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Michael Beyerlein, Major Professor

Rodger Ballentine, Committee Member
Clifton Watkins, Committee Member
Marnie Crawford, Committee Member
Bert Hayslip, Jr, Graduate Program
Coordinator in the Department of
Linda Marshall, Chair of the Department of
Sandra L. Terrell, Dean of the Robert B.
Toulouse School of Graduate Studies
Eric Phillip Simpson, B.A., M.S.
Dissertation Prepared for the Degree of

May 2006
UMI Number: 3214499
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Simpson, Eric Phillip, Examining Employee Satisfaction, Customer Service and
Customer Satisfaction in a Retail Banking Organization. Doctor of Philosophy
(Experimental Psychology), May 2006, 98 pp., 10 tables, references, 253 titles.
In the increasingly competitive world of retail banking, organizations are focusing
their attention on customer service as a means of increasing customer loyalty and
retention. With this goal of increasing customer retention, the link between the attitudes
of the service provider (employee satisfaction), the customer interaction behaviors that
those attitudes lead to (customer service quality), and the attitudes that those behaviors
generate in the customer (customer satisfaction) has become an increasingly important
area of investigation. The goal of this research is to analyze the relationships that exist
between these three variables: employee satisfaction, customer service quality, and
customer satisfaction in a mid-sized retail bank. Data from three separate surveys
collected during the same time period in 137 branches of a regional bank are analyzed
using multiple regression analysis to determine whether relationships and interactions
exist at a banking center level. While results of the analyses did not show a significant
relationship between the variables, issues relevant to this determination are discussed
and conclusions drawn regarding the nature of these constructs.

1. INTRODUCTION AND LITERATURE REVIEW.......................................................... 1
Employee/Job Satisfaction .......................................................................................... 3
Management Effect on Employee Satisfaction......................................................... 8
Organizational Climate............................................................................................. 9
Opportunities for Advancement and Challenge...................................................... 10
Emotional Support.................................................................................................. 10
Trust and Equity..................................................................................................... 11
Training.................................................................................................................. 11
Compensation........................................................................................................ 11
Customer Service Effectiveness -- Service Quality.................................................... 12
Feedback in the Customer Service Literature........................................................ 15
Customer Evaluations of the Organization............................................................. 16
Customer Evaluations of Individual Service Representatives ................................ 17
Service Quality Literature....................................................................................... 19
Mystery Shopping -- Measures of Customer Service Quality................................. 20
Link between Employee Satisfaction and Customer Service ................................. 21
Service Quality and Customer Satisfaction............................................................ 23
Customer Satisfaction................................................................................................ 24
Relationship Quality ............................................................................................... 28
Disappointment and Defection ............................................................................... 30
Service Profit Chain................................................................................................... 32
Satisfying Your Employees .................................................................................... 36
Summation............................................................................................................. 38
Hypotheses................................................................................................................ 39
2. METHODOLOGY...................................................................................................... 41
Setting ....................................................................................................................... 41
Sample ...................................................................................................................... 41
Instruments................................................................................................................ 43
Customer Service Quality ...................................................................................... 43
Customer Satisfaction Survey................................................................................ 44
Job Satisfaction Survey.......................................................................................... 45
Procedures ................................................................................................................ 47
Data Collection Procedures ................................................................................... 47
Data Aggregation ................................................................................................... 47
Summary of Instruments and Subjects .................................................................. 49
Data Analysis Procedures...................................................................................... 50
3. RESULTS.................................................................................................................. 52
Preliminary Data Analysis.......................................................................................... 52
Employee Satisfaction............................................................................................ 52
Customer Service Quality ...................................................................................... 54
Customer Satisfaction............................................................................................ 56
Primary Analysis........................................................................................................ 60
Results....................................................................................................................... 63
4. DISCUSSION............................................................................................................ 65
Implications for Theory .............................................................................................. 65
Limitations ................................................................................................................. 67
Conclusions ............................................................................................................... 71
APPENDICES .............................................................................................................. 73
REFERENCES.............................................................................................................. 83

In the increasingly competitive world of retail banking, organizations must
establish a presence that sets them apart from the crowd. Low cost, convenience, broad
product lines, and customer service have all been used to segment the banking
industry. For small and medium sized banks, customer service has increasingly been
the method of choice for making their mark. This strategy has been driven primarily by
an inability to compete in other key areas with the larger players in the banking industry,
but also by the economics of customer retention.
The process of obtaining new customers is a costly and time-consuming venture.
Because of this, banks of all sizes have focused a great deal of time and energy on
improving customer service practices. The underlying belief is that improved customer
service will help to create relationships with customers that are strong enough to
prevent them from leaving for potentially more attractive opportunities elsewhere. These
improvements in customer loyalty, and therefore retention, are believed to have a
significant impact on the long-term profitability of the bank.
Since customer retention is a critical goal, the question becomes; what factors
affect a customers perception of the bank and what actions can the bank take to
increase positive perceptions. The answer that has increasingly been the subject of
investigation is the link between the attitude of the service provider (employee
satisfaction), the customer interaction behaviors that those attitudes lead to (customer
service), and the attitudes that those behaviors generate in the customer (customer
This relationship between employee satisfaction, customer service, and customer
satisfaction has ultimately been connected with customer retention, a concept that has
particular importance in the sales and service environment of the banking industry.
Front line workers are the primary link between the company and its customers. Every
interaction between these employees and their customers has a direct impact on the
publics opinion of the organization. The employees performance in relation to customer
service activities can either create a sale for the bank or loose a customer. The loss of a
single customer can cost the company a great deal of money in terms of lost sales as
well as the cost of replacing that customer; so every interaction is crucial.
The goal of this research is to analyze the relationships that exist between these
three variables: employee satisfaction, customer service behaviors, and customer
satisfaction. The variables of interest in this research represent part of a larger body of
research described as the service-profit chain (Heskett & Sasser, 1997). This line of
research proposes a causal link running from a number of environmental factors (train,
empowerment, coaching, etc.) to employee satisfaction through customer service and
customer satisfaction ultimately impacting the profitability of the organization.
The current study is useful because it adds to the body of literature attempting to
quantify the relationship between service workers and the people they serve. This link is
critical to the success of all retail sales organizations and the knowledge gained from
research of this type has implications that can directly affect the financial performance
of these organizations. Minor improvements in a firms ability to satisfy their customers
can have a major impact on their competitiveness. Research into the link between
employees and customers can inform decisions regarding the process of managing
performance, training and developing employees and managers, as well as the
allocation of resources. In essence, it can help answer questions such as, should banks
spend time and money on customer service training, employee satisfaction efforts,
management training, etc.
What sets this research apart from other studies of a similar nature is the use of
customer services (service quality) and customer satisfaction measures along with
employee satisfaction measures within the same organization. The bank being studied
has a standard process for measuring customer service via a mystery shopper
program as well as a standardized process for measuring customer satisfaction via
phone interviews. This information, combined with data collected through an online
employee satisfaction survey, will provide a more systemic view of the connections
between these variables. Most studies have only looked at one or two of the variables
included in this study.
Employee/Job Satisfaction
Job satisfaction is one of the most frequently studied variables in organizational
behavior research. Thousands of articles and dozens of books have been written on the
topic from numerous academic and professional perspectives. Job satisfaction has
been shown to be simply the extent to which people like or dislike their jobs (Spector,
1997, p. 2). While seemingly simple on the surface, the factors that lead to satisfaction
and/or dissatisfaction are many and varied. While a full survey of the literature on
employee satisfaction would be nearly impossible, in what follows the researcher will
attempt to review the aspects of the topic that are pertinent to this research.
The study of job satisfaction has a very long history dating back to the mid-1900s
when Abraham Maslow developed his theory of a Hierarchy of Needs (1943). Recent
research has moved away from theories of need fulfillment and tends to focus attention
on cognitive processes rather than needs (Spector, 1997). The expectancy theory of
human motivation was a significant contributor to advancing thinking within the field.
The theory goes beyond simple behavioral concepts and attempts to explain motivation
as the comparison between perceived value of outcomes of actions and the probability
that actions will bring about desired outcomes. In this way, the theory takes into account
the intrinsic values that affect satisfaction (Vroom, 1964). Research has often found
intrinsic values to be equally important to job satisfaction compared to extrinsic values
(Spector, 1997).
Motivation-Hygiene Theory directly addresses the issues of both satisfaction and
dissatisfaction on the job. This theory and research suggest that job dissatisfaction is
caused by the absence of "hygiene" factors such as salary, job security, working
conditions, company policies, quality of supervision, and quality of interpersonal
relationships (Herzberg, 1975). These factors do not result in job satisfaction, if present,
but can cause job dissatisfaction if absent. Accordingly it is the "motivation" factors
intrinsic to a job and related to job content that have the power to increase job
satisfaction (Herzberg, 1975). Motivation factors include achievement, recognition,
responsibility, advancement, the work itself, and possibility of growth.
While job satisfaction can be considered a global reaction to the job, it is typically
studied in terms of the numerous facets of the job that impact the more general
perception. By looking at multiple aspects of the job, it is possible to more fully
understand the pieces that are related to satisfaction and/or dissatisfaction. Two general
categories encompass the facets that impact job satisfaction (Spector, 1997).
Environmental factors and personal factors both play a critical role in the
satisfaction/dissatisfaction process.
The most influential theories regarding the characteristics that affect job
satisfaction have five core characteristics. Skill variety, task identity, significance,
autonomy, and feedback are thought to lead to three psychological states (Hackman &
Oldham, 1976). Meaningfulness of work is a state induced by skill variety, task
identity, and task significance, while feelings of responsibility are provoked by
autonomy. Finally, job feedback leads to knowledge of results of the work (Hackman &
Oldham, 1976). These psychological states determine how motivating a job is likely to
be and therefore directly impact job satisfaction.
In addition to the five core characteristics, a personality variable was
hypothesized called growth need strength which functions as a mediator of the effects
of the core characteristics (Hackman & Oldham, 1976). Similar to Maslows (1943)
theory, growth need strength represents the individuals drive to fulfill higher order
needs such as those for autonomy and personal growth. The implication is that the five
core characteristics will impact individuals differently depending on their growth need
While some studies have supported job characteristics theory, especially as
related to growth need strength (Loher, Noe, Moeller, & Fitzgerald, 1985), there has
also been criticism (Frese & Zapf, 1988; Roberts & Glick, 1981; Spector, 1992). The
primary criticism is that causality between job characteristics and job satisfaction has
never been shown. The use of incumbents perceptions regarding the core
characteristics of a job as well as their level of satisfaction has left the link in question. It
is equally plausible that job satisfaction affects peoples perceptions of job
characteristics, as it is the other way around. Research using non-incumbent measures
of job characteristics has found inconsistent correlations of job characteristics with job
satisfaction (Spector & Jex, 1991).
Overall it seems likely that job characteristics impact job satisfaction but the
direction of this relationship is less than certain. It also seems wise to consider personal
characteristics when attempting to find the right fit between a person and job. Locke
(1969, 1976, 1984) proposed that satisfaction with any single job characteristic (facet) is
determined by two factors: (a) the have-want discrepancy for the facet and (b) the
importance of the facet. The have-want discrepancy is the perceived gap between the
amount of a job facet that the worker wants to experience and the amount that the
worker feels he or she actually experiences. This discrepancy is the result of a
psychological comparison process in which workers cognitively assess their current job
situation against their wants and desires. Finally, facet importance refers to the position
that the facet holds within the worker's personal hierarchy of values.
The range-of-affect hypothesis explains how have-want discrepancies and facet
importance determine the potential range of satisfaction that can be elicited by a
particular job facet (Locke, 1984). When facet importance is high, it is possible to
experience the full range of affective reactions, from extreme satisfaction to extreme
dissatisfaction. When facet importance is low, however, affective reactions are more
muted and restricted to the neutral range of the satisfaction-dissatisfaction dimension.
Based on the range-of-affect hypothesis, it is possible to predict when workers
will experience great satisfaction or great dissatisfaction with a particular job facet.
Facet satisfaction will be greatest when the amount received matches the amount
wanted for facets that are high in importance. Conversely, facet dissatisfaction will be
greatest when the amount received falls short of or exceeds the amount wanted for
facets that are high in importance. Intermediate (i.e., neutral) reactions on the
satisfaction/dissatisfaction dimension are predicted for job facets of low importance,
regardless of the size or direction of the have-want discrepancy. Theoretically, facets
with low personal importance are incapable of generating strong affective reactions,
either negative (dissatisfaction) or positive (satisfaction). Workers cannot have strong
affective reactions to job facets that are unimportant to them.
Beyond the five core characteristics described above there and a range of affect
hypothesis, other researchers have found numerous aspects of work-life that are
correlated to job satisfaction (Hackman & Oldham, 1976; Locke, 1976). While causality
hasnt been confirmed, the relationships are many and varied. Job satisfaction is
influenced by intrinsically rewarding conditions such as interesting work, challenge, and
autonomy. In addition, extrinsic rewards, such as pay and security, also influence job
satisfaction, though to a lesser extent. Research has found that job performance does
not directly influence job satisfaction, although it indirectly affects it through the
consequences of greater rewards (Cranny, Smith, & Stone, 1992).
As researchers have moved from a macro view of employee satisfaction to a
more micro view, the individual facets that have impact have become a prime
consideration. The following section looks at the research specific to various facets or
characteristics that influence employee satisfaction.

