collected from customer-contact employees to explore the antecedents and ...... The authors found that supportive leadership, customer care training, trust, and.
Employee-Customer-Relationships: An Investigation Into the impact of Customer-Contact Employees' Capabilities on Customer Satisfaction In Jordan Banking Sector
By
YAHYA MELHEM, BA, MBA. THESIS SUBMITED TO THE UNIVERSITY OF NOTTINGHAM FOR THE DEGREE OF DOCTOR OF PHILOSOPHY FEBRUARY 2003
I
DEDICATION
TO MY FATHER AND MOTHER, TO MY WIFE, HORIA, TO MY CHILDREN WASEN, QATER ALNADA, NEBRASS AND HUSAM FOR EVERYTHING
II
ACKNOWLEDGEMENTS The help and support of friends, relatives and colleagues must be acknowledged. Firstly, I give special thanks to my supervisor Christine Ennew, who provided me with all the guidance and, support, and directed me throughout this journey, and to Dr. Lisa O’Mally, my second supervisor for her concern and constructive feedback.
Many thanks go to Professor Gretchen Spreitzer from University of Southern California for her help and assistance in the questionnaire development stage of this study. To Dr. Jody Hoffer Gittell from Harvard Business School for her help via Email in sharing literature and ideas during the theoretical stage of this thesis.
To my father and mother who suffered a lot, to their spirit that resides in mine and inspires me to aim high all the time.
To my wife Horia, who journeyed with me, and who listened, supported and persisted. To my children, Wasen, Qater, Nebrass and Husam. Sorry it took me away from you so much.
To my brothers and sisters who gave me more than one can expect of a brother or a sister. Special thanks to my brother Ahmad for his care, help and concern.
Finally, to Yarmouk University, the institution that made the dreams come true.
III
ABSTRACT This thesis will examine the relationship between employees, employers and customers and will specifically investigate the importance of empowerment and its impact on employee's ability to deliver a high quality service. It will investigate the impact of empowerment on the satisfaction of both the customers and the employees. The literature review reveals that there is an extensive body of work that addresses empowerment in general but there is less emphasis on the service sector. Moreover, evidence of the impact of empowerment on service quality and customer satisfaction in the service industry is limited. A literature review concludes that researchers have invested so much effort in looking at the empowerment perspective internally, that they have overlooked the impact of such effort on the external customer. Specifically, a great deal depends not only upon the quality of the relationship between the employee and the supervisor, but also upon the impact that this has on customers. Employee-employer relationships could work as a precondition for improving the customer-contact personnel capabilities, therefore, improving both service quality and customer satisfaction levels. In order to explore this issue, method triangulation was used to collect primary data from customers first to establish how they evaluate the service encounter quality and the service provider capabilities. Data was also collected from customer-contact employees to explore the antecedents and consequences of giving them more authority to provide better service quality for their customers. It is however very significant for researchers and practitioners alike to explore the impact of empowering the customer contact employee on some consequences that affect the survival of the organisation, such as customer and employee satisfaction.
The findings in this research appear to be consistent with a great deal of findings in the cited literature. As such, the analysis part of this thesis demonstrated the significant association between the antecedents of empowerment and the consequences.
IV
TABLE OF CONTENTS DEDICATION ......................................................................................................II ACKNOWLEDGEMENTS ..................................................................................III ABSTRACT........................................................................................................ IV TABLE OF CONTENTS .......................................................................................V LIST OF TABLES.............................................................................................VIII LIST OF FIGURES ...............................................................................................X 1
INTRODUCTION ........................................................................................... 2 1.1 PREFACE .......................................................................................................... 2 1.2 THE IMPORTANCE OF THE RESEARCH................................................................. 2 1.3 AIMS OF THE RESEARCH.................................................................................... 5 1.4 RESEARCH CONTRIBUTION ................................................................................ 6 1.5 STRUCTURE AND CHAPTER CONTENT ................................................................ 7
2
STAFF-CUSTOMER RELATIONSHIP IN SERVICES .............................14 2.1 INTRODUCTION ..........................................................................................14 2.2 THE SERVICE CONTEXT..............................................................................15 2.2.1 Service Classifications ......................................................................18 2.3 EMPLOYEE-CUSTOMER RELATIONSHIPS .....................................................25 2.3.1 Inter-Functional Dependency and the ‘Part-Time Marketer’ .............28 2.3.2 Customer Perceived Quality..............................................................30 2.3.3 Service Quality in the Gap Model......................................................33 2.3.4 Service Encounters and Service Relationships..........................................36 2.4 THE INTERNAL MARKETING CONCEPT ........................................................38 2.5 CUSTOMER CONTACT EMPLOYEE QUALITIES ..............................................43 2.6 EMPLOYEE EQUITY ....................................................................................45 2.7 THE PEOPLE FACTOR .................................................................................46 2.8 SUMMARY .................................................................................................48
3
EMPOWERMENT.........................................................................................51 3.1 INTRODUCTION ..........................................................................................51 3.2 THE DEFINITION OF EMPOWERMENT...........................................................53 3.2.1 Theory on Psychological Empowerment ............................................55 3.2.2 Delegation of Authority and Empowerment .......................................56 3.3 THE NATURE AND SCOPE OF EMPOWERMENT .............................................58 3.4 EMPOWERMENT IN THE SERVICE SECTOR....................................................60 3.5 DIFFERENT PERSPECTIVES..........................................................................64 3.6 CONCEPTUAL FRAMEWORK ........................................................................67 3.6.1 The Service Profit Chain ...................................................................68 3.6.2 The Empowerment Model ..................................................................74 3.6.3 The Proposed Model .........................................................................76 3.7 EMPOWERMENT ANTECEDENTS ..................................................................78 3.7.1 Knowledge and Empowerment ..........................................................78 3.7.2 Communication and Empowerment ...................................................79 3.7.3 Trust and Empowerment....................................................................81 3.7.4 Incentives and Empowerment ............................................................82 3.7.5 Employee Empowerment and Job Satisfaction...................................83 3.8 SUMMARY .................................................................................................85 V
4
JORDANIAN AND ARAB BANKING BACKGROUND ............................92 4.1 INTRODUCTION ..........................................................................................92 4.2 THE BANKING INDUSTRY IN JORDAN ..........................................................92 4.3 STRUCTURE OF THE JORDANIAN BANKING SECTOR .....................................95 4.3.1 Central Bank of Jordan .....................................................................95 4.3.2 Commercial Banks ............................................................................96 4.3.3 Islamic Banks ....................................................................................97 4.3.4 Investment Banks...............................................................................99 4.3.5 Specialised Credit Institutions .........................................................100 4.4 THE BANKING SECTOR IN JORDAN AND THE STUDY CONSTRUCTS .............100 4.5 CULTURAL ISSUES ...................................................................................102 4.5.1 Culture and Management Development...........................................102 4.5.2 Culture and Empowerment ..............................................................103 4.5.3 Empowerment, Commitment and Religion .......................................105 4.5.4 Islam and Culture............................................................................106 4.6 CONCLUSION ...........................................................................................108
5
RESEARCH METHODOLOGY.................................................................111 5.1 INTRODUCTION ........................................................................................111 5.2 METHODOLOGY .......................................................................................112 5.2.1 Triangulation ..................................................................................114 5.3 SURVEYS .................................................................................................117 5.4 SEMI-STRUCTURED INTERVIEWS ..............................................................119 5.5 SAMPLE ...................................................................................................120 5.5.1 Study Population .............................................................................120 5.5.2 Sampling Frame..............................................................................121 5.6 QUESTIONNAIRE DESIGN ..........................................................................124 5.6.1 Translating the Questionnaire .........................................................129 5.6.2 Question Format .............................................................................129 5.7 DATA COLLECTION ..................................................................................131 5.8 VALIDITY AND RELIABILITY.....................................................................132 5.8.1 Validity Analysis .............................................................................132 5.8.2 Reliability Analysis..........................................................................135 5.9 DATA ANALYSIS TECHNIQUES..................................................................136 5.10 METHOD (SEM OR MULTIPLE REGRESSION).................................................137 5.10.1 STRUCTURAL EQUATION MODELLING........................................................137 5.10.2 Multiple Regression .............................................................................138 5.11. CONCLUSION ..............................................................................................139
6 EXPLORING THE EMPOWERMENT RELATIONSHIPS AND DIMENSIONS ......................................................................................................141 6.1 INTRODUCTION ........................................................................................141 6.2 NATURE OF INFORMANTS INTERVIEWED ...................................................142 6.3 INFORMANTS’ PERCEPTIONS OF THE EMPOWERMENT DIMENSIONS – STAFF INTERVIEWS ........................................................................................................144 6.3.1 The Empowerment Issue..................................................................144 6.3.2 Empowerment Antecedents..............................................................151 6.3.3 Empowerment Consequences ..........................................................166 6.4 CUSTOMER SATISFACTION – CUSTOMER INTERVIEWS ...............................169 6.5 CONCLUSION ...........................................................................................175
VI
7
DESCRIPTIVE ANALYSIS ........................................................................180 7.1 INTRODUCTION ........................................................................................180 7.2 GENERAL DEMOGRAPHIC ANALYSIS ........................................................180 7.2.1 Gender ............................................................................................180 7.2.2 Age..................................................................................................181 7.2.3 Education........................................................................................182 7.2.4 Job Title ..........................................................................................183 7.2.5 Subject Background.........................................................................184 7.3 CUSTOMER-CONTACT EMPLOYEES’ LEVEL OF EMPOWERMENT AND ANTECEDENTS ....................................................................................................185 7.3.1 The Dimension of Empowerment .....................................................185 7.3.2 Employee-Supervisor Relationships.................................................188 7.3.3 Incentives ........................................................................................189 7.3.4 Communication ...............................................................................190 7.3.5 Skills and Resources........................................................................191 7.3.6 Employee Satisfaction .....................................................................193 7.3.7 Customer Satisfaction......................................................................194 7.4 RELIABILITY ANALYSIS AND VALIDITY ....................................................196 7.4.1 Validity Analysis .............................................................................196 7.4.2 Reliability Analysis..........................................................................208 7.5 CONCLUSION ...........................................................................................210
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THE ANTECEDENTS AND CONSEQUENCES OF EMPOWERMENT213 8.1 INTRODUCTION ........................................................................................213 8.2 TESTING THE ASSUMPTION OF MULTIPLE REGRESSION .............................213 8.3.1 Normality ........................................................................................214 8.3.2 Linearity..........................................................................................215 8.3.3 Homoscedasticity ............................................................................215 8.3.4 Multicollinearity..............................................................................216 8.4 THE ANTECEDENTS OF EMPOWERMENT ....................................................217 8.4.1 The Assumed Measurement Structure ..............................................219 8.4.2 The Emerged Measurement Structure..............................................222 8.5 TEST OF STRUCTURAL STABILITY ...................................................................230 8.6 INDEPENDENT VARIABLES RELATIONSHIPS...............................................233 8.7 CONCLUSION ...........................................................................................233
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SUMMARY, IMPLICATIONS AND RECOMMENDATIONS ................237 9.1 INTRODUCTION ........................................................................................237 9.2 SUMMARY OF THESIS ...............................................................................237 9.3 THEORETICAL CONCLUSION......................................................................240 9.4 EMPIRICAL CONCLUSION ...............................................................................242 9.5 MANAGERIAL AND PRACTICAL IMPLICATIONS .................................................244 9.6 LIMITATIONS AND AVENUES FOR FUTURE RESEARCH ...............................246
REFERENCES.....................................................................................................249 APPENDICES ........................................................................................................270
VII
LIST OF TABLES Table 2.1
The Nature of Customer Relationships ..............................................19
Table 2.2
Degree of Customisation .....................................................................20
Table 2.3
Degree of Customer Contact in the Banking System.........................22
Table 3.1
Study Propositions ..............................................................................87
Table 3.2
Summary of diverse literature on empowerment, aspects, and
implications .....................................................................................................88 Table 4.1
Total Number of Banks and Branches in Jordan ..............................93
Table 5.1.
Total Number of Banks in Jordan ................................................123
Table 5.2.
List of Items in the Research Questionnaire ................................128
Table 6.1
Informant’s Profile............................................................................142
Table 6.2
Characteristics of Customer-Contact Staff in Jordanian Banks.....143
Table 7.1 Frequency Distribution of Age...........................................................182 Table 7.2 Frequency Distribution of Education ................................................183 Table 7.3 Frequency Distribution by Job Title .................................................184 Table 7.4 Frequency Distribution by Respondent Qualification ......................184 Table 7.5
The Respondents’ Perceptions of the Level of Empowerment. .......186
Table 7.6
The Respondents’ Perceptions of the Trust and Relationship between
the Managers and the Employees.................................................................188 Table 7.7
The Respondents’ Perceptions of the Level of Incentives Provided by
the Bank ........................................................................................................189 Table 7.8
The Respondents’ Perceptions of the Level of Communication and
Information Flow at the Bank......................................................................190 Table 7.9
The Respondents’ Perceptions of the Level of Skills and Resources at
the Bank ........................................................................................................192 Table 7.10
The Respondents’ Perceptions of the Level of Employee
Satisfaction at the Bank................................................................................193 Table 7.11
Perceptions of the Level of Customer Respondents’ Satisfaction at
the Bank 195
VIII
Table 7.12
Factor Analysis for the Empowerment Dimension ......................200
Table 7.13
Reason for Excluding Items from the Empowerment Dimension 202
Table 7.14
The Factor Analysis for Trust ......................................................202
Table 7.15
The Factor Analysis for Incentives ...............................................203
Table 7.16
The Factor Analysis for Communication .....................................203
Table 7.17
Reason for Excluding Items from the Communication Dimension 205
Table 7.18
Factor Analysis for Knowledge and Skills....................................205
Table 7.19
Factor analysis for Employee Satisfaction ...................................206
Table 7.20
Factor Analysis for Customer Satisfaction...................................207
Table 7.21
Reasons for Excluding Items from Customer Satisfaction ..........208
Table 7.22
Reliability Analysis; Cronbach Alpha ..........................................209
Table 7.23
Cronbach’s Alpha Coefficients .....................................................210
Table 8.2.
Regression of Empowerment and Employee Satisfaction............220
Table 8.4.
Regression of Control and Antecedents........................................224
Table 8.5.
Regression of Responsiveness and Antecedents ...........................226
Table 8.6.
Regression of Discretion and Antecedents ...................................227
Table 8.7.
Regression of Employee Satisfaction and Empowerment
Dimensions ....................................................................................................228 Table 8.8.
Regression of Customer Satisfaction and Empowerment
Dimensions ....................................................................................................229 Table 8.9.
Regression Summary for Tellers, Managers and Others and
Islamic and Commercial Banks* .................................................................232 Table 8.10.
Correlations Between Independent Variables..............................233
Table 8.11.
Regressions with Five Independent Groups and Six Dependent
Variables .......................................................................................................235 Table 8.12.
Significant and Insignificant Relationships ..................................235
IX
LIST OF FIGURES Figure (1.1) The Research Structure .....................................................................12 Figure2.1.
Dimensions of Service Quality ........................................................24
Figure2.2.
The Gap Model................................................................................34
Figure 3.1
SPC Model 1 ....................................................................................72
Figure 3.2
The Empowerment Model ..............................................................74
Figure 3.3
The Proposed Study Model of Empowerment ...............................77
Figure 4.1
The Banking Structure of Jordan...................................................94
Figure8.1.
The Original Model.......................................................................217
Figure8.2.
Diagram of the Antecedents and Consequences of Empowerment* 218
X
Chapter One
Introduction
Our task is not to learn where to place power; it is how to develop power…Genuine power can be grown, it will slip from every arbitrary hand that grasps it Mary Parker Follett Metcalf and Urwick (1941)
1
1 Introduction 1.1 Preface The topic of this thesis is concerned with the antecedents and consequences of empowering customer-contact staff in services, particularly in the banking sector. The framework of this thesis encompasses three aspects. Firstly, the antecedents of empowerment, which, include trust, information and communication, knowledge, and incentives. Secondly, the empowerment of customer-contact employees, based on the dimensions of control, discretion and responsiveness. Thirdly, the consequences of empowerment, which include employee satisfaction and customer satisfaction.
The purpose of this introductory chapter is to present an overview of the research that is discussed over the next eight chapters. This introduction starts by presenting the importance of the research and the contribution it makes from academic and professional perspectives. This is followed by a discussion of the research objectives and ends with a brief summary about the structure of this research.
1.2 The Importance of the Research Today’s business environment is characterised by rapid change, knowledge explosion, technological advancement, and intense competition (Cummings, 1990; Stewart, 1989). Some theorists are calling for major changes in the way service organisations, as well as manufacturing organisations, function (Handy, 1990, 1994; Snow et al., 1992). Executives are demanding more active organisational involvement from their employees than they did in the past (Kanter, 1989). Organisations are embracing horizontal cooperation as a means of increasing flexibility and expecting that their employees will demonstrate responsiveness, involvement and proactivity (Eylon, 1998) in order to deliver customer satisfaction, which is seen as essential for high levels of business performance. Researchers however, see declining commitment among organisational members in the service industry as well as in the manufacturing industry (Mowday et al., 1982) suggesting that there is a need for structural changes and, more importantly, a change in the relationship between managers and employees. Given such organisational demands, it
2
should come as no surprise that interest in empowerment is on the rise (Fulford and Enz, 1995).
While the need for changes is necessary and significant in different types of industries, it is more imperative in the service industry because people play a key role in the delivery of services. Service organisations now constitute a large proportion of the global economy. They constitute, for example, approximately 64 percent of the US gross domestic product (Chung and Schneider, 2002). These data indicate that the provision of services has displaced the production of goods.
In the past, organisations may have relied heavily on capital assets, as they were the most demanding of organisational and management concerns. However, today’s service organisations may require more attention to the management of the peopleside of the organisation (Chung and Schneider, 2002). Additionally, the reason for more attention and concern to the human resources in the service sector lies behind three commonly defined attributes of services: intangibility, simultaneous production and delivery, and customer participation in the service (Bowen and Schneider, 1988). First, because there is often no tangible product involved, customers often see customer-contact staff as the tangible aspect of the service. Second, the fact that services are produced and consumed simultaneously, suggests that customer-contact employees are largely responsible for quality control at the time of service delivery (Chung and Schneider, 2002). Finally, having customers involved in the production of the service as a co-producer creates a special relationship between customers and employees which perhaps makes customer contact employees more concerned regarding customer needs and customer satisfaction.
The central role of service employees as representatives of the service organisation to the external customer, and the central role of service employees as co-producers with the external customer, has not received sufficient attention from either management or researchers. Unfortunately, to date, there has been little empirical research regarding the potential role played by customer-contact employees or, as they are sometimes considered, the frontline employees.
3
To give some attention to the customer-contact staff in the service sector, employee empowerment programmes have rapidly been implemented in different organisations (Fulford and Enz, 1995). In spite of this, many programmes fail not only to provide employees with the expected commitment and satisfaction but also fail to enable the customer-contact employee to satisfy the customer and therefore provide the service quality expected by the customer (see for example, Randolph, 1995; 2002).
Many researchers have suggested that in order to successfully empower the customercontact staff, the organisational climate has to be empowering. Bowen and Lawler (1992; 1995) have introduced an interesting model, as discussed in Chapter Four. The model presents four important dimensions to enhance the empowerment climate in the organisation. These dimensions include knowledge, information, rewards, and power. There are however other researchers who acknowledge the importance of these antecedents (see Randolph, 1995; 2000) to the empowerment of customercontact employees. Nevertheless, much research in this area is still either conceptual, like Bowen and Lawler (1995), or based on limited case studies (Randolph, 1995). The proposed empowerment model in this thesis consolidates four antecedents to the empowerment of customer-contact employees based on the Bowen and Lawler model (1995) including information, knowledge, incentives and trust. These dimensions are then empirically investigated in this study. Additionally, empowerment itself is investigated from customer and employee perspectives in the banking sector, which is chosen because it exemplifies attributes of the service and the important role of the customer-employee encounter and relationship.
Furthermore, most related studies of service relationships, employee-customer relationships, internal marketing, and empowerment of customer-contact staff have been conducted in the United States and Europe. There is, however, a scarcity of studies specifically on the empowerment of customer-contact staff in developing countries. All these issues add to the importance of this research as it investigates the employee-customer-relationship and the impact of the customer-contact employees’ capabilities and empowerment of customer satisfaction in the Jordanian banking sector.
4
1.3 Aims of the Research This thesis investigates a very important area of research to both academics and practitioners alike. The empowerment of customer-contact staff within a marketing perspective might add more significance to the marketing function in the wider scope of marketing. As such, marketing no longer concerns itself with a narrow focus on the four p’s (Gronroos, 1994). In the service enterprise (such as banking services), new perspectives (IM, RM, Empowerment) are evolving and adding more scope and depth to the marketing arena. Employees are becoming the discussion of academics and executives to include them and consider them in the marketing perspective. Empowering staff is one of the issues that concerns marketing and customer orientation in particular. Significantly important is the empowerment of those employees who are representing the service organisation on the frontline with the customer. Thus systematic managerial efforts are necessary to work towards studying the empowerment concept through careful assessment of its outcomes and end results.
However, this thesis aims to demonstrate the importance of empowerment in improving the service delivery process and in exploring the relationships between the empowerment antecedents and consequences. It also aims to investigate customercontact staff’s capabilities in providing better service quality through better relationships with their customers and supervisors. This might allow for a more friendly and trusting atmosphere in the organisation where the company management is expected to release more control, trust and discretion to the customer-contact staff in return for an improved service quality, more satisfied staff and more satisfied customers. Such a study gains more importance when exploring the hypothesised relationships in a different environment: in Jordan, where such empirical efforts are still limited or nonexistent.
As this research is investigating these issues in a different environment, such initiatives might bring further empirical and theoretical research avenues relating to the empowerment of customer-contact employees as a core area of this study. Other areas might also be brought into being, such as employee-customer relationship and internal marketing.
5
1.4 Research Contribution This thesis seeks to make an original contribution to knowledge by investigating the customer-employee relationships in the banking industry in Jordan. This thesis contributes to the services marketing discipline in finding out about the role of an empowered service employee in delivering a better service quality within the service sector. It investigates the service sector to demonstrate the uniqueness of the service organisation and the importance of giving employees more freedom to act because of those unique and distinctive dimensions of the service. Knowledge and skill, communication and information, incentives, and trust are the focus of this study as antecedents to employee empowerment. As such this study is trying to contribute to the marketing knowledge and services marketing in particular by looking at the role of these four dimensions in creating an empowered service workforce utilising both qualitative and quantitative methodologies to explore such relationship in an environment where no previous research efforts has been done to investigate such relationships.
Another contribution for this thesis is by finding about the role of empowerment in impacting both employee satisfaction and customer satisfaction. As such this study will provide an empirical analysis of the relationship between empowerment and employee satisfaction and empowerment and customer satisfaction. Additionally, the impact of employee satisfaction on customer satisfaction will be explored in this study. Adopting the whole model is the overall contribution for this thesis by looking at the empowerment of customer-contact employees and investigating both the antecedents and the outcomes of empowerment. Such contribution will be beneficial both academically and professionally. Academically, this research aims at getting academic attention to such neglected domain in the context of this research. And professionally, managers will also look at the practical implications of such effort and the possibility of implementing the implications of this research in their actual relationships with their employees and their customers as well. Hence, creating and developing the employee-customer relationships through realisation of the key role played by customer-contact employees and their potential capabilities to deliver better service to the customer is a
6
very important dimension that should attract the attention of both academics and practitioners alike.
1.5 Structure and Chapter Content The initial focus of this study is on understanding the employee-supervisor relationship followed by suggestions to examine the impact of such a relationship on the customer. Reviewing the literature in employee-employer relationships leads to finding a focus in the literature on empowerment as a significant dimension, affected mainly by such a relationship between the employee and the supervisor. That is, to put it another way; the type of relationship has an important impact on the level of empowerment provided to the employee. To add more focus and importance to this study, the customer was to be considered as an important party to be affected by the empowerment of customer-contact employees.
The structure of this thesis will be covered in eight chapters as follows.
