The management team at a national retailer of consumer healthcare products came under pressure from the parent company to improve profitability. In the past, they had focused on progressive human resource practices as a key success factor. Now, they had to show how these practices drove growth and profitability and what practices could be improved. They asked a consulting firm to conduct the analyses necessary to address this challenge.
Analysis of data from financial records, customer satisfaction surveys, and employee surveys for each of the company’s approximately 400 stores began with the business criteria of sales growth and profitability and worked backward through customer satisfaction toward employee opinions.
The results showed that stores that had increased their financial performance over the years (sales, profit, and profit as a percent of revenue) had been creating a different customer experience. They had raised their customers’ ratings of the communication and service performance of the sales staff.
In turn, the improved customer ratings of the staff were associated with an improvement in a set of employee perceptions.
This set of employee perceptions centered around their service capability—in particular, their ability to fix customer 73 Linkage research provides a powerful tool for service organizations because it identifies those elements of the work environment that are connected, or linked, with important organizational outcomes including customer satisfaction and financial performance.
In doing so, linkage research integrates functional areas across the organization, providing managers with a common language and framework for a holistic, strategic measurement system focusing on the shared objective of serving the customer. Data from linkage studies are also used to establish an agenda for improving the practices that matter most for customer satisfaction, and the data serve as useful predictors of future firm performance. This article describes the basic linkage model that connects employees and customers in service organizations.
We describe the contexts in which employee opinions are most strongly related to customer outcomes and identify the eight practices that have been found to be important drivers of customer satisfaction. problems. This capability was high in stores where employees received training, worked well in teams, and where store management emphasized service quality. Specifically, an improvement in this set of employee perceptions by 6 percentage points was associated with a 1. 3 percentage point improvement in customer ratings of the sales staff.
This improvement, in turn, led to a. 5 percent improvement in sales, which translated into an additional $4 million in revenue. Figure 1 is a graphical representation of these associations. Employee-Customer Linkage Research The preceding vignette reports an example of linkage research conducted by the third author’s firm. 1 Linkage research connects, or links, elements of the work environment described by employees to important organizational outcomes such as customer satisfaction and financial performance.
The purpose of this article is to inform managers about the basics and practice of linkage research. For the retailer of healthcare products in the opening example, the benefits of linkage research were threefold. First, the results created a compelling story. Across the company, employees could FIGURE 1 Linkage in a Retailer of Consumer Healthcare Products now easily understand how a store’s work environment and service capabilities influenced customer reactions, sales growth, and eventually profitability.
Linkage research integrates functional areas in a company: the customer-focused processes and measures of the marketing and operations areas, and the employee-focused measures of human resource management (HRM). It provides managers in different areas with a common language and framework for a holistic, strategic measurement system focusing on the shared objective of serving the customer. Second, the employee survey, dubbed the Service Excellence Index, helped to establish an agenda of the HRM issues that mattered most for customer satisfaction and financial success.
The Service Excellence Index measured employee attitudes toward and perceptions of several workplace practices, including working conditions, workplace obstacles, technology, training, pay, benefits, and quality focus. The specific practices showing the strongest relationships to customer satisfaction were training, teamwork, and a consistent managerial emphasis on the delivery of quality products and services.
On the basis of these relationships, a business case was built for increasing the amount of training for low performing stores, adjusting the store design to facilitate teamwork, and evaluating store managers on their service-quality focus. Linkage research helps managers identify, measure, and manage the Intra organizational drivers of customer satisfaction by directing managers to those strategic “levers” that improve the bottom line. Applications of linkage research address the question: What can we change in our organization—in terms of internal structures, staffing, processes, reward systems, and the like—that will have a positive impact on the quality of service our customers receive? Third, the Service Excellence Index became a leading and early indicator of bottom-line performance. It identified problems that affected customer reactions before these problems reduced growth and profitability. In contrast to financial results as a “rearview mirror” of past performance, data from linkage research are predictive performance indices. The preceding example does not stand alone. Discussing linkage research at Sears, executive vice president Anthony Rucci said, “If we knew nothing about a local store except that employee attitudes had improved by 5 points on our survey scale, we could predict with confidence that if revenue growth in the district as a whole was 5 percent, revenue growth at this particular store would be 5. 5 percent. ”4 As predictive indices, linkage data fit neatly into balanced scorecards and other strategic measurement systems.
