Do Satisfied Employees MakeCustomers Satisfied?: aninvestigation into the relationshipbetween service employee jobsatisfaction and customer perceivedservice quality

Guy Herrington and Wendy Lomax

ISBN No. 1-872058-47-7 KINGSTON BUSINESS SCHOOL

Kingston University Occasional Paper Series No 34January 1999

ContentsPage

Abstract (ii)

Introduction 1

The Service Employee and Service Quality 1

The Service Employee and Job Satisfaction 2Loyal Employees 2Previous Multi-Faceted Research 2

Research Objectives 3

Hypotheses and Conceptual Models 4

The Employee Job Satisfaction Model: JS – CPSQ (Model1) 4The Loyalty Models: JS – CRI (Model 2) and JS – CIR (Model 3) 6

Research Methodology 6

Data Collection 6Adviser Questionnaire 7Customer Questionnaire 7Construct Reliability 8

Results 8

Discussion 10

The Employee 10The Employee and the Customer 11The JS – CRI Relationship 12Recommendations for Financial Services Managers 12Research Limitations 13Recommendations for Future Research 13

Summary and Conclusions 14

Acknowledgements 14

References 15

Table 1: Definitions of Relevant Employee-Role Constructs 3Table 2: Cronbach’s Alpha Measures for Constructs 8Table 3: Path Model of the Service Employee - Significant Paths 9

Figure 1: The Service Employee and the Customer Relationship: Hypothesised Model 5

Figure 2: The Service Employee and the Customer Relationship: Empirical Model, Standardised Estimates 9

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Abstract

The relationship of employee job satisfaction with customer service quality evaluation andcustomer loyalty is studied. A study of the UK financial services industry finds that, contraryto previous research, employee job satisfaction does not affect customers’ perceptions ofservice quality; but there is a relationship between job satisfaction and one measure ofcustomer loyalty - repurchase intention. Managers aiming to improve employee satisfactionshould reduce the negative consequences of the two main role stressors of role ambiguity androle conflict.

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Do Satisfied Employees Make Customers Satisfied?: aninvestigation into the relationship between serviceemployee job satisfaction and customer perceivedservice quality

Introduction

Both general and marketing management share an interest in job satisfaction (JS). Much hasbeen written about the need to offer satisfying work environments and there have beennumerous investigations of the job satisfaction construct (Brown and Peterson, 1993). Thereis ethical value clearly in a company creating JS, but its commercial value is unproven. Sincethe provision of JS involves cost, there should be evidence of a mitigating return. One wouldexpect a satisfied employee to generate satisfied customers who will, as a consequence, beloyal. This link is obvious enough to be assumed by many (Rosenbluth, 1991; Hoffman,1992; Brown and Peterson, 1993; Reichheld, 1996), but evidence of the relationship is verylimited.

This research investigates the relationship between JS and customers’ perceptions of servicequality (CPSQ). The research also considers the relationship between JS and two customerpropensities, customer repurchase intention (CRI) and customer intention to recommend(CIR). The approach used differs from previous research in two ways. First, in muchprevious work only single role relationships are studied (Singh, 1993; Brown and Peterson,1994; Rogers et al, 1994). In this study, both the employee environment and the employee-customer relationship are investigated. Second, even where previous studies have been multi-faceted (Hartline and Ferrell, 1996; Atkins et al, 1996), the relationships have been observedat the organisation or departmental level. Although this level of analysis is commonly usedin organisations (Reichheld, 1996) it assumes aggregation effects, ie that individualsatisfaction will be detected at the collective level. Our study offers greater precision asindividual job satisfaction is matched with the individual customer’s perception of servicequality.

The industry context is UK financial services, and follows Hartline and Ferrell’s (1996)investigation of the US hotel industry. This industry is suited to this type of research for anumber of reasons. Financial products are generally significant purchases and long term innature. They often involve risk, in a field in which the consumer is unknowledgeable and theproduct is intangible. The role of the financial service adviser hence becomes critical, and ishypothesised to affect customer service quality evaluation and customer loyalty. In addition,the adviser is often the sole point of contact between customer and company, so the dilutingeffects of interaction with other employees are minimised.

