Employee and Customer Perceptions of Service in Banks

Employee and Customer Perceptions of Service in BanksAuthor(s): Benjamin Schneider, John J. Parkington and Virginia M. BuxtonSource: Administrative Science Quarterly, Vol. 25, No. 2 (Jun., 1980), pp. 252-267Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management,Cornell UniversityStable URL: http://www.jstor.org/stable/2392454 .

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Employee and Cus- tomer Perceptions of Service in Banks

Benjamin Schneider, John J. Parkington, and Virginia M. Buxton

? 1980 by Cornell University. 0001 -8392/80/2502-0252$00.75

This research was partially supported by the organizations in which the study was accomplished; we thank them for their financial and psychological assistance. Bruce Katcher and Hannah Hirsh helped with some of the analyses reported herein. Our colleagues Phil Bobko, Pete Dachler, Irv Goldstein, Nancy Jagmin, Janina Latack, and John Slocum helped us with their valuable comments on an earlier version of this article.

June 1980, volume 25

A representative design for diagnosing effectiveness in retail service organizations is presented and operation- alized in a study of the employees and customers from twenty-three bank branches. The design builds on some boundary-spanning theory and on some practical realities which suggest that data should be collected from both employees and customers when diagnosing and evaluating service organizations. Assumptions underlying the use of perception-based diagnoses are also explained. Results revealed some strong relationships between employee perceptions of branch practices and procedures in relation to service and customer perceptions of service practices and quality. Results are discussed with reference to organizational diagnosis and the potential integration of organizational and consumer behavior."

This study enacts a research strategy for evaluating the practices and procedures of retail service organizations. The research process assumes that the providers of service, because of their boundary position, are sensitive to customer requirements and organizational practices in relation to the provision of service.

Recent conceptualizations of the evaluation of organizational effectiveness have focused on the characteristics of organizational constituencies. For example, Pennings and Goodman (1977) present a structuralist view of constituencies, in which constituencies are conceptualized as though they are clearly identifiable structured entities, either subunits of an organization or another competing organization. Following earlier works by Thompson (1 967) on dominant coalitions and Blau and Scott (1962) on primary beneficiaries, they conceptualize both internal and external units to the organization as constituencies that may differentially contribute to goal definition, goal constraints, and the frames of reference used when evaluating effectiveness.

Pennings and Goodman are not unique in concentrating on structured entities as the relevant others in evaluating organizational effectiveness. Cummings (1977), for example, presents an instrumental view of organizational effectiveness, noting (1977: 60): Within this [instrumental] framework, organizational efficiency, profitability, and productivity become necessary minimal conditions for organizational survival. They are not, however, the goals of an effective organization. In order for an organization to be effective in this instrumental sense, a subsystem must be concerned with showing that performance meets the standards that external constituencies (for example, resource suppliers) monitor.

Here again is an emphasis on a structured constituency, the resource supplier.

Although Cummings' point about the necessity to evaluate effectiveness by the standards of structured external constituencies is important, most retail service organizations have at least one major constituency that is not structured: its daily customers. Research on the daily customers of retail service organizations is essentially missing in the literature (Schneider, 1973), and little published information exists about the ways in which organizational functioning may be

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Employee and Customer Perceptions

reflected in consumer behavior. The present study details a strategy for evaluating the effectiveness of retail service organizations in relation to the customers of the organization. The research design requires that the perceptions of the customers and the employees of an organization be obtained. Specifically, the present research concerns branch customers' perceptions of service at branch banks and the relationship of the customer perceptions to employee views of the practices and procedures that characterize branch service.

Our general hypothesis, based on the boundary-spanning literature (Thompson, 1967; Bennis, 1970; Aldrich and Herker, 1977; Katz and Kahn, 1978), is that employee and customer perceptions of the quality of service provided to customers are strongly related. We reasoned that the necessity to balance the established rules and routines of the bank against the demands of customers places branch employees in the position of having to be aware of, and responsive to, organizational and client goals. This awareness should not only sensitize employees to the perceptions customers have of the branch but it should also sensitize employees to the practices and procedures of the bank as employees attempt to meet customer demands.

