Linking the Employee - Customer Interface

SERVICES MARKETING: LINKING THE EMPLOYEE– C U S T O M E R I N T E R FA C E

Edited by

SHARYN RUNDLE-THIELE Associate Professor of Marketing University of Southern Queensland Springfield QLD, Australia

REBEKAH RUSSELL-BENNETT Senior Lecturer Queensland University of Technology Brisbane QLD, Australia ISBN 978-0-9775242-4-2

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Published in Australia by: eContent Management Pty Ltd PO Box 1027 Maleny, QLD 4552 Australia Tel. +61-(0)7-5435 2900 Fax: +61-(0)7-5435 2911 E-mail: [email protected] ABN 87 091 432 567 Affiliates in: Sydney, Amsterdam, Palo Alto A special issue of the Journal of Management & Organization: Volume 14 Issue 2 (May 2008) ISSN 1833-3672 Journal of Management & Organization Services Marketing: Linking the employee–customer interface Bibliography ISBN 987-0-9775242-4-2 1. Linkage research. 2. Employee–customer interface. 3. Service delivery. 4. Service climate. 5. Service orientation. 6. Organisational citizenship behaviour. 7. Customer satisfaction. 8. Servicescape. I. Rundle-Thiele, Sharyn. II. Russell-Bennett, Rebekah. [Series: Journal of Management & Organization (Maleny QLD): vol. 14_2] © 2008, eContent Management Pty Ltd This publication is copyright. Other than for purposes of and subject to the conditions prescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the Publisher at: [email protected] Publisher: James H Davidson, eContent Management Pty Ltd (Queensland) Desktop Publisher: Kim Webber, Southern Star Design (New South Wales) Printed in Malaysia by Vivar Printing Sdn Bhd, Selangor D.E. (Malaysia)

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JOURNAL OF MANAGEMENT & ORGANIZATION Journal of the Australian and New Zealand Academy of Management S e r v i c e s M a r k e t i n g : L i n k i n g t h e E m p l o y e e – C u s t o m e r I n t e r face Edited by Sharyn Rundle-Thiele and Rebekah Russell-Bennett ISBN 978-0-9775242-4-2

CONTENTS

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EDITORIAL – Sharyn Rundle-Thiele and Rebekah Russell-Bennett

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The role of the customer advocate: Contextual and task performance as advocacy participation – Jane Galloway Seiling

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Work climate and customer satisfaction: The role of trust in the retail context – Long W Lam and Dora C Lau

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Service climate and employee well-being in higher education – Angela Martin

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Aggression at the service delivery interface: Do you see what I see? – Loraleigh Keashly and Joel H Neuman

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Optimising the internal value chain: Principles and practices – Mark T Spence and Sudhir H Kale

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Employee–customer interface in a service crisis: Impact of senior management attributes and practices on customer evaluation – Nell Kimberley and Charmine EJ Härtel

Service sells: Exploring connections between customer service strategy and the psychological contract – Leanne Cutcher

Service staff attitudes, organisational practices and performance drivers – Amanda Beatson, Ian Lings and Siegfried P Gudergan

EPILOGUE

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Untangling the employee–customer interface for services – Raymond P Fisk

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EDITORIAL S HARY N R UNDLE -T HIELE Associate Professor of Marketing, University of Southern Queensland, Springfield QLD, Australia R E B E K A H R USSELL -B ENNETT Senior Lecturer, Queensland University of Technology, Brisbane QLD, Australia

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elcome to our Special Issue of the Journal of Management & Organization. We are indebted to our reviewers all of whom gave time to review manuscripts to help us to improve papers for you to read. Special thanks are also directed to the people who responded to our call for papers. We received 25 manuscripts and while all manuscripts were reviewed we were only able to select eight papers. We would finally like to express our thanks to authors of articles appearing in this Special Issue. The theme for our Special Issue was linking the employee–customer interface. The idea for this Special Issue originated from an idea put forward by Schneider and colleagues (2005). Essentially, their proposition was that research was required to bring together two key areas of organisations – the employee and the customer. They termed this type of research ‘linkage research’. Linkage research involves linking employee experiences at work, with the experiences employees provide for customers leading to outcomes for the employee, the organisation and the customer. In particular, this nexus between the employee and the customer is usually in the area of service delivery (whether it be service as the core product of the organisation or after-sales service and complaint handling). This special edition was aimed at stimulating research that considered employees and customers and 114

the behaviours individuals engage in within a service context and the effects of these behaviours on employee, organisational and consumer outcomes. The goal of this special issue was to bring together management, marketing, organisational behaviour and customer behaviour researchers. The employee–customer interface involves two key parties reflecting the two environments that influence the service encounter; internal and external. The internal environment consists of organisational employees and practices while the external consists of the customer and market forces, amongst other things. The papers in this special issue span both of these environments and offer conceptual, qualitative and quantitative insights. The articles are written by researchers from around the world thus indicating that this topic is of global significance. The number of submissions also indicates the level of academic interest in this area. We commence the Special Issue with two articles that examine individual characteristics of service employees, then three articles that focus on situational factors in the internal environment of a service organisation. Next, we move to the external environment with an article that examines the point of interaction in health services. The following two articles focus on the relationship between the internal and external environments, with

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emphasis on customer outcomes. We conclude with an epilogue by Professor Ray Fisk of Texas State University who is well known for his research in services marketing. The epilogue is a commentary on two key themes that arise from the eight articles concluding with recommendations for further research in the employee–customer interface. We have chosen not to summarise the articles for you at the outset. For those seeking a summary, please go straight to the Epilogue where the eight articles have been summarised succinctly by Ray Fisk. Instead, we would like to encourage you to consider how your research could by linked to research conducted by one of your marketing or management colleagues. As noted by Schneider and colleagues, there is a need for linking employee experiences at work, with the experiences employees provide for customers, leading to outcomes for the employee, the organisation and the customer. This Special Issue is merely a starting point and the articles in this Special Issue note many opportunities that arise for future research. Conceptual papers by Jane Seiling, Rico Lam and Dora Lau, Mark Spence and Sudhir Kale and Nell Kimberley and Charmine Härtel certainly offer researchers a framework for empirical research. The empirical papers by Leanne Cutcher, Angela Martin, Amanda Beatson, Ian Lings and Siggi Guddergan and Loraleigh Keashly and Joel Neuman each offer ideas to further stimulate and extend linkage research. Again we encourage you to link with colleagues to further our knowledge of the interplay between employees and customers, who are both needed for business survival. The epilogue by Fisk discusses the ‘entangled’ relationship between employees and customers and highlights two themes that arise from the eight articles in this special issue; the

characteristics of people and situational influences. Researchers are encouraged to consider these themes to further academic and managerial understanding of the employee-customer interface. In closing, we express our deepest appreciation to Professor Ken Parry for his guidance throughout the entire Special Issue process. It has been quite a journey and Ken’s answers to endless questions were essential to make sure that we reached the final destination. We would also like to thank JMO’s Publishing Coordinator, Jen who always responded to our emails and was able to find an answer for every question. We know that she did this in difficult circumstances towards the end of the Special Issue process. Lastly, our thanks go to our colleagues, with a special thankyou to Ray Fisk, for their support and the Queensland University of Technology for their financial support.

R e f e rences Schneider B, Ehrhart MG, Mayer DM, Saltz JL and Niles-Jolly K (2005) Understanding OrganizationCustomer Links in Service Settings, Academy of Management Journal 48: 1017–1027.

REFEREE

ACKNOWLEDGMENT

The Guest Editors wish to express their sincere appreciation to the panel of reviewers for their contribution to this Special Issue whose names are listed below in alphabetical order. Simon Albrecht Lynda Andrews Amanda Beatson Tracey Dagger Angela Dobele Judy Drennan Jillian Farquhar Margie Hume

Lester Johnson Ian Lings Doan Nguyen Maria Raciti Rebekah Russell-Bennett Alastair Tombs Herman Tse

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Service sells: Exploring connections between customer service strategy and the psychological contract L EANNE CUTCHER Discipline of Work and Organisational Studies, University of Sydney, Sydney NSW, Australia

ABSTRACT Drawing on detailed qualitative case study evidence from four retail banking organisations, this article highlights the connections between customer relations strategy, the psychological contract and employee behaviour. The purpose of the research is to extend our understanding of the links between employees and customers by showing how this relationship evolves over time and by highlighting that a front-line employee’s service orientation needs to be understood within the broader context of the employee’s service experience. It is suggested that a better understanding of these connections could facilitate improved customer service standards and enhance the experiences of those working in service industries. Keywords: customer; service climate; sales; psychological contract; strategy.

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ncreasingly, customer service staff are required to add a sales function to their core service role. Hairdressers, for example, no longer just style our hair and listen to our stories; they are required to sell us hair products. At the point where our hairdresser tells us we must buy this latest product to get the ‘right look’ the dynamic of the relationship shifts. This is because such active stimulation of demand highlights the previously hidden instrumental nature of the relationship and reminds both the customer and the hairdresser that the main aim of the game is for the firm to make money (Korczynski 2002). The requirement for employees to actively stimulate demand and encourage customers to make a purchase is likely to require a significant mind-shift for employees who have been recruited and trained to satisfy customer requirements and perform transactions without the immediate aim of

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making a sale. This article presents findings from in-depth case study research that explores how such shifts in customer relations strategy can impact on front-line service employees’ attitudes and behaviours. The purpose of this article is to highlight the importance of understanding employee behaviour in customer service settings not simply as one-off exchanges, but within the broader context of the employee’s long-term customer service experience. This is done by contrasting the experiences of employees in four service organisations, two that changed from a service to a sales-focused strategy, and two that maintained a strategy focused on providing high levels of service with selling as an off-shoot of that strategy. In exploring the implications of these changes for employees the paper reviews the critical literature on key trends in customer service and discusses

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the impact that changes in the service climate of an organisation may have on an employee’s psychological contract. The article begins with an overview of the literature that highlights the link between customer relations strategy and employee behaviour. The case study industry and research sites are then introduced. The next section of the paper sets out the methodology employed in the research and then the findings from the four case study organisations are presented. The discussion section highlights the implications of these findings for customer service organisations and the conclusion points to the need for future research that takes a longer term view of employee responses to change.

LITERATURE

REVIEW

Ser vice climate and the psychological contract Customer service work entails a complex threeway interaction between management, employees and customers (McCammon & Griffin 2000; Frenkel, Korczynski, Shire & Tam 1999). In service work, the customer is not one-step removed from the organisation but enters into the workplace through direct contact with employees, and it is this direct contact that makes service work unique (Bowen & Ford 2002; Korczynski 2002; Lengnick-Hall 1996). The uniqueness of service work relates to its intangibility, perishability and the simultaneous processes of production and consumption that characterise interactive service work (Bowen & Ford 2002). However, it is not just the physical customer but also the ‘the character of the customer [that] has invaded the internal world of the service organisation’ (du Gay 1996: 79). Management often seeks to imbue customers with certain characteristics in order to extend, enhance or control the nature of the service interaction. Korczynski, Shire, Frenkel and Tam (2000: 671) argue that in seeking to achieve the dual goals of customer-orientation and efficiency,

management prefer employees to identify with a collective, disembodied customer, however, because interactions with customers can be an important arena of meaning and satisfaction for service workers they will tend to relate to customers as embodied individuals. They note that the tension between employees’ individual/ embodied customer and management’s preference for a collective/disembodied customer becomes particularly apparent when management attempt to introduce elements of sales into what have previously been predominately service jobs (Korczynski et al 2000: 684). This tension, they suggest, is likely to result in a heightened degree of conflict and resistance because sales work involves a more instrumental approach to the customer which is much more in line with management’s abstract concept of the disembodied/collective customer (Korczynski et al 2000: 672). Korczynski et al (2000) conclude that the move to a sales focus in a number of areas of service work has implications for the experience of front-line employees in terms of satisfaction, control and resistance. In one of the few studies to explore the ways in which employees respond to an increasing emphasis on sales in service roles, Wray-Bliss and Willmott (1999) identified how call centre employees drew on the language of customer service as a counter-argument to the pressures of meeting sales targets. They argue that the adoption of a discourse of customer service with its emphasis on notions of care, and providing for peoples’ needs can be unsettling for organisations wanting to promote sales and focus on profits (Wray-Bliss & Willmott 1999: 287). Elsewhere Wray-Bliss (2001: 53) has suggested that the call centre employees’ use of an oppositional discourse of customer service is attributable to their being ‘emotionally involved and feeling the need to resist’. We can expect then that asking front-line officers to change the way they think about and engage with customers will invoke an emotional response and inevitably impact on the organisation’s ‘service climate’ (Schneider et al 2005). The

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concept of ‘organisational climate’ is a measure of ‘the fit between the prevailing culture and the individual values of the employees’ (Schwartz & Davis 1981: 33). Given that organisational ‘climate’ is an indicator of ‘the extent to which employee beliefs and expectations are being fulfilled’ (Buono, Bodwitch & Lewis 1985: 482), it is suggested that the psychological contract provides a useful framework for exploring the relationship between changing customer relations strategy, the service climate of the organisation and employee responses and behaviours. The ‘psychological contract’ has been identified as an individual’s beliefs, shaped by the organisation, regarding terms of an implicit agreement between the individual and the organisation (Rousseau 1995, 1998). These understandings are subjective and may be shared by a number of employees in the organisation (Deery, Iverson & Walsh 2006). Due to its subjective nature ‘employees and employers may hold different views on the content of the psychological contract and the degree to which each party has fulfilled the mutual obligations of the exchange’ (Coyle-Shapiro 2000: 905). It follows then that if a person is recruited into a customer service role and for many years the organisation’s strategies aim to develop a ‘passion for service’ (Bowen & Ford 2002: 461) and a ‘strong service climate’ (Schneider et al 2005) then these values and behaviours will shape the psychological contract between the employee and the organisation. Deery et al (2006: 172) found that this was the case for the call centre operators in their study, they conclude that: Where organisations declare an intention to be customer-focused and committed to a complementary set of human resource practices, they help to define their obligations to the staff. More important, these obligations will come to form part of the psychological contract with employees. When employees believe that the psychological contract they have with the organisation is 118

being honored then they will be motivated to reciprocate with organisational citizenship behaviours (OCB) and high job performance (Sturges, Conway, Guest & Liefooghe 2005: 824). High levels of OCB have been identified as critical to the development of a strong service climate (Schneider et al 2005) and extra customer service role behaviours, such as, ‘going the extra mile’ or ‘delighting the customer’ (Bettencourt & Brown 1997: 41). On the other hand, breaches of the terms of the psychological contract have been strongly associated with individual intention to quit, high rates of turnover, (Sturges et al 2005), diminished OCB (Coyle-Shapiro & Kessler 2000), increased mistrust (Maquire 2002) and reduced job satisfaction (Deery et al 2006). The literature suggests that ‘changing the deal’ of the psychological contract (Coyle-Shapiro & Kessler 2000: 903) can have serious implications for the quality of service provided by customer-contact employees (Schneider et al 2005; Deery et al 2006). In assessing the temperature of an organisation’s service climate, there needs to be an understanding that ‘employee expectations are based on a type of psychological contract formed at organisational entry and early socialisation experiences, in addition to individuals’ own prior experiences and perceptions of the larger environment’ (Buono et al 1985: 482). This article explores how an organisation’s customer relations strategy can impact on front-line employees’ psychological contract in ways that can enhance or detract from the service climate.

F ro m s e r v i c e t o s a l e s i n re t a i l b a n k i n g The relationship retail banks have with their customers has undergone significant change in the past two decades making it an ideal sector to explore the impact of changing customer strategy on employee behaviour. In essence, the overall customer strategy of the major retail banks in Australia has been to segment their customer base and to reshape the role of the customer as a ‘co-producer’ (Lengnick-Hall 1996) of the serv-

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ice exchange in a very narrow sense, that is, by having customers conduct their banking transactions themselves through the use of automatic teller machines (ATMs), phone and internet banking. Such technological service delivery options, buffer the customer from the production process, and, from the bank employee (Bowen & Ford 2002: 458). The large retail banks have used fees and branch closures to reduce costs and ‘encourage’ customers to take up these technological self-service options. Where there is a personal interaction with the customer (either over the phone or counter) the bank employees’ role has shifted to proactively marketing and selling financial products. Whereas, the major banks focused on diversifying delivery channels, segmenting customers and re-orientating towards a sales focus, some smaller Australian financial service institutions have sought to differentiate themselves from the large retail banks by claiming to offer customer strategies based on personalised, face-to-face service. The four organisations discussed in this paper were selected primarily because they purported to offer an ‘old-fashioned’ approach to service that emphasised such friendly, face-to-face service. For three of the organisations, Power Credit Union (Power), Seaside Credit Union (Seaside), and Statewide Credit Union (Statewide)1 these different approaches to customer service arise from the fact that they are credit unions and as mutual entities, view their customers as owners of the organisation. The fourth organisation, Southco, is a Victorian-based rural bank that has expanded its branch network across Australia, in part, through a community bank model that draws on a very similar customer service strategy to credit unions. Initially it was thought that contrasting these institutions’ strategies with the strategies of the large retail banks would provide some interesting insights into the employee–customer relationship 1

between larger and smaller retail banking organisations. However, closer examination of the four organisations showed distinct differences in their approaches. Whereas management at Statewide and Southco continue to emphasise service and a low key approach to on-selling, management at Seaside and Power had emulated the strategies of the large retail banks and shifted the emphasis to selling financial service products. Comparing and contrasting the approach of these four organisations builds on our limited understanding of the way in which employees interpret and respond to changes in customer relations strategy and the implications of this for service delivery and sales effectiveness.

M ETHODOLOGY This study was designed to explore the perceptions and reactions of front-line service officers to changes in customer strategy. The empirical evidence for the paper was gathered through indepth qualitative case study research. A case study approach was taken because this was considered to be the most appropriate method for facilitating in-depth exploration of the meanings that organisational members ascribe to changes in their specific organisation (Stoecker 1991; Yin 2003, Ogbonna & Wilkinson 2003). Further, a multiple case study approach allowed for comparisons and contrasts to be made between the cases, strengthening the validity of the research findings (Eisenhardt 1989). While data collection was predominantly based around in-depth interviews, a range of other sources, including company brochures, PR information, customer newsletters and brand strategy reports, were also analysed to ensure that organisational information (as well as individual perceptions) had been obtained and conclusions were drawn from multiple measures of the same phenomenon (Yin 2003). Semi-structured interviews were conducted with a total of 90 respondents including man-

Pseudonyms have been given to all the financial institutions in order to protect the identities of the customer service officers from these organisations who participated in the research.

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agers, employees, union officials and customer advocates working in the retail banking industry. The majority of the interviews (n = 55) were conducted with front-line officers and managers in the four case study organisations. The research was undertaken in selected branches of the four organisations. Permission was given to interview all staff present on the days the researcher visited the case study organisations. Four Southco branches, one in a suburb of a large metropolitan city, one in a regional centre and two rural branches, were visited. These branches were chosen because they represented the different geographical areas serviced by Southco. Statewide only has one branch office which is located in a large metropolitan city. Power serves a large regional centre and staff in two branches within this region were interviewed and, because Seaside serves both coastal and rural communities interviews were conducted in two rural branches and two coastal branches. Participation in the interviews was voluntary, the interview data gathered was kept completely confidential and the researcher was not required to report back to management of the organisations on any of the research findings. Of the 43 front-line employees interviewed across the four organisations, only two were male. This in part reflects the gendered nature of customer service work in retail banking which, in turn, is attributable partly to the perception that women are better suited to customer service roles (Tyler & Taylor 2001). It is also the result of the limited career opportunities in these smaller organisations and the fact that more than 50% of the front-line officer roles were part-time. The interviews were semi-structured in that while there was a list of standard questions, these were not strictly followed and interviewees frequently introduced other issues into the discussion, which were pursued where relevant. The ongoing process of data analysis guided the development of interview questions. The interviews were conducted on a one-on-one basis and ranged in time from 30 to 90 minutes. All of the 120

interviews were audio recorded with the consent of the interviewees and were transcribed as close to the interview time as practicable so that it was possible to recall and reflect on the meaning constructed at the time. A ‘reflexive’ approach was adopted in the analysis of the interview transcripts. As Dunford and Palmer (1996: 696) explain, ‘reflexivity entails possessing the ability to be critical or suspicious of our own intellectual assumptions [however, it] does not mean falling into an endless regress of self-reflexive interpretations and deconstructions’. In order to aid this reflexivity and produce inductive rather than deductive research, the interview transcripts (665 pages in total) were analysed using the ‘constant comparative method’ where the data is coded into categories and basic social processes (Glaser & Strauss 1967). These processes were continuously amplified and revised as new information was obtained, coded and analysed.

F INDINGS At first glance the four case study institutions appear to be underpinned by a very similar customer service ethic and therefore we might expect a very similar approach to human resource management. Yet closer examination showed that what differentiates these four organisations from one another is the extent to which they have emulated the sales strategy of their major competitors – the large retail banks. The implications for employees of these different customer service approaches are set out in the following two sections.

Ser vice sells at Statewide and Southco In differentiating themselves from their competitors both Statewide and Southco draw on customer service discourses that reflect their respective histories. At Statewide, the customer service discourse is centred on the notion of ‘customers as equals’, reflecting the history of the credit union as an organisation providing a banking service to a group of public sector employees. During the interviews front-line officers linked

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the concept of equality amongst customers with the concept of equality amongst employees. As one employee commented, ‘It is what is great; we are all level. We have management and supervisors but it is not a ‘you and us’ thing. We are all the same level’. This idea of equality amongst employees was underpinned by an approach to reward and recognition that emphasised the contribution of all and rejected individualised or even team based rewards. Statewide’s Human Resource Manager, explained: ‘Organisationally, informally we do have targets at the higher level, but the staff don’t have individual targets. They don’t have team targets’. She further noted that management recognised achievement at an organisational level by hosting special employee functions and announcing achievements in the staff newsletter. Targets were seen as being incompatible with the organisation’s emphasis on service. The thinking behind this human resource policy was explained by the Assistant General Manager for Marketing and Customer Service: ‘Why should staff working with the customer right up front have the opportunity to get things that others that are supporting them can’t get? So it is the concept of customer equality also going through to staff equality’. This notion of equality was part of the ethical framework the front line service officers operated from and they drew on the concept of ‘customer as equal’ to reinforce their ethic of service. At Southco, the customer service discourse centres on the notion of the ‘customer as community’. This discourse reflects Southco’s history as a rural bank. Southco’s particular conceptualisation of ‘community’ is underpinned by a claim to have returned to banking values of the past with a local branch manager who understands the needs of his or her customers and has the authority to make decisions locally. Recruitment advertisements are only placed in local papers and this is part of a deliberate strategy to recruit ‘locals’. As the Recruitment Manager explained, ‘The local community feel is very much what it is about’. The focus on service to community

and an emphasis on friendly, face-to-face service are supported by a deliberate move away from the use of sales target and performance based pay. A local branch manager explained that the criteria for employees’ annual performance review were broad and extended to ‘the [staff member] taking part in the community and getting to know people and talking to people. It is just as important as the banking side’. The concept of customer service as community service has been taken up by the front-line officers who drew on the managerial discourse of ‘community’ to explain their preparedness to offer extra levels of service. For example, Mary stated, ‘Part of it also for me is that it isn’t just another job but you are part of the local community and you are contributing something to the local community’. The way in which employees at both Statewide and Southco have reciprocated the terms of their psychological contract by being prepared to ‘go the extra mile’ in terms of the customer relations they provide is in part a legacy of their many years working in customer service roles. The employees at Statewide valued their organisation’s ongoing commitment to customer service despite the fact that most other retail banking organisations had moved towards a greater emphasis on selling financial service products. As Steve from Statewide stated: When I came to the credit union I just came part-time because I was going to retire and I couldn’t believe the level of service that they gave and I thought well I am back in my element now; this is what I enjoy, giving customer service. At Southco all the employees interviewed had considerable work experience with the large retail banks and their ideas about what constituted ‘good customer service’ had been developed earlier in their careers when retail banking institutions placed a premium on face-to-face service and the pressure to sell was far less pronounced. They disliked the way in which their previous

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employers (the large retail banks) had replaced an emphasis on service with a focus on sales and the high levels of employee commitment they demonstrated to Southco Bank were a legacy of their previous work experience with the large retail banks. As Joy, an employee with 25 years experience in the banking industry, explained: I feel like I have done a full circle. It is more on personal customer service. We know the customers, we call them a lot more by name than you would in say a big bank, were it is just so busy and [because of ] lack of staff you don’t provide the service you can give here. The front-line officers at both Statewide and Southco recounted stories about getting involved in the lives of their customers, about visiting customers in their homes, and about taking money to customers who were too ill to get in the branch. As Grace recounted: We have one [customer] that basically is stuck at home and he can’t get out and he rings up every now and then and says, ‘Can you bring me some money?’ and we take it up there to him and he signs the voucher and we bring it back … We have got another customer who has rung in and said, ‘I can’t get in’, so I have just taken the money up. They are good customers and you like to do that for them. It is part of being in the community. Clare recalled the day one of her customers called to say she would not be coming into the bank again and she wanted to thank Clare and the other members of staff for all the help she had given her in putting her financial affairs in place, so that she could die peacefully. In recounting these stories the employees were indicating that they wanted to become involved in the lives of their customers. The front-line officers interviewed indicated that it was most important to them that the organisation they worked for shared their ‘ethic’ of customer service. As Mary commented, ‘Well they (Southco Bank management) actually care 122

about the people. Well I care about the customers, so they have got my ethics’. At both Statewide and Southco the customer relations strategy is underpinned by a belief that if you provide extremely high levels of service then you will sell products to your customers. Management at both organisations have rejected the idea of introducing sales targets and the human resource practice of rewarding individual sales performance and continue to invest significantly in training and development that emphasises service. Employees in both organisations were committed to delivering high levels of customer service and this is in large part because their particular conceptualisation of the customer and customer service fitted with that being promoted by management and helped to reinforce a preferred sense of identity as caring, individuals that had been developed over many years of working in customer service roles.

F ro m s e r v i c e t o s e l l i n g a t S e a s i d e and Power While Power and Seaside continue to emphasise the service orientations of their organisations in their external communications with customers, their internal discourse and their human resource management strategy seeks to re-construct the customer as a sales opportunity. This had led them to introduce customer segmentation strategies aimed at increasing the value of customers to the organisations. Greg, a branch manager, outlined how Seaside’s segmentation strategy works: The customer is being designated as a Gold, Silver or Customer. Gold is a person that generates a certain amount of profit in their account per annum. The staff members will see this customer is a gold customer so that they not necessarily get better service but should they be getting better service than a person who is making a loss of $1,000 a year. At both Power and Seaside, the move towards a sales-oriented customer relations strategy has been accompanied by changes in the organisa-

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tion’s human resource strategies. Both organisations have also altered their recruitment policy and now, rather than employing people with customer service skills, they look for applicants with sales experience. The front-line officers have been given new titles: Sales Consultant at Seaside and Sales Officer at Power. However, employees at both credit unions resisted the management initiative by continuing to refer to themselves as Customer Service Officers. As Kathy commented: Basically I still think of myself as a customer service officer because I would rather service customers than sell them products. I think it is a much nicer title. By saying, ‘Sales Consultant’ it is more along the bank’s imagery because that is where we were headed when I worked in the bank. Training at both organisations was also very much focused on developing sales skills. All the Power employees interviewed commented on the extensive training offered to help them develop ‘sales skills’. Power’s Human Resource Manager explained that the sales training focused on ‘[a] mental shift of moving from service to sales and getting people to realise that sales wasn’t a dirty word and that developing a personal relationship for the purpose of selling didn’t contradict the organisation’s previous emphasis on selling’. However, the front-line officers interviewed did not agree and felt that linking salary increases to sales targets had increased work levels and stress and created tensions among staff members. These tensions had become exacerbated at both Power and Seaside as the most recent development in the sales strategy and training program led to a concentration on cold calling and closing sales. At Power all front line staff were taken off the counter for an allotted time each week (approximately 1.5 hours) to conduct telephone sales calls. None of the employees interviewed was comfortable with this new component of their role. However Lucy, a new recruit to the organisation (recruited for her prior sales experience), was much more willing to take on this

task and this meant that each month she was awarded the sales bonus. Lucy outlined the tensions this created: There have been times when I have had to say to the girls, ‘OK it is Thursday morning and it is quiet and so I am going to make my phone calls, and others have mumbled under their breath, ‘Well I am never going to get anything am I!’ And that makes you feel very bad. But you know you have got to go out there and do those phone calls. At Seaside all the front-line staff interviewed were united in their resistance to the new sales strategy. At one bank branch the front-line officers refused to individualise their sales performance figures, and shared the targets across the whole group. As Ruth explained: ‘we just open up one program for recording our sales and we take turns – one day all the sales will go to one staff member on the next day to the other because we have stated time and time again we are a team and that is the way we operate’. This reshaping of the rules by the employees reflected their collective approach to reward as opposed to management’s attempts to individualise performance targets and rewards. Carol from the same branch stated, ‘We work as a team regardless of what happens’. Their cynicism over the sales targets and the way they sought to circumvent the new system led management to label this branch as the ‘problem branch’. The organisational climate had deteriorated significantly at Seaside, where Scott, the Operations Manager, had issued staff with an ultimatum that ‘if their [sales] performance doesn’t improve they won’t be staying there for very much longer. It is either improve and we give them all the resources and all the help, or go’. During 2002 alone, 25% of Seaside’s staff left the organisation. The changes resulted in considerable stress for those who stayed. As Sylvia commented: There is the stress from the sales; we have to be thinking, thinking. Then we get stressed if we

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get sick. Who can cover us - no one. It really scared me and I haven’t been right and I kept getting sick all the time. I feel like I need to go to the toilet all the time. I would think about work and almost start crying. As Deidre lamented: You think in a different way. You don’t want to hassle with the little tiny things when you know the next person is standing there with an insurance policy and your target is to try and get that person. I want to treat the person in front of me like I normally would and not think, oh God the next one is really important; I want to get it before the other [staff ]. I am feeling that the next person is more important than the person in front of me. I don’t like that! The recent emphasis on sales linked to individualised rewards based on results-based performance (meeting sales targets) was seen by employees as a significant breach of their psychological contract and led to high levels of stress, turnover and resistance among employees at both organisations. Their resistance to these changes was reflected in their refusal to adopt their new job titles, open sabotage of the performance management system and by continuing to identify ‘helping people’ as the most important aspect of their role despite management’s emphasis on selling products.

D ISCUSSION Frenkel et al (1999: 228) suggest that because sales workers know they will receive commissions based on customers’ purchases, the service exchange will be more genuine and they are unlikely to smile at customers through ‘gritted teeth’. However, this research shows that individualising sales rewards do not offer a further incentive to smile, either genuinely or through gritted teeth. Rather the research outlined in this paper indicates that placing a greater emphasis on the sales role can hinder front-line staff from offering the kind of service they wish to provide. 124

The front-line officers at all four case study organisations preferred to identify with a real ‘embodied, individual’ customer rather than the abstract concept of a ‘collective, disembodied’ sales opportunity promoted by management (Korczynski 2002). This is because customer service work is an interpersonal experience (Bowen & Ford 2002: 460) and front-line service employees want to be able to relate to customers in ways that extend beyond the exchange of a business transaction and demonstrate their capacity to ‘care for’ the customer (Halbesleben & Buckley 2004; Korsczynski 2002; Tyler & Taylor 2001). For the respondents in this study being able to get to know and care for their customers gave their work added meaning and helped to reinforce a preferred sense of self that had been built up over many years working in service roles. At both Power and Seaside the new emphasis on selling conflicted with employees’ ideal of ‘customer service’ that had developed over years of working for a service-oriented organisation. The shift from a service to a sales culture had reconstructed customers as ‘profit-sources’ and employees’ reluctance to embrace the new sales culture arose in large part because it required them to think about the customers in a more instrumental way. For employees at Seaside and Power the psychological contract ‘deal had changed’ (Coyle-Shapiro & Kessler 2000) considerably and they reacted by leaving the organisation, internalizing the stress, naming the inconsistencies, and articulating their resistance through a morally-based discourse. This evidence supports earlier studies which show that breaches of the psychological contract amongst customer service employees will led to diminished OCB, reduced job satisfaction, mistrust and turnover (Sturges et al 2005; Deery et al 2006; Maquire 2000; Coyle-Shapiro & Kessler 2000). In contrast, at Statewide and Southco management promoted and rewarded high levels of customer service and maintained a ‘relational’ psychological contract with their employees. As O’Donnell and Shields (2002: 440) explain:

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‘relational contracts are long-term, entailing considerable investment by both parties in training and development, a high degree of mutual interdependence and involve rewards that are not explicitly performance contingent’. The continued or renewed emphasis on service fitted with the employees’ sense of self as service providers and enabled them to construct their labour as ‘morally infused and charged with notions of care, responsibility and service’ (Wray-Bliss 2001: 52). Respondents at Statewide and Southco were satisfied in their work roles when management strategy allowed for a continuation or a return to a valued sense of self-identity developed over their work history and life experience (cf Buono et al 1985). For many of the front-line service employees at Statewide and Southco their identification as caring sales people had developed early in their retail banking careers. Some of them had experienced first hand the negative implications of the introduction of a ‘sales’ strategy in the large retail banks and they appreciated the fact that the concept of customer service offered by their current employer was consonant with their own conceptualisations of ‘good customer service’. For them the terms of the psychological contract they had with the organisation was being reciprocated and this can be seen in their high levels of OCB (Sturges et al 2005) and extra role behaviour (Bettencourt & Brown 1997). While Power and Seaside claimed to promote service as a key differentiating factor the bundles of practices (both marketing and human resource) (Schneider et al 2005) breached the psychological contract with employees and led to behaviours that had the potential to undermine the service relationship. Whereas, at Statewide and Southco the bundles of practices recognised the many years of experience of their front-line officers and the organisational values reciprocated the terms of the psychological contract and created a service climate conducive to delivering high levels of service (Schneider et al 2005; CoyleShapiro & Kessler 2000; Deery et al 2006).

CONCLUSIONS It needs to be acknowledged that at the time the research was undertaken the changes to customer strategy at Seaside and Power had been in place for less than two years. Future research would assess how these changes have impacted over the longer term on the service climate, the psychological contract and organisational performance. This follow-up research would explore if employees were able to make the transition required of them by management or if they had left the organisation, either voluntarily or had been replaced by sales-oriented staff. It would also explore the impact of the changes on performance by assessing whether or not the organisations who had adopted a salesfocus had improved sales figures and profits and compare these performance measures with those of the two organisations that maintained a service focus. A key limitation of this research is that it does not tell us how customers themselves experienced the changes introduced. The findings here point to the need to ask customers how they felt the changes had impacted on the service they were provided and whether or not they felt more or less valued as a customer. Future research would seek the views of both customer service workers as well as customers in order to more fully account for the impact of changes in customer service strategy. This future research would build on the findings from this study that indicate that employee responses to changes in customer relations strategy need to be understood as part of a longer term continuum of experiences. This study suggests that any change program that fails to acknowledge the longer term experiences of employees will meet with some degree of resistance. It is imperative then that management clearly articulates not just changing customer strategies but, also, changing employee expectations, the new terms of the psychological contract and gives employees time to adjust to the new service climate.

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A CKNOWLEDGEMENT The author would like to thank Professor Charles Areni for comments on an earlier draft, as well as the two anonymous referees for their very helpful feedback on the paper.

