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    Concept of Productivity in Service Sector

    Jonas Rutkauskas, Eimen Paulaviien

    Kauno technologijos universitetas

    K. Donelaiio g. 73, LT- 44309, Kaunas

    Productivity shows whether the activity of an organi-

    zation is efficient and effective. Though the terms like pro-

    ductivity, efficiency and effectiveness are used together

    and practicians sometimes alternate their meanings, how-

    ever we must not identify productivity with efficiency

    and/or effectiveness. Productivity requires both efficiency

    and effectiveness, because a certain activity will not be

    productive if it is only efficient, but not effective, or effec-

    tive, but not efficient. Productivity in economic position is

    defined as the relation between output and input. Inputelement in an organization consists of resources used in

    the product creation process, such as labour, materials,

    energy. Output consists of a given product, service and the

    amount of both.

    Mostly productivity is analyzed in manufacturing

    sphere. Productivity in the service sector was not analyzed

    before the end of the twentieth century, while productivity

    in manufacturing has been analyzed for more than two

    hundred years. Many researchers argued that application

    of productivity concept in service sector is more compli-

    cated task than its application in manufacturing.

    Productivity concept in manufacturing is analyzed in

    the scope of organization, but in the service sector this scopeis larger and involves an external element from the organ-

    izational position customer. Some of the service organiza-

    tions reduce an input element by including customer to their

    activity and thus boosting service productivity.

    The quality aspect in manufacturing is not gauged, be-

    cause input and output are measured by quantity units

    which quality is seemingly the same. The quality in service

    sector is very important. Customers often evaluate a given

    service not only by its amount. If only one unit or package

    of service is purchased, output is mostly gauged only by

    the quality aspect. Input commonly is gauged both by the

    quantity and quality aspects. Quantity and quality aspects

    in the determination of productivity will differ in differentspheres of service sector.

    Service sector input elements such as materials, ma-

    chines and energy are not as important as in manufactur-

    ing. The main element in service sector is labour because

    service sector is more personnel-intensive comparing to

    manufacturing. Output in manufacturing is measured by

    quantity units and boosted by increasing the amounts of

    production, its realization. Service sector output usually

    has no high values by the quantity aspect, therefore it is

    mostly increased by the attempt to provide higher quality

    services to the customer, seeking for better customer satis-


    Keywords: productivity, service sector, quality, qualityand productivity ratio.


    The origin of productivity management is deeply rootedin the context of mass production therefore issues of produc-tivity are mainly analyzed in this sphere. This may be themain reason for the prolonged neglect of the productivityissues in the sphere of service. Service organizations arerecognized as the largest and fastest-growing segment of theeconomy in the world (Sahay, 2005). Johnston and Jones

    (2004) states, that despite the importance of productivitymanagement in service organizations it is surprising thatthere is relatively little empirical research on this topic.

    Organizations that deliver service must broaden theirexamination of productivity from the conventional organi-zation-oriented perspective to a dual organization cus-tomer perspective. This broadened approach can help rec-oncile conflicts between improving service quality andboosting productivity (Sahay, 2005). According to Parasu-raman (2002), customers are often involved into activity ofan organization providing some amount of input in theform of time, physical effort and mental energy.

    With the expansion of point of view towards the ex-

    amination of productivity to the point of organization customer perspective, the problem of quality productivityratio becomes more relevant. Some researches state thatquality and productivity are two unrelated concepts (Brig-nall et.al., 1996), (Heskett et.al., 1994). However, most re-searches state that quality and productivity can not be ap-proached as separate concepts (Sahay, 2005), (Kontaghior-ghes, 2003), (Parasuraman, 2002), (Murugesh, 1997).