Chapter Two: reviews the development and application of the employee-supervisor relationship within the services marketing area. This chapter aims to define and discuss staff-customer relationships in service marketing within the service context. In the service context, the unique features and characteristics of the service are presented as well as service classifications. These sections on the service context aim to define and recognise the role of the people in the service delivery process. The employee-customer relationship is presented in Chapter Two from a relationship marketing perspective. The chapter also highlights related areas including interfunctional dependency and the part-time marketers, customer perceived service quality, service quality in the gap model, and service encounters and service relationships.
The chapter continues to present the internal marketing (IM) concept viewing different definitions and approaches to IM and concluding with a more comprehensive approach, a perspective that puts more weight on the employees’ role and capabilities and empowerment. This chapter also tries to introduce some general
7
issues from broader literature on the significant role of people in the service organisation, including the people factor and the employee equity.
Chapter Three: develops a model for the empowerment and its antecedents and consequences. In order to develop this model a number of issues are discussed. Firstly, empowerment is defined by highlighting different definitions and different perspectives. Secondly, the nature and scope of empowerment are presented and empowerment in the service sector is discussed, to present the conceptual framework for empowerment in the service profit chain model by Heskett et al. (1997). Thirdly, the empowerment model presented by Bowen and Lawler (1995) is discussed to lead to the proposed model based on and inspired by these two models. The chapter concludes with the study propositions including the four antecedents to empowerment, knowledge, trust, communication and information and incentives, in addition to the consequences of empowerment. The consequences of empowerment include employee satisfaction as a direct result of the empowered customer-contact staff and the customer satisfaction as a direct result of the employee satisfaction and indirectly affected by the empowerment of the customer-contact employees.
Chapter Four: presents background to the Jordanian banking system and structure, along with a brief overview of the Jordanian culture. This chapter provides some idea about the history of banking in Jordan under the Central Bank of Jordan as a governing body of the whole banking system. The objectives and functions of the Central Bank of Jordan are reported. Chapter Four provides some detail about the different banks in the country including commercial banks, Islamic banks including their unique services and products (e.g., mudarabah, musharakah, murabah, etc.), investment banks and specialised credit institutions. This chapter highlights the applicability and the suitability of the study constructs in the banking sector in Jordan, and refers to existing research related to the study constructs, including employee involvement and participation. The final part of this chapter discusses culture in Jordan and other Arab Countries, and includes sections about culture and empowerment, and culture and religion. The purpose of these sections is to highlight the impact of the culture in Jordan on the organisational practices and the relationships between people inside the organisation. Additionally, culture clarifies the organisational internal environment, which incorporates a set of assumptions, 8
beliefs, and values that members share and is used to guide their behaviours. This chapter concludes with a section on Islam and culture due to the enormous impact of religion on the general culture and the organisational culture as well.
Chapter Five: discusses the method and tools by which the research will be carried and implemented. In this chapter different research philosophies are discussed and their strengths and weaknesses are assessed. This evaluation leads the researcher to identify the benefits of both qualitative and quantitative research methodologies to gain more perspective and explore the researched relationships in more depth. As such, this chapter begins by discussing the different research methodologies presenting the main methodological paradigms. While this research has relied more on the quantitative approach, the triangulation approach is utilised, where both the quantitative and qualitative approaches are incorporated in this research in order to compensate for the drawbacks of either methodology. The semi-structured interviews helped the researcher in developing more perspective of the study environment, which in turn helped in the preparation for the second method in identifying the sample and identifying the right conditions for the data collection process. This chapter continues to discuss the survey stage of the research, explaining the questionnaire design, the semi-structured interviews including the sample, the sample population, the sampling frame, the sample size, and the translation of the questionnaire. The data collection process is also discussed in this chapter regarding semi-structured interviews and the survey collection, how the survey and the interviews were conducted and the response rate of the survey using a drop-off and pick-up approach. The research validity is discussed using face validity, criterion validity and construct validity. The reliability analysis is also presented in Chapter Five and finally the chapter concludes with a brief overview of the data analysis techniques used in this research in addition to a brief assessment and justification for the chosen method to analyse the data.
Chapter Six: presents the results of the qualitative study as one element of the triangulation approach in this research. It aims at exploring the empowerment relationships and dimensions by providing the results and the analysis of the semistructured interviews conducted with bank staff, customers and managers. This chapter begins by providing an overview of the nature of informants being 9
interviewed including customers, managers, tellers and others, and their characteristics. This chapter continues to discuss bank informants’ perceptions of the empowerment dimensions. Informants revealed different levels of empowerment ranging from high to low. After, the discussion on the informants’ perceptions regarding the empowerment dimensions, the empowerment antecedents were also discussed and analysed, including trust, incentives, communication and knowledge. Throughout these antecedents informants expressed different views. Their views seemed to form some pattern in the sense that those who see higher levels of trust, communication and information, knowledge, and incentives see higher levels of empowerment in their units or branches. The final section of this chapter discusses and analyses the informants’ data concerning the empowerment consequences including employee satisfaction and customer satisfaction. The final part, the section on customer satisfaction was based on customers’ interviews revealing their perceptions of customer-contact qualities.
Chapter Seven: starts with a descriptive statistical analysis of the general demographic characteristics of the respondents including their gender, age, education, job title and each subject’s background. Chapter Seven continues to discuss and analyse the mean, standard deviation, and mode of the respondents’ perceptions concerning twelve items of the empowerment construct. The employee-supervisor relationships (i.e., level of trust), incentives, level of communication, and skill and resources are then analysed using the mean, standard deviation to analyse the respondents’ perceptions concerning their relationships with their supervisors. Chapter Seven also discusses levels of employee and customer satisfaction. The chapter also discusses the validity of the measurement scale using face, content, criterion, and construct validity. Factor analysis was used to identify the empowerment antecedents and consequences. Finally, the measurement reliability was analysed, suggesting an acceptable reliability in internal consistency measurement Chapter Eight: presents the data analysis stage of this thesis. It starts with a assumptions of multiple regression using normality, linearity, homoscedasticity, and multicollinearity. Chapter Eight continues to analyse the antecedents of empowerment. There are two measurement structures used for this purpose. The first
10
is the initial assumed measurement structure before conducting the factor analysis and the second is the emerged measurement structure produced by the factor analysis.
Overall, the analysis of the regressions suggests that most hypothesised dimensions are significant in aggregate demonstrating the importance of the empowerment relationships in this study.
Chapter Nine: provides a profile of the research as well as the theoretical summary with the empirical implications and limitations of the study and directions for future research. It suggests that customer-contact empowerment is a significant predictor of customer and employee satisfaction and the empowerment antecedents affect that customer-contact staff empowerment. Customer-contact staff tend to perceive high levels of empowerment with higher levels of communication and flow of information, higher levels of trust and good relationships with their supervisors, and higher levels of skills and degrees of knowledge and higher incentives.
11
Figure (1.1) The Research Structure Chapter One Introduction
Literature Review
Chapter Two Staff-Customer Relationships in Services
Chapter Five Methodology
Chapter Three Empowerment
Chapter Six Qualitative Research
Fff
Chapter Eight Data Analysis
Chapter Nine Conclusion
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Chapter Four Jordanian and Arab Background
Chapter Seven Descriptive Analysis
Chapter Two
Staff-Customer Relationship in Services
Trust is a small word with powerful connotations and is a hugely complex factor. The ingredients are a combination of competence, constancy, caring, fairness, candor and authenticity. Warren Bennis, summer (1999)
13
2
Staff-Customer Relationship in Services
2.1
Introduction
Services Marketing has long stressed the importance of staff and particularly customer-contact staff in delivering a high quality service and contributing to overall customer satisfaction. Currently the role of people in service delivery varies considerably across service contexts but “financial services” is one area where customer-contact staff are thought to be of particular importance. It is widely argued that the overall quality of the delivered service for organisations such as banks is influenced, among other things, by the nature of the relationship between the customer and frontline employees. In this chapter it will be argued that the nature of this relationship is itself influenced by the quality of the relationship between customer-contact employees and other employees within the organisation, particularly their managers and supervisors. Arguably, it is the qualities of these internal relationships that produce effective service providers with a sense of ownership and capability.
The importance of customer satisfaction and service quality arises because both are seen as indicators of and antecedents to customer loyalty, customer retention and ultimately improved organisational performance (Anderson and Fornell, 1994; Heskett et al., 1994; Heskett, 1997). While the relationship between customer satisfaction and its outcomes has been widely researched in services (Zeithaml, 2000; Fornell, 1992; Fornell, Johnson, Anderson, Cha, and Bryant, 1996; Anderson, Fornell, and Lehmann, 1994; Kordupleski et al., 1993), there is rather less research addressing the impact of providing the frontline employees with the right capabilities and attributes (e.g., empowerment). Nevertheless it is commonly argued that the extent to which employees are satisfied would improve their relationships with their customer and in turn influence their customer’s satisfaction and loyalty to the service provided and the service organisation.
The issue of supervisor/employee relationships in the service industry as an antecedent to employee/customer relations has gained some attention in the last decade (see for example, Berry, 1995; Sheth and Parvatiyar, 1995; Price et al., 1995;
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Crosby et al., 1990; Gwinner et al., 1998). Nevertheless, most of this research is still conceptual with less empirical efforts to explore the significant impact of the internal relationships on the external relationships, particularly in the financial service industry (i.e., the banking sector). Indeed, limited attention has been given to the supervisor/employee relationships in the service industry as an antecedent to employee/customer
relationships,
particularly
customer-contact
employees’
capabilities in enhancing customer satisfaction and relationship. Additionally, where such research has been undertaken, it has typically been conducted in a developed country context and there is a shortage of systematic studies in other environments such as developing countries where culture differences and environmental practices may be of particular importance.
The purpose of the current chapter is to explore existing literature relating to services marketing. Services are different from products, because of their characteristics; intangibility, inseparability, heterogeneity and perishability (Zeithaml et al., 1985). The unique characteristics of services highlight the importance of ‘people’ in the service markets and their importance in the service encounter and mainly the employee-customer interactions and relationships. Due to the importance given to the service context in this research this chapter will start by looking at the nature of services marketing and classifcations. The next section will address the relationship between employees and customers in service organisations highlighting the different aspects of relationship marketing, including customer perceived quality, service encounters and relationships. This will be followed by a discussion of the internal marketing concept as a way of involving and motivating employees. Customercontact staff’s qualities will be discussed followed by a general discussion of the human side of the organisation, the human factor and the importance of putting people first (Pfeffer and Veiga, 1999). It is worth noting that while the later sections on the human factor take a general perspective they are probably more significant in the service sector than in other sectors.
2.2
The Service Context
Throughout the 1970s the marketing literature debated over whether services and goods were sufficiently different (Fisk et al., 1993). The United States, for example,
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was developing a huge service economy to the extent that academic scholars began to recognise the importance of a service paradigm (Fisk et al., 1993). Hence, academic and research efforts in this area resulted in the recognition that services were in fact unlike products, because of their different and unique characteristics including intangibility, inseparability, heterogeneity and perishability (Zeithaml et al., 1985; Berry, 1980; Bateson, 1977; Shostack, 1982; Parasuraman et al.,1985; Bowen and Schneider, 1988). These characteristics have significant implications for the delivery and marketing of services. In particular the first three characteristics highlight the importance of the people aspect in the service organisation and they imply that staff may have a very important role to play in the service delivery process. The first factor is the intangible nature of service output (Shostack, 1977). Shostack (1977) further provided a compelling rationale in debating that services were indeed different from products.
It is wrong to imply that services are just like products “except” for intangibility. By such logic, apples are just like oranges, except for their “appleness”. Intangibility is not a modifier; it is a state. Intangibles may come with tangible trappings, but no amount of money can buy physical ownership of such intangibles as “experience” (movies), “time” (consultants), or “process” (dry cleaning). A service is rendered. A service is experienced. A service cannot be stored on a shelf, touched, tasted or tried on for size. (Shostack, 1977: 73)
The key role played by the service staff is very clear with relevance to the unique features of the service: in intangibility, for example, where there is a lack of physical form to the service, the service deliverer may play an important role in compensating for that ‘intangibility’ of the service and by improving the service quality dimensions (Parasuraman et al., 1985).
In the second characteristic, services do not exist until a customer decides to consume a service experience. This is ‘inseparability’, where services tend to be produced and consumed simultaneously in the presence of the customer (Solomon et al., 1985). Such inseparability signifies the service deliverer as the key role in the service 16
encounter. As such, customer-contact personnel play a very important role when involved in the direct contact with their customers. In such direct contact, customercontact employees may use their capabilities to provide a better service quality and value to their customers. The third relevant characteristic is the ‘heterogeneity’ of the service. Services are heterogeneous, which explains the difference in customers’ needs and the variability of services provided. The service deliverer in this characteristic may also play an important role using their empowerment and initiative in personalising the service and meeting individual customer needs (Gummesson, 1991; Solomon et al.,1985).
Gummesson (1991) argues that service dimensions lead to a direct consequence for service quality and he stresses, “the type and degree of controllability that a service provider can exercise over the output is different from the controllability that can be exercised by a manufacturer” (p.9). Indeed, controllability is different because the production of the service is partially performed in interaction with the customer where the customer contributes to quality just as much as the provider does. In addition to this element, the place of service production is variable with the provider having limited or no control over certain elements of the service process. According to Gummesson (1991) “service design must differ from goods design in one essential aspect: it must include a certain amount of discretion and it must empower employees to use their best judgement in interaction with customers. Service design largely deals with human behaviour; beware of designed-in helplessness and stupification of personnel and customers” (p.10).
Moreover, while goods quality has come a long way to reducing variability, service quality is characterised by high variability (Gummesson, 1991). Variability of service quality is a major issue. It is mostly a consequence of the customer-employee interaction of the service delivery process where the customer-contact employee may make the service much better or much worse. Hence, customer-contact employees can play a major part in improving the service quality and using the variability issue as an opportunity to improve the service quality. Accordingly, there is a need for consistent and systematic research to explore the role played by customer-contact staff in the service sector given the unique features of the service. The service deliverer may possesses the competence, capability, and willingness to improve the 17
service quality, customer satisfaction, and loyalty and therefore improve the organisation’s competitive advantage. There is however a great need for research and investigation in this area to find out about the possible ways to enhance the staff capabilities to provide a better service quality for the customer.
Given the above characteristics it is evident that frontline employees play a key role in the service encounter (Bitner et al., 1990). Service delivery relies heavily on human interaction. Carlzon (1987) introduced the “moment of truth” concept to highlight the importance of service encounters (buyer-seller interaction) in customer satisfaction. Because of the importance of service encounters and the responsiveness required by service providers, it has been argued that some degrees of empowerment and discretion are important (see Bitner et al., 1994). However, the degree of empowerment is contingent on the type of service provided. Inevitably, not all services are the same and the degree of intangibility, inseparability, perishability and heterogeneity will vary considerably (Lovelock, 1983). Hence, the degree of employee empowerment required is likely to be influenced by type of service. Thus, it is helpful to understand different types of services that exist and what their characteristics are. Therefore, the following section encompasses an attempt to classify services based on the work of Lovelock (1983).
2.2.1 Service Classifications Indeed, not all goods and services are the same. They do differ in their level of intangibility, inseparability, perishability and heterogeneity. However, various attempts have been made in the past by marketing theorists to classify goods into different categories. By contrast, service industries remain dominated by an operation that insists that each industry is different. For example, Lovelock (1983) has reported that marketing of airlines has nothing at all in common with that of banks, insurance, motels, hospitals or household movers. However, if it can be shown that some of these services do share certain relevant marketing characteristics, then the stage may be set for some useful cross-fertilisation of concepts and strategies (Lovelock, 1983). Developing classification schemes, according to Lovelock, is not enough if they don’t yield into managerial value and offer strategic insights. As such, they can be used as guidelines for managers to enhance the customer-contact employees’ role in the
18
service delivery and to carefully define customer needs and expectations.
The first type of classification developed is the tangibility-intangibility classification, which encompasses tangible and intangible actions (Gilmore and Moreland 2000). Hence, the more intangible the service the more important the role-played by the customer-contact employee in the service delivery process and in the service encounter relationship. The second type of classification describes relationships with customers in the service delivery: formal and ‘no-formal’ relationships. This type of classification describes the relationship between the organisation and its customers based on either a “membership” relationship on a continuous basis or otherwise on a discrete basis without membership, or consistent type of relationship as shown in the following table (Table 2.1).
Table 2.1
The Nature of Customer Relationships Nature of Relationship With the Customer Formal Relationship
Continuous Banking Internet service delivery provider Telephone service Education Service
Discrete
Subscriptions (i.e., theatre) Travel pass (for students, pensioners etc)
No Formal Relationship Public broadcasting Refuse collection Policing Street lighting
Hairdresser Air travel Car rental
Source: Lovelock 1983.
Continuous formal relationships present many marketing advantages, particularly with respect to the volume and type of information, which organisations can collect with respect to their customers. This information should allow those organisations to understand their customers more fully and tailor services to their needs, ideally increasing loyalty as a consequence where customer-contact staff may be able to play a key role in this category.
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The third type of classification (the most relevant to this research) is the degree of customisation in core service features or in the service delivery as shown in Table 2.2.
Table 2.2
Degree of Customisation Customisation of Core Service Features
Customisation High in delivery
Low
High
Low
Legal services
Vaccination programmes
Financial services
Health education
Medical care
Education (Large classes)
Taxi service Retail banking
Fast food
Hotel accommodation
Public transport Dry cleaning
Telephone/internet service Source: Lovelock, 1983.
Whereas service features concern the service designed by the internal system of the service organisation, the service delivery is concerned with the process of delivering the service to the customer through the customer-contact employees. However, customisation may vary from high customisation in service delivery and in core service features (e.g., legal services or financial advice), to high customisation in service delivery and low customisation in core service features (e.g., vaccination programmes, or education), to low customisation in service delivery and high customisation in core service features (e.g., retail banking or hotel accommodation), and finally to low customisation in both service delivery and in core service features (e.g., fast food or public transport). Clearly where there is customisation as opposed to standardisation in service delivery, variability and heterogeneity would increase. In such circumstances, the people component may require particular attention as part of the marketing strategy. The greater the degree of customisation, the higher the degree of flexibility and responsiveness needed on the part of the customer-contact 20
employees. They need to be able to accommodate different customer needs and demands. To do that, management needs to review the internal marketing strategy and service culture in order to enhance the customer-contact staff capabilities, knowledge and skills.
Reviewing the different classifications by Lovelock (1983) may give further attention and importance to the type and level of interaction and communication between the customer and the service provider. However, Lovelock (1983) suggests other service classifications but they are not discussed in this study because they are less relevant to this research.
Again, one of the most important aspects of the service is its people aspect alongside the service process and the physical surrounding of the service provision. The more the service is intangible, inseparable, heterogeneous and perishable, the greater the importance of the people’s aspect of the service provision, since service organisations are more inclined to be people intensive, rather than capital intensive (see also Parasuraman, 1987), whereas in people intensive organisations the emphasis is more on the people side than material assets, technology and/or physical equipment. Moreover, the presence of the customer, also referred to as “customer contact” (Chase, 1981), has been suggested as an important influence on the behaviours, attitudes, and performance of service employees (Rafeli, 1989). There are even differences in customer contact that may exist within the same service organisation, ranging from high contact functions (see Table 2.3) of the tellers in the bank, for example, to the lower contact jobs of account representatives who open accounts and process loan applications (Brown and Mitchell, 1993). In contrast to tellers, the account representatives may experience less customer contact because they have slightly more control over customer arrival rates (i.e., through appointments), and because they simply don’t interact with as many clients as tellers do (Brown and Mitchell, 1993). Branch managers have even less contact with customers, because of the nature of their job and the internal role they are obliged to perform. Thus, banks are typical of service operations in that we may expect to find a range of customer contact intensity. The same may apply to many other services in the same organisation (e.g., insurance, education, restaurants, etc). The unit of analysis in this research is the customer-contact staff, mainly tellers in the banking services. Table 21
2.3 demonstrates that a teller’s job entails a high degree of contact with customers, which is particularly suited to the Relationship Marketing (RM) perspective, as discussed in the following section. As such, RM principles and directions may play a key role in marketing services, particularly the relationship between bank tellers in financial services, and customers.
Table 2.3
Degree of Customer Contact in the Banking System
Position/degree
high
Bank teller
x
Account reps
moderate
low
none
x
Branch manager
x
IT
x
Telemarketing
x
However, there are other services provided by some service firms (like the ATMs in the banking sector for example), that may require a minimum level or perhaps not even any form of a direct employee-customer interaction. Other forms may include indirect contact through IT via the Internet or telephone communication where one can see no face-to-face communication between people. While recognising the variations within banking services, the focus of this study will involve direct, and face-to-face interaction through the service encounters. Service encounters and direct contact with customers may set the grounds for establishing better relationships with the customer and positive service encounters (Albrecht, 1988).
Discussing the importance of services and service classifications and dimensions is very important to the main theme of this research to set the stage for the importance and the key role of the frontline employee in the service delivery and quality, specifically in the services that rely more on the interaction and contact between the service workers and the customers. Crosby et al. (1991: 68) established that:
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The absence or low level of use of a tangible source in service delivery increases the value and importance of the persons involved in service delivery.
Central to this argument is the concept of customer orientation and satisfaction presented by Kelly (1990). She argues that the success of any marketing strategy implemented by financial firms, for example, is determined by the satisfaction of customer needs. In order to satisfy more completely the needs of their customers, financial institutions must develop a customer-oriented culture. Customer orientation involves the satisfaction of customer needs through the individual relationships existing between customer-contact personnel and customers (Saxe and Weitz, 1982). Customer satisfaction and expectations of services include both “hard data” and “softdata”. Gilmore and Moreland (2000 p.4) describe the hard standards that they relate to quantifiable issues such as performance and reliability. Such standards are tangibles and easy to measure as shown in figure 2.1. However, it is more difficult to measure service quality in relation to the qualitative aspects of customer expectations and relations. Such soft data according to Gilmore and Moreland (2000) are more difficult to manage and measure. For example studying four call centres in Ireland, the authors found that it is more difficult to measure customers’ and-frontline employees’ feelings, perceptions, courtesy and requirements in relation to the intangible dimensions of the service delivery which might lead to high degrees of employee and customer dissatisfaction (see the following figure on dimensions of service quality by Gilmore and Carson, 1993).
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Figure2.1.
Dimensions of Service Quality
Quantitative standards
Psychological standards
Tangible elements (Easy to measure)
Intangible elements (Difficult to measure)
Physical facilities
Responsibility
Product and packaging
Accessibility/Courtesy
Speed of delivery
Responsiveness
Credit facilities
Willingness to help
Technical support
Good communication
Appearance of staff
Competence of staff
Trustworthiness Image
As such, the tangible nature of services can be implemented mainly through suitable rules and procedures (i.e., speed of service, number of calls answered in the call centre, number of customer served every hour etc.), whereas the intangible ‘soft’ dimensions of service quality are determined by perceptions, attitudes, and actions of customer-contact staff. Therefore it is important to look at the right way to manage service employees in order to provide total service quality given ‘soft’ measures as well as hard measures of the service dimensions.
Consequently, the intangible source can be compensated by the human capital, the people involved in the service delivery. The value and importance of those people must be congruent with their capabilities, competence and knowledge. Moreover, a healthy internal relationship will serve as a catalyst in empowering the service delivery people who might be expected to make a discretionary effort, to be responsive, to ask the extra question or suggest the extra service, and who take the time to listen to the customer (Donnelly et al., 1985) and use all this to build a better relationship with the customer. Accordingly, the following section will discuss the
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employee-customer relationships where the employee satisfaction and feelings of responsibility and control over the service encounter are all very important factors in sustaining a better relationship between the customer and the customer-contact employee.
2.3
Employee-Customer Relationships
Reviewing the service features and classification in the previous section demonstrates the importance of employee-customer relationships in the marketing of services, particularly high contact services like the tellers in the banking services (see section 2.2). This section will examine the nature of customer-employee relationship in more detail.