R e f e rences Bettencourt LA and Brown SW (1997) Contact employees: Relationships among workplace fairness, job satisfaction and prosocial service behaviours’, Journal of Retailing 73: 39–61. Bowen J and Ford R (2002) Managing service organisations: Does having a ‘thing’ make a difference?’ Journal of Management 28: 447–469. Buono AF, Bodwitch JL and Lewis JW (1985) When cultures collide: The anatomy of a merger, Human Relations 38: 477–500. Coyle-Shapiro J and Kessler L (2000) Consequences of the psychological contract for the employment relationship: A large scale survey, Journal of Management Studies 37: 903–930. Deery S, Iverson RD and Walsh JT (2006) Toward a better understanding of psychological contract breach: A study of customer service employees, Journal of Applied Psychology 91: 166–175. Dunford R and Palmer I (1996) Conflicting uses of metaphors: Reconceptualising their use in the field of organisational change, The Academy of Management Review 21: 671–718. du Gay P (1996) Consumption and Identity at Work, Sage Publications, London. Eisenhardt KM (1989) Building theories from case study research, Academy of Management Review 14: 532–550. Frenkel SJ, Korczynski M, Shire K and Tam M (1999) On the Front Line – Organisations of work in the information economy, ILR Press, Cornell University Press. Glaser B and Strauss A (1967) The Discovery of Grounded Theory, Aldine Publishing Company, New York. Korczynski M (2002) Human Resource Management in Service Work, Palgrave, Basingstoke. Korczynski M, Shire K, Frenkel S and Tam M (2000) Service work in consumer capitalism: Customers, control and contradictions, Work, Employment and Society 14: 669–687. Lengnick-Hall C (1996) Customer contributions to quality: A different view of the customeroriented firm, Academy of Management Review 21: 791–824. McCammon HJ and Griffin LJ (2000) Workers and 126

their customers and clients: An editorial introduction, Work and Occupations 27: 278–295. Maquire H (2002) Psychological contracts: are they still relevant? Career Development International 7: 167–180. O’Donnell M and Shields J (2002) Performance management and the psychological contract in the Australian federal public service, The Journal of Industrial Relations 44: 435–455. Ogbonna E and Wilkinson B (2003) The false promise of organisational culture change: A case study of middle managers in grocery retailing’, Journal of Management Studies 40: 1151–1178. Rousseau DM (1998) The ‘problem’ of the psychological contract considered, Journal of Organisational Behaviour 19: 665–671. Rousseau DM (1995) Psychological contracts in organisations, Thousand Oaks, CA: Sage. Schneider B, Ehrhart M G, Mayer DM, Saltz J and Niles-Jolly K (2005) Understanding organisation-customer links in service settings, Academy of Management Journal 48: 1017–1032. Schwartz H and Davis SM (1981) Matching corporate culture and business strategy, Organisational Dynamics Summer: 30–48. Stoecker R (1991) Evaluating and rethinking the case study, The Sociological Review 39: 88–112. Sturges J, Conway N, Guest D and Liefooghe A (2005) Managing the career deal: The psychological contract as a framework for understanding career management, organisational commitment and work behavior, Journal of Organisational Behavior 26: 821–838. Tyler M and Taylor S (2001) Juggling justice and care: Gendered customer service in the contemporary airline industry, in Sturdy A, Grugulis I and Willmott H (Eds) Customer Service: Empowerment or entrapment, Palgrave, Basingstoke. Wray-Bliss E (2001) Representing customer service: Telephones and texts, in Sturdy A, Grugulis I and Willmott H (Eds) Customer Service: Empowerment or entrapment, Palgrave, Basingstoke. Wray-Bliss E and Willmott H (1999) Battling with the gods: Employees, management and the deities of post industrial management culture, Goodman RA (Ed.) Modern Organisations and Emerging Conundrums, Lexington Books, Lanham. Yin RK (2003) Case Study Research: Design and methods, 3rd edn, Sage Publications: Thousand Oaks. Received 19 February 2007 Accepted 11 September 2007

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The role of the customer advocate: Contextual and task performance as advocacy participation J ANE GALLOWAY S EILING Lawrence Technological University, Southfield MI, USA

ABSTRACT Contextual performance in the workplace has been identified as including relational activities that maintain the broader social and psychological environment in which task performance occurs in organisations. In this conceptual writing, organisational advocacy (OA) is offered as a form of task and contextual performance that is pertinent in the 21st century, especially while serving and working with customers on a day-to-day basis. Organisational citizenship behaviour is conceptualised as a component of the contextual performance of OA. OA and customer advocacy are defined and models are provided, suggesting that what is thought, said, and done by organisational members must receive expanded attention, in this case, in dealing with internal and external customers. Keywords: organisational advocacy; organisational citizenship behaviour; contextual performance; customer advocacy; advocacy participation

I

t is now assumed that failing to manage service strategically not only leaves customers angry, but also costs profits (Gale 1994; Schneider 1980). Customers now define and decide the fate of companies. Yet, the importance of customers continues to be taken for granted (Blanding 1991). Pertinent to this issue, the following statement by Schneider, Ehrhart, Mayer, Saltz and Niles-Jolly (2005: 1029) is a step in the right direction: ‘[C]ompanies should seek employee display of motivated behaviour in pursuit of important organisational outcomes—like customer-focused OCB’. This paper adds to the call for concern regarding what members ‘display’ through what they think, say, and do inside the task and contextual performances of involvement with customers. According to Schneider (1980), ‘[O]rganisational dynamics have a direct impact on the peo-

ple the organisation serves, as well as on employee performance and attitudes’ (p. 53). Ultimately, positive organisation dynamics and the contributive choices of members result in the focus of this writing: members’ willingness to do the work well and the demonstration of concern for the customer pay dividends. In a study by Motowidlo and Van Scotter (1994: 479), task and contextual performance was shown to involve different patterns of behaviour and these patterns ‘contribute independently to supervisor’s judgments about an individual’s overall worth to the organisation’. Task performance, the work-related activities performed by organisational members that contribute to the technical core of the organisation (Borman & Motowidlo 1997), has long been a focus of research. In recent years, contextual performance,

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the activities performed by members that help to maintain the broader organisational, social, and psychological environment in which the technical core operates (Motowidlo, Borman & Schmit 1997), has also become a focus of researchers. The purpose of this conceptual paper is to define and discuss, through the lens of task and contextual performance, the concepts of organisational advocacy (OA), customer advocacy and advocacy participation as performance factors in serving one’s customers. (Workplace advocacy issues also include self-advocacy, leader advocacy, member advocacy, customer advocacy, community advocacy and inclusion advocacy [see Table 1]). In the following, first, customer advocacy, a subset of organisational advocacy (Seiling 2001), is introduced and a model of organisational advocacy is offered which includes customer advocacy. Second, the role of the customer advocate is described. Third, the activities of advocacy participation are described. Then, expressive TA B L E 1 : GL O S S A RY

activity approaches are noted as they relate to customer advocacy. Finally, implications for theory development and future research are offered. The author acknowledges the risk of writing in somewhat contradictory ways regarding the highly researched and valuable organisational citizenship behaviour (OCB) activities that have proliferated across multiple academic disciplines. Although slowly moving into the literature upon introduction in the late 80s (Organ 1988), in the 1990’s OCB burst onto the academic scene with enthusiasm. Podaskoff, MacKenzie, Paine and Bachrach (2000: 515) state, ‘The literature also indicates that there are a number of occasions where essentially the same idea or concept [as OCB] has been given different labels by different researchers’ making it ‘difficult to see the overall patterns that exist in the research literature’. It is not the purpose of this writing to add to the confusion or to go in depth regarding the common themes identified by Podskoff et al (2000: 516) and others or dimen-

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Organisational advocacy is defined as ongoing, intention-based, value-added activities of workplace members that are significant to expanded achievement and furthering the well-being of themselves, their co-members, and the collective organisation. Advocacy participation influences the performance and achievement of the organisation and the contributing individual and his or her group. Being willingly responsible and accountable for one’s workplace performance is significant to performing as an organisational advocate. Organisational advocacy includes the following workplace issues.

Self advocacy: Actions of workplace members who appropriately promote themselves and their comembers and organisation as capable and reliable contributors to organisational achievement. Leader advocacy: Member actions and activities that promote organisational leaders as competent, desirable leaders whose actions are beneficial to organisational achievement. Leader advocates also encourage and support the learning of those leaders who have much to learn about leading. Member advocacy: Leader actions and activities who promote individuals and groups to others as beneficial performers, leading to expanded opportunities for group contributions to organisational achievement. Customer advocacy: Member actions of positively representing the company to the customer and the customer to the company. Community advocacy: Member actions that promote the existence of an inclusive, integrative, and flexible internal workplace community while encouraging their organisation to respond to the needs of the outside community. Inclusion advocacy: The responsibility and accountability of the individual, whatever his or her role, and the organisation in the quest to include and respect the worldviews and voice of all members in the expansion of individual and organisational potential. From The Meaning and Role of Organisational Advocacy: Responsibility and accountability in the workplace ,(2001), Jane Galloway Seiling, Greenwood Publications, Westport, CT.

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sions regarding OCB that include: ‘(1) helping behaviour, (2) sportsmanship, (3) organisational loyalty, (4) organisational compliance (5) individual initiative, (6) civic virtue, and (7) self development’. The purpose is to locate advocacy participation as verbal and actional performance activities that proliferate in the contextual performance of the above common theme behaviors.

CUSTOMER

ADVOCACY

Customer advocacy, the focus of this writing, is noted as: ‘member actions of positively representing the company to the customer and the customer to the company’ (See Table 1) (Seiling 2001: 92). These actions are linked to performance with both internal and external customers (Motowidlo & Van Scotter 1994). This linkage spreads across work activities in the communications and behavioral area (contextual) and the performance of the work (task). Unless otherwise noted, the term ‘customer’ is related to both the internal and external location of customers. Of importance is the realisation that task and contextual performance in the role of the customer advocate as service provider requires the intentional of willing M odel oforchestration Organizational

choices that consistently reflect purposeful and beneficial service performance. Customer advocacy is a subset of organisational advocacy (OA) (See Figure 1). OA includes ongoing, intention-based, value-added verbal and actional activities of workplace members significant to expanded achievement and the furtherance of the well being of the members and the organisation (Seiling 2001). Advocacy activities noted as advocacy participation (see Figure 2), includes the ‘ongoing use of language and energy to perform through words and actions in ways that advance the welfare of self, others, and the organisation as a whole’ (Seiling 2001). This is supported by Van Dyne, Graham and Dienesch’s (1994) description of the term advocacy participation, which they note as occurring within OCB. Advocacy participation in OA includes everyday task and contextual performances, as well as expansive activities of innovation, and maintenance of high standards, (part of what is represented in Podaskoff et al [2000] as civic virtue) and making suggestions for change. As noted, all are part of and significant to routine performance. This moves customer advocacy past the occasional OCB moment into everyday activities of service.

Advocacy Organizational Advocacy

Self Leader Member Customer Community Inclusion

Actional

Expectation of Motivated Behavior

Advocacy Issues:

Verbal

Contextual Performance Task Performance Transforming goods A ctivities that serve the technical core Intentional

FIGURE 1 : M ODEL

Rewarded

OCB activities Emotional Labor

Advocacy Participation

Enthusiasm Working Toward Objectives Endorsing, supporting, defending

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THE ROLE OF THE CUSTOMER ADVOCATE Social role theory defines role as ‘an organised set of prescriptions and/or expected activities that can be associated with a given position’ (Gottlieb 1998: 130; Katz & Kahn 1978; Sarbin & Allen 1968; Shaw & Costanzo 1982; Thomas & Biddle 1966). A role includes categories of activities that are recognised and expected by others as existing in a certain category of persons (Thomas & Biddle 1966). Goffman (1961) notes that a person’s values, personality and aptitudes, as well as the expectations of one’s employer, adjust the ability of the person to perform a given role. Additionally, according to the theory, the environment in which one performs the role may ‘preclude some role behaviors, partially permit others, and force others into being’ (Gottlieb 1998: 130). Yet, behavioral and task activities previously not seen as assigned roles have recently been moved into the expectations of performance. It is now assumed that all realms of performance cannot be described regarding role performance and members are responsible for active participation in stretching the boundaries of what was previously assumed as ‘top performance’ (Seiling 1997). Innovative customer service is expected and no longer is perceived as OCB behaviour.

Contextual per f o r mance at a deep level Hockey’s compensatory control model—‘an adaptive regulatory process, which helps to maintain output for high-priority task goals within acceptable limits, at the expense of other (low-priority) activities’ (2000: 219)—addresses the need to make choices as to how to work effectively. Attention and intention is given to how fast to work, how much accuracy is needed, and how to continually adjust activities for performance based on attributions that impact choice (Shackleton & Wale 2000). In the case of the customer advocate, although routine patterns of performance exist, there is attentiveness to effective performance on an ongoing, complementary basis. Advocacy participation is part of ongoing effective performance. 130

Energy level is a factor. As noted by Hockey, ‘[O]perating at a very high level for any length of time is likely to be uncomfortable, and to impose considerable strain and give rise to fatigue’ (2000: 222; Hockey & Meijman 1998; Hockey, Briner, Tattersall & Wiethoff 1989). This is especially significant in customer engagement activities and advocacy practices in general, again requiring ongoing attention to effective levels of engagement that can be utilised without strain or fatigue production over time. As represented in the literature on emotional labour (Ashforth & Humphrey 1993; Fineman 1993; Hochschild 1983; Putnam & Mumby 1993), in the case of serving customers, suggests that organisation members must be prepared to offer experience, knowledge, expertise, and skills that can support organisational effectiveness in order compete at a higher organisational level than in the past. These activities can be demanding and stressful. According to Hochschild (1983), frontline customer service people engage in emotional labour at the ‘surface’ or ‘deep’ level, depending on the circumstances (Fineman 2000). Since the advocate works with intention, the emotional labour of advocacy participation can be noted as ‘deep’ emotional labour, demanding a level of commitment and representation that requires advantageous connection with the customer. There is a conscious effort to produce best results, in this case, to do the work and serve the customer. Customer advocacy gestures include asking questions and going deeper into the needs of the customer, rather than only addressing expressed needs, in order to identify the real problem. It is suggesting solutions that may not be particular to other situations or may be beyond the service parameters of the advocate. It may include telling the customer about other, cost-saving services of the company etc.

C u s t o m e r a d v o c a c y a s a n i n t e r de pendent activity Activities of the customer advocate are performed as interactive exchanges that support,

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confirm, affirm, and validate the representative as an effective, accountable, interdependent actor representing the organisation. A company of beneficial representative/advocates reinforces expectations of the organisation to perform to its fullest in order to be as reputable, profitable, and as effective as possible. This requires exchanges of information and worth within activities of work.

Moving beyond ‘doing enough’ Pine and Gilmore (1998: 117) state, ‘Process excellence—at least in the sense of truly engaging customers—surfaces only when a worker decides to enrich how he or she performs each activity’. Doing what is necessary to meet job description designations and occasionally doing ‘a recognisable modest, trivial extra-role performance’ (Morrison & Phelps 1999: 403; Organ 1988), is no longer enough. In the role of customer advocate, it is the presence of intention, energy, and engagement everyday that matters—what Glasser calls organised behaviors, noted as ‘all we know how to do, think, and feel—that are presently available from our behavioral systems… We use them day after day to maintain control of our lives’ (1984: 88). The level of engagement and belief in how to do and what to do regarding serving others demonstrates whether advocacy is a part of one’s ‘organised behaviours.’ OA emphasises that every member participates in the success of his or her organisation. This is especially significant to beneficially serving customers (Schneider 1980). The advocate, when needed, actively calls for change regarding serving the customer. In the organisational context, each person constructs the context of the organisation with others. Addressing issues of needed change are pertinent to the role of customer advocate. In summary, in the case of customer advocacy, advocacy participation suggests purposely working with energy, cooperation, collaboration and appreciation of the customer being served, whether it is an internal or external customer. The role of the advocate includes the willingness

to inquire and advocate, when needed, to expand the abundance of resources and results pertinent to serving one’s customers. It is part of the everyday activities of ‘working well’ with others.

Activities of advocacy par ticipation People naturally put energy into adjusting the world around them to represent what they perceive as important. In doing so, they express themselves and perform in ways in order to put their distinctive personal thumbprint on everything they do (Culbert 1996). Advocacy activities are expressions of that thumbprint, acting as a contextual performance factor of the work. These activities include actions and activities significant to the dictionary meaning of the word advocacy: an act of pleading for, supporting, and recommending. In order to plead for and support, inquiry must be included as part of the activities of advocacy and participation at a level of successful contribution is essential. Senge (1990) and Argyris (1985) note that a balance of inquiry and advocacy is necessary suggesting that ‘pure’ advocacy (strong challenging behaviour) does not include inquiry. Thus, successful advocacy participation includes activities of inquiry occurring inside exchanges of information, support, and innovative verbal engagement. Advocacy participation also includes being attentive to task performance, first, by paying attention to effectiveness and what needs to be learned to do the job well and second, by being alert to the elements of customer care. The expansion of technology and the demand for more information by customers continues to impact task performance (Burke & Cooper 2002), causing the need to more deeply merge task performance with contextual performance in order to meet the needs of customers. Schneider et al (2005), in expanding on what has been called ‘linkage research’ pertaining to customers (Wiley 1996), suggested that ‘what employees experience in their work worlds is correlated with the experiences they provide for customers’ (p. 1017). In this writing, customer

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advocacy is offered as a conceptual extension of Schneider et al’s study of climate-customer satisfaction. Although customer satisfaction and employee satisfaction are not discussed in this paper, it is proposed that customer satisfaction will be enhanced by activities of the advocate producing a dynamic outcome and/or a reaction by the customer to performance that creates a working framework of connection and partnership between the advocate and the customer. Thus, the customer can ultimately become an advocate for the company. The Activities of Advocacy Participation (Figure 2) are discussed below. The location of the advocate, whatever the advocacy issue involved (see Table 1), is inside the intersection in Figure 3, identifying the advocate as representative and intermediary of the company with the customer, and as a representative and intermediary of the customer to the company. As noted in the activities of advocacy participation (Figure 2), advocates perform verbal and actional contributions that promote and balance the needs and welfare of both the customer and the organisation to and with the other, activating advocacy participation efforts. Responses of the customer to advocacy participation efforts are both a response to the approach of the advocate in the moment and the history of impressions experienced in the

past – yet responses can be revised by the performance of advocacy gestures by the service provider. Performance as a customer advocate is influenced by: 1. The willingness to beneficially represent the company 2. An understanding of the ramifications of contextual and task performance within the role through ongoing education and training 3. Customer expectations of performance by the company representative 4. The existence and experience of accountability with the company representative 5. The relationships developed through performing the role of advocate over time, and 6. The outcomes that occur as a result of performance of the role. The model emphasises the ongoing interactive and performative nature of advocacy gestures pertinent to influencing impressions and the activation of assumptions regarding future performance activities in the workplace.

Expectancy theor y Pertinent to the model, expectancy theory suggests that member advocacy responses are governed by a set of expectations about what is permissible

Figure 1: Model of Advocacy Participation Aw areness Accou ntable act ivities Advocacy Issu es : Self Leader Member Customer Community Inclusion

On going

Po sitive

(Positive or Negative) Verbal and Actional Contri butions

Negat ive

Advocacy Participation

Acknow ledg ed and rewarded

Internal and Extern al Cust omers

(Positive or Negati ve) Exchange of Advocacy Responses

(Plus or Minus) Outcomes

Supp liers Community Administration Fut ure custo mers

Re-activation/Ot hers Acting as O rganizational Advocates W hat is hough t, said, d done done matters matters What istthought, said, an and

FIGURE 2 : MODEL

132

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Verbal and Actio nal Advocacy Participation

O rganization

Customer Advocate

Customer Internal External

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F I G U R E 3 : L OCAT I O N

and what is not (Dovidio, Piliavin, Schroeder & Penner 2006), both in task performance and contextual performance. The basic idea of expectancy theory was described by Vroom (1964) suggesting that people ‘are motivated to behave so that they obtain the outcomes which they believe will provide the results they desire’ (in Foster 2000: 311). The theory assumes leader behaviour and organisational climate are relevant to subordinate conceptions about how to attain rewards (House 1971), ultimately influencing the motivation to perform one’s assigned role (Organ & Bateman 1986; Schneider et al 2005). The three elements of expectancy theory significant to contributions of positive customer advocacy practices and customer outcomes are: expectancy (belief that positive verbal and actional effort attributed as beneficial will result in performance), instrumentality (belief that effortful performance with customers will be rewarded), and valence (how much the reward is valued) (House 1971; House & Mitchell 1974; Shackleton & Wale 2000). These elements are relevant to the willingness of members to perform collaboratively with to internal and external customers. Of note is that few actions, once they are performed, are really reversible (Cummings & Anton 1999). Observers (customers) consider that actions are volitional, made by choice. They are attributed as thought through and purposeful (Salanick 1995) and made at the direction of the company represented by the performer. Thus,

OF T H E A D V O C ATE

what the service provider does and says is experienced as the voice and actions of the company.

Two locations of advocacy participation In organisations today, there are two views of the role of customer advocate for the external customer: the assigned role and the routine (everyday) role of customer-contact person. An assigned role is typical of what has been termed corporate advocacy and has typically been the role of the public relations department of organisations. Yet, based on this writing, temporary assignment as a customer contact role to a specific person is noted as performing as a customer advocate. An example of the assigned role of the customer advocate occurs at Xerox, a company with a history of customer focus starting with the founder, Joe Wilson, Xerox President from 1946 to 1966. Today at Xerox, an ‘Officer of the Day’ at the corporate staff level deals with issues that reach the attention of the CEO. This Officer of the Day focuses on the problem and is the champion for the customer with the company. He or she works with the customer relations area or others who can identify resolutions (research and investigation) and then completes the circle by contacting the originator of the complaint (the customer). According to Zemke and Schaaf, ‘The priority today is to continuously and carefully listen to customers, understand what they’re saying as it applies to the business of serving them, and then respond creatively to what they tell you’ (1989: 29).

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Also present at Xerox is an active program to train customer contact employees in good customer contact skills and how to take care of customer needs, an example of the second role, the everyday customer-contact advocacy role. According to Dave Maskens, Customer Experience Manager – Xerox Services, The goal is to identify and listen to customer concerns and to quickly address those concerns. Of course, each contact is situation based, but we encourage and train [employees] to effectively meet the needs of customers. Many of our training programs include a focus on four contact employee behaviors identified through our own research as important to meeting customer needs. They are: accessibility, responsiveness, follow through, and ownership of the issue (personal communication, July 2007). Xerox demonstrates that listening is productive when there are active efforts made to understand the ‘moments of truth’ identified through active efforts of the customer advocate.

ORGANISATIONAL ADVOCACY AS IT RELATES TO OCB Smith, Organ and Near (1983) labeled the occasional higher level of employee activity as organisational citizenship behaviour. Organ defined OCB as ‘individual behaviour that is discretionary, not directly or explicitly recognised by the formal reward system, and that in the aggregate promotes the effective functioning of the organisation.’ He also says, ‘By discretionary, we mean that the behaviour is not an enforceable requirement of the role or the job description, that is, the clearly specifiable terms of the person’s employment contract with the organisation; the behaviour is rather a matter of personal choice, such that its omission is not generally understood as punishable’ (1988: 4). Following his lead, in recent decades researchers and writers have highlighted the benefits of citizenship behaviour as a social exchange model of innova134

tive and spontaneous activity that goes beyond role prescriptions in organisations (Konovsky & Pugh 1994; Organ 1988; Bolino et al 2002). Konovsky and Pugh agree, ‘Citizenship behaviour is employee behaviour that is above and beyond the call of duty and is therefore discretionary and not rewarded in the context of an organisation’s formal reward structure’ (p. 656). Wang, Law, Hackett, Wang and Chen (2005: 421) also note that OCB supports task performance by enhancing a social and psychological activities in the work environment (Organ 1997), suggesting the importance of contextual performance. OCB was especially salient in the 20 th century when leading was based in the ‘leaders think and employees do’ approach to performance. In this approach, job descriptions define the job. OCB activities, going beyond the job description, could be seen as going the extra mile with the assumed permission of those in charge. When doing so, it was noticed and noted, and, since it was occasionally expected, it could also be noted when not doing so. The person who occasionally makes an OCB gesture could be seen as being a high performer. As noted earlier, Morrison and Phelps state that research on OCB ‘has concentrated almost entirely on what Organ [1988] referred to as modest, some would even say trivial, behaviors that sustain status quo’ (1999: 403). Moving past ‘the trivial,’ the difference between OCB and OA, as emphasized in advocacy activities, is the persistence of member performance at a higher level. Occasional acts of OCB are no longer sufficient.

Other noted dimensions of OCB Noted in Chen, Chen and Meindl (1998), Tjosvold (1988) identifies four interaction dimensions of OCB associated with the cooperative goal relationship: ‘(1) exchanging and combining information, ideas, and other resources; (2) giving assistance; (3) discussing problems and conflicts constructively; and (4) supporting and

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encouraging each other’ (Chen et al 1988: 287). Tjosvold (1988) also notes the similarity of Graham’s (1989) four-dimension model of OCB: ‘(1) interpersonal helping, (2) individual intiativeness in communications to others in the workplace, (3) personal industry in performing specific tasks beyond the call of duty, and (4) loyal boosterism – that is, the promotion of organisational image to outsiders’ (noted in Chen et al 1998: 287). ‘Boosterism’ can be seen as the verbal activities and ‘personal industry’ can be noted as within the task performance activities of OA. Podsakoff, MacKenzie, Paine and Bachrack (2000), in a review of the literature, note that within almost 30 definitions of OCB there is a great deal of conceptual overlap that can be organised into seven common themes: ‘(1) Helping behavior, (2) sportsmanship, (3) organisational loyalty, (4) organisational compliance (5) individual initiative, (6) civic virtue, and (7) self development’ (p. 516), many of which fall into the dimensions of ‘innovative and spontaneous’ behaviour suggested by Katz (1964), and noted by Podsakoff et al as ‘including (1) cooperating with others, (2) protecting the organisation, (3) volunteering constructive ideas, (4) self-training, and (5) maintaining a favorable attitude toward the company’ (p. 526). Many of these dimensions are also evident in the contextual performance of advocacy participation, suggesting the inclusion of OCB as contextual performance gestures within OA. However, the reoccurring (ongoing efforts) and spontaneous and purposeful (intentional) nature of advocacy striving that is recognised and rewarded in order to express, affirm, and act on organisational and personal goals is pertinent to the expressive and instrumental activities of OA, suggesting divergence from the occasionalness nature and lack of recognition and reward of OCB. For this reason, advocacy is suggested as a contributory aspect of performance in which OCB is embedded as a segment of contextual performance (Figure 1).

E X P R E S S I V E CUSTOMER A D V O C A C Y APPROACHES Galbraith (1967) states that human energy is not like other scarce resources: humans have a basic need to use energy for expressive activity. Expressive activities include contextual and task activities, thus, people attempt to express themselves in constructive ways in order to be actively contributive. Organisational roles offer opportunities for the use of energy in channeling expressive activities into the accomplishment of effectiveness and efficiency in different activities and functions within the organisational environment (Katz & Kahn 1978). Expressive activities are present in the activities of the advantage-producing role of the organisational advocate. The advocate can be described as an institutional intermediary. Institutional intermediaries have typically been described as highstatus actors having a strong influence on an organisation’s prominence (Kuran & Sunstein 1999; Rao, Davis & Ward 2000; Rindova, Williamson, Petkova & Sever 2005) specialising in disseminating information about their organisation and potentially influencing an organisation’s prominence (Fombrun 1996; Rao 1998). Moving the intermediary concept to the customer contact, service providers can be seen as institutional intermediaries who influence the thinking of customers regarding the company through verbal (contextual) and actional (task) activities. As intermediaries, they are local disseminators of information about the organisation and the products or services offered, whether performed consciously or unconsciously. FedEx takes this a step further be using both managers and employees as speakers at external conferences. The in-house speaker’s bureau uses rigorously trained company volunteers to give presentations. It is felt that this reinforces FedEx’s corporate reputation and builds relationships with new and existing customers (Gronstedt 2000). These activities of advocacy participation influence current and future decisions of the customer regarding the particular organisation.

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Customer advocates demonstrate effort and motivation that represents, from the organisation’s viewpoint, a system of effective production of action and/or service. Energetic, expressive activity, as it relates to serving internal and external customers, can be approached through Boccialetti’s (1995) three basic style orientations (although he was not at the time talking about serving customers): accommodating approaches, autonomous approaches, and adversarial approaches. Translated to advocacy approaches for serving customers, Accommodating approaches are those used when the contact person is attentive to, listens to, and generally performs to deliver the message of interest, concern and accommodation while staying within the guidelines of productive service. Autonomous approaches are those in which the contact person steps beyond normal authority when it is necessary to do so. Broader guidelines are assumed by the advocate in order to meet expanded needs while delivering the voice and actions of the company. Adversarial approaches are activated when the person sees the customer as a problem (potentially holding an extreme mindset of judgment and intolerance; Rindova, Becerra & Contardo 2004). Unfortunately, this viewpoint is delivered as resistance to the requests/needs of the customer. Unfortunately, the performance may spurn guidelines provided by the company regarding beneficial service. Accommodation theory suggests that persons tend to adjust their language to lower barriers to working effectively with others (Haslam 2004). This suggests that the desire to use expressive approaches which enhance (or diminish) effectiveness in interpersonal exchange activities with others can be adjusted in order to address the other’s needs. Bolman and Deal highlight Argyris and Schon’s (1974) argument that an ‘individual’s behaviour is controlled by personal ‘theories for action,’ that is, assumptions and ideas about the nature of effective action. A theory for action … informs behaviour and tells a person what to 136

do’ (1991: 136). Argyris and Shon suggest this theory-for-action (approach) is a self-protective model of interpersonal behaviour utilised to get what is wanted while protecting the performer in various situations (Bolman & Deal 2000).

THE

ROLE OF THE ORGANISATION

Working in an organisation automatically assigns the role of corporate representative to each person suggesting that what this person says and does is assumed by others as organisationally permitted activity. Thus, advocacy performance practices cannot be ignored. As demonstrated by Xerox’s previously noted focus on training, the role of the organisation is to expand the meaning of effective performance (advocacy) and its impact on service to customers, whether internal or external. To do so, the organisation (1) commits to serving its own people in ways that make it safe and desirable to be an advocate of the customer to the organisation and to advocate for the organisation to the customer, (2) hires advocacyoriented people – those who care about customers, (3) clearly defines what a successful customer advocacy role is, (4) emphasises the message of advocacy through education and accountability while tying it to the organisation’s overarching purpose and (5) clearly understands that the place where marketing for the organisation really happens is at the place of customer contact (Seiling 2001), with both the internal and external customer. The question, ‘Is this organisational member a positive or negative advocate for our company?’ is of importance to contextual and task performance assessment. This question is always answered within the context of the organisation. As stated by Trevino and Brown (2004: 72), ‘Most people are the product of the context they find themselves in. They tend to ‘look up and look around,’ and they do what others around them do or expect them to do’. Awareness of the need to continually inform, educate, and train on an ongoing basis around the consequentialist framework (Schneider et al 2005) – considera-

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tion of the benefits and/or harms that come to organisations because of the presence of or lack of constructive contextual and task performance activities—is important to effective and productive internal and external customer activities).

SUMMARY

A N D CONCLUSION

This writing focuses on the issue of customer advocacy within the model of OA (Figure 1) and the activities of the organisational advocate (Figure 2). Advocacy participation expands the contributions of verbal and actional advocacy participation into the realities of 21st century contextual and task activities of work. It is suggested that activities of dynamic, intentional, and ongoing advocacy participation, especially with customers, must become the norm in order for members to be effective contributors in the organisational context. Effective organisational performance requires members to understand the ramifications of both task and contextual performance. When willing to reorganize, acknowledge, and perform behaviors that reflect ongoing advocacy participation, the members and the organisation benefit. Organisational advocacy and customer advocacy call for the shifting of paradigms in how serving others occur in internal and external organisational customer relationships. Of importance is the understanding that systems of relationships are dynamic, that making small changes in relationships (in this case, with internal and external customers) has the potential of orchestrating positive ripple effects in the relational system.

Implications for theor y development What are the implications for theory development for OA in general and customer advocacy in particular? From the perspective of this author, it is difficult to overestimate the importance of this area of study and theory development. First, the motivational implications cannot be ignored. Organisations struggle with providing reasons for connecting with internal and external customers. Second, customer advocacy

provides a reason and purpose for members to verbalize the positive attributes of their organisation, ultimately helping people to see their companies in a better light (self-fulfilling prophecy). Third, advocacy gestures, especially with customers, provide moderating influences that shape attributions and interpretations of events both in the moment and over time by the customer; and, fourth, customer advocacy can, as accommodating and autonomous expressive and performative activities, recursively reduce negative attributions and gain support for the development of positive connections and membership affiliations inside the workplace—and with customers. To continue to ignore advocacy participation is to ignore these dynamics and is done to the peril of organisations.

Future research Research is necessary for further conceptualisation of the model of OA and, as Schneider et al (2005: 1027) also suggest, it must be undertaken in order to ‘untangle when and under what circumstances the relationships in these extendedlinks models will appear’. The study of OA and customer advocacy (as well as the other advocacy issues in the workplace) has much to contribute to organisational psychology and other disciplines. Research regarding OA’s relationship to OCB and prosocial behaviour would be a step in that direction. Thus, this writing proposes a model of OA, a broad road map for future study, suggesting the inter-relationships of advocacy with in contextual performance and task performance. Also, given that the theories of OCB and OA appear to be intended to insinuate the level of involvement and commitment of organisational members, empirical attention to theoretical discrepancies between the two theories is warranted. Future research could include testing of the model of OA offering insights as to the validity of recognising advocacy participation as beneficial both individually and organisationally. Questions might include: What are the role

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expectations for organisational advocates? What expressive approaches/activities are most beneficial to internal and external customers? How do organisations recognise positive advocacy as it relates to customers? How are these verbal and performance activities measured against performance? Do these activities promote performance? How can these activities be promoted in a new organisation, or in an established organisation? What are the other effects of advocacy performance? What context effects would occur regarding organisational behaviour and how does advocacy participation effect/adjust inferences about this behaviour? Why should researchers study advocacy issues in the workplace now? Importantly, the voice of organisational members as they talk to customers regarding the organisation represented has been addressed in the past with little success. The voices and thoughts of members as they relate to working and serving others on a daily basis, although no longer seen as irrelevant to promoting organisational performance, is not adequately emphasised as a performative and reputational factor for organisations. Unfortunately, until positive psychology and positive organisational scholarship emerged as a beneficial approach, what organisation members had to say about their organisations both on and off the job was ignored and was often less than pleasant—a member’s reputational impact has remained mostly outside the investigational realm of organisation behaviour. Although the basic transaction cost economics viewpoint emphasises the transference of goods and services (Bigley & Pearce 1998), there has been little emphasis on the power of the promotional activities of the organisation member in the context of face-to-face contact with customers. The sense that what-one-thinks-saysand-does-matters, as it relates to internal and external customers, is seen as important, yet the focus remains on how to treat the customer without emphasis on the power and responsibility of organisation members to impact the welfare of 138

the organisation they represent. With few exceptions, the verbal and actional elements of the issues of advocacy have not been sufficiently incorporated into the research of academia or into the education and training of organisational members.

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Work climate and customer satisfaction: The role of trust in the retail context L ONG W L A M Faculty of Business Administration, Universidade de Macau, Taipa, Macau

D ORA C L AU Department of Management, Faculty of Business Administration, Chinese University of Hong Kong, Shatin NT, Hong Kong ABSTRACT We propose that a trust climate will help the employee–customer interface in the retail context. Specifically, we argue that a work climate that is based on trust induces the exercise of discretion by retail managers and discretionary behavior by front-line staff. Managerial and staff discretion is necessary for retail stores to become locally responsive, as store responsiveness is linked to customer satisfaction. Our propositions are derived from interpersonal trust and social exchange theories. The use of a trust climate to analyse the antecedents of customer satisfaction offers another theoretical perspective to study the interface dynamics between employees and customers and thus this paper contributes to ‘linkage research.’ Keywords: trust climate; relational exchanges; customer satisfaction; store responsiveness; organisational citizenship behavior; managerial discretion.