Support will be found for the assumption that employees are sensitive to customer perceptions of service quality and branch practices and procedures in relation to quality if (1) customer and employee perceptions of the quality of service given customers are positively related and (2) employee perceptions of the service-related practices and procedures of the branch are related to customer perceptions of service quality.

From a theoretical standpoint, these relationships would support the generally held view that more effective organizations engage in practices and procedures that are responsive to environmental pressures, in the present case, the pressure for good service. Also of relevance from a theoretical perspective is the direct link that these relationships would show between the studies of organizational and consumer behavior. Thus, in a time when more people are em- ployed in service organizations than in manufacturing, the consumption of services requires a broadly based research perspective which includes those delivering the service as well as those consuming it.

This latter point is related to a practical outcome of this kind of evaluation design, namely, the specification of organizational practices and procedures that, if changed, might be reflected in changed customer perceptions. If relationships between customer and employee perceptions are found, then the employee perceptions can be viewed as organizational diagnoses which specify the practices and procedures requiring change.

Perception and Organizational Behavior

The perceived environment has a stormy history in the study of organizational behavior, which may be attributed to Costello and Zalkind's (Zalkind and Costello, 1962; Costello and Zalkind, 1963) early summary of the role of perception

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in administration. Their survey of the "new look" (Bruner, 1958) in the psychology of perception emphasized perceptual bias. Subsequent attempts to use perceptual measures in diagnosing organizations have thus been criticized because of assumed subjectivity. Especially in research on organizational climate, a number of scholars, such as Guion (1973), Johanneson (1973), and Payne and Pugh (1976), have been critical of perception-based diagnoses because of the potential subjectivity of the resultant data. More re- cently, in an especially critical piece, Woodman and King (1978) claimed that climate research belongs more to folklore than to science.

We shall not take the space to present our review of the theoretical and empirical literature on organizational climate here (see Jones and James, 1979, or Joyce and Slocum, 1979, for a recent review). Based on this review, the present research proceeded under the following assumptions about the role of perception and organizational climate in the study of organizational behavior:

1. Member perceptions of organizational practices and procedures are the critical data in understanding organizational behavior. No behavior in, or of, organizations occurs in the absence of perceptions. To conceptualize an organization requires a consideration of human behavior, and human behavior does not exist without perception (Heider, 1958; Miller, Galanter, and Pribram, 1960; Bowers, 1973).

2. Although one may observe bias in perceptions when relatively extreme emotional conditions exist, people in a work setting will tend to agree in their descriptions of the practices and procedures that characterize the setting. People in a work setting tend to agree with each other because they are more like each other than they are like people in other settings (Holland, 1976). This assumption of agreement in perceptions has been demonstrated empirically and allows for the aggregation of data within settings, facilitating studies across settings (Drexler, 1977).

3. The climates of organizations emerge out of the naturally occurring interactions of people in pursuit of various personal and organizational goals. Climates, in turn, affect the way people and organizations proceed in their pursuit of goals. Climates are then, at various times, independent, mediating, and dependent variables. In the present research, service climate is never directly assessed; the practices and procedures identified as components of service climate are the foci of measurement.

Practices and procedures are measured for two reasons: (1) because they are changeable and, it is further assumed, changes in practices and procedures can alter climates (Lit- win and Stringer, 1968; Seashore and Bowers, 1970); and (2) because the relationships established between employee perceptions of practices and procedures and customer perceptions of service quality were of considerable interest to us.

4. Organizations may have many climates, including a climate for creativity, for leadership, for safety, for achieve- ment, and/or for service. Any one research effort probably

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can not focus on all of these, but the effort should be clear about its focus (Schneider, 1975). In the present study, service climate in branch banks is the focus.

METHOD The bank branches studied represent a subset of the branches of a large, Atlantic Coast, commercial, full-service bank. The branch customers studied were individual, not corporate, account holders. More details on samples are provided, as appropriate, below.

The data collection strategy had three distinct phases: (1) branch entry and preparation of the organization for the data-collection process; (2) conduct of interviews with (a) a sample of employees, to establish the practices and procedures thought to reflect a positive service climate and (b) a sample of customers, conceptually to map the "quality of service" domain, and (3) development of survey measures for assessing customers' and employees' views, so that the relationships of interest could be established.

