The relationship between employee satisfaction and customer satisfaction

Hoseong Jeon
Hallym University, Chuncheon, Korea, and

Beomjoon Choi
California State University, Sacramento, California, USA
Abstract Purpose This study aims to examine whether the relationship between employee satisfaction (ES) and customer satisfaction (CS) is bilateral or unilateral based on dyadic data. In addition, it seeks to examine the role of moderating variables which have incremental impacts on this link. Design/methodology/approach The authors conducted an empirical test on this relationship in an educational service context. Structural equation modeling was employed to test the hypotheses. Findings Results indicate that employee satisfaction leads to CS but CS did not affect ES, which suggests that the relationship between ES and CS is unilateral rather than bilateral. The ndings also demonstrate that the dispositional variables (i.e. self efcacy, cooperative orientation) moderate the impact of ES on CS. Research limitations/implications This study provided theoretical implications for the ES-CS relationship. Practical implications This nding suggests that top level management in the service industry must take an active role in recruiting employees who are condent in their abilities and who display pro-social dispositions. Originality/value The linkage between ES and CS has been previously examined but the ndings have been inconsistent. The authors used dyadic data to investigate the relationship between ES and CS and found the inuence of ES on CS but not vice versa. Keywords Employee satisfaction, Customer satisfaction, Self efcacy, Cooperative orientation, Perceived fairness, Supervisory support, Employees, Customers Paper type Research paper

An executive summary for managers and executive readers can be found at the end of this article. Efforts to enhance customer satisfaction have been considered critical by many organizations, particularly those in the service sector (Schmit and Allscheid, 1995) and hence, have been researched by numerous studies. Despite vast research previously conducted on the relationship between the employee satisfaction and customer satisfaction, Schmit and Allscheid (1995) assert that further conceptual and empirical evidence is needed to reveal the relationship between employee satisfaction and customer satisfaction. In previous research, employee satisfaction (hereafter ES) has been frequently measured by asking customers perception of employee and customer satisfaction (hereafter CS) also has been measured by employees via survey. Though the use of indirect measures in assessing ES and CS is quite common, it still remains unclear whether this practice is appropriate. As an alternative attempt to measure customer and employee satisfaction more accurately, Schmit and Allscheid (1995) employed dyadic data from both the customer and employee surveys and simultaneously estimate
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both employee and customer model. They assumed employee job satisfaction was inuenced by the work climate produced by the customers, linking employee model and customer model simultaneously. But each model was estimated based on different level of data: The employee model was based on the individual level, whereas customer model was based on data collected at the multiple ofces of a service-oriented organization. As such, previous research which attempt to identify the ES-CS relationship had potential limits in gauging the focal constructs. To show a comprehensive framework depicting the interplay of ES-CS, the present study tested the ES-CS relationship in the causal models which incorporates key constructs instead of just considering focal variables (i.e. ES and CS) (Brown and Lams, 2008). In an attempt to uncover the link between ES and CS, this paper reviews information derived from relevant prior research and investigate whether the relationship between employee satisfaction and customer satisfaction is bilateral or unilateral. This study also examines the role of moderating variables which have incremental impacts on this link.

Hypothesis development on ES-CS relationship

The inuence of ES on CS The inuence of employee satisfaction on customer satisfaction has received considerable attention in marketing literature and practice in recent years. It has been argued that behavior of satised employees plays an important role in shaping customers perceptions of business interactions (Spiro and Weitz, 1990). This phenomenon may occur as 332

Journal of Services Marketing 26/5 (2012) 332 341 q Emerald Group Publishing Limited [ISSN 0887-6045] [DOI 10.1108/08876041211245236]

