Doctoring The Truth Essays - Health In The United States, Insurance

Doctoring The Truth Doctoring the Truth. The New Republic. Nov 15, 1999. P 13. Is it ethical for doctors to bend the truth in order to get an insurance company to pay for medical treatment? According to this article, most doctors do. A survey has shown that 58% of doctors say that they would be willing to give an insurance company deliberately deceptive documentation to influence the companys decision to approve surgery or other treatment for a life-threatening illness. These doctors believe that if they did not lie, their patients would receive sub-standard health care. Insurance companies are continually looking for ways to reduce their costs, and the most common way is to second-guess the doctors opinions or to approve the minimum treatments necessary. This has created a crisis in American medicine in which doctors feel they must be dishonest with the insurance companies in order to be the good guy to their patients. Does the end justify the mean? After all, these doctors seem to have a good reason for lying. They are trying to help someone, right? But it does not make it morally and ethically right. Lying is wrong, no matter what the reason is. Even though saving someones life seems to be a valid reason for bending the truth, it does not solve the problem. It is unethical for a doctor to lie, even to an insurance company. Although HMOs and insurance companies need to be dealt with, lying is not the way to defeat them. You should not lie to beat the system. It solves nothing. Lying is a quick fix. It may work on a case-to-case basis, but health care reform is the only permanent solution. While we can condemn doctors for being untruthful, we also have to look at the flip side HMOs and other insurance companies who are trying to cut back costs, approving the least expensive treatments and sometimes denying those claims that have real merit. These companies do breed an environment where it is difficult for doctors to be completely honest. Doctors are supposed to be looking after the interests of their patients, and they sometimes see lying as the only way to skirt the policies of some HMOs. The author takes the position that it is morally and ethically wrong for doctors to lie to insurance companies. However, in the current health system, dishonest pays. This creates a continuous cycle of corruption. The integrity of the medical community is at stake and patients have become the pawns. Health insurance companies have indeed created the problem but lying is not the answer. This cycle of deception begetting new rules begetting new deceptions could continue indefinitely. The authors opinion appears unbiased. He presents the facts and both sides of the issue, and condemns them both. Perhaps someday we can agree upon a reasonable system where the needs of the patient come before the wallet of the insurance company. Only then will doctors feel that they are not obligated to lie and integrity will be restored to the American health system. Social Issues

Service Quality Essay Example

Service Quality Essay Example Service Quality Essay Service Quality Essay University of Nottingham The Dark Side of Customer Relationship Management in the Luxury segment of the Hotel Industry Akshay Jaipuria MA Management Abstract Today, service organizations are shifting their focus from â€Å"transactional exchange† to â€Å"relational exchange† for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities. The hotel industry, especially the luxury segment hotels needs to be purely customer-centric and focus on the customer needs and duly fulfill them. Customers will not blindly accept poor service quality from a luxury hotel. They expect high quality of service in return for the money they spend on luxury hotels. This paper is an attempt to explain the dark side of CRM in the luxury segment of the hotel industry with the help of the ‘gap model’ available in literature which suggests that gaps in service occur at various instances. The author explains that the gap model is a useful tool to explain the dark side partly. There is more to the dark side like privacy issues, unwillingness of customers to build a relationship with the service provider and changing tastes and preferences of the customer. Ritz- Carlton Hotel Company, L. L. C. has been chosen as a single case study and the research questions have been addressed for the industry at large using Ritz- Carlton as a classic example of superior service quality to the customers. Some simple measures to reduce the dark side have been mentioned, which addresses the third and last research question. The project would contribute as a useful guide to luxury hotels, giving them some valuable information on what the customer expectations are and if they are duly met then service gaps shall not occur. This paper shall provide scope for luxury hotels to improve their overall service quality and strengthen their position in the industry. The relevant existing theory has been reviewed and the subject has been explored, using the ‘gap model’ (Parasuraman et al 1998) mainly. Based on the research findings and analysis, recommendation has been given to reduce the dark side at Ritz-Carlton and luxury hotels in general. Table of Contents Abstract0 Table of Contents2 Acknowledgments4 Chapter 1: Introduction5 Chapter 2: Literature Review7 2. 1 What is Customer Relationship Management? 7 2. 2Customer satisfaction, loyalty and business performance9 2. 3CRM and Service Quality13 2. 3. 1 Customer’s perception of quality:13 2. 3. 2 The Perceived Service Quality approach16 2. 3. 3 Gaps between customer expectations and perceptions:17 2. . 4 Service Guarantee24 2. 3. 5 Service Recovery26 2. 3. 6 Complaints management28 2. 4 Do all customers want a relationship with their service provider? 29 2. 5 Synopsis31 Chapter 3: CRM and Hotel Industry32 Chapter 4: Methodology and Research Design34 4. 1 Overview34 4. 2 Research objectives34 4. 3 Research design35 4. 4 Case study: An introduction36 4. 5 History of case study37 4. 6 Types of Case Study37 4. 7 Choice of cas e: Ritz-Carlton Hotel Company38 4. 8 Components of the Case Study38 4. 9 Data collection39 4. 9. 1 Documentation41 4. 9. Focus Groups41 4. 9. 3 Interviews43 4. 10 Data Analysis49 4. 11 Key issues of Data collection: Reliability and Validity50 4. 12 Synopsis51 Chapter 5: Case study52 5. 1 Ritz-Carlton: An Overview52 5. 2 Ritz-Carlton and the â€Å"Gold Standards† of Service Quality54 5. 2. 1 The Credo54 5. 2. 2Motto55 5. 2. 3 Three Steps of Service55 5. 2. 4 Service Values55 5. 2. 5 Employee Promise56 5. 3Ritz-Carlton: Current Reality57 Chapter 6: Research Findings59 6. 1 Focus groups findings59 6. 1. 1 Does the gap model explain the dark side of CRM? 59 6. 1. Is there more to the dark side of CRM than what is explained in the gap model? 61 6. 1. 3 How can the dark side of CRM be reduced? 62 6. 2 In-depth interview findings63 6. 2. 1 Customer Interviews64 6. 2. 2 Employee Interviews67 Chapter 7: Analysis of Research Findings70 7. 1 Does the gap model explain the dark side of C RM? 70 7. 1. 1 Ritz-Carlton and the ‘Gap model’70 7. 1. 2General Inference for the luxury hotel sector75 7. 2 Is there more to the dark side of CRM than what is explained in the gap model? 76 7. 2. 1 Willingness to build a relationship76 7. . 2 General Inference for the Hotel Industry79 7. 3 How can the dark side of CRM be reduced? 79 Chapter 8: Conclusion and Further research83 References85 Appendices93 Appendix 1Consent Form93 Appendix 2CRM and ‘Atithi Devo Bhava’94 Appendix 397 Appendix 4100 Appendix 5108 Acknowledgments Education is a progressive discovery of our ignorance. Will Durant (1885-1981) U. S. author and historian I would like to thank all those who helped me through the project phase of the MA Management program. I would like to express my sincere appreciation to my supervisor, Prof. Dave Wastell for his enlightenment of my knowledge of CRM and the hotel industry, valuable advice and kind support throughout the process of dissertation completion Most importantly, I would like to thank my parents and sister who were always there to motivate me. I would also like to thank my close friends at Nottingham for being around to discuss my ideas and giving me emotional support when I was stressed. I would like to thank all the focus group members for giving their valuable time and thoughts to my project. I would like to thank all the customers and employees of Ritz-Carlton for sharing their valuable thoughts which helped me shape this project. Lastly, I would like to thank the academic and library staff at University of Nottingham for their support throughout this year. Chapter 1: Introduction In the mid-twentieth century, mass production techniques and mass marketing changed the competitive landscape by increasing product availability for consumers. However, the purchasing process that allowed the shopkeeper and customer to spend quality time interacting with each other was also fundamentally changed. As a result, customers lost their uniqueness becoming an â€Å"account number†. Shopkeepers lost track of their customers’ individual needs as the market became full of product and service options. Many companies today are striving to re-establish their connections to new as well as existing customers to boost long-term customer loyalty (Chen and Popovich, 2003). The world has come full circle from selling to marketing and from seller’s market to buyer’s market. The customer today has the option to buy what he thinks he should and from whom, being in his best interest. Product development, technological improvement, cost optimization and excellent service facility are very important for any organisation but their importance is only if the customer appreciates it. For example, both diamond and coal are carbon but they are priced differently due to different valuations by the customer. Therefore, any business begins and ends with the customer (Sugandhi, 2002). Thus, service organizations are shifting their focus from â€Å"transactional exchange† to â€Å"relational exchange† for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities. The paper explores â€Å"The Dark Side of Customer Relationship Management (CRM) in the Luxury segment of the Hotel Industry† using the ‘gap model’ of Parasuraman et al (1985) and suggests generic strategies to reduce the dark side. The researcher was motivated to choose the hotel industry because of his deep rooted passion for luxury hotels. The importance of this research is that it helped the researcher familiarize himself with the use of primary with a blend of secondary research to analyze a given situation. This piece of work shall contribute to the academic community as there is not much literature available on the dark side of CRM for the luxury hotels. It shall also benefit the management of luxury hotels to understand what the customer expects in terms of service quality. The aim of this research is to highlight the dark side of CRM in the luxury segment of the hotel industry using The Ritz-Carlton Hotel Company as a classic example of high service quality. The research objectives are as follows: 1. Does the gap model explain the dark side of CRM? 2. Is there more to the dark side of CRM than what is explained in the gap model? 