LINKING EMPLOYEE PERCEPTIONS OF SERVICE CLIMATE TO CUSTOMER SATISFACTION

PERSON?.IELPSYMOLOGY 19%. 49

LINKING EMPLOYEE PERCEPTIONS OF SERVICE CLIMATE TO CUSTOMER SATISFACTION

JEFF W. JOHNSON Questar Data Systems, Inc.

Although a common theme in the service quality literature is that organizations must create and maintain a climate for service in order for employees to effectively deliver service, few studies exist that evaluate climate for service components against a criterion of customer satisfaction. The effectiveness of different aspects of a climate for service is evaluated by determining the relationships between service climate components and facets of customer satisfaction, as rated by 538 employees and 7,944 customers across 57 branches of a large bank. All service climate components were significantly related to at least one facet of customer satisfaction (e.g., teller service). Seeking and sharing information about customers' needs and expectations, training in delivering quality service, and rewarding and recognizing excellent service were the practices that were most highly related to satisfaction with service quality.

A common theme emerging from the service quality literature is that organizations must create and maintain a climate for service in order for employees to effectively deliver excellent service (Schneider, 1990; Schneider & Bowen, 1995). In other words, employees are more likely to deliver excellent service to customers when the organization expects and rewards such behavior and establishes practices that facilitate service delivery (Schneider, Wheeler, & Cox, 1992). Although much has been written on the topic, there is very little research investigating the effectiveness of management practices designed to enhance service delivery. For organizations in the service industry, the most appropriate criterion for organizational performance is customer satisfaction (Schneider & Chung, 1994). Service quality researchers point out the importance

An earlier version of this paper was presented at the E n t h Annual Conference of the Society for Industrial and Organizational Psychology, Inc., Orlando, JX, 1995. I thankKen Bruskiewicz, Caroline Cochran, Carol Lynn Courtney, Kris Fenlason, Andrea Olson, Fred Oswald, and Benjamin Schneider for their comments on earlier drafts of this article.

This article is dedicated to the memory of my loving wife Mary. Correspondence and requests for reprints should be addressed to Jeff W. Johnson,

Questar Data Systems, Inc., 2905 West Service Road, Eagan, MN 55121-2199. E-mail may be sent to [email protected].

COF'YRIGm 0 1996PERSO"ELPSY~OLOGy,INC.

831

832 PERSONNEL PSYCHOLOGY

of examining both customer and employee attitudes when managing service quality (e.g., Schneider, Parkington, & Buxton, 1980; Tornow & Wi- ley, 1991), but few studies exist that evaluate climate for service components against a criterion of customer satisfaction. The objective of this study is to evaluate the effectiveness of practices and conditions asso- ciated with a service climate by determining the relationships between service climate components and facets of customer satisfaction across branches of a large organization.

The climate of an organization is the perceptions incumbents share about what is important in the organization, obtained through their ex- periences on the job and their perceptions of the kinds of behaviors management expects and supports (Schneider & Bowen, 1995). Aclimate for service exists when these perceptions are integrated into a theme that indicates service is important to the organization. Schneider and Bowen offered examples of management practices that are expected to enhance a climate for service. They stated that creating a climate for service begins with identifying what the market expects and needs for service quality. This involves measuring customer expectations and satisfaction, sharing the data with affected employees, and generating goals and plans to ensure improvement in service delivery. Schneider and Bowen also suggested that the climate for service can be enhanced by hiring people who are willing and able to deliver excellent service, training them on aspects of service delivery, and rewarding them for providing excellent service. They also believe that equipment, procedures, and technology should facilitate service delivery in the eyes of both the employees and the customers; and that the functions of operations management, mar- keting, and human resources should work together, rather than compete, to create a cohesive service system.

Albrecht and Zemke (1985) suggested a similar set of practices and conditions that they expected to be related to an organization’s ability to deliver high quality service. These practices were (a) focusing on the customer and understanding customers’ wants, needs, and expectations; (b) developing and communicating a service strategy that defines excellent service and how it will be delivered; (c) designing customer-friendly service systems; and (d) having well trained, service-oriented people at all levels of the organization.

Schneider et al. (1992) obtained qualitative information from employees to identify the themes that constitute a climate for service. Then they used content analysis to relate each of these themes to employee perceptions of service excellence. Across locations, employee perceptions of the organization’s emphasis on service were most highly related

JEFF W. JOHNSON 833

to soliciting and being responsive to customer opinion, establishing procedures for delivering service, hiring procedures, feedback on performance, compensation equity, and training.

The components of a climate for service identified by Schneider and Bowen (1995), Albrecht and Zemke (1985), and Schneider et a]. (1992) help to illustrate the numerous procedures and behaviors that commu- nicate what is important in a setting. According to Schneider (1990), the challenge of climate research is to identify the organizational practices that are related to the criterion of interest. In the case of service climate, the criterion is customer satisfaction (Schneider & Chung, 1994). When the practices that are likely to facilitate the accomplishment of the goal of customer satisfaction have been identified, their status in organizations can be evaluated and changes can be made in the way they function (Schneider, 1990). Theories of service climate can then go beyond lists of practices that are presumed to influence customer satisfaction, to rec- ommendations for specific changes that different kinds of organizations can make to improve specific facets of satisfaction.