The Linkage Research Model Linkage research is based on a conceptual chain connecting employees to customers and profits. The origins of linkage research can be traced to the work of Ben Schneider and his colleagues, who found that in retail banks when employees saw their bank branches as having a strong service orientation, customers reported better service delivery in those branches. 5 They also found that when employees rated certain human resource management practices favorably, customers had more positive service experiences. James Heskett and his colleagues at the Harvard Business School added a focus on the determinants of customer loyalty and firm financial performance to these ideas and termed the sequence from employees to customers to profits the “service profit chain” (see Figure 2). 7 According to the service profit chain, a company’s operating strategy and service delivery system impact its employees’ service capability— that is, their ability, authority, and latitude to meet 2002 Pugh, Dietz, Wiley, and Brooks 75 Source: Adapted and reprinted by permission of Harvard Business Review.
An exhibit from “Putting the Service Profit Chain to Work,” by J. L. Heskett, T. O. Jones, G. W. Loveman, W. E. Sasser, Jr. , and L. A. Schlesinger, March–April 1994: 166. Copyright (C) by the President and Fellows of Harvard College, all rights reserved. See also Heskett, J. L. , Sasser, W. E. , & Schlesinger, L. A. 1997. The service profit chain. New York: Free Press. FIGURE 2 The Service Profit Chain customer needs. Service capability, in turn, enhances employee productivity. Employee productivity influences customer perceptions of service value, hich is a function of the quality of service received and its cost. Service value has a positive association with customer satisfaction, which leads to customer loyalty. 8 Finally, customer loyalty improves revenue growth and profitability. In fact, evidence suggests that loyalty is a better predictor of profitability than the common measure of market share. Heskett and colleagues illustrate this point with the example of Southwest Airlines, the most consistently profitable U. S. airline, known for its fiercely loyal customers and relatively small market share in relation to the other major carriers.
Evidence suggests that loyalty is a better predictor of profitability than the common measure of market share. Linkage research applies the ideas of the service profit chain, focusing explicitly on the internal organizational practices and employee perceptions that have an impact on customer satisfaction. The internal drivers or levers that are the focus of linkage research would fall, in the service profit chain model (Figure 2), under the broad category of operating strategy and service delivery systems.
In the opening example of the retailer of consumer healthcare products, employees had service capa- bility to the extent that their business unit’s strategy and service delivery system emphasized training, teamwork, and service quality. Service capability, in turn, was associated with improved customer satisfaction and higher sales. In practice, linkage research relies on data from employees and customers, viewing them as subject-matter experts about service delivery, coupled with archival data on performance. Typically, a company focuses on linkages at the business-unit level.
In surveys, employees describe their business unit’s work environment as it relates to service performance, their business unit’s service climate and management practices, their service capabilities, and their attitudes. The business unit’s service climate reflects shared norms and values which signal the extent to which top-quality service is important in that unit. In a positive service climate, employees report that management expects, supports, and rewards the delivery of top-quality service. 9 Moreover, they report that they have the service capability to achieve results for their customers.
Concurrent with the employee data collection, data from customers on their satisfaction and perceptions of service quality are obtained. Survey data from employees and customers are matched for each business unit and combined with data on unit financial performance, typically profitability and growth. In a final step, the associations or links between employee reports, customer experiences, and financial performance are examined to identify the internal practices that have the strongest connection with the outcomes of customer satisfaction and financial performance.
A considerable body of research and practice has established the viability of linkage models, showing that a company’s service climate has a substantial impact on customer satisfaction. Moreover, this work has identified a core set of drivers of service climate and service capability that we describe in detail later (see Table 1 for a list of these drivers). The real value of linkage research lies in the identification of these drivers, as it helps an organization to manage human resources strategically. That is, this research helps identify which internal management practices have an impact on customer satisfaction so that those practices can be focused upon. In our opening example, quality emphasis, training, and teamwork were important predictors of customer satisfaction, but it is also important to note that other issues—pay and benefits to name just two— were not associated with customer satisfaction. vice performance. This work environment leads employees to perceive a positive service climate and to feel capable of delivering top-quality service.
