CHAPTER 5

Service Staffing in Tourism and Hospitality Industry

Introduction
This chapter discusses the process of selecting and screening employees that would fit the
requirements of the hospitality organization. Further, techniques about training, developing,
empowering, and equipping talents to fit into the culture of the organization shall be discussed as
well. This chapter explains the role of employee empowerment and how it can affect the services
provided by hospitality organizations. Moreover, this part of the book imparts the importance of
having the right mindset in the organization and how culture influences employee productivity in
the organization
Learning objectives at the end of this chapter, the students should be able
 to understand the process of recruiting employees and be familiar with the approaches
and techniques of interview and screening of job candidates
 understand the training and development techniques used by the tourism and hospitality
organizations;
 know how tourism and hospitality employees are trained to provide outstanding guest
services; know why hospitality organizations value their employees through
empowerment; and
 understand the importance of managing and equipping employees of the right mindset as
being part of the organization.

Reality Bites
Pacifico San Pedro has recently retired from Maginhawa hotel, a hotel known to provide
the best service in an island province. Before retirement, he served as the assistant general
manager of the hotel for 15 years. Mr. San Pedro started working in the hotel as a bell boy and
worked his way up the corporate ladder of the hotel. All his professional life he spent with the
hotel and he was awarded and recognized in different capacities as a model employee of the
organization. He was also a recipient of the Kaagapay Awards, a national recognition for
outstanding professionals in the hospitality and tourism industry.
Maginhawa Hotel is the choice hotel among vacation seekers in the holiday island of
Bolawan. The hotel prides itself of providing service the "maginhawa" way. Guests are treated
and pampered as royalties starting from the moment they set foot on the island up to the time
they take off from the destination. Guests are assigned personal butlers all throughout their stay
and are given the privacy as they desire. The hotel anticipates the needs and wants of the guests
by studying the profile and preparing for what they may possibly ask once they arrive.
 The of Mr. San Pedro has left a void that is hard to fill. His style of work endeared him to
all employees from all levels of the organization. His work experience also gave him insights
about the culture and experiences of the different units in the organization. These gave him
inputs on how to run the operations of the organization. The spot he left has a lot of possible
candidates being considered by the organization. External applicants are aplenty coming from
known hotels and are equipped with significant experiences to competently fill in the spot.
Internal candidates also abound with different work experiences and competencies that are also
qualified to take over the position.
Given the choices, what would be the qualifications to consider for the best candidate?
What are the processes to screen and select the applicants? What would be the factors to consider
when making decisions to hire for a position?
Content
Every hospitality organization, whether it is a hotel, restaurant, resort, lodging house,
spa, amusement park and the likes, would want be known as a business that provides the best
quality service and uniqueness. These can only be resized the services that they provide are
acceptable to the guests or customers. Since customer expectations differ from one to the other,
the organization an anticipated to provide the best services that they can to avoid any unhappy
guests. Any guests dissatisfied with the services that an organization renders would not only be a
lost opportunity to earn profit, but also a nonbeliever that would spread displeasure in the
organization to other potential guests. Repercussions resulting from this may be immeasurable
and can affect the operation of the organization.
Among service-oriented organizations a vital role is played by the staff in rendering the
services that the organization promises to provide among expectant guests. Unlike in the
manufacturing industry where success is mostly measured by the quality of the product
produced, the product in the service industry starts and ends with the interaction of guests and
staff. A successful service is measured starting from initial salutation to the guests when they
inquired about the company and ends after a staff member has called and thanked them for
choosing the organization. These could only be provided by competent and dedicated staff that
are willing to go the extra mile for the ultimate guest experience.
Staffing for Service
Whenever there is a need for workforce requirement or there would be a position to fill in
the department, it is often referred to the human resource department or to the talent acquisition
division of the organization to find a suitable person for the spot. This is the correct and usual
process. But it is also important for a person, as a future manager, to study and understand this
process to facilitate efficiency and accuracy of finding the right person for the position in his/her
team or department.
When hiring employees for the department, it is best to look first at the requirements
needed for the position rather than looking at the applicants. Short- sighted managers would
often look at applicants' credentials and experiences before even considering if the tasks and
responsibilities required of the employee fit the applicant. Similar to sports, coaches would have
a long-term plan for their teams and the character these should embody. A defense-oriented
coach would not be excited to acquire a one-dimensional scoring champion since the player
would not fit in his/her time. Managers should be able to carefully study the needs of their
department. To achieve the plan or objective of the department, the manager must first have an
inventory of the available talents in the department. After which, analyze the workforce needs
that would complete the existing in order to meet the goals of the department. Consider a
systematic and exhaustive assessment of the employee needs of the organization in order to
identify the needed competencies and specific job requirements of the organization. Further,
managers should always consider forming a team for a long run to avoid spending time of doing
the process repeatedly. The repetitious exercise would be resource-consuming and
counterproductive.
Tourism and hospitality-oriented organizations look for other factors aside from the usual
credentials required to land a job, such as educational attainment, physical features, and skills.
Since the employees are often interacting with guests, organizations seek employers with the
abilities that could provide the best guest services. Applicants should have the right attitude and
character, such as friendliness grace under pressure, integrity, and going the extra mile to be
strongly considered by companies. Many applicants have the right skills and credentials but very
few possess the right attitude for the job.
Many organizations, when hiring new employees, set their criteria based on the model
employees of the organization. Employees who perform well are appreciated and loved by the
organization, and as much as possible, the organization would desire to have many of this kind of
employees. The organization then looks for new employees who would at least approximate the
skills, character, values, personality and abilities of their finest employees. This style would
somehow guarantee that the new employee that the organization is hiring would perform well in
the organization.
In terms of recruitment, it is suggested that the values of the brand are clearly marketed
or advertised to internal customers right from the beginning of the hiring process. This would
start with very clearly written job descriptions to address job descriptions to address job-specific
requirements, and then more broadly to familiarize potential employees with the values and
mission of the organization (Kim, Kim, Kim, & Kruesi, 2019).
A common practice of organizations today when looking for new employees is to
generate a profile matching the specific requirements of a particular position together with the
abilities and talent of their top workers. The profile that wat created would become the basis
when looking for new members of the team.
In the service organization, specifically in the hospitality and tourism, it is a must that
front liners must possess extraordinary traits that are not common among all employees of the
organization. These traits should be embodied by the employees since they are always in
constant contact with the guests. The different traits that should be possessed by the frontline
employees include: service-oriented, empathic, enthusiastic, responsible, polite, considerate,
conscientious, and customer-focused.
After defining the required profile of the employee, the organization can now proceed to
recruitment. There are several ways to fill the needs for the positions, the organization may look
for new employees outside of the organization or from within. Entry-level positions are sourced
from outside of the organization. If the position to be filled is above entry-level, the organization
often looks for qualified employees within before entertaining applications from outside
Internal Hiring
Many organizations favor internal hiring because they see a lot of advantages more than
hiring from outside of the organization. Although hiring from within is not the only solution or
foolproof strategy in staffing the departments, the obvious benefits outweigh the others.
Information about the Applicant
Data about applicants from within the organization can be easily accessed and are more
accurate compared to the information submitted by an external applicant. Since internal
applicants have been with the organization, the previous evaluations about the employee's
performance, work ethics, habits, strengths, and weaknesses are recorded or observed. The
limited information from an external candidate may result in hiring mistakes. There are some
external applicants that are good on "paper" or curriculum vitae, others are excellent during
interviews; and some are simply impressive in their looks but eventually lead to wrong decisions.
Sometimes, these applicants do not live up to what is expected of them. Maybe a factor to
consider favorable to internal applicants is that they show the desire to stay and remain loyal to
the organization. Their desire to improve and move up to the hierarchy can be an indication of
their dedication to the organization as well.
Fairness of the Company
Internal hiring for positions with qualified applicants from within the organization is an
objective strategy that would be received well by the employees. Hospitality organizations are
rich in employees who have varied backgrounds and highly competent in terms of training and
education. these employees would somehow feel unfair if the positions they applied for are given
to an outsider despite their efforts and hard work to help the organization succeed.
Knowledge and Experience Within the Organization
Organizations favor hiring from within because some believe that employees who have
been with the organization are already familiar with the organization's functions, values, and
culture. Organizations favor promoting employees who have started from entry-level position
moving them up the corporate ladder. This strategy may look good for the tourism and
hospitality organizations but there are two sides from the supply side of labor. To non college
graduates, this is an opportunity for them to have a higher position in the organization and better
compensation. but to degree holder applicants, they would either settle for a position lower than
what they actually deserve or find a job in other industries.
 Other organizations also believe that if an incoming manager or supervisor will be
coming from outside of the organization, there is a big question of properly supervising someone
assigned to a particular task without having the actual experience of doing the task. In the
hospitality industry, in order to manage guest services well, a manager must know how it is like
to serve a guest, or must have experienced solving issues and concerns on the spot and resolving
guest complaints right at the moment. The point is promoting an employee would guarantee that
his/her experiences and knowledge of the organization make him/her a better choice to keep the
organization working.
Organizational Culture and Values
Employees chosen for a position that were hired internally would have a better time in
adjusting to the organization's culture and values. Internal employees are already familiar with
the corporate values and need no further training. The organization's culture is expected to be
embodied by the employees as well. With this assumption, internal applicants need less time
adjusting to their new positions since they are expected to know how to get things done and what
they are supposed to deliver.
Reduce Costs
Hiring employees entails a lot of costs in different areas. these include advertising the
vacancy to major dailies or television, workforce and logistic expenses during exams and
interviews, some organizations incur travel expenses for applicants and human resource
personnel, training, and orientation among others. When an organization hires from within, these
costs could be minimized. Costs in advertising would be eliminated and the human resource
department could just disseminate a memo for a job position internally. Tasks of evaluating
applicants would be focused on internal candidates, reducing time for interview and
examinations. The familiarity of candidates to the position and its responsibility would require
less training and orientation; other candidates may have had actual experiences in performing the
task before.
Moreover, qualified external candidate when already employed has a high tendency to
leave or cause employee turnover. Employee turnover may be caused by different factors, such
as time schedule, quality of work, organizational culture, and personal issues. With internal
hiring the organization tends to get employees who have proven their loyalty and have the
interest to improve with the organization. This would also create an impression among
employees that the organization recognizes their dedication and rewards them for being loyal.
External Hiring
Employees and organizations often favor internal hiring more than external. However,
there are situations where candidates should be sourced externally. Still, hiring employees from
outside of the organization is an option that every organization can choose in order to improve its
operations. As there are advantages when hiring from within, there are also very good reasons to
take in employees from outside of the organization.
Paradigm Shift and New Perspectives
 Some organizations, when they believe that the organization is not realizing its full
potential, hire people that would serve as catalysts for change. This is often evident among
positions that entail specific skills and important responsibilities. There are tendencies that
employees tend to familiarize themselves too much with how things are done in the organization
that they forget they must ensure also that the organization must reach a level of competitiveness
and efficiency as compared to its competitors. With an outsider's point of view, the better way of
doing things can be realized and applied in the organization. A fresh perspective may set the tone
on how to improve the processes of the organization, or in extreme cases, it could determine if
there is a need for a re-organization. Initially, this strategy may be costly. since it involves
offering attractive packages for blue chip candidates and trainings for the new hires, but the
benefits gained may outweigh the cost in the future.
The desired culture of an organization may not always be the existing culture among
employees. If a change in organizational culture is required or the organization desires to infuse a
different mindset for its managers, then hiring from within should be taken for a second look.
Instituting changes in the organization would require good managers and leaders to steer the
organization toward the objective. If the talent to implement these desired changes is not present
in the organization, the organization has a good reason to hire candidates from the outside. There
are instances when organizations promote from within, these organizations often promote good
worker level employees or the so called line-level employees into supervisors or managers, and
eventually, some do not make good managers.
Education and Experience
This strategy directly contradicts the idea "start your way up from the bottom and climb
up to the top." With the rapid pace of technological innovations applied to the tourism industry,
the demand for highly skilled and well-experienced worker makes organizations hire from
outside the organization. It would take time and higher costs for organizations to train and
develop employees from within as compared to hiring employees that are already trained and
proficient with the job required.
Diversity of Workforce
Service-oriented organizations prefer diversity in the workforce since this provides a
wider perspective in doing business. The diversity of employees equips the organization in
understanding the varied culture of guests, preparing for the required services, and servicing the
guests according to their preferences. Both higher level and lower level positions seek candidates
with diverse backgrounds in order to have a better workforce. Organizations gain competitive
advantage when they seek out the best employees regardless of ethnicity, cultural background,
faith, and color. Further, the labor force is represented by types that include single parents,
children with elderly responsibilities, dual-career employees, differently abled persons, and
members of the LGBT community.
Approaches to Hiring External Employees
 Organizations that consider hiring employees outside of the organization can choose
different options to promote the vacancies in their organization. These options can be traditional
in nature or may utilize state of the art methods depending on the preferences or possible
expenses that the organization is willing to commit. Traditional or not, the success of these
approaches still depends on how the organization handles the output of each strategy
1. The Internet- the internet may be the greatest invention of today. Every aspect in our daily
lives may have been directly and indirectly affected by the world wide web. Many express that
the world got smaller because of the internet. It facilitated communication, production and
manufacturing, transportation, and many other industries all over the world. Of the many aspects
of the Internet, it made itself easily accessible among different media. The ease of access made
information gathering quickly that information: are made available in a snap of one's fingers.
Easily, people would have answers to the information that they desire. With these, people also
used the internet to find jobs that would best fit their profiles and preferences. This facilitated the
rise of job recruitment sites that posted job vacancies or open positions of different companies.
Also, it is not limited to a certain geographic location. Sites posted vacancies even for
international postings open for anybody interested. Applications can be submitted online and job
interviews are available online as well. The internet has attracted a lot of applicants and these
applicants have a lot more access to job openings.
2. Print Advertising - Despite the popularity of the Internet in sourcing job advertisement and
placement engine, print media is still a common and an effective method in advertising job
requirements of organizations. Applicants can still find ad placements for job openings among
major dailies and selected magazines.
3. Professional Linkages or Groups- Associations or groups belonging to the same industry or
sector form organizations or clubs. This functions as venue to keep professionals updated of
current trends and situations of their industries. This is also an effective way to find out potential
jobs or recruit professionals. Often, members of the organization seek out needs for applications
to job opening in their companies. Some may find recruits through connections and exchanges in
club gatherings and chat rooms.
4. Internship or Work and Travel Program- This approach targets recent graduates or
students who are about to take their on-the-job training (ojt). Job recruitment companies offer
programs that would provide the young people an opportunity to earn and gain experience as
they prepare for their professional careers. This is mutually seen as advantageous to both
employer and employees since each is expected to benefit from the other. The company
welcomes the enthusiastic, energetic, and educated young individuals who also expect to learn
and grow with the organization. Recruitment organizations usually approach the universities to
offer the program. Students who are eligible to join the program shall be interviewed by the
recruitment organization and would-be employer. Qualified students can join the program and
will be given credits by the university in their OJT subject. Recent graduates are endorsed by the
university as part of further industry training and experience after their academic life.
5. Referrals or Peer Recommendations - A good employee is always sought after by
organizations. Some go to the extent of offering better compensation package to rein in their
target. These good employees are also possible sources of new employees who may be of same
caliber as they are. Organizations ask their hardworking employees if they know of other people
who are interested to work with the organization as well. Good employees most often think of
the welfare of the organization and themselves. The tendency is to refer or talk to individuals
who they think can help the organization as they do or can be as talented as hardworking as they
are. These employees do not want to lose face with the organization by bringing in bad choices.
Further, these good employees tend to be responsible for the new employees that they brought in.
6. Company's Image or Brand - An organization with reputation such as the best place to work
and that takes care of its employees and values the members of its workforce is a magnet for a lot
of applicants. Being known to be the best hospitality organization and knows how to take care of
its employees would help in attracting good applicants to join the organization. A recognition
among peers or of the industry can also boost the image of an organization to be the best
workplace to serve.
7. Walk-in Application – Applicants personally bring in their application forms to the
organization. Despite the availability of other methods to file job application, walk-in application
is still practiced by many. Walk-in applications are usually aimed at entry-level positions and are
done by job seekers who do not have enough work experience yet.
8. Headhunters - Other organizations seek out the services of recruitment organizations when
they are looking for specific skills and particular talents that are vital in their organizations. They
are commonly called as headhunters because they specifically look for professionals in the
industry who are performing well in other organizations. These headhunters usually talk to
candidates and offer packages that elicit the prospects to consider transferring
9. Talent Pooling- In the Philippine setting, where there is an excess of workforce and not
enough job positions to fill in, it is common that companies maintain a list of candidates for a
single position. In this way, there would be candidates readily available to consider in cases
where another slot opens with similar requirements. Or in cases that the successful applicant did
not push through with the employment, a replacement can immediately be called upon.
After the successful recruitment process, it is now up to the organization to select the
candidate that would best fit the requirement of the organization. A strict selection process is not
a guarantee that the employee would fit into the organization's expectation or whether the
organization has chosen well among the candidates available. To minimize the possibility of
falling into this concern, the organizations must be able to properly screen applicants. The
process of selecting and sifting through the application may look like just matching a puzzle
together, but it may be more complicated than expected. Aside from it is a time-consuming task.
it would also be costly since workforce and resources are required to undertake this process. To
aid in the selection of the best candidates, organizations must be able to gather as many
information as possible about the candidates. In gathering the information, there are several tools
that can be used.
 Tools for Gathering Information About Applicants

