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Discussion of the Results, Relevant Actions, and Recommendations for Public SSC

CHAPTER 4 CONCLUSIONS, IMPLICATIONS, AND RECOMMENDATIONS

4.3. Discussion of the Results, Relevant Actions, and Recommendations for Public SSC

Public SSCs have played a key role in improving the public service and reducing operating costs in developed and developing countries, as part of government policies often. With this, governments can release billions of dollars that would be allocated to operational expenses and direct them to their core activities such as education, health, transportation, security, etc. However, there are accounts of failure and loss in the implementation of SSCs in the public sector. This study extends the knowledge of the SSCs of the public sector to propose and empirically test a model of factors that influence the performance of SSCs. In addition to substantiating the importance of each factor of the model, there are eight proposed measures, related to these factors, which public managers can take to improve their SSCs models, existing or to be implemented to help to prevent new cases of failure.

The proposed model represents the relationship of six factors (culture, leadership, resources, readiness for change, excellence, and market orientation) that affect performance (seventh factor) of an SSC and the results of empirical research that ratified the hypotheses of relationship between these factors are discussed below in the light of the results obtained. The only exception was for the relationship between leadership and excellence, whose evidence was not statistically proven, as discussed below. To recall, the established hypotheses were H1: Culture relates positively to Excellence in SSCs; H2: Leadership relates positively to Excellence in SSCs; H3: Resources relates positively to Excellence in SSCs; H4: The greater the Readiness for Change, the higher the level of the Excellence in SSCs; H5: Excellence relates positively to Market Orientation in SSCs; and H6: Market Orientation relates positively to Performance in SSCs.

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Culture – The results confirm the existence of a positive relationship between

culture and excellence. Thus, the more the culture is, for example, oriented to quality and customer service, and engaged in the mission of the SSC, the higher the operational excellence. Other studies have also proven that the organisational culture is related to excellence (e.g. Oliveira & Roth, 2012; Mohammad Qawasmeh et al., 2013; Irani et al., 2004; Oakland, 2001). Research findings suggest that culture is an enabler of service excellence and that it contributes to the success of the strategy desired with the deployment (for example, quality of service to citizens). The established culture in the public SSC is one of the determinants of success in providing quality services and the final performance of the SSC. One of the eight measurements discussed later, Measure 1, relates to these findings.

Leadership – The results showed no statistical significance and led to the rejection

of the hypothesis that there is a positive relationship between leadership and excellence (see Section 3.11.4). This could suggest that the leadership style is not directly related to the achieved level of excellence, but it is not the case, as several other studies, for example, in the field of quality, confirmed the existence of this positive relationship (Prabhu & Robson, 2000; Kanji, 1998; Mohammad Qawasmeh et al., 2013). With the information available, I could not find a conclusive reason for the lack of statistical significance; causes can be related to the sample and respondents, for instance. A final analysis of the reasons for this discrepancy will require further study, possibly in a new research. As the qualitative part of the research, in addition to studies of other researchers, corroborated strongly (including the Action Learning Set) the importance of leadership to an appropriate degree of excellence and performance of the SSC, and this factor led to an improvement measure as a suggestion of this study, see Measure 3.

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Resources – The results indicate that there is a positive relationship between

resources and excellence. This is also a relation proven in numerous other studies as Barney (1991) and Fok-Yew & Ahmad (2014). Another main finding is that the way the financial, human, and specific to services resources, among others, are organised and used is so important for excellence, as cost reduction or improving quality (Fok-Yew & Ahmad, 2014). For this reason, the SSC must organise its resources in a vision and approach for a service operation. This finding suggests that the SSC in pursuit of excellence should also be aware of the differentiated orchestration of their resources, as specified in Measure 8, discussed later.

Readiness for change – The results show that the relationship between readiness

for change and excellence is positive. This means that the higher the commitment of managers and employees with the desired organisational changes, and the better the SSC's competencies to lead change, the more favourable are the conditions to achieve excellence. Certainly, these competencies need to be incorporated in the SSC culture in greater or lesser degree, depending on the requirements of the portfolio of services offered. I.e. services that require more flexibility, and continuous changes will require skills and culture more favourable to change fastest than more stable services that require very few variations over the years (Goldstein et al., 2002; Clark et al., 2000). Even so, in the latter case, the customer service and the way services are provided (processes) will always need to be improved, and SSC employees be prepared to accept and adhere to the changes, preferably being co-responsible for the design and implementation of the changes (Kotter, 2001; Anderson & Anderson, 2010).

Excellence – The results confirm the positive relationship between excellence and

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expectations of the customer (Gouthier et al., 2012; Johnston & Clark, 2001). It also means providing quality service, be compared to the best in the category (benchmarking), have established quality standards and be oriented to delivering value to customers and other stakeholders (Camarero, 2007; Hietschold et al., 2014; Noble et

al., 2002). For this, contributing factors as an organisational culture defined and

implemented to promote excellence, and likewise, the leadership, resources, and readiness for change. The results from this study suggest that in the opinion among the survey respondents, excellence contributes directly with more emphasis on the SSC's performance than to market orientation. That is, the greater the degree of excellence, the better the performance, and with less intensity, the greater the market orientation (customers). As discussed in Chapter 3, the ALS experts believe that the trend is that the relationship between excellence and market orientation is strengthened as the SSCs reach new levels of maturity and customer focus ('outside -in' view).