Schneider et al. (1980) were the first to link employee perceptions of service climate themes to ratings of customer satisfaction from actual customers by collecting data from employees and customers in 23 branches of a large bank. They correlated mean responses to survey dimensions across branches, and found that several employee variables were significantly related to customer satisfaction with overall service quality (e.g., managerial functions, enthusiastic service orientation, the degree to which attempts were made to retain customers, and employee perceptions of customer satisfaction). These variables were also significantly related to more specific facets of customer satisfaction such as teller courtesy and competence. Other employee variables, such as job satisfaction, effort rewarded, and central processing support, were not significantly related to any of the customer variables measured. Schnei- der and Bowen (1985) did a replication and extension of this study using 28 branches from the same bank. Most of the same relationships were found, although correlations tended to be lower in the second study. They extended the first study by including the human resources practices of supervision, status, career facilitation, socialization, and work facilitation. All of these variables were related to customer ratings of overall service quality, but not as highly as were employee perceptions of the climate for service. Other studies have found relationships between employee and customer attitudes, but have not specifically examined relationships between service climate themes and customer satisfaction (e.g., Johnson, Ryan, & Schmit, 1994; Schmit & Allsheid, 1995; Tornow & Wiley, 1991; Wiley, 1991).


The Present Study

The purpose of this study is to identify organizational practices that facilitate the delivery of service by determining the relationships between these practices and actual ratings of customer satisfaction. The measure of service climate used in this study is the Service Management Practices Inventory (SMPI; Performance Research Associates, Inc. & Questar Data Systems, Inc., 1988). This is an employee opinion survey that is designed to measure employees' perceptions about the performance of their organization in managing the delivery of quality service. It is based on the four service climate components identified by Albrecht and Zemke (1985). Through a series of paper-and-pencil surveys, personal interviews, and focus groups, these components were further defined into eight assessment areas for the SMPI. These areas are (a) service strategy; (b) seeking information (from employees on customer expectations and needs); (c) evaluating service performance; (d) service training and support; (e) service rewards and recognition; (f') service orientation and commitment; (8) sales and service relationship (managing the transition between sales and delivery); and (h) service systems, policies, and procedures (systems designed to make it easy for customers to do business).

The SMPI was administered to employees in a sample of branches from a large bank. A survey designed to measure specific aspects of service and overall quality was also administered to customers of the bank The customer survey measured what Schneider and Bowen (1995) called personakontact and nonpersonal-contact aspects of service. Personal- contact service dimensions are those in which customers rated the quality of their interactions with people at the bank. These include the performance of tellers, phone representatives, and other branch staff, and the service received when problems arose. Nonpersonal-contact service dimensions are those that do not involve direct contact with people. These include the quality of the bank statements and the convenience of hours, locations, and automatic teller machines.

Awegalion Issues

As in previous studies of this nature, data were aggregated to the branch level so correlations between dimensions from each survey could be calculated. Individual perceptions are the basic data for climate research, but these perceptions may be aggregated when aggregation makes conceptual sense and the frame of reference for the perceptions is at the appropriate level (Schneider, 1990). In this study, branches

JEFF W. JOHNSON 835

of the participating bank are locally owned and operated, and the organizational emphasis is on serving the individual community of each branch. Thus, although branches are expected to follow general com- pany policy, they are relatively independent. Employees within a branch are expected to have similar perceptions of stimuli in the setting (Schnei- der & Bowen, 1985), which is partially supported by evidence in fa- vor of the attraction-selection-attrition cycle (Schneider, Goldstein, & Smith, 1995). Items on employee and customer surveys were written such that the branch was the frame of reference provided to respondents. For example, employees were asked about their satisfaction with the branch's performance on specific practices. Similarly, customers were asked about their satisfaction with branch tellers, rather than about one specific teller. Therefore, it made conceptual sense to aggregate employee climate perceptions and customer service perceptions to the branch level in this study. Statistical support for aggregation (i.e., agreement within settings) is provided in the Method section.

Hypotheses

The SMPI was designed to measure service climate dimensions that are important to the delivery of quality service, so all dimensions were expected to be related to customer satisfaction. Because most practices aimed at facilitating a service climate seem to primarily support the delivery of personal-contact service (e.g., training, rewards and recognition), it was hypothesized that most service climate dimensions would be more strongly related to personal-contact aspects of customer satisfaction (i.e., staff performance and problem solving) than to nonpersonal- contact aspects of customer satisfaction (i.e., bank statements and convenience of hours and locations).

Employees who deal directly with customers are likely to have a good idea of how satisfied their customers are (Schneider & Bowen, 1995), and this relationship has been found in previous studies (Schneider & Bowen, 1985; Schneider et al., 1980; Wiley, 1991). Therefore, it was further hypothesized that employee ratings of their customers' satisfaction with service would be related to customer ratings of actual service satisfaction.

Method

Sample

Survey data were obtained during the third quarter of 1993 from employees and customers of a large retail and commercial full-service


bank with over 600 branches in four states. The study was conducted on employees and customers of 466 branches across 134 regions in three states. Because the project was not originally undertaken with branch- level analyses in mind, not all branches could be included. Employees were only asked to indicate on the survey the region in which they work, so it was not possible to identify their branch unless there was only one branch in the region. The number of branches that satisfied this criterion was 57.

To control costs, employees were selected to complete the SMPI by sampling every fifth personnel file. Employees received face-to-face in- struction and completed the survey during work time, which resulted in response rates ranging from 92% to 100% across regions. The to- tal number of surveys returned was 4,945. Schneider and Bowen (1995) suggested that employees who deal directly with customers are accurate in identifying the service delivery issues that are important to customer service satisfaction, and many of the questions on the SMPI are geared toward direct service providers. Therefore, employees who indicated that they deal primarily with external customers (as opposed to providing services for internal customers employed by the organization) were selected, reducing the sample size to 2,940. The number of employees in the 57 branches available in this study was 538. This yielded an average N per branch of 9.4 (SD = 3.7), with a minimum of 3 and a maximum of 19.

