Effect Of Employee Satisfaction On Customer Satisfaction Management

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Customer satisfaction is perhaps the most significant tool of assessing the performance of any company or business, as well as a reliable indicator of the likelihood of failure or success of the business. Customer satisfaction, however, is a complex interplay of various factors, such as product or service value addition, packaging, presentation and, ultimately, customer support. Customer support is usually associated with the service industry as it is in any kind of business. The image of the company that customers have is that of the employees who attend to them. This image is created through such interactions as customer queries handling, feedback time, employee courtesy, complaint management, vital consumer information provision in proper time, and the general shopping or other interaction type experience. These factors are as important to a client as a product or service value addition in their lives.

The today's Gross Domestic Product (GDP) is experiencing a higher reliance on the services industry than ever before, translating to more engagement between employees and customers in different sectors. The global economy has a 62.9% reliance on services sector (International Monetary Fund, 2012). The Egypt's service sector contributes 48.6% of its GDP, which is the highest single contributor (International Monetary Fund, 2012). These facts point to a need for the industry players to re-evaluate their core objectives and realize the importance of customer satisfaction (Turban, 2002). This is besides the fact that the non-service sectors also rely on customer satisfaction through direct and indirect interactions of employees and customers in order to remain profitable and to grow. Customer service, which is directly linked with employee- customer contact, is a major contributor to overall customer satisfaction. It is, therefore, important that an employee should project a good company image to a customer. This study will quantify the effects on employee satisfaction of the employee- customer contact and, ultimately, customer satisfaction.

1.1 Problem Statement

The study will seek to address the research problem, which is establishing the effects of employee satisfaction on customer satisfaction. The biggest motivation for this study is the increasing reliance on the services sector of most major economies, and the reliance of the service sector on intricate direct customer contact with employees of a company. Previous studies indicate that customers create an image of the company judging by the "moment of truth", which is that brief moment when a customer interacts with a company in a business transaction. This moment creates such a lasting impact regardless of whether prior products or services from the company had portrayed a different image (Bulgarella, 2005).

1.2 Research Objective

This realization drives the research motivation to find ways in which employee-customer relation can be enhanced. Employee satisfaction is, in turn, the most significant determinant of employee-customer relation. The objective of this study is to establish the most significant factors that affect the way employees relate with customers, the employees contribution to their feelings about their work, the way their feelings about job satisfaction affects the way they handle customers, and, ultimately, how this affects customers satisfaction. The study will also aim at providing solutions to improve the important employer- employee relations with the aim of improving customer satisfaction.

2.0 Background of the Study

The customer service is a core concept in any company's management. It defines whether a company will succeed or fail in its future. The currently heightened world economy's reliance on the service industry points to the importance of proper customer management principles, given that most service companies predominantly feature customer- employee interactions during the 'moments of truth.' In a moment of truth, the customer's expectations from a company get redefined as they interact verbatim with the representative of the company- or the company. This interaction may be in form of physical contact at a customer care outlet, over the phone through a call centre experience, or through correspondence, such as via e-mail. In any case, the customer gets a newer opinion and creates a new image of the company through this experience. Research indicates that moments of truth are more effective in shaping a customer's opinion regarding a company than the cumulative past experiences they had with the company, such as through previous products and services purchases. Research shows that customers who had a very successful moment of truth are at least two times more likely to place future orders with a company or refer their friends to it, regardless of their previous perceptions of the company, than customers who had an unsatisfactory experience (Hays, 1999).

While the importance of the customer service cannot be overemphasized, the following service is usually the responsibility of front line employees. It is these employees, usually lower to the middle level, who are mandated with projecting the company image to customers through direct contact (moments of truth). A problem arises if these workers are unable to project a good representation due to certain challenges, such as work strain, poor co-worker and employer relations, facilities incapacity or any other challenges. The strain in workers is likely to be transferred onto the customers, possibly damaging the client experience. Lower to the middle level workers, are, unfortunately, the most vulnerable categories to misrepresentation, workplace abuse, underpayment, and general de-motivation in their job roles. The management usually may ignore the internal phenomena arising from work-level conflicts and complaints from junior staff since, in most cases, the highest turnovers are from this category, a factor that may encourage the management to overlook lower level employees' concerns (Kosteas, 2009).

