Facility management contrasts between office and hotel industries

Upgrade thesis Name: Paul R.J.M. van der Heijden Reg.nr: 890404-335-080 Programme: MSc Management, Economics and Consumer studies (MME) Specialisation: Management studies, Facility Management Date: June 2014

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Abstract

Facility Management activities are present in various organisations and sectors, however there might

occur differences in the scope and influence of FM within different sectors. This research focused on

analysing the contrasts between two industries regarding the facility services provision. The objective of

this research is to create a generic clear overview of general contrasts between two industries,

regarding facility management. The scope of this research is placed on two different settings/sectors

and different type of actors involved. The focus is on the hotel industry (as an example of a servicescape

setting) and subsequently on customers; whereas the other focus is on the office industry (as an

example of a workscape setting) and subsequently on employees. Literature is reviewed to analyse

contrasts present in the facility services provision, the demand actors (customers/employees), the core

business related to FM, and the effects of the physical environment. The core business activities in the

hotel industry are closer related to facility services compared to this relation with the office industry.

Facility services are outsourced in the office industry to a large extent, whereas this is not (yet) the case

in the hotel industry. Furthermore, the demand actors contrast on the fact whether the actor pays for

the facility services (which is the case in the hotel industry), and also on the type of consumption

(hedonically relates to the hotel industry, utilitarian relates to the office industry). Also the physical

environments can use different parameters (satisfaction, performance) to measure it effect on the users

(customers/employees), which also implicates that further contrasts are difficult to assess. Finally, it can

be included that it might be difficult to implement FM aspects of one industry into the other industry,

due to the large differences/contrasts.

Key words: Facility Management, contrasts, core activities, hotel industry, office industry

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Index Abstract ........................................................................................................................................................ 2

Index ............................................................................................................................................................. 3

1. Introduction ......................................................................................................................................... 4

2. Relation core businesses and FM ........................................................................................................ 7

3. Internal or external provision of facility services/products ............................................................... 11

4 Demand for facility services/products ............................................................................................... 15

5. Effect physical environments on users ............................................................................................... 18

6. Conclusion and Discussion ................................................................................................................ 23

Conclusion .............................................................................................................................................. 23

Discussion ............................................................................................................................................... 25

Sources ....................................................................................................................................................... 26

Appendix A: Real estate strategy and core business ................................................................................. 31

Appendix B: Generic facilities classification model ................................................................................... 32

Appendix C: Motives for outsourcing ........................................................................................................ 33

Appendix D: Service quality and servicescape .......................................................................................... 34

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1. Introduction

This research starts with a problem analysis and includes also the research questions and methodology.

In the problem analysis, a brief introduction into the issue/problem of this research is provided. Further,

the research questions are stated, after which the used methodology is briefly explained.

Problem analysis

Facility Management is, according to Atkins and Brooks (2009), the integrated process to support and

improve the effectiveness of the primary activities of an organization. Facility Management (FM) is

present in various organisations and sectors, however there might occur differences in the scope and

influence of FM within different sectors. The same facility management aspects/services might be

differently perceived/weighted among different sectors. This research focuses on analysing the

contrasts between two industries regarding the facility services provision. The goal of this research is to

create a generic clear overview of general contrasts between two industries which induce a difference in

facility management between these industries. The picture that has emerged is of a fragmented facilities

management profession which is developing in isolation in different specialist sectors. There can be little

understanding of the relationship between the facilities being managed and the core business objectives

of the organisation that used them (Loosemore and Hsin, 2001).Therefore, this research explores the

differences (e.g. core businesses) between two sectors, regarding facility management.

The two sectors used for this research are two distinct settings. The used sectors relate to the

application of facility management for different users in different environments/organisations. One

sector emphasizes on work environments influential to the employees, whereas the other sector relates

to the service environments influential to customers. The service environment can be interpreted as the

physical surroundings of a service company, which is also described as servicescape. The work

environment can be interpreted as the physical (and social) environment at the workplace influential on

employees (2), which is described as workscape. Lee and Choi (2012) indicate that as the servicescape

affects customers, the workscape can affect employees. Thus, two sectors (where the build physical

environment applies mainly on different users) are used in this research. Although the topic of this

research differentiates from the research of Faber et al. (2003), this latter research illustrates the

differences between the two sectors/settings. They state that there are two technical architectures; one

that delivers the service (front office) and one that connects the actors to work together (back office). In

this research, the same differentiation is used regarding the different sectors (hotel and office sector).

According to Price (2004), a generic facilities differentiation can be based on among others the speed of

feedback between customers and occupiers (of the physical environment), which is visible in Appendix

B. Two distinct sectors are for example the hotels and the back-offices. According to this differentiation,

the hotel receives a higher and faster feedback between the customer and the facilities, compared to

back-offices which have a lower or indirect feedback between the customer and the facilities. The used

sectors for this research are therefore selected as the hotel sector (as the servicescape setting) and the

office sector (as the workscape setting). The term office sector, used in this research, focuses on

different back-office sectors, in order to enable the gathering of sufficient information about this

generic sector and the workscape. Another reason why these two sectors are selected for this research

is based on the trend that hospitality is becoming more important in the provision of facility services.

Therefore, two different sectors are selected where one sector already is often focussed on hospitality

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(hotel sector) and where the other sector is yet to implement this hospitality trend more into its current

facility practices (the office sector). Other sectors could have been selected, however these sectors are

selected for this research, also since the physical environments of these sectors clearly differentiates.

This research will not primarily focus on the effects of the physical environments on the users, since this

has already been researched numerously. This research will primarily focus on the differences between

two different sectors/settings, regarding facility management (FM); since a different focus on users

(customers / employees) might result in a different facility management provision. This is not necessarily

directly a problem, however a clear initial overview of these FM differences is not yet provided. This

overview can indicate possible issues/problems for organisations, when different settings (and thus

different actors) should be managed differently. An example of a possible issue is that facility service

providers should manage their service provision in accordance to the sector/setting characteristics. The

service provision and the criteria for e.g. cleaning might differ between a workscape and a servicescape.

It could be a problem when organisations do not adapt their services to the different sectors / users.

This research focuses therefore on proving an initial overview of important aspects to consider in

different sectors. Possible contrasts are analysed on the supply side (facility services provision), the

demand side (the customers) and the different physical environments (servicescapes c.q. workscapes)

related to their effect on the ‘main’ users (customers c.q. employees). All together, this research is

focussed on exploring the generic industry differences related to the facility services between the two

different sectors.

The objective of this research is therefore as follows:

To analyse the possible contrasts between office and hotel industries regarding facility

management by performing a literature study.

Research questions

The following general research question (GRQ) is defined based on the problem analysis and objective of

this research.

What facility management contrasts occur between the office industries and hotel

industries, according to literature?

In order to answer the general research question, the following research questions are defined. Since

the problem analysis indicated that there can be little understanding of the relationship between the

facilities being managed and the core business objectives of the organisation, the first question focuses

on the core business of the different sectors and their relation with facility management. The other

questions relate to possible (other) contrasts between the different sectors, regarding FM. First, the

internal or external provision of facility services is addressed, since this consequently relates to RQ1. The

next question focuses on the demand for facility services/products. Furthermore, the last question

focuses on the physical environment (servicescape/workscape) en their effect on the users, since the

physical environment has been indicated in the problem analysis as a contrast between the sectors.

RQ 1) How do the core businesses of the office- and hotel industries relate to facility management?