The Service Employee and Service Quality

The pivotal role of the service employee derives from the nature of services. Theindivisibility of production and consumption (Zeithaml et al, 1985) stresses the serviceemployee role, whilst increasing the difficulty of delivering consistency. This ‘servuction’process (Eiglier and Langeard, 1987) suggests that the behaviour of the employee influencesthe customer’s evaluation of service quality (Bitner, 1990) and future loyalty (Atkins et al,1996). There is an intuitive link between JS and CPSQ; people who feel good aboutthemselves ought to produce good results (Blanchard and Lorber, 1984). Loyal employees

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should make loyal customers (Reichheld, 1996). It is unlikely that the customer will beserved well if the employee is actively dissatisfied (Hoffman, 1992; Rogers et al, 1994).

The Service Employee and Job Satisfaction

The JS construct is complex (Singh, 1993), and refers to the individual’s attitude toward thevarious aspects of their job as well as the job in general (Rogers et al, 1994). Serviceemployees often have low status within the organisation and society (Bateson, 1995),performing the role of ‘boundary spanner’ (Thompson, 1967) in bridging the gap betweencompany and customer. The low status of these roles can lead to low JS levels (Basset, 1994).

Employee effort has been found to relate positively to JS (Brown and Peterson, 1993)independently of job performance outcomes. In financial services, this suggests that contests,awards and recognition, based at least partly on effort (eg contacts made), could improve JS.Surprisingly, JS was found to have only a weak, positive relationship with job performance(Brown and Peterson, 1993). If the employee performance against objectives is not affectedby JS, then there is even greater need to identify where the relationship lies, for if there wereno relationship with customer outcomes either, what would the commercial value of JS be?

Loyal Employees

Organisations tend to focus on developing loyalty in customers, but a case can be argued fordeveloping loyalty among employees. As Reichheld (1996: 91) comments, “employees whoare not loyal are unlikely to build an inventory of customers who are”. Customer loyalty andemployee loyalty should therefore be mutually reinforcing and yet companies often ignorethe economics of customer and employee retention, even though these can overwhelm theeconomics of conventionally measured productivity (Reichheld). JS has a positive effect onan employee’s organisational commitment and a negative effect on turnover intentions(Singh et al, 1996).

Previous Multi-Faceted Research

Two earlier studies have investigated multiple dimensions of the service encounter. Atkinsetal (1996) considered the relationship between satisfied staff (nurses) and patients’ perceptionsof service quality in a US hospital environment. The analysis was at the ward and hospitallevel. The authors found a positive relationship between nurse JS and patient intention torecommend, using correlation analysis. They also found an association between JS andintention to return; but healthcare is an atypical industry. These dependent variables wereregarded as measures of customer loyalty. Atkins et al (p 20) state that “it is obvious that theintervening variable of satisfied staff is the pivotal relationship between nursing care andpatient loyalty”. However, relevant to the current research, they did not find a significantrelationship between JS and CPSQ.

Hartline and Ferrell (1996) undertook a three-way investigation of the US hotel industry.Issues concerning manager-employee, employee-role and employee-customer wereinvestigated concurrently, with the latter two facets relevant to this research. The employee-role dimension included the constructs of role conflict (RC) and role ambiguity (RA),employee adaptability (EA), self efficacy (SE) and job satisfaction (JS). These are defined inTable 1 below. The employee-customer dimension was investigated by using a modificationof SERVQUAL to measure service quality performance of the hotel staff.

In the structural equation model constructed, RC did not reduce self efficacy (SE) or JS andadaptability (EA) directly. Surprisingly, adaptability was not found to be related to CPSQ orself efficacy, although the latter and, importantly JS, both related positively to CPSQ. Selfefficacy related negatively to JS which was not expected. The authors argued that this wasbecause the employees in the industry were largely transient, having other aspirations. Theywere confident in their abilities but did not gain satisfaction from the job.

Both the Hartline and Ferrell (1996) and the Atkins et al (1996) studies investigate theemployee-customer relationships at the aggregate level rather than the individual. Theaggregate of a number of customers’ CPSQ was compared with the JS of a number ofemployees. Although appropriate, given the organisational nature of the studies, this meansthat it was not possible to ensure that the employee respondents had served the customerrespondents.

Research Objectives

This research develops previous studies and adds to our knowledge by:

◆ Empirically testing the nature of the relationship between JS andCPSQ at an individual level, matching employees to specificcustomers.

◆ Assessing the importance of selected antecedents and outcomes of JS,also at the individual level.