In order to serve customers better, employees need to perceive just the right internal environment. Employee conflicts may arise due to three factors: horizontal challenges, vertical challenges, and external challenges. Horizontal challenges include relationships between workers themselves, while vertical challenges involve worker relationships with immediate supervisors and senior management. External factors include the customer originated strain, type of job strain, alternative employment incentives among others. In addition, career dissatisfaction is another common challenge. Employer related strain may be associated with poor remuneration, lack of management support, unreasonable workload, poor facilities, lack of self-esteem, employer bullying, and lack of constructive challenges in the work role among others. The co-worker related strain may be as a result of bullying, mistreatment, sexual harassment among others. In order to understand factors that drive customer satisfaction, it is important to discuss how the above factors affect employee satisfaction.

Bulgarella (2005) proposed an organizational structure that affects and determines the nature of customer- employee relationship and, therefore, customer satisfaction. The figure below shows the relationship.

Figure 1: Yoon Organizational Structure

Employee service effort

Perceived organizational support

Employee service quality

Supervisory support

Job satisfaction

Customer participation

(Bulgarella, 2005)

Perceived support from the organization measures the employees feeling about the efforts the organization takes to promote their well being and better the working environment. It also incorporates the extent to which the company values the employee contribution to the success of the company. Perceived support from the supervisor level indicates the way employees feel about their immediate supervisors. It measures the overall contribution of such factors as helpfulness, level of trust between supervisor and employee, friendliness at the communication level, and general atmosphere of work. This factor emphasizes the importance of the social-emotional balance in the workplace as a necessary tool in driving employee and, hence, customer satisfaction. The Yoon model also recognizes the customer input in service delivery as an important contribution to overall customer satisfaction.

The model enlists the customer's physical, emotional and psychological participation in the product/service development. These three initial forces represent the antecedent for employee satisfaction, a necessary phenomenon for the next stage. The Yoon model identifies supervisor support as the single as well as most significant contributor to employee satisfaction, and that job satisfaction rates more significantly in determining an employee's service quality than employee service effort. Kosteas (2009) presents a variation of the Yoon model in which service climate and supportive management are the most important antecedents in employee satisfaction. In this model, these basic antecedents affect an employee's work effort and job satisfaction, which, in turn, drive the employee's service quality.

2.1 Employee- Employee Strain

This strain arises between employees in the same rank, and it may sometimes arise following temporary placements of certain workers in positions in which supervisory roles give them an advantage over peers. Another possible leeway for employee conflicts arises during extended work periods, such as late hour assignments. This may be common during times when dedicated teams are assigned specific assignments requiring late hour commitments and common transportation to and from location during the following time certain employees may find it easier to bully colleagues. In addition, any such arrangements are likely to compromise employee privacy, as well as hinder private lifestyle (Hays, 1999). The cumulative effect of these off-routine practices may lower employee satisfaction with their work. Employee level conflicts may also arise due to workload management if equality is not perceived to guide each employee's contribution. It is possible, for instance, for certain workers to shun work which requires a joint effort, thereby overburdening their colleagues. Such scenarios are common in the front office where workers handle customers in queues, such as bank lobbies, customer service centers, airline booking lounges among other, similar places.

According to Alliance Training and Consulting Inc (ATC), there were 11,364 sexual harassment claims filed in 2011 where 16.3 % of those were filed by men. In addition, there were 33,956 claims filed for workplace harassment by colleagues. The total compensations handed in the same duration were worth $153.5 million according to the Equality Employment Opportunity Commission (EEOC). The percentage of reported cases is less than 30 even in countries where worker representation is enhanced. It may, therefore, be expected that the effect of employee- employee conflicts whether directly related to harassment and discrimination or not is larger in the actual workplaces than statistics tend to show (Alliance Training and Consulting Inc., 2012). The employer is mandated with the responsibility of enhancing good relations between workers, with an aim of maintaining integrity, teamwork, and respect for co-workers. Bullying Statistics (2012) observes that, up to one third of workers are exposed to bullying, and 20 percent of this leads to actual harassment. In addition, a study documented by The New York Times stated that more than 60 percent of bullies were men, and their victims are equally distributed in gender. The website observes that common effects of workplace bullying include low productivity, absenteeism, low self-esteem, digestive problems, high blood pressure, insomnia and troubled relationships at work. All these factors are incompatible with employee satisfaction and often lead to lowered customer satisfaction.

