MCS in Service Organization –

“Characteristics of Service Industry Determines

the nature of MCS to be followed and strategy
to be used to implement the said MCS.”
Service Industry Differs from Mfg. Industry in
terms of -
• Inventory building - cannot store the product
• Different resources requirements - labor
intensive
• Quality of product – difficult to control (Relative
concept and Professional Dependent)
• Pricing of product – No sound cost base
• Multi-unit organization setup – fast food chain
10/17/08 hmahesh45@yahoo.com; VIM Pune 1
MCS in Service Organization –
Characteristics of Service Industry
• Very few tangible assets  ROI may be
meaningless
• Special class of labor  seeks more autonomy in
working.
• Input and output measurement is difficult 
difficult to arrive at effectiveness and efficiency of a
professional.
• Usually of small size  Viability of elaborate MCS is
in question.
• Marketing of the services is usually informal  may
lead to problem in arriving at inputs of revenues.
• Cost of services is of flexible nature such as
traveling expenses, communication expenses
10/17/08 hmahesh45@yahoo.com; VIM Pune 2
therefore building standards is difficult process.
 MCS in Service Organization –
Issues Involved: -
1. Pricing – Usually linked with time spent.

2. Transfer Pricing
(When service providing unit is defined as Profit center)
3. Strategic Planning and Budgeting – usually long
range staffing plan.
4. Control of operations – Crux is in scheduling the
professional time.

Hours Billed

5. Billed time ratio = --------------------------

Professional Hours Available
10/17/08 hmahesh45@yahoo.com; VIM Pune 3
 MCS in Service Organization –
General Performance Measures
1. Recommendations of investment banker V/s Stock Market
indicators.
2. Closeness of Diagnosis & Actual findings.
3. Judgments made by superiors.
4. Use of numerical ratings.
5. Appraisal by peer professionals/ self appraisal.
6. Client reports.
7. Budget to measure the cost/time performance.
8. Professional quality and quantity of work – Clients
referrals, Time taken to complete the task.
9. Internal audit to control quality and quantity.
(You can add few more, depending on your own experience)
10/17/08 hmahesh45@yahoo.com; VIM Pune 4
MCS in Service Organization –
Performance Parameters for a Insurance Industry
1. Time and cost budgets
2. Revenue generated (to rank performance)
3. Quality control trough – Metrics such as Client
Satisfaction, Number of complains and average complains
received, Complain disposal rate, Claim settlement period
(average)
4. Client profile of a branch/center
5. Product range sold/promoted
6. Client relationship and dealer relationship
7. Promotional campaigns undertaken
8. Number of defaulting Clients and Amount overdue
9. Number of policies revived
10. Number and amount
10/17/08
of claims settled
hmahesh45@yahoo.com; VIM Pune 5
MCS in Service Organization –
Performance Parameters for a Hospitality Industry
1. Occupancy rate, spread over a period
2. Revenue generated out of main activity
3. Revenue generated out of allied activities – cousin, bar, shops,
parlor, boutique
4. HR budget
5. Cost per customer/per day – for cost control
6. Promotional efforts undertaken
7. Quality control through – customer feedback, customer
referrals, repeat customers
8. Booking register position
9. No of tie-ups, corporate clients
10. Number of complains received and resolved
11. Time to taken to attend and render the desired service
10/17/08 hmahesh45@yahoo.com; VIM Pune 6
MCS in Service Organization –
Performance Parameters for a Transportation Industry
1. Average plying/idle time, spread over a period
2. HR cost and fuel cost budget
3. Maintenance cost budget
4. revenue generated per vehicle/per employee
5. Number of customer complains
6. Cost of complain redress (Average and Total)
7. Number of breakdowns, accidents, insurance claims,
average recovery period
8. Employee relationship/loyalty build
9. Average waiting time/loading/unloading
10. time schedule, fleet schedule management
11. Average load carried V/s Ideal load capacity
10/17/08 hmahesh45@yahoo.com; VIM Pune 7
MCS in Service Organization –
Performance Parameters for a Tourism Industry
1. Number of customers, Revenue generated and spread
over a period
2. Quality control through – Customer referrals, repeat
customers
3. Time taken to attend and render the desired service
4. Cost and revenue per package/tours
5. Package mix
6. Allied services provided – pick-up, drop, food, beverages
7. Promotional campaigns undertaken
8. CRM and Liaison maintained
9. Average number of customers or revenue per package
V/s Ideal numbers
10. Discounts offered and revenue spurred
10/17/08 hmahesh45@yahoo.com; VIM Pune 8
11. Number of complains received and average time taken to
 MCS in Service Organization –
Financial Service Organization
1. Monetary assets – primary resource

2. Time period for transaction may range from

hours, days to number of years – unsound base for
input assessment

3. Risk and Rewards based trade – therefore

knowing the risk component of transaction one can
decide the reward.

4. Technology plays significant role –

Automated teller machines -, Electronic market
places for securities.
10/17/08 hmahesh45@yahoo.com; VIM Pune 9
 MCS in Service Organization –
Organizations taking up Projects -
Characteristics
• Single objective – “ to built a flyover or supercomputer”
• Project organization and project management
• Management’s focus is project.
• Need for trade off is vital - scope, schedule and cost.
• Less Reliable standards
• Frequent changes in plans.
• Different rhythm in implementation of project
• Greater external Environmental Influence

10/17/08 hmahesh45@yahoo.com; VIM Pune 10

 MCS in Service Organization –
Health Services Organization-Characteristics

1. Availability & Cost is primary concern ,the

performance efficiency comes latter.
2. Wide variety in Service Mix of facilities – many
options are in offing. (Polyclinics, Total Health Care
Centers)
3. Third party payers – the costs have being
subsidized by govt., NGO institutions.
4. Professional’s loyalty is primarily to his
profession rather than organization.
5. Quality control possible through peer review or
through outside review agency.

10/17/08 hmahesh45@yahoo.com; VIM Pune 11

 Thanks….

10/17/08 hmahesh45@yahoo.com; VIM Pune 12

 MCS in Service Organization –
Non Profit Making Organization-Characteristics

•1. Absent of profit performance measure –

•2. NGO’s have contributed capital –
•3. Fund accounting –
•4. Governance – Usually NPO are managed
by trusts

10/17/08 hmahesh45@yahoo.com; VIM Pune 13