3. How can the dark side of CRM be reduced? This paper is divided into seven chapters. Chapter one is an introduction to the paper. Chapter two provides the reader with necessary literature available on CRM. Chapter three provides information on CRM and the hotel industry. Chapter four discusses the research design including interviews and focus groups that have been used for primary research. Chapter five provides an overview of The Ritz-Carlton Hotel Company . Chapter six provides a summary of the research findings. Chapter seven is an analysis of the research findings addressing the research questions, one of which provides recommendations to reduce the dark side. Chapter eight is a conclusion of the paper. The following chapter provides the literature review. Chapter 2: Literature Review Modern marketers are rediscovering the ancient mantras for success in corporate world and blending them with contemporary marketing practices. Long term survival and competitive advantage can only be attained by establishing an emotional bond with the customers. A shift is taking place from marketing to anonymous masses of customers to developing and managing relationships with more or less well known or at least some identified customers (Gronroos, 1994). This section shall provide general literature on CRM and its link with customer satisfaction, customer loyalty and business performance followed by literature on CRM and service quality in details. The ‘gap model’ shall be introduced and literature on service guarantee, service recovery, and complaint management shall be provided. This would lead to the privacy issues related with CRM. 2. 1 What is Customer Relationship Management? Customer Relationship Management (CRM) â€Å"is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high-quality customer data and enabled by IT† (Buttle, 2004). CRM is a business strategy to identify, cultivate, and maintain long-term profitable customer relationships. It requires developing a method to select your most profitable customer relationships (or those with the most potential) and working to provide those customers with service quality that exceeds their expectations. McDonald, 2002) An organization’s survival depends largely on harmonious relationships with its stakeholders in the market. Customers provide the ‘life-blood’ to the organization in terms of competitive advantage, revenue and profits. Managing relationships with customers is imperative for all types and size of service organizations. A sound base of satis fied customers allows the organization to move on the path of growth, enhance profitability, fight out competition and carve a niche in the market place. Bennett (1996) described that CRM seeks to establish long term, committed, trusting and cooperative relationship with customers, characterized by openness, genuine concern for the delivery of high quality services, responsiveness to customer suggestions, fair dealings and willingness to sacrifice short term advantage for long term gains. Schneider and Bowen (1999) advocated that service business can retain customers and achieve profitability by building reciprocal relationships founded on safeguarding and affirming customer security, fairness and self esteem. It requires that companies view customers as people first and consumers second. Trust, commitment, ethical practices, fulfillment of promises, mutual exchange, emotional bonding, personalization and customer orientation have been reported to be the key elements in the relationship building process (Levitt,1986; Gronroos, 1994; Morgan,1994; Gummesson,1994; Bejou et al,1998 ). CRM refers to all business activities directed towards initiating, establishing, maintaining, and developing successful long-term relational exchanges (Heide, 1994; Reinartz Kumar, 2003). One of the results of CRM is the promotion of customer loyalty (Evans Laskin, 1994), which is considered to be a relational phenomenon, (Chow Holden, 1997; Jacoby Kyner, 1973; Sheth Parvatiyar, 1995; cited by Macintosh Lockshin, 1997). The benefits of customer loyalty to a provider of either services or products are numerous, and thus organizations are eager to secure as significant a loyal customer base as possible (Gefen, 2002; Reinartz Kumar, 2003; Rowley Dawes, 2000). Recent developments in Internet technology have given the Internet a new role to facilitate the link between CRM and customer loyalty (Body and Limayem, 2004). It is common knowledge that a dissatisfied and unhappy customer will share his unfortunate experience more than a satisfied customer. It is also observed that a fraction of unhappy customers choose to complain while others simply switch their loyalty to others service providers. Loss of customer is loss of business along with the opportunity for business growth and profitability. Feedback collection from the customer is essential for the supplier to ascertain customer satisfaction and scope for improvisation (Sugandhi, 2002). The fundamental reason for companies aspiring to build relationships with customers is economic. For survival in the global market, focusing on the customer is becoming a key factor for companies big and small. Establishing and managing a good customer relationship is a strategic endeavor. Having a CRM software installed does not ensure a successful customer relationship. For this to happen business processes and company culture have to be redesigned to focus on the customer. CRM software can be only a tool to implement a customer strategy. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. Improving customer retention rates increases the size of the customer base. Thus, customer retention is essential. (Baumeister, unknown). 2 Customer satisfaction, loyalty and business performance The rationale for CRM is that it improves business performance by enhancing customer satisfaction and driving up customer loyalty (see figure 4). There is a compelling logic to the model, which has been dubbed the ‘satisfaction-profit chain’ (Anderson and Mittal, 2000). Satisfaction increases because customer insight allows companies to understand their customers better, and create improved customer value propositions. As customer satisfaction rises, so does customer repurchase intention (Anderson, 1994). This in turn influences actual purchasing behaviour, which has a significant impact on business performance. [pic] Figure 4: Customer satisfaction, customer loyalty and business performance (Buttle, 2004) Customer satisfaction has been the subject of considerable research and has been defined and measured in various ways (Oliver, 1997). Customer satisfaction may be defined as the customer’s fulfillment response to a consumption experience, or some part of it. Customer satisfaction I a pleasurable fulfillment response while dissatisfaction is an unpleasurable one (Buttle, 2004). Satisfaction and dissatisfaction are two ends of a continuum, where the location is defined by a comparison between expectations and outcome. Customers would be satisfied if the outcome of the service meets expectations. When the service quality exceeds the expectations, the service provider has won a delighted customer. Dissatisfaction will occur when the perceived overall service quality does not meet expectations (Looy, Gemmel Dierdonck, 2003). Sometimes customer’s expectations are met, yet the customer is not satisfied. This occurs when the expectations are low (Buttle, 2005). For example, the customer expects the flight to be late and it gets late. Customer satisfaction is considered to be one of the most important outcomes of all marketing activities in a market-oriented firm. The obvious need for atisfying the firm’s customer is to expand the business, to gain a higher market share, and to acquire repeat and referral business, all of which lead to improved profitability (Barsky, 1992). Studies conducted by Cronin and Taylor (1992) in service sectors such as: banking, pest control, dry cleaning, and fast food; found that customer satisfaction has a significant effect on purchase intentions in all four sectors. Similarly, in the health-care sector, McAlexander et al. (1994) found that patient satisfaction and service quality have a significant effect on future purchase intentions. Kandampully and Suhartanto, 2000) Customer loyalty can be defines as â€Å"customer behavior characterized by a positive buying pattern during an extended period (measured by means of repeat purchase, frequency of purchase, wallet share or other indicators) and driven by a positive attitude towards the company and its products or services† (Looy, Gemmel Dierdonck, 2003). Practitioners and researchers have not clearly identified a theoretical framework, identifying factors that could lead to the development of customer loyalty (Gremler and Brown, 1997). However, there is a consensus amongst practitioners and academics that customer satisfaction and service quality are prerequisites of loyalty (Gremler and Brown, 1997; Cronin and Taylor, 1992). Those technical, economical and psychological factors that influence customers to switch suppliers are considered to be additional prerequisites of loyalty (Selnes, 1993; Gremler and Brown, 1997). Recent studies also indicate that the firm’s image may influence customer enthusiasm: value, delight, and loyalty (Bhote, 1996). (Kandampully and Suhartanto, 2000) Loyalty behaviors, including relationship continuance, increased scale or scope of relationship, and recommendation (word of mouth advertising) result from customers’ beliefs that the quantity of value received from one supplier is greater than that available from other suppliers. Loyalty, in one or more of the forms noted above, creates increased profit through enhanced revenues, reduced costs to acquire customers, lower customer-price sensitivity, and decreased costs to serve customers familiar with a firm’s service delivery system (Reicheld and Sasser, 1990). Yi’s â€Å"Critical review of customer satisfaction† (1990) concludes, â€Å"Many studies found that customer satisfaction influences purchase intentions as well as post-purchase attitude† (p. 104). Customer loyalty can be viewed in two distinct ways (Jacoby and Kyner, 1973). The first views loyalty as an attitude. Different feelings create an individual’s overall attachment to a product, service, or organization (see Fornier, 1994). These feelings define the individual’s (purely cognitive) degree of loyalty. The second view of loyalty is behavioural. Examples of loyalty behaviour include continuing to purchase services from the same supplier, increasing the scale and or scope of a relationship, or the act of recommendation (Yi, 1990). The behavioural view of loyalty is similar to loyalty as defined in the service management literature. In brief, there are two dimensions to customer loyalty: behavioural and attitudinal (Julander et al. , 1997). The behaviour dimension refers to a customer’s behaviour on repeat purchases, indicating a preference for a brand or a service over time (Bowen and Shoemaker, 1998). Attitudinal dimensions, on the other hand, refer to a customer’s intention to repurchase and recommend, which are good indicators of a loyal customer (Getty and Thompson, 1994). Moreover, a customer who has the intention to repurchase and recommend is very likely to remain with the company. (Kandampully Suhartanto, 2000 and Hallowell, 1996) Customer attitude being difficult to measure, for financial and practical purposes, customer retention is widely used as an indicator of customer loyalty. Researchers have combined both views into comprehensive models of customer loyalty. Dick and Basu (1994) came up with a two-dimensional model of customer loyalty identifying four forms of loyalty according to relative attitudinal strength and repeat purchase behavior. The true loyal are those who have high levels of repeat purchase behavior and a strong relative attitude. Spuriously loyal customers tend to be more motivated by impulse, convenience and habit i. e. if the conditions are right. Latent loyalty applies to those customers who are loyal simply because they have no other choice. Lastly, there will always be some customers who shall not be loyal to any particular brand. 2. CRM and Service Quality Service quality is essential for an organization’s survival and growth. Interest in service quality emerged in 1970s. Ever since, the topic has attracted substantial attention among researchers and practitioners (Gronroos, 2001). Service quality is a form of attitude representing a long-run, overall, evaluation, which is different from customer satisfaction, a more short term, transaction specific judgment. The level of customer satisfaction is a result of the customer’s comparison of the service quality expected in a given service encounter with perceived service quality. This implies that satisfaction assessments require customer experiences while quality does not (Caruana, Money and Berthon, 2000). 