Organizational Entry and Preparation

Entry. Because both the researchers and the client organization wanted the study conducted, organizational entry (as contrasted with branch entry) was not a problem. The branch managers to be involved in the study were asked to attend a meeting, at which the general research plan was presented, questions about the project were answered, and their participation was encouraged by senior management. At the meeting, branch managers were told that their branch data would remain anonymous in any report, because the focus of the study was on diagnosing relationships between employee and customer views across bank branches. They were also told that each of them would be asked to participate in an interview, so that their personal input into the diagnostic instrument was ensured. Further, they were to designate the other employees from their branch to be interviewed. The philosophy of this meeting, then, was to offer branch managers an opportunity to participate, with the underlying understanding that they, in fact, controlled the study process and, thus, the success or failure of the study. All twenty-five managers who were asked to participate agreed to do so. Upon the managers' agreement, all of the employees in the twenty-five branches were sent a letter describing the study and their potential role in it, with a request to participate. At the same time, a news release was prepared for the bank newspaper informing the total branch system about the project.

Liaison team. Because every organization has its own cul- ture, it is critical to have such a team when a goal of the research instrument, as in the present case, is that it be relevant to the system (Alderfer and Brown, 1972). The liaison team was composed of the researchers, members of the bank marketing department, people with major responsibilities for drawing samples, printing and mailing surveys, arranging interview schedules, etc., and branch-related people who were asked to criticize proposed questionnaire scales, items, timing, etc. for a total of nine people.

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Interviews

The interviews that were conducted served to orient the researchers to the general class of issues salient to the employees and customers and to the language of the re- spondent population, facilitating the wording of questions for the survey. All interviews were tape recorded with permis- sion of the interviewee(s).

Three employees from each branch were interviewed: the branch manager, a teller, and a nonteller/nonmanager. Thirty of these interviews (from ten branches) were conducted individually. The rest of the interviews of branch employees were conducted in groups of three to five persons each. The groups were always composed of similar types, that is, all managers, all tellers, or all nontellers/nonmanagers, in an attempt to encourage their freedom in responding, to pre- vent interviewees from feeling dominated or constrained by the presence of branch employees with higher status.

The interviews were open-ended. The sessions began with a description of the project, which emphasized that the pur- pose of the study was to discover ways of improving customer service. Employees were asked to describe the practices and procedures of their branch in providing service to customers.

The goal of the interviews with employees was to gain a broad understanding of the range of practices and procedures that define service. In addition, data were obtained on the way respondents felt about their work and their work world, specifically, on their feelings of job involvement, organizational identification, job/organizational satisfaction (Bux- ton, 1977), and role conflict and role ambiguity (Parkington and Schneider, 1979). (These latter kinds of data will, for the most part, not be presented in this report.) Ten "good" interviews were transcribed and used as a basis for writing questionnaire items in terminology appropriate to the respondents. The determination of whether an interview was "good" was made by the interviewer immediately following the interview and was based on the presence of a great deal of explicit material about branch practices and procedures.

The customers to be interviewed from each branch were randomly selected from customer mailing lists, contacted by telephone, and asked to participate in an interview, for which they would be paid fifteen dollars. Interviews were held in the branch bank nearest the customer's home. All customer interviews were conducted individually. As with the employee interviews, behavorial specificity about branch service was a goal in the interview. The authors listened to the tapes of all customer interviews and wrote the survey items from notes made while listening to the interviews.

Survey Development

An informal content analysis of the two sets of interviews served as the major input into the a priori definition of the issues requiring questionnaire items. The survey items used were, for the most part, taken from the employee and customer interview typescripts or notes.

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Employee Perceptions of Branch Service

It is important to preface presentation of the service issues suggested in the employee interviews by emphasizing that the focus of interest in this study was to diagnose the branch practices and procedures relating to service to customers, not those relating to employee needs for rewards, pay, promotion, supervision, and so forth. The results refer, then, only to the effectiveness of branch practices and procedures in meeting customer needs.

