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A critical evaluation of how the effective management of service processes, service people and resource capacity/resource utilization can potentially contribute to the success of a business.
Within the marketplace today an increasingly competitive business environment exists, with organisations currently growing into becoming complex organisms, whereby they evolve to the ever changing consumer demands as well as changes in the industry; factors that have become vital to their survival. Identifying key consumer needs and delivering them via an organisation’s product or service has now taken a crucial role in the infrastructure design of a great number of successful organisations. The role of returning clientele, as well as consumer satisfaction, is deemed of the upmost importance to the long term success of a firm operating in their respective industry. Furthermore, the effective management of service production methods plays a key role in achieving not only a greater amount of customer satisfaction but also in reaching the goal of a healthier working environment for the organisation as a whole. This has led many large firms to finally appreciate the need for effective operations and service management plans as they battle for market dominance.
This essay will set out to critically evaluate the service processes of Virgin Trains as well as its management of personnel and its capacity and utilisation of existing resources. Furthermore, it will seek to identify key areas where the company has succeeded in implementing advantageous managerial schemes whilst also setting out to identify where improvements could be made. The theoretical benefits of the successful management of service processes, personnel and resource capacity and utilisation will be explored and critically analysed. In addition to this, real life costs and benefits will be presented through the use of the case study in order to successfully measure the extent to which the theories are advantageous in terms of their practical applications.
Virgin Trains is a train operating company in the UK which has been active since 1997. Virgin Trains not only operates as a private firm but is also changing the structure and environment their staff operates in by condoning initiatives, ideas and opinions that have been offered by their employees in all positions. In the mid-2000s Virgin Trains launched their vision which amongst other priorities highlighted the need of the organization to increase consumer satisfaction and in the process create a train service that would be “fit for the 21st century (Times100, 2013).
As a result of this Virgin Trains has adopted a de-centralised structure that is based on a regional management policy (Times100, 2013). In effect, this means that each regional station is better equipped to effectively and timely convey the needs of the local population to the rest of the management team. An example of this policy in action can be seen in the Scottish region. In this region special consideration has been given to include both the local population as well as in addition giving focus to special requirements in order to better cater to the needs of the increasing number of tourists visiting the area (Times100, 2013). The structure thus is better linked with the train crew and with the station offices and therefore provides a more effective infrastructure ideal for maximising the quality of service on offer to consumers, achieved by more effectively cutting unnecessary costs and reducing waste (Times100, 2013).
In 2003Tony Collins, then CEO of Virgin Trains, laid out his vision for the company. This vision included the involvement and empowering of staff to take on larger responsibilities and ownership of their everyday performance. This vision is to this day a governing principle in the decision making processes at Virgin Trains and is largely considered the reason for a number of the company’s achievements. The vision set out in 2003 by Tony Collins is a clear reflection of the companies’ inherent forward thinking spirit. This vision described and set out highlighted the values of the company, as well as its additional aims for profitability, openness to new ideas and also to a new way of working. This further included becoming the “most safe, consistent, reliable and profitable of the train operating franchises in a climate that respects different views and people need not be afraid to be open and honest” (Virgin, 2003).
This vision expressed by Collins has since become closely linked, and even a form of workplace guideline, to the company’s working culture as it is a defining behaviour of the employees of the company. Tony Collins set the tone for a transformational style of leadership approach to management, where employees ‘have a say’.
As part of the implementation of Virgin Trains’ vision senior managers have been continually encouraging employees at a local level to voice their ideas and suggestions for a better, more effective, service. This was deemed necessary partly due to the geographical stretch of the organisation, whereby it became imperative and beneficial that local employees, who were better equipped to suggest changes necessary on a more local level, were heard and their opinion and suggestions taken into account. This policy thus also ensures a lower level of disconnection between the firms’ senior management and the consumer. On a practical level this has led to smaller consumer oriented changes. An example of this is the provision of toys in waiting areas for passengers (Times100, 2013).
By allowing their employees high levels of discretion Virgin Trains have been successful in fully realising the untapped potential within their employees, which in turn has greatly helped Virgin Trains improve its overall customer image (Times100, 2013) and as a result helped improve customer satisfaction. It should be noted that increased customer satisfaction is considered by researchers to increase the number of returning consumers (Anderson, 2004). This will result in additional profitability for a firm seeking to establish a long-term relationship with clients. Virgin Trains has recognised that employees working at a direct level with the consumer not only possess the required technical knowledge but also hold the commercial awareness to suggest changes that will in turn better the company’s operations (Times100, 2013). Other employee directed changes examples include the reduction of Virgin Trains’ carbon footprint. The issue arose from employees and has since led to the company now encouraging recycling operations in all its offices and trains (Times100, 2013). Despite the fact that transformational leadership is said to encourage employees to work by creating a more enthusiastic work environment and a more motivated workforce there is a general assumption that charismatic leadership is required to successfully implement this (Phatak,2012). Thus, one limitation that has been identified is that it is possible that the leaders of the organisation may not have the force of character to achieve the desired motivational results (Phatak, 2012)
Furthermore, Virgin Trains has also taken the initiatives of putting the customer first in their considerations and encouraging employees that have contact with the customers (identified by Virgin as front-line employees) to associate and interact with the customer more in order to better understand how to make the customer happy (Times 100, 2013). Managers are thus given a more side-lined role whereby they are tasked with overlooking operations and actively seeking out advise from employees on how to better the business (Times 100, 2013). This also plays a vital role in making employees feel that they are part of an organisation that takes their opinions into consideration and allows them to work in a less-mechanical and standardised manner. In addition to this, Virgin ensures that regular ‘priority meetings’ takes place whereby local staff has the chance to identify problems, discuss potential solutions, share their concerns and discuss what they believe the company’s priorities should be going forward (Times100, 2013). This allows the company to have an increased responsiveness to consumer demands in terms of items that should be included on the train’s menus or additional options that could be offered in terms of tickets. A more effective working relationship is also achieved through the fact that managers often follow up on ideas brought to them by ‘front-line’ employees. These better working relationships in turn lead to less withdrawal behaviour, better team performance and less absenteeism (Bond et al, 2006). This regular feedback from ‘front-line’ employees also serves to help establish a more effective infrastructure to aide in capacity planning and control, thus potentially minimising demand-capacity mismatches. This level of high employee discretion is considered to increase both employee motivation as well as employee loyalty to a firm. However, it has also been argued by critics to lead to a more ‘relaxed’ attitude concerning timeframes and targets, which may serve as a limitation to the reaching of organizational goals and targets, as well as the efficient running of daily operations (Green, 2008). In the case of Virgin Trains, the benefits of a higher level of employee discretion is evident through the changes they have made from a consumer standpoint, which were a result of ‘front-line’ employees’ observations (Times100, 2013). Increasing consumer satisfaction is a crucial component of building long-term relationships with consumers and companies generally find that due to increased consumer satisfaction their rates of returning clientele increase (Phatak, 2012).
