Process Design and Efficiency: Evidence from Retail Banking

WFIC 96-04

Posted: 3 Jul 1998

See all articles by Frances X. Frei

Frances X. Frei

Harvard Business School

Patrick T. Harker

University of Pennsylvania - Operations & Information Management Department

Date Written: January 1996

Abstract

This paper presents a methodology which determines the role of design in calculating the efficiency of service delivery processes. The efficiency of these processes is determined by using a variation of frontier estimation (DEA-like) techniques. The methodology is then applied to a particular service delivery process in retail banking. The methodology allows us to address the question of how much inefficiency in a business process is due to the wrong process design, and how much is due to the right design, poorly executed. Consistent with our expectations, the results show that no single process design dominates. However, for a particular institution, the methodology demonstrates the tradeoffs, and in fact offers specific recommendations, for either improving an existing process or radically changing to a different design.

JEL Classification: C13, G21

Suggested Citation

Frei, Frances X. and Harker, Patrick T., Process Design and Efficiency: Evidence from Retail Banking (January 1996). WFIC 96-04, Available at SSRN: https://ssrn.com/abstract=7193

Frances X. Frei (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan Hall 411
Boston, MA 02163
United States

Patrick T. Harker

University of Pennsylvania - Operations & Information Management Department ( email )

Philadelphia, PA 19104
United States
215-898-4715 (Phone)
215-573-2065 (Fax)

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