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Table 1: Definitions of Relevant Employee-Role Constructs

Constructs Acronym Definition Authors(date)

Job Satisfaction JS The individual’s attitude towards the Rogers et alvarious aspects of their job, and the (1994)job in general

Role Conflict RC The incompatibility or incongruity Rizzo et alof the requirements of a given role (1970)

Role Ambiguity RA When and individual is unable to Rizzo et alpredict the results of their behaviour, (19970)and/or lack of clarity as to the behaviour expected in a given role

Self Efficacy SE The confidence an employee has in Banduratheir ability to perform a role (1977)

Employee EA The altering of employee behaviour Spiro & WeitzAdaptability in response to information received (1990)

during the service encounter(s)

◆ Empirically testing the nature of the relationship between JS andcustomer loyalty at an individual level. Customer RepurchaseIntention and Customer Intention to Recommend are the twomeasures used for loyalty.

Hypotheses and Conceptual Models

Synthesis of earlier research suggests three alternative models. The core model is presentedin Figure 1 below, the shaded area representing the final dependent variable. In Model 1 thisvariable is CPSQ, Model 2 CRI, and Model 3 CIR. The path from JS to these variables ishighlighted in bold to denote the principal focus of this investigation.

Each model, with its related hypotheses, is discussed in turn below. To enable replication, thehypotheses mirror those in Hartline and Ferrell (1996: 54 -56).

The Employee Job Satisfaction Model: JS – CPSQ (Model 1)

Job Satisfaction

Service employees can positively effect customer satisfaction by appreciating, and reactingto, the differing requirements of customers (Zeithaml et al, 1988). A strong relationshipexists between employee job satisfaction and customer perceptions of service quality (Atkinset al, 1996), and low job satisfaction can result in poor employee performance in the serviceencounter (Bitner et al, 1990). For these reasons it is proposed that:

H1: Service employee job satisfaction will have a positive impact oncustomers’ perceptions of service quality [JS – CPSQ].

Employee Adaptability

In their investigation of adaptive selling Spiro and Weitz (1990: 62) define adaptability as“the altering of the sales behaviour during a customer interaction, or across customerinteractions, based on perceived information about the nature of the selling situation”. Inmany sales environments the needs of customers will be very different so it is not surprisingthat Spiro and Weitz (1990) find that the job performance of the sales person is stronglyrelated to adaptability. Bitner et al, (1990) established that employees who alter behaviour inresponse to customer requirements should deliver enhanced service quality. Consequently itis hypothesised that:

H2: Service employee adaptability will impact positively on customerperceptions of service quality [EA – CPSQ].

Self Efficacy

Self Efficacy (SE) is the confidence an employee has in their ability to perform a role(Bandura, 1977). “The importance of self efficacy lies in its ability to increase employeeperformance” (Hartline and Ferrell, 1996: 54). It is therefore hypothesised that:

H3: Service employee self efficacy will relate positively to customers’perceptions of service quality [SE – CPSQ].

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Self efficacy (SE) influences employees’ expectations about their abilities to performsuccessfully and to adjust to new situations (Jones, 1986). Spiro and Weitz (1990) proposedthat service employees must have confidence if they are to alter their (sales) presentations tocustomers. Hartline and Ferrell (1996) observed that existing research strongly supports SE’spositive effect on JS and EA. We therefore propose that:

H4: Service employees who possess greater levels of self efficacy arelikely to experience higher degrees of (a) Job Satisfaction [SE – JS]and (b) Adaptability [SE – EA].

Role Stress: Role Conflict and Role Ambiguity

Role stress results from the presence of Role Conflict and Role Ambiguity (Babin and Boles1996). Role Conflict (RC) is the incompatibility or incongruity of the requirements of agiven role (Rizzo et al, 1970); Role Ambiguity (RA) occurs when employees are not able topredict the results of their behaviour(s) and/or when they are unclear as to what behaviour isexpected. (Rizzo et al, 1970).

Financial service salespeople are particularly susceptible to a high degree of role stress(Montgomery et al, 1996), which has the capacity to reduce JS and job performance (Kellyet al, 1981; Brown and Peterson, 1993). RA and RC are the most direct antecedents of JS(Brown and Peterson, 1996) and, given H1 above, are likely to affect CPSQ via JS. Previousresearch has also shown that RA and RC can have negative consequences on employee SEand EA (Hartline and Ferrell, 1996). The following hypotheses are proposed:

H5: Greater role conflict in service employees is likely to result inreduced (a) job satisfaction [RC – JS]; (b) self efficacy [RC – SE];and (c) adaptability [RC – EA].