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

satised employees are more apt to be friendly, enthusiastic, attentive, and empathetic toward customers (Beatty et al., 1996; Rafaeli, 1993). According to the concept of partner effects, a person is in some way, verbally or nonverbally, inuenced by the characteristics and behaviors displayed by his or her counterpart (Dolen et al., 2002). Additionally, the contagion effect explains how satised employees inuence others around them to feel good (Hateld et al., 1993). As such, Schneider and Bowen (1985) said that employee job satisfaction is positively related to customers perceptions of service. This notion suggests that employees who have higher levels of job satisfaction also believe they are able to deliver excellent service (Schlesinger and Zornitsky, 1991). It is also expected that happy or satised employees are more inclined to share these positive emotions with customers (Brief and Motowidlo, 1986). This was also consistent with Brown and Lam (2008) who provided the empirical evidences showing the robust relationship between employee job satisfaction and customer satisfaction. Thus, the following hypothesis is proposed: H1-1. Employee satisfaction will positively inuence customer satisfaction. The inuence of CS on ES Compared to the inuence of ES on CS, the impact in the opposite direction (from CS to ES) is supported by a few theories such as the social exchange theory (Konovsky and Pugh, 1994) and the psychological contract theory (Robinson and Morrison, 1995). Central to these conceptions is the norm of reciprocity (Netemeyer et al., 1997): Customers satised with their counterpart will engage in cooperative behavior as reciprocation for those who have beneted them (Bateman and Organ, 1983; Schnake, 1991). Beatty et al. (1996) and Gremler and Gwinner (2000) found that customers who developed a bond with the employees also were likely to care about employee wellbeing. If customers like the performance of the employee and express gratitude or satisfaction, in turn, it is also expected to lead to a higher level of employee satisfaction (Dolen et al., 2002). In other words, positive reinforcement from customers increases the satisfaction of sales employee (Beatty et al., 1996). In a similar vein, Bitner et al. (1990) posit that customers inputs make important contributions to enhancement of service quality, leading to employee satisfaction. Goodwin and Gremler (1996) also argue that employees are concerned about customers feelings and are pleased when customers display appreciation for quality service. Based on these notions, this study argues that customer satisfaction inuences the job satisfaction of their counterpart. Therefore: H1-2. Customer satisfaction will positively inuence service providers job satisfaction. Sample and procedures This study was administered with the cooperation of one of leading private education companies in Korea. This company has a business model of providing educational services through private tutors who visit the customers homes on a regular basis. Private education services in Korea can be regarded as a commercial exchange because customers pay for the education services received and private tutors are 333

considered service employees to their customers (Williams and Anderson, 2005; Yi and Gong, 2008). Educational services seem to be good contexts for testing our research purpose as the customers could interact with employee on a regular basis and can observe the counterparts. To test these hypotheses, dyadic data incorporating both the customer and the corresponding employee were developed. This study recruited the customers and the corresponding private tutors to test the ES-CS link. The surveys were administered as follows: First, 500 customer samples were randomly selected from about 50,000 customers nationwide. Questionnaires were sent to 372 customers who agreed to participate in the survey. After one month, 285 questionnaires were returned to us. It turns out that the sample represents the customer pool appropriately based on similarity of demographics between the nal sample and the population. Second, the survey for employees was administered. Those who correspond to customers who respond to surveys were recruited for the purpose of probing the ES-CS relationship. Since there are no multiple customers from a single tutor, it could be said that customers are not nested within tutors. Finally, 227 samples (227 pair of customers and corresponding employees) were used in the nal analysis after discarding the incomplete questionnaires. Measures This study used measures for key variables from existing studies and literature by slightly modifying them into the context of the current study (educational service). All constructs were assessed by multiple items using ve-point scale ranging 1 strongly disagree to 5 strongly agree. Figure 1 explains the simultaneous model considering both employee and customer perspectives. Employee model This study examined ve constructs in the employee model. Each was role ambiguity, role conict, job satisfaction, commitment, and intent to stay. Used were items developed by Ho et al. (1997) to assess employee role ambiguity and role conict. Also, this study measured employee job satisfaction with the items proposed by Netemeyer et al. (1997) and Hartline and Ferrell (1996). Commitment, the employees identication with organization, was assessed with the items developed by Ganesan and Weitz (1996). Intent to stay was measured by items established by Good et al. (1996). Customer model In the customer model, ve different constructs were considered: interaction quality, outcome quality, customer satisfaction, trust, and customer loyalty. Interaction quality and outcome quality were measured by applying an adapted version of Brady and Cronins (2001) model tailored for the context of educational service. Customer satisfaction was assessed by adapting the items of Mano and Oliver (1993) and Bettencourt (1997). These items were used to measure customers responses to service experience with the employee. Customer trust was measured by the four items proposed by Ramsey and Sohi (1997). This study also dened customer loyalty as the customer having intention to do the business with the organization in the future and engaged in positive word-of-mouth communication about it. Customer loyalty was assessed by modifying items developed by Zeithaml et al. (1996).