1. Application form - application forms are the most basic tool used to gather information
during the employment process. Aside from the curriculum vitae, resume, or bio-data, the
application form contains the pertinent data about the applicant. The form includes: personal
background, educational attainment, employment history, licenses and certifications personal
achievements, and affiliations. This could further be designed to gather specific skills or
information relevant to the specification of the job. Through the years, application forms have
evolved more so often we encounter printout forms to be filled out manually. At present,
application forms are now available online and may be printed if necessary. The availability of
the form and its submission can also be done 24 hours because of technology. Submissions can
be accepted anytime of the day and sometimes real-time.

2. Interview - Candidates who qualified after the initial screening process shall be scheduled for
an interview. The interview is a process to confirm the information contained in the application
form and to seek further data that would help companies decide which applicant to select.
Interviews are done through face-to-face or through the aid of technology using the internet or
video chat. Other interviews involve a panel of interviewers to one applicant or vice versa, to
save time, multiple candidates are interviewed simultaneously by an interviewer or a panel.
Employment interviews are often structured and follow a format. This is to elicit responses of
required information relevant to the job. Some service-oriented organizations conduct interviews
using situations or cases where applicants are asked about how they would react to a situation.
This style would measure the behavior or predict future performance of the applicants.

3. Psychological Tests - Often considered as just a part of the employment process, this
particular tool measures some of the most important factors considered when looking for
employees. This test evaluates mental soundness, intellectual capacities, intelligence, logical
reasoning, memory. and other cognitive functions of an individual.
4. Background/References - Other organizations call on references or persons mentioned by the
applicant to confirm the information about the applicant. Former employers are called through
phones to verify or validate information and to ask if they are recommending the applicant for
employment. Drug tests and clearances from the police and National Bureau of Investigation are
checked to ensure that the criminal records of the applicants do not compromise the safety and
security of the company and, most especially, guests and clients.
Once the selection of the candidates is done, the most critical part is deciding on who to
hire. Candidates are selected based only on the richness of the information gathered. It is quite
more challenging if the company is in the tourism and hospitality industry since the basis is not
only on the competency of the candidate, but also on how the employee will be behaving given
challenging circumstances and the logical sense of dealing properly with untoward incidents that
might happen. To be hired. the candidates should not only be able to comply with the basic
requirements, but should also be the best among the many applicants. Also, unsuccessful
applicants’ profiles may be retained so that whenever there is a need for future application, the
organization does not need to go through the same tasking process again because there may be
qualified candidates already.
 Once an applicant is hired, it is also important to properly orient him/her. The company
should make sure that the new employee would feel welcome in the organization. An alienated
employee would most likely last for a short period. It would be very difficult to work in an
environment where a person does not feel welcome in the organization. When the new employee
leaves, the organization needs to undertake the hiring process again. The warm reception of the
company can influence the mentality of the new hire to stay and grow with the company or to
leave because he/she felt unwanted.
Attention is more focused on the hiring process of the organization rather than on
selecting or removing employees from the organization. Employee turnover is ho a concern of
companies, especially those in the tourism and hospitality industry. This industry is known to
have a high turnover rate that many employees change companies as fast as seasons would
change. The dynamism of this industry provides an opportunity for the tourism professionals to
take chances and grab opportunities that present every once in a while. Employee turnover
comes in two ways the voluntary and the involuntary. Voluntary connotes the free will of the
employees to leave the organization; while involuntary is when the choice of separation of
employment is made by the organization. Voluntary separation of employees from the service
may be caused by difficulties experienced by employees, such as working on holidays, shifting
work schedule, difficult working conditions in the kitchen, or low wages or compensation.
Depending on what perspective we are looking at, turnover can also be good for the
organization. When an employee leaves, a vacant position can be filled by a better one who can
be more enthusiastic and dedicated to the job. A new hire may also bring in new ideas, fresh
perspectives, and, as discussed earlier, new methods that could help in the efficiency of the
organization. Whenever turnover happens in the higher level of the organization, it opens
opportunities to the talented managers and officers at the lower level to be promoted and to grow
instead of resigning from the organization.
Training and Developing Employees to Serve
Tourism and hospitality industry organizations would least likely want to hear or
experience complaints about the services they render. The situation may be very minor to an
unsuspecting eye, but the impact could be devastating to the organization. A misstep or an
unattended request may result in a disappointed guest who may no longer intend to return to the
establishment, or worst, it can aggravate to deluge of negative comments on social media. It may
cause a storm that may crash the image that the organization built through the years in order to
avoid such organizations invest on their employees by continually exposing them to training and
further development.
Training the Employees
Hiring the most qualified and skillful staff does not mean that the service would turn into
the desired result of the organization. Whether the employee is a new member of the
organization or even the most veteran staff in the plantilla, all require training to perform their
jobs properly. The new employee needs to be trained how to deliver services and to perform
tasks consistently based on the values and practices of the organization. veteran employees need
to be updated and reminded of the policies, practices, culture, and strategies of the organization.
Sometimes, too much familiarity in the organization leads to neglect and complacency that affect
the services of the organization.
Further, the hospitality industry is a service intensive business and interaction with
customer is constant. There is no room for failure in the delivery of superb services that are
expected by the guests. Each employee should be trained and made to understand the value of
providing the best guest experience. The training should also equip the employees with
knowledge on proper anticipation in order to provide for the customer's expectation and to figure
out solutions on situational problems that may arise spontaneously.
Some organizations are at a loss on why some areas of their operations are not
functioning as expected or are performing below normal not knowing that the department is
already depleted and some are not trained to specific tasks that they are assigned to do. Despite
the trainings conducted, the department is still way below par with its targets.
Training program for employees is not a one shot do-it-all type of solution. Different
issues require varied training designs in dealing with issues. To make the training effective, there
should be a process to approach these concerns. The first step is to conduct an analysis of the
training needs of the employees. Managers can start investigating the strength and weaknesses of
the concerned departments to identify the needs to be addressed, whether through training or re-
organization. It is through proper investigation where managers can review if the issues or
concerns are about skills and competencies that the company should deliver, or are specific
functions or tasks to be performed by an employee, or are about an employee who should
perform the expected output. The result of the review can be of different levels of concern which
also require different types of training programs to be administered. Firstly, if the issue is about
the competencies of the organization, then the training should focus on the training of the whole
organization. Secondly, if the concern is on performing a specific function or task, then the focus
should be on instructions on how employees could perform their tasks properly. Lastly, if the
concern is on the employee performing the task, then the focus of training is on the enhancement
of the performance of the individual. A properly defined issue or problem would set forth a
correct training program for the employees. Once training administered, the organization should
monitor the progress of the employees, the stability of the system or processes, and the
consistency of the service. Together with the monitoring and evaluation of performance, training
should be a continuous process.
Trainings can be conducted in two ways: external or internal. Organizations have the
option of choosing any of the two types depending on their choices and abilities to conduct
training.
External training is conducted by training organizations and training consultants who have the
expertise and resources to handle coaching skills, needs, or any topics required by organizations.
These training organizations may vary, from a big organization that has a pool of trainers that
can provide specialized training for the whole organization or a small organization that
specializes in a particular field, such as flight attendant training or tour guide training. These
training firms cater to service organizations that require specialized trainings for a small group
participants in the organization. The trainings required may be to learn specific skills of or
proficiencies and oftentimes needed within a defined period of time. Further these training
organizations can also customize trainings based on the requirements of the contracting
company.
Internal trainings, also known as in-house trainings are often done by the department within the
organization involved with the training and development of human resources or talents. Major
organizations see it fit to maintain a training department so that it can personalize the training of
its employees and emphasize the type of service and culture that the organization wants to
portray and provide to its clients.
Training organizations employ different types of training depending on the required topic
or area of expertise. These trainings can be a long term program where progress is evaluated
periodically or on a short term basis where participants are expected to execute certain skills as
part of the culminating activity. Trainings are often delivered in a combination of methods, such
as lecture presentations, role-play, simulations, audiovisual presentation, case analysis,
interactive games or exercises, computer aided methods, site visits, and reflections. Some of the
common methods of training applied by tourism and hospitality organizations are the following
1. Personal Training-There are several types of personal training that can be applied, but it
usually refers to a teacher and a student type of training or sometimes one-on-one training,
between a trainer and a trainee. Mentoring is the first of personal training wherein the one who
educates or gives advice is usually the more experienced or senior member of the team. This type
of training is done to help the newest member of the team learn the ropes and techniques to
improve their performance based on the experiences and expertise of the colleague who was
there before him/her. The next type is called coaching, this type of personal training is a function
between an expert focused on how to build the skills and competencies of a prodigy. Coaches
inform how the correct actions should be done and how to better apply skills to become more
efficient and productive. Lastly, apprenticeship is a training involving an experienced master
guiding an apprentice to learn a new craft through observation and hands-on experience through
a set period of time. for example, a master chef often have an apprentice that assists him/her in
preparing culinary masterpieces.
2. On-the-Job Training- Also known as on-site training, It is a form of training where an
individual learns the job through actual experiences. Often, a supervisor or a senior staff member
oversees the performance of the trainee. The trainees are at times rotated in different departments
of the organization. This is to maximize their exposure to the different possible tasks that they
would encounter in the future.
3. Classroom Lecture - Often referred to as the traditional teach and learn approach where the
trainees listen to the trainer about the knowledge and skills that an employee has to know. After
the lecture, the trainees may be given exercises such as case studies as an application of the
topics learned. Case studies often involves scenarios or settings where decision making skills and
problem analysis of the trainees are practiced.
4. Simulation - In organizations where on-site training is not possible, a simulated training area
is set up for training. Trainees are made to practice their tasks in a controlled environment that
mirrors an actual scenario in a workplace. In situations where hands-on practice is required but is
too costly to commit a mistake in the real setting such as pilot training or lifeguard training,
simulation training can be an effective way for trainees to learn the skills that they need.
5.Audiovisual Presentation- Audiovisual materials are often used to aid in training sessions.
Many big organizations create or commission a production of a standard training video that
could be used and viewed by their employees from the different branches in varied locations.
The availability of online access to videos from different sources makes it easier to provide
training materials for various training needs.
6. Computer-aided Training- The Internet of things phenomenon has somehow made things
easier for all. Many skills and certification trainings in the hospitality industry are done with the
aid of computers. Instructions and exercises are done through computer programs. Trainers who
cannot be physically present can conduct trainings through the Internet even at a remote location.
The internet has somehow made training available anytime and anywhere.
7. Do-It-Yoursel (DIY) Training- It refers to a training through modules coupled with self-paced
training method. An employee learns the different segments of the course through self-study
during the time and place most convenient to the person.
Motivating Employees to Provide Exceptional Service
The hospitality staff who are in contact with the guests must not only be equipped with
proper training and knowledge about the tasks ahead, but must also be motivated to render the
expectations of the customers.
Companies should encourage new ideas and behaviors of internal employees. When
employees have a more open attitude, it is easier for customers to accept new services and
products, which is conducive to the performance of the company (Li, Li, & Gao, 2019).
Most common belief is that when employees are well-compensated, it immediately
equates to being motivated. But motivation is an idea that is more than just willingness to work
just to satisfy an employee's economic needs. Employees may be motivated to join and be with
the organization because the staff saw the opportunity to fulfill their dreams and meet their
needs. People may join particular organizations in the tourism industry, such as hotels,
restaurants, resorts, cruise lines, and airlines, to sustain the different kinds of people's needs.
Compensation (economic needs) is one of the primary reasons that influence employees to
choose particular organization. Financial incentives and rewards can be a good motivator for
employees to stay with the chosen company. Other employees choose to stay and work with an
organization because they work well with co-employees and have a sense of belongingness
(social needs); others are with the organization because they see the opportunity to contribute
and share their expertise (achievement needs); and some feel that they are appreciated and valued
(recognition needs) by the organization.
 Having known the different kinds of needs of employees, the company can develop
programs to address these needs. These programs can be financial and nonfinancial in nature.
Financial rewards can either be wages, incentives (group or individual), bonuses, company
stocks, or commissions. Nonfinancial rewards can come in different forms: performance
recognition, fun and enjoyment in the workplace. and minimizing stress. Performance
recognition usually goes with financial rewards. But in some cases, simple programs are
organized to highlight the accomplishments of the employees. Employee accomplishments may
come from the different areas of work or categorized based on assigned tasks, such as sales
performances, innovative projects, model employees, perfect attendance, loyalty, and length of
service. These awards acknowledge that the initiatives and efforts of the employees to provide an
exemplary service to customers are appreciated, treasured, and desired as tributes to the
performance of employees, they are given symbolic items gifts, such as plaques, company
merchandise, accessories, recreational or household items, jewelry, and/or electronic items.
To some employees, rewards need not be things that are given by the organizations. In
some instances, the work by itself can be the reward. employers who are happy with what they
are doing in the company or if they are having fun while performing their specific tasks do not
feel burdened in their works. Often, these employees inspire others and serve as role models in
their jobs. most tourism organizations create a leisure and fun experience for their clients starting
with their employees. Among the many theme parks in the world, it can be observed that
employees starting from the staff at the entrance gate, ride attendants, show performers, utility
personnel, and even the park sweepers---radiate that feeling of excitement and fan of being
inside the park.
If employees are to see the organization and its associated brand as authentic. they must
receive the same type of treatment that external customers have come to expect of the brand. this
type of authentic treatment of the employees would result in increased organizational
commitment, which in turn, would prompt further service-oriented citizenship behavior and,
consequently, further rewards for the employee (Kim et al., 2019) empowerment another aspect
in order to encourage
Motivating Employees to Provide Exceptional Service
The hospitality staff who are in contact with the guests must not only be equipped with
proper training and knowledge about the tasks ahead, but must also be motivated to render the
expectations of the customers.
Companies should encourage new ideas and behaviors of internal employees. When
employees have a more open attitude, it is easier for customers to accept new services and
products, which is conducive to the performance of the company (Li, Li, & Gao, 2019).
Most common belief is that when employees are well-compensated, it immediately
equates to being motivated. But motivation is an idea that is more than just willingness to work
just to satisfy an employee's economic needs. Employees may be motivated to join and be with
the organization because the staff saw the opportunity to fulfill their dreams and meet their
needs. People may join particular organizations in the tourism industry, such as hotels,
restaurants, resorts, cruise lines, and airlines, to sustain the different kinds of people's needs.
Compensation (economic needs) is one of the primary reasons that influence employees to
choose a particular organization. Financial incentives and rewards can be a good motivator for
employees to stay with the chosen company. Other employees choose to stay and work with an
organization because they work well with co-employees and have a sense of belongingness
(social needs); others are with the organization because they see the opportunity to contribute
and share their expertise (achievement needs); and some feel that they are appreciated and valued
(recognition needs) by the organization.
Having known the different kinds of needs of employees, the company can develop
programs to address these needs. These programs can be financial and nonfinancial in nature.
Financial rewards can either be wages, incentives (group or individual), bonuses. company
stocks, or commissions. Nonfinancial rewards can come in different forms: performance
recognition, fun and enjoyment in the workplace. and minimizing stress. Performance
recognition usually goes with financial rewards. But in some cases, simple programs are
organized to highlight the accomplishments of the employees. Employee accomplishments may
come from the different areas of work or categorized based on assigned tasks, such as sales
performances, innovative projects, model employees, perfect attendance, loyalty, and length of
service. These awards acknowledge that the initiatives and efforts of the employees to provide an
exemplary service to customers are appreciated, treasured, and desired. As tributes to the
performance of employees, they are given symbolic items or gifts, such as plaques, company
merchandise, accessories, recreational or household items, jewelry, and/or electronic items.
To some employees, rewards need not be things that are given by the organizations. in
some instances, the work by itself can be the reward. Employers who are happy with what they
are doing in the company or if they are having fun while performing their specific tasks do not
feel burdened in their works. Often these employees inspire others and serve as role models in
their jobs. Most tourism organizations create a leisure and fun experience for their clients starting
with their employees. Among the many theme parks in the world, it can be observed that
employees starting from the staff at the entrance gate, ride attendants, show performers, utility
personnel, and even the park sweepers-radiate that feeling of excitement and fan of being inside
the park.
If employees are to see the organization and its associated brand as authentic. they must
receive the same type of treatment that external customers have come to expect of the brand.
This type of authentic treatment of the employees would result in increased organizational
commitment, which in turn, would prompt further service-oriented citizenship behavior and,
consequently, further rewards for the employee (Kim et al., 2019).
Empowerment
Another aspect in order to encourage employees to perform better and develop into
becoming role models in the organization is to provide them opportunities to make decision in
relation to the performance of their jobs. Giving them the responsibility to make decisions that
can influence the outcomes enables the employees to better understand and appreciate the value
of performing well in their jobs and being recognized as trusted members of the organization.
Many hospitality organizations utilize employee empowerment to send signals that the staff are
trusted by managers to make the right decisions at the right time to provide guests the best
service expected. Not all employees are given the opportunity to be empowered. But once
employees are given the responsibility to make decisions, they are expected to know what to do
and are trusted to execute the tasks beyond what is expected of them.
Empowerment goes beyond allowing the employees to make decisions. organizations
should make sure that employees have the proper tools to effectively execute their decision-
making choices. Employees must be equipped well by undergoing training on how to make
sound decisions. Empowered employees need to be fully aware of the boundaries of their
responsibilities and must know when to make the right decisions.
Since empowerment is a responsibility, employees who are given such should be
prepared to do it when opportunity requires. Some employees are not up to the task because they
are afraid of the adverse effect of their decisions. For good decisions that are made, a reward
program should be formed. Rewarding employees who made the right decisions shows that the
company recognizes their efforts. It also strengthens the resolve of employees that when they
utilize empowerment properly, then their efforts are worthy.
Empowerment can only be effective if it serves the right purpose. Not in all situations can
we say empowerment is effective. Most hospitality organizations apply empowerment when the
services they render are customized or personalized, the connections with customers are long
term, the factors affecting the business environment are constantly changing, or their employees
have strong interpersonal skills.
Culture
Employees are more likely to accept brand values and to align their attitudes and become
committed to the brand if they perceive that the brand authentically embodies the values they
communicate to external customers and that these values are congruent with their own (Kim et
al. 2019).
A culture in the organization is often referred to as the values, way of life. or philosophies
embodied by each member of the organization. Most of the time, the culture is created by the
organization to serve as the identity that it would like to project among its customers. Culture is
an action or an attitude on how employees should perform and think in the performance of their
jobs. Culture may change through time depending on the direction set by the organization.
Sometimes, influences by new members from their past work experiences can create changes in
the organization. Managers of the organization in charge of maintaining the values and
ideologies should be aware of the possible effects that can either be detrimental or beneficial to
the established norms. To avoid these complications, the organizations may start providing
orientations to new members. New employees should be taught the cultural beliefs and
assumptions of the organization even before they start in their new jobs. It is very important for
tourism and hospitality organizations to establish their culture firmly in order to provide
consistent service to their respective clients. If employees are properly taught about the
organization's culture, they would be able to discern how things should be, to distinguish what is
right and wrong, to differentiate the preferred and not preferred actions, and to deliver the
expected performances.
Among many organizations. especially those that have large number of employees, may
experience a formation of subcultures. Subcultures develop oftentimes among large companies
composed of many units with many members involved in the culture. These units may create
their own subculture unconsciously different from the other units, especially if the exchanges,
interactions, or communication with the other units are not regular. Other factors may also
contribute to the creations of subculture, such as cultural ethnicity, nationality, faith, and
geographic settings
Culture should be properly communicated among the members of the organization to
affirm and reinforce the shared beliefs, values, and norms. Tourism and hospitality organizations
communicate culture through a number of ways: company policies and rules-employees are
explicitly informed of what the organization expects them to do and the penalties involved in
case these are not followed; role models or model employees - these are people that employees
can look up to emulate, and be inspired by, ceremonial activities or rites - these give off a
feeling of belongingness, rite of passage, and strong sense of affiliation to become a part of the
organization; symbols-wearing a pin or a cap or holding an office in a higher floor connotes an
understanding of certain hierarchy within the organization: and linguistics-oftentimes, groups
formulate their own ways of communicating with each other by using jargons or words in
context, thereby forming an exclusive form of language not common to those outside of the
group
 CHAPTER 6
Designing and Managing Service

