The manager's role in the customer-oriented service company

The benefits of operations management...

... can especially be found in three development areas where the manager plays a central part in ensuring focus and supporting the development:

1. By focusing more on the customers and to a much larger extent adapting the production of services to the customers’ demands and needs rather than internal considerations
2. By strengthening the operations management and the overview in the daily operations through optimisation of prioritisation mechanisms and processes
3. By strengthening the involvement of employees in continuous improvement of the daily operations

The challenges of the service organisation

Countless service organisations – public as well as private – have, to some extent, been occupied with development and improvement of processes as a consequence of demands for increased efficiency and bottom line focus while at the same time having to fulfil the customers’ wishes for high quality, short delivery times and low prices. For a number of years, the most common approach to process optimisation has been the Lean philosophy, where Womack & Jones’ five principles from studies of the Japanese motor industry have been applied to service environments.

In the companies that have worked with Lean, this has resulted in an exploration of processes and a large number of activities involving the employees and the managers in creating an overview of how the company’s services are delivered.

The process work has typically been centred around Value Stream Mapping in accordance with the second Lean principle, and the organisation has subsequently worked on identifying and eliminating waste – typically inspired by Ohno’s seven wastes. In order to handle ideas for process development, many companies have also introduced Kaizen processes. Here, the employees have been encouraged to bring forward ideas which have then been assessed according to different criteria, and the most feasible ones have been implemented.

The companies that seem to have experienced the most significant results from Lean are the ones that have also worked with optimisation of the process flow – especially including reduction of the delivery times to the customers, e.g. by aiming at day-to-day delivery or other very short delivery times. In many case administrating service organisations (e.g. insurance or public organisations), the reduction of delivery times from several days or weeks/months to a very short period of time is experienced as a quantum leap.

This requires that the backlog is eliminated so that focus, at all times, is on fulfilling the demand of the day. That, however, calls for a completely different type of management than traditionally used, and this is where the discipline of operations management becomes relevant. Employees and managers will typically experience it as a significantly different situation if they suddenly have to switch from facing the work accumulated through several days to continuously gearing the ”production” to the anticipated demand and a short reaction time.

It could be argued that it is more comfortable being an employee in an organisation with a substantial backlog. Here, there is job security due to the backlog, and the eager employee can save the day – every day. Equally, it could be argued that it is comfortable being a manager in a backlog situation – daily management is not necessarily needed since the backlog can be placed with the employees so that the manager’s time can be spent on other management tasks than daily forecasting and operations management of employees and cases.

But if you are a customer of the service company in which there is a substantial backlog, it is, obviously, a doubtful pleasure. Waiting times for registration of property rights, for a telephone answer from the insurance company or for having your construction project processed at the local authority result in annoyance and bad experiences, which is often in sharp conflict with the organisation’s objectives regarding customer service. Of course, the answer is sometimes that the demand exceeds the capacity. Before this discussion makes anybody jump to conclusions, it is, however, relevant to examine whether the capacity is being used expediently – whether the daily operations are efficient.

Mapping of processes or value streams will not provide an answer to these questions. Rather, it is something which the operations manager should be able to answer: How do we ensure high productivity without reducing the employees’ motivation?

The daily activities can be managed

The operation of the daily activities in the company is, not surprisingly, associated with the management. But in most Scandinavian service companies, a considerable degree of selfmanagement is a central part of the culture, which is why that is often said to be an important factor in employee motivation – just as motivation is, of course, crucial for being able to retain employees and deliver good service to the customers!

Much energy has, consequently, been spent on training the coaching and involving manager who provides the employees with self-management and a large degree of freedom. The employees prioritise their tasks themselves and serve the customers using their common sense. However, the result may, unintentionally, be a large backlog of cases and individualisation of the case administration. One and the same customer may, thus, experience that his cases are administrated differently, depending on which ”common sense” is taking care of the next case.

The trained operations manager...

...should, at all times, be able to answer the following questions precisely:

1. How large was productivity in the previous week? Was it smaller/larger than usual? Why/why not?
2. How large a part of the cases/tasks was not solved at a satisfactory quality?
3. How large a part of the cases was solved within the time limit which we had promised the customer?
4. How large was the customer and employee satisfaction, respectively?
5. What will the situation be like next week?
   1. How many cases do we anticipate? What is our resource situation?
   2. Where are the most important imbalances? What are we going to do to deal with them?