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

Figure 1 Comprehensive model based on dyadic data

Analysis Structural equation methodology was applied to test the hypothesized model. In order to specify the model, each of the constructs was represented by multiple measures. The rst step in the model testing was to conduct a multiple items reliability and validity check by applying conrmatory factor analysis to conrm if the multiple items sufciently measure the proposed constructs. Next, the hypothesized model was assessed by estimating the standardized path coefcients for each proposed relationship. Reliability and validity checks The rst step of the reliability and validity check was to conrm the overall goodness-of-t indices of the measurement model. In Table I, this study presents the results for both the customer model and the employee model. Since the GFI and AGFI may contain inconsistencies due to sampling characteristics (Hoyle and Panter, 1995), this study substituted two t indices with TLI and CFI. x2 and RMSEA are also included as t indices since it is generally recommended to incorporate at least 4 indices to conrm general tness (Kline, 1998). In conducting conrmatory factor analysis, added were related variables such as customer satisfaction in the employee model and employee satisfaction in the customer model. The indices of employee model include the following results: the chi-squire statistic was 367.5 with 194 degree of freedom, comparative t index (CFI) was 0.989, TLI was 0.986, and the root mean square error of approximation (RMSEA) was 0.063. The tness of customer model was x2 155 247:3, CFI 0.995, TLI 0.993, RMSEA 0.051. According to the outcomes, the model tness was adequate for both models because the values of CFI and TLI in the 0.90 range have been known as the adequate t for these indices and RMSEA is lower than the criteria proposed by Browne and Cudeck (1992). The reliability and inter-correlations of the constructs are reported in Tables I-III. Given that this study consisted of dyadic data, this process conducted within each domain. In Table I, the evidence of internal consistency is provided by the composite reliability. It is regarded as a less constraining index 334

for measuring internal consistency compared to Cronbachs alpha (Homburg and Giering, 2001). All values are higher than the criteria proposed by Venkatraman (1990), as Table I shows, the composite reliability ranged from 0.627 to 0.883. Also, the correlations (F estimates) among the latent variables are included in Tables II and III. Table II contains the outcomes of the employee model and Table III presents the results of customer model. This study performed test of discriminant validity among the factors based on F estimates. Table II showed that there are no correlation estimates which comprise 1 in condence intervals (F ^ 2SE) at the employee model. Also, the AVE values were greater than the squared F coefcients (Bagozzi and Yi, 1988). Thus, it could be said that all measurements achieved criterion for discriminant validity (Anderson and Gerbing, 1988). The values of correlation estimates ranged from 2 0.483 to 0.844. In the customer model, the condence intervals of all F values (F ^ 2SE) were also under 1 and the square roots of AVE values were greater than the F coefcients. These outcomes also explained that all estimates achieved the criterion for discriminant validity in the customer model. Table III shows that the values of correlation estimates ranged from 0.419 to 0.850 in the customer model. Results According to the model tness analysis, our hypotheses linking the employ model with the customer model t well ( x2 (584) 939.4, CFI 0.987, TLI 0.985, RMSEA 0.052). The overall t of the structural model was adequate, and the standardized path estimates indicate signicant relationships among the constructs. In Table IV, this study present the results of the structural equation model depicted in Figure 1. All paths were statistically signicant with the only exception occurring in the path from customer satisfaction to job satisfaction. Since the unilateral model can be nested in the bilateral model, the improvement in t is assessed by comparing the chi square difference between the bilateral model and each unilateral model. The model testing is conducted by comparing the baseline model (i.e. bilateral model) with the test model (i.e. unilateral model) in which imposes a relationship of zero on the path

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

Table I The Composite reliability of employee model and customer model

Role ambiguity Employee model Customer model 0.757 Role conict 0.627 Job satisfaction 0.761 Composite reliability Interaction Commitment I-T-S quality 0.883 0.742 0.761 0.697 0.742 0.863 0.856 Outcome quality Customer satisfaction