Introduction
The manifestation of innovative activity through the innovation process creates the
conditions for the sectoral economic development and tourism services quality improvement. To
form an innovative mechanism and to implement innovative ideas, it is necessary to develop
local tourism systems aimed at creating new tourist resources and products to stimulate their
growth and competitiveness (Chkalova. Efremova. Lezhnin. Polukhina, & Sheresheva, 2019). In
this chapter, students are expected to learn the concept of service design. Further, service design
principles, innovation, and setting shall be discussed in details as applied in the tourism and
hospitality industry.
Learning Objectives
At the end of this chapter, the students should be able to:
 understand the concept of service design
 comprehend the challenges of service innovation and design
 be familiar with the different service design principles
 learn the differences among the types of service setting
 explain the necessity for service process redesign and
 understand how service process redesign can improve service quality and productivity

Reality Bites
A family-owned Filipino-Chinese fast-food chain has been in existence for more than a
decade already. Upon the retirement of the family patriarch, the next generation owners decided
to expand their operation. The fast-food chain branches have only been placed to areas proximate
to the commissary of the company. The commissary also locates the executive and
administrative offices. In its area of operation, the fast-food chain fares well against its
competition. The success can be attributed to the familiarity of the locals to the food that the
restaurant offers. Also, a great portion of the menu is categorized as a good pasalubong present
for out-of-own travelers.
 Being in the category of quick service restaurant, what would be the best strategy to take
when the restaurant opens in places dominated by nationally known quick service restaurants
(QSRs)? What type of service can be adopted in order to hold ground against the competitors?
Content
Concept of Service Design
Design is a term often related to the physical structure or model of certain products that is
aimed to provide more value, better efficiency, or enhanced performance of the goods. The term
also applies to services, procedures, management styles, and processes with the same purpose of
providing value to clients and generating higher income for the organization. With these
objectives, design can be applied in all areas of the organization using symbols in
communication or materials and behavior to convey specific type of service.
Design is used for various purposes in the different aspects of running business
organization, such as creating standards in order to justify a premium price, introduce a new
product in a highly competitive industry, discourage competitors, please the customers,
streamline complex procedures, motivate employees and members of the organization, apply
innovative ideas, improve efficiency, and establish the competitive advantages.
As an element of a business operation, design can be a form of service, an output or
product, part of a process, an activity, culture of the organization, or simply a management
function.
Design is often connected to the organization's action or reaction to external stimulus,
such as changing market demands. technological innovations and emergence of competitors.
Service Innovation and Design
The uniqueness of the tourism and hospitality industry as a service-oriented industry has
made the delivery, description, and communication of its product difficult. More so that the
product is intangible and often co-created with the customer makes it complex, very dynamic,
and challenging. The services provided by the hospitality industry are often subject to the
description of the product through words since the offerings cannot be touched nor examined
physically. With these. the method of describing the service through words may lead to
unfavorable results which can be disadvantageous to the service organization Words that were
used may somehow be inadequate or oversimplified to describe a complex service. A cruise
travel may simply be described as a trip to Bahamas by boat, or a suite room may simply be
mentioned as a bedroom with a sala and a bathroom.
The use of words alone may also result in an incomplete information dissemination. A
detailed and intricate process of preparing a meal service for two VIP guests may be relayed with
some details or elements being omitted. Also, the person relaying the message or information
may have a biased idea or opinion that may result in an opinionated description rather than a
factual delivery.
 Some organizations with impeccable track records apply strategies and philosophies that
best fit their organization. These approaches may be cutting-edge designs and innovations that
provide impressive products and services. Organizations tend to adopt strategic balance to
product or service and delivery process. A balanced combination would ensure that the
organization maintains its position from its competitors and improves in efficiency and
productivity process. Others follow the top management approach where top brass set the
direction and design effort and for others to be committed to the objectives set. Working together
as one team is also important in order to encourage employees or departments to get
synchronized with the main objective of the project.
Before implementing service innovation, organizations can invest more attention in their
cultural dimension. It can enhance the collective cohesiveness, strengthen the trust between
members, and create a united professional team for enterprise service innovation activities (Li,
Li, & Gao, 2019).