H

ow employees behave will impact whether customers will feel satisfied in the consumption process. This is especially important in the retail context in which front-line staff members have frequent interactions with customers. Most companies understand the importance of employee behavior but their responses in dealing with this challenge can be drastically different. The Ritz-Carlton’s motto of personalised service is ‘We are ladies and gentleman serving ladies and gentleman’ (Metters, King-Metters, Pullman, & Walton 2006: 209). Nordstrom’s first rule in serving guests is ‘Use your good judgement in all situations. There will be no additional rules’ (Pfeffer 1994: 42). The investigation into the

interface between employees and customers is known as ‘linkage research’ (Wiley 1996). Studies of the employee–customer interface offer fruitful information to retail firms through which they can ‘find ways to effectively manage their customer-contact employees to help ensure their attitudes and behaviors are conducive to the delivery of quality service’ (Hartline & Ferrell 1996: 52). Previous studies on service climate have shown that employees working under such a context tend to exhibit more service behaviors, which helps to improve customer satisfaction (eg Liao & Chuang 2004; Hui, Chiu, Yu, Cheung & Tse 2007). For example, a recent empirical

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study by Schneider, Ehrhart, Mayer, Saltz and Niles-Jolly (2005) suggested that a work climate with a strong service orientation did induce more service-focused behaviors among employees, which resulted in greater customer satisfaction. Their basic premise is that the work climate affects how employees feel in the workplace. The behavior of employees then influences how customers feel during the service encounter. Work climate is a set of shared perceptions among members of an organisation regarding its policies, procedures, and practices (Schneider 1990). Work climate shapes employee behaviors by influencing what employees consider as important in their environment (Salancik & Pfeffer 1978). If there is a service climate, employees will then regard service to be ‘expected, desired, and rewarded’ in their workplace (Liao & Chuang 2004: 45) and thus engage in service behavior. In the service quality framework of Parasurman, Zeitham and Berry (1988), service quality is made up of tangibles, reliability, responsiveness, assurance, and empathy. If employee behavior enhances these dimensions, customers are more satisfied. The work by Schneider and his colleagues (Schneider & Bowen 1985; Schneider, White & Paul 1998) offered indirect evidence that employee behaviors that are related to these service dimensions should be conducive to customer satisfaction. Our study follows the same approach of previous climate research but takes a different theoretical route to explain service behavior. In addition to service climate, we argue that a work climate based on trust can also lead to customer satisfaction. The additional impact on customer satisfaction is achieved by emphasising the importance of self and discretion in the workplace and by encouraging cooperation among co-workers. First, when employees are trusted by store management to make decisions, they will feel better about themselves due to improvement of selfesteem and self-efficacy (Conger & Kanungo 1988). One core idea of linkage research is that ‘what employees experience in the work worlds is 142

correlated with the experiences they provide for customers.’ (Schneider et al 2005: 1017) Retail staff receiving positive self experience at the workplace is more likely to provide positive services to customers. Second, trust climate enables discretionary behavior in the retail context. Wiley (1991) found that in addition to emphasis on service, removal of obstacles to work accomplishment (ie discretion) was also positively related to customer satisfaction. Trust does not directly lend itself to employees’ service behavior but it enables relational exchanges to take place between store management and staff (MacNeil 1980; Konovsky & Pugh 1994; Coleman 1990). Without trust, employees will be hesitant to initiate any relational exchange because they are highly skeptical that the manager will reciprocate. Relational exchanges are conducive to retail staff being willing to provide discretionary behaviors to customers. Third, trust climate also encourages cooperation among co-workers due to establishment of relational exchanges among themselves. Wiley (1991) suggested that cooperation among staff members is one of essential features of a successful retail store environment. In our conceptual model, we will first explain why a work climate that is based on trust will lead to discretionary behavior in the workplace. We will then explain why discretionary work behavior is beneficial to customer satisfaction in the retail context due to importance of store responsiveness. Our propositions are based on interpersonal trust and social exchange theories. Our paper contributes to ‘linkage research’ in several ways. First, our model shows that retail front-line staff is sometimes unwilling to provide extra services to customers due to the lack of a trust climate in the workplace. Frontline retail staff members are considered to be the boundary spanners between firms and customers (Bowen & Schneider 1985). As a result, front-line staff is likely to encounter opposing demands that arise because of the discrepancy between a firm’s policies and customer requests, which leads to role conflict and ambiguity. When employees are left

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unattended, counterproductive work behavior results and employees suffer from low job satisfaction (Hartline & Ferrell 1996; Babin & Boles 1998). A work climate that is based on trust alleviates role-related problems because front-line staff is trusted to make customer-related decisions. Second, we provide the theoretical underpinnings to empirically test if customer satisfaction is related to a work climate of trust. Retail firms can utilise our model to shape their human resource policies, if further research provides sufficient evidence to support our propositions. Third, our model addresses the employee– customer interface through trust and social exchange theories. Doing so opens another theoretical approach to understand the interface dynamics between employees and customers.

CONCEPTUAL

MODEL

Our conceptual model is built on three premises. First, in order to satisfy customers, retail units can become locally responsive through the discretionary behaviors of both retail managers and employees. Second, relational, rather than transactional, exchanges are necessary to induce discretionary behaviors. Third, a climate of trust is a

Staff Trust Towards Manager

P1

Manager Trust Towards Staff

P2

Trust Among P3 Staff

FIGURE 1 : A

Retail Manager Discretion

necessary condition for relational exchanges to take place. When a trust climate is established, staff members also develop better self images and are more willing to cooperate with co-workers. Figure 1 provides a summary of our model.

Tr usting climate and manager/staff d i s c re t i o n Organisational or work climate is ‘the shared perceptions of employees concerning the practices, procedures, and kinds of behaviors that get rewarded and supported in a particular setting’ (Schneider 1990: 384). Climate can be differentiated by the core theme that is supported by the organisation or workplace, such as service, employee commitment, cooperation, customer orientation and so forth (Schneider, White & Paul 1998; Schneider et al 2005; Rogg, Schmidt, Shull & Schmitt 2001). In the first portion of our model, we propose that the establishment of a trusting climate increases managerial discretion and the discretionary behavior of staff in the form of organisational citizenship behavior (OCB). According to Hambrick and Finkelstein (1987: 371), managerial discretion is defined as the ‘latitude of managerial actions.’ OCB on the

P5

Store Responsiveness

P4

Retail Staff Discretionary Behavior

P6

Retail Customer Satisfaction

P5

C O N C E P T U A L M O D E L OF A T R U S T I N G C L I M ATE A N D R E TA I L C U S T O M E R S AT I S FA C T I O N

( P 1 - 6 : P ROPOSITIONS )

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other hand is the extra and discretionary effort that is provided by employees that is above and beyond the job requirements (Podsakoff, MacKenzie, Paine & Bachrach 2000; Smith, Organ, & Near 1983; Organ 1988). Both manager and staff discretion are important to enhance customer satisfaction in the retail context. This will be explained in the later part of the conceptual model. We define trust climate as ‘shared employee perception that trusting others is an important principle and practice in the workplace.’ Our definition is consistent with Salamon and Robinson’s (2002) idea as they defined trust climate as employee perceptions of how much they are trusted by top management and peers. When a climate of trust is established, trusting others is manifested as the willingness to rely on actions of your colleagues, and to do so without monitoring and control. Trusting others is discretionary as trustor becomes ‘vulnerable to the action of another party based on the expectation that the other will perform a particular action important to the trustor’ (Mayer, Davis & Schoorman 1995: 712). Trust induces trustors to take risk with another party because they believe and expect, but cannot guarantee, that favorable outcomes will take place. To avoid potential loss, individuals will then select others who are trustworthy in terms of their ability, benevolence, and integrity. In a business setting, the capability to accomplish work successfully in a specified domain is an important basis for trust (Schoorman, Mayer & Davis 1996). In addition, those who are trustworthy are characterised by taking care of others (McAllister 1995; Smith, Carroll & Ashford 1995); by being reliable, consistent and honest; and by having high moral standards (Currall and Judge 1995; Rempel, Holmes & Zanna 1985).When trust becomes a climate, the issue of risk and vulnerability becomes less threatening to individuals because every staff member is sanctioned to engage in the practice of trusting others. If an individual takes advantage of 144

other trustors and acts opportunistically, he/she is likely to be caught because every staff in the store has the motivation to uncover such behavior. In the retail context, since staff is expected to trust other members within the store, three trusting relationships will occur as a result of trust climate: each retail staff trusts the store manager, store manager trusts every retail staff and staff members trust each other (Brower, Schoorman & Tan 2000). Each type of trusting relationship is expected to affect managerial discretion and staff OCB differently. When a retail store has established trust climate, each staff member is likely to place a high level of trust on store manager. The overall impact on retail store is quite powerful as staff members who trust leaders are ‘willing to accept the leader’s activities, goals and decisions and work hard to achieve them’ (Dirks 2000: 1005). Dirks’ (2000) study suggested that the entire basketball team would perform better if all team members trusted the coach’s decisions. In the retail context, trust in their store managers implies that staff members have confidence in the expertise of their supervisors. Believing that the managers will make correct decisions, even when the decisions deviate from or are not covered by store standards, minimises any doubt that such decisions may hurt store performance. This reduces potential role ambiguity that may be experienced by front-line staff in following the direction of managers. In addition, when staff members trust their retail managers, they believe that the managers will protect their interests. Regardless of the outcome of implemented policies or practices, retail managers will not blame the staff members, exposing their vulnerability. As a result, the level of risk incurred is reduced. If the retail managers are highly trusted, store staff can be expected to implement the managers’ policies and decisions efficiently and with strong motivation by applying their local knowledge, making extra efforts, and exhibiting OCB. Meta-analytical studies that

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were conducted of the antecedents and consequences of trust in a leader confirmed that when subordinates trusted their leaders, they exhibited citizenship behavior (Dirks & Ferrin 2002; Podsakoff, MacKenzie, Paine & Bachrach 2000). If the managers are able to demonstrate their trustworthiness, subordinates are more likely to believe that their extra-role actions will be rewarded when the opportunity comes along (eg Can I ask for a day off tomorrow to see my sick sister?). If, indeed, their actions are rewarded, subordinates are more likely to ‘give’ in the future, thus further enhancing both trust and discretion levels. Proposition 1(P1): When staff members trust their managers, they will perform OCB in the hope of payback. Managerial discretion will likely increase because staff members will have less doubt about following decisions that deviate from or go beyond store standards. The second consequence of a trust climate is that store manager also has high level of trust on each staff member. When the entire crew of staff members feels that they are trusted, they are more likely to assume an obligation or responsibility to carry out assigned duties or tasks (Salamon & Robinson 2002; Deutsch 1958). Deutsch (1958: 268) noted that a ‘trustworthy person is aware of being trusted and that he is somewhat bound by the trust invested in him.’ In other words, a sense of obligation is invoked when subordinates feel that they are trusted by their managers. To reciprocate, subordinates will try to help their supervisors, exhibiting both inrole and extra-role behaviors. This is particularly important in the retail context because managers are not always present at the store. As staff members are the ultimate implementers of store policies and plans, a group of responsible staff members will be more able to assist retail managers in implementing managerial decisions, even when the decisions may deviate from or go beyond store standards. Deutsch (2004) and Lau and Lam (2007) found that trusted subordinates

felt more responsible collectively and performed more prosocial behaviors. Feeling trusted also leads to several affective and behavioral consequences among employees. First, staff members will feel empowered when store managers trust them. Psychological empowerment refers to an active orientation to one’s work role in terms of four cognitions, including meaning, competence, self-determination and impact (Spreitzer 1995). When they feel empowered, staff members perceive that they have the autonomy to complete their required tasks and other extra-role behaviors (Morrison & Phelps 1999). Second, being trusted is a source of self-efficacy (Conger & Kanungo 1988), and if their managers have confidence in them, staff members believe that they have the capability to complete their jobs and to make appropriate decisions. Finally, feeling trusted by managers represents the sense of a sense of recognition among subordinates, which results in higher selfesteem. Empirical results indicated self-esteem is positively related to OCB (Pierce & Gardner 2004). Delegation and empowerment come with both risk and opportunity. On the one hand, if subordinates fail in their jobs, for example, in handling special requests by customers when store managers are absent, their superiors are also held accountable. On the other hand, when managers delegate because they trust their staff, managers hope that their decisions will be rewarded with better job performance. When subordinates are successful in carrying out their expanded responsibilities, they are also willing to make an extra effort to reward the trust of their managers (Organ 1988). Managers who are not willing to take that risk will limit the amount of responsibility that employees can assume. The result is that employees will do exactly what they are supposed to do on the job – nothing less, nothing more. Managerial discretion is thus limited because employees are less willing to follow directions that are outside the scope of their position.

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P2: When retail managers trust their staff, staff members, in return, are more likely to perform OCB. Managerial discretion will likely increase because of the assistance of responsible, empowered, confident, and willing staff members. The last consequence of a trust climate is that trusting relationships will be developed among staff members. The distinction between restricted and generalised exchanges illustrates why this condition is effective in creating additional discretionary behavior and cooperation among staff members. While restricted exchanges refer to the reciprocated exchanges of resources between two people, generalised exchanges involve more than two people such that when A initiates an exchange with B, B may reciprocate by giving to C, instead of A. In the retail context, we can imagine A is the retail manager and B, C, D and E are store staff members. When the retail manager (A) needs help, he or she may expect help from somebody in the store (B, C, D or E), but not necessarily B (Ekeh 1974; Takahashi 2000). If generalised exchanges have also been established among staff members, B, C, D, and E will recognise the favour from the retail manager (A), even when it is applied to only one person in the network (B, C, D or E). Sherony and Green (2002) found that the quality of the leader–member exchange between supervisors and subordinates was positively related to the quality of coworker exchanges. These findings suggest that if retail store managers establish positive relational exchanges with their staff members, it is possible that these members will also experience positive exchanges among themselves. In addition, third parties take an important role in coworker trust formation. Ferrin and his colleagues (Ferrin, Dirks & Shah 2006) recently found that trust is transitive so that dyadic coworker trust is significantly informed and influenced by the trust of surrounding coworkers. In other words, trusting relationships has potential to spread from dyadic 146

(restricted) relationships to multiple relationships (generalised) within stores. If generalised exchanges are formed within the retail store, the impact of trust climate is the most pronounced because store success depends upon the cooperation of all members. When trusting relationships are developed among staff members, the likelihood of exchanging favors, help, and support among store members also increases (Coleman 1990). In a well-established climate of trust, store members are more willing to initiate help or extend favors to others, believing that others will reciprocate their help or favors in the future (eg Susan will help me check the inventory in other stores when I am trying to fulfill a customer’s special request). With storewide cooperation and help, it is more likely that retail managers’ plans and goals in meeting or going beyond store standards can be implemented effectively. Retail managers are also able to make more ambitious plans when they know that staff members are able to work together more closely and can depend on each other for mutual help. Trust among staff members also facilitates information exchange and clarification. Decisions that are made by retail managers which deviate from or go beyond existing standards are risky and induce doubt, making staff hesitant to follow the instructions. Trust among the staff members creates a psychologically safe environment in which to discuss the intentions, goals, and purposes of the retail managers before the implementation of their decisions (Edmondson 1999). Confirmation from trustworthy colleagues and shared implementation of the decisions help to reduce the doubts and uncertainty involved.

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Transactional versus relational exchanges The second portion of our conceptual model explains why relational exchanges are important to facilitate the use of discretion by both retail managers and staff. Two types of social exchanges can be found among employment relations: transactional and relational (MacNeil 1980; Konovsky & Pugh 1994). In transactional exchanges, employees and employers negotiate a list of tasks and responsibilities in which are outlined the corresponding rewards for fulfilling the contract and the sanctions for violating the agreed-upon terms over a period of time. In this case, employees are motivated by the incentive/sanction structure. If additional responsibilities need to be carried out, employers may need to provide extra incentives, such as overtime. Relational exchanges, on the other hand, are less specific about the list of tasks, rewards, and duration. These exchanges are diffuse in nature, according to social exchange theory (Blau 1964; Coleman 1990). In this case, one party may provide services to another party with the expectation that the other party will reciprocate; however, the form and the timing of reciprocation are not known. The initiating party runs the risk of not being rewarded for his or her services. In lieu of structured incentives and sanctions, successful relational exchanges depend on mutual trust and commitment (Molm, Takahashi & Peterson 2000). In retail stores, staff members are recruited and paid to sell products or services according to company standards. Retail firms also implement rules and corresponding incentive and sanction systems to ensure acceptable behaviors. When staff members demonstrate these acceptable behaviors, they are rewarded with pay and job security. In other words, transactional exchanges exist between retail firms and individual staff members. Retail managers and staff, however, may and can share a somewhat different relationship. On the one hand, retail staff members consider man-

agers to be agents of retail headquarters. Since executives of headquarters cannot monitor every staff member, the fulfillment of the transactional exchange on the part of the staff is ensured by retail managers’ direct supervision. In the absence of a trust climate, retail staff members are less willing to perform discretionary behavior that is beyond their standard assignments. On the other hand, leader–member exchange studies suggest that retail managers also share a potentially unique relationship with their subordinates in terms of mutual respect, commitment and loyalty (Graen & Uhl-Bien 1995). When trust climate is developed within the store, retail manager and staff members work together with mutual trust so that relational exchanges can take place. Under this circumstance, one party is more willing to do a favour for the other and, as a result, expects some form of reciprocation to occur in the future. ‘Relational exchange between supervisors and subordinates leads employees to expend much time and energy on tasks, to be innovative in completing tasks, and to accept responsibilities in addition to those specified in their employment contracts’ (Konovsky & Pugh 1994: 659). Employees may hope that their actions will be rewarded someday in the future – in the form of job promotion, fringe benefits, better evaluations, and so forth. Managerial discretion, by definition, involves making decisions that are either not clear or not covered by existing work policies or standards. These decisions are very often not included in employment contracts but can be beneficial to store performance. With relational exchanges, staff members are more likely to perform extrarole behaviors that store managers deem necessary. For instance, doing favors for customers is precarious for staff members because behaviors that deviate from standards are risky and may not be sanctioned by retail headquarters. Previous studies have shown that retail staff suffer from low job satisfaction when they experience such situations (eg Hartline & Ferrell 1996), due to role conflicts and ambiguity when staff mem-

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bers encounter conflicting demands between firms and customers. As a result, when retail managers want to exercise their discretion in order to be locally responsive, they may encounter resistance from staff members. In other words, when retail managers want to exercise discretion and set different standards in their stores to be locally responsive, employees who view their relationship with their managers as transactional may not be willing to assume the risk of deviating from the standards that are set by headquarters. Hambrick and Finkelstein have cautioned that the latitude of managers is hampered if their actions are perceived by subordinates to be ‘unduly risky, implausible, or ill-fated’ (1987: 375). The transactional relationship between retail managers and staff thus becomes counterproductive to the practice of both managerial and staff discretion. However, retail staff members are more willing to perform discretionary behavior if they view their exchanges with their manager as relational rather than transactional. Therefore following the precepts of social-exchange theory, we propose the following. P4: In a relational exchange relationship, store staff members are more likely to perform OCB in the hope of reciprocation from retail managers. The discretion of retail managers will also increase because they can expand the scope of action due to the extra effort put in by their staff. Managers with additional discretion will also be able expand the boundary of actions that store staff members can act so that more OCB can be performed.

M a n a g e r / s t a ff d i s c re t i o n a n d s t o re responsiveness Store responsiveness is the ability of retail units to adapt their policies and practices to suit the local market and customer needs (Bradach 1998). Store responsiveness is based on the need of retailers to adapt to differing market conditions; because retail units are dispersed in various 148

geographical locations, retail headquarters may find it difficult to design a set of policies that apply to every unit. Furthermore, although the uniform practices imposed by retail headquarters can help individual stores to realise benefits from standardisation, they also constrain the unit’s ability to adapt locally (Audia, Sorenson & Hage 2001). Retail chains therefore may become less innovative afterwards. Retail headquarters also may impose policies on stores regardless of their local environment. Ingram and Baum (1997) documented one such example. One hotel chain required all member hotels to offer family and children menus in their restaurants; an individual hotel manager in Manhattan found it odd to do so because his business was located in a redlight district. In each retail unit, the manager and staff must be willing exercise discretion in order for the entire store to become locally responsive. We will first address the discretion of retail managers. As mentioned previously, managerial discretion is defined as the latitude of managerial actions (Hambrick & Finkelstein 1987). Part of this latitude involves the formulation of ideas. Managers who have greater discretionary power often have more options when they are tackling problems. Thus, in retail units, they are better able to respond to local issues because responsive decisions are difficult to standardise. Local issues are not routine problems that can be anticipated by headquarters in advance; that is, all possible events cannot be covered by a set of rules and policies. In reality, grey areas exist. Managers who have more discretionary power have more latitude in interpreting and resolving non-routine matters. Responsive decisions also need to be timely so that service quality is enhanced at the retail level (Parasurman et al 1988). Retail managers who have little discretionary power must consult headquarters to get approval for their decisions, and doing so delays their responses. To be able to offer prompt responses to consumer requests, retail managers must be given the discretion to make judgement calls.

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Managerial discretion further enhances store responsiveness due to double-loop learning. In single-loop learning, people’s behavior in response to situations that are nonstandard is based on established standards and policies. Double-loop learning takes place when those standards and policies are subject to questioning and to change, and people can respond to nonstandard situations in non-standard ways (Senge 1990). Retail managers with discretion are able to experiment with new ideas and practices in order to respond to local needs. If these new ideas prove to be successful, they are sources of innovative practices that may be beneficial to the entire company. Darr et al (1995) documented how a pizza store of a well-known chain established a new cooking procedure, which resulted in a productivity gain for the pizza firm after the other stores followed the same practice. The discretion of retail staff is related to employee OCB. Retails units can achieve a higher level of local responsiveness when their staff is willing to perform OCB towards peers, customers and organisations (Podsakoff, MacKenzie, Moorman & Fetter 1990; Simons & Roberson 2003). OCB towards peers takes place when retail staff members are willing to go above and beyond their duties to help colleagues at work. Retail staff members may find it difficult to resolve customer requests individually, especially if the staff member is newly recruited or other staff members are already occupied with other customers. The outcome is delayed service, which hurts store responsiveness. OCB towards peers thus helps retail units to improve responsiveness by providing timely responses to customer requests. George (1991) found that altruistic behavior of employees was associated with improved sales performance in a retailer of clothing and household goods. OCB towards customers helps retail units to become increasingly locally responsive by meeting customer demands that are outside the normal job duties of retail staff, especially if customers have above-

average expectations during their visits. Schneider et al (2005) showed that OCB towards customers led to higher customer satisfaction among supermarket departments. OCB towards organisations takes place when retail staff is willing to spend extra time and effort to improve the welfare of the retail unit. Retail staff has abundant local knowledge that retail managers do not have because staff members interact more frequently with customers. Thus, store managers need input from staff to formulate locally responsive decisions. However, this requires the willingness of staff members to share genuine rather than superficial experiences with the retail manager. These factors lead us to propose the following: P5: Retail units are more likely to achieve store responsiveness when retail managers have discretion and staff members exhibit discretionary work behavior in the form of OCB towards peers, customers, and organisations.

S t o re re s p o n s i v e n e s s a n d c u s t o m e r satisfaction There are several reasons why retail units that are responsive to local needs are likely to enjoy strong customer satisfaction. First, the delivery of customer service cannot be fully specified prior to the consumption of service (Banker, Lee, Potter & Srinivasan 1996). Although senior management of retail headquarters may very much prefer to ‘instruct’ their units in how to react under all circumstances, there are always exceptional situations that cannot be predetermined. For this reason, retail units should be given a certain amount of discretion in dealing with local customers. This argument is also proposed by Hurley (1998) who argued that exercise of discretion is instrumental in satisfying customers. Second, research work that is based on the disconfirmation paradigm suggests that customers have different expectations prior to consumption (eg, Oliver 1980; Mooradian & Olver 1997; Tse & Wilton 1988; Tsiros, Mittal & Ross 2004). Thus, on any given day, there will be variance in

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the expectations among customers during service encounters. Therefore, responsive retail units are more likely to satisfy customers with varying service expectations. Third, responsiveness is one of critical dimensions of service quality (Parasurman et al 1988) and service quality leads to customer satisfaction (Cronin & Taylor 1992). Service responsiveness includes promptness, willingness, and readiness of employees to meet customer demand (Parasuraman, Zeithmal & Berry 1994). Locally responsive units are more likely to deliver prompt service because they are empowered to resolve customer requests. If the approval of retail headquarters is required before fulfilling customer requests, retail units are less likely to be timely in responding. Since trust climate enables staff members to provide discretionary services, locally responsive units are also capable to meet the criteria of willingness and readiness in the service quality framework. For these reasons, we propose the following: P6: Customer satisfaction will be greater in retail units that have a high level of store responsiveness.

CONCLUSIONS Being locally responsive is critical for retail firms to achieve customer satisfaction. In this paper, we use interpersonal trust and social exchange theories to illustrate how two aspects of discretionary behavior—managerial discretion and staff OCB—are interrelated in relational exchanges. A relational and generalised exchange relationship between manager and staff members helps retail stores to become locally responsive. We theorise that a trust climate facilitates relational and generalised exchanges through three different avenues: (1) employees’ trust toward managers, (2) managers’ trust toward employees, and (3) trust among employees. Each form of trust has a positive influence on managerial discretion and staff OCB, but is manifested differently. Our model explains why, in the absence of a trust climate, front-line staff is unwilling to pro150

vide discretionary services to customers. Without trust, the relationship between retail staff and manager remains transactional. Staff members are unwilling to exercise discretionary behavior because the prospect of reciprocation is uncertain. Employee behavior that conforms to inflexible company standards is not conducive to customer satisfaction. Without trust, employees are also not empowered and confident enough to act on their own in serving customers. Thus, responsiveness, a critical dimension of service quality, is less likely to be experienced by customers. In this paper, we do not suggest that discretionary behavior will always lead to store responsiveness. It is not feasible, however, to expect that a retail store become locally responsive without granting discretion to store managers and staff. It is important to note that discretionary behavior is a necessary but not sole condition of store responsiveness. If this discretion is not granted, stores will lack autonomy, and it is difficult to achieve local responsiveness without autonomy (Taggart & Hood 1999). Some degree of autonomy and decentralisation is necessary for local units to cope with unexpected demands and opportunities (Taggart 1997). Moreover, the local responsiveness of any organisational unit is related to its ability to form ties with local constituents (Luo 2001). Previous literature on the employee–customer interface used service climate to explain how front-line staff will interact with customers. Our approach is consistent with the logic of the service climate but adds a new dimension. The use of interpersonal trust and social exchange theories leads to new propositions that have not been tested in previous linkage research. These propositions, if verified empirically, point to the need to create a trust climate to enhance the service-encounter experience. In testing our propositions, we suggest researchers to adopt a multi-level approach. Our model includes both trust climate, a group-level construct, and trusting relationships, a dyadic level phenomenon. To

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assess their individual contribution to discretionary behavior, a multi-level analysis using hierarchical linear modeling will be necessary (see for example, Hui et al 2007). Creation of a trust climate brings a new challenge to retail firms. Compared to the number of studies that have been conducted on the service climate, little has been written on how to establish a trust climate in the retail context. Thus, we can only speculate how this climate may be established based on the interpersonal trust literature. According to the meta-analysis performed by Dirks and Ferrin (2002), there are several possibilities that can explain why employees trust their leaders. First, employees generally place higher trust in transformational rather than transactional leaders, because the former demonstrate care and concern for staff. Second, trust is more likely to be given to leaders who demonstrate fairness and justice in their decisions. Third, participative decisionmaking is also found to improve trust because it shows that leaders respect employees’ input and opinions. Based on these findings, retail firms need to develop a management approach that includes the involvement of front-line staff in decision making, an appraisal structure that acknowledges employee efforts and a compensation package that extends to employees’ personal and family welfare. Doing so will certainly add costs to retail firms, especially for those that are accustomed to paying minimum wages to front-line staff, but may be deemed worthwhile if customer satisfaction is enhanced and store performance is improved after the establishment of a trust climate. In addition to its contribution to ‘linkage research,’ our paper has other theoretical implications. Our model shows that dyadic relationships can have an impact on organisational effectiveness. Traditionally, social exchange theory has been applied mostly at the individual and group level, including leader–member exchanges and their impact on employees’ behaviors and attitudes (Graen & Uhl-Bien 1995; Konovsky &

Pugh 1994). We argue that a relational and generalised exchange relationship between managers and staff members within a retail store facilitates their discretionary behaviors so that the entire store achieves local responsiveness and better unit performance. Our paper is a sharp departure from the traditional use of social exchange theory and expands its scope with the study of a macro phenomenon. Our paper also adds to the understanding of managerial discretion. The majority of research on managerial discretion focuses on how the external environment shapes managerial discretion, but it does not give much information on how organisational constraints work (eg Finkelstein & Hambrick 1990; Hambrick & Abrahamson 1995; Haleblian & Finkelstein 1993). In the original model by Hambrick and Finkelstein (1987), a person’s managerial actions are ‘given’ by who he or she is (personality) and where he or she works (organisational and industry context). There is little that managers can do to enhance their discretion. This view is actually quite deterministic. In our model, we propose a solution in which managers alter their discretion based on establishment of trust climate and dyadic relations. The addition of interpersonal trust and social exchange theories brings the original notion of strategic choice back to the discretion literature. Our model also has practical implications for retail store management. Our conceptual model illustrates how important it is to have store managers who are willing to bend the rules and display an entrepreneurial spirit when necessary; these managers can rely on the joint efforts of staff members who go above and beyond their prescribed roles. If our propositions are valid, retail firms should consider hiring entrepreneurial store managers who are able to identify opportunities and learn from past errors, rather than hiring strictly ‘by-the-book’ managers. In addition, training store managers regarding trust and relationship-building skills becomes critical in achieving store success.

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A CKNOWLEDGEMENT The authors would like to thank Greg Dess, Sharon Foley, Vilmos Misangyi, Leonard Love, David Nino, and the Behavioral Research Group participants of the Chinese University of Hong Kong for their valuable input and comments.

R e f e rences Audia GP, Sorenson O and Hage J (2001) Tradeoffs in the organisation of production: multiunit firms, geographic dispersion and organisational learning.’ In Baum JAC and Greve HR (Eds) Multi-unit Organisation and Multi-market Strategy, pp.75–105. Amsterdam: JAI. Babin BJ and Boles JS (1998) Employee behavior in a service environment: A model and test of potential differences between men and women, Journal of Marketing 62: 77–91. Banker RD, Lee SY, Potter G and Srinivasan D (1996) Contextual analysis of performance impacts of outcome-based incentive compensation, Academy of Management Journal 39: 920–948. Blau PM (1964) Exchange and Power in Social Life, New Brunswick, NJ: Transaction Publishers. Bowen DE and Schneider B (1985) Boundaryspanning-role employees and the service encounter: Some guidelines for management and research, In Czepiel JA, Solomon MR and Surprenant CF (Eds) The Service Encounter: Managing Employee/Customer Interaction in Service Businesses, pp.127–47, Lexington MA: Heath and Company. Bradach JL (1998) Franchise Organisations, Boston, MA: Harvard Business School Press. Brower HH, Schoorman FD and Tan HH (2000) A model of relational leadership: The integration of trust and leader-member exchange, Leadership Quarterly 11: 227–250. Coleman JS (1990) Foundations of Social Theory, Cambridge, MA: Belknap Press of Harvard University Press. Conger JA and Kanungo RN (1988) The empowerment process: Integrating theory and practice, Academy of Management Review 13: 471–482. Cronin JJ and Taylor SA (1992) Measuring service quality: A reexamination and extension, Journal of Marketing 56: 55–68. Currall SC and Judge TA (1995) Measuring trust between boundary role persons, Organisational Behavior and Human Decision Processes 64: 151–170. 152

Darr D, Argote L and Epple D (1995) The acquisition, transfer and depreciation of knowledge in service organisations: Productivity in franchises, Management Science 41:1750–1762. Deutsch M (1958) Trust and suspicion, Journal of Conflict Resolution 2: 265–279. Dirks KT (2000) Trust in leadership and team performance: Evidence from NCAA basketball, Journal of Applied Psychology 85: 1004–1012. Dirks KT and Ferrin DL (2002) Trust in leadership: Meta-analytic findings and implications for research and practice. Journal of Applied Psychology, 87: 611–628. Edmondson A (1999) Psychological safety and learning behavior in work teams, Administrative Science Quarterly 44: 350–383. Ekeh PP (1974) Social Exchange Theory: The two traditions, London: Heinemann. Ferrin DL, Dirks KT and Shah PP (2006) Direct and indirect effects of third-party relationships on interpersonal trust. Journal of Applied Psychology, 91: 870–883. Graen GB and Uhl-Bien M (1995) Relationshipbased approach to leadership: Development of leader-member exchange (LMX) theory of leadership over 25 years: Applying a multi-level multi-domain perspective, Leadership Quarterly 6: 219–247. Hambrick DC and Finkelstein S (1987) Managerial discretion: A bridge between polar views of organisational outcomes, In Cummings LL and Staw BM (Eds) Research in Organisational Behavior, pp. 369–406, Greenwich, CT: JAI Press. Hartline MD and Ferrell OC (1996) The management of customer-contact service employees: An empirical investigation, Journal of Marketing 60: 52-70. Hui CC, Chiu CK, Yu HC, Cheung CH and Tse HM (2007) Effects of service culture and supervisor leadership behaviours on service quality: A multi-level analysis, Journal of Occupational and Organisational Psychology 80: 151–172. Hurley RE (1998) Customer service behavior in retail settings: A study of the effect of service provider personality. Journal of the Academy of Marketing Science 26: 115–127. Ingram P and Baum ACJ (1997) Chain affiliation and the failure of Manhattan hotels, 18981980. Administrative Science Quarterly 42: 68–102.

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Work climate and customer satisfaction: The role of trust in the retail context Konovsky MA and Pugh SD (1994) Citizenship behavior and social exchange, Academy of Management Journal 37: 656–669. Lau D and Lam LW (2007) Effects of trust and being trusted on team citizenship behavior in chain stores. Asian Journal of Social Psychology, forthcoming. Liao H and Chung A (2004) A multilevel investigation of factors influencing employee service performance and customer outcomes. Academy of Management Journal 47: 41–58. Luo Y (2001) Determinants of local responsiveness: Perspectives from foreign subsidiaries in an emerging market, Journal of Management 27: 451–477. Malhotra D and Murnighan JK (2002) The effects of contracts on interpersonal trust, Administrative Science Quarterly 47: 534–559. MacNeil IR (1980) The New Social Contract, New Haven: Yale University Press. Mayer RC, Davis JH and Schoorman FD (1995) An integrative model of organisational trust, Academy of Management Review 20: 709–734. Metters RD, King-Metters KH, Pullman M and Walton S (2006) Successful Service Operations Management, Singapore: Southwestern. McAllister DJ (1995) Affect-based and cognitionbased trust as foundations for interpersonal cooperation in organisations, Academy of Management Journal 38: 24–59. Molm LD, Takahashi N and Peterson G (2000) Risk and trust in social exchange: An experiment of a classical proposition, American Journal of Sociology 105: 1396–1427. Morradian TA and Olver JM (1997) I can’t get no satisfaction: The impact of personality and emotion on postpurchase processes, Psychology and Marketing 14: 379–393. Morrison EW and Phelps CC (1999) Taking charge at work: Extrarole efforts to initiate workplace change, Academy of Management Journal 42: 403–419. Oliver RL (1980) A cognitive model of the antecedents and consequences of satisfaction decisions, Journal of Marketing Research 17: 460–469. Organ DW (1988) Organisational Citizenship Behavior: The good soldier syndrome, Lexington, MA: Lexington Books. Parasuraman A, Zeithaml V and Berry L (1988) Servqual: A multiple-item scale for measuring consumer perceptions of service quality, Journal of Retailing 64: 12-40.

Parasuraman A, Valarie AZ and Leonard LB (1994) Alternative scales for measuring service quality: A comparative assessment based on psychometric and diagnostic criteria, Journal of Retailing 70: 201–230. Pfeffer J (1994) Competitive Advantage Through People: Unleashing the power of the work force, Boston, MA: Harvard Business School Press. Podsakoff PM, MacKenzie SB, Moorman RH and Fetter R (1990) Transformational leader behaviors and their effects on followers’ trust in leader, satisfaction and organisational citizenship behaviors, Leadership Quarterly 1: 107–142. Podsakoff PM, MacKenzie SB, Paine JB and Bachrach DG (2000) Organisational citizenship behaviors: A critical review of the theoretical and empirical literature and suggestions for future research, Journal of Management 26: 513–563. Rempel JK, Holmes JG and Zanna MP (1985) Trust in close relationships, Journal of Personality and Social Psychology 49: 95–112. Rogg KL, Schmidt DB, Shull C and Schmitt N (2001) Human resource practices, organisational climate and customer satisfaction, Journal of Management 27: 431–499. Salamon DM and Robinson S (2002) Does Trust Climate Deter Work Deviance? An organisational level analysis, Paper presented at the Academy of Management Conference, Denver. Salancik GR and Pfeffer J (1978) A social information processing approach to job attitudes and task design, Administrative Science Quarterly 23: 224–253. Schneider B (1990) The climate for service: An application of the climate construct, in B Schneider (Ed.) Organisational Climate and Culture, pp. 383–412, San Francisco: Jossey-Bass. Schneider B and Bowen D (1985) Employee and customer perceptions of service in banks: Replication and extension, Journal of Applied Psychology 70: 423-433. Schneider B, Ehrhart MG, Mayer DM, Saltz JL and Niles-Jolly K (2005) Understanding organisation-customer links in service settings, Academy of Management Journal 48: 1017–1032. Schneider B, White SS and Paul MC (1998) Linking service climate and customer perceptions of service quality: Test of a causal model, Journal of Applied Psychology 83: 150-163. Schoorman FD, Mayer RC and Davis JH (1996) Organisational trust—Philosophical perspectives and conceptual definitions, Academy of Management Review 21: 337–340.