2.2 Employee-employer Conflicts

These conflicts arise in the employer-employee relationship. The first common source of dissatisfaction concerns the work expectations. In a dynamic corporate environment, employers set targets that will help the company realize its growth and profit incentives. These targets, however, fail to put into consideration fairness in worker performance expectations. Management allocates responsibilities based on the ideal situation, which is seldom ever achieved in the real life. The hindrance to idealness is born of system failures, labor force incapacity, emergencies such as work absences among other factors. The management's rigidity with throughput requirements, therefore, imposes targets that may be unachievable, leading to conflicts. When workers are overwhelmed, their loyalty is decreased (Oats & Vella-Brodrick, 2003). In a 2009 study published by the UK Department for Business Innovation and Skills (DBIS), involvement in management was a major contributor to employee satisfaction in most workplaces, with the only exception being the financial services industry where involvement in management was a stressor (Williams, 2009). In addition, the study found that working in densely populated environments lead to great stress, just as did working in dynamic environments with products whose markets are rapidly growing. In a study on the effects of employer -employee and employee-employer relationship on overall job satisfaction in worker aged 25-35 years conducted by Richard Hammer from the Australian Catholic University, School of Psychology, there was established a positive correlation in both categories (Harmer & Findlay, 2005). The table below indicates the regression values.

Table 1: Determinants of Worker Satisfaction


Mean M

S.D standard deviation




General job satisfaction



Satisfaction with co-workers




Satisfaction with supervisor





Total well being






Where *p< 0.05, ** p<0.01, ***p< 0.001

(Harmer & Findlay, 2005)

The study analyzed 69 respondents' rating for the factors on overall job satisfaction as affected by satisfaction with supervisor and satisfaction with co-workers. The mean for general job satisfaction, an externally determined factor that varies per industry, was 39.49. The study revealed that general satisfaction with co-workers achieved a weight of 36.16 across the respondents rating, while that of employee- supervisor scored 39.16. In addition, multivariate regression analysis conducted to determine the roles that co-worker and supervisor relations had on global job satisfaction revealed that relations with co-workers was the stronger determinant with a beta value of β=0.52 at p<0.001. The implication of this study is that both employee-employee relations and employee -employer relationships were instrumental for worker satisfaction, a primary determinant of customer satisfaction (Harmer & Findlay, 2005).

2.3 Training and Development

Another source of conflicts regards the employee development in the modern corporate world. For instance, junior workers are required to put in between 8 and 10 hours of labor per day, sometimes opting to take overtime responsibilities to meet life challenges. In this condition, employees often lack the time to update themselves with current trends in the international labor platform, which means that in the event of job termination, they would experience major challenges securing employment in a position they qualified for a few years back. An appropriate example may be given of the mobile communication industry whose operational standards have been changed between four generations in less than three decades (1G, 2G, 3G to 4G) since 1985- 2008. Workers who enrolled in this sector in 1998 would require constant training and development at least one per year to keep up and remain competitive. However, management is sometimes unwilling to support training needs for employees, especially if the said training is not significant in their present job roles.

This hesitation is borne of three reasons. Firstly, any form of training implies the absence from the work position, meaning less gross productivity per employee and, consequently, less profitability for the company. Secondly, training goes against cost cutting policies, a common core principle in most corporate today. Training usually may take up between 20-50 percent of modern companies' resource allocations, with IT and technology related upgrades being the major cause. Finally, training and development put employees in positions in which they are more competitive and, therefore, more likely to exit employment and search for better jobs with peer companies. There is no wonder that a significant percentage of company sponsored training is subject to certain employment terms whose violation through, for instance, exit, attracts legal implications, such as compensation for the company. Constraints of this type, while sometimes genuinely protecting employer interests, greatly hinder employee satisfaction.

Another major concern in this category is remuneration and benefits. Employees will, all other factors held constant, look for the highest paying job and the one with best terms and benefits. While remuneration may not be the only, or sometimes the most significant, determinant of how an employee is willing to take or keep a job, it is, however, a most significant factor where an employee is faced with choices between two peer employers if all other factors are comparable. This factor is a significant source of employee turnover.

According to Gardner (2003), surveys have indicated that most training is carried on with an aim to enhance internal processes (more than 70%), while only less than 10% is done to achieve non-employer intended goals. The table below shows the results. The implication of this analysis is that employees are unlikely to be sufficiently equipped to perform their role even at the basic level without constant and effective training. It is worth noting that this type of training does not necessarily equip the employee with skills that could be applied outside the parent organization. In addition, employee satisfaction was found to be influenced jointly by training and development, recognition and reward. These three elements complement each other in attaining employee satisfaction.

Figure 2: Purpose of the Internal Training Survey

(Gardner, 2003)

2.4 Growth in Position

Promotions are a major concern for any employee. For a job to provide satisfaction, it has to offer opportunities for growth that are significantly attractive, timely and fair. Unfortunately, employers may find it hard to secure growth for junior to middle level employees due to certain restraints. Firstly, companies wish to incur the least possible costs and achieve the maximum possible benefits. This usually implies reducing new employments, which, therefore, means that employees holding current positions, who already qualified and due for promotion, have no replacement personnel to take up their positions and, therefore, cannot be promoted. It is a rather common practice that a significant percentage of junior to middle level workers do not only fail to get promotions, but actually handle multiple roles in their current positions which are understaffed (Kosteas, 2009).

