PERFORMANCE

MEASUREMENT IN
SERVICE INDUSTRIES

Rosemary R. Seva, PhD

Industrial Engineering Department
De La Salle University
OUTLINE OF THE LECTURE

Introduction
Results and determinants framework
Balanced scorecard
Workshop
"Measurement is the first step that leads to control and
eventually to improvement. If you can't measure
something, you can't understand it. If you can't
understand it, you can't control it. If you can't control it,
you can't improve it.“

H. James Harrington
SERVICE CLASSIFICATION SCHEME

Hair salon

Repair shop

Laundry shop

Fitzgerald, et al, 1991

HOW DO YOU CLASSIFY A GOVERNMENT
SERVICE?
Contact time
Customization
Discretion
Focus on people
Process/product orientation
HOW DO YOU CLASSIFY A UNIVERSITY
SUPPORT SERVICE GROUP?
Contact time
Customization
Discretion
Focus on people
Process/product
orientation
TERMS AND DEFINITIONS
(NEELY, 2005)

PERFORMANCE MEASUREMENT
 Process of quantifying the effectiveness and efficiency of an
action
PERFORMANCE MEASURE
 A metric to quantify the effectiveness and efficiency of an
action
PERFORMANCE MEASUREMENT SYSTEM
 A set of metrics to to quantify the effectiveness and efficiency
of actions
THREE QUESTIONS IN PM
(BRIGNALL, FITZGERALD, JOHNSTON, & SILVESTRO, 1991)

What has happened?

Why has it happened?
What are we going to do about it?
WHY MEASURE PERFORMANCE?

Benchmarking
Measure effect of
interventions

OTHER IDEAS???
WHY MEASURE PERFORMANCE?

Advanced Performance Institute

PROBLEMS OF PM SYSTEMS
(BRIGNALL & BALLANTINE, 1996)

Cannot monitor and

measure multiple
indicators
Focus is on financial
measures (lagged
indicators)
Centers only on
those that are
quantifiable
RESULTS AND DETERMINANTS
FRAMEWORK
(FITZGERALD ET AL, 1991)

RESULTS DETERMINANTS
Competitiveness Quality
Financial Flexibility
Performance Resource utilization
Innovation
MEASURE OF RESULTS

COMPETITIVENESS FINANCIAL
Relative market Profitability
share Liquidity
Sales growth Capital structure
Customer base Market ratios
DETERMINANTS MEASUREMENT

SERVICE QUALITY FLEXIBILITY

Reliability Delivery speed
Responsiveness Specification
Comfort flexibility
Friendliness Volume flexibility
DETERMINANTS MEASUREMENT

RESOURCE UTILIZATION INNOVATION

Productivity Performance of the
Efficiency innovation process
Performance of
individual
innovations
BALANCED SCORECARD

A framework that translates the company’s

strategic objectives into a coherent set of
performance measures

It enables translating of strategy to action from

financial and non-financial measures (Chenhall,
2008)
UNIVERSITIES THAT USE BSC

UC-Davis – Administration section

UC-San Diego – Auxiliary services
University of Virginia – library
California State University Northridge –
Administration and Finance
Bond University – entire university
FOUR PERSPECTIVES OF BSC

Balance Scorecard Institute

FIVE PARAMETERS OF THE SCORECARD

1. Customer perspective
2. Financial perspective
3. Internal perspective
4. Innovation perspective
DESIGN OF MEASUREMENT

What percentage of the performance would

be measured objectively through balanced
scorecard?
What percentage will be measured
subjectively?
CUSTOMER PERSPECTIVE

Level of responsiveness for complaints

Student ratings of services
Value for money
Assignment turnaround time
INTERNAL PROCESSES

Quality of researches
Quality of services
Service time
Timeliness of materials procured
FINANCIAL PERSPECTIVE

Cash flow
profitability
relationship with suppliers
cost vs. competition
cost vs. revenue
INNOVATION PERSPECTIVE

career enhancement prospects

training and developmental programs
attended
Continuous improvement
Management of change
RESULTS OF SOME BSC IMPLEMENTATION

Culture clashes with changes

Problems in data gathering
Problems in measurement
CHALLENGES IN PM IMPLEMENTATION

Finding the right metrics

Gathering valid and reliable data
Analyzing data
Getting cooperation from subordinates
5 DIMENSIONS OF CITY PERFORMANCE

Administrative
Social
Economic
Environmental
Good governance

http://www.good.is
TOP 5 CITIES IN THE PHILIPPINES 2011
(HIGHLY URBANIZED CITIES)
1 Valenzuela
2 San Juan
3 Puerto Princesa
4 Olongapo
5 Davao

Source: DILG
Measure what you want to achieve
WHAT SHOULD A UNIVERSITY MEASURE?

Think of DLSU
Identify four metrics that you think will help
the university improve its performance
Explain the reasons for these metrics
 REFERENCES
Bhatnagar, J., Puri, R., & Jha, H. M. (2004). Managing innovative strategic HRM: The
balanced scorecard performance management system at ITC hotels. South Asian
Journal of Management, 11(4), 92-110. Retrieved from
http://ezproxy.library.usyd.edu.au/login?url=http://search.proquest.com/docview/2227
06033?accountid=14757
Chenhall, R.H., 2008. Accounting for the horizontal organization: a review essay.
Accounting, Organizations and Society 33 (4–5), 517-550
Brignall, T., Fitzgerald, L., Johnston, R., Silvestro, R. (1991). Performance measurement in
service businesses, Management Accounting, p. 34
Neely, AD and Gregory, MJ and Platts, KW (2005) Performance measurement system
design: a literature review and research agenda. International Journal of Operations and
Production Management, 25. pp. 1228-1263. ISSN 0144-3577
Sainaghi, R., Phillips, P., & Corti,V (2013). Measuring hotel performance: Using a
balanced scorecard perspectives’ approach, International Journal of Hospitality
Management, 34, 150-159.