Market orientation – The results indicate that the relationship between

performance and market orientation is positive. Thus, to be able to deliver quality services, be proactive and have great performance, an SSC needs to be oriented to its clients and open to the external environment (Jaworski & Kohli, 1993). In this way, it will be possible to meet customer expectations and comply with the other stakeholders. However, guiding the SSC to their clients is just the first step because usually, this first movement leads the organisation only to answer to what the customer requests, which is called responsive market orientation. Though, to have high-level performance, the SSC needs to go one step further and practice what is called proactive market orientation, which consists of anticipating the customers' latent needs (Narver et al., 2004). The absence of competition in the public service tends to lead the SSCs not to achieve optimal

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performance. In this context, market orientation with its management practices and mechanisms can compensate for the lack of competition, and help the SSC managers in the continuous improvement of the service operation.

Performance – The results show that the performance is influenced by market

orientation, as per excellence. The empirical validation of the model has shown that the relationship between performance and excellence is more intense than between market orientation and performance (as discussed in Section 3.11 Quantitative Action Research) when it was expecting the opposite. These findings, in the interpretation of the Action Learning Set, is because the model has captured the view of the current situation of the SSCs and not the desired situation, or in future with a higher level of maturity. Performance here is not limited to the financial dimension, but is extended, for example, the positive impact that the SSC has in society, motivation and productivity of their employees, resources dedicated to monitoring performance, customer satisfaction, and coordinated implementation of strategy defined for the SSC (see Section 2.6 Conceptual Model).

In short, culture, leadership, resources, readiness for change, excellence, and market orientation, are key predictors of performance, and this means that if these factors are organised, developed and operated properly, and achieve high levels of best practices, will influence decisively, so there is high performance of the SSC. The findings from the quantitative and qualitative results (e.g. Table 3.27), were discussed on the Action Learning Set composed of experts in SSC and public service (see Chapter 3). The experts gave suggestions and commented on the results and preliminary findings I found. Based on these insights, I developed the first version of the eight measures for

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ALS for refinement, resulting in these eight measures discussed here. The eight measures summarise the knowledge generated from my research, and facilitate the operationalisation of the research knowledge by the public SSCs managers. The following I present and discuss each one of these measures:

Measure 1 – Create its own service culture. It has been found by the qualitative

research that many public SSCs lack adequate culture for service oriented to the customer (customer centric culture) and the lack of resources for investment makes them less competitive than the private SSCs. It should be allowed for an SSC have its own culture, oriented to the delivery of service to the customer/citizen with high employee engagement; combining with creative responses, the excellence in service with the necessity of fulfilment of the legislation and the limitations inherent in the civil service. This culture must also be appropriate and aligned with the culture of the client organisations served. The SSC should also have mechanisms of 'chargeback' (Bergeron, 2002), charging for their services and thus having the resources to invest, to maintain high levels of excellence in service. While paying for the service, the clients also will be compelled to be more demanding, taking the SSC to a virtuous cycle of continuous improvement. In services provided directly to citizens, the SSC may charge, for instance, the organs of core activities, since the citizen already pay his taxes. Care should be taken that the SSC compensation model does not take to limit their focus to acting only in 'their' processes, but also to integrate 'its processes' to the processes of its customers (actually processes should be (re)designed from end to end). Cultural adaptation also needs to be made to the client organisations to assimilate the 'chargeback,' so don't try to avoid the service because it is charged. However, beyond that, not to generate resistance in the SSC clients, the collection of chargeback must be made with due care,

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so that they feel that the value and form of the collection are fair.If not in this way, the chargeback can derail the success of the SSC. The moments of the greatest need of austerity tend to favour the adoption of chargeback, and the decision as to the form of the collecting, values by type of service and the SSC margin, must pass the approval of the Board of customers in a forum discussed in the Measure 2 the following. Below, Table 4.1 presents the relevant actions to developing and implementing the Measure 1, which I suggest to the public SSC managers.

24Table 4.1 Relevant actions to take the Measure 1 – Create its own service culture

Measure 2 – Steering by its customers (client focus). The research revealed that

many public sector SSCs operate with a vision toward inside (inside-out), when they should run from the customer focus (outside-in), and that because of it have impaired performance and dissatisfied customers. An SSC must, by definition, be directed by its customers, and this direction level is typically more strategic (not in the daily management of the SSC), through a Council or similar mechanism. In this strategic