This reality is a source of dissatisfaction for employees. The second reason why companies are unwilling to give promotions is conflicts of interests in the internal environment. Usually, management is concerned that rapidly rising employees present a threat to them. This is mostly pronounced in companies where mid-level management are external employees who have no private connection with the ownership, and are, therefore ,unlikely to feel personally responsible for the overall company growth. It is, therefore, possible that such a management would hold personal interests above the genuine company growth through worker recognition and promotion, leading to such practices as non-merit promotion and unlawful termination. A study conducted in 2009 and documented in the Social Science Research Network (SSRN) found that there was a positive correlation between promotion possibility and overall job satisfaction (Kosteas, 2009). The study established that a promise for promotion was an adequate incentive for a worker to remain in the current employment (Kosteas, 2009). In addition, it was revealed that promotions effect on job satisfaction was only minimally affected by the accompanying increase in payments, and that a complete lack of payment increase was not necessarily a factor in promotion-related job satisfaction. The study also revealed that past promotions had little impact on satisfaction, and only future promotions matter.

2.5 Employer Harassment

Employer harassment is common across the labor force but is more rampant in the private sector. The private sector employs more personnel than the public sector in most economies and is, therefore, more prone to worker mishandling (Bove, & Smith, 2006). In addition, the private sector is largely independent on ethics and rigorous worker rights requirements. There are lesser avenues for the formation of worker unions in private sector, and the hiring/firing processes are largely a private affair. This situation is even further aggravated by the fact that private employers carefully craft employment or contract letters in such a manner as to give the employer a legal advantage in cases of, for instance, summary termination of employment. Also, there lack a proper legal system to impose checks and standards in defining acceptable employee treatment during employment in the private sector. Thus, such practices as physical assault, worker manipulation in role performance, organizational polarization along such groupings as political, management level, race, age and gender, sexual advances and harassment among other practices are reported in employment. These factors hinder employee morale and loyalty to employer.

Human Resource Diversity limited, a company that documents research on workplace practices in the UK, states that there were 236,000 reported cases of workplace bullying in the UK employments and that 80% of managers have already been aware or participated in the bullying. Of these, 49% of managers have experienced some form of bullying themselves, and 37 % have indicated that they have lacked the proper management training needed to manage bullying in the workplace. The report indicate that 19 million sick offs are taken annually in the UK as a result of bullying, where 1 out of 4 people is a victim. The UK looses 120 million pounds each year to bullying charges, with the bulk of these in out of court settlements (Guest, 2002).

2.6 Employee Background

This aspect concerns the reason why the employee is in that employment, and has a major impact on employee satisfaction, all other factors held constant. Joblessness is a major challenge for most governments in the current global economy (Sue, 1999). It is, therefore, common to find people going into employment in out of desperation, for the lack of alternative choices. When employees take up positions in the sectors that are not in their line of training or, sometimes, not in their preferred career paths, it is likely that they may not fit in those positions and may, therefore, lack the professional satisfaction that comes with a proportionate job. This factor often leads to the lack of satisfaction in the workplace, even where all other stressors are absent.

For instance, a person who was trained as a computer engineer may, out of joblessness, opt to take a front office job in a major discount store where they are expected to interact with customers, handle dissatisfied clients, and drive sales. This person is more likely to feel dissatisfied in his/ her job role than a person who has a diploma in sales and marketing, or another with background in customer management.

2.7 Positive Job Challenges

This factor arises from routine employment without new role challenges. It may seem insignificant but has a far greater effect on employee satisfaction than it may be expected. The condition of the lack of motivation owing to such practices as idle sitting and routine performance can lead to hypo stress, which is the stress that results from inactivity. In contrast, overwhelmed workers may suffer from hyper stress. It is worth noting that the results may very often be the same. This scenario is even more rampant in employment where employee interaction is limited, and most workers spend most time alone or in the automated environments. A typical scenario is a position where an employee works in a factory line where his/ her job is to pick containers from a conveyor belt and pack them into boxes, all day alone. Such a worker is likely to be de-motivated for lack of challenges in work. Constructive challenges in a work scenario lead to morale boost and role satisfaction in workers.

