Customer Satisfaction and Employee Satisfaction: A ... Customer Satisfaction and Employee Satisfaction: A Conceptual Model and Research Propositions 1. Introduction The study of customer satisfaction

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    Customer Satisfaction and Employee Satisfaction: A Conceptual Model and

    Research Propositions


    Purpose: The marketing literature reflects remarkably little effort to develop a framework for

    understanding how customer responses to service affect the work attitudes of employees. In

    particular, very little is known about the influence of customer satisfaction and customer

    satisfaction outputs on the individual employees work satisfaction.

    Theoretical Background: The authors draw on balance theory and emotional contagion theory

    to provide a foundation for future research by developing research propositions, and

    constructing a framework for understanding how customer satisfaction influences employee


    Practical Implications: Managers can use the information from this study as a guide for

    matching employees to customers.

    Keywords: Employee Satisfaction, Customer Satisfaction, Employee-Customer Identification,

    Emotional Contagion, Balance Theory, Customer Status

    Track: Services Marketing

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    Customer Satisfaction and Employee Satisfaction: A Conceptual Model and

    Research Propositions

    1. Introduction

    The study of customer satisfaction, along with its determinants and outcomes is a major area

    of interest among marketing academia. In terms of outcomes of customer satisfaction,

    performance and loyalty have been the major variables considered. However, in recent years,

    there is a growing a body of research which focuses on how customer satisfaction affects

    employees (Pugh, 2001, Ryan, Schmidt and Johnson, 1996; Yi, Nataraajan and Gong, 2011;

    Luo and Homburg, 2007). The idea that customer outcomes might influence employee

    attitudes has been present in the literature for over four decades. For example Friedlander and

    Pickle (1968: ) suggest that Customer satisfaction may fulfill employee service needs,

    thereby causing employee satisfaction. However till date, very little empirical attention has

    been devoted to the potential impact of customer satisfaction on employee satisfaction. To the

    researchers knowledge, only three empirical studies (Ryan, Schmidt, and Johnson, 1996;

    Pugh, 2001; Luo and Homburg, 2007) have explicitly addressed this issue.

    A careful examination of the limited literature on this topic reveals two important gaps. First,

    most extant studies have discussed or tested a direct relationship between customer and

    employee satisfaction. This leaves the reader with a black box of process. There is

    therefore need for more theoretical work explaining this key relationship. Second, there is a

    need to better understand what factors make an employees work satisfaction more or less

    prone to the influence of customer satisfaction? The limited literature in this area, by

    focusing on aggregate employee satisfaction, often implicitly assumes that employees are

    similarly influenced by customer satisfaction or dissatisfaction. This is unlikely because

    individual characteristics, job characteristics as well as relational dynamics might result in

    work satisfaction being influenced to different degrees by customer satisfaction. From a

    practice perspective, describing conditions under which the relationship between customer

    satisfaction and employee satisfaction may be stronger or weaker provides information to aid

    managers in the individual management of employees.

    The purpose of this article, therefore, is to delineate the effect of customer satisfaction on

    employee satisfaction, develop a propositional inventory, and create a framework for directing

    future research in this area. While there are studies that focus on how employee satisfaction

    influences customer satisfaction (e.g., Evanschitzky, Sharma and Prykop, 2012; Homburg and

    Stock, 2005), our study, without conflicting with these studies, examines customer

    satisfactions influence on employee work satisfaction. In developing propositions, we draw

    on the literature in marketing and related disciplines. Figure 1 is a conceptual model for our


    2. Literature Review and Research Propositions

    Work satisfaction is defined as an employees sense of satisfaction not only with the work

    itself but also with the larger organizational context within which work exists.Customer

    satisfaction is defined as an attitude resulting from an evaluative process where a standard

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    concerning an offer obtained from a company is compared to the customers perception of the

    actual offer (e.g., Oliver, 1996). For reasons of parsimony, we do not discuss level of analysis

    issues or the different facets of customer satisfaction overall satisfaction with the firm,

    satisfaction with the employee this paper.