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RQ 2) What are characteristics related to the internal or external provision of facility services/products

in the office- and hotel industries?

RQ 3) What are characteristics related to the demand for facility services/products in the office- and

hotel industries?

RQ 4) What are important characteristics related to the effect of the physical environment on users in

the office- and hotel industries?

Thus, this research starts by elaborating on the relation between the core businesses and facility

management. A possible consequence of this question is the level of internal or external provision of

facility services. Therefore, the second research question proceeds on analysing this level of service

provision. Beside analysing the facility services in different sectors from the perspective of

organisational core business, the perspectives from the customer/client is also taken into account in

order to analyse the demand characteristics of the different actors (customers/employees).

Consequently, the effect of the different physical settings (servicescape/workscape) on these actors is

also analysed, since the management of facilities can also be affected by their environmental effect.

Altogether, different industries are analysed on their facility management contrasts in their core

business, the type of facility provision, different physical environments and the different actors in order

to provide an overview of the generic contrasts.

Methodology

This research used the research strategy ‘desk research’ to gather the required data for this research,

since there is already related literature available (especially of the hotel customer satisfaction). The

material gathered during this research is analysed in order to answer the research questions. ‘Desk

research’ is a research strategy which is carried out mainly from behind a desk, in the library and/or in

archives. It has been decided to base the research project completely on the existing literature and/or

on the material gathered by others (Verschuren and Doorewaard, 2010).

Figure 1.1: Overview research questions and relation (research questions are indicated as number)

Office sector Hotel sector

Relation core businesses and FM

RQ 1

Provision of facility services/products (supply)

RQ 2

Demand for facility services/products (demand)

RQ 3

Effect physical environments on users

RQ 4

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2. Relation core businesses and FM

In this section, the relation between the core businesses/activities of the office- and hotel sector and FM

is discussed. First, the core businesses of the industries are analysed (upon the extent in which this is

possible). Furthermore, FM is explained from different perspectives to subsequently analyse the

relationship between FM activities and both sectors’ core business

Core businesses office and hotel industries

In order to identify the relation between the core businesses and FM, it is first relevant to indicate what

the core businesses are of the subject industries. Whereas the supporting activities (ancillary activities)

facilitate the production of good/services of the organisation, the core activities produce the

goods/services of the organisation in order to satisfy the client/yield income. Facility Management

differs in general between sectors/industries. Grimm (1994) notes that in some industries the support

functions attract little attention. In other industrial sectors, the support services might signify a crucial

operational element in the success of that company. The role/function of facility and other support

services can therefore vary according to the business environment of organisations. Some business

sectors, such as hotel, commercial mixed-use, and leisure, are much more facility-based than others.

The research of Loosemore and Hsin (2001) states that it is important to have some understanding of

the sectors and their peculiarities in a managerial perspective. For example, the goal of the facilities

manager in a hospital environment is to achieve zero defects in the hospital’s physical operation.

Loosemore and Hsin (2001) further mention that in contrast to the hospital sector, the hotel sector uses

buildings as a direct generator of profit. Unlike the commercial sector where buildings perform a

supporting function and income is generated in general from non building-related activities, hotel

organisations generate income directly from activities within the building itself (Loosemore and Hsin,

2001). Given the concept of buildings as the primary generator of income and hence profit potential for

the hotel operator, there is a need to manage facilities efficiently. The research of Okoroh et al (2002)

also states that the effect and influence of FM on its users and organisational outcome depends on its

importance within a sector. This research points out that FM has been more prevalent in environments

where the facilities are part of the non-core activities of the organisation. Also, the term ‘FM’ frequently

relates to the work environment and the physical assets of the organisation.

According to Lindholm (2008) firms may want to emphasize revenue growth through building the

franchise and/or increasing value to its customers, or it may alternatively want to emphasize

profitability through improved cost structure and more efficient use of assets. Lindholm et al. (2006)

have modelled the relationship between core and non-core business in the context of real estate

management and facilities management. This framework illustrates how corporate real estate adds

value to the core business and wealth of the firm. And, as stated above, the business strategy can be

comprised of two basic approaches for increasing the shareholders’ value: revenue growth and

profitability. Based on this framework (see figure A1 in appendix A), the different sectors (hotel and

office), the related environments (servicescape and workscape) and the focus on different actors

(customers / employees, differentiations can be made to a certain extent. In general, the hotel core

business is focussed on attracting customers and providing an environment that supports the sale. The

core business of a hotel can be defined as satisfying customers in their needs of an accommodation for

an overnight stay. This mainly relates to the core business performance strategy of ‘revenue growth’

and consequently relates to a ‘promote marketing and sale’ strategy level. In the office sector, the focus

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of the real estate is also largely on employees and their working environment (workscape). The core

business of a typical office setting can be generically defined as providing a service for

clients/organisations that aligns with their demand. It is important to mention that the core business in

an office setting relates not necessarily to the office-building and that in an workscape the main actors

are employees, whereas the servicescape involves customers are main actors. Based on this generic

assumption and consequently this delimitation for this research, the real estate strategy ‘increase

employees satisfaction’ is also applicable on the office sector. Furthermore, other aspects related to

‘productivity, flexibility and cost reduction’ also refer to the workplace environment (workscape).

Therefore, a generic deliminitiation for this research is made that the service environment relates more

to the ‘revenue growth’ core business performance level, whereas the work environment relates more

to the ‘profitability growth’ level.

Based on this assumption and delimitation, the (real estate) core business performance level in a

servicescape might be more focused on revenue and consequently increasing turnover by stimulating

customers’ consumption of core services, whereas the core business performance level in a workscape

might be more focused on profitability, and consequently lowering costs by rationalizing support. The

remark has to be made that this does not implicate that within the hotel sector profitability growth or

within the office sector revenue growth is no core business focus. Since the focus in this research is also

on FM, this is now discussed below. Subsequently, the relation with the sectors’ core activities is further

discussed.

Facility Management

In order to understand Facility Management (FM) in

different sectors, it is initially relevant to explain

and define FM. The Facility Management model

(see figure 2.1) can be used to explain more about

Facility Management. This model visualizes the

relationship between different aspects which are

important in the management of facility

services/products. The model is based on the vision

that the main task in managing facilities is the

management of the related demand and supply.

The responsible actor is a director or agent which

aligns the clients’ demand and the facility service

provision. This can be compared to the supply chain

management of the required facilities. The model also provides an indication of the interdependencies

and –relationships.

According to Atkins and Brooks (2009), ’Facility Management is the integrated process to support and

improve the effectiveness of the primary activities of an organization by the management and delivery of

agreed support services for the appropriate environment needed to achieve its changing objectives’.

However, besides this definition, other definitions of FM are also stated. For example; Okoroh et al.

(2002) defines FM in hotels as ‘the management of constructed facilities and organizational assets to

improve their efficiency and add value to their performance and services’. This definition of FM in hotels

assigns especially the constructed facilities/assets to FM, which indicates a difference with the other

Figure 2.1: Facility management model (EN-15221-1; 2006)

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definition. Okoroh et al. (2002) also state that one of the outcomes of effective FM is that the property

and other physical assets of an organization are managed, in line with organizational objectives, to

improve their value to the organization, in direct terms and/or in terms of their impact on the people

and processes involved. Thus, the important note has to be made that already the definition of facility

management in general differs between sectors/industries. And, as mentioned in the problem analysis,

the picture that has emerged is of a fragmented facilities management profession which is developing in

isolation in different specialist sectors. There can be little understanding of the relationship between the

facilities being managed and the core business objectives of the organisation that used them

(Loosemore and Hsin, 2001). Therefore the further focus in this section is on relation with the core

business/activities of the different sectors.

