The Impact of Employee Satisfaction Levels on Customer Satisfaction - Research Proposal Example

? The impact of employee satisfaction levels on satisfaction: Starbucks Rochester, NY of the of the Table of Contents Table of Contents 2 Chapter One: Introduction 3 Abstract 3 Introduction 3 Problem Significance 4 Problem Statement 5 Hypothesis 6 Chapter Two: Review of literature 7 Literature review 7 Methods 7 Literature 8 Implication and recommendations 10 Gap in the Literature 10 Conclusion 11 Chapter Three: Methodology 12 Methodology 12 Participants 12 Measurement Instruments 13 Procedure 14 Limitations 14 Chapter Four: Discussion and Findings 15 Chapter Five: Document Summary 15 References with Annotations 17 Chapter One: Introduction Abstract In order to decrease the price competition among the competitors, the organizations are seen to use various differentiating strategies that can lead to offering of better services. One of the most dominating strategies is to increase the satisfaction of the employees, which will establish better service climate, thereby creating satisfaction and loyalty among the customers. Therefore, the researchers have stressed on the fact that the three aspects of employee satisfaction, customer satisfaction and profitability of the organization is interconnected. The present study has been designed to assess the relationship between employee satisfaction and customer satisfaction with respect to Starbucks. In this respect, the two hypotheses are: Linear and symmetric relationship, which exists between customer satisfaction and employee satisfaction in context to Starbucks Rochester and secondly: interactive features and physical features of service can affect customer satisfaction in context to Starbucks Rochester, NY. In order to prove these two hypotheses, primary data will be collected through questionnaire survey and the findings of the research will be highly useful for the management of Starbucks. Introduction In the last 30 years, several studies have been made to understand the relationship between employee satisfaction and customer satisfaction but until now, standardization in the research findings of previous research scholars has not been achieved. Considering the research work of Koys (2003) reveals the fact that relationship between employee satisfaction and customer satisfaction is more applicable in context to service organization, where employees need to have direct contact with customers while delivering service. However, it is not that the relationship between employee satisfaction and customer satisfaction is not important in manufacturing sector or product selling organization, but very less amount of research work has been done on the topic in the mentioned organizations such as, manufacturing or product selling companies. In such context, research works of Moon & Quelch (2006) reveals the fact that Starbucks Corporation is known for their superior customer service and employee engagement. For example, training is provided to employees in Starbucks coffee shops to develop both “hard skills” such as, procedures for using cash registers and mixing drinks as well as “soft skills” such as, communication with customers and interpersonal skills. In such background, the final research paper will dig deep in understanding nature of relationship between customer satisfaction and employee satisfaction, in context to retail service chain of Starbucks Corporation. Problem Significance Chi & Gursoy (2009) argued that in most of the cases, research scholars have found positive relationship between employee satisfaction and customer satisfaction in service organizations like, Quick Service Restaurants, banks, healthcare and hospitality sector. In this context, the study by Pantouvakis and Bouranta (2013) has provided a conceptual model that can bridge the link between employee job satisfaction and customer satisfaction in service environment. However, it has been found by the researcher that a scarce amount of research work has been done to understand the nature of relationship between employee satisfaction and customer satisfaction in context to Quick Service Restaurants (QSRs) like, Starbucks Coffee shops or other fast-food outlets. Pantouvakis and Bouranta (2013) also pointed out that interactive features and physical features of service environment can even direct the relationship between employee satisfaction and customer satisfaction within service environment. Although, Pantouvakis and Bouranta (2013) introduced the concept of interactive features and physical features of service matrix but until now, further development of the work has not been done in proper manner. In order to fulfill such shortcomings in previous literature, the researcher will analyze the nature of relationship between employee satisfaction and customer satisfaction in context to Starbucks Coffee shops, which will work as a sample representative of service environment. For convenience, the researcher has selected Starbucks Rochester, NY, as the sample coffee retail store for the study. However, similar kind of research work has been done by Jeon & Choi (2012) but their research findings have concluded that satisfied employees can increase customer satisfaction by integrating high self-efficacy or cooperative orientation, which is