Managing Productivity

Service firms are under great pressure to keep costs down and increase productivity. There are seven approaches to improving service productivity:

1. Have service providers work more skillfully. Top service companies such as Starbucks go out of their way to hire and foster more skillful workers through better selection and training.

2. Increase the quantity of service by surrendering some quality. Doctors working for some HMOs have moved toward handling more patients and giving less time to each patient.

3. Industrialize the service by adding equipment and standardizing production. Levitt recommended that companies adopt a "manufacturing attitude" toward producing services as represented by McDonald's assembly-line approach to fast-food retailing, culminating in the "technological hamburger."30

4. Reduce or make obsolete the need for a service by inventing a product solution, the way carpet-cleaning services offer stain-removing products for consumers to use on their own.

5. Design a more effective service. For example, hiring paralegal workers reduces the need for more expensive legal professionals.

6. Present customers with incentives to substitute their own labor for company labor. Customers of iPrint ( save at least 25 percent by designing, inputting, and proofreading the content of their printing jobs before submitting their orders through iPrint's Web site.31

7. Use technology to give better customer service and make service workers more productive. Companies, such as Cisco Systems, that use their Web sites to empower customers can lessen workloads, capture valuable customer data, and increase the value of their businesses. Cisco's on-line Knowledge Base of Frequently Asked Questions (FAQs) allows customers to quickly find answers to questions without talking to any employees. As a result, Cisco cut the number of customer calls by 70 percent or 50,000 calls a month, saving $10 million a month.32

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