The service climate directs employee efforts toward the delivery of superior service, and these employee efforts to satisfy customers, coupled with the service value provided by the company, improve customer attitudes. Their satisfaction with the service ties the customers to the company. The customers reciprocate high service value and satisfaction with loyalty and repeat business, ultimately improving the company’s growth and profitability. It is noteworthy that neither the example depicted in Figure 1 nor the management philosophy behind linkage research proposes employee job satisfaction as a primary driver of customer satisfaction. Interpreting linkage research as simply advocating that satisfied employees lead to satisfied customers is a vast oversimplification. It masks the power of linkage models for predicting and improving customer attitudes, as the following comment to managers suggests: Assume that you can ask your employees only one question. On the one hand, if you ask “How do you rate your job satisfaction,” you may find where it is low and then try to fix things commonly known to affect it: pay, supervision, working conditions, promotions, and the like. So what now?
Hopefully, job satisfaction will rise, perhaps leading to improved customer satisfaction. More clearly, though, you will have a happier workforce less likely to leave the organization. On the other hand, if you ask employees about their ability to deliver customer service, you will receive specific information that as a manager you can “fix. ” These fixes directly impact customer satisfaction. And, as customer satisfaction increases, so will employee satisfaction because employees much prefer serving happy customers with fewer frustrations.
In linkage research, the core issues are employee opinions about service climate and service capability, not employee happiness or satisfaction. Employee satisfaction plays an important role in organizational life, but in linkage models, we consider it largely an outcome of employee abilities to serve the customer. Particularly among the best employees, an inability to serve customers is a source of dissatisfaction.
This research helps identify which internal management practices have an impact on customer satisfaction so that those practices can be focused upon. The Management Philosophy Behind Linkage Research We view the management philosophy as addressing two questions. First, why are companies that manage linkages between employees and customers successful? As explained in detail below, these companies are successful because they build longterm and mutually beneficial relationships with and between employees and customers. These relationships motivate employees to deliver top quality service and customers to remain loyal.
Second, when are linkages between employees and customers strongest? Our answer will be that these linkages are stronger as the closeness between employees and customers increases. Why are companies that manage linkages among employees and customers successful? The management philosophy behind linkage research is one of the long-term and mutually beneficial relationships among the company, employees, and customers. The company creates a work environment that enables employees to deliver high employee satisfaction.
Heskett and his colleagues called this the satisfaction mirror: Employees react positively to satisfied customers and reflect these reactions back onto the customer. Employee satisfaction also can contribute to customer satisfaction because it raises the motivation to perform above and beyond the call of duty. 15 In summary, although job satisfaction should not be ignored, linkage models position service climate and service capability as the engines that drive customer satisfaction, and job satisfaction as a by-product and potential turbo that further enhances that engine’s power.
When are linkages between employees and customers strongest? Most services involve some degree of contact or closeness between employees and customers. Often, customers participate actively in service delivery. Employees and customers become closer to the extent that they interact frequently. They may develop social bonds or relationships. The degree of closeness varies according to many factors, including service strategy (for example, does the company concentrate on one-time encounters with customers or on building relationships between customers and specific employees? and delivery medium (for example, face-to-face or by telephone). As the closeness between employees and customers increases, they exercise more influence on each other and share more information. The linkages between employees’ and customers’ opinions and attitudes become stronger. close to and involved with customers in their day-to-day interactions. 18 A linkage project in a U. S. retail bank confirmed the impact of closeness on linkages between employee and customer opinions. 19 The branches of this bank varied systematically on the average frequency of customer visits.
In branches where customer visits were relatively infrequent, employee service climate perceptions had no relationship with customer satisfaction. In bank branches where the clientele had contact with employees relatively frequently, however, the linkages between employee service climate perceptions and customer satisfaction were strong and positive. In these branches, employees and customers knew each other well, and managers could forecast customer satisfaction from the employees’ focus on delivering quality service.
One outcome of closeness between employees and customers is that with greater closeness, employee opinions more reliably predict customer outcomes. Employee-Customer Linkages: A Summary Understanding why companies that manage linkages are successful is important because it can tell managers where to focus their efforts: what to pay close attention to and what to ignore. Understanding the concept of closeness helps managers understand in what organizational contexts linkage research will be most useful.
In service companies that pursue long-term customer relationships, and where the operating system puts employees and customers in close contact, linkage research will be particularly helpful for understanding, predicting, and changing customer attitudes. As the frequency and degree of contact decrease, the relationship between employee and customer attitudes will become weaker. Note, however, that even relatively infrequent and impersonal contact, as in fast-food restaurants, has been found to be sufficient for establishing some employee-customer linkages.