subject to controversy. For example, Jeon & Choi (2012) did not try to establish statistical validity of their conclusion or properly identify the exact types of emotional expression from employees to customers. Therefore, significant scope exists for the researcher to understand how employee satisfaction can direct customer satisfaction within food service environment such as, Starbucks Rochester, NY. The study will also focus on understanding the influence of interactive features and physical features in determining the nature of relationship between employee satisfaction and customer satisfaction, in context to Starbucks Rochester, NY and the researcher’s approach will strengthen the arguments of Pantouvakis and Bouranta (2013) and Bell, Auh, & Smalley (2005). Therefore, significance of this research paper lies in its ability to fulfill gaps in the literature review regarding relationship between employee satisfaction and employee satisfaction, in context to service environment. Problem Statement It has been mentioned that none of the previous research works have tried to shed light on understanding the nature of relationship between employee satisfaction and employee satisfaction or the effect of interactive features and physical features of service on customer satisfaction and employee satisfaction, in context to Starbucks Coffee retail shops located in Rochester, NY. Therefore, the research paper will have two problem statements such as, 1- understanding the nature of linearity and symmetries in the relationship between customer and employee satisfaction, in context to Starbucks Rochester, NY and 2- measuring the effect of interactive features and physical features of service on customer satisfaction and employee satisfaction, in context to Starbucks Rochester, NY. Hypothesis From statistics viewpoint, it can be said that hypotheses are tested on the basis of estimates in the sample population. Therefore, a hypothesis can either be accepted or rejected, but never be proved (Robson, 2011). In such context, following hypotheses are being drawn for the research paper. Hypothesis 1: Linear and symmetric relationship exists between customer satisfaction and employee satisfaction in context to Starbucks Rochester. Hypothesis 2: Interactive features and physical features of service can affect customer satisfaction in regards to Starbucks Rochester, NY. Chapter Two: Review of literature Literature review In the service sector, enhancing the satisfaction of the customers is considered to be critical and organizations have taken major steps to incorporate the same. This literature review focuses on the findings of the previous researches conducted to find the relationship between the employee satisfaction and customer satisfaction. This literature review will discuss the findings of the research scholars that can affect the present study with the impact of employee satisfaction on customer’s satisfaction, in case of Starbucks. The literature will also discuss the gaps that are left by the previous reviews. Methods The literature review is done using the journals that are retrieved from the databases such as, ProQuest, Emerald and Sage. While choosing the journals, the following criteria are considered: The journals that are dealing with the study of relationship between customer satisfaction and employee satisfaction. The journals that have focused on the factors that have led to customer satisfaction or employee satisfaction. The journals that are written in English. By following the above criteria, the journals that are closely relevant to the research topic has been considered for the review. Literature Market orientation is defined as the business perspective in which customers are the point of focus for all the business operations. For a market-oriented firm, it is very essential to understand the needs of the customers and develop solutions that can cater to these needs. Through market orientation, a sustainable competitive advantage can be developed to attain superior performance of the organization. In this context, the competitive advantage can be related partially to the structural characteristics such as, paying attention towards the needs of the employees, market power and delivering the required services to the customers as promised (Esteban, Millan, Molina & Martin-Consuegra, 2002). Therefore, the employees should exhibit a market-oriented behavior which will serve as the key towards successful market orientation of the firm. In order to create superior value for the customers in an effective and efficient manner, the organizational culture plays a leading role. The study conducted by Jyoti & Sharma (2012) had collected data from the customers, employees and executives of several showrooms of automobiles, for understanding the role played by employee satisfaction and customer satisfaction, while impacting the market-orientation of the firm. The analysis was done using structure equation modeling (SEM) which revealed significant relationship between market orientation and performance of the business. In order to enjoy market-orientation, the customer satisfaction and employee satisfaction must be given huge importance and the organizational culture should be as such that employees treat the customers as the major stakeholders. In