And what to do when the workload apparently exceeds the capacity available – when the backlog and the administration time increase? Or when demands for optimisation are to be fulfilled? When a need for improving the company arises, the improvement initiatives are often directed at the employees’ processes or IT systems. Process optimisation and IT development are, thus, well-known tools, which, however, with some justification, are experienced as fatiguing and lengthy in many organisations.

Another approach to the improvement initiatives is to upgrade the managers in the service companies to be able to manage the daily activities to a much larger degree. In fact, the result will often be that both the customers and the bottom line are influenced directly and fast in a positive manner if we regard service production as actual production. We should, thus, consider how to let ourselves inspire by the management disciplines in the industrial sectors without at the same time getting negative associations about production lines and repetitive work.

This is where the management role operations management becomes relevant as it can be a very important parameter for the ability of the service company to deliver the right quality of the company’s service to the customer at the right time and at the right price (i.e. the right cost). In many service companies, the operations management task is, however, not clearly specified to the managers. And in addition, it is a task which the managers are not necessarily equipped for solving in the optimal manner.

The management task of managing operations typically makes the department’s core expertise fade into the background in favour of the expertise regarding the ability to prioritise tasks and the employees’ time consumption as well as involve the employees at the right time in sharing knowledge and identifying the best common ways of executing the tasks.

The operations manager is the day-to-day manager/team leader of the department – with specific tasks

In practice, the operations manager will, thus, be the manager in the individual department. The operations manager’s task is to ensure that the day-today operations are efficient, i.e.

• That the right amount of resources (employees with the right competences) are available for handling the anticipated workload (demand)
• Planning as to which employees are to solve which tasks/cases
• That the quality of the company’s deliverables responds to the given objectives
• That the processes are efficient, including that the employees are involved in continuously optimising the routines

The somewhat clinical description above implies that the operations manager, at all times, has an overview of the current situation in and around the department and has a good picture of what will happen the next day. A picture which, by the way, should be known by the employees (and cooperating partners), so that expectations can be reconciled and surprises and frustration be minimised.

Thus, it is necessary that the operations manager has an insight – which he also shares – into which types of tasks exist,and what the time consumption for executing them is expected to be, quite precisely. Moreover, the operations manager must have a complete picture of what the employees available in the department can be expected to produce – also at a quite detailed level. It is, thus, for the operations manager to continuously ensure that the right tasks are allocated to the right employees in such a manner that non-productive time is minimised, and the daily work is carried out as efficiently as possible.

Once the routines have been established, this management task will only require a little amount of management time as the experienced operations manager uses standardised ”distribution mechanisms” (e.g. Heijunka planning shelves and planning boards), so that the ”normal situation” in the department implies that the employees pull most of the cases themselves.

The operations manager will, thus, at all times be able to tell whether the department is in the normal state, i.e. everything is under control, or whether an irregular state is approaching, i.e. the execution of the tasks is not developing as expected, and re-prioritisation and specific actions are, consequently, needed.

The figure illustrates the tasks of the operations manager as well as a number of his tools: (a) The operations manager continuously forecasts the amount of new cases to be processed in the next month/week/day. Cases awaiting to be processed by an employee are made visible, placed and prioritised in a Heijunka planning shelf system (which may also take an electronic form). Based on the staffing plan, the operations manager on a daily basis agrees with the employees who takes care of which cases (c). The name of the person responsible for each case as well as the expected number of cases processed today/this week are stated on the planning board (d), thus making all agreements visible for everyone. (e) It is, furthermore, the responsibility of the operations manager to set targets for the area and follow up on whether these targets are achieved and to facilitate continuous improvements of processes and operations. In the following, the tools of the operations manager will be elaborated on.

What does the operations manager use in practice?

The operations manager makes use of a number of well-known, structured management tools based on visibility and quantifiable quantities. The four tools below are powerful and common in an operationally managed organisation.

1. Performance board

The overall objectives of the department/area must be clearly formulated, quantified and known by everyone, regardless of the employees’ commitment to the objectives. If it is expected that our administration time for construction projects is 5 days at the maximum, all employees should have an overview of the status at all times, and, therefore, reporting must be performed. Likewise, if it is expected that our customer satisfaction is 4.7 on average on a scale from 1 to 5, everybody should know what the status is.

The performance board should reflect the objectives that are important to the work of the department. A good starting point is to set specific targets for:

• Productivity
• Delivery time (how long the customer is to wait for the service)
• Quality
• Employee satisfaction

The performance board is updated at a fixed frequency, e.g. weekly. Here, the employees in the department gather at the weekly performance meeting and discuss the current status of the overall objectives of the department. On the same occasion, initiatives for continuous improvement are discussed and initiated – in Lean terminology, Kaizen.