Management Effect on Employee Satisfaction
Research conducted with retail sales people suggests that a manager's
leadership behavior both directly and indirectly influences job satisfaction and turnover
(Jones, Kantak, Futrell, & Johnston, 1996). One of the mechanisms of this influence, as
described in a study of retail workers, is that the employees perception of supervisory
support reduces stress. This stress reduction seems to affect the employees overall job
satisfaction in a positive direction (Babin & Boles, 1996).
In similar research conducted in a community hospital (Medley & Larochelle,
1996), researchers found that supervisor's leadership style affected job satisfaction of
nurses. This research supported the idea that supervisors who effectively communicate
visions and strategies, and function as role models, have staff with higher job
satisfaction than those who do not.
Other research has suggested that supervisors can increase employees' job
satisfaction by providing performance evaluations regularly and directly, by giving
personal attention to employees, and by broadening responsibilities as soon as
possible. In addition, asking for advice, helping employees improve their performance,
and making their work interesting was seen as beneficial to work satisfaction (Pollack &
Pollack, 1996).
In studies of hospital nurses and bank tellers, researchers found that
participatory management techniques and employee inclusion in decision-making
positively influence job satisfaction (Drews & Fisher, 1996; Kappelman, Prybutok, & von
Dran, 1996). This finding was replicated in a study where participation as well as task
variety were found to be significant influences on employee satisfaction (Zeffane, 1994).
In addition to management support and involvement, a team based management
style has also been shown to increase productivity through job satisfaction and
employees' desire to win approval from peers (Deshpande, 1996).. Recognizing
workers importance, learning how to train them, and learning how to motivate them can
have a significant impact on their satisfaction (Zeffane, 1994). This research suggests
that while the customer should be the number-one priority for employees, the number-
one priority for managers should be the employees (Deshpande, 1996)..
It has been suggested that organizational structures that fail to take into account
the unique roles played by certain individuals or groups may negatively impact job
satisfaction (Crawford & Nonis, 1996). There is a need to recognize that the
personalities and values of employees influence their work and this in turn affects
satisfaction and performance. This leads to recognition of the need to strive for a good
"fit" when making personnel decisions (Crawford & Nonis, 1996).
Organizational Climate
While the impact of the manager or supervisor on employee attitudes toward
work seems intuitive, other research has looked at the broader issue of organizational
climate. In a study of non-profit workers, it was found that a "caring" organizational
climate is linked with high levels of satisfaction with supervisors, while an "instrumental"
(authoritarian and task-oriented) climate has a negative impact on overall job
satisfaction (Deshpande, 1996). In addition, an authoritarian climate was seen to have a
negative influence on satisfaction with promotions, co-workers, and supervisors.
Alternatively, an innovative climate (Jones, 1996) was found to be associated with
workers beliefs that the organization is a "good" place to work and had a positive
impact on employee satisfaction. One study found that nurses job satisfaction
increased when an autonomous climate was facilitated (Pierce, Hazel, & Mion, 1996).
Opportunities for Advancement and Challenge
In studying social workers it was found that perceived opportunities for promotion
and job challenge are significant influences on job satisfaction (Vinokur-Kaplan,
Jayaratne, & Chess, 1994). On researcher found that employees report interesting
work to be the most important possible reward and that it is strongly correlated with
employee satisfaction (Kovach, 1995).
In a study of telecommunications employees it was found that managers report
higher job satisfaction than do non-managers (Zeffane, 1994). A study of social work
supervisors and administrators showed that higher level administrators have
significantly higher job satisfaction than do lower level supervisors (Poulin & Walter,
1992). Career oriented mentoring was also found to be significantly related to job
satisfaction (Aryee, Wyatt, & Stohne, 1996).
Emotional Support
Emotional support has been found to be an important factor contributing to work
satisfaction for women (King, Mattimore, King, & Adams, 1995). A study of public
employees found that when role conflict is high, social support from co-workers and
supervisors positively influences job satisfaction and is associated with lower levels of
depression (Dunseath, Beehr, & King, 1995). Tangible rewards can sometimes lower
performance levels, and creating a supportive work environment may actually decrease
the need for incentive" programs (Aryee, Wyatt, & Stohne, 1996).
Trust and Equity
A study of executives found that trust in management positively influences
satisfaction (Andaleeb, 1996). Among secretaries, perceptions of reward equity as well
as recognition are significantly associated with pro-organizational behavior (McNeely &
Meglino, 1994).) Trust in management is also correlated with acceptance of changes in
the job; it was hypothesized that trust influences job satisfaction, and that trust can be
affected by managerial competence, ethical behavior, and organizational change
management strategies (Cranny, Smith, & Stone, 1992).
A study of newly hired entry-level professionals showed that the amount of
training provided is significantly related to job satisfaction, as well as to job
performance, commitment, and ability to cope (Saks, 1996). According to another study,
well planned orientation and training programs improve morale and help both the
employee and the organization meet their goals (Sherman, Bohlander, & Snell, 1996).
A survey of compensation professionals found that merit pay is only marginally
successful in influencing employees' attitudes and behavior (Eskew & Heneman, 1996).
While supervisors believe that good wages are most important to employees, the
employees themselves reported that interesting work is most important (Kovach, 1995).
The need to recognize that money is not highly related to job satisfaction or
employee motivation has been proven, and Herzberg's Motivation-Hygiene Theory of
satisfaction versus dissatisfaction on the job should be taken into account when
designing motivators for employees (Herzberg, 1975). It has been suggested that
although correcting inadequate wages, poor company policy, poor supervision, or lack
of job security can reduce employee dissatisfaction, only intrinsic motivators such as
recognition, interesting and challenging work, and opportunities for advancement can
serve to increase satisfaction (Filipczak, 1996; Merit, 1995).
What is clear from the research is that numerous factors affect an employees
level of job satisfaction. While it is important to consider the drivers of employee
satisfaction, of equal importance to this study are the motivators of performance in
respect to customer service behavior (service quality). The links between employee
satisfaction and customer service are also critical and will be considered after defining
customer service more fully.
Customer Service Effectiveness -- Service Quality
The transition to a service economy has had important repercussions for
organizations and the way they operate (Bowen & Schneider, 1988). In todays
competitive environment, service effectiveness is increasingly seen as a critical
organizational objective (Cascio, 1995; Reicheld & Sasser, 1990). To understand the
impact of the customer service focus, it is important to examine how the delivery of
service differs from more traditional delivery of goods. The delivery of customer service
is complex, dynamic, and dependent upon customer expectations and perceptions
(Cascio, 1995; Iacobucci, Ostrom, & Grayson, 1995). Unlike manufacturing and
distribution of products, the delivery of customer service generally is not a highly routine
or structured task. There are three defining features of services that the set them apart
from the traditional delivery of goods:
1. First, services are intangible in nature. In contrast to products, or goods, that
can be touched and possessed, services tend to be experiential in nature
(Berry, 1983).
2. A second distinguishing feature of services is that production and
consumption occur simultaneously. It is suggested that the chain of events
involved in the creation and consumption of goods differs from the order of
events that occurs in the creation and consumption of services (Berry, 1983).
Goods are generally produced, then sold, and finally consumed. Services, on
the other hand, are generally purchased first, then produced and consumed
at the same time.
3. The final defining feature of services is that the consumer is often involved in
the production and delivery of the service. With respect to goods, consumers
typically have little input into the creation of the product they are purchasing
(Schneider & Bowen, 1984).
These three characteristics of services (i.e., intangibility, simultaneous production
and delivery, and customer participation) mean that the customer service employee,
who directly interacts with the customer, is critical to the delivery of quality service. The
research suggests that these customer service employees perform two critical
functions. First, because of their direct contact with customers, they are essential
collectors of information about customer expectations and attitudes as well as a source
of suggestions for improving the quality of the service and its delivery (Bowen &
Schneider, 1988).
Second, and possibly even more importantly, customer service employees
represent the organization to the customer. The service employee is the embodiment of
the organization for most customers. Consequently, the behavior of the service
employee, and the impact it has on the customer, is a critical factor in defining
customers perceptions of the company. Given the important roles filled by customer
service employees, organizations wishing to deliver quality service must find ways to
support and effectively coordinate the behavior of these individuals (Schneider &
Bowen, 1992, 1995).
A particularly important approach to customer service is one that focuses on
moving beyond the delivery of high quality service to the formation of long-term
relationships with customers. The benefit of forming such relationships comes from the
presumably higher levels of customer commitment and retention. The commitment and
retention should lead, in turn, to higher profits for the organization (Schneider, White, &
Paul, 1997). Based on this line of reasoning, the manner in which customer service
representatives treat customers will have a significant impact on the development of
these long-term relationships.
Customer service effectiveness is an important means for organizations to gain a
competitive edge in todays service economy (Parasuraman, Zeithaml, & Berry, 1988;
Bowen & Schneider, 1988). Customers who are satisfied are more likely to return for
future business and sometimes recommend the service organization to others through
word-of-mouth (Rucci, Kirn, & Quinn, 1998). Previous research has shown that
customer retention leads to greater profitability year after year in many industries (e.g.,
automotive, banking) (Reicheld & Sasser, 1990). Further, the effort needed to retain
current customers has been shown to be significantly less costly than that needed to
find new customers (Reicheld & Sasser, 1990).
The effectiveness of customer service relationships has been operationalized in
a number of ways. Studies have focused on customer evaluations, such as customer
satisfaction (Johnson, 1996; Schmit & Allscheid, 1995) or service quality (Parasuraman,
Zeithaml, & Berry, 1988; Schneider, White, & Paul, 1998). Other studies focus on
customers behavioral intentions, such as word-of-mouth intentions (Blodgett, Granbois,
& Walters, 1993; Hartline & Jones, 1996), or repatronage intentions (Blodgett et al.,
1993; Boulding, Kalra, Staelin, & Zeithaml, 1993). One limitation of existing research is
that customer attitudes and behaviors are not often examined within a single study. This
prevents thorough examination of the construct validity of these variables and how
these variables relate to one another (Zeithaml, Berry, & Parasuraman, 1996).
Research suggests that service quality may stem more from behind-the-scenes
processes (e.g., supply chain management) than actual interactions between
employees and customers (Iacobucc., et al., 1995). In contrast, the findings indicate that
customer satisfaction stems from customers experiences in service situations (e.g.,
interactions with service providers) (Iacobucc. et al., 1995).
Feedback in the Customer Service Literature
Seeking feedback from customers is critical for maintaining awareness of
customer perceptions and thereby evaluating the service process. This information can
be used to help employees meet organizational and personal goals of satisfying
The frequent interaction between customers and service employees suggests
that customers hold unique information about the performance of employees that is not
available to supervisors or peers (Cascio, 1995; Lambert, Sharma, & Levy, 1997). In
organizations where customer service is important, this information on customers
perceptions is critical to the organizations success.
Customer Evaluations of the Organization
Research about the role of feedback in customer service contexts examined
employee perceptions that an organization seeks or values customer input. It was
considered information seeking regarding service effectiveness in an employee survey
of service climate. Information seeking is defined as an organizations efforts to
identify and track service quality and to share customer opinions with employees
(Johnson, 1996). This research found that employee perceptions of the organizations
information seeking were related to customer evaluations of overall service
effectiveness. In addition, employee perceptions of information seeking were also
correlated with customer evaluations of individual customer service representatives
effectiveness. After controlling for branch size and location, information seeking was
most strongly related to customer satisfaction (r = .48, p < .01). It was concluded that
asking customers for input regarding service effectiveness (i.e., determining needs and
desires of customers) is a critical first step in providing exceptional service (Johnson,
In a longitudinal investigation, customer feedback was assessed as a
dimension of service climate (Schneider et al., 1998). Using essentially the same
definition of information seeking as Johnson (1996), Schneider and colleagues also
found that asking for customer feedback at Time 1 predicted customer perceptions of
service quality three years later (r = .31, p < .01). They concluded that the key to
positive customer perceptions of service quality . . . may be listening to customers and
creating conditions that will meet those customers expectations and needs (p. 159).
Results of these two studies (Johnson, 1996; Schneider et al., 1998) indicated that the
popular press (Peters & Waterman, 1982) is on target the best service firms do listen
to their customers. The results of these studies also support the tenet that customer
feedback seeking behaviors are positively related to service effectiveness. These
studies (Johnson, 1996; Schneider et al., 1998) demonstrate that there is a positive
relationship between employee perceptions that the organization solicits and values
customer input and customer ratings of service effectiveness. The implication is that
organizations that collect customer information on an organizational level are perceived
as providing better service than those who do not collect customer information provide.
Using customer feedback allows organizations to monitor and regulate their service
offerings and delivery.
Customer Evaluations of Individual Service Representatives
In addition to customers evaluating organizations, frequently customers are being
used to evaluate employees. For example, state that approximately 60% of the
consulting firms and organizations surveyed collect performance ratings of employees
made by internal or external customers (London & Smither, 1995). In addition,
customers are now being included in formal performance appraisal programs in service
settings (Lambert et al., 1997; Milliman et al., 1995). In an article in Personnel Journal,
Federal Express and Digital Equipment Corporation were reported to have used
customers in 360-degree goal-setting processes (Milliman et al., 1995). A Harvard
Business Review article described their employee-customer-profit model that is used to
determine rewards and compensation for the top 200 ranking managers within the
company. All of these managers long-term incentives are based equally on employee
satisfaction, customer satisfaction, and financial performance (Rucci, Kirn, & Quinn,
1998). In another example of the use of customer input, General Electric includes
interviews with customers in the formal appraisal process of senior management
(Cascio, 1995). Taken together, these findings suggest that organizations are beginning
to value customer perspectives as an important index of employee performance.
Although anecdotal examples abound, there is very little published research
investigating customers as evaluators of individual employees; as noted above, this is
an area in which practice is well ahead of theory and research (London & Smither,
1995, p. 807). While the literature examining customer performance evaluations of
service employees is thin, two relevant empirical studies have been identified. In one
study the generalizability of customer service ratings of academic faculty made by
undergraduate students was examined (Schneider, Hanges, Goldstein, & Braverman,
1994). It was found that student ratings of teaching effectiveness (service effectiveness)
were related to department chair ratings of teaching, to other facets of faculty
performance (e.g., graduate educator effectiveness, undergraduate educator
effectiveness, department service, colleagueship), and to chair ratings of overall faculty
effectiveness. The significant correlation between student and chair ratings of faculty
effectiveness (r = .32, p < .01) demonstrates that service effectiveness judgments made
by customers and supervisors are related (Schneider, et al., 1994).
The correlation also demonstrates that nearly 90% of the variance in student and
chair ratings is not shared. This study indicates, as we might expect, that customer
ratings are likely to agree to some extent with supervisor ratings of customer service
representatives. However, this study also demonstrates that customers are likely
providing important additional information and observing additional service behaviors
that supervisors do not see, making their ratings a valuable addition to the performance
appraisal process.
The second empirical study regarding customer evaluations of customer service
representatives was conducted in the health care industry (Lambert et al., 1997).
Customers and managers of the customer service representatives, made appraisals of
customer service representatives. Customer ratings of customer service representative
employees knowledge, availability, and trustworthiness were significantly correlated
with managers ratings of employees on these dimensions (ranging from r = .28 - .36, p
< .05) (Lambert et al., 1997). Again, these results indicate that while customers and
managers demonstrate some agreement on the effectiveness of customer service
representatives, each perspective provides unique information. For example, customers
likely are in a better position to observe customer service representatives behaviors in
service interactions than are managers.
Service Quality Literature
Service quality is the customers perception of how well their expectations were
met during the service encounter (Zeithaml et al., 1990). Researchers typically measure
service quality using customer evaluations of five attributes: reliability, empathy,
assurance, tangibles, and responsiveness. Service quality has typically been measured
by surveying customers both before and after a service experience and differentiating
their expectations and perceptions (Zeithaml et al., 1990). Based on the service delivery
gap model, perceptions greater than or equal to expectations suggest satisfactory
service quality; perceptions less than expectations indicate unsatisfactory service
quality (Parasuraman, Zeithaml, & Berry, 1985, 1988; Zeithaml et al., 1993). Most
researchers (Bitner, 1990; Bitner et al., 1990; Zeithaml et al., 1990) only measure
service quality after the service encounter and rely on this single survey of a customers
perception to reveal the service delivery gap.
Mystery Shopping -- Measures of Customer Service Quality
Another way of measuring the quality of the service delivery is by making use of
participant-observer evaluations by mystery shoppers. Mystery shopping is a method
used to measure the quality of customer service provided by employees as it occurs
(Grove & Fisk, 1992). Mystery shopping uses trained observers posing as customers to
interact with staff and objectively assess service quality. The technique typically focuses
on activities and procedures that do or do not occur rather than gathering opinions
about the service experience (Wilson, 1995, p. 725). Thus, mystery shopping provides
an alternative to customer surveys or other feedback techniques that occur after the
The validity of the mystery shopper technique hinges on the employees believing
that the observer is a real customer, not an undercover evaluator. To both protect the
anonymity of the shopper and to increase the believability of the interaction, mystery
shoppers follow a script, or scenario, to solicit responses from the employee. After each
interaction, the evaluator independently rates the quality of customer service received
based on an established set of criteria.
According to one study, service organizations use mystery shopping because
customer surveys do not provide sufficient information on weaknesses in the service
delivery (Wilson, 1995). Investigating the business randomly and anonymously can
have a dramatic effect on employees by creating the belief that their work could be
evaluated at any time (Baggs & Kleiner, 1996).
In another study, mystery shopping was not only comparable to customer
surveys for reliability but offered a more cost effective means for data collection (Fin &
Kayande, 1999). When evaluating the same subjective construct, an individual mystery
shopper provides higher quality data than does an individual customer (Fin & Kayande,
1999, p. 107).
Mystery shopping can discern finer differences between locations than can be
detected using customer surveys because of the greater attention paid by the
respondent (Fin & Kayande, 1999). The fact that mystery shoppers know in advance
that they will be evaluating an interaction gives them an advantage over individuals
presented with a customer service survey. There may also be further advantage in
having individuals who have been trained to be observant providing the assessment
especially when they have clearly defined behavioral criteria to assess.
Link between Employee Satisfaction and Customer Service
Extensive research has been conducted regarding the relationship between job
satisfaction and various work-related behaviors including job performance measures
such as customer service quality. Satisfied workers have been found to be more
conscientious, helpful, and to have greater willingness to report unethical behaviors
than dissatisfied workers (Silberstang, 1995). Work satisfaction has been shown to
influence attendance at work, pro-organizational behaviors, decisions to leave the
organization, and psychological withdrawal behaviors (Cranny, Smith, & Stone, 1992).
Researchers have also noted that the methods researchers use to study
satisfaction and performance greatly impact the conclusions reached regarding their
relationship (Cranny, Smith, & Stone, 1992). They suggest that correlation studies have
shown only moderate relationships at best, while intervention research supports a
stronger relationship. For example, in a review of 207 studies of the effects of
psychologically-based interventions on productivity and performance, investigators
reported that 87% of the interventions were successful in raising productivity, as well as
job satisfaction (Katzell & Guzzo, 1983).
Intervention studies assess the effects of a manipulated independent variable
(such as pay, benefits, or supervisory practices), and are believed to take into account
various mediating factors (such as extrinsic and intrinsic rewards, and perceived equity)
that affect both performance and satisfaction better than correlation studies (Cranny,
Smith, & Stone, 1992).
Using path analysis, it was found that work satisfaction significantly influences
job performance as rated by supervisors (though not as self-reported), which is believed
to be due to increased alertness and focused attention (Cranny, Smith, & Stone, 1992).
Other research found that job satisfaction is a significant predictor of organizational
commitment for female advertising executives (DeConinck & Stilwell, 1996); and
organizational commitment of supervisors was positively related to performance
(Becker, Billings, Eveleth, & Gilbert, 1996). In studying research and development
teams, it was found that satisfaction with pay, advancement, and supervision was
related to an increase in patent acquisition, technical quality ratings, and publication of
articles, all of which can be considered job performance issues in the research and
development field (Keller, Julian, & Kidia, 1996).
Service Quality and Customer Satisfaction
Service quality and customer satisfaction are similar concepts and controversy
exists regarding the nature of the relationship between them (Oh & Parks, 1997). Some
researchers consider service quality to be an outcome of the service encounter while
customer satisfaction is a response to service quality. Other scholars suggest that a
causal relationship exists but disagree on which comes first. Many researchers agree
that customer satisfaction and service quality are distinct constructs that share many
attributes (Bitner et al., 1990; Boulding et al., 1993; Carmen, 1990; Parasuraman et al.,
Given the overlap in these concepts, its not surprising that many investigators
(Cadotte et al., 1987; Fornell, 1992; Oliver, 1980; Oliver & Swan, 1989; Spreng et al.,
1995) have conducted customer satisfaction research using service quality measures.
This confusion within the academic community has led to companies using customer
satisfaction and service quality measures interchangeably in assessing service delivery
(Devlin, Dong, & Brown, 1993). From an organizational perspective, service quality and
customer satisfaction both impact strategic marketing variables such as customer
loyalty, trust and commitment, tendency to engage in positive word-of-mouth
communications, intention to return, and profitability (Anderson, 1998). In addition,
extremely high levels of service quality and customer satisfaction are acknowledged as
important components in building loyalty.
Despite the debate surrounding the specific nature of customer service
effectiveness (Iacobucc. et al., 1995; Gotlieb, Grewal, & Brown, 1994), there is
agreement that customer attitudes (e.g., customer satisfaction) are related to important
customer behaviors (i.e., loyalty and attrition). This proposition is consistent with a
model of attitudes which predicted behavioral intentions (Fishbein & Ajzen, 1977).
Previous research on attitudes and behavioral intentions in other contexts provides
further support for the assertion that customer satisfaction leads to behavioral
Customer Satisfaction
While service quality provides insight into the effectiveness of the service delivery
process, customer satisfaction, or the customers perception of their experience, is
generally the measure of greatest concern to organizations. This concern is driven by
the organizations belief that customer satisfaction leads directly to customer retention.
Consequently, researchers continue to explore new models and methods for uncovering
meaningful information about customer satisfaction.
While no single definition for customer satisfaction exists, the complexity of the
processes involved in a customers arriving at judgment of satisfaction or dissatisfaction
continues to provide opportunity for study. Most researchers broadly define customer
satisfaction and dissatisfaction as the consumers judgments regarding a businesss