2. 3. 1 Customer’s perception of quality: Quality of a particular service is whatever the customer perceives it to be. Service quality as perceived by the customer may differ from the quality of the service actually delivered. Services are subjectively experienced processes where production and consumption activities take place simultaneously. Interactions, including a series of moments of truth between the customer and the service provider occur. Such buyer-seller interactions or service encounters have a critical impact on the perceived service. The Nordic Model, originated by Christian Gronroos and developed by others, adopts a disconfirmation of expectations approach. This claims that customers have certain expectations of service performance with which they compare their actual experience. If the expectations are met, this is confirmation; if they are over performed, this is positive disconfirmation; if they are underperformed this is negative disconfirmation. According to Gronroos (1984), the quality of service as perceived by customers has two dimensions; a technical or outcome dimension and a functional or process-related dimension. What customers receive in their interaction with a firm is clearly important to them and their quality evaluation. This is one quality dimension, the Technical Quality of the outcome of the service production process. However, as there are numerous interactions between the service provider and customers, including various series of moments of truth, the technical quality dimension will not count for the total quality which the customer perceives he has received. The customer will also be influenced by the way in which technical qualitys include the accessibility of ATM, a website, appearance and behavior of waiting staff, how service employees perform their task, what they say and how they do it. Interestingly, other customers simultaneously consuming the same or similar services may influence the way in which customers will perceive a service. Thus, the consumer is also influenced by how he receives the service and how he experiences the simultaneous production and consumption process. This is the second quality dimension, the Functional Quality of the process, closely related to how the moments of truth of the service encounters themselves and are taken care of and how the service provider functions. Illustrated in figure 1, there are the two basic quality dimensions, namely, What the customer receives and How the customer receives it; the technical result or outcome of the process (technical quality) and the functional dimension of the process (functional quality. An organization’s image is an important variable that positively or negatively influences marketing activities. Image is considered to have the ability to influence customers’ perception of the goods and services offered (Zeithaml and Bitner, 1996). Thus, image will have an impact on customers’ buying behaviour. Image is considered to influence customers’ minds through the combined effects of advertising, public relations, physical image, word-of-mouth, and their actual experiences with the goods and services (Normann, 1991). Similarly, Gronroos (1983), using numerous researches on service organizations, found that service quality was the single most important determinant of image. Thus, a customer’s experience with the products and services is considered to be the most important factor that influences his mind in regard to image. For instance, if the service provider shares a positive or favorable image in the minds of the customers, minor mistakes will probably be overlooked or forgiven. However, if the image is negative, the impact of any mistake will often be considerably greater than it otherwise would be. This entire combination shall lead to total quality. [pic]Figure 1: Two service quality dimensions (Gronroos, 2001) 2. 3. 2 The Perceived Service Quality approach Gronroos (1982) introduced a service oriented approach to quality with the concept of Perceived Service Quality and the model of Total Perceived Service Quality. This approach is based on research into consumer behavior and the effects of expectations concerning goods performance on post-consumption evaluations. In previous sections, the two basic quality dimensions (the what and the how) in the minds of the customers has been discussed. However, the quality perception process is more complicated. It is not the experiences of the quality dimensions alone that determine whether quality is perceived as good, neutral or bad. Figure 2 illustrates how quality experiences are connected to traditional marketing activities resulting in a Perceived Service Quality. Good perceived quality is obtained when the experienced quality meets the expectations of the customers i. e. the expected quality. If expectations are unrealistic, the total perceived quality will be low, irrespective of the experienced quality measured in an objective way being good. As illustrated in figure 2, the expected quality is a function of factors, namely, marketing communication, word of mouth, company/local image, price, customer needs and values. Marketing communication includes advertising, direct mail, sales promotion, websites, internet communication and sales campaigns. These are directly under the control of the company unlike the image and word of mouth factors which are indirectly controlled by the company. Image of the company plays a central role in customer perception of service quality. Thus, it is imperative that image be properly managed. External impact on these factors could possibly occur, but they are a basically a function of the previous performance of the firm, supported by for instance advertising. Lastly, the needs of the customers as well as the values that determine the choice of customers also impact on their expectations. Thus, the level of total perceived quality is not determined simply by the level of technical and functional quality dimensions, but rather by the gap between the expected and experienced quality. [pic] Figure 2: Total Perceived Quality (Gronroos, 2001) 2. 3. 3 Gaps between customer expectations and perceptions: There exists a gap between expected service quality and perceived service quality. In an attempt to explain such gap, Parasuraman et al (1985), came up with a ‘gap model’ which is intended to be used for analyzing sources of quality problems and help managers understand how service quality can be improved. The model is illustrated in figure 3. Figure 3: The Gaps Model (Source: Parasuraman et al, 1988) Firstly, the model demonstrates how service emerges. The upper portion of the model includes phenomena related to customers, while the lower portion includes phenomena related to the service provider. The expected service is a function of the customer’s past experience and personal needs and of word of mouth communication. It is also influenced by the market communication activities of the firm. The service experienced, which in this model is termed as perceived service, is the outcome of a series of internal decisions and activities. Management perceptions of customer expectations guide decisions regarding service quality specifications to be followed by the company when service delivery (i. e. the execution of the service express) occurs. The customer experiences the service delivery and production process as a process-related quality component and the technical solution received by the process as an outcome-related quality component. As illustrated, marketing communication can influence the perceived service and also the expected service. This basic model demonstrates the steps that have to be considered during analyzing and planning service quality. The five discrepancies (so-called quality gaps) between the various elements of the structure are a result of inconsistencies in the quality management process. The ultimate gap (Gap 5) i. e. the gap between expected and perceived (experienced) service is a function of other gaps that possibly occurred in the process. The five gaps are discussed below: 1. The Management Perception Gap (Gap1): This gap occurs when the management perceives the quality expectations inaccurately due to inaccurate information from market research and demand analyses, inaccurately interpreted information about expectations, nonexistent demand analysis, bad or nonexistent upward information from the firm’s interface with its customers to management and numerous organizational layers which stop or change the information that may flow upward from those directly involved in customer contacts. Necessary action to open up or improve the various internal information channels has to be taken in such situations. 2. The Quality Specification Gap ( Gap 2): This gap signifies that service quality specifications are not consistent with management perceptions of quality expectations due to planning errors or insufficient planning procedures, bad management of planning, lack of clear goal-setting in the company and insufficient support for planning service quality from top management. The planning related problems vary depending on the size of the first gap. However, even if there is sufficient accurate information on customer expectations, planning of quality specifications may fail due to lack of real commitment to service quality among top management. Commitment, dedication and devotion to service quality among management as well as service providers are of highest importance and priority in closing the Quality Specification Gap. 3. The Service Delivery Gap (Gap 3): This gap means that quality specifications are not met by performance in the service production and delivery process due to specifications which are too complicated and/or too rigid, employees not agreeing with the specifications and therefore not fulfilling them, specifications not being in line with the existing corporate culture, bad management of service operations, lacking or insufficient internal marketing and technology and systems not facilitating performance according to specifications. The possible problems here are many and varied and usually the reasons for the existence of a Service Delivery Gap are complicated and so are the cures. The reason for this gap can be divided into three categories: management supervision, employee perception of specifications and rules/customer needs and wishes, and a lack of technological/operational support. Management and supervision related problems may be varied too. For instance, supervisors may not be encouraging and supportive of quality behavior or the supervisory control systems may be in conflict with good service or even with quality specifications. In an organization where control and reward systems are decided upon separately from the planning of quality specifications, which is the case often, there is inherent risk of a Service Delivery Gap occurring. Often non-essential or important activities are controlled, perhaps even rewarded; and activities that contradict quality specifications are encouraged by the control system. Control and reward systems partly determine the corporate culture, and goals and specifications that do not fit the prevailing culture tend not to be well executed. The cure here involves changes in the way managers and supervisors treat their subordinates and in the way supervisory systems control and reward performance. Since the way in which performance requirements of the specifications, on one hand and existing control and reward systems on the other hand, are in conflict with each other, an awkward situation may arise for personnel when a customer contact person realizes that a customer requires different behavior on the part of the service provider than that expected according to the company’s specifications. It must be noted that situations where the service provider is aware of the fact that the customer is not receiving what he expects and may feel that the demands and wishes of the customer are justified and perhaps could be fulfilled, however, the service provider is not allowed to perform accordingly, may ruin the motivation for quality-enhancing behavior among personnel. The skills and attitudes of personnel may cause problems if the wrong people are recruited. For instance, the firm may have employees who are unable to adjust to the specifications and systems that guide operations. Furthermore, the workload perceived by employees may be a problem. For example, there may be too much paperwork or some other administrative tasks involved, so that quality specifications cannot be fulfilled and a result of which, the service provider does not possess time to attend to customers as expected. Lastly, the technology or the systems of operating, including decision making may not be suitable to employees. The problem may be the employees, but it is quite probable that technology and operational and administrative systems have been introduced inappropriately. Perhaps the technology and systems do not support quality behavior, or they have been improperly introduced to the employees. To close the Service Delivery Gap, the problems need to be dealt with effectively and efficiently. 