2. Staffing plan

To service the customers and solve the tasks of the department, the operations manager needs to know which competences are available. The availability of employees (competences), therefore, appears from a staffing plan, which is updated on a daily basis. The staffing plan should be visible and accessible for everyone, preferably on a board on the wall. The optimal staffing plan is based on the employees’ different competences, so that bottlenecks, if any, are identified at an early stage.

In addition to the daily operational tasks, the staffing plan should also take into account other important tasks which currently exist in the department, e.g. competence development, product development or process improvements.

3. Heijunka planning shelves

In many service companies, the individual employee typically has a good grasp of his own tasks. But how do we ensure that the next task which is solved is the most important task for the department/company as a whole? How do we ensure a shared overview of the total workload? And how do we ensure that we are not overburdened when the intake of cases fluctuates?

A central tool for the operations manager is the Heijunka planning shelves where cases/case types are simply placed on the appropriate shelf in accordance with a certain system, and the employees then pull the cases in the right order rather than prioritise between them. Heijunka planning shelves, furthermore, help level out the workload, so that the cases allocated exactly correspond to the number of cases which the employees available are expected to be able to solve. Thus, the Heijunka planning shelves become an important factor in ensuring that the right competence solves the right case at the right time.

Heijunka planning shelves may take many forms and may be both physical and electronic. What is most important is that clear standards exist as to what the individual types of cases imply, where they are found, how they should be pulled and solved as well as what happens to the cases before and after they have been solved. Moreover, it is important that a clear distribution of roles exists concerning the Heijunka planning shelves, making it clear to all employees where and when they should pull cases, and how many cases they are expected to pull.

4. Planning board

What does the operations manager specifically do in order to arrange with the employees how each day should be structured? The daily operations are agreed with the employees at the daily operations meeting – which may take place one or more times a day, e.g. at nine and two o’clock – and are updated by means of a planning board.

At the operations meeting, follow-up on the previous day is performed, and today’s production targets are set. In small teams, this would be a task that the operations manager may delegate to a coordinator in the team, and all coordination would then subsequently take place with the operations manager and the other coordinators. The planning board indicates the targets of the day and who specifically are expected to solve the different cases.

In addition, forecasting – i.e. the ability to estimate tomorrow’s demand – is an important element in managing operations. This would typically also be shared with the employees on the planning board. The planning board and the Heijunka planning shelves often supplement each other, the purpose of both being to ensure that the right cases are taken care of at the right time by the right employees.

The above four visual management tools enable the manager to maintain and share an overview of staffing, distribution of tasks and production.

It is not the tools alone that make the competent operations manager – rather, it is management

The most important purpose of the visual tools is to remove complexity in operations from the individual employee’s work, thus releasing energy and time for dealing with the complexity of tasks within the employee’s specialist area. The customer, after all, takes it for granted that our management procedures work, and that the expertise of the employees is used for solving the cases and not for management! One may, therefore, take the point of view that it is the manager’s task to ensure that the employees, in a focused manner, spend their time and resources on solving the customers’ cases – rather than on prioritising between them.

As an operations manager, much more than tools is required to make things work. Time and management competences are crucial – both in order to make the employees committed and to gain control of the role as an operations manager.

Management time is required to increase efficiency among the employees

Being an operations manager typically requires somewhat more systematism regarding the manager’s own workday than what comes naturally to many managers in service companies. Introducing planning boards and Heijunka planning shelves, thus, requires that the manager, at fixed times, takes a look at the status and prioritises on the basis thereof. The boards alone, however, are not sufficient for communicating messages and distributing tasks – which calls for short, well-structured meetings where the employees obtain an overview of the current situation, and where agreements are made as to the handling of tasks for the period until the next meeting (in 4 hours, tomorrow etc.).

In this context, being an operations manager requires strict daily calendar management regarding whiteboard meetings, which also requires mutual respect concerning scheduled meeting times from employees as well as management colleagues. One way of succeeding with such calendar management is that the manager systematically earmarks time for operations management tasks by ”standardising” the management tasks that are important but not urgent, cf. Covey’s seven good habits.