success or failure in meeting expectations. When expectations are met, satisfaction
results; unmet expectations lead to dissatisfaction (Oliver, 1980). Research dating back
to the early 1960s (Cardozo, 1965) suggests that customer satisfaction is a
consequence of the confirmation or positive disconfirmation of expectations, and that
customer dissatisfaction is a by-product of negative disconfirmation of expectations
(Day, 1984; Oliver, 1980; Olshavsky & Miller, 1972; Olson & Dover, 1976).
Customer satisfaction has been discussed using many different models and
taxonomies. Customer expectations, the disconfirmation paradigm, service quality,
customer delight, customer loyalty, and defection are among the popular topics in the
customer satisfaction literature. The disconfirmation paradigm (Oliver, 1977, 1980) is
the most widely used and explored measure of customer satisfaction. Oliver developed
the disconfirmation paradigm from adaptation level theory (Helson, 1964). According to
Oliver, expectations and disconfirmation are the two cognitive processes involved in
customer satisfaction. Positive disconfirmation (performance exceeding expectations)
and negative disconfirmation (performance below expectations) produce the affective
outcomes called customer satisfaction and dissatisfaction. Each service encounter
influences the expectation level for the next visit. Numerous researchers have applied
the paradigm to their research (Bearden & Teel, 1983; Swan & Trawick, 1981; Tse &
Wilton, 1988).
One study suggested that the factors that determine customer satisfaction differ
between goods offerings and service encounters (Churchill & Surprnant, 1982). Studies
have also shown an interaction between goods and service activity in achieving
customer satisfaction (Bearden & Teel, 1983; Cadotte, Woodruff, & Jenkins, 1987;
Oliver, 1993). One study concluded that food quality and personal service interact in the
dining experience to determine customer satisfaction or dissatisfaction (Oliver, 1993).
One researcher introduced the notion that customer satisfaction involves
cognitive and affective aspects in pre-purchase, purchase, and post-purchase phases of
buying goods and/or receiving services (Westbrook, 1980). While many other
conceptualizations exist, there is agreement that satisfaction is a perception or
judgment a customer makes following a service encounter in which goods and/or
services are exchanged (Yi, 1990). This evaluation of satisfaction is highly
heterogeneous. It differs from customer to customer, encounter to encounter, and firm
to firm, supporting the need for new insights in customer satisfaction between and
across industries. One study emphasized that satisfaction is a process spanning the
consumption period and that research of the post-purchase phase is critical to new
knowledge development (Tse, Nicosia, & Wilton, 1990).
Prior experience, the relationship or history that a customer has with a business,
moderates the customers service quality judgment and level of satisfaction (Oh &
Parks, 1997). The satisfaction judgment a customer makes after each transaction may
be a transaction-specific judgment (Bitner, 1990) or a cumulative global judgment based
on multiple interactions with the firm or product (Cronin & Taylor, 1994; Ostrom &
Iacobucci, 1995).
One study identified prior experience as an important aspect of the service
encounter, and therefore customer service, because it influences subsequent service
encounters and the future relationship between the customer and the service provider.
Customers continually update their beliefs and expectations regarding a service, and
with each visit they incorporate new information with their existing knowledge about the
provider. Each service encounter yields a service quality judgment that results in
updated expectations for the next visit (Tax, Brown, & Chandrashekaran, 1998). Two
belief-updating processes were adapted to analyze customer dissatisfaction with
complaint handling, and in each case the mitigating effect of prior experience (or lack
thereof) was demonstrated (Aaker, 1991). Expectations are personal norms based on
experience with the product (Woodruff, Cadotte, & Jenkins, 1983). Support for the idea
was provided that expectations vary with the consumer and are formed from past
experiences as well as word-of-mouth and advertisements about a firm (Zeithaml et al.,
1990). Comparisons have been viewed as being made against six types of
expectations: ideal (Miller, 1977), desired (Spreng & Olshavsky, 1993; Zeithaml et al.,
1993); equitable and ideal outcomes (Tse & Wilton, 1988), values (Westbrook & Reilly,
1983), acceptability (Miller, 1977; Zeithaml et al., 1993), and should-be (Boulding, Kalra,
Staelin, & Zeithaml, 1993). These six expectation types are represented in six different
customer satisfaction models. Recent work has begun to accept all six models as valid,
recognizing that customers hold multiple expectations simultaneously (Spreng,
MacKenzie, & Olshavsky, 1996).
After the traditional customer satisfaction paradigm was extended to consider the
affective role (Westbrook & Oliver, 1981), other researchers introduced five types of
satisfaction evoked by feelings:
1. Contentment (acceptance or tolerance),
2. Pleasure (an evoked positive experience ending with happiness),
3. Relief (aversive state is removed),
4. Novelty (interest or excitement due to expected or unexpected events), and
5. Surprise (delight or outrage due to far exceeded or unmet expectations)
(Oliver & Swan, 1989).
Regardless of how customers form expectations or arrive at satisfaction, all
customers have expectations (Tse & Wilton, 1988). Expectations change as encounters
with a firm change. Meeting or exceeding these evolving expectations determines the
financial success of a firm (Fornell, Anderson, & Lehman, 1994).
Relationship Quality
Trust and commitment, the constructs of relationship quality, are critical to long-
term relationships between customers and service providers (Dwyer, Schorr, & Oh,
1987; Gronroos, 1994; Gummesson, 1994, 1998). Trust and commitment potentially
grow or shrink with each service encounter.
Trust is the confidence the customer has in the service providers reliability and
integrity. Trust is a major determinant in the success of a relationship between a
customer and a service provider (Wilson, 1995). According to another source reliability
over multiple service encounters adds to a customers trust in the organization
(Ganesan, 1994). Trust has been linked to outcome in complaint handling (Kelley &
Davis, 1994). Higher levels of customer satisfaction have predicted higher levels of trust
(Smith & Bolton, 1998).
Commitment is the customer and service providers desire to continue their
relationship (Morgan & Hunt, 1994). Higher levels of customer satisfaction have been
correlated with higher levels of customer commitment across service encounter
outcomes and in particular in regard to outcomes due to complaints lodged by the
customer (Kelley & Davis, 1994; Smith, 1998; Smith & Bolton, 1998; Weun & Trocchia,
Awareness, exploration, expansion, commitment, and dissolution have been
identified as the stages in the relationship between customer and service provider.
Throughout these stages, customers use satisfaction or dissatisfaction to form their
intentions to repatronize the business, engage in negative or positive word-of-mouth
communications about the business, or exit and not return. Customers return or defect
from service businesses for multiple reasons, only one of which is satisfaction level
(Dwyer et al., 1987). The latest satisfaction craze has been called a satisfaction trap
because between 65% and 85% of satisfied customers will defect (Reichheld, 1996).
Researchers have used intentions to repatronize a service to test the validity of
service quality and customer satisfaction models. Research has demonstrated that low
levels of service quality and low customer satisfaction are related to switching behavior
(Bitner, 1990; Boulding et al., 1993; Cronin & Taylor, 1992). Research has also
demonstrated that only extreme levels of satisfaction result in loyal customers (Bitner,
According to one study, this means a very positive satisfaction level (nine or ten
on a ten-point scale) (Hart, 1988). Although loyalty has been defined by repeated
buying behavior, it has been suggested this is unwise because of the convenience
factor (Jacoby & Chestnut, 1978). It was agreed that a customers loyalty must be
measured further by analyzing the customers beliefs, affects, and intentions (Oliver,
1999). A proposed framework combining beliefs, affects, and intentions in the creation
of customer loyalty framework suggests there are three components of customer
loyalty. First, the customer must prefer the product to the competitors product. Second,
the preference for the product must coincide with an emotional preference for the brand.
Third, the end result is the consumer has a higher intention to remain with that brand
(Dick & Basu, 1994).
Customer loyalty has been defined as a deeply held commitment to rebuy or
repatronize a preferred product/service consistently in the future, thereby causing
repetitive same-brand or same brand-set purchasing despite situational influences and
marketing efforts having the potential to cause switching behavior. It was suggested
that the loyal customer would pursue the product against all odds and at all costs
(Oliver, 1999, p.34). Research has shown that loyalty may be determined by one good
service encounter with a service organization (Solomon, Surprenant, Czepiel, &
Gutman, 1985). In addition, it was suggested that loyalty can occur at any stage of a
business relationship (Oliver, 1999).
Disappointment and Defection
Disappointment is defined as a deeper affective state or a more extreme
dissatisfaction felt when service goes differently than expected (Zeelenberg & Pieters,
1999). It is suggested that a disappointment model detailing the emotion of
disappointment (one of 32 emotions identified by Frijda, Kuipers, & Schure, 1989) is
important to services marketing researchers because disappointment and regret are
related to decision making (Inman, Dyer, & Jia, 1997). Research into the relationship
between disappointment and the behavioral intentions of complaining, engaging in
negative word-of-mouth communications, and defecting showed more disappointed
customers complaining and engaging in negative word-of-mouth but not more defecting.
This confirmed past studies (Inman et. al., 1997). Defection is a falling away from loyalty
or habit in buying behavior (Heskett et al., 1997). It is the final behavioral response that
dissolves the relationship between customer and service provider. Defection has been
shown to lead to reduced market share, lower profitability, and increased cost
(Reichheld & Sasser, 1990; Rust & Zahorik, 1993; Rust, Zahorik, & Keiningham, 1995).
Studies have linked switching behavior to service failures in retail stores (Kelley et al.,
1993) and to dissatisfaction in the insurance industry (Crosby & Stephens, 1987).
Research focused on quality, satisfaction, or service encounters has yielded only partial
information about defecting behavior.
Extremely satisfied customers usually do not defect (Jones & Sasser, 1995).
However, even customers who communicate their satisfaction do defect (Liljander,
Roos, & Strandvik, 1998; Roos, 1999). Some natural defection occurs due to factors
beyond the control of the provider. Researchers refer to defection that is not natural and
that could possibly be avoided or revoked by applying improved business behaviors as
nonattritive defection. Both satisfied and dissatisfied customers defect attritively and
Three categories for nonattritive defection were presented in one study. First,
price may impact defection by being too high, by increasing, by being unfair, or by being
deceptive. Second, convenience may influence defection through location, hours of
operation, wait time, or availability of appointments. Finally, core service failures have a
direct effect on customer defection (Keaveney, 1995). Mistakes, billing errors, and
service catastrophes were identified as the subcategories of core failures.
In one study, 20% of respondents who switched service providers mentioned
inconvenience; 44% of respondents said their defection was related to core service
failures, and 34% defected due to personal interactions with the service provider
(Keaveney, 1995). In another study defection was categorized as revocable and
irrevocable by applying the attributes of relationship length, switching determinants
(push, sway, and pull), emotions, voice, and length of process. Irrevocable defections
were characterized by medium relationship length, being pushed from the provider by
product and service failures, the experience of strong emotions, having complained
often with no response, and having taken between two and four months to make the
decision to defect (Roos, 1999). It has also been found that long-time customers want
no failures (Smith & Bolton, 1998). Several studies have indicated that dissatisfied
customers have a higher likelihood of defecting than satisfied customers (Loveman,
1998; Rust & Zahorik, 1993; Solnick & Hemenway, 1992).
Service Profit Chain
In recent years, many companies have invested considerable resources into
programs for measuring and increasing employee satisfaction (Heskett et al., 1994;
Heskett, Sasser, & Schlesinger, 1997). The assumption underlying these activities is
that increased employee satisfaction ultimately leads to increased customer
satisfaction. This supposed link between employee satisfaction and customer
satisfaction is a central element of a conceptual framework referred to as the service
profit chain (Heskett et al., 1994; Heskett, Sasser, & Schlesinger, 1997) or value profit
chain (Heskett, Sasser, Schlesinger, 2003). This model suggests a causal chain linking
employee satisfaction to financial performance through the mediating constructs of
employee loyalty, customer satisfaction and customer loyalty. However, the suggested
link between employee satisfaction and customer satisfaction is based on somewhat
limited and anecdotal evidence.
As stated above, much of the research linking the areas of employee satisfaction,
customer satisfaction, and customer loyalty has been summarized in The Service Profit
Chain and The Value Profit Chain (Heskett, Sasser, & Schlesinger, 1997). These two
books summarize the interrelationship between the corporate policies, employee
satisfaction, value creation, customer loyalty, and profitability. At the core of the
research is the link between employee satisfaction and customer satisfaction. The
authors describe the need for a seamless integration of all components in the service-
profit chain (Heskett, Sasser, Schlesinger, 2003) They suggest that organizations must
guide and support employees since the employees play a central role in ensuring
customer satisfaction and the benefits it creates (Heskett, Sasser, & Schlesinger, 2003).
Although customer satisfaction (Fornell et al., 1996; Oliver, 1996) and employee
satisfaction (Behrman & Perreault, 1982, 1984; Churchill, Ford, & Hartley, 1985) have
been widely studied constructs within a number of disciplines, the research relating the
two constructs to each other is sparse and contradictory. Despite the plausibility of the
link between employee and customer satisfaction, systematic theory-driven research
based on sound empirical analysis in this area is scarce. More importantly, existing
empirical research on this link is subject to numerous limitations. First, several studies
have collected data exclusively from employees (Schlesinger & Zornitsky, 1991), rather
than using data from both sides of the dyad. The problem with such an approach is that
highly satisfied employees might rate customer satisfaction higher than dissatisfied
employees based on their generally positive perception of the company (common
method bias). Second, data analysis has typically been based on bivariate approaches
(Loveman, 1998; Schlesinger & Zornitsky, 1991; Tornow & Wiley, 1991), rather than
exploring the relationship between employee and customer satisfaction within a more
comprehensive causal network. Third, existing research has typically been exploratory
(Schlesinger & Zornitsky, 1991; Loveman, 1998; Tornow & Wiley, 1991) and neglected
the theoretical justification of the link between employee and customer satisfaction.
More recently, research testing the service chain paradigm has shown mixed
results (Abbott, 2003; Gelade & Young, 2005; Silvestro, 2002; Silvestro & Cross, 2000;
Spinelli & Canavos, 2000; Yoon, Seo, & Yoon, 2004). A study of six metropolitan, full-
service hotels found a relationship between employee and guest satisfaction. Results
indicated that for employees, monetary factors can be dissatisfiers, but employees
responded favorably to appreciation, participative decision making, and team work.
Further, results showed that hotel guests responded favorably to courteous staff
members who were fast and competent (Spinelli & Canavos, 2000). On the other hand,
in exploratory research on the UK business-to-business (B2B) sector on the relationship
between employee satisfaction and profits, results showed that morale can be very low,
yet employees work hard to keep customers loyal and to maximize company profits
(Abbott, 2003).
In one study of a major UK grocery retailer, results showed an inverse
relationship between employee satisfaction and measures of productivity, efficiency,
and profitability. In other words, contrary to prediction, the most profitable stores were
those in which employees were least satisfied. Further, employee loyalty, as measured
by length of service, also appeared to be inversely related to productivity and
profitability. The researchers argued that pressure to obtain maximum store efficiency
may be causing dysfunctional managerial behavior at the store level (Silvestro, 2000).
In a related study, relationships were found among profit, customer loyalty, customer
satisfaction, service value, internal service quality, output quality, and productivity.
However, no support was found for the hypothesis that these were caused by employee
satisfaction and loyalty. Further, the researchers found a strong association between
employee dissatisfaction and store profitability (Silvestro & Cross, 2000).
In a study of relationships among organizational climate, employee attitudes,
customer satisfaction, and sales performance in the retail-banking sector, it was found
that customer satisfaction was a mediator between employee attitudes and sales
performance in a large sample (55,200 employees, with an overall response rate of
67%) of bank branches in multiple organizations. However, although mediation effects
of borderline significance were found when the sample size is large, the effects were too
small to be of real importance. The results suggest that other accounts of the service
profit chain model may be better at explaining the relationship between employee
attitudes and business performance (Gelade & Young, 2005).
Such a model was suggested by other recent studies (Koys, 2001; Yoon, Seo, &
Yoon, 2004). In a cross-lagged regression study that hypothesized that employee
satisfaction, organizational citizenship behavior, and employee turnover would affect
profitability and customer satisfaction, Koys (2001) collected data from the units of a
regional restaurant chain using employee surveys, manager surveys, customer surveys,
and organizational records. Results showed that employee attitudes and behaviors at
the first measurement point were related to organizational effectiveness at a later
measurement point. Another study (Yoon, et al., 2004) looked at the effects of contact
employee supports on employee responses and customer service evaluation. This
study combined perceptions from customers and the employees with whom they had
contact. Sources of support included organization support, supervisory support, and
customer's participation. These factors were hypothesized to affect the attitudes and
behaviors of employees, and thereby to affect customer's perceptions of service quality
provided by employees. Results showed that three sources of support for employees
had significant impacts on job satisfaction and employee service quality, and that
perceived organizational support and customer participation affected service effort.
Results also showed that employee service effort and job satisfaction strongly affected
customers' perceptions of employee service quality.
Finally, a four-point theoretical formulation to explain the mirror relationship
between employee and customer satisfaction has been proposed (Ellis, Gudergan, &
Johnson, 2001) that includes level of focus on customer satisfaction and level of risk-
aversion in staff members. The model proposes that the greater the customer
satisfaction focus in the contract between the organization and service-providing staff
members, the stronger will be the satisfaction mirror. Second, the model proposes that
in the presence of a customer-satisfaction-focused [i.e., outcome-- based] contract
between staff and organization and more risk-averse frontline service staff members,
the weaker will be the satisfaction mirror. Third, the model proposes that the greater the
customer service focus of the contract between the organization and risk-averse staff,
the greater will be the satisfaction mirror. Finally, with a behavior-based, customer-
service-focused contract between organization and staff, as the number of outcomes
the organization desires from the staff member increases, the satisfaction mirror will
Satisfying Your Employees
Creating a work environment that encourages rapid response to customers'
needs and attentive follow-through is the key to leveraging the power of the service-
profit chain (Heskett et al., 1997). This is only possible when people are empowered to
make decisions and are motivated to solve problems. By encouraging employees to go
beyond the literal boundaries of their jobs - to make suggestions for improvement - you
gain not just a part, but the full potential of their contributions to the business.
Research aimed at quantifying the links between employee satisfaction and
customer satisfaction began in 1980 with Schneiders survey of satisfaction levels of
bank customers and employees. Books such as The Loyalty Effect (Reichheld, 1996)
and The Service Profit Chain (Heskett et al.,1997) produced the first sets of hard data
quantifying these links. Both studies concluded that there are direct and quantifiable
links between customer service variables (such as satisfaction and loyalty) and
employee variables (such as satisfaction, enthusiasm, loyalty, commitment, capability,
and internal service quality).
Since the publication of these studies, authors and companies have accepted
that these links exist and literature often states that these links are proven and
considered to be a fact of business. In 1997, Development Dimensions Internationals
(DDI) researchers conducted focus groups, customer interviews, literature reviews, and
surveys to determine what would be required to create an effective service environment
in the future. While reviewing the results, DDI researchers also found substantial
information that showed a circular relationship between employee satisfaction and
retention, and customer satisfaction and loyalty. In addition, the study revealed that
employee satisfaction was strongly related to employee commitment and loyalty, and
that both of these measures have proven relationships to retention and productivity
(From Corporate Leadership Council, 2001).
A 1998 study conducted by Sheffield Effectiveness Program, based jointly as the
Centre for Economic Performance at the London School of Economics and the Institute
for Work Psychology at the University of Sheffield, examined how the way that people
are managed impacts both productivity and profitability. The study found that 5% of
variation between companies in their profitability and 16% of variation in their
productivity can be explained by the variations in the job satisfaction of their employees.
(From Corporate Leadership Council, 2001).
Since the publication of these earlier studies, companies have worked to
determine the extent to which these links exist within their own organizations. A general
consensus has emerged around the idea that companies must build their own models
because customer satisfaction is only one variable in understanding the relationship
between employee satisfaction, customer satisfaction, and customer retention.
Moreover, each company must determine how it defines employee satisfaction and
customer satisfaction, which can even differ between departments and business units
within a single company (Corporate Leadership Council, 2001).
Another issue that continues to be problematic in the understanding of previous
research is the role of employee behavior. Employee attitudes cannot influence
organizational effectiveness on their own, as employees must also behave
appropriately, a factor which is not included in most of the available models, with the
exception of that of Yoon et al. (2004).
The goal of the present study was to critically analyze the relationships that exist
between these three variables: employee satisfaction, customer service behaviors, and
customer satisfaction. The current study adds to the body of literature attempting to
quantify the relationship between service workers and the people they serve. This link is
critical to the success of all retail sales organizations and the knowledge gained from
research of this type has implications that can directly affect the financial performance
of these organizations. While the Service-Profit Chain (Heskett & Sasser, 1997) informs
this research, the inclusion of customer service behaviors (service quality) adds a
dimension that has not previously been analyzed within the same study.
Given that the results of past research and the development of the service-profit
chain model (Heskett & Sasser, 1997) a pattern emerges that suggests a relationship
between the variables being considered in this study. The evidence suggests a
relationship that runs from employee perceptions (job satisfaction) through employee
behavior (customer service quality) to customer perceptions (customer satisfaction).
The question for the organization participating in this study was whether the
relationships that have been shown to exist elsewhere between employee satisfaction,
customer service quality, and customer satisfaction could be measured internally. The
first question was whether an employees level of satisfaction had a measurable
association with the quality of the customer service they provide. Hypothesis 1. There
will be a positive and significant correlation between measures of employee satisfaction
and measures of customer service quality as evaluated by a mystery shopper survey.
Since employee satisfaction has been shown to correlate with customer
satisfaction directly (regardless of customer service quality), the second question was
whether employee satisfaction had a measurable association with customer
satisfaction. Hypothesis 2. There will be a positive and significant correlation between
measures of employee satisfaction and measures of customer satisfaction.
Finally, while there is limited and contradictory empirical evidence in this regard,
the relationship that exists between customer service quality and customer satisfaction
was considered. Hypothesis 3. There will be a positive and significant correlation
between measures of customer service quality as measured by the mystery shop
survey and measures of customer satisfaction.
The purpose of the present chapter is to describe the methods and procedures
used to test the following null hypotheses:
: There is no relationship between measures of employee satisfaction and
measures of customer service quality as evaluated by a mystery shopper.
: There is no relationship between measures of employee satisfaction and
measures of customer satisfaction.
: There is no relationship between measures of customer service quality
and measures of customer satisfaction.
The chapter is organized as follows. The first section describes the setting of the
study. This is followed by sections describing the sample, instruments used, data
collection procedures, and data analysis procedures.
Data were collected at a midsize retail bank operating in Texas and California.
This particular bank had identified customer service as their key market differentiator
and had implemented multiple programs in support of this strategic goal over the last
several years. Training had been conducted at all levels of the organization to
emphasize service quality and the marketing department has positioned two different
metrics to collect performance data.
Three different sources of data were utilized for this study. Customer satisfaction
and customer service quality data were provided by the company under analysis, while
employee satisfaction data were collected by the researcher. Each source was