4. The Marketing Communication Gap (Gap 4): This gap occurs when promises given by market communication activities are not consistent with the service delivered due to market communication planning not being integrated with service operations, lacking or insufficient coordination between traditional external marketing and operations, the organization failing to perform according to specifications, whereas market communication campaigns follow these specifications and an inherent propensity to exaggerate, and, thus, promise excessively. The reasons for Marketing Communication Gap can be divided into two categories: the planning and executing of external market communication and operations and a company’s propensity to over-promise in all advertising and marketing communication. The cure in the first situation could be creating a system that coordinates planning and execution of external market communication campaigns with service operations and delivery. For instance, every major campaign could be planned in collaboration with those involved in service production and delivery for Dual goal to be achieved. First, promises in market communications become more accurate and realistic and second, a greater commitment to what is promised in external campaigns could be achieved. The second category of problems i. e. over-promising can be dealt with by improving planning of marketing communication and/or closer management supervision. 5. The Perceived Service Quality Gap (Gap 5): This gap signifies that the perceived or experienced service is not consistent with the expected service resulting in negatively confirmed (bad) quality and a quality problem, bad word of mouth, a negative impact on corporate or local image and lost business. However, this gap may also be positive, which leads either to a positively confirmed quality or over-quality. If a Perceived Service Quality Gap occurs, the reason could be any one or a combination of those discussed above or other additional reasons. Addressing these gaps could be a basis for developing service processes in which expectations and experience consistently meet and a good perceived service quality will enhance. Some of the possible strategies that could be adopted by organizations to close these quality gaps are tabulated in Table 1. Gaps |Possible strategies to close gaps | | | | |1 |Change of management (in extreme situations), otherwise normally, learn from front-line customer contact | | |staff, flatten the hierarchical structure, include expectations data in consumer records, market research| | |for improvement in the knowledge of the characteristics of service competition, etc. | | | |2 |Change in firm’s priorities, Commitment to develop service standard s wherever possible, feasibility | | |assessment of customer expectations, develop a standards documentation process, automation of processes | | |wherever possible and desirable, activities outsourced wherever competencies are lacking, development of | | |service quality goals, etc. | | | |3 |Investment in people: (recruitment, training and retention), investment in technology, redesigning | | |workflow, encourage self organized teams; improve internal communication, clear job specifications to | | |avoid ambiguity, reward service excellence, etc. | | | |4 |Brief the advertising agency of the company, external communication of what the customer can expect | | |through advertising, training employees not to over-promise, penalize employees who over-promise, | | |encourage customers to sample the service experience, excel at service recovery, encourage and manage | | |customer complaints, etc. | Buttle, 2004; Gronroos, 2001 and Looy, Gemmel Dierdonck, 2003) 2. 3. 4 Service Guarant ee An organization tries to balance its customers’ expectations with the delivered service. A service guarantee promises the customers a certain service quality and backs up such promise with a payout, making services more ‘tangible’, reducing the perceived risk of purchasing a service. â€Å"A service guarantee makes the customer a meaningful promise and specifies a payout and an invocation procedure in case the promise is not kept. Each of these elements is equally important in making a guarantee successful† (Looy, Gemmel Dierdonck, 2003) The key elements of this definition are discussed below: The Promise Through introduction of a service guarantee, an organization makes a credible promise to its customers. For example, PTT Telecom promise to connect new telephones within three working days and to fix telephone lines within a day and a half. This promise is a credible one in a European context, where shorter lead times are highly desirous by customers (Looy, Gemmel Dierdonck, 2003). In defining a promise, a company should be careful not to promise what would be expected anyway. This may negatively signal that service failures are likely to be expected. Some promises are limited in scope i. e. guarantee only less important service aspects or are highly conditional, excluding all major causes of service failure. For example, Lufthansa guarantees that its customers will make their connecting flights if there are no delays due to weather or air-traffic control problems. Ironically, these two problems cause in total 95 percent of all flight delays. Furthermore, the guarantee is applicable only if all flights including connecting flights are with Lufthansa (Lufthansa airlines, 1987). The presence of a service guarantee can support the perception of service reliability, which is one of the most critical determinants of customer satisfaction. However, sometimes a guarantee may give out a negative message, indicating that service failures may occur due to customers wondering why it is necessary to provide a guarantee. For example, Lufthansa promises its customers that their luggage will arrive with them. However, this created the perception that lost luggage is more a problem with Lufthansa than its competitors (Lufthansa airlines, 1987). The effectiveness of communicating a service guarantee also depends on the source of the message, especially if the form has a history of service problems, making it difficult for a service firm with bad service reputation to send out credible message. The Payout In a situation where promises are not kept, the customer shall receive a payout which will encourage the customer to communicate all service failures, which has a double effect: Service recovery: The customer who claims his payout is less likely to defect or spread a negative word of mouth. Hence, service recovery becomes a possibility. Service quality improvement: Each claim represents valuable information about quality errors and their possible causes, but the avoidance of future payouts functions as an incentive to all staff to participate in improvement projects. In order to achieve service recovery, the payout has to be meaningful to customers. It should not only make up for all the damage and inconvenience suffered bu t also make the customer ‘whole. ’ For example, the payout offered by the Dutch bus service organization, â€Å"Interliner,† makes their customer ‘whole’ by guaranteeing that their passengers will reach their connecting flights and buses. A refund would not adequately compensate the passenger who missed a connection. Therefore, any passenger who would have to wait for more than fifteen minutes for a connection due to delay by Interliner would be taken to his destination by taxi at Interliner’s expense (www. interliner. nl). A payout can also be too high. For example, in India atleast, Domino’s Pizza offers customers its pizza free of charge if they were not delivered within thirty minutes from ordering. The Invocation Procedure The final aspect of the service guarantee is the invocation procedure. Invocating a guarantee should be either easy or proactive. For example, supermarkets Hoogvliet (Netherlands) and Match (Belgium) promise short queues at their checkouts. If all tills are not manned and if some customer is the third one (Hoogvliet) or the fourth one (Match) in the queue, he does not have to pay (Hoogvliet) or receives a significant discount (Match). An example of unconditional satisfaction guarantee which is easy to invoke is that of Superquinn’s Goof Card System. Superquinn is the leading supermarketing chain in the Greater Dublin area. Periodically, customers who participate in the loyalty saving system called ‘Superclub’ receive a ‘Goof Card’. Each time Superquinn ‘goofs’ i. e. produces a service failure, the customer simply has to point it out to any member of staff, and he shall receive thirty bonus points worth ? 1. The guarantee offers unconditional satisfaction guarantee as customers are able to define the goof themselves, however, for further help to customers, Superquinn lists ten examples of goofs. The invocation of PTT Telecom’s guarantee for example is proactive as well. After each connection or repair, PTT Telecom makes an after-sales call to the customer trying to assess customer’s satisfaction. If there is a failure of promise, the customer is immediately informed of the payout (Looy, Gemmel Dierdonck, 2003). 2. 3. 