Another one of Virgins Trains’ value adding activities involves voluntary three day workshops where employees are taught how to give and receive constructive feedback. Regional teams attend the workshops together as a team and this gives employees at all levels of the management scale an opportunity to meet together and discuss their vision for the company in a relaxed atmosphere (Times100, 2013). Such activities are well suited for building up a ‘level of trust’ in the company and its workings, and empower the employees to offer opinions and be heard. Such activities have a number of benefits, including the clarification of roles in the company, the building of better working relationships between managers and the rest of the employees and motivating staff across the spectrum of Virgin Trains’ operations. Motivated staff usually performs better and will also be more involved in the process of transmitting the consumers’ demands to the upper levels of the company’s management. Well-designed roles within the company and better work relationships lead to better performance, less absenteeism and less turnover intention (Bond et al, 2006). It can also be seen to improve the mental health of employees (Bond,Flaxman & Bunce, 2008) and lead to a better working environment as a whole.
Furthermore, Virgin Trains has been highly successful in involving its employees in performance improvement, leading to a highly motivated, inspired, hard-working labour force which actively seeks to improve the company it works for and has high levels of corporate consciousness. These are telling of Virgin Trains’ philosophies of leading in a transformational manner rather than applying a form of transactional leadership. Virgin Trains have also given a special emphasis to leader-member exchange theory which advocates a more participative approach to management (Dansereau et al, 1975). However, Virgin Trains have also used transactional leadership theories in awarding employees that excel in their field or that have made a difference (Times100, 2013). More specifically official award nights are held where these exceptional employees are awarded and recognised for their services (Virgin, 2013).
There are however certain implications for a company trying to offer a higher variety of options to consumers and making an additional effort to match consumers’ needs (Slack, Chambers & Johnston, 2007). These are often the higher costs associated with providing a more tailored service and the more complex infrastructure and the service processes a firm has to adopt in order to successfully implement these changes. Well defined, possibly impersonal, services benefit from more standardised costs, a more routine and easier to apply routine and lower unit costs. Often, the associated cost both in terms of financial but also in terms of time spent implementing structural changes in the service processes may work unfavourably for a company (Slack, Chambers & Johnston, 2007). Another possible negative effect could be inconsistency in the delivery of the service or product (Slack, Chambers & Johnston, 2007).
Employee empowerment however does not always work in uniformity and results may vary according to the employee’s personality and the nature of the firm (Clark, 1999). High levels of employee discretion may be more useful in industries which require a degree of creativity such as marketing and advertising whereas mass production businesses such as fast-food restaurants may benefit from lower levels of employee discretion (Clark, 1999). Virgin Trains, for example, has to find a beneficial balance between employees that would benefit from higher levels of discretion (i.e. employees that are in direct contact with the customer) and those which will benefit the company by working in a less adaptive manner, such as the drivers of the trains. Clark (1999) has also stated that it is possible for staff to have both compliant and adaptive roles in a firm.
In conclusion, Virgin Trains has seemingly managed to implement a correct management plan of its service processes and this has translated into the running of a successful business model. Virgin Trains has invested in the talent and skills of its staff’s knowledge and commercial awareness of the consumer to better its service and its offerings resulting in a high quality service which gives it a competitive advantage over other companies. Modern business practices and the appropriate utilisation of its key personnel and staff in the decision making processes of the firm have led to increased customer satisfaction rates and an increase in return clientele. Furthermore, it is now a lean organisation which aims to and achieves in reducing waste and is highly responsive to changing consumer demands. De-centralising the structure of management has allowed for Virgin Trains to successfully grow through a better understanding of the local consumers’ individual needs and preferences. Well-designed roles in the firm allow for high levels of employee discretion without sacrificing levels of returns and transformational leadership has allowed Virgin Trains to keep their employees both motivated and brand-loyal. Through a variety of value adding activities the company has successfully managed to better work relationships between employees and implement a more effective change management plan. Workers, managers and the directors of the firm have been brought closer together by the company’s initiatives and seem to be benefitting from the resulting increase in meeting consumers’ demands more efficiently.
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Virgin Trains has been in operation since 1997 in the UK market by controlling the Inter-City West Coast franchise. The company is mainly known for running high-speed, state of the art trains and is known for providing a reliable service. It currently runs 333 trains and transports over 62,000 passengers every day. It is a firm that has repeatedly stated in its mission its desire for better operational management) and has shown its understanding of its importance for the future of the franchise. Trains, up until 1993, were run by the public sector, under the British Rail, where the business culture was one where decisions came from the top and employees were to implement them without question, which has since changed (Virgin 2013)