The interviews with employees suggested a complex set of issues involved in the service orientation of branches. At a general level of abstraction, employees spoke about an enthusiastic versus a bureaucratic orientation to service. The kinds of issues mentioned for the enthusiastic orientation (italicized labels appear in subsequent tables) had reference to the philosophy of the branch regarding a flexible and interpersonally open form of involvement with the customers of the branch and the community in the delivery of service. The kinds of items assessing the enthusiastic orientation referred to, for example, keeping a sense of "family" among branch employees, involving the branch in community affairs, and giving customer service in new and creative ways. In contrast, the bureaucratic orientation was viewed in terms similar to those used by Bennis (1970) and Blau (1974): stress on rules, procedures, and system mainte- nance, which often divert energy away from providing services to clients in order to maintain the status quo. These items tapped into such issues as strictly following rules and procedures, doing one's job in a routine fashion, and using only established methods for solving customers' problems.

The enthusiastic (10 items) and bureaucratic (6 items) service orientation questionnaire scales required employees to indicate how essential they felt bank management thought the issue in the item was to giving good customer service (very, somewhat, not very essential to bank management). These two kinds of general customer orientation items appeared randomly in the same section of the employee questionnaire.

Table 1

Items Comprising the Managerial Function Scale from the Employee Survey

Item number Item

4 My branch manager supports employees when they come up with new ideas on customer service.

7 My branch manager sets definite quality standards of good customer service.

9 My branch manager meets regularly with employees to discuss work performance goals.

13 My branch manageraccepts the responsibilities of his/her job.

20 My branch manager gets the people in different jobs to work together in serving branch customers.

21 My branch managerworks at keeping an orderly routine going in the branch.

29 My branch manager takes time to help new employees learn about the branch and its customers.

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At a more specific level, employees spoke about the degree to which the branch manager assumed the traditional managerial functions with respect to giving good service (planning, coordinating, goal setting, establishing routine), the extent to which extra effort in serving customers was rewarded and appreciated (effort rewarded), and the degree to which there was an active attempt to retain customers in the branch. Employees indicated the extent to which the situation portrayed by each item was true of what happens in their respective branch office (very true, somewhat true, not true). As an example, the items comprising the managerial function scale are presented in Table 1.

The above specific and more abstract customer service orientation issues were seen as intrabranch climate phenomena affecting customer service. At the extrabranch level, employees spoke of the necessity for support systems controlled by the larger bank system to support the branch. Four apparently independent and identifiable support systems were noted: 1. Personnel support ("The employees sent to us by personnel are able to do their jobs well.") 2. Central processing support ("Having all customer records in a central location makes it easier on the branch.") 3. Marketing support ("We are well-prepared by Marketing for the introduction of new products and services.") 4. Equipment/supply support ("Equipment and machinery in the branch are well serviced and rarely break down.")

Questionnaire items assessed branch employees' perceptions of the attributes of these support systems. The rating scale used for these items was very true, somewhat true, not true. The employee survey items used to assess both the more specific customer service dimensions (managerial functions, effort rewarded, and retain customers) and the support system facets were included, randomly, in the same section of the survey.

Employees were also asked to describe the overall quality of service in their branch: "Indicate with a check mark (/) how you think the customers of your branch view the general quality of the service they receive in your branch." Six alternatives were provided: outstanding, excellent, good, not so good, terrible.

Scale scores for the various scales were created for each employee using unit weights for items. Branch scores for employees were subsequently obtained by averaging employee scale scores on a particular scale within each branch. Similarly, a branch score was computed for the quality-of- service item.

Customer Quality-of-Service Dimensions On an a priori basis, customers appeared to distinguish ten separable facets of service: 1. Teller courtesy ("Tellers care about customers as people in my branch.") 2. Officer courtesy ("Some officers in the branch know me by name.") 3. Teller competence ("Tellers in the branch seem to be well trained and knowledgeable.") 4. Adequate staff ("My branch seems to have enough employees to handle its customers.")

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5. Branch administration ("It sometimes seems to me that tellers have to walk all over the place to get things done.") 6. Handling services ("Deposits are promptly credited to my account(s).") 7. Convenience ("I like the fact that a large number of branches exist.") 8. Employee turnover ("There seems to be a high turnover of employees in my branch.") 9. Selling ("Officers of the bank have tried to get me to open new accounts.") 10. Employee attitudes ("My impression is that the branch employees really try to give the customers good service.")