Generally speaking, innate human needs dominate much of our behaviour and especially our reaction to the behaviour of others. Robert Hogan, a prominent personality theorist argued that the fundamental attribute of personality is its relational nature. He contends that people are not islands unto themselves but for the most part, define themselves in relationship to others (Hogan, 1982). Accordingly, Schneider and Bowen (1999) argue that in order to focus on customer needs you need to concentrate on relationships and building relationships requires that companies view ‘customers’ as people first and ‘consumers’ second. This might be true in the good sectors and perhaps more in the service sector, as indicated in the previous section.
The purpose of this section however is to present employee-customer interactions and relationships demonstrating that employee empowerment may improve the quality of employee-customer relationships. It was noted in the previous section that the employee-customer relationship in service firms is very important and widely recognised in the literature (Grönroos, 1995, 1999; Gummesson, 1995, 1987; Czepiel, 1990). Employee-customer relationships can be viewed within the relationshipmarketing paradigm. Relationship marketing is defined by Berry (1983: 25) as “attracting maintaining, and enhancing customer relationships”. The customer’s relationship with the employee is potentially a key part of the customer relationship with the organisation (Sheth and Parvatiyar, 1995).
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Relationship marketing covers different commercial settings including business marketing (i.e., business-to-business), consumer marketing (i.e., business-toconsumer), and services marketing (i.e., service provider-to-client) (Iacobucci and Ostorm, 1996). Employee-customer relations, specifically in services marketing, are seen to be of significance because of their impact on service quality, customer satisfaction, employee satisfaction and overall organisational performance and profitability (Lau, 2000). However, the customer-contact employee is the main focus of this relationship and the attitudinal and behavioural responses of customer-contact employees are important because of the interactive nature of service delivery (how the service is delivered) (Grönroos, 1983). To this end, Bateson (1985) argues that contact employees are better able to satisfy customers when the employee has some control over the service encounter. Bitner et al. (1990) argue that customers are more satisfied with the service encounter when employees possess the ability, willingness, and competence to solve their problems. Bitner et al. (1990) provide evidence to support the assertion that an employee’s ability to adapt to special needs enhances customers’ perceptions of the service encounter. In addition, several studies have shown that friendliness, enthusiasm and attentiveness of contact employees positively affect customers’ perceptions of service quality (cf. Bowen and Schneider, 1985). It is argued that such positive behaviours (i.e., friendliness, enthusiasm, and attentiveness) would tend to be manifested among more self-confident and empowered employees. Hartline and Ferrel (1996) add further weight to the argument by stressing that during the service encounter, employee behavioural performance often is the service, as perceived by customers. The literature has not clearly explained the role of empowerment in the RM paradigm. However, it is expected that empowered staff may sustain a better relationships with their customers than those who feel disempowered and helpless, because empowered and satisfied employees are more likely to engage in behaviours that assist customers.
Relationship Marketing Vs Transactional Marketing Relationship marketing researchers distinguish between relationship marketing and transactional marketing (Grönroos, 1995; O’Malley and Tynan, 2000). While TM is more oriented toward short-term goals (e.g., to get customers), the aim of RM is to
26
get and keep customers (Grönroos, 1995). Grönroos (1995) stressed that service firms have always been relationship oriented because there is always a direct contact between the customer and the service firm. However, no party can force a relationship on the other. Grönroos (1995) emphasises this very clearly, stating that even if the customer contacts of service firms are relational in nature, some contacts are such that no relationship could be established. He makes the point that some customers don’t wish to get involved in a relational association with a service firm. Nevertheless, Heskett (1990) and Reichheld and Sasser (1990) argue in favour of the customer lifetime value or profit potential and that the customer should not be viewed or classified based on his/her short-term (transactional) relationship with the service firm. They further argue that such short term or transactional relationships could be converted sometimes to a long-term relationship. Heskett et al. (1997) argue that the first time a current account holder seeks a loan to buy a car or a mortgage to purchase a house, he or she would be motivated by marketers’ RM efforts. However, such an argument does not limit managers from dealing with their customers according to the type of relationship customers prefer and the type of service they ask for. Sheth and Parvatiyar (1995: 256) argue “when the product or service and its provider are inseparable, consumers develop a relationship with the product-service provider”. The role of service provider has not fully been researched in this relationship specifically in terms of authority and discretion in the service encounter. It can be argued that the level of empowerment given to employees might influence the quality of relationship between the customer and the service provider (Bitner, et al., 1994; Schlesinger and Zornitsky, 1991).
In another vein, the customer-contact employee relationship with the customer is also critical in impacting the degree of empowerment among those customer-contact employees. There is however a lack of empirical studies examining the association between employee-customer relationships and empowerment, except that of Corsun and Enz (1999). On the part of customers, when they respect and dignify the customer-contact employee, the likelihood of that individual experiencing empowerment is enhanced (Corsun and Enz, 1999). Such a reciprocal relationship might suggest that if customer-contact employees are treated with respect they might be more inclined to offer caring and superior service quality (Corsun and Enz, 1999). As such, Corsun and Enz (1999) argue that a supportive customer relationship is a 27
very strong predictor of customer-contact employees’ empowerment. However, employee empowerment has been viewed in this study as the cause of an employeecustomer relationship rather than an effect of customers’ courtesy and respect. As such, customer-contact employees’ empowerment and courtesy would be expected to impact on an employee-customer relationship. Nevertheless customers’ respect and courtesy might be a supporting rather than a major element in creating the empowered customer-contact employee. It is, however, expected that employees who are more capable of sustaining and developing positive employee-customer relationships are more capable of utilising such a relationship in satisfying customer needs and expectations.
Satisfying customer needs and expectations requires further internal organisational efforts at different levels of the organisation. It requires the collaboration of all departments in the organisation, besides the marketing department. Such collaboration requires inter-functional dependency and the ‘part-time marketer’ concepts (Gummesson, 1987). More details about these concepts are presented in the following section.
2.3.1 Inter-Functional Dependency and the ‘Part-Time Marketer’ Services marketing theory has found that production, marketing and even service development are largely handled by the same people. As a result the marketing function is spread throughout the firm; the marketing department sometimes becoming insignificant or even non-existent (Gummesson, 1987) simply because everybody is ‘a part-time marketer’ (Gummesson, 1987: 17). The concept of the ‘part-time marketers’ according to Gummesson (1987), dictates that everyone in the service organisation can contribute towards customer satisfaction and service quality.
The impact of the ‘part-time marketers’, as well as the customer orientation of systems, technology, and physical resources, is paramount to the success of interactive marketing (Grönroos, 1990). Hence, the interactive marketing function recognises that every component – human as well as other – in producing a service, every production resource used and every stage in the service production and delivery process, should be the concern of marketing as well, and not considered operations
28
and personnel problems only (Grönroos, 1990). The traditional organisational functions are linked together by the common objective of providing customers with good service (Gummesson, 1987). Schneider and Rentsch (1987) suggest an integrative and interactive approach that can be developed to give consideration not only to the HRM function but also to the integration of all the organisational functions. This is, in order to focus on developing the highest service quality to the customer and to improve employees’ ability to meet customer needs by ensuring satisfaction, especially among frontline staff. According to Heskett et al. (1997) it is not useful to have a very good service provider while the service is in poor design and ill prepared. In this case, the frontline employee’s empowerment and courtesy will not compensate (for example, for the airline’s consistent delays and mishaps). HRM must be integrated at least with the marketing and operations management (OM) functions for it to provide maximal contribution to a firm’s success”.
Schneider (1994) is further suggesting that operations management, for example, must integrate their effort with HRM and vice versa, asserting that the new era requires co-ordination at least across marketing, HRM, OM and others. Gronroos (1990) asserts that the marketing consequences of every resource and activity involved in interactive marketing has to be acknowledged in the planning process, so that the production resources and operations support and enhance the organisation’s attempts to develop and maintain relationships with its customers by making every effort possible to meet the customer’s expected and perceived quality.
The issues discussed in this section are not irrelevant to the context presented in this chapter. Organisational coordination, integration synergy and good design in service firms are all important in enabling the customer-contact employee to provide a better service quality that meets customer needs or expectations. As such, functional quality must be complemented with technical quality if we need to build the right organisational climate and culture for the right people with the right capabilities and qualities in order to give them the support to provide total quality for the customer.
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2.3.2 Customer Perceived Quality The quality customers perceive will typically differ, depending on what strategy a firm uses (Grönroos, 1994). According to the model of total perceived quality developed within the Nordic School of Services, the customer perceived quality is basically a function of the customer perceptions of two dimensions: the impact of the outcome or the technical solution (what the customer receives), and an additional impact based on the customer’s perception of the various interactions with the firm (Norman, 1984). The former quality dimension is sometimes called the technical quality of the outcome or solution, whereas the latter dimension is called the functional quality of the interaction process (see Grönroos, 1994). In relationship marketing, however, the customer interface is broad, and the firm has opportunities to provide its customers with added value of various types (technological, information, knowledge, social, etc.). Hence, the functional quality dimension, how the interaction process is perceived, grows in importance (Grönroos, 1994). In relationship marketing the functional quality dimension grows in importance and often becomes the dominating one. Of course, this does not mean that the technical quality can be neglected, but it is no longer the only quality dimension to be considered as of strategic importance (Grönroos, 1994). This assertion was made earlier in this chapter when discussing the soft and hard dimensions by Gilmore and Carson, 1993. The technical quality is similar to the hard data or hard dimensions described by Gilmore and Carson (1993) and the functional quality is similar to the soft dimensions. It is therefore important to recognise both especially the soft dimensions simply because they represent the neglected aspect because of it’s intangibility (Carson and Gilmore, 1989/1990).
In a transaction marketing strategy, the benefits sought by the customer are embedded in the technical quality provided by the core product (Grönroos, 1994; 1995). What the customer gets as the end result of the production process, which in service contexts is called output quality or technical quality, determines the level of satisfaction with quality (Grönroos, 1995). However, in order to start developing an ongoing relationship with a customer, the firm must be able to offer a good interaction process as well. All the interactions with the firm, with its contact personnel, information systems, and physical
30
resources, have to support the quality perception of the customer. The functional quality or the impact of the interaction process, and how the service production and delivery process itself is perceived, grows in importance, and is highly valued by customers (Grönroos, 1995). Closely related, the case in service organisations where the customer and the customer-contact staff are inseparable, the customer-contact staff may play a significant role in the improvement of the functional quality. As such, capable customer-contact staff may play an important role in shaping the perception of their customers regarding the overall service quality throughout the service encounters. It is particularly important to look at the customers’ perception and attitude towards the empowered employee as an assumed dimension of the total service quality Customer attitudes towards empowered employees In this study however, it was interesting to find that customers, when interviewed, were different in their way of looking at the empowerment aspect. Ten customers were interviewed. They seem to be interested in commenting on their experiences with the banking services perhaps because most of them have to deal with a single bank and they would literally proclaim: “my bank” when referring to the bank they deal with, but when it comes to other services like buying groceries or clothing, for example, they would not say “my shop” or my “grocery store”. However, not all customers are likely to have the same interest in the employees’ service delivery behaviours or attitudes. While customers usually show appreciation and interest in customer-contact employees’ courtesy and extra-role behaviour, some other customers tend to feel more comfortable with a transactional type of relationship, avoiding unnecessary empowerment-related behaviours. For example, some customers would feel uncomfortable with extra-role behaviours where the employee would show extra friendliness or try to show more personal attention to the customer. Such attitudes might be perceived as unnecessary and unpleasant for some customers who would therefore be more comfortable in dealing with a routine and fixed service delivery without any extra role or relationship behaviours. This, indeed, has been expressed by one of the customers saying that:
31
The most important thing for me is speed because I have routine transactions with the bank. I do not care if they smile or not. All I care about is the service quality, reliability, and doing the job right. Speed is also important. Additionally, some customers could feel apprehensive when they encounter unbounded flexibility with bank employees’ behaviours. They might, for example, feel anxious over the security of their savings in the bank. Such customers might be more secure, for example, with a teller who strictly follows the bank’s rules and regulations. Indeed, some of the interviewees in this study explicitly expressed this concern. One interviewee stated that: “ this is a bank that deals with people’s money, it is not a place for building relationships”, implying that empowerment must be restricted by firm rules and regulations. Therefore, financial security is more fundamental. As such, the frontline employee should perhaps be aware and sensitive to customers’ reactions to the right degree of empowerment necessary to meet their expectations and should not therefore exaggerate unwanted behaviours.
On the other hand, the service quality gap model by Parasuraman et al. (1985, 1990) provides strong insights into the role played by the staff specifically through the service performance gap, as illustrated in the following section.
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2.3.3 Service Quality in the Gap Model The gap model as illustrated in figure 2.2 is determined mostly by the quality of relationship with customers (Ravald and Grönroos, 1996). However, the employeecustomer relationship and interaction and the quality of service provided by the customer-contact staff is usually subject to different expectations and perceptions by customers and organisations as well. Parasuraman et al. (1985) suggested that service quality perceptions are formed by a comparison of pre-service encounter expectations with actual service delivery experiences. The difference, known as a service quality gap, is driven by four other internal gaps, as shown in Figure 2.2. The gap model was later extended to include a framework to guide the management of service quality by identifying the potential antecedents of each gap (Parasuraman et al., 1990). The first gap and the third gap are relevant to this study. However, the first gap is concerned with the difference between what customers expect and what managers think customers expect (Parasuraman et al., 1990). However, the antecedents to employee-customer relationships are presented in this context through Boshoff et al.’s (1996) argument concerning the gap model. Gap one, according to Boshoff et al. (1996) is often driven by inadequate communication between management and frontline personnel and this inadequate communication presents an antecedent to perhaps affect employee-customer relationships. So it is suggested that one way of closing Gap 1 would be for management to communicate their service quality expectations to employees through clear goal setting (Boshoff et al., 1996). The second gap is regarding the difference between management perceptions of consumer expectations and service quality specifications. This gap is affected by such things as management commitment to service quality, setting goals for service quality, and task standardisation and perception of the feasibility of meeting customer expectations. These also present significant antecedents to employee/customer relationships. For example, when management commitment to service quality suffers, customer-contact employees’ commitment to service quality will not be in a better position. The relationship, therefore, might also suffer.
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Figure2.2.
The Gap Model
Marketing research orientation Upward communication
Gap “1”
Levels of management
Management commitment to service quality
Tangibles
Gap “2”
Goal setting Task Standardisation
Reliability Gap “5” (service quality)
Perception of feasibility
Responsiveness Assurance Empathy
Teamwork Employee-job fit Technology-job fit Gap “3” Perceived control Supervisory control systems Role conflict Role ambiguity
Horizontal communication
Gap “4”
Propensity to Over-promise
The third gap measures the difference between service quality specifications and the service quality actually delivered. This gap is influenced by the extent of teamwork 34
perceived by employees, employee-job fit, technology-job fit, the extent of perceived control experienced by customer-contact personnel, and the extent of role ambiguity experienced by customer-contact personnel. Such antecedents might also have more impact on the relationship between the customer-contact employees and their customers. Even when guidelines exist for performing services well and treating consumers correctly, high quality service performance may not be a certainty (Parasuraman et al., 1985). Managers realise that a service firm’s employees exert a strong influence on the service quality perceived by consumers and that employee performance cannot always be standardised (Parasuraman et al., 1985). When asked what causes service quality problems, managers consistently mentioned the pivotal role of contact personnel (Parasuraman et al., 1985). It is however, difficult for service employees, particularly customer-contact employees, to adhere to specific standards because of the variability of the employee performance and service process and delivery to the customer and by the customer. Gap 3, according to Parasuraman et al. (1985), is the gap between service quality specifications and actual service delivery that will affect service quality from the consumer’s standpoint. Boshoff et al. (1996) further argue that initiation of structure (e.g., the degree to which the management defines all the guidelines and procedures to be followed by the employee), job satisfaction and teamwork are antecedents of Gap 3, providing that job satisfaction, rather than “employee-job fit” and teamwork, will exert a positive influence on organisational commitment and a positive influence on service quality. But initiation of structure (i.e. autocratic management) will exert a negative influence on service quality.
However, if service quality is largely determined by the behaviour of frontline employees during the so-called service encounter, as the literature suggests (Bitner and Zeithaml, 1987), employees are unlikely to behave as expected (deliver the quality service that customers expect) unless they believe in what the organisation stands for (Congram and Friedman, 1990). The relative strength of an individual’s identification with and involvement in a particular organisation is termed organisational commitment. As Boshoff et al. (1996) hypothesised that “employeeorganisation fit” can impact on service delivery, organisational commitment is modelled as an intervening variable between the antecedents of Gaps 1 and 3 and service quality (Boshoff et al., 1996: 11). 35
The front-line employees are representatives of the organisation interacting with outside parties and, will influence the cognition, attitudes and evaluations formed by customers (Bowen and Schneider, 1985). Therefore, due to the characteristics of services, and the gaps’ antecedents and consequences presented in this discussion, not all front-line employees’ behaviours can be specified and predetermined by management guidelines (Mattsson, 1994). A degree of discretion, therefore, has to be exercised in unusual service delivery situations (Kelley, 1993). Discretionary behaviour will determine the effectiveness of frontline employees behaving as parttime marketers and may have a significant impact on customer satisfaction and favourable service quality perceptions (Bowen and Schneider, 1988). This is the situation in the service sector, particularly in the financial service sector, where managers do not have direct control over employees during the service encounter. Therefore, empowerment is the approach to enhance the customer-employee relationships and the level of service quality created through such a relationship. This leads to improve the service relationship via service encounters as discussed in the following section.
2.3.4 Service Encounters and Service Relationships Service encounters are interesting phenomena with short-run and long-run effects (Czepiel, 1990). In the short run, they are the social occasion of economic exchange in which society allows strangers to interact. In the long run, encounters provide the social occasions in which buyer and seller can negotiate and nurture the transformation of their accumulated encounters into an exchange relationship (Czepiel, 1990).
Indeed, they are the building blocks of the service provider-customer relationships. As service encounters accumulate over time, a buyer and seller have the opportunity to transform them from a collection of individual, discrete transactions into a relationship (Czepiel, 1990). In an exchange relationship, an individual exchange is viewed not so much as an entity unto itself as it is a continuation of a past series of exchanges likely to continue into the future. Each purchase decision looks not only at the immediate cost/benefit analysis but also at the past history of the relationship and
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the possible future as well (Dwyer et al., 1987). Hence, customer satisfaction is a significant outcome of such a relationship (Halliday, 2002) that develops, over points of contact, into improved perceived service quality (Parasuraman et al., 1985; Zeithaml et al., 1988).
The literature on services is clear on the difficulty that consumers have about judging service quality (Berry, 1980; Levitt, 1981; Parasuraman et al., 1985). The intangibility of services makes it difficult to examine the service for the physical evidence of suitability or in many instances, even to sample the service. Dealing with a supplier with whom one has had successful prior purchases assures the buyer that he or she will be dealt with fairly, while, for the supplier, the expectation of future purchases by the customer provides the incentive to maintain quality (see Czepiel, 1990). An exchange relationship can be said to reduce social distance – the buyer is not an anonymous entity that will never be seen again – the seller is motivated to provide the quality required by the buyer.
Service heterogeneity means that tailoring the service to meet the exact needs of the client is possible. This requires, however, that the client “open up” to the firm concerning his or her problems and goals. It requires, also, that the firm be “close to the customer”, in the language of Peters and Waterman (1982), if it is to understand the customer’s real needs (Czepiel, 1990). Accordingly, Gummesson (1997: 269) notes, customers have a role as “a co-producer of value and a partner” within this encounter. This emphasis is based upon services marketing theory, in which one of the key points of a service, as distinct from a physical product, is simultaneity of production and consumption (Zeithaml et al., 1988). As such, many services require the active participation of the consumer; the repeated encounters provide the occasions in which the provider and client are able to develop a more complex relationship (Czepiel, 1990). Since service encounters are social encounters first, it is only natural that repeated encounters develop personal as well as professional dimensions (Czepiel, 1990). Not only does the personal dimension have the effect of reducing the social distances between the client and the provider and the firm, it also results in a double bond between the two: a personal bond and a professional or economic bond. While such a process can develop under any mode of repeated
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interaction, the face-to-face mode is likely to be the most potent situation for the development of such relationships (Czepiel, 1990).
Relationships between individuals are, by definition, social. In some service businesses – hairdressing and investment banking are alike in this regard – the personal relationships established by employees can be the key to the business’s success (Czepiel, 1990).
The relationship marketing approach concerns the relationship between the customer and the organisation. The customer’s attitude and evaluation of such a relationship is very important. While positive relationships might keep customers coming back to the same service provider, negative relationships might end up with customers terminating the whole relationship with the service firm. Looking closely at this issue, Morvis (1984) identified a number of reasons why customers choose to terminate their relationship with a service firm, such as a bank, as an example. He found that 13 percent close their accounts because of an encounter with a rude or unhelpful employee; 11 percent terminate because they feel that their bank is cold and impersonal; and 16 percent close accounts because of a general perception of poor service. Such indicators signal the importance of investigating the role of servicestaff. As such, motivating employees to deliver a high quality service and to invest in positive relationships with their customers will hence greatly aid customer retention and potentially form the basis of a truly sustainable advantage (Sargeant and Asif, 1998). Enhancing the internal service quality, the internal relationships, the climate of trust and respect between the staff and their supervisors and establishing staff support systems may motivate the customer-contact employees to improve the service and attempt to deliver better service, which customers will recognise. The internal marketing concept provides the climate for getting staff involved and committed and building good employee customer relationships.
2.4
The Internal Marketing Concept
There seems to be a great deal of confusion in the literature as to exactly what IM is (Rafiq and Ahmed, 2000). Rafiq and Ahmed (2000) reviewed the development of the internal marketing concept over the last two decades and attempted to provide an
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advanced definition of the concept. Similarly, Varey and Lewis (1999) tried to present their broader conception of IM.
However, the internal marketing concept emanates from the idea that employees within an organisation should be viewed as customers in the same way as those who actually consume the product or service (Corsun and Enz, 1999; Sargeant and Asif, 1998) A review of the Internal Marketing literature may reveal different views regarding the concept. However, there seem to be several views on the internal marketing concept leading to a broader conception suggested by Varey and Lewis (1999) and Rafiq and Ahmed (2000). While Gremler and Bitner (1994) present the first internal marketing view arguing that internal marketing is concerned with the relationship between the company and its employees, Berry (1984) similarly defines the internal marketing concept as:
Viewing employees as internal customers, viewing jobs as internal products, and then endeavouring to offer internal products that satisfy the needs and wants of these internal customers while addressing the objectives of the organisation.
As such, internal marketing is focusing on meeting the needs of employees (i.e., internal customers). The focus of internal marketing is employee satisfaction according to this view. However, the second perspective of internal marketing, according to Kotler (1997), is the work done by the company to train and motivate its internal customers, particularly its customer-contact employees and supporting service people to work as a team to provide customer satisfaction. The difference in the above approaches is the focus on the external customer by Kotler’s approach where one can see that the purpose of meeting the internal customer need is to help satisfy and meet the external customer’s needs. Rafiq and Ahmed (1993) provide a similar view of the internal marketing concept. They define it as:
A planned effort to overcome resistance to change and to align, motivate
and
integrate
employees
towards
implementation of corporate and functional strategies.
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the
effective
Recently, while their literature review revealed three major phases in the development of the concept, namely an employee motivation and satisfaction phase; a customer orientation phase; and a strategy implementation/change phase, Rafiq and Ahmed (2000: 452) synthesise these phases in a comprehensive definition:
Internal marketing is a planned effort using a marketing-like approach to overcome resistance to change and to align, motivate and inter-functionally co-ordinate and integrate employees towards the effective implementation of corporate and functional strategies in order to deliver customer satisfaction through a process of creating motivated and customer oriented employees.
Moreover, Varey and Lewis (1999) argue in favour of a broader conception of internal marketing. According to Varey and Lewis (1999: 936) “ new employee relations” or marketing orientation may well require managers to rethink their role, and to recognise the processes by which value is profitably created for internal and external customers, but this has rarely been addressed in terms of organisation design or development. While traditional IM views employees as a tool that can be manipulated, selected, accepted and sometimes rejected, a broader conception (Varey and Lewis, 1999) would view the employee as a partner to feel more sense of ownership and empowerment.