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NEW

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Taggart J and Hood N (1999) Determinants of autonomy in multinational corporation subsidiaries, European Management Journal 17: 226–236. Takahashi N (2000) The emergence of generalised exchange, American Journal of Sociology 105: 1105–1134. Tse DK and Wilton PC (1988) Models of consumer satisfaction formation: An extension, Journal of Marketing Research 25: 204–212. Tsiros M, Mittal V and Ross WT, Jr. (2004) The role of attributions in customer satisfaction: A reexamination, Journal of Consumer Research 31: 476–483. Wiley JW (1991) Customer satisfaction: A supportive working environment and its financial cost. Human Resource Planning, 14: 117–127. Wiley JW (1996) Linking survey results to customer satisfaction and business performance, In Kraut AI (Ed.) Organisational Surveys: Tools for assessment and change, San Francisco: JosseyBass. Received 27 February 2007 Accepted 17 October 2007

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Service climate and employee well being in higher education A N G E L A M AR TIN University of Tasmania, School of Management, Hobart TAS, Australia ABSTRACT A growing emphasis on the discourse of ‘student as customer’ has increased the salience of the concept of service climate in universities and anecdotal evidence suggests that this may have placed increased pressure on staff. This study investigated the relationship between service climate and psychological well being in a sample of 340 university staff. Questionnaire data was analysed using structural equation modelling showed that a positive service climate was negatively related to jobinduced tension and positively related to job satisfaction. Job-induced tension also mediated the effects of service climate on psychological dysfunction and job satisfaction. Implications for management of university stakeholder relationships and directions for future research are discussed. Keywords: service climate; students; employee well being; university employees; job satisfaction.

H

igh levels of competition in the global higher education market and the policy agenda of the current Australian government has seen a growing emphasis on the discourse of ‘student as customer’, increasing the relevance and salience of the concept of service climate in universities. Service climate reflects the degree to which employees feel that the organisation places significant value on the needs of its client or customer base (Schneider & Bowen 1985). Service climate, a dimension of the psychological climate in an organisation has been studied in the retail and banking sectors as an important source of competitive advantage, particularly in relation to its contribution to high levels of staff and customer satisfaction (Borucki & Burke 1999; Schneider & Bowen 1985; 1993; Schneider, & Reichers 1983; Schneider, Wheeler, & Cox 1992; Schneider, Ehrhart, Mayer, Saltz & Niles-Jolly 2005). This paper explores the relevance of the service climate construct in relation to what

appears to be a relatively unexplored correlate, that of employee well being, in the context of the higher education sector. Whilst there has been recent debate about whether students really have a customer relationship with their university (see for example, Svensson & Wood 2007) most employees of universities are highly cognisant of the fact that students often perceive themselves in a customer role. Many students have expectations about course content, teaching styles and other administrative aspects of service that they equate with the concept of ‘value’ that they receive in exchange for their fees. Moreover, it could be argued that university management often have a propensity to view students as customers given, for example, the intensive marketing activities undertaken and the strong focus placed on student satisfaction data in performance management. Whilst it is beyond the scope of this paper to document historical changes in the higher

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education sector that have lead to the current situation, it is important to acknowledge that these changes have led to increased demands on university staff because they have occurred in an environment of decreasing resources. It is not uncommon to hear academic staff commenting on how the current climate has impacted their perceptions of their role as an educator, in addition to their workload. Research on the well being of university employees shows that both academic and general staff are reporting increasingly high levels of stress (Gillespie, Walsh, Winefield, Dua & Stough 2001). Intense competitive dynamics in the global marketplace has placed increasingly stronger emphasis on improving service climate as a source of competitive advantage. Whilst Schneider and his colleagues (1992, 1993, 2005) have argued that a strong service climate is a source of employee and customer satisfaction, there is little research that investigates how it relates to other aspects of employee well being such as perceived job tension and psychological health. Consequently, the aim of the present study was to investigate a previously unreported relationship in the literature on service climate, that relationship between service climate and indicators of employee well being. This investigation is also undertaken in a new context for research on service climate, namely the higher education sector. The paper commences with a brief review of the theoretical foundations of service climate – namely, the construct of psychological climate. Next, the empirical literature on service climate is reviewed, noting potential links between the dimension of service climate and indicators of employee well being (operationalised in this study as job induced tension, job satisfaction and psychological dysfunction). Six hypotheses to be tested in the present study are integrated into this review.

PSYCHOLOGICAL CLIMATE IN ORGANISATIONS Psychological climate is a valuable construct in any investigation of organisational functioning 156

(Brown & Leigh 1996; James & James 1989). It is defined as a perceptual attribute of the individual regarding the organisational context (James & Jones 1974). These perceptions provide a cognitive map of how the organisation functions and therefore help individuals determine the appropriate attitudes and behaviour within that organisation (Schneider & Reichers 1983). Psychological climate is theorised as a mediator between objective characteristics of the work environment and employee attitudes and behaviours (Day & Bedeian 1991). The literature provides considerable support for the role of psychological climate in predicting employee attitudes. A recent meta-analytic review of over 100 studies showed that psychological climate had a consistently strong effect on employees’ job satisfaction; which in turn predicted motivation and performance (Parker, Baltes, Young, Huff, Altmann, Lacost, & Roberts 2003). Current conceptualisations of psychological climate arise from two broad theoretical perspectives: the social constructionist and multiple stakeholder approaches. The social constructionist approach conceptualises psychological climate as applied to specific referents (Schneider & Reichers 1983, Rousseau 1988) such as customer service (Schneider & Bowen 1993), creativity and innovation (Ekvall 1996), or safety (Flin, Mearns, O’Connor, & Bryden 2000). It has been reported that studies using referent measures of climate produce stronger relationships with specific organisational outcomes than more global measures (Schneider et al 1992). The multiple stakeholder approach to psychological climate emphasises employee perceptions of the way the organisation impacts on stakeholders as determinants of a range of broader employee attitudes towards the organisation (Burke, Borucki, & Hurley 1992). Stakeholders are those groups within or outside an organisation, who have a stake in the performance of the organisation and are therefore affected by its actions, for example customers and shareholders (Roberts & King 1989). Students are obviously

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more readily conceptualised as stakeholders than customers. Burke, Borucki and Kauffman (2002) provided a theoretical rationale for the multiple stakeholder perspective in climate research: (1) employees are aware of and sensitised to, customer needs and organisational practices in relation to the provision of service; (2) employees are likely to affix meaning to environmental attributes on the basis of evaluations or cognitive appraisals of how the attribute impacts on their well being; and (3) employees may cognitively appraise their work environment in terms of what is meaningful not only to their own well being, but also to the well being of stakeholders. Hence, service climate is conceptualised as a dimension of psychological climate that draws on both the social constructionist and multiple stakeholder theories by reflecting employee perceptions that service is important to the organisation and a shared desire among employees to work together to serve the client (Parasuraman 1987). Service climate is distinct from the construct of service orientation which is a more trait based, dispositional construct (Chandrasekhar 2001), or characteristic of the individual, rather than a product of the interaction between the individual and the organisational environment. In the present study, service climate represents employee perceptions of how well the university serves one of its major stakeholder groups (students).

S ER V I C E

CLIMATE

Whilst there is considerable evidence supporting the link between psychological climate and job satisfaction in the literature reviewed above, there is also empirical support for a relationship between the dimension of service climate in an organisation and outcomes such as satisfaction, work effort and performance (see Liao & Chuang 2004; Yoon, Beatty & Suh 2001). In an initial exploration of the applicability of service climate in higher education, Martin, Kennedy and Stocks (2006) developed and tested a measure of university service climate and found significant links with job satisfaction, organisational

commitment and turnover intentions amongst staff. Hence, in any study of service climate, it would not be unexpected to find a relationship with job satisfaction. Although not the focus of the present research, job satisfaction will be measured in order to examine effects on well being independent of those on job satisfaction. H1: Service climate will have a main, positive effect on job satisfaction Importantly, this link has been shown to have implications for customer evaluations of service received. The proposed mechanism for this relationship is that employee attitudes, such as job satisfaction, positively influence customer satisfaction via service transactions. That is, aspects of the climate of an organisation are visible to the customer due to the psychological and physical proximity between employees and customers during service interactions (Borucki & Burke 1999; Schneider & Bowen 1993; Schneider et al 1992; Liao, & Chuang 2004). Further, the ‘contagion hypothesis’ proposes that customers may experience the expressed emotions of employees (a result of high or low levels of job satisfaction), thereby affecting the customer’s experience of service and contributing to their evaluations of it (Griffith 2001). Given the close contact and potential for emotional exchanges between students and staff, it would not be unexpected to find similar processes occurring in a university setting. Indeed, Martin et al (2006) found a positive relationship between students’ perceptions of service climate and satisfaction with the quality of teaching they received and with their course overall. Whilst employee well being is the focus of the present study and links with customer satisfaction are not measured here, it is an important potential outcome of service climate that should be investigated in the same way that the ‘emotional contagion’ of job satisfaction has been. The literature reviewed above suggests that service climate is a source of competitive advantage in terms of its function as a source of

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employee and customer satisfaction. However, Michela, Lukaszwski and Allegrante (1995) argued that aspects of workers’ experiences included within the climate concept are potential stressors and can serve to broaden the range of variables or conditions examined for their stressful effects. Stressors in the work environment are appraised by employees and are reflected in measures of perceived work stress, or job tension. When coping strategies enacted to manage these stressors are not successful, strain or psychological dysfunction can result (Lazarus & Folkman 1984). Although there are a range of individual and environmental factors that impact psychological health, prospective studies of very large samples of employees have shown that work related stressors represent a major risk factor for psychological dysfunction, particularly the development of depression and anxiety symptoms (Ferrie, Head, Shipley, Vahtera, Marmot & Kivimaki 2006). The costs of employee psychological dysfunction to organisations and communities are also well documented (Quick, Quick, Nelson & Hurrell 1997). For example, job stress has been found to predict reduced performance in customer service employees (Varca 1999). Dormann and Zapf (2004) investigated the link between customer-related social stressors and burnout, finding that factors such as ambiguous customer expectations and customer verbal aggression predicted employee burnout beyond a variety of control variables. Whilst their study examined the individual’s experience of certain customer related stressors, it does not address the impact of service climate, or employee perceptions about the importance of customers, on individual employee well being indicators. One study has examined the link between service climate and the appraisal of a specific stressor, the experience of organisational change in a hospital setting. Martin, Jones and Callan (2005) failed to find a relationship between measures of service climate and the perceived stress of organisational change or general psychological well being. These relationships were 158

expected to be significant, given that it has been argued that the desire to satisfy clients provides a level of continuity, direction and control that may help to reduce the stress of change and facilitate positive adjustment (Harber, Ashkanasy, & Callan 1997). Despite these insignificant findings and a lack of empirical data to guide the predictions of the current study, the present research aims to further explore the relationship between service climate and employee well being in a different setting, namely the higher education sector. It could be argued that feelings of frustration may result from the perception that the organisation is failing to serve its major stakeholders. Thus, the perceived satisfaction of clients could impact on levels of job induced tension by acting as resource that buffers the stress response. That is, the perception that the organisation is serving clients well may result in feelings of pride and confidence, thereby increasing selfefficacy (a key variable in studies of work stress) and reducing perceived job stress. H2: Service climate will have a main, negative effect on job-induced tension Studies of psychological health have found both direct effects of stressors on strain (dysfunction) and indirect effects via perceived stress - the individual’s response to the environmental conditions they experience (Quick et al 1997). H3: Service climate will have an indirect effect on psychological dysfunction, mediated by job-induced tension. As discussed earlier in the paper, we also know that high levels of perceived job stress have an impact on general indicators of psychological dysfunction such as depression and anxiety (Ferrie et al 2006; Lazarus & Folkman 1984; Quick et al 1997). H4: Job-induced tension will have a main, positive effect on psychological dysfunction. In addition, sources of stress in the work environment and levels of resultant perceived job

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stress are consistently associated with lower levels of job satisfaction (Baglioni, Cooper, & Hingley 1990). To supplement the investigation of employee well being, job satisfaction is included as a model variable due to its significant relationship to both service climate and generic studies of job stress. H5: Job-induced tension will have a main, negative effect on job satisfaction. H6: Service climate will have an indirect effect on job satisfaction, mediated by job-induced tension.

A IMS

OF THE PRESENT STUDY

An integrated model based on the literature review and hypotheses generated above is simultaneously tested in the present study. The research aims to contribute to the both the employee well being and service climate literature. The model tested examines the predicted associations between service climate and jobinduced tension, job satisfaction and psychological dysfunction as indicators of employee well being. This investigation is undertaken in the context of the university environment where it is argued that the increasing ‘consumerisation’ of students may be a source of job pressure for university staff.

M ETHOD Sample

of the participants were between 31 and 50 years of age (57.3%). Of the remaining subjects 19.5% were 30 years of age or younger, while 23.2% were 51 years of age or older. Academic staff comprised 39.7% of the sample and 60.3% of subjects were general staff encompassing a wide range of job types such as administration, finance, marketing and maintenance. More than three-quarters of the sample had been employed by the university for three or more years. The approximate response rate was 25% (calculated from 1310 full-time equivalent staff ). Whilst this rate is slightly lower than desirable, as noted by Baruch (1999) response rates in management studies are declining. However, it can be argued that the sample was representative of the population studied as shown in Table 1 (demographic statistics of the sample, as compared to the actual staff demographic profile). The academic and general staff groups were combined into one sample to allow a sample size that would allow a more robust application of the analytic technique employed (structural equation modelling). Three ANOVAs were conducted to check that there were no significant differences for the academic/ general staff groups, gender or age groups for any of the dependent variables in the study. The results for each of these was non-significant (Job tension F, 0.32 (2); P = 0.7; Job satisfaction F, 2.3 (2); P = 0.1; Psychological dysfunction F, 0.71 (2); P = 0.5).

M e a s u r es

Three hundred and forty voluntary respondents were drawn from three campuses of a long established, regional Australian university. Both academic and general staff from all divisions and faculties of the university were invited to participate by completing an online questionnaire (or on paper if preferred). The questionnaire was promoted to staff through e-mail, the staff intranet, heads of faculties and divisions and posters displayed on the largest campus. The percentage of males and females in the sample was 43.9% and 56.1% respectively. Most

Service climate was measured using the six-item measure developed by Martin, Kennedy and Stocks (2006). The items measure employees perceptions about the level of service provided by the university to its students (or customers) using a five-point likert scale (1 = ‘strongly disagree’ to 5 = ‘strongly agree’) eg ‘This university provides good quality academic training to students’. Job-induced tension was measured using a subscale of House and Rizzo’s (1972) Anxiety and Stress Questionnaire. The seven-item scale assesses employees perceptions of the effects of their

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Angela Martin TA B L E 1 : D E M O G R A P H I C P R O F I L E Demographic

Description

Gender

OF

PA R T I C I PA N T S F re q u e n c y

S a m p l e P e rcent

S t a t i s t i c s S t a ff

Female

189

56.1

51.5

Male

148

43.9

48.5

Job Type

Academic

126

38.1

41.4

General staff

205

61.9

58.6

Division

1

52

16.0

17.6

2

18

5.5

6.4

3

32

9.8

7.8

4

29

8.5

5.3

1

67

20.6

19.0

2

20

6.1

8.5

3

52

16.0

13.4

4

54

16.6

15.5

1

38

17.8

14.9

2

172

80.8

81.7

3

3

1.4

1.3

Faculty

Campus

job on their psychological health using a 5-point Likert scale (1 = ‘strongly disagree’ to 5 = ‘strongly agree’) eg ‘I work under a great deal of tension’. Recent usage of this scale by Liu, Perrewé, Hochwarter and Kacmar (2004) reported good reliability. Job satisfaction was assessed using the intrinsic satisfaction sub-scale from Warr, Cook and Wall’s (1979) job satisfaction measure. The measure continues to be widely used (eg Faragher, Cass & Cooper 2005). The seven-item measure used a seven-point Likert scale (1 = ‘extremely dissatisfied’ to 7 = ‘extremely satisfied’) eg How satisfied are you with ... ‘the recognition you get for good work’. Psychological dysfunction was assessed with six items from Goldberg’s (1972) General Health Questionnaire, an internationally normed and still widely used screening instrument for depression and anxiety disorders. The items used a four-point Likert scale with various scale anchors assessing the frequency of various symptoms eg ‘been able to enjoy your normal day-to-day activities (eg 1 = ‘more so than usual’ to 4 = ‘much less than usual’). 160

RESULTS Data screening for respondent errors and omissions was conducted prior to analysis. Diagnostic procedures conducted on the data revealed that multivariate kurtosis was not marked. Hence, the data were analysed using the maximum likelihood procedure (Bentler & Hu 1995).

T h e m e a s u re m e n t m o d e l Confirmatory factor analysis (CFA) (see Anderson & Gerbing 1988) was used to test the adequacy of the measurement model. The items used to measure each of the theoretical constructs were used as indicators of latent variables. Factor variances were set to one in order to identify the model and a range of model fit and modification indices were computed. The pattern of results from the test of the a priori measurement models indicated that the model showed a reasonably good fit to the data (see Table 1). However, items that had highly correlated residuals or indicated significant cross loading with another latent variable were deleted from the model. Four of the six service climate items, four of the seven job satisfaction and four of the seven job-

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induced tension items were retained in the modified measurement model. All six of the psychological dysfunction items were retained. The modified measurement model yielded an improved pattern of results in terms of the goodness of fit indices (see Table 2) and still demonstrated adequate content validity in representing the constructs of interest. The item content, factor loading and average variance extracted (AVE) for each of the latent variables’ indicators in the final measurement model is provided in Table 3. As noted by Fornell and Larker (1981), a compelling demonstration of convergent validity is a model containing AVE estimates of 0.5 or above which the measurement model in the present research satisfies. The correlations between the latent variables were all within a low to moderate range indicating good discriminant validity (Kline 1988). Fornell and Larker’s (1981) criteria for discriminant validity is that the variance shared among any two factors is less than the variance in the items explained by each of these factors. This was the case in the measurement model presented here, except in relation to the job satisfaction measure (Fornell & Larker 1981). Finally, it is also important to note that none of the measurement error terms were significantly correlated. A one-factor, or baseline, model did not fit the data well and had large and significant chi-square differences when compared with the four-factor measurement model tested in the CFA process described above (see Table 2). It has been suggested that such results provide an indication that common method variance did not pose a subTA B L E 2 : GO O D N E S S

stantial threat to the validity of the measurement model (Harris & Mossholder 1996). This procedure assumes that if method variance is largely responsible for the co-variation among the measures, a single (method) factor model should fit the data well. This step was taken in order to discount the presence of severe method variance.

Test of the structural model Structural equation modelling (using version 6.1 of the EQS program, Bentler 1989) was used to test the utility of the theoretical model proposed in the present research (representing Hypotheses 1-6). The pattern of results from the test of the structural model suggested that the proposed model fitted the data well and all of the direct paths (main effects) were significant providing support for Hypotheses 1, 2, 4 and 5 (β 0.36, CR 6.17, P < 0.001; β -0.20, CR -3.19, P < 0.01; β 0.48, CR 7.01, P < 0.001; β -0.49, CR -8.01, P < 0.001; respectively). In terms of the endogenous variables, the final model explained 4% of the variance in job-induced tension 19 % of the variance in psychological dysfunction and 43% of the variance in job satisfaction. In order to test the mediation hypotheses or indirect effects, the critical values for decomposition of effects (Bentler & Hu 1995) were examined. The relationship between service climate and psychological dysfunction (β -0.09, CR -2.96, P < 0.01) was significantly mediated by job tension, supporting Hypothesis 3. The relationship between service climate and job satisfaction (β 0.10, CR 3.06, P < 0.01) was also statistically mediated by job tension, supporting Hypothesis 6.

OF F I T STAT I S T I C S

Model

a priori measurement model Modified measurement model 1 factor model a priori structural model Direct effects only model Fully mediated model

χ2 ( d f )

χ2 / d f

CFI

GFI

RMSEA

χ2 d i ff

734 (293) *** 357 (129) *** 1991 (135) *** 358 (153) *** 483 (132) *** 399 (132) ***

2.5 2.8 14.7 2.3 3.7 3.0

0.91 0.93 0.45 0.93 0.90 0.92

0.86 0.89 0.49 0.89 0.84 0.88

0.07 0.07 0.20 0.07 0.09 0.08

1634 (6) *** 125 (21) *** 41 (21) **

Note. *** P < 0.001; ** P < 0.01

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Angela Martin TA B L E 3 : S U M M A RY

OF PA R A M E T E R E S T I M AT E S F O R T H E M E A S U R E M E N T M O D E L

Factor loading Items ‘University X’ puts students first ‘University X’ provides good quality academic training to students ‘University X’ is responsive to student needs ‘University X’ provides students with value for their fees I work under a great deal of tension I have felt fidgety or nervous as a result of my job If I had a different job, my health would probably improve Problems associated with my job have kept me awake at night The recognition you get for good work The amount of responsibility you are given Your opportunity to use your abilities The attention paid to suggestions you make Been able to enjoy your normal day-to-day activities Been able to face up to your problems Been feeling unhappy and depressed Been losing confidence in yourself Been thinking of yourself as a worthless person Been feeling reasonably happy all things considered

SC

JT

JS

PD

Av. Var. Ext.

0.74

-

-

-

0.54

0.72 0.86

-

-

-

0.52 0.74

0.76 -

0.80 0.78

-

-

0.58 0.64 0.61

-

0.75

-

-

0.56

-

0.71 -

0.81 0.76 0.77 0.71 -

0.76 0.76 0.85 0.82 0.79 0.85

0.51 0.65 0.58 0.59 0.5 0.58 0.58 0.72 0.68 0.63 0.73

Factor covariances and (cor relations) Service climate (SC) Job-induced tension (JT) Job satisfaction (JS) Psychological dysfunction (PD)

-0.23* 0.75* -0.05

(-0.21*) -0.79* 0.29*

(0.46*) (-0.56*) -0.19*

(-0.06*) (0.44*) (-0.23*)

N.B: all parameter estimates are significant at P < 0.05*

Alternative (or nested) models that could be proposed to account for the relations among the variables were also tested. There was evidence that the final structural model presented above (a hybrid model which contained both direct and mediated paths) compared favourably with a fully mediated model and a model predicting direct effects only. Chi-square difference tests revealed that the differences between each of the alternative models and the final model were significant (see Table 2). These results suggest that the final structural model presented in Figure 1 best represents the relationships found in the data. 162

D ISCUSSION The present study sought to examine the utility of the concept of service climate in a higher education context, specifically in predicting employee well being. The fit of the proposed model and the data collected provided evidence that the service climate construct is associated with two indicators of employee well being (job-induced tension and psychological dysfunction). The results make empirical, theoretical and practical contributions to the literature in a number of ways. The results showed that staff perceptions of service climate, together with job-induced ten-

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Service climate and employee well being in higher education χ2 (df ) 358 (153); χ2 (df ) 2.3; CFI 0.93; GFI 0.89; RMSEA 0.07

Psychological dysfunction

H3 -0.09

Service Climate

Job-induced tension

H2 -0.20

0.48 H4

-0.49 H5 H1 0.36

H6 0.10

Job satisfaction

Main effect (bold)

Mediated effect (italic) F I G U R E 1 : R E S U LTS

OF T H E S T R U C T U R A L M O D E L

sion and an indirect effect of service climate on job-induced tension accounted for 43% of the variance in job satisfaction. Although the relationship between perceived job stress and job satisfaction is well documented, these findings provide further support to the literature on links between service climate and job satisfaction in organisational settings other than banking and retail. Nineteen percent of the variance in psychological dysfunction was explained by the direct effects of job-induced tension and again, a small indirect effect of service climate. Whilst job stress is a well known predictor of employee well being, the finding that service climate explained a modest, but significant amount of variance (4%) in job-induced tension and the resultant indirect effect on psychological dysfunction, broadened the range of outcomes examined in this literature. Thus, this study observed that despite what anecdotal evidence may suggest, employee perceptions that the organisation strongly emphasises customers/stakeholder needs, are reflected in lower levels of job tension, increased job satisfaction and reduced psycholog-

ical dysfunction. This may be because high levels of service climate are a potential source of pride and confidence for an employee (regarding their contribution to a collective effort on behalf of the organisation) and may also reflect a lack of potential sources of pressure such as student complaints and the feeling of not being able serve ‘customers’ well. These findings have practical implications for the management of human resources in the higher education sector. Firstly, both job satisfaction and employee well being have cost implications such as absenteeism and turnover and constitute an important rationale for effective human resource development and occupational health management. It could be argued that another important implication of the relationship between service climate and both job satisfaction and employee well being can be found in relation to performance (eg Parker et al 2003). The sample contained both academic and general staff for whom performance is assessed differently. For academics, both teaching and research performance are vital to the continued levels of funding

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Angela Martin

for their institution. Martin et al (2006) have linked students’ evaluations of teaching and overall course satisfaction with their perceptions of the service climate in the university. However, given the complexity of the methodology required to demonstrate a direct link between staff perceptions of service climate, satisfaction and well being and student evaluations of their learning experience, this mechanism has not yet been established. Research performance may also be affected by service climate, satisfaction and well being, but no specific studies of this link have been reviewed and constitute another important direction for future research. For general staff, administrative effectiveness is likely to provide essential support that can enhance the ability of academic staff to perform well, again this is unexplored. Known antecedents of service climate in an organisation include employee perceptions of the organisation’s (i) human resource practices eg employee training and reward and recognition of employee service performance (ii) responsiveness to consumer input and (iii) the processes and procedures for actual delivery of service to customers eg adequate resources and supportive supervision (Schneider & Bowen 1985; Schneider et al 1992). Basically, employees need to feel that their own needs have been met within the organisation, to effectively meet the needs of customers. Thus, managers must create two related but distinct climates: (i) a climate for service and (ii) a climate for employee well being. Both are necessary conditions for a positive service climate, but alone, neither is sufficient (Schneider & Bowen 1993). As noted in Martin et al (2006) these dimensions may be particularly pertinent in considering policies and management strategies affecting casual or junior teaching staff members who typically have very high levels of contact with students. Schneider and colleagues (2005) recent paper also highlights the importance of unit leaders’ service-focussed behaviour in creating service climate and customer focussed employee behav164

iour, such as modelling service for employees, setting goals for customer satisfaction and providing resources to enable employees to deliver service quality.

Limitations The major limitation of the present study is the cross sectional nature of the survey design and its’ reliance on self-report measures. Thus, a directional relationship (causal link) between service climate and employee well being cannot be claimed on the basis of the structural equation analyses. Given the exploratory and parsimonious nature of the model presented, it should also be noted that the omission of other known predictors of all of the endogenous constructs (eg other climate dimensions and individual dispositional/control variables) may have inflated the effects of the service climate construct. Whilst there are obviously numerous individual differences that may be associated with increased risk of psychological dysfunction, the focus of the present study was on the service climate construct and the research context did not allow for measures of individual factors to be included. Another limitation that should be noted is that the model presented could be considered borderline in relation to some indices of goodness of fit and some items shared more variance than ideal. However, in order to keep the model as close to the a priori predictions as possible, only minimal re-specification was undertaken. Further, as noted by Whetton (1989), applying a well supported theoretical model (albeit with an addition to the outcome variable set) in a new setting is not theoretically instructive, it does demonstrate that the university sector provides an important setting for service climate research. Whilst the findings may be generalised to other universities similar to the one studied in the present research, it is not clear whether the service climate-wellbeing link may be found in other types of professional service work where close relationships exist between employees and important stakeholders or clients. Finally, although screening of the sam-

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ple for direct client contact was not undertaken in the present study, it is arguable that a large proportion of university employees are in direct contact with students.

university staff and highlight the need for further research in the area, particularly for further integration of theories of service climate and employee well being.

Directions for future research

A CKNOWLEDGEMENTS

The measure of service climate utilised in the current research has shown some evidence of construct validity and thus constitutes a promising means of empirically assessing the climate for service in a university. The study also made an important theoretical contribution to both service climate and employee well being research by demonstrating a relationship between focal constructs from these usually quite disparate literatures. Future studies could look beyond single source data, possibly using absenteeism as a proxy for employee well being and include a wider range of climate and individual difference variables. A more ambitious research objective would be to develop a quasiexperimental study of the relationships between students’ perceptions of service climate and staff well being in order to test the ‘emotional contagion hypothesis’ in a reverse direction (Griffith 2001).

Dr Barbara Kennedy and Ms Belinda Stocks are thanked for their contribution to the collection of data analysed in this paper and for their collaboration on a broader project examining service climate in higher education.

CONCLUSIONS This investigation constituted a unique application of the service climate construct in relation to the provision of service in the educational transaction between university staff and students. The study utilised the higher education sector as a research context in order to expand the literature beyond banking and retail studies and explore the impact of changes in the psychological climate in universities. The results of the study supported the empirically documented link between the climate for service in an organisation and job satisfaction, but also showed that it was positively related to a previously unreported outcome, job induced tension and via this relationship has the potential to impact on psychological dysfunction. The results have important implications for the management of

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Angela Martin Day DD and Bedeian AG (1991) Predicting job performance across organizations: The interaction of work orientation and psychological climate. Journal of Management, 17: 589–600. Dormann C and Zapf D (2004) Customer related social stressors and burnout. Journal of Occupational Health Psychology, 9: 61–82. Ekvall G (1996) Organizational climate for creativity and innovation. European Journal of Work and Organizational Psychology, 5: 105–123. Faragher EB, Cass M and Cooper C (2005) The relationship between job satisfaction and health: A meta-analysis. Occupational & Environment Medicine 62: 105–112. Ferrie JE, Head J, Shipley MJ, Vahtera J, Marmot MG and Kivimaki M (2006) Injustice at work and the incidence of psychiatric morbitidy: The Whitehall II study. Occupational &. Environmental Medicine, 63: 443–450. Flin R, Mearns K, O’Connor P and Bryden R (2000) Safety climate: Identifying the common features. Safety Science, 34: 177–192. Fornell C and Larker DF (1981) Structural equation models with unobservable variables and measurement error: Algebra and statistics. Journal of Marketing Research, 28: 382–388. Griffith J (2001) Do satisfied employees satisfy customers? Support-services staff morale and satisfaction among public school administrators, students and parents. Journal of Applied Social Psychology 31: 1627–1658. Gillespie NA, Walsh M, Winefield AH, Dua J and Stough C (2001) Occupational stress in universities: Staff perceptions of the causes, consequences and moderators of stress. Work and Stress, 15: 53–72. Goldberg DP (1972) The Detection of Psychiatric Illnesses by Questionnaire. Oxford: Oxford University Press. Harber DG, Ashkanasy NM and Callan VJ (1997) Implementing quality service in a public hospital setting: A path-analytical study of organisational antecedents of employee perceptions and outcomes. Public Productivity and Management Review, 21: 13–29. Harris SG and Mossholder KW (1996) The affective implications of perceived congruence with culture dimensions during organisational transformation. Journal of Management, 22: 527–547. House RJ and Rizzo JR (1972) Role conflict and ambiguity as critical variables in a model of 166

organisational behaviour. Organizational Behaviour and Human Performance, 7: 467–505. James LA and James LR (1989) Integrating work environment perceptions: Explorations into the measurement of meaning. Journal of Applied Psychology, 74: 739-751. James LR and Jones AP (1974) Organizational climate: A review of theory & research. Psychological Bulletin, 81: 1096–1112. Kline RB (1998) Principles and practices of structural equation modelling. London: Guilford Press. Lazarus RS and Folkman S (1984) Stress, Appraisal and Coping. New York: Springer Publishing Company. Liao H and Chuang A (2004) A multilevel investigation of factors influencing employee service performance and customer outcomes. Academy of Management Journal, 47: 41–58. Liu Y, Perrewé P, Hochwarter WA and Kacmar CJ (2004) Dispositional antecedents and consequences of emotional labor at work. Journal of Leadership & Organizational Studies, 10: 12–25. Martin AJ, Jones ES and Callan VJ (2005) The role of psychological climate in facilitating employee adjustment during organisational change. European Journal of Work and Organizational Psychology, 14: 263–289. Martin AJ, Kennedy B and Stocks B (2006) Academic service climate as a source of competitive advantage: Leverage for university administrators. Education Research and Perspectives,forthcoming. Michela JL, Lukaszwski MP and Allengrante JP (1995) Organisational climate and work stress: A general framework applied to inner-city schoolteachers. In Sauter SL and Murphy LR (Eds) (1995) Organisational risk factors for job stress. Washington, D.C.: American Psychological Association, pp. 61–80. Parasuraman A (1987) Customer-oriented corporate cultures are crucial to services marketing success. Journal of Services Marketing, 1: 39–46. Parker CP, Baltes BB, Young SA, Huff JW, Altmann RA, Lacost HA and Roberts JE (2003) Relationships between psychological climate perceptions and work outcomes: A meta-analytic review. Journal of Organizational Behaviour, 24: 389–416. Quick JC, Quick JD, Nelson DL and Hurrell JJ (1997) Preventative Stress Management in Organizations. Washington, D.C.: American Psychological Association.

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Service climate and employee well being in higher education Roberts NC and King PJ (1989) The stakeholder audit goes public. Organizational Dynamics, 17: 63–79. Rousseau DM (1985) Issues of level in organisational research: Multi-level and crosslevel perspectives. Research in Organisational Behaviour, 7: 1–37. Schneider B and Bowen DE (1985) Employee and customer perceptions of service in banks: Replication and extension. Journal of Applied Psychology, 70: 423–433. Schneider B and Bowen DE (1993) The service organisation: Human resources management is crucial. Organizational Dynamics, 21: 39–52. Schneider B, Ehrhart MG, Mayer DM, Saltz JL and Niles-Jolly K (2005) Understanding organisation-customer links in service settings. Academy of Management Journal, 48: 1017–1032. Schneider B and Reichers AE (1983) On the etiology of climates. Personnel Psychology, 36: 19–39. Schneider B, Wheeler JK and Cox J (1992) A passion for service: Using content analysis to

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explicate service climate themes. Journal of Applied Psychology, 7: 705–716. Svensson G and Wood G (2007) Are university students really customers? When illusion may lead to delusion for all! International Journal of Educational Management, 21: 17–28. Varca PE (1999) Work stress and customer service delivery. The Journal of Services Marketing, 13: 229–241. Warr PB, Cook J, Wall TD (1979) Scales for the measurement of some work attitudes and aspects of psychological well being. Journal of Occupational Psychology, 52: 129–148. Whetton DA (1989).What constitutes a theoretical contribution? Academy of Management Review, 14: 490–495. Yoon MH, Beatty SE and Suh J (2001) The effect of work climate on critical employee and customer outcomes: An employee-level analysis. International Journal of Service Industry Management, 12: 500–521. Received 28 February 2007 Accepted 17 October 2007

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Service staff attitudes, organisational practices and performance drivers A MANDA B EATSON Faculty of Business, Queensland University of Technology, Brisbane QLD, Australia

I AN L INGS Associate Professor, School of Advertising, Marketing and PR, Queensland University of Technology, Brisbane, Australia SIEGFRIED P G UDERGAN School of Marketing, University of Technology, Sydney, Broadway NSW, Australia ABSTRACT We provide conceptual and empirical insights elucidating how organisational practices influence service staff attitudes and behaviours and how the latter set affects organisational performance drivers. Our analyses suggest that service organisations can enhance their performance by putting in place strategies and practices that strengthen the service-oriented behaviours of their employees and reduce their intentions to leave the organisation. Improved performance is accomplished through both the delivery of high quality services (enhancing organisational effectiveness) and the maintenance of front-line staff (increasing organisational efficiency). Specifically, service-oriented business strategies in the form of organisational-level service orientation and practices in the form of training directly influence the manifest service-oriented behaviours of staff. Training also indirectly affects the intention of front-line staff to leave the organisation; it increases job satisfaction, which, in turn has an impact on affective commitment. Both affective and instrumental commitment were hypothesised to reduce the intentions of front-line staff to leave the organisation, however only affective commitment had a significant effect. Keywords: research paper; service training; service orientation; staff attitudes and behaviours; organisational performance drivers

T

he successful management of front-line staff is important for service organisations. Frontline staff link the organisation with its customers (Babin & Boles 1998) and customers make evaluative judgments of the service quality delivered by these staff. Consequently, the behaviours and attitudes of front-line staff that provide services are

168

crucial for the positive evaluation of services by customer (Bienstock, DeMoranville & Smith 2003). Organisational strategies and practices affect these front-line staff attitudes and behaviours (Gonzalez & Garazo 2005) and it is important to understand the specific organisational factors that influence those staff attitudes which

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subsequently influence behavior towards customers and the firm (Babin & Boles 1998). The focus of this study is on this issue precisely; we investigate the relationship between organisational strategies and practices directed at customers and staff (captured in organisational-level service strategies and staff training) and front-line service staff attitude towards their job and service delivery (such as individual-level service orientation, job satisfaction, affective and instrumental commitment and intentions to leave the organisation). The reasons for examining the effects of organisational strategies and practices on frontline staff attitudes are numerous. The most crucial can be linked back to an organisation’s performance. Strongly held attitudes are thought to predict behaviours associated with those attitudes (Ajzen 1991). Consequently, service-orientated attitudes of staff predict service-oriented behaviours of front-line service staff; and these service behaviours positively impact customers’ evaluations of the service that they receive (Homburg, Hoyer & Fassnacht 2002); hence enhancing the organisation’s effectiveness. Additionally, low front-line service staff turnover reduces hiring and training-related investments, increasing the efficiency and performance of the organisation (Sager, Futrell & Varadarajan 1989). It is within the context of this logic that this paper provides additional insights into the impact of organisational practices towards their front-line service staff. Thus, strategies and practices that can both enhance the attitudes of staff towards service delivery and reduce the turnover of staff are likely to enhance the performance of service organisations. This is likely to lead to more satisfactory service encounters at the employee–customer interface.