Customers were randomly sampled within each region such that the 99% confidence intervals around the proportions of respondents select- ing each response option were approximately f.05. The customer survey was mailed to 77,600 current retail customers, with a $1 incentive enclosed. There were 31,800 surveys returned, for an overall response rate of 41%. Of these, the respondents who indicated that they considered this bank to be their primary bank were selected, reducing the sample to 21,849. Customers were then selected who do their banking at the 57 branches on which SMPI data were available, so the final customer sample size was 7,944. This yielded an average N per branch of 139.4 (SD = 48.2), with a minimum of 41 and a maximum of 262.

With a sample size of 57, the power of a one-tailed test to detect a significant relationship between variables when the population correlation is .30 is approximately .72 at N = .05 and .47 at a = .01. Power for a population correlation of .50 is approximately .98 at a = .05 and .92 at N = .01.

TABL

E 1

D

imen

sions

of

the E

mpb

yee

Surv

ey

Dim

ensi

on la

bel

Def

initi

on

Item

s A

lpha

rc

c(2

) rW

s(,

) A

vera

ge

Serv

ice s

trate

gy

Serv

ice s

uppo

rt

Serv

ice.

syst

ems

Info

rmat

ion

seek

ing

Trai

ning

Rew

ards

and

re

cogn

ition

~ ~

Prov

idin

g a

clea

r sta

tem

ent e

xpla

inin

g wha

t is m

eant

by

exce

llent

serv

ice

and

how

it is

cre

ated

, pay

ing

atte

ntio

n to

smal

l det

ails

, and

setti

ng

stan

dard

s fo

r res

pons

e tim

e to

cus

tom

er q

uest

ions

or c

ompl

aint

s. Ex

tent

to w

hich

diff

eren

t par

ts o

f the

com

pany

coo

pera

te to

del

iver

se

rvic

e, d

emon

stra

ted

by te

amw

ork

betw

een

units

in m

eetin

g cu

stom

er n

eeds

and

pr

ovid

ing

exce

llent

serv

ice t

o in

tern

al c

usto

mer

s. Ex

tent

to

whi

ch p

olic

ies a

nd p

roce

dure

s co

ntrib

ute

to th

e de

liver

y of

exc

elle

nt

serv

ice

(e.g

., it

is e

asy f

or c

usto

mer

s to

reac

h th

e ri

ht p

erso

n w

hen

they

hav

e pr

oble

ms;

pro

cedu

res

are

defin

ed fo

r wha

t to

do w

ien

mis

take

s are

mad

e).

Con

tinuo

usly

seek

ing

info

rmat

ion

from

em

ploy

ees a

nd c

usto

mer

s reg

ardi

ng

how

serv

ice

qual

ity c

an b

e im

rov

ed, t

rack

ing

the

succ

ess o

f eff

orts

to

impr

ove

serv

ice

qual

ity, a

nd s

iari

ng c

usto

mer

eva

luat

ions

with

em

ploy

ees.

Prov

idin

g su

ffic

ient

trai

ning

on

rodu

cts

and

serv

ices

off

ered

, em

ploy

ees’

sp

ecifi

c ro

les i

n de

liver

ing

exce

lpen

t ser

vice

, the

day

-to-d

ay th

ings

they

can

do

to d

eliv

er e

xcel

lent

serv

ice,

and

how

to d

eal w

ith an

gry

cust

omer

s;

com

mun

icat

ing

regu

larly

abo

ut th

e im

porta

nce

of pr

ovid

ing

exce

llent

serv

ice.

R

ewar

din

and

reco

gnui

n em

ploy

ees w

ho p

rovi

de su

erio

r ser

vice

and

take

a

pers

ona!

int

eres

t in

reso

king

cus

tom

er p

robl

ems,

ceib

rati

ng to

p se

rvic

e ac

com

plis

hmen

ts, a

nd m

akin

g it.

clea

r th

at d

eliv

erin

g ex

celle

nt se

rvic

e is

impo

rtan

t in

adva

ncem

ent d

ecsi

ons.

5 .7

8 .5

6 .7

4

5 .8

5 .6

6 .7

4

5 .8

2 .6

0 .6

4

I .8

4 .4

3 .7

6

6 .8

1 .5

2 .7

2

5 .8

9 .4

4 .5

6

m

w 4

Tabl

e 1 (c

ontin

ued)

Dim

ensi

on la

bel

Def

initi

on

Ave

rage

Ite

ms

Alp

ha

ICC

(2)

T,,

,~(

~)

~ t;j

Man

agem

ent s

ervi

ce

Exte

nt to

whi

ch m

anag

ers s

et ex

ampl

es o

f exc

elle

nt cu

stom

er s

ervi

ce,

5 3

7

.72

.64

W

orie

ntat

ion

dem

onst

rate

com

mitm

ent t

o ex

celle

nt c

usto

mer

ser

vice

, and

supp

ort

empl

oyee

s in

thei

r ser

vice

qua

lity

effo

rts.

prob

lem

s, co

oper

ate

to so

lve c

usto

mer

pro

blem

s, ar

e co

mm

itted

to p

rovi

ding

ex

celle

nt se

rvic

e, a

nd fe

el p

erso

nal r

espo

nsib

ility

for t

heir

wor

k.

expe

ctat

ions

of c

urre

nt, n

ew, a

nd p

oten

tial c

usto

mer

s.