Trust

Loyalty

Table II AVE and correlation among the latent variables in the employee model
Role ambiguity n Standard error Role ambiguity 1.000 Role conict 0.249 0.011 Job satisfaction 2 0.483 0.022 Commitment 2 0.524 0.010 I-T-S 2 0.357 0.030 Average variance extracted (AVE) Employee model 0.723

Role conict Standard error

Job satisfaction n Standard error

Commitment Standard error

I-T-S Standard error

1.000 2 0.422 2 0.638 2 0.538

0.020 0.014 0.035 0.606

1.000 0.795 0.679

0.022 0.050 0.680

1.000 0.844

0.039 0.775

1.000 0.719

Table III AVE and correlation among the latent variables in the customer model
Interaction quality n Standard error Interaction quality Outcome quality Customer satisfaction Trust Loyalty Average variance extracted (AVE) Customer model 1.000 0.619 0.850 0.505 0.502 0.028 0.025 0.019 0.025 0.737 Outcome quality n Standard error 1.000 0.692 0.419 0.495 Customer satisfaction n Standard error Trust Standard error Loyalty Standard error

0.030 0.024 0.034 0.644

1.000 0.485 0.445

0.019 0.024 0.730

1.000 0.786

0.029 0.758

1.000 0.729

Table IV Standardized path estimates and t-value

Estimate SE

Table V Test of model comparisons

t-value
Bilateral model vs unilateral model (from CS to ES) Bilateral model vs unilateral model (from ES to CS) Note: *Means p , 0.10 df 1 1 Dx2 1 3.7 * 0.5

Employee model Role ambiguity ! job satisfaction Role conict ! job satisfaction Job satisfaction ! commitment Job stisfaction ! customer satisfaction Commitment ! intent to stay Customer model Interaction quality ! customer satisfaction Outcome quality ! customer satisfaction Customer satisfaction ! trust Customer satisfaction ! job satisfaction Trust ! loyalty

2 0.455 2 0.425 0.802 0.133 0.859 0.762 0.433 0.503 0.051 0.785

0.125 2 3.640 0.234 2 1.816 0.116 6.913 0.050 2.660 0.224 3.834 0.114 0.048 0.110 0.116 0.110 6.684 9.020 4.572 0.439 7.136

supporting H1-1. On the other hand, the chi square difference between the unilateral model assuming a path from ES to CS and the baseline model indicates that adding a path from CS to ES does not improve its t. Therefore, H1-2 was not supported. Discussion H1 provided partial support for our conceptions derived from the previous studies related with the ES-CS relationship. The inuence of employee satisfaction on customer satisfaction was found to be signicant, supporting H1-1, but the path from customer satisfaction to employee satisfaction (H1-2) was not signicant. This partial support indicates that the relationship between employee satisfaction and customer satisfaction is unilateral rather than mutual. Given no signicance of customer satisfaction on employee 335

Notes: t -values of 1.65 or greater are signicant at the 0.05 level, and t-values of 1.96 or greater are signicant at the 0.01 level

from ES to CS or on the path from CS to ES at the bilateral model. The results of these comparisons, reported in Table V, indicate that failure of the path from ES to CS causes it to t the data signicantly worse than the baseline model,

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

satisfaction, employee satisfaction seems to be affected less by customer satisfaction, possibly more by other factors (e.g. pay, co-workers, and supervisor). Simply stated, the results show that employees job satisfaction leads to an increase in customer satisfaction, however, not vice versa. Brown and Lam (2008) found variables such as service characteristics, research contexts, and study methods moderated the relationship between ES and CS, but employees disposition and work climate factors which were proven to be critical variables in the domain of employee satisfaction research were not included. Hence, we investigate how dispositional variables moderate the relationship between ES and CS.