CONCEPTUAL

MODEL

The rationale of the conceptual model outlined in this section is that organisational strategies and practices are the thrust underlying the performance of an organisation as discussed previously. In the following sections we provide some

understanding of how precisely organisational strategies, routines and associated directives influence the attitudes of service staff, so that ultimately, their performance can be managed successfully. Such an understanding provides the basis for adopting employment practices that are effective in managing service staff and delivering quality services.

Or g a n i s a t i o n a l p r a c t i c e s a n d r o u t i n e s One such organisational routine is the enactment of service-orientated business practices (Homburg, Hoyer & Fassnacht 2002). Enactment of such service-oriented business practices implies that an organisation demonstrates commitment to services and meeting customer’s needs through appropriate service delivery. This can be captured in the notion of organisational climate (Schnieder & Bowen 1985). This organisational-level service orientation influences frontline service employee attitudes and subsequent behaviours, in a manner that facilitates the delivery of high quality services. Consequently it plays an important role in creating positive customer experiences with the organisation (Lytle, Hom & Mokwa 1998; Yoon, Choi & Park 2007). Service-oriented business strategy influences the service-oriented climate of the organisation. Acculturation into this service-oriented climate influences the attitudes that employees hold and directs the way that they treat customers. This is manifest in the employee’s perceptions of their work environment (Hartline, Maxham & McKee 2000). When the organisation recognises the importance of customer service and impresses the importance of service delivery on its employees, employees’ attitudes to service provision and satisfying customers’ needs become more positive. In keeping with past research we hypothesise that adopting a service-oriented business strategy will have a direct impact on the staff member’s individual-level service orientation. That is, the importance that individual staff place on customer service will be dependent on the organisational

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Amanda Beatson, Ian Lings and Siegfried P Gudergan

H3: The greater the training the stronger the job satisfaction reported by front-line staff.

espoused value of meeting and serving customer needs. Therefore, we suggest the following effect; Hypothesis 1 (H1): The greater the business oriented service strategy the stronger the service orientation of front-line staff. Another organisational-level practice which has been shown to affect employee attitudes and behaviours is training (Hart 1994). The importance of providing front-line staff with appropriate training is well recognised (Bitner, Booms & Mohr 1994). Training influences the manner with which staff approach customer service and in particular their service orientation (Chung & Schneider 2002; Yoon et al 2007). When staff are given appropriate training on how to provide customers with the service they require, their level of service orientation increases. Staff may display weak commitment to service behavior if they do not have the skills to deliver high quality services. Amongst other things, service employees require training to understand the service delivery systems of the organisation, to become confident in managing the many and numerous interactions involved in the service encounter (such as those with the firm and its servicescape, the individual and other customers). Consequently, we conclude with the following argument; H2: The greater the training the stronger the service orientation of front-line staff. Training also has a direct impact on job satisfaction (Hart, Heskett & Sasser 1990; Tax & Brown 1998). Job satisfaction is the extent to which an employee feels positively about their job (Lytle & Timmerman 2006; Boxx & Dunn 1990). Not only does training equip staff with the relevant information to execute their jobs, it also demonstrates to staff that they are valued by their employer and are worth investing in. Both of these elements contribute positively to their level of job satisfaction. With that in mind, we put the following argument forward; 170

Employee attitudes The relationship of job satisfaction with employee attitudes is well recognised (Lok & Crawford 2004). The level of satisfaction that front-line staff feel towards their work environment is likely to have an impact on their attitude to service (Lytle & Timmerman 2006). When staff enjoy their jobs they are more likely to value the firm’s customers and want to ensure that these customers are happy with the service they receive. The way that these staff can do this is by delivering good service and fulfilling customers’ needs. Thus, if staff are satisfied with their jobs, they are more likely to develop positive attitudes towards service-oriented behaviours, therefore placing importance on serving the customer and delivering services that are valued by them (Gonzalez & Garazo 2006). This logic gives rise to the following hypothesis: H4: The greater the satisfaction of front-line staff with their jobs the stronger their serviceorientation. Previous research has indicated that staff who exhibit high levels of job satisfaction are also likely to be more committed to their organisation (Lok & Crawford 2004; Fletcher & Williams 1996). Therefore, those staff that experience high levels of job satisfaction will also experience positive feelings (affective commitment) toward their employer (Saura, Contríí, Taulet & Veláázquez 2005). In this context, affective commitment represents a desire to continue working with an employer because of a liking, or a positive attitude toward the organisation. This positive affect is sometimes referred to as ‘psychological attachment’ (Gabarino & Johnson 1990) and is derived from the emotional pleasure of staying with an employer (Allen & Meyer 1990). Consequently, we put the following hypothesis forward;

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H5: The greater the satisfaction of front-line staff with their jobs the greater their affective commitment to the organisation.

Or g a n i s a t i o n a l p e r f o r m a n c e d r i v e r s Affective commitment has a beneficial impact on employee behavior and their comfort in their work role (Allen & Meyer 1990). A staff member’s commitment has a positive effect on their intention to remain with an organisation (Yongcourt et al 2007). With that in mind, we anticipate that when staff experience affective commitment toward their employer, they are less likely to want to leave that organisation. Strengthening affective commitment would accordingly reduce staff turnover intentions and increase the overall efficiency of the service organisation. Specifically, in the context of this research, we argue; H6: The greater the affective commitment of front-line staff to the organisation the weaker their intentions to leave. We also argue that affective commitment to the organisation will positively influence the service orientation displayed by front-line service staff. Through organisational commitment, staff are mobilised in the development of the organisation’s goals, purposes and infrastructure which would manifest itself in their commitment to service (Kim, Leong & Lee 2005). Thus, when front-line service staff like their organisation, they are more likely to represent the organisation in the best possible way and consequently have a more positive attitude towards serving customers better. This gives rise to the following hypothesis; H7: The greater the affective commitment of front-line staff to the organisation the stronger their service-orientation. Notwithstanding the role of affective commitment, employees often remain with an organisation because they feel they are unable to leave. Instrumental commitment reflects the notion that employees stay with their organisation

because of the existence of perceived costs and barriers associated with leaving the organisation (Gundlach, Achrol & Mentzer 1995). In other words employees perceive a lack of suitable alternatives to their current employment. The costs of leaving arise from the amount of time it takes to find a new employer of the same quality (Allen & Meyer 1990) and these costs reduce leaving intentions (Sager, Futrell & Varadarajan 1989). That is, when there is a perceived lack of suitable alternative employment, employees are more likely to remain with their employer. Thus, we suggest; H8: The greater the instrumental commitment of front-line staff to the organisation the weaker their intentions to leave. In conclusion, our conceptualisation builds on the assumption that organisational-level service orientation influences the attitude of front-line service staff to service delivery (service orientation). In addition, we argue that the latter is directly and indirectly affected by the training offered to the staff. Furthermore, intention to leave is influenced by the instrumental and affective commitment of staff with the latter being affected by the training provided. This conceptual framework provides a basis for understanding organisational routines (service orientation and training) on employee attitudes and behavior. An illustration of the conceptual model representing the hypothesised relationships is provided in Figure 1.

R ESEARCH

METHODOLOGY

The context chosen for this study is service staff working in the travel industry. The survey was administered to front-line staff serving both business and leisure travelers. These staff have a high degree of contact with customers and the selected employing organisation competes on the quality of service that it provides; thus, providing a suitable context for the purpose of our study. Questionnaires were administered and responses

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Amanda Beatson, Ian Lings and Siegfried P Gudergan Organizational Practices and Routines

Employee Attitudes

Service oriented business strategy

Organizational Performance Drivers

H 1+

Service Orientation

H 2+

H 4+

Service Tr aining

H3+

Job Satisfaction

H5+

H 7+

Affective Commitment

H 6Instr umental Commitment

FIGURE 1 : SER VICE

O R I E N TAT I O N A S A P R A C T I C E A N D A P E R F O R M A N C E D R I V E R

posted anonymously to the researchers. In total 60 questionnaires were administered and 53 usable responses were received. This corresponded to an effective response rate of 88%. Service employees were chosen as respondents because of their unique influence on the service quality perceptions of customers (Bell, Menguc & Stefani 2004). Furthermore, even though the sample represents a single organisation, the unit of analysis is the individual member of staff and differences in these individual’s behavior are expected to derive from differences in their perceptions of the organisational practices that they experience and interpret. Consequently, it is expected that there will be sufficient variability across respondents for the constructs of interest to adequately test the hypotheses developed above. All constructs in this study are measured using adaptations of existing scales used in the marketing and psychology literatures (see for example Allen & Meyer 1990; Lytle, Hom & Mokwa 1998; Kelley 1992; Babin & Boles 1998; Singh, Verbeke & Rhoads 1996). Responses were cap172

H8-

Intention To Leave

tured using seven-point, reflective multiple-item scales anchored at strongly agree and strongly disagree.

M e a s u r es Service training was measured using three items adapted from Lytle al (1998) tapping into employees’ perceptions of the amount and applicability of service training that they receive. Two example items are: ‘I am provided with personal skills training that enhances my ability to deliver high quality services’ and ‘This Company spends a great deal of time and effort in training activities to help me provide high levels of service’. Job satisfaction has been operationalised in this study as the employee’s emotional attitude toward their employer and how content they feel with their current employment. It was measured using items adapted from scales reported by Cammann, Fichman, Jenkins and Klesh (1998) Aryee, Fields and Luk (1999). Items included: ‘I feel satisfied with my present job’ and ‘I am happy that I took this job’.

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Affective commitment was measured using an adaptation of the scales reported by Garbarino and Johnson (1999) and Allen and Meyer (1990). Three example items from the four items used are: ‘They feel a sense of belonging to this company’, They are committed to their relationship with the company’, and ‘They are loyal to this company’. The scale was modified to tap into the feelings of employees towards the firm. As suggested by Podsakoff, MacKenzie, Lee and Podsakoff (2003), employees were asked to report the feelings of their co-workers to minimise social desirability bias. Instrumental commitment was measured using seven items, which were modified from Gundlach al (1995) and Morgan and Hunt (1994). The items that were used explored employees’ perceptions about the costs involved to change employers. Example items include; ‘Moving to another employer is not worth the effort’ and ‘I would have to invest a lot of time and effort to find another employer of equal standard’. Service-orientation of the front-line staff was measured using seven items, either adapted from the items reported by Lytle al (1998) and Saura al (2005) or designed specifically for this study. These designed items tapped into the employees’ attitudes towards delivering quality services as identified by Parasuraman, Zeithaml and Berry (1998). Example items of the seven used in the survey include: ‘I provide prompt service’, ‘I am committed to service’ and ‘I view customer interactions as opportunities to please’. Intentions to leave was measured using Singh (2000). The three items used tapped into the likelihood of the employee leaving the organisation. The items used were ‘It is likely that I will actively look for a new job next year’, ‘I often think of quitting’ and I will probably look for a new job next year’.

A s s e s s m e n t o f v a l i d i t y a n d re l i a b i l i t y In order to achieve content validity we undertook an in-depth literature search to define the domain of the research and we used established

scales to measure the constructs in the study. The adequacy of the measurement model was addressed by evaluating the reliability of individual items, the internal consistency between items expected to measure the same construct and the discriminant validity between constructs (White et al 2003). The loadings of measures onto their corresponding constructs were examined to assess individual item reliability, and in all cases we retained only items with factor loadings greater than 0.5 as suggested by Hulland (1999). The majority of item loadings (35 from 37) exceeded 0.7. Internal consistency was examined using coefficient α measures (Carmines & Zeller 1979; Churchill 1999). All coefficient α measures exceeded the 0.7 cut off suggested by Nunnally (1978) indicating adequate internal consistency for each of the scales in this study. The average variance extracted for each scale also exceeded the recommended minimum of 50%. A full list of items and the AVE and coefficient α for all scales are shown in Appendix 1. The discriminant validity of the constructs was assured by ensuring that no item loaded onto any other construct more strongly than it did on its associated construct (White et al 2003). Accordingly, the measurement properties suggest a sufficient basis for testing the theoretical relationships between our constructs embedded on our structural model.

RESULTS The conceptual model was tested using the partial least squares (PLS) structural equations modeling technique (Wold 1985), employing SmartPLS V2M3 software (Ringle, Wende & Will 2005). PLS is adopted because of its suitability to analyse data from small samples (Sambamurthy & Chin 1994; Sosik, Avolio & Kahai 1997). PLS estimation requires a minimum sample size 10 times greater of either the number of items comprising the most formative construct or the number of independent constructs directly influencing a dependent construct (eg Wixom & Watson 2001: 28). In this case, we had no form-

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ative scales so the minimum sample size is 30 (10 times the maximum number of independent constructs directly influencing a dependent construct; service orientation is hypothesised to be influenced by three independent constructs). PLS does not make assumptions about data distributions to estimate model parameters, observation independence or variable metrics, making a more suitable technique for analysing these data than other SEM techniques which requires multivariate normality, interval scaled data and large sample size (Jung & Sosik 2002). Overall, the estimated model explains sufficient variance in the performance drivers, which the model aims at explaining; the r-square for service-orientation of staff is 0.487; and for intentions to leave is 0.350. The r-squares for our intermediated constructs of job satisfaction and affective commitment are 0.581 and 0.588 respectively. These r-square values suggest that our model is capable of providing insight into the variations we are interested in studying. The path coefficients and t-values are listed in Table 1 and indicate support for H1, suggesting that employees’ perceptions of the level of service orientated strategy of the firm (its service objectives, procedures and delivery expectations) has a significant and substantial influence on their personal attitudes to service delivery. This is in line with our expectations as awareness of the service TA B L E 1 : R E S U LTS

OF

culture and ambitions of the organisation would be expected to influence the attitudes that individuals hold towards delivering quality services to customers. This finding emphasises the importance of communicating the organisation’s service objectives to all staff involved in the delivery of service to customers. Interestingly, H2 did not find significant support in our data suggesting that training did not have a significant direct effect on the service orientation of staff; rather training significantly and positively influenced the satisfaction of staff with their jobs (H3) providing additional evidence to verify the assertions of Hart al (1990) and Tax and Brown (1998). Our results suggest that training had a significant impact on the service orientation of staff (H4). Our results suggest that training opportunities account for approximately 75% of the variation in job satisfaction of these employees. This is a much higher impact than was envisaged at the outset of the study but may be explained by the relative satisfaction of these staff with other job related hygiene factors such as levels of pay. We predicted that job satisfaction would have a significant and positive influence on the attitudes of service staff, both to the firm and its customers. Our results suggest that job satisfaction does indeed influence the staff attitudes to the firm and its customers. The relationship between job satisfaction and service orientation (H4) is significant

P L S PATH A N A LY S I S

H1 : s e r v i c e o r i e n t e d b u s i n e s s s t r a t e g y – ( + ) – > s e r v i c e o r i e n t a t i o n o f f ro n t - l i n e s t a ff . H2 : service training –(+)–>service orientation of front-line staff. H3 : s e r v i c e t r a i n i n g – ( + ) – > j o b s a t i s f a c t i o n H4 : j o b s a t i s f a c t i o n – ( + ) – > s e r v i c e - o r i e n t a t i o n o f f ro n t - l i n e s t a ff . H5 : j o b s a t i s f a c t i o n – ( + ) – > a ff e c t i v e c o m m i t m e n t H6 : a ff e c t i v e c o m m i t m e n t – ( - ) – > i n t e n t i o n t o l e a v e H7 : affective commitment–(+)–> service-orientation of front-line staff. H8 : instrumental commitment –(-)–> intention to leave

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Beta

T-value (critical |tt | = 2.006) P = 0.05, n = 53, 2-tailed

0.458

3.503

0.104 0.762

0.712 14.283

0.380

2.252

0.767

11.754

-0.520

3.520

-0.053

0.566

-0.101

0.842

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and substantive with job satisfaction predicting approximately 38% of the variance in service orientation. Job satisfaction was also found to significantly and positively influence staff attitudes to the firm; and predicted approximately 3/4 of the variation in affective commitment of staff to the organisation (H5) which in turn predicts approximately 50% of intentions to leave (H6). This is in line with previous assertions in the literature: Price, Curry, Wakefield and Mueller (1986), and Rusbult and Farrell (1983) all report negative relationships between employee satisfaction and employee turnover. Our results suggest that affective commitment did not significantly predict the service-oriented attitudes of staff as we had predicted (H7). This may be explained by the focus of the attitudes in these two constructs. Affective commitment is an attitude directed to the employer, whereas service orientation is directed to customers. Although we would have expected these two attitudes to be correlated, it appears that employees, at least in this sample, did not associate positive attitudes to their employer with their positive attitudes towards serving the customer in the same way that they appear to have associated their positive feelings about their work (job satisfaction) with positive attitudes to serving the customer. This result appears to provide some evidence to suggest that happy staff are a pre-requisite condition for the firm to create happy customers (see for example, Gummesson 1991; Gronroos 1981; Schneider & Bowen 1985), but not that employees must like their employing organisation in order to wish to serve customers well. A test of the discriminant validity of the measures of job satisfaction and affective commitment reveals that, although moderately correlated (77%), the measures differentiate between the two constructs. Apparently, employees have no problem distinguishing their feelings about their work (job satisfaction) from their feelings about their employer (affective commitment), and it is their feelings about their work that influence how they feel about customers, not their feelings towards the firm.

Finally, with regard to leaving intentions, we do not find support for our hypothesis that instrumental commitment reduces leaving intentions (H8). Instrumental commitment refers to the commitment of employees to the organisation arising from difficulty in obtaining alternative employment or similar pay and conditions. In these data, instrumental commitment did not have a significant effect on the wishes of employees to leave or stay with the firm, unlike affective commitment. This may suggest that instrumental commitment is not a major force driving employee loyalty to this employer and may be a function of the prevailing employment conditions at the time of the research. In this sector and in this region employment levels were high and competition between employers for good staff was prevalent. It may be that under conditions of higher unemployment, staff may well be driven to stay with an employer because of the challenges of finding a suitable alternative.

CONCLUSION This study provides some insight into the relationship between service employees and their employers, and the impact that this relationship may have on relationships between the organisation and its customers. In achieving this we address the call for additional investigation into the factors that influence staff satisfaction, performance and quitting intentions (Babin & Boles 1998). Some preliminary evidence of important organisational initiatives affecting staff attitudes, in particular service-orientation, is reported. Our conceptual arguments and empirical findings suggest that service organisations can enhance their performance by putting in place practices and routines that strengthen the service-oriented attitudes of their employees and reduce their intentions to leave the organisation. Improved performance is accomplished through both the delivery of high-quality services as a result of service-oriented attitudes and consequent behaviours that ultimately enhances the effectiveness of the

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organisation. The retention of front-line staff also increases the organisation’s efficiency. More specifically, our findings show that both organisationallevel service orientated practices and routines and training influence service-oriented attitudes of staff. Organisational practices and routines have a direct impact on service orientation of staff and training has an indirect impact. Training increases staff satisfaction, which in turn influences their positive attitudes to serving the customers. Training also affects indirectly front-line staff ’s intention to leave the organisation (or retention of staff ). It increases job satisfaction, which, in turn, has an impact on affective commitment, which in turn reduces front-line staff ’s intentions to leave the organisation. We provide a framework on which to base further research in this area and from which additional insights into the impact of organisational routines and practices on employee attitudes and behavior and resultant consequences for the organisation’s performance can be explored. Further replications of this work would help examine the stability of our results in other service contexts. Additionally, research in other cultural settings would help increase the generalizability of our findings in regards organisationallevel service orientation practices and associated front-line staff behaviours. This work is not without limitations and further replications should address these if possible. Our research was conducted in one organisational context. Despite the high response rate for our data collection efforts our total sample size was relatively small. Additional data would allow for alternative analyses to be conducted, in particular it would be useful to confirm the results of the PLS analysis using a covariance based SEM analysis technique such as LISREL. Additionally, as all of our data were collected directly from respondents using the same instrument, it is possible that some common method bias is present in the data, including, but not limited to, social desirability bias. Given the small absolute sample size, it is not possible to conduct the usual tests 176

for common method bias, eg Harman (1976). A larger sample size would allow for such tests to be conducted. In addition to collecting more data, future research could address some of the limitations of our study by collecting data from different respondents. We have asked employees to report on their attitudes and have drawn on previous literatures to connect these attitudes with probable behaviours. Future researchers could use alternative techniques to observe employee behaviours directly, for example a mixed method approach could combine direct observation of employee behaviours with self reporting of employees’ feelings and attitudes to their work and the organisation. Alternatively, customers or managers could be surveyed to provide an alternative view of employees’ manifest behaviours, which may be less likely to contain social desirability bias. Finally, the single context of the study presents some limitations, not least of which arise from the uniform nature of the external employment conditions. We noted earlier that the expected impact of instrumental commitment on intentions to leave was not found and this may be due to the favorable employment market in this context. Further research, examining these relationships in contexts with a variety of employment levels and competition for employees would allow for a more interesting examination of the impact of instrumental commitment on employees attitudes towards remaining in their current employment and could provide interesting insights into management practices under different employment market conditions.

R e f e rences Ajzen I (1991) The theory of planned behavior, Organisational Behavior and Human Decision Process, 50: 179–211. Allen NJ and Meyer JP (1990) The measurement and antecedents of affective continuance and normative commitment to the organisation, Journal of Occupational Psychology 63: 1–18. Aryee S, Fields D and Luk V (1999) A crosscultural test of a model of the work-family interface, Journal of Management 25: 491–511.

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Service staff attitudes, organisational practices and performance drivers Babin BJ and Boles JS (1998) Employee behavior in a service environment: A model and test of potential differences between men and women, Journal of Marketing 62: 77–91. Bell SJ, Menguc B and Stefani SL (2004) When customers disappoint: A model of relational internal marketing and customer complaints, Journal of the Academy of Marketing Science 32: 112–126. Bienstock CC, DeMoranville CW and Smith RK (2003) Organisational citizenship behavior and service quality, Journal of Services Marketing 17: 357–378. Bitner MJ, Booms BH and Mohr LA (1994) Critical service encounters: The employee’s viewpoint, Journal of Marketing 58: 95–106. Cammann C, Fichman M, Jenkins D and Klesh J (1998) Assessing the attitudes and perceptions of organisational members. In Seashore S, Lawler E, Mirvis P and Cammann C (Eds) Assessing Organisational Change: A guide to methods, measures and practices, New York: John Wiley. Carmines EG and Zeller RA (Eds) (1979) Reliability and validity assessment. Vol. Series No 07–017, Quantitative Applications in the Social Sciences. Beverley Hills, California: Sage Publications. Chung BG and Schneider B (2002) Serving multiple masters: Role conflict experienced by service employees, Journal of Services Marketing 16: 70–87. Churchill GAJ (1999) Marketing Research: Methodological foundations. 7 edn. Orlando, USA: The Dryden Press. Fletcher C and Williams R (1996) Performance management, job satisfaction and organisational commitment, British Journal of Management 7: 169–179. Garbarino E and Johnson MS (1999) The different roles of satisfaction, trust, and commitment in customer relationships, Journal of Marketing 63: 70–87. Gonzalez JV and Garazo TG (2006) Structural relationships between organisational service orientation, contact employee job satisfaction and citizenship behavior, Journal of Service Industry Management 17: 23–50. Grönroos C (1981) Internal marketing: An integral part of marketing theory. In Donnelly JH and George WR (Eds) Marketing of Services, American Conference Proceedings. Gummesson E (1991) Marketing-orientation revisited: The crucial role of the part-time marketer, European Journal of Marketing 25: 60–75. Gundlach GT, Achrol RS and Mentzer JT (1995) The structure of commitment in exchange, Journal of Marketing 59: 78–92.

Harman, Harry H. (1976) Modern Factor Analysis. Chicago: University of Chicago Press. Hart CWL, Heskett JL and Sasser WE Jr. (1990) The profitable art of service recovery, Harvard Business Review 68: 148–156. Hart PM (1994) Teacher quality of work life: Integrating work experiences, psychological distress and morale, Journal of Occupational and Organisational Psychology 67: 109–132. Hartline MD, Maxham JGI and McKee DO (2000) Corridors of influence in the dissemination of customer-oriented strategy to customer contact service employees, Journal of Marketing 64: 35–50. Homburg C, Hoyer WD and Fassnacht M (2002) Service orientation of a retailer’s business strategy: Dimensions, antecedents, and performance outcomes, Journal of Marketing 66: 86–101. Hulland J (1999) Use of partial least squares (pls) in strategic management research: A review of four recent studies, Strategic Management Journal 20: 195–204. Jung DI and Sosik JJ (2002) Transformational leadership in work groups, Small Group Research 33: 313–336. Kelley SW (1992) Developing customer orientation among service employees, Journal of the Academy of Marketing Science 20: 27–36. Kim WG, Leong JK and Lee Y-K (2005) Effect of service orientation on job satisfaction, organisational commitment, and intention of leaving in a casual dining chain restaurant, International Journal of Hospitality Management 24: 171–193. Lok P and Crawford J (2004) The effect of organisational culture and leadership style on job satisfaction and organisational commitment: A cross-national comparison, Journal of Management Development 23: 321. Lytle, RS and Timmerman, JE (2006) Service orientation and performance: an organisational perspective, Journal of Services Marketing 20 136–147. Lytle RS, Hom PW and Mokwa MP (1998) Serv*or: A managerial measure of organisational serviceorientation, Journal of Retailing 74: 455–489. Morgan RM and Hunt SD (1994) The commitment-trust theory of relationship marketing, Journal of Marketing 58: 20–39. Nunnally JC (1978) Psychometric Theory (2nd edn) New York: McGraw-Hill. Odom RY, Boxx WR and Dunn MG (1990) Organisational cultures, commitments, satisfaction and cohesion, Public Policy and Management Review 14: 157–170.

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Amanda Beatson, Ian Lings and Siegfried P Gudergan Parasuraman A, Zeithaml VA and Berry LL (1988) Servqual: A multiple-item scale for measuring consumer perceptions of service quality, Journal of Retailing 64: 5–6. Podsakoff PM, MacKenzie SB, Lee J-Y and Podsakoff NP (2003) Common method biases in behavioral research: A critical review of the literature and recommended remedies, Journal of Applied Psychology 88: 879–903. Price JL, Curry JP, Wakefield DS and Mueller CW (1986) On the causal ordering of job satisfaction and organisational commitment, Academy of Management Journal 29:847–858. Ringle C.M, Wende S, Will A, (2005) SmartPLS Release: 2.0 (beta) Accessed at http://www.smartpls.de, University of Hamburg, Germany. Rusbult CE and Farrell D (1983) A longitudinal test of the investment model: The impact on job satisfaction, job commitment, and turnover of variations in rewards, costs, alternatives, and investments, Journal of Applied Psychology 68: 429–438. Sager JK, Futrell CM and Varadarajan R (1989) Exploring salesperson turnover: A causal model, Journal of Business Research 18: 303–326. Sambamurthy V and Chin WW (1994) The effects of group attitudes toward alternative GDSS designs on the decision-making performance of computer-supported groups, Decision Sciences 25: 215–241. Saura IG, Contríí GB, Taulet AC and Veláázquez BM (2005) Relationships among customer orientation, service orientation and job satisfaction in financial services, International Journal of Service Industry Management 16: 497–525. Schneider B and Bowen DE (1985) Employee and customer perceptions of service in banks:

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A V A I L A B L E

GLOBAL SERVICE SECTOR MANAGEMENT Guest Edited by Nils Timo and Peter Haynes A special issue of the Journal of Management & Organization – vol 13/2 (May 2007) ISBN 978-0-9757710-8-2 Length: iv + 92 Format: s/c Price: $66/$110 incl GST Global Service Sector Management yields new insights and highlights the rich tapestry that is the modern service workplace. The diversity and complexity of services is illustrated in the choice of papers. See - http://jmo.e-contentmanagement.com/archives/vol/13/issue/2/global-service-sector-management This special issue will also be available as a course reader. Course coordinators are invited to contact the publisher for an evaluation copy. eContent Management Pty Ltd, PO Box 1027, Maleny QLD 4552, Australia Tel.: +61-7-5435-2900; Fax. +61-7-5435-2911; [email protected] www.e-contentmanagement.com

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Service staff attitudes, organisational practices and performance drivers APPENDIX 1 : I TEMS

U S E D A N D R E L E VA N T STAT I S T I C S .

S e r v i c e - o r i e n t a t i o n ( i n h e re n t t o i n d i v i d u a l )

Alpha

AV E

1 1 1 1 1 1 1

0.922

0.68

Alpha

AV E

0.863

0.60

Alpha

AV E

0.985

0.96

Alpha

AV E

0.942

0.85

Alpha

AV E

0.918

0.66

Alpha

AV E

0.964

0.82

Intention to leave

Alpha

AV E

7 1 1

0.951

0.91

I make a real effort to meet customers’ needs. I view customer interactions as opportunities to please. I provide consistent service I provide prompt service. I have a reputation for good service. I am committed to service. I view serving customer as a priority

Ser vice-orientated business strategy 2 1 1 1 1 1

We are told to make a real effort to satisfy customers’ needs. We are told to view customer interactions as opportunities to please. This company has a reputation for good service. This company has a true commitment to customer service. This company views serving customers as a priority. This company emphasises prompt service.

Job satisfaction 3 1 1 1

I like my work. I am happy that I took this job. My job is pleasant. My job is worthwhile.

A ff e c t i v e c o m m i t m e n t 4 1 1 1

Company X staff feel a sense of belonging to this company. …… are committed to their relationship with the company. …… are loyal to this company. …… feel strongly attached to the company.

Instr umental commitment 5 1 1 1 1 1 1

I would have to invest a lot of time and effort to find another employer. It would be difficult for staff to move to another employer. I would be concerned about what would happen if they moved to another employer. Moving to another employer would not be worth the effort. I would find it inconvenient to change employer. I would find it difficult to find another employer of equal standard I do not have good alternatives to this employer

Ser vice training 6 1 1 1 1 1

There are opportunities for me to develop new skills. I am offered training courses that match my particular needs. I am provided with opportunities for learning and development. This company encourages me to seek opportunities for professional growth. I am provided with personal skills training that enhances my ability to deliver high quality services. This company spends a great deal of time and effort in training activities to help me provide high levels of service.

It is likely that I will actively look for a new job next year. I often think of quitting. I will probably look for a new job next year.

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Aggression at the service delivery interface: Do you see what I see? L ORALEIGH K EASHLY Department of Communication, Wayne State University, Detroit MI, USA J OEL H N E U M A N School of Business, State University of New York at New Paltz, New Paltz NY, USA

ABSTRACT Aggression at the service delivery interface (the point of contact between service provider and service recipient) has become a focus of much recent research attention. However, much of what we know is based on cross-sectional survey data – which tells us little about the underlying dynamics within specific aggressive incidents. Further, these data are often collected from the perspective of the service provider alone. For this study, we focused on specific hostile interactions during the delivery of healthcare services and gathered data from the perspectives of service providers and service recipients. Drawing on interviews with US Department of Veterans Affairs (VA) staff and US military veterans, we categorised and compared each party’s attributions for the initiation of hostile (unpleasant) encounters. We found that staff and veterans had different perspectives on the nature of precipitating factors and that the initial attribution for the event was linked to differences in subsequent responding. These findings are discussed in terms of their insight into the temporal dynamics of aggressive events and their implications for the prevention and management of hostility at the service delivery interface. Keywords: workplace aggression; dynamics of aggression; management of aggression; conflict; patient–staff interactions; healthcare delivery

B ACKGROUND

W

orkplace aggression and violence is a well documented problem in the health care sector. To give a sense of the extent of the problem of aggression at the staff–client interface, 44% of workers surveyed by Northwestern National Life Insurance (1993) reported being attacked and 36% reported being threatened by a client or customer. According to Kingma (2001), healthcare workers are 16 times more likely to experience violent assaults than any other service workers. In a review of violence in federal agencies based on 1993 Office of Workers Compensa180

tion Plan data, Freeman, Fox, Burr and Santasine (1996) found that the US Department of Veterans Affairs (VA) had one of the highest rates of fatal and nonfatal assaults of all federal agencies and that the targets tended to be nursing staff and police. Thus, what is clear is that the healthcare service delivery interface is a fertile one for hostile interactions. In addition, from a scientific perspective, the higher base rates of aggression in healthcare settings provide an opportunity to examine the dynamics of these incidents. The delivery of healthcare services is characterised by a number of factors associated with the

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onset of aggression. For example, there is substantial literature linking aggression to perceptions of injustice and provocation (social), frustration and stress (situational) or factors that produce psychological (emotional) or physiological arousal/discomfort such as, heat, cold, poor lighting and/or air quality, crowding etc (Anderson, Anderson & Deuser 1996; Greenberg & Alge 1998). These variables are ubiquitous in VA (and other healthcare systems) in the form of long waits for service, delays in treatment, being in pain or discomfort, perceived intrusion into one’s personal life (and most private space) and uncomfortable physical environments associated with many older facilities or resulting from costcontrol measures. These may all contribute to hostile responses from patients and their families (eg Hoad 1993). From the employee perspective, downsizing, restructuring, increasing workloads, unhappy clients and generally, having to do more with less has come to characterise the current healthcare system. This volatile mix produces an environment rife with antecedents strongly linked to interpersonal aggression in general and workplace aggression in particular (Baron & Neuman 1996). Unfortunately, although much research has been done on the service delivery interface in healthcare, it has been limited almost exclusively to data collected from the service provider’s perspective – viewing the service recipient (ie patient/client) as the source of the problem. Common sense and a good deal of research on interpersonal conflict and aggression, suggests that this assumption is misguided. For example, research demonstrates that reciprocity is a key factor in the development and escalation of incivility, conflict, workplace aggression and bullying and violence. In the case of chronic illness or injury, a common occurrence among US military veterans, the relationship between healthcare providers and recipients often is on-going and long-term in nature. This provides ample opportunity for the development of negative or positive forms of reciprocity. Since negative reciprocity is

such a powerful antecedent to anger and retaliation (Eisenberger, Lynch, Aselage & Rohdieck 2004), it seems critical to examine the incidents from the perspectives of both parties. Consistent with this interactional perspective, research by Lanza and Kayne (1995) examined both providers’ and recipients’ perspective on specific aggressive incidents that had been reported on a hospital ward. They found that though there was agreement on the ‘facts’ of an incident (location, time, participants), perceptions (attributions, response sequencing) of the incident differed between individuals. They concluded that fully understanding aggressive behavior requires the perspective of both staff and patient. Thus, in the current study, we gathered information from the perspectives of VA staff and veterans about upsetting or negative experiences they have had during the delivery of healthcare services. Another issue is that much of what we know about aggression in healthcare and other organisational settings is based on cross-sectional survey data – which tells us little about the underlying dynamics within specific aggressive incidents (for exceptions, see Beale, Cox, Clarke, Lawrence & Leather 1998; Glomb 2002). Content analysing formal incident reports describing encounters between patrons and staff, Beale et al (1998) examined violent incidents in bars and identified a sequence of events in which there were several points at which the interaction could be terminated constructively or escalate to physical violence. Though rich in content, this behavioral analysis fails to capture data related to staff and patron cognitions and feelings during the incident and clearly, the context in which Beale et al’s (1998) study was done is markedly different than those found in service-delivery settings in general or healthcare settings in particular. Since contemporary theories of aggression emphasise the importance of affect, cognition and arousal as antecedents of aggressive behavior (Andersson & Pearson 1999; Neuman & Baron 1997 2003; Anderson, Anderson, Dill & Deuser 1998) a fuller understanding of the dynamics of aggressive encounters requires the col-

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lection of such data. The most effective and efficient way to gather such information is to interview people in detail about their thoughts and feelings during the course of a specific incident (Glomb 2002; Keashly 2001). Of particular relevance, in both theoretical and practical terms, the present study focuses on the causal attribution process. Such cognitive appraisals have been strongly linked to the onset and mitigation of aggression. For example, research clearly demonstrates that individuals attribute dispositional (as opposed to situational) causes for the actions of another person, especially when those actions have an adverse impact on the observer. In such circumstances, observers tend to discount the importance of situational factors in shaping the actor’s behavior and tend to believe that the harm-doing was intentional or due to some personal failing on the part of the actor. Actors, on the other hand, are more sensitive to the role of situational forces in shaping their behavior. Furthermore, research demonstrates that the attribution process is most likely to be activated when individuals encounter unpleasant outcomes or events. Coupled with the fact that the onset of aggression is most frequently associated with perceptions of intentional provocation (unfair treatment) by others (Harris 1993), it seems clear that an understanding of the appraisals being made by parties is critical to our understanding of the evolution of aggressive encounters between service providers and service recipients. Conversely, with respect to the de-escalation of aggression, providing information, explanations, or accounts (highlighting situational factors beyond the actor’s control or apologising for wrongdoing) tends to mitigate or reduce hostile reactions. As noted above, healthcare settings are likely to provide conditions in which the attribution process will play a significant role in instigating or mitigating the ever-present unpleasant outcomes and events. In the current study, we conducted interviews with US military veterans and VA staff and focused on specific hostile and upsetting incidents 182

within veteran–staff encounters during the delivery of healthcare. In this paper, we focus on the causal attributions made by the interviewees and provide some preliminary evidence of the link between attributions and subsequent behaviors.