Reviewing the different IM efforts and initiatives seems to suggest that in practice, for such initiatives to succeed, organisations need to value their staff and change the way they view their people. Central to this argument, Pfeffer (1994) stresses that achieving competitive success through people means working with them, not limiting the scope of their activities. There is increasing evidence, according to Corsun and Enz (1999), that “workers whose managers are perceived as supportive are more likely to see themselves as influential” (206). Moreover, a new partnership between management, customers, and employees based on honesty, trust, caring, support, dignity, and mutual respect is at the heart of employee commitment and involvement (Melohn, 1994). As such, an effective internal marketing system would have a positive influence on employees’ attitudes and behaviours toward the organisation 40
and its objectives and goals, the job and performance quality, and finally the external customer (Rafiq and Ahmed, 1993). To achieve that the change has to start from the managers in the way they see their employees. They need to start trusting them and give them a greater part in the decision making process.
To conclude, the internal marketing concept suggested by Varey and Lewis (1999) does not just view employees as customers but also as partners who deserve to be involved, be responsible, and to share in the decision-making process.
Internal Marketing and Empowerment Researchers explain that many companies practise rulebook management or have thick policy and procedure manuals to facilitate control (Czaplewski et al., 2001). However, this style of management can stifle initiative and prevent employees from delivering personalised and unrestricted service quality. Good internal marketing involves giving service workers the opportunity to create value for their customers and achieve recognition for themselves (Czaplewski et al., 2001). While successful service companies like Southwest have strong operating policies, they also empower employees to make their own judgments and decisions about service. Czaplewski et al. (2001) are examining the practices of excellent companies like Southwest and Cisco Systems. They argue that Southwest Airlines for example continually seeks to de-emphasise its hierarchy so employees can make decisions and act to serve its customers. Empowered employees are encouraged to take whatever action they deem necessary to help fellow workers and to meet customer needs, even if it means breaking company policies. Accordingly, if the employee is treated as a customer, informed of the organisation’s mission, strategic objectives and the needs of their customers, both internal and external, they should become more focused on the satisfaction of those needs and hence contribute significantly to organisational effectiveness (Sargeant and Asif, 1998; Frost and Kumar, 2000). As such, the right internal marketing climate is expected to end up giving staff more control, empowerment, and satisfaction, leading eventually to the satisfaction of their external customers.
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Employee Satisfaction Leads to Customer Satisfaction Consistent with IM conception, more research, yet mainly conceptual, suggests that satisfied internal customers are a critical prerequisite to the satisfaction of external customers (Berry and Parasuraman, 1991; Schneider and Bowen, 1985; Gronroos, 1985; George, 1977; Schlesinger and Heskett, 1991), specifically in the case of services, due to the high degree of interaction between customers and staff. Schneider and Bowen (1985) provided empirical evidence through survey data from 142 employees and 968 customers from the banking industry. They found strong support for positive relationships between branch employees’ and branch customers’ service perceptions and attitudes and that satisfied employees may form a basis for satisfied customers. Schneider and Bowen (1985) further found that employee attitudes and customer attitudes were related to their own and one another’s turnover intentions. Schlesinger and Zornitsky (1991) provide empirical evidence from 1,277 employees and 4,269 customers of personal lines insurance organisations, recognising that the gap and discrepancies between employee perceptions of service quality and actual customer satisfaction are negatively related to both job satisfaction and service capability. This signifies the importance of the compatibility between the employees’ and the customer’s perceptions of service quality.
Internal Marketing and Frontline Staff Czaplewski et al. (2001) argue that nearly every corporation says its goal is to provide excellent service, but evidence shows that the service quality of many organisations lags below customer expectations. The blame, according to the authors, is on the lack of commitment and skills of the frontline employees who are interacting with customers. What is missing, according to the authors, is a strategy called internal marketing, which involves treating the frontline as internal customers in the effort to encourage these employees to provide an excellent example for the successful execution of internal marketing strategies. A very interesting remark made by the authors is that an internal marketing strategy appears to be a prerequisite for building employee capabilities and motivation (Halliday, 2002), which leads to higher levels of service quality. In turn, a higher level of service quality leads to greater customer satisfaction and retention, higher sales revenue, and ultimately greater profitability.
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Internal Marketing-Conclusion While IM conception is still evolving and progressing (as illustrated above) towards a more advanced theoretical basis, the following elements may conclude the different viewpoints and perspectives presented in this section: •
Treating employees as customers-internal customers.
•
Motivating and satisfying the internal customers.
•
Building a customer orientation climate among the internal customers.
•
Building cooperation, coordination and teamwork.
•
Emphasising corporate and functional strategies among internal customers.
•
Emphasising the implementation of the above.
•
Viewing managers and employees as partners.
However, despite such a comprehensive and broad conception regarding the IM approach, there is a lack of emphasis on two significant dimensions: first the employee involvement, participation and empowerment, and second the employee qualities, including knowledge, skills and capabilities. Training perhaps is very important in this sense to improve their qualities and to develop their abilities if we need to be consistent with any broader internal marketing concept.
2.5
Customer Contact Employee Qualities
While job related skills and qualities are significant to do the job and to perform the daily tasks by staff, other functional and personal qualities are important as well. Several related studies have suggested that the friendliness, knowledge and skill, enthusiasm, attentiveness, empowerment, and the ability to communicate of customer-contact employees positively affect customers’ perceptions of service quality (cf. Bowen and Schneider, 1985; Rafaeli, 1993), and enhance the degree of trust between the customer and the front-line employee. Heskett et al. (1997) provide a similar perspective about the frontline employee empowerment termed “employee’s capability”. Moreover, the role of trust in the development and maintenance of successful relationships is likely to be of particular significance in the service sector,
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especially in the banking sector because of the complexity of many of its products (Diacon and Ennew, 1996). The degree to which a customer trusts a particular salesperson will be positively influenced by the belief that the salesperson or the front-line employee is operating in the customer’s best interests (customer-oriented), and negatively influenced by the belief that the customer-contact employee is operating in their own best interests (sales-oriented) (Bejou et al., 1998). However, as implied by Schneider and Bowen (1985) and Heskett et al. (1997), the trust and positive relationships between the frontline employees and their customers mirror the internal relationships between the frontline employees and their supervisors. The most significant characteristics that the frontline employee should exhibit are the characteristics of capability, latitude, responsiveness and the feeling of responsibility towards the organisation’s goals and objectives, in order to establish such a positive relationship between the organisation and its customers. Empowering employees, however, is central to the satisfaction of both the customer and the employee (see Bowen and Lawler, 1992; 1995). Well-managed interaction would also seem to foster a more suitable fit or degree of compatibility between the customer and the service, the contact employee, and other customers in the service environment (Bowers et al., 1990). Customer involvement, psychological identification with the service and with the service provider is also likely to result (Bowers et al., 1990). Monitoring and observing these desirable benefits reveals that they are also applicable to contact employees. That is, management wants service employees to deliver high quality job performance; to value their employment; to be satisfied with their jobs and with the service organisation; to be loyal to the firm and to its programs; to provide feedback to the customers and to the organisation; to be compatible with customers, other employees, and the organisation; and to be involved with the job and with the company (Bowers et al., 1990). All that may secure a satisfied and loyal customer, creating good value and high performance for the organisation. Such qualities of employee/customer relations shed light on some expected attributes of the customercontact employees in particular. Such qualities include knowledge, expertise, commitment, and identification with organisational objectives, trust, openness and empowerment.
Given the service personnel qualities, managers realise that a service firm’s employees exert a strong influence on the service quality perceived by consumers and 44
that employee performance cannot always be standardised (Parasuraman et al., 1985). When asked what causes service quality problems, managers consistently mentioned the pivotal role of contact personnel (Parasuraman et al., 1985). It is however, difficult for service employees, particularly customer-contact employees to adhere to specific standards because of the variability of the service delivery and process. Therefore, personnel intuition and discretion is significant in utilising their qualities to provide better service quality to their customers.
To put more value on the above qualities in the service or manufacturing firms and to put more emphasis on the general importance of the people side of the organisation, the following section presents important points that might help in looking at the staff differently, starting with employee equity, the people factor and the creativity factor.
2.6 Employee Equity One of the traditional management approaches of managing people is the so-called “Job-based framework”. This approach for managing people has worked for many years (Cardy, 2001) For example, service and manufacturing companies have developed a measure of employee abilities relevant to various types of job requirements, and these tests often provide valid predictors of job performance. The problem with a job-based approach according to Cardy (2001) is that it simply cannot work when routine and repetitive tasks no longer make up a job. The more dynamic and fluid the tasks performed by a worker are, the less the job-based approach can be a rational basis for management. Narrow job descriptions, while providing clarification, may hinder flexibility and create a bureaucracy that creates difficulties for an organisation rather than helping it to rapidly change and adapt. “Not in my job description” is a phrase that might slow down change and prevent an organisation from getting ahead and achieving a competitive advantage. According to Cardy (2001), what is needed in today’s organisation is a new framework that helps achieve a competitive advantage, an approach that will attract and retain the best talent and promote a competitive edge without the drag of bureaucracy.
A customer service framework, as stated by Rust, Zeithaml, and Lemon in their text Driving Customer Equity (2000), is based on the concept of customer equity.
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Customer equity is the total of the discounted lifetime values of customers and is composed of three facets: value equity, brand equity, and retention equity. Adapting this framework to the internal organisational environment according to Cardy (2001: 2), customer equity could be relabelled employee equity. Employee equity accordingly, can be the lifetime value of employees to the organisation, and provides a radically different but rational basis for managing employees. Rather than shortterm performance on a set of tasks, employee equity focuses management attention on maximising lifetime value and on promoting workplace loyalty and retention. The primary unit of analysis then shifts from tasks to people.
Central to these ideas is the internal marketing concept as discussed in section 2.4, which emphasised that employees themselves are customers of internal services. As internal service quality affects external service quality, measuring internal service quality is essential. It is found that, while marketers have actively researched service quality, internal service quality has not received much attention (Frost and Kumar, 2000). In addition, employees offer insights into the conditions that affect service quality in an organisation as they experience the service delivery system on a daily basis. Such employee research helps reveal why certain service problems occur and how to overcome them. Indeed, employees may provide an early warning system to marketers, as people are able to identify when the system is going to break down particularly in the service context because of their direct contact with customers.
2.7
The People Factor
The study in this thesis mostly concerned itself with the human aspect of the organisation. It tried to recognise the importance and the role played by the employees in the organisation, specifically those employees who are working in direct contact with the customer. Such a factor is significantly neglected in many organisations by management when compared with financial assets and or physical resources. Drawing on literature from the organisation behaviour, Pfeffer and Veiga (1999) argue that organisations habitually overlook readily available opportunities to boost their financial performance. The authors are drawing on extensive empirical
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research to prove that the culture and capabilities of an organisation derived from the way it manages its people are the real and enduring sources of competitive advantage. According the Pfeffer and Veiga (1999), managers today must begin to take seriously the often heard, yet frequently ignored, adage that people are the most important asset. Pfeffer and Veiga (1999: 38) further emphasised the following:
Rather than putting their people first, numerous firms have sought solutions to competitive challenges in means that have not been very productive. That is, treating their businesses as portfolios of assets to be bought and sold in an effort to find the right competitive niche. Downsizing and outsourcing in a futile attempt to shrink or transact their way to profit, and doing a myriad other things that weaken or destroy their organisational culture in efforts to minimise labour costs.
Referring to evidence provided by the award-wining study of the high performance work practices of 968 firms representing all major industries, 702 firms in 1996 and 100 German companies operating in ten industries, they find a strong link between investing in employee and stock market performance. Companies, which place workers at the core of their strategies, produce higher long-term returns to shareholders than their industry peers (Blimes et al., 1997).
In their book Employee Involvement and Total Quality Management, Edward Lawler and his colleagues also provide statistical findings regarding the relationship between empowerment and financial outcomes. They demonstrate that when people are given more control and responsibility, companies achieve greater return on sales (10.3%) than in companies that do not involve people (6.3%) (Lawler et al., 1992). Similar studies suggest that empowerment is essential for companies that hope to succeed in the new knowledge-based economy (Malone, 1997). Such substantial benefits in profits, quality, and productivity come about because high performance management practices provide a number of important sources for enhanced organisational performance. Pfeffer and Veiga (1999) further argue that people work harder because of the increased involvement and commitment that comes from having more control and say in their work; people work smarter because they are encouraged to build 47
skills and competence; and people work more responsibly because more responsibility is placed in the hands of employees farther down in the organisation (Pfeffer and Veiga, 1999). It is not the purpose of this study to show a link between the financial results and the human aspect of the organisation. Rather the purpose of this section is to show the importance and the value of considering the human capital (Lawler III, 2001) as an important asset of the organisation. The capability and creativity of individuals are at the heart of the human capital concept. As such, the human asset of the organisation is very important for their ability and creativity. Warren Bennis, in his article The End of Leadership, strongly emphasised that “exemplary leadership and organisational change are impossible without the full inclusion, initiatives and cooperation of followers”(Bennis, 1999: 74).
This is a general discussion on the importance of people perhaps in all industries and not on any particular industry. Given the earlier discussion with relation to services marketing, it is expected that the people aspect be more significant and the role played by people to be more important due to the unique features of services that were presented earlier in the chapter.
2.8
Summary
This chapter has introduced the importance of people in the service delivery process presenting the significance of their role in building a better relationship with their customers and supervisors as well. Sections presented in this chapter were centred on the human element of the organisation. The topics presented in this chapter were based on an existing literature related to services marketing, including service characteristics and classifications, employee-customer relationships, and internal marketing.
However, there is a shortage of empirical research on these areas overlooking the very important link between service firms and the service deliverer, the customercontact employee. Service organisations are different from manufacturing organisations. The customer involvement in the service process is very high and there is a high degree of interaction between the customer and the staff. The service is mainly intangible, inseparable, and many times heterogeneous and variable. All this 48
signifies the very important role of the staff in the service delivery and service quality perceived by the customer. However, there is a lack of systematic and empirical research pertaining to the key role played by people in service encounters. Specifically, there is a lack of systematic efforts towards exploring the role of control, autonomy or empowerment of customer contact employees. For example, over 20 years ago internal marketing was first proposed as a solution to the problem of delivering high service quality (Rafiq and Ahmed, 2000). However, despite the rapidly growing literature in these areas (e.g., IM), there is still a need to recognise the pivotal role of the frontline staff. The issue of providing those people with enough empowerment via knowledge information, trust and rewards is a very important issue that must be considered along with the issues of internal marketing, employeecustomer relationships and services marketing in the general sense.
The following chapter will focus on the empowerment of customer contact employees highlighting the empowerment concept, antecedents, and consequences. It will also develop the research model and the research propositions which will be empirically investigated and analysed.
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Chapter Three
Empowerment
You can empower all of the people some of the time and some of the people all of the time, but you can’t empower all of the people all of the time
Abraham Lincoln
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3
Empowerment
3.1
Introduction
The previous chapter focused on the employee-customer relationships emphasising the key role played by the customer-contact employees in the service delivery process and in enhancing relationships with customers. The previous chapter also explained that service organisations are different from manufacturing in that the customer involvement in services is high and there is a high degree of interaction between the customer and the staff. As such, the service delivery role played by customer-contact staff is very significant in service organisations.
However, there is a significant lack of systematic and empirical research concerning the key role played by people in service encounters. Specifically, the unique features of the service characteristics explained in Chapter Two, section 2.2, suggest the importance of the customer-contact employees’ responsiveness, flexibility and empowerment whenever the service is more intangible, inseparable, and variable (Shostack, 1977).
Bowen and Lawler (1992; 1995) highlight the importance of empowerment and that empowerment of service employees requires very important prerequisites including knowledge, information, rewards, and power. The literature suggests that the ability of an employee to make the proper response during the service delivery process is largely a function of the employee’s knowledge and control (Bitner et al., 1990; Randolph, 1995). For example, Bitner et al. (1990) stress that knowledge of the service concept, the service delivery system and its operation, and the system standards enables employees to inform customers about what happened, what can be done, and why their needs can or cannot be accommodated. Yip (2000) argued that power, information, knowledge and rewards are very significant measures to have an effective workforce. They further assert that empowerment also leads to greater levels of satisfaction among staff, whereas empowered employees can provide faster and friendlier service to customers as well.
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While most literature provides only conceptual or anecdotal evidence, there is still a need for more systematic and empirical efforts in investigating the role of empowerment among customer-contact employees. There is particularly a need for further research to explore the antecedents that impact and initiate enduring and real empowerment in addition to investigating the consequences of empowerment. Hence, the issue of providing customer-contact employees with enough empowerment via knowledge, information, trust and incentives is the issue of this research, accompanied by an analysis of two important consequences of empowerment including employee satisfaction and, ultimately, customer satisfaction.
Furthermore, there is a huge body of literature on the subject of empowerment but its application and relevance to services is surprisingly, as yet, still relatively underdeveloped. Moreover, researchers still hold opposing views regarding the suitability of empowerment for customer-contact employees. Indeed, there is an extensive body of work that addresses the empowerment of employees in different fields (e.g., Organisation Behaviour, Human Resources and Marketing). It is a programme that has to do with increasingly changing organisational structures (Niehoff et al., 2001; Mishra and Spreitzer, 1998; Eccles, 1993), strong international competition, increased “visibility” of global products, globalisation, marketing and customer orientation strategies, rapid product innovations and growing customer aspirations. Many service organisations believe that empowering employees ultimately leads to increased profitability, while improving customer satisfaction (Brymer, 1991). Therefore, “employee empowerment programs are rapidly being implemented in organisations across the spectrum of industries” (Fulford and Enz, 1995: 161).
This chapter will discuss the concept presented by the literature on empowerment in services (e.g., Bowen and Lawler, 1992, 1995; Conger and Kanungo, 1988; Schlessinger and Heskett, 1991; Rafiq and Ahmed, 1998; Berry, 1995). It will also present the importance of empowerment to employees, customers and management. A framework will be developed to explain the use of empowerment with customercontact employees who are standing in a challenging spot and must respond
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creatively, intuitively, and sometimes quickly to the changing needs and wants of many customers in different services.
Thus, section 3.2 will discuss different definitions of empowerment. Giving employees more freedom and discretion over their work-related activities and task roles is a common factor between the different definitions of empowerment. This section will also include subsections on theory of psychological empowerment and delegation of authority and empowerment. Section 3.3 will discuss the nature and scope of empowerment. The link between empowerment, service quality and customer satisfaction will be briefly discussed through this section. Section 3.4 will discuss the empowerment in the service sector. Section 3.5 will provide different viewpoints regarding the empowerment issue to present the different sides of the argument. The conceptual framework established for the thesis will be presented in section 3.6. Finally, the empowerment antecedents will be discussed in section 3.7 within the study’s main propositions regarding the four antecedents of empowerment, knowledge, communication, trust and incentives, in addition to the employee empowerment and job satisfaction in section 3.7.5.
3.2
The Definition of Empowerment
The empowerment literature reveals different concepts and definitions of the empowerment construct (Honold, 1997). In spite of this, most definitions agree that empowerment is concerned with giving employees more authority and discretion in task and context related issues. For example empowerment has been defined as giving employees discretion or latitude over certain task-related activities (Conger and Kanungo, 1988; Schlesinger and Heskett, 1991; Bowen and Lawler, 1992). While such definition concentrates on task-related activities, empowerment in its wider sense takes on more than task-related authority and latitude. To Zemke and Schaaf (1989: 65), empowerment means “turning the frontline loose”, encouraging and rewarding employees to exercise initiative and imagination: “empowerment in many ways is the reverse of doing things by the book”. A more explicit definition by Jan Carlzon views empowerment as freeing someone from rigorous control by instructions, policies, and orders, and giving that person freedom to take responsibility for his/her ideas, decisions, and actions. It is to release hidden resources
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that would otherwise remain inaccessible to both the individual and the organisation (Carlzon, 1987). Moreover, empowerment is described as a state of mind (Berry, 1995; Bowen and Lawler, 1995; Rafiq and Ahmed, 1998) to the extent that an employee with an empowered “state of mind” experiences the following qualities: feelings of control over how the job shall be performed; awareness of the context in which the work is performed; accountability for personal work output; shared responsibility for unit and organisational performance; and equity in the rewards based on individual and collective performance (Berry, 1995).
Empowerment is further defined as management strategies for sharing decisionmaking power (Bowen and Lawler, 1991). Barbee and Bott (1991) also define empowerment as being the act of vesting substantial responsibility in the people nearest the problem.
Randolph and Sashkin (2002) recently argued that empowerment is recognising and releasing into the organisation the power that people already have in their wealth of useful knowledge, experience, and internal motivation (Randolph, 1995; 2000). Releasing this power to focus on organisational goals call for changes in organisations’ structures and culture.
These different definitions reflect different assumptions about the nature of empowerment and the power of the empowered. Some imply a shift in authority, whilst some others may be concerned with a shift in responsibility (Lashley, 1999). There are, however, three types of managerial intentions for empowerment of customer-contact staff according to Lashley (1999). Firstly, empowerment through participation which is closely related to the Bowen and Lawler definition because Bowen and Lawler (1995) are chiefly concerned with empowering employees with decision-making authority in some aspect of the work, which had been formerly the domain of management. Secondly, empowerment through involvement, consultation and joint problem solving: managers continue to make the decision but with inputs from employees. The third type, according to Lashley (1999), is the empowerment through commitment, with greater commitment to organisational service quality objectives. As with Barbee and Bott’s definition, these initiatives are ultimately about employees taking more responsibility for the service encounter through a variety of 54
training programmes and appeals to both extrinsic and intrinsic sources of job satisfaction. In the service organisations, in particular, such an approach to empowerment is supposed to be more rewarding and consistent with the essence of empowerment.
Furthermore, empowerment through commitment aims to sensitise employees to customer service objectives (Lashley, 1999; Barbee and Bott, 1991; Fulford and Enz, 1995). Employees are also encouraged to intervene in the service situation, and they experience the authority, responsibility and ownership of the problem or the service encounter. So empowerment is more than just giving employees limited and conditional authority and/or responsibility. Enabling employees to sense their own power and the significance of their role in the service drama may help employees manage the emotions required of their performance (Fineman, 1993). Empowerment of employees seems to offer the prize of generating feelings of commitment to the service encounter (Barbee and Bott, 1991) with the appropriate amount of power and the freedom to use that power (Van Oudtshoorn and Thomas, 1993) to meet customer needs as they arise. Such definitions may lead to the understanding of the levels and degrees of empowerment. However, the following section will enhance the understanding of the construct from different perspectives. The organisational literature provides more insight into the empowerment concept, providing a theory of psychological empowerment (Spreitzer, 1995; Thomas and Velthouse, 1990; Conger and Kanungo, 1988).
3.2.1 Theory on Psychological Empowerment Before looking at the construct from a relationship perspective, it is very important to review some of the organisation behaviour literature that focuses on the motivational factors behind the empowerment construct. In addition to the literature about empowerment in marketing or services marketing, or internal marketing, researchers from the organisation behaviour discipline have identified and examined psychological empowerment as a construct meriting critical inquiry (e.g., Kanter, 1989; Thomas and Vethouse, 1990). A psychological definition of empowerment according to Spreitzer (1995), and previously defined by Conger and Kanungo (1988), is the motivational concept of competence or self-efficacy (Bandura, 1986). 55
The Oxford English Dictionary defines the verb empower as “to enable”. In contrast to the earlier definition of empowerment as delegation of authority, enabling implies motivating through enabling personal efficacy (Conger and Kanungo, 1988). An important distinction to make, according to Conger and Kanungo (1988) about the construct, is that empowerment is a motivational construct- meaning to enable rather than simply to delegate (McClelland, 1975).
3.2.2 Delegation of Authority and Empowerment Conger and Kanungo (1988) argue that delegating (Burke, 1986) or resource sharing (Neilsen, 1986) is only one set of conditions that may (but not necessarily) enable or empower subordinates. The process of delegation is too limited in scope to accommodate the complexity of empowerment. Thus, there are various other conditions
of
empowering besides
delegation
or
participation.
Therefore,
empowerment is defined as a process of enhancing feelings of self-efficacy among organisational members through identification of conditions that foster powerlessness and through their removal by both formal organisational practices and informal techniques of providing efficacy or competence information.