Empl

oyee

serv

ice

Ekte

nt to

whi

ch br

anch

em

ploy

ees g

o ou

t of

thei

r way

to

solv

e cu

stom

er

4 .8

3 .3

8 .6

3

Sale

s & se

rvic

e Ek

tent

to w

hich

sale

s em

ploy

ees c

omm

unic

ate

to o

ther

em

ploy

ees a

bout

the

4 .7

3 .4

4 .7

8 5 l?

Estim

ate

of c

usto

mer

A

sked

of e

m l

oyee

s: “

Ove

rall,

how

satis

fied

do yo

u th

ink

cust

omer

s are

with

1

- .6

2 .5

7 8

satis

fact

ion

the

qual

ity o!

servic

e th

ey re

ceiv

e?”

0

orie

ntat

ion

rela

tions

hip

Ov

Falls

ervi

ce

clim

ate

Mea

n of

all

surv

ey it

ems i

nclu

ded

in st

udy.

49

.9

6 .5

8

Not

e: I

CC

(2)

is th

e in

terr

ater

relia

bilit

y ac

ross

bra

nche

s acc

ordi

ng to

the i

ndex

sugg

este

d by

Jam

es (1

982)

. Ave

rage

T~

~(

~)

is

the

aver

age

inte

rrat

er

agre

emen

t acr

oss b

ranc

hes

acco

rdin

g to

the

inde

x cr

eate

d by

Jam

es e

t al.

(198

4).

JEFF W. JOHNSON 839

Procedure

Employee survey. The version of the SMPI used for this project consisted of 57 items measured on a 5-point scale. Unit-weighted composite variables were created based on the results of a principal axis factor analysis with direct oblimin rotation. Although a confirmatory factor analysis may have been preferable, the asymptotic covariance matrix re- quired for the analysis of ordinal variables (Joreskog & Sorbom, 1989) was not positive definite, probably because of the large number of variables. Confirmatory analyses were therefore not possible.

To avoid sample-specific factors, the sample used for the factor analysis included only employees who dealt primarily with external customers who did not work in the branches included in this study ( N = 2,402). The factor analysis suggested an 11-factor solution. One factor was excluded from further analyses because it consisted of a heterogeneous set of items all measuring the level of change over the past year. These items are not included on the standard SMPI. Another factor was excluded because it was made up of two items that asked about the individual’s commitment to service. Because these questions were not written with the branch as the frame of reference, it would not be appropriate to aggregate these items to the branch level (Schneider, 1990). No other SMPI items were written with an individual-level focus. Definitions of the remaining factors and Cronbach’s alpha are given in Table 1. Asingle item measuring employee perceptions of customer satisfaction was also retained. This item asked employees how satisfied they think customers are with the quality of service they receive, on a 5-point scale where 1 = Very dissnttsfied and 5 = Viry satisfied. An overall service climate variable was also created by computing the mean of all items used to create the dimension scores.

Customer survey. Focus groups with retail customers were conducted to identify key service issues for the customer survey. This resulted in a survey consisting of 48 items measured on a 5-point scale assessing satisfaction with specific service issues. Scores on these items from the 13,905 primary customers who were not included in the study were submitted to a principal axis factor analysis with direct oblimin rotation, resulting in eight factors. Dimension scores were created using the same procedure as for the employee survey, and these dimensions are shown in Table 2. Because perceived quality and customer satisfaction are divergent constructs (Gotlieb, Grewal, & Brown, 1994), a single-item measure of satisfaction with service quality was retained. This item asked the customer to rate “the extent to which your treatment as a valued customer met your expectations of quality service” on a 4-point scale.

a,

P

0

TABL

E 2

Dim

ensi

ons of th

e C

usto

mer

Sur

vey

Dim

ensi

on la

bel

Def

initi

on

Ave

rage

Ite

ms

Alp

ha

IcC

(2)

rwg

(j)

Xlle

r se

rvic

e

Bra

nch

staf

f ser

vice

Phon

e.re

pres

enta

tive

serv

ice

Prob

lem

solv

ing

Ban

k st

atem

ents

C

onve

nien

ce

Satis

fact

ion w

ith

serv

ice q

ualit

y Pe

rcei

ved

qual

ity

Ove

rall

satis

fact

ion

Com

pete

nce

and

cour

tesy

of

telle

rs (

e.g.

, wai

ting

time

is re

ason

able

, te

llers

are

aw

are

of s

ervi

ces,

seem

to g

enui

nely

care

abo

ut p

rovi

ding

se

rvic

e).

7 .8

8

Com

pete

nce

of br

anch

staff o

ther

than

telle

rs o

r pho

ne re

pres

enta

tives

(e

.g.,

pres

ent i

nnov

ativ

e so

lutio

ns, e

xpla

in o

ptio

ns a

nd fe

atur

es, m

ake

qmck

dec

isio

ns on

loan

app

licat

ions

). C

ompe

tenc

e an

d co

urte

sy o

f ph

one

repr

esen

tativ

es (e

.g.,

mee

ting

need

s on

firs

t cal

l, took th

e tim

e to

und

erst

and

cust

omer

’s ne

eds,

wai

ting

time

reas

onab

le).

Whe

n a

prob

lem

occ

urs,

it is

reso

lved

qui

ckly

, with

min

imal

eff

ort

8 .9

2 on

the

cust

omer

’s p

art,

and

does

not

recu

r. B

ank

stat

emen

ts a

re ea

sy to

use

and

und

erst

and.

2

.89

Con

veni

ence

of l

ocat

ions

, hou

rs, A

TMs,

and

over

all.

