TOWARDS SERVICE EXCELLENCE IN LOCAL COUNCILS: A MARKET-ORIENTED APPROACH

ASSOC. PROF. DR. JAMIL HAMALI
DR. VOON BOO HO
DR. NAGARAJAH LEE
Universiti Teknologi MARA Sarawak
Kampus Kota Samarahan Sarawak

INTRODUCTION

Service quality is one of the key domains for organisational excellence. It has also been recognised as an effective differentiation tool for achieving competitive advantage and financial success (e.g. Zeithaml and Bitner, 2000). Nevertheless, service is not something that everyone can do well and only the people or organisations with a deeply ingrained service orientation will probably be able to develop the service reputation that is hard to emulate (Rahman, 2004). As such, there is always a continual quest for a strategy or approach to advance service quality. Of which, the marketing concept has offered numerous strategic insights.              

The marketing concept stresses the importance of understanding customer needs and wants as well as assessing organisational performance from the customer viewpoint. As such, there are scholars believed that marketing is about the whole business seen from the customer’s vantage (e.g. Drucker, 1954; Webb et al., 2000). The role of customer perception is also stressed in measuring and managing service quality (e.g. Parasuraman et al., 1985, 1988). In the context of local governments like local councils, there are various types of stakeholders or customers that they need to serve wholeheartedly and the voices of these groups of people or organisations need to be well understood, and responded accordingly, competently, consistently and continuously. The market orientation theories of Narver and Slater (1990), Kohli and Jaworski (1990) and Deshpandé, Farley and Webster (1993) have indicated these imperatives for advancing organisational performance. Delivering excellent service that can maximise their satisfaction is required. The organisational culture and behaviours for the achievement of service excellence is imperative. In fact the Malaysian government has stressed the importance and management of civil service quality and there were various public administration circulars (PKPAs) since 1991 adressing this (see Appendix A). This includes the service quality advancement for local councils. This paper contributes towards a better understanding of market-oriented service culture and behaviours for local councils towards service excellence. Two local councils in Sarawak are referred and the following section briefly provides the background information on the two councils.

Kuching City North Council (DBKU) 

Kuching, the capital of Sarawak, was awarded city status on 1^st August 1988 and it was administered by two city councils namely Kuching City North Council (DBKU) and Kuching City South Council (MBKS). With over 1000 employees (full- and part-time) and a Mayor, DBKU is one of the largest and fastest growing local councils in Malaysia. Since its inception, DBKU has tried its best to serve the multi-cultural citizens (i.e. Malays, Chinese, Bidayuh, Melanau, Iban and others) and make Kuching a clean and beautiful city. The council provides a wide range of services (as found in DBKU’s web site dated 30^th May 2006) in relations to the items listed below:

1.      Amphitheatre, auditorium, cate museum and library;

2.      Assessment rates collection and other related payments;

3.      Building alteration, control, enforcement and plans;

4.      City cleaning, sewerage and pollution control, dogs, garbage collection, etc;

5.      Parks and recreation, landscaping services, potted plant rental services, etc;

6.      Environmental health enforcement;

7.      Food quality control and hygiene;

8.      Related licence and permit issuance (e.g. hawkers, hotels, hair saloon);

9.      Pest control, recycling, public toilets services, solid waste management, etc.;

10.  Roads and pavement, roadwork, river cleaning;

11.  Street cleaning, street lighting, traffic lights, parking services, and others.

The Council’s vision is ‘An Attractive, Cultured, Clean and Safe City’ and its mission is ‘To enhance the quality of life of our community through excellent delivery of services’.   

Padawan Municipal Council (MPP) 

Padawan Municipal Council (formerly known as Kuching Rural District Council) was formed in 1956 under the provision of the Local Authority Ordinance 1948, Chapter 117 (MPP’s web site dated 31th May 2006). Its area of jurisdiction, land size of 1,431.82 sq kilometers with more than 300,000 people, is on the peripheral of Kuching City Councils. Its main emphasis, under the leadership of a Chairman, is on infrastuctural development and provision of quality services to the rate payers. The fast growing housing, commercial and industrial development hopes to complement the growth and development of Garden and Healthy City of Kuching. Environment is protected and the quality of life of the people is continuously emphasized and upgraded.   