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Role Conflict Role Ambiguity

AdaptabilitySelf-EfficacyJob Satisfaction

Figure 1:The Service Employee and the Customer Relationship: Hypothesised Model

H7+

H4a+ H4b+

H2+H3+H1+

H5a to c- H6a to c-

Model 1: Customer Perceived Service Quality (CPSQ)Model 2: Customer Repurchase Intention (CRI)Model 3: Customer Intention to Recommend (CIR)

Source: after Hartline and Ferrell (1996, p:54) and Atkins et al (1996)

H6: Service employees who are subject to greater role ambiguity arelikely to experience reduced (a) job satisfaction [RA – JS]; (b) selfefficacy [RA – SE]; and (c) adaptability [RA – EA].

Employees facing inconsistent demands and expectations might well experience doubts as tohow to carry out a given role. RC has been found to have a positive relationship with RA(Behrman and Perrault, 1984; Babin and Boles, 1996; Hartline and Ferrell, 1996). It istherefore hypothesised that:

H7: Service employee role conflict will have a positive relationship withservice employee role ambiguity [RC – RA].

The Loyalty Models: JS – CRI (Model 2) and JS – CIR (Model 3)

In the second and third models, the dependent variable CPSQ is replaced by measures ofcustomer loyalty. Model 2 has Customer Repurchase Intention (CRI) as the dependentvariable, and Model 3, Customer Intention to Recommend (CIR). The direction of all of therelationships remains the same but the employee-customer hypotheses are termed H_(2) forCRI, and H_(3) for CIR.

Employee dissatisfaction can have a negative effect on customer loyalty in terms of theirwillingness to recommend others and repurchase (Atkins et al, 1996). Loyal employees willcultivate loyal customers and encourage referral behaviour (Reichheld, 1996). It is thereforeproposed that there will be a direct and positive relationship between JS and CRI/CIR, in apath akin to JS – CPSQ in Model 1 above.

Adaptive and confident employees are likely to encourage repurchase and recommendationso the relationship between EA and SE with both CRI and CIR are hypothesised to bepositive. Both behaviours (CRI and CIR) are features of consumer satisfaction which relatesto service quality (Cronin and Taylor, 1992).

The loyalty models were constructed in part because of a concern that job satisfaction modelmight not reveal any direct CPSQ relationships. It would be expected that the distribution ofself-reported consumer satisfaction responses would be negatively skewed and that thisskewness would undermine the correlation between consumer satisfaction and other variables(Peterson and Wilson, 1992). This will be true also for CPSQ self-reporting, given thatCPSQ is regarded as an antecedent of CS (Cronin and Taylor, 1992; de Ruyter et al, 1997).Since relationships with CPSQ may not be observed, we considered alternative dependentvariables.

Research Methodology

The populations in the dyad were financial service advisers and their customers. Thecompany selected was a wholly owned financial service subsidiary of a UK bank.

Data Collection

A mailed questionnaire was the survey instrument for both advisers and customers. A total of150 advisers were selected (from 738), stratified by geographic distribution to ensurenational representation. For each adviser 25 customers were identified, to include only thosewho had bought in the last three months. This condition to ensure valid service encounter

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recall. Each questionnaire was coded to enable subsequent matching of advisers with theirspecific customers.

A total of 130 (86.6%) usable adviser responses and 709 (18.9%) customer responses werereceived.1 Using SPSS data facilities, customer questionnaires were aggregated and averagedto create the unit of analysis, ie the adviser. Advisers and customers were matched using theallocated code number as the ‘break variable’. Cases where there were either no adviserresponses, or less than three customer responses, were then deleted in order to be consistentwith Hartline and Ferrell (1996). A total of 111 cases remained with the number of customerresponses per adviser ranging from three (21.6% of cases) to 10 (3.6% of cases), with amean of 5.3. The SPSS AMOS™ structural equation modelling procedure was used to testthe hypotheses as it was considered to be less sensitive to non-normal distribution (Wothke,1998).

Adviser Questionnaire

Established indicators were used to measure the five employee-role constructs. For RA andRC the scales developed by Rizzo et al (1970) were used, following the precedent set inprevious JS research (Behrman and Perrault, 1984; Rogers et al, 1994; Brown and Peterson,1994). These were amended slightly by omitting the question “I have to break rules in orderto complete my work”, since this was not appropriate for the UK financial service setting,given regulatory requirements. A seven-point Likert scale ranging from ‘strongly disagree’ to‘strongly agree’ was employed and scale items numbered seven for both RA and RC.