regards to the relationship between customer satisfaction and employee satisfaction, it has been suggested that the satisfaction of the employees is reflected on the customers and vice versa, which in turn results into a good service cycle (Keiningham, Aksoy, Cooil, Peterson & Vavra, 2006). The end result of the whole cycle leads to the profit of the organization. Harter, Schmidt & Hayes (2002) had suggested that employee engagement and satisfaction has led to the short-term outcomes such as, customer satisfaction and employee turnover, which finally results to financial outcomes. Research conducted by Jeon & Choi (2012) has suggested that employee satisfaction and customer satisfaction are not mutually related, instead they are related unilaterally. The reason behind considering the relationship as unilateral is the fact that there are several antecedent variables that act between satisfaction of the employees and customer satisfaction. Customer satisfaction is determined from the interaction that they have with the employees or the emotional bonding that is created during this interaction. On the other hand, the satisfaction of the employees is seen to be less impacted by the customer satisfaction. The employee believes that their job satisfaction is inter-connected with the benefits, salary, supervisor, co-workers and work environment. Satisfaction of the employees is not a crucial factor that helps in deciding the satisfaction of the customers. Satisfied employees are seen to be cooperation-oriented and with high self-efficacy and are emotionally more inclined towards the customers. Therefore, it can be concluded that the job satisfaction of the employees leads to satisfaction of the customers, but not vice-versa. It has also suggested that cooperative orientation and self-efficacy are marginally moderating the effect of employee satisfaction on the customer satisfaction. This signifies that higher the cooperative-orientation or self-efficacy, greater will be the effect of employee satisfaction on the customer satisfaction. However, Frey, Bayon & Totzek (2013) has suggested a different picture. According to them, the satisfaction among the customers is seen to indirectly impact the satisfaction of the employees, which is due to the appreciation that they receive from the clients. Hence, they suggested that the organization should invest heavily towards the satisfaction of the customers which will provide double benefit for the firm; firstly, by enhancing the revenue and profit of the organization and secondly, by enhancing employee satisfaction and retention. A positive feedback from the customer leads to the employee satisfaction via recognition. Schwartz (2010) has pointed out that the front line employees are the main agents that directly interacts with the customers and creates a huge impact on the interaction of the customer with the business. Pantouvakis and Bouranta (2013) have suggested that the satisfaction of the front-line employees plays a significant role in determining the perception regarding the service quality offered by the organization. They have found that a positive relationship exists between the interactive and physical features and the satisfaction of the customers. As compared to the physical features, interactive features are seen to have a greater impact on the satisfaction of the customers. Implication and recommendations The gathered information in the review suggested that market-orientated approach is significant for the organization to remain competitive in the market. In order to become market-oriented, contribution of the employee satisfaction is very important to create satisfaction among the customers. Some of the researches have suggested that customer’s satisfaction leads to employee satisfaction too. Physical and interactive features also lead to customer satisfaction. Therefore, the study provides a deep insight regarding the factors of employee satisfaction and the way they lead to customer’s satisfaction. Gap in the Literature The literature, that has been discussed, presents a generalized view related to a particular sector and provides a linear relationship between job satisfaction of the employee and customer satisfaction. These studies do not reveal all the aspects that play a significant role in deciding the role of employees in generating customer satisfaction. The literature here has discussed about the relationship in context to service sector, but there is absolutely no literature in context of the Quick service restaurant such as, Starbucks. Therefore, this present research intends to fill up the gaps left by the existing literature. Conclusion Employee satisfaction in their job is related to the feeling among the employees when their needs are taken care of by the organization or management. If the employees are satisfied with their job, they cater more efficiently towards the requirement of the customers. Furthermore, in order to cater the needs of the customers, the organization has established quality goals, which differentiates them from the competitors. In this regards, the study that is conducted on the relationship between the customer satisfaction and employee satisfaction, with regards to Starbucks, is quite significant and will draw enough attention from the Quick service