4 .7

2 O

vera

ll, d

oes

(fai

l to

mee

t, m

ee

t,

mee

t, ex

ceed

) you

r exp

ecta

tions

of q

ualit

y se

rvic

e?

9 .9

2

5 .9

2 -

’s tre

atm

ent o

f you

as a

val

ued

cust

omer

1

Will

ingn

ess t

o re

com

men

d ba

nk to

oth

ers

and

re e

at

busi

ness

; how

ban

k co

mpa

res

to o

ther

ban

ks in

t& ar

ea.

13

.96

Mea

n of

all

surv

ey it

ems u

sed

in st

udy.

48

.9

7

.93

.57

.82

.74

.61

.62

.49

.06

.54

.48

.76

.81

.76

.74

.79

.86

.85

.90

Not

e: I

CC

(2) i

s th

e in

terr

ater

relia

bilit

y ac

ross

bra

nche

s ac

cord

ing

to th

e in

dex

sugg

este

d by

Jam

es (1

982)

. Ave

rage

vW

g(>

) is th

e av

erag

e in

terr

ater

ag

reem

ent a

cros

s bra

nche

s ac

cord

ing

to th

e in

dex

crea

ted by J

ames

et a

l. (1

984)

.

JEFF W. JOHNSON 841

An overall satisfaction score was created by computing the mean of the 48 items on the customer survey that used the 5-point scale.

Statistical JustiJication for Aggregation

Two measures were calculated to ensure that aggregation was empirically appropriate. To estimate the reliability of the mean dimension scores within branches, James’ (1982) ICC(2) intraclass correlation was calculated (cf. Schmit & Allsheid, 1995). This index measures the extent to which the branches can be reliably differentiated in terms of individual dimension scores. It can also be interpreted as the correlation between the mean dimension scores across branches and the means of another hy- pothetical group drawn from the same population (James, 1982). ZCC(2) is reported in Tables 1 and 2 for each dimension score. The average interrater reliability across dimensions was .54 (SD = .11) for employees and .73 (SD = -15) for customers.

Interrater agreement was calculated to demonstrate the similarity of ratings within branches in an absolute difference sense. Interrater agreement was assessed for each dimension score using the T ~ ~ ( ~ ) index de- veloped by James, Demaree, and Wolf (1984). This index is based on the extent to which individuals within the same setting agree on the rat- ing of a stimulus compared to the agreement that would be expected by chance. Because attitude data are typically negatively skewed, the null distribution used for calculation of the index corresponded to the follow- ing response probabilities: 1 = .05,2 = .15,3 = .20,4 = .35, and 5 = .25 (James et al., 1984). The average T ~ ~ ( ~ ) across branches is reported in Tables 1 and 2 for each dimension score. The average interrater within- branch agreement across dimensions was .70 (SD = .11) for employees and .64 (SD = .26) for customers. These reliability and agreement in- dices are adequate to justify the aggregation of individual scores to the branch level for the employee dimensions and most of the customer dimensions. Average interrater agreement for the customer dimension of problem solving was very low ( T ~ ~ ( , ~ ) = .06), however, so results con- cerning this variable should be interpreted very cautiously.

Results and Discussion

Table 3 contains descriptive statistics and intercorrelations for the service climate dimensions, and Table 4 contains descriptive statistics and intercorrelations for the customer survey dimensions. Branch-level correlations are below the diagonal, and individual-level correlations are above the diagonal. Most correlations are higher at the branch level, probably due to a reduction in measurement error (Ostroff, 1993).

TABL

E 3

Des

crip

tive S

tatis

tics a

nd Z

ero-

Ord

er C

orel

atio

ns B

etw

een

Serv

ice C

hmat

e Dim

ensio

ns at

Bra

nch

and Individual L

evel

s ~

~~

M

SD

1

2 3

4 5

6 7

8 9

10

11

'd m

1.

Serv

ice

stra

tegy

3.

70

.33

- .5

7 .6

0 .6

9 .6S

.5

5 .4

8 .3

4 .6

1 .60

.80

2. Se

rvic

esup

port

3.

61

.42

.73*

* -

.69

.49

.SO

.40

.37

.32

.54

.47

.71

3. Se

rvic

e sys

tem

s 3.

1 1

.40

.86*

.83*

* -

.52

.S2

.45

.37

.28

.SO

.49

.72

2 4.

Info

rmat

ion s

eeki

ng

3.49

.31

.SO**

.64**

.76*

* -

.72

.69

.57

.36

.66

.46

.85

m

5.

Trai

ning

3.

57

.33

.69*

* .6

i-

.n*

*

.82*

* -

.63

.59

.43

.65

.4i

.w r

6. R

ewar

ds an

d re

cogn

ition

3.40

.41

.70**

S2**

.6

3**

.83*

* .7

2**

- 5

6

.41

.60

.39

.78

7. M

anag

emen

tser

vice

orie

ntat

ion

3.n

.5

2 .4

2**

.33*

35

'; .5

2**

.62*

* do**

- .4

4 .5

6 .3

2 .7

3 8.

Em

ploy

ee se

rvic

e ori

enta

tion

3.98

.3

4 .24

.2

6*

.27*

.3

1*

.38*

* .4

7**

.46*

* -

.49

.24

.58

10.