However, Thomas and Velthouse (1990) defined empowerment more broadly as increased intrinsic task motivation manifested in a set of four cognitions reflecting an individual’s orientation to his or her role: meaning, competence, self-determination, and impact.
Meaning. Meaning is the value of work goal, judged in relation to an individual’s own values (Thomas and Velthouse, 1990). As such, meaning involves a fit between the requirements of a work role and beliefs, values, and behaviours (Brief and Nord, 1990; Hackman and Oldham, 1980).
Competence. Competence, according to Spreitzer (1995), is an individual’s belief in her or his capability to perform activities with skill (Gist, 1987).
Self-Determination. While competence is a mastery of behaviour, self-determination is an individual’s sense of having choice in initiating and performing actions (Deci,
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Connell and Ryan, 1989). It reflects autonomy in performing work related tasks: for example, making decisions about work methods, pace, and effort (Bell and Staw, 1989).
Impact. Impact is the degree to which an individual can influence strategic, administrative, or operating outcomes at work (Ashforth, 1989)
Accordingly, Spreitzer (1995) defined empowerment as a psychological motivational construct manifested in four cognitions: meaning, competence, self-determination, and impact. While empowerment, according to the above literature, is viewed as a psychological construct influenced by the above four cognitions, such literature overlooks the organisational factors created by relationships between managers and employees and between employees and customers. Investigating the organisational conditions (i.e., information, knowledge, trust, and incentives) might be important in understanding the empowerment and its expected consequences including employee and customer satisfaction.
Spreitzer, however, in her nomological network included a mix of personality traits and work context variables as antecedents to empowerment. It is rather significant to separate between work context and personality trait antecedents, instead of mixing self-esteem, locus of control as a personality trait with information sharing and reward structure. The model that is proposed in this study focuses on work context antecedents to empowerment, including information and communication, rewards, knowledge, and trust.
Such studies by Spreitzer for example have empirically tested the impact of empowerment on managerial effectiveness and innovation while this study is examining the impact of empowerment on employee satisfaction and the indirect impact on customer satisfaction. While this section has provided more insight into the empowerment construct from a psychological perspective, the following section will provide more insight to the concept in terms of the nature and scope of empowerment.
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3.3
The Nature and Scope of Empowerment
There are different debatable ideas and viewpoints regarding the issue of employee empowerment. Table 3.2 at the end of this chapter summarises some of the different ideas and viewpoints regarding the concept. As such, Bowen and Lawler (1995) argue that there seems to be a considerable vagueness about what actually constitutes empowerment, where and how empowerment works, and how to implement it. For some it means allowing employees to decide how they will greet a customer, while for others, it includes giving employees almost unlimited discretionary spending power to recover from any service problem (Bowen and Lawler, 1995). Empowerment works well in organisations that create the right climate for empowerment inside the organisation, and the initial step in doing that is by creating the feeling of responsibility among those who are empowered in the organisation (Bowen and Lawler, 1995). A feeling of responsibility, according to Covey (1993), is the first step leading to personal success and effectiveness at the individual and collective level. High-involvement organisations use multiple management systems to create work environments in which all employees, not just management, are encouraged to think strategically about their jobs and the business and assume personal responsibility for the quality of their work (see Lawler, 1986). Eccles (1993: 13) takes a sceptical view of the practical application of empowerment. He argues “management would have to be prepared to reshape the power structures and processes of the organisation and build up a hierarchy of empowerment practices if significant gains were to be achieved”.
Many researchers however, like Eccles (1993), take a sceptical view of the practical application and implementation of empowerment. This is perhaps so because of the underestimation of the conditions that might create the right environment for empowerment (Forrester, 2000). Forrester was more optimistic about the empowerment initiative. He argues that the shortfalls in empowerment that many organisations have experienced are more about flawed implementation than flawed conception. It is true that many empowerment programmes might fail when they focus, for example, on “power” without also redistributing information, knowledge, and rewards. The result is that frontline employees have the power to act as “customer advocates”, doing whatever it takes to please customers, but do not have
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the training to act as responsible businesspeople. To this end, Bowen and Lawler (1995) used a simple empowerment equation “empowerment = power x information x knowledge x rewards” to illustrate that a multiplication sign, rather than a plus, indicates that if any of the four elements is zero, nothing happens to redistribute that ingredient, and empowerment will be zero. The formula reminds managers to avoid the common error of giving employees more discretion (power) but not the necessary support to exercise that discretion wisely. According to them, management practices that disseminate power, information, knowledge, and rewards give employees an empowered state of mind, which mediates the relationship between objective management practices and business results. Yip (2000) has confirmed these dimensions of empowerment affirming that power, information, knowledge and rewards are very significant measures to have an effective workforce. They further assert that empowerment also leads to greater levels of satisfaction among staff, whereas empowered employees can provide faster and friendlier service to customers as well.
However, the appropriate levels and the types of empowerment given to employees depend on a combination of the complexity (or variability) of customer needs and the degree of task complexity (or variability) involved in delivering the customer needs (Rafiq and Ahmed, 1998: 689). The above formula by Bowen and Lawler (1995) is modified in this study to include trust, communication, knowledge and skill, and rewards and incentives. Moreover, such a formula needs to be empirically tested rather than just conceptually presented.
Treating employees with dignity, and in a trusting and humanistic manner pervades the words of advocates such as Tom Peters in Bowen and Lawler (1992: 32):
It is necessary to “de-humiliate” work by eliminating the policies and procedures (almost always tiny) of the organisation that demean and belittle human dignity. It is impossible to get peoples’ best efforts, involvement, and caring concern for things you believe important to your customers and the long-term interests of your organisation when we write policies and procedures that treat them like thieves and bandits. 59
Accordingly, Deming (1982) argues that managers need to remove barriers, which hinder the worker from becoming more effective. He contends that these barriers rob workers of the right to be proud of their work and the right to do a good job. As such, supervision that is both supportive and non-controlling would enhance employee creativity (Pfeffer and Veiga, 1999). Not only does conceptual evidence support such a statement, but an empirical study in 1996 by Oldham and Cummings on 171 employees from two manufacturing facilities concluded that supportive and controlling supervision should encourage feelings of self-determination and initiative by providing informational feedback, few controls on employee behaviours, and increased employee discretion in decision-making. Interestingly, Oldham and Cummings (1996) demonstrated that for employees, regardless of creativity-relevant personality characteristics, increased job complexity and supportive, non-controlling supervision enhance overall work performance and lower intentions to quit. Empowerment, as such, does not evolve and develop in a vacuum. This study will focus on four factors that might enhance the empowerment to be sustained and endured: knowledge and skill, communication, incentives and trust. Bowen and Lawler (1995) conceptually investigated the first three constructs, and Spreitzer and Mishra (1999) empirically studied the trust construct as illustrated in the conceptual framework of this study. Empowerment consequences will be explored, including employee and customer satisfaction.
However, before discussing the conceptual framework in section (3.6), it is important to look at the empowerment in the service sector because the service sector is the environment and context of this study and because of the explained circumstances, features and classifications of services in Chapter Two.
3.4
Empowerment in the Service Sector
The unique features and characteristics of services, as discussed in Chapter Two, entail the significant link and association with empowerment. Empowerment in the service industry has been linked with many of the key issues related to employment practices in general, namely in gaining competitive advantage through improved service quality (Adelmann et al., 1994).
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Accordingly, frontline employees play a crucial role in the service encounter. There are, in fact, some base level customer expectations of employee performance, positive interpersonal contacts, service deliverer attitudes, courtesy and helpfulness, that are all closely related to customer evaluations of service quality. Empowerment has to do with various levels and degrees of responsiveness, reflexivity and creativity by the frontline employee in dealing with the customer needs or wants. It has to do with customisation (e.g., as mentioned in section 2.2.1) (Lovelock, 1983), versus the “production-line approach (see section 3.6.1.2 and Figure 3.1) to services” (Levitt, 1972) or the “industrialisation of services” (Levitt, 1976). While customisation is consistent with non-routine jobs, the production line approach and industrialisation are consistent with jobs that require mass production, routine and repetitive tasks. However, even the most standardised operation encounters occasions when customer service needs are difficult to predict and quick response is needed at the point of the service encounter (Lashley, 1999). These responses still require employees to act with initiative and discretion. The intangible element of the service encounter requires some form of employee participation, even in highly standardised and routine situations (Lashley, 1999). The organisation will experience lower labour turnover (Cook, 1994), there will be high staff morale and employees will take responsibility for their own performance and improvement (Barry, 1993).
According to Lashley (1999), and based on his case study and semi-structured interviews covering three service organisations, in each case, the study involved semi-structured interviews with senior managers to explore their perceptions of empowerment, intentions for the initiative and experienced benefits ensuing from the changes. Interviews were also conducted with the immediate line managers of the empowered. His findings suggest that empowerment as such; will not result in an almost automatic improvement in organisational performance (Foy, 1994; Stewart, 1994). According to Lashley’s findings, researchers have to take into account different managerial intentions, different forms of empowerment, differences in what employees can do, different needs of employees to feel empowered, and different impacts on the resulting performance exercised by employees.
Lashley (1999) further identifies five dimensions of empowerment:
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The task dimension considers the discretion, which is allowed to the empowered in performing the task for which they were employed. However, this depends on the type of organisation and the service provided to their customers. Lashley (1999) examines three service businesses. In the cases he studied there are limits put on the employee because of the brand attributes being marketed. Hence employees in McDonald’s Restaurants and Harvester Restaurants were not allowed to alter menus or provide dishes off the menu; not even unit managers were allowed to make these decisions. In TGI Fridays, employees could get a non-menu item produced if it involved ingredients that were stocked. In most cases, and to varying degrees, employees had some discretion over the service encounter. McDonald’s for example had scripted the service in the past, but had dropped this in recent years as part of a strategy to improve service quality (Lashley, 1999). Other businesses (e.g., Harvester and TGI Fridays) relied on training and service values to guide the employee in their interaction with customers. An employee of TGI Fridays reported an incident that seemed typical. A customer had asked for a cigar, the company do not stock cigars, so the employee went next door to the tobacconist and bought one. The guest was very pleased and wrote a letter to the company congratulating it on its excellent service. Service organisations tend to give their employees more empowerment as an approach to improve service quality and gain customer satisfaction.
The task allocation dimension considers the amount of responsible autonomy an individual employee or group of employees has in carrying out their tasks: to what extent are they directed, or need to ask permission to complete their task. Lashley (1999) provides empirical evidence that the “one best way” approach involves a narrow span of control and close supervision of both frontline employees and managers, where such an approach might be appropriate for very routine and standardised tasks, it might not be appropriate for many non-routine services. However, service employees are encouraged to use their initiative in finding ways to customise the service interaction, to exercise more responsible autonomy and to be empowered to deal with customer complaints and problems.
The power dimension is concerned with the feelings of personal power, which individuals experience as the result of being empowered. Power is a major aspect of
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the empowerment approach (Bowen and Lawler, 1995). The empowered employees should feel and exercise authority not for the sake of power or authority but for improving the service provided to the customer. However, feelings of powerlessness and helplessness among employees might lead to more frustration and less confidence in their ability to satisfy and please their customers.
The commitment dimension explores the assumptions about the source of employee commitment and organisational compliance in a particular form of empowerment. The findings provided by Lashley (1999) demonstrate that employees working in autonomous work teams liked the experience and the extra responsibility given to them and such a feeling is reflected by increased commitment to the organisation and its goals and objectives.
The culture dimension examines the extent to which organisational culture fosters feelings of empowerment being oriented towards openness, learning, and employee contributions and creating a climate of trust (Sternberg, 1992). Empowerment is consistent with less bureaucratic culture and with the initiative to empower as a part of a broad organisational culture. Thus, all these five dimensions – the task, nature of work, the amount of necessary power, the commitment and the culture – are very important to take into consideration before applying the empowerment approach in any organisation. However, one can argue that these dimensions are missing one very important dimension, which is the customer in terms of his/her needs and wants. The customer aspect should be the core to all of the above dimensions. The task, the power, the commitment, and the culture dimensions should all relate to meeting the customer needs and expectations in a proactive and responsive fashion and creative manner.
The discussion so far seems to provide more weight to the advantage of empowerment, as it seems that most cited literature and more research findings support the empowerment initiative. Despite the praise that empowerment receives from both academics and practitioners, there seems to be a gap in reality between theory and practice (Argyris, 1998). Although an increasing body of literature supports the empowerment initiative and empowerment receives the attention it does, still there are different viewpoints and perspectives towards the empowerment 63
initiative. The following section sheds light on the different perspectives towards empowerment.
3.5
Different Perspectives
Despite its popularity, empowerment is still “a term that confuses even as it inspires” (Simon, 1990: 27). A review of the literature (see table 3.2 at the end of this chapter for a summary of different viewpoints) reveals little shared understanding of the construct, and there is no doubt that further research is needed to understand the conditions behind the empowerment initiative (Eylon, 1998). Its importance has been stated in psychological terms, with an emphasis on its benefits to the individual, such as self-esteem and self-efficacy benefits (e.g., Cogner and Kanungo, 1988; Spreitzer, 1995, 1997; Thomas and Velthouse, 1990). Similarly, its sociological importance has been recognised, with a focus on the contextual factors, which foster helplessness (Hoffman, 1978). As such, various researchers have looked at the empowerment construct and the dimensions of empowerment through different lenses (Honold, 1997); for example, control of one’s work or job, autonomy on the job, variations of teamwork, and delegation of authority are all called empowerment.
Roots of the Concept of Employee Empowerment The beginnings of the concept of employee empowerment can be found in several places (Honold, 1997). The socio-technical approach (Lewin, 1951) encompasses two aspects of work in a systemic manner. In job enrichment (Herzberg, 1968), work was focused on increasing control and decision-making in one’s work. Job autonomy (see Herzberg, 1968; Hackman and Oldham, 1976, 1980) addresses another component of what is today referred to as employee empowerment. Generally, the following approaches outline some of the major perspectives on empowerment.
The Leadership Approach that empowers subordinates as a primary component of managerial and organisational effectiveness is called employee empowerment (Benis, 1989; Kanter, 1979, 1989; McClelland, 1975). As such, the leader’s approach focuses on the role of the manager in empowering employees (Sullivan and Howell, 1996). This approach suggests that an empowered organisation is one where managers
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supervise more people than in a traditional organisational structure, and delegate more authority to their lower level employees (Malone, 1997). This approach focused on delegation of authority, giving employees more responsibility. Nevertheless, employees do not perceive this as empowering because they feel that they are given additional tasks and the language of “subordinate” and “superior” was not changed (Menon, 1995).
The Individual Perspective of Empowerment Honold (1998: 204) describes this perspective: “if power is not taken by those it is bestowed upon, there is no empowerment”. The individual perspective approach has its beginnings in the form of internal organisation power and control (Kanter, 1979; Tannenbaum, 1968). It suggests that the sharing of power and control increases organisational effectiveness. Accordingly, Vogt and Murrel (1990) define empowerment as an act of building, developing and increasing power by working with others, and having the ability to influence one’s own behaviour, which is called “self empowerment”. Consistent with the individual perspective, Thomas and Velthouse (1985) believe that empowerment relates to the very basis of human existence. They conceive empowerment as occurring when “cognitive variables” change. They key cognitive variables are the environment, the tasks, the behaviour of the leader, the individual’s interpretive style, and the impact of the task. Empirically speaking, surveying 393 middle managers, Spreitzer (1996) found that employees who are empowered have low ambiguity about their role in organisations and greater access to information and resources
Team Empowerment Focusing on self-empowerment might lead to losing sight of the teamwork and cooperation and that this depends on each element in the system working in harmony with every other element. Team empowerment perhaps developed out of the quality circle initiatives of the 1970s and 1980s (Sims, 1986). Empowerment according to this perspective is an act of building, developing, and increasing power through cooperation and sharing and working together (Rothstein, 1995).
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Total Quality Management and Empowerment This perspective sees the need for changing the processes of work within an organisation as critical to achieving employee empowerment (Honold, 1998). This approach refers to the work of Edward Deming on quality and total quality management. In TQM the incremental improvement of the total quality is critical and as such empowerment is an approach used to empower people to work towards that goal. They are encouraged to use all they can to make continuous improvement on the quality of the processes, work inputs and outputs to satisfy the target market. As such empowerment is only a means, and not an aim in itself.
Multi-Dimensional Perspective to Empowerment This perspective does not claim to reject the previous perspectives. It builds on those perspectives but it suggests that one-dimensional approach to empowerment is not enough (Honold, 1998). For empowerment to be effective it must be multidimensional. Vogt and Murrell (1990), for example, identify six dimensions to empowerment: educating, leading, mentoring/supporting, providing, structuring, and one that incorporates all of the above. Empowerment, in their view, may be initiated by oneself or by others. In this perspective, employees are able to fully participate as partners, take initiative, work on teams as well as individually, and have the authority to make strategic decisions (Garfield, 1993). Accordingly, empowerment is more than a personal feeling (i.e., “I feel empowered today”). The process results from changes in organisational contextual and individual inter-relational variables, such as the quality of communication and information and the degree of true trust and confidence the individual receives from the work environment as well as the degree of responsibility he or she feels for the work results and outcomes. Information and communication, trust, rewards and incentives, and skill and knowledge have been among the most important underlying themes in much of the work conducted on empowerment to date (Cogner and Kanungo, 1988; Sprietzer, 1995; Vogt and Murrell, 1990; Bowen and Lawler, 1992,1995).
In the services marketing literature, some researchers have also viewed the empowerment issue from a multi-dimensional perspective (e.g., Bowen and Lawler, 1992, 1995; Rafiq and Ahmed, 1998; Heskett et al., 1994, 1997; Schlesinger and
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Zornitsky, 1991). Like other disciplines, empowerment in services marketing still holds different views. For example, in their empirical study Hartline and Ferrel (1996) were surprised to find out that empowered employees experience increased frustration (conflict) in their attempt to fulfil the demands of their managers and customers. However, it is possible that the problem here is not with empowerment per se; rather the problem is with the way empowerment is being implemented. Bowen and Lawler (1992; 1995) made a point by asserting that empowerment needs to be applied with careful deliberation and concern. But this point needs empirical evidence to support the logic that it seems to present. Peccei and Rosenthal (2001) tested data from a large-scale attitude survey covering approximately 2100 frontline employees in a large supermarket store in the UK after a service excellence initiative. The authors found that supportive leadership, customer care training, trust, and positive employee-employer relationships can produce a sense of empowerment among employees, and that empowerment will, in turn, enhance customer-oriented behaviours. As such the authors arrive at finding a positive association between all the above dimensions. While Peccei and Rosenthal’s study is closely related and perhaps similar to this research, it probably adds significance to study different context and build broader empirical testing for the study constructs. This thesis is also different in combining the antecedents and consequences of empowerment in a model that requires further testing.
The following discussion however will lead to the development of the conceptual framework of this study through the analysis of different perspectives and viewpoints within the service profit chain model.
3.6
Conceptual Framework
The conceptualisation of this research will be based on two related models. These models provide conceptual underpinnings about the significant relationship between the internal and the external service quality of the service organisation. Such models suggest that when service companies put employees and customers first, a radical shift occurs in the way they manage and measure success. These models will be utilised in this research to derive the conceptual model of this study. The first model
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is the service profit chain model developed by Heskett et al. (1994), and the second model will illustrate the possible linkages between empowerment and the service profit chain by Bowen and Lawler (1995).
3.6.1 The Service Profit Chain The service profit chain is a well-recognised model to explain the sustainable competitiveness of many organisations (Lau, 2000). According to the service profit chain (Heskett et al., 1994), internal service quality serves the foundation of the model and it creates a chain effect ultimately leading to an organisation’s growth and profitability. As such, the service-profit chain, as illustrated in Figure 3.1, establishes linear relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity (Heskett et al., 1994). These links in the chain (which are regarded by the authors as propositions) begin by profit and growth stimulated by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created through satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.
3.6.1.1 Evaluation of the Service Profit Chain Notwithstanding that the service profit chain is a well-received model (Lau, 2000; Schlesinger and Zornitsky, 1991; Rucci and Quinn, 1998), its relationships are still mostly conceptual providing some anecdotal evidence from a selected sample of those leading American organisations like Banc One, and South West Airlines. Moreover, the service profit chain, as shown in Figure 3.1, indicates that internal quality drives employee satisfaction, but does not clearly explain what are the internal quality factors that may lead to employee satisfaction. Nevertheless, the model has created continuous debate over the viability of the chain or some of its links and still stimulates both conceptual and empirical research in differing contexts. While Schlesinger and Zornitsky (1991) empirically support the relationship between an employee’s capabilities (implied within the internal service quality) and customer satisfaction, Loveman (1998) doubts the service profit chain’s series of hypothesised relationships between employees, customers, and financial outcomes. He argues that 68
the service profit chain’s series of hypothesised relationships between employee, customer, and financial outcomes has not been rigorously tested using data that cover all components of the model. The author provides empirical evidence through panel data from the branches of a large regional bank to test individually each of the service profit chain’s constituent hypotheses. In spite of the author’s initial reservation regarding the model, results generally support the model with some exceptions regarding the loyalty mirror, which simply means that customer satisfaction is not necessarily positively associated with employee satisfaction (e.g., customer satisfaction mirrors employee satisfaction). Similarly, Loveman’s (2000) findings were even more equivocal regarding the relationship between customer loyalty and employee satisfaction, which means that there is no clear association between loyal customers and satisfied service employees. Similar effort was initiated by Silvestro and Cross (2000) conducting an exploratory study of the application of Heskett, Sasser and Schlesinger’s service profit chain (Figure 3.1) to a single organisation, one of the UK’s leading retailers. Their results showed a correlation between profit, customer loyalty, customer satisfaction, service value, internal service quality, output quality and productivity; however, there was no support for the claim that these are driven by employee satisfaction and loyalty. Rather, they found a strong correlation between dissatisfaction and store profitability. Heskett et al.’s service profit chain (1997) postulated, through an empirical study of 20 large service organisations, that there are direct and strong relationships between profit, growth, customer loyalty, customer satisfaction, the value of goods and services delivered to customers, service quality and productivity, and employee capability, satisfaction, and loyalty. However, Silvestro and Cross (2000) criticised the original assumptions of the service profit chain, which claimed all positive relationships through out the chain. They argued that the Service Profit Chain Model has not subjected any single organisation to an analysis of all the linkages in the chain.
However, three factors were not taken into consideration in Silvestro and Cross’s study: First, the lack of an empowering condition in the studied organisation: Silvestro and Cross (2000: 257) acknowledge that “staff tend to have to work harder; they are more tightly supervised; mistakes are more likely to be picked up on; and the work place is more stressful”. An atmosphere like this obviously lacks any grounds for employee participation, involvement, or even freedom to deal with the customer. 69
Second, their study indicated that low levels of employee customer-contact might be an intervening factor for possible employee satisfaction. Finally, the empowerment antecedents were perhaps lacking. Without the prerequisites of an effective communication system, i.e., trust and good relationships between frontline employees and their supervisors, skilful and knowledgeable employees, and reward and incentive systems, it is expected that the empowerment system will be subject to failure.
These three elements are germane to the service profit chain. So it is very important when applying the chain not to forget the service context where there is a high level of contact and interaction between the customer and the frontline employee (see Table 2.3 in Chapter Two), the high level of intangibility of the service provided, and the empowering atmosphere. All of these elements are significant in establishing a positive link between employee satisfaction or loyalty and customer satisfaction or loyalty (see service classifications in section 2.2.1).
However, after looking at some of the debates about the service profit chain model, there is some empirical and conceptual evidences that supports the model, particularly the positive relationships between employee satisfaction and customer satisfaction (Schlesinger and Zornitsky, 1991; Schneider et al., 1980; Schneider and Bowen, 1985; Rucci et al., 1998; Hocutt and Stone, 1997; Moore et al., 1998). Rucci et al. (1998), for example, describe the application of “Employee-Customer-Profit Chain at Sears.” The model was used by Sears managers to “change the logic and culture of the business” (p. 83). Their empirical analysis confirmed the existence of significant positive relationships. The model shows that a 5 point improvement in employee attitudes and capabilities leads to a 1.3 point improvement in customer satisfaction, which in turn leads to 0.5 percent improvement in revenue growth.