restaurants. Chapter Three: Methodology Methodology For the purpose of this research, the researcher will use Mixed Method (the Explanatory Sequential Design) backed by both qualitative and quantitative research methodology (Robson, 2011). As part of Explanatory Sequential Design, collecting and analyzing quantitative data will be done in one phase of the research, while collecting and analyzing qualitative data will be done in another phase. As part of measures, online questionnaires survey (backed by close-ended questionnaires) of customers and employees in the Starbucks store will be used for collecting data. Ethnographic observations of behavior of employees and customers within Starbucks in Rochester, NY, will also be used for collecting primary data. For collecting secondary data, the researcher will use academic peer reviewed journals, books, online articles, company website data and printed magazines. It has been predicted that the data collection period will continue for 3 months. The first two and half months will be used for developing the survey instrument and collecting primary data, while last half of the third month will be used for data analysis. Participants Population of Interest: Population of customers and employees in Starbucks, Rochester, NY, will be the principal population of interest. As the objective of the study is broad, it will use large sample population in order to conduct the survey. The study will conduct the sample survey in five Starbucks stores, located in Rochester, NY. However, at this stage, it will be too tentative to prescribe the exact store names because selection of Starbucks stores in Rochester, NY, will be guided by resource availability and convenience of the researcher. Changes in selected stores might take place during the course of the research and therefore at this moment, it can only be revealed that sample survey will be done in five Starbucks stores, located in Rochester, NY. As part of sampling, judgmental sampling will be used for selecting employees (on the basis of their work experience, age and association regarding particular Starbucks stores), while simple random sampling will be used for selecting customers. Procedure for Selection: First and foremost, the researcher will visit the five selected Starbucks stores located in Rochester, NY, in order to get the permission of employees and customers for conducting the sample survey. By visiting the stores, the researcher will collect the e-mail addresses of both customers and employees of these stores. In addition, a Facebook group will also be established to promote the survey process. Participant selection criteria for online e-mail-based questionnaire survey would be monthly visits to Starbucks stores (for customers), age group (for customers), numbers of years being associated with the store (employees) and seniority (employees) (Robson, 2011). Proof of such selection criteria would be gathered during first two weeks of observatory visits to Starbucks, Rochester, NY. Measurement Instruments For the survey, customers will be ranged from 15 to 80 years in age, while employees would range from 20 to 50 years in age. Most of the participants in the survey will be from Rochester, NY (living permanently or temporary) and total sample size will not be more than 200. From the customer’s side, maximum 150 respondents will be selected, while from employee’s side, maximum 50 respondents will be selected. For the observation process, 40 participants will be ideal. Procedure Close-ended questionnaire will be designed with the help of 5-point Likert scale, multiple choice questions, and dichotomous questions (Robson, 2011). In Likert scale, 5-point will indicate “Highly Agree” option, while 1-point will indicate “Strongly Disagree” option. Each of the respondents will be asked to fill up the online confidentiality form and return the filled-up questionnaire with the confidentiality form to the given e-mail address of researcher. Qualifying questions will also be used to screen out participants that do not meet the selection criterion and in special occasion, video chat application of Skype can be used for sorting out queries of respondents. SQL database will be used for collecting the data, while statistical tool pack SPSS (version 20) statistics will be used for data analysis. Inferential statistics backed by interval estimation, T-tests, factor analysis, correlation, linear and logistic regression, will be used for data analysis. Limitations In the online survey, the researcher cannot check the honesty or physical expression of respondents while filling the questionnaire and that will be major limitation of the study. As the researcher is living in Rochester area, thus, he will conduct the questionnaire survey in Starbucks stores located in Rochester, for time and cost convenience. Due to such convenience, there are possibilities that the researcher will exclude other potentially qualified participants and the research findings might not represent the characteristics of entire population. Due to resource constraints, the researcher will not be able to provide financial incentives to participants for giving responses, which would further decrease engagement level of respondents in the survey process. Chapter Four: Discussion and Findings For the online