These ten issues were assessed with a total of 41 randomly ordered items. Respondents indicated with an S, N, or ? (Schneider, 1 973) the extent to which the banking situation portrayed by each item was similar (S), not similar (N), or neither (?) to the customer's experiences and feelings. A single item about overall quality of service was asked: "Check the box F that best describes the general quality of the service you receive in your bank branch." The same six-point scale used in the employee survey was used for this item. As an example of the customer items, Table 2 reports the items comprising the branch administration scale.

Scale scores for each customer were created using unit weights for items. Branch scores for each dimension were obtained by averaging customer scale scores within each branch. Branch scores were also developed for the quality- of-service item for customers.

It should be noted that customer-usage data were also obtained from the survey: tenure as an account holder, day of week usually visiting branch, number of branches used on a regular basis, frequency of branch visits, hour of the day usually doing banking, and whether banking activity occurs near residence or work or both. In addition, customers were cautioned to respond to the survey with respect to the branch at which they do most of their banking and to indi-

Table 2

Items Comprising the Branch Administration Scale from the Customer Survey

Item number Item

3 An officer (or someone else) takes charge of things when the bank becomes overcrowded.

-4 It sometimes seems to me that tellers have to walk all over the place to get things done.

-12 When I've opened new accounts or had to change old ones, something usually got messed up.

34 My branch has an adequate supply of deposit or withdrawal tickets.

-36 I sometimes feel lost in the branch, not knowing where to go for a certain transaction.

-39 It is difficultto knowwhoto call orwheretowrite when I need specific kinds of bank-related information.

Note: A minus sign before the item number indicates that the item was reverse-scored .

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Gate the name of that branch if it was different from the branch name on the front page of the survey.

Samples for Statistical Analysis

Employee sample. In a first mailing, all employees from 24 branches (one branch was dropped from the study because of its involvement in another project) were mailed a survey with a return envelope to the researcher. Due to an over- sight in the mailing process, branch identification codes were not placed on the survey forms, so the survey had to be mailed again to all potential respondents. The response rate to the second mailing was 56 percent (42 percent of the first mailing was received by the time the second mailing was made) for a total employee sample size of N = 263. From one very small branch no employee responses were received, so that the final branch sample size was N = 23.

Customer sample. Approximately 600 customer surveys were mailed to a random sample of customers from each branch stratified by account type and account balance. The account type (savings, checking, or loan) from which the name was drawn was coded by using three differently col- ored surveys, and the account balance (high, medium, or low) was coded by having the surveys returned to three different mail boxes. Branch identification was coded by making the first page of the customer survey a letter signed by the branch manager of the branch from which the customer's name came.

Approximately 15 percent (2,060) of the 13,800 customer surveys were returned, but the usable sample size was only 1,657 (or 11.5 percent) because of a lost bus shipment of about 400 completed questionnaires somewhere between the bank and the researchers. Even with the missing surveys, there was an average of about 70 customer responses per branch available for analysis.

Customer returns were quite representative of account type and account balance. In addition, no significant relationships were found between the bank usage data and the various customer scale responses. There was a slight but significant tendency, however, for more negative responses about quality of service to be associated with branches from which a larger percentage of returns came.

RESULTS The items comprising the two surveys were tentatively submitted to principal components analyses as a way of re- ducing the number of dimensions to be studied. We say tentatively, because the issue of whether factorial analyses accomplished on individual responses will adequately represent between-unit (group, branch, etc.) differences is not all clear (Schneider, 1975; Katerberg, Herman, and Hulin, 1977). This is an important issue in this paper, because all data are presented at the branch level. For information purposes it can be noted that a principal components factor analysis, with orthogonal rotation, accomplished on the 1,657 customer surveys yielded five factors. Briefly, the items on the a priori scales numbered 1, 2, 3, and 10 collapsed into a Competence/Courtesy factor, whereas a priori scales 4, 5, 7, and 8 retained their independence. Items on scales 6 and 9

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Outstanding 6.00 -

5.00 -

LL

0 4.00 _

U S

3.00

Terrible 1.00 1.00 2.00 3 00 4.00 5.00 6.00

Terrible Outstanding EMPLOYEE

Figure. Scattergram of correlation coefficient between customer and employee perceptions of overall quality of service provided to customers.

loaded on various factors, making a clear interpretation difficult. A similar analysis of the employee survey (with N = 263 employees) was difficult to interpret, probably due to the relatively large number of items submitted to the analysis and the relatively small sample. However, the internal consistency reliability estimates of the a priori scales were thought to be acceptable.