To achieve results with operations management, the manager must take an interest in it

It is our experience that the manager’s preference for working with the quantitative aspect of the work in the department has as significant influence on the manager’s success as an operations manager. Managers who maintain their specialist knowledge as the most important standpoint and who basically cannot mobilise a real interest in production times and quantities may have a hard time being successful in the role as operations managers. However, this is an interest that, for the majority of managers, can be evoked, which we have seen numerous examples of – even if their attitude has been (highly) sceptical at first. Most managers are, of course, interested in being successful in their management work, and if the manager’s manager also takes an interest in and demands behaviour based on facts in the daily operations, this tends to have a catching effect…

An appreciative approach paves the way for operations management

Successful operations management of employees in service organisations typically requires that the manager trains his appreciative side. True, many employees regard an increased overview and a levelled workload as two important and immediate benefits of operations management, but on the other hand, the same employees often also experience that the individual freedom to prioritise on what to spend their time (or which cases they consider most important) disappears. And since few people basically find it attractive to be “ordered about” in their everyday work, both empathy and consequence are required from the manager to take on the highly controlling role in relation to the task.

It is our experience that operations management can be used for providing a clear picture of what kind of effort is expected in order to be successful. And successes should, of course, be recognised and celebrated properly…

The change requires hard work – and not all succeed

Introducing new management approaches which in many ways conflict with the known management practice is, obviously, not an easy job. The manager must, when establishing the foundation for operational management, create an overview, which some employees may regard as a build-up of control, and, at a later stage, the manager will be prioritising between tasks, which until now has belonged under the employees and has formed part of their “freedom”. These measures potentially create resistance, unwillingness and opposition in the initial phase. The manager’s ”backbone” and determination are, in other words, put to the test – depending, of course, on the culture in the organisation.

We have experienced organisations that have judged it to be too overwhelming to transform the manager role. Consequently, these companies must find other ways of optimising their business, e.g. process-related or ITfocused – or simply cutting back in general. In the cases of individual managers who have not had a preference for operational management, it is for the corporate management to assess whether transforming or maintaining is most important. We have seen it go both ways.

Whatever the outcome of each company’s considerations, our experience tells us that much is to be gained from transforming the manager role – and that the majority of service companies ought to do so. For the sake of the customers, if nothing else...

How to embark on operations management?

So, what does it take to start introducing operations management of service production? Obviously, there is no one, universal answer to this, since each organisation always has its own unique starting point and characteristics (customers, services, surroundings, history, employees, ownership structure etc.). That being said, the core aspect in managing everyday activities is to establish a structured overview. A recommended approach is, thus, to ensure that the following elements are in place:

1. Establish a structured overview of your customers and their expectations concerning your services, including the differentiation of your services. Do differences exist regarding the customers (segments)? Do differences exist regarding services and the expectations in relation to them? A division of services is typically a central starting point in order to be able to manage accurately and adequately.
2. Establish an overview of your competences and tasks. Which employees are available, and which competences do they possess in relation to the tasks that the organisation must daily solve, i.e. in relation to the services delivered? A matrix of tasks and employees can be the most optimal way to create this overview, in which the individual employee is classified in relation to the individual tasks, e.g. on a 4-point scale: 4 – is able to solve the task unassisted, 3 – is able to solve the task with assistance, 2 – wants to learn how to solve the task, 1 – is not able to solve the task… In this context, it may, furthermore, be relevant to obtain an overview of the time spent by each employee (e.g. per week) on the different tasks. Thus, we will also gain an insight into how much time we use in total in order to deliver our different services.
3. Establish an overview of the production – how long does it take to solve each individual case on average (standard time), and how many cases on average do we receive per day/week/month? What are the variances? How is the balance compared to the registered time consumption of the employees? This is where operations management becomes relevant: the allocated time must match the anticipated time consumption – and ensuring this is an important part of the operations manager’s daily role and task.
4. Establish habits and introduce management tools (performance board, staffing plan, planning board and perhaps Heijunka planning shelves) for communicating status and following up on results. We believe that the most successful implementation is achieved when the manager outlines a clear direction and, to the extent appropriate, involves the employees in realising it. This is a process which, according to our experience, requires a large degree of firmness in the initial phase, but which, gradually, allows tasks and responsibilities to be transferred to the employees, so that the operations manager primarily is to step in when the situation enters some kind of an irregular state.

Being an operations manager is, to a large extent, about balancing the four operational dimensions: productivity, delivery time, quality and employee satisfaction. Ultimately, it is, however, the operations manager’s ability to achieve a large degree of flexibility in the daily activities that produces great results: Competitive advantages are achieved through the very ability to develop a flexible organisation, in which operations management enables the employees to take responsibility and dedicate themselves to solving the tasks which are most important. In this way, the operations manager’s handling of the service production will positively affect the customers every day. And this will, typically, also be reflected on the bottom line…