Service Design Principles

There are five principles of design that are followed by professionals. These are founded
on the ides that service design is focused on delivering quality customer experience.
1. Holistic. Although the design is focused on the customer, the organization should not forget
the idea that the environment plays a big role or influence on how well services could be
delivered. A carefully planned design would consider how the different factors from the
environment can enhance the service process
2. Co-creative. Aside from the environment, those who create service designs should also look
and take into account the stakeholders who, in one way or another, may influence the design.
Consider as well the impacts on how the design process can be properly communicated or
delivered through the stakeholders to maximize the potential of the service design.
3. User-centered. Service design is first and foremost created for the customers. Designs must
focus on how customers expect how the products or services will be delivered. Ultimately
designs will be dictated on how customers will require the service.
4. Sequencing. Products and services most often are delivered from a combination of interrelated
actions to come out with an output which is the product or service. In order to render the best
service, proper sequencing and timely delivery should be done, which may even increase the
level of satisfaction of customers.
5. Evidencing. Unlike tangible products and goods which can be physically scrutinized, services
should somehow create a visual expectation of the product. This would make the service
establishment difficult to forget for it has created an impact to the customers already.
These principles serve as guide in order to elevate the experience of customers.
Innovation can always be available at any given time. Consequently, the principles we know
today may be irrelevant tomorrow.
Service innovations may be of different types and they are based on strategies and
solutions undertaken by firms around their services rather than product. Some types of service
innovations are the following :
1.Service Provisions Innovation. There are several methods and style in this type of service
innovation. This innovation is about the services offered by firms which are either new or
improvements of existing services. The types of this innovation include: major or fundamental
innovations-these are new services to the market that were not yes offered and often create an
impact to consumers,
eg. Internet applications: new services for segments that are being catered to by an existing
product that is of same generic need-examples include ride sharing services competing against
taxis or online banking which used to be supported by over-the-counter transactions: service
extensions-inclusion of new items among the choices of customers, such as new port of calls for
cruise ships and new food in the menu: service improvements-changes in features of services;
and change in style-change in color scheme, change in logo design, and website revision among
others.
2. Service Innovation Around Customer. This innovation happens when the customer's role is
redefined or altered. People who enjoy eating while watching home movies used to go to fast-
food chains or convenience stores for their food during the movie watching session. New
companies now are offering delivery services to bring the food that a customer wants right at
his/her doorstep.
3.Innovation Through Solution. Firms approach the customer needs not by the traditional
offering of products, but by offering activities translating to provision of solutions, such as
consulting in area of expertise, managed services, design of travel and vacation, and outsourcing
4. Service Innovation Through Interconnectivity. The advancement of technology brought forth
the digitization of most electronic products. With digitization sensors are built in to these
appliances, including ways that the equipment may communicate. These sensors can capture data
that can then be transformed to create information and connectivity. This interconnectivity may
result in technology development to be able to provide comfort and convenience to customers.
Interconnectivity allows equipment to be accessed remotely, enhances performance and safety,
amplifies knowledge and capabilities; and creates new capabilities.
Blueprinting Services
Blueprinting is an illustration on how services are rendered. It shows how a service
design is implemented. It is a plan that displays the interaction between departments, or elements
and activities as part of one entity. Blueprint provides a tool to dissect the different components
and steps in the process, how the tasks were performed, and proof of service based on actual
customer experience. Some of the steps in blueprinting services are the following:
a. Prepare a diagrammatic format of all the elements and processes of the service design.
Geometric figures may be used to represent the different elements and process flow. As the
process becomes more complex, the diagram may also look multifaceted and may require a
larger space to render
b. Recognize possible decision points and conflict zones or areas where there could be possible
issues and concern that may arise
c. Set standards in terms of allowable adjustments acceptable from the perspective of both the
customer and the organization
d. Any photos, slides, or videos of the process can be very useful as pieces of evidence that
represent contact points, encounters, or interactions.
e. Analyze the impact of the pieces of evidence, contact points, and interactions as regards to the
effect to efficiency and profitability of the organization.
Selected Methods and Tools for Service Process
Some of the other methods and tools used to analyze service process are the following:
1. Affinity Diagram. It is an analytical tool to gather and organize information from a
significant amount of mixed data sourced from researches insights, concepts, diagrams,
brainstorm ideas, and designs. This method is employed to sort and bundle information into
groups or based on their relationships. Often, these connections and relationships provide deeper
insights and new ideas.
2. Brainstorming. It is a method to generate ideas from a group of people to solve a design
problem. Under the direction of a facilitator, members of the group contribute ideas freely to
cover as many areas as possible in search of best possible design. Rough ideas contributed by the
participant are gathered and refined to determine solutions
3. Character Profiles. These supplement the understanding and appreciation of designers by
providing patterns or trends about service users. Knowing the profile would also help in
justifying the innovations and improvements design for the clients
4. Contextual Interview. It refers to interview conducted in the natural environment where the
service occurs. This type of interview yields highly accurate and detailed information because
this method observes and probes the behavior of the service user. There is a collaborative
partnership between the interviewer and the service user to understand the behavior of the user.
In the interview, the observation and interpretation are discussed with the user, wherein the user
is free to correct or expand the interpretation of the interviewer.
5. User Journey Map. It is a diagram that uses illustrations, photographs, and/or quotes telling
about the journey of the user through a service. It helps in identifying the key stages and
touchpoints along the user's service experience, what parts of the service work for the user and
what parts need to improve. It is a useful technique to understand the motivations of customers in
relation to their wants, needs, hesitations, and concerns.
6. Cultural Probes. These are also referred to as User Diary. It provides a way of gathering
information about people and their activities and insights about the daily life of communities.
Cultural probes are used when information needed from users are with minimal influence on
their actions, or when the process or event being explored happens intermittently or over a long
period.
7. Documentaries. These are tool used to provide information at the initial stages of the design
process. This method is a visual representation human emotions and expressions captured
through film.
8. Empathy Probes. These are tool for design that considers what the users are thinking and
feeling more than what they are doing and saying. Empathy probes give an opportunity for the
users to speak out what is in their minds. These help designers to observe the users before
concentrating on the area to engage deeply
9. Ethnographic User Research. Is a tool used to support a deeper understanding of the design
issues for service designers. Through this research tool, the designer will be able to establish
what motivates the users to do something and what hinders them to not do things. Ethnographic
research is usually done at the beginning of the project to be able to support design decisions.
10. Experience Prototype. It is a simulation of service to test new service ideas or design for
specific physical touchpoints. It seeks out whether the design is applicable to the user or
identifies the area that could possibly be improved. This tool communicates what the experience
would be like and allows the designer to test and to improve the designs with the potential users.
11. Focus Group. It is a setting of deliberately selected people who are participants of
discussion about a particular topic which intends to bring out their perceptions and feedback to
design ideas. A trained moderator leads a discussion within the group that is designed to gather
helpful information. The moderator is with a set list questions that will be shared with the group
to elicit responses, opinions, and ideas from all the participants
12. Immersion (Workshop). It is also known as emphatic research or role- playing. A
researcher involves himself/herself with the study area by becoming part of it. It is a good source
of information since the designer will have an actual experience with regards to emotions and
social interactions with the community.
13. Observation. It is a method that can be used to identify problems when users are interacting
with a product. Through observation, services can be evaluated and the user experience can be
determined to a certain level. With set parameters, by mere observation, one could tell if the
service at par with expectations.
14. Personas. These refer to fictional characters created as archetypes, not stereotypes, to
represent types of users that avail of the services or products of companies. Personas are created
to help understand the needs, behaviors, experiences, and goals of users. Through the personas,
the needs and expectations of users can be recognized and considered. Personas are not created
from real people, but they are based on "actual" data collected from different individuals. These
help designers understand patterns from the research and simplify the types of people that a
designer seeks to design for
15. Prototyping. This tool is used to examine the behavior and performance of a fresh design
before it goes to production. The service is tested by observing the interaction of the user with a
prototype of the service, mimicking the venue, settings, and conditions where the service is
actually rendered. The kinds of prototyping methods are the following:
a. Sketches and Diagrams. These are used to illustrate the ideas for discussion and analysis.
Sketches are among the earliest forms of prototyping and also the simplest to use. These can be
at its simplest or roughest form, and artistic skills need not be at high level for them to be
acceptable or of value. The objective is to bring out the idea from somebody's mind and to share
it to the team for scrutiny and improvement. Sketches may include diagrams or mind maps to
explain and demonstrate a process, procedure, system, or structure. Diagramming is a related
concept to sketching which can be utilized in understanding complex situations where different
factors affect one another. Diagrams help a designer visualize and analyze ideas that are
interrelated which can either complement or contradict each other.
b. Storyboarding. This is a presentation of cases or prototype scenario using a series of
drawings or pictures to visualize a sequence of events. This tool can be used to show a situation
where interaction of service happened or a service prototype is being tested for implementation.
The tool also present information about the venue where the service interaction took place, the
personalities involved and the details about the actual setup during the interaction.
c. Building blocks Prototype. Beyond the idea of having fun with building blocks as a toy, the
versatility and ability to stimulate creativeness has made this toy a valuable tool in prototyping
Building blocks are easy to handle which helps in easily creating crude designs as prototypes or
create scenarios to depict a story.
d. Role-play. This refers to acting out service situations where users interact with products or
services. The implied condition clarifies the direction where the service design should take, that
the service really exists and then render a possible journey through its functionalities.
e. Physical Models. For design service that may require physical representation, mock-ups can
be created for testing Materials: that can be used include paper, cardboard, wax, clay, and wood
among others to build the models. The physical model is a tangible representation of an idea
which is related to the testing of service interactions. This aids in having a better testing scenario
with the users and may trigger solutions or new approaches to finding solutions.
f. User-driven Prototype. This prototype method uses a unique approach in coming up with a
service design. Instead of the designer conjuring a design for the service user, it is instead the
user who will get to make a design. The user-driven prototype recognizes that it is important to
understand how the users think. This tool is not into using the design generated by the user, but
more of knowing the point of view of the user. Upon knowing how the users think, the designers
can come up with design solutions best suited for the users.
16. Scenarios. These refer to the creation of a hypothetical story to visualize how user will
utilize a service in order to generate design. Scenarios can either be written or drawn with
sufficient detail to anticipate and demonstrate the needs of users. These are useful in
communicating and designing services where multiple interactions may occur over a period of
time
17. Service Prototype. This is a simulation tool to test the service design through observation of
the interaction between the user and the prototype of the service set in the place, situation, and
condition where the service truly exists. The objective of the test it to verify what happens when
other factors interfere during the service delivery. The simulation varies simple "role-play" to
more complicated full-scale recreation with active user participation, props, and physical
touchpoints.
18. Shadowing. The researcher acts as an observer only and does not interfere with the
participant in any circumstances. In this method, the researcher goes along with the users and
observes how they utilize the service or product within their natural environment. In general
researchers immerse into the lives of customers or employee/staff to observe their behavior and
experiences. It gives an opportunity for researchers to witness the real moments when problems
occur or situations where people say one thing but actually does something differently
19. Stakeholder Map. It is a tool that shows a visual presentation of an organization's staff,
sponsors, investors, board, partner organizations or customers. The map reflects the level of
interest and importance of the stakeholder in the organization. The stakeholders are listed and
sorted on a chart based on the extent of their interest and influence or the power each holds in the
organization. A stakeholder map helps determine who among the stakeholders possesses the
biggest impact on the organization.
Service Setting
The term service setting is defined as the physical environment or background in which
service is rendered. It paints an idea to clients, customers, stakeholders, and employees on how
service would be in terms of tangible and intangible feature and appearance. The tangible
physical environment is also known as servicescape. Intangible physical environment deals on
ideology values, and beliefs. An organization’s values and beliefs may eventually conclude
whether or not people will buy from or avail of its services.
It is in the design of the service environment where the brand or the distinct image of an
organization should be concentrated and expressed consistently. Service setting plays an
important role in today's competitive marketplace since it can communicate the exceptional and
enviable characteristics of an organization. In this way, an organization will gain headway in
terms of positioning and differentiation against its competitors.
Types of Service Setting
There are two aspects on how service settings are classified. First, service setting is
differentiated based on service participants and the level of intricacy of service involved.
The first classification is concerned with whom the service setting would affect. Its
emphasis is to differentiate who is exposed to the design setting and is most likely influenced by
the design.
Based on this, the first type of organization is called self-service. Customers of this
organization perform most of the transactions and activities. There is a minimal participation
from the employees of this organization. Examples of this organization are online shopping,
television shopping, online banking, movie, hotel, and airline bookings, and online food ordering
among others. In these organizations, the service setting should be planned to provide seamless
use of facilities, find the match market and provide the desired services of the customers.
Directly in contrast with the first, the second type of organization is called remote service
organization wherein there are no customer involved in the service setting. Examples are
telecommunication companies and utilities provider (power water, etc.). The service design
could focus on motivating employees in order to encourage productivity, efficiency, and
teamwork in the workplace.
In between the two types are the organizations where both the customer and service
employees are present, called interpersonal services. Most hospitality and leisure businesses are
under this category, such as hotels, spas, resorts, and restaurants. In this type, service setting
should consider both customer and employer welfare to maximize the quality of interaction
between customers and employees.
The second way of classifying service setting is through service complexity. There are
organizations that are very simple, modest in composition, few pieces of equipment, and few
elements such are termed as lean. This type often provides service from one simple structure and
it is often straightforward in nature. When service setting in an organization is complicated with
multiple elements and forms it is called elaborate.
Redesigning Service Processes
Service process is similar to all other processes that become outdated because of the
changes of factors affecting them, such as technology, customer needs and preferences, presence
of new offerings, new service features, and even changes in policies and laws regulating such.
Indications that service should be redesigned are as follows:
a. The volume of exchanges in communication between customer and service units is heavy. It
may imply that the data is no longer sufficient to satisfy the requirements of the client
b. Growing number of customer complaints about irrelevant and unnecessary procedures
c. Exceptions are increasing
d. Proliferation of review and rechecking steps among new features or activities.
Service process redesign is about increasing productivity and improving service quality.
The focus of the redesign process is to reduce the quantity of service failures, to shorten the
completion process, to enhance productivity, and to heighten customer satisfaction.
Redesigning the service process often entails activities that involve review of the present
process and recommend actions, such as reconstruction, revision, rearrangement, or substitution
of service procedures. Some of the actions being undertaken by some organization in redesigning
their service process are the following:
a. Review the existing service design. A thorough review of the plan would help to
identify problems and to come up with solutions. The review may involve the different
stakeholders to participate in brainstorming for possible solutions and or improvement to the
process.
b. Removal of unnecessary steps. Streamline the process by determining parts of the
process that are not essential and removing them or integrating into the other steps to make the
procedure shorter and simpler.
c. Eliminating the bottlenecks. Bottlenecks are steps in the service process where
capacity is slowed down. Managers may come up with suggestions to address the inefficiency, to
strengthen the capacity, and to ensure that the flow would be smooth in the entire process.
d. Shifting to service design to self-service. More and more organizations are looking at
self-service as an alternative to keeping their service process more productive and cost-efficient
Airports encourage self check-ins in kiosks scattered around airports; hotels and fast-food chains
are also ins using the automated self-service system.
 CHAPTER 7
Balancing Demand and Productive Capacity for Quality Service

Introduction
To better understand the dynamics of balancing demand and capacity, it will facilitate
learning if we recall the basic definition or at least have a grasp of the concept of demand,
capacity, and productivity. In the study of basic economics. we learned that demand represents
the amount of need of certain products or goods for the consumption of individuals or markets.
Parallel to this, in the tourism and hospitality industry, demand is the volume of services
required by clients or customers at any certain period of time. In the service industry, demand
implies the quantity of services that are required from the firms. These may include passenger
seats in the airlines, tables for restaurants, rooms for hotels, or attendants from spas. Although
the previous examples talked about tangible materials, the actual demand speaks about the
provision of service to attend to the needs of the customers. Airline seats refer to transporting
passenger to a destination, tables refer to dining space for hungry customer, rooms for the
accommodation during the stay, and attendants refer to a therapy that will be accorded to clients.
Going back to the original discussion on demand, some economic scholars mentioned
that demand, for it to function properly, has to have a counter force which is supply. Supply
represents the amount of goods or products available for consumption in the market. For the
service industry, the supply side is synonymous to capacity. Since organizations produce services
rather than tangible goods often refer to the output as capacity. Capacity refers to the ability of
organization to provide or render services among their customers. It often relies on the amount of
inputs in order to produce services which can either sustain the requirements or fall short. Inputs
normally come in different forms, such as labor,. time, space, and others, which will be discussed
further in this chapter. The ability of organizations to create services reflects an organization's
productivity. Since organizations rely profit to be sustainable, the primary objective then of such
organization is toward maximizing productivity.
 This chapter discusses the concept of demand, capacity, and the challenges of matching
demand and supply in the service industry. Service performance gap occurs when an
organization fails to manage demand, over utilizes its capacities, caters to wrong customer mix,
or becomes price-dependent. Most service organizations consider the effective use of capacity as
key success factor. The aim is to utilize employees, equipment, and facilities as productively as
possible.
Learning Objectives
At the end of this chapter, the students should be able to:
 understand the concept of demand;
 be familiar with capacity constraints
 apply strategies on matching demand and capacity;
 learn the benefits and risks of yield management strategies;
 understand strategies for managing waiting lines when capacity and demand cannot be
aligned: and
 understand customers' perceptions about waits and queueing systems.