5 Service Recovery The real test of the customer orientation of a service provider takes place when service failure has occurred. Ideally, quality should be high throughout and failures should not occur in the service processes. However, in reality employees makes mistakes, systems break down, customers in the service process may cause problem for other customers, etc. Service recovery is a strategy for managing mistakes, failures and problems in customer relationships (Gronroos, 2001). As defined by Tax and Brown (2000) (in gronroos 2001), â€Å"Service recovery is a process that identifies service failures, effectively resolves customer problems, classifies their root cause(s), and yields data that can be integrated with other measures of performance to assess and improve the service system. † Service recovery includes all actions taken by company when there has been a service failure. Services fail for different reasons- sometimes technical service fails; sometimes functional service quality (Keaveney, 1995 in Buttle, 2004). Problems caused by a service failure are two-fold; factual and emotional problems (Gronroos, 2001). In a problematic situation when service recovery is called upon, customers are often frustrated, possess high expectations and tend to have a narrower zone of tolerance that normal (Tax et all, 1998). Therefore, service recovery could be risky (Smith and Bolton, 1998) and needs to be well managed. Service recovery performance can be better if the employees are more committed to the visions, strategies and service concepts of the firm. Moreover, empowered employees can be expected to perform better in recovery situations, inclined to deal quickly and effectively with service failures (Boshoff and Allen, 2000). When companies resolve problems quickly and effectively there are positive consequences for customer satisfaction, customer retention and word-of-mouth (Tax et al, 1998). Service recovery process should be developed and exercised to maximize fairness as perceived by the customer (Ruyter and Wetzels, 2000). In addition to mistake correction, quick response and adequate compensation are considered crucial elements of service recovery (Johnston and Fern, 1999). It has been discovered that customers who have been let down, then well recovered, are more satisfied than customers who have not been let down all (Hart et al, 1990). A well managed recovery has positive impact in development of a trusting relationship between a firm and its customer and may also deepen the customer’s commitment towards the service provider (Tax et al, 1998). Service recovery is an important factor influencing perceived service quality and is a criterion which can have a positive effect on functional quality. Satisfaction with the service can be increased through good service recovery (Spreng, Harrell Mackoy, 1995). According to Patrick Mene, Director of Quality at the Ritz-Carlton Hotel Company â€Å"1-10-100 rule of service recovery†, what costs the firm one pound, euro or dollar to fix immediately will cost ten the next day and hundred later on (Patlow, 1993). An example of quick service recovery is an incident that took place at the Ritz-Carlton Hotel in Phoenix, Arizona. A group of four MBA students from Europe had attended a seminar at the hotel and wished to spend a few hours of leisure time at the swimming pool before leaving for the airport. When they arrived at the swimming pool around mid afternoon, they were politely told that the pool area was closing because the area was to be prepared for an evening reception and dinner. The students explained that during their stay at the hotel, that was the only time they could spend at the pool before returning to the freezing temperature of their country and they had been looking forward to this opportunity. The waiter requested them to wait while he sorted out the situation. After a short while, a supervisor arrived to inform them that the hotel unfortunately had to close the entire pool area for evening preparation. However, he added that a limousine was waiting for them outside the main entrance to take them and their luggage to Biltmore Hotel where the pool area would be at their disposal. This limousine was at the Ritz-Carlton’s expense undoubtedly. This delighted the group and their already favorable perception of the hotel was improved further. They also engaged in considerable amount of positive word-of-mouth communication (Gronroos, 2001). 2. 3. 6 Complaints management Customers complain under one or both of the conditions: their expectations being underperformed to a degree that falls outside their zone of tolerance or unfair treatment. Complaints management process should be developed to take a positive view of customer complaints. Customers who complain provide an opportunity for the service firm to identify root causes of problems as well as win back unhappy or dissatisfied customers to retain their future value (Buttle, 2005). A complaints management process should allow company to capture complaints before customers spread a negative word-of-mouth or take their business elsewhere (Buttle, 1998). Up to two-thirds of customers who are dissatisfied do not complain to the organization (Richins, 1983). However, they may complain to their social networks. Dissatisfied customers are likely to inform twice as many people about their experience than customers with a positive experience (TARP, 1995 in Buttle, 2005). According to Wilson (1991), only 4 percent of the dissatisfied customers actually complain, providing valuable feedback to the company. The remaining 96 percent choose to simply leave the business and go elsewhere. Companies choose to deal with complaints efficiently to bring about customer retention, continuous improvement in service quality and build a customers of each such benefit are mentioned below Recognition: A customer may feel more valued and important when recognized and addressed by name Personalization: For example, over time, a hotel manager may understand a customer’s particular preferences or expectations Power: For instance, some of the power asymmetries in relationships between banks and their customers may be reversed when customers feel that they have personal relationships with their bank officers and managers. Risk reduction: Risk may be in the form of performance, physical, financial, social or psychological. High levels of perceived risk are uncomfor table for many customers. A relationship has the ability to reduce, or even eliminate risk. For example, a customer may develop a relationship with a garage to reduce the perceived performance and physical risk attached to having a car serviced. The relationship provides the assurance that the job has been skillfully accomplished and the car is safe to drive. Status: For example, customers may feel that their status is enhanced by a relationship with an organization, say, the Hilton. Affiliation: people’s social needs can be met through relationships. For example, many people join particular forums or associations to be a part of a community. However, there are some customers who would be satisfied with the service quality and perhaps decide to be loyal, but not want a relationship as such with the supplier for privacy issues. It is a known fact that suppliers wish to increase their sales to customers. In order to know and analyze their customers, companies collect extensive data on their customers through various channels. One popular rather common channel is through loyalty programs and cards. Examples include Tesco loyalty cards, Hilton hhonors program, British Airways frequent flyer cards, etc. The companies provide some benefits to customers and collect data like contact name, history of purchase, money spent in the past on company’s services, etc. However, if the data is mishandled or incorrectly handled, it can destroy the trust and loyalty in the relationship. (Vargas, 2006) Privacy and data protection are key concerns of customers, who are increasingly concerned about the amount of information that organizations have about them and the uses to which information is put. In reality, most customers are unaware of the quantity of information available to companies. Some customers may wish to simply not join any loyalty programs in order to secure their privacy and prevent intrusion into personal information. 2. 5 Synopsis This section has provided available literature about CRM. The gap model explained shall be a strong basis for explaining the dark side of CRM. Privacy issues shall be given importance as well. The customers’ perception of service quality is to be given supreme priority by the hotel industry. It is important how customers perceive the service quality to be. What they receive and how they receive corresponding to their expectations helps them judge the service quality to a large extent. Chapter 3: CRM and Hotel Industry The hotel industry today has been recognized as a global industry, with producers and consumers spread around the world. The use of hotel facilities such as: room, restaurant, bar, nightclub or health club; are no longer considered a luxury. For many people these services have become an integral component of lifestyle. Moreover, in the last two decades, demand for and supply of hospitality services beyond that of the traditional services intended for travelers have escalated the growth of the hospitality industry globally, leading to intense competition in the market-place. One of the greatest challenges facing hotel organizations today is the ever-growing volume and pace of competition. Competition has had major implications for the customer, providing increased choice, greater value for money and augmented levels of service. Additionally, there is little to distinguish one hotel’s products and services from another. Thus it has become imperative for hotel organizations to gain a competitive advantage. There are two strategies most commonly used by hotel managers in order to gain a competitive advantage, which are low-cost leadership through price discounting and developing customer loyalty by providing unique benefits to customers. Hotels that attempt to improve their market share by discounting price run the serious risk of having a negative impact on the hotel’s medium- and long-term profitability. As a result, it is quality of service rather than price that has become the key to a hotel’s ability to differentiate itself from its competitors and to gain customer loyalty. Getty and Thompson (1994) studied relationships between quality of lodging, satisfaction, and the resulting effect on customers’ intentions to recommend the lodging to prospective customers. Their findings suggest that customers’ intentions to recommend are a function of their perception of both their satisfaction and service quality with the lodging experience. However, satisfying customers alone is not enough, since there is no guarantee that satisfied customers will return to purchase. It is now becoming apparent that customer loyalty is significantly more important than customer satisfaction for success. Numerous examples illustrate that it is important that the hotel industry develop customer loyalty, as opposed to relying solely on pricing strategies. Researchers have shown that a 5 per cent increase in customer loyalty can produce a profit increase of 25 per cent to 85 per cent (Reichheld and Sasser, 1990). Hence a dedicated focus on customer loyalty is likely to become a necessary prerequisite for the future survival of hotel organizations. In the hotel industry, Customer relationship management (CRM) is more than the practice of collecting guest-centric data. It’s the art of using historical, personal, and experiential information to personalize a guest’s stay while generating incremental revenue opportunities. For instance, knowing a traveler is an avid sports fan creates the opportunity to market tickets to a game; knowing a guest had a less-than-memorable experience in the hotel restaurant gives you a chance to win them back the next time they are in town. With the latest offerings in CRM, hoteliers can develop comprehensive guest profiles from reservation information and demonstrate to guests that the property is in touch with their needs, drive guest-centric data down to the transaction level, allowing employees and guest-facing technology to deliver greater value to the guest, generate a realistic profile on the spending and stay patterns of guests, allowing the property to create guest-centric marketing for increased loyalty and spending, etc. Microsoft, 2006). To summarize, the shift in the sales and marketing landscape requires the hotel companies to be as advanced as technology will allow in managing their customer relationships. â€Å"There will be a sea change from management of customer data to management of customer relationships†. Hotel companies must carefully consider how they store, track, analyze and act upon every aspect of their relationships with their guests and booking customers. † The emphasis should be on using the data intelligently to predict consumer behavior, such as loyalty and usage patterns, and to use the customer knowledge to anticipate the customer needs or problems (EURHOTEC, 2000). Chapter 4: Methodology and Research Design 4. 