Relationships between Customer and Employee Views

Table 3 presents the correlation coefficients representing the relationships between customer and employee perceptions of branch service across the 23 branches. Labels in the table correspond to italicized variable names in the text.

Table 3

Correlations between Employee and Customer Variables

Employee variables >

_3 _ Cu C C >

Cu4- C C u C _ 0 h00 - X ' P CD D - i-

Customervariables o v ~ ? z4 wo Xo X- cn C o z' X'X

Overalliquality 67T 26 41 71 A 22 54T 36 63T 46 08 40 50 -

Teller courtesy 50T 27 28 63T 15 56T 11 52 35 -03 20 36 71 Officer courtesy 46 29 16 44 -28 31 11 31 11 20 07 17 25 Teller competence 36 17 35 54T 16 44T 09 45 42 12 22 35 64 Adequate staff 64T 25 25 66T 22 57T 23 64F 35 15 31 42 73 Branch administration 50 14 38 72T 30 58T 23 56T 30 -05 36 51A 52 Handling services 42 05 33 55 41 48 38 46 30 12 37 42 33 Convenience -08 -04 18 -11 -01 -27 22 -22 -12 20 -12 -24 41 Employee turnover 46 26 33 37 19 52 34 43 47 23 39 47 71 Selling 27 29 32 36 -11 09 34 17 24 13 09 07 40 Employee attitudes 56> 30 25 56U 18 47 28 47 35 04 22 34 72 KR-14 internal

consistency 70 53 85 40 65 64 65 65 55

Note Decimals omitted, N = 23 branches *p <.05; eep< .01

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At the end of each column or row, KR-14 internal consistency reliability estimates are presented for multiple item scales.

The correlation between employee views of the general level of quality of service offered and customer views of service received is quite high (r = .67, p < .01). A scattergram plot of this relationship, shown in the Figure, revealed no nonlinearity.

Table 3 also shows the relationships between employee perceptions on the dimensions of branch service orientation and customer perceptions of overall service quality. These data reveal strong positive relationships between customer perceptions of good overall quality and employee views that (1) the branch emphasizes an enthusiastic orientation to service (r = .71, p < .01), (2) the manager takes on the traditional managerial functions of planning, goal-setting, etc., with respect to service (r = .54, p < .01), and (3) the branch attempts to actively retain customers (r = .63, p < .01). In addition, perceptions by employees of two support systems are significantly and positively related to customer perceptions of good overall quality of service: personnel support (r = .46, p < .05) and equipment/supply support (r = .50, p < .05). Clearly, the ways in which branch employees describe some facets of the service orientation of their branch and the support received from some systems outside the branch are related to what customers say about the quality of the service they receive in the branch.

Indeed, further examination of Table 3 reveals that not only are customers' perceptions of general quality of service significantly related to employee perceptions, but that many of the service issues described by customers are also related to various facets of branch service as perceived by employees. Thus, employee perceptions of an enthusiastic orientation, a manager who performs the traditional managerial functions, and an attempt to retain customers are all consistently and significantly related to customer perceptions of teller courtesy and competence, adequate staff, branch administration, handling services, employee turnover, and employee attitudes.

It should be noted here that none of these significant relationships would be observed if the data for each branch were unreliable. Thus, these significant correlations between employee and customer perceptions indicate that within branches there was sufficient agreement about branch practices and procedures to produce reliable branch averages. It should also be noted that the range of branch averages was generally significant; that is, the high and low scores pro- duced a significant range of responses across branches. Some feel for this range of scores is obtained by examining the means, standard deviations, and high and low scores for selected employee and customer perceptions: employee view of quality: M=2.97, s.d.=.32, Hi=3.35, Lo=2.23; customer view of quality: M=3.40, s.d.=.61, Hi=4.75, Lo=2.00; branch administration: M=1.73, s.d.=.14, Hi= 1.97, Lo= 1.37; managerial functions: M=2.29, s.d.=.27, Hi=2.81, Lo=1.57.