Relation FM activities with office- and hotel industries

Taken along that the core activities in the hotel industry relate also to the building as a primary

generator of income, this provides indications that the core business in the hotel industry closely relates

to the FM activities. In hotels, the physical assets and environment are a (major) part of the sales

product, which could indicate the importance of certain facility services for the core business of hotels.

Employed in a servicescape, FM activities become more or less an integral part of the core services. For

the office industry, in this research limited to the workscape within (back-office) organisations where

the employees are the main actors, FM activities are typically employed as previously defined; ‘support

and improve of primary activities’.

The relation between FM and the core activities is not always recognized. The research of Loosemore

and Hsi (2001) indicated that there was no understanding of the relationship between the facilities KPI’s

and the core KPI’s of the main business. The achievement of the core business objectives in hotels is

mainly identified with guest satisfaction, but is also identified with the number of occupants; revenue

generated and gross operating profit. Efficient FM holds the potential for increasing profitability,

improving reputation, safety, cleanliness, comfort and the working environment, according to Okoroh et

al.(2002). In office organisations, FM is applied within the organisation as a managerial function. The

research of Okoroh et al. (2002) states that it is evident that many hotels are in fact also already using

‘facilities management’ practices or elements of it, but are instead using the generic terms like hotel

management, accommodation management, premises management and hospitality management for

the concept as a focus within the organisation

Okoroh et al.(2002) state that given the nature, characteristics, variety of components, and related

economic aspects of hotels, it seems that there are benefits to be derived from the application of FM in

hotel businesses. For instance, owners/owner managers in the sector, who are more proactive in the

management of their constructed facilities, achieved higher occupancy rates, profitability and repeat

business. Proactive management becomes essential when it is realized that service products essentially

propel hotel products. Despite the relatively high concern for facilities and rates of expenditure in the

hotel sector, the research of Loosemore and Hsin (2001) states that very little understanding is present

of the relative contribution of different functional spaces within the facilities to the core business

objective.

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SUBCONCLUSION

In this section, the following research question is addressed: How do the core businesses of the office-

and hotel industries relate to facility management? In general, the core activities of organisations are

producing goods/services to satisfy clients and/or yield income. The scope of this research is the hotel

industry as an example of a servicescape setting with customers as core actors, and the office industry

as an example of a workscape setting with employees as core actors. In hotels, FM activities and its

outcome are a major part of the core business by creating an appealing servicescape for customers,

opposed to FM as a general support function in the office setting, providing functional workspaces for

employees. Appendix B illustrates also that facilities have a lower business critical impact in back offices

than in hotel settings.

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3. Internal or external provision of facility services/products

In this section, the focus is on the generic contrasts between the two industries in the provision of the

facility services/products. The scope of this analysis is limited to the extent of internal/external facility

provision and follows after the previous question. This can be clarified with the Facility Management

Model (EN-15221-1; 2006) (see figure 3.1), which provides an integrated framework which describes

how FM supports the primary

activities of an organisation. This

section will focus on the supply side

(on the right side of the model),

where the insourced or outsourced

service provision is an important

theme.

REMARK: This model also suggests

different levels of alignment

(strategic, tactical and operational).

However, this alignment is not used

and thus analysed in this research,

due to the focus and limited scope

of this research. This alignment is

rather useful to analyse the

alignment per specific organisation.

Reasons for different facility services provision

Since the facility service provision is addressed in this section which is among others related to the in- or

outsourcing of these services, the reasons for the internal or external provision are first indicated. The

reasons for outsourcing can vary among organisations and sectors. One of the most often mentioned

benefits of outsourcing are the improved financial performance (attributable, in part, to almost

immediate cost improvements) and various nonfinancial performance effects. Examples of these

nonfinancial performance effects are the increased focus on core competencies (Gilley and Rasheed,

2000), gaining access to external competencies and improve service quality (Hilmer and Quinn (1994).

More reasons for outsourcing have been listed numerously, of which Appendix C is an example.

Furthermore, the relationships between the providers and the organisations (which could occur due to

outsourcing) can also be described with characteristics of these collaborating relationships. As Lehtonen

(2006) stated, the characteristics of collaborative relationships in facility services context can be

explained by three facts (which are also based on Salonen, 2004): (1) for most organizations, facility

services are support activities without significant strategic importance; (2) facility services are usually

fairly standardized services; and (3) in most cases, there are many alternative service providers in the

market. These facts indicate that, similar to the reasons for outsourcing, the strategic importance of

activities plays an important (key) role in outsourcing-decisions. Outsourcing can vary between

activities/services among different organisations/sections. Below, the outsourcing of FM in the hotel

industry and the office industry is further addressed.

Figure 3.1: Facility management model (EN-15221-1; 2006)

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Outsourcing in the office- and hotel sectors

The outsourcing model of Arnold

(2000) is used in order to clarify more

about organisations core activities. In

figure 3.2 is this model visualized.

First of all, the company core

activities (centre of the circles) are

the activities which are vitally

important and linked with the

existence of the organisation. Core-

close activities have a direct link with

the core activities, whereas the core-

distinct activities support the core

and core-close activities. Core-

disposable activities are activities which are generally available. It is important to clarify the

dependencies between the core existence of the organisation and the activities related to FM. In

general, the ordinary FM activities/processes are in the hotel industry closely related to the core

business of hotel organisations.

Hotel

The research of Okoroh et al.(2002) states that the following eight elements of FM in the hotel sector

have most significance: 1. Reception work, 2. General cleaning, 3. Catering, 4. Building maintenance, 5.

Maintenance of heating, 6. Electricity services maintenance, 7. Decorating, and 8. Communications /IT

maintenance. Of these activities, the reception, general cleaning and catering are suggested to be core

activities for the hotel industry. of Okoroh et al.(2002) found that the most frequently outsourced tasks

within the hotel sector are electricity services-, TV/radio’s- and communication/IT systems -repair and

maintenance, whereas the other FM activities are mainly insourced. For example, these insourced

activities are reception work (100% insourced), catering (97,5%) and general/regular cleaning (95%).

Reception work, catering and general cleaning are all identified predominantly as handling people,

whereas the maintenance activities were associated with handling technology. Reception and catering

are both perceived as important with respect to gaining a reputation and providing character to the

hotel Okoroh et al.(2002). There exists a consistently high level of scepticism towards outsourcing in the

hotel sector, according to Loosemore and Hsin (2001). The main problem with outsourcing was

perceived to be the slowness in responding to guest needs and complaints. Risk was used as the main

determinant of whether an activity should be outsourced or not. Outsourcing was only used when the

risks were minimal to the standards of service provided to guests. Beyond this constraint, the main

reason for outsourcing was cost effectiveness. Hotel facilities might be seen by the hotel managers as a

top priority and an asset that should be properly managed to make a strategic contribution to core

business objectives.