Self efficacy was measured utilising an eight-item scale from Jones (1986). The Jones (ibid)wording was amended to reflect the present tense rather than the expected, as the originalscales were designed to measure SE in employees new to a role. For example, the statement“my new job is well within my capabilities” was altered by deleting the word ‘new’.Advisers were asked to rate each item on a seven-point Likert scale ranging from ‘stronglyagree’ to ‘strongly disagree’.

An eight-item scale was used to measure job satisfaction in accordance with Brown andPeterson (1993) and Hartline and Ferrell (1996). Employees were asked to rate their level ofsatisfaction with each factor using a seven-point response option ranging from ‘extremelydissatisfied’ to ‘extremely satisfied’.

Employee adaptability was measured by a ten-item measure, derived from Spiro and Weitz(1990). This assessed the advisers’ ability to adapt to different customers. Advisers indicatedtheir agreement with each item on a seven-point strongly ‘agree/disagree’ scale.

The SE, JS and EA scales were the same as used by Hartline and Ferrell (1996). However,we used Rizzo et al (19970) for RC and RA, whereas the original investigation used Chonkoet al, (1986). We found that the latter’s role stress scales caused confusion in our pilot study.

Customer Questionnaire

Hartline and Ferrell (1996) used a modified version of SERVQUAL (Parasuraman et al,1988) to measure CPSQ. We used SERVPERF, which assesses performance only, as it wasdeemed to be more generic and reliable (Cronin and Taylor, 1992; Brown et al, 1993).

Where appropriate, wording was amended to highlight the need to respond regarding theadviser and not the company as a whole, eg “ I receive a prompt service from the staff of

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XYZ” was amended to “I receive a prompt service from my adviser”. A seven-point responsescale ranging from ‘strongly agree’ to ‘strongly disagree’ was offered.

Measurement of CRI and CIR was achieved by the inclusion of two additional questionsfollowing Atkins et al (1996) and Cronin and Taylor (1992). Customers were asked toindicate the likelihood of their repurchase and recommendation behaviour. A seven-pointLikert scale, anchored by ‘strongly agree’ and ‘strongly disagree’ was used.

Construct Reliability

Given the stages of data preparation required in order to arrive at the final, aggregated caseset (n = 111), there was concern with the effect that aggregation and case deletion might haveon construct reliability. Cronbach’s alpha tests were therefore performed at each stage and allconstructs were deemed reliable. The final alpha measures, ie after case aggregation anddeletion, are shown in Table 2.

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Construct Cronbach’s Alpha

Role Conflict 0.69

Role Ambiguity 0.78

Self Efficacy 0.68

Job Satisfaction 0.83

Employee Adaptability 0.82

Customer Perceived Service Quality 0.88

Table 2: Cronbach’s Alpha Measures for Constructs

Results

Of the hypothesised relationships, six were found to be significant as detailed in Table 3.Critical to this research is the finding that JS has a positive and direct effect on CRIand istherefore in support of H1(2). The three models included a total of nine hypothesisedemployee-customer relationships. That JS – CRI is the only one observed is an importantfinding. The absence of the JS – CPSQ relationship is interesting and differs from theoriginal study where direct, CPSQ relationships, were found with JS and SE. This could bedue to the amended research design and is discussed below. Of equal interest is the absenceof any observed JS – CIR relationship, given the JS – CRI finding.

H4b is supported in the context of SE’s direct and positive effect on EA. However, therelationship of SE to JS is not significant (H4a). In comparison with Hartline and Ferrell(ibid) the SE – EA relationship is a new finding. Equally, SE – JS differs in so far as theformer study found a direct and negative path. In terms of H5a, RC has a negative effect onJS as expected, although it does not have the hypothesised negative effect on SE (H5b) andEA (H5c). These results again differ from the original investigation where RC had no effecton JS and, surprisingly, had a significant positive effect on SE.

RA has a marginal and negative effect on SE (H6b) and a significant negative effect on JS(H6a), supporting both hypotheses. There is no relationship found between RA and EA andconsequently H6c is not supported. The former study found negative relationships in all threedirections. As anticipated, there is a positive relationship between RC and RA, supporting H7

and consistent with the original investigation. A path diagram of the structural relationshipsis provided in Figure 2.

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Path Hypothesis Standardise t-value Critical RangeCoefficient

JS – CRI H1(2)+ 0.16 1.73 *

SE – EA H4b- 0.23 2.45 **

RC – JS H5a- -0.41 -5.23 ***

RA – JS H6a- -0.38 -4.84 ***

RA – SE H6b- -0.16 - 1.62 ;

RC – RA H7+ 0.26 2.88 **

Table 3: Path Model of the Service Employee - Significant Paths

Notes * significant at p = 0.05; ** significant at p = 0.01; *** significant at p = 0. 001;marginally significant at p = 0.05, retained because of the strength of the theoreticalbackground for inclusion (Diamantopoulos, 1994)

Role Conflict Role Ambiguity

Self-EfficacyAdaptability

CustomerRepurchase

Intention

Job Satisfaction

Figure 2: The Service Employee and the Customer Relationship: Empirical Model,Standardised Estimates

0.26 H7

-0.38 (H6a)

0.23 (H4b)

-0.41 (H5a)

0.16 (H1(2))

- 0.16 (H6a)

CMIN GFI RMSR AGFI PGFI RMSEA

p = 0.727 0.996 0.013 0.972 0.142 0.00

Goodness of fit statistics

The output statistics illustrate that the model achieved a good, overall fit. One measure, theparsimonious goodness of fit (PGFI), was low at 0.142. In view of the relatively low value,RMSEA was used to test for model complexity and indicated a satisfactory position.

Discussion

This study has produced a series of interesting findings, several of which differ fromprevious research. This is consistent with Hubbard and Armstrong (1994), who found that 60per cent of extensions produce results that conflict with the original findings. In the case ofthis study, some of the differences may be due to the change in the research context,particularly the employee environment.

The Employee

It is to be expected that an employee who faces inconsistent demands from a role would lackclarity in how best to behave. This research, as expected, finds a positive relationshipbetween such role conflict and RA. The negative relationship between RC and JS indicatesthat the financial services adviser must have a sound understanding of job priorities. This isespecially the case given that income and status are directly affected by achievement ofobjectives. Any dilution of effort caused by conflicting demands will impact on remuneration,self-esteem, and therefore JS.

The fact that RC does not reduce SE is unexpected. Hartline and Ferrell (1996) found aneven more surprising result in that RC actually increased SE. They considered that this wasdue to the mental stimulus that may occur when it is necessary to cope with conflictingdemands (Bandura, 1977). It is suggested that this stimulus is present within financialservices to the extent that the effects of RC on SE are mitigated. The combined results of thecurrent and foundation studies do provide evidence of an absence of a negative effect of RCon SE. It would be logical to extend the ‘stimulus theory’ to adaptability, now that twostudies have found no relationship between RC and EA.

Consistent with previous research RA shows a negative relationship with JS (Brown andPeterson, 1993; Rogers et al, 1994; Hartline and Ferrell, 1996). It is reasonable to expect thatemployees lacking clarity in their role would find it difficult to sense achievement and hencesatisfaction. RA’s effect on SE is also negative in this study. It is interesting to see how RC’seffect on SE can be mitigated by ‘stimulus’ but not the effect of RA. A logical conclusionwould be that an individual can cope with conflicting demands (ie RC) by assigning theirown priorities. However, when objectives are vague or information about the role is lacking,(ie RA) employee confidence levels are reduced because priority decisions cannot be made.

The absence of a relationship between RA and EA differs from Hartline and Ferrell (1996).It is posited that this is a reflection of the research environment. Professional sales forces arelikely to possess significant qualities of EA (Spiro and Weitz 1990). Consequently, financialservices employees should display adaptive selling qualities even when faced withambiguous roles. Their livelihood, after all, depends on these qualities.

Contrary to the original study, SE is shown to have a positive relationship with EA which isconsistent with the Spiro and Weitz (1990) view of confidence being an antecedent ofadaptive selling. The original research found an unexpected negative SE – JS relationshipwhich is likely to be due to the research context. The hotel employees in the survey were onthe whole young, well educated and ambitious (Hartline and Ferrell, 1996: 62). They weretransient in nature, and unlikely to consider remaining in their jobs for long. This resulted in

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a need to accomplish more in order to achieve a state of JS. The current investigation doesnot find the hypothesised, positive SE – JS path. However, neither does it detect a negativerelationship which would suggest that financial services invites a more stable and fulfilledemployee. This supports the Hartline and Ferrell (1996) assertion that the nature of the SE –JS relationship depends on the type of service employee.

The Employee and the Customer

Given the weight of theoretical evidence and the results of the Hartline and Ferrell (1996)study, it is surprising that there was no relationship identified between JS and CPSQ. Anumber of possible reasons for this can be hypothesised.