survey, the e-mail reply from respondents containing filled-up questionnaire would help the researcher to develop cluster-wise database for customers and employees of Starbucks stores located in Rochester, NY. As part of qualitative analysis, the researcher will conduct content analysis of existing literature on the topic and historical data. Statistically, analyzed data will be compared with findings gained through qualitative content analysis. Even personal viewpoint of the researcher, gathered through observation, will be used for validating research findings. For feasibility of feeding input to SPSS software, coding of the collected responses will be done. Chapter Five: Document Summary This research proposal aims to fill the gaps in the literature review regarding relationship between employee satisfaction and customer satisfaction. At present, scarce amount of literature exists regarding the role of interactive features and physical features of service on customer satisfaction, in context to coffee retail and fast food service environment. Therefore, this document would not only fill in the gaps in the literature, but also can be used as a reference for future researchers, researching on the topic. It is evident from the literature review that very few researcher scholars had defined the relationship between employee satisfaction and customer satisfaction in precise and exact manner for organizations like, Starbucks, which focus heavily on customer services. So, this document will help the company to understand the service factors which affect customer satisfaction and on the basis of significance of such factors, the company will derive strategies to retain more customers. In such context, considering and implementing the probable research findings of this research will not only improve the quality of customer services in Starbucks stores, but will also enhance motivation and engagement among employees. References with Annotations Bell, S. J., Auh, S., & Smalley, K. (2005). Customer relationship dynamics: Service quality and customer loyalty in the context of varying levels of customer expertise and switching costs. Journal of the Academy of Marketing Science, 33(2), 169-183. Simon J. Bell (Ph.D) is marketing lecturer at Judge Institute of Management. Seigyoung Auh (Ph.D) is an assistant professor of marketing at Brock University, Ontario, Canada. Karen Smalley is a graduate in marketing at the University of Melbourne. The study investigated and perceived switching costs and customer investment expertise on relationship between customer loyalty and techno-functional aspects of service quality. The researchers were successful in understanding the three-way interactions between perceived switching costs, customer expertise and techno-functional aspects of service quality. It has been found that techno-functional aspects of service quality have inverse relationship with perceived switching costs. Until now, the paper has been cited in 239 different research papers by different research scholars. Chi, C. G., & Gursoy, D. (2009). Employee satisfaction, customer satisfaction, and financial performance: An empirical examination. International Journal of Hospitality Management, 28, 245–253. Christina G. Chi and Dogan Gursoy are professors in School of Hospitality Business Management, Washington State University, Pullman. Purpose of their study was to understand the nature of relationship between customer satisfaction and employee satisfaction and the research paper had also examined the impact of customer satisfaction and employee satisfaction on financial performance of hospitality companies. The researchers used the concept of service profit chain to address the research problems. Chi & Gursoy (2009) found positive relationship between financial performance and customer satisfaction, but no such relationship has been found for employee satisfaction. Until now, the paper has been cited in 92 different research papers by different research scholars. Esteban, A., Millan, A., Molina, A. & Martin-Consuegra, D. (2002). Market orientation in service: A review and analysis. European Journal of Marketing, 36(9/10), 1003-1021. This article was published in European Journal of Marketing that retains the brand identity of Europe and is an international journal in true sense, which encourages global contribution from the research scholars working in the domain of marketing. The article mainly concentrates on market orientation that is connected to tangible product such as, service and tries to evaluate market orientation from the perspective of the customers and compare it with demand and supply. Frey, R-V., Bayon, T. & Totzek, D. (2013). How customer satisfaction affects employee satisfaction and retention in a professional services context. Journal of Service Research, 16(4), 503-517. This article through their dyadic field study and experimental study aims to prove the proposition that customer satisfaction leads to employee satisfaction and increases their retention. Harter, J. K., Schmidt, F. L. & Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87(2), 268–279. This article has aimed to conduct a meta-analysis in order to investigate the relationship between employee satisfaction and the outcomes of the business unit related to profit, employee