M ETHODOLOGY Specific incidents were gathered from staff and veterans associated with three different facilities within the Veterans Integrated Service Network (VISN) 11 of the Veterans Health Administration (VHA). These facilities serve the approximately 1.4 million veterans who reside in the VISN 11 service area.

E t h i c s a p p ro v a l Ethical approval was a two stage process. Each VA facility’s research review committee reviewed and approved the study. Once we received approval from each of the facilities, the institutional review boards of our respective institutions reviewed the study and approved them independently. This final approval notice was then filed with each of the facilities. After all approvals were in place, we began recruiting participants.

Respondents Recruitment of staff and veterans was done in collaboration with local working groups established at each facility and composed of VA staff, union, management and representatives from the Veterans of Foreign Wars (VFW) and the American Legion (AL). Recruitment of staff and recruitment of veterans was handled differently. Staff members were recruited through notices in facility-wide newsletters accompanied by an endorsement from the facility Director and also by presentations to all major staff groups within each participating facility. The most effective recruitment procedure involved staff members of the working groups recruiting through their extensive networks. Ultimately, we interviewed 21 staff members. The staff members were predominantly female (14), white (14) and ranged in age from 39 to 61 years.

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Recruitment of veterans proved to be more challenging, as they are a much more widely dispersed population. Recruitment notices were placed in the statewide monthly newsletters of participating Veteran Service Organizations (VSOs) and were also handed out when veterans came to visit an onsite VSO office. In two cases, veterans were referred by another veteran who had been interviewed. In one facility, recruitment notices were handed out to all veterans when they came to get their parking ticket validated. At the time of writing, we had interviewed 19 veterans. The veterans were predominantly male (n = 16), white (n = 18) and ranged in age from 39 to 75 years. Interested veterans and staff contacted the first author who described the project in more detail and screened to ensure that they had a specific incident that they could recall. An interview was then scheduled at a time and place convenient for the respondent. Prior to the interview, the respondent read and signed a consent form indicating their agreement to be interviewed. Once the interview was completed, the respondent was asked if she or he would like to receive a summary of the results. If they answered in the affirmative, contact information was requested.

I n t e r v i e w p rotocol A semi-structured interview protocol was developed with questions and probes in the following areas: 1. Specifics of the incident – behaviors of the other and self; own thoughts and feelings 2. Outcome of the interaction – including causal attribution; whether or not the incident was reported and to whom 3. What could have been done differently to change the outcome? 4. What advice would the respondent share with others based on his/her experience? All interviews were audio taped and then transcribed verbatim. The interviews ranged in length from 20 minutes to two hours with an

average of 45 minutes. The total number of transcript pages analysed was 1815.

A n a l y t i c a l a p p r oach The directed approach to content analysis (HsiuFand & Shannon 2005) was taken with respect to these interviews. Our initial coding scheme focused on key concepts we had identified from existing theory and research regarding the initiation and progress of hostile incidents. These codes captured respondent: (1) attributions for the incident, (2) affect/feelings, (3) descriptions of specific behaviors occurring within the exchange and (4) recommendations for approaches to better manage staff–client interactions. From a methodological perspective, these particular coding categories are useful for three reasons. First, they are consistent with categories commonly identified in the hostility literature. Second, they are commonly used by aggression researchers to classify antecedents to aggression. Finally, they provide ‘actionable’ information, in that they identify high value target areas and potential strategies for interventions. Interviews were read and coded with the initial coding scheme by a graduate research assistant. In a second reading of the transcripts, quotes identified under a particular code were examined together to determine if subcategories were needed to further refine the concept. For example, within the initial code of ‘attribution for initiating event’, analysis of the quotes revealed that there were different sources to which the incident was attributed; specifically, situational, social, individual and system-level sources – with subtypes within each of these groupings. For this second step of the analysis, both the first author and the graduate assistant reviewed the text associated with a specific code, independently noting possible subcategories (eg which attribution source was represented). These categorisations were then shared and any discrepancies were resolved through discussion. For this paper, we focus on respondent attributions for initiating events (what caused this

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incident to occur) and the category of ‘advice,’ (what advice would you give others in handling similar situations). Then, theory-grounded comparisons were made between veteran and staff narratives of these incidents.

group factors are tied to general impressions of VA staff or military veterans. More specific examples are provided in the narratives that we collected during the interviews, described in more detail below.

RESULTS

D i ff e re n t i a l s o c i a l , s i t u a t i o n a l a n d d i s positional attributions

Eleven types of initiating events were identified and clustered under four broad sources (1) situational, (2) social, (3) individual characteristics and (4) social-situational or group level factors (refer to Table 1). Though the social and situational factors are described by specific examples in Table 1, the other two factors need further explanation. Individual characteristics capture observer attributions about the character, emotional/psychological state, or motivation/intent of the ‘other’ person in the incident. Social/situational factors capture two features of the broader social context that people described as setting the ‘tone’ or ‘atmospherics’ for the interaction. System attributions are reflected in comments about how veterans perceive VA operations in general (eg too bureaucratic, disorganised) while specific TA B L E 1 : P E R C E I V E D

Relevant to the issue of how such events evolve or unfold over time are differences in veteran–staff perceptions of initiating factors. VA staff appeared more likely to view their own actions as being shaped by situational factors, attributing the causes of veteran behavior to dispositional causes. Conversely, military veterans seeking services for acute (as opposed to chronic) conditions seemed unaware (or less aware) of the situational factors and more likely to focus on failures of the staff in interaction as the source of the incidents. Evidence of this can be seen in Table 1. Staff members cited situational factors with more frequency than did veterans. This included themes related to the denial or delay of service, application of painful/unpleasant medical procedures, unpleas-

CAUSES B Y POSITION

Ve t e r a n (n = 2 8 )

S t a ff (n = 2 8 )

Total (n = 5 6 )

2 1 1 0 0 0

15 9 2 1 1 2

17 10 3 1 1 2

24 11 7 6

3 1 0 2

27 11 7 8

Individual characteristic

1

8

9

Social/situational • System attribute • Specific group

1 1 0

2 0 2

3 1 2

Factor Situational • Denial of service/benefits • Delay of service • Painful/disruptive procedure • Environment or location • System error Social • Diminishment of concern • Not attending/listening • Exposure of private info

Note: Results based on 40 transcribed interviews; Respondents reported more than one factor.

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ant environmental conditions and billing problems. Unlike veterans, staff cited characteristics of the veterans themselves as a source of difficulty referring to the veteran as ‘trying to pull a fast one’, ‘he just thought he could do whatever he wanted’ or ‘I know that he was irritated when he came up’. Conversely, veterans appeared to demonstrate a greater focus on social factors such as the lack of attention or concern demonstrated by staff towards veterans, the patronising tone adopted by staff, the carelessness with which confidential information was handled or the lack of concern for privacy during examinations. For example, veterans talked about staff being ‘uncaring’ or ‘cold’, and treating them as ‘objects instead of people,’ ‘still just a number’ or ‘second class citizens.’ An example of such ‘social insensitivity’ can be found in the words of a veteran respondent (007V) who came to the VA Medical Centre because of concern about a growth that he thought might be cancerous. He described himself as ‘feeling very afraid and highly anxious.’ When he approached the desk, the staff member initially did not look up. When she did, the veteran expressed his concerns and said that he wanted to see someone right away. Her response was, ‘We do not take walk-ins.’ He was handed a stool sample card and told to mail it in. The veteran said, ‘It was like well, we will get you in two months. And it’s like you know, I’m afraid now, I’m upset now. I need some reassurance. I wanted a professional opinion. I’m really scared. I don’t know what I have back there … it just did not compute with these people.’ The respondent then went on to say that he raised his voice. ‘…it’s like, Lady I want you to hear me… I don’t want you to turn around.’ Security was called and when they arrived they indicated that they felt nothing would get out of hand and left. The veteran was then seen by a doctor. In reflecting on what had happened he indicated: ‘Had you just answered my question or thought about what I am trying to say’ then he would not have yelled and escalated the situa-

tion. In his own words, the veteran makes the connection between staff behavior and his response, indicating how his behavior would have been different had the staff handled him differently.

Social/situational factors Both veterans and VA staff do agree that there are some systemic problems but there are differential responses to these factors. The veterans perceive that the large bureaucratic nature of the VA creates a system in which patients are allowed to fall through the cracks. In the words of many of our veteran respondents, ‘the left hand doesn’t know what the right hand is doing.’ This impression, in part, derives from the fact that veterans seeking multiple medical procedures or services have to disclose the same personal information over-and-over again (eg filling out the same medical information forms at different service locations). While these situational factors lead to frustration on the part of veterans, they seem to have a different impact on VA personnel. For staff, the bureaucratic nature of the system seems to lead to feelings of resignation as opposed to frustration (eg ‘there’s nothing I can do about it!’). Such resignation results in few attempts to manage the situation or help patients cope.

R e s p o n s e s t o p ro b l e m s In analysing the interview narratives for perceptual biases, we also identified behaviors that seemed to mitigate or defuse aggression. For example, one VA staff person (clearly resigned to life in the ‘system’) simply told veterans that ‘everyone has to wait... that’s just the way things are, deal with it.’ Another staff member, in an identical ‘delay of service’ situation, suggested that the veteran go get a cup of coffee and they would take him when he got back. According to staff descriptions, the first comment drew an angry response while the second reduced the level of patient agitation. Here again we see the link between staff response and subsequent veteran behavior.

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In addition to reviewing the interviews for such conflict management themes, we explicitly asked our respondents to provide advice for improving the nature of the interactions between veterans and VA staff. In analysing these data, we found evidence that empathy was a key aspect of staff and veterans’ experiences in the advice respondents would offer to staff or to veterans about dealing with the other in such situations. As can be seen in Table 2, advice tended to focus on orienting to the other and treating each other with respect and politeness. Both staff and veterans noted that an important orientation in the interaction was the understanding and appreciation of each other’s position, (eg VA staff are overworked and veterans are owed care) as well as the Golden Rule emphasising the importance of treating others in ways one wishes to be treated. Very specific communicative acts that engenTA B L E 2 : A D V I C E

dered respect included listening to one another, being clear about their information, demonstrating patience, acknowledgement through apology and the use of non-verbal signals of empathy and engagement. A good illustration of this was a staff member’s (014S) handling of a highly agitated veteran. The veteran had been denied access to a physician because he did not have an appointment. The veteran was upset because he said his physician had asked him to come see him once he was done with a previous appointment. He stormed away from one desk and went to the desk of this staff member and her colleagues. By this time he was highly agitated, pacing and raising his voice. Other staff members wanted to call security but this staff member said ‘No, let’s find out what he needs.’ The staff member asked him what was upsetting him. She deliberately maintained a calm voice and

FOR I M P R O V I N G I N T E R A C T I O N S B Y ACTOR A N D P O S I T I O N

F o r S t a ff

For Veterans

S t a ff (n = 7 3 )

Ve t e r a n (n = 7 4 )

S t a ff (n = 4 5 )

Ve t e r a n (n = 4 2 )

Communicative acts Listen/attend Talk out issues Give/request info clearly Be polite/respectful Apologise Nonverbal cues of attention Provide options

38

37

21

18

R u l e s / r i g h t s / roles Have info re own situation Follow the rules Do your job (for staff) Self-advocate (for vets) Participate in own care

12

13

14

20

Orientation Willingness to provide care Golden Rule Understanding other’s position

23

24

10

4

Categor y

Note: N is the number of separate comments made; respondents often made more than one suggestion; Total number of comments is 234.

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posture and when it became clear that he wanted to see his physician, she told him she would find the doctor for him. Upon finding the physician, he indicated that he had in fact asked the veteran to see him. The staff member came to the veteran and apologised for what had happened at the previous station and agreed that they should have checked with his physician before turning him away. She then took him to the physician. While he was still upset, he was much calmer. After visiting the doctor, the veteran returned and thanked her for her help. When asked about her thoughts during this time she said, ‘…he was agitated. He had run out of pain medication, he had been told that day or the day previous that he had to be treated for cancer. He was extremely agitated. It did not help for him to feel like he was being pushed off or pushed aside. All he needed was someone to just take five or ten minutes and actually listen to him. And they would’ve heard what I heard and they would’ve gotten up and found his provider …’ This staff member identified the initiating event as a number of situational factors, including denial of service. In response, she chose to focus on hearing what the veteran had to say and finding a way to get what he needed. She did this by speaking in a calm tone, acknowledging his frustration and anxiety, asking questions and listening to his answers and apologising, all the elements that were identified across interviews as what one should do in such situations.

D ISCUSSION Our examination of the interview data revealed that factors, which have been theorised and examined as antecedents for aggressive behavior at work are also features perceived as important by respondents in the genesis of specific incidents that they experience (Glomb 2002; Keashly 2001). By focusing on specific incidents, we were able to identify context-specific manifestations of these factors, particularly as relates to healthcare settings. Such context-specific or

nuanced information is relevant in the development of actions for the prevention and management of hostility, which we will discuss shortly. Focusing on specific veteran and VA staff interactions also revealed the impact of larger systemic issues, within VA, that influence both the nature of veteran–staff interactions and the perception of those interactions by each party. For example, the workload and cost-cutting issues mentioned earlier may contribute to delay of service, billing errors and environmental stressors (eg lack of facility maintenance, poor air quality and uncomfortable temperatures) and bureaucratic organisational structures. All of these factors have been linked to the onset of interpersonal aggression (Baron & Neuman 1996; Salin 2003). Perhaps most importantly, our results suggest that service providers and service recipients may perceive these precipitating conditions very differently, leading to very different experiences of the interaction. Baumeister, Stilwell and Wotman’s (1990) work on victim and perpetrator accounts of angry episodes led to similar conclusions. Participants were asked to provide accounts of angry situations when they were a victim and another situation when they were the perpetrator. The authors noted substantial discrepancies in attributions and responsibility for the events. Particularly relevant to our discussion is that the accounts showed no recognition that there would be such differences in perspectives between ‘perpetrators’ and ‘victims.’ They argue that such unrecognised discrepancies in interpretation can be fuel for interpersonal conflict and anger. Our analysis of respondents’ attribution sources and their advice for ameliorating difficult situations is consistent with this interpretation. Regardless of the variety of initiating events and whether actors’ attention appeared differentially focused on situational versus social causes, what veterans and staff believe is needed in managing these situations focuses on the handling of the interaction itself. That is, interactional justice is viewed as vital. Thus, while the client may be

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frustrated by waiting, pain, delays in benefits, what they will focus on is how they are acknowledged and treated in the interaction. So while having an understanding of what initiated the event is important (what Greenberg (1993) referred to as ‘informational’ justice), the process from that moment on depends on how people perceive they are being treated. Indeed, of all the precipitating factors identified, it is the social factors alone over which staff and clients can have the most control.

Implications for theor y Our findings are consistent with theories of organisational justice (and social justice more broadly defined) and may further suggest an extension of this literature. The ‘fair process effect’ is a well established finding involving an interpersonal ‘process x outcome interaction.’ Specifically, perceptions (attributions) of procedural justice mitigate the adverse impact of unfair or unpleasant outcomes. In essence, people who experience adverse outcomes are less likely to be upset if they believe the process used to determine those outcomes was fair. Though this has generally been viewed as an ordinal interaction, our data suggests a possible threshold effect. If we consider that there is a boundary between aggression and non-aggression, the use of informational justice (accounts, explanations, contextual information) and interpersonal forms of justice (demonstrations of concern, respect, empathy, sensitivity and engagement) may prevent behaviors from crossing that boundary. This threshold effect has been described as a ‘popcorn metaphor’ of employee aggression (Folger & Skarlicki 1998). Simply put, just like popcorn kernels pop when the temperature of the cooking oil reaches a certain level, people may ‘pop’ (become aggressive) when the situation reaches a certain ‘temperature’ (level of stress, frustration, negative affect etc.). Clearly, we did not test for this but our respondent narratives speak to this possibility. This possibility also is consistent with contemporary theories of interpersonal aggression, especially as 188

relates to the interaction between cognition, affect and aggression (Anderson, Anderson & Deuser 1996) and earlier work on temperature, affect and aggression (Baron & Bell 1975).

Implications for practice Consistent with the theoretical implications noted above, these preliminary findings point us in the direction of ways to prevent or manage hostile situations at the service delivery interface. An awareness of the risk factors both on the part of the service recipient and the service provider may help prepare individuals for the interaction. Understanding that there are situational factors that contribute to frustration and hostility, specific steps can be taken to, if not remove the factor, at least to mitigate its impact. For example, understanding that ‘waiting’ is part of receiving treatment and that some people ‘don’t wait well’ can help both clients and staff be prepared. For clients, this might involve coming with materials to read (to help pass the time) or arranging for early morning appointments (when delays are less likely) whenever possible. For staff, it can involve acknowledging the client’s patience, expressing empathy with their frustration and suggesting alternatives to pass the time. Beyond providing such alternatives, or working to address scheduling problems or delays, research suggests that it is important to bring expectations in line with reality. For example, the use of realistic job previews to lower overly optimistic expectations about prospective jobs, during the personnel recruitment process, has been shown to reduce post-hire employee turnover and dissatisfaction. As relates to hostile interactions, unmet expectations result in feelings of relative deprivation and a sense of frustration, which have been strongly linked with aggression. Specific to healthcare situations, changes in eligibility and the nature of coverage over time has resulted in reductions and restrictions in service, which contributes to a sense of ‘illegitimate violation of legitimate expectations’ (Folger & Baron 1996). The issue of expectations is reflected in the rules,

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rights and roles category of the advice in Table 2 and highlights veterans’ awareness of the importance of understanding the current rules of and rights in the VA healthcare system. This suggests that more accurate communications about waiting times or other inconveniences as well as changes in eligibility might result in more reasonable expectations on the part of healthcare recipients. Consistent with the realistic job preview literature, communications directed at clarifying services and expectations provide an ‘inoculation’ against frustrating situations. Recognising that discrepancies in perceptions may exist can also be helpful in preventing potentially hostile interactions. Knowing that the person on the other side likely does not ‘know what you know,’ individuals can be encouraged to be assertive in their needs and those on the receiving end of this assertion should be encouraged to listen carefully to understand what is being asked. However, such appreciation of possible differences can be demanding at the best of times and given the circumstances under which people seek health care services, they may not be in the best position to patiently and respectfully assert. In such cases, as in many of the interventions suggested above, much more of the responsibility falls to staff to be ‘customer oriented.’ Support for this interpretation comes from an examination of the comments provided on ‘how to handle such situations’ from our respondents. Of the 234 total comments, the majority (147) was directed at staff and was equally likely to come from other staff as from veterans. Most of these comments were focused in the communicative acts and the orientation categories. We offer this interpretation cautiously. By acknowledging that staff will bear more of the responsibility for managing interactions with veterans, we are not arguing that staff must put up with abusive and hostile treatment from veterans as part of their job. Rather, we are suggesting that they actually have more control and influence than they may perceive in determining the course of an interaction and the challenge is to train them to recog-

nise this and develop strategies for managing their own as well as the veterans’ behavior (eg Schat & Kelloway 2006).

CONCLUSIONS Through in-depth individual interviews, we have captured detailed descriptions describing the evolution of hostile encounters between service recipients and service providers in three healthcare settings. Employing well-established theories of interpersonal aggression and conflict, we have confirmed known risk factors and identified the more nuanced factors operating within the system-level context. Further, drawing on empirical and conceptual research on attribution theory, we have confirmed a discrepancy in attributional focus between staff and clients. This highlights the importance of considering the influence of actors’ perspectives when investigating such encounters and, more importantly, as an intervention in proactively altering (improving) the nature of the interaction as it is occurring. Methodologically, we have illustrated the potential value of inquiring into specific incidents and exposing individual cognitions and emotional reactions experienced by each party over the course of the experience. The benefits of such an approach are twofold: 1) respondents feel listened to and hence, provide more information and 2) it provides insight into the dynamics of specific incidents which enriches our understanding of how these incidents evolve and how they can be changed.

Limitations The focus on healthcare interactions may potentially limit generalisability. There is reason to believe that our findings—and our methodological approach—may generalise to other service sector interactions. In many such environments (eg financial services, retail settings and hospitality industries, to name a few) service providers and service recipients may find themselves in situations of stress and frustration. Although the nature and significance of these stressful encoun-

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ters may be quite different than those found in the healthcare sector, stressor-stress-strain models of aggression (including escalation of conflict) are equally applicable. So, too, are theories of attribution and perspective-taking. Though the form of aggression (expression of hostility) and the consequences of such unpleasant interactions may vary from situation to situation, we believe that the basic underlying mechanisms may be very similar. To the extent that we are increasingly becoming a service-sector economy, the way we manage interpersonal encounters has consequences for the health and well being of organisations, their staff and the people they serve.

F u t u re d i re c t i o n s It is clear that to fully understand how hostile incidents evolve and thus, how to prevent and manage them, the perspectives and contributions of all involved parties need to be investigated. In this study, we gathered detailed descriptions of incidents from the perspective of service providers and service recipients but not on the same incident. Methodologically, the challenge is how to get these data. Lanza and Kayne (1995) focused on violent incidents on an inpatient psychiatric ward where they had access to both staff and patients. The hospital had policies and procedures in place for investigation of such incidents and the researchers as knowledgeable insiders were able to gain access to these data. Thus, it may be possible to collaborate with an organisation or units involved in investigating incidents to gain access to such information. Such a partnership would be more likely within the framework of participatory action research in which industry and academic partners are co-researchers in the process. Another possible source of such information would be outside consultants who conduct these evaluations. Given the sensitive nature of these data, a priori negotiations regarding confidentiality and anonymity of data and consent of disputants would be critical in developing these partnerships. 190

Another direction to pursue is empirically testing the theoretical connections proposed between attributions and affect by tracking the connections over time within specific incidents. While we did not specifically focus on affect in this study, we noticed during coding that attributions made by veterans and staff appeared to have both content and valence components. For example, if a delay of service occurs, it may be viewed as negative by one staff member and neutral or positive by others. The question becomes, how does valence of an attribution link to subsequent behavior? One hypothesis might be that a negative attribution may be linked to defensiveness or an angry response. This link between affect and behavioral responding is a core aspect of affective events theory (Weiss & Cropanzano 1996) and, as noted previously, theories of interpersonal aggression. Examining and demonstrating this link within the context of specific hostile incidents suggests additional possibilities for actions in addition to the more cognitive focused ones that we have discussed above. For example, training directed at staff and veterans that focuses on how they manage their emotions in response to such attributions may reduce hostile responses (Schat & Kelloway 2006). Such analyses would also prove important in exploring the ‘threshold effect’ discussed earlier. While we examined initial attributions in response to an event, we noticed in our coding of the interviews that respondents made differing attributions throughout their descriptions. Research examining specific incidents needs to examine how attributions change over time from the initial attribution to the more process-linked attributions and what is linked to such changes. An examination of the attribution sequences across a variety of different incidents may be able to discern turning points in the interaction that move it in an escalatory or de-escalatory fashion. Identification of such turning points creates the opening or opportunities for action to change the trajectory of the event.

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R e f e rences Anderson CA, Anderson KB and Deuser WE. (1996) Examining an affective aggression framework: Weapon and temperature effects on aggressive thoughts, affect and attitudes, Personality and Social Psychology Bulletin 22: 366–376. Anderson KB, Anderson CA, Dill KE and Deuser WE (1998) The interactive relations between trait hostility, pain and aggressive thoughts, Aggressive Behavior 24: 161–171. Andersson LM and Pearson CM (1999) Tit-for-tat? The spiraling effect of incivility in the workplace, Academy of Management Review 24: 452–471. Baron RA and Bell PA(1975) Aggression and heat: Mediating effects of prior provocation and exposure to an aggressive model. Journal of Personality and Social Psychology, 31, 825–832. Baron RA and Neuman JH (1996) Workplace violence and workplace aggression: Evidence on their relative frequency and potential causes, Aggressive Behavior 22: 161–173. Baumeister RF, Stillwell, A and Wotman, SR (1990) Victim and perpetrator accounts of interpersonal conflict: Autobiographical narratives about anger, Journal of Personality and Social Psychology 59: 994–1005. Beale D, Cox T, Clarke D, Lawrence C and Leather P (1998) Temporal architecture of violent incidents, Journal of Occupational Health Psychology 3: 65–82. Berkowitz L (1989). Frustration-aggression hypothesis: Examination and reformulation. Psychological Bulletin 106; 59–73. Buckley MR, Fedor DB, Veres JG, Wiese DS and Carraher SM (1998) Investigating newcomer expectations and job-related outcomes, Journal of Applied Psychology, 83: 452–461. Eisenberger R, Lynch P, Aselage J and Rohdieck S (2004). Who takes the most revenge? Individual differences in negative reciprocity norm endorsement. Personality and Social Psychology Bulletin 30: 787–799. Fedor DB, Buckley MR and Davis WD (1997) A model of the effects of realistic job previews, International Journal of Management 14: 211–221. Felson RB and Steadman HJ (1983) Situational factors in disputes leading to criminal violence, Criminology 21: 59–74. Folger R and Skarlicki D (1998) A popcorn metaphor for employee aggression. In Griffin

RW, O’Leary-Kelly AM and Collins JM (Eds.), Dysfunctional Behavior in Organizations: Violent and deviant behavior (Vol. 23 Part A, pp. 43–81). Stanford, CT: JAI Press. Fox S and Spector PE (1999) A model of work frustration and aggression, Journal of Organisational Behavior 20: 915–931. Fox S, Spector PE and Miles D (2001) Counterproductive work behavior (CWB) in response to job stressors and organisational justice: Some mediator and moderator tests for autonomy and emotions, Journal of Vocational Behavior 59: 1–19. Freeman C, Fox S, Burr B and Santasine J (1996) Workplace violence in federal agencies. In VandenBos GR and Bulatao EQ (Eds) Violence on the Job: Identifying risks and developing solutions, pp. 199–206, American Psychological Association, Washington, DC. Glick WH, Huber GP, Miller CC, Doty DH and Sutcliffe KM (1990). Studying changes in organisational design and effectiveness: Retrospective event histories and periodic assessments, Organization Science 1: 293–312. Glomb TM (2002) Workplace aggression: Informing conceptual models with data from specific encounters. Journal of Occupational Health Psychology, 7: 20–36. Gouldner AW (1960) The norm of reciprocity, American Sociological Review 25:161–178. Greenberg J and Alge BJ (1998) Aggressive reactions to workplace injustice. In Griffin RW, O’Leary-Kelly A and Collins J (Eds.), Dysfunctional behavior in organizations: Violent and deviant behavior Vol. 23, pp. 83–117, JAI Press, Stamford, CT. Harris MB (1993). How provoking! What makes men and women angry? Aggressive Behavior 19: 199–211 Hoad CD (1993). Violence at work: Perspectives from research among 20 British employers. Security Journal 4: 64–86. Hsiu-Fand H and Shannon SE (2005). Three approaches to qualitative content analysis. Qualitative Health Research 15: 1277–1289. Jones EE and Nisbett RE (1971) The Actor and the Observer: Divergent perceptions of the causes of behavior, General Learning Press, Morristown, NJ. Keashly L (2001) Interpersonal and systemic aspects of emotional abuse at work: The target’s perspective, Violence and Victims 16: 233–268. Kelley HH (1971) Attribution in Social Interaction, General Learning Press, Morristown, NJ.

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Loraleigh Keashly and Joel H Neuman Lanza M and Kayne HL (1995). Patient assault: A comparison of patient and staff perceptions. Issues in Mental Health Nursing 16: 129–141. Lee F and Robinson RJ (2000). An attributional analysis of social accounts: Implications of playing the blame game. Journal of Applied Social Psychology 30: 1853–1879. Miller NE, Sears RR, Mowrer OH, Doob, LW and Dollard J (1941) The frustration-aggression hypothesis, Psychological Review 48: 337–342. Mueller CW (1983) Environmental stressors and aggressive behavior. In Geen RG and Donnerstein EI (Eds.), Aggression: Theoretical and empirical reviews Vol. 2, pp. 51–76, Academic Press, San Diego, CA. Neuman JH and Baron RA (1997) Aggression in the workplace. In Giacalone R and Greenberg J (Eds.), Antisocial Behavior in Organizations, pp. 37–67, Sage, Thousand Oaks, CA. Neuman JH and Baron RA (2003) Social antecedents of bullying: A social interactionist perspective. In Einarsen S, Hoel H, Zapf D and Cooper CL (Eds.), Bullying and Emotional Abuse in the Workplace: International perspectives in research and practice, pp. 185–202, Taylor and Francis, London. Northwestern National Life (1993) Fear and Violence in the Workplace: A survey documenting the experience of American workers, Minneapolis, MN Pruitt DG and Rubin JZ (1986) Social conflict: Escalation, stalemate and settlement, Random House, New York. Salin D (2003 Ways of explaining workplace bullying: A review of enabling, motivating and precipitating structures and processes in the work environment. Human Relations 56: 1213–1232.

Schat A and Kelloway EK (2006) Training as a workplace aggression intervention strategy. In Kelloway EK, Barling J and Hurrell JJ (Eds) Handbook of Workplace Violence, Sage, Thousand Oaks, CA. Spector PE (1997) The role of frustration in antisocial behavior at work. In Giacalone RA and Greenberg J (Eds.), Antisocial Behavior in Organizations, pp. 1–17, Sage, Thousand Oaks, CA. Tedeschi JT and Felson RB (1994) Violence, Aggression and Coercive Actions, American Psychological Association, Washington, DC. Wanous JP (1973) Effects of realistic job preview on job acceptance, job attitudes and job survival, Journal of Applied Psychology 58: 327–332. Wanous JP (1980) Organisational Entry: Recruitment, selection and socialization of newcomers, Addison-Wesley Publishing Company, Reading, MA. Wanous JP (1989) Installing a Realistic Job Preview: Ten tough choices, Personnel Psychology 42: 117–134. Weiss HM and Cropanzano R (1996). Affective events theory: A theoretical discussion of the structure, causes and consequences of affective experiences at work. In B. M. Staw & L. L. Cummings (Eds.), Research in Organisational Behavior (Vol. 18, pp. 1–74). Greenwich, CT: JAI Press. Zapf D and Gross C (2001). Conflict escalation and coping with workplace bullying: A replication and extension. European Journal of Work and Organisational Psychology 10: 497–523. Received 25 February 2007 Accepted 23 September 2007

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Optimising the internal value chain: Principles and practices M A R K T S PENCE Associate Professor of Marketing, Bond University, Gold Coast QLD, Australia SUDHIR H K ALE Professor of Marketing and Associate Director, Globalization and Development Centre, Bond University, Gold Coast QLD, Australia ABSTRACT The employee–customer interface in hedonic services requires high quality interactions at key touch points to ensure experiences are positively remembered. We propose an approach that combines service blueprinting with internal marketing to achieve these experiences. While internal marketing suggests using marketing techniques for hiring, retaining and motivating employees, the literature in this field has been largely independent of each employee’s contribution to the internal value chain. Service blueprinting is a useful approach which makes explicit the value creation processes used in service production. No study has thus far connected the blueprint (which identifies functions to be performed) to internal marketing (which specifies the mechanisms for hiring, retaining and motivating the people performing the functions). This paper proposes a service value chain optimisation framework to enhance employee–customer interactions in hedonic services using these two research streams. Keywords: internal value chain; moments of truth; internal marketing; service blueprinting

T

he gist of the marketing concept is twofold: satisfy your customer and garner a sustainable, competitive advantage. Within the service sector, the primary drivers affecting customer satisfaction – and the profits that follow – are the physical environment and service personnel (Bitner 1992; Booms & Bitner 1982; Zeithaml, Bitner & Gremler 2006). When reconstructing memories of affect-laden experiences, as would likely be the case when considering returning to, for example, a beauty parlour or theme park, holistic memories are heavily influenced by the most extreme experience recalled as well as the last experience encountered (cf Fredrickson & Kahneman 1993; Kahneman, Fredrickson, Schreiber & Redelmeier 1993; Varey & Kahneman 1992).

Therefore, smart organisations carefully manage employee–customer interactions to mitigate the possibility of an unfavourable encounter which could taint the overall experience. Within this manuscript we advance the need to integrate two disparate streams of research – service blueprinting and internal marketing. The first focuses on identifying employee–customer interaction points and the concomitant elements in the internal value chain. Most existing literature on internal marketing starts with the supposition that the internal value delivery process (henceforth referred to as the internal value chain) is fixed, which is not accurate. Strategically, the first step in internal marketing should involve identifying and prioritising relevant value

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delivery processes with a view to streamline service operations, particularly if multiple touch points are involved in performing one function. Once this is accomplished, the emphasis shifts to internal marketing, involving application of the principles and practices which would enhance the likelihood of superior performance on the part of individuals involved in the internal value chain. This sequence of actions is encapsulated in Figure 1 – every section of this manuscript from hereon corresponds to a component within this Figure. The flowchart depicted in Figure 1 seeks to deliver excellent service on a consistent basis. In making the case for integrating these currently disparate research streams, we first advocate the need for service blueprinting so as to identify and prioritise employer–customer interactions. Drawing on research on interpreting hedonic

experiences, we suggest that within a particular service process, touch points need to be consolidated. A backward induction process is then taken by looking at the desired quality levels from the customer’s perspective (the outcome variable in Figure 1). This is followed by a diagnosis of the internal environment at the various touch points, and a discussion of ways to capitalise on internal marketing opportunities to foster a desirable employee–customer interaction in a hedonic experience. Insights generated in this manuscript are best suited for those running medium to large enterprises that offer high touch, hedonic experiences, such as the hospitality sector. In these situations, the customer experience plays out over time and typically involves many interactions or touch points with employees, each of which can affect recollections of the overall experience.

