged, and the handicapped. ICTs and volunteers play important roles in delivering these innovative services.4.2 Interview outline design and interview procedureIn order to examine the critical activities that result in the three public agencies being successful in service, we first developed an interview outline. The outline is designed asquasi-structured and open-ended. We then asked for volunteers for pilot testing before the formal interviews were conducted. The final version of interview outline is shown in Table II.Table II Interview outline1.Would you feel free to talk about the process and experiences when you promote service quality?2.How did you convince your employee to accept customer-oriented service concepts and for it tobecome a culture in your organization?3.What did you think the key factors for facilitating service quality?4.Were there any difficulties in carrying out the service quality improvement project?5.How do you think about internal and external customers in your organization?6.How did you determine the needs of internal and external customers in your organization?7.Have you ever learned about any innovative service from other private or public sector agencies?If yes, what is your experience?8.How did you develop and implement an innovative service?9.Is there any cross-functional teamwork in your organization?10.Is there employee education and training in your organization?11.How are complaints from either internal or external customers dealt with in your organization?12.Are there communication channels for internal and external customers in your organization?Before the interview was conducted, we made an appointment by phone and then faxed the interview outline to the interviewee. The interviews began with a general introduction to make the interviewees aware of the purposes of the study and the interview agenda. To increase reliability and validity, we used some principles proposed by Goetz and Lecompte (1984): (1) we chose research subjects in accordance with research objective; (2) two interviewers participated in the interview data analysis; (3) we encoded and checked the interview data by multiple sources, such as the interview tape, document and observation; (4) the research objective was well understood by the interviewee; (5) the interviewer kept a neutral stance during the interview; (6) data were analyzed according to the facts only.Each interview took about 2–3 hours. The interviews were taped, and then the interview content, observational records and documents were encoded into manuscript files.4.3 Data analysis schemeUpon finishing interview manuscripts, content analysis is then conducted. Many approaches have been used in unitizing procedure of content analysis, such as word, sentence, theme, paragraph, and whole text (Weber, 1990), and even character, space and time (Kassarjian, 1977). Among them, theme is an appropriate approach to analyze the opinion of a proposition. In particular, it is very useful in discussions on event, value, belief and attitude (Kassarjian, 1977). We chose it in the content analysis of interviews. Here, a theme represents a complete activity in relation to customer- oriented service.Two phases of content analysis were employed. In the first phase, the whole interview manuscripts were decomposed into units. The unit is called theme. The themes were then placed into the appropriate cell of the five-stage service system design and management dimension (see the horizontal dimension of Table III). This procedure tried to deploy the customer-oriented service activities from the three cases into the five-stage service system design and management.The first phase of content analysis In the second phase of content analysis, we tried to place all themes into the appropriate cell in accordance with the three-layer of organizational culture (see the vertical dimension of Table III). This procedure is to place the customer-oriented service activities from the results of the first phase analysis into the three-layer organizational culture dimension. The COSES model was finally proposed from the results of the two phases of content analysis.4.4 Reliability analysisFor measuring the reliability of the two phases of content analysis, except the researcher, we invited two additional coders to engage in this analysis. In the first phase of content analysis, the two coders were asked to place the themes into one of the five stages service system design and management. Their results are then compared with the researcher. The degree of mutual agreement with the researcher 1 and the reliability 2 are computed to examine whether both indices are beyond 0.70.In the second phase of content analysis, the two coders are asked to perform the same task as researcher. The degree of mutual agreement with the researcher and the reliability are also computed to examine whether both indices are beyond 0.70.5. ANALYSIS OF COSES MODELIn this section, analysis of COSES model is performed according to the data analysis scheme described above.5.1 The first phase of content analysisIn the first phase of content analysis, the three interview manuscripts were decomposed into analyzing units, which are themes. Table IV presents three examples of the unitizing procedure. A total of 19 themes were found from the three interview manuscripts (see Table V). We then placed these themes into the corresponding stage of service system design and management dimension. In other words, these themes were categorized into one of customer identification, customer needs survey, service system design, service delivery, and service recovery stages. The frequency of the 19 themes was indicated in the parenthesis of each cell of Table VI.1 BParty by agreed number A Party by agreed number parties by two agreed completely items of number 2agreement mutual of Degree +×=2 ()[]agreement mutual average of Degree 1-21agreement mutual average of Degree 2y Reliabilit ×+×=Table IV Examples of the unitizing procedureNo. Unitanalysis Themes Corresponding StageCustomer needs recognition Customer needs survey1 First, we have to understand the citizen’s needs ineach group, and the employees’ needs. We theninvestigate, analyze, plan, and execute. Executionincludes a pilot run, to spread around completely,back to review, and then to reform (Case I).CustomerclassificationCustomeridentification2 We search and collect the media information and civilsuggestions actively, and integrate them into ourstrategic planning of various innovative serviceprograms (Case II).Consideration ofenvironmentalchange instrategicplanningCustomer needssurvey3Besides the public agency, employee visits to otherexcellent businesses are encouraged. These visits arefollowed by a conference to discuss learning fromthose excellent business units aboutcustomer-oriented service (Case III).BenchmarklearningCustomeridentificationAs listed in Table V, 19 themes described the customer-oriented service activities werefound in the three public agencies. Despite job rotation was found only once in case I, we thought it is one of the most important activities in the human resource management of the public sector. Research indicates that organizations benefit from job rotation (Robbins, 1992). The numbers of identified themes in each stage are 3, 3, 5, 5, 3, respectively (see Table VI). They are illustrated in the following.First, three themes were deployed to the customer identification stage: (1) customer classification, which indicates the action of classifying customers into different categories; (2) benchmark learning, which means to learn from other excellent businesses or public agencies; and (3) customer definition, which means knowing how to distinguish each cluster.Second, three themes were deployed to the customer needs survey stage: (1) consideration of environmental change in strategic planning; (2) survey customer needs periodically, which means conduct customer’s needs surveys frequently; and (3) customer needs recognition, which means recognizing that different clusters of customers have different needs.Third, five themes were deployed to the service system design stage: (1) set service standard procedures to satisfy customer’s needs; (2) incentive system; (3) employee education;(4) service quality audit system (ISO system); and (5) design of service items in accordance with customer needs.Fourth, five themes were deployed to the service delivery stage: (1) teamwork and empowerment, which indicates sharing of responsibility, information and decision making among group members; (2) cross-functional cooperation; (3) job rotation; (4) willingness to help customers deliver their requests; and (5) the uses of ICTs.Finally, three themes were deployed to the service recovery stage: (1) building customers’ complaints procedures; (2) providing multiple channels for good communication, which means the communication channels are always accessible; and (3) customer’s benefit first, which means putting the customer’s benefit first.。