Est

imat

eofc

usto

mer

satis

fact

ion

3.56

.46

.77*

* .7

1**

.73*

* .5

8**

.52*

* .46**

.32*

.3

1*

.59*

* -

57

11

. O

vera

ll se

rvic

e clim

ate

3.61

.2

9 .86**

.78*

* .8

5**

.90*

* .8

8**

.Mi**

.69*

* S

l**

.88*

* .7

0**

- N

ote:

N =

57

at b

ranc

h le

vel;

N =

538

at i

ndiv

idua

l lev

el. B

ranc

h-le

vel c

orre

latio

ns ar

e be

low

the

diag

onal

; ind

ivid

ual-l

evel

corr

elat

ions

are

abov

e th

e di

agon

al. A

ll ite

ms w

ere on a

5-p

oint

scal

e. M

eans

and

sta

ndar

d de

viat

ions

are

for b

ranc

h-le

vel v

aria

bles

. All in

divi

dual

-leve

l cor

rela

tions

are

si

gnifi

cant

at p

<.O

1.

*p<

.05

**p

<.O

l

9. Sa

les &

serv

ice r

elat

ions

hip

3.70

.3

1 .7

2**

.69*

* .6

6**

.75*

* .77

" .7

7*

.66 *

* .4

5*

- .4

2 .80

2

TAB

LE 4

Des

crip

tive S

tatis

lics a

nd Z

ero-

Ord

er C

orre

latio

ns B

etw

een

Cus

tom

er S

atis

fact

ion D

imen

sion

s at

Bra

nch

and

Indi

vidu

al Le

veLF

M

SD

A

B

C

D

E

F G

H

I

A.

Telle

r ser

vice

3.

91

.25

- .7

3 .6

1 .4

9 2.5

.5

1

.39

.68

.85

8 B.

B

ranc

h st

aff s

ervi

ce

3.93

.1

6 .7

9**

.67

.62

.27

.53

.43

.74

.81

4 e E.

B

ank

stat

emen

ts

4.18

.1

2 .3

2*

.32*

.2

2 .0

7 .2

5 .1

9 .3

0 .3

8 5

- -

.62

.24

.so

.37

.65

30

D

. Pr

oble

m s

olvi

ng

3.60

-3

7 .4

3**

.45*

* .5

8**

- .2

0 .4

0 .5

1

.68

.83

C.

Phon

e re

pres

enta

tive

serv

ice

4.11

.1

8 .6

5**

.75*

*

- E

C

onve

nien

ce

3.98

.l

l .0

3 .2

6*

.33*

.1

3 -

.07

- .3

0 .6

5 .7

0 x

G.

Satis

fact

ion w

ith s

ervi

ce q

ualit

ya

3.03

.0

9 .7

2**

.63*

* .6

5**

.54*

* .1

4 .1

0 -

.so

SO

H

. Pe

rcei

ved

qual

ity

3.81

.1

6 .6

9**

.77*

* .7

0**

.39*

* .1

8 .3

6**

.73*

* -

.92

I. O

vera

ll sa

tisfa

ctio

n 3.

94

.I5

.90*

* .9

0**

.El*

* .5

2**

.32*

.2

9*

.77*

* .8

9**

- N

ote:

N =

57

at b

ranc

h le

vel; N =

21,

849

at in

divi

dual

leve

l. B

ranc

h-le

vel c

orre

latio

ns a

re b

elow

the

diag

onal

; ind

ivid

ual-l

evel

cor

rela

tions

are

ab

ove

the

diag

onal

. A

ll ite

ms w

ere

on a

5-p

oint

scal

e ex

cept

as n

oted

. M

eans

and

stan

dard

dev

iatio

ns a

re fo

r bra

nch

leve

l var

iabl

es. A

ll co

rrel

atio

ns

at th

e in

divi

dual

leve

l are

sign

ifica

nt a

t p<

.Oi.

a4

-poi

nt sc

ale.

*p

<.05

**

p<.O

l

z 03

P

w


Some correlations are higher at the individual level, such as correlations involving management and employee service orientation in Table 3. Ser- vice orientation may be something the organization has less control over than the other climate dimensions, which may explain the lower correlations involving those variables. Higher correlations at the individual level are probably due to common method variance (i.e., individuals tend to give similar scores to items on the same survey; Spector, 1994). The same explanation could account for the generally lower branch- level correlations involving bank statements and convenience in Table 4. These nonpersonal-contact dimensions are expected to be less related to personal-contact dimensions. Lower correlations involving problem solving, however, are probably explained by the lack of interrater agreement for this variable.

Note that some branch-level correlations are very high. This is not surprising, because branches would be expected to emphasize many aspects of service delivery rather than just one or two. Scores on many dimensions are therefore highly related. Composite variables were not created because each dimension had a specific enough definition that composites would be too broadly defined to be useful. Dimensions that are highly correlated and have similar patterns of correlations with other dimensions are grouped together in the tables and discussed together to remind the reader that they are not independent.

Previous research indicates that bank size has a moderating effect on relationships between management practices and organizational performance measures (Paradise-Tornow, 1991). Therefore, partial correlations between service climate dimensions and customer satisfaction dimensions were computed using the number of employees at each branch as the covariate (cf. Johnson et al., 1994). Controlling for branch size had only a small effect on most correlations. Another potential moderating variable is geographic location of branches. Local labor, social, and economic influences are likely to moderate the relationship between service climate and customer satisfaction. For example, customers may tend to be more satisfied in some regions than others because there is less competition around to which the bank can be compared. Dummy variables were created to indicate in which of 13 broad geographic regions each branch was located. Location had a large influence on many correlations. Partial correlations controlling for branch size and location simultaneously are shown in Table 5 . Controlling for size and location had the biggest influence on rewards and recognition, increasing most correlations involving that variable substantially.