Conduct Service Blueprinti ng

Eliminate Dispensable Touch Poi nts

Prioritize Value Add Services Along Nodes

Ensure Appropri ate Servicescape

Conduct Internal Marketing Values Interest

Social

Economic

Development Application

Conduct Internal Marketing Research

Deliver High Quality Service

FIGURE 1 : SER VICE

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Monitor Service Quality

V A L U E C H A I N O P T I M I S AT I O N F R A M E W O R K

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CONDUCT

SER VICE BLUEPRINTING

The starting point to identify employee–customer contact points is to develop a service blueprint, a schematic that encapsulates the flow of activities in the service delivery process (Lings 1999; Shostack 1984; 1987). To briefly illustrate, consider a prospective hotel patron: the patron calls the customer service representative, who keys in the reservation into the organisation’s data base; at a later date the patron arrives at the hotel, a valet greets her, then parks her car, and so on. Developing a service blueprint illuminates: (1) touch points with the customer, in this case interactions with the customer service representative and the valet, (2) who are the responsible service personnel, and (3) what resources are required to perform the function (eg reservation data base and parking spaces for use by valets). In Shostack’s (1987: 37) words, ‘Blueprints provide visible portraits to which customers can react, and which can facilitate exploration of more parts of the service system than just its processes.’ Like moment-tomoment responses, touch points should not be viewed as discrete pieces within a ‘service production process,’ but rather as interdependent elements within an interactive system. Much has been written on service blueprinting and interested readers can access several informative sources (cf Baum 1990; George & Gibson 1991; Shostack 1987; Shostack & Kingman Brundage 1991). Our research into published case studies as well as experience with several service establishments leads us to conclude that comprehensive service blueprints rarely exist. If they do, they tend to be activity specific. Thus, for an integrated resort there may be a service blueprint for hotel operations, one for food and beverage and a third for convention facilities. In an ideal world, and particularly for firms embracing customer relationship management, these blueprints would be combined (Kale 2003); nevertheless, these circumscribed blueprints are an admirable start.

ELIMINATE AND PRIORITISE EMPLOYEE –CUSTOMER TOUCHPOINTS ‘Academics and practitioners focus too much on measuring customer satisfaction or expectations and too little on connecting customer needs to business processes.’ (Grapentine 1998: 18). Two aspects of service blueprinting relevant herein are the line of visibility and service complexity. With respect to the former, many customer interaction points are visible to the customer, for example, the front-desk staff when checking in at a hotel, or interactions with a croupier when playing blackjack at a casino. In these cases, customer perceptions of service quality are affected by the physical environment as well as by the demeanor of the relevant service personnel (Zeithaml et al 2006). Other contact points are not visible, for example, calling a customer service information line. Here, the physical environment does not affect customer satisfaction, but the employee–customer interaction still does. In a study of Roche Diagnostics the number of customers who were ‘very satisfied’ with the company’s call centre increased significantly when they did away with the automated voice response system and had call-ins go straight to a person, who in turn was crosstrained to increase the likelihood that the first customer service representative responding to the call could answer the customer’s question (Keiningham & Goddard 1999). Transferring phone calls was a source of customer dissatisfaction as well as an inefficient use of employee time. As this example illustrates, and regardless of whether contact points are visible or not, they constitute moments of truth – points in time during which customers are afforded the opportunity to gauge service quality. The latter example nicely illustrates service complexity, that is ‘the number and intricacy of the steps required to perform [a task]’ (Shostack 1987: 35). In this case Roche Diagnostics elimi-

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nated a step (the automated voice response) and empowered the call centre representatives to address a wider range of issues. In its original manifestation reducing complexity implied specialization, with all its concomitant advantages (eg cost savings) and disadvantages (narrowing the firm’s focus), whereas adding complexity meant adding or enhancing existing services, which can broaden the appeal to customers. However, if not carefully monitored, complexity can result in loss of control over service quality (Shostack 1987). In the Roche Diagnostics example, however, the reduction in complexity was achieved by reducing steps within a given function, not the function itself. We posit that, regardless of the total number of functions a service organisation performs, touch points within a given function should be perused to see if any can be consolidated or eliminated. Careful consideration would probably lead one to conclude that some moments of truth can be combined and/or eliminated. A scenario familiar to academics will help clarify this issue. Consider students arriving on a university campus for the first time. The students’ first day will typically involve at least five touch points: (1) they interact with one individual to register for their courses, (2) another person to discuss financial assistance, (3) a third person to pay for tuition, (4) a fourth to receive a university services access card, and (5) a fifth to have their photo taken for their access card. Each interaction is a snapshot in time that affects the overall experience. No wonder bewilderment, if not outright frustration, runs high the first day of the term. That day’s experience will be disproportionately affected by the least enjoyable moment in the value delivery process. In this case, five service providers are involved in a process that could possibly be consolidated into two steps (combine steps 1 to 3, and 4 to 5). Combining steps may not reduce the number of employees required – in this case, all the activities still need to be performed – but at a minimum reduces the frustration associated with 196

standing in queues and filling-out paper work. A second proposed action – which may precede or follow the process of reducing touch points – is to prioritise moments of truth. Not all moments of truth are equally important to the customer. For example, in academia we would like to believe that the classroom experience is more important to students’ overall evaluation of the university than is, say, interfacing with the clerk at the campus book store. Keiningham and Goddard (1999) propose creating an importance-performance quadrant, which plots the correlation of the performance of a moment of truth to overall satisfaction on one axis versus the percentage of customers who are delighted on the other. However, caution is advised against overly embracing a resultant rank ordering for two reasons, the first best illustrated by use of an example. In an ideal world there would be few call-ins to a customer help or complaint line. The correlation of performance of this moment of truth to overall satisfaction could therefore be spurious. Yet, Page and Spence (2003) have demonstrated that properly handling a complaint – in their case, a failure with one or more Oracle routers – can actually increase overall satisfaction levels and customer loyalty relative to those who had no complaints. The act of complaining exposes customers to an aspect of the value delivery process that they may not have otherwise experienced; a prompt and courteous resolution was apparently perceived by customers as a demonstrable commitment by the firm to their well-being. Another cause for concern about overly embracing a rank ordering is that overall evaluations are endogenous: they are affected by the ordering of the moment-to-moment responses comprising the total experience (Baumgartner, Sujan & Padgett 1997). A positive snapshot or moment in time that overall ends on a bad note would likely exhibit low correlation with one’s overall evaluation; reversing these two moments would change the correlations as well as perceptions of the overall experience.

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Alternative techniques to establishing rank orderings exist; but the intent here is to be less concerned with the absolute ordering than with the emerging pattern. Moments of truth near the bottom of importance – insofar as being correlated with one’s overall experience or related to percentage of customers that are very delighted – are the first ones that should be considered for possible consolidation or elimination.

ENSURE

APPROPRIATE SER VICESCAPE

In face-to-face services, the employee is part of the servicescape and is thus an important consideration in optimising service value. Bansal et al (2001) discuss the impact of human resource practices on the internal customer (employee), whose actions in turn affect customer perceptions and behaviour. They propose a causal sequence of events starting with HR practices like providing employment security, training and rewarding employees generously, through to external marketing outcomes, like greater customer satisfaction and customer loyalty, both of which improve profitability. Elements of this causal model have received attention before. For example, Berry and Parasuraman (1992) also argue that rewarding employees generously can yield dividends, while differentiating between competence pay (for the type of work performed) and performance pay (for the quality of work performed). Despite the logically intuitive conclusion that pay is positively correlated – albeit not perfectly – with effort expended, it is not uncommon for front-line service personnel to be poorly paid and trained (Singh 2000); as a result, there is often high turnover. Turnover not only drives-up operating costs, but adversely affects employee morale, service quality, and ultimately customer satisfaction and profitability (O’Connell & Kung 2007). Bitner (Bitner 1990; 1992; Booms & Bitner 1982) takes a different perspective when she focuses on the environment. She presents a causal sequence that links environmental stimuli within the organisation (eg ambient conditions,

layout, signage and décor, which collectively result in a perceived servicescape) to the cognitions, emotions and physiological responses these stimuli evoke; these, in turn prompt approach/ avoidance behavioural responses on the part of both customers (eg staying/exploring, spending money) and employees (affiliation, commitment). Lucas (2003) lends empirical support to Bitner’s (1992) propositions within a casino context. He demonstrates the positive impact of seating comfort, cleanliness, floor layout and décor on customer satisfaction, desire to stay and likelihood of recommending the establishment. Importantly, his fine grained analysis of servicescape dimensions sheds insight into the relative contribution of various dimensions. In another study involving a Las Vegas Hotel (Mayer, Johnson, Hu & Chen 1998), guests invited to participate in a focus group most commonly mentioned words like ‘friendly’ and ‘warm’ – in reference to hotel staff – during discussions about the venue’s atmosphere, although they also made reference to issues like size and air quality. In this case it was not natural for customers to disentangle characteristics of the physical environment from the individuals who worked there. Indeed, friendliness of staff was stated as the primary driver of choice of hotel. While these studies focus on customers’ perceptions, Bitner (1990) provides empirical evidence that physical surroundings positively affect the likelihood of employees providing explanations and offers to compensate in complaint resolution situations, characteristics that would arguably be classified as ‘friendly’ by customers. Combining these two perspectives would reach the conclusion advanced by Zeithaml, Bitner and Gremler (2006): profitability is the result of delivering quality services, which in turn are driven by the appropriate physical environment – the servicescape – and trained, motivated and conscientious service personnel. Parasuraman, Zeithaml and Berry (1985, 1988) have, for all intents and purposes, institutionalised this perspective via their service quality assessment

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(SERVQUAL) measure, variations of which have been widely accepted by industry practitioners (cf Grapentine 1998). A common thread in published literature, both empirical and conceptual, is that the constituent components of the proposed framework or measurement tool advanced are in reference to overall evaluations. For example, SERVQUAL measures may be tailored for a specific client and sent to customers to elicit their overall reaction to the relevant organisation. However, recent psychological studies have revealed that overall reactions to a temporal hedonic event – one that plays out over time, as would be the case when visiting a theme park, attending a sporting event or staying at a hotel – are disproportionately affected by specific moments during the overall experience (Fredrickson & Kahneman 1993; Kahneman, Fredrickson, Schreiber & Redelmeier 1993; Ross & Simonson 1991; Varey & Kahneman 1992). Memories of emotion-laden experiences are not reconstructed as continuous flows, but are reconstructed as a series of snapshots (moments) in time (Fredrickson & Kahneman 1993). For anecdotal evidence, recall a recent special evening out with your partner: what quickly comes to mind might be that first sip of wine, selecting your main dishes and the comment made about the slow service. It is these snapshots (moment-to-moment responses) that receive disproportionately large weight in forming overall evaluation. There is considerable evidence to suggest that the last experience has the strongest effect on overall evaluation, referred to as the ‘preference for happy endings’ effect (Ross & Simonson 1991; see also Kahneman et al 1993). In addition to the end state, peak experiences or key moments also receive disproportionate weight. These findings on moment-to-moment responses on overall evaluations lend theoretical support to a view espoused by Disney Corp (reported in Zeithaml, Bitner & Gremler 2006). On average, each customer at a Disney theme park has 74 service encounters per day; it takes only one bad encounter to sully the customer’s total experi198

ence. In other words, each employee–customer interaction, also referred to as a touch point or moment of truth, is a discrete snapshot that can intentionally or otherwise be remembered as a peak experience, whether extremely positive or negative. The last interaction – the final or end moment – should always be regarded as having a particularly strong effect on overall evaluations. Moments of truth afford the opportunity to gauge the quality of a service encounter. We do not imply that removing touch points is always good; however, as discussed below, in situations involving multiple interactions – the Disney example is extreme – not all employee– customer interactions are equally important to the customer, but even those of little importance could become peak moments. In the next section, we discuss a means for identifying touch points and the concomitant value delivery processes these touch points entail. Few employees are equipped to understand their firm’s value creation processes from the customer’s perspective. Identification of touch points within the context of value creation brings this association to surface while also allowing for the opportunity to eliminate touch points that are deemed dispensable (see Figure 1).

DELIVERING A QUALITY EXPERIENCE : A B A C K WA R D I N D U C T I O N P E R S P E C T I V E Having identified moments of truth, the next step is to look introspectively. Shostack (1987) likens the processes associated with service delivery as akin to the raw materials in a tangible product; and to take the analogy further, she posits that these ‘raw materials’ can be engineered for strategic purposes. It is for that reason we make the reference to backward induction: starting from the customer’s perspective, look up at the value creation processes (the chain of events or actors) that support each moment of truth. Who are the internal personnel or suppliers in the internal value chain that connect to each moment of truth? Many employees do not deal directly with customers, but they might support the people who

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do. Lings (1999) provides a nice example: a customer contacts the call centre (a moment of truth below the line of visibility), the call centre’s performance is in turn affected by support received from the IT department, whose performance in turn is affected by the procurement department and so on. If the customer database is not accessible to the customer service representative – eg the computer system is down – frustration levels for both the employee and the customer will increase as can the discord between IT personnel and customer service representatives. Linking the internal value chain to moments of truth to produce an internal marketing schematic is likely to reveal a long chain of actors/actions. In two case studies, one involving a telecommunications company and the other a supplier to the aerospace industry, the number of process steps identified exceeded 300 (Lings 1999). In these case studies, the process of producing the internal marketing schematic revealed ‘duplicated efforts between departments and inefficient transactions between internal customers and suppliers’ (Lings 1999, p. 460). We can probably all relate to contacting a customer service representative who requests personal identification information, only to be forwarded to another department who requests the same identification information, a clear duplication of effort – and a source of frustration. There will be nodes within the internal marketing schematic, such as the IT department, that link to multiple internal value creation processes. These processes (and associated work expectations) must be clear and their priority known so as to effectively counter multiple demands on one’s time. IT departments, for instance, may be tempted to process requests in chronological order, a seemingly equitable solution, but one that is likely to be highly inappropriate because it treats every work order as equally important. As indicated in Figure 1, moments of truth highly correlated with overall perceptions of service quality or customer satisfaction should be supported first.

Just as elucidating moments of truth prompts one to consider their relative importance and their necessity, illuminating the internal sequence of value creation processes involved should prompt three questions: (1) Are all steps in the internal value chain necessary? To err – or procrastinate – is human; (2) If deemed necessary, are the tasks to be performed clear and work activities prioritised? And finally; (3) Do all employees involved in service delivery understand where and how they fit in the internal value chain? While a review of blueprinting seeks to answer the first question, internal marketing touches upon questions two and three (see Figure 1). Berry and Parasuraman (1992, p. 25) define internal marketing as ‘attracting, developing, motivating, and retaining qualified employees through job products that satisfy their needs. [It] is the philosophy of treating employees as internal customers and it is the strategy of shaping job-products to fit human needs.’ We embrace this definition and its variants that view internal marketing as a management practice (cf Joseph 1996; Lings 2000; Kotler & Keller 2006) and expound upon the implications in the next section. But a defect of this definition is that it overlooks question one: Are each of the elements in the internal value chain, hence the person(s) employed to do them, necessary? Internal marketing decisions must stem from a clearly articulated strategy which should involve unearthing, prioritising and pruning moments of truth and the concomitant internal value creation processes the moments of truth entail. Assuming an internal marketing schematic has been developed, we now direct attention to internal marketing practices that engage, enable, empower and reassure employees (Drake 2005).

OPTIMISING THE SERVICE VALUE CHAIN V I A INTERNAL MARKETING ‘It used to be a business conundrum: ‘Who comes first? The employees, customers, or shareholders?’ That’s never been an issue for

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me. The employees come first. If they are happy, satisfied, dedicated, and energetic, they’ll take real good care of the customers. When customers are happy, they come back. And that makes the shareholders happy’ Herb Kelleher, former CEO, Southwest Airlines, 1996 Internal marketing addresses matters of appropriate treatment of employees and shaping job functions and work processes with employees’ needs in mind (Berry & Parasuraman 1992; Joseph 1996; Kale 2007; Kotler & Keller 2006). In the proposed framework we have included two processes; conducting internal market research which then informs the implementation of internal marketing strategies. As part of the implementation phases, we propose five employee initiatives: (1) Become a preferred employer; (2) Know the functions to be performed by each ‘internal customer’ (employee) and make these functions appealing; (3) Hire employees based upon service inclination and interaction skills, and be prepared to train them for technical skills; (4) Acknowledge the powerful role of sharing of information – encourage employees to participate in defining their job functions, the relevant value add processes to which they fit, and even the company’s vision; and finally; (5) Measure, appreciate and reward performance. These initiatives are not hierarchical – they are all important. Appropriately marketing a firm internally will yield external rewards (profits, customer satisfaction etc), even when the external customer is not the focus. We elucidate, starting with the first issue.

I want to work for that company Prospective employees are seldom well-informed about the inner workings of a potential employer, hence the desire to work for a given organisation may initially be driven by how they perceive that firm in the market place, what Kale (2007) 200

calls their corporate citizenship. Thus, one may view Virgin Blue Airlines favourably because it is perceived as a young and hip organisation, an image that may be reinforced by knowledge of employee-directed policies, such as deeply discounted airline tickets. Conversely, the same person might not be favorably disposed toward a tobacco company like Philip Morris, even though they have no idea of internal employment practices. The Marriot Group of Hotels has gained a reputation as a desirable employer because it offers stock option plans, welfare-towork training classes, and English and reading classes to all employees. Arguably these initiatives are prosaic; but to many potential employees the Marriot seeks to attract, such perquisites create a favourable image of the organisation as a place to work. Assuming the external perceptions of a firm are not unfavorable, Berthon, Ewing and Hah (2005) empirically distilled five values or utilities that make an employer attractive, which they label interest, social, economic, development and application value. However, their study does not propose means to achieve these ‘attractive’ employer qualities. We offer some insights. Interest value refers to creating an exciting work environment where workers are encouraged to be creative and are party to novel work experiences (Berthon et al 2005). The Japanese philosophy of Kiazen has shown that even assembly line production processes are conducive to teamwork and creativity. The Japanese usage of Kaizen is ‘to take it apart and put back together in a better way.’ What is taken apart is usually a process or a system and it is put back within a more human workplace. The act of getting employees involved in determining work practices contributes to interest value; and expecting what is beyond the employees’ ability to contribute causes unnecessary stress and anxiety. Social value is in reference to creating a happy, fun work environment, where there exist collegial relationships. Teamwork can be an effective way of encouraging camaraderie and friendships,

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which makes the act of working more enjoyable. Other useful means to create social value are public relations activities directed to employees, such as firm sponsored Christmas parties and retreats. More and more companies are realising the importance of making the workplace enjoyable for employees. The Container Store has a ‘fun committee’ that sponsors activities and events that connects employees to one another (Sisodia, Wolfe & Sheth 2007). According to senior company officials, the committee functions to allow employees to ‘get to know one another at a different level.’ Economic value refers to remuneration, job security and promotion opportunities (Berthon et al 2005), a broad definition, but all pertaining to one’s financial well-being, now and in the future. Costco, a leading US retailer pays its employees about 65 per cent more than WalMart, the world’s largest retailer. Despite this wage differential, Costco’s financial performance far outstrips Wal-Mart. Sisodia, Wolfe and Sheth (2007: 35) explain: ‘Costco’s higher wages buy it reduced recruiting and training costs and better relationships with customers that leads to higher sales per customer and deeper customer loyalty. By contrast, Wal-Mart reportedly hired 620,000 new workers in 2004 just to replace those who left or were let go. By following Costco’s business model, Wal-Mart might save huge sums. Its ‘Everyday Low Prices Everyday’ might even be lower.’ Bansal et al (2001) and Drake (2005) note the benefits of job security, or perhaps better stated as an organisation having a caring attitude toward employees and not being flippant about dismissals. This is not meant to imply employees should never be let go: there may be idiosyncratic reasons (an employee consistently underperforming) or changes in market conditions that require restructuring or downsizing. Arguably, remuneration and job security is less a source of perceived value in tight labour markets than is career advancement opportunity. However, Bansal et al (2001) and Cowhead and Levine

(1992) note that there are certain advantages to downplaying status distinctions and promoting pay equity. For instance, rewarding individual achievers at the expense of the team can adversely affect overall morale. Development value refers to intrinsic rewards, like recognition for a job well done, and preparing employees for career enhancing experiences (Berthon et al 2005). Announcement boards noting the employee of the month are a typical means of creating development value as is a more liberal application of ‘pats on the back’ for outstanding performance, both of which boost employees’ self-worth and confidence. New employee training and on-going training and development signals a commitment by the firm to employees, while preparing them for career advancement. The Container Store in the US provides its first-year employees an average of 241 hours of training versus the retail industry’s average of seven hours (Sisodia, Wolfe & Sheth 2007). This is supplemented by equally lavish on-going training. Application value refers to the opportunity to apply one’s knowledge and to share it with others in an environment ‘that is both customer-orientated and humanitarian’ (Berthon et al 2005). The former, in particular, is regularly stated as a career objective on resumes by students completing tertiary education. This insight suggests that it might be worthwhile for organisations to rethink job descriptions or position their companies differently, particularly for entry level job seekers.

Knowing job functions and making them appealing All employees should have a clear idea of where and how they fit in the internal value chain. Practical experience suggests that functions and responsibilities for various positions are often vague, perhaps intentionally so. For many employees ambiguity is unsettling, and can have adverse psychological consequences and affect work performance, as Teas (1983) discovered with salespeople.

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Another item to put on the internal market research agenda is periodic eliciting of employees’ desires and aspirations. For some employees, full time positions and the opportunity to earn overtime pay are appealing, whereas others may prefer casual shifts. Should an employer want to appeal to both these types of individuals it would be necessary to make available flexible terms and conditions. Management often assumes it knows what is best for employees, yet this is often not the case (Henry 2003), which underscores the importance of conducting internal market research. Such research can cover a variety of issues, role clarity and employee desires being but two.

H i re f o r s e r v i c e i n c l i n a t i o n a n d i n t e r a c t i o n s k i l l s , a n d t e a c h t h e re s t It is easier to teach a person a skill set than it is to change a personality trait – or what some call service attitude (Freiberg & Freiberg 1997). Embracing this perspective means that on-going training becomes self-evident, an issue not relegated to new hires or lower-level personnel. Kale (2007) notes the direct and positive impact of training on employee morale. The organisation is, after all, investing resources developing the employee, a clear signal of its commitment to the employee. Particularly tight labour markets face a Catch 22: because the labour market is so tight, skilled labour is in short supply. There is a heightened need for training; but trained employees become even more attractive to competitors. Astute organisations should therefore think not only of training, but of developing innovative retention strategies, promotion guarantees and longevity bonuses being among them.

Infor mation flows both ways A key component of internal marketing is information flow across all levels of the organisation. This includes formal (eg written policies and procedures) as well as informal exchange of information (hall talk, pats on the back, verbal promises etc). Of relevance here is work in transaction cost economics (TCE) and in particular 202

the material on bounded rationality and opportunism, traits considered fundamental to human nature (Coase1937; Williamson 1975). Bounded rationality stems from asymmetrical information between parties in a transaction (relationship). Consider a person responding to a job announcement. Information about the other party in a relationship (eg what a job candidate knows about the firm or vice versa) may be unobtainable – perhaps intentionally – or too effortful to obtain. In either case, the information – lacked by one party and possessed by the other – can be used for opportunistic purposes. An example might be misrepresenting the extent of effort required to complete a job task, or misrepresenting one’s qualifications. Clear—and more importantly honest—twoway communication mitigates bounded rationality and hence reduces instances of opportunism. We have already emphasised the need to make transparent to employees where and why they fit in the service value delivery chain; this should also involve asking employees what they have to say about their job functions, the necessity of doing the various functions, and any recommendations they may have for streamlining activities. Drake (2005: 17) advises: ‘Involve employees in helping create your company’s vision and then paint a clear and vivid picture of how you want them to execute it’. Doing so boosts morale, increases job satisfaction, and decreases turnover, all of which improve the bottom-line. Kale (2007: 9) offers an additional insight: ‘Open and active communication can be effectively used to convey sympathy and encouragement, thus contributing to team camaraderie and bonding.’ Unfortunately, our experience with several service organisations suggests that attempts at eliciting employees’ perceptions of managementemployee interactions are, at best, half-hearted – so bounded rationality and opportunism persist.

M e a s u re , a p p re c i a t e a n d re w a rd Henry (2003) shares an interesting example concerning differences in perspectives between man-

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agers and employees. In his study, workers rated ‘full appreciation for a job well done’ as one of the most valued aspects of their job, yet management rated it eighth (on a ranking of 1 to 10). Conversely, managers thought good wages was the most important determinant of job attractiveness to employees, but employees listed it fifth. Clearly there is a mismatch. In reference to the five values discussed previously, employers put economic value first whereas employees stress development value. This does not negate the importance of economic value, but it should serve as a signal to keep it in perspective relative to other means of creating ‘value’ for employees. Expressing appreciation increases employees’ pride in themselves and in the job functions they perform, which enhances service quality. Verbal platitudes about the need for employee engagement are not enough. Systematic internal research is essential to measure the degree to which the employer actually delivers the five values sought by employees – interest, social, economic, developmental and application. Since all employees may not place the same level of importance on these values, a flexible reward system could be instituted, where ‘reward’ should be interpreted liberally to include all five values. For example, it might be possible to offer a casual work option as a means of increasing economic value to those not wanting to work full-time and to offer continuing education to those in pursuit of development value. Ultimately the purpose of measuring performance is to appreciate and reward employees, to increase their commitment to the organisation and to motivate them to constantly improve the proficiency with which they perform their job functions. A difficulty in rewarding employees is that many job tasks are based on teamwork. Rewarding teams can build camaraderie, but unfortunately can come at the expense of demotivating the most ambitious and gifted contributor to the group, as individuals familiar with the free rider problem can attest. Singling-

out the contribution of an employee within a team can prove problematic, but that does not diminish the importance of attempting to do so, perhaps through confidential assessments by employees concerning the relative contributions of their colleagues.

P ro p o s e d re s e a rch agenda Service organisations involve customer contact at a level not evidenced in the production and selling of goods. It is the nature and conduct of this provider–customer interface that largely determines customer satisfaction, customer loyalty and enterprise profitability. Identifying the moments of truth, streamlining the operation when feasible, and optimising the performance of the remaining touch points reduces service costs while simultaneously enhancing client satisfaction from the service experience. We therefore urge researchers in service marketing to pay greater attention to the nexus between service blueprinting and internal marketing. Industry-specific empirical research on service blueprinting and touch point consolidation will assist service providers in better configuration of the service-profit chain. It will also help employees understand how they fit into the customer experience and provide explicit meaning and substance to the tasks they perform. Further research into the five ‘employee values’ across industries, markets, and countries is also needed to provide a contingency framework for intelligent internal marketing. Case studies to date indicate that management oftentimes misperceives the relative worth of these values to employees, which is suboptimal for both employers and employees. Some useful research questions that could be asked are: 1. What would be the impact on perceived service quality if a substantial number of touch points in a service were reduced/increased? 2. What is the optimal number and type of touch points for a hedonic experience to be favourably remembered?

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3. What are the key elements in the servicescape that have the most influence on internal marketing? 4. How do the five elements of internal marketing value influence the elimination and prioritisation of touch points? 5. What is the influence of context on blueprinting and internal marketing? 6. Do individual characteristics of the employees influence the service blueprint, and if so, how?

SUMMARY

A N D CONCLUSIONS

Hedonic services are a growth area in western economies as the focus on leisure intensifies. Given the high level of face-to-face contact required to deliver hedonic services, it is important to understand how value is created for both employees and customers. This paper has proposed a framework that integrates service blueprinting and internal marketing to achieve value. While many organisations are starting to measure relationships between individual links in the internal value chain, only a few have related the links in ways that can lead to lasting competitive advantage (Heskett et al 1994). What seems lacking in most cases is a comprehensive approach to decipher the antecedents and consequences of service quality. We have suggested a sequential approach to optimising the service value chain through a closed-loop framework, beginning with service blueprinting, followed by applying internal marketing concepts to the people in charge of service delivery at various touch points and measuring the effectiveness of these initiatives through service quality. We recommend that a comprehensive service blueprinting exercise be conducted prior to any internal marketing discussion. Mystery shoppers can be employed here, thereby ensuring that the blueprint truly captures the customer’s perspective of the organisation. If multiple touch points are involved in performing a job function, it may very well be feasible to remove some contact points while still performing the function as was 204

explained through our call centre example. Each touch point provides the customer an occasion to gauge the performance of an organisation; leaving in unnecessary touch points increases the probability of an unpleasant evaluation. The resulting value creation processes – the ‘raw materials’ in a service enterprise – should be prioritized in terms of their impact on customer experience and firm profitability. While we have explained the rationale for removing certain touch points within the value chain, management may also decide to add touch points so as to differentiate its offerings from competition (Shostack 1987). Regardless, producing a blueprint and prioritising its components is still a vital exercise that forms a precursor to employee recruitment, training, motivation, and retention, frequently referred to as ‘internal marketing.’ Most importantly, we hope this paper will promote sorely needed appreciation of the vital link between service configuration and internal marketing as they together determine the quality and value of the customer experience.

A CKNOWLEDGEMENTS The authors would like to thank the guest editor and two anonymous reviewers for their helpful and constructive comments on an earlier draft of this manuscript.

R e f e rences Baum SH (1990) Making your service blueprint pay off! The Journal of Services Marketing 4: 45–52. Baumgartner H, Sujan M and Padgett D (1997) Patterns of affective reactions to advertisements: The integration of moment-to-moment responses to overall judgments, Journal of Marketing Research 34: 219–232. Bansal HS, Mendelson MB and Sharma B (2001) The impact of internal marketing activities on external marketing outcomes, Journal of Quality Management 6: 61–76. Berry LL and Parasuraman A (1992) Services marketing starts from within, Marketing Management Winter: 25–34.

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Optimising the internal value chain: Principles and practices Berthon, P, Ewing M and Hah LL (2005) Captivating company: Dimensions of attractiveness in employer branding, International Journal of Advertising 24: 151–172. Bitner MJ (1990) Evaluating service encounters: The effects of physical surroundings and employee responses, Journal of Marketing 54: 69–82. Bitner MJ (1992) Servicescapes: The impact of physical surroundings on customers and employees, Journal of Marketing 56: 57–71. Booms, Bernard H and Bitner MJ (1982) Marketing services by managing the environment, Cornell Hotel and Restaurant Administrative Quarterly 23: 35–39. Coase RH (1937) The nature of the firm, Econometrica 6: 386–405. Cowhead DM and Levine DI (1992) Product quality and pay equity between lower-level employees and top management: an investigation of distributive justice theory, Administrative Science Quarterly 37: 302-320. Drake SM (2005) Light Their Fire: Using internal marketing to ignite employee performance and wow your customers, Kaplan Professional Group, Chicago, Il. Fredrickson BL and Kahneman D (1993), Duration neglect in retrospective evaluations of affective episodes, Journal of Personality and Social Psychology 65: 45–55. Freiberg K and Freiberg J (1997) Nuts! Southwest Airlines’ crazy recipe for business and personal success, Broadway Books, NY. George W and Gibson B (1991) Blueprinting: A tool for managing quality in service, in Brown, S, Gummesson, E and Edvardsson, B (Eds) Service Quality: Multinational and multidisciplinary perspectives, pp. 73–91, Lexington Books, Lexington, USA. Grapentine T (1998) The history and future of service quality assessment, Marketing Research 10: 5–20. Hales C and Mecrate-Butcher J (1994) Internal marketing and human resource management in hotel consortia, International Journal of Hospitality Management 13: 313–326. Henry R (2003) Retention One Key to Great ROE, accessed at http://www.vcgsoftware.com/pdf/wp_ROE_ retention.pdf on 7 July 2006. Heskett JL, Jones TO, Loveman GW, Sasser WE Jr and Schlesinger LA (1994) Putting the serviceprofit chain to work, Harvard Business Review 72: 164–175.

Kahneman D, Fredrickson BL, Schreiber CA and Redelmeier DA (1993) When more pain is preferred to less: adding a better end, Psychological Science 4: 401–405. Kale SH (2003) CRM in gaming: It’s no crap shoot! UNLV Gaming Research & Review Journal 7: 43–54. Kale SH (2007) Internal marketing: an antidote for Macau’s labour shortage, UNLV Gaming Research & Review Journal 11: 1–11. Keiningham TL and Goddard MKM (1999) Customer delight and the bottom line, Marketing Management 8: 57–63. Joseph WB (1996) Internal marketing builds service quality, Journal of Health Care Marketing 16: 54–64. Kotler P and Keller KL (2006) Marketing Management, 12th edition, Pearson Prentice Hall, Upper Saddle River, NJ. Lings IN (1999) Managing service quality with internal marketing schematics, Long Range Planning 32: 452–463. Lings IN (2000) Internal marketing and supply chain management, Journal of Services Marketing 14: 27–43. Lucas AF (2003) The determinants and effects of slot servicescape satisfaction in a Las Vegas hotel casino, UNLV Gaming Research & Review Journal 7: 1–11. Mayer KJ, Johnson L, Hu C and Chen S (1998) Gaming customer satisfaction: an exploratory study, Journal of Travel Research 37: 178–183. O’Connell, M and Kung MC (2007) The cost of employee turnover, Industrial Management 49: 14–19. Page R Jr and Spence MT (2003) Is there a relationship between product failure and customer loyalty? Marketing Update, Australian Marketing Institute, May. Parasuraman A, Zeithaml V and Berry LL (1985) A conceptual model of service quality and the implications on for future research, Journal of Marketing 49: 41–51. Parasuraman A, Zeithaml V and Berry LL (1988) SERVQUAL: A multiple-item scale for measuring customer perceptions of service quality, Journal of Retailing Spring: 12-40. Ross WT and Simonson I (1991) Evaluations of pairs of experiences: A preference for happy endings, Journal of Behavioral Decision Making 4:273–282. Schwartz N (2000) Emotion, cognition and decision making, Cognition and Emotion 14: 433–440.

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Mark T Spence and Sudhir H Kale Shostack GL (1984) Designing services that deliver, Harvard Business Review January-February: 133–139. Shostack GL (1987) Service positioning through structural change, Journal of Marketing 51: 34–43. Shostack GL and Kingman Brundage J (1991) How to design service, in Congram, C and Friedman M (Eds), The AMA Handbook for the Services Industries, pp. 221–229, American Marketing Association, Chicago. Singh J (2000) Performance productivity and quality of front-line employees in service organisations, Journal of Marketing 64: 15–34. Sisodia RS, Wolfe DB and Sheth JN (2007) Firms of Endearment: How world-class companies profit from passion and purpose, Wharton School

Publishing, Upper Saddle River NJ. Teas RK (1983) Supervisory behaviour, role stress, and job satisfaction of industrial salespeople, Journal of Marketing Research 20: 84–91. Varey C and Kahneman D (1992) Experiences extended across time: evaluation of moments and episodes, Journal of Behavioral Decision Making 5: 169–185. Williamson O (1975) Markets and Hierarchy, The Free Press, NY. Zeithaml VA, Bitner MJ and Gremler DD (2006) Services Marketing: Integrating Customer Focus Across the Firm (4th edn) McGraw-Hill Irwin, NY. Received 16 February 2007 Accepted 16 October 2007

A N N O U N C I N G I N N O V AT I O N

A N D T H E CI T Y - I N N O V AT I V E CI T I E S A special issue of Innovation: Management, Policy & Practice - volume 10/3 December 2008 ISBN 978-1-921348-17-4

G u e s t e d i t e d b y J a n e M a rceau Adjunct Professor, City Futures Research Centre, University of New South Wales in Sydney* Innovation has become the catchcry of policy makers in most OECD countries as they seek to ensure continued prosperity in changed technological and competitive circumstances. Observers have discussed multiple aspects of innovation, including its stimulants, processes and systems. Others have focused on the geographical distribution of innovative firms, their relationships with universities and other public and private sector knowledge generation and diffusion organisations. Usually this work has focused on regions rather than cities and the characteristics of urban space as an innovation hub or laboratory. The Special Edition will have two themes: Innovation in the City and Innovative Cities 1. Innovation and the City It has long been said that cities are innovation nodes and that much change derives from the crowded life of metropolitan areas. Cities are complex entities and constitute a crowded policy field for those attempting to deal with problems or encourage change. Some research has included observations on the role of 'the city' in innovation and on the differences between cities which stimulate innovation and, as cities have returned to be a focus of public policies of many kinds aimed at economic growth, sustainability and social and cultural development, it is timely to revisit these observations. 2. Innovative Cities Recently both city policy makers and observers have begun to focus on 'innovative cities' where, for example, governance mechanisms, population characteristics and policies make some cities innovative in many domains. This section will focus on whole cities of this kind, or major sections of them. This journal will describe new approaches based on real cities, using the insights of different disciplines and discuss the issues broadly. *Professor Marceau is an Adjunct Professor with the City Futures Research Centre at the University of New South Wales in Sydney. eContent Management Pty Ltd, PO Box 1027, Maleny QLD 4552, Australia Tel.: +61-7-5435-2900; Email: [email protected] www.innovation-enterprise.com

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Copyright © eContent Management Pty Ltd. Journal of Management & Organization (2008) 14: 207–218.