Getting the Most Out of Linkage Research Conducting a linkage project requires a substantial commitment of company resources in terms of money and time. Below we describe what we have learned about (1) which (business units), (2) what (survey content) and (3) who (certain employees and customers) should be surveyed to maximize the likelihood of identifying linkages that are useful to the company. Our suggestions for conducting linkage research are largely based on our understanding of the importance of closeness for the link-
As the closeness between employees and customers increases, they exercise more influence on each other and share more information. Successful service organizations understand the importance of employee-customer closeness. Southwest Airlines’ founder Herb Kelleher spoke of moving the customer relations function into his office. He wanted to get close to the customer, to “see what customers actually say about all facets of our company.”As a result, each company officer goes out into the field each quarter to fill customer contact positions.
In fact, part of Southwest Airlines’ success at satisfying customers has been attributed to their employees’ ability to identify customers’ important needs, not through sophisticated marketing research, but by simply being ages between employee and customer opinions. As mentioned earlier, the greater the closeness between employees and customers, the stronger are the linkages between their opinions. In turn, the stronger these linkages are, the more reliable are the forecasts of future performance, which managers derive from linkage research projects.
Business Unit A company’s structure and strategy usually prescribe the business units for which linkages are established. In geographically dispersed organizational structures, where business units are profit centers and have a well-defined clientele, it is logical to study these units. In a department store chain, however, meaningful linkages may be established for workgroups, departments, or whole stores. The decision as to which level of the business unit to study (e. g., department, store, or organization) should be based on how the customer interacts with the organization and where customers make meaningful distinctions. For example, if in a department store different customer segments interact primarily with distinct departments (e. g., shoes, appliances, or sporting goods) and these departments are relatively independent, it makes the most sense to study linkages at the level of the department rather than the entire store. Business-unit size is also relevant for understanding linkage research, because it may affect the types of employee-customer relationships that develop.
Some organizations pursue service relationships, where the same employee-customer pair interacts repeatedly and parties may develop extensive knowledge about each other (professional services, such as law and medical practices, are one example). Less intimate “pseudo-relationships” also can develop where customers have repeated interactions with different employees in the same business unit, or interactions can be onetime encounters with no expectations of future exchanges. The smaller a business unit is, the closer is the relationships that employees and customers develop. 1 Small business units have a higher likelihood of repeated interactions between the same employees and customers. At a national shoe retailer, we found that employee-customer linkages were weaker in larger business units than in smaller ones.
Implication: When conducting their linkage research, managers should realize that the primary decision criteria for selecting business units are a company’s structure and strategy. In deciding which business unit to study, managers should carefully consider the organization’s structure (e. g., are the business units geographically and/or operationally distinct? and how the customer comes to know the organization. A second decision criterion is unit size. Smaller units are inherently closer to their customers and thus more likely to foster the development of service relationships. To strengthen linkages in larger stores, offices, or departments, managers have to actively promote closeness. In interpreting linkage research, managers must be aware of unit size, in particular, if there are large variations among the units. Survey Content Employee and customer surveys have to focus on those service aspects that the organization’s service strategy emphasizes.
Kaiser Permanente’s service strategy centers around the relationship between the customers and their primary healthcare physicians. The organization goes to great lengths to establish and reinforce this relationship. Hence, Kaiser Permanente’s linkage research focuses specifically on this topic.
Moreover, the wording of the survey questions should refer to the level of the company where employees and customers interface. Typically, this interface is at lower levels like the store or branch and not at the overall company level.
Customers tend to view the company through their experiences with their business units. Because of their closeness with customer-contact employees, customer satisfaction is more affected by the service climate of their unit than by the service climate of the whole company. For example, in a retail bank, customers almost exclusively interacted with the employees of one branch. In a linkage project, the service climates of the branches predicted customer satisfaction, but the service climate of the retail bank as a whole did not.
Implication: A company’s service strategy prescribes the topics on which managers should focus their employee and customer surveys. Moreover, the choice of business unit prescribes the level on which these questions focus. If managers are interested in assessing linkages at several levels of the organization, the surveys must clearly identify the level for each item. Finally, if survey length is an issue (and it usually is, with many companies limiting the number of survey items to less than 50), the surveys for employees must include measures of drivers, service climate, and ser- 002 Pugh, Dietz, Wiley, and Brooks 79 vice capability, rather than of general employee attitudes.