(Lengnick-Hall et al., 2000). This cooperative orientation will, in turn, improve customer satisfaction. Therefore: H2-2. The employees cooperative orientation moderates the ES-CS relationship: For those individuals who score high on cooperative orientation, the corresponding employee satisfaction will be more positively related to customers satisfaction. Organizational variables Supervisory behaviors have been found to exert important effects on job satisfaction of employee (Corner et al., 1989; Kohli, 1985). In general, supervisory behaviors are categorized into three types: person-organization t, organizational justice, and supervisory supports (Netemeyer et al., 1997). In the present research, organizational justice and supervisory support were our focal points and hence, this study investigates whether organizational justice (in particular, perceived fairness) and supervisory support moderate the impact of ES on CS. The notion of reciprocity suggests that when employees perceive fair treatment from the organization, they respond by delivering high quality service to their customers. Empirical studies also suggest that fairness perceptions affect job satisfaction, which, in turn, positively affect job performance (Dubinsky and Levy, 1989; Livingstone et al., 1995). Based on these principles, this study predicts employees who perceive fairness via appropriate rewards at the workplace are more willing to deliver high level of services in interaction with customers and this, in turn, increase customer satisfaction. Therefore: H2-3. Perceived fairness in reward allocation moderates the ES-CS relationship: For those who score high on perceived fairness, employee satisfaction will be more positively related to customers satisfaction. Employees perception about supervisory support, the degree of support and consideration an employee recognizes from a supervisor (Netemeyer et al., 1997), often inuences their job satisfaction (Wofford and Liska, 1993). The path-goal theory also suggests job satisfaction is highly related to leadership support (Brown and Peterson, 1993; Podsakoff and Hui, 1993). This indicates that a leader can increase employee fulllment and their job satisfaction by constructing more uid paths and help them attain their career goals (Churchill et al., 1993). According to Ilies and Scott (2006), increased satisfaction causes employees to engage in behaviors which could be critical for organizational success as long as their personal goals are aligned with organizational support. Thus, this study posits that employees with high perceptions of leadership support deliver a higher quality of customer service, and this will also enhance customer satisfaction. For this reason, the following hypothesis is proposed: H2-4. Supervisory support moderates the ES-CS relationship: For those who score high on perceived supervisory support, employee satisfaction will be more positively related to customers satisfaction. Employee self efcacy was measured using four items developed by Sujan et al. (1994). This scale measures the degree to which employees feel condent with their job skills and their abilities to successfully perform their job. Employee cooperative orientation was measured from the employees perspective. 336

Hypothesis development on moderating effect

Dispositional variables Personality factors have been known to account for the differences in job attitudes (Staw and Ross, 1985). Among various dispositional variables, this study posits that self efcacy acts as a moderating variable. Self efcacy is a core concept in social cognition theory (Yi and Gong, 2008) and refers to individuals judgments that they have capabilities to perform their job or fulll duty appropriately. Self efcacy also pertains to judgments about what one is capable of doing a task with whatever skills one possesses (Bandura, 1986). McKee et al. (2006) said that individuals who have more condence in their abilities tend to exert more effort to perform particular behaviors, persist longer in order to overcome obstacles and set more challenging goals than those who have less condence in their abilities. It is also expected that people with high self efcacy generally set a higher level of outcome expectations and are more likely to achieve their desired outcomes (Pereay et al., 2004). As such, employees with higher self efcacy are expected to show more condence in their abilities and are more likely to provide quality service to the customers. This, in turn, is expected to lead to a higher level of customer satisfaction. Therefore: H2-1. Employee self efcacy moderates the ES-CS relationship: For employees who score high on self efcacy, employee satisfaction will be more positively related to customers satisfaction. A persons social orientation often shows his or her willingness to cooperate (Declerck and Bogaert, 2008). This disposition has been regarded as distinct personal trait compared to other traits since Kurzban and Houser (2001) showed that individual differences in cooperative behavior were not correlated with other personality factors such as the Big 5. Iedema and Poppe (2001) suggested that social value consists of ve different constructs: cooperation, individualism, competition, altruism, equality and maximin. Among these constructs, cooperation is considered the most pro-social oriented social value and it also leads to pro-social behaviors (Iedema and Poppe, 2001). Given that cooperative orientation may lead to service employees discretionary behavior which is often accompanied by delivery of high quality service (Bettencourt, 1997; Groth, 2005), this study argues that cooperative orientation moderate the relationship between ES and CS. That is, employees with more cooperative orientation will be more likely to engage in pro-social behavior and this will, in turn, lead a higher level of cooperation, helpfulness, and kindness