    Productivity of manufacturing organizations is meas-ured in quantitative units of input and output with rela-tively the same quality. There were several attempts tomeasure service sector productivity in the same way, i.e.using only quantitative dimensions of input and output

    (McLaughlin, 1990).At least there are two reasons for inadequacy of thistype of service sector productivity measures. The first rea-son is the fact that input and output of service sector pro-ductivity consist not only of quantitative elements but alsoqualitative (Reid, 2005). The second reason is the fact thatquality and productivity in all the sectors of service arestrongly correlative (Gummesson, 1992). Customer in-volvement to the organizational activity in the service sec-tor generates many output quality variations. Therefore,output of service sector in many cases could be measuredonly by measuring its quality variations. How can servicesector productivity be determined? What parameters are

    primary in the determination of service sector productiv-ity? How are these parameters related? What are the singu-larities in the determination of service sector productivity?

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    empirical research on this topic (Johnston and Jones,2004). According to Adam et.al. (1995), the concept ofproductivity mostly analyzed in manufacturing is too nar-row in the case of service sector. Therefore, we have tointerpret the analysis of productivity in the service sector ina broaden way than in the traditional manufacturing sense.We must include quality to our definition in the analysis ofthe productivity of service operations (Grnroos, 1990).We can define service productivity at the outset of analysisas the ability of a service organization to use inputs forproviding services with quality matching the expectationsof customers (Jrvinen et.al., 1996).

    The quantity and quality of service sector cannot betreated in isolation, because it may be impossible to sepa-rate the impact of service process on conventional produc-tivity from its impact on service quality (Kontaghiorghes,2003). Hence, both the quantity and quality aspects mustbe considered together to provide a joint impact on thetotal productivity of the service organizations.

    We can define service sector productivity to the fol-

    lowing ratio:


    outputofqualityandoutputofQuantitytyproductiviService =

    In order to understanding the ratio better, we will ana-lyze it in a more detailed fashion factors (quantitative andqualitative aspect) inside ratio.

    The quantity aspect of service productivity

    The quantity aspect of service productivity is identicalto the manufacturing productivity and consists of material,labor, capital. Service business is personnel-intensive, there-fore productivity of many service spheres is low comparedto manufacturing sphere. Therefore many providers of ser-vices investing to technologies as alternative of using labor(e.g. automated teller machines replace operators, WorldWide Web business replace sellers in the shops). It shows away to increase productivity trough investing to the tech-nologies in expenses of input element of capital. Thoughcapital mostly impacts service productivity, we have no usefor only this partial (capital) productivity measures.

    It might seem that output, amount or quantity is theprimary factors to measure productivity. When a proposedservice consists of one or several standardized compo-nents, output of service is easy to measure (Quinn andPaquette, 1990). Therefore output can consist of a numberof standardized services adapted to individual customers(e.g. in the case of a unique service package). Thereforedefining the service output is a difficult task.

    It is strategically important for the service provider tohave enough of resources in order to match demand for theservice. This strategy is oriented towards the quantity.However, from the customers view, the volume of theservice output is hardly a significant issue, because thecustomer usually buys only one unit of output (e.g. haircut)or one package of service (e.g. holiday tour). The customeris therefore inclined to give priority to service quality in-

    stead of quantity (Sahay, 2005). Yet, the actual volume ofoperations is determined by the variation of demand overtime (McLaughlin, 1996). As a consequence, the produc-

    tivity ratio of service operations may vary greatly from onetime period to another, if it is measured as a quantity ratio.Due to the variation in the amount of the total demandacross time, the service provider has to solve two basicproblems related to the quantity aspect: capacity size andcapacity scheduling (McLaughlin et.al., 1991).

    The quality aspect of service productivityThe quality aspect is a dimension that is difficult to de-

    fine objectively. According to Gummesson (1992), there isa humanistic quality approach. At the one extreme we mustpay more attention to the customers, personnel, leadershipand culture, whereas at the other end lies a technical ap-proach concerning operations management, statistics andmethods of measurement. Lehtinen and Lehtinen (1991)talk about physical quality, interactive quality and corpo-rate quality, and on the other hand they talk about the qual-ity of process and output. As our ratio suggests, we dividequality into input and output dimensions, which are paral-lel to Lehtinen and Lehtinens latter division of quality

    aspect. Therefore we could state that output consists of atotal service offering in terms of quality, and the input in-cludes both tangible and intangible elements.