Contact- vs. Non-Contact Position
Customer-contact employees are the subject matter experts for predicting and improving customer satisfaction. At times, however, managers rely merely on their intuition to make decisions about improving customer satisfaction. When doing so, they run the risk of basing their actions on inaccurate information. At Enterprise Rent-A-Car, CEO Andy Taylor noted that his managers were “right only about half the time” in heir judgments of low- and high-performing branches. Similarly, in a nationwide retail eyewear chain, the opinions of store managers did not predict customer judgments of service quality, but those of customer contact employees did. Implication: Managers should seek out the opinions of customer-contact employees. In healthcare, relevant employee groups could be nurses and/or even orderlies. Focus groups composed of front-line employees are helpful in the design and interpretation of linkage research.
For example, these employees typically have a better understanding of barriers to service delivery than do managers. Employee Expertise Even among customer-contact employees, not all employees are equally close to customers on all service aspects. In the previously mentioned retail eyewear chain, laboratory technicians who made customer eyewear had a strong understanding of customer perceptions of product quality but not of service quality. The sales staff, on the other hand, had accurate views of customer satisfaction with service quality but not product quality.
Implication: Managers should think carefully about the issues important to their customers, then seek out the employees with expertise about these issues. If our survey at the eyewear chain had omitted laboratory technicians, for example, we would not have reliably forecasted customer judgments of product quality. Employee Tenure Employees who have been with one business unit and its clientele for a long time know the customers better than their recently hired colleagues do. At Southwest Airlines, many employees have been with the company and its customers for over a decade.
They help Southwest to have customer knowledge far exceeding that of its competitors. A linkage study conducted in a life insurance company found that more experienced employees were better judges of customer opinions than were less experienced employees. As employee tenure increased, employee and customer opinions on service quality converged. Implication: Ideally, in linkage research managers should sample all employees. If that is not possible, the primary criterion for including employees in the survey is their knowledge of the customers.
Usually, this implies front-line, customer-contact employees. But employee expertise and length of service are also important factors. Customer Segments Most service organizations cluster their customers into segments. These customer segments receive different kinds of service and differ in their service experiences. For example, in a video rental chain, high-volume customers valued high-quality service interactions. Because of their focus on interactions, it was not surprising that their customer satisfaction was affected by how employees saw their company’s service climate.
Low-volume customers, however, we’re primarily interested in value for money. Their satisfaction was not related to employee attitudes. Implication: Managers must take into account their organization’s customer segmentation strategy in establishing employee-customer linkages. At a minimum, linkage research targets those customer segments that are most valuable and profitable. Generally, customer surveys should include information to allow the identification of the segment to which the respondent belongs.
Customer Tenure Long-time customers have a better understanding of an organization and its service performance than do newly acquired customers. The involvement of experienced customers can go beyond the completion of customer surveys. Federal Express asked regular customers to participate in the redesign of its information-processing systems for tracking deliveries. The company benefited from customer recommendations but also enhanced customer commitment to a new system that required a high degree of customer participation.
November Implication: Ultimately, it is an organization’s role to understand the customer, not the customer’s role to care about the inner workings of an organization. Issues of customer satisfaction, loyalty, and, most importantly, the antecedents of future customer behavior are the critical elements of a customer survey. Organizational performance, financial and otherwise, depends upon these critical customer outcomes. When conducting linkage research, organizations can benefit from the insights of their long-time, closest customers.
Among the most important customers (for example, highest-revenue or highest-profit customers), it is prudent to listen particularly carefully to frequent-contact, long-term customers. They tend to have the most in-depth and useful views of the company’s service. Customer databases or surveys should include measures of contact frequency, service use, and tenure. Over two decades of linkage research have identified a core set of drivers of service climate, service capability, and top quality service. Despite the various contingencies listed above (e. g. in which types of service settings linkages will be strong or weak), the listed drivers represent themes that emerge consistently across a broad sampling of industries. The reader is encouraged to view these drivers as a starting point for the examination of service delivery. The outlined techniques of linkage research should be followed to discover how they play out far more specifically in one’s own organization. Customer Orientation and Service Quality Emphasis In organizations that serve customers well, employees report a strong customer orientation and believe that management consistently stresses the importance of service quality.