Reality Bites
The Gutierrez family owns the Amiananti Bantay Farm and Resort located Pangasinan.
The farm is a very popular resort destination every summer. It offers multiple activities like
hiking, camping, fishing, swimming, horseback riding, and all- terrain vehicle (ATV). It has
facilities for overnight stays, including a dormitory building, multiple huts, and a camping
ground. Day visitors are treated to three adult pools and one kiddie pool The 20-hectare lot is
teemed with fruit-bearing trees and a petting zoo of different farm animals.
Guests have to book at least six months prior to their stay in order to reserve a slot for the
summer season. The management is keenly observing the carrying capacity of the area, that is
why walk-ins are strongly discouraged. A very small percentage of guests are walk-ins and they
have to wait to know if there are slots coming from "no-shows" or cancellations. The farm is also
strict in observing use of materials that are harmful to the environment. Guests need not bring
anything in the resort because the package paid for already includes basic amenities. Guests are
allowed to bring personal items and clothes. Food, accommodation, and other utilities are
provided. Service staff are always available to attend to the needs of guests. They are trained to
be courteous, flexible, and gracious to the guests and co-employees.
After the summer season, the farm closes for some time to allow the place to recover.
Although the farm opens after two months, there is barely any activity that happens during this
time. Guests are almost inexistent, and operations are at a minimum.
Given the situation, what should be the strategy or strategies in order to maximize
productivity and yield of the farm? What are the policies of the resort that could be retained?
What should be changed? What should be done to bring in customers after summer season?
Content
Service organizations must consider the different factors that affect demand and capacity.
These factors may result in conditions that post challenges to managers in maintaining the
productive operation of the company. Most service organizations are faced with the predicament
of having fixed capacity and unpredictable demand. Unfortunately, as discussed by Zeithaml.
Bitner, and Gremler in their book Services Marketing 7th edition (2017), at any given moment,
a service organization may face any of the following conditions:
a. Excess in demand. The demand for services far surpasses the maximum available capacity.
The situation often leads to denying services to excess customer and losing the opportunity to
gain profit.
b. Demand exceeds optimum capacity. Quality of experience in this situation is deteriorating.
Customers can still be accommodated, but the place already feels crowded. There is
dissatisfaction of the services rendered
c. Balanced demand and supply at optimum capacity. This condition reflects the ideal
situation for both the organization and the customers. The facility is in full capacity but is not
strained; employees are busy but not overworked. The customers receive good service on time
and no delays.
Managing Demand
Managing demand has always been one of the primary considerations of service
organizations to maximize productivity. In order to manage fluctuating demand in a service
business, it is a must to understand the nature of demand, including demand patterns, reasons of
fluctuation, and the market segments that create demand at any given point in time.
a.Predictable Cycles. These refer to the periodic increase and decrease of demand levels at
specific time which may transpire at different intervals: daily (may happen by hour); weekly
(may happen by day): monthly (may happen by day or week); and/or yearly (may happen based
on months or seasons). In cases where predictable cycles are detected, the reasons they occur
should be identified.
b. Random Demand Fluctuations. Contrary to the first condition, sometimes demand appears
to be random. There is no predictable cycle that could be derived. Even so, the cause of demand
can still be identified. A good example is the weather condition of an area. The number of park
goers increases if the weather is good and declines if the sky is not clear of rain showers. Other
random and unpredictable conditions that may affect demand include: health-related incidents
(accidents, heart attacks and births); natural disasters (floods, fires, and hurricanes), or even acts
of war and terrorism.
c.Demand Patterns by Market Segment. A service organization that has thorough knowledge
about its customers may be able to come up with a strategy in order to cater more appropriately
to its customers. With the analysis of the profile of an organization's customer, it may be able to
identity patterns of demand whether it is predictable or random. The organization would then be
able to design a service specific to the market segment.
Managers should be aware that applying an effective demand planning process may
contribute to a reduction in the level of disruptions caused by operational risks. (Swierczek,
2019).
Upon learning about the patterns of demand among the different market segments, an
organization can focus to demand management activities. There are several basic approaches to
management of demand:
a. Take no action and leave demand to find its own levels.
b. Reduce demand during peak periods.
c. Increase demand during low periods
d. Inventory demand using a queuing system.
e. Inventory demand using a reservation system.
These approaches are options that guide an organization to improve its strategies to
maximize profitability. Customers may react positively or adversely depending on how well an
organization manages to implement these approaches. Naturally, customers react based on the
convenience it brings to them. The first approach take no action, looks very simple but may be a
hotbed of trouble among many service-oriented organizations. Ultimately, customers may learn
from experience or from word of mouth when they should stand in line to use a service and when
it will be available without delay. With the presence of competitors, customers may also be able
to find other service organizations that are more responsive.
Molding Demand Patterns through Marketing Mix Elements
Organizations often approach management of demand based on what fits their style and
resources. The freedom to choose and the diversity of choices to demand management has led
organizations to be creative and resourceful. Many organizations utilize the elements of
marketing mix as tools to manage demand since it directly affects the customers. Organizations
can easily influence their clients to adjust accordingly by using the different elements of the
marketing mix.
 Elements of Marketing Mix
1. Use Price and Nonmonetary Costs to Manage Demand. The use of pricing one of the most
utilized way of balancing supply and demand. Changes price has an immediate and direct effect
on the decision-making process of customers. Pricing strategy is stronger when the services are
price sensitive. Changes in price may influence the decision of customers to either delay or
advance the timing of their purchase. Nonmonetary costs involve customer decisions as to
choosing convenience and preferences in availing services. Some customers would choose to
dine in a restaurant at times when they do not need to wait and to avoid crowded conditions
2. Change Product Elements. There are service organizations that offer products that even any
amount of price discounts would translate to having business. In order to encourage customer
demand, a new service product needs to be introduced. The objective is to encourage the same
set of customers, to find new other market segments, or to cater to both. An example is a
swimming resort that offers water and other sports activities during summer may offer to cater to
teambuilding clients and customers or may offer function areas for variety of events.
3. Modify Place and Time of Delivery. For services that are continuously offered at specified
time and place, service organizations can capitalize to market needs by adjusting the time and
place of delivery.
a. Vary the times when the service is available. Services maybe adjusted on schedules where
market segments can most likely avail of the services. Professionals may only have time to move
around after office or during their rest days. Shopping hours of malls may be extended to cater to
different types of office workers. Business process outsourcing (BPO) employees may require
services beyond the usual day time hours.
b. Offer the service to customers at a new location. Visibility is the key to the success of some
businesses. However, not all service organizations can locate at strategic areas most of the time
due to financial and logistics concern. Service organizations can choose to be mobile and locate
at different places at different times. Or added service features can be offered to customers to
generate business during lean times. For example, clothes for laundry may be picked up and
delivered by the laundry shop before and after washing.
4. Promotion and Education. Organizations can always use the multimedia to inform its clients
about its operations, innovations, and changes through advertising, publicity, or sales promotion.
A strong communication effort may help in managing demand even if the other elements of the
marketing mix are constant.
Managing Capacity
Among many organizations across different industries, service capacity is fixed. Fixed
capacity can be due to different factors depending on the type of service that an organization
provides. These factors may include time, labor, equipment, facilities. or a combination of these.
Among several service organizations, the primary constraint on service production is
time. If the period of work of an employee is not used productively because of some reasons,
then profits are lost. Or in case there is a high level of demand at a certain period of time, an
additional time cannot be created in order to satisfy the demand.
For service organizations that employ a number of employees, labor can be the primary
capacity constraint. In cases that demand fluctuates and, for some reason, persists for some time,
then the service organization will be very concerned with idle labor and extra costs. Some other
cases consider equipment as a critical constraint. Service organizations that are dependent on
their machineries to render service may consider the capacities of those machineries as their
limitation. If an airline company can only maintain a few small aircrafts, then the capacity of
those carriers defines the capacity limit of the organization.
Many other organizations are limited by the facilities that they can provide. Service
organizations like hotels can only sell a certain number of rooms; spas are limited to the number
of bath areas; and restaurants are restricted to the number of table and seats available.
To maximize the understanding the concept of capacity, it is imperative to learn the
difference between optimal and maximum use of capacity. These terms pertain to different
situations. Optimal capacity would mean that the resources of a service organization are fully
utilized but not overused. And more importantly, customers still receive quality and prompt
service. Maximum capacity, on the other hand, refers to conditions where the total limit of
service is fully utilized. The maximum use of capacity may result in excessive waiting by
customers, leading to customer dissatisfaction.
Human factor capacity, which includes people's time or labor, is more flexible and harder
to specify as compared to facilities and equipment. In cases where a service provider's capacity
has been exceeded, it would most likely result in diminished service quality, customer
dissatisfaction, and employee burnout and turnover.
Stretching Capacity Levels
Capacity levels of some service organizations can be considered as elastic when it comes
to accommodating more demands. For example, bars can offer seats for around 50 people and
allow standing room for 30 with enough space for all. However, during special holiday
occasions, may be around 100 people can squeeze in and mix with the partygoers.
Likewise, other capacities may be stretched. Employees and staff can be asked to perform
at high intensity during peak times. Although, because of human factor, the efficiency of their
performance will only be as good until they get tired, which may result in poor service. The
capacity of some facilities can be extended when these are used for longer periods Cinemas or
theaters that are screening from 11 am to midnight, may add more screening hours to
accommodate more customers.
Moreover, the average amount of time customers spend in the service process may be
reduced. Diners in a restaurant will have a faster turnover if the services provided to them are
faster. Seating of customers can be done immediately as soon as the table previously used by
other customers are quickly buzzed out; the menu is made available, and the bill is promptly
presented after the meal. Slack time in the delivery of service should be minimized.
Aligning Demand and Capacity
Service organizations must have a clear understanding of the limits of their capacity and
the patterns of demand they face in order to come up with strategies to match the available
supply with the demand. Matching capacity and demand may be accomplished through the
following strategies: level the fluctuations of demand by modifying demand to match the
existing capacity or adjust capacity according to demand fluctuations.
Strategies in Modifying Demand to Match Existing Capacity
This general strategy aims to reduce excess customers beyond the capacity of the
organization during peak times and to influence them to use the service during off-peak times
instead. Service organizations will be able to maximize productivity they can move customers
during slow periods or even attract new customers at this time. This strategy may not be possible
for other customers whose needs cannot be adjusted. For example, executives and business
people may not be able to move their flight schedules, hotel bookings, and other reservations at a
later or in earlier time. Customers belonging to this category will be considered as lost
opportunities. The following methods can be considered when trying to match the demand with
the existing capacity:
a.Communicate with Customers. Service organizations can create and maintain
communication with customers to inform them of the peak periods and to sway them to use the
service at other times for them to avoid crowding delays, and long waiting time.
b.Modify Timing and Location of Service Delivery. Organizations may choose to adjust their
operation time to cater to market segments to disperse crowding. Others locate in strategic areas
or offer online transactions to accommodate customers whenever and wherever they are.
Families usually go out and relax during weekends, hence, cinemas can increase the number of
theaters showing family-oriented movies. Bus and rail cards may be purchased at convenience
stores other than their usual ticketing booths.
c.Offer Incentives for Off-peak Usage. Special discounts, promo packages, or freebies may be
offered to customers who will use the service during off- peak periods.
d. Set Priorities. Service organizations may choose to prioritize frequent and loyal customers
during peak times. This somehow guarantees a continued patronage to your organization.
Organizations may also choose to serve customers that need immediate attention or require
greater considerations. Airlines would allow the elderly, minors, or differently abled to board the
plane before others.
c.Charge Full Price. Service organizations may opt to charge the full amount to customers
during peak periods and not allow the use of discount cards or coupons. Hotels may not be able
to honor gift certificates during the holiday season because they are fully booked.
Strategies in Adjusting Capacity to Meet Demand
The objective of this second strategy is to adjust the capacity of a service organization in
order to match supply and demand. Shifting capacity involves expanding the organization's
ability to meet customer needs during peak periods and minimizing capacity during downtime to
minimize costs or wasting of resources. The following are some of the schemes that can be
considered and adopted:
1. Increase Capacity Temporarily. Most of the time, capacities can be temporarily expanded to
meet the demand. Expanding capacities need not equate to inducing new resources, but instead,
employees or staff, facilities and equipment will be programmed or required to work for longer
and harder to sustain demand.
a. Extend People, Facilities, and Equipment Temporarily. For instances that there is a strong
level of demand. services may be extended temporarily. Malls extended their mall hours two
weeks before Christmas day to accommodate the Christmas rush shoppers. It may be possible to
extend the hours of service temporarily to accommodate demand.
b.Use Part-time Employees. Service organizations usually call out additional workforce from
their on-call list of staff to supplement labor during the peak of the demand. Caterers and
shopping centers hire part-time employees during the holiday season to cope with the demand for
events, functions, and holiday rush
c. Cross-train Employees. Employees may be trained with multiple skills in order to make them
perform tasks where they are most needed. This would also address work issues where staff are
underutilized in certain departments while others are overworked.
d. Outsource Activities. Service organizations that are experiencing temporary peak in demand
for internal service operations, such as information technology, finance, or human resources,
may just choose to outsource the service instead of hiring and training new employees for a
temporary position.
e. Rent or Share Facilities and Equipment. During the temporary peak periods, organizations
may decide to rent equipment and facilities instead of procuring new ones.
2. Adjust Use of Resources. Also known as "chase demand" strategy, it aims to modify service
resources to go after the demand curve in order to match capacity with demand patterns. Still, the
focus would be on people, facilities, and equipment in relation to adjusting the basic mix and use
of these resources.
a. Schedule Downtime during Periods of Low Demand. Operations may be downgraded
during off-peak periods to provide opportunity for people, equipment, and facilities to recover
and not waste resources.
b. Perform Maintenance and Renovations. Repair maintenance work, and renovations may be
done during low demand period.
c. Schedule Vacations and Employee Training Strategically. To ensure that the employees are
at their best whenever they are asked to perform, they need to be properly rested and trained.
Vacation leaves and trainings may be scheduled during off-peak times. In this way, operations
will not be greatly affected and the staff are already in tip-top shape during peak season.
d. Modify or Move Facilities and Equipment. Adjustments to facilities and equipment during
slow demand period should be done similar to adjustments being made during peak season. In
this way, the organization need not put too much strain to its equipment and facilities, hastening
their deterioration.
e. Encourage Customers to Perform Self-service. Limited capacities can be reduced when
customers learn to perform tasks without having employees attend to them most of the time.
Self- service facilities and technologies may augment the labor force providing services to
customers.
f. Ask Customers to Share. Customers can be given options share the services they are availing
of. Transport network vehicles may offer "ride sharing" schemes to people who are going on the
same directions for a reduced rate or fee.
g. Create Flexible Capacity. Organizations sometimes design their services to cater to specific
segments of the market. Organizations may design facilities that can be easily modified in order
to cater to broader types of market. Restaurant tables may be specifically designed for pairs,
families, or groups; it could be an issue if the customers of a restaurant are in groups but the only
tables that are free are for pairs. Organizations may be able to design tables that could cater to
pairs, to fours when combined, and to groups when combined further, and vice versa.
Increase Demand to Match Capacity
There are approaches in matching capacity and demand that are focused on increasing
demand during conditions where demand for service is low. The following demand may be
considered with the aforementioned situation:
a. Educate Customers. During periods of low demand, organizations may inform customers
about the availability of their services. Further advertising and promo materials may encourage
and inform customers of the advantages when availing of their services at this time.
b. Convert How the Facility is Used. Some organizations may opt to offer their facilities to be
used for different purposes, depending on the season of the year. Dormitories occupied by
students studying in Baguio City during school time may be offered as transient house for
visitors during vacation time or Holy Week.
c. Modify the Service Offering. Service organization may modify the process of how they
deliver their services to increase demand. Spa and massage parlors can offer home services for
customers who do not want to leave their homes.
d. Differentiate on Price. Most organizations offer discounted or promo packages during slow
seasons. Resorts and hotels in summer destinations offer discounted fees for groups, families, or
pairs who will book during the rainy season.
Strategies in aligning capacities and demand abound. The organizations' ability to decide
and choose the best for them is a key to keep them profitable.
Productive Service Capacity
 The term productive capacity denotes resources or assets that organizations utilize to
manufacture goods and to render services. For service-oriented organizations productive capacity
can be in the form of equipment, facilities, infrastructure, and labor. This is also known as
capacity management.
Equipment is an important element of capacity since it is used during the process of
rendering service. Equipment are vital components in the delivery of services among
organizations. These equipment facilitate the process in order to provide the best and most
immediate services to customers. This may take the form of small tools to a very complex
machine used to process or aide in the course of delivering service.
Facilities are resources that pertain to handling of customers and provisions to store or
process goods and services. They usually pertain to the buildings, structures, or premises where
customer avail of the products. They also refer to areas where storing and processing of goods
sold to customers are located.
Infrastructure refers to public and private structures essential to deliver quality service to
customers. It may include structures such as roadways, bridges, ports, terminals, and other public
utilities.
Labor refers to human elements that manipulate the process and deliver the goods and
services required by the customers.
Yield Management
Yield management is also known as revenue management. Organizations use this method
to find the best combination among price, customer, and capacity used. The objective of yield
management is to produce the best possible return from a limited available capacity. Particularly,
it tries to allocate the fixed capacity of a firm to match the potential demand in various market
segments in order to maximize revenue or yield. In a mathematical presentation, yield
management is:
Yield= Actual Revenue
Potential Revenue
Where:
Actual Revenue = Actual Capacity Used X Average Actual Price
Potential Revenue = Total Capacity X Maximum Price
Yield is basically a measure of the extent to which an organization's resources (time,
labor, equipment, or facilities) are achieving their full (revenue-generating potential.
Yield management may seem to be the best tool to match demand and supply but it has
its share of risks, which are the following;
a. Loss of competitive focus. Organizations that are so focused on profit maximization may
carelessly forget the facets of service that provide long term competitive success.
b. Customer alienation. Multiple price structures may create confusion and dissent among
customers and may perceive it as unfair.
c. Overbooking. Disenfranchisement may be felt by customers who will be affected by
overbooking practices used by yield management systems.
d. Incompatible incentive and reward systems. Complains and resentment may happen when
employees feel like the incentive structures do not match their efforts.
e. Inappropriate organization of the yield management function. Some organizations may have
difficulty complying with the requirements of the yield management methods to operate
effectively.
Waiting Lines and Queuing Systems
Waiting is a phenomenon that happens everywhere. Also known as queue,it may happen
whenever a system to process a transaction is exceeded by the number of influx of dealings.
Queues are manifestation of surplus of requirements over the capacity to transact.
Mismatch of capacity management and demand often results in queueing, but sometimes,
it is not possible to manage capacity to precisely match demand, or vice versa. There are
conditions where precise matching of capacity and demand would be too costly for an
organization to maintain. Ships and planes cannot be available anytime to ferry passengers to
certain destinations A schedule has to be made to maximize productivity.
Sometimes, even scheduled flights that have specific times to arrive and leave may
experience delays due to differences of length of time for service of other fights in the same
airport. There is queueing because other planes take longer to deplane and take off.
Organizations may consider the following different strategies to deal with queueing
issues:
1. Audit the Operational Process. The organization should study the operational process to
pinpoint the possible causes of queueing. Any part of the process may reorganize or
redesign to eliminate lines and facilitate movement. Some service organizations may not
be able to eradicate lines: in this condition, concerned organizations may have to choose
what kind of queueing system to use, or if system is already present, the organization
may decide on how to configure the queue. Queue configuration is concerned with the
design and effect of queue system that will be placed Specifically, it discusses the
number of queues, the locations, the space needed, and the impact on customers.
2. Institute a Reservation Process . An option for service organizations to avoid waiting
lines in their facilities is to put in place a reservation system. Using the reservation
system would allow customers to choose any available time they intend to arrive in the
company. This would guarantee that the customers will be accommodated once they
arrive. Further, the reservation system would be able to spread demand to less popular
time periods or slots. The downside of this system would be customers who will be "no-
shows" in their appointed time.
 3. Differentiate Waiting Customers. Service organizations who have waiting lines usually
come up with policies to prioritize customers based on needs or profiles. Customers need
not wait the same length of time to avail of the service. Some organizations differentiate
among customers to allow some customers to wait for a shorter amount of time. The
usual rule for choosing the next customer to be served is through "first-come, first-
served" basis. There are other factors or rules that may apply depending on company
policy. The following are the other bases of differentiating customers:

a. Importance of the customer. Some organizations may have frequent customers

availing of the company services regularly, or sometimes customers who spend large
amounts with the organization (also referred to as preferred clients) can be given
priority in service by providing them with a special waiting area or separate lines.

b. Urgency of the job. Customers who require more pressing needs may be served first.
Often, this applies to institutions that provide for medical needs or security concerns.
In the regular day-to-day transactions, priority is given to customers with essential
issues more than those require routine checks.

c. Duration of the service transaction. Services may be differentiated on the basis of

length of service required. If upon diagnosis it was determined that it requires short
service, then the customer may be referred to "express lanes" for immediate disposal.
Customers requiring more attention and may take time to address the issue will be
endorsed to a service provider that caters to specialized requirements.

d. Payment of a premium price. Some service organizations have special

accommodations to customers who pay extra. Customers in this category are often
given priority, such as separate check-in lines or express systems for airplane
passengers, "fast pass" for theme parkgoers, or VIP lounge for "preferred clients."

e. Make Waiting More Pleasurable. Customers who are waiting may still be satisfied
depending on how they will be attended to by the service organization. It is not just
the length of waiting time that has an impact to customers, their experiences and
conditions during the wait will also matter.

Reducing the waiting time of customer requires a multidimensional approach. Increasing

capacity is not always the best option among conditions where service organizations need to
balance customer satisfaction vis-à-vis costs of operation Service organizations may consider
other approaches such as the following.
a. Revalidating the queuing system design (including configuration and wait options):
b. Fitting the queuing system according to market segments (needs urgency, price, or
importance of the customer.
c. Managing customers' behavior and their perceptions of the wait (making the waiting time
more pleasurable).
d. Installing a reservations system (booking or appointments to distribute demand); and
e. Redesigning service process to shorten transaction time (installing self-service kiosks).
Different Types of Queues
Managers have a lot of choices for queueing system. The challenge is for them to choose
which best fit the requirement of their organization.
1. Single-line, sequential stages. In this system, customers pass through several serving
operations or segments, as in a buffet line. Bottlenecks may happen in any segment
where it would take longer to undertake than the previous segment.
2. Parallel lines to multiple servers. This applies to establishments that cater to a big
number of people at any given time. The immigration section at the airport utilizes
this queueing system.
3. Single line to multiple servers. This is also known as a "snake. In contrast to
"parallel lines to multiple servers" system, issues about line speed movements are
addressed. Check-in counters of airline companies within the airport premises cater to
departing passengers who are checking in their luggage.

4. Designated lines. This system segregates lines for different customers based on
specific categories. Immigration personnel designate lanes for diplomatic passport
holders, foreign passport holders, residents, overseas Filipino workers (OFW), or
Association of Southeast Asian Nation (ASEAN) countries.

5. Take a number. Upon entry to the establishment, customers are provided numbers
from an automated counter: The customers are given the opportunity to sit down,
relax, or do something else while waiting for to be called. This system caters to a
significant volume being attended to by organizations .Telecommunication of
companies and other utility companies use this system of queueing.

6. Waiting list. Food service establishments usually use this type of queueing system
where customers are requested to provide their names along with the size of their
group. Customers wait until their names are called. There are several designs of wait
listing which are the following:

a. Party size seeing- Customers wait until a table that matches the number of people in
the company is available.
b. VP seating- Favored customers are given priority slots and special rights.
c. Call- ahead seating- Customers call the restaurant before arrival to hold seats for the
customer.
 d. Large party reservations- Customers that require a significant number of seats and
tables or a fraction of the guest area are compelled to make arrangement prior to
arrival.

Psychology of Waiting Time

The following are how people perceived waiting time at different conditions:
1. Unoccupied Time Feels Longer than Occupied Time. Customers that are doing nothing
while waiting will likely be bored and will observe the passage of time more than when they are
doing something
2. Preprocess Waits Feel Longer than In- process Waits. Customers tend to feel that the
waiting time seems shorter if they perceive that the service has started. Customer tend to believe
that service has started and they are not waiting anymore if they see that there are activities
related to the upcoming service.
3. Anxiety Makes Waits Seem Longer. When customers become anxious, they carry with them
negative impressions about what they are experiencing. Customers anxiety may be addressed if
they are properly informed on the length of waiting time.
4. Unexplained Waits are Longer than Explained Waits. Customers who are aware of the
causes of waiting are usually more patient and less worried. Informed customers may have an
estimated idea on how long they have to wait.
5. Unfair Waits are Longer than Equitable Waits. When customers think that they are
unfairly attended to because other customers who arrived after them have already been serviced,
it will heighten the impression that waiting seem longer. This happens when there is no visible
queueing system and customers are trying to be served.
6. The More Valuable the Service, the Longer the Customer Will Wait. Customers expecting
premium services are more tolerant in terms of waiting.
7. Solo Waits Feel Longer than Group Waits. Customers who come in groups are more
tolerant to waiting because they can focus their attention on their companions while waiting.
They may be oblivious of the time, especially if they are into discussions of interesting topics.
8. Physically Uncomfortable Waits Feel Longer than Comfortable Waits. Waiting is
burdensome when customers are waiting in an uncomfortable situation. The discomfort
magnifies the feeling of being in line for a long time.