1 Overview Methodology can be defined as (i) â€Å"a body of methods, rules, and postulates employed by a discipline†, (ii) â€Å"a particular procedure or set of procedures or (iii) â€Å"the analysis of the principles or procedures of inquiry in a particular field†, the common idea being the collection, the comparative study, and the critique of the individual methods that are used in a given discipline or field of inquiry (Wikipedia, 2006). This chapter of the paper provides an overview of the research design (i. e. the case study) used for research about the hotel industry. The objectives of the research have been mentioned followed by a definition of research design and the qualitative approach of the case study. The researcher then presents his justification for choosing Ritz-Carlton Hotel Company as his case example leading to methods of data collection for the research conducted along with each method’s strengths and weaknesses. This chapter concludes with discussion on data analysis and the reliability and validity issues with data collection 4. 2 Research objectives A review of the present literature is a stepping stone in compiling the objectives behind the research. In this regard, the literature review enabled an understanding of how can the hotel industry improve its business performance through service quality, customer satisfaction and customer loyalty. The service quality is provided by hotels to ultimately satisfy the customers and the hotel managers must know what their customer wants rather than blindly assuming. Even though the service quality may be satisfactory, there may be a gap between the expected service quality by the customer and their experienced service quality. The hotel management has to strive to bridge these gaps to improve service quality and customer satisfaction and attempt to bring about customer loyalty which in turn would impact business performance. The literature review also highlighted that there is possibly a ‘dark side of CRM’ which refers to privacy issues of the customer and doubts about customers willing to build relationships in the long run. There is also not ample literature available on the customer’s perspective i. e. how he customer feels about what the hotel provides him with, if the hotel actually provides them with what they promise to deliver, if the customers value all they receive and how much, the privacy issues and possibly customers’ reaction to certain experiences during their stay, just to name a few not so explored sides of CRM. Inspired by the above, the research objectives are as follows: 1. Does the gap model explain the dark side of CRM? 2. Is there more to the dark side of C RM than what is explained in the gap model? 3. How can the dark side of CRM be reduced? . 3 Research design A research design can be explained as the â€Å"detailed blueprint used to guide a research study toward its objectives† (Aaker, Kumar and Day, 2003). Research design provides the â€Å"glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project the samples or groups, measures, treatments or programs, and methods of assignment work together to try to address the central research questions† (Social research methods, 2006) The process of designing a research study requires some interrelated decisions to be made. The most significant decision is the choice of research approach which determines how the information will be obtained. The choice of research approach is dependant on the nature of the research to be conducted. Research approaches can be categorized into one of the three general categories of research i. e. exploratory, descriptive and casual (Aaker, Kumar and Day, 2003). Exploratory research: This type of research is undertaken when one is seeking insight into the general nature of a problem area, the possible decision alternatives and relevant variable that are to be considered. The research methods are loosely defined, highly flexible, unstructured and qualitative. The researcher begins without firm preconceptions as to what will be the outcome. The absence of structure allows a thorough pursuit of ideas and clues about the problem situation. Such research is conducted because a problem has not been clearly defined. Explor

Social perception and managing diversity Essay Example | Topics and Well Written Essays - 500 words

Social perception and managing diversity - Essay Example Managers must also employ good communication process as this could further align the people. Aligning the people could eliminate formation of diversity in an organization as this involves actual communication of the vision to the human resource (Kotter, 1998). In addition, managers must employ policies that could help promote teamwork disregarding the presence of race, color, age, demographic, gender or sexual preference. One important move in an organization is to create a team that could work together in the same direction and as one, disregarding whatever prevailing issues concerning diversity in various aspects of an organizational climate. As a result, this would create a positive implication on diversity climate, by which employees would be able to learn to recognize the organization is fair in dealing with its human resource (Kreitner & Kinicki, 2010, p.53). Finally, managers must enhance their ability in decision-making by which they could showcase their ability to handle disturbance in an organization (Kotter, 1998). Stereotypes are important components of this organizational disturbance that every manager as decision-maker should take into account. Affirmative action is an artificial intervention in order for the management to correct imbalance, injustice and other unnecessary actions that could probably hinder productivity (Kreitner & Kinicki, 2010, p.36). To emancipate this, a legal system or act should be well implemented in order to create a positive response from every concerned. In line with this, some policies or legal act should be mandated in every organization such as those that would promote equal and balanced opportunity for everyone. In the workplace for instance, the law concerning discrimination must be employed in order to adhere to affirmative action. For example, every organization is under employment law that seeks to give equal opportunity to each individual and such discriminatory practices

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Introduction To Trade Union

Introduction To Trade Union According to the Central Statistics Office (CSO) there are around 535,500 employees on the Mauritian labour market in the first quarter of 2012. These workers are the human resource of our country and they deserved to be treated as valuable asset. However, in our lucrative oriented era, where the pursuit of profit triumph over the human rights and freedom of these workers. Hundreds of workers have no say in their working conditions; many are helpless in front of the managerial level, others are intimidated, or dismissed when their basic objective is to prone the human rights of freedom of association, collective bargaining and industrial democracy. On this basis, it has been none a coincidence to perceive the rise of trade union movements and understood that these movements had been on a perpetual alert and are continually fighting for their members to make the human right prevail before profits. The history of Trade Unions is a history of struggles for greater social justice and against tyranny, both in societies and at the workplace. The need for Trade Union in our country begun with the Industrial Revolution, where the rise of factories and the deskilling of labour led to workers seeking security through collective bargaining agreements. Trade Unions in Mauritius operate within the framework of the Industrial Relation Act 1973 (IRA). Of course, these trade unions around the country have the same purpose and objectives which is the welfare of the workers. Haniff Peerun the president of MLC confederation told us that: Mauritius Labour Congress being a Confederation always sees to it that all labour laws are respected and that all workers rights are respected. On the same basis, Mr X leader of the National Trade Union Congress told us that; the role of his organisation is to help promote and protect the rights of workers in the country. Trade unions give employees a number of important privileges that they would not otherwise possess as individuals. This is the reason why trade unions need to safeguard that their determinations to defend their labours match the efforts of managers looking to destabilise the employees. In addition, psychological contract and employers- employees relationship is also taken into consideration, by helping in the flow of communication as well as renegotiation through collective bargaining. 1.2 Aims and objectives This investigation will focus on the role and responsibilities of Trade Union movements in our country and the extent to which they are efficient and effective in both the public and private sector. The four specific objectives of this study are: Evaluate the perception of usefulness of trade unions as well as its accessibility in private sector as well as public sector. Assessing the employees intention to rely on Trade Unions and measure the gauge of satisfaction in a Unions member perspective Investigate the methods used by the Trade Union movement to negotiate better working conditions, for negotiation, leadership and securing economic benefits. Finding out how the Trade Union deal with certain crisis that arises in the workplace and the concrete involvement of the Trade Unions for their members 1.3 Background of study Mauritian development promises to promote standards of living for its population by bringing about a greater productivity through the diffusion of technological innovation as well as updated methods in exploiting equipment and the human resources, superior specialization, enhanced access to credit and capital as well as cheaper goods and services. At the same time, policies, laws and acts were amended for the welfare of the citizen, for instance the Industrial Relation Act 1973 or employment rights act 2008. However with the sole vision of making the country a world- wise competitive one, little importance is given to the concrete implementation of those laws on a daily basis. On that basis, Trade Union movements were launched in Mauritius, so as to voice out the workers rights. The chief target of the project is to identify the effectiveness of the roles and responsibilities of trade unions in our Mauritian system. It briefly examines the evolution of these movements in the country, by going back on their very start. In addition, a highlight of the intervention of the Trade Unions in our various sectors and how their concrete actions contribute to their members. The document will also enlighten the functions and importance of trade union in the Mauritian context as well as providing reasons to enrol as a Trade Union member. Analyzing the different challenges face by the Trade Unions such as the recent PRB issue, Labour laws, decent work, living condition among others, in the point of view of the trade unions, federation and confederation.Comparing the old managerial style to the new one, the paper will also bring emphasis on why the popularity of Trade Union has diminished. An overview of the future role of trade union will be discussed in order to see if t hese movements will resist the major changes of globalization as well as financial crisis. As a group of students, we implemented a top-down, quantitative approach to our research, which allowed us to analyse the various roles of trade unions in Mauritius, as this was considered the most appropriate method for studying the topic; we evaluated the hierarchy of trade union; Confederation, federation and finally Trade Unions. We identified the Mauritius Labour Congress as the main Confederation, the National Trade Union Congress and the Mauritius trade Union labour as federation and various other trade unions which are affiliated to the federation. Adhering to the concept of interviews and surveys, our observations were pooled to provide a broader and more precise representation than that provided by a sole investigation technique. Chapter 2: Roles and Responsibilities of Trade Union 2.1 Definition of Trade Union Trade Union is defined in the Employment Relations Act 2008 as an association of persons, whether registered