nt of service companies have such programs in the early-1990s, however, the estimate is that 70 percent of service companies employing 500 or more persons will have formal quality control programs by 2000. The most aggressive pursuit of quality in the service industries is expected in financial services and health care, with retailers and higher education providers not far behind.
In the production of services, "the hard part of improving quality . . . is the fleeting nature of the product." The service product cannot be inspected before it is delivered, and it cannot be brought back for repair later. Employees "create" the product, "and then it disappears." It is, thus, important for services providers to understand that it is the employees, not the managers, who are in charge of quality at service companies. Therefore, an effective application of TQM in service companies requires high levels of employee job satisfaction, and greater discretionary authority for employees interacting with customers. High quality in services industries means, among other things, that the organizational employee interacting with a company's customer can solve the customer's problem then and there, as opposed to telling a customer that "We'll get back to you." The effective application of TQM in service, professional, and construction firms requires that great care be exercised in employee selection. Such application also requires that superior training be provided to employees; that effective job-related support services be provided for employees; and that firms retain employees. Service companies must also remember that the well known traditional "MBA programs and accounting systems don't cut in the service game. In a service business, knowledge and information are the raw materials, and the assets are loyal customers and employees. Accounting systems don't measure those. Career paths and compensation schemes fight against t
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