According to Lamminmaki (2005) numerous studies indicate that there is limited prior research

concerned with outsourcing in the hotel sector. This lack of research interest is surprising, according to

Lamminmaki (2005), since outsourcing has become a significant facet of modern hotel management

(Sieburgh, 1992; Rowe, 1994; Hottman and Adams, 1996). Understanding the motivation of hotels for

outsourcing is as important as technology, cost, and demand in determining success (Milgrom and

Figure 3.2: Outsourcing model (Arnold, 2000)

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Roberts, 1992). The over-riding conclusion of the study of Lamminmaki (2005) is that asset specificity is

useful when attempting to understand hotel outsourcing. Asset specificity relates to the extent to which

investments in assets (either human or physical) are specific to a particular trading relationship. The two

asset specificity dimensions that appear most pertinent in this context are site specificity and brand

capital (Lamminmaki, 2005). In the context of hotel management, site specificity can arise with respect

to laundry equipment and custom-made restaurant fitting investments. Brand capital is related to the

core business of the hotel, given the considerable importance attached to branding in the industry

(Lamminmaki, 2005). Furthermore, they found a large unwillingness to outsource restaurants, food and

beverage, and linen ownership due to a concern over brand capital maintenance. However, it could be

that for example the restaurant is outsourced, for, according to Lamminmaki (2005), the need of the

restaurant operators to maintain their own reputation can provide a safeguard that the restaurant

would be managed in a way that would not damage the hotel’s reputation. In this case, the restaurant’s

reputation facilitated the outsourcing arrangement. This example presented an extension of the “brand

capital” dimension of asset specificity (Lamminmaki, 2005). The effect of outsourcing on organizational

performance is important. The pros and cons of outsourcing should be evaluated properly (Bolat and

Yilmaz, 2009). Lam and Han (2005) found that outsourcing (in China) has become a commonly adopted

strategy in the hotel industry as managers attempt to squeeze operating costs in a tough business

environment. The purpose of such a strategy is to improve productivity, increase revenues, lower

operating costs, and reduce risks.

Office

Outsourcing in the office sector deviates strongly from the outsourcing of FM activities in the hotel

industry. Bailey et al. (2002) also adds to this that many private sector organisations have outsourced

support services such as catering, cleaning, maintenance and security. The trend in facilities

management seems to be continuing towards integrated services provided by one supplier (Smith and

Pitt, 2007). Since the facilities in an office environment do not directly relate to the core business of the

organisation, outsourcing is more often applied in the office industry than in the hotel industry. The

operational facility services, such as catering, cleaning, maintenance and security services have a

relatively long history of outsourcing (Tuomela et al., 2001), and furthermore, a trend towards more

collaborative approach with fewer service providers has been recognized.

As Atkin and Brooks (2009) mention, the importance of service attributes relates to the level of

outsourcing of facility services. Aspects as customer service and the priority of the service can be

identified as low importance aspects regarding facility services in the office environment. Therefore, the

outsourcing of earlier mentioned operational facility services is a common occurrence in the office

sector. As Quinn (1999) also states; today’s knowledge and service-based economy offers innumerable

opportunities for well-run companies to increase profits through strategic outsourcing. Subsequently,

upon serious investigation, most companies will find that 60 percent to 90 percent of their in-house

activities are services that are neither being performed at best-in-world levels nor contributing

significantly to competitive edge — and are not very risky to carefully outsource. Ancarani and Capaldo

(2005) mention that the most frequently outsourced services are catering, cleaning, waste and recycling,

security and hospitality, whilst the services most frequently retained in-house are procurement, human

resources, finance, estate management and business strategy. This level of outsourcing in (office)

organisations is also further

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SUBCONCLUSION

In this section, the following research question is addressed: What are characteristics related to the

internal or external provision of facility services/products in the office- and hotel industries? In the office

industry, the outsourcing of FM activities has become the normal stance since the 1980’s. Motives for

this are, amongst others, reduce operational costs, focus, and quality. Especially core distinct and core-

disposable activities like catering, cleaning, reception and maintenance have reached high degrees of

outsourcing (over 80%). On the other hand, in the hotel industry catering, cleaning, and reception are

considered core-close activities and therefore hardly outsourced. Important are the relationship with

the core business and safeguarding the quality/brand of the services Yet, also in the hotel industry

outsourcing is becoming more apparent.

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4 Demand for facility services/products

In this section, the focus is on the generic contrasts on the customers and their demand between the

two industries. Similar to previous section, this can be clarified with the Facility Management Model

(European Committee for Standardisation, 2006; also referred to as EN-15221-1; 2006), which provides

an integrated framework which describes how FM supports the primary activities of an organisation.

This section focuses on aspects of the customers and their demand.

Involved demand actors

In order to analyse contrasts in the demand of facility services/products, focus is placed on the actors

involved in the establishing of the demand. As figure 4.1 indicates, the demand actors can be

differentiated into the client, customer and end-user. These aspects are defined as follows (EN-15221-1;

2006):

Client can be defined as

the organisation that

specifies needs and

procures facility services

by means of a FM

agreement,

Customer can be defined

as an organisational unit

that specifies and orders

the delivery of facility

services within the

condition of a FM

agreement,

End user can be defined as

the person receiving facility services in a permanent or temporary way.

REMARK: Although the different demand actors are described with FM agreements and facility services,

the overall context is still usable. Where the end-users primarily receive the services, the client primarily

is the purchasing actor.

Demand actors in office- and hotel sectors

The two sectors used for this research are two distinct settings: the hotel sector relates primarily to the

service environment influential to customers, the office sector relates primarily to the work

environment influential to employees.

In order to illustrate the differentiated demand actors (client, customer, user), Coenen et al. (2011)

provides the following example: a FM company that delivers, for example, cleaning services to a bank,

can define as its “customer” – in the broadest sense – either:

the bank as a whole (client);

the internal FM of the bank (customer);

the bank’s employees (internal end user); or

the bank’s customers (external end user).

Figure 4.1: Facility management model (EN-15221-1; 2006)

16

While using the explanation above of the different demand actors, the focus of this research is on the

employees in a work environment and customers in a service environment. The employees in a work

environment are usually not paying for the services and have occasionally no real free choice concerning

the facility services delivery. Therefore, these employees are considered end-users of the facility

services. In the hotel sector, the customer is not only the end-user of the facilities, but also often the

paying actor, which relates to aspects of the client. In general, hotel guests as the customers have a real

choice whether or not to use the facilities in terms of an overnight stay, whereas the employees are

restricted to the available facility services on site. In offices, demand is more complex, related to the

organisational structure with top management as client setting the boundaries for facility services

delivery, unit managers as customers specifying and ordering facility services, and employees as end-

users receiving facility services.

Other contrasting differences between customers and employees are the former are external to the

organisation (being the hotel), whereas the latter is internal to the office organisation. To customers the

expression ‘He/She who pays the piper, calls the tune’ is applicable. The paying actor in a work

environment is generally spoken the client (and not the employees) and subsequently thus also ‘calls’

the eventual desired service level/cost.

Hedonic and utilitarian demand

Besides analysing the differences in demand actors, the needs of these actors can also vary between the

two sectors. This can be further explained using the differences between hedonic and utilitarian

consumption. Lim and Ang (2008) categorize products (purposed for consumption) as being hedonic or

utilitarian. Hedonic products are primarily consumed for sensory gratification and affective purposes

(Woods, 1960) or for fun and enjoyment. Thus, hedonic products generate emotional arousal (Mano

and Oliver, 1993) with benefits that are evaluated primarily on aesthetics, taste, symbolic meaning, and

sensory experience (Holbrook and Moore, 1981). In contrast, utilitarian products possess a rational

appeal and are less arousing as they generally provide cognitively oriented benefits (Hirshman, 1980;

Woods, 1960).

