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GUIDESTAR RESEARCH WHITE PAPER

According to their model, employee satisfaction not only affects employee commitment and employee loyalty, but it also has a twofold impact (i.e., direct and indirect) on critical customer satisfaction-related variables.

The relationship between employee satisfaction and customer satisfaction has received further empirical confirmation from two methodologically strong studies. Specifically, a recent meta- analytic investigation (Harter, Schmidt, & Hayes, 2002), based on 7,939 business units in 36 companies, found generalizable relationships, large enough to have substantial practical value, between unit-level employee satisfaction-engagement and business-unit outcomes such as customer satisfaction, productivity, profit, employee turnover, and accidents. Finally, Berhardt, Donthu, and Kennett (2000) measured the relationship between employee satisfaction, customer satisfaction, and profit longitudinally showing that, although the effects of employee satisfaction and customer satisfaction on business profit at a given point in time might not be detectable, they become visible and prominent over time. Specifically, these researchers found a positive relationship between change in customer satisfaction and change in profit/sales, a positive relationship between change in employee satisfaction and change in business profit, and a strong relationship between employee satisfaction and customer satisfaction at any point in time.

Understanding the Relationship Between Employee Satisfaction and Customer Satisfaction

The literature offers several explanations as to why employee satisfaction affects customer satisfaction:

  • 1.

    Employees that interact with customers are in a position to develop awareness of and respond to customer goals and needs.

  • 2.

    Satisfied employees are motivated employees; that is, they have the motivational resources to deliver adequate effort and care.

  • 3.

    Satisfied employees are empowered employees; in other words, they have the resources, training, and responsibilities to understand and serve customer needs and demands.

  • 4.

    Satisfied employees have high energy and willingness to give good service: at a very minimum, they can deliver a more positive perception of the service/product provided.

  • 5.

    Satisfied employees can provide customers with interpersonal sensibility and social account

    • (i.

      e., adequate explanations for undesirable outcomes). It has been suggested that these

components of interactional justice (i.e., quality of interpersonal treatment provided in a negotiation/exchange) have a significant impact on customer satisfaction. According to this view, because satisfied employees experience interactional justice, they can deliver it; that is, satisfied employees have enough emotional resources to show empathy, understanding, respect, and concern.

GUIDESTAR RESEARCH - WHITE PAPER - FEBRUARY 2005

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