3.0 Employer Satisfaction

It is important to discuss employer satisfaction as a necessary factor in customer satisfaction because, at the end of the process, it is the employer who must decide to continue or terminate with the business. The important factor for employers is to understand how to gain the same results (profitability and sustainable growth), through different ways: the ways which satisfy both the employee and customer. Establishing these methods is the only way to attain the long term growth and development, thus adding value to the society and contributing to the national product. A standard option for employers to consider while making any policy is whether there is another method or way to achieve the same results for employers and customers to benefit too. Such an approach will invariably incorporate employee input in decision making. Employees' involvement achieves two purposes: it leads to a consensual agreement, which benefits both parties, and improves employee morale and, therefore, loyalty during their roles. This scenario improves customer satisfaction through the associated employee robustness and willingness to own up in cases of customer complaints.

3.1 Employee - Customer Relationships

This factor is as significant a source of employee dissatisfaction as all the previously discussed factors. The nature of employee- customer interaction is the core focus of this study. It is the moment of truth that the customer relies on when rating a company. The nature of this relationship is supposed to be very positive. However, the interaction is not always positive due to certain conditions (Snipes, Thomson, & Oswald, 2006). Firstly, employees fail to understand the expectations of customers during the interaction. It is true that a significant percentage of customers visiting a customer service centre or otherwise seeking interaction with company representatives do this because they are dissatisfied with products or services and are, therefore, presenting a complaint.

The customer may have a complaint that concerns the top level management, and not directly in the jurisdiction of the representative with whom they interact. The employee cannot understand why the customer is unwilling to understand the issue that cannot be solved at the customer service level, while the customer cannot understand why the employee does not realize that the customer cannot directly reach the top level management in order to express his/her grievance. This scenario may often present a deadlock between customer and employee which deteriorates with time, leading to reduced customer satisfaction. The important process in such a scenario is for the employee to understand that only he / she can own up, whether the customer is unreasonable or not. To the customer, the employee is the company, and must resolve any queries arising from the product/ service usage. Consequently, a seamless link between the employee and top management is needed in order to ensure employee support, as well as practical turn-around duration for the escalated issues. If the employee fails to understand the imbalanced nature of his/ her relationship with the client and uses it to the company's benefit, there is supposed to be conflicts between him / her and the customer, leading to the latter's dissatisfaction. However, the employee is unable to take this burden unless he / she can perceive a need to do this, and the following need can only stem from a good employee- employer relationship.

Another major source of conflict in the employee- customer relationship is harassment and bullying. Even though harassment and bullying is usually more prevalent from the customer to the employee and mostly by male to female parties, it is also evident, to a smaller extent, from the staff to the client (especially in services offered by monopolistic businesses in countries where human rights are not so vigorously guarded, and situations in which the company is a public government offices or other public entity), and by female to male parties (Fischer, Gainer & Bristor, 1997).

In this light, it is important to note that significant gender disparities exist in the number of personnel employed in the customer service sector. Here, the customer service refers to the front office operations by employees of a company in direct interaction with customers. The previous discussion highlighted the growing percentage of women experiencing harassment in places of work as compared to men; this situation is even further aggravated by the fact that the customer service is a female dominated domain. Statistics supports the possibility that female employees have been a constant target of customer harassment. For instance, the Australian Commission on Human Rights has conducted the research in to employee harassment in Australian companies and established that above 10% of all harassment was initiated by a customer. The figure below represents this evidence.

Figure 3: Source of Bullying and Harassment in Australian Companies.

(Australia Human Rights Commission, 2008)

It should be noted, however, that these figures involve employees in all departments in a company. But even then, ten percent of respondents experienced harassment by clients. This means that a higher percentage of employees in the customer care division, which deals directly with customers, were likely to report harassment. In addition, surveys conducted by the commission also indicate that workers in the service based industries, such as hotel and catering, education and community services, were most likely to become targets of harassment (Snipes,Thomson, & Oswald, 2006).

4.0 Customer Service

The customer service is a very significant practice in customer satisfaction. The following service, just like satisfaction, can be defined differently by different schools of thought; though, the underlying principles remain the same. Mathies & Burford (2010) define the customer service as the sum total activities that are aimed at enhancing customer satisfaction. It may also be defined as the activities that a customer care agent does before, during and after a sale of a product or service in order to boost customer satisfaction. Other than customer service, there are other factors that contribute to customer satisfaction. These factors include: product or service quality or value addition, product packaging, after sale service among other factors.