The types of consumption can also be related to different types of service settings. Below, the relation

between the consumption types and these different service settings are generically given. The remark

has to be made that this relation does not focus specifically on the effects of physical environments, but

more on general utilitarian or hedonic consumption in different service settings. In the next research

question, this research continues on the hotel and office setting and focuses on the effect of the

physical environment (service-/workscape) on the users.

Reimer and Kuehn (2005) indicated that retail banking as a service is used for utilitarian reasons, and

restaurants as a service is mainly used for hedonic reasons. Reimer and Kuehn’s (2005) indicated that

customers use services (such as e.g. appliance repair and maintenance, long-distance telephone,

telephone repair, insurance, retail banking, dry-cleaning) mainly for utilitarian reasons. Many of these

services relate to facilities. Utilitarian services indicate that the service result is of far greater importance

than the service process. Therefore, the customers only spend as much time in the service provider’s

environment as necessary. In these cases, the environment might be less important than for services

mainly used with hedonic reasons. Hedonic services involve situations where customers usually spend

17

more time (e.g. overnight stay compared to office work hours) in the service provider’s environment

and where the process of service delivery is of greater importance. Typical examples of hedonic service

settings are concert halls, theatres, restaurants and other leisure services (such as hotels). Wakefield

and Blodgett (1996) also state that these leisure services generally require customers to spend extended

periods of time in the physical surroundings of the service provider. Furthermore, the study of Reimer

and Kuehn (2005) indicated that the servicescape is of greater importance in determining customers’

evaluations of the expected service quality in hedonically motivated services compared to a utilitarian

service.

SUBCONCLUSION

In this section, the following research question is addressed: What are characteristics related to the

demand for facility services/products in the office- and hotel industries?.The extent in which the actors

have an unrestricted open choice and are paying for the services is an important contrasting aspect. The

customers in hotels are often also paying, whereas employees in offices are usually not paying for the

services. Demand in offices relates to the complexity of the organisation with different hierarchical

levels and employees, internally to the organisation, playing different roles. Demand in hotels relates to

guests as customers, externally to the organisation, with a single role as end-user. Another contrast in

the demand is the type of consumption. Whereas in the leisure industry (e.g. hotel) hedonic/affective

consumption is more present, the consumption in the office industry can be defined more as a rational/

utilitarian consumption. It is for the management of facilities important to realise for which type of

actors the facilities are provided. E.g. when facility services are provided for consumption by customers,

the demand of these actors might be more relevant to take into account than the demand of employees

(which are often not the paying actors). Furthermore, the type of consumption (hedonically or

utilitarian) can influence the importance of for example the quality of facility services. E.g. with

utilitarian consumption, it might not be recommended to provide a quality which over-satisfies the

needs of the users, since an affective sensory consumption plays a minor role in this service delivery.

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5. Effect physical environments on users

In this section, the effect of the physical environments on users is analysed in both the office- as the

hotel sector. First both sectors are individually addressed, to subsequently compare these in the

subconclusion. The effect of both settings (servicescapes c.q. workscapes) is related to its ‘main’ users,

with Lee and Choi (2012), whereas the servicescape affects customers, and the workscape can affect

employees.

Hotel industry

Services (as in the hotel industry) are more or less subjectively experienced processes where production

and consumption activities take place simultaneously. Interactions, including a series of moments of

truth between the customer and the service provider occur and are so-called buyer-seller interactions or

service encounters (Grönroos, 2007). Hotels can be categorized as service organisations with

interpersonal services and an elaborate physical complexity of the servicescape (physical surroundings).

This categorization is based on the typology of service organisations (Bitner, 1992), which is explained in

more detail in appendix D In this appendix, the service quality and servicescape are further elaborated.

Since the service environment can be related to the service quality, this paragraph starts initially with

the service quality, followed by the servicescape for the hotel sector. This initial start also provides an

indication whether the interaction really matters in this service setting, or whether also the

environment influences the customers’ perception. Subsequently, this section focuses on the physical

environment.

Intangibles and tangibles

A research of Mei et al. (1999) examined the dimensions of service quality in the hotel industry (in

Australia).This research concluded as key findings that service quality was represented by three

dimensions in the hotel industry, relating to employees, tangibles and reliability. The best predictor of

overall service quality was the dimension referred to as employees (Akbaba, 2006). Olorunniwo et al.

(2006) had similar findings: the service quality in the lodging industry is dominantly influenced by

tangibles, responsiveness, knowledge and recovery. However, in this research, accessibility/flexibility

and reliability failed to demonstrate a dominant role in service quality. In a research about the service

quality in business hotels by Akbaba (2006), the factor tangibles turns out to be a particularly important

contributor to service quality evaluation. Other important contributors were understanding and caring,

adequacy in service supply, assurance, and convenience respectively. In this research, the most

important factor in predicting guests’ overall service quality evaluation was tangibles, followed by

understanding and caring (Akbaba, 2006). As Wakefield and Blodgett (1996) indicate, a key theoretical

implication is that service quality research, particularly in the case of leisure services, should not only

look at intangible factors (e.g. reliability, responsiveness, empathy and assurances), but should also

more thoroughly investigate the tangible aspects of the service; namely, the servicescape.

Furthermore, Akbaba (2006) found that studies conducted in the hotel sector produce different

outcomes with regard to the hierarchy of dimensions in contributing to the overall evaluation of service

quality. Aspects varying from courtesy and competence of hotel personnel, employees, conviviality,

reliability and intangibles are differently mentioned as the most important dimension in influencing the

perceived quality in the hotel industry. The literature research of Choi and Chu (2001) also states

numerously different research related to service quality, but also to satisfaction and repeat patronage.

19

The empirical research of Choi and Chu (2001), focussed on the determinants of hotel guests’

satisfaction and repeat patronage in the Hong Kong hotel industry, pointed to ‘staff service quality’,

‘room qualities’, and ‘value’, to be the top three hotel factors that determined travelers’ overall

satisfaction levels and their likelihood of returning to the same hotel as well (Choi and Chu (2001).

Servicescape

Servicescape is a widely used term to describe the physical surroundings of a service company (Reimer

and Kuehn, 2005) and is used in this research. A number of empirical studies have demonstrated the

importance of servicescape characteristics on customer satisfaction and perceptions of service quality

(Miles et al., 2012). In the study about the impact of physical environment on the perceived service

quality in hotels (Kim, 2007) the impact of both tangible as intangible services on the perceived service

quality and on customer loyalty was researched. They found that in hotel public space, ambient

conditions factor had the strongest influence on perceived service quality among three factors. The

other two factors (space and function / signs, symbols and artifacts) had less influence on perceived

service quality relatively. In hotel guest room, space and function factor had the strongest influence on

perceived service quality among the three factors. The signs, symbols and artifacts factor also had

stronger effect than ambient conditions for hotel guest room. These results indicate that customers

perceive service quality differently depending on the area within the building. This research further

indicated that the overall perceived service quality is influenced by perceived intangible and tangible

service quality. The study results indicated also that intangible service quality has a slightly stronger

effect on overall perceived service quality; but the differences between intangible and tangible service

quality’s influence is relatively small. The findings indicate that hotel owners, managers, and operators

need to reconsider the physical environment of their properties (Kim, 2007). Losekoot et al. (2001)

examined ‘hard’ and ‘soft’ dimensions in hotels by focussing on the nature of customer complaints. A

‘soft’ approach is related to the interactional activities, while the ‘hard’ approach refers to facilities and

amenities (physical aspects). This research pointed out that between one in three and one in four guest

complaints origin from ‘hard’ elements in the hospitality product, rather than the ‘soft’. More generic

literature about the leisure services sectors also indicates that the servicescape does have a significant

impact on leisure service customers’ repatronage intentions and on the length of time they desire to

stay in the leisure service (Wakefield and Blodgett, 1996). Wakefield and Blodgett (1996) also indicate

that the “servicescape” affects perceptions of service quality, in particular, interior décor, cleanliness

and accessibility.