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DISCUSSION

The present design for diagnosing organizational effectiveness in relation to customers yielded some interesting data. As hypothesized, employees were sensitive to customer perceptions of branch service quality. This sensitivity to customers was primarily revealed in the correlation of .67 between customer perceptions of branch service and employee perceptions of how customers feel about branch service. In addition, however, it was shown that employee perceptions of service-oriented practices and procedures were consistently related to customer perceptions of overall service quality, as well as to customer perceptions of specific facets of service. Thus, the focus on dual perspectives for diagnosing organizational effectiveness yielded data useful not only for making global evaluations of branches but also for specifying some facets of branch practices and procedures that, if attended to, might yield more positive customer perceptions of service quality.

From a methodological standpoint, the most important bene- fit of this dual perspective on organizational diagnosis is that response-response contamination is effectively eliminated. In most approaches to diagnosis, a persistent problem has been that data invariably come from a single source, result- ing in information that may be admirably reliable but of un- known validity. The present diagnostic procedure eliminates the potential contamination associated with data coming from a single source by permitting the examination of relationships between the process evaluation of branch practices and procedures by employees and the outcome evaluation by customers (Campbell, 1974; Goldstein, 1978).

The relatively strong relationships revealed in this manner serve to focus attention on the role of boundary personnel in retail service organizations like the branch banks studied here. Most conceptualizations and writings about employees at the boundary of organizations seem to concentrate on issues such as control over and processing of information or the function of the boundary employee as an external representative of the organization. In addition, the emphasis is usually on interorganizational relationships (Aldrich, 1979). As noted in the introduction, branch employees are forced to deal with a relatively unorganized (structurally ill-defined) constituency. Perhaps more importantly, this study shows that some people at the boundary of organizations have relatively little control over information, are neither required nor expected to process information from external constituencies, and who really are not external representatives in the classical sense. Yet branch employees seem to possess information that may be of considerable value to the organization. They have a good sense of the ways in which the organization's customers view the organization and can apparently accurately identify some of the practices and procedures associated with customer evaluations of effectiveness. It is in this sensitivity to customers and to the practices and procedures carried out in service to customers that these data may be particularly helpful, for, theoretically, this kind of sensitivity can be expected in occupants of similar kinds of roles in other organizations.

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Aldrich and Herker (1977) noted that employees who deal with the public may develop attitudes about the organization similar to those of customers and that, if this occurs, it may yield the negative organizational consequences of overiden- tification with the consumer and underidentification with the organization. Although their explanation of sensitivity and its outcomes is of value, an alternative theoretical position, that of occupational/organizational choice, yields a more positive view of the outcomes of identification with customers.

The literature on occupational choice suggests that people tend to choose jobs that permit manifestation (Holland, 1976) or implementation (Super, 1953) of their personality. Holland's position, in particular, specifies the attraction of people to occupations that are a good fit for their personality type. His theory, combined with the literature on organizational choice (cf. Hall, 1976) and personnel turnover (Porter and Steers, 1973; Mobley et al., 1979) suggests that people are attracted to, and remain with, organizations that fulfill their expectations and are instrumental for them in attaining the kinds of outcomes they desire.

If we hypothesize that bank employees who occupy branch boundary roles are, generally, of a social and enterprising personality type (Holland, 1976), we can expect them to want to give good service. This desire to give good service might be precisely what sensitizes them to the views customers have of service and to what their branch is doing to give good service. Although no direct evidence for this hypothesis was obtained in this study, a study by Parkington and Schneider (1979) provides some supportive data, which suggest that bank branch employees see themselves as more enthusiastic and less bureaucratic about service than management. Their data also suggest that the greater the discrepancy between views of self and views of management, the stronger were employee turnover intentions. We believe that the question of role occupants' sensitivity to customers should undergo further research, and our hypothesis is that such sensitivity (1) should be expected and (2) if utilized as a diagnostic input, will not at all necessarily have a negative outcome for the organization.

A Note on Perception and Organizational Behavior.

Some usually implicit assumptions about the role of perceptions in organizational behavior were made explicit in the introduction, because, collectively, they served as a frame of reference for the research strategy. The results of this study only suggest the utility of perception-based diagnoses, because an evaluation of the effects of any changes based on the perceptions was not carried out. However, two kinds of data support the validity of the employee perceptions. First, the employee descriptions of branch practices and procedures were related to customer perceptions of service. Second, some data in Table 3 not previously discussed also suggest support for the validity of employee perceptions; the scales for job satisfaction and organizational satisfaction reveal only one significant relationship with customer perception of service (between organizational satisfaction and customer views of quality). (Job and Organizational satisfaction were assessed with 6-point Faces [Kunin, 1955] scales.)