The increase in percentage of businesses directly involved in customer services, as opposed to the product, such as manufacturing, has led to the increased focus on customer service as a key element in attaining customer satisfaction (Fischer, Gainer, & Bristor, 1997). Different requirements have been set by different industry players regarding the satisfactory customer service. There is no particular customer service model held as superior to all others, certain benchmark qualities of a good customer care representative have come up. Mathies & Burford (2010) from the University of New South Wales conducted a research concerning fundamental gender differences that are in the customer service industry. The researchers noted that there were differences in expectation levels from clients to employees and employees to customers, which were aligned along gender basis. The study involved 876 workers in 20 service industries in Australia. The respondents were 44% male and 56% female. The research question was the respondents' perception of good customer service. The Leximancer text analysis tool was used to map underlying themes in different responses (Mathies & Burford, 2010). Ten key words that emerged from the analysis with regard to definition for the good customer service are given in the table below.

Table 2: Survey on Perception of Good Customer Service





































(Mathies & Burford, 2010)

The table above indicates the underlying principle in a customer service as understood by customer service representatives. The relative weighting indicates the importance attached to any of these words as a marker of a good customer service. Listening, for instance, is perceived as the most important quality of a good customer care interaction, with a weight more than double that of the ability to help (help has a weight of 9.3 points). Therefore, an effective customer service, as understood by the people giving it, is a complex matrix of personality and not necessarily a satisfactory immediate help for the customer. The table brings out an important realization; that the five most highly rated attributes of a good customer service all have to do with altitude and perception of the employee, rather than to do with actual assistance for the customer.

The ability to listen to, being happy, offering good service, being friendly, and having a smile are all factors that, to the natural human, rely on internal feelings and satisfaction and that trying to feign them would be stressing to the person doing it. Therefore, employees who are genuinely unhappy and unsatisfied are unlikely to present a satisfactorily good customer service. This also points back to the management, who share the responsibility of ensuring employee satisfaction. In this research, it also emerged that good customer service practices meant different things to the different genders. Women tend to view a good customer service as one in which the service process is favorable and in which there is a good quality of interaction. Men, on the other hand, tend to view a good customer service as one in which the outcome favors the customer, that is, there is an actual problem solving for the customer.

These differences in perception may present significant conflicts between customers and employees, especially in places where there is a gender imbalance and, therefore, no harmony for the different customer gender. This is in consideration of the fact that customers will also tend to view a good customer service based on their gender, as well. Unfortunately, the average front office is likely to have more female than male workers, which means that customers who place outcome of interaction above the quality of interaction may find the moment of truth unsatisfactory. Similarly, male dominated in the customer service centers are likely to have more unsatisfied customers on the basis of the service quality, as opposed to the outcome of interaction.

Apart from the customer care centre experience, there are other avenues of customer service. Call center agents are customer care agents who resolve the customers' queries on the phone. Like employees in the physical customer care centers, call centre agents are exposed to the same management challenges as any other employees. Therefore, they are just as likely to experience dissatisfaction and lowered productivity challenges when handling customers. Other avenues include social media, with such platforms as Face book, Twitter and other social sites that are increasingly gaining popularity as customer service channels. In addition, most companies in the current domain support a customer management portal where dedicated teams can resolve the customers' queries through such services as blogs and webmail.

A call center, however, is still the preferred customer service method when compared to social media. According to the study conducted by the Customer Engagement Network (CEN), seven in ten respondents in a survey featuring 500 call centers said that calls were still the preferred mode of communication with their customers (Customer Engagement Network, 2012). Further, the study revealed that 70% of respondents stated that they expect phone calls to remain the customer service channel of choice in the foreseeable future (Customer Engagement Network, 2012). This has the implication that employers should focus on enhancing customer interactions through the current channels, in addition to investing resources into the new customer service platforms.

4.1 Effect of Employee Satisfaction on Customer Satisfaction

The previous sections have discussed the foundation of employee satisfaction and the customer service experience. This section gives case studies of employee satisfaction effects on customer satisfaction. Customer satisfaction is considered the total experience that a client gets from a company's product/service processes, which makes them sustain a feeling of satisfaction and a need for re-use of the company's goods or services.

4.1.1Measuring Customer Satisfaction

Customer satisfaction is often a deduced rather than a measured factor. The most common test for customer satisfaction is company profitability and growth, seeing that customer satisfaction is the major determinant of these two variables (Alpha Measure, 2012). However, customer satisfaction may also be measured directly through direct surveys, such as through interviews and questionnaires (Snipes, Thomson, & Oswald, 2006). Most customer satisfaction surveys utilize the following four variables; satisfaction with the company in general, satisfaction with the local branch where applicable, satisfaction with service delivery, and satisfaction with employees (Alpha Measure, 2012).

4.1.2 Satisfaction with Company

This variable is measured as a customer's overall rating of a company's products and services. It is driven by the customer's direct experience with their services, as well as external factors, such as its reputation, ethical and legal history, ranking in national and international reports among other variables. This variable is jointly determined by the personal experience and other factors.