Office sector

Price (2004) states the workscape as a term deliberately suggested as an equivalent to Bitner's

servicescape of which the built or facilities environment is part. Rather than a fixed workplace, an

individual’s workscape will encompass many workplaces. With the recognition of the role of physical

environment in services in general (servicescape) and work environment, the study of Lee (2013)

proposed the definition of the workscape as ‘the physical and social environment at the workplace

influential on employees’. This is also in accordance with the statement of Lee and Choi (2012), which

indicated that as servicescape affects customers, workscape can affect employees.

Intangibles and tangibles

Literature indicates that the workscape could be considered as a hygiene factor according to Herzberg’s

two factor theory. The physical environment could be seen as the lowest-level motivator and mainly as

20

dissatisfier (Kampschroer and Heerwagen, 2005). This also corresponds with the different comfort

levels. Whereas the physical comfort refers to basic human needs such as safety, hygiene and

accessibility; functional comfort refers to the degree in which the environment supports the users’ tasks.

Even further, psychological comfort discusses the feelings of belonging, ownership and control over the

workspace (Vischer, 2008). However, (newer) literature indicates that the workscape has empirically

demonstrated to be an important factor influential on employees trust and commitment toward the

organisation.

Price (2004) states that there is mounting evidence that the social dynamics of the workplace, which

design can influence, have a greater impact on productivity than the notional “killer variables” such as

temperature of so much concern to too much of the office evaluation literature. This is also in line with

the research of Haynes and Price (2002), which mentions that interactions have the largest positive

impact on their perceptions of their productivity and disruptions the largest negative. Interactivity to

distraction ratio would appear compatible with the edge of chaos model. Too little of the former (order)

and productivity suffers and too much of the latter (chaos) and the negative effects of distraction

dominate (Haynes and Price, 2004). In line with the different type of comfort levels, Haynes and Price

(2004) related the (in)tangible components to different environmental level. Tangible components,

environmental services, office layout and perhaps “flexible space” relate directly to the individual and

physical environment. The component “Distraction” and “Interaction” appear to point to more

intangible or psychological factors; indeed they may be a insight into the social construction of individual

offices (Haynes and Price, 2004). Lassar et al. (2000) also states that the human performance plays a

major role in the perceived quality, since four out of five measured dimensions (tangibles, reliability,

responsiveness, assurance, empathy) result (in)directly from human performance. Furthermore,

tangibles score relatively low, compared to the other dimensions.

Workscape

Organizations, work practices and the workforce have changed dramatically in the past 25 years due to

technological advances, demographic shifts and continual demands for innovation in both the product

and service sectors. (Kampschroer and Heerwagen, 2005). Newer research thinks of the 'office' more as

an environment to enable certain conversations, a component of the 'workscape' (Price, 2004). The

notion is strengthened that the space organisations occupy is an integral part of how an organization

functions. Later work has built on this concept, producing such ideas as ‘workscape’ to indicate an

inclusive approach to both the use and the planning and design of the work environment (Becker &

Steele, 1994). Lee (2013) extracted seven determinants of the workscape: 1) pleasantness, 2) openness,

3) privacy, 4) refreshing, 5) crowding, 6) others’ appearances, and 7) location and surroundings. In line

with these determinants, aspects of the workspace environment include according to Vischer (2008)

ambient environmental conditions (noise, lighting, air quality, thermal comfort), furniture layout and

ergonomics (workstations, offices and shared amenities), and process issues, such as user participation

in design, and meeting business and organizational objectives. (Vischer, 2008)

The physical environment has proven to influence the employees’ satisfaction and performance. As

Vischer (2008) states, a large number of work environment studies have tested users’ satisfaction in

reference to specific workspace features (Becker, 1981; Brennan et al., 2002; Hedge, 1991; Humphries,

2005; Veitch et al., 2004). These studies show that people’s preferences are affected by, amongst

others, indirect lighting, mechanical ventilation rates, access to natural light, new furniture, and aspects

21

of the acoustic environment, as well as some degree of participation in decision-making (Vischer, 2008).

Also, open plan workspaces tend to judge noise to be a primary source of discomfort and reduced

productivity (Stokols and Scharf, 1990; Mital et al.,1992) (Vischer, 2008). Workspace stress could

potentially result from discomfort and makes users compensating and expending their own energy

performing activities in adverse environmental conditions (Vischer, 2008).

As the servicescape has influence on the perceived service quality of the customer, the workscape can

have influence on the performance (productivity) of the employees. The lack of knowledge about the

links between workplace and organizational effectiveness is partly cause by the real-estate (property)

profession itself, which sees success largely in financial terms (e.g. cost per square foot) and not in

organizational terms.(Kampschroer and Heerwagen, 2005). However, recent studies have shown that

physical work environment affect employee‘s behavior, creativity, and concentration (Lee, 2013).

Furthermore, results show that perceived workscape positively affects employee‘s perceived

organizational support and organizational pride. (Lee, 2013). As Kampschroer and Heerwagen (2005)

state, despite the fact that organizational scientists pay little heed to the physical environment, there is

good evidence that space influences many social behaviours and processes of value to organizations,

such as collaboration and communication (Cachere et al., 2003; Heerwagen et al., 2004; Teasley et al.,

2000), work flow (Nandhakumar, 2002), and the coordination of activities (Horgen et al., 1999).

There are at least three types of productivity that are influenced by environmental design, each of them

in different ways. These three categories are individual, group, and organisational productivity: each

category denotes a variation in scale of environmental influence (Vischer, 2008). Individual productivity

is typically evaluated at the scale of the individual workspace (desk and office) and on how the micro-

environment influences individual task performance, that is to say, how fast and accurately a worker

carries out his tasks at work. Individual task performance is affected by environmental conditions such

as lighting and visual conditions, variations in temperature and humidity, furniture ergonomics, and, to

some degree, acoustics. Positive individual productivity outcomes mean improved speed and accuracy

of the tasks performed, whereas negative outcomes might include a higher error rate, slower time for

task completion, or adverse health effects on workers, such as sore eyes, fatigue or upper respiratory

problems (Vischer, 2008). The productivity of workgroups sharing workspace, such as a teamwork

environment, is typically evaluated in terms of the quality and quantity of group processes. Teamwork is

affected by the mid-range environment, that of the work-group or team (Vischer, 2008). Furthermore,

the productivity of the company or organization’s entire workspace or accommodation – the macro

environment - can be assessed differently. The degree to which workspace helps (or fails to help) a

company meet its business objectives and/or increase its competitive advantage is an important

measure according to Vischer (2008).

Studies have shown that both worker performance and organisational success is compromised “when

the physical environment interferes with actions taken towards achievement [of objectives]” (McCoy

and Evans, 2005) The difference between a supportive and an unsupportive workspace is the degree to

which occupants can conserve their attention and energy for their tasks, as opposed to expending it to

cope with adverse environmental conditions. For example, certain variables such as lighting, ventilation

and noise can,under certain conditions, generate stress, which, in turn, has a negative effect on

productivity (Evans and Cohen, 1987).