independent, employing different data collection methods, surveys, and populations.
For the employee satisfaction survey, subjects constituted all levels of employees
at each of the 137 retail banking centers involved. Positions ranged from tellers to
banking center managers with an average of five employees participated per banking
center. The retail bank population was approximately 930 employees, and 745 surveys
were completed. After initial data clean-up, 661 employees had provided the banking
center numbers capable of inclusion in further analysis, for a return rate of 71% of the
total population.
For the customer service quality (mystery shop) survey, a total of 548 mystery
shops were conducted across the 137 banking centers involved in the research. The
target of each assessment, the banking centers, received an average of four mystery
shops during the quarter under investigation.
For the customer satisfaction survey, a total of 4,100 surveys were collected
during the quarter under investigation, averaging 30 per banking center. Response
rates for the customer satisfaction survey were less than 50% but company policy
stipulated that additional random customers be contacted until a sufficient number of
responses were obtained.
While all three surveys collected data from individuals, the primary unit of
analysis for this study was the banking center. This allowed the researcher to look at
differences among employee satisfaction, customer service quality, and customer
satisfaction at a comparable level and to take advantage of larger sample sizes.
Banking centers with fewer than three employee satisfaction surveys were eliminated
from the sample to increase the likelihood that the data were accurate and to increase
variability within the banking center level data. This process left 129 banking centers
available for analysis.
Three separate tools were utilized in this study. Two surveys, customer service
quality (mystery shop) and customer satisfaction were proprietary instruments provided
by the marketing department of the organization participating in the investigation.
These surveys are not included in this document. The third dataset, derived from the job
satisfaction survey, was collected by the researcher.
Customer Service Quality
Customer service quality was measured via a mystery shopper program
implemented with the help of an external vendor. This program objectively assessed
the quality of service delivery at each banking center utilizing professionally trained
shoppers. Each banking center was visited and phoned four times quarterly and
judged on the quality of the service they provided. Separate, proprietary scoring
templates (scripts) were used for teller interactions, phone interactions, investment
sales interactions and overall banking center service quality. Each template included
between 85 and 105 specific criteria but scoring is based on the observations and
transactions of each individual shopper such that not all items were used during every
interaction. The templates were worded such that individual items could be scored on a
pass/fail basis with room for comments and impressions logged by the shopper.
This data were captured in a score card format with an overall score calculated as a
percentage of the number of items passed by the banking center as a whole, with
100% being the highest possible score. Areas covered included such items as
response time, courtesy, professionalism, and product knowledge.
Due to the nature of the mystery shop data, item level analysis was not
possible. The data were collected by "mystery shoppers" during live interactions in
such a way that each survey covered different items. In addition, each script focused
on one of several overlapping areas (i.e., phone, teller, personal bankers, etc). Given
that each "shopper" was different and each interaction could progress differently,
individual surveys were difficult to compare; however, the organization pooled the four
separate surveys to provide a more inclusive view of the service provided by a given
banking center. For the purposes of this study the consolidated score was used to
represent customer service quality (mystery shop) for each banking center.
Customer Satisfaction Survey
In addition to the mystery shopper program, the bank collected data utilizing a
customer satisfaction survey. This was a script-based phone survey conducted with
random participants from the customer population of each banking center. Also
developed with input from an external vendor, this proprietary survey assessed the level
of satisfaction the customer had in their recent (within 3 months) interactions with their
primary banking center. The tool contained 30 items and covered areas including:
satisfaction with interpersonal interactions, speed, accuracy, and problem resolution. In
addition, it covered intent to refer others and maintain a relationship with the bank. The
survey utilized multiple question formats including yes/no and two different Likert-type
scales for various questions.
In order to improve the focus of the survey on issues relevant to this research, an
initial analysis of the content of each question was conducted. This led to the exclusion
of 12 items deemed irrelevant to the study based on their focus on product marketing
rather than customer services. The remaining 18 questions were scrutinized to
determine if subscales could be created to improve analysis and understanding of the
nature of the tool. Visual inspection of the questions suggested that the survey may
have been measuring two different constructs. The first 12 questions appear to be
measures of customer services, focusing on the quality of the interaction and the
behaviors of the services providers. The final six questions are more traditional
measures of customer satisfaction, with a focus on the attitudes and perceptions of the
customers in response to the service experience as well as intention to continue doing
business with the company. Investigation of the existence of subscales will be explored
in the analysis section and commented on there.
Both the Mystery Shopper survey and Customer Satisfaction survey were
changed between 2004 and 2005, making a time series design impossible. Owing to
the fact that the bank is fairly new to the process of collecting customer service and
satisfaction data, it has been modifying its surveys fairly dramatically each year in an
attempt to find the best mix of information. All data are collected on a quarterly basis
and analyzed accordingly. Data for use in this research were obtained to correspond
with the collection of data from the employee satisfaction survey from the second
quarter of 2005.
Job Satisfaction Survey
While the bank has placed great emphasis on customer service and satisfaction,
it has done little to indicate the importance of employee satisfaction or develop metrics
in this regard. For the purposes of this research, the Job Satisfaction Survey (JSS;
Spector, 1985) was the measure of employee satisfaction. The JSS is a copyrighted
scale but, according to the author, can be used free of charge for noncommercial
educational and research purposes in return for the sharing of results. It is available
online at
The JSS survey assesses nine facets of satisfaction as well as providing an
overall satisfaction score. The nine facets include: pay, promotion, supervision, fringe
benefits, contingent rewards, operating conditions, coworkers, nature of work, and
communication. The tool contains 36 items and uses a summated rating scale format
with four items per facet. Each of the items is a statement that is either favorable or
unfavorable about an aspect of the job, with half of the items scored in a positive and
half in a negative direction. A 6-point Likert-type scale is utilized in which 1 corresponds
to disagree very much and 6 corresponds to agree very much.
According to Spector (1997), internal reliability measures for the JSS have
produced coefficient alphas ranging from 0.60 for the coworker subscale to 0.91 for the
total scale. This suggests a fairly high level of internal consistency, though two of the
subscales (coworkers and operating procedures) fall below the 0.70 typically preferred
(Nunnally, 1978). Test-retest reliability ranged from 0.37 to 0.74 over a time span of 18
months. These numbers are based on a single sample but are adequate given the
dynamic nature of attitudinal constructs such as employee satisfaction.
The JSS has been shown to correlate with a number of scales and variables that
have been shown in the literature to correlate with other job satisfaction scales (Spector,
1997). Spector (1997) reported correlations with the Job Descriptive Index (JDI)
ranging from 0.61 for coworkers to 0.80 for supervision subscales. The JDI is
considered to be the most carefully validated scale of job satisfaction (Smith et al.,
1969); however, cost considerations and survey length made its use prohibitive in the
current study.
Data Collection Procedures
Employee satisfaction data were collected online using the Zoomerang online
survey system. This is an online data collection tool which allows for anonymous
distribution of surveys via email and links to a web-based survey system. Employees
received an email containing informed consent information and instructing them on
where to go and how to complete the survey. Participants could opt-out of the survey
by simply ignoring the email. Request was made for the participants to include their
banking center number and/or location so that data analysis could be accomplished at
the business unit level (661 employees provided this information). Optional
demographics were also collected but were not included in this study owing to low
response rates and the aggregation of data to the banking center level. Survey data
were downloaded from the Zoomerang system and imported into SPSS (Statistical
Package for the Social Sciences) for further analysis.
Customer service and customer satisfaction data relevant to the same time
period of the employee satisfaction survey were provided by the company through the
vendors who collect it. These are ongoing data collection processes managed by
outside vendors but utilizing proprietary surveys developed by the company. Data were
provided in spreadsheet format and imported into SPSS (Statistical Package for the
Social Sciences) for further analysis.
Data Aggregation
In order to effectively utilize the three sources of data available to the researcher,
a common level of analysis needed to be determined. This presented problems for the
employee and customer satisfaction data as they represent personal attributes that can
only be understood in terms of an individual's perceptions of the characteristic that
comprise satisfaction (Schneider, 1990). The aggregation of individual perceptions is
reasonable if the grouping makes theoretical sense given the researcher's objective
(Schneider, 1990).
In the current study, each data set was collected from a separate population with
the only commonality being the banking center for which the employee worked, the
customer shopped, or the mystery shopper visited. Aggregating attitudes is based on a
belief in the existence of local influences on satisfaction such as manager behavior, co-
workers, environment and clientele (Ostroff, 1993b) that create work units with similar
levels of satisfaction. It has been observed (Ostroff, 1992, 1993a) that job satisfaction,
and other attitudinal variables, may be influenced as much by situational variables as by
individual differences.
The participating company was organized into 10 regions with multiple business
units (banking centers) per region. Individual banking centers are given latitude to
respond to local influences with the banking center manager being most influential in
the daily environment of the employees. In addition, the company participating in the
study collects customer satisfaction and customer service quality data (mystery shops)
at the banking center level to determine how well units are performing. These data are
not focused on a particular individual but rather on the banking center of which the
individuals are a part. Interventions related to these data are also carried out at the
banking center level.
Finally, statistical techniques for analyzing multivariate data assume that
requirements for specific sample sizes are met. Given the small size of individual
business units as well as informed consent requirements, sample size was variable as
well as uncontrollable. Accordingly, it made both conceptual and practical sense to
aggregate employee satisfaction perceptions gathered in the current study at the
business unit level.
The best organizational level for analysis is the one in which within-unit
differences are as low as possible (Allen & Wilburn, 2002, p. 108). To ensure that the
aggregation of employee satisfaction data was appropriate, preliminary analysis was
conducted on the raw job satisfaction data to determine if the within-unit differences
were lower than the total sample.
Summary of Instruments and Subjects
Given the multiple instruments included in this study (job satisfaction, customer
satisfaction, and customer service), the following table is provided (Table 1) to help
clarify the variables and sample sizes at each level (total sample, region level, and
banking center level). Each sample is independent of the other two with no overlap in
population or data collection processes. While populations and processes were
different between the three samples, the time frame in which they were collected and
the locations involved in the process were consistent.
Table 1
Summary of Instruments and Subjects
Instrument Questions
Job Satisfaction 36 questions; 9 facets plus
total satisfaction 661 66/region 5/Bank
Customer Service
(mystery shop)
80+ questions; A single total
sum used for comparison 548 55/region 4/Bank
18 questions plus total
customer satisfaction 4100 410/region 30/Bank
Data Analysis Procedures