    Figure 1: Customer Satisfaction and Employee Satisfaction










    ESEC: Employee susceptibility to emotional contagion; ECID: Employee Customer Identification

    PICS: Perceived Importance of customer Satisfaction

    2.1 Mechanisms of Influence: How does the influence occur?

    In explaining the direct and mediated paths linking customer satisfaction and employee

    satisfaction, we draw upon three principles of social psychology that link individuals

    interactions and their attitudes. First, individuals seek balance, which may be achieved by

    modifying their attitudes to correspond to those of others (Heider, 1958). Second, information

    theory suggests that individuals sentiments are influenced by the information to which they

    are exposed through interaction with others (Anderson 1971). Third, emotional contagion

    theory holds that exposure to someone elses positive or negative emotions can produce a

    corresponding change in the observers emotional state (Pugh, 2001) and subsequently lead to

    attitude change.

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    2.2 Mediators: Direct Outputs of Customer Satisfaction

    The key mediators which link customers satisfaction to employee satisfaction are customers

    reactions following their evaluation of satisfaction or dissatisfaction as well as their expressed

    emotions. Literature suggests that complaining about service or complimenting service

    employees are two potential reactions that may emanate from satisfaction judgements.

    Furthermore, customers might express negative or positive emotions depending on their

    satisfaction levels. Consequently

    Proposition 1: Customer satisfaction has a direct effect on customers complaining behaviour

    Proposition 2: Customer satisfaction has a direct effect on customers complimenting


    Proposition 3: Customer satisfaction has a direct effect on customers emotions

    2.3 Employee Work satisfaction: why should customers matter?

    In the internal marketing literature, work satisfaction is often thought to be the result of

    controllable elements of the work environment and work conditions. However, while

    intuitively convincing, working conditions as the major cause of work satisfaction have been

    challenged. Research suggests that non-controllable elements also impact on the satisfaction

    of employees and in particular frontline employees. Furthermore, there is a growing

    appreciation that outputs of customer contact employee interactions with customers (e.g.,

    customer satisfaction) are also determinants of employee satisfaction (Bell et al., 2004; Luo

    and Homburg, 2007). There are a few reasons for this. First, a need fulfillment theory

    perspective (Vroom, 1964), suggests that work satisfaction is the result of good performance

    (Bagozzi, 1980). Second, customer satisfaction and its outputs serve as feedback to the

    employee about how their work and their organization are perceived (Bell et al., 2004). Third,

    customer satisfaction should influence employee work satisfaction because it indicates the

    attractiveness of the organization as an employer and thus signals better future opportunities

    for the employee (Luo and Homburg, 2007).


    Proposition 4: Customer satisfaction has a direct effect on employee satisfaction

    Proposition 5: Customer complaining has a direct effect on employee satisfaction

    Proposition 6: Customer compliments has a direct effect on employee satisfaction

    2.4 Employee Emotions

    Emotional contagion effects are likely to flow from customers to employees because

    individuals are more likely to transmit their emotions to others when they are able to express

    these emotions (Hatfield, et al., 1994). We argue that customers are more likely than

    employees to consciously display emotions related to their experiences in the service

    encounter. Individuals are also likely to assimilate the emotions of individuals to whom they

    pay attention to. Furthermore, employees are likely to pay attention to the emotions of

    customers because they depend more on the customers than vice-versa (Hatfield et al., 1994).

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    We also suggest in line with previous research that employee emotions are directly influenced

    by customer complaints and customer compliments. Therefore

    Proposition 7: Customer emotions directly influence employee emotions

    Proposition 8: Customer complaining has a direct effect on employee emotions

    Proposition 9: Customer compliments has a direct effect on employee emotions

    2.5 Employee Emotions and Employee Satisfaction

    We also suggest that employee emotions are crucial in determining how satisfied employees

    are with their work. Employees who experience negative emotions on the job are less likely to

    be satisfied than those who experience positive emotions. Therefore

    Proposition 10: Employee emotions directly influence employee satisfaction

    2.6 Moderators

    2.6.1 Perceived Importance of Customer Satisfaction: Research has shown that the effect of

    feedback on individuals depends on how important that feedback is to the individual (Earley,