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board, the customer should have a voice and the power of veto in any decision relevant to the life of the SSC, and not only in matters of his specific interest. Moreover, the SSC should not be seen only as a form of cost reduction, but also a provider of best services to its customers, corresponding to their quality expectations. The public SSC will naturally be 'more competitive' if guided and directed by its customers (in the words of one of the members of the ALS to 'Do what the customer needs'). Note: the meaning of ‘more competitive’ here is to respond with effectiveness to the needs of the SSC customers. On the other hand, it is essential that the SSC learns to balance what the client requests with the need for standardisation and economies of scale, which will bring a significant part of the cost reduction and the final value for the existence of SSC. Another important aspect is that depending on the nature of the service provided by the SSC client may be an internal organ or the citizen. Therefore, it is necessary to define who is the customer who will be part of the board (e.g. the owners of the SSC, the stakeholders, those who pay the SSC for the services rendered?). And if it is not the end customer, they should also be heard through other mechanisms— that should always be part of all SSC—as, for example, periodic satisfaction surveys (e.g. after each customer service via phone, sent by email or placed to the client access portals, as well as research with probabilistic sampling), complaint channels that work in a structured way (e.g. web portals), ombudsman channel, etc. Below, Table 4.2 presents the relevant actions to developing and implementing the Measure 2, which I suggest to the public SSC managers.

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25Table 4.2 Relevant actions to take the Measure 2 – Steering by its customers (client focus)

Measure 3 – Develop an entrepreneurial leadership1. The results of the inquiry

point that, though many public SSCs are high-performance operations of services, comparable to the best of the industry, others are driven by administrators and not leaders, with performance complacency and more preoccupied in paying attention to the political context than to the clients of the SSC. An entrepreneurial leadership (Osborne, 2006, 2010; Keuper & Lueg, 2013), as part of an entrepreneurial culture (see Section 2.2.2), can revolutionise a lenient, too indulgent SSC, even with the limitations arising from bureaucracy, scope defined by law, politics, and limitations related to staff. This can lead to the transformation of the attitude of the SSC staff and positively affect service quality. As discussed in Section 2.6.4, an effective leader must have strong skills to drive change towards continuous improvement of a public SSC, inspiring staff with their conduct in defence of service excellence in every decision made daily. This leadership should not be a 'transactional leadership,' oriented to everyday transactions, but a 'transformational leadership,' as argued by Kanji & Sá (2001), that every day leads to a continuous transformation of the public SSC towards excellence in service. With such leadership, the SSC will seek to provide a public service with excellence, despite

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the bureaucracy of the public sector. On the other hand, a challenge always present will be to find the right leader for the SSC context in question, as well as having an entrepreneurial attitude, and lead and motivate staff towards excellence in service. This leader should have other equally important leadership predicates, not discussed here, but, which will need to be described in the profile of the desired head when designing the SSC model. This measure will also help reduce the impact of problems that were reported by survey respondents as the high turnover of staff in many public SSCs and lack of leadership control over who will work in their teams. Below, Table 4.3 presents the relevant actions to developing and implementing the Measure 3, which I suggest to the public SSC managers.

26Table 4.3 Relevant actions to take the Measure 3 – Develop an entrepreneurial leadership

1 Note: Despite the hypothesis H2 (Leadership relates positively to excellence)

was rejected (see Section 3.11.6), the Action Learning Set considered leadership as a critical element to lead the civil SSC to be more client-oriented.

Measure 4 – Bring some people from the industry to the public SSC. It has been

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although in some countries the level of best practices in public service SSCs is comparable to those of the industry, many public servants working in other SSCs have limitations in their training, experience, or mainly, attitude. Thus, people with the right skills to promote high-performance SSCs could be brought from the industry to the SSCs of the public sector that needs them. This could occur (with the appropriate legal mechanisms in place) for instance on a temporary (but, not too short) basis, by project, or other similar initiatives. Public-private partnerships could also provide the legal means for the establishment of SSCs that can count on professionals from the industry; they can disseminate best practice and form a culture that favours acting as a client- oriented service unit. A member of the ALS commented that the public sector would need to develop mechanisms to identify the right people for doing that. Another challenge in some countries may be to convince these professionals to go to the public- sector due to substantial differences in the characteristics and dynamics inherent to each sector workplace. Below, Table 4.4 presents the relevant actions to developing and implementing the Measure 4, which I suggest to the public SSC managers.

27Table 4.4 Relevant actions to take the Measure 4 – Bring some people from the industry to the public SSC

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Measure 5 – Public SSC as a State Policy. Another finding of the research is that

many SSCs are susceptible to political interference affecting their performance and customer service quality. This is especially serious if we consider the fact that more and more countries should now adopt the SSCs as a solution for reducing operating costs and improving public service quality, as recommended by OECD (1995, 2010). The SSC should be protected by law (or equivalent) against political interference (whether at the federal, state or regional/municipal level), not to be a management practice dependent on an elected Government—which will govern during a relatively short period of time— to avoid being subsequently discontinued, or severely impacted, when there is a change of Government. In the words of one member of the ALS “It is important that the SSC has a clear mandate and that this mandate is isolated, as much as possible, from the shifting and changing perspectives of politics. Establishing the SSC using formal legislative vehicles will protect, as much as is possible, from interference.” Another ALS member informs that in the US, for example, the level of this kind of political interference (in federal SSCs), practically does not exist. This is not a matter of wanting to force the adoption of SSC by law, as it most likely would not work, but once defined by consensus that SSC is an appropriate solution, to protect services operation and the results for

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