It was expected that all service climate dimensions would be related to customer service satisfaction. This was generally supported, as all dimensions were significantly related to at least some facets of customer

TABL

E 5

Parti

al C

orre

latio

ns B

etw

een

Serv

ice C

limat

e Dim

ensi

ons a

nd C

usto

mer

Sat

irfa

ctw

n L%

nens

wm

, C

ontr

ollin

g for

Bra

nch

Size

and

Loc

atio

n

Empl

oyee

var

iabl

es

A

B C

D

E

F

G

H

I

Serv

ice s

trate

gy

.13

.20

.20

.25

.19

.16

.25

.37*

* .3

1*

Serv

ice s

uppo

rt .0

7 .06

.09

.17

.39*

* .2

4 .0

8 .3

3*

.23

crl z

Serv

ice s

yste

ms

.ll

.13

.13

.31*

.2

3 .1

5 .2

0 .3

4*

.2a*

8 In

form

atio

n se

ekin

g .3

5*

.43*

' .3

6* *

.35*

.1

2 .2

3 .3

9**

.40*

* .a**

Trai

ning

.3

4*

.46*

* .2

7*

.44*

* .1

5 .2

1 .34*

.33*

.4

4**

Rew

ards

and

reco

gniti

on

.31*

.4

6**

.31*

.3

1*

.18

.22

.28*

.2

1 38".

Man

agem

ent s

ervi

ce o

rient

atio

n .0

9 .25

.21

.32*

.0

7 .3

6**

.04

.ll

.20

3 Em

ploy

ee se

rvic

e or

ient

atio

n .2

2 .2

4 .3

8**

.16

.29*

.1

7 .1

5 .09

.23

!2 z

Sale

s & se

rvic

e re

latio

nshi

p .1

8 .25*

.22

.25

.24

.31*

.l

l .2

5 .2

9*

Estim

ate

of c

usto

mer

sat

isfa

ctio

n .1

7 .1

8 .2

8*

.28*

.1

6 .1

8 .3

5*

.29*

.3

1*

Ove

rall

serv

ice

clim

ate

.26*

.3

6**

.31*

.3

7**

.25

.29*

.2

6*

.34*

.4

0**

conv

enie

nce;

G =

satis

fact

ion

with

serv

ice q

ualit

y; H

= p

erce

ived

qua

lity;

I =

ove

rall

satis

fact

ion.

N

ure:

N =

57.

A =

telle

r se

rvic

e; B

= b

ranc

h st

aff s

ervi

ce; C

= p

hone

rep

rese

ntat

ive

serv

ice;

D =

pro

blem

sol

ving

; E =

ban

k st

atem

ents

; F =

*p<

.05

**p<

.01


satisfaction. Eight of the 11 service climate dimensions had significant partial correlations with overall customer satisfaction. The dimensions of information seeking, training, and rewards and recognition showed the strongest relationships; service support, management service orientation, and employee service orientation had the weakest relationships. In addition, the overall service climate variable was significantly related to all customer dimensions except bank statements.

It was also expected that the customer dimensions of bank statements and convenience would tend to be less related to service climate dimensions, because these are nonpersonal-contact facets of customer satisfaction. Although there were fewer significant partial correlations involving these variables, there were still some relatively strong relationships. The nonpersonal-contact facets of satisfaction, however, were related to different climate variables than were the personal-contact facets. The variable most highly related to bank statements was service support, which was not significantly related to any of the personal-contact facets of customer satisfaction. The variable most highly related to convenience was management service orientation, which was only significantly related to problem solving among the personal-contact facets. Similarly, the variables most highly related to personal-contact facets (information seeking, training, rewards and recognition) were not significantly related to bank statements or convenience.

It was also expected that employee estimates of their customers’satisfaction levels would be related to actual customer perceptions of service quality. A positive correlation between employee and customer perceptions of service quality was observed in Schneider et al. (1980), Schneider and Bowen (1985), and Wiley (1991), and was observed again in this study (zero-order correlation of T = .45, p < .01; partial correlation of T = .35, p < .05). This type of research would be more feasi- ble if i t could be firmly established that employees have insight into the perceptions of customers. Relationships between customer satisfaction and perceptions of organizational attributes could then be estimated in organizations lacking multiple divisions or branches by using employee perceptions of customer attitudes as a surrogate for actual customer satisfaction (e.g., Schneider et al., 1992). Although the correlation in this study was significant, it was far too low for employee perceptions to be considered a substitute for customer perceptions.

A very interesting result of the partial correlation analysis was the ef- fcct controlling for branch location had on rewards and recognition. Al- though rewarding and recognizing employees who deliver excellent service is considered an important component of a climate for service (e.g., Schneider & Bowen, 1995), previous studies examining this variable (or similar variables) have shown it to be relatively unrelated to customer

JEFF W. JOHNSON 847

satisfaction (Schneider et al., 1980; Tornow & Wiley, 1991; Wiley, 1991; although see Schmit & Allsheid, 1995, for a significant correlation). The zero-order correlation between rewards and recognition and overall satisfaction was only .19 (ns). After including the control variables, however, this correlation increased to .38 ( p < .01). Correlations between rewards and recognition and personal-contact facets of customer satisfaction also increased substantially (e.g., increase from .24 to .46 for branch staff service). These results indicate that, contrary to some previous research, rewarding and recognizing excellent service contributes to a climate for service and is positively related to customer satisfaction.

Implications

This study provides evidence for the effectiveness of specific management practices and service climate themes in facilitating the delivery of customer service. Specifically, having a strategy for how service is to be delivered, seeking information about customers’ needs and expectations, training in delivering quality service, teamwork between units, rewarding and recognizing excellent service, employee and management service orientation, managing the transition between sales and delivery, and designing service systems, policies, and procedures to promote the delivery of service were all shown to be significantly related to some aspects of customer perceptions of service quality.

Information seeking, training, and rewards and recognition were the service climate themes that were most predictive of specific facets of customer satisfaction and overall satisfaction with service. These are all key components of a climate for service according to Albrecht and Zemke (1985), Schneider and Bowen (1995) and Schneider et al. (1992). These dimensions were also very highly related to each other, however, so it is possible that the relationships for one variable would not be as strong in the absence of the others. For example, training employees to deliver quality service may have little relationship with customer satisfaction if employees are not also rewarded for delivering quality service. These three dimensions are probably highly related because they all have an informational component. Information seeking involves asking employees and customers how to improve service quality and sharing this information with employees. Training involves communicating to employees how best to deliver service. Rewards and recognition communicates to employees that quality service is important to the organization. We might conclude from these relationships that the greater the emphasis an organization places on customer service, the more satisfied customers of that organization will tend to be.


This study is the first to show a relationship between customer satisfaction and the extent to which employees are rewarded or recognized for delivering quality service. According to the items composing the rewards and recognition dimension, employees should be rewarded or recognized for providing superior service, resolving customer complaints and problems, and finding better ways to serve customers. Delivering excellent service should also be an important part of advancement deci- sions.

Training has been shown to be related to customer satisfaction (John- son et a!., 1994; Wiley, 1991), but training specifically in delivering service has not been examined. According to this study, employees should have sufficient training on the products and services offered by the organization, how to deal with angry customers, the day-to-day things they can do to deliver quality service, and the individual's specific role in delivering quality service. There should also be regular communication about the importance of providing excellent service to customers.

Information seeking has not been examined in previous studies, but determining the wants, needs, and expectations of customers and sharing this information with employees are the first things organizations should do to develop a climate for service (Albrecht & Zemke, 1985; Schneider & Bowen, 1995). In this study, information seeking refers specifically to asking employees and customers how service quality can be improved, consistently measuring customer satisfaction, and sharing customer eval- uations with employees. This study is the first to show that this important component of service climate is related to customer perceptions of service quality.

Limitarions and Directions for Future Research

Although many significant relationships were found in this study, there were several limitations that can be improved upon in future studies. The employee estimate of customer satisfaction and customer satisfaction with service quality were single-item scales with few response alternatives, which could limit their reliability. Improving these measures (e.g., by creating multiple-item scales) would probably increase the correlation between these variables.

Another limitation was that branches were selected for inclusion in the study on a nonrandom basis. Therefore, branches, employees, and customers may not be representative of the entire organization. Com- parisons of mean scores on survey dimensions between selected and unselected groups showed no significant differences for employees, and only small differences on some dimensions for customers (differences

JEFF W. JOHNSON 849

were significant primarily because of large Ns). Very similar factor so- lutions were also found when factor analyses were done separately for selected and unselected groups. This does not necessarily mean that the correlations reported in this study are representative of what would be found in the population of branches, but there does not appear to be any reason to expect any systematic differences between selected and unselected groups.

Because selected branches were the only branches in their respective regions, they tended to be larger than the average unselected branch. A post hoc analysis of small and large selected branches (classified by me- dian split on the number of primary customer responses) showed that correlations tended to be larger in the smaller branches. This suggests that the correlations found in the sample of branches used in this study may have been underestimates of the correlations that exist in the population of branches.

Another limitation is the sampling strategy used for employees. Only about 20% of bank employees were selected to participate in the study, so the amount of sampling error at the branch level was fairly high. Inter- rater reliability and agreement were good, however, and this is another factor that would tend to suppress correlations rather than inflate them.

All analyses in this study were correlational, so the direction of causality was not demonstrated. We can only assume that improving the climate for service will increase customer satisfaction. The relatively small number of branches that could be included in this study prevented the use of causal modeling techniques like path analysis. Future studies should attempt to include larger numbers of units to allow for the application of multivariate analyses such as multiple regression and structural equation modeling (e.g., Schmit & Allsheid, 1995).

Future research should address the intervening behaviors between employee perceptions of service climate and customer satisfaction. This study was done at the branch level, so we can not generalize the results to the individual level (Schneider, 1990). For example, we can conclude that bank branches in which employees receive training on service delivery tend to have more satisfied customers, but we can not conclude that training an individual will cause customers to be more satisfied with the service delivered by that individual. This would require customer ratings of individual service providers, perhaps before and after a training program has been implemented. Individual behavior is at the core of any organizational change effort, and successful change will persist only if organization members alter their on-the-job behaviors in appropriate ways (Porras & Robertson, 1992). For organizations to change to a more service-oriented climate, the individual behaviors that must be altered to sustain such a change must be determined.


Conclusion

Often, one of the most frustrating aspects of implementing an organizational intervention is convincing decision makers that it will have an impact on the bottom line. It is difficult to demonstrate that increasing job satisfaction, improving benefits, or training employees to deliver quality service has any influence on profits or other important organizational outcome variables. This study shows empirically that creating a climate for service in an organization is likely to enhance customer perceptions of quality service delivery. Future research should be directed at further examination and explication of the relationships between service climate dimensions and customer satisfaction, tests of other models of service climate, and the development of a stable taxonomy of service climate and customer attitude relationships in different types of organizations. Organizations differ on a variety of variables (e.g., industries, goals, resources), so a comprehensive taxonomy of the impact of specific management practices on customer satisfaction would be a valuable guide to organizations attempting to improve service quality.

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Documents

LINKING EMPLOYEE PERCEPTIONS OF SERVICE CLIMATE TO CUSTOMER SATISFACTION