22

SUBCONCLUSION

In this section, the following research question is addressed: What are important characteristics related

to the effect of the physical environment on users in the office- and hotel industries? Literature is not

constant when referring to the important influencing aspects of the servicescape or workscape on the

users. However literature is consistent that not only the intangible aspects (interaction or social) are

important for influence the users, but also the tangible aspects (servicescape/workscape) affect the

users importantly. Relatively, different researches provide some indications that the intangible aspects

might influence the users (slightly) more than the tangible aspects. An important contrast in (the scope

of) this research is that the effect of the physical environment varies due to the involved actors. The

used dependent variables vary for example when the actor employee or customer is used. E.g. whereas

the servicescape is often linked to the satisfaction of the customer, the workscape is often linked to the

performance (productivity) of the employees.

23

6. Conclusion and Discussion In this paragraph, the general research question is discussed, based on the analysed literature. Furthermore, possible discussion points are addressed.

Conclusion The general research question (GRQ) of this research is:

What facility management contrasts occur between

the office and hotel industries, according to literature?

Before addressing the GRQ, it is first relevant to restate the scope and focus of this research. The scope

of this research is placed on two different settings/sectors with different type of actors involved. The

focus is on the hotel industry (as an example of a servicescape setting) with customers as core actors,

and the office industry (as an example of a workscape setting) with employees as core actors. Below, the

conclusion is stated, which is composed out of the analyses of the different research questions.

Relationship core business and FM

An important aspect on the relationship between the core business/activities and FM is on the extent in

which facilities/facility management play an important role in the core business of the industry. As the

core business of the hotel industry relates closely to many facility services (such as buildings), whereas

the core activities of the office industry are mainly indirectly supported by the facility services. The

business critical impact of the facilities in the (back-)office industry is lower than this impact is in the

hotel industry. This also indicates the contrast between observing many FM activities as an integral part

of the core business (in the hotel industry) versus observing FM activities as general support functions

(in the office industry).

Facility service provision

The facility services can be provided in-house or by an external organisation (which implicates

outsourcing). In the office industry, outsourcing of facility services has become the normal stance, due

to the core-distinct relationship between the facility services and the core business. In the hotel

industry, outsourcing is becoming more apparent for some services, however services like catering,

cleaning and reception desk are not outsourced for their core-closeness. Another consideration for

whether or not to outsource these services is safeguarding the quality/brand of the

services/organisation.

Demand for facility services

With respect to demand characteristics, contrasts between hotels and offices become also apparent. A

relevant aspect concerning the demand for facility services is that in this research the hotel sector

relates to customers, whereas the office sector relates to employees. An important contrast-aspect is

the extent in which the actors have an unrestricted open choice and are paying for the received facility

services. Customers are often also the paying actors, whereas the employees are usually not the paying

actors. Furthermore, the type of actors’ consumption is different between the sectors. Whereas, the

consumption of facility services in the office industry can be defined as rational/utilitarian consumption,

this consumption in the hotel industry is more an affective/hedonic consumption. Customers use and

consume the facility services of their choice by selecting a hotel for an overnight stay that suit their

24

needs. Employees on the other hand are users of the work environment, affected but most probably not

involved in its design and quality levels that were decided on by higher management.

Effect of physical environment

In both the hotel and office setting there are indications that the intangible aspects influence the users

(slightly) more than the tangible aspects. However, a clear contrast between the influences of aspects of

the physical environments is difficult to state, due to the different research outcomes. An important

aspect to emphasize is the contrast between the used dependent variables to analyse the effect of the

environment. Whereas the servicescape is often linked to the satisfaction of the customer, the

workscape is often linked to the performance (productivity) of the employees.

Context of different contrasts

Altogether, the facility service differences between the office and the hotel industry point out that there

are a lot of characteristics which point out the present contraries. The context between the different

contrasts explains the rational reasoning on these contrasts. E.g. due to the fact that some facility

services are core-close to the core business in the hotel industry; the level of outsourcing of these

services is often lower. When actors are paying for the services; their demand can become more

important for the organisations; which results in a higher importance of a facility service provision (core

closeness) which meets this demand. The workscape and servicescape have an influence on the

users/actors, however this is also influenced by the type of users and their demand. E.g. customers

often have a hedonistic need in the servicescape of an hotel, contrary to the needs of employees in an

office setting.

Final remarks

It is important to realize that besides these generic FM differences in these sectors, more specific

differences can also be present. However, this research focused on exploring these two industries on

their generic differences in FM and providing an overview of these contrasts. Both the supply as the

demand of facility management services are managed quite differently in both sectors. This research

provides indications that FM is differently managed in different sectors, which can make it more difficult

to utilize best-practices/trends of one industry (office or hotel) in the other industry. For example, the

management of facilities for employees differs from the facility demand of customer in a hotel setting.

25

Discussion This research and its outcome can be used for further (empirical) research. It is also relevant to point out

some limitation and discussion points about this research, the outcome and further implications.

Limitation

This research is a literature study, which has used different sectors’ literature. Especially the used term

of office industry is a wide terminology and covers different sectors. Literature from different sectors is

therefore used in this research. Office industry is used to point out the overall generic differences

between the facility services in office buildings and the hotel sector. Another discussion point is that for

the hotel sector no further selection criteria/scope is determined, which implicates that literature about

different types of hotels and different geographical researches all together is used. Furthermore; since

the focus of this research is in the hotel industry on the servicescape setting and customers, while in

office industry this is on the workscape setting and employees, some actors and different other physical

environments are excluded in this research. E.g. office environments can also have servicescape settings

(for example the reception) and can also have customers as users of the facilities.

Discussion

A development of FM services within the office sector that has become apparent is that towards an

increase in customer focus and hospitality focus. Different (professional) literature has indicated the

trend within FM to become more hospitable and focussed on the customers. This development is very

interesting, especially regarding the outcome of this research. This research clearly points out some

obvious and large differences between the two sectors. And therefore, coping with these differences is

an important threshold in order to change ordinary FM services more towards facility services as in the

hotel industry. It can be difficult for example to move towards a consumer focus, while in general the

focus on costs probably will always have an important role within Facility Management in the office

sector. This latter statement perhaps summarizes the important aspect which influences the further

facility provision. In order to place the emphasize not only on costs, but also on hospitability and

customers. It could be possible that, according to FM trends, facility management is developing towards

a focus on customer management, while this in reality is perhaps not in the mindset of facility

management in office organisations. The focus on hospitality and customers matches the customer

interaction servicescape in a hotel industry, while a workscape is more focussed on the employees. This

could implicate that a change towards a customer focus in the office industry might be impossible, due

to the large differences with the hotel industry.