◆ Aggregation level: in the Hartline and Ferrell study the JS – CPSQ relationship wasidentified. However, this was at the hotel level and the research was unable toensure that the service employee respondents had actually served the customerrespondents. It is accepted that the study was organisational in nature and thus theapproach was valid; but the results of the current investigation do suggest thatfindings can be different when the sample is matched at the individual level.

◆ Research Environment:hotel employees are likely to behave differently thanfinancial advisers, given the transient nature of their employment. It could thereforebe that the performance of the hotel worker is more variable and detectable andhence the relationship between JS and CPSQ visible. The use of the differingservice quality scales, ie Modified SERVQUAL v SERVPERF may also have beena factor.

◆ Negative skewness of CPSQ:the CPSQ evaluations were subject to high negativeskew at -1.75, consistent with many previous studies (Peterson and Wilson, 1992;Hall and Dornan, 1988: 643) suggest that individuals may need to distort upwardlytheir evaluations of outcomes which reflect on the wisdom of their own behaviouror judgement. This may be the reason for the absence of any observed JS – CPSQrelationship.

◆ Regulation: this is a major influence within the UK financial services industry.Companies must train, manage and monitor their advisers with legislation in mind.In order to fulfil the statutory requirements an adviser will often have to hold morethan one client interview, which increases, almost by default, the customerinvolvement. It also ought to give the impression of a more thorough process, befittingof an experience possessing quality. With all advisers subject to the legislation, itmay well be that there is ‘standardised’ CPSQ.

◆ Reward systems: just as the customer is unlikely to buy if the CPSQ is not to theirsatisfaction, the adviser will be acutely aware of the need to deliver CPSQ if a saleis to result. Remuneration is commission based and promotion is geared to anadviser’s sales record. Accordingly, there are major incentives to behave in amanner consistent with high CPSQ delivery. This holds even when the employee issuffering from low to moderate JS, and might be the reason for the absence of arelationship.

◆ Complexity of the job satisfaction construct:employees may become dissatisfiedbecause they cannot see enough customers, rather than in relation to the specificencounters which they have. Or may become dissatisfied if they are highly motivatedbut cannot accomplish the job due to factors beyond their control, such as head

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office incompetence. The result is that they try harder and give a good service.However, they remain dissatisfied but the customers still want to repurchase.Customers are only seeing one part of the employee’s role, the customer interface. Itmay be that other areas of the job are creating the dissatisfaction.

The absence of the JS – CPSQ path is likely to be due to a combination of these factors. It isproposed that the prime influences stem from a relatively high degree of involvement in thebuying process, the tendency for negative skew in this type of research and the effects ofregulation. These features combine to indicate a high, reported state of service quality to theextent that the relationships with other variables cannot be identified (Peterson and Wilson,1992).

The JS – CRI Relationship

That JS should relate positively to CRI, but not CPSQ requires explanation. Previousresearch has identified that CPSQ is an antecedent of customer satisfaction, which is in turnan antecedent of CRI (Cronin and Taylor, 1992). What has been established in this study, andin Atkins et al (1996), is that there is a direct relationship between JS and CRI. It is believedthat this is a result of the consistency of the CPSQ performance within the UK financialservices industry. The customer is unable, or possibly unwilling, to differentiate on mattersof CPSQ for the reasons noted above. Consequently, differentiation is more a judgementabout future purchase. Here, the employee directly influences the customer’s futureintentions as a result of their behaviour, and perhaps demeanour, during the sales process.

If this theory is accepted, there is difficulty in appreciating the reason for an absence of asimilar path towards CIR, given that both are loyalty measures. It would be reasonable toexpect the same evaluative criteria to be used for the customer’s recommendation andrepurchase decisions. This conflicting finding is in need of further research.

Recommendations for Financial Services Managers

The nature of this research gives the ability to analyse some of the constituent parts of the JSconstruct and therefore highlights issues of importance in the employee-role interface.Extending the research to the customer dimension provides insight into the outcomes of JSand the strategic marketing opportunities that result. In the light of the findings the followingrecommendations are made to managers in the industry.

◆ Role Stressors:the negative influence of RC and RA is significant on employee JS.Managers must concentrate in reducing their effects. Contradictions in prioritiesmust be avoided and clear statements made regarding responsibilities andobjectives. These actions should result in focused, motivated employees who areconfident and adaptive in their approach with customers.