Despite its adoption by managers, the evidence underlying the service profit chain has remained limited to case studies and empirical tests of components of the concept in certain environments (in the west).
While comprehensive and systematic evidence is necessary to examine the components of the chain, this study is not intended to fill this void. There is however, 70
a lack of focus on some parts of the model that relate to the role played by the service employee. Within the internal service quality part of the model, the key role of employee capabilities is in need of further investigation. Specifically, there is a need for further empirical research into the antecedents that lead to employee empowerment in the service sector. Accordingly there is a need for research to clearly identify the impact of customer-contact employees’ empowerment on employee satisfaction and customer satisfaction, leaving the impact of customer satisfaction on revenue and profit, not because of its insignificance but because of a high degree of consensus among researchers to the high degree of association between the two. Zeithaml’s (2000) “Service Quality, Profitability, and Economic Worth of Customers: What We Know and What We Don’t Know”, in the Journal of the Academy of Marketing Science, has provided compelling evidence from an intensive literature search regarding the strong association between customer satisfaction and economic returns.
More specifically this research will try to explore the empowerment construct through four antecedents namely, trust between supervisors and customer-contact employees, incentives, communication and information, and knowledge of customer-contact employees. This research will then investigate the impact of employee empowerment on employee and customer satisfaction. Moreover, the empowerment of employees is not being clearly explained or discussed in the service profit chain. However, Figure 3.2 (a modification of the service profit chain by Bowen and Lawler, 1995) will further focus on the empowerment dimensions of the internal service quality as a major factor to bring about the expected outcomes in terms of customer satisfaction and employee satisfaction.
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3.6.1.2 The Service Profit Chain Framework Figure 3.1 SPC Model 1
Internal service quality
Employee Retention Service Value
Employee Satisfaction Employee productivity
Customer satisfaction and loyalty
Revenue growth
Profitability
(Adapted from Heskett et al., “Putting the service profit chain to work.” Harvard Business Review, March-April 1994, pp.164-174.).
Research on the service profit chain, as illustrated in Figure 3.1 above, has not established, however, that empowerment is a necessary link in the chain (Bowen and Lawler, 1995). The chain starts with employee satisfaction (Heskett et al., 1994), which is most strongly affected by internal service quality and how much employees feel able to produce results for customers. The critical question raised by Bowen and Lawler (1995) is whether employees are more likely to feel this way in an empowerment approach or a production line approach (Levitt, 1972) (see Figure 3.2). Their response to this question is that empowerment is more consistent in the service context as discussed in the service characteristics and context in Chapter Two. On the other hand, The production line or ‘control’ approach according to Gilmore and Moreland (2000: 4) is “a hierarchal, mechanistic, bureaucratic, top down approach to management where procedures are set in place to ensure work standardisation”. The
72
advantage of such an approach is in obtaining consistency through work standardisation. As such, a service can be considered in the same way as a product where standardisation will ensure consistency. This is acceptable when services are routine, simple and mass produced. However, this approach might not work effectively with non-routine, complex, personalised and sometimes customised services. The empowerment approach then is more consistent. This is built on the concept that if the service organisation is determined to raise its quality and performance levels, then, customer-contact employees need to be involved (Gilmore and Moreland, 2000).
Bowen and Lawler (1995) speculate that the production-line approach (e.g., simplification of tasks, clear division of labour, routine rules and procedures, little decision-making discretion afforded to employees; see Levitt, 1972, 1976) at McDonald’s Restaurants is the key factor that enables employees to feel that they can produce results for customers because their job is routine and requires less flexibility and personal judgment. As such, employees who confidently perform specialised tasks according to established procedures see that the service delivery system rarely fails and customers are almost always satisfied (Bowen and Lawler, 1995). Nevertheless, with the accelerating need for customisation (Lovelock, 1983), adaptability in response to customer needs (Hartline and Ferrell, 1996), responsiveness (Parasuraman et al., 1985) and spontaneity (Bitner et al., 1990) and flexibility, customer-contact employees in service firms need to use their own selfjudgment and empowerment to deliver better service quality and better satisfy their customers.
Accordingly, the firm situation and the type of task that the employee is performing are very critical determinants of empowerment success and implementation. Again, in service organisations with non-routine tasks and where the employee-customer contact is high, empowering employees can be essential for consideration and perhaps implementation.
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Figure 3.2 The Empowerment Model
Empowerment or Production Line Approach
Employee Feels Able to Produce Results for Customers
Employee Satisfaction and Loyalty
Service Value
Customer Satisfaction and Loyalty
Profits and Growth
(Adapted from Bowen and Lawler “Empowering service employees.” Sloan Management Review, Summer, 1995).
3.6.2 The Empowerment Model This model in Figure 3.2 starts with the choice between the empowerment or the production-line approach, depending on the type and nature of the service. This suggests that there is no one best approach for all organisations, but the ones that might benefit more from empowerment are service organisations with the following contingencies, according to Bowen and Lawler (1992: 37):
1- The basic business strategy of the firm is based on differentiation, customisation, and personalised service (see Lovelock, 1983). 2- The relationship with the customer is based on long time period and relationship style (see service classifications, section 2.2.1). 3- The technology is non-routine and complex. 4- The business environment is unpredictable and can hold surprises.
These elements (consistent with Lovelock, 1983, on service classifications) are considered as a necessary first step to be followed by the sequential stages of the original service profit chain. Particularly, these are more compatible with the empowerment approach rather than the production line approach described in the previous section. Empowerment, however, is not an easy solution that can be applied
74
overnight. Forrester (2000: 71) strongly argues, “empowerment programmes sometimes founder because they are made up of piecemeal actions that are positive in themselves but can’t succeed without addressing the larger system”. Also reflecting this is the concept of Bowen and Lawler (1992; 1995), suggesting that many empowerment programmes fail when they focus on power without also redistributing information, knowledge, and rewards. Bowen and Lawler (1995) concentrate primarily upon factors necessary for empowerment to exist. The authors add further weight by formulating these conditions in an empowerment equation where empowerment = power x information x knowledge x rewards (Bowen and Lawler, 1995: 74). These four elements are important in enabling the service people, the customer-contact staff, in developing their capabilities through information, skills and knowledge, incentives and power. Hence, by sharing these four prerequisites to empowerment, employees will be more susceptible to be more comfortable with empowerment than the production-line approach. These four elements: information and communication, incentives, knowledge, and incentives (power, which is one of the elements provided by Bowen and Lawler (1995) is not an antecedent to empowerment because it is implied within the empowerment construct itself), are considered as the antecedents to empowerment and explicitly demonstrated in the research proposed model in Figure 3.3. Furthermore, trust is a dimension that may replace power when managers are willing to rely on their employees based on the belief that their employees are competent, reliable, and honest (Hart and Saunders 1997). According to Spreitzer et al (1999) trust is likely to increase the willingness of managers to involve frontline employees and give them more empowerment.
While Figure 3.1 describes the possible linkage between the internal service quality (where the emphasis is on the management support and staff capabilities in developing service quality ready to meet customer needs), employee satisfaction and productivity, customer satisfaction, and profitability and growth, Figure 3.2 concentrates on a major aspect of the internal service quality in relation to employee and customer satisfaction and the following section will discuss the proposed research model in Figure 3.3, which is being inspired by the previous two models in Figures 3.1 and 3.2.
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3.6.3 The Proposed Model During the last ten years a large amount of anecdotal and case study evidence has accumulated, creating debate concerning the viability or importance of the empowerment efforts. This situation creates a need for more systematic and empirical studies in different contexts to explore conditions and circumstances under which such programmes might be effective for the service delivery process. Thus, this study aims to examine the relationship between knowledge, trust, communication, and incentives and customer-contact employees’ empowerment, and whether these conditions work in the Jordanian banking sector to sustain and enhance customercontact employees’ responsiveness and capabilities in serving their customers. These four antecedents to empowerment are assumed to form the basic infrastructure for an enduring empowerment. Many organisations tried to apply the empowerment concept but they fail (Argyris, 1998). Argyris believes that despite all the talk and the change programmes, empowerment is still mostly an illusion: The change programmes and practices we employ are full of inner contradictions that cripple innovation, motivation, and drive. At the same time, CEOs subtly undermine empowerment. Managers love empowerment in theory, but the command-and-control model is what they trust and know best. For their part, employees are often ambivalent about empowerment – it is great as long as they are not held personally accountable (89). As such, the problem is not with the change programmes, the problem is with people implementing change programmes. The justification here is that if knowledge is enhanced, communication is established, incentives are provided for innovative ideas and trust is prevailing. However, this does not guarantee the automatic application of empowerment but it establishes the necessary conditions and the right climate for a management initiative to implement such programmes. Argyris (1998) and other commentators (Eccels, 1993) overlook the right conditions that need to be built before introducing any empowerment programmes. These conditions include establishing the right relationships between supervisors and their employees where they conceive each other as partners instead of subordinates. Such a shift in attitude must be followed by other changes. Communication should ensure the free and open 76
flow of information throughout the organisation to those who are in direct contact with the customer in order to ensure the ability of those service people to answer customer questions and solve customer problems. A change also is required in terms of incentives. Incentives must reward people for their responsiveness to customer needs and for their initiative and adaptability. Employees must be viewed as knowledge workers rather than muscle workers. This study expects that these antecedents work as important conditions to an enduring state of empowerment among customer-contact employees, deserving further investigation and exploration in different environments. Additionally, the empowerment of customer-contact employees is also important in this study and its importance emanates from its ability to influence employee satisfaction and customer satisfaction as well.
However, more about the antecedents and consequences of empowerment in section 3.4 provides further justifications to the importance of such antecedents to employee empowerment. This study will also consider the impact of empowerment on the satisfaction of employees and customers. The importance of satisfaction is very clearly expressed in the literature for both customers and employees (see for example, Reichheld and Sasser, 1990; Schneider and Bowen, 1985, and the literature about Service Profit Chain Model by Heskett et al., 1997). Finally, this study will incorporate the dimensions presented by the models in Figure 3.1 and Figure 3.2 to be developed and modified in Figure 3.3, as illustrated in the following framework and expressed in more detail in the rest of this chapter. Figure 3.3 The Proposed Study Model of Empowerment
Knowledge and skill Communication
Employee Satisfaction and loyalty
Employee Empowerment
Trust
Customer Satisfaction and Loyalty
Incentives
This figure includes three constructs proposed by Bowen and Lawler as antecedents of empowerment (1995) adding the trust construct. Trust is a widely researched and
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recognised construct in terms of its impact between customers, staff and management. Trust is being investigated in the literature in association with empowerment. Spreitzer et al. (1999), for example, provided empirical evidence demonstrating that managerial trust in lower level employees improves their involvement and participation in decision-making situations. More justification about trust and empowerment is discussed under “empowerment antecedents” in the following section. Moreover, these four constructs are predicted to have an influence on the staff
empowerment,
particularly
customer-contact
employees.
Employee
empowerment, then, is expected to produce satisfied employees who are capable of providing better value for their customers. Though it is not going to be investigated in this study, the service value presented in Figure 3.2 and implied in Figure 3.3 represents the results customers receive in relation to the total costs (Heskett et al., 1994). That is, value is a function of quality and price or cost of service. Service value, as in Figure 3.3, represents the employees’ capabilities of dealing with customer problems on the spot. That is what makes customers more satisfied and loyal (Reichheld and Sasser, 1990).
Relationships in this figure will further be explained in the following section with propositions provided for every relationship, as shown in the Table 3.1 at the end of this chapter.
3.7
Empowerment Antecedents
3.7.1 Knowledge and Empowerment Knowledge and empowerment are expected to be related constructs and the rise of knowledge work has been foreseen for many years (Cortada, 1998). In a longitudinal empirical study between 1987 and 1990, Lawler, Mohrman, and Ledford (1992) have stressed the importance of knowledge and skill development and concluded that:
…Without the right skills, it is impossible for individuals to participate in the business and influence its direction. At a more basic level, it is impossible for individuals without skills to do most jobs effectively. (16)
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The term “knowledge worker”, described by Peter Drucker (1989) in his book, The New Realities, signals to the great shift from the industrial worker into the knowledge worker where knowledge is indeed an invisible asset; “an invisible asset that resides largely in the minds of human beings and therefore management can no longer be about close observation and monitoring (Davenport, 2001: 44). As such, knowledge, skill and expertise are very important conditions of empowered staff to act and deal with customers based on that skill or knowledge (see, Drucker, 1989). Simply, knowledge of the job content and context will enable service employees to solve customers’ problems and answer customers’ questions promptly saving time and effort for the customer, the manager and themselves. Knowledge is currently being touted as the basis of future competitiveness (Swan et al., 2000). What is new about attitudes to knowledge today is the recognition of the need to harness, manage and use it like any other asset. An important goal of knowledge and knowledge renewal (Ballantyne, 2000) is to enhance the customer consciousness of employees. Others researchers, like Thomas and Velthouse (1990), Spreitzer (1995), and Goodale and Koerner (1997), relate knowledge, skill and expertise to self-efficacy (i.e., the perception of confidence in one’s ability to perform well). Thus, knowledge increases an employee’s confidence in their decisions and more importantly in serving their customers. However, while knowledge and expertise have been heavily researched and many articles and books have tackled the issue, still there is a lack of empirical work exploring the relationship between these constructs and the empowerment of customer-contact employees. This leads to the development of the first three propositions:
P1: empowerment levels are higher among employees with more knowledge and skills.
3.7.2 Communication and Empowerment Communication is operationalised as the extent of information sharing between customer-contact employees and their supervisors (e.g., upward and downward communication) in order to serve the customer and meet his/her expectations. Any relationship would include at least two parties, often more in a network of
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relationships, and in order for the relationship to develop successfully the parties involved have to share information about needs that have to be fulfilled and solutions that can be offered (Grönroos, 2000). Sharing information according to Pfeffer (1994: 41) is:
A necessary precondition to another important feature found in many successful work systems: encouraging the decentralisation of decision
making
and
broader
worker
participation
and
empowerment in controlling their own work process.
Furthermore, parties involved have to communicate about different ways of creating and fulfilling solutions to customer needs and of handling activities (Grönroos, 2000) and to be able to share information and listen to each other, and not rely on persuasion and manipulation. Mary Parker Follet, one of management theory’s finest pioneers, identified at the turn of the last century that true empowerment is achieved only when the possibility of a respectful ongoing dialogue between all members of the organisation is established (Eylon, 1998). The same ideas are heralded recently by Grönroos (2000), emphasising that true dialogue between the relationship partners has to emerge, away from the manipulative, one-way type of communication.
Indeed, information sharing is an essential part of high performance systems (Pfeffer and Veiga, 1999). The sharing of information according to Pfeffer and Veiga on such things as financial performance, strategy, and operational measures conveys to the organisation’s people that they are trusted. Even motivated and trained people cannot contribute to enhancing organisational performance if they don’t have information of important dimensions of performance and training on how to use and interpret that information. Communication and sharing information in this study is assumed to be associated with empowerment because communication is the means by which employees’ knowledge will be developed through the flow of information throughout the organisation in order to serve the customer better. Recently, Randolph and Sashkin (2002) provide a compelling rationale arguing that open sharing of information is crucial to empowerment, since without information people cannot act responsibly, even if they want to. The authors recognise that the problem in most organisations is 80
that top managers are often reluctant to share financial, performance, and strategic information with people throughout the organisation. Perhaps managers feel that such information is too complex and too sensitive for such sharing.
Researchers have also theorised and demonstrated that open communication between frontline personnel and managers is important for achieving service quality (Parasuraman et al., 1990; Parasuraman et al., 1988). However, such efforts overlooked the possible association between communication and empowerment. While communication and delegation of authority are very important to ensure that things are going just right, a system of communication in different ways (e.g., upward and downward communication) is also necessary to keep the employee informed of the organisation’s strategy, objectives, mission and other developments. This in itself may improve the employees’ self esteem and morale. An example is the financial information
that
tells
everybody
about
the
organisation’s
direction
and
competitiveness (Christison, 1994). Companies need to disseminate information by sharing customer expectations and feedback and financial information (Bowen and Lawler, 1995). Kanter suggested that in order to be empowering, organisations must “make more information more available to more people at more levels through more devices” (1989: 5). Simply, communication in general and information sharing in particular are very important for employees’ empowerment by enabling them to answer the customer’s question correctly, quickly and effectively. Based upon these ideas, the second proposition is:
P2: The levels of empowerment will be higher for frontline employees when communication and dissemination of information is effective in the organisation.
3.7.3 Trust and Empowerment Trust is an individual’s willingness to be vulnerable to another based on the belief that another party is competent, honest, reliable, and concerned about the individual’s own interests (Hart and Saunders, 1997; Mayer et al., 1995). Vulnerability is defined as the potential for significant risk of loss (Granovetter, 1985; Mayer et al., 1995; Moorman et al., 1992). In this study, trust is predicted to be of importance to empowerment of service employees. Such a prediction is not only a logical one but
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also supported in the literature. For example, Rothstein et al. (1995) stress that without trust, no empowerment scheme could work. Accordingly, Hart and Saunders (1997) and Mayer et al. (1995) argue that without trust people assume self-protective, defensive postures that inhibit learning. As such, leaders need to trust employees by distributing power, exhibiting confidence in employees, providing necessary resources, and accepting new ideas. Kotter (1995) observed that in transforming an organisation, management needed to encourage risk-taking and non-traditional ideas, activities and actions and that risk-taking will prevail only in a culture of trust. The central argument concerning “trust” as a construct in this study is that: employees close to the customer are the first to know about problems and are in the best position to determine what can be done to satisfy the customer (Hart et al., 1990). They can be more responsive and proactive than their supervisors in dealing with customer problems and complaints due to their constant interactions with their customers more than any one else in the organisation. Spreitzer et al. (1999) demonstrate that managerial trust in customer-contact employees will increase the likelihood that managers will involve first line employees in decision-making and give them more empowerment. In spite of the conceptual argument provided by authors like Hart et al. (1990) and Kotter (1995), and empirical evidence supported by Spreitzer et al. (1999) from the automotive industry, further empirical evidence is warranted in the service sector to demonstrate that trust is a key antecedent to employee empowerment. This will lead to the propososition that:
P3: Empowerment will be higher among frontline employees when more trust is being exercised between them and their supervisors.
3.7.4 Incentives and Empowerment Another mechanism for reducing the risks associated with trusting actions is incentives. In traditional hierarchical systems, a major determinant of an individual’s pay is the type of work they do (Miles and Creed, 1995). A high involvement system requires a different reward system: one that rewards performance rather than the job per se (Lawler, 1992). Such rewards are termed incentives based on the outcomes of the employees’ behaviour rather than for specific behaviours (Eisenhardt, 1989). Incentives work to co-align employee preferences with those of the organisation
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which reduces the risk of self-interested behaviour. A company’s reward and incentive structure is expected to give employees positive reinforcement for solving problems and pleasing customers (Hart et al., 1990). Pleasing customers or solving customers’ problems can be publicised and held up as examples to inspire others (Hart et al., 1990). Spreitzer (1995), Hesterly et al. (1990), Lawler (1990), and Miles and Creed (1995) argue that the role of incentives will help make managers more willing to involve lower level employees in decision-making, and enhance employees’ concern for the success of their organisation. However, much of the literature regarding the issue of incentives and empowerment is either very broad or lacks empirical evidence. While it is important to study the general association between empowerment and incentives, it is rather more significant to look at such relationships, specifically in service encounter situations in which customers’ needs and problems are being handled. Nevertheless, Heskett et al. (1997) explain the association between incentives and taking “ownership” of customers’ problems, but this conceptual assertion requires an empirical investigation to explore such an association. Therefore, the following proposition will look at rewards and incentives as a precondition for empowerment of customer-contact employees in order to take more responsibility in solving problems and pleasing customers.
P4: empowerment levels will be higher for frontline employees who are being rewarded and recognised for their ability to satisfy customers.
3.7.5 Employee Empowerment and Job Satisfaction Knowledge, communication, trust and incentives are all expected to contribute to establishing more enduring degrees of empowerment for customer-contact employees. Employee empowerment therefore is predicted to improve the level of self-efficacy among employees (Spreitzer, 1995; Thomas and Velthouse, 1991; Conger and Kanungo, 1988). Furthermore, employees who have greater choice and meaning regarding how to do their own work have been found to have high job satisfaction and thus contribute to high performance (Spreitzer et al., 1997). Spreitzer et al. (1997) demonstrated empirically that meaning serves as the “engine” of empowerment where meaning or purpose involves a fit between the needs of one’s work role and one’s values, beliefs, and behaviours (Brief and Nord, 1990). People
83
who feel they have a degree of control over their work are also less likely to feel alienated (Seligman, 1975). Whether or not people feel empowered can have consequences for individuals and organisations (Koberge et al., 1999); perceptions of empowerment can enhance the value of work for individuals, increase job satisfaction, and contribute to work productivity and success (Lawler, 1992; Eylon and Au, 1996; Fulford and Enz, 1995; Spreitzer, 1995). Koberge et al.’s (1999) findings suggest that workers who feel empowered have beneficial effects for both organisations and individuals through increased job satisfaction and work productivity/effectiveness and a decreased propensity to leave the organisation. Therefore, their findings suggest that in attempting a service delivery process, highly empowered service employees will be more satisfied with their jobs than less empowered employees. Job satisfaction concerns the degree to which employees are satisfied with particular aspects of their job (Hackman and Lawler, 1971). Satisfaction with “the work itself” is a particularly important attitude concerning the intrinsic rewards of a job. For frontline service employees, a specific job facet that is particularly relevant during a service recovery or delivery attempt is the opportunity for independent thought and actions (autonomy).
In research on job enrichment, autonomy has been associated with higher employee satisfaction and work quality (Hackman and Oldham, 1980; Lower et al., 1985). Thus, the following proposition is being presented:
P5: In a service encounter, job satisfaction will be greater for employees who have been given more empowerment to manage the service delivery process than those lacking empowerment.
Empowerment is expected in this study to directly satisfy the customer-contact employees and customers. The customer-contact employees’ levels of discretion responsiveness and control will directly influence customers. As such, a service employee who is in control of the situation at hand in the service encounter will be able to solve the customers’ problems and needs more promptly than employees who have to seek answers through their supervisors before getting back to their customers. This in turn provides direct satisfaction to the customer. Thus, the following proposition is: 84
P6: In a service encounter employee empowerment will lead to customer satisfaction.
The final relationship is between employee satisfaction and the customer satisfaction, assuming that employee satisfaction will be reflected on customer satisfaction. Accordingly, those employees who are more satisfied will be more capable of mirroring that satisfaction to their customers. There is support for the relationship between employee satisfaction and customer satisfaction from the Service Profit Chain literature (Heskett et al., 1994) as illustrated back in section 3.6.1. Part of the chain’s argument supports the link between satisfied employees and satisfied customers (Lau, 2000; Rucci and Quinn, 1998; Schlesinger and Zornitsky, 1991). Therefore, the final proposition states that.
P7: In a service encounter employee satisfaction will lead to greater customer satisfaction.
3.8
Summary
Chapter Three begins by introducing the empowerment concept signifying the importance of empowerment not only in the service sector but also in organisations across the spectrum of different industries (Fulford and Enz, 1995).
The chapter starts by defining empowerment and providing different concepts and definitions to empowerment. The chapter proceeds to introduce empowerment according to the psychological perspective and then differentiating between empowerment and delegation of authority. The nature and scope of empowerment is then presented followed by different perspectives to empowerment including a discussion into the roots of empowerment and the different approaches. This section introduced the leadership approach to empowerment, the individual perspective, team empowerment, the total quality management approach, and finally the multidimensional approach to empowerment.
The next section discusses the conceptual framework of the research. According to Bowen and Lawler (1995) empowerment is lead by four preconditions including
85
power, information, knowledge, and rewards. Power has been replaced with trust as indicated earlier because trust can be based on positive relationships, win-win policy, and good well between parties involved. The research framework presented in this chapter in Figure 3.4 is based on the Bowen and Lawler (1995) model, which is also built on the evaluation of the Service Profit Chain Model, developed by Heskett et al. (1994). In this framework, four antecedents are being examined in this study to explore their relationship with empowerment and if there is a significant impact by these prerequisites on empowerment of customer contact employees in the banking system in Jordan. This framework also presents the antecedents of empowerment including employee satisfaction followed by customer satisfaction. As such, the investigation will try to further explore the impact of empowerment on employee satisfaction and customer satisfaction and in turn, the impact of employee satisfaction on the customer satisfaction.