Data from the three independent surveys were analyzed using a combination of
statistical methods. Given aggregation issues discussed above, and the lack of
empirical soundness of the customer satisfaction survey, several analyses were
conducted prior to hypothesis testing.
The employee satisfaction survey was analyzed to determine whether
aggregation to the banking center level was appropriate. Analysis of variance (ANOVA)
was used to determine if the total amount of variation within each of the business units
was less than the variability within the total sample. Within groups sum of squares were
compared to ensure that they were smaller than the total sum of squares for each
employee satisfaction variable. This was done first because if business units are not
homogeneous, then aggregation should not be attempted.
The customer service quality data was analyzed to determine whether
aggregation of the four independent surveys into a single banking center average was
appropriate. Cronbach's Alpha was calculated and Analysis of variance (ANOVA) was
used to determine if the total amount of variation within the surveys of a given banking
center was less than the variability for the total sample. Within groups sum of squares
were compared to ensure that they were smaller than the total sum of squares for each
survey. This was done first because a lack of homogeneity within each set of surveys
suggests inter-rater reliability issues that would undermine the validity of the aggregated
customer service quality data.
The customer satisfaction survey was analyzed to determine if subscales
existed. Inspection of the 18 items included on the survey suggested that it may have
been tapping two different constructs. Factor analysis was conducted utilizing a
maximum likelihood approach to determine if subscales were viable for inclusion in
further analysis. If factor analysis did not establish the existence of logical subscales, a
single customer satisfaction scale would be utilized for further analysis.
Following these initial analyses, the resulting databases were aggregated into a
single matrix with the banking center as the common unit of analysis. Descriptive and
frequency statistics were run and correlation matrixes were utilized to summarize the
relationships between customer satisfaction, customer service quality, and employee
satisfaction, along with employee satisfaction subscales.
Finally, multiple regression analyses were utilized to explore the relationships
that exist between the three primary variables (employee satisfaction, customer service
quality, and customer satisfaction) and the nine employee satisfaction subscales
involved. Each scale was regressed alone and in combination with the other variables
to obtain an overall picture of the associations between these measures.
Preliminary Data Analysis
Prior to conducting analyses relevant to the hypotheses put forth in this study,
the researcher needed to examine two of the measurement tools in greater detail. In
particular, the employee satisfaction survey was considered in light of the aggregation
issue. The question of whether it made empirical sense to aggregate the employee
satisfaction data to the banking center level needed to be answered. In addition,
exploration of the customer satisfaction survey was needed to determine if subscales
exist that could be included in the analysis or whether a single score should be utilized.
The question of how best to construct the single customer satisfaction score would need
to be pursued if subscales were not possible.
Employee Satisfaction
While aggregation of the employee satisfaction survey data to the banking center
level was necessary from a practical standpoint, given the focus of the other measures
involved in the study, the employee level data was first analyzed to determine if
problems existed in the raw data that would prevent aggregation. Descriptive statistics
were run to provide insight into the appropriateness of items on the employee
satisfaction survey.
Analysis of the raw employee satisfaction data showed no significant problems.
Skewness (-2.14) was noted on item 7, but subscales showed no indication of being
significantly skewed (skewness statitistic >+/-2) (Tabachnick & Fidell, 2001). Table 9 in
Appendix C shows the full results of the descriptive analysis of the employee
satisfaction survey.
In order to ensure that within-group variance for each subscale was lower than
the total variance, an ANOVA was run. Table 2 shows that this is the case.
Table 2
Employee Satisfaction Survey ANOVA
Subscale SS df MS F Sig.
Pay &
Remuneration Between Groups 4064.73 128 31.75 1.35 .01
Within Groups 12491.76 532 23.48
Total 16556.50 660
Opportunity Between Groups 3439.35 128 26.87 1.43 .00
Within Groups 9971.21 532 18.74
Total 13410.56 660
Behavior Between Groups 4552.36 128 35.56 1.88 .00
Within Groups 10051.14 532 18.89
Total 14603.50 660
Fringe Benefits Between Groups 2752.66 128 21.50 1.28 .03
Within Groups 8886.78 532 16.70
Total 11639.44 660
Conditions Between Groups 2422.61 128 18.92 1.14 .16
Within Groups 8832.06 532 16.60
Total 11254.67 660
Coworkers Between Groups 3282.91 128 25.64 2.18 .00
Within Groups 6242.89 532 11.73
Total 9525.80 660
Nature of Work Between Groups 1737.62 128 13.57 1.15 .14
Within Groups 6281.00 532 11.80
Total 8018.63 660
Communication Between Groups 3328.27 128 26.00 1.62 .00
Within Groups 8515.00 532 16.00
Total 11843.27 660
Total Employee
Satisfaction Between Groups 119990.80 128 937.42 1.51 .00
Within Groups 329388.24 532 619.15
Total 449379.05 660