turnover, productivity and customer satisfaction, based on the data from 7939 business units in about 36 companies. Jeon, H., & Choi, B. (2012). The relationship between employee satisfaction and customer satisfaction. The Journal of Services Marketing, 26(5), 332-341. The paper was written by Hoseong Jeon, who is professor in Hallym University, Chuncheon, Korea and Beomjoon Choi, who is professor in California State University. Purpose of the research paper was to examine the bilateral or unilateral nature of relationship between employee satisfaction (ES) and customer satisfaction (CS). The study also examined the influence of any moderating variable on the relationship. Educational service context was used for study context. It was found that employee satisfaction can lead to CS, but there is no guarantee that CS may lead to enhancement of ES. Influence of dispositional variables such as, cooperative orientation and self-efficacy, have also been identified by the scholars. Until now, the paper has been cited in 11 different research papers by different research scholars. Jyoti, J. & Sharma, J. (2012). Impact of market orientation on business performance: role of employee satisfaction and customer satisfaction. Vision: The Journal of Business Perspective, 16(4), 297–313. This article was published in Vision and the idea originated from the academic findings such that market orientation is not linked directly, but also indirectly to the performance of the organization. The findings of the articles are based on the primary data related to the automobile sector. Keiningham, T., Aksoy, L., Cooil, B., Peterson, K. & Vavra, T.G. (2006). A longitudinal examination of the asymmetric impact of employee and customer satisfaction on retail sales. Managing Service Quality, 16(5), 442-459. The article was published in the journal named Managing Service Quality, which encourages research in the field of service management. This article aims to investigate the changes as well as the consistencies in the employee and customer satisfaction in regards to the changes in the sales in large specialty retailers of U.S. Koys, D. (2003). How the achievement of human-resources goals drives restaurant performance. Cornell Hotel and Restaurant Administration Quarterly, 44 (1), 17–24. Daniel J. Koys (PhD) is professor of Human Resource Management in DePaul University. Key objective of the paper was to connect behavior and attitudes of employees to direct business success of restaurants. Quantitative research methodology was used to collect data from 28 regional restaurants chain and the study found that good people management skills in terms of employee satisfaction, employee retention and organizational citizenship behavior, can direct business performance. Until now, the paper has been cited in 53 different research papers by different research scholars. Moon, Y., & Quelch, J. (2006). Starbucks: Delivering customer service. Retrieved from https://is.vsfs.cz/el/6410/zima2013/BA_BM_A1/um/Starbucks.pdf. The paper has been written by Youngme Moon and John Quelch and the case was published in Harvard Business School. The paper highlighted value proposition of Starbucks in context to service responsiveness, employee engagement, channel of service distribution, partner selection and training program. The paper measured service performance in terms of responsiveness, cleanliness, product quality and empathy towards customers. The case also measured customer satisfaction in terms of statistical indices and key attributes of customer service. Pantouvakis, A., & Bouranta, N. (2013). The interrelationship between service features, job satisfaction and customer satisfaction: Evidence from the transport sector. The TQM Journal, 25(2), 186-201. The research paper was written by Angelos Pantouvakis (Department of Maritime Studies, Greece) and Nancy Bouranta, (Department of Business Administration of Food and Agricultural Products, Greece). Purpose of the paper was to develop conceptual framework that explores the relationship between physical and interactive service features with customer satisfaction and employee satisfaction. Close-ended questionnaire survey of first line employees was used by research scholars to collect data. The study has found positive relationship between mentioned variables. Until now, the paper has been cited in 4 different research papers by different research scholars. Robson, C. (2011). Real world research. (3rd ed.). Chichester: John Wiely and Sons Ltd, Publication. Colin Robson is the author of the book and 3rd edition of the book was published in 2011. The book reveals various facets of social research and probable methodological implications that might be needed to conduct a research in successful manner. Although the book was written for acceptable research methods for psychological studies, but the mentioned research methods can be successfully implemented in real world business scenario. Schwartz, G. (2010). Marrying employee engagement with customer satisfaction. Strategic HR Review, 9(3). This article stresses on the fact that employees should be motivated to deliver more towards the organization. It also hammers on the fact that forward-looking organizations should understand the link between employee satisfaction and customer satisfaction. Read More