The framework’s propositions are discussed in the final section and illustrated in Table 3.1 at the end of the chapter. This study took place in Jordan, the researcher’s country of residence. As such, the following chapter will try to present an overview of the Jordanian management and culture background, particularly in relation to the banking sector and structure in Jordan.
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Table 3.1
Study Propositions
Propositions
P1
Relationship Empowerment levels are higher among employees with more knowledge and skills.
P2
The level of empowerment will be higher for frontline employees when communication and dissemination of information is effectively exercised in the organisation.
P3
Empowerment will be higher among frontline employees when more trust is being exercised between them and their supervisors.
P4
Empowerment will be higher for frontline employees who are being rewarded and recognised for their competence and authority and ability to meet customers’ expectations.
P5
In a service encounter, job satisfaction will be greater for employees who have been given the autonomy to manage the service delivery process than those lacking autonomy.
P6
In a service delivery or service encounter, empowerment leads to customer satisfaction.
P7
In a service encounter employee satisfaction will lead to greater customer satisfaction.
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Table 3.2
Summary of diverse literature on empowerment, aspects, and
implications Empowerment
Authors
Implications/Findings
StudyType1
Level of analysis2
Notes
Commitment, internal vs external
Argyris (1998)
C
E and M
CEO s work against empowerment using the old command-and –control approach.
Empowerment means “turning the frontline loose”.
Bowen and Lawelr (1992)
C
E
The service encounter is described as “The moment of truth” Enhancing feelings of self-efficacy, empowerment is an increased intrinsic task motivation.
Carlzon
Empowerment is still mostly an illusion because of external commitment rather than internal commitment Employees are empowered if they get information, rewarded, have the knowledge and the power to make decisions that influence organisational direction and performance Service encounters (buyer-seller interaction) should lead to customer satisfaction Empowerment as an enabling process affects both initiation and persistence of subordinates’ task behaviour. Supportive peer and customer relationships are predictive of higher levels of empowerment Fostering employee commitment for self empowerment requires communicating the organisation’s mission, organisational justice, creating a sense of community, supporting employee development and placing people first. Management need to reshape power structures and processes of the organisation and build up a hierarchy of empowerment practices Organisations need to strive to allow their members the authority and control to perform and define the essential functions of their jobs. Lessons from best firms.
C
E
C
E and M
E
E
C with some examples
E
C
E/M
C
E/M
dimensions/aspects or concepts
Meaning, influence and self efficacy
Cogner and Kanungo (1988) and Thomas and Velthouse (1990). Corsun and Enz (1999)
Employee commitment
Dessler, (1999)
Responsibility, judgment and decisive action
Eccels (1993)
Quality information, trust, and real responsibility
Eylon (1998)
Support of employee involvement
Ford et al (2001)
88
Employees are using those “moments of truth” to value these encounters and please their customers. Organisational contextual factors may lead to lowering self-efficacy belief among employees.
Before they can market empowerment to their employees, management have a more introverted task. They have to market it to themselves.
Empowerment dimensions/ aspects or concepts
Authors
Implications/Findings
StudyType1
Level of analysis2
Notes
Power-Sharing, value and expectations.
Forrester (2000)
When power is widely distributed organisations do better than those which power is held by relatively few people.
C with some examples
E
Middle managers for example need to realise the value and the importance of giving up on some power to those in the frontline.
Meaning, self efficacy, and influence
Fulford and Enz (1995)
E
E
Intangible dimensions of the service
Gilmore and Moreland (2000) Hartline and Ferrel (1996)
Empowerment leads to increased levels of employee and customer satisfaction and loyalty. Managers need to realise the importance of empowerment.
E
E
Managers who are committed to service quality are more likely to empower their employees. To increase customers’ perceptions of service quality, managers must increase employee self-efficacy and job satisfaction, and reduce employees’ role conflict and ambiguity. A linear positive association is found at Sears: Internal service quality including employee empowerment influenced employee and customer satisfaction as well as the overall performance of the company. Effective communication and information are necessary prerequisites for empowerment The intangible sources of service delivery increase the value of service people involvement and empowerment in service delivery. Empowered people have beneficial effects for both organisations and individuals through increased job satisfaction. In services, competent and helpful employees
E
E
T
E and M
C
E
E
E
E
E
E
E
Employee adaptability, selfefficacy, roleconflict, and role ambiguity and management commitment to service quality
Internal service quality including employee empowerment and capability
Heskett et al (1997)Rucc i et al (1998)
Communication and Information must be available through more devices
Kanter (1989)
Intangible services
Crosby et al (1991)
Perception of empowerment
Koberg et al (1999)
Quality of work life
Lau (2000)
89
The production line approach does not suit the intangible elements of the service.
are the key to success
Empowerment dimensions/ aspects or concepts Control and responsibility
Authors
Implications/Findings
StudyType1
Level of analysis2
Lawler et al (1992)
E
E
Control, Decisionmaking and IT
Malone (1997)
Empowerment, control and responsibility given to service people will enhance the firm’s financial returns Empowerment is not just a fad, but a response to fundamental changes in the economics of decision-making enabled by new ITs.
C
-
Is Empowerment Just a fad? It signifies the importance of IT and empowerment
Empowerment is not suitable for all occasions or all types of employees. Empowerment can help achieve economic goals and it can help people capitalise on rich diversity of knowledge, experience, and motivation.
C
E
T
E
Empowerment of service people is contingent on their tasks, and their customers’ needs. Empowerment does not create freedom without response-ability.
Gaps between employee perceptions of service quality and customer satisfaction are negatively related to both job satisfaction and empowerment and is a key promoter of job satisfaction. Evidence of convergent and discriminant validity of four dimensional measure, Suggesting that each of the four dimensions contributes to an overall construct of empowerment. A unit with little role ambiguity, strong sociopolitical support, access to information, and participation is found to be associated with managerial perceptions of empowerment. Supportive management leads to employee capability.
E
E
E
E
E
M
E
E
Putting people first
Customer needs, task complexity and degrees of discretion Accurate information, autonomy via boundaries, and selfmanaged teams.
Job satisfaction, service capability, and customer satisfaction
Niehoff Pfeffer and veiga (1999) Rafiq and Ahmed
Randolph and Sashkin (2002)
Schneider Shelsinger and Zornitsky (1991)
Meaning, Competence, self determination, and impact
Spreitzer (1995)
Role ambiguity, span of control, access to information and resources, sociopolitical support, and work unit climate
Spretizer (1996)
Supportive management, trust and authority
Yoon (2001)
1-C = conceptual; E = empirical , 2-E = employees; M = managers.
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Notes
The four dimensional measure includes locus of control, self-esteem, access to information, and reward
Chapter Four
Jordanian and Arab Banking Background
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4
Jordanian and Arab Banking Background
4.1
Introduction
This chapter presents a brief and general background to the Arab and Jordanian management and culture in a period of uncertainty and continuous change. However, the complexity of human nature, diversity of experience and the dynamics of organisational environment make it unrealistic to advocate universal assumptions about human nature (Ali, 1989). In the Middle East, nothing is certain except change. The area is rich in resources and internationally intriguing. The social, economic, and political orientations besides modern global changes have a considerable influence on the nature of management, particularly on autonomy, participation and delegation of authority (Ali, 1989). The banking system is no different; it is being influenced by local and global changes including competition, privatisation, and deregulations. However, most of the research about the banking system in the Arab countries, and Jordan in particular, is still in its infancy and requires more empirical efforts. Moreover, in the banking system, most studies concentrate on the financial measures overlooking the quality of service delivery, the quality of work life, the employeecustomer relationship, and autonomy programmes.
This chapter will provide an introduction about the nature of the banking system in Jordan in addition to a context-related discussion. Thus, this chapter will begin by presenting a background about the banking industry in Jordan; the banking system structure is then discussed under the umbrella of the Central Bank of Jordan followed by a discussion of a transition stage to more flexible systems with a better environment to provide more autonomy and quality of work life conditions for the staff. A brief conclusion completes the chapter.
4.2
The Banking Industry in Jordan
Banking in Jordan goes back to 1925 when the Ottoman Bank, a Turkish bank, opened a branch in Amman, the capital of Jordan (Horani, 1978: 11). By 1948 there were four banks, the Ottoman Bank, the Arab Bank, the Umah Bank and the British Bank of the Middle East in Jordan. There were five branches of these banks in the
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two largest cities in the country, Amman and Irbid (Horani, 1978). The Central Bank of Jordan was established in 1964 and started regulating the banking activities in the country (Hendi and Jasser, 1982). As of 2002, there are now 21 banks with a network of 469 branches (see Table 4.1 below).
Table 4.1 Total Number of Banks and Branches in Jordan Year
No. of Banks
No. of Branches
1997
20
451
1998
21
457
1999
21
463
2000
21
469
Source: Central Bank of Jordan.
Banks in Jordan can be classified into two main types: Jordanian Arab banks and international Western (Anglo-American) banks. In Jordan there are commercial (retailing) banks, which are generally larger in size, and investment banks that are mainly the medium and small banks.
Al-Rasheed (1994) illustrated through an empirical investigation that Jordanian bank managers are educated and experienced carrying the same patterns of motivation and job satisfaction similar to Western managers. However, there is a lack of empirical research investigating the relationship between managers, employees and customers, with the exception of Al-Smadi (1997). Al-Smadi used a sample of 500 bank customers in Jordan to examine customer perception concerning bank employees’ characteristics, including cooperation, courtesy, speed of service, personal appearance, and empowerment. The study demonstrated that customer-contact employees’ qualities (i.e., empowerment, courtesy and co-operation) among other qualities positively influence the salesperson-customer relationship. This study, however, only investigated the customer perception and did not examine the employees’ perception regarding the empowerment conditions and antecedents. Moreover, such findings require more focused effort, specifically in exploring the impact of employee latitude and autonomy in service encounter situations.
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Figure 4.1 The Banking Structure of Jordan
The Banking System 2001 1964 Central Bank of Jordan
3
National Banks
Foreign Banks
Commercial Banks 1930 1956 1960 1960 1974 1977 1978 1989 1996
Arab Bank PLC Jordan National Bank PLC Bank of Jordan PLC Cairo Amman Bank Housing Bank for Trade and Finance
Jordan Kuwait Bank Jordan Gulf Bank Arab Banking Corporation (Jordan) Export and Finance Bank
33 45 40 33 94 31 24 14 1
55 6 25 19 5 7 5 3 1
53
16
11
-
9 7 12 7 16
7 2 1 1
1949 HSBC bank Middle East 1951 Egyptian Arab Land Bank
92 12 5 18 5 2 2 -
3 20
1957 Rafidain Bank
4
1969 Standard Charterred Grindlays Bank LTD 1974 Citibank NA
11 3
Islamic Banks 1979 Jordan Islamic Bank for Finance and Investment 1997 Islamic International Arab Bank PLC
Investment Banks 1978 1989 1991 1993 1993
Arab Jordan Investment Bank Jordan Investment and Finance Bank Union Bank for Savings & Investment
Philadelphia Investment Bank Middle East Investment Bank
2 1 -
Specialised Credit Institutions Public Ownership 1959
Agricultural Credit Corporation Housing & Urban Development Corp. Cities and Villages Development Bank
1965 1966
Joint Ownership 22 3 5
Other Financial Institutions Money Changers
Contractual Credit & saving Companies 1984 Beit AL-Mal Saving and Investment for Housing Company Ltd.(Beitna)
In Amman
42
Out of Amman 32
Representative Offices
In Jordan
1
Out of Jordan
Source: Central Bank of Jordan (2001).
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6
8
4.3
Structure of the Jordanian Banking Sector
The above diagram (Figure 4.1) is an illustration of the banking structure in Jordan issued by the (CBJ) Central Bank of Jordan. This section will discuss the units of this banking system and structure as follows.
4.3.1 Central Bank of Jordan Foundation Jordan set out preparations to establish the Central Bank of Jordan (CBJ) in the late 1950s. The Law of the CBJ was enacted in 1959. Thereafter, its operational procedures were commenced on the first day of October 1964. The CBJ succeeded the Jordan Currency Board, which had been established in 1950. The capital of the CBJ, which is totally owned by the government, was increased gradually, from one million to 18 million Jordanian Dinars. The CBJ enjoys the status of an independent and autonomous corporate body, although its capital is owned entirely by the government.
Objectives and Functions of the CBJ The law establishing the CBJ stipulates “the objectives of the Central Bank shall be to maintain monetary stability in the Kingdom, to ensure the convertibility of the Jordanian Dinar, and to promote the sustained growth of the Kingdom’s economy in accordance with the general economic policy of the government.”
To achieve the above-mentioned objectives, the CBJ’s functions have evolved to include the following: • Issuing and regulating bank notes and coins. • Maintaining and managing the country’s reserves of gold and foreign exchange. • Acting as a banker and fiscal agent to the government and public institutions. • Acting as a banker to banks and specialised credit institutions. •
Maintaining the safety of the banking system.
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•
Advising the government on the formulation and implementation of fiscal and economic policies.
•
Managing monetary problems and participating in containing local economic problems.
•
Regulating credit.
In addition to the above mentioned functions, the CBJ has effectively participated in the establishment of a number of financial institutions and corporations, such as Amman Stock Exchange, Jordan Mortgage Refinance Company, Jordan Loan Guarantee Corporation, Deposit Insurance Corporation, all of which have played an evident role in supporting economic development efforts in Jordan.
In summary, the Central Bank of Jordan (CBJ) control and regulate the banking system in Jordan according to Jordan law. The CBJ oversees national banks and international or foreign banks. In Jordan, there are five foreign banks, including HSBC Bank Middle East, Citybank N.A, Grindlays Bank, Arab Egyptian Land Bank, and Rafidain Bank.
The national banks include commercial banks, Islamic banks, investment banks and specialised credit institutions. However, the following will detail the services and offerings provided by each category of these banks.
4.3.2 Commercial Banks Commercial banks in Jordan operate under the control of the CBJ. Commercial banks offer a broad range of deposit accounts, including checking, savings, and time deposits, and extend loans to individuals and businesses. Commercial banks can be contrasted with investment banking firms, such as brokerage firms, which generally are involved in arranging for the sale of corporate or municipal securities. Commercial banks support public sector institutions and companies, provide financing to the government, supporting medium- and small-sized projects and schemes and promoting national and international agreements, loans, grants, and financing programmes. Between 1930 and 1996, there were nine commercial banks in Jordan starting with the Arab Bank PLC in 1930 and the most recent establishment
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was in 1996, the Export and Finance Bank. These banks contribute heavily in supporting the economic status in Jordan and help the government and the public and the private sectors through their financing and banking services, in addition to providing a huge traditional and modern banking service to the public at large.
4.3.3 Islamic Banks There are two major Islamic banks in Jordan. The first is Jordan Islamic Bank for Finance and Investment, which was established as a public shareholding company on 28 November, 1978. It was licensed to practise financing, banking and investment activities in compliance with the provisions of the glorious Islamic Shari’a in accordance with the Special Law according to which the Bank was established. The second Islamic bank, named the Islamic International Arab Bank PLC, was established in 1997 and had nine branches by the year 2000. These Islamic banks provide generic banking services that most banks deal with, including joint investment accounts, savings, fixed accounts, issuing of banking cards, including Visa card, Visa Electron and Master Card, issuing of ATM cards (24-hour service), accepting of cheques and collection of financial papers, money transfer, using the SWIFT system and a host of other services which do not violate the Islamic law. These banks however are different from commercial banks in providing banking services according to the Shari’a Islamiyeah (Islamic Law) providing the following Islamic banking services based on a non-interest basis because interest or usury is haram (Unlawful) according to the teaching of Islam.
•
Mudaraba is a contract between provider of capital and an entrepreneur. The provider, called Rabb al-amal in Arabic, entrusts money to the entrepreneur (referred to as the mudarib in Arabic, or the working partner) in connection with an agreed project. When the project is complete the mudarib returns the principal and a pre-agreed share of the profit to the rabb-al-amal. Any losses are borne by the rabb-al-amal. Mudarabah with the bank is a basis for making loans where the depositor is the provider of capital and the bank is the entrepreneur.
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•
Musharakah, which can be divided into: i) Decreasing participation: Participation by the Bank as a financing partner, fully or partially in a profitable project, on the basis of agreement by the other partner that the Bank will receive a certain part of the net revenues actually realised, and that it is entitled to retain the remaining part of these revenues, or any part thereof, as may be agreed upon, to be off-set against the funds advanced by the bank for financing the project. After the amount of financing provided by the bank has been fully off-set, the ownership of the project is transferred to the partner. ii) Continued participation: Where the bank holds a share in the equity of a project that is expected to gain a return. The Bank – in such cases – continues to be a partner.
•
Murabaha (Credit Sale) This is an alternative to conventional loans and is sometimes referred to as cost plus financing. Under Murabaha, the bank purchases the goods, which the customer requires, from a third party. The bank then sells the goods to the customer for a pre-agreed, usually higher, price with deferred payments. A customer wishing to deposit money with a bank may make deposits into a Murabaha fund and then will share in the returns from such transactions.
•
Direct Investment Whereby the Bank invests directly in real estate, vehicles and machinery, either for the purpose of selling such assets to make a profit or for the purpose of leasing them to get revenues.
•
Leasing Ending in Ownership This applies when the bank participates in buying ships, aircrafts, real estate and machinery that are then leased for a certain period, at the end of which the ownership of the leased asset is transferred to the lessee in accordance with Shari’a principles which govern such investments.
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•
Salam Finance (Sale with Future Delivery) Salam is a sale of a commodity whose delivery will be at a future date for a prepaid cash price. It is a financial transaction in which price is advanced in cash to the seller who binds him/herself to deliver a commodity of determined specifications on a certain future time.
•
Istisna’a (Pre-manufacturing Finance) Istisna’a is a project financing service. It is a modern financing investment to finance industrial and construction projects. The banks maintaining this service act as a contractor responsible for supervising, overseeing, and maintaining the project. Subcontractors are assigned the task of implementing and commissioning the project. Upon completion of the project the customer begins to pay the cost of the project and the profit according to the bank terms and conditions based on the initial agreement. The bank may allow for a suitable period of time prior to the payment and may provide the customer with easy instalment options payable over a period of time.
•
Ejara Finance (a Form of Leasing) In this form of leasing the bank will purchase the asset required by the customer and then lease the asset to that customer at a pre-arranged rate with the asset to be used productively and in ways that do not conflict with Shariah law.
4.3.4 Investment Banks Investment Banks in Jordan provide different banking services. There are five investment banks in Jordan with 54 branches. The main purpose and mission is to provide and facilitate the following investment services: •
Trading in foreign currencies, commercial papers, precious metals, securities and other investment vehicles.
•
Investment portfolio management held in foreign currencies.
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•
Trading in local securities through the bank brokerage office at the Amman Stock Exchange.
•
Management and participation in locally syndicated loans.
•
Underwriting and management of stocks in the primary and secondary markets.
•
Providing financial advisory services and expert opinion on investment opportunities in Jordan.
•
Investment in Jordan Fund.
4.3.5 Specialised Credit Institutions Specialised credit institutions: are non-commercial banks that provide the banking services for specified types of economic activities such as industrial, real estate and agriculture and development. Specialised institutions are categorised into public ownership institutions and joint ownership institutions. There are however three public ownership financial institutions, including the Agriculture Credit Corporation, the Housing & Urban Development Corp, and the Cities and Villages Development Bank. On the other hand, the Joint venture ownership includes the Industrial Development Bank and the Jordan Cooperative Corporation.
After presenting an overview of the Jordanian banking structure, the next sections will provide an overview concerning the relationship between the banking system in Jordan and the various constructs investigated in this research. Then, a discussion of the Jordanian culture will follow including the Islamic culture as a very significant factor in determining the overall culture in Jordan as well as many other Arab countries.
4.4 The Banking Sector in Jordan and the Study Constructs Like other service organisations in Jordan and in the Arab world, the banking system in the Arab countries and Jordan in particular still is not so comprehensive and systematic. Moreover, in the banking system most researchers and practitioners concentrate on financial measures or other issues overlooking the quality of service
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delivery, the quality of work life, the employee-customer relationship, and autonomy programmes that has been long dealt with in western organisations. For example, in an exploratory study of the Banking sector in Jordan, Al-Rasheed (1994) concluded that there was clear lack of delegation of authority in decision making with lack of autonomy and teamwork. However, one of the factors that might stand behind such implications is the young age of Arab and Jordanian business organisation. Most of the Jordanian/Arab banks are less than 30 years old. However, Al-Rasheed (1994) findings are not in agreement with many other empirical studies. He suggested that there is no place for participation in decision making in the Arab countries and delegation of authority only exist in western cultures. However, many other researchers see it differently (e.g., Ali, 1989; Darwish, 2000; Darwish, 2001; Ali, 1997; Darwish, 1997; Badawy, 1980; Jasim, 1987c; Ali, 1990). Arab countries however share similar cultural dimensions along with other social, political, and economic and many other environmental factors. Generally, it is also difficult to overlook the tremendous economic and global developments that have been adopted by the region, including privatisation, competition, technology in the banking sector in addition to the increasing number of banking services and products, when investigating such issues.
As such, further empirical research is needed to gain more understanding of the quality of work life aspect, internal service quality and employee customer relationships in the banking sector. However, the purpose of this section is to have a closer look at the Jordanian and Arab culture and management to gain initial perspectives on the relevance of study constructs in the Jordanian context, given that the study constructs were developed in western context. As such, the following sections present those cultural issues including culture and management development, culture and empowerment, commitment and empowerment and finally Islam and culture. Islam and culture is presented in this discussion because it has a great influence on culture in the region.
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4.5
Cultural Issues
4.5.1 Culture and Management Development Culture and management development in the Arab world in general, and in Jordan in particular, are very much interrelated issues along with other social, political and economical issues. Atiyyah (1993) suggests that what the future holds for management development (MD) in the Arab countries largely depends on developments in their political, economic, socio-cultural, and organisational systems. The author argues that in addition to expanding their training capacities to meet the expected increase in demand, local MD firms need to improve the quality of their services by first, conducting rigorous needs assessment, secondly, reviewing training curricula, and finally, adopting more effective training techniques. The extended family, clan, tribe, and Islamic religion play a major role in community life and interpersonal relationships. Family ties and ideological affiliation have an impact on Arab people outside and inside organisations and this affects organisation practices and relationships between people inside the organisation. For example, in terms of promotion or development opportunities, social and ‘who you know’ play a major role, sometimes, in being recruited, promoted, or given a better opportunity at work. Such subjective measures might however affect the relationships and the level of trust between managers, employees and customers. In an Arab organisation, staff and managers alike are concerned about creating social relationships in the workplace. Employees spend much of their time meeting visitors at their offices. Such cultural and social problems might impact on management development programmes and other interventions, especially in service organisations, because they are mainly labour intensive and they depend more on human interaction than manufacturing organisation. As such, this might impact on the level of trust between people, information might be used for personal preferences, and employees might not be rewarded equitably. All this might affect relationships and satisfaction levels among staff and customers as well.
However, the following section might provide a different perspective and viewpoint towards the culture issue with relation to empowerment. While culture in the Arab world might have a negative impact on some organisational aspects, it might have a
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positive effect in different perspectives. The following section will focus on the cultural aspect from a broader and more related view to the study problem.