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

Modied were three items from Bettencourts (1997) model to create better t for the situation of educational services. Perceived fairness in relation with reward allocation was measured by use of 3 scales from Netemeyer et al. (1997). This study measured supervisory support by adapting 4 items proposed by Netemeyer et al. (1997) and Babin and Boles (1996). Figure 2 explains our research schemes in this study. Results The reliability of the constructs is reported in Table VI. Evidence of internal consistency is provided by the composite reliability since it is a less constraining index compared to Cronbachs alpha (Homburg and Giering, 2001). All values are higher than the criteria proposed by Venkatraman (1990). The purpose of this study is to examine how the effect of ES on CS differs according to the employees disposition and work climate factors. To compare parameters across groups, variance must be measured in a common metric for all groups (Yoo, 2002). When testing the quality of factor loadings, the present research imposed equality constraints on factor loadings across the two groups, with xed and free parameters remaining consistent with that specied in the baseline model for each group. As shown Table VII, full metric invariance was supported; the chi-square differences between the non-restricted model and full metric invariance model were insignicant in the each moderator variable. This study veries hypotheses through the chi-square difference test (Dx2 ). This test has two steps. The rst step is to develop a constraint model by imposing an equality constraint on the focal link. The second step is to compare the chi-square between the free model and the constraint model. The respondents were divided into two groups of high vs low score based on the median of aggregated data representing moderating variables (Stone and Hollenbeck, 1989) and compared group differences to our focal link. With regards to self efcacy, H2-1 predicted that this disposition would moderate the effect of ES on CS. The result show that the higher self efcacy, the greater impact of ES on CS (Dx2 1 3:5, p , 0:10) though it was marginally signicant. The results also indicate that when the higher cooperative orientation group is compared to the lower counterpart, a Figure 2 Comprehensive model explaining moderating effect

Table VI The composite reliability of moderating variables

Self efcacy 0.705 Cooperative orientation 0.772 Composite reliability Perceived fairness 0.777 Supervisory support 0.899

greater impact of ES on CS is shown (Dx2 1 3:0, p , 0:10), supporting H2-2 though this was marginally signicant. Unlike our expectations, H2-3 and H2-4 were not supported. The results of the analyses are reported in Table VIII.

Discussion Our results indicate partial support for the moderating effect within H2. While H2-1 and H2-2 were marginally supported, H2-3 and H2-4 were not supported. The culmination of our outcomes asserts that dispositional variables moderate the relationship between ES and CS, yet the same does not hold true for organizational variables. Testing of H2-1 and H2-2 suggests that personal traits inuence emotional interactions between employees and customer. This is because satised employees with high self efcacy or cooperative orientation are more likely to display positive emotion, which stems from job satisfaction, in interacting with customers. However, unlike our predictions, organizational variables such as supervisory support and perceived fairness did not moderate the relationship between ES and CS. Organizational variables may have little impact in helping employees job satisfaction turn into higher quality service in interaction with customers which also leads to higher level of satisfaction. The results indicate that the personal trait of satised employees facilitates efcacious interactions with customers but the perception about organizational activities only have diminutive effects on transferring employee satisfaction to the customer. Our ndings reinforce the importance of recruiting the right employee especially in the educational service business.

337

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

Table VII The test for metric invariance

Self efcacy Cooperative orientation df 1,196 1,170 37.6 Perceived fairness n df 1,733.1 1,694.4 38.7 1,196 1,170 Supervisory support n df 1,743.8 1,726.4 17.4 1,196 1,170

n
Full metric invariance (x2 ) Non restricted model (x2 ) Dx2 26 Note: Dx2 26 1,727.7 1,690.1

n
1,784.7 1,758.9 25.8

df 1,196 1,170

value of 38.9 or greater are signicant at the 0.05 level

Table VIII The results for the effect of moderating variables in ES-CS link
High group Path estimates n t-value Low group Path estimates Dx2(1) n t-value n df 0.034 0.076 0.055 0.055 0.574 1.595 0.732 0.848 3.5 1 * 3.0 1 * 0.9 1 1.7 1