or not, having as one of its objects the regulation of employment relations between workers and employers The Trade Union or Labour Union movement is a continuous and voluntary association whose membership comprises of salary earners, employees and union leaders. Those members have bonded together motivated by a simple motto Unity makes strength. Workers will therefore utilise trade unions as their representative voice when dealing with employers or on the board of directions. Independently, the workers do not bear the power to defy the top management. Therefore they grouped and seek to institute their terms and conditions of employments. When they realised that negotiating as an individual, the manager would be more powerful, due to the fact that an individual would not matter as much a group in regard of running an organisation. According to Cunnison, Trade Union is a monopolistic combination of wage earners who stand to the employers in a relation of dependence for the sale of their labour and even for the production, and that the general purpose of the association in view of that dependence is to strengthen their power to bargain with the employers The main role of trade union is to ensure the welfare of its members such as safeguarding the interests of its members, protecting the reliability of its trade, achieving higher wages by securing economic benefits. It also optimises the working conditions at the workplace and guarantees a job security while protecting members against unfair dismissal at workplace. Through its leadership, trade union engages in collective bargaining, whereby labour contracts are negotiated with the employers. Also it acts as a recruiting manager, the Union leaders interfere with the recruitment and selection of the company, its intention is to maximise the number of employees an employer can hire. 2.2 Hierarchy of Trade Unions There is a hierarchy in Unions, we had identified; the confederation, the federations and the trade unions. Regarding the confederation, there are one main which is Mauritius Labour Congress and it is affiliated to the International Confederation of Free Trade Unions (ICFTU).In the category of federation there are; National Trade Union Confederation (NTUC) which is affiliated with the International Trade Union Confederation (ITUC) and the Mauritius Trade Union Congress (MTUC). Finally, the trade unions which are affiliated to the NTUC; The Federation of Civil Service Unions, Federation of Progressive Unions, Federation des Travailleurs Unis, Confederation Mauriciennes des Travailleurs, General Workers Federation and Federation of Free Workers. Confederation: The Mauritius Labour Congress The MLC is the largest registered and recognized central organization of workers in the country. It was created in 1963 from a merger of the Mauritius Trade Union Congress and the Mauritius Confederation of Free Trade Unions. It represents over 45,000 members through its 56 affiliates, which directly and indirectly covers 125 individual trade unions. The MLC was the unique national confederation affiliated with the International Trade Union Confederation (ITUC) representing workers from practically all sectors such as Sugar Industry, Civil/Public Service, Para-statal Bodies, Aviation, Docks, Banking, Insurance, Tea, Transport, Hotel and Tourism, EPZ, Local Authorities and the private sector. We had an interview with Mr Haniff Peerun, the president of the confederation who told us that the vision of the organisation was to defend the rights of workers on the labour market. According to him, the aim and objectives of his trade union were: Adequate salary compensation to be paid to workers Make proposal to the government on budget To train the trade union members and affiliates To raise their voice whenever the rights of workers and consumers are at stake. Federation: The National Trade Union Confederation The National Trade Unions Confederation (NTUC) is a national trade union center in Mauritius and is affiliated with the Confederation. Which have two primary affiliates in the name of Federation of Civil Service Unions, and the Organization of Artisans Unity. It is composed of 20 members who represent all categories of workers within the public sector and its members are organised in branches, each branches having an executive committee, consisting of a president, secretary and a treasurer. The Vision of the confederation which has been identified after an interview with the leader of the organisation came out to be: To be a respected partner and a reference in trade unionism To be at the forefront of change, leadership and sound industrial relations. Moreover, according to him the aim and objectives of the Union are: Our main objective is to maintain mobilisation of our members and also organise those whom we represent. We also aim to help to make the public service more responsive to the needs of the people : Mauritius Trade Union Congress (MTUC) The Mauritius Trade Union Congress (MTUC) is a national trade union center in Mauritius affiliated with the International Trade Union Confederation. It was founded by Emmanuel Anquetil in 1946. It comprises of 29,000 members and is have Mr Dewan Quedou as president. 2.3 Structure of Trade Union The trade unions structure is divided into several parts, namely: The Annual Delegates Congress It is the authority which governs the federation. The Executive Council It comprises of one representative of each affiliates which is usually the secretary or the president and the Bureau members and two observers per affiliates. Once every two months they conduct meeting regarding applications for affiliates from trade unions and affiliation of the Federation to any local, regional or international organisation promoting the interest of the workers and to discuss disagreements between different affiliates. Meeting can be scheduled on the demand of the President or the Bureau or of the members of the Executive Council too. The Bureau It comprises of the President, the General Secretary and the eight elected members. Among them, one is the 1st Vice president and another is the 2nd vice president, a 3rd as Assistant Treasurer and a fourth one who is the organising secretary. President He represents the Federation and he is the spokesman of the federation. General secretary The General Secretary arranges meetings and draw up the minutes of the meeting. Along with the General Secretary, Deputy General Secretary and the Assistant General make up the Secretariat of Federation. Treasurer He is in charge of the accounts of the federation. Organising Secretary He is in charge of organising events like training sessions, seminars, workshop among others. Public Relation Officer He deals with the media for conferences, coverage, reports and other information that will be published by the media. 2.4 Nature and Scope of Trade Union The existence of an influential and recognised trade union is a pre-requisite to the industrial development pace of the country. With modernization in different sectors and the formation of new one such as the technological one as well as the tourism sector, human resources were required. However, mistreatment of the Mauritian labour force appears. This is where the trade union emerged; they ensured that the human rights of their members are respect as per the laws and the constitution. Trade Unions are currently considered as a sub-system which attends a precise sub-groups interest. When defending a particular sector they consider themselves as an integral part of the organisation in respect to the feasibility, growth and development of the community of which they formed part of. The influence of Trade Unions is of key importance for their members in the following ways: First, they are more effective and efficient when the need of negotiation is required between employers and employees by attempting to create a win-win situation. They facilitate the flow of communication between workers and the management, by providing the guidance and support to both of them. The Union leaders will seek a health and safety in the working environment. In addition, they also act as an educational institution; they provide different types of courses to their members. They also accelerate the pace of economic development for instance; they act as a recruiting and selecting agent for the unemployed workers, managing conflicts in the organisation, inculcating corporate social responsibilities to the members among others. 2.5 Objectives of trade unions. The main body of a trade union usually consists of individual workers, sometimes professionals and past workers. Their primary aim is to ensure that the employment conditions of employees are respected and that fair working conditions are offered. However, trade unions also engage in issues like: Negotiation One of the main targets of trade unions is to negotiate with employers about the matters affecting their members and other employees at work. If a union is formally recognised by an employer, it can negotiate with the employer over terms and conditions. These negotiations are commonly known as collective bargaining. Any trade union works to protect and advance the interests of its members. One of the ways it achieves this is by collectively bargaining with employers about the pay and conditions under which its members work. The negotiation process normally deals with matters such as working rules and regulations, complaint procedures, hiring principle, dismissing or promoting employees, workplace safety and policies etc. Some trade unions even have the power to negotiate rates of pay, bonuses for target achievement, employment conditions and job descriptions on behalf of the employees. For collective bargaining to be effective, unions and employers need to agree on how the arrangement is to operate. The objective of that collective bargaining or negotiation process is to settle with a mutual agreement also known as collective agreement between the management and the trade union. Representing Body Employees and other workers have the right to be accompanied at a disciplinary or grievance hearing. They can either choose a co-worker or a union representative. Often, the union representative, will be a workplace representative who is also a co-worker and will support the employee on the board meeting. Information and Advice If someone forms part of a union he/she can also ask them for advice. Unions are experts at solving problems at work. Trade unions provide staff with information, advice and guidance about any work related problems. Member Service Trade unions provide its members with a variety of services such as training, insurance, financial assistance and legal advices, sickness benefits, education facilities in some cases, guarantee of satisfactory work conditions in areas such as health and safety as well as equal opportunities. Voice in decision affecting Workers Trade unions act as a spokesperson for the staff. When matters concerning an individual employee or a group of workers arise, the trade unions job is to voice out the problem in order to negotiate for a solution. In case no agreement is settled or respected, the trade union members may enforce strikes or resistance to lockouts. They can also intervene in order to resist schemes of the management which reduce employment, e.g. restructuring and automation 2.6 Types of Trade Union Craft or Occupation Union. This type of union was the earliest type developed, it comprised of employees of a particular craft or skill regardless of place of work. The advantage of craft unionism is the sense of solidarity, as there is a feeling of common interest between the members. In addition, as this union bears skilled workers, they have a good economic position for collective bargaining. On the other side, more and more new mechanical devices were being developed, the need for large numbers of skilled workers decreased. One- Shop Union or House Union The one-shop union organizes all workers in the same establishment or factory. This type of union has the advantage of being relatively easy to organize because all workers share a common goal in securing a good collective agreement for their particular factory. However, as it is small, it has little bargaining power and it is easily dominated by management. Common Employer Union. The common employer union is basically the same except that it organizes across establishments owned by the same employer. It suffers from basically the same disadvantages as a one-shop union. 