26

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Appendix A: Real estate strategy and core business

Figure A1: How real estate decisions support strategies and core objectives (Lindholm et al. (2006)

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Appendix B: Generic facilities classification model

Figure B1: A generic facilities classification model (Price, 2004)

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Appendix C: Motives for outsourcing Table C.1: Outsourcing motives with references, (Advanced Facility Management Presentation, 2011)

Main motive identified Main references

To reduce operational costs Lacity and Hirschheim (1993b); McFarlan and Nolan (1995);

Barthélemy and Geyer (2000); Kakabadse and Kakabadse

(2002)

To focus on core competencies Quinn and Hilmer (1994); Saunders et al. (1997); Alexander

and Young (1996b); Kakabadse and Kakabadse (2002)

To reduce capital invested McFarlan and Nolan (1995); Kakabadse and Kakabadse

(2002)

To improve measurability of costs Barthélemy and Geyer (2000)

To gain access to external competencies and

to improve quality

Quinn and Hilmer (1994); McFarlan and Nolan (1995);

Kakabadse and Kakabadse (2002)

To transform fixed costs into variable costs Alexander and Young (1996a)

To regain control over internal departments Lacity and Hirschheim (1993a); Alexander and Young (1996a)

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Appendix D: Service quality and servicescape

Satisfaction can be defined as “an overall evaluation of performance based on all prior experiences with

a firm (Skogland and Siguaw, 2004). Also, customer satisfaction can be perceived as a perception of

satisfaction or dissatisfaction which follows from a perception of service quality (Grönroos, 2007). This

emphasizes the relevance of service quality for customer satisfaction. Grönroos also states that “what

counts is quality as it is perceived by customers”. ‘Service quality is considered to be a strategic tool for

increasing efficacious competition in the hotel industry, as positive quality affects customer satisfaction,

stimulates their intention to return and their behaviour regarding the recommendation of hotels’ (Ekinci

et al., 2003). Previous researches about conceptualizing service quality have formed various

perspectives. The perspectives which are explained below are (1) those introduced by the Nordic School,

(2) those based on the disconfirmation paradigm, particularly the SERVQUAL model, and (3) the

hierarchical perspective (Kuo, et al., 2012). Although many different other (related) perspectives also

apply on the perceived service quality, this research mainly emphasizes on these three perspectives.

The first perspective states that the service quality contains two key dimensions which are functional

quality and technical quality. This perspective was introduced by scholars form the Nordic School (e.g.

Grönroos, 1984) and is visualized in figure D1.

Basically, the quality of a service as it is perceived by customers has two dimensions: an outcome

(technical) dimension and a process-related (functional) dimension. The technical quality of the

outcome focuses on ‘what’ the customer is left with, when the service production process and the

service encounters are over (e.g. hotel quest will be provided with a room and a bed to sleep

in)(Grönroos, 2007). The functional quality of the process focuses on ‘how’ the customer received the

service and how he/she perceives the simultaneous production and consumption process. The image of

the company can also affect the perception of quality in various ways and can be viewed as a filter (e.g.

with a favourable image, minor mistakes will probably be forgiven; while with a negative image, the

impact of any mistake will be considerably greater)(Grönroos, 2007). Grönroos (2007) also states that a

third dimension (serviscape quality, using the term servicescape) was suggested in some literature to

include the physical environment of the service encounter. A good perceived quality is obtained when

the experienced quality meets the expectations of the customers (expected quality). The expected

quality is a function of factors, namely marketing communication, image, word-of-mouth (WOM) and

Figure D1: Total perceived quality (Grönroos, 2007)

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customer needs. The level of total perceived is not determined by the level of technical or functional

quality dimensions, but rather by the gap between the expected and experienced quality.

The second perspective discusses also the disconfirmation paradigm, similar to Grönroos (2007). This

perspective addresses the SERVQUAL model (Parasuraman et al., 1985). This model views service quality

as the gap between the expected level of service and customer’s perception of the level of service

received. The SERVQUAL model consists of the following five elements: tangibles, reliability, empathy,

responses, and assurances.

Originally 10 determinants of service

quality were identified by

Parasuraman et al. (1985), after

which these were recast into five

specific components as mentioned

before (see figure D2).The tangible

dimension corresponds to the [...]

physical environment aspect, the

reliability dimension corresponds to

the service outcome aspect and the

remaining three represent aspects

of interaction quality.

There can be several latent reasons

for the difference between expected and perceived service (thus the perceived service quality). There

exists a set of key discrepancies/gaps regarding executive perceptions of service quality and the tasks

associated with service delivery to customers. These gaps can be major hurdles in attempting to deliver

a service which consumers would perceive as being of high quality (Parasuraman, 1985).

The third perspective is based on the hierarchical perspective by Brady and Cronin (2001). This approach

links physical environmental quality, interaction quality and output quality and to service quality. This

model also points out that each of the primary dimensions of service quality (interaction, environment,

and outcome) has three subdimensions (see figure D3). This model is also partially based on the three-

component model of Rust and Oliver (1994) and has offered first empirical evidence for the three-

component conceptualization of service quality (Brady and Cronin, 2001). The model repositioned the

SERVQUAL factors as modifiers of the nine subdimensions.

Figure D2: Determinants of Service Quality (Parasuraman et al. 1988)

Figure D3: Hierarchical service quality (Brady and Cronin, 2001)

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The different perspectives all have some similarities and mention with some consensus that service

quality consists of three primary aspects: outcome quality, interaction quality and physical service

environment quality (Rust and Oliver, 1994; Brady and Cronin, 2001). The last perspective of service

quality (Brady and Cronin, 2001) provides also subdimensions which quite correspond with the concept

‘servicescape’. This concept is briefly explained below.

Servicescape

A number of empirical studies have demonstrated the importance of servicescape characteristics on

customer satisfaction and perceptions of service quality (Miles et al., 2012). For example, studies have

suggested “fine dining” would require one particular set of ambient conditions while “fast food” may

require another (Bitner, 1992). Evidence has emerged over a number of years to suggest that the

surroundings within a service act as a form of non-verbal communication and influence a person’s

beliefs about the overall service and service provider (Broadbent et al., 1980; Rapoport, 1982).

Servicescape is a widely used term to describe the physical

surroundings of a service company (Reimer and Kuehn,

2005). Servicescapes have a very important role in

customers’ evaluation of any particular service. They are

important because they influence customers’ cognitive,

emotional, and physiological states and subsequent

purchase behaviours according to Lin (2004).The physical

setting may also influence the customers’ ultimate

satisfaction with the service (Bitner, 1990). Bitner identified

three dimensions of the physical environment, which are:

ambient conditions, spatial layout and functionality, and

signs, symbols and artifacts (see figure D4).

Ambient conditions are according to several

authors a factor that affects perceptions of and

human responses to the environment (Bitner, 1992).

Ambient conditions include background characteristics of the environment such as temperature,

lightning, noise, music en scent (Bitner 1992).

Spatial layout refers to the ways in which machinery, equipment, and furnishings are arranged,

the size and shape of those items, and the spatial relationships among them (Bitner, 1992).

Functionality refers to the ability to these items to facilitate performance and the

accomplishment of goals.

Signs, symbols and artifacts refers according to several authors to the (many) items in the

physical environment serving as explicit/implicit signals that communicate about the place to its

users.

Figure D4: Servicescape (Bitner et al., 1992)

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Bitner et al. (1992) also categorizes service organisations on two dimensions that capture important

differences in the management of the servicescape (see figure D5). The vertical dimension relates to

whom is performing actions within the servicescape: the customer, the employee, or both. One extreme

is represented by the "self-service" organization in which few (or no) employees are present and the

level of customer activity is high. At the other extreme is the "remote service" where there is little or no

customer involvement in the servicescape and sometimes even little employee involvement, such as in

fully automated voice-messaging services. "inter-personal services" are positioned between the two

extremes. In those organizations, both customers and employees are present and performing actions

within the servicescape. The horizontal dimension captures the complexity of the servicescape. Some

service environments are very simple, with few elements, few spaces, and few forms. They are termed

"lean" environments. Other servicescapes are very complicated, with many elements and many forms.

They are termed "elaborate" environments. In such an elaborate environment, the full range of

marketing and organizational objectives theoretically can be approached through careful management

of the servicescape.

Figure D5: Typology of Service Organisations (Bitner et al., 1992)