Employees view the leadership of their company as putting a strong emphasis on meeting customer needs and delivering excellent services by clearly stating goals and objectives. In a financial services organization, employees described their company’s emphasis on serving customers with statements such as “We want people to come here and be treated the best”; “The manager treats his clients like he wants his employees to treat them”; “The message is getting out—service pervades the whole job. Ultimately, it is an organization’s role to understand the customer, not the customer’s role to care about the inner workings of an organization. Linkages and Service Quality: Lessons Learned Linkage research, as has been described, connects internal management practices with employee outcomes. Just what are those internal manage- Table 1 Drivers of Service Climate Dimension Customer Orientation and Service Quality Emphasis Management
Support Hiring Definition Management emphasizes meeting customer needs and their expectations for service quality Management facilitates employees’ service delivery Management hires employees who are motivated and able to meet customer demands and maintains appropriate staffing levels Management provides training that equips employees with the knowledge and skills needed to service customers efficiently Management recognizes and rewards employees for their service performance Management fosters teamwork in the service delivery process Management designs systems, including physical facilities and computer systems, that remove obstacles to work and enhance employees’ abilities to serve customers Management solicits and uses feedback from customers to improve service delivery Training Rewards and Recognition Teamwork Support Systems
Customer Feedback 2002 Pugh, Dietz, Wiley, and Brooks 81 Management Support In top-performing units, managers, and, in particular, immediate supervisors support service delivery through their daily actions. Managers are responsive to employee questions and concerns and get employees the information they need. At Kaiser Permanente, employees noted that in the best units, supervisors promptly communicated the information that employees needed to do their jobs well. Moreover, these supervisors made decisions promptly and fairly. Hiring Two themes related to hiring frequently emerge as important predictors of service capability and customer satisfaction.
First, the best-performing businesses carefully select employees with the highest potential for service performance. The focus of the hiring is on positive attitudes toward customer service, and training complements staff development by providing the necessary skills and abilities. Sometimes, finding the best employees requires unconventional methods. Southwest Airlines sends recruiters to cheerleading conventions across the country. The purpose of attending these conventions is twofold. First, it is a way is to get the word out about their cheerful company. Second, it leads to the recruitment of people with the kind of qualities—spirit, teamwork, confidence, and attitude— that make successful employees at Southwest Airlines. A focus on hiring also involves monitoring staffing levels. Top-performing business units have flexible staffing plans that ensure the presence of enough and sufficiently qualified employees even at peak times. customer service improvements. Moreover, their customer service training includes information on the connection between the drivers of customer service and customer satisfaction. Trainees also learn to examine their work environment for new ways to improve customer satisfaction. Rewards and Recognition A common theme from employees at the best service providers is that management provides feedback, recognition, and rewards for excellent service delivery.
Customer satisfaction data is often tied to formal compensation systems. At the software company PeopleSoft, the performance evaluations of account managers are based on customer satisfaction and customers’ ability to use the company’s software. It is also important for employees to view their compensation as fair, internally in comparison to that of their fellow employees and externally in comparison to that of employees of other similar companies. Teamwork Because service delivery frequently requires a smooth, coordinated effort across different functions, a company’s emphasis on teamwork is often associated with customer satisfaction.
In top-performing business units, management supports the accomplishment of service goals through a service design that allows for teamwork. An example of teamwork driving customer service and profitability is Whole Foods, a natural foods grocery that has grown from 12 stores in 1991 to over 130 stores in 2002. Whole Foods’ organizational structure is based on teams. Hiring decisions are group decisions, and bonuses are tied to team performance. Teams also play a valuable role in teaching newcomers the values and behaviors that define the grocery’s service concept. As CEO John Mackey noted, at Whole Foods teams “replace bureaucracy. ” Support Systems Support systems, such as information systems, make service delivery possible.
Employees in companies that serve customers best report that management supports service performance through systems that remove barriers to excellent service delivery. Progressive Corporation, for example, has distinguished itself from other insurers on the basis of its 24-hours-a-day, 7-days-a-week service termed Immediate Response. Representatives arrive at the accident site, process claims immediately, and often issue a settlement check on The best-performing businesses carefully select employees with the highest potential for service performance. Training The best service providers make sure that training provides employees with the skills and abilities to serve the customer.
This includes training on both products and service delivery. In these units, employees are aware of formal and informal skill improvement opportunities and are able to attend these opportunities. Data from linkage research can be used to guide training priorities, as it has at Kaiser Permanente. 36 Linkage research led to the development of training materials that address the solicitation of employee input into decisions about spot. A technologically advanced support system called Claims Workbench allows representatives to conduct the entire process in the field, from entering police report information to calculating repair estimates.