4.5.2 Culture and Empowerment Culture is an important context for this study and one of the reasons for including the cultural aspect in Jordan is because the organisational culture clarifies the part of the organisation’s internal environment, which incorporates a set of assumptions, beliefs, and values that members share and use to guide their attitudes and behaviours (Kilmann et al., 1986; Schein, 1985, 1990). Therefore, one would predict that these assumptions and values guide and impact the type of relationship between managers and employees, particularly the decision-making style and the degree of trust, empowerment, and cooperation between supervisors and employees in the organisation. Reviewing the empowerment literature in the Arab countries revealed almost no discussion of the issue. Indeed, there is a lack of empirical studies regarding the construct of empowerment in the Middle East and Arab countries in general, except for the work of Al-Smadi (1997), who had investigated the empowerment factor among other factors rather than taking it as a major element in the study (see section 4.2). However, there are some studies looking at relevant constructs like commitment and decision-making styles which involve similar ideas and variables. Therefore one might instead review other related constructs such as decision-making style or leadership style and employee commitment. For example, Darwish (1998) surveyed 400 decision makers in different organisations in the United Arab Emirates’ industrial sector to explore the role of organisational culture and level of technology used in the organisation as predictors of decision-making styles in the United Arab Emirates. Ali (1993) points out that decision-making style is an important attitude, which is crucial for managerial performance. Whyte (1988); Hofstede (1980) and Tayeb (1988) argue that the choice of decision-making styles depends among other things, on the broad culture, which affects the organisation’s culture. Hence, Ali (1993) found that Arab executives are highly committed to a consultative style in which managers consult their staff prior to making decisions and then they would make decisions that may or may not reflect their staff’s influence. However, the participative style is a more advanced style in which, managers share and analyse problems with their subordinates as a group, evaluate alternatives, and
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come to a majority decision. Interestingly, researchers (Ali et al., 1997; Badawy, 1980; Ali, 1989b; Ali and Shakhis, 1985; Ali et al., 1995, 1997; Ali et al., 1993; AlJafary and Hollingsworth, 1983; Muna, 1980) in many Arab countries, with the exception of Dahhan (1988) who found that Jordanian managers followed autocratic styles, found strong support for using consultative and participative styles of decision-making. This evidence suggests that the Jordanian environment and culture may be suitable to investigate the study constructs that have been found in a western environment,
including
the
main
dimensions
of
empowerment,
control,
responsiveness, and discretion among staff members in service organisations, such as the Jordanian banking system.
Moreover, in his study, Darwish (1998) found that 86 percent of those who display a participative decision-making style had college or graduate education, 96 percent were 25 years or over, and 66 percent were in middle management. It seems that Arabian, young, highly-educated, middle managers are open-minded and willing to involve subordinates in the decision-making process and therefore employ a participative decision-making style. However, Ali (1989b) argues that such a situation may be explained by the western impact on Arabian managers through education, business contacts, the influx of multinationals and the effect of mass media. But these studies seem to survey mostly managers instead of employees. As such it is necessary to take the other side’s view. That is, to investigate the employees and see how they perceive the level of involvement in the organisation’s real practices. Accordingly, it is important to look at the empowerment issue rather than leadership styles. As such, there is a clear lack of any empirical research efforts examining the empowerment of customer-contact staff, particularly in the banking sector. Additionally there is a need for systematic research efforts to study the internal side of the organisation and how it impacts on any possible empowerment or involvement programmes. Furthermore, there is a need for further research to investigate the role of employee empowerment on the satisfaction of the customer as well as the employee satisfaction.
Another relevant issue to the context of this study is the commitment issue. To more fully understand the relevant situation in the context of this study, the commitment dimension is further presented and discussed in the following section. 104
4.5.3 Empowerment, Commitment and Religion Commitment is defined as the relative strength of the identification of the individual and his/her involvement in his/her particular organisation (Mowday et al., 1979). Arab culture shares a common denominator, the Islamic culture. Thus, when talking about any Arab country, we can generalise to other Arab countries, except under certain conditions, such as when comparing the economic situation between the rich Gulf States and other Arab countries. Islamic culture however, is a strong culture in the Arab countries, establishing the grounds for the researched relationships in this study. For example, trust, respecting one another, consultation, and the word “Shora” (in Arabic, consultation) are all cultural principles that positively influence the commitment of the individual to the group or the organisation. The prediction that the prevalent perceived leadership behaviour is consultative corresponds with earlier findings that Arab culture nurtures consultative and participative tendencies (Darwish, 1998; Ali et al., 1997). This preference demonstrates the influence of Islamic and tribal values and beliefs, since both tribal and Islamic law reinforce consultation in all aspects of life (Ali, 1989; Darwish, 2000). Darwish (2000) concludes in an empirical study that employees in organisations are highly committed to their organisations, highly satisfied with their jobs, and their performance is high, which might indicate that these employees perceive their supervisors as adopting a consultative or participative leadership style. As such, Darwish (2000) suggests that there is a positive relationship between leadership behaviour or style, and organisational commitment, job satisfaction and job performance. This further indicates that those who perceive their supervisors as adopting a consultative or participative leadership style are more committed to their organisations, more satisfied with their jobs and they have a higher performance level. This indicates that there is a tendency to trust employees and use the culture and the religion factors to influence the quality of work life among employees and particularly among customercontact employees. More about the relationship between culture and Islam is presented in the discussion due to the fact that Islam is the underpinning factor determining the common culture in Arab countries.
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4.5.4 Islam and Culture Islam has a spiritual thrust towards work-related practices, including trust, honesty, integrity, and hard work. The Islamic work ethic has its origin in the Quran, dictating that hard work caused sins to be absolved and that Prophet Mohammad preached that “no one eats better food than that which eats out of his/her work”. For example the Quran encourages humans to acquire skills and technology, and highly praises those who strive hard in order to earn a living. Islam views dedication to work as a virtue. Sufficient effort should go into one’s work, which is seen as obligatory for a capable individual (Darwish, 2001).
Islam emphasises cooperation in work, and consultation is seen as a way of overcoming obstacles and avoiding mistakes. Social relations at work are encouraged in order to meet one’s needs and establish equilibrium in one’s individual and social life. In addition, work is considered to be a source of independence and a means of fostering personal growth, self-respect, satisfaction and self-fulfilment. Islam also stresses creative work as a source of happiness and accomplishment. Hard work is seen as a virtue, and those who work hard are more likely to get ahead in life (Ali, 1988). Besides constant hard work to meet one’s responsibilities, competition is encouraged in order to improve quality. In terms of service quality, Islam dictates that “if you do any work you must try your best to make it right and perfect” in order to deliver the best quality. In brief, Islam argues that life without work has no meaning and engagement in economic activities is an obligation. Ali (1986-87) argued that Islam is one of the most influential factors that has shaped current Arab value systems. Ahmad (1976) argued that Islamic principles stand not for life denial but for life fulfilment and holds business motives in the highest regard. Consequently, it is more likely that those who embrace such principles tend to be more committed to their organisations and presumably more satisfied with their jobs.
As such, people who are highly committed to Islamic values tend to be hard working, committed, dedicated to work, creative, and cooperative at their organisations. Darwish (2001), Ali (1989; 1992), and Ali and Azim (1994) support such implications. This, of course suggests that the empowerment model investigated in this research can be tested in the Islamic culture and in the Arab context. Moreover,
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the positive relationship between Islamic values and both organisational commitment and job satisfaction is supported in many studies, including Kidron (1978), Putti et al. (1989), Oliver (1990) and Abboushi (1990). These studies seem to consider a relationship between Islamic religion and positive job-related attitudes like trust, communication and interest in cooperation, social and interpersonal relationships. Such cultural values are different from those in the west. In the west, perhaps, rules and systems are more likely to govern the people’s dealings and relationships, whereas in the non-western countries, and in particular in the Arab countries, religion, traditional and tribal values, social relationships, and personal relationships are sometimes more dominating and affect employee-employer relationships and employee-customer relationships. This might raise an issue with regard to the possible confrontation and contradiction between the cultural values on the one hand (i.e., sometimes are stronger than rules), and the organisational rules and systems on the other hand. For example, people must queue to wait for service at the bank where some people may violate the rule by ignoring the queue and getting what they want simply because they know the service deliverer or the manager in person, which is certainly inconsistent with Shari’a guidance. In conclusion, cultural and Islamic values may have an impact on the relationships between managers, employees and customers. While such impact might sometimes have a negative impact because of people abuse, there are many instances where the culture and the religion may enhance positive relationships between these parties through embracing the sacred values prescribed by Islam. While such values seem to support the quality of work life, trust, honesty, integrity, participation, consultation and respecting human abilities and capabilities, systematic investigation is due to explore the empowerment construct and its related antecedents and consequences in this region.
Accordingly, based on this and existing research, the environment seems to be appropriate to examine the research model and to test the employee-customer relationships and the impact of customer-contact employees’ capabilities and empowerment on the customer satisfaction in the banking industry in Jordan.
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4.6
Conclusion
This chapter was necessary in this thesis to present the context and the environment in which the fieldwork of this research was conducted. It represents a brief overview of the culture and the banking system in Jordan, which shares common characteristics with many Arab countries in the region. It is insufficient to provide in a few pages a detailed view about the culture, the commercial and the management practices in the country. However, this chapter tries to give an idea about the banking structure in Jordan headed by the Central Bank of Jordan, which is the governing body of the whole banking system. Due to many contemporary developments, the banking system is trying to excel and adapt with local and global transitions that are affecting the whole region. The impact may reach the overall managerial practices including many human resources and marketing aspects. Service quality and customer relations appear to have a place too. Internal and external relationships are the focus of this research where a transition might be in its way to many service organisations including financial services. This chapter started by presenting the background to the banking industry in Jordan followed by the structure of the banking system, which encompasses commercial, Islamic, investment and specialised banks providing different services to the customer.
The banking sector in Jordan was then presented in terms of some related constructs such as the decision-making styles and the leadership behaviours. Cultural issues were presented, including some aspects of culture and management development, commitment and empowerment in the context of the culture issue. Finally, Islam was discussed as the source that formulates most of the cultural values in the Muslim and Arab world, including Jordan, as a country that shares with other Arab and Muslim countries, a common set of religious and cultural values.
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109
Chapter Five
Research Methodology
110
5
Research Methodology
5.1
Introduction
The preceding chapters have discussed the concept of empowerment in Chapter Three and examined study context in Chapter Four. In Chapter Four, the discussion was related to the cultural context in addition to a review of the nature and structure of the banking system in Jordan. It concluded that it is very reasonable to use the research model and utilise the research tools and methods in the Jordanian context to examine the constructs of this study. The literature in this thesis has emphasised the concept of empowerment as a major issue within the service sector as being more related to this research than the manufacturing sector.
However, this chapter provides the method and the tool by which the researcher will be able to generate empirical evidence and assess the validity and reliability of his findings. While the main method of this study was quantitative, a qualitative research method was conducted in a triangulation approach where two methods that have offsetting biases are used to assess a given phenomenon, and the results of these methods may corroborate one another (Greene et al., 1989) and then enhance the validity of findings from the research. Thus, this triangulation approach required that two methods (quantitative and qualitative) be used to assess the same conceptual phenomenon (Greene and McClintock, 1985).
Accordingly, the following section, section 5.2 of this chapter, will provide a summary of the general research philosophy consistent with this study. Section 5.2.1 will discuss the triangulation method used in this research. Section 5.3 will discuss the survey design, and in section 5.4 semi-structured interviews conducted in this research will be explained. The sample and the sampling frame will be presented in section 5.4.1 followed by the questionnaire design in section 5.6. The translation of the questionnaire will be explained in section 5.6.1 and the data collection process will be discussed in section 5.7. Section 5.8 presented the validity and reliability analysis that will be further discussed in Chapter Seven. Finally section 5.9 will discuss data analysis methods used to arrive at the nature of the hypothesised relationships in this research.
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5.2 Methodology There is a long-standing debate in the social sciences, particularly concerning the nature and philosophy of management research (Starkey and Transfield, 1998), about the most appropriate philosophical position from which methods should be derived. The two main competing paradigms are the phenomenology or the interpretivists paradigm and the positivists paradigm (Easterby-Smith, Thorpe and Lowe, 1991). Each of these positions has to some extent been elevated into a stereotype, often by the opposing side (Easterby-Smith et al., 1991). Although it is possible to highlight a list of characteristics or assumptions associated with each perspective, it is hard to identify a scholar who ascribes to all characteristics of either positivism or interpretivism. Sometimes an author from one perspective produces ideas that belong to those of the other perspective, but one might find some others who stick to the extreme of either perspective at some point in time (Easterby-Smith, Thorpe and Lowe, 1991).
Recently, Carson et al. (2001) described the positivism paradigm where the positivist ontology holds that the world is external and objective and that researchers can explain causal relationships by means of objective facts. Based on this, the positivist’s perspective sees that the social world exists externally, and that its properties should be measured through objective methods, rather than being inferred subjectively through sensation, reflection or intuition. Interpretivism on the other hand emphasises, relativism and that there are few truly universal standards of scientific adequacy. As such, this is the paradigm that views the world and “reality” as socially constructed and given meaning by people.
Pfeffer (1993), however, critiques management research for its reflexivity, pluralism, and relativism, from a positivist perspective, relying on so much evidence and literature to prove his positive, objective, and consensus approach. He concludes that many researchers entered the field of organisations because of its theoretical and methodological openness and pluralism. Pfeffer’s findings were confronted by further debate by several scholars from the opposite paradigm – the interpretivism side. Maanen (1995), for example, argues in favour of the phenomenological approach by
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emphasising that theories must help generate reality – not mirror that reality. Moreover, science is a socially embedded activity according to Cannella and Paetzold (1994). Gould argues in favour of interpretivism stating that:
It progresses by hunch, vision, and intuition. Facts are not pure and unsullied bits of information; the most creative theories are often imaginative visions imposed upon facts; the source of imagination is also strongly cultural (Gould, 1981: 21-22).
As debate between the above paradigms continues; there are those who propose a compromise, like Giddens (1990), and throwing their critiques on both paradigms, address the strengths and weaknesses of both to suggest a compromise. So the ‘extremes’ of both apparent alternatives have been debunked, and the problem areas can be more subtly redefined so as to include the good bits of both poles of opinion (Giddens, 1990). Indeed, the extreme of either one might mean either loss of direction towards an unknown destination at one extreme, or pure, hard, and rigid dimensions at the other extreme. Thus, a compromise between the two perspectives might bring the debate into a fruitful discussion for the benefit of both knowledge and humanity.
However, the researcher in this study leans more towards the positivist paradigm and seeking some type of compromise between the positivist and interpretivist approaches. The main thrust of this research relied upon hypothesis testing by logical empiricism, a positivist approach. However, two sources of data were used in this research, one qualitative and one quantitative within a triangulation approach that is most recommended by many researchers (Creswell, 1994; Greene et al., 1989). The main instrument that was employed to collect data required for testing the hypotheses developed in this research was the questionnaire. Survey questionnaires have a history of use in marketing and management research (Abdelaziz, 2001). A questionnaire instrument is generally broad in nature, focusing on breadth rather than depth. As such, it is acceptable to collect a large amount of data of a cross-sectional nature that is required for quantitative studies like this research. Questionnaires have been used extensively in quantitative researches aiming to measure services, employee involvement, customer satisfaction, and employee satisfaction, in addition
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to employee-employer relationships and attitudes (e.g., Parasuraman et al., 1990, 1991, 1994; Hartline and Ferrel, 1996; Cronin and Taylor, 1992; Carman, 1990; Spreitzer, 1995, 1996; Babakus and Mangold, 1992; Rust et al., 1996; Fulford and Enz, 1995; Lau, 2000; Hartline et al., 2000; Yagil and Gal, 2002). While the survey was the main data collection method, the following section will discuss both the quantitative and the qualitative method in what is called a “triangulation method”.
5.2.1 Triangulation Using multiple research methods, according to many researchers in marketing and social sciences (Carson, 2001; Creswell, 1994; Green et al., 1989; Deshbande, 1983; Sieber, 1973), allows more perspective on the phenomena to be investigated. Triangulation, according to Denzin (1978), is a term borrowed from navigation and military strategy to argue for the combination of methodologies in the study of the same phenomenon. As such, the triangulation concept was based on the assumption that any bias inherent in particular data sources and method would be neutralised when used in conjunction with other data sources and methods (Jick, 1979). Greene et al. (1989) also supported the concept of triangulation, proposing several objectives of the concept. Some of these objectives or purposes for combining methods in a single study are developmental, wherein the first method is used sequentially to help inform the second method and where the mixed methods add scope, and fresh perspectives may emerge. In such situations the qualitative method, using interviews for example, might help the researcher in developing more understanding of the study environment which helps in carefully utilising and preparing for the second method by clearly identifying the sample and the right conditions appropriate for the data to be collected. However, according to Creswell (1994) there are three models for combining designs: 1- two-phase design; 2- dominant-less dominant design; and 3- mixed methodology. In this study, the researcher used the dominant-less dominant design, presenting the study within a single dominant method with one small component of the overall study drawn from the alternative method (Creswell, 1994).
In this way, this research is conducted in a broadly positivist tradition using two methods of data collection. As such, both the qualitative and the quantitative approaches are incorporated in this research in order to compensate for the drawbacks
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of either methodology (Jick, 1979; Creswell, 1994 and Green et al., 1989). Although many researchers (see Reichardt and Cook, 1979) have described such a combination of data collection (i.e., quantitative and qualitative approaches) as polar opposites, it should be kept in mind that individual researchers in social sciences fall somewhere along the continuum between the two extremes. However, the position taken by Deshpande (1983) is a very logical and sound one. That is, rather than becoming more and more polarised by taking either side, researchers would be better off realising that both methods have a place in marketing and perhaps other social science disciplines, provided they are not being made to do each other’s work (Deshpande, 1983). As such, researchers should learn not only both quantitative and qualitative research methods, but also the strengths and weaknesses of each set of procedures (Deshpande, 1983). Triangulation of procedures would then lead to using an appropriate mix of both quantitative and qualitative methods such that the weaknesses of one set of methodologies is compensated for by the strengths of the other and vice versa (Deshpande, 1983). An interesting example is provided by Sieber (1973), who indicates how qualitative fieldwork and quantitative survey methods can be interplayed within a research endeavour. He specifies three primary areas in which qualitative fieldwork can make a contribution to surveys: survey design, data collection, and analysis. In the first case, preliminary personal interviews or participant observation on a limited sample of the subject population can help provide insights into the specific sample segments that should later be included as part of a larger survey. In this situation, qualitative fieldwork involves project investigators developing personal familiarity with a setting or group to be surveyed. This familiarity can make a major contribution to the development of a meaningful survey design by allowing the investigator to be much more specific in determining the precise sample that will be part of the survey which perhaps helped much in this research. Much expense and later statistical data manipulation can be minimised or avoided if the initial design is an appropriate one.
The second area where qualitative fieldwork can contribute to surveys is in the data collection. Sieber (1973) indicates that interviews preceding a large-scale survey can yield valuable information about the receptivity, frames of reference, and span of attention of respondents. In this study, the interview phase provided that insight regarding the respondent’s ability to properly respond to the survey questionnaire. 115
Additionally, the survey instrument can be broadened or narrowed, depending on the topics that are salient to pre-test respondents.
The third contribution that qualitative fieldwork can make to survey research is in data analysis. Although the quantitative data part of this research was analysed thoroughly and separately, statistical results from survey data analysis can be validated by recourse to qualitative observations and informant interviews. Thus, it can help interpret statistical relationships by reference to field observation. Accordingly, most of the statistical results from the quantitative data analysis stage in this study were consistent with the qualitative analysis side of this research reconfirming the overall findings.
However, the qualitative interviews may reveal some issues that might be relevant to the context and the culture as revealed by this study. While the qualitative study intended to examine theory alongside the major survey study, new and unexpected findings emerged from the qualitative study through the semi-structured interviews with both bank customers and bank staff. Some external issues were revealed through the interviews like, for example, the issue of rules and regulations. To this end, many informants expressed their resentment for the organisational rules and regulations and that such rigid rules would limit the employees’ responsiveness to the customer. Another issue was revealed related to the significance and importance of the personal relationship and courtesy required in the service encounter between the customer and the customer-contact staff. It was revealed through those interviews that Jordanian bank customers could be very vulnerable to personalisation and emotional relationships. As such, the display of positive emotions was viewed as an expected part of the service in the bank. This is consistent with a recent empirical study by Pugh (2001) citing similar findings presented by Hochschild (1983) of a direct positive relationship between the display of positive emotion by employees and customers’ evaluation of service quality.
Nevertheless, this study has relied more upon numerative and statistical approaches specified from a defined sample for the main testing of an hypothesis. Therefore, a survey was distributed to a sample of bank employees (customer-contact employees) in 16 major retail banks in Jordan to collect the appropriate and required data. As 116
research instruments, surveys provide sufficient information in an efficient and effective way (Churchill, 1992).
5.3
Surveys
Typically, researchers attempting to collect primary data have a number of choices to make among the means that will be used. The primary decision is whether to employ communication or observation. Observation does not involve questioning. Rather, it means that the situation of interest is checked and the relevant facts, actions, or behaviours recorded (Churchill, 1992). Communication involves questioning respondents to gather the desired information, using a questionnaire. Too often, surveys are carried out on the basis of insufficient design and planning or on the basis of no design at all (Oppenheim, 1992). Information gathering can be interesting to the researcher to which a questionnaire opens a quick and easy avenue; the weaknesses in the design are sometimes hard to detect until the results have to be checked and analysed (Oppenheim, 1992). Researchers, therefore, must understand that the design of a survey requires a great deal of technical knowledge beside a prolonged and arduous intellectual exercise in the course of which researchers are continuously trying to clear their minds about their own goals Researchers find that, as their research takes shape, their aim undergoes a number of subtle changes as a consequence of greater clarity in their thinking. Such changes may require a new and better design, which in turn will lead to a better specification for the instruments of measurement (Oppenheim, 1992). However, the emphasis of this study will be placed on a survey questionnaire because most of the general issues of quantitative techniques can be illustrated with it and it is the appropriate technique used in this study. Questionnaires are very widely used in large-scale investigation of political opinions, management fields and consumer preferences (Easterby-Smith et al., 1991). Two data collection methods were used in this study.
Main data of this research originated from customer-contact employees, subsidiary data from consumers via in-depth or semi-structured interviews. These interviews were conducted with approximately ten customers. This number of interviews has been recommended by Reynolds, Diamantopoulos and Schlegelmilch (1992), suggesting a sample size from 5-10 to be used in the pilot study or when pre-testing
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the questionnaire. The nature of the data required from the customer is to confirm in general the data collected from the employee regarding customer satisfaction and employee capabilities. However, it was almost impossible and not feasible to collect data about the customer and the employee in a dyadic fashion by soliciting data from individual customers about their perception of particular employees as they receive the service from the teller or the customer-contact employee. What was possible for the researcher however was to contact customers as they left the bank and try to see if they would agree to be interviewed. However, some customers used to refuse to be interviewed mainly because they were busy. Others, however, accepted and were given a choice of venue or place in which they felt comfortable in order to conduct the interview. Usually, the interview would take place in a nearby place; sometimes in a nearby coffee shop or sometimes in a restaurant or inside the bank when possible.
With regard to the questionnaire, the main decisions to be made in questionnaire design relate to the type of questions to be included in the study. For the questionnaire and the survey to be carried out in this study, the population sampled covered customer-contact staff, including tellers as the main proportion of the sample, along with other staff (i.e., account reps and branch managers) at major retail banking institutions in Jordan. According to Stephan and McCarthy (1967), the best way to start any design is to relate and link the design to purpose and aim of the survey. To produce a satisfactory result, the design process must be guided by specific purposes toward definite goals and objectives (Stephan and McCarthy, 1967). Objectives, then, need to be translated into the research question with good survey design. As such, this study was consistent with such guidelines by clear survey design and objectives.
The data was collected from a sample of 750 bank employees (customer-contact employees) to get information about the constructs used in this study, such as the level of empowerment, antecedents and consequences of empowerment, employee satisfaction and customer satisfaction. Ideally the latter should be investigated directly from the customers, since it is customers or clients who perceive the service provided as satisfactory or not. However, as mentioned in the previous section it would be very difficult to match data from individual customers against individual employees. Nevertheless, there is empirical evidence that support the method of collecting data from the service provider to serve as a proxy for the perceptions of the 118
customers (see for example Schneider et al., 1993; Goodale and Kenoear, 1997). The formulation of the questionnaire was mainly based on the investigation of the most relevant literature that is being discussed and explained in Chapters Two and Three of the literature review. The other source is the semi-structured interviews, designed to aid in theory confirmation along with the survey instrument. The following section will explain the semi-structured interