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NPS ARCHIVE 
1997. 0(p 
ALLEN, R. 



NAVAL POSTGRADUATE SCHOOL 

Monterey, California 




THESIS 



Thesis 
A37956 



DEVELOPING WORLD-CLASS CUSTOMER SERVICE AT 

NAVY FIELD CONTRACTING ACTIVITIES: AN 

ASSESSMENT OF THE FISC SAN DIEGO REGIONAL 

CONTRACTS DEPARTMENT 

Robert P. Allen 
June, 1997 



Principal Advisor. 



Nancy C. Roberts 



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June 1997 



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Master's Thesis 



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4.TITLE AND SUBTITLE 

Developing World-Class Customer Service at Navy Field Contracting 
Activities: An Assessment of the FISC San Diego Regional Contracts 
Department 



6.AUTHOR(S) 

Robert P. Allen 



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Naval Postgraduate School 
Monterey CA 93943-5000 



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1 1 .SUPPLEMENTARY NOTES The views expressed In this thesis are those of the author and do not reflect the official policy 
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13. ABSTRACT (max/mum 200 words) 

This thesis assesses the customer service ability of the FISC San Diego Regional Contracts 
Department. Utilizing both archival research and interviews, a service quality benchmark is 
determined and then applied to the FISC San Diego Regional Contracts Department to assess service 
ability and identify areas for possible improvement. This assessment process highlights the recent 
emphasis on improved service quality both in the Federal Government and the private sector. The 
thesis defines world-class customer service and then describes various aspects of service quality 
including the customer's perspective on service, how service is delivered, how to effectively 
communicate with the customer and how organizations can implement change to enhance their service 
quality. 



14. SUBJECT TERMS 



customer service, service quality, world-class service, service benchmarking, 
FISC San Diego Regional Contracts Department 



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92 



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II 



Approved for public release; distribution is unlimited. 

DEVELOPING WORLD-CLASS CUSTOMER SERVICE AT NAVY FIELD CONTRACTING 

ACTIVITIES: AN ASSESSMENT OF THE 
FISC SAN DIEGO REGIONAL CONTRACTS DEPARTMENT 

Robert P. Allen 

Lieutenant, Supply Corps, United States Navy 

BA, University of Washington, 1986 

Submitted in partial fulfillment of the 
requirements for the degree of 

MASTER OF SCIENCE IN MANAGEMENT 

from the 

NAVAL POSTGRADUATE SCHOOL 
June 1997 



tots A\ :v£ 
WW. dft 




HiQULiM)/ wfBRARY 

l«VAlP08T6RADOATESCHOOi 
10NTEREV & 43943-5101 



ABSTRACT 

This thesis assesses the customer service ability of the FISC San Diego Regional 
Contracts Department. Utilizing both archival research and interviews, a service quality 
benchmark is determined and then applied to FISC San Diego Regional Contracts 
Department to assess service ability and identify areas for possible improvement. This 
assessment process highlights the recent emphasis on improved service quality both in the 
Federal Government and the private sector. The thesis defines world-class customer service 
and then describes various aspects of service quality including the customer's perspective 
on service, how service is delivered, how to effectively communicate with the customer 
and how organizations can implement change to enhance their service quality. 



VI 



TABLE OF CONTENTS 

I. INTRODUCTION 1 

A. BACKGROUND 1 

B. RESEARCH QUESTIONS 2 

C. PURPOSE AND IMPORTANCE 2 

D. SCOPE OF THE THESIS 2 

E. RESEARCH METHODOLOGY 3 

F. CHAPTERS AND CONTENTS 3 

n. WORLD-CLASS CUSTOMER SERVICE 5 

A. THE NATURE OF CUSTOMER SERVICE 5 

1. Defining World-Class Customer Service 5 

2. The Dimensions of Service Quality 6 

3. Methods of Service Delivery 6 

4. Communicating with the Customer 10 

B. INTERVIEWS WITH WORLD-CLASS SERVICE PROVIDERS 15 

1. Interview with Ms. Lizette Blaisof the Disney Institute 16 

2. Interview with Mr. Jerry Gass of United Services Automobile Association 19 

3. Interview with Mr. Jeff Canty of Saturn Corporation 23 

III. ORGANIZING FOR OUTSTANDING CUSTOMER SERVICE 27 

A. LEADERSHIP AND A VISION FOR SERVICE QUALITY 27 

B. MIDDLE MANAGEMENT'S ROLE IN SERVICE QUALITY 28 

C. THE ROLE OF THE FRONT-LINE SERVICE PROVIDER 29 

D. REWARDS AND RECOGNITION 31 

E. IMPLEMENTING CHANGE 32 



VII 



IV. SERVICE QUALITY BENCHMARKING 35 

A. OVERVIEW 35 

B. KEY SERVICE QUALITY CHARACTERISTICS 35 

LA Vision for Service Quality 35 

2. Formal Service Quality Improvement Programs 36 

3. Robust Customer Communication and Feedback Methods 36 

4. Strategic Use of Customer Complaints 37 

5 . Effective Service Delivery Techniques 38 

6. Strong Internal Customer Service 38 

7. Customer Service Training Programs 39 

8. Employee Reward and Recognition Programs 39 

V. METHODOLOGY 41 

VI. ASSESSMENT OF FISC SAN DIEGO REGIONAL CONTRACTS DEPARTMENT43 

A. DESCRIPTION OF THE REGIONAL CONTRACTS DEPARTMENT 43 

B. ANALYSIS 44 

VH. CONCLUSION AND RECOMMENDATIONS 51 

A. CONCLUSION 51 

B. RECOMMENDATIONS 52 

C. LIMITATIONS OF STUDY 54 

D. SUGGESTIONS FOR FURTHER RESEARCH 55 

APPENDIX A. INTERVIEWS WITH FISC SAN DIEGO PERSONNEL 57 

APPENDIX B. SURVEY TO MEASURE SERVICE DIMENSIONS 75 

LIST OF REFERENCES 79 

LIST OF INTERVIEWS 81 

INITIAL DISTRIBUTION LIST 83 



VIII 



I. INTRODUCTION 

A. BACKGROUND 

Successful firms in today's service economy are finding that superior customer 
service is a lucrative way to gain market share, especially in services that are relatively 
indistinguishable among competitors. Outstanding service benefits all concerned, including 
the customer, the provider and stockholders, to name a few. Companies, such as Federal 
Express, Nordstrom, Disney, Saturn, and USAA, are finding that superior customer 
service is a winning competitive strategy. [Ref. 1: p. 2] 

The success of outstanding service companies has attracted the interest of the public 
sector. The Federal Government in recent years has taken bold steps to redefine the way it 
conducts business. The emphasis is on reducing bureaucracy, cutting red tape and making 
executive agencies more accountable to the customers they serve. The Congress started the 
process with the drafting of the Government Performance and Results Act of 1993, which 
requires executive agencies to focus on achieving performance goals. [Ref. 2] Based on the 
recommendations of the Vice President's National Performance Review [Ref. 3], the 
President issued Executive order 12862 which requires executive agencies to focus on the 
needs of their customers and develop measurable service standards. [Ref. 4] 

This thesis assesses customer service performance of the Fleet and Industrial 
Supply Center (FISC) San Diego's Regional Contracts Department This organization is 
responsible for all Navy field contracting within the Southwestern United States. Utilizing 
a benchmarking process, the study examines the various aspects of service quality, the 
organization's service performance and provides recommendations for improvement. 



B. RESEARCH QUESTIONS 

The primary research questions are as follows: 

1. How does the FISC San Diego Regional Contracts Department compare to 
world-class service providers? 

2. What can the FISC San Diego Regional Contracts Department do to enhance 
service quality? 

The following are the subsidiary research questions: 

1 . What is world-class customer service? 

2. What do customers value the most in customer service? 

3 . How should an organization structure itself to deliver outstanding service? 

4. What are the common service quality traits and characteristics of world-class 
customer service organizations? 

C. PURPOSE AND IMPORTANCE 

The purpose of this thesis is to help improve the customer service performance of 
the FISC San Diego Regional Contracts Department. The study provides specific 
information regarding the characteristics of service quality and details how organizations 
such as the Regional Contracts Department can organize to deliver improved customer 
service. 

This research effort is important because it assists FISC San Diego and the Naval 
Supply Systems Command with their goal of providing customer focused contracting and 
"one touch" supply. This research will also assist with meeting the mandate of Executive 
Order 12862. 

D. SCOPE OF THE THESIS 

The scope of this thesis is limited to an assessment of the FISC San Diego Regional 
Contracts Department The thesis does not analyze the customer service effectiveness of 



the entire FISC San Diego organization. A comprehensive study of the entire FISC San 
Diego organization exceeds the resources of this researcher. This thesis is also limited to 
two primary sources of information, a review of literature and interviews. The thesis did 
not include a survey of customers, instead, the research effort focused on the overarching, 
common characteristics of service quality. 

E. RESEARCH METHODOLOGY 

This research effort consists of an assessment of service quality at the FISC San 
Diego Regional Contracts Department. The assessment is based on a benchmark of "key 
service quality characteristics" derived from archival research and interviews of world-class 
customer service providers. Interviews and observations were collected during a site visit 
of FISC San Diego. These data are then compared to the service quality benchmark. 

F. CHAPTERS AND CONTENTS 

Chapter II provides an understanding of service quality, describes how service is 
delivered, discusses methods to communicate with customers and explains the key role 
customers play in defining service quality. Chapter II also includes interviews with three 
acknowledged world-class service companies. This information supplements the archival 
data from the chapter. Chapter III describes how an organization can structure itself to 
deliver outstanding customer service and provides a plan of action to get started on 
improving service quality. 

Armed with archival and interview data from Chapters II and III, the thesis then 
develops a service quality benchmark in Chapter IV. The benchmark is organized into a 
group of key service quality characteristics. Chapter V details the assessment methodology, 
assumptions and limitations. Chapter VI provides an assessment of the service capability of 
the Regional Contracts Department. 



Chapter VII concludes the study with a summary statement regarding the significant 
findings relating to the research questions. The chapter also provides recommendations for 
improvement and follow-on research. 



II. WORLD-CLASS CUSTOMER SERVICE 
A. THE NATURE OF CUSTOMER SERVICE 

1 . Defining World-Class Customer Service 

Unlike the quality of a tangible good, service quality can be difficult to precisely 
define. A manufactured product is assumed to be of good quality if it meets established 
criteria such as performance or physical characteristics. Services differ substantially from 
tangible goods in at least three significant ways. [Ref. 1: p. 15] First, services are 
intangible. A service is usually a performance by a human being. The consumer usually 
cannot inspect the service prior to delivery and once this interaction is completed, it is gone 
forever. Second, services are heterogeneous . Service quality can vary significantly from 
customer to customer or from provider to provider. Service quality can even vary from day 
to day. Third, the production and consumption of most services are inseparable. Unlike a 
manufactured item, service cannot be stored for future use to serve as a buffer during shifts 
in consumption patterns. 

The only criterion that matters when evaluating service quality is defined by the 
customer, all other criteria are irrelevant. [Ref. 1: p. 16] Each customer approaches his/her 
evaluation of service quality differently than the next customer. Each customer harbors 
certain expectations of service quality and bases his/her evaluation on these expectations. 
World-class customer service organizations understand the importance of exceeding 
customer expectations. World-class customer service can be defined as consistently 
exceeding the expectations of customers in the delivery of service. [Ref. 1: p. 19] 



2 . The Dimensions of Service Quality 

Zeithaml, Parasuraman and Berry (1990) conducted a landmark study to measure 
the needs and desires of customers. The study consisted of focus-group interviews with 12 
different groups representing a broad sample of service firms throughout the United States. 

The researchers concluded from these interviews that the needs of customers can be 
defined by five service dimensions. [Ref. 1: p. 20] These are (in priority): 

1. Reliability : The ability to perform the promised service dependably and 
accurately. 

2. Responsiveness : The willingness to help customers and provide prompt service. 

3. Assurance : The knowledge and courtesy of employees and their ability to convey 
trust and confidence. 

4. Empathy : The caring and individualized attention a firm provides its customers. 

5. Tangibles : The appearance of physical facilities, equipment, personnel, and 
communication materials. 

The ability of an organization to satisfy customers depends directly on its ability to 

provide services that reflect these service dimensions. Organizations with degraded service 

quality have some measure of difference between what customers expect and what is 

actually delivered. The difficult challenge facing most service organizations is how to 

accurately and economically determine customer expectations. 

3. Methods of Service Delivery 

Gutek (1995) outlines a fundamental change in service delivery resulting from 
today's service "revolution". In the decades prior to the 1980's and 1990's, services were 
primarily delivered in the context of relationships. For example, a family might have one 
doctor for years, building a relationship with the physician. The development of a close 
relationship was central to ensuring quality service. 

The service revolution changed this traditional medium for service delivery for two 
reasons. [Ref. 5: pp. 2-3] The first is due to the sheer volume of services available today. 



Over 70 percent of workers in the United States, Canada, and Britain work in services, as 
do over 50 percent of workers in Japan, West Germany, France and Italy. [Ref. 5: p. 3] 
Correspondingly, consumers spend a greater portion of their income on services. Estimates 
are that the average household expends 45 percent of its income on services. [Ref. 5: p. 3] 

This increased volume of services requires quick and efficient methods of service 
delivery to reach the maximum amount of customers. Relationships take a significant 
investment in time and resources and therefore are not always the most efficient method to 
deliver service. 

The second reason is the change in the way services are provided. Services are no 
longer primarily provided by practitioners (e.g. doctors), instead they are delivered by 
organizations or partnerships of practitioners. [Ref. 5: p. 2] For example, today many 
physicians are members of HMOs or PPOs. This represents the mass marketing of 
encounter services. The encounter is usually brief, scripted and impersonal. 

Relationship service providers seek customers that they intend to serve for a long 
duration. The customer develops trust of the service provider and reserves its business 
for them. An interdependence between the provider and the customer is therefore the 
essence of the relationship approach. Both parties are willing to work on nurturing the 
relationship, and building loyalty towards each other, the result of which is an accumulated 
knowledge of customer needs. This knowledge results in improved efficiency and 
effectiveness during subsequent service incidents. Ultimately services are tailored to the 
specific needs of the customer because of the extra time and attention spent with the 
customer. 

Service as an encounter is analogous to the mass production of manufactured 
goods. Encounter systems can deliver goods and services in high volume and result in the 
standardization of procedures and service. This assembly-line approach is common in 
many services today. McDonald's corporation serves as an excellent example. Patrons of 



McDonald's experience a service encounter when they visit the restaurant. They are served 
quickly, efficiently and they receive a standardized product. 

Despite the efficiency of encounter systems, there are draw backs. First and 
foremost is the disincentive for the encounter provider to deliver outstanding service on 
any given service performance. The provider is unlikely to ever encounter the customer 
again and the large volume of customers can actually lead to customer resentment. 
Secondly, encounter providers rarely receive praise for good service performance. 
Customers are more inclined to provide feedback only when they have a complaint. [Ref. 
5: p.47] Government agencies are extremely vulnerable to this situation. Customers of 
government bureaucracies are much more likely to only discuss negative aspects of a 
service encounter even if the service was good. [Ref. 5: p. 48] 

Encounter systems require a large investment of management time to ensure their 
efficiency. Unlike a relationship, encounters are not self-regulating. They require oversight 
because there is little feedback in comparison to the direct feedback received from a 
relationship. Unlike a manufacturing procedure, encounters are not easy to continuously 
improve (as in Total Quality Management). Oversight, if not properly conducted, can result 
in stifled creativity and lead to employees focusing more on procedural compliance than on 
the needs of the customer. Service quality becomes more of a routine than a true concern. 

Relationships and encounters are not mutually exclusive, however. Over time, 
encounters can evolve to become relationships. Likewise, certain aspects of relationships 
can take on encounter characteristics. Gutek points out that a service provider's motivation 
is often linked strongly with salary and service volume. If a provider earns more with each 
encounter, there may be tacit motivation to provide superior service. If a provider's income 
is not related to the service provided, as in many government jobs, there is no motivational 
aspect between service and salary. In this setting, a government worker may develop 
significant relationships if they are assigned a small case load. The greater the increase in 

8 



customers, the less incentive for spending time on problem solving and customer 
satisfaction. 

An interesting insight into the differences between relationships and encounters 
centers on the area of attribution. In a relationship, good service may often be attributed to 
the skill of the provider. As a customer develops a long standing relationship with a 
provider, they will become more inclined to view a poor service incident as an aberration 
that is beyond the fault of the service provider. The situation is much different in an 
encounter scenario. If the customer receives poor service, they will either attribute it to the 
actual service provider or to the whole organization. If they receive good service, they may 
not necessarily credit the service provider. Instead, they may attribute the service to the 
high standards of the organization. [Ref. 5: p. 75] 

Relationship providers are primarily experts or professionals. Relationship 
providers utilize their expertise to perform their job, drawing on a base of knowledge to 
solve problems. [Ref. 5: p. 101] To be truly considered a relationship provider, the 
provider needs to identify with a particular profession and career path. Relationship 
providers tend to develop their careers within their substantive area of expertise. 

Key to the success of the encounter provider is to interact in an efficient and 
uniform manner with customers. This ability is more important than any accumulated 
expertise that is developed by the provider. Encounter providers are considered functionally 
equivalent and not differentiated on expertise. [Ref. 5: p. 110] Encounter providers are 
usually required to maintain specified levels of service quality. They are not expected to 
provide the customer with broad-based expertise on the service they are delivering. Many 
unskilled, low -paying front-line service jobs utilize an encounter system. 

One of the most significant requirements for an encounter provider is that they react 
to encounters in a specified, relatively scripted manner. By design, encounter type service 
jobs involve limited decision making authority. This is believed to result in a more 



standardized delivery of service. Decision making lies within the power of a limited number 
of management personnel. A significant drawback to this separation of decision making 
and service delivery is that encounter providers will often acquire significant levels of 
stress. This is especially the case when a service encounter cannot be solved without 
overriding internal policy. The encounter provider may feel powerless to help resolve the 
situation. 

The efficiency of the encounter system has made it the standard for most of today's 
service providers. Large volumes of customers are provided a standardized service or range 
of services (or products) in a consistent, predictable manner. Today's consumer is 
perceived to demand this kind of service, but also wants to be treated as an individual. This 
presents a dilemma for service providers. Encounter systems treat every customer 
consistently by design. The result is a loss of personal service. Many organizations are 
bridging the gap between encounters and relationships by creating "pseudorelationships". 
[Ref. 5: p. 197] The goal of this process is to benefit from the standardized, efficient 
processes employed by encounters, but to treat customers in ways that infer a relationship. 
For instance, a customer service representative may be instructed to refer to customers by 
their first name. The appearance of a relationship with the customer is believed to fulfill 
the perceived need for a personal relationship. 

A new twist to the pseudorelationship is the attempt by organizations to develop 
relationships between the customer and the organization rather than a specific employee. 
This is considered an experience relationship. The connection between customer and 
organization can lead to brand loyalty and repeat business. [Ref. 5: p. 204] 

4. Communicating with the Customer 

As earlier research indicated, customers value various service dimensions when 
they receive service. Research also tells us that the only true criteria that matters when 



10 



evaluating service quality is defined solely by the customer. Finding out what customers 
expect is essential to providing service quality. [Ref. 1: p. 54] 

There are numerous methods of communicating with customers to better understand 
their expectations. These methods can be as simple as using unsolicited customer feedback 
or as sophisticated as an elaborate expectation study. 

Many organizations depend on customer complaints as their sole means of 
feedback. [Ref. 1: p. 54] Even though complaints can be a very useful source of 
information, research indicates that customers rarely complain about poor service. 
Technical Assistance Research Programs (TARP), a Washington DC based research 
organization, has conducted extensive research in the area of customer complaints. Their 
research is sobering. Only four percent of customers with problems actually complain to 
companies. The remaining 96 percent remain unsatisfied and tell an average of nine to ten 
other people about their bad service incident In one study TARP found that 26 out of 27 
people did not complain about poor service. [Ref. 1: p. 54] As the TARP research 
indicates, most organizations are barely scratching the surface of the potential feedback 
available from customers. 

Janelle Barlow and Claus M0ller (1996) of the international consulting firm TMI, 
focus on the valuable resource of customer complaints in their book, A Complaint is a Gift. 
The authors show mat complaints are ways that customers tell us to improve or change to 
better serve their needs. [Ref. 6: p. 1] Unfortunately, American culture views complaints as 
things to be avoided at all costs. Many would rather pretend that a complaint does not exist 
than to correct a problem. Some organizations even take the drastic position that complaints 
are simply the views of trouble-makers and whiners. The authors conclude that complaints 
should not be viewed as such, but should be utilized as strategic tools to help improve the 
organization. 



11 



Complaints can be a low cost way of gathering information on the needs and 
desires of the customer. On a continuum of information gathering techniques, complaints 
are the least expensive in terms of dollars invested or time. Other methods such as 
benchmarking of similar industries, market research, customer panels and comprehensive 
studies of customer expectations can be significantly more expensive. [Ref. 1: p. 55] 

The feedback that an organization receives from complaints can assist them in "fine 
tuning" their services. In some instances, feedback can help prevent poor management 
decisions that could cost millions of dollars. This is the case with the Coca Cola 
corporation when it released "New Coke." Customer backlash was staggering and Coke 
quickly re-released the old Coke re-named "Classic Coke" before they experienced 
significant losses to their product lines. 

To make complaints a valuable tool, it is necessary to encourage customers to share 
complaints with an organization. After a complaint is communicated to the organization, it 
is then crucial that it be handled effectively. A well handled complaint results in reciprocity 
between customer and service provider. If a complaint is resolved to the satisfaction of the 
customer, they are likely to think favorably of and make positive comments about the 
service provider. As mentioned earlier, most customers do not take the time to actually 
complain. There are many reasons that people do not complain including lack of time, the 
feeling that it will have no effect, the feeling that they will be viewed as a trouble maker or 
that they will get someone in trouble. Rather than complain, customers will instead spread 
the news of their experience to their friends or associates. These "Bad-will Ambassadors" 
can cause significant damage to an organization's reputation. [Ref. 5: p. 34] 

How does an organization get a customer to share his/her true feelings and express 
a complaint? The first step is to create an organization that seeks out complaints. The 
Motorola Corporation utilizes meetings with customers called Technical Action Requests 
(TAR). During these meetings the two sides discuss problems only. Motorola makes a 

12 



conscious effort to bring suppressed problems to the surface so that they are properly 
solved. The benefits often include increased efficiency, improved service and most 
importantly a more satisfied customer. 

Not all service-related complaints come strictly from the customer. Complaints from 
front-line service providers are increasingly becoming a valuable source of feedback for 
many organizations. To understand the value of internal complaints it is necessary to 
understand the needs and desires of service providers in their day-to-day activities. Internal 
quality of a working environment contributes most to employee satisfaction. This quality 
is measured by the attitudes and feelings that employees have towards their jobs, co- 
workers, supervisors and the organization as a whole. [Ref. 7: p. 238] 

The fact that most customers do not complain about service quality necessitates the 
use of other forms of customer communication to supplement complaints. One method that 
can provide useful customer feedback is "Key-Client" studies. [Ref. 1: p. 57] Large 
customers are critical enough to an organization's success to warrant dedicated study. 
General Electric Company's aerospace group has key clients in the DoD including the 
Army, Navy and Air Force. GE conducts extensive interviews with these customers at all 
levels. These interviews assist GE in clearly defining their customer's needs and allow 
them to focus their efforts to meet these needs. [Ref. 1: p. 57] 

A derivative of "Key-Client" studies is to utilize customer "panels" or "focus- 
groups". These groups are composed of selected customers and are facilitated by a leader 
from the organization. The groups meet on a periodic basis and discuss service quality 
issues. [Ref. 8: p. 109] Companies such as USAA and Saturn Corporation utilize focus- 
groups to supplement their customer communication systems. 

Surveys are another effective means of communicating with customers. Surveys 
can be utilized in various ways including periodic satisfaction and feedback surveys. 
Organizations periodically send out detailed surveys to probe customers for feedback 

13 



regarding their perception of service and/or product quality. USAA utilizes a detailed 
annual survey that it sends out to selected customers. The researcher participated in 
USAA's most recent annual survey. The survey consisted of approximately five pages of 
detailed service and product related questions. 

Surveys can also be conducted at the conclusion of a service transaction. This type 
of survey is known as a "transaction-based'' customer survey. [Ref. 1: p. 58] American 
Express corporation surveys customers after their representatives assist them with billing 
problems. These surveys cover areas such as employee courtesy and competence, and the 
customer's overall satisfaction. The Disney Institute conducts a similar survey for 
customers at the conclusion of their stay. 

Surveys can also be utilized to gather information on the satisfaction of employees. 
These are known as "internal surveys." Internal surveys are useful for providing 
management with suggestions to improve service to the end customer or to better equip 
employees to improve service to the end customer. Many times the direct customer contact 
of a front-line service provider makes them a valuable source of input to improve service 
quality. [Ref. 9: p. 19] 

The most elaborate and expensive method for gathering information on customer 
needs and expectations is to conduct a comprehensive customer expectation study. [Ref. 1: 
p.58] This technique combines various feedback mechanisms already discussed such as 
surveys (both internal and external) and focus group interviews. American Express utilized 
this technique to determine the quality dimensions most important to their customers in the 
context of their financial services. [Ref. 1: p. 59] 

One final area of consideration in the development of enhanced customer 
communication is information technology. Some organizations are effectively leveraging 
their customer service capability with elaborate computer networks, electronic imaging 
technology and telephone systems. An excellent example of this is USAA, which has a 

14 



state-of-the-art electronic imaging system that allows all correspondence to be scanned and 
stored electronically. This allows any USAA representative to instantly access a customer's 
file and provide on the spot service. [Ref. 7: p. 137] At a time when many service 
companies are discovering that their heavy investments in technology do not translate into 
productivity gains, USAA has used technology to increase productivity and improve 
service quality. [Ref. 7: p. 132] 

Some organizations are beginning to utilize information technology as a tool to 
gather and track customer feedback. For example, USAA's property and casualty group 
recently implemented a feedback system called "ECHO" (Every Contract Has 
Opportunity). [Ref. 10: p. 2] The ECHO program logs customer comments, including 
complaints, compliments or suggestions. The program catalogs the input and immediately 
routes the information to designated action agents. These agents are responsible for 
investigating the problem and following-up with the customer if needed. This input is 
utilized to make changes to policy or products, to improve customer service. A weekly 
analysis of the changes and suggestions is circulated from front-line employees to top 
management. ECHO logs over 2,000 entries per week. [Ref. 10: p. 2] 

B. INTERVIEWS WITH WORLD-CLASS SERVICE PROVIDERS 

To further supplement the archival data gathered from the literature, a series of 
interviews was conducted with three diverse firms with reputations for service quality. The 
three companies were identified in the archival data as acknowledged quality service 
providers. The intention was to provide current insight into the customer service techniques 
being utilized by today's progressive service firms, to determine if any common traits or 
characteristics exist between them and to utilize this information to help build the service 
quality benchmark to assess the FISC San Diego Regional Contracts Department 



15 



The three companies were selected at the discretion of the researcher for their 
business diversity. Three broad areas of the service economy are represented by these 
companies including financial services, entertainment and retail auto sales and service. The 
sample size was limited to three companies to facilitate the evaluation of qualitative 
information. Only one person within each company was interviewed. These individuals 
were middle managers with significant roles in the management of service quality. Each 
person was asked a series of six questions. These questions were developed by the 
researcher to gain insight into the service philosophy of each firm. Each interview was 
conducted via telephone. 

1 . Interview with Ms. Lizette Blais of the Disney Institute 

Ms. Blais is a program coordinator at the Disney Institute, the branch of the Disney 
Corporation that provides training and consulting services to the public and private 
industry. The Disney Institute is located within the Disney World Complex in Orlando, 
Florida. The interview was conducted via telephone on February 25, 1997. 
Question 1: How are you designed to offer customer service? 

Ms. Blais provided me with a comprehensive history of Walt Disney and his 
mission to develop a different kind of amusement park and to provide a "family experience" 
for his "guests" (as customers are called). Disney developed a quality service formula that 
would ensure that guests would receive the best in service. Central to the formula is an 
extensive training program. Every potential employee with the Disney Corporation, from a 
street sweeper to the CEO, attends this training. By having people of all levels of 
management together in the same class, teamwork and a common vision is emphasized. 
Future employees or "cast members" learn to work together to deliver on Walt Disney's 
service pledge. 



16 



Question 2: How do you collect information on your customers? 

Disney utilizes many methods of communication with guests, including surveys. 
The Disney Institute provides training in the Disney way of management through the 
Disney University. At the Disney University for example, guests are surveyed upon check- 
in. They are asked six short questions regarding their check-in procedure, for example, 
"Were the front-desk cast members courteous?" During the actual program the guest is 
provided a marketing oriented survey that includes questions such as, "How did you hear 
about us?" At the conclusion of the program an exit survey is performed to gather overall 
impressions of the stay. Guests are asked questions about their stay including the food, the 
field experience and their overall rating of the program. 

In the amusement park environment, Disney will often have a cast member with a 
clip board ask guests their opinion regarding various aspects of the park. They may be 
asked questions regarding the value of the park visit for the money spent. 

Disney receives a large amount of feedback via letters from guests. They receive on 
average about 1 ,000 letters a day. Disney has a dedicated department that responds to each 
letter. The sheer volume of correspondence necessitates that most of the letters be 
responded with a form letter. Disney requires these letters be hand signed in blue ink to 
make them feel more personal. Disney finds the letters to be a great tool for strategic 
feedback, including new marketing ideas and ways to improve the company. Suggestions 
are seriously considered and utilized whenever possible. 
Question 3: How do you resolve complaints and bad service incidents? 

Guests at the Disney Institute are asked for their "magic and tragic" moments at the 
conclusion of their stay. This is a chance to listen to the guest's feelings regarding their stay 
and to solicit feedback regarding the experience. Disney understands that guests may be 
frustrated concerning some aspects of their stay. Disney attempts to listen to the "essence" 
of any complaints. They attempt to find any underlying reasons for complaints. Guests are 

17 



requested to provide a name of the cast member, the location and the time of the incident. 
Disney management will talk to the cast member to understand the incident and make 
recommendations for change. 

Disney cast members are encouraged to rectify problems on the spot. They are 
empowered to compensate guests up to a specified value. This includes free tickets, food, 
pictures or some other form of compensation. Disney cast members are also trained to 
empathize with guests and to listen to their frustrations. Many times guests simply want 
someone to listen to them as they vent their feelings. 

Question 4: How do you instill customer service related values in your 
employees? 

As mentioned in question one, prospective cast members are provided with a 
training program at the beginning of the hiring process. This training program is called 
"traditions" and focuses on the history, philosophy and standards of the Disney 
Corporation. As part of this training they are shown a video that chronicles the life of Walt 
Disney and then provides an overview of Disney goals and employment standards. 
Applicants are told up front what is expected of them, including grooming standards. 
Applicants are asked if they can adhere to these standards. If an applicant is not hired, 
Disney will still suggest ways for the applicant to improve their interview skills and poise. 
Disney views this as a service to the public and hopes that it helps improve people. 
Moreover, Disney sees these people as potential guests in the future. 
Question 5: Provide some examples of outstanding customer service. 

Ms. Blais described numerous examples of outstanding service provided by cast 
members. She described how a cast member provided autographed pictures to guests, to 
compensate them for a break down in service. She described how street sweepers routinely 
assist guests with all kinds of needs, including directions, information regarding attractions 
and assistance with lost children. 

18 



Question 6: What are the most important components of an effective 
customer service program? 

Rather than provide me with a lengthy list of components for a customer service 
program, Ms. Blais concluded the interview with some bottom-line concepts regarding the 
Disney philosophy. She said that for Disney, "the front-line is the bottom line". Everyone 
is part of the "show" and that for Disney to be effective, every cast member must "buy-in" 
to the Disney philosophy and truly believe in the goals and methods of the organization. 
Teamwork and belief in the Disney service vision are what makes Disney what it is today. 

2 . Interview with Mr. Jerry Gass Of United Services Automobile 
Association 

USAA is a leader within the insurance and financial services industry. USAA's 
members are primarily uniformed officers of the department of defense or their family 
members. USAA's goal is to provide the customer personalized service, while retaining the 
benefits of a large, multi-line, multinational company. USAA is a unique company in that 
its members are located around the world and conduct their business primarily by toll-free 
telephone calls, fax and mail. This indirect nature of serving the customer presents unique 
challenges, but USAA is consistently rated as one of the best customer service companies 
in the industry. USAA's dedication to quality in customer service has been recognized by 
many national organizations and they have received extensive coverage by the Harvard 
Business Review. [Ref. 10] 

Mr. Jerry Gass is a member of the Market Research Branch of USAA located in 
San Antonio, Texas. The interview was conducted via telephone on March 3, 1997. 
Question 1: How are you designed to offer customer service? 

USAA seeks to hire employees with a service orientation. They want to hire 
employees who have a genuine desire to serve the customer. Employees are trained 



19 



extensively in the operation of USAA's state-of-the-art document imaging system that 
allows anyone in the organization to access any type of correspondence on any customer. 
They are also trained extensively in telephone service techniques. 

USAA Insurance company is broken down into two areas, claims and policy 
service. The company is organized by geographic regions, which is done to help provide 
service tailored to a customer's location since insurance is regulated at the state level. 
Incoming calls are automatically routed to the applicable region based on the area code of 
the customer. 

USAA utilizes an extensive customer service training program and a large portion 
of their operating budget goes towards this training. Each new front-line customer service 
representative is provided a minimum of 16 weeks of training that covers all aspects of state 
insurance regulations, policy information, claims procedures and telephone techniques. 

Employees of USAA are trained to anticipate the needs of customers and to be 
empathetic and understanding. They utilize a concept called "propensity" to market their 
products to their customers. For example, a retired Navy Captain might be contacted 
regarding vacation cruise packages by USAA's buying services branch. An Ensign, on the 
other hand, would not be targeted for a cruise but instead be contacted regarding life 
insurance for his family. The emphasis is on providing a full-range of products to a 
customer throughout their professional life and thus establishing a long term relationship 
with the customer. 
Question 2: How do you collect information on your customers? 

Every time a customer calls USAA, the company verifies that its customer database 
is complete and accurate. The company utilizes transactional surveys after selected service 
transactions such as a policy update. They also utilize over 100 customer focus groups with 
customers in various offices around the United States and at their corporate headquarters in 
San Antonio, Texas. Other methods of communication are annual member meetings, ten 

20 



percent living samples of customers and participation in the insurance industries' national 
opinion survey. 

The Property and Casualty group of the company utilizes a dedicated customer 
feedback system titled ECHO (Every Contact Has Opportunity). This system allows 
customers to play a role in improving USAA's customer service. Customer comments, 
both good and bad, are logged by service representatives. These log entries are 
automatically routed to designated action agents. Action agents are responsible for 
correcting problems and will follow-up with customers to get additional information or 
report action taken. A weekly analysis of changes and suggestions is circulated from front- 
line personnel up to senior management. The system is currently receiving over 2000 
entries per week. 
Question 3: How do you resolve complaints and bad service incidents? 

The company puts an emphasis on the speed of resolving complaints. Customer 
service representatives are encouraged to do whatever it takes to satisfy the customer and to 
do it as soon as possible. USAA aims to resolve complaints within 24 hours. 
Question 4: How do you instill customer service related values in your 
employees? 

The business culture at USAA is centered on customer service. Air Force Brigadier 
General (Ret.) Robert McDermott, long time CEO of USAA, developed six tenants that 
became the strategic vision of USAA. They are (in priority): 

1. Customer service. 

2. Financial strength. 

3. Resources (Infrastructure). 

4. Product value. 

5. Growth. 

6. Public outreach. 

21 



By pursuing these tenants, the General believed USAA would enjoy success as a 
financial services company. In fact, he believed that if you could achieve goal number one, 
that the rest would follow. Employee training instills these values in each member of the 
USAA team. 
Question 5: Provide some examples of outstanding customer service. 

Mr. Gass provided two examples of outstanding customer service. During 
Operation Desert Storm, USAA established a "Member Survivor" team to ensure timely 
and effective response to any life insurance claims. The thrust behind the team was to 
ensure that members received comprehensive casualty assistance with one phone call. 
USAA wanted to empathize with members that had lost loved ones during the war and to 
ensure that there was no difficulty in receiving benefits. Another example of outstanding 
service during the Gulf War was USAA's special pricing on auto insurance policies. If a 
service member was in the Gulf, and the auto was not operated, they received a significant 
discount on their premiums. 

Question 6: What are the most important components of an effective 
customer service program? 

In answering this question, Mr. Gass emphasized three areas. They are: 

1. Education throughout the organization : Employees are constantly reminded to 
remain focused on the customer and to view service through the eyes of the 
customer. 

2. Stay the course: USAA has an advantage over most companies in that it is 
member owned and is not influenced by the pressures of stock holders. This 
flexibility allows them to implement change over time and support long term 
initiatives. 



22 



3. Control all aspects of service quality : Since USAA does not utilize insurance 
agents or other forms of middlemen, they can control service quality and 
consistency. 

3 . Interview with Mr. Jeff Canty Of Saturn Corporation 

Saturn Corp. is a division of General Motors and was developed with the primary 
focus of providing outstanding products and service. Saturn produces a line of economical 
cars with a reputation for reliability and value. The company is recognized as one of the 
leaders in customer satisfaction within the auto industry. Mr. Canty is a customer service 
regional manager. The interview was conducted via telephone on March 7, 1997. 
Question 1: How are you designed to offer customer service? 

Saturn is organized into four service regions, east, south, west and central. Each of 
these service regions has a team leader. Within a region, a team leader has five or six 
market area managers. These managers are responsible for the strategic development of the 
market area. They are responsible for implementing key strategies with the seven or eight 
Saturn retailers in their area. Each market area has two or three facility consultants that 
assist retailers with the measurement of customer satisfaction. 

Saturns are marketed by what the company refers to as "retailers" as opposed to 
"dealers". A retailer can own more than one "retailorship" within the same market area. 
This type of organization is rare within the auto industry, where privately owned 
dealerships compete head-to-head. Saturn finds that this type of organization allows for 
more consistent quality of service. A Saturn retailer has more in common with a 
McDonald's franchise than with a traditional auto dealer. 

Saturn has a network of Customer Assistance Centers. These centers are lead by a 
Customer Assistance Manager that knows the retailers within his region. Each center is 
budgeted to provide service to its retailer base and has approximately 100 team members. 



23 



The centers budget for a basic service standard. For example, they might budget for a staff 
that can achieve a telephone wait time of less than 40 seconds, approximately 96 percent of 
the time. 

The training program at Saturn is structured and comprehensive. Employees hired 
at customer assistance centers are trained for five weeks in telephone service techniques, 
role playing and computer skills. A customer service specialist receives an additional two 
weeks of training. Saturn employees are encouraged to team build and are provided 
incentives to improve teaming. 
Question 2: How do you collect information on your customers? 

Saturn gathers customer needs and desires using surveys and customer focus 
groups. Focus groups are composed of a cross-section of Saturn customers and are lead by 
a focus group facilitator that asks questions and leads discussions. The company collects 
complaints using a computer data base called "CAMIS." This system catalogs all complaint 
letters and calls. It can track the status of a complaint, allowing visibility until resolution. 
Question 3: How do you resolve complaints and bad service incidents? 

If a customer complains by letter, the service center will determine the responsible 
retailer and then act as a liaison between the customer and the retailer. The service center 
strives to find a "happy medium" for both the customer and the retailer. They resolve all 
legitimate complaints within "reason." 

Question 4: How do you instill customer service related values in your 
employees? 

Mr. Canty believes that you cannot instill values in employees. Instead, Saturn 
spends time trying to find employees that share the same values that Saturn does. The 
company spends resources to educate employees about the benefits of Saturn's values. 
They may on occasion coach those that fail to abide by these values. The company has a 
two year probationary period and is careful to screen for only the best applicants. 

24 



Question 5: Provide some examples of outstanding customer service. 

Mr. Canty described an incident where a customer bought a used car from Saturn 
that later experienced extensive engine damage. The car was a Toyota and was essentially 
an unprofitable sale. An inspection of the engine revealed that the owner did not maintain 
the engine properly. Rather than risk losing the customer, Saturn was willing to pay for 
one third the cost of a new engine. Most dealerships would never do this. The result is a 
pleased customer that is likely to patronize Saturn in the future. 

Question 6: What are the most important components of an effective 
customer service program? 

Mr. Canty read me Saturn's Mission Statement to illustrate the components of an 

effective customer service program as defined by Saturn Corp. 

To generate customer and team member enthusiasm by incorporating 
practices that focus on understanding customer and team member needs, 
and identifying opportunities to exceed expectations. 

Saturn is constantly trying to balance enthusiasm and satisfaction. The difficult problem is 

that as expectations rise, it becomes less economically viable (in most cases) to deliver on a 

service promise. Customers demand more service that often results in reduced profit 

margins. 



25 



26 



III. ORGANIZING FOR OUTSTANDING CUSTOMER SERVICE 

A. LEADERSHIP AND A VISION FOR SERVICE QUALITY 

Organizations with a reputation for outstanding customer service did not achieve 
this reputation without considerable time and effort. Research indicates that world-class 
customer service organizations are characterized by management structures that place a 
strong emphasis on providing quality service to the customer. These organizations closely 
examine the way they are structured to ensure value is added to the customer service goals 
of die organization. 

Senior management must perform a crucial internal service role, the role of service 
leadership. Only senior management has the position and clout to build an organization's 
value system on the pillars of satisfying customers, freedom of action, creative problem 
solving, and respect for employees. [Ref. 1: p. 137] 

Many organizations fail at achieving improvements in customer service because of 
lack of leadership. Customer service may not be a high priority for many senior managers. 
Often this is because they are evaluated for other qualities besides providing superior 
customer service. Other managers simply do not have the resources to implement 
significant customer service change within an organization. All too often customer service 
is not deemed worthy of up-front investment. Improving service generally involves 
spending significant monetary resources. Some senior managers simply do not have the 
obsession or spirit to lead the development of a customer service culture. It takes managers 
with strong leadership skills and a passion for service to generate employee enthusiasm. 
This enthusiasm must sustain any organizational change that can take significant time to 
manifest itself. 

All members of the service organization must have a clear understanding of the 
organization's strategic plan regarding service. All members must understand their role in 

27 



providing outstanding service and how they can work together to provide it. This 
understanding is rooted in the customer service vision of the organization. This vision is 
the responsibility of the organization's leadership. Leaders must look beyond the 
distractions of everyday work and provide a clear vision of the customer service goals and 
aspirations of the organization. Steven Jobs, co-founder of Apple Computer Corp. once 
said that leaders are the "keepers of the dream," [Ref. 8: p. 72] but they must go beyond 
this and inspire others to share the dream. 

Dean Tjosvold in Teamwork for Customers, describes the vision building process 
as a shared process. This process requires that management involve employees in 
developing the vision. The process consists of an assessment of the organization's current 
vision and then reflection on ways to improve it. The vision is then updated and improved. 

James L. Heskett in Command Performance, describes a "strategic service vision" 
that world-class customer service organizations utilize to achieve customer service 
excellence. The vision consists of identifying a target market segment (the customer) and 
developing a service concept to meet the customer's needs. An operating strategy is then 
developed to support the service concept and a service delivery system is designed to 
support the operating strategy. [Ref. 7: p. 8] 

High-performance service companies have gained their status in large part by 
turning their strategic service vision inward by targeting important groups of employees as 
well as customers. These companies understand that it takes more than a vision to achieve 
superior customer service, employees must subscribe to and share the vision if it is to be 
effective. 

B . MIDDLE MANAGEMENT'S ROLE IN SERVICE QUALITY 

Middle managers play a crucial role in developing service quality. In most 
organizations, they provide the bulk of the management and leadership in day-to-day 



28 



activities. They provide the link between the service vision of senior management and the 
front-line employee. Without middle management's support for change, any plans to 
improve an organization's service quality are destined for failure. They can either "put fuel 
or sand in the gas tank." [Ref. 1: p. 140] 

Middle managers must be much more than a conduit for change. They must step 
beyond their traditional roles as managers, and help multiply the message of change. They 
must continuously reinforce the service vision and inspire front-line employees to 
internalize the vision. 

Senior management must understand the reluctance for change that middle 
managers harbor. A middle manager with years of experience is likely to resist change and 
may feel threatened by it. This is very much the problem with the movement to teams. 
Middle mangers often cannot adjust to their new roles as coaches and facilitators. Senior 
management must ensure that middle managers are educated to properly handle change. 
Simply delegating or mandating change to improve service quality is likely to fail. Middle 
managers that do not "buy-in" to change will do whatever they can to prevent it. 

C . THE ROLE OF THE FRONT-LINE SERVICE PROVIDER 

World-Class customer service organizations are characterized by superior 
management, training, policies and most importantly, superior front-line personnel. The 
best customer service organizations recognize that recruiting the best people is crucial to 
making them better than their competitors. The best training program in the world will not 
guarantee outstanding service if you hire only mediocre people. 

Front-line workers set the tone for an organization. Their actions, their appearance 
and attitudes are on display for the customer. [Ref. 9: p. 6] In the world of service, first 
impressions are crucial for the success of the organization. Front-line workers that give a 



29 



bad impression both in appearance and attitude will almost guarantee a dissatisfied 
customer. 

What exactly makes an outstanding front-line service provider? The answers are 
numerous and varied, but one quality that is always present is a true desire to serve the 
customer. Outstanding front-line workers truly enjoy service and solving customer 
problems. They often seek out challenges and look for ways to provide value to the 
customer. [Ref. 9: p. 67] 

As mentioned earlier, customers value reliability, responsiveness, tangibles, 
assurance and empathy. These qualities also best describe outstanding front-line service 
providers. Reliable service providers can be counted on to get the job done. A responsive 
front-line service provider is one that provides the customer what they need, when they 
need it. Tangibles in the context of front-line service providers pertains to the appearance of 
the service provider. This relates back to the idea that first impressions are important in 
service. Outstanding front-line service providers are constantly viewing service from the 
point of view of the customer and understand the potential impact of internal policy on 
service to the customer. 

It is important to match service people with the right job. If a service job calls for 
someone with high energy, then a high energy person should be placed in the position. 
Management must be very careful about matching job requirements with individual skills. 
People often fail at a job because the job requirements are not consistent with their 
strengths. Matching up strengths is more important than finding people with prior 
experience. [Ref. 9: p. 233] 

Research indicates that satisfied employees consistently deliver superior customer 
service. There is a direct relationship between customer satisfaction and the service 
capability of the front-line staff. The degree to which an organization's front-line 
employees feel they have the capability, tools, and organizational support to provide for 

30 



customer needs mirrors the degree of customer satisfaction. [Ref. 11: p. 10] An example 
of this is Federal Express Corporation. Fedex tries to align company goals with the goals 
of its employees. The company has inverted the traditional management pyramid through a 
process called Service Leadership. [Ref. 11: p. 21] The process puts customers on top and 
actively supports front-line personnel to ensure that customers are satisfied. Fedex believes 
that the efforts, talents and commitment of their people are the basis on which customers 
judge service quality. 

Service work can be extremely demanding both physically and emotionally. Front- 
line service providers must be equipped to handle the stresses of providing quality service 
on a daily basis. They require quality leadership from senior and middle management and 
the tools to properly perform their job. It is not fair to demand high standards of service 
from front-line personnel, but deny them the resources to effectively provide it. 

Once properly supported, front-line service providers must be challenged to 
improve the quality of service they provide. Relying on service standards is not a long term 
solution for increased service quality. Front-line personnel must strongly identify with the 
customer. They must empathize with the customer and be trained to view service from the 
perspective of the customer. If front-line personnel do this, they will experience a strong 
self-motivation to please the customer. 

D. REWARDS AND RECOGNITION 

Service employees respond positively to rewards and recognition. Employees can 
be strongly motivated to improve service quality if they are properly recognized and 
rewarded. Mark J. Murphy, President of Johnson and Johnson Hospital Services, Inc. 
emphasizes this point 

There can never be too much recognition. People perform based on what 
they are measured and rewarded for.... [Ref. 12: p. 16] 



31 



Employees that are properly recognized and rewarded develop loyalty to an 
organization. World-class service leaders view their best employees as they do their best 
customers; once they have them, they do everything possible to keep them. [Ref. 7: p. 115] 
Compensation is one key aspect of retaining quality employees, but it takes more than this. 
Outstanding service employees value tangible rewards such as gifts and formal recognition 
before their peers. [Ref. 9: p. 119] 

Virgin Atlantic Airways Chairman Richard Branson has a very generous reward 
and recognition program. Every year, this self-made billionaire throws a week long 
celebration for employees of his airline and other Virgin enterprises. This celebration 
includes carnival rides and live entertainment Another recent reward program offered to 
airline employees involved a competition to sell duty free merchandise. The winning air 
crew enjoyed a week long stay at Branson's exclusive, private Caribbean island called 
"Necker Island." [Ref. 13] 

It is not necessary to have rewards and recognition programs as elaborate as those 
utilized by Virgin Atlantic Airways. Many less costly methods will achieve the same result, 
the key is to develop programs that motivate extremely competitive people, but yet still keep 
all employees interested. [Ref. 9: p. 106] 

E. IMPLEMENTING CHANGE 

Having the knowledge and the determination to implement customer service related 
change is no guarantee of success. Significant and lasting change takes much more than 
this. The first step in initiating a lasting change is to create formal service improvement 
roles within the organization. [Ref. 1: p. 147] Initiatives that are informal and unstructured 
are unlikely to have lasting benefit. Formal roles demonstrate that the organization is 
committed to long term change and is willing to dedicate resources to service improvement. 



32 



An effective method to institute service related change is through the use of teams. 
Service improvement teams should be composed of personnel at all levels of the 
organization. This includes front-line personnel, middle management and Senior 
management. This coordinated effort has the best chance for success. Teamwork can be a 
stimulating experience for most people and very rewarding. The problem solving abilities 
of well structured teams often significantly exceed those of traditional work organizations. 
"Delivering Quality Service" describes the use of three types of teams that are necessary for 
service change, these are vertical teams, project teams and horizontal teams. [Ref. 1: p. 150] 

Metropolitan Life Insurance developed an extensive service improvement process to 
become more customer focused. The management of Met life asked each organizational 
unit to identify the services they provided and what customers they served. They then 
formed teams to focus on each service and improve them. Each team was lead by a 
member of middle management and composed of the service support and delivery 
personnel. By involving management and front-line providers in a formal team process, 
Met Life significantly improved service quality. [Ref. 1: p. 147] 

Service improvement teams must be coordinated and facilitated to ensure lasting 
success. The best organizations utilize interdepartmental steering groups at the executive 
level to continuously evaluate service related initiatives and recommend improvements. 
Service improvement management teams or steering groups should develop a strategic 
sense of the required improvements in customer service. They should attempt to distill the 
fundamental service goals into a short and concise list of objectives and develop a plan to 
achieve them. 

Service improvement teams must be empowered to make decisions that can make a 
significant impact. Giving a team this kind of power is often difficult for American 
managers. Our society still tends to view power as a zero-sum, win-lose competitive 
struggle. [Ref. 8: p. 48] If one group has power, then it is assumed to be at someone 

33 



else's expense. In today's world-class service organizations, power is a positive force. 
Front-line personnel that are empowered to make decisions are more enthusiastic about 
delivering service. They are free to make decisions that deviate from policy if necessary. 
They come to see that their input is valued by the organization. Managers with power have 
the resources and confidence to encourage employees. Members of a cooperative team 
support and encourage each other and provide each other with resources and assistance. 
[Ref. 8: p.48] 

The complexity and enormity of the service-quality challenge often inhibits 
management's willingness to act Faced with a seemingly impossible goal of providing 
superior customer service, many simply do not even attempt to get started. [Ref. 1: p. 150] 
In situations like this, it may help to focus on steady improvement and incremental 
improvement. Developing a service minded culture is an "evolutionary" process rather than 
a "revolutionary" process. [Ref. 1: p. 150] 



34 



IV. SERVICE QUALITY BENCHMARKING 

A. OVERVIEW 

The archival data and interviews with world-class service providers indicate several 
key service quality characteristics that serve as the benchmark for FISC Regional Contracts 
Department These characteristics can be grouped into the following areas of emphasis: 

1. A vision for service quality 

2. Formal service quality improvement programs 

3. Robust customer communication and feedback methods 

4. Strategic use of customer complaints 

5. Effective service delivery techniques 

6. Strong internal customer service 

7. Customer service training programs 

8. Employee reward and recognition programs 

B . KEY SERVICE QUALITY CHARACTERISTICS 

1 . A Vision for Service Quality 

The interviews of world-class service providers indicate that a service "vision" 
shapes the service culture of the organization. Customer service shapes all aspects of the 
business and is the most important priority in the company. 

Senior leadership facilitates the development of the service vision and continuously 
reinforces it. More importantly, the senior leadership has inspired other employees to share 
the service vision. Disney describes this process as employees "buying-in" to the Disney 
philosophy. This shared vision provides the central focus for service quality. 



35 



2. Formal Service Quality Improvement Programs 

The archival data indicate that world-class service organizations utilize formalized 
service quality improvement programs. These programs are most effectively implemented 
by forming teams made of up of senior leadership, middle management and front-line 
service personnel. A good example of the use of service quality improvement teams is 
USAA's use of the PRIDE program (Professionalism Results In Dedication to Excellence). 
This program uses teams comprised of front-line service personnel and management. The 
teams promote innovation and problem solving with an eye towards improving service to 
the customer. 

3. Robust Customer Communication and Feedback Methods 

The interviews with the world-class service providers indicate an extensive system 
of customer communication and feedback collection. Surveys are used extensively as a tool 
to gather information regarding customer needs, perceptions and experiences. Disney 
utilizes three different surveys for people that attend their Disney Institute Seminars. USAA 
conducts an extensive annual survey of customers to determine customer perceptions of 
service quality and to solicit input on service ideas from customers. 

Focus groups are used extensively by each company to gather information 
concerning service performance. Saturn Corp. assembles a cross-section of customers and 
teams them with a facilitator to probe into their customer service experience. 

USAA and Saturn both utilize automated customer service tracking software as 
another means of collecting information. These sophisticated data bases allow both 
companies to more efficiently track complaints, ensuring total visibility until resolution. 

These communication techniques provide these companies with numerous chances 
to understand the service needs of their customer. The companies understand that it takes 
multiple methods to obtain information from customers. The different techniques serve as 



36 



checks and balances on customer service trends. For example, it would be unwise to base 
an expensive marketing decision on the results of one written survey. Furthermore, all of 
the companies utilize probing questions that encourage customers to share their true 
feelings. 

4. Strategic Use of Customer Complaints 

As the research by Technical Assistance Research Programs (TARP) indicates, 
people generally do not complain about service. It takes numerous communication 
techniques to really understand the problems customers have with service. 

The interviews with the three companies revealed some common characteristics in 
dealing with complaints and resolving bad service incidents. All three companies placed a 
strong emphasis on resolving complaints at the lowest possible level. This is because of the 
element of "time" and the customer's perception of the company's competence. Obviously 
the quickest way to resolve a complaint is to have the service provider solve it on the spot. 
Often customers may anticipate that complaints will take longer to resolve and by 
shortening the time involved, the company has a chance to exceed the customer's 
expectations. A service provider that is empowered to make critical decisions regarding 
customer complaints is perceived to be competent and authoritative. Customers will step 
away from the service incident with a reinforced confidence in the organization. 

All three companies effectively utilized "service compensation" for bad service 
incidents. Each company allowed service providers to compensate the customer with 
monetary compensation (including waving fees) or gifts during times of bad service. All 
three companies have a clear understanding of the long term implications for strong service 
recovery. By keeping a customer satisfied, they have strengthened their relationship and 
perhaps gained the customer for life. 



37 



One final aspect of complaint resolution common to all three companies was a clear 
understanding of the effective use of "empathy" for the customer. Disney for example 
places a strong emphasis on listening to the "essence" of a complaint and then empathizing 
with a customer during a complaint. This is especially crucial when the service incident is 
truly beyond salvage. Disney employees share the same view of the incident and almost 
"share the pain" of the process. 

USAA's special programs utilized during the Gulf War are also excellent examples 
of empathy for the customer. By establishing a casualty assistance center to assist with life 
insurance claims, USAA took a pro-active approach towards empathy for the customer. 
This approach provided USAA another chance to exceed customer expectations and to 
further cement the long term relationship. 

5. Effective Service Delivery Techniques 

The archival data, specifically the research by Gutek, indicate that services are 
provided either in the form of a service encounter or a service relationship. Encounter 
systems are advantageous for repetitive, homogeneous service tasks that do not require 
extensive expertise. Customers value consistent quality and speed of delivery from a 
service encounter system. Relationship systems, in contrast, are utilized for more 
complicated services such as health care, where the service provider has extensive 
knowledge and training. Customers value professional, individualized service in a 
relationship system, they also value the quality of the service over the speed of delivery. 

6. Strong Internal Customer Service 

Superior front-line service requires strong internal customer service. It is essential 
for management to understand that if an employee is not serving an external customer 
directly, then they are serving someone else that is. Without this support, service will fail. 



38 



Strong internal service also plays a critical role in fostering employee "buy-in" to a service 
vision and the service culture of the organization. 

7 . Customer Service Training Programs 

Customer service training conducted by the three companies covered an extensive 
array of topics including: telephone techniques, problem solving, dealing with problem 
customers, personal hygiene, empathizing with the customer and other topics. The 
customer service training at these companies was also done on a periodic basis. This 
training is the cornerstone of the "consistent" service quality delivered by the companies. 

8. Employee Reward and Recognition Programs 

The archival data suggest that employee rewards and recognition are critical to 
incentivize change within an organization. Employees are motivated by more than salary. 
World-class service providers understand this and develop programs to reward and 
recognize exceptional performance. To be effective the rewards and recognition must be 
appropriate, meaningful and timely. 



39 



40 



V. METHODOLOGY 

This study is an assessment of the customer service ability of the FISC San Diego 
Regional Contracts Department The assessment consists of three fundamental steps. First, 
archival data concerning service quality were gathered from a review of customer service 
literature. The archival data were supplemented with interview data on the service quality 
characteristics of world-class service providers. Second, on site interviews were 
conducted with FISC San Diego Regional Contracts Department personnel to gather data 
on current service procedures and perceptions. The third step in the assessment process 
was the benchmarking of FISC San Diego Regional Contracts Department utilizing the 
archival and interview data collected in steps one and two. 

To provide structure to the benchmarking process, a list of key service quality 
characteristics was developed. This list summarizes the key concepts from the archival and 
interview data collection steps. FISC San Diego Regional Contracts Department was then 
assessed utilizing the list of service quality characteristics. 

The researcher conducted a site visit of the FISC San Diego Regional Contracts 
Department on 25 and 26 March 1997. The site visit provided the chance to conduct 
interviews and to make personal observations of the working environment A total of eight 
FISC San Diego Regional Contracts personnel representing all levels of the organization 
were interviewed. These levels included senior leadership, middle management and front- 
line service personnel. The emphasis was primarily at the middle management and front- 
line service level. This number represented less than five percent of the personnel in the 
department. The views of these eight personnel are not necessarily representative of the 
entire department and the researcher claims no statistical significance to the sample size or 
data results. The sample was limited to eight personnel to facilitate qualitative analysis. 
These personnel included the Military Director, Technical Director, Policy Director, two 

41 



procuring contracting officers, a contract negotiator, the Small Purchase Military Director 
and the Small Purchase Supervisor. 

Each person was asked the following seven questions. 

1. Who are your organization's customers? 

2. What services does your organization provide to customers? 

3. How are you designed to offer customer service? 

• people 

• structure 

• budget 

• programs 

• training 

4. How do you collect information on your customers? 

• needs and desires 

• complaints 

5. How do you resolve complaints and bad service incidents? 

6. Provide some examples of customer service. 

• good 

• bad 

7. On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade would you assign 
to your organization's customer service performance? 

These questions were developed to gain insight into the customer service 
performance of the Regional Contracts Department, and to provide an understanding of 
customers, services, feedback methods and perceptions of service performance. The 
complete text of each interview is provided as appendix A. 



42 



VI. ASSESSMENT OF FISC SAN DIEGO REGIONAL CONTRACTS 

DEPARTMENT 

A. DESCRIPTION OF THE REGIONAL CONTRACTS DEPARTMENT 

The Regional Contracts Department is responsible for performing all procurement 
functions for FISC San Diego. This includes performing all supply and services related 
contracting for customers in the Southwestern region of the United States. Principle 
customers include shore installations of the Department of the Navy and the Department of 
Defense. Currently there are over 500 customers, with the majority of work focused on a 
handful of large customers. The top seventeen customers by dollar value accounted for 621 
contract actions during 1996 at a total of $437 million. [Ref. 14] The rest of the over 
45,000 contract actions were within the small purchase threshold of $100 thousand, for a 
total of $160 million. The department provides support to afloat units, primarily through its 
simplified acquisition division (also refered to as the small contracts division). 

The department is identified as code 200 within the FISC San Diego organizational 
structure. The most current on board figures show 167 personnel assigned to the 
department Of this, three personnel are military and the rest civilians, primarily contracting 
specialists including 1 102, 1 105 and 1 106 codes. The department is mission funded from 
the Naval Supply Systems Command for 146 personnel. There are also six interns and 
twelve personnel that are on reimbursable funding from other activities. [Ref. 15] The 
Regional Contracts Department Oarge contracts division), specializes in drafting, 
negotiating and administering services contracts and they consider themselves to have a 
core competency in engineering services contracts. 

The Department Director (code 200) and the Deputy Director (code 201) are assisted 
by a Deputy for Small Business (code 202) and Contract Policy and Technology Directors 
(210). The rest of the organization is divided between large contracts (greater than $100 



43 



thousand) and simplified acquisitions (up to $100 thousand). The large contracts division is 
organized into four contracting teams, an off-site team at Naval Weapons Station Seal 
Beach, CA and the Procurement Management Review team which conducts training and 
assessments. An organizational chart is included below. [Ref. 15] 



Contracts Department Director 

(200) 

Deputy Director 

(201) 



Deputy for 

Small Business 

(202) 



Simplified 

Acquisition 

(220) 



Contracts Branch 

San Diego 

(240) 



Procurement 

Mgmt Review 

(230) 



Contract Policy 

& 

Technology 

(210) 



Contracts Branch 

San Diego 

(260) 



Contracts Branch 

San Diego 

(250) 



Contracts Branch 

Seal Beach 

(280) 



Contracts Branch 

San Diego 

(270) 



B. ANALYSIS 

FISC San Diego Regional Contracts Department has a customer focused vision 
statement that reads, "Become the contracting center of choice in the Western Region by 
being NAVSUP's most innovative and most efficient buyer of best value goods and 
services that meet our customer's needs". This vision is reinforced by the leadership of 
FISC San Diego. Interviews and observations of FISC contracting personnel indicate that 
from the Commanding Officer on down, the priority is on serving the customer. 

The personnel of FISC San Diego have internalized the organization's vision of 
service to the customer. There are two primary reasons for this. First, the leadership has 



44 



established a clear and understandable statement regarding customer service in the vision 
statement. Second, the leadership continuously reinforces this vision. A recent climate 
survey conducted at FISC San Diego supports this. The survey indicates that employees 
have knowledge of the strategic plan, including focus on the customer. Employees also 
consider themselves focused on the customer. [Ref. 16] 

The interview data obtained from FISC San Diego indicate that they do not utilize 
formalized service quality improvement teams in the Regional Contracts Department There 
are service quality improvement initiatives being implemented such as those that reduce 
cycle times, including the use of oral proposals or increased "up-front" involvement by 
contracting personnel in acquisition planning. These initiatives are derived from recent 
acquisition policy implemented throughout the Department of Defense, and were not 
developed utilizing service quality teams. Some of the initiatives are based on "best 
practices" that are currently being embraced by acquisition reform decision makers at the 
Department of the Navy and the Department of Defense (e.g. oral proposals). These 
policies address the acquisition "process," but are not based on feedback from FISC San 
Diego Regional Contract's customers. 

The communication techniques utilized by FISC San Diego Regional Contracts are 
not as varied or as effective as those utilized by world-class service providers. There are no 
focus groups utilized, surveys are not utilized as extensively and they lack an automated 
means of tracking customer complaints. The current emphasis in the customer feedback and 
communication system is on obtaining the customer's overall satisfaction score during a 
quarterly satisfaction survey. This information is helpful for understanding the overall 
opinion of the customer and facilitates the gathering of data by the Naval Supply Systems 
Command in order to monitor the customer service performance of the entire field 
contracting system. As a feedback mechanism, the current survey is too limited to serve as 
a powerful source of customer information. 

45 



The Regional Contracts Department is not staffed to provide continuous live 
response to all telephone inquiries. To compensate for this, the department relies on a voice 
mail system. Although voice mail systems do allow visibility of all telephone inquiries, 
they can work against customer satisfaction if customers begin to perceive the system as 
non-responsive. This can also happen with e-mail if not read and responded to in a timely 
manner. This appears to be happening at the Regional Contracts Department and customers 
often complain that they are unable to access key personnel when they need them. 
Overtime, the appearance of "non-responsiveness" may impact on customer expectations. 

One example of an effective feedback method utilized by PCO's within the Regional 
Contracts Department is customer site visits. The interviews indicate that PCO's are being 
encouraged, and are actually starting, to conduct customer site visits of local customers. 
This provides the best medium for gathering customer feedback and sends a strong 
message to the customer that the Regional Contracts Department is serious about service 
quality. Site visits are also critical to the development of customer and provider 
relationships. 

The current shortfalls in customer feedback techniques by F1SC San Diego 
Regional Contracts Department are likely also seen in many other Navy field contracting 
activities and indicate a lack of understanding of the use of customer feedback. Today's 
emphasis is to look at customer service as a metric to compare performance among field 
contracting activities. This is problematic because each field activity serves an entirely 
unique set of customers and these customers may define service quality differently. 

Interviews with F1SC San Diego Regional Contracts personnel indicate an attempt 
to resolve customer complaints at lower levels in the organization. Compared to the three 
companies, it appears that this is not always the case. In many cases the level of complaint 
resolution was indicated as the PCO or supervisor level. This is caused by the impact of 
federal regulations or internal policy. A customer that has a regulation or policy-specific 

46 



complaint is unlikely to get resolution from a front-line service provider. In most cases it is 
easier or even encouraged for the service provider to seek supervisory assistance with a 
customer complaint. This is primarily an issue of the authority to compensate the customer. 
The issue of "service compensation" is problematic in the government sector of our society. 
It may be common practice for companies to allow thresholds for monetary compensation 
for complaining customers, this is essentially not possible in the public sector. Such 
individual discretion would be a radical idea in today's government with its emphasis on 
"fiduciary" accountability, no matter what the amount. 

The service structure at FISC San Diego Regional Contracts Department can be 
described as both encounter and relationship based. In some cases there may be a transition 
from one to the other, such as from an encounter to a relationship. The organizational 
structure of the Regional Contracts Department, and the large contracts division in 
particular, provides a strong foundation for developing outstanding customer service. 

As identified earlier, the large contracts division is organized into four customer 
teams and one team dedicated to training (the procurement management review team). Each 
team is structured around one or more large customers based on contract actions. The 
interviews indicate that the customer team structure is enhancing relationships between 
customers and contracting personnel in the division. PCO's are establishing frequent 
communication with these customers and in some cases are meeting with customers to 
discuss service issues. In many cases these relationships are developing into personal 
relationships. It is not uncommon for PCO's or negotiators to know their customers by 
name. The relationships between customer and provider are having a positive impact on 
customer satisfaction. 

A drawback to the relationship method of service delivery is the time required to 
develop a relationship. It may take a significant period of time to establish a strong working 
relationship with a major customer. This should not be a significant constraint for the large 

47 



contracts division because the contracts they award are usually of a more complex nature, 
t example a complex engineering services contract. The complexity of the contract 
usually allows enough time for a relationship to build. 

In contrast to the large contracts division, the small contracts division is faced with 
the dynamics of an encounter service delivery system. Most of the purchases are less 
complex, lower cost supply and service contracts. A greater emphasis is placed on speed of 
delivery than is within the large contracts division. This is because requirements are usually 
more of an emergent nature and can often effect the short term mission effectiveness of an 
organization. An example of this would be a Navy ship that is scheduled to deploy and 
requires a critical part for its engines. This emphasis on speed of delivery drives the need 
for a standardized and consistent service delivery mechanism. The customer demands that 
the service process be simple, consistent and effective. The interviews indicate that the 
division still faces problems in these areas. Procurement lead time is not always consistent 
and documentation is occasionally lost. 

FTSC San Diego Regional Contracts Department places a large emphasis on internal 
customer service. The contracting specialists within the department view themselves as 
professionals and take great pride in their jobs. As professionals, an emphasis is placed on 
education to enhance job proficiency. This is partly the result of initiatives to improve the 
education of acquisition professionals within the Department of Defense, such as the 
Defense Acquisition Workforce Improvement Act (DAWIA). 

The Technical and Policy Directors are the primary facilitators of internal service 
quality. Both expressed the opinion that their customers are both external and internal in 
nature. They both take an active role in providing tools for the PCO's and contract 
specialists to perform their jobs. These include leading training stand-downs, tracking 
training requirements and sitting on contract review boards, to name a few. 



48 



The contract negotiator interviewed viewed the Defense Finance and Accounting 
Service as an internal service provider because they provide payment to contractors. This 
example illustrates the depth of understanding regarding the importance of internal service 
within the Regional Contracts Department Department personnel understand the 
importance of teamwork in improving internal service quality and also understand that 
improving internal service will enhance service to external customers. 

One of the more significant areas of difference between F1SC San Diego Regional 
Contracts Department and the three companies was in the area of customer service related 
training. Customer service related training was common place at USAA, Saturn and 
Disney. In contrast it was essentially non-existent at FTSC San Diego Regional Contracts 
Department. The only exception was in the small contracts division which has conducted 
some forms of customer service related training. 

The current training emphasis within the department is on the acquisition process. 
Most of the training tools available to the department are primarily related to improving the 
acquisition process. These training tools are rooted in the requirements of the Defense 
Acquisition Workforce Improvement Act. 

A recent climate survey at FISC San Diego indicates that there is an opportunity for 
improvement with the organization's reward and recognition programs. Many personnel 
believe that recognition is not timely and that there is not enough recognition for special 
achievement Lack of recognition or untimely recognition can be detrimental to the service 
attitudes of personnel within an organization. Worse, inappropriate recognition or 
recognition of the wrong personnel can erode internal customer service and teamwork. To 
address this perceived area of weakness, FISC San Diego is placing an increased emphasis 
on the publicizing of reward programs and is developing solutions with the help of a 
"Recognition" Quality Management Board (QMB). 



49 



50 



VII. CONCLUSION AND RECOMMENDATIONS 

A. CONCLUSION 

This research effort provides a clearer understanding of the dynamics of service 
quality. Service quality is significantly more difficult to determine than the quality of a 
manufactured good. Service quality is ultimately defined by the customer that is receiving 
it. Service is fleeting, it exists for a short time and then is gone forever. There are usually 
no second chances in delivering service. 

Customers utilize some basic attributes when evaluating service quality. These 
attributes are called service dimensions. These are in order of importance: reliability, 
responsiveness, assurance, empathy and tangibles. All customers, from retail customers to 
customers of FISC San Diego Regional Contracts, have a hierarchy of service dimensions. 

Improvements in service quality require service providers to establish 
communication with the customer. Customer feedback allows an organization to 
understand the needs of the customer, including their service dimensions. World-class 
customer service organizations utilize a multitude of customer feedback mechanisms 
including surveys, focus-groups, automated information systems and personal visits. 

Service is delivered in either encounters or relationships or some combination of 
both. These delivery systems have advantages and disadvantages and require careful 
consideration. 

Organizations can structure themselves to improve their service quality. This 
process begins with a service quality vision. The senior leadership of an organization is 
responsible for developing and delivering this vision. Middle management and front-line 
service providers both play key roles in improving service quality. Many organizations 
improve service quality by establishing formal service quality roles within the organization. 
One of the most significant characteristics of world-class service providers is a heavy 

51 



emphasis on employee training. This training includes both operational training and 
customer service related training. 

The assessment of the FISC San Diego Regional Contracts Department indicates the 
following. The organization has a well defined customer service vision and personnel have 
a clear understanding of this vision. There are no formal service quality roles within the 
organization. The organization utilizes limited methods of customer feedback and does not 
have a formal customer service training program. 

FISC San Diego Regional Contracts is well structured to improve service quality. 
The large contracts division is organized by customer teams which allows them to capitalize 
on the benefits of service relationships. The small contracts division, although characterized 
by aspects of an encounter system, is also developing relationships with its customers. 

B . RECOMMENDATIONS 

The following recommendations are offered to enhance the customer service 
effectiveness of the FISC San Diego Regional Contracts Department, 

1. Establish formal customer service roles. 

2. Develop more robust customer feedback mechanisms. 

3. Establish a customer service training program. 

4. Continue to enhance customer and provider relationships. 
Recommendation number one: 

Formal customer service roles are necessary for the long-term effectiveness of a 
customer service program. FISC San Diego Regional Contracts Department should charter 
an Integrated Process Team to improve service quality. The team should be comprised of 
personnel from all levels of the department including senior leadership, middle management 
and front-line service providers. This team would provide legitimacy to the customer 
service improvement effort. 



52 



Recommendation number two: 

The first task of the IPT would be the drafting of an in-depth survey to determine 
the service dimensions of customers. A suggested survey is included as appendix B. This 
is based on a survey developed by Zeithaml, Parasuraman, and Berry called 
"SERVQUAL." [Ref. 1: p. 23] This survey will require some tailoring depending on the 
needs and desires of the Regional Contracts Department 

Surveys addressing individual contract performance should also be utilized for each 
completed contract action. This survey should be limited in scope and complexity and 
should focus primarily on determining the service quality of the instant contract. 

The Regional Contracts Department should implement an automated customer 
service tracking program such as "support magic," the software program currently utilized 
by the customer service department at FISC San Diego. This software would allow the 
department to effectively track and respond to all customer complaints. 

The Regional Contracts Department should consider utilizing mobile 
communication technology to facilitate the accessibility of contracting personnel. A 
common complaint from customers is that they always get 'Voice mail" instead of the 
person they are calling. Mobile communication technology such as pagers or cellular 
phones are tools that could facilitate accessibility. Key individuals, such as PCO's, could 
be issued these tools. 
Recommendation number three; 

FISC San Diego Regional Contracts Department should implement a customer 
service training program. This training program should provide contracting personnel with 
the tools to provide enhanced service. Topics should include interpersonal skills, telephone 
techniques, conflict resolution techniques, listening skills, ways to serve difficult 



53 



customers and other topics as appropriate. The training should also explore the use of 
customer service teams to develop stronger customer relationships. 

There are different ways a customer service training program could be 
implemented. The training can be developed internally and administered by either FISC 
Regional Contracts personnel or FISC training personnel. Another option is to hire a 
professional training consultant to conduct the training on site. A final option would be to 
send designated personnel to a training site to obtain training skills. This is the "train the 
trainer" approach. The Disney Institute provides this kind of training. Ms. Lizette Blais of 
the Disney Institute can provide information on these programs and can be reached at (407) 
828-4411. 

As a side note, customer service training for contracting personnel should be 
included under the requirements of the Defense Acquisition Workforce Improvement Act 
Currently, the Defense Acquisition University does not include customer service training 
in its curriculum. Inclusion of customer service training within the formal acquisition 
workforce education curriculum may open the door for additional training resources. 
Recommendation number four 

The Regional Contracts Department is well structured to provide outstanding 
service quality. The customer team organization provides the greatest opportunity for 
developing customer and provider relationships. All things equal, solid relationships are the 
best guarantee of long term customer satisfaction. Each customer team should establish 
frequent communication with their customers and when possible, they should periodically 
visit with their customers. 

C. LIMITATIONS OF STUDY 

This research effort was limited to an assessment of the FISC San Diego Regional 
Contracts Department The research indicates some general concepts that can be applied 



54 



throughout the entire Navy Field Contracting System. The research also reveals some 
information that is specific only to the FTSC San Diego Regional Contracts Department 
Discretion is necessary when extrapolating the results of this research to address the entire 
Navy Field Contracting System. It is hoped that this research can be utilized by FISC San 
Diego and other field contracting activities to assist mem with their service quality journey. 

D. SUGGESTIONS FOR FURTHER RESEARCH 

This thesis provides a strategic approach to developing enhanced customer service. 
A follow-on research effort could focus on customer perceptions of service quality 
provided by the FISC San Diego Regional Contracts Department This follow-on research 
effort could assist the Regional Contracts Department with the tailoring of their customer 
feedback tools and could help them interpret customer feedback. 



55 



56 



APPENDIX A 
INTERVIEWS WITH FISC SAN DIEGO PERSONNEL 
A. INTERVIEW WITH THE DIRECTOR, REGIONAL CONTRACTS, 
FLEET AND INDUSTRIAL SUPPLY CENTER SAN DIEGO 
Question 1: Who are your organization's customers? 

The Regional Contracts Department of FISC San Diego has numerous customers 
(over 500), but most of the work is concentrated with a handful of key customers. These 
organizations include FISC "partners." A partner organization is one that used to perform 
field contracting in house but now has this function performed by FISC San Diego. 
FISC's customers are primarily ones within the Southwestern United States. The 
Department is mission funded to provide contracting services to these customers. FISC 
also has some nationwide customers such as the Defense Finance and Accounting Service 
(DFAS). 

FISC has numerous regional customers including; the Naval Aviation Depot 
(NADEP) North Island California, Shore Intermediate Maintenance Activity (SIMA) San 
Diego California, SIMA Ingelside Texas, Naval Submarine Base San Diego, Naval 
Amphibious Base San Diego, Naval Weapon Station Seal Beach California, Naval 
Construction Battalion Port Hueneme California, Fleet Training Center Pacific (San 
Diego), and Naval Station San Diego. Other divisions of FISC San Diego also receive 
service from the Regional Contracts Department 
Question 2: What services does your organization provide to customers? 

The Regional Contracts Department provides both large and small contracting 
services. Large contracts are those with a dollar threshold exceeding $100,000. They also 
have a group that provides contracting related training and assessment. This group is called 
the procurement management review (PMR) group. Last year FISC processed over 
46,000 contract actions for a total of $600 million. Of this $160 million was under the 

57 



$100,000 threshold. One of FISC's "core competencies" is engineering services 
contracts. They also negotiate indefinite delivery/indefinite quantity contracts which can be 
either for supplies or services. Another important service they provide the customer is "up 
front" acquisition planning. They will actually help the customer define their requirements 
and assist them in developing a statement of work, for example. 
Question 3: How are you designed to offer customer service? 

There are approximately 165 people within the Regional Contracts Department 
This includes personnel at FISC San Diego headquarters and at other regional partner 
sights. The Regional Contracts Department is organized into teams that consist of a 
Procuring Contracting Officer (PCO), two or more negotiators (pre-contract award), two or 
more contract administrators and an administrative assistant. To provide a customer service 
focus, they are utilizing customer service performance as a performance evaluation criteria 
for all contracting personnel. 

The budget is developed utilizing a concept known as "productive unit resourcing." 
This system assigns end strength and develops a budget based on contract actions. In the 
area of programs, they utilize customer service meetings to discuss service issues. There is 
no formal customer service training program, nor have contracting personnel ever received 
specialized training in customer service. 
Question 4: How do you collect information on your customers? 

Information is collected on customers by utilizing quarterly surveys, phone calls 
and site visits. FISC's customer service code (code 100) is currently implementing a 
software program called "support magic". This system will allow FISC to track customer 
feedback, including complaints. 



58 



Question 5: How do you resolve complaints and bad service incidents? 

Complaints or other difficult problems are usually resolved at the PCO level, or in the case 
of the small contracts division, at the Officer-in-Charge level. They try to encourage 
problem solving at the lowest level possible. 
Question 6: Provide some examples of customer service. 

The recent emphasis on providing the customer "up front" assistance with 
requirements definition is seen as a example of good customer service. Other examples 
include the use of multiple task order contracts such as those used with household good 
moves. Recently household goods contracts are placing a heavy emphasis in contractor past 
performance to determine future awards. This is improving the quality of household good 
moves. 

PCO's are beginning to utilize many new and innovative contracting techniques as a 
result of recent acquisition reform. For example, FISC recently awarded a $48 million 
indefinite quantity contract (this includes two option years) to a company called "corporate 
express" to provide office supply delivery to fleet and shore customers. What is new about 
this contract is that it utilized oral/technical proposals rather than the traditional written 
proposals. This process resulted in a marked reduction in procurement lead time. Offerors 
were required to provide an oral presentation of their proposal, including view slides. 

Examples of bad customer service included problems with the accuracy and quality 
of contract distribution (these are the copies of the completed contract that are sent to the 
customer). On rare occasions a contract renewal will slip through the cracks. For example, 
the Defense Distribution Regions' contract for forklift propane was accidentally not 
renewed on time. 

A common complaint of many customers is the inability to reach contracting 
personnel in person on the phone. Many customers do not like to utilize voice mail and 
instead want a live person. This is a dilemma for the Regional Contracts Department 

59 



because many times the customer wants information that only the PCO can provide, but it 
would not make sense to have the PCO's staff the phones 24 hours a day. F1SC is still 
trying to resolve this issue of quick accessibility to individual contracting personnel. 
Question 7: On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

The Director graded the department at 3.5 and indicated that as a whole, they are 
providing good customer service but that there is room for improvement. He indicated that 
they are on the right track. They are talking to their key customers on a regular basis, 
meeting with them and developing strong relationships. He indicated that more customer 
service tools are still needed such as "support magic" software to track customers. 

B. INTERVIEW WITH THE TECHNICAL DIRECTOR, REGIONAL 
CONTRACTS, FLEET AND INDUSTRIAL SUPPLY CENTER SAN DIEGO 

Question 1 : Who are your organization's customers? 

The Technical Director characterized customers as both internal and external. 
Internal customers are the various PCO's within the Department and external customers are 
the requiring activities and partners of FTSC San Diego. The Regional Contracts 
Department is beginning to develop strong relationships with F1SC partners early in the 
contracting process. This has not always been the case. For years, the Regional Contracts 
Department was a stand alone command known as the Naval Regional Contracts Center 
(NRCC). A few years back the NRCC merged with FTSC. In the early stages of this 
merger, communication between the FTSC, its partners and the Regional Contracts 
Department was weak. Today the lines of communication are greatly improved. 
Question 2 : What services does your organization provide to customers? 

Services used to be exclusively contracting, but this has changed recently. Today 
the department also assists the customer in the requirements definition stage of the 



60 



contracting process. This process is really a team effort between the customer and the 

contracting personnel. 

Question 3 : How are you designed to offer customer service? 

The Regional Contracts Department is subdivided by large and small contracts. The 
large contracts section (Code 210) is organized into 5 teams. Each team focuses on a group 
of customers. For example, one PCO has the Naval Aviation Depot, North Island and 
Naval Air Forces Pacific. Another has the Defense Finance and Accounting Service and the 
Naval Communications Station. One PCO has the FISC itself, the Fleet Training Center 
Pacific and the Naval Shipyard. Another PCO is responsible for all outsourcing 
requirements. The procurement management review team provides training services. 

The department is weak in customer service training. There has been no formal 
customer service training for Code 210 (large contracts). 
Question 4 : How do you collect information on your customers? 

Customers are surveyed on a quarterly basis utilizing a format provided by the 
Naval Supply Systems Command. Surveys in various forms have been in use since around 
1990. In the early days, surveys were forwarded with each completed contract. These 
surveys had a response rate between 28-30% and were generally ranked above satisfactory. 
When the NRCC merged with FISC San Diego, the surveys were stopped. FISC San 
Diego was already utilizing a consolidated customer service survey. In the last year we 
started the NAVSUP directed, quarterly surveys. 
Question 5 : How do you resolve complaints and bad service incidents? 

Most complaints are simply misunderstandings between contracting personnel and 
the customer. These are usually resolved at the PCO level and normally with a phone call. 
Question 6 : Provide some examples of customer service. 

The indefinite delivery contract with "Corporate Express" is an example of good 
customer service. This streamlined contract process resulted in at least a three month time 

61 



savings. There were two primary reasons for this, one was the use of oral proposals and 
the other was awarding on initial offers. Another example of good customer service is the 
recent help that the large contracts section provided to the small contracts section when the 
USS CONSTELLATION was preparing to deploy. Normally this customer is served by 
the small contracts division. The large contracts personnel were able to assist in the pre- 
deployment workload surge for CONSTELLATION. 

An example of bad customer service would be when a customer recently requested 
that a line of accounting data be modified in a certain way. The request could not be 
completed because of limitations with the automated accounting process. The customer 
was not happy with this inability to deviate from established policy. 
Question 7 : On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

The Technical Director graded their customer service performance between 3 and 
3.5. She indicated that they do fairly well, but they have room for improvement. She 
indicated that contracting personnel need customer service training. 

C. INTERVIEW WITH THE POLICY DIRECTOR, REGIONAL 
CONTRACTS, FLEET AND INDUSTRIAL SUPPLY CENTER SAN DIEGO 
Question 1 : Who are your organization's customers? 

The Policy Director viewed her customers as the PCO's and negotiators of the 
department She viewed her role as primarily that of an internal customer service provider. 
Question 2 : What services does your organization provide to customers? 

The Policy Director listed numerous tools that she provided to assist the PCO's and 
negotiators. Some of these tools are desktop guides, the Defense Acquisition Deskbook, 
and access to various Federal Government, DLA, Army, Air Force and Navy Acquisition 
related resources. 



62 



Question 3 : How are you designed to offer customer service? 

The large contracts division has seen significant down sizing in recent years 
(approximately 30%). The organization is lean because of cutbacks. This presents an added 
challenge in delivering customer service. 

The Policy Director indicated that she has received training in Total Quality 
Leadership. She utilizes this knowledge to train others in the division. She is also 
responsible for tracking the training requirements of all contracting personnel, including 
those required by the Defense Acquisition Workforce Improvement Act (DAWIA). She 
also coordinates training stand downs. 
Question 4 : How do you collect information on your customers? 

Since the Policy Director is primarily an internal service provider, she is able to 
gather information utilizing numerous communication channels. She is in a position that 
allows for frequent contact with contracting personnel. One form of contact with customers 
is during the contract review board process. This is a board composed of the senior 
leadership of the Regional Contracts Department The purpose of the board is to conduct 
quality reviews of pending contracts. The Policy Director indicated that she rarely receives 
complaints from contracting personnel. 
Question 5 : How do you resolve complaints and bad service incidents? 

Complaints are resolved by utilizing direct communication. For example when the 
procedures where changed for processing Commerce Business Daily synopsis' some 
personnel complained until they were provided training. 
Question 6 : Provide some examples of customer service. 

The Policy Director cited the various training tools as examples of good internal 
customer service. She emphasized that good internal customer service meant being pro- 
active and anticipating internal needs. 



63 



Question 7 : On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

The Policy Director graded the organization a 4.8. She believes that the contracting 
work force is dedicated to providing outstanding customer service. 

D. INTERVIEW WITH THE PROCURING CONTRACTING OFFICER 
FOR THE DEFENSE FINANCE AND ACCOUNTING SERVICE 
CUSTOMER TEAM 
Question 1 : Who are your organization's customers? 

The PCO for this team listed some of her customers, including her largest 
customer, the Defense finance and Accounting Service. DFAS has seven major centers and 
21 operating locations. She also serves the Public Works Department San Diego, NAS 
Fallon Nevada, and the MCAS Miramar Brig. She also has numerous other customers as 
assigned. 
Onestion 2 : What services does your organization provide to customers? 

Services include contract award and administration. The team also assists customers 
with the requirements definition stage of the contracting process. 
Question 3 : How are you designed to offer customer service? 

The large contracts division is composed of four contracting teams. These teams are 
organized around major customers. Contracting personnel on these teams consist of pre- 
award and post-award specialists. There is a move to develop this into a single specialty. 
The budget is not developed at the PCO level. The team receives a budget from the front 
office (the Director). PCO's do provide budget input during the budget formulation 
process. There is no specific budget for travel funds to visit customers. If a customer is in 
the local area (San Diego), they are visited on a regular basis. If the customer is outside the 

64 



local area, they will need to provide travel funding or visit us. The PMR group is funded 
for travel, however. This is because their mission is to provide training in the field. The 
team receives training from the PMR group and the Policy Director. 
Question 4 : How do you collect information on your customers? 

Customer information is collected utilizing a quarterly survey. In the past, surveys 
were sent out with each signed contract This survey did not capture any post-award 
activity. This team still forwards surveys with each contract on occasion. Other forms of 
communication include the phone and e-mail. 
Question 5 : How do you resolve complaints and bad service incidents? 

Complaint resolution is very specific to the actual complaint. Most complaints 
concern cycle time. Customers complain that the process is too long. Generally, the more 
complex the requirement, the longer the procurement lead time. The short term solution 
requires moving the workload internally and re-prioritizing the workload. 

The team should be moving faster considering recent acquisition streamlining, but 
it is still moving slower in some situations. This seems to be a learning curve problem as 
contracting personnel become more familiar with new processes, and tools. Some recent 
changes have also caused some confusion. For example, telephone services are now 
considered a commodity instead of a utility. This changes the way that they are contracted 
for. Another example concerns the contracting for Emission Reduction Certificates. These 
are essentially pollution permits that have market value and can be bought and sold. There 
was difficulty in defining whether these are services or supplies. The distinction effects the 
terms and conditions of the contract. 
Question 6 : Provide some examples of customer service. 

DFAS was very satisfied with a recent multiple award contract we completed for 
them. The contract included 30 day delivery time frames and also helped DFAS identify 
cost savings. 

65 



An example of where we need to improve is the contract for telephone services at 
NAS Fallon Nevada. The Navy's Top Gun School recently moved to Fallon from NAS 
Miramar California and the base need additional telephone infrastructure to accommodate 
the new squadrons. Procedurally the contracting process was performed by the book, the 
problem was the customer was not really happy with the final product. The customer really 
wanted a digital system that the local telephone utility could not provide at a price the 
customer could afford. Ultimately local politics played a big role in keeping the local utility 
on the job even though the work was really beyond their capacity. The customer was very 
frustrated with the system more than anything. 

Question 7 : On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

The PCO assigned a grade of 3.75. She identified the need to improve lead times 
and believes that the team is committed to doing this. 

E. INTERVIEW WITH THE PROCURING CONTRACTING OFFICER 

FOR THE FLEET AND INDUSTRIAL SUPPLY CENTER CUSTOMER 

TEAM 

Question 1 : Who are your organization's customers? 

Customers include other FISC divisions, Navy ships for habitability work, Naval 
construction battalions. The team works on husbandry contracts for ships making port 
visits in Mexico. All mess attendant contracts for base galleys are processed by the team. 
Other customers are assigned as needed. 
Question 2: What services does your organization provide to customers? 

Services include contracts and requirements planning. Many customers call for 
expert advice in developing requirements and the statement of work. There is a wealth of 



66 



experience and knowledge available from the contracting personnel on the team. The team 

is committed to customer service. 

Question 3: How are you designed to offer customer service? 

All contracting personnel are organized into teams that are structured according to 
our customer base. The budget is limited for travel and other customer service support. 
The team does train customers on the acquisition process. The team has not received any 
formal customer service training. 
Question 4: How do you collect information on your customers? 

The Division used to utilize a survey for every contract action. This should 
probably be reintroduced. One dilemma with the survey is that there is often inconsistency 
with the management level that completes the survey. Some customers have junior enlisted 
personnel complete the survey, while others have a senior officer complete the survey. In 
some cases it is probably necessary to send surveys to more than one person in the 
command. 
Question 5: How do you resolve complaints and bad service incidents? 

Most complaints are with the system in general. People are frustrated when the 
system delays the acquisition process. Contractors often complain that they are not getting 
paid in a timely manner. The team will assist contractors to get paid by DFAS. Every 
problem is resolved on a case by case basis. 
Question 6: Provide some examples of customer service. 

The innovative contract with "Corporate Express" for office supplies is an example 
of good customer service. The contract saved numerous months of preparation and 
negotiation time. 

Sometimes things don't work out as planned. In these cases it is imperative for the 
contractor and the team members to work out the problem together. Recently F1SC looked 
at contracting out the compressed bottle yard. An analysis of costs determined that 

67 



outsourcing would be more expensive. This may actually be at odds with the desires of the 

customer. 

Question 7: On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 

would you assign to your organization's customer service performance? 

The PCO assigned a grade of 4. There is room for improvement. For example, 
there needs to be improvements in infrastructure such as the phone system. 

F. INTERVIEW WITH THE CONTRACT NEGOTIATOR FOR THE 
FLEET AND INDUSTRIAL SUPPLY CENTER CUSTOMER TEAM 
Question 1: Who are your organization's customers? 

Customers include FISC, the Special Warfare Group, Naval Bases, the Naval 
Hospital at Balboa, Public Works, SIMA, NADEP and other miscellaneous customers as 
assigned. DFAS is an internal customer because they pay our vendors. 
Question 2: What services does your organization provide to customers? 

Services include all aspects of large contracts. This includes helping the customer 
with requirements definition, the statement of work, justification and approvals and the 
actual contract. 
Question 3: How are you designed to offer customer service? 

The large contracts division is organized into four teams. Each team is headed by a 
PCO. A typical team has four negotiators (pre-award), two contract administrators (post- 
award) and one administrative assistant. There are also staff that place delivery orders. 

There is no formal customer service training conducted in the division. There is 
informal training by management regarding team member service expectations. Teams are 
actively involved in training customers to guide them trough the pre-award process. 



68 



Question 4: How do you collect information on your customers? 

The negotiator believed that surveys were conducted on a quarterly basis. In the 
past surveys were sent out with each signed contract. Every time the negotiator receives a 
Form 2276 (procurement request from the customer), she calls the customer to introduce 
herself and provide introductory information to guide the customer through the process. 
Complaints are usually received by telephone or during a survey. Usually customers 
complain about the process and not any particular individual. 
Question 5: How do you resolve complaints and bad service incidents? 

There is no formal process in place to resolve complaints. Each complaint is looked 
at on a case by case basis and handled individually. If the problem is minor and it is legally 
permissible, the problem is usually resolved at the lowest level possible. Customer 
satisfaction is a high priority at FISC San Diego, and they don't want to get a bad report 
card from the customer. 
Question 6: Provide some examples of customer service. 

The team is getting a jump start on the procurement process by getting involved 
early. The team helps the customer with the development of requirements and works with 
the customer to write any required justifications and approvals. The team will often help 
customers gather information on requirements and provide advice based on years of 
experience. There is a wealth of knowledge in the large contracts division. The contract 
with "Corporate Express" for office supplies is an example of acquisition streamlining at 
work. Reducing lead time keeps customers happy. 

In the past the policy was to reject any requirement with errors or that was missing 
information. This is no longer the case. The team goes out of its way to collect the required 
information from the customer and push the procurement on through. The team still needs 
to improve by being more pro-active in educating the customer about the process. 



69 



It is important to realize that the contractor is very much a customer. Many 
contractors, especially small companies, will simply refuse to do business with the 
Government if the process is too cumbersome. For example, during the Gulf War there 
were only two sources of supply for CBR (chemical, biological and radiation) suits. One 
source was a small business that did not want to work with the Government anymore 
because of bad experiences getting paid in a timely manner. 

Question 7: On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

The negotiator assigned a grade of 4. 

G. INTERVIEW WITH THE DIRECTOR, SMALL CONTRACTS 
DIVISION, FLEET AND INDUSTRIAL SUPPLY CENTER SAN DIEGO 
Question 1: Who are your organization's customers? 

The customer base has expanded dramatically in recent times. F1SC San Diego has 
numerous partners such as the Construction Battalion at Port Hueneme; the NADEP; the 
Submarine Base; the Naval Hospital; Morale, Welfare and Recreation; and the Fleet 
Training Center Pacific to name a few. 

There are now numerous personnel that are located outside of the San Diego office. 
This presents a leadership challenge since these personnel are really internal customers and 
have service needs. 
Question 2: What services does your organization provide to customers? 

The small contracts division provides buying services for requirements that are 
$100 thousand or less. There are four designated buyers that concentrate on requirements 
over $25 thousand. The division also provides contract administrative services, technical 
support and training. The division has two naval architects that provide technical assistance 
to ships that are undergoing habitability work. The Corona California site has very 



70 



knowledgeable buyers. They can basically write a statement of work with very little 
assistance from the customer. 

In some cases, the division is holding purchase cards for smaller activities. This 
means that our division will perform most of the administrative functions surrounding the 
use of the card. The purchase card can be utilized for micro-purchases (under $2,500). The 
division is holding the card for some mine sweepers that are based out of Ingleside, Texas. 
Question 3: How are you designed to offer customer service? 

The division is structured into teams. The buyers are multi-faceted. They usually 
start out as procurement technicians and then move up later to be buyers. Buyers are 
assisted by clerks. Procurement technicians are usually prior service and have a good 
understanding of customer requirements. 

If a customer calls with a question, the call first goes to FISC's newly established 
Customer Information Center (CIC). This is a central point of information for the customer 
regarding the status of requirements. CIC monitors incoming calls utilizing a software 
program called "support magic." This program tracks calls and monitors wait times. 

There is some customer service training conducted for supervisors. A recent 
Inspector General inspection noted that the division is customer focused, so the message of 
customer service appears to be getting through. 
Question 4: How do you collect information on your customers? 

Every quarter our top ten customers are surveyed. Information is also collected 
utilizing SALTS, e-mail, telephone and IG surveys. The Director will also visit customers 
to collect information. 
Question 5: How do you resolve complaints and bad service incidents? 

Complaints are resolved at the lowest level possible. If necessary, supervisors get 
involved. Sometimes military customers want to talk only to a military counterpart. 



71 



Question 6: Provide some examples of customer service. 

Good examples include the times when buyers work pro-actively and contact the 
customer early in the process. Most buyers are willing to "walk the gray line" and look for 
reasons to say 4t yes" rather than utilizing the regulations to conveniently say "no." 

On the bad side, the division still experiences times when they lose documents. 
Document distribution can stand some improvement. Other times buyers do not meet the 
expectations of the customer. They may make a promise they can't keep. Buyers need to 
be realistic with customers and set achievable goals such as accurate delivery dates. Some 
buyers need to improve on telephone etiquette. 

Question 7: On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

There is room for improvement for some of our partners, but overall the division is 
doing well. Grade of 4. 

H. INTERVIEW WITH THE SUPERVISOR, SMALL CONTRACTS 
DIVISION, FLEET AND INDUSTRIAL SUPPLY CENTER SAN DIEGO 
Question 1: Who are your organization's customers? 

Customers include the fleet units (ships) at the Naval Station San Diego. There are 
also many shore customers including FISC and the naval hospitals at Balboa and Camp 
Pendleton. The small purchase site at NAS North Island serves the aircraft carriers. 
Question 2: What services does your organization provide to customers? 

The small contracts division procures numerous supplies and services such as 
ADP, habitability services and maintenance contracts. Naval architects assist customers 
with habitability requirements. The architects can enforce contractor performance by 
inspecting work in-progress. They can also help with requirements definition and help draft 
habitability documentation. 

72 



Question 3: How are you designed to offer customer service? 

The division conducts periodic customer service training. There has not been 
training recently though. The division tries to project a positive image. People are reminded 
to smile and to look for ways to say "yes" to the customer. The division prepares 
"procurement tips" that assist the customer in preparing requirements. The division will 
periodically send personnel to the training division within code 100 (customer service) for 
customer service related training. The training division has classes and video training tools. 
The supervisor is not involved in the budget process. 
Question 4: How do you collect information on your customers? 

Surveys are conducted by code 100 and 200. The division will sometimes receive 
"Bravo Zulus" from the fleet (thank you messages). The division also receives letters (both 
good and bad). 
Question 5: How do you resolve complaints and bad service incidents? 

The supervisor never receives complaints concerning individual buyers. Complaints 
are resolved at the lowest level possible, usually the buyer level or at the supervisor level if 
necessary. Sometimes customers are visited, such as the Balboa Naval Hospital. 
Question 6: Provide some examples of customer service. 

Recently a buyer saved a ship over $20 thousand on an order of fruit juice for the 
galley. The buyer actively looked for other sources of supply and identified a cheaper one 
that provided good quality. 

On a bad note, a buyer recently performed a habitability contract modification 
without getting a funding increase from the customer (a ship). The customer was out to sea 
and the buyer did not attempt to communicate with the ship. Usually modifications like this 
turn out fine, but this time it back-fired on the buyer since the customer did not have the 
funds available. 



73 



Question 7: On a scale of 1 to 5 (5 being outstanding, 1 poor), what grade 
would you assign to your organization's customer service performance? 

The small purchase team is doing a good job, grade of 5. This is for small purchase 
greater than $2,500. The micro-purchase division that is now under code 100 (customer 
service) is not this high. 



74 



APPENDIX B 

SURVEY TO MEASURE SERVICE DIMENSIONS 
(Adapted from SERVQUAL)[Ref. 1: pp.181-183] 



Tangibles 

1. FISC SD Regional Contracts has 
modern looking equipment 



2. FISC SD Regional Contracts has 
clean and appealing facilities. 



What voo expect 



Strongly 

Disagree 

1 2 

1 2 



Strongly 
Agree 

4 5 



How we are 



Strongly 
Disagree 
1 2 

1 2 



Strongly 
Agree 

5 



3. FISC SD Regional Contracts has 1 
neat-appearing employees. 

4. FISC SD Regional Contracts utilizes 1 
visually appealing pamphlets and 
memos to assist you with the 
contracting process. 

Reliability 

5. When FISC SD Regional Contracts 1 
promises to do something by a certain 
date, they do so. 

6. When a customer has a problem, 1 

FISC SD Regional Contracts is sincere 
in its effort to solve it. 

7. FISC SD Regional Contracts performs 1 
services right the first time. 



8. FISC SD Regional Contracts provides 
their services at the time promised. 



1 



9. FISC SD Regional Contracts insists on 1 
error free contracts and documentation. 

Responsiveness 

10. FISC SD Regional Contracts 1 
personnel tell the customer exactly 
when services will be performed. 

11. FISC SD Regional Contracts 1 
personnel give prompt service to 
customers. 



12. FISC SD Regional Contracts 
personnel are always willing to 
help customers. 



75 



What yoc expect How we are 

Strongly Strongly Strongly Strongly 

Disagree Agree Disagree Agree 

13. FISC SD Regional Contracts 12345 12345 
personnel are never too busy 

to respond to customer requests. 

Assurance 

14. The behavior of FISC SD 12345 12345 
Regional Contracts personnel 

instills confidence in customers. 

15. FISC SD Regional Contracts 12345 12345 
customers receive value in 

their transactions. 

16. FISC SD Regional Contracts 12345 12345 
personnel are consistently courteous 

with customers. 

17. FISC SD Regional Contracts 12345 12345 
personnel have the knowledge to 

answer customer questions. 

Empathy 

18. FISC SD Regional Contracts 12345 12345 
gives customers individual attention. 

19. FISC SD Regional Contracts 12345 12345 
has operating hours convenient 

to all customers. 

20. FISC SD Regional Contracts 12345 12345 
has personnel that give customers 

personal attention. 

21. FISC SD Regional Contracts has the 12345 12345 
customer's best interests at heart. 

22. FISC SD Regional Contracts 12345 12345 
personnel understand the specific 

needs of their customers. 



76 



SERVICE DIMENSION WEIGHT FACTORS [Ref. 1: p. 184] 

The following five statements represent the five service quality dimensions: 
tangibles, reliability, responsiveness, assurance, and empathy. Respondents are to assign a 
total of 100 points across all the statements based on their relative importance. The most 
important dimension should receive the most points, the second the second largest amount 
etc. until the total of 100 is reached. Weight factors are then calculated by dividing each 
individual score by 100. 

1. Appearance of FISC SD Regional Contract's points 

facilities, equipment, communication materials and people. 

2. FISC SD Regional Contract's ability to perform points 

the promised service dependably and accurately. 

3. FISC SD Regional Contract's willingness to help points 

customers and provide prompt service. 

4. The knowledge and courtesy of FISC SD Regional points 

Contracts personnel and their ability to convey trust 

and confidence. 

5. The caring, individualized attention that FISC SD points 

Regional Contracts provides its customers. 

Total Allocation 100 points 



METRICS [Ref. 1: pp. 176-177] 

For each question 1-22 calculate the difference between the perception score (how 
we are) and the expectation score (what you expect). 

Individual question score = perception score - expectation score 

The next step is to calculate the service quality along each of the five dimensions by 
averaging their individual question score across all customers. For N number of surveys 
the steps are follows: 

1. For each customer add the individual question scores that pertain to each 
dimension (ex. questions 1-4 pertain to tangibles) and divide the sum by the 
number of statements making up the dimension. 

2. Add the quantity obtained in step 1 across all N customers and divide the total by 

N. 

The scores for the five dimensions obtained from the preceding steps can also be summed 
across the total number of customers to develop an unweighted score for the individual 
dimensions. The score is unweighted because there is no consideration for the relative 
preferences for each dimension. 

77 



To determine a weighted score utilize the following steps: 

1. For each customer, compute the average individual question score for each of the 
five dimensions, (same as step one earlier). 

2. For each customer, multiply the individual question score for each dimension 
(from step one) by the service dimension weight factor assigned by the 
customer. 

3. For each customer, add the weighted individual question scores across all five 
dimensions to obtain a combined score. 

4. Add the scores obtained in step three across all N customers and divide by N. 



78 



LIST OF REFERENCES 

1 . Zeithamal, Valarie A., A. Parasuraman, and Leonard L. Berry, Delivering Quality 
Service, The Free Press, 1990 

2. The Alliance for Redesigning Government world wide web site, Implementation of 
the Government Performance and Results Act of 1993 (GPRA). 

3 . Accompanying Report of the National Performance Review, Office of the Vice 
President, September 1993. 

4. Executive Order 12862, Setting Customer Service Standards, Office of the 
President, September 1993. 

5. Gutek, Barbara A., The Dynamics of Service, Jossey-Bass Publishers, 1995. 

6. Barlow, Janelle, and Claus M0ller, A Complaint is a Gift, Using Customer 
Feedback as a Strategic Tool, Berrt-Koehler Publishers, 19% 

7. Harvard Business Review, Command Performance, Harvard Business School 
Publishing, 1994 

8. Tjosvold, Dean, Teamwork for Customers, Jossey-Bass Publishers, 1993 

9. Fromm, Bill, and Len Schlesinger, The Real Heroes of Business, Doubleday, 
1993 

10. USAA Company overview paper. 

1 1 . The Conference Board, Leveraging Front-line Capability, The Conference Board, 
Report Number 1121-95-CH, 1995 

12. The Conference Board, Creating a Customer-Focused Organization, The 
Conference Board, Report Number 1030, 1993 

1 3 . Virgin Atlantic Airways contest flyer. 

14. FISC San Diego top customer listing (large contracts). 

15. FISC San Diego Regional Contracts Department Procurement Management Review 
Briefing, March 1997. 

16. FISC San Diego Climate Survey Analysis, February 1997. 



79 



80 



LIST OF INTERVIEWS 

1 . Interview of February 25, 1997 with Ms. Lizette Blais of the Disney Institute. 

2. Interview of March 3, 1997 with Mr. Jerry Gass of United Services Automobile 
Association. 

3 . Interview of March 7, 1997 with Mr. Jeff Canty of Saturn Corporation. 

4. Interview of March 25, 1997 with the Director, Regional Contracts Department, 
Fleet and Industrial Supply Center San Diego. 

5 . Interview of March 26, 1997 with the Technical Director, Regional Contracts 
Department, Fleet and Industrial Supply Center San Diego. 

6. Interview of March 25, 1997 with the Policy Director, Regional Contracts 
Department, Fleet and Industrial Supply Center San Diego. 

7. Interview of March 25, 1997 with the Procuring Contracting Officer for the 
Defense Finance and Accounting Service customer team. 

8. Interview of March 26, 1997 with the Procuring Contracting Officer for the Fleet 
and Industrial Supply Center customer team. 

9. Interview of March 26, 1997 with the Negotiator for the Fleet and Industrial Supply 
Center customer team. 

10. Interview of March 26, 1997 with the Director of the Small Contracts 
Division, Fleet and Industrial Supply Center San Diego . 

1 1 . Interview of March 26, 1997 with the Supervisor of the Small Contracts Division, 
Fleet and Industrial Supply Center San Diego. 



81 



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