Customer Feedback Management actively seeks and uses customer feedback to improve service delivery. Royal Caribbean Cruise Lines, for example, heavily emphasizes the retrieval and use of customer feedback. Customer comment cards are distributed in each cabin. When the ship returns to homeport, employees board and retrieves customer comment cards, transcribe and tabulate the comments and ratings, and return the data to the ship’s management before it sails again at the end of the day. This procedure allows employees, from captains to housekeepers, to receive feedback on the quality of the customers’ experience on the previous cruise and to make any needed changes for the following cruise.
Identifying the Important Drivers Each of the above eight practices has been found to be an important driver of customer satisfaction across a wide variety of industries, but managers should not expect each driver to be equally important in their organization. Herein lies the value of linkage research: It helps identify which drivers are important for a particular organization, service strategy, and customer segment. In a sense, linkage research points to the return on investment of each management practice by validating the practice against important criteria such as customer perceptions of service quality. This is the crucial point that moves the implications of linkage research beyond general recommendations to simply keep employees satisfied so that they will produce satisfied customers.
Many management practices can have an impact on employee satisfaction but only a minimal and indirect effect on customer outcomes. Linkage models provide a scientific framework for identifying which practices matter most to the customers of a particular organization. success. In practice, however, there often is a disconnect between management practices (for example, hiring, training, and support systems) that enhance employee service capabilities and bottom-line performance, such as profitability. Linkage research builds the business case for these practices. It demonstrates their impact on customer satisfaction and firm financial performance.
It also directs managers across different functional areas in the organization to those internal practices that matter most for customer satisfaction, customer loyalty, and profitability: the drivers. In the company profiled in the opening case, linkage research provided a common language and framework for constituents from operations, marketing, and human resources. It informed management about the drivers of service quality and profitability. And it resulted in a strategic focus on improving performance on the important drivers of customer satisfaction. We have indicated the organizational contexts where linkage research works best. We have identified the important drivers of a company’s service climate and its employees’ service capability and have suggested techniques for maximizing the effectiveness of linkage projects.
These issues are important for creating the best possible linkage research models, but regardless of a company’s unique strategy and design, linkage research has produced a substantial body of advice that managers of all organizations can use. Linkage models are powerful tools for helping companies bridge the gulf between workplace initiatives, customer experiences, and financial performance. They help to create those unique strategic practices that allow companies to build a competitive advantage in the marketplace.
- Wiley, J. W. 1996. Linking survey data to the bottom line. In A. I. Kraut (Ed. ), Organizational surveys: Tools for assessment and change. San Francisco: Jossey-Bass: 330 –359.
- Wiley, J. W., & Brooks, S. M. 2000. The high-performance organizational climate: How workers describe top-performing units. In N. M. Ashkanasy, C. P. M. Wilderom, & M. F. Peterson (Eds. ), Organizational culture & climate. Thousand Oaks, CA: Sage: 177–191; and Hallowell, R., Schlesinger, L. A., & Zaritsky, J. 1996. Internal service quality, customer, and job satisfaction: Linkages and implications for management. Human Resource Planning, 19(2): 20–31.
- Rucci, A. J. , Kirn, S. P., & Quinn, R. T. 1998. The employee-customer-profit chain at Sears. Harvard Business Review, 76(1): 83–97.
- Ibid., Schneider, B. Parkington, J. J., & Buxton, V. M. 1980. Employee and customer perceptions of service in banks. Administrative Science Quarterly, 25(2): 252–267.
- Schneider, B., & Bowen, D. E. 1985. Employee and customer perceptions of service in banks: Replication and extension. Journal of Applied Psychology, 70(3): 423– 433.
- Pugh, Dietz, Wiley, and Brooks 83 Heskett, J. L. Sasser, W. E. , & Schlesinger, L. A. 1997. The service profit chain. New York: Free Press. 8 Rust, R. , & Zahorik, A. 1993.
- Schneider, B. , White, S. S. , & Paul, M. C. 1998. Linking service climate and customer perceptions of service quality: Test of a causal model. Journal of Applied Psychology, 83(2): 150 –163.
Cite this Service Effectiveness Through Employee-Customer Linkages
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