The services of MPP are often benchmarked against that of the nearby conterparts and MPP also works with the public and communities to enhance service quality. Currently, there are 25 councillors. The Council’s vision is ‘To be a leading model local authority in the State by providing excellent service through the total and active participation of a dedicated, well-dedicated and committed workforce’. Its mission is ‘to enhance and sustain a good quality of life of customers by providing, maintaining and upgrading infrastructure, amenities, facilities and rendering efficient, reliable and timely services. The council has six divisions, namely the Administrative, Engineering, Treasury, Public Health and Services, rating and Valuation, and Enforcement Division.      

MARKET ORIENTATION AND LOCAL COUNCILS 

Marketing is central for business administration and market orientation is about the implementation of the marketing concept. Market orientation emphasises customer orientation, integrated marketing actions and profitability (Barksdale and Darden 1971, Bell and Emory 1971, Webster 1988). It has been conceptualized as consisting of three core activities - intelligence generation, dissemination and responsiveness (Kohli and Jaworski 1990, Kohli et al., 1993) and three behavioural components – customer orientation, competitor orientation and inter-functional coordination (Narver and Slater 1990). The impacts of market orientation on organizational performance have been extensively researched (e.g. Narver and Slater 1990; Deshpandé et al. 1993; Deng and Dart 1994; Pelham and Wilson 1996; Pitt et al., 1996; Gray et al., 1998; Pulendran et al., 2000; Zhou et al., 2005; Ho and Tsai, 2006)). Kirca et al. (2005) concluded from a meta-analysis that market orientation positively influence organisations’ profits, sales, market share, perceived quality, customer loyalty, customer satisfaction, innovativeness, organizational commitment, team spirit and job satisfaction. Its relevance to non-profit organsitions like public organisations has also been recognised (Cervera et al., 2001; Kara et al., 2004; Padanyi and Gainer, 2004; Voon, 2005).    

Market orientation should not be confused with marketing orientation (Slater and Narver, 1998). The latter tends to be more functional in nature, especially when it is being perceived as marketing-oriented. Its scope can be perceived as narrower. On the other hand, market orientation is more strategic in nature and encompases the culture and behaviour or even belief (Deshpandé and Farley, 1998) for serving the target market and this inevitably needs the various marketing functions. The term ‘market’ reminds us of the presence of customers, employees, public, competitors, environment and so forth, which facilitate the required exchanges and value creations. Thus, market orientation is supposed to be more comprehensively addressing the service to the various constituents or stakeholders (Greenley et al., 2004), through the instrumentality of marketing concept and functions. It aims to be about a strategic market management. In the context of local councils, the market is diversed and the constituents are individual and organisational customers, public at large or community, employees, government agencies, competitive counterparts and so forth. Their services cater for their targetted market segments. In multicultural settings like Sarawakia, these segments especially the individual customers, come with their different background and culture that need to be well understood and responded to. As such, a market-oriented way of serving them is deemed necessary.           

Market orientation is central for service organisations. Service management experts suggest that the breakthrough service organisations consistently meet or exceed customer needs and expectations (e.g. Heskett et al., 1990). Besides, they have the skillful organization and integration of marketing, operations and human resource management. Achieving maximised customer and service satisfaction is their key objectives. For this, an organisational service orientation that adapts the market orientation theory can be instrumental (Lytle, 1994; and Lytle et al., 1998).  The service-driven market orientation (SERVMO) model of Voon (2005) has further suggested for a service-driven approach that strategically adds value to the present market orientation theory in terms of service quality advancement. SERVMO can be potentially appropriate to advance the service quality of service organisations like local councils, towards service excellence. Its holistic nature of SERVMO is demonstrated through the inclusion of customer orientation, competitor orientation, interfunctional orientation, performance orientation, long-term orientation and employee orientation which are imperative for a breakthrough service. Adapting this model, the following section discusses the proposed conceptual framework (Figure 1) for service excellence in local councils. The shaded part of the framework looks like ‘C’ as it is for the Councils. Incorporating the performance measurement and management concept of Kaplan and Norton (1996), these dimensions are called the Key Performance Indicators (KPIs). These are the ‘soft’ measures which most probably will be measured through questionnaire survey. Latter in the discussions and implications, the various proposed Performance Indicators (PIs) are also discussed. 

