What is Service Decoupling? Cost, Quality, Delivery Speed, Flexibility, Strategy

What is Service Decoupling?

Service decoupling refers to breaking up activities in the service delivery process and performing these activities separately and independently. For example, a restaurant can completely separate the food preparation activity from the serving activity.

These two activities can be executed by different individuals. In service organisations, front-office activities are generally decoupled from back-office activities. The ‘front-office’ and ‘back-office categorisation’ depends on the level of customer contact required in an activity.

If an activity has ‘very low’ or ‘no’ customer contact, it is considered to be a back-office activity. On the other hand, if an activity requires high-level customer contact, it is considered to be a front-office activity.

For example, in a hotel, activities like receiving guests, providing them room service, etc. are considered front-office services whereas cooking, maintenance of reservation records, or accounting activities are considered back-office activities as these activities involve no or very little customer contact.

When front-office activities are decoupled from back-office activities, different individuals can perform different activities rather than a common set of staff performing all activities. Therefore, decoupling provides the benefits of specialisation to service organisations in terms of improved expertise of staff members in their assigned work.

Such specialisation help in improving efficiency, reducing variability in service performance and increasing service conformity (as when the same person repeatedly carries out a task, the service level shows less fluctuation).

Decoupling and Cost

Decoupling can provide a cost advantage to service organisations as specialisation leads to increased efficiency of the organisation. For example, when a same set of staff performs different activities, they need to frequently switch between tasks.

In decoupling, different activities are performed by a different set of people. As a result, there is a minimal movement of workers between different activities. Reduction of staff movement results in lower cycle time, which, in turn, reduces costs.

In addition, when different activities are decoupled, they are executed in a more specialised way. Such specialisation results in greater productivity, which further reduces per unit cost.

Moreover, decoupling reduces services variability which in turn reduces the chance of a service getting rejected by customers. Therefore, decoupling results in cost reduction by eliminating waste.

It should be noted that decoupling is not always associated with cost reduction. In many instances, it can result in increased cost as well. Implementation of service decoupling requires organisational restructuring, redefining work processes and flows and hiring specialised people for executing each individual activity.

Such changes require a significant amount of initial investment. In addition, decoupling can result in increased idle time for workers involved in front-office activities. This is because earlier front-office workers used to be involved in back-office activities as well.

However, because of decoupling they will have idle time as the arrival of customers can be very irregular. Moreover, decoupling can result in duty over-lapping i.e. some tasks being conducted multiple times by different workers.

For example, when a process is divided and segregated among multiple workers, each one tends to repeat a small part of the previous worker’s activity. This results in duty overlap, which in turn results in wastage of manhours and increased cost.

Decoupling and Quality

Decoupling leads to improvement in quality by increasing service conformance. Service conformance refers to the maintenance of the same service level repeatedly over a period of time.

When a worker is responsible for a single activity or task, he/she gains expertise in the task in a short period of time. Such expertise reduces variation in the activity and decreased variation increases service conformity. However, conformity is not the only component of service quality.

Service quality also includes dependability and accuracy. Breaking a process or activity into smaller activities or tasks and assigning those to different individuals can result in more errors and less dependability.

For example, in the late 1980s, the Bank of America decoupled its process of automobile loans and the process of repossession of automobiles in case of default.

This resulted in confusion in the organisation as ineffective communication among the staff involved in these two processes resulted in erroneous repossession of automobiles of lenders who did not default on the loans. Had the process not been decoupled and the same staff were involved in both the processes, such errors would not have occurred.

Moreover, decoupling can reduce the autonomy and dilute the role of front-office staff in dealing with nonstandard customer requests. Because of role dilution, the front-office staff may not be able to create the best customer experience as creating such experience might require seamless coordination with the back-office staff. Such coordination is not always present in real-life organisations.

Decoupling and Delivery Speed

Decoupling focuses on identifying and categorising services based on front-office and back-office activities. The distinction of activities helps in standardising tasks and building expert task forces that help in delivering quality services.

Decoupling can transform the delivery speed of a service provider. Let us take an example of a hospital where different people are assigned different tasks to deliver health care services competently. In a health care facility, you may find a medical office receptionist, greeting patients, answering their inquiries and scheduling appointments with relevant physicians.

Then, there are doctors/physicians who examine, diagnose and treat patients. Apart from this, there are medical laboratory technicians who perform tests on tissue, blood and other body fluids to assist physicians in the diagnosis and treatment of diseases.