Employee/customer interface in a service crisis: Impact of senior management attributes and practices on customer evaluation NELL K IMBERLEY Department of Management, Monash University, Caulfield East VIC, Australia CHAR MIN E E J H ÄRTEL Department of Management, Faculty of Business and Economics, Monash University, Caulfield East VIC, Australia ABSTRACT Customer power is an ever-increasing phenomenon, particularly in relation to service failure. Service failures not only elicit strong emotional reactions from disgruntled customers, but may ultimately lead to a severing of the service provider–customer relationship. A significant but overlooked area of research relates to the behavioural processes which shape customers’ perceptions of service failure and recovery. As front-line staff are frequently the customer’s only contact in the service encounter, they act as the key referent point in the literature with regard to service quality, speed and convenience. However, it is asserted that as employees of the organisation, senior management also plays an important role. This conceptual paper draws from research in the field of services marketing and organisational behaviour to provide evidence which suggests that customer responses to a service crisis are likely to be affected by perceptions of senior management behaviours and character attributes as generally just. We propose a cumulative effect of these justice perceptions on customer emotions and trust. In the wake of exceptional service failure, we argue, these factors play a vital role in shaping how customers may respond to such events. Keywords: services marketing; service failure; service recovery; emotions; trust; justice

C

ustomer satisfaction is central to business success and is linked to profits and market share (Sparks & McColl-Kennedy 2001). On the other hand, a crisis in customer confidence as a consequence of exceptional service failure (determined by the number of customers affected and/or the impact of the failure) can occur in any organisation and because of the enormous effects on stakeholders and business viability, it is an impor-

tant area for management and academic concern (LaPlant 1999; Pearson & Clair 1998). For example, after the Enron crisis, Arthur Andersen surrendered its licences to practise and lost nearly all of its clients and most of its worldwide staff of approximately 85,000 employees (Stephens 2002). Similarly, an unofficial strike by British Airways check-in staff in 2003 resulted in thousands of

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stranded passengers and a five per cent drop in the value of BA shares (Elliott, Harris & Baron 2005). The process of handling service failures is referred to as service recovery (Sparks & McCollKennedy 2001). Tax et al (1998) suggest that the ability to recover service failures contributes to customers’ positive evaluations of the service and the organisation, thereby increasing the potential for customer loyalty, retention rates and bottom-line performance. In terms of the front-line employee’s responses for redressing service failure, these generally include apologising to the customer, providing customers with explanations as to the nature of the service failure, empowering front-line staff to resolve the issue and/or offering compensation (Sparks and Callan 1996; Sparks & McCollKennedy 2001). In practical terms, such remedies may translate into customers being upgraded to business class on a flight, being allocated more comfortable accommodation, being compensated with a free meal or drinks, having an extra night’s free accommodation, assistance in solving the problem, and so forth. The responses of front-line employees to service failures, however, are shaped by senior management’s commitment to service demonstrated by their actions, values, and communications. When an extreme service failure, such as a crisis occurs, senior management take on the critical interface role between the customers and the organisation and thus directly influence the perceptions and attitudes of customers. Researchers have shown that the communication a company provides regarding a crisis, as well as the message source, influence the crisis outcome (Griffin, Babin & Attaway 1991; Jorgensen 1994, 1996). These findings raise the possibility that the characteristics and behaviours of company senior managers, impact the way in which an exceptional service failure is likely to be framed by customers. The features which shape the course of customer scrutiny are poorly understood, and it is to this gap in particular that this paper aims to contribute. In this conceptual paper, we draw upon theories of justice, trust and emotions. This paper com208

mences with a brief overview of a Model of the employee/customer interface during a service crisis. This is followed by discussion of senior management practices and attributes which influence customer perceptions. The next section reviews and integrates the justice literature focusing on customer perceptions of justice and attitudinal outcomes, in particular, trust. The paper finally examines the mediating effects of emotion before it concludes and suggests areas for further research. The Model of the employee/customer interface during a service crisis assumes that senior managers play a significant role in the context of a service crisis. The model depicts senior management practices and character attributes as affecting customer perceptions of justice and trust. A number of practical implications ensue from the model, including the importance of company managers to be seen by customers as communicating effectively, encouraging customer voice and adopting respectful practices. When these perceptions are in place, customers are likely to perceive the organisation as just, which in turn increases the likelihood of high trust and positive emotional responses. This is expected to result in less post-crisis customer dissatisfaction and consequently, less loss of customer confidence, sales and share prices. On the other hand, when perceptions of justice are low, customers are likely to respond with less trust and negative emotions, escalating the financial damage resulting from the crisis. The model is depicted in Figure 1 and a rationale for the proposed linkages is provided in the following sections.

THE IMPACT

OF SENIOR MANAGEMENT PRACTICES AND CHARACTER ATTRIBUTES ON CUSTOMER PERCEPTIONS

Service industries are very conscious of service failures and the subsequent implications for negative customer evaluations. If the organisation is aware of the service failure, considerable effort is then directed toward the recovery process. As Sparks and McColl-Kennedy (2001: 209) comment, ‘Knowing how to act in the recovery process, what to say, what to do, the extent of concern to

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Senior management practices in response to service failure: Communication quality: • Causal accounts • Ideological accounts • Referential accounts • Procedural accounts • Penitential accounts Voice/participation Respectful treatment of customers

Character attributes of senior managers: • Integrity • Benevolence • Ability P2a

+

P1a

Front-line Employee responses

P1b

+

P2b

Perceived justice of company behaviour: • Distributive • Procedural • Informational • Interpersonal

+

P3

P4

Customer emotional responses

P4

+ Customer trust of organisation

-

P5

Negative financial impact of service

Note:

solid line shows direct relationship

FIGURE 1 : A

dotted line shows mediated relationship

M O D E L O F T H E E M P L O Y E E / C U S T O M E R I N T E R FA C E D U R I N G A S E R V I C E C R I S I S

express, and the degree of voice an organisation should give to the complaining customer appear to be important to the overall success of a recovery attempt.’ The Model of the employee/customer inter-

face during a service crisis posits that the practices and attributes of senior management influence customer attitudes, particularly trust. This section of the paper discusses how customers evaluate sen-

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ior management practices and attributes through heuristics, then explores specific management actions. It also examines the effects of senior management character attributes on customer perceptions of trustworthiness.

Fair ness heuristic theor y Theorists argue that scenarios, such as service failure, trigger the use of fairness heuristics or ‘shortcuts’ by customers to assess the fairness or otherwise of outcomes, processes and treatment (Van Den Bos, Wilke & Lind 1998). In such circumstances, customers reflect on their experiences with the organisation and its management (Van Den Bos et al 1998). An event occurs (such as a service failure) to which senior management responds; the customer perceives the response to the event as fair or unfair; in turn, he or she responds positively or negatively toward the organisation. Specific senior management practices such as communication, encouraging customer voice and respectful attitudes toward customers, influence customer justice perceptions.

Senior management practices Typically, senior management practices during an exceptional service failure include a communications strategy. A number of useful dimensions of information as cognitive schema are offered by Bies (1987) who refers to these dimensions as ‘accounts’. There are five types of social accounts. For example, causal accounts explain the reasons for an event, usually making reference to the environmental context. Ideological accounts convey the vision and values of the organisation. Referential accounts establish new frames of reference which help customers evaluate the success of handling the event. Penitential accounts, on the other hand, are aimed at ameliorating negative consequences by expressing regret for any adversity customers may incur due to the event (Cobb, Wooten & Folger 1995; Griffin, Babin & Attaway 1991; Weinberger, Romeo & Piracha 1991). Studies examining customer responses indicate that confession, apologies, expressions of 210

regret, restitution and acceptance of responsibility are most favourably received followed by excuses then justifications and least favourably, denials and silence (Braaten, Cody & DeTienne 1993). Together, these accounts provide customers with information as to the justification for the response adopted by the organisation, as well as indications as to the credibility of the source of information. Thus, social accounts can provide an overall picture and common understanding of context, as well as perceptions of fairness. Customer ‘voice’ is also expected to play a role in perspectives of fairness as it allows some degree of influence in relation to the service recovery process. Voice allows customers to express their concerns or views, their feelings, appeal against decisions, and to provide input into the process (Morrison & Milliken 2000; Paterson & Cary 2002). Procedures that allow customers to express their opinions are likely to increase their commitment to the organisation and, in the case of service recovery, are important in influencing levels of customer satisfaction (Sparks & McColl-Kennedy 2001). While the expression of views is seen to be beneficial for the customer, from the company’s perspective failure to acknowledge and act on the problems they have identified may lead to further dissatisfaction (Blodgett et al 1995; Tax et al 1998). Another significant aspect of senior management behaviour relates to their attitudes toward customers. Respectful treatment of customers by senior managers can be translated as the extent to which they are treated with dignity, politeness and honesty during the service recovery process (Tax et al 1998; Tyler & Bies 1990). Injustice is perceived when customers experience a violation of a code of conduct, an insult or are otherwise treated with disrespect. Deceptive or inconsiderate acts on the part of companies during a service crisis could well be perceived as violating customer perceptions of fairness (Konovsky 2000). The way customers are treated is likely to have a significant impact on their perceptions of justice, not only about the service recovery procedures adopted by senior

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managers, but also about the moral obligations to treat everyone fairly (Cohen-Charash & Spector 2001; Saunders & Thornhill 2003: 364).

Senior management character attributes Customer perceptions of the character attributes of senior managers are also important. In the context of a service crisis, customers make sense of the organisation and its trustworthiness based on shared information and observation. In this paper, it is argued that customers form such judgements by observing any consistency between management rhetoric and action, as well as management’s level of behavioural integrity. A review of the literature relating to antecedents of trustworthiness suggests that there are three key attributes which may influence perceptions of senior management trustworthiness (Mayer et al 1995). These include: integrity, benevolence and ability.

Integrity, benevolence and ability While communication is important in generating positive perceptions, so too is the alignment between an senior manager’s words and deeds. If, for instance, senior managers are seen to act with integrity, and keep their promises, customers may feel they are trustworthy and may express confidence in the organisation. Thus behavioural integrity refers to the perceived degree of congruence between values expressed by words and action, or what is commonly referred to in the workplace as ‘walking the talk’. It frequently includes consistency in adhering to values and promises. The perception of integrity also depends on the consistent pattern of behaviours that are exhibited by leaders as well as the moral principles that customers infer as underlying these behaviours. In a longitudinal study conducted by Bews & Rossouw (2002), integrity was found to be a predictor of trustworthiness. It is unlikely that customers will trust individuals whom they perceive to be dishonest or manipulative. The second attribute of benevolence is defined as ‘the perception of a positive orientation of the

trustee toward the trustor’ (Mayer et al 1995: 719). In the services marketing literature, benevolence is perceived by some authors as inherent in the definition of trust (Doney & Cannon 1997: 36). In the context of service failure and recovery, benevolence relates to the extent to which managers want to do good deeds for their customers. While, at first glance, benevolence may appear to be closely linked to treating others with dignity and respect, it also includes acts undertaken in the interests of customers, such as loyalty, concern and goodwill (Bews & Rossouw 2002). Therefore, empathy and social consideration would be attributes of benevolent senior managers. This is important in terms of customer appraisals of crisis situations. The final attribute relevant to trust is ability. Here, the term ‘ability’ is differentiated from ‘competence’. Competence refers to technical expertise in a specific and fixed field, while ability relates to skills and aptitudes in another domain, thus reflecting a broader range of expertise, for example interpersonal communication. Ability therefore relates to the task as well as the context. The belief that senior managers have the ability to successfully deal with a crisis may lead to trust and to positive customer attitudes and emotions.

Influence of senior management p r a c t i c e s o n f ro n t l i n e e m p l o y e e s Front-line employees are usually the first point (or only point) of contact for dissatisfied customers and the success or otherwise of service recovery is often dependent upon their effectiveness (Boshoff and Allen 2000). In order to facilitate service recovery, it is expected that front-line staff possess the skills and abilities which enable them to interact with disgruntled customers quickly, flexibly and with authority (Lewis & Gabrielsen, 1998). The services marketing literature asserts that appropriate generic skills should be included in a front-line employee’s position description, and that they should be given adequate training in relation to company policy, warranties, anger diffusion and interpersonal skills

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(Tax et al 1998). However, as Sparks and McCollKennedy (2001:210) assert, ‘front-line service providers do not always know how far they should go with their attempt to recover the problem, whether they should express a considerable amount of concern, whether they should compensate the customer or follow company policy or do something special for the customer.’ Thus, the extent to which front-line employees can act may be constrained by organisational rules, procedure and culture (Lewis & Gabrielsen 1998). While front-line employees are indeed critical to service recovery, senior management leadership can affect front-line employees’ confidence and commitment to service. Senior managers act as role models for the organisation. Role modelling demonstrates senior management’s commitment to service because their behaviour reinforces attitudes, values and behaviours necessary to implement appropriate service by front-line employees further down the organisational hierarchy (Boshoff & Allen 2000). Moreover, when there is a service crisis, senior managers are ultimately responsible for solving problems, resolving conflict and allocating resources (Cobb, Wooten & Folger, 1995). When an organisation’s reputation is at stake, it is clearly the responsibility of senior management as spokespersons for the organisation to respond appropriately (Siomkos & Shrivastava 1993). Based on the role of front-line employees and the discussion above pertaining to the role modelling effect of senior management, we propose that: Proposition 1a: Front-line employee responses will reflect the role modelling of senior management’s commitment to service. Proposition 1b: Front-line employee responses will have a direct effect on customers perceptions of the justice of company behaviour.

CUSTOMER

PERCEPTIONS OF JUSTICE

Customer perceptions of fairness are important. In the context of a service crisis, customers expect certain things to happen ‘as a matter of right’ and therefore, make comparisons between their expec212

tations and the actions undertaken by senior managers (Daly & Geyer 1994: 624). Four types of justice judgements have been identified in the justice literature: the degree to which the distribution of outcomes is perceived as fair (distributive justice), the degree to which the policies and procedures used to distribute outcomes are perceived as fair (procedural outcomes), the degree to which interpersonal treatment is perceived as fair (interpersonal justice) and the degree to which the dissemination of information is perceived as fair (informational justice) (Cohen-Charash & Spector 2001; Smith, & Bolton 2002). The following passage briefly examines the four major justice dimensions and their relationship with service recovery. Perceptions of distributive justice arise whenever there are explicit organisational allocations and outcomes, such as an apology or financial compensation to customers in the form of a refund, vouchers or discount off the service (Cohen-Charash & Spector 2001; Saunders & Thornhill 2003: 362; Sparks & McCollKennedy, 2001). Sparks and Callan (1996) also suggest that the value of compensation should be appropriate to the service failure. Customer satisfaction is not only based on financial or other outcomes, but on the fairness of the procedures adopted to reach those outcomes (Mishra 1996 in Ellis & Shockley-Zalabak 2001; Tax et al 1998). A fair complaint procedure should be ‘easy to access, provide the complainant with some control over the disposition, is flexible, and is concluded in a convenient and timely manner’ (Tax et al 1998: 62). The way customers are treated (interpersonal justice) is likely to have a significant impact on their perceptions of fairness, particularly when customers express frustration and anger with the service failure (Tax et al 1998). The justice literature provides an overview of the range of actions that offend others and arouse feelings of injustice. Sources of disrespectful treatment may include unjustified blame, violations of promises, failure to admit an error, giving directives in an inappropriate tone and ruthless use of one’s power (Miller

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2001). Insults or disrespectful treatment by others are a source of anger, resentment, aggression and moral outrage (de Lara 2006; Miller 2001). While the services marketing literature frequently refers to front-line employees who enact the service recovery process as the source of justice, it is feasible that customers perceive senior managers as a source of interpersonal justice or injustice through symbolic communication and observation, even though these exchanges may occur less frequently than their interactions with front-line staff (Sparks & McColl-Kennedy 2001; Tax et al 1998). Informational justice refers to individuals’ perceptions as to the quality of communication during a service crisis. Information is important because it not only provides a rationale for outcome decisions, but also reduces uncertainty and anxiety in customers over time (Armenakis, Harris & Mossholder 1998; Daly & Geyer 1994). As mentioned previously, Bies’ (1987) social accounts, or explanations provide customers with information as to the justification for decisions, as well as indications as to the credibility of the source of information. Research also suggests that information conveyed verbally rather than in writing is more effective in enhancing justice perceptions (Shapiro et al 1994 in Konovsky, 2000). In contrast, a lack of explanation may be perceived as unfair, generating resentment toward management and outcomes (Daly 1995). Paterson and Cary (2002: 84) cite several characteristics of successful communication: helpfulness, openness (Miller, Johnson & Grau 1994 in

Paterson & Cary 2002); accuracy, timing and completeness (Richardson & Denton 1996).

Influence of senior management practices on tr ust In terms of the Model of the employee/customer interface during a service crisis, it becomes apparent that perceived senior management attributes, as well as organisational activities, contribute to perceptions of justice and trustworthiness by customers. As Cobb et al (1993: 135) assert, ‘leaders perceived as fair command loyalty, commitment and trust’. Figure 2 shows that trustworthiness is determined by some combination of integrity, benevolence and ability, however, trustworthiness may also be temporal. Events or incidents, such as the lack of follow-up during service recovery, can prompt reappraisal of these attributes in the future (Mayer & Davis 1999). Extending these findings to the employee/customer interface, it is asserted that if senior managers are seen to act with integrity and have the intention and ability to successfully deal with a crisis situation, this may lead to positive customer attitudes and behaviours. Based on the foregoing discussion on customers’ perceptions of justice and the practices of senior management, we propose: Proposition 2a: Customers will make justice judgements about a company based on what they observe to be practices of its senior management in dealing with a service crisis.

Senio r executive behaviours: Ability Benevolence Integrity

Lens

F I G U R E 2 : TR U S T W O R T H I N E S S

Customer perceptions of trustworthiness

Trust attitude

B A S E D ON E X E C U T I V E AT T R I B U T E S

Source: Caldwell & Clapham, (2003: 352)

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Proposition 2b: Customers will make justice judgements about a company based on their perceptions of the character attributes of the company’s senior managers.

Justice and tr ust There is a clear link between justice perceptions and the development and maintenance of trust (Weiss et al 1999). The justice literature asserts that all major dimensions of organisational justice are deemed to be differentially related to trust in the organisation (Aryee et al 2002). The services marketing literature acknowledges the importance of trust in the establishment, development and maintenance of successful relational exchanges (Doney & Cannon 1997; Ganesan 1994; Morgan & Hunt 1994). High quality relationships therefore involve parties trusting that the other parties (individual, group or organisation) will meet their obligations, and this has important implications for service failure and recovery, particularly restoration efforts (Konovsky & Pugh 1994). In the marketing literature, trust is also significant in influencing long-term relationships with customers. This is based on the reduction of risk associated with opportunistic behaviours and increased confidence in the company’s future actions (Ganesan 1994). The service provider signals future actions by showing concern for customers and by developing a reputation for fairness. The customer chooses to trust the service provider based on careful consideration as well as credible evidence. In a service failure and recovery scenario, the quality of communication, the fairness of the recovery procedures and senior management attitudes toward customers and subsequent actions toward restoring customer satisfaction, are all elements which can be monitored and assessed by customers. It can therefore be said that justice influences customer behaviour through generating or degenerating trust.

MEDIATING

EFFECTS OF EMOTIONS

The marketing literature defines emotions as ‘mental states of readiness that arise from cogni214

tive appraisals of events of one’s own thoughts’ (Bagozzi, Gopinath & Nyer 1999 in Smith & Bolton 2002:7). In a service crisis, there are two opportunities for customer emotions to come into play. The first occasion arises from the service failure itself, and the second emanates from the service recovery process. Service failure can produce very strong negative emotions in customers, such as irritation, annoyance, and anger, and these emotions influence service evaluations, hence the pressure on organisations to ensure that service recovery is successful (Smith & Bolton 2002). As Smith and Bolton (2002: 5) suggest, ‘customers are more observant of recovery service than routine first-time service.’ The importance of a fair recovery process cannot be underestimated. Research reveals that individuals who perceive that they are treated fairly will experience positive emotions, while those who perceive injustice, will experience negative emotions (Chebat & Slusarcyzk 2005; Weiss et al 1999). Emotional responses to justice/injustice also vary across the justice dimensions (Barclay et al 2005; Chebat & Slusarcyzk 2005). Distributive justice is regarded as the most tangible and easily assessed of the relevant justice dimensions. The fairer the distribution of outcomes to the customer, the more likely it is that he or she will feel positively (Hegtvedt & Killian 1999 in Chebat & Slusarcyzk 2005). Generally, the perception of unfavourable outcomes has been found to be consistently related to anger and resentment, not surprising in instances where customers are inconvenienced (Stecher & Rosse 2005). From an interpersonal perspective, Miller (2001) contends that insults or disrespectful treatment of employees are a source of anger and aggression. Recent research revealed that both perceived injustice arising from the distribution of outcomes and disrespectful and insensitive treatment by senior managers produced significant main effects on negative emotions (Stecher & Rosse 2005). Given the link between justice judgements and emotions (Chebat & Slusarcyzk 2005), it is reasonable to expect that the financial impact of a service crisis

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(ie customers’ behaviour) will be influenced by a justice–emotion–trust linkage. We therefore contend that a company’s recovery efforts should be focused on customer perceptions of justice. On that basis, we also propose that customers’ emotional responses to their perceptions of the company as just will mediate their trust in the organisation. Consequently, we propose: Proposition 3: Customers’ justice judgements about a company will be positively associated with customers’ emotional responses to a successful service recovery. Proposition 4: The relationship between customers’ justice judgements about a company and their trust of the company will be mediated by their emotional responses to the justice judgement. As Tax and colleagues (1998) note, bottomline performance is likely to be influenced by the extent to which customers hold a positive evaluation of the service and the organisation. Trust not only facilitates positive evaluations, but it facilitates confidence that promises and one’s interest will be met (Ganesan 1994; Konovsky & Pugh 1994). Thus we propose: Proposition 5: The financial impact of an exceptional service failure will be negatively related with the level of customer trust in the organisation.

CONCLUSIONS Service crises can have enormous effects on the success and long-term viability of providers. Often they elicit strong emotional reactions from disgruntled customers, which may ultimately lead to a severing of the service provider-customer relationship. This conceptual paper examined the behavioural processes which shape customers’ perceptions of exceptional service failure and recovery. It proposed a Model of the employee/customer during a service crisis which asserts that customer responses to a service crisis

are likely to be affected by perceptions of senior management practices and character attributes as just. In the past, the services marketing literature has focused on front-line employees as the focal point for service recovery, however, this model acknowledges that in the context of a service crisis, the behaviours and character attributes of senior management are also significant. Research linking various senior management practices relating to a service crisis may assist in identifying the role and emphasis given to management practices by consumers affected by service failure, as well as whether attributes of the consumer or service failure moderate their influence. Further research is required to identify the information cues consumers use to make evaluations regarding an organisation’s management practices and the character traits of its leaders. Such investigations will assist in developing a holistic understanding of service failures as well as organisational practices which ameliorate negative consequences. A future research agenda flowing from the model developed in this paper follows. Firstly, empirical investigations of the consequences for front-line employee responses of senior management practices in response to a service failure are required. The quality of communication as assessed by various accounts and respectful treatment of customers, as well as a participative approach by senior management, is expected to show a flow-on effect to front-line employee responses. The quality of senior management practices and front-line employee responses, in turn, are both expected to show a positive association with customers’ perception of the fairness of company behaviour. Secondly, customers’ justice judgements are expected to be positively correlated with the level of integrity, benevolence and ability customers perceive senior managers to possess. Customer justice perceptions are expected to significantly impact customer trust of the organisation and customer emotions. Thirdly, justice perceptions are expected to influence trust through the emotions they evoke. Finally, customer trust is

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expected to be fundamental to the financial impact a service crisis exerts. Investigation of each of these links in the employee/customer interface during a service crisis is expected to reveal specific employee and organisational development practices and monitoring systems which underscore effective service crisis management. A number of practical implications ensue from the model, including the importance of company senior managers to be seen by customers as communicating effectively, encouraging customer voice and adopting respectful practices. When these perceptions are in place, customers are likely to perceive the organisation as just, which in turn increases the likelihood of high trust and positive emotional responses. Therefore the enactment of these behaviours over time and in a crisis situation are expected to result in less post-crisis negative behaviour and, consequently, less loss of customer confidence, sales and share prices. In the wake of exceptional service failure, we argue, that justice, trust and emotions are factors which play a vital role in shaping how customers may respond to such events.

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EPILOGUE Untangling the employee–customer interface for services R AYMOND P F I S K Professor and Chair, Department of Marketing, McCoy College of Business Administration, Texas State University-San Marcos, San Marcos TX, USA Keywords: employee; customer; interface; marketing; service

I NTRODUCTION

T

he English word ‘service’ originates in the Latin word ‘servus’, which means slave. Many of the modern difficulties between employees and customers are embedded in that distant and unfortunate past. Academic service researchers have been concerned with employee –customer interfaces (or customer–employee interfaces as it is frequently phrased in marketing) from the earliest days of service research in the 1970s and 1980s. In the service marketing literature, virtually all of the early researchers saw a disconnection between the traditional managerial tools known as the marketing mix (the four Ps) and managing services. Booms and Bitner (1981) proposed three new marketing mix tools for services: participants, physical evidence and process. Similar points were made when Steve Grove and I (Grove & Fisk 1983) proposed a theatrical perspective for managing services, which described service organisations and service customers in terms on actors, audience, setting and performance. Both of these perspectives placed special emphasis on people and their interaction, which was rather new for the larger field of marketing. People and their interaction is the essence of this special issue of the Journal of Management and Organization on employee– customer interfaces.

Today, employee–customer interfaces are central to understanding service organisations and service customers. For example, major service marketing textbooks devote considerable attention to employee–customer interfaces (Fisk, Grove & John 2008; Lovelock & Wirtz, Zeithaml & Bitner 2006). One of the most influential concepts in services is a triangular classification model of services marketing that was first developed by Grönroos (1990) and was later elaborated by Kotler (1994) and Brown and Bitner (2006). In many ways, this model captures the modern intermingling of marketing and management functions. The services marketing triangle model (See Figure 1) is based on three key components: organisations, employees, and customers. Between these three components are three forms of services marketing: internal marketing, external marketing and interactive marketing. Internal marketing is the marketing effort by an organisation directed at those who provide services. External marketing is the marketing effort by the organisation directed at customers. Interactive marketing is the marketing effort by the service employees directed at the organisation’s customers. This model includes all the interactions between any service employee and any customer.

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F I G U R E 1 : TH E

SER VICES MARKETING TRIANGLE

Source: Brown SW and Bitner MJ (2006) Mandating a services revolution for marketing, in The Service-Dominant Logic of Marketing: Dialog, debate and directions, RF Lusch and SL Vargo (Eds) Armonk NY: M.E. Sharpe.

Brown and Bitner (2006) added the role of promises to the triangle model of services marketing. Internal marketing enables promises, external marketing makes promises and interactive marketing keeps promises. In short, interactive marketing is where the organisation proves its commitment to serving customers. The importance of interactive marketing was a major reason we (Fisk, Grove & John 2008) chose to title our book Interactive Services Marketing. ‘Untangling’ is the first word in the title of this epilogue because I think it captures the great research challenge in studying human interactions. Human interaction is fundamentally entangled. Indeed, it might even be said that without entanglements what would be the point of interaction. The entanglement is physical (situations and environment) and psychological (both emotional and cognitive). Further, as humans we cannot pretend to be completely dispassionate in our research. We are entangled, too. What can we do to untangle this proverbial Gordian knot? We can label the parts of the knot and then tug on the parts until we pull them briefly apart.

COMMENTARY

ON K E Y THEMES

From my perspective the eight articles in this special issue untangle employee–customer inter220

faces into two broad themes. Three of these articles are concerned with characteristics of people (employees and managers) and five articles are concerned with situational influences (external and internal influences).

Characteristics of people Leanne Cutcher examines the employee characteristic of service orientation. She found that service oriented employees resist organisational changes that are less customer-oriented. Jane Seiling proposed a conceptual framework for understanding organisational and customer advocacy behaviors by service employees. Her model helps explain key aspects of both internal and external marketing. Nell Kimberley and Charmine Härtel studied the role of senior managers during a service crisis and proposed a model of the employee–customer interface during crisis. Their logic that senior managers should model appropriate front-line behaviors during a crisis is quite compelling.

Situational influences These situational influence articles concern work climate, service climate, organisational practices and internal influences, too. Rico Lam and Dora Lau propose a conceptual model of a trusting cli-

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mate and retail customer satisfaction. A work climate based on trust encourages employees to engage in discretionary behaviors that are beneficial to customers. Angela Martin examines the influence of service climate (a similar concept to work climate) by empirically investigating the relationship between service climate and the psychological well being of university staff. Like work climate, positive service climates are good for the employee–customer interface. Amanda Beatson, Ian Lings and Siggi Guddergan examine the influence of service-oriented organisational practices on employee attitudes. Like work climate and service climate, positive organisational service orientation is good for employees. Mark Spence and Sudhir Kale examined how the internal environment influences customer outcomes and experiences. They proposed an interesting framework for service value chain optimisation that is built on service blueprinting and internal marketing. Loraleigh Keashly and Joel Neuman studied aggression at the service delivery interface. While some aspects of such aggression can be termed characteristics of employees or customers rather than situational influences, my own prior research on customer rage (Grove, Fisk & John 2004) found that a very large portion of customer rage incidents were situational. Preventing such aggression is essential to providing satisfactory employee–customer interfaces.

F UTURE

RESEARCH ON THE EMPLOYEE –CUSTOMER INTERFACE

In 2000, Steve Grove, Joby John and I (Fisk, Grove & John 2000) published a collection of perspectives from ten services experts: Leonard L. Berry, Mary Jo Bitner, David Bowen, Stephen W. Brown, Christian Grönroos, Evert Gummesson, Christopher Lovelock, Parsu Parasuraman, Benjamin Schneider, and Valarie Zeithaml. Each of them commented on the future of services marketing, and we synthesised their perspectives in a subsequent article (Grove, Fisk & John 2003). One of the themes that emerged from the comments of the ten experts was a need for more research on the customer–employee interface.

From my perspective the topic of employee– customer interfaces will continue to be an important topic that deserves further research. After all, human beings are social creatures and interaction is the essence of social behavior. In the bustling economies of our modern world, the social interaction between employees and customers is emblematic of the service economies. Here are my thoughts on where I think future research on the employee–customer interface is needed: service arts and service technology.

Ser vice ar t s Recently, IBM created a major initiative called Service Science, Management and Engineering (SSME) (http://www.ibm.com/university/ssme). In 2006 (Grove, John & Fisk 2006) and 2007 (Fisk, Grove, Daly & Ganz 2007) my coauthors and I have argued that one more part of the service field is needed: service arts. We think there are four significant benefits to developing and including service arts in the service domain. First, the arts are concerned with aesthetics and beauty, which is essential to service design. Second, the arts focus heavily on creativity, one of the most precious of human capacities. Third, the arts are learned skills that draw on centuries of rich history for inspiration and guidance. Fourth, the arts are most capable of stirring human emotions and delivering joy to the human experience. Without emotional content, a service would have no ability to connect with its employees or customers. In short, I think the future of research on employee–customer interfaces should include perspectives and scholars from service science, service management, service engineering, and (especially) service arts.

Ser vice technology Technology is rapidly changing service delivery. More and more employee–customer interactions are mediated by service technology. My colleagues Lia Patrício, João Falcão e Cunha and I (Patrício, Fisk & Cunha 2008), have developed a service blueprinting tool that can enable service organisations to create service delivery systems that allow

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customers to choose different levels of interaction with employees (face to face, via telephone or via the Internet). With the rapid pace of technological change, more research is needed on the use of new service technologies in future employee–customer interfaces. For example, how does the service experience change when both the employee and the customer interact in virtual worlds like Second Life (http://secondlife.com/) via avatars? The use of such service surrogates may become commonplace. Is there a future for employee avatar-customer avatar interface research?

CONCLUSIONS In this epilogue, I have sought to comment on both the ancient and the modern nature of the employee–customer interface. Topics that are so deeply embedded in the complex fabric of human relationships can never really go out of style and they never cease to fascinate. In our private life, social relationships with our friends and family are essential to personal happiness. In our public life, social relationships between employees and customers are essential to enjoying working and to enjoying being a customer.

R e f e rences Booms BH and Bitner MJ (1981) Marketing strategies and organizational structures for service firms, in Marketing of Services. JH Donnelly and WR George (Eds) Chicago: American Marketing Association, pp47–51. Brown SW and Bitner MJ (2006) Mandating a services revolution for marketing, in The Service-

N O W

Dominant Logic of Marketing: Dialog, debate and directions. RF Lusch and SL Vargo (Eds) Armonk, NY: M.E. Sharpe, Inc. Fisk RP, Grove SJ, Daly A and Ganz W (2007) Service Arts: Broadening the Services Field, Presentation at the AMA Frontiers in Service Conference, San Francisco, California. Fisk RP, Grove SJ and John J (2000) Services Marketing Self-Portraits: Introspections, reflections and glimpses from the experts. Chicago: American Marketing Association. Fisk RP, Grove SJ and John J (2008) Interactive Services Marketing (3rd edn) Boston: Houghton Mifflin. Grove SJ and Fisk RP (1983) The dramaturgy of service exchange: An analytical framework for services marketing, in Emerging Perspectives on Services Marketing, LL Berry, LG Shostack and GD Upah (Eds) Chicago: American Marketing Association, 45–49. Grove SJ, Fisk RP and John J (2003) The future of services marketing: Forecasts from ten services experts, Journal of Services Marketing, 17: 107–121. Grove SJ, Fisk RP and John J (2004) Surviving in the age of rage, Marketing Management March/April: 41–46. Grove SJ, John J and Fisk RP (2006) Back to the future: Putting the people back in marketing, in Does Marketing Need Reform? Sheth JN and Sheth RS (Eds) Armonk, NY: M.E. Sharpe. Lovelock C and Wirtz J (2006) Services Marketing (6th edn) Upper Saddle River, New Jersey: Prentice Hall. Lia P, Fisk FP and Falcão e Cunha J (2008) Designing multi-interface service experiences: The service experience blueprint, Journal of Service Research, May (In print). Zeithaml VA and Bitner MJ (2006) Services Marketing: Integrating customer focus across the firm. (4th edn) New York: McGraw-Hill.

A V A I L A B L E

AUSTRALASIAN ENTREPRENEURSHIP Guest edited by Professor Trish Corner, Auckland University of Technology, Faculty of Business, Auckland, New Zealand, and Associate Professor Kathryn Pavlovich, University of Waikato, Waikato Management School, Hamilton, New Zealand A special issue of the Journal of Management & Organization, Volume 13, Issue 4 This special issue will be available as a course reader. Course co-ordinators are invited to contact the publisher for inspection copies. eContent Management Pty Ltd, PO Box 1027, Maleny QLD 4552, Australia Tel.: +61-7-5435-2900; Fax. +61-7-5435-2911; [email protected] www.e-contentmanagement.com

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