    The output in the form of quality is what the customerin fact pays for, which is mostly intangible and may bedifficult to quantify (Adam et.al., 1995). Service quality isgenerally defined as customer perceived quality whichstresses the individuals assessment of the value of the totalservice offering (Gummesson, 1994) and there is differ-ence between expected service quality and experiencedservice quality (Grnroos, 1982). When purchasing ser-vices, customers attention is often limited to a small num-ber of tangible inputs (Zeithalm, 1984). Physical environ-ment buildings, offices and interior design affects cus-tomer beliefs, attitudes and satisfaction (Zeithaml and Bit-ner, 1996), and provides an opportunity to tell the rightstory about a given service (Berry, 1984). It is also veryimportant how contact personnel dresses, articulates,writes, designs and presents proposals (Levitt, 1983).

    As intangible input, the service personnel represent theservice, the organization and the marketers in the cus-tomers eyes (Zeithmal and Bitner, 1996). The qualitymanagement of personnel includes such things as motivat-ing, managing information, training, career planning, re-cruiting and retaining the right people (Normann, 1991;Zeithalm and Bitner, 1996). Service business is personnel-intensive, meaning that quality supplied to the customer isessentially a result of the way personnel perform (Nor-mann, 1991). Both employees and customers will experi-ence more positive outcomes when the organization oper-ates with a customer service orientation and managementsupports it (Blois, 1989).

    According to Gummesson (1994) there are attempts toinclude customers in the service organization activity.Martin and Horne (2001) refer to it as a common phe-nomenon. It provides an opportunity to utilize customers asfree inputs in order to increase productivity from the view-point of service provider. Therefore customer cannot beconsidered in isolation from the organization of offeringand delivering services.

    Another important intangible element is service cul-

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    ture. By participating in the service delivery process, cus-tomers influence and even create perceived service culture.High levels of intangibility call for image building andmaintenance to attain reliance based on reputation and sub-

    jective impressions of the service (Cowell, 1988). In thelong run, image depends mainly on what the organizationactually provides but in the short run image can be used asa tool for the creation of new reality (Normann, 1991).

    Service sector productivity is heavily dependent onfast developing technologies and automation (Gummesson,1998). Customers, instead of interacting with a contactperson, they transact using an automated teller machine ora computer. According to Normann (1991), there are fivemain reasons for using information technologies:

    1.Reducing costs by substituting service officers forinformation technologies

    2.Standardizing services3.Increasing availability (24-hour access to services

    using appropriate machines or computers)4.Linking customers into the service system5.Affecting customer and personnel relationships andbehavior.Figure summarizes analyzed service sector productiv-

    ity concept.




    Input: Labour; Rawumaterials; Capital.

    Output: Customerwpercievedwquality.

    Input: Tangibleelements

    Aquality; Intangiblewelements.

    Output: Service


    Figure. Principal scheme of service productivity

    Different service sector spheres demand different for-mulations of the service productivity (Vourinen et.al., 1998).Therefore, dependent on service sector sphere quantity andquality aspects weights of service productivity will differ.

    Further research area could show productivity measure-ment problems. Foremost we have to answer to the questionsin the research process how to measure input and output qual-ity and how to relate different input and output factors.


    1.The literature analysis concerned with researchtopic showed the prolonged neglect of the produc-tivity concept in the service sector.

    2.Determining productivity of service sector, we mustevaluate output and input elements in the aspects ofquantity and quality. Quality of service sector is

    analyzed in the two aspects: humanistic and techni-cal. Therefore output consists of a total service of-fered in terms of quality, and the input includes

    both tangible and intangible elements.3.Analysis of productivity concept in service sector

    helps to reconcile conflicts between improving ser-vice quality and boosting productivity.

    4.The most important element in the determination ofproductivity of service sector is not quantity, butquality. It is especially clearly revealed in determi-nation of output. From the customers view, thevolume of the service output is hardly a significantissue, because the customer usually buys only oneunit of output or one package of service and qualitybecomes the most important aspect of output. De-termination of service output could be a difficulttask because of its intangible nature.

    5.One of the most effective ways of boosting produc-tivity is investing to new technologies, which helpsto reduce labour element of input and to reachhigher values of productivity.

    6.Input element is decreased with including custom-ers to the organization service delivery system and

    thus boosts the service productivity.References

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    2. Berry, L. Services marketing is different // Service Marketing Engle-wood Cliffs, 1984, p.29-37.

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    Vuorinen // Paper presented at the Second International ResearchWorkshop on Service Productivity. April 18-19. Madrid, 1996.

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    Jonas Rutkauskas, Eimen Paulaviien

    Produktyvumo samprata paslaug sferoje


    Produktyvumas ekonominiu poiriu apibriamas kaip vestiesir ivesties santykis. vest organizacijoje sudaro sunaudoti itekliaiprodukto gavimo procese, tai yra darbas, kapitalas, mediagos, ener-gija; ivest gautas produktas, jo apimtis.

    Produktyvumas paslaug sferoje pradtas nagrinti tik XX ami-

    aus pabaigoje, nors gamyboje jis pradtas nagrinti daugiau nei priedu imtus met.Gamybos sferoje produktyvumo koncepcij nagrin jama organi-

    zacijos viduje, o paslaug sferoje ios ribos platesns: apima organi-zacijos poiriu iorin element vartotoj. Nustatant produktyvumgamybos sferoje, kokybs aspektas nra svarbus, nes vestis ir ives-tis matuojama fiziniais vienetais, kuri kokyb tariamai yra vienoda.Paslaug sferoje kokybs aspektas labai svarbus. Paslaug sferojeivestis kiekybiniu aspektu daniausiai bna nedidel ar net lygivienetui, todl ivestis daniausiai didinama stengiantis suteikti kuoauktesns kokybs paslaugas vartotojui, siekiant kuo geriau paten-kinti jo poreikius ir lkesius.


    Nepaisant didels produktyvumo vadybos svarbos paslaugossferoje, empirini tyrim iuo klausimu atlikta stebtinai maai.

    Paslaugas teikianios organizacijos privalo praplsti poir produktyvumo nagrin jimo sfer nuo prasto organizacija dvilyporganizacija vartotojas. Dauguma mokslininkmano, kad kokybir produktyvumas negali bti nagrin jami kaip atskiros, nesusijusiossvokos paslaug sferoje. Gamybin je organizacijoje produktyvumasmatuojamas fiziniais vesties ir ivesties vienetais, kuri kokybtariamai vienoda.

    Tokie matavimai nra tinkami produktyvumui nustatyti paslaugsferoje. Pirmiausia paslaug sferoje ir vest, ir ivest sudaro nevien kiekybiniai elementai, bet ir kokybiniai. Antra kokyb ir pro-duktyvumas visose paslaug sferos srityse yra glaudiai susijusios.Kaip nustatyti produktyvum paslaug sferoje? Kurie kriterijai svar-biausi nustatant produktyvum paslaug sferoje? Kaip ie kriterijaisiejasi vienas su kitu? Kurie ypatumai svarbiausi nustatant produkty-vumpaslaug sferoje? ie klausimai ir sudaro mokslins problemosesm.

    Paslaug sferoje produktyvumo koncepcija pradta nagrinti tikXX amiaus pabaigoje, o atlikus isam literatros, susijusios sunagrin jama problema, tyrimus, aptikta tik keletas altini, tiesiogiaisusijusi su nagrinjama tema. Esant tokiam problemos tyrimo lygiui,svarbu konceptualiai inagrinti produktyvumo koncepcijos taikymoypatumus paslaug sferoje. Lietuvos mokslininkai tokio pobdiotyrimo nra atlik, ir produktyvumas buvo nagrinjamas tik gamybossferoje. ie samprotavimai parodo straipsnio mokslin naujum.

    io straipsnio tikslas atlikti produktyvumo koncepcijos tai-kymo paslaug sferoje analiz, konceptualiai paaikinti, kaip galimabt nustatyti produktyvum paslaug sferoje, atlikti produktyvumoir kokybs ryio paslaug sferoje analiz.

    Straipsnio objektas produktyvumo koncepcijos taikymaspaslaug sferoje. Pasirinktas tyrimo metodas mokslins literatroslogin analiz.

    Paslaug produktyvumo apibrimas

    Terminas produktyvumas paprastai apibriamas kaip santykistarp ivesties (pagamintos prekes ar suteiktos paslaugos) ir vesties(sunaudot itekli) produkto gavimo procese.

    Auktas produktyvumas pasiekiamas, kai organizacijos veikla iritekliai produkto gavimo procese sukuria vert gaunamam produktui.Produktyvumas dar gali bti siejamas su nuostoliais, kurie didinantproduktyvum turi bti paalinami. Produktyvumas priklauso nuopokyi konkurent pus je ar kit mat konkreiu laiko momentu,arba nuo pokyi laike.

    Dvi labiausiai susijusios su produktyvumu svokos yra rezul-

    tatyvumas ir efektyvumas. Taiau ios svokos danai nra aikiaiapibriamos ar net sutapatinamos su produktyvumo svoka.

    ISO 9000 serijos standarte rezultatyvumas apibriamas kaipplanuot priemoni gyvendinimo ir planuot rezultat pasiekimolaipsnis, o efektyvumas kaip pasiekto rezultato ir panaudot iteklisantykis. Produktyvumui reikia efektyvumo ir rezultatyvumo kartu.

    Pagrindinis ekonominio racionalumo principas yra pasiekti nu-matyt rezultat, sunaudojus kuo maiau itekli arba gauti maksi-mal rezultat, sunaudojus numatytus iteklius. Taiau paslaugsferoje labai sudtinga nustatyti aukiausi pasiekim lyg. Todlsvarbu remiantis produktyvumo koncepcija ekonomikai vertintipaslaugoperacijas.

    Nagrin jant produktyvum paslaug sferoje, turime j interpre-tuoti plaiau nei jis pateikiamas tradicin je gamybin je sampratoje.Analizuojant produktyvumo svok paslaug sferoje, apibrimreikia traukti kokyb. Analizs pradioje galime apibrti paslaug

    produktyvum kaip paslaug organizacijos gebjim panaudoti savovestis siekiant suteikti kokybikas paslaugas vartotojams patenkinantjporeikius ir lkesius.

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    Produktyvumpaslaug sferoje galima apibrti ia formule:


    kokybivestiesirkiekybIvestiesmasproduktyvuPaslaug =

    Kiekyb ir kokyb paslaug sferoje negali bti nagrin jamos at-skirai viena nuo kitos, kadangi nemanoma atskirti paslaug procesopoveikio produktyvumui nuo poveikio paslaugkokybei.

    Kiekybinis paslaug produktyvumo aspektas

    Kiekybinis aspektas paslaug produktyvume yra toks pats kaip irgamyboje; j sudaro ie pagrindiniai vesties elementai: aliavos, darbas,kapitalas. Dl intensyvaus darbo jgos panaudojimo paslaug sferojedaugelyje ios sferos srii produktyvumas yra labai emas, palyginti sugamybins srities. Todl daugelis paslaug teikjdaug investuoja tech-nologijas, kurios bna alternatyva darbo jgos naudojimui.

    Vartotojo poiriu, paslaugos ivesties apimtis daniausiai nrareikminga, nes vartotojas neretai perka vien ivesties vienet arbapaslaugos komplekt. Todl vartotojas teiks prioritet paslaugoskokybei, o ne kiekybei. Produktyvumo santykis paslaug operacijoseskirtingais laikotarpiais gali ymiai keistis, jei bus matuojamaskiekybiniu aspektu. Keiiantis bendrajai paklausai laike, paslaugosteik jas turi sprsti dvi pagrindines problemas, susijusias su kieky-biniu aspektu: pajgumdydio ir pajgumkalendorinio planavimo.

    Kokybinis paslaug produktyvumo aspektas

    Kokyb paslaug sferoje reikia nagrinti humanistiniu poiriu,be to, viena vertus, ypating dmes skirti vartotojams, personalui,lyderystei ir kultrai, o kita vertus, nagrinti techniniu poiriu sie- jant j su operacij vadyba, statistika ir matavimo metodais. Kokybyra dalijama vesties kokyb ir ivesties kokyb. Todl galimeteigti, kad ivest sudaro bendrasis paslaugos pasilymas kokybiniupoiriu, o vestis matuojami ir nematuojami elementai.

    Paslaugos kokyb galima apibrti kaip vartotojo suvokiamko-kyb, kuri pabria individuali bendro paslaugos pasilymo vert iryra skirtumas tarp tiktosios ir patirtos paslaugos kokybs. Pirkdamipaslaug, vartotojai savo dmes daniausiai atkreipia tik ma dalapiuopiam vesi. Paslaugas teikiantis personalas reprezentuojapaslaug, organizacij ir paslaugos pardavjus vartotojpoiriu kaip

    neapiuopiamvest. Kartais bandoma traukti vartotojus paslaugasteikianias organizacij veikl kaip laikinus darbuotojus. Tai leidiapanaudoti vartotojus kaip laisvas vestis didinti produktyvumuipaslaugos teikjo poiriu.

    Vartotojai, dalyvaudami paslaugos teikimo procese, daro takarnet kuria paslaugos kultr.

    Produktyvumas paslaug sferoje didinamas dl spariai be-sivystani technologij ir automatizavimo. Vartotojai, uuot ben-drav su kontaktiniu asmeniu, gali sveikauti su automatine atsakympasiteiravimus maina ar kompiuteriu.

    Tolimesni tyrim gaires gali nurodyti paslaug produktyvumomatavimo problemos.


    1. Mokslins literatros, susijusios su nagrin jama tema, anal-iz parod, kad produktyvumo svoka paslaug sferoje ilglaiknebuvo taikoma.

    2. Nustatant produktyvum paslaug sferoje, reikia vertintivesties bei ivesties elementus ir kiekybiniu, ir kokybiniuaspektu. Todl ivestis susideda i bendrojo paslaugos pasi-lymo kokybiniu poiriu, o vestis i matuojam irnematuojam element.

    3. Produktyvumo koncepcijos nagrin jimas paslaug sferojepadeda sprsti prietaravimus tarp kokybs gerinimo ir pro-duktyvumo didinimo.

    4. Danai nustatant produktyvum paslaug sferoje svarbiausiasaspektas yra ne kiekyb, o kokyb. Vartotojo poiriu paslaugosivesties apimtis daniausiai nra reikminga, nes vartotojasdaniausiai perka vien ivesties vienet arba paslaugos kom-plekt, ir svarbiausiu ivesties aspektu tampa kokyb.

    5. Vienas veiksmingproduktyvumo didinimo metodpaslaugsferoje yra investavimas vairias naujas technologijas; taipadeda sumainti didel darbo vesties element ir siektididesnio produktyvumo.

    6. Vartotojo traukimas organizacijos veikl gali padaryti jvesties elementu, sumainti bendr vest ir tokiu bdupadidinti produktyvum.

    Raktaodiai:produktyvumas, paslaugsfera, kokyb , kokybs ir produkty-vumo santykis.

    The article has been reviewed.

    Received in November, 2004; accepted in June, 2005.