◆ CPSQ: Service quality remains an important objective in its own right,notwithstanding the absence of a JS relationship. In this industry, good servicequality may not differentiate but poor quality certainly will. Competitive advantagemay be difficult to gain simply on a quality platform, but standards must bemaintained. The employee remains an important factor in this process as he/she cansignificantly affect the CPSQ evaluation (Bitner et al, 1994; Bateson, 1995), ieissues of training and knowledge will precede JS and impact detrimentally onservice delivery if inadequate.

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◆ CRI: having identified the JS – CRI path, managers will want to ensure that theirrelationship management strategies are properly formulated and operational. Thecustomer may well be loyal and intent on buying again, but in the financial servicesindustry adviser contact is critical to commencing this process. Calling programmestherefore need to be established and adhered to.

◆ Recruitment: this research, does emphasise the need to offer jobs only to thosewho aspire to the post available. Employees who believe that they are ‘destined forbetter things’ may be confident, but not satisfied. Managers need to guard againstemploying those with the right skills but the wrong attitudes. Reichheld (1996) usesthe spouse analogy, suggesting that to get loyal employees, organisations shouldtake recruitment as seriously as marriage.

Research Limitations

In view of the complexity of the matching process (advisers with customers) the sample wasrestricted to a single company. It is accepted that a single sample limits the ability togeneralise the findings. However, control of cross firm and cross industry variancestrengthens the ability to test hypothesised, theoretical relationships (Morgan and Hunt, 1994;Bettencourt and Brown, 1997).

Whilst high scores are anticipated in satisfaction research (Peterson and Wilson, 1992), thenegative skewness in the CPSQ measure was greater than expected. This may have led to theabsence of relationships being identified, the possible reasons for this were presented earlier.

By implication, research of this nature is only able to include customers who have bought inthe sample and, as has been stated, high CPSQ evaluations might be expected. Nevertheless,if this is the case then the importance of JS on other outcomes, eg repurchase intentions, isemphasised.

Recommendations for Future Research

Having identified the JS – CRI relationship, it is important now for further research toidentify the behaviours of the satisfied employee which generate the repurchase intention. Amulti-dimensional study observing the relationship between JS – CPSQ – CS – CRI/CIRwould aid understanding of the direction and magnitude of the causal pathways. To whatextent, for example, is the relationship between JS – CRI a direct one? The influence of CSas a mediating variable could be important to this path.

We agree with Hartline and Ferrell (1996) that replication in professional services would beapposite. It is likely that the results would imply greater impact of SE on JS and CPSQ/CRI.Wider variation would also be expected in the CPSQ/CRI results given the absence of thesame degree of regulation. In highly confidential and personal interactions, eg solicitor/clientand doctor/patient a more prominent and noticeable effect of JS on CPSQ/CRI would beanticipated as the provider is both the service and the product. Given the findings of thisstudy, analysis at the individual level is recommended.

A longitudinal study to see if changing states of JS cause differing CPSQ/CRI evaluationswould aid understanding of the effect of JS over time. However, it is accepted that this mightbe difficult to execute in practice given the large sample sizes needed.

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The questionnaires were designed in an attempt to minimise the effects of negative skewtendency, ie additional response options were provided. Peterson and Wilson (1992) suggestother methods which future researchers may choose to adopt. For example, it is suggestedthat the skewness will be reduced by framing questions in a negative rather than positivemanner. That is, asking how dissatisfied customers are with a company, rather than satisfied.Alternatively, surveys could be issued at a later point in time as satisfaction appears to behighest immediately after purchase and will decrease over time (Peterson and Wilson, 1992).This approach would have to be balanced against the customer’s ability to recall the serviceencounter.

Summary and Conclusions

This research was intent on developing the commercial argument for investment in serviceemployee JS. Building on previous research, it was anticipated that JS would relate positivelyand directly to CPSQ. Surprisingly, this was not the case; but there is, however, evidence ofa relationship between JS and one of marketing’s most important measures. ie the customer’swillingness to buy again. The ethical argument for fostering employee JS is a strong one, thisresearch provides evidence of a more pragmatic justification.

There will be occasions when JS is bound to suffer. Organisational change, recession, mergerand acquisition are all factors that can increase the role stressors and combine to lower JS.Pursuing JS at all costs would therefore probably be unachievable. However, managers havea duty to support employees through good times as well as bad, loyalty is after all areciprocal concept. It cannot be said from this research that a satisfied employee will generatehigh CPSQ, but there is evidence that a satisfied employee will encourage the customer tobuy again.

Acknowledgements

The authors would like to thank Professor Michael Hartline of Louisiana State University forhis assistance in this research and Professor Robert East of Kingston University, for hishelpful comments on earlier drafts.

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