In addition, there are nurses who provide hands-on care to patients by observing and monitoring their health conditions, maintaining records and communicating with doctors.

Now, each job role in a hospital is performed by a person who is specialised in delivering their own task efficiently. The receptionist does not treat patients and the doctor does not perform a lab technician’s task.

Therefore, decoupling helps in dividing activities based on their nature of specialisation. When each person is specialised in his/her task, the chances for error also reduce, which ultimately reduces the service delivery time.

Here, you must understand that there is a difference between task speed and process speed. Decoupling divides a process into different tasks, performed by different people. It also includes waiting times and hands-off between tasks.

However, a customer sees a service delivery process as a whole and not in tasks. If there is delay in a task, it may hamper the speed of the entire service delivery process. Increased decoupling waiting times and hand-offs between tasks may negatively affect the entire service delivery speed.

In order to obtain quick delivery speed, it is important to reduce waiting times and hand-offs between tasks. This can be done by centralising buffers between tasks or between front-office and back-office activities.

Take an example of McDonald’s outlet. You will find separate front-office and back-office sections, performing their specialised tasks. Front-office people, greeting customers, taking their orders and giving bills; and back-office people preparing the food order by customers.

Now, if there is delay between tasks of these two sections, it would result in delay in service delivery and increase in customer waiting time. In order to deal with such situations, the back office needs to prepare food items in advance and keep it in a buffer so that they could be delivered to the customers as soon as the order comes to the front office.

Thus, keeping buffers helps in dealing with disruptions, allows smooth workflow and increases service delivery speed. It helps in dealing with bottleneck situations by holding inventory ahead of time to maximise production.

Here you must note that if the decoupled service is not creating a bottleneck situation, it is not serving its purpose of cost optimisation.

Decoupling and Flexibility

Decoupling results in the standardisation of activities as workers are supposed to follow standard procedures to carry out specific tasks assigned to them. Such standardisation results in the loss of flexibility to workers.

For example, in a coupled environment, the same staff members are responsible for the entire process rather than a part of it. So staff members have more autonomy and discretion in carrying out the entire process.

However, in a decoupled environment, each staff member is assigned with a specific job and he/she does not have control over other activities in the same process.

Reduction in flexibility has negative effects on the level of satisfaction of customers of a service organisation. For example, suppose a customer approaches a front-office worker, say a receptionist in a hotel, and requests certain customised services for which the receptionist will have to sidestep his/her standard operating procedures.

In a coupled environment, the receptionist would have such discretion to tweak certain rules as he/she is responsible for the entire process. However, in a decoupled environment, he/she will have to coordinate with back-office for such discretions.

Such coordination may not be possible due to physical distance between front-office and back-office or for other reasons. Therefore, it becomes difficult for front-office workers to provide customised services in a decoupled environment.

Decoupling and Strategy

From the discussion so far, it can be concluded that service organisations mainly conduct decoupling for two important reasons – decreasing cost and improving the focus on service. However, decoupling often results in trade-offs, i.e. increasing costs and reducing service quality.

Therefore, service organisations need to decide on the level of decoupling (high or low level) and the level of focus on cost or service quality. On the basis of the decoupling goals service organisations can follow any of the four types of decoupling strategies.

The strategies are discussed as follows:

• High service: Under this strategy, a service organisation provides a highly flexible and customised service to customers at a premium price. This strategy combines high focus on service with a low level of decoupling.
  
  Organisations that are looking for high operational flexibility and responsiveness can go for the decoupling strategy. American Express follows the high service strategy.
  
  
• Focused professionals: In this strategy, the main goal of decoupling is to support and enable the front office to provide seamless services to customers. This strategy combines high focus on service with a high level of decoupling.
  
  Reduction of cost is not a primary objective under this strategy. A financial service provider Merrill Lynch follows this strategy.
  
  
• Cheap convenience: Under this strategy, a low level of decoupling is followed to reduce cost and provide the highest level of convenience to customers.
  
  This strategy combines high focus on cost reduction with a low level of decoupling. An American law firm Jacoby & Myers follows this strategy.
  
  
• Cost leader: In this type of decoupling strategy, the primary focus is to reduce the cost to such an extent that the service provider can provide services at the lowest possible cost to customers.
  
  This strategy combines high focus on cost reduction with a high level of decoupling. Retail giant Walmart follows this strategy.