Dispositional variables Self efcacy Cooperative orientation

0.209 0.314

2.718 2.340 2.218 2.353

Organizational variables Perceived fairness 0.144 Supervisory support 0.189

Note: *Means p , 0.10

Great discussion and conclusion

This study identies the ES-CS relationship by relating customer satisfaction to employee performance model. Some of the previous research probing this link was criticized for the practice of measuring focal variables. For example, employee satisfaction was assessed from the customers perception under the assumption that it could be regarded as a good proxy for true employee satisfaction (Vilares and Coelho, 2003). Different from previous research, the present research was conducted based on dyadic data incorporating both the customer and the corresponding employee as the unit of analysis. The results of H1 suggest that the ES-CS relationship is unilateral rather than mutual. In particular, using dyadic data, this study found out employees job satisfaction leads to customer satisfaction but not vice versa. This nding is noteworthy because a possible common method bias has been ruled out in the present study since it has been analyzed based on dyadic data. We also examined the variables which moderate the relationship between ES and CS. For a hypothesis testing, two key variables dispositional variables and organizational variables were identied. Self-efcacy and cooperative orientation are considered dispositional variables while perceived fairness and supervisory support are considered organizationally related variables. This study found only dispositional variables self efcacy and cooperative orientation marginally moderate the effect of ES on CS. This indicate that the higher the self efcacy/cooperative orientation, the greater the impact of ES on CS. 338

Theoretical and managerial implications The contribution of this current study is to relate the ES-CS link to comprehensive models employee models and customer models which were proved in previous research. The ndings of this analysis are consistent with the serviceprot chain perspective proposed by Heskett et al. (2008). It is noteworthy to demonstrate that the relationship between employee satisfaction and customer satisfaction is unilateral rather than mutual. Our reasoning regarding this unilateral relationship is as follows: Employee satisfaction and customer satisfaction may have different antecedent variables. Customer satisfaction may be determined depending on interaction with employees and emotional bonding or connection during the interaction, whereas employee satisfaction seems to be less affected by customer satisfaction. Perhaps employees perceive that customer evaluations are not relevant to their job satisfaction, which are more likely to be determined by factors such as salary, work environment, co-workers, supervisors, and benets. Simply put, customer satisfaction may not be critical in forming employees job satisfaction. According to our results, it is possible that previous research which supported reciprocal effects from CS to ES might be caused by methodological limitations measuring the relationship ES and CS. The results also show that dispositional variables were found to be moderating the ES-CS relationship marginally. These ndings could be interpreted that satised employees with high self efcacy or cooperative orientation might be more inclined to share these emotions with customers. When the affective state interacts with personal traits, it generates episodic behaviors such as discretionary action and extra role behavior. This nding also suggests that top level management in the service industry must take an active role in recruiting employees who are condent in their abilities and who display pro-social dispositions. Limitations and future research Although the results of the current study have little concern for common method variance, there are some other problems that may limit the implications of study. First, by using educational services to probe the ES-CS relationship, the outcomes of this study might be applicable in the educational service context. Further studies in other types of services seem necessary to generalize the outcomes of this study. Another potential problem with the current study is the relative simplicity of the comprehensive model tested. The number of the variables examined in this study was relatively small when considering that there were many other aspects in relation to personality traits or organizational variables. To further our understanding of the relationship between

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

employee satisfaction and customer satisfaction, more variables need to be included in the model by obtaining more information from both employees and customers.

References
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About the authors

Dr Hoseong Jeon is an Associate Professor in the Department of Business Administration at Hallym University. He received an MA in Advertising at Michigan State University and PhD in Business Administration at Seoul National University. His current research interests include customer relationship management, advertising effects and determinants of customer loyalty. Dr Jeons research has been published in the journals such as Journal of the Academy of Marketing Science. Dr Beomjoon Choi is an Assistant Professor of Marketing at the College of Business Administration, California State University, Sacramento. He earned his PhD from the University of Kansas. Dr Chois recent research includes: sequential decision making, marketing communication, prejudice, service failure and recovery. Dr Chois research has been published in numerous journals such as International Journal of Electronic Commerce, Serviced Industries Journal, and Journal of Education for Business. Beomjoon Choi is the corresponding author and can be contacted at: bchoi@csus.edu

Executive summary and implications for managers and executives

This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article

The relationship between employee and customer satisfaction Hoseong Jeon and Beomjoon Choi

Journal of Services Marketing Volume 26 Number 5 2012 332 341

in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benet of the material present. You might think that a service employee who feels happy with his or her job will have an attitude towards the customer which makes that customer feel good about themselves. In other words one persons demeanour would have a positive affect on the other more simply, that employee satisfaction leads to customer satisfaction. And youd be right to think that. You might even think its common sense. You might also think that the reverse is true that a customers satisfaction with the service delivery affects the employees satisfaction. Maybe you might even think that that was common sense too. But youd be wrong. At least according to research conducted in an educational service context in Korea (where private tutors visit customers homes on a regular basis) which suggests that the employee satisfaction (ES) customer satisfaction (CS) relationship is unilateral rather than mutual. In short, it found that employees job satisfaction leads to customer satisfaction but not vice versa. This might be because employee satisfaction and customer satisfaction may have different antecedent variables. Customer satisfaction may be determined depending on interaction with employees and emotional bonding, whereas employee satisfaction seems to be less affected by customer satisfaction. Perhaps employees perceive that customer evaluations are not relevant to their job satisfaction, which are more likely to be determined by factors such as salary, work environment, co-workers, supervisors, and benets. Consequently, customer satisfaction may not be critical in forming employees job satisfaction. It is possible that previous research which supported reciprocal effects from CS to ES might be caused by methodological limitations measuring the relationship ES and CS. Study results show that dispositional variables were found to be moderating the ES-CS relationship marginally. These ndings could be interpreted that satised employees with high self efcacy or cooperative orientation might be more inclined to share these emotions with customers. When the affective state interacts with personal traits, it generates episodic behaviors such as discretionary action and extra role behavior. This nding also suggests that top level management in the service industry must take an active role in recruiting employees who are condent in their abilities and who display pro-social dispositions. In The relationship between employee satisfaction and customer satisfaction, Hoseong Jeon and Beomjoon Choi tested two key variables which might moderate the relationship between ES and CS dispositional variables and organizational variables. Self-efcacy and cooperative orientation are considered dispositional variables while

perceived fairness and supervisory support are considered organizationally related variables. This study found only dispositional variables marginally moderate the effect of ES on CS. This indicates that the higher the self efcacy/ cooperative orientation, the greater the impact of ES on CS. The inuence of employee satisfaction on customer satisfaction has received considerable attention in marketing literature and practice in recent years. It has been argued that behavior of satised employees plays an important role in shaping customers perceptions of business interactions. This phenomenon may occur as satised employees are more apt to be friendly, enthusiastic, attentive, and empathetic toward customers. According to the concept of partner effects, a person is in some way verbally or nonverbally inuenced by the characteristics and behaviors displayed by his or her counterpart. Additionally, the contagion effect explains how satised employees inuence others around them to feel good. As such, it has been said that employee job satisfaction is positively related to customers perceptions of service. This notion suggests that employees who have higher levels of job satisfaction also believe they are able to deliver excellent service. It is also expected that happy or satised employees are more inclined to share these positive emotions with customers. Compared to the inuence of ES on CS, the impact in the opposite direction, although not supported by this research, has had support of theories such as the social exchange theory and the psychological contract theory. Central to these conceptions is the norm of reciprocity: Customers satised with their counterpart will engage in cooperative behavior as reciprocation for those who have beneted them. Previous research found that customers who developed a bond with the employees also were likely to care about employee wellbeing. If customers like the performance of the employee and express gratitude or satisfaction, in turn, it is also expected to lead to a higher level of employee satisfaction. In other words, positive reinforcement from customers increases the satisfaction of sales employee. The results here applied in the context of an educational service might not, of course, be applicable elsewhere. Also, the number of the variables examined in this study was relatively small when considering that there were many other aspects in relation to personality traits or organizational variables. To further our understanding of the relationship between employee satisfaction and customer satisfaction, more variables need to be included in the model by obtaining more information from both employees and customers. cis of the article The relationship between employee (A pre satisfaction and customer satisfaction. Supplied by Marketing Consultants for Emerald.)

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