2.7 Characteristic of Trade Union Trade unions have shown remarkable progress since their inception in Mauritius and as the union is an essential and dynamic aspect of the society it bears special characteristics such as: Trade Union come together for common goals and interest The members have some materials of collective interest such as improving working conditions, better wages, benefits, job security among others. The trade unions have the right to contest a managerial decision, if they considered that their members are at risk with the outcome. Trade Union is an association of workers and salary earners: Unions are essentially a cooperative labour marketing association whose aim is to safeguard human rights on one or more labour market. In addition, they also bear a hand in the progress of the society, cultural interest and political views of its members. Trade unions have been implemented so as each sector of the working class bear a specific union. Mauritius therefore bears different Union association such as: Agricultural Research Extension Unit (AREU) Mauritius Labour Congress (MLC) Mauritius Trade Union Congress (MTUC) National Trade Union Confederation (NTUC) Trade Unions are basically voluntary organizations: Members of any trade union are voluntary in nature. They are completely free to become a member of a Trade Union or not; none is constrained to subscribe to a Trade Union. If any individual is forced to join a Union, the very essence of trade of trade unionism is defeated. Unions are egalitarian bodies: The Unions are self-governed; this is the reason why they can effectively act in our society. The union leaders are voted by the members and perform as per the Trade Union Act. The Trade Union is a continuous association Union is not a daily affair. In order to work effectively for their adherents they ask a long term membership Constant evolution in the characteristic of Trade Union With this dynamic era, the union continually update their techniques and amend their work. With new complications in the workplace, the unions need to find infinite approaches so as to serve the union members. Rapport with the Management: The unions have the responsibility to improve the employers and employees relationship. They go through the process of negotiation and collective bargaining with the direction of the members organisation concerning their problems. In so doing, the employer and employee relationship is enriched and enhance the quality and welfare of the employees. 2.8 Functions of Trade Unions Broadly speaking, trade unions perform two types of functions: Militant Function Amongst the various activities performed by trade unions is the betterment of the position of their members in relation to their employment. The aim of such activities is to ensure that all the clauses of the hiring and psychological contract are respected. When the union fails to accomplish these aims through collective bargaining and negotiation, in extreme conditions they adopt drastic measures in the form of go-slow, strike, boycott, work sabotage etc. to make the management react and reconsider their requests. Hence, these functions of the trade unions are known as militant or fighting functions. Fraternal Function Another actions performed by trade unions are to provide help to its members in needy times, and improving their efficiency. Trade unions try to nurture a spirit of cooperation, mutual aid and promote friendly relationships and sharing of knowledge and culture among their colleagues. In some cases, they also arrange for legal assistance. Besides, these, they undertake many welfare measures for their members, e.g., school for the education of children, library, reading-rooms, in-door and out-door games, and other recreational facilities. These activities, which may be called fraternal functions, obviously depend on the availability of funds, which the unions raise by subscription from members and donations from outsiders, and also on their competent and enlightened leadership. Another broad classification of the functions of unions may be as follows: Intra-mural activities: These deals with whatever happens on the site of work and has direct impact on employees e.g. wages, strikesà ¢Ã¢â€š ¬Ã‚ ¦ Extra-mural activities: These activities help the employees to maintain and improve their efficiency or productivity e.g., methods intended to foster a spirit of cooperation, promote friendly relationsà ¢Ã¢â€š ¬Ã‚ ¦ Political activities: Modern trade unions also take up political activities to achieve their objectives. Such activities may be related to the formation of a political party or those reflecting an attempt to seek influence on public policy relating to matters connected with the interests of working class Other Functions Trade unions have a number of functions, one more important than the other depending on the situations; however the five main general principles developed have been: The service function The representative function The regulatory function The government function The public administration function The service function This involves the delivery of services and assistance to the union members. The representative function This implies that the trade union will act like a delegate for the members at the workplace. The regulatory function This enables trade unions to actively participate in rule-making over the workplace. This can be done either: directly multi-employer collective bargaining e.g. through the Joint Industrial Council Or indirectly through regulatory legislation The government and public administration function Trade unions engage with the government to assure that they can accomplish their respective function within the law. Trade unions also play an important role in: improving bottom-up communication in order to increase commitment of employees in meeting the organizations objectives negotiating improvements to pay and working conditions to retain the people encouraging companies to invest in training and development for better performance and personal as well as professional development of employees acting as a positive change agent thus gaining employees support for the smooth running of the organization Protecting the interests of employees by taking active participation in the management. safeguarding organizational stability, growth, and leadership Chapter 3: Trade Union at Work 3.1 Need for trade Union Trade Unions contribute much in the industrial peace; they are required for different purpose such as effective communication between employees and employers as they are the mediator between them. They also make sure that the divergence of opinions is taken into consideration and of course do not turn out into conflicts. They also bear a great responsibility in safeguarding the interests of their members. They are the protector, the counseling, the mediator, coach, and keep an eye on the environment in which their members evolves every day seeking a healthy and safe working place. Reasons why Trade Union is useful at work: Trade unions aid to enhance the pace of economic growth in many ways; through the recruitment and selection of workers instructing discipline among the workforce Trying to inculcate the organisation culture of the organisation to the new employee settling industrial clashes in a rational manner helping in social adjustments: new working conditions, abiding to new rules and policies Trade unions are a portion of society and are concern with the national integration: Encouraging and preserving national integration through the minimization of industrial conflicts. Incorporating a sense of corporate social responsibility in workers Attaining industrial peace To ensure job security and right pay for the members: One of the main reasons why the employee decides to join a union is principally for security, especially in the private sector where people are unsure of their job position. Employees desire to get paid according to their qualifications and skills. To express the complaints of employees to the managerial level: Though some employees do have grievance again the employers, they do not convey their thoughts as they fear of getting dismissed Employees do not like to be subjected to arbitrary and capricious actions by management. When difficult situation happens, employees may notice that they have little or no influence in job-related matters, thus becoming prime targets for unionization Facilitate the flow of communication between employers and employees Enhance the employer and employee relations Facilitate decisions making through the process of collective bargaining and negotiations 3.2 Reason for joining a Trade Union Individuals in various sectors of Mauritius choose to join a union in order to protect by the laws and regulations which abide the union. They might have different reasons joining and these reasons will tend to change over time. At the start of ones career, the main reason is for job security and working conditions, and when having experience it is for a better salary or benefits. Remember that independently, the workers do not bear the power to defy the top management. Therefore they grouped in order to make Unity stand still in front of managers. Other reasons can involve dissatisfaction with management, need for a social outlet, opportunity for leadership, forced unionization and peer pressure. Other important reasons for joining trade union: Greater Bargaining Power: As said before, when trying to bargain alone, the employee will not make the difference but if the whole organisation voices out it will me more tangible; a Strike by a union is a powerful tool that often causes the employer to accept the demands of the workers for better conditions of employment. Minimize Discrimination in decisions concerning wages, working conditions, promotion among others. There might be favouritisms if the manager appreciates more one employee than another. Discrimination can arise in term of racism, culture, religion, gender, origins and names. Sense of Security: employees join unions so as to have adequate security in term of accidents, injury, illness, unemployment, but also obtaining; retirement benefits and compelling the management to invest in welfare services for the benefit of the workers. Sense of Participation: so as to be involved in the decision- making of the organisation and influence the results through collective bargaining. Sense of Belongingness: some join because their co-mates are members others under group pressure. This may be an aspect of respect for those who are not members. Platform for self-expression: the workers want to be taken into consideration by the managerial level. Thus Trade unions provide such a forum to convey feelings, ideas, complaints and opinions. Betterment of relationships; workers believe that unions can satisfy the main need for suitable equipment for proper maintenance of employer-employee relations. Unions help in betterment of industrial relations among management and workers by solving the problems peacefully. 3.3 Pros and Cons of Trade Union Advantages of Trade Union Trade Union can increase the salary of its members as well as benefit through negotiation. Represent the workers in front of the employers and society Protect against exploitation Uphold health and safety legislation Trades unions can give representation to workers facing legal action. Can voice out for better working conditions Ask for training, learning and development of knowledge, skills and abilities Build the employee and employer