Customer Orientation 

Excellent organizations are close to customers and in fact the customers intrude into every nook and cranny of their business functions (Peters and Waterman, 1982). Service organizations should conduct their business on the basis of customer needs satisfaction (Parasuraman et al., 1983). For local councils, both expressed and latent needs and wants of customers’ ought to be well understood and responded to so as to attain the desired level of council service quality, satisfaction and loyalty. Strictly speaking, it could mean that all activities of the customer-oriented organization should be judged against the litmus test of customer needs (Deng and Dart, 1994). Deshpandé et al. (1993) emphasised customer orientation as central to their market orientation construct. As captured in the focus groups discussions in this study, customer orientation in local councils involves delivery of quality service, having good employee-customer relationship as well as showing care and respect for customers and community served. 

Competitor Orientation. 

Local councils should have a good understanding of the capabilities of competitors, both current and potential, in serving the target markets. The behavioural component should include intelligence generation, dissemination and responsiveness to intelligence regarding competitors’ actions (Kohli et. al. 1993). Rational service providers must understand their competitors, opponents or counterparts well in order to create and deliver relatively better or superior value for their customers. The customers and community are expecting the best, even world-class standards of service practices from the local council and all its employees. Pricing-related issues like rates have to be competitive and the council concerned is required to be comparable or better than the competitors or counterparts.

Figure 1: Conceptual Framework for Service Excellence in Local Councils

Inter-functional Coordination 

An organization is able to effectively create superior value and satisfaction for customers only when the entire organization coordinates its resources and efforts (Shapiro 1988, Narver and Slater 1990). The various functions need to be integrated in order for an organization to successfully achieve its goals. Corporate unity is the key. This is equally relevant in local councils where all staff and departments need to work together to understand and deliver quality council services to the various constituents. Moreso when it comes to serving the multi-cultural Sarawakian community with diversed background and needs. Effective inter-functional coordination requires effective communication and sharing of ideas, knowledge and resources from all levels. Good teamwork, relationships and cooperation among the staff are essential. Besides, the leaders concerned are instrumental promoting inter-departmental communication and social interaction (Kohli and Jaworski 1990; Jaworski and Kohli 1993; Harris and Piercy 1999). The role of top management is especially important because they need to take the lead to establish clear values and beliefs as well as promote integrated planning and communication (Webster 1988). Informal and decentralized organisational structures also help to facilitate inter-functional integration by improving the flow of communication and information (Avlonitis and Gounaris 1999).

A local council is just a part of the whole body of local governments that should play its functions well, in tandem with the whole body. As such, good coordination with external organisations is necessary for an effective and efficient service delivery system. As a government agency, the local council needs to also work hand-in-hand with other government agencies and people representatives to know and respond to customer needs, so as to excellently serve the targetted customers and community. 

Long-term Focus 

A futuristic service performance management is crucial for achieving and sustaining service excellence. The implementation of market orientation is based upon the objective of long-term survival and performance improvement (Siu and Wilson 1998). A local council therefore needs to continuously develop its human resources as well as its infrastructure and quality of services. The public image of a local council is an important aspect affecting the ability to prosper in the long run. The implication is that local council administrators, managers and councilors should always consider the impact of their strategies and actions on the overall corporate image of the council. Furthermore, the core business of local councils is unique in that it has a long-term impact on the future of the community served. For example, public health services can affect the quality of life of the next generations. Therefore, long-term orientation in local councils also means having a sense of responsibility and concern for the well being of customers and community by ensuring that services provided are relevant to the present and future generations of the targetted community.

Employee Orientation. 

Many people will tend to agree that service excellence starts from within. Employees or the internal customers of organizations play an important role in service management (e.g. Schneider and Bowen, 1993; Lings 2004).  This is even more profound in services-oriented organizations like local councils. Grönroos (1978) argued that almost every employee belongs to the “marketing department” whereby practically every person or employee in a service organization is engaged to communicate in serving the customers. This is necessary ass service itself is intangible, employees are responsible for transforming the service into a concrete offering and thus they are called the bearers of the service (Grönroos, 1978). As such, the quality of employee-customer interactions is crucial in determining favourable service encounters and creating satisfying experiences for valued customers (Schneider and Bowen, 1993; Bitner et al., 1994). Experienced, well-trained, satisfied, and motivated employees are important to ensure quality service delivery. Since the customer-contact employees deal with customers very frequently, they must be trained and educated (Crosby, 1996). An employee-oriented council will reward and motivate its staff for better productivity in service production and delivery. Besides, empowering the staff appropriately is also a critical element for delivering excellent service.

Performance/Financial Orientation.

Service providers are expected to be achievement-oriented and strive for excellent performance to compete effectively in serving the customers of the target market. The spirit of excellence is crucial for achieving service excellence (Voon and Kueh, 2004). It should permeate all other dimensions discussed earlier and ‘police’ the performance in the customer, competitor, inter-functional, employee and long-term perespectives. In the case of local councils, service excellence manifest, though unexhaustively, the high standard of council services, prudent financial management, excellent market reputation, use of state-of-the art technology to facilitate service delivery, promotion and provision of quality of life services, adequate facilities that are well-maintained and regularly upgraded, innovative service systems and management.  It also involves a genuine concern for community’s welfare and the desire for continuous improvement in both societal and administrative aspects. Performance orientation therefore also includes the ability to deliver a high level of service quality in terms of being prompt, responsive, efficient, courteous, attentive and reliable. Council staff must be committed to excellent service performance and be proactive in identifying and satisfying the needs and wants of the target stakeholders. Long-term oriented investments on resources could be unavoidable in order to improve service. Prudent financial management should ultimately aims for a self-sufficient council. As such, cost, collection and revenue generation effectiveness and prudent budgetting are essential.  

The council’s philosophy, vision and mission are crucial for spearheading and continuously guiding the council and staff towards service excllence. This leadership-centred component of the model will serve as a ‘light-house’ for the journey. Kohli and Jaworski (1990) and Kirca et al. (2005) have suggested the critical need of top management support in developing market orientation of organisations. Service leadership is necessary for shaping the market-oriented service culture of local councils. It continuously reminds the staff organisational-wide to be market-oriented in serving the targetted customers and community.       

THE QUALITATIVE CASE STUDIES 

Two high performance councils in Sarawak were selected for a case-study style qualitative research. This exploratory research aims to confirm the existing a priori market orientation dimensions (based on SERVMO Model) as well as to discover the relevant items for market orientation in local councils. Two focus groups were conducted at two different local councils in Kuching (Kuching City North Council and Padawan Municipal Council) to identify contextual specific dimensions and their items. This exploratory technique was used as it could allow respondents to express their perceptions and experiences freely. This method is believed to be able to capture experiences and opinions from the heads of departments and employees and to be effective in gathering actual happenings on service performance management. This is necessary because the market orientation theory emphasizes organization-wide implementation of the marketing concept.  Real stories and instances told by them are useful for understanding the service culture and practices. The organizational stories could help to tap the unconscious, qualitative phenomena that pervade the organization (Mitroff and Kilmann, 1975). Service researchers (Bitner et al. 1990, 1994) used stories told by individuals to understand the favourable and unfavourable service behaviours.

In the focus groups, open-ended questions related to service performance management were used to probe and solicit for detailed explanation and answers. Some of questions posed were ‘What are the core services of the Council?’, ‘How does the Council know how well it has served the customers and community?’ and ‘How can the Council improve its quality of service?’ and so forth. The documented contents of these focus groups were carefully read and sorted according to pre-determined market orientation of SERVMO (Voon, 2005). In this content analysis, interrater reliability of at least 80% was achieved (Bitner, Booms and Mohr, 1990; Kasserjian 1977). Findings from the discussins have generated specific operational details of each dimension, thus providing strategic insights and practical guidelines for practitioners in local councils. Table 1 shows the various exploratory findings from the focus groups as well as from reliable secondary data sources (e.g. the published Council’s web site).

TABLE 1:  Market Orientation Dimensions and Items for Local Councils

MANAGERIAL IMPLICATIONS

 The findings presented in this paper, although exploratory and subject to further refinement, show that an employee-perceived market orientation identifies the various critical values and behaviours necessary in serving customers in a local councils setting. Customer orientation includes high commitment for customer service, sufficient understanding of customer needs and satisfaction as well as delivering quality customer service. On the other hand, a competitor orientation comprises knowledge of competitors, responsiveness to competitors, strategic customer targeting, as well as a passion for competitive service advantage. The local councils need to know themselves and their competitors well in order to respond accordingly and strategically to gain the service advantage. Nevertheless, customer and competitor-oriented behaviours need to be supported by other employees and functions organisation-wide in order to yield the desired results. The customers’ perceptions of these practices and culture will also be useful as they can be the true ‘judges’ for quality and service excellence.

            Besides, local councils need to be inter-functionally oriented or inter-functionally coordinated. This requires coordination and communication across the different departments. Performance orientation, long-term orientation and employee orientation are also found to be integral parts of market orientation for service excellence. The inclusion of performance orientation indicates that the pursuit of the marketing concept needs to be executed with excellence, moving away from mere lip service. Furthermore, a market-oriented council, from the viewpoint of customers, should be futuristic and emphasize continuous improvement and consistency in service. Employee orientation is also imperative as it is a critical element in the service value-chain.

            Above all, there should be a spirit of excellence in the local councils. All the employees must ‘walk the talk’ and not merely a ‘lip service’. The Prime Minister of Malaysia, Datuk Seri Abdullah Ahamd Bedawi (2005), had reminded that all Malaysians must have the ‘towering spirit’. The performance/financial orientation discussed and operationalised in this paper aims to address that. Besides, the council’s philosophy, vision and mission are crucial as ‘prime-mover’ and ‘supporter’ for the market-oriented journey towards excellence. Therefore, these should not be simply and conveniently changed, though there are organisations that have the tendency of doing so. Any unavoidable need of change must be thoroughly researched and examined with organisational-wide agreement and support. Organisational leaders in the local councils must remember that their employees need to be continuously led and reminded about the council’s core businesses as well as the call for service excellence. Hence, competent service leadership coupled with effective communications is imperative for the sucsess.

            The proposed concept framework and the focus groups findings on the various items in the respective dimesions, as presented in this paper, have pathed way for the development of service excellence scorecard for local councils in a market-oriented way. The balanced scorecard approach of Kaplan and Norton (1996) can be expanded into more perspectives to include the various suggested ‘soft’ measures derived from the dimesions of the service-driven market orientation (Voon, 2005). The market orientation dimesions can be the key performance indicators (KPIs) whereas the measurable attitudinal and behavioral items and/or others related ‘soft’ and ‘hard’ measures within the respective dimensions the performance indicators (PIs), as shown in Figure 2.  

Figure 2:  The Proposed Service Excellence Scorecard for Local Councils

            Practically, the measurement aspects need to be addressed. Service performance managers would always like to know how exactly the measurement can be done. Service excellence can be operationalised by the achievement of maximised service quality and customer satisfaction through survey and the widely used SERVQUAL instrument can be adapted, with proper permission, for objective measurement. Statiscally, the average score for the various dimensions should be at least significantly higher (at α = 0.05) than 5.5 of the 7-point Likert scale used for the measures. Nevertheless, the management team of the local councils may resort to other measures which they believe can be more relevant to their situations.  

CONCLUSION

This paper has explored the dimensions and items of a market-oriented service performance management framework for local councils towards service excellence through two focus groups with two selected local councils in Sarawak and some reliable secondary data available. It potentially serves as a useful supplement to the existing literature on market orientation that has been largely derived based upon survey-based quantitative analyses. Moreover, appropriate items were discovered to operationalise each of the market orientation dimensions within the context of local councils. Most importantly, the spirit of service excellence is promoted in this paper. Further research could focus on translating these dimensions and items thorugh sructured questionnaire survey to measure the level of the customer- and employee-perceived market orientation and empirically test the required correlations and causal relationships. It would also be useful to investigate whether similar dimensions and items can be applicable to local councils in other contexts and cultures in and outside Sarawak.