The within groups sums of squares for each subscale was lower than the total
sum of squares. This created a heterogeneity index of less than 1 for each scale
analyzed (Tabachnick & Fidell, 2001). Based on this information, the employee
satisfaction survey data were aggregated by banking center in order to make further
analysis and comparisons to the other data sets possible. All results hereafter refer to
the aggregated data.
Customer Service Quality
Customer service quality was measured using data collected through a mystery
shopping program. Each banking center was assessed four times over the course of
the quarter. Descriptive statistics of this data showed some issues with skewness
(Mystery Shop 2 and 4), but the aggregated score was not significantly skewed (+/- 2.0)
(Tabachnick & Fidell, 2001) (Table 3).
Table 3
Customer Service Quality (Mystery Shop) Descriptive Statistics

N Min Max M Std. Skewness Kurtosis
Statistic Statistic Statistic Statistic Statistic Statistic SE Statistic SE
Mystery Shop 1 129 29 100 86.62 15.56 -1.78 .21 3.01 .42
Mystery Shop 2 129 18 100 87.29 16.78 -2.29 .21 5.23 .42
Mystery Shop 3 129 43 100 89.51 12.54 -1.52 .21 1.97 .42
Mystery Shop 4 129 32 100 91.74 13.32 -2.48 .21 6.25 .42
Total Mystery
Shop Sum Score
129 226 400 355.17 32.01 -1.40 .21 2.88 .42

In order to ensure the appropriateness of aggregating this data into a single
average score per banking center, Cronbach's alpha was calculated. This analysis
showed the there is a lack of consistency (inter-rater reliability) between the four
independent assessments (Cronbach alpha = .22). An ANOVA was run to determine if
the variability between the scores for a given banking center was lower than the total
variance. Table 4 shows that this is the case.
Table 4
Customer Service Quality (Mystery Shop) ANOVA

Sum of
Squares df
Square F Sig
Between Group 32804.10 128 256.28
Within Group Between Items 2089.48 3 696.49 3.46 .016
Residual(a) 77136.18 384 200.87
Total 79225.67 387 204.71
Total 112029.78 515 217.53

The within groups (between items) sums of squares was lower than the total sum
of squares creating a heterogeneity index of less than 1 for each scale analyzed
(Tabachnick & Fidell, 2001). This suggests that while inter-rater reliability may be poor,
there is greater homogeneity in the aggregated banking center data than in the total
data set. Based on this information, and the practical need to aggregate the data, the
customer service quality survey data were aggregated to produce a single average
score per banking center. It should be noted that, while this aggregation was necessary
to make further analysis and comparisons to the other data sets possible, it does
suggest limitations to any associations made in subsequent analyses.
Customer Satisfaction
Preliminary examination of the customer satisfaction survey included in this study
suggested that it may be composed of multiple subscales which would be of interest for
further analysis. Initially, descriptive statistics from the raw data were considered to
help identify possible issues within the data set. The outcome of this analysis is shown
in Table 5 below.
This analysis showed that many of the individual items on the survey were highly
skewed (skewness statistic >+/- 2.0) (Tabachnick & Fidell, 2001). In particular, the
dichotomous items (1, 7-10, & 14) on the scale had skewness statistics ranging from -
1.7 to -9.6. Likert scale items (2-6, 13, & 15-18) faired better but still suffered from
considerable skewness, ranging from -.75 to -2.71.
Table 5
Customer Satisfaction Descriptive Statistics

N Min Max M Std. Skewness Kurtosis
Stat Stat Stat Stat Stat Stat SE Stat SE
1. Knows my
3608 1 2 1.83 .37 -1.73 .04 1.01 .08
2. Shows genuine
3820 1 5 4.66 .75 -2.66 .04 7.53 .07
3. Convenient hours 3810 1 5 4.39 1.03 -1.78 .04 2.45 .07
4. Knowledgeable 3740 1 5 4.66 .73 -2.71 .04 8.33 .08
5. Give Options 3645 1 5 4.60 .82 -2.50 .04 6.57 .08
6. Exceptional
3832 1 5 4.63 .78 -2.54 .04 6.89 .07
7. Quick and
3815 1 2 1.97 .16 -5.93 .04 33.22 .07
8. Accurate
3826 1 2 1.99 .11 -8.66 .04 73.19 .07
9. Acknowledged 3835 1 2 1.96 .19 -4.83 .04 21.33 .07
10. Friendly 3851 1 2 1.99 .10 -9.66 .03 91.40 .07
11. Used name 3538 1 2 1.87 .33 -2.20 .04 2.84 .08
12. Said thank you 3777 1 2 1.99 .11 -8.89 .04 77.22 .08
13. Feelings about
doing business
3804 1 3 2.47 .65 -.84 .04 -.39 .07
14. Will you refer 3792 1 2 1.94 .23 -3.73 .04 11.93 .08
15. Overall
3851 1 5 4.65 .72 -2.51 .03 7.09 .07
16. Use for future
3725 1 5 4.48 1.02 -2.18 .04 4.01 .08
17. Use for future
3122 1 5 3.60 1.62 -.65 .04 -1.21 .08
18. Use for future
3334 1 5 3.67 1.58 -.75 .04 -1.04 .08

Based on the descriptive analysis, and given that further planned analyses (i.e.,
multiple regression) could not accommodate the inclusion of both Likert and
dichotomous data, it was determined that the dichotomous items would be removed
from the survey. This left nine survey questions for further analysis. Question fifteen,
overall satisfaction, was also excluded from the factor analysis as it represents a
single measure of the overall construct the researcher is attempting to measure.
Results of the scales created from the factor analysis will be compared with question
fifteen to determine their validity.
To determine if subscales exist, factor analysis was conducted on the eight
variables remaining on the customer satisfaction survey (Table 6). A maximum
likelihood extraction method with oblique rotation was used to extract factors with
eigenvalues of at least one. Two factors were subsequently extracted, accounting for
66% of the total variance.
Table 6
Customer Satisfaction Survey Factor Analysis - Total Variance Explained
Factor Initial Eigenvalues
Extraction Sums of Squared
Sums of
% of
% Total
% of
% Total
1 3.996 49.952 49.952 3.584 44.795 44.795 3.416
2 1.308 16.350 66.302 .926 11.573 56.368 2.171

The low proportion of variance accounted for in the data suggested potential
problems in the viability of individual subscales given that a large amount of variance
was left unexplained. Utilizing cutoff scores of .5 for inclusion in a scale and .3 for
exclusion from other scales, the following factors were obtained (Table 7).
Factor one was comprised of four items (questions 1, 3, 4, & 5) with a fifth item
(question 6) which loaded significantly on both factors. Factor two was comprised of
questions seven and eight, and again question six crossloaded. Question two (hours of
operation) did not meet the cutoff score for inclusion in either factor.
Table 7
Customer Satisfaction Factor Analysis Rotated Factor Matrix
Questions: 1 2
1. Employee showed interest .828
2. Hours of operation
3. Employee was knowledgeable .771
4. Employee gave options .777
5. Employee gave good service .833
6. Plan to return for business
.585 .568
7. Plan to return for business loan .773
8. Plan to return for business

Visual inspection of the questions contained in factor two suggested a focus on
customer loyalty (i.e. intent to repatronize) rather than customer satisfaction. This,
along with the fact that it contained only two items after the crossloaded question was
removed, led to the decision to use only the first factor in further analysis. To ensure
that there was significantly correlated with question fifteen (overall satisfaction), a
person product moment correlation was calculated. Results showed a significant
correlation, r = .76 (N = 124) with a two-tailed significance level of .01.
Considering the results of previous analyses, it was determined that the best
customer satisfaction scale would utilize the four Likert-type items discussed above.
This would provide the most robust measure of customer satisfaction combining the
variability of four separate questions while maintaining a strong correlation to the overall
satisfaction question embedded in the survey. The resulting Total Customer
Satisfaction score was used for all comparative analyses.
Primary Analysis
With preliminary analyses completed, and the data aggregated to the banking
center level, analyses were conducted to determine the relationships between the
variables in regard to the stated hypotheses. Descriptive statistics for the aggregated
data set were reviewed to determine whether issues existed within the data. No
problems associated with skewness or kurtosis were noted, with all skewness scores
falling between 0 and .84 and kurtosis scores falling between 0 and .74 (Tabachnick &
Fidell, 2001). Table 8 shows the results of descriptive analysis of the aggregated data

Table 8
Aggregated Data Descriptive Statistics

N Min Max M Std. Skewness Kurtosis
Stat Stat Stat Stat Stat Stat SE Stat SE
Pay and
Remuneration 124 1.58 5.05 3.33 .66 .00 .21 .00 .43
Opportunities 124 1.92 5.50 4.03 .61 -.64 .21 .74 .43
Behavior 124 2.95 6.00 4.90 .66 -.84 .21 .61 .43
Fringe Benefits 124 2.90 5.26 4.04 .51 .16 .21 -.65 .43
Rewards 124 2.67 5.58 4.15 .65 -.15 .21 -.56 .43
Conditions 124 2.17 4.58 3.41 .50 -.03 .21 -.21 .43
Coworkers 124 3.16 5.88 4.85 .57 -.49 .21 -.26 .43
Nature of Work 124 3.90 5.88 4.98 .43 -.22 .21 -.23 .43
Communication 124 2.56 5.56 4.39 .58 -.56 .21 .34 .43
Overall Employee
Satisfaction 124 3.18 4.99 4.23 .39 -.08 .21 -.34 .43
Customer Service
Quality 124 70.75 100.00 89.65 6.56 -.73 .21 .16 .43
Satisfaction 124 4.18 4.92 4.65 .14 -.57 .21 .50 .43


Given that a single outlier is capable of considerably changing the value of a
correlation, outliers were removed using standardized values. Z-scores greater than
three in the overall employee satisfaction, customer service quality, or customer
satisfaction scales were removed (5 total subjects) and the analyses were run based on
the new dataset (Barnett & Lewis, 1984).
Pearson product moment correlations were calculated for the aggregated data
set including all employee satisfaction subscales, customer service quality, and
customer satisfaction. The full results are shown in Table 10 of Appendix D.
Results of a Pearson product moment correlation coefficient with one-tailed
significance indicated moderate but significant positive relationships between most
subscales on the employee satisfaction survey (Table 10). Significant correlations (.05
level) ranged from r = .20 (operating condition and fringe benefits) to r = .72 (contingent
rewards and promotion opportunities) (N = 124). Several subscales did not correlate
with each other, but all nine subscales showed significant positive correlation to the
overall employee satisfaction scale. Correlations ranged from r = .44 (fringe benefits) to
r = .85 (contingent rewards) and all were significant at the .01 level (N = 124).
Comparison of the aggregated customer service quality (mystery shop) and
customer satisfaction data was less noteworthy. The customer satisfaction scale
showed no statistically significant associations with any of the employee satisfaction
subscales. For the customer satisfaction scale, correlation coefficients ranged from r =
0 to r = .11, suggesting that the customer satisfaction scale has no relationship to the
employee satisfaction or customer service quality scales.
The customer service quality scale was negatively correlated with the operating
conditions subscale of the employee satisfaction survey; r = -.18, significant at the .05
level (N=124). This suggests a slight negative relationship between customer service
quality and the employee satisfaction questions regarding operating conditions, but the
size of the relationship is small and may the direction seems counter intuitive.
Despite the existence of only a single correlation between the customer service
quality scale and the operating conditions subscale of the employee satisfaction
survey, multiple regression analysis was used to assess the predictive power of the
multiple employee satisfaction subscales involved in the study. The employee
satisfaction survey subscales were looked at as a group, and in combination with the
customer service quality data.
The first hypothesis was that employee satisfaction would be positively
associated with customer service quality. In order to analyze this relationship, the
employee satisfaction subscales were entered as independent variables to determine
their predictive power in relation to the customer service quality (mystery shop) scale.
Results of the multiple regression analysis were significant with only 9% of the total
variance explained (r
= .09, F = 1.01). Collinearity diagnostics suggest that
multicollinearity was an issue in this analysis. The condition index summarizes the
findings with an index over fifteen indicating a possible multicollinearity problem and a
condition index over thirty suggesting a serious multicollinearity problem (Tabachnick &
Fidell, 2001). Condition index scores for the employee satisfaction subscales and
customer service quality regression ranged from 18.3 to 66.4.
The second hypothesis was that employee satisfaction would be positively
associated with customer satisfaction. In order to analyze this relationship, the
employee satisfaction subscales were entered as independent variables to determine
their predictive power in relation to the customer satisfaction scale. Results of the
multiple regression analysis were non-significant with only 7% of the total variance
explained (r
= .07, F = .89). Collinearity diagnostics suggest that multicollineartiy was
an issue in this analysis as well, with condition index scores ranged from 18.3 to 66.4.
The third hypothesis was that there would be a positive relationship between
customer service quality and customer satisfaction. This relationship could not be
assessed utilizing multiple regression analysis, since there were only two scales
involved. Based on the previously referenced correlation matrix (Table 10 of Appendix
D), customer service quality and customer satisfaction were not significant correlated.

The current study found that, for this midsized retail bank, employee satisfaction
was not significantly correlated with customer service quality or customer satisfaction.
Minimal support for a link between customer service quality and the operating
conditions subscale of the employee satisfaction survey was found (r = -.18, p = .05),
but the direction is counter intuitive and may be attributable to issues with the data
rather a true relationship (Cronbachs alpha = .22).
Implications for Theory
These findings, while contrary to the popular notion of the relationship between
these variables, are consistent with a small but growing body of research that has
shown mixed results regarding the service-profit chain concept (Abbott, 2003; Gelade &
Young, 2005; Silvestro, 2002; Silvestro & Cross, 2000; Spinelli & Canavos, 2000; Yoon,
Seo, & Yoon, 2004). In particular, a UK based study suggested that employee
satisfaction can be very low, but employees will continue to work hard to keep
customers satisfied and to maximize company profit (Abbott, 2003). While not
considered in the current study, variables such as work ethic or pride-in-work could play
a significant role in the relationship between employee satisfaction and customer
service quality. Although an employee may not be satisfied with his/her job, they may
continue to provide a high level of customer service quality because of their personal
beliefs about work.
In addition to the effect of work ethic and pride, it is also possible that the service
context and relationships that form between the service provider and the customer play
a role in the employee satisfaction-service quality relationship. The retail banking
environment is one in which customer relationships with ones banker can be stronger
than ones relationship with the bank. The researcher has heard many anecdotal
accounts of customers closing accounts to follow a banker to another bank rather than
maintain their accounts with the bank. This suggests that dissatisfied employees may
continue to strive for high levels of service quality in hopes of forming personal loyalty
with their customers. When combined with the issues of work ethic and pride, this
combination could explain the lack of correlation between these two variables.
The assumed link between employee satisfaction and customer satisfaction has
also been undermined by recent research. Silvestro and Cross (2000) found no
relationship between employee satisfaction and customer satisfaction. While their study
involved only a small number of grocery stores, it did question one of the fundamental
components of the service-profit chain. In the highly competitive banking industry,
where significant pressure is placed on managers to improve their customer satisfaction
scores, it is possible that the stress associated with this drive undermines employee
satisfaction. Attempts to increase customer satisfaction by constantly focusing on it
may create a working environment that is less satisfying. While the inverse relationship
suggested by this breakdown was not found in the current study, it is an issue that may
confuse the analysis.
In addition to the issue of employee stress, the connection between employee
satisfaction and customer satisfaction is complicated by the nature of the employee-
customer interactions. Although the retail banking industry is often thought of as a
commodity, there are still aspects of price, convenience, and product availability which
are outside of the employees control but which impact customer satisfaction. In
addition, the bank involved in this study utilizes multiple customer loyalty programs (i.e.,
lower rates for multiple accounts and airline points for maintained checking balance)
that may impact a customer satisfaction independent of employee satisfaction. These
variables, not assessed by the current study, could play a role in mediating the
relationship between employee satisfaction and customer satisfaction.
The link between customer service quality and customer satisfaction seems even
more direct than the relationship posed by the other hypotheses, and therefore harder
to understand when data fail to support it. It seems obvious that good service would
lead to high levels of customer satisfaction, but it appears that in fact the relationship is
more complex and not a direct one. The limited research that exists does suggest that
service quality stems as much from behind-the-scenes processes (e.g., operations,
processing, and supply chain management) as it does from actual interactions between
employees and customers (Iacobucci et al., 1995). In contrast, findings indicate that
customer satisfaction stems from customers experiences in service situations (e.g.,
interactions with service providers) (Iacobucci et al., 1995). The interplay of the
behind-the-scenes interactions with the direct delivery of services to the customer
makes this a difficult area to quantify. In addition, issues of price, convenience, and
product availability, discussed above, are likely contributors to this relationship.
While the lack of correlation between the three variables may be an accurate
representation of the data, there are some problems which impacted the analysis and
limit the usefulness of the study. First, two of the three measured variables in the study
were designed idiosyncratically, rather than conceptually or empirically. That is, the
participating organization made available internal metrics for use in this analysis
(customer service quality and customer satisfaction). These metrics were designed by
marketing firms with significant involvement from senior leaders of the organization.
This committee approach to survey design, combined with annual changes in the items
based on the shifting desires and needs of the organization, have led to survey tools
that are poorly constructed.
The customer satisfaction survey suffered from a lack of conceptual or empirical
development. The combination of scale types (dichotomous and Likert-type) precluded
the use of some items in the analysis and factor analysis produced only one usable
scale from the remaining items. A much better approach would have been to develop
measures that were more consistent with a specific model of customer satisfaction
rather than utilizing a method of survey construction and development that lacked
theoretical and methodological rigor. In addition, the annual changes to the survey
prevent the collection of longitudinal data and prevent the development of reliability and
validity estimates for the survey.
The measurement of customer satisfaction has a set of unique problems that
makes its measurement more problematic than that of employee satisfaction. Peterson
and Wilson (1992) showed that the nature of most self-report customer satisfaction
measures cause them to have skewed distributions. They noted that this skew will lead
to an underestimation of the "true" relationship between customer satisfaction measures
and measures of other variables. In the current study, the skewed distribution of the
customer satisfaction data was managed through the creation of a single scale which
utilized the most appropriate items from the initial survey (skewness = -1.4), but skew
may still have impacted the results.
Finally, many variables likely to affect customer satisfaction were not considered
in this study. These variables include individual differences of the customers (e.g.,
gender, race, negative affectivity, impulsivity); the degree to which the customer co-
produces the service; the specific financial product; the degree of customer focus
across retail banking functions such as human resources, marketing, and operations;
and the expectations and needs of the customers (Schneider & Bowen, 1995).
Inclusion of these variables may have changed the outcome of the analysis.
The customer service quality (mystery shop) measure also had issues that
contributed limitations to this study. As with the customer satisfaction survey, the
customer service quality measure was created by committee with the help of an outside
vender. The constant modification of the items prevents long-term comparison or
estimations of reliability and validity. In addition, the inter-rater reliability of the measures
seems suspect and the consistency of the four assessments per banking center is
questionable. The small amount of data (four surveys per banking center) also creates
issues for the analysis.
The primary limitation of the employee satisfaction survey was that it did not
include items identified in previous research as pertinent in the formation of satisfaction
or dissatisfaction. In particular, goal emphasis, role stress, work ethic, autonomy, and
job challenge were not considered (Burke et al., 1992; James & James, 1989)
The size of the sample available for this study made analysis difficult and results
less certain. While sample size was not controllable for this study, future efforts should
use a time sample design or multiple organizations such that deeper analysis can be
conducted. Finally, the current study included data from a single organization, at a
single point in time. These limitations lead to questions about generalizability. For
example, when data are aggregated at the business unit level, factors in the external
environment of the local offices, such as economic conditions or local demographics,
could affect either customers, employees, or both in ways that might change the
proposed relationships between the groups' attitudes. These issues could not be
addressed in this study and need to be considered in future research.
In the current study an issue was raised regarding multicollinearity in the
regression analyses. Since the goal of this study was simply to predict one variable
from a combination of other variables, multicollinearity was not a critical concern. The
predictions are still accurate, and the overall r
quantifies how well the model predicts
the values. In this case no predictive ability was found. Had the goal been to
understand how the multiple variables impacted each other, then multicollinearity would
have been a more serious problem (Lewis-Beck, 1995).
Multicollinearity occurs because two (or more) of the independent variables
involved in the regression are related they measure essentially the same thing (Lewis-
Beck, 1995). In the current study, employee satisfaction subscales were used as
independent variables to predict customer satisfaction and customer service quality.
The subscales on this survey were shown to be highly correlated, thus creating the
multicollinearity issues. Given that the single, total employee satisfaction score (see
table 11) was not correlated with customer satisfaction or customer service quality,
further development of the scales did not seem warranted. Another method for
reducing the impact of collinearity is to increase sample size. This approach was not
possible in the current investigation but should be considered in future studies.
While the current study did not support the service-profit chain model, it did add
support to the idea that this model as currently formulated is too simplistic to fully
encompass the relationships among the multiple variables involved (Silvestro, 2002;
Silvestro & Cross, 2000; Spinelli & Canavos, 2000; Yoon, Seo, & Yoon, 2004). Future
research should be aimed at the development of a model that incorporates all the
variables associated with employee satisfaction, customer service quality, and the
resulting customer satisfaction. While many research efforts have attempted to link
employee satisfaction, customer satisfaction, and profitability, there has been less effort
to attend to the multitude of intermediate variables in the service profit chain. The
current research underscores the complexity of this relationship and suggests that
attempts should be focused on clearly understanding the linkages that exist at this micro
level before turning attention to broader issues such as profitability and growth. In
addition, efforts should be focused on potential differences which exist between various
retail industries. There is likely a difference between the customer service requirements
from a personal banker and those from a grocery store clerk.
More standardized approaches to measuring the variables under consideration
should also be developed. In particular, the mystery shopping approach to customer
service quality needs further exploration and refinement. Mystery shopping appears to
be a vendor-driven data collection approach that makes limited use of the science of
measurement and survey construction. The face validity of question items and the
willingness of vendors to change measures frequently, coupled with the lack of focus on
analysis of scale reliability and validity, leads to metrics that are inadequate for decision
making purposes.
Finally, organizations should utilize a more rigorous approach to measurement
rather than getting caught up in the quick and easy methods offered by many
assessment vendors. This particular study focused on only one company, but the
recommendations are generally relevant, as it has been the authors experience that
many organizations operate in a similar manner to the one under consideration.
Measures of attitude and behavior such as service quality and customer satisfaction are
difficult to create and interpret. Organizations need to pay greater attention to the
methodology of the data collection as well as the nature of the surveys they are using.
By better application of the scientific method and the use of better constructed tools,
organizations will achieve greater returns on the investments they make in these

University of North Texas Committee for the Protection of Human Subjects
Research Consent Form
Dear Bank Employee,

You are being invited to participate in a research project that is intended to benefit The Retail Bank. The
purpose of the study is to better understand the connection between your level of job satisfaction,
customer service, and customer satisfaction. This will potentially help the organization to create better
training, communication practices, and work processes in order to improve employee satisfaction and
customer satisfaction.

This study is being conducted by Eric Simpson. I am a member of the Organizational Development and
Training Dept. for Temple-Inland Corporate Services and a doctoral student at the University of North

Participation in the study typically takes 15 minutes and is strictly anonymous. If you choose to
participate, you will answer one questionnaire focused on your current level of job satisfaction. Your data
will be combined with all the data collected from your branch and compared with additional data already
collected by the company (customer service and customer satisfaction).

All responses are treated as confidential, and in no case will responses from individual participants be
identified. Rather, all data will be pooled by branch and published in summary form only. If a branch has
fewer than 4 employees, no summary report will be created for that branch.

If participants have further questions about this study or their rights, or if they wish to lodge a complaint or
concern, they may contact the principal investigator, Eric Simpson at 512-434-8274 or Professor Michael
Beyerlein, University of North Texas at (940) 565-2653.

This research study has been reviewed and approved by the UNT Institutional Review board (IRB).
Contact the UNT IRB at 940-565-3940 or if there are any questions regarding your
rights as a research subject.

I understand that I do not have to take part in this study, and my refusal to participate or to withdraw will
involve no penalty or loss of rights or benefits.
If you are 18 years of age or older, understand the statements above, and freely consent to participate in
the study, please follow the link below and complete the survey.
(URL to online survey will be included in email)


Table 9
Employee Satisfaction Survey Descriptive Statistics
N Mean Std. Skewness Kurtosis

Stat Stat Stat Stat
1. I feel I am being paid a fair
amount for the work I do.
663 3.47 1.53 -0.10 0.10 -1.15 0.19
2. There is really too little chance
for promotion on my job.
663 3.93 1.55 -0.30 0.10 -0.98 0.19
3. My supervisor is quite
competent in doing his/her job.
663 4.94 1.37 -1.46 0.10 1.38 0.19
4. I am not satisfied with the
benefits I receive.
663 4.04 1.59 -0.35 0.10 -1.11 0.19
5. When I do a good job, I receive
the recognition for it that I
should receive.
663 4.46 1.41 -0.93 0.10 0.15 0.19
6. Many of our rules and
procedures make doing a good
job difficult.
663 3.63 1.53 -0.04 0.10 -1.07 0.19
7. I like the people I work with.
663 5.42 0.87 -2.14 0.10 6.03 0.19
8. I sometimes feel my job is
663 4.88 1.42 -1.17 0.10 0.41 0.19
9. Communications seem good
within this organization.
663 4.11 1.47 -0.63 0.10 -0.52 0.19
10. Raises are too few and far
663 2.82 1.58 0.51 0.10 -0.87 0.19
11. Those who do well on the job
stand a fair chance of being
663 4.41 1.36 -0.80 0.10 0.02 0.19
12. My supervisor is unfair to me.
663 5.03 1.41 -1.41 0.10 0.94 0.19
13. The benefits we receive are as
good as most other
organizations offer.
663 4.22 1.40 -0.64 0.10 -0.45 0.19

(table continues)
Table 9 (continued).

N Mean Std. Skewness Kurtosis

Stat Stat Stat Stat
14. I do not feel that the work I do
is appreciated.
663 3.96 1.63 -0.30 0.10 -1.15 0.19
15. My efforts to do a good job are
seldom blocked by red tape.
663 3.52 1.51 -0.12 0.10 -1.05 0.19
16. I find I have to work harder at
my job because of the
incompetence of people I work
663 4.22 1.58 -0.45 0.10 -1.00 0.19
17. I like doing the things I do at
663 5.11 0.99 -1.45 0.10 2.66 0.19
18. The goals of this organization
are not clear to me.
663 4.84 1.37 -1.18 0.10 0.58 0.19
19. I feel unappreciated by the
organization when I think about
what they pay me.
663 3.49 1.60 0.08 0.10 -1.11 0.19
20. People get ahead as fast here
as they do in other places.
663 3.85 1.35 -0.40 0.10 -0.56 0.19
21. My supervisor shows too little
interest in the feelings of
663 4.52 1.54 -0.81 0.10 -0.45 0.19
22. The benefit package we have is
663 4.13 1.27 -0.62 0.10 -0.16 0.19
23. There are few rewards for
those who work here.
663 4.54 1.28 -0.79 0.10 -0.10 0.19
24. I have too much to do at work.
663 3.40 1.51 0.03 0.10 -0.97 0.19
25. I enjoy my coworkers.
663 5.28 0.94 -1.64 0.10 3.34 0.19
26. I often feel that I do not know
what is going on with the
663 4.16 1.37 -0.41 0.10 -0.69 0.19

(table continues)

Table 9 (continued).

N Mean Std. Skewness Kurtosis

Stat Stat Stat Stat
27. I feel a sense of pride in doing
my job.
663 5.22 1.01 -1.51 0.10 2.39 0.19
28. I feel satisfied with my chances
for salary increases.
663 3.65 1.53 -0.28 0.10 -0.90 0.19
29. There are benefits we do not
have which we should have.
663 3.73 1.40 -0.20 0.10 -0.72 0.19
30. I like my supervisor.
663 5.15 1.23 -1.73 0.10 2.66 0.19
31. I have too much paperwork.
663 3.16 1.54 0.21 0.10 -0.91 0.19
32. I don't feel my efforts are
rewarded the way they should
663 3.73 1.51 -0.14 0.10 -0.95 0.19
33. I am satisfied with my chances
for promotion.
663 3.98 1.46 -0.47 0.10 -0.63 0.19
34. There is too much bickering
and fighting at work.
663 4.50 1.53 -0.78 0.10 -0.45 0.19
35. My job is enjoyable.
663 4.77 1.13 -1.13 0.10 1.40 0.19
36. Work assignments are not fully
663 4.44 1.38 -0.66 0.10 -0.40 0.19
Pay & Remuneration
663 13.44 5.01 -0.01 0.10 -0.62 0.19
Promotion Opportunity
663 16.16 4.50 -0.37 0.10 -0.36 0.19
Management Behavior
663 19.64 4.70 -1.23 0.10 0.98 0.19
Fringe Benefits
663 16.12 4.20 -0.15 0.10 -0.41 0.19
Contingent Rewards
663 16.69 4.63 -0.31 0.10 -0.49 0.19
Operating Conditions
663 13.70 4.13 0.04 0.10 -0.30 0.19
663 19.42 3.79 -0.79 0.10 0.17 0.19
Nature of Work
663 19.98 3.48 -1.15 0.10 1.78 0.19
663 17.55 4.23 -0.58 0.10 -0.06 0.19
Total Employee Satisfaction
663 152.69 26.06 -0.11 0.10 -0.19 0.19
Table 10
Aggregated Data Correlation Matrix
1 .550** .203* .446** .619** .361** .300** .385** .488** .729** -.096 -.047
.000 .012 .000 .000 .000 .000 .000 .000 .000 .145 .304
124 124 124 124 124 124 124 124 124 124 124 124
.550** 1 .324** .321** .720** .351** .374** .488** .544** .778** -.063 -.046
.000 .000 .000 .000 .000 .000 .000 .000 .000 .244 .307
124 124 124 124 124 124 124 124 124 124 124 124
.203* .324** 1 .009 .460** .061 .538** .284** .469** .576** .086 .033
.012 .000 .460 .000 .250 .000 .001 .000 .000 .172 .357
124 124 124 124 124 124 124 124 124 124 124 124
.446** .321** .009 1 .238** .203* .137 .137 .275** .445** -.048 .085
.000 .000 .460 .004 .012 .065 .065 .001 .000 .299 .173
124 124 124 124 124 124 124 124 124 124 124 124
.619** .720** .460** .238** 1 .434** .456** .487** .679** .855** .037 -.001
.000 .000 .000 .004 .000 .000 .000 .000 .000 .341 .496
124 124 124 124 124 124 124 124 124 124 124 124
.361** .351** .061 .203* .434** 1 .063 .318** .517** .528** -.181* .074
.000 .000 .250 .012 .000 .242 .000 .000 .000 .022 .206
124 124 124 124 124 124 124 124 124 124 124 124
.300** .374** .538** .137 .456** .063 1 .487** .465** .634** .144 .108
.000 .000 .000 .065 .000 .242 .000 .000 .000 .055 .117
124 124 124 124 124 124 124 124 124 124 124 124
.385** .488** .284** .137 .487** .318** .487** 1 .608** .667** -.101 .111
.000 .000 .001 .065 .000 .000 .000 .000 .000 .132 .110
124 124 124 124 124 124 124 124 124 124 124 124
.488** .544** .469** .275** .679** .517** .465** .608** 1 .829** .055 .110
.000 .000 .000 .001 .000 .000 .000 .000 .000 .272 .112
124 124 124 124 124 124 124 124 124 124 124 124
.729** .778** .576** .445** .855** .528** .634** .667** .829** 1 -.019 .062
.000 .000 .000 .000 .000 .000 .000 .000 .000 .419 .248
124 124 124 124 124 124 124 124 124 124 124 124
-.096 -.063 .086 -.048 .037 -.181* .144 -.101 .055 -.019 1 .068
.145 .244 .172 .299 .341 .022 .055 .132 .272 .419 .228
124 124 124 124 124 124 124 124 124 124 124 124
-.047 -.046 .033 .085 -.001 .074 .108 .111 .110 .062 .068 1
.304 .307 .357 .173 .496 .206 .117 .110 .112 .248 .228
124 124 124 124 124 124 124 124 124 124 124 124
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pearson Correlation
Sig. (1-tailed)
Pay and Remuneration
Promotion Oppertunities
Management Behavior
Fringe Benefits
Contingent Rewards
Operating Conditions
Nature of Work
Overall Employee
Customer Service Quality
Customer Satisfaction
Pay and
Conditions Coworkers
Nature of
Correlation is significant at the 0.01 level (1-tailed).
Correlation is significant at the 0.05 level (1-tailed).

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