4.1.3 Satisfaction with Local Branch

This applies where services are de-centralized and are likely to be derived more at a personal level. The determining micro-factors include level of service, product/service presentation, after sale service, and nature of customer service. It is differentiated from the overall company rating due to the possibility of different service levels in the different branches, for example, in a bank's branch network.

4.1.4 Satisfaction with Services

This variable refers to the general rating of a company's services, not necessarily the service level at the customer's moment of truth point. While a customer is supposed to judge his/ her level of satisfaction without any reference, most customers will rate service level with a reference of another company they have visited.

4.1.5 Satisfaction with Employees

The customers evaluate employee performance usually as customer service, as they may not know of other duties fulfilled by employees. Back office workers, therefore, may receive a non-realistic rating in generating customer satisfaction. Heskett et al (1994) proposed a model linking employee satisfaction and customer satisfaction in the form of a service profit chain. In the chain, employees and customers are linked by the role of management in a cyclic manner of cost and benefit. The figure below illustrates the Heskett's service- profit chain.

Figure 4: Heskett's Service Profit Chain


(Heskett et al, 1994)

Since 1994 the service profit chain has been used extensively by leading companies in enhancement of sustainable profitability trends. It starts with the internal company environment and works from inside out, with the result being happier employees and happier customers. The internal environment is evaluated using the internal service quality, which is made up of such variables as workplace design, job design, employee selection and development, reward and recognition, as well as customer service tools.

4.2 Internal Service Quality

This general variable is composed of the following:

4.2.1 Workplace Design

Workplace design takes consideration of such factors as spacing, lighting, comfort, temperature regulation, environment surrounding the workplace, among similar factors. The ideal or optimum workplace design should aim at providing a comfortable, relaxed environment in which employees feel motivated to work with minimal unnecessary exhaustion. The job design as a variable considers the nature of the job, specifically mini-variables, such as duration of work, strain level per employee, flexibility of work schedule and off-work days, the level of skill required and implications in the workplace, the type of work relationships between employees (teamwork versus individual roles) among other factors. The employer should provide the best combination of variables with an aim of optimizing employee comfort while not jeopardizing profit implications on the long run.

A study conducted by a University of Pretoria masters student, David Stanford, 2008, attempted to quantize the importance of each internal indicator of employee satisfaction. The study involved telephone interviews that were presented to 67 workers and 66 clients and came up with the following table.

Table 3: Importance of the Internal Environment Survey.



Standard deviation
















Operating procedures






Nature of work









(Stanford, 2008)

The above table emphasizes the effect of workplace design on the overall satisfaction of an employee. It shows, for instance, that the nature of work and supervision, both attributes of the workplace, carried the highest weighting and least standard deviation as satisfaction determinants. Pay, on the contrary, had the least points but the highest standard deviation. This indicates that, while many employees disagreed more with regard to the importance of pay as a satisfaction determinant, very few workers disagreed concerning the importance of the workplace environment as a satisfaction marker. Co-workers influence in job satisfaction also received a high rating as a determinant of job satisfaction with 18.3 points. This table highlights the most important factors that employers needed to improve to generate employee, and thus customer satisfaction.

4.2.3 Employee Recruitment and Development

This variable affects the general perception of the worker while performing his/ her role. Selecting the right employee for a particular position is likely to enhance employee comfort in role management and, therefore, boost productivity. Conversely, an unfit employee is likely to experience dissatisfaction in the role performance due to such factors, as incompetence, boredom or incapacity to bond with co-workers and clients. The employees' development, on the other hand, means constant upgrading of employee skills in order to enhance easy adaptability to changing technology and industry standards in any sector. Employees who are regularly trained are likely to exhibit greater optimism towards their role than non-trained ones performing the same role. In addition, the greater interactivity with customers of the front office workers requires a great deal of regular training in order to pass reliable information to the enquiring clients. The lack of this training and development will, in the least, lead to discomfort and embarrassment when dealing with customers.

4.2.4 Employee Satisfaction, Retention, and Productivity

Enhancing the factors in the internal environment is expected to lead to employee retention, satisfaction, and productivity. According to Heskett et al (1994), there is a direct relationship between the three variables, with retention and productivity being the dependent variables driven by customer satisfaction. The driven variables, retention and productivity, are instrumental in shaping the external environment, which is the external service value.

4.2.5 External service Value

External service value pertains to customer service, specifically all factors in the employee-customer interaction that lead to customer satisfaction. Service concept is all experience that is designed with the aim of creating a positive lasting impression in the customer regarding company's services or products. A satisfied customer is likely to be retained in the company's clientele; the customer is likely to bring repeat business to the company and to refer others to such a company. This, according to Heskett et al (1994), is the key to the company's revenue growth and profitability. The section below will discuss case studies of employee-customer satisfaction surveys.

4.3 A Chinese Security Firm Service - Profit Analysis Based on Employee- Customer Satisfaction

A study carried out by Yingzi Xu and Robert Goedegebuure (2005) aimed at finding out the relationship between employee satisfaction and customer satisfaction as related to the company's profitability per employee. It should be noted that the company's profitability, especially in the long term, is a direct result of customer satisfaction. The scholars studied a group of 680 employees picked from 30 branches in the security firm. 495 customers and 426 employees took part in the study. Employee satisfaction was modeled using two variables: satisfaction with the company and satisfaction with the job. Customer satisfaction was measured using four variables of the customer- profit model: satisfaction with the company, the particular branch, services, and employees. Profit as the dependent variable was obtained from linear regression of the above variables and calculated as profit per employee (Xu & Goedegebuure, 2005). The study used Cranach's alpha rating of 0.7 and 0.89 for employee and customer satisfaction.

Figure 5: Regression Plane for Employee versus Customer Satisfaction on Profit.

(Xu & Goedegebuure, 2005)

In the table, the plane of regression was made on a three dimensional coordinate plane with customer- employee relationship versus profitability per employee. The table indicates that there, indeed, exists a relationship between customer and employee satisfaction with the company's profitability. In another survey, Sears, Roebuck and Company performed a survey in their 800 stores regarding the way employees felt about their jobs and how this affected their service delivery (Corporate Leadership Council, 2003). The company found out that a 5% increase in customer satisfaction lead to an average 1.3 % increase in customer satisfaction, which, in turn, led to a 0.5% increase in the profit growth (Rucci, Kirn, and Quinn, 1998). The study further found out that customer- employee relationship accounts for between 40 to 80% customer satisfactions, the percentage being higher in the service industry companies.

Rucci, Kirn, and Quinn (1998) conducted a study in which Sun Systems used a service- profit model that revealed a relationship between employee satisfaction and customer satisfaction and profitability. The company stated that the likelihood for customers to recommend Sun as an organization with which to conduct business greatly correlated to the likelihood for employees to state that Sun was a good place to work in. Sun engages in a monthly survey in which its employees fill in a form to measure employee satisfaction, as well as performance hindrances. This system enables the company to continually review its policy to enhance good employee- employer relationship. The result of these monthly data analysis provides the company with employee quality index, which helps the company to gauge its customer delight index. This direct link between employee satisfaction and a customer delight index has helped the company maintain a trend of profitability and growth.

5.0 Conclusion

The documented case studies above indicate the existence of a direct relationship between employee and customer satisfaction. This relationship is more pronounced in companies that are more service oriented than those that are product related because the employees are engaged directly with customers for longer average durations. In addition, the research has showed that companies with a higher customer satisfaction rating are those that treat their employees as internal customers, and as a precious tool for driving customer satisfaction. The increasing percentage of economies whose major GDP earner is service oriented, as well as the rapidly expanding global business platform with increasing competition should serve as a cue for any company to target personalized customer satisfaction as the next primary focus.

6.0 Recommendations

Employers who wish to enhance the customer experience as a growth and profitability strategy will need to focus on the following recommendations.

Understand the reasons why employees take up jobs and help them achieve their objectives. In addition, recruit employees whose reasons for taking the job are likely to lead to a mutual benefit for the employer and employee (Alpha Measure, 2012).

Constantly hold communication with employees in order to let them know what objectives their companies want to achieve, and involve them in consultations and certain decision making in order to boost their morale and let them own up to their role responsibilities.

Put value in employee training and development. This practice will help employees to take pride in their work and feel competent in doing it, this trend is likely to enhance their relationship between workers and employees. In addition, it is likely to make employees get a sense of value addition in the employment, a trend which is likely to enhance retention and better productivity.

Let employees take initiative in at least some of their duties. Constant supervision is a de-motivator that leads to reduced productivity and lowered self-esteem, both of which contribute to poor customer service and poor customer satisfaction. In addition, challenging responsibilities help employees feel that they are useful and important in the company, which leads to the increased productivity and better customer relationships.

Cultivate a good working relationship between employees and their immediate supervisors. Such a relationship will create a free atmosphere in which workers and managers corporate in problem resolution, as well as have a common goal and perception, which will enhance customer satisfaction.

Article name: Effect Of Employee Satisfaction On Customer Satisfaction Management essay, research paper, dissertation