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The lack of significant correlations between employee feelings of satisfaction and customer perceptions of service suggests that employees were able to distinguish meaning- fully their descriptions of branch practices and procedures from their feelings of satisfaction. Internal analyses of the employee scale intercorrelations revealed this separation for job satisfaction, clearly showing its general independence from the more descriptive perceptions. This was less true for organizational satisfaction, however, supporting the generally higher correlations between employee satisfaction with the organization and customers' views of service revealed in Table 3.

Obviously, some affective measures will correlate with more descriptive perceptions. The point here is that this is not necessarily true (Johanneson, 1973), that perceptions and satisfaction are not necessarily isomorphic (Guion, 1973), and that useful diagnostic data may be obtained using perceptions of organizational processes as the data of interest (Schneider, 1975).

On this last point, it may be instructive to identify some additional nonsignificant correlations in Table 3. That is, if one accepts the importance of significant relationships based on perceptions, nonsignificant data should also be in- formative. Three employee scales (marketing support, processing support, and effort rewarded) revealed no significant relationships with customer perceptions. Although perceptions of these issues tended to be relatively the same across branches (variability was somewhat low), this fact alone fails to account for the lack of observed relationships. Internal analyses of the correlation matrix for employee scales revealed that effort rewarded was more strongly related to the two satisfaction measures than to the branch practices indices, that processing support was unrelated to essentially everything else, and that marketing support was strongly and consistently related to the other significant correlates of customer perceptions. In the latter case, it can be seen in Table 3 that the correlation coefficients are moder- ately strong, frequently failing to meet traditional levels of significance by only a few points.

The findings forprocessing support may be accounted for by the fact that the entire branch system in this bank was undergoing a transition from decentralized to centralized data processing, yielding differences between branches as far as employees were concerned. However, these differences were unrelated to what was generally happening to customers in a branch. In other words, effects of the larger system on the branch may have been accurately perceived by employees, but other features of the service offered customers by each branch were more important for the delivery of customer services; system effects unrelated to the typical service style of a branch were not reflected in customer perceptions.

Selling and convenience were the two weakest customer scales from the standpoint of relationships with employee perceptions. Internal analyses of the correlation matrix for customers failed to illuminate these findings. Both scales, however, were two-item scales with low internal consist-

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ency reliability estimates, and this might account for their lack of relationships with employee perceptions. An alternative explanation for convenience is that an externally controlled decision determines a branch location, and, because employee perceptions tend to reveal branch attributes controlled or controllable within the branch, a significant relationship between customer and employee perceptions should not be expected.

Integrating Consumer and Organizational Behavior

In 1973, Schneider noted that a review of the consumer behavior literature revealed little, if any, cognizance of the purchaser and user of services. From an organizational behavior perspective, it is important to note that in many retail service organizations the job of front-line employees is serving customers. The importance of this seemingly obvious statement is that a central component in the tasks of the occupants of boundary roles, the customer, is relatively outside the range of control and manipulation of the organization. The potential for ambiguity and stress associated with such jobs (Adams, 1976) suggests the need for a particular kind of organization to deal with this situation, one oriented toward the customer through flexibility and support of those employees in face-to-face boundary-spanning roles.

Gartner and Riessman (1974) argue forcefully for the idea that, as more workers function in service roles, the boundary between employee and customer will become continu- ally blurred; more consumers will be service workers themselves, and consumers will be intimately involved in the production of services. Thus, service activity may frequently require active consumer participation, as in filling out deposit tickets at the bank, "dipping" a bank credit card to obtain cash, etc. It becomes clear that such considerations about consumers move them closer to the traditional view of labor and vice versa, laborers now being more in the role of facilitators rather than producers. Gartner and Riessman discuss these issues, and others, in their look into the future, a future that many of the administrative sciences, with their emphasis on the world of manufacturing, have failed to begin to understand.

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Documents

Employee and Customer Perceptions of Service in Banks