    1986). In essence, while some employees would perceive feedback in terms of customer

    satisfaction as very important, others might perceive it as less important. These differences in

    importance perceptions may result from different individual characteristics such as levels of

    customer orientation or from perceptions of the consequences of customer satisfaction on

    personally-relevant outcomes might differ from one employee to another. For example, some

    employees may not consider their promotion to be significantly dependent on customers

    satisfaction while others might perceive the opposite. As a result of differences in perceived

    importance, we expect that, for all levels of customer satisfaction, there would be differential

    impacts of customer satisfaction on work satisfaction. Therefore:

    Proposition 11: The effects of customer complaints, customer compliments, and customer

    emotions respectively on customer emotions are moderated by the perceived importance of

    customer satisfaction to the employee

    Proposition 12: The effects of customer complaints and customer compliments on customer

    satisfaction are moderated by the perceived importance of customer satisfaction to the


    2.6.2 Susceptibility to emotional contagion: Previous literature has documented individual

    differences in susceptibility to emotional contagion due to differences in gender, culture,

    personality, occupation, and so on (Hatfield et al., 1994). Translated to an organizational

    context, differing levels of susceptibility should influence both the actions and reactions of

    employees to events. Verbeke (1997), for example, found that salespersons that are more

    sensitive to the emotions of their customers could perform better yet incur higher risks of

    burnout in a sales organization. Accordingly, we conjecture that the effect of customer

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    satisfaction on employee work satisfaction will depend on how susceptible employees are to

    the emotions of customers. Therefore:

    Proposition 13: Susceptibility to emotional contagion increases the effect of customer

    emotions on employee emotions

    2.6.3 Employee-Customer Identification: Recent advances in social identity theory suggest

    that identification with customers can also be a powerful source of self-definition (Korschun,

    Bhattacharya and Swain, 2010). When a social identity is salient, people see themselves as

    relatively interchangeable members of the group rather than as unique individuals; a process

    known as depersonalization (Mackie et al., 2008). Depersonalization causes an individual to

    react as a group member rather than as a unique individual, and so events have emotional

    consequences based on how they affect the group and not the individual. Consequently, we

    suggest that the more the employee identifies with the customer, the more the employees will

    be influenced by the customers actions and emotions. Therefore:

    Proposition 14: The effects of customer complaints, customer compliments, and customer

    emotions respectively on customer emotions are moderated by the employee-customer


    3. Managerial Implications

    First, our research suggests that customer satisfaction should impact upon employee work

    satisfaction. This is important because, if customer satisfaction directly influences employee

    satisfaction, then in addition to efforts by the organization to improve employee work

    satisfaction efforts may also be focused on directly improving customer satisfaction. Second,

    the research clearly delineates the process of influence as well as factors that can be expected

    to strengthen or weaken the effect of customer satisfaction on employee work satisfaction.

    While many of these factors are not controllable, some of them are controllable by managers

    and therefore can be altered by them so that customers satisfaction might more readily

    influence employee satisfaction. For example, managers can act to make customer satisfaction

    more personally relevant (and so important) to employees through restructuring of rewards.

    Managers can also use the information from this study as a guide for matching employees to

    specific customers. For example, when faced with a difficult customer, who is constantly

    dissatisfied, managers might choose to match such a customer with an employee who is less

    likely to be influenced by the customers emotions and attitudes.

    In conclusion, our propositional inventory and conceptual framework represent efforts to

    build a foundation for understanding how customers influence employees. Future studies can

    improve knowledge by expanding the framework and empirically testing our propositions.

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    Selected References

    Anderson, N. H. (1971). Integration theory and attitude change. Psychological Review, 78 (3)


    Ashforth, B. E., Harrison, S. H., & Corley, K. G. (2008). Identification in organizations: An

    examination of four fundamental questions. Journal of Management, 34(3), 325-374.

    Dormann, C. & Zapf , D. (2001). Job satisfaction: a meta-analysis of stabilities. Journal of

    Organizational Behavior 22(5): 483-504.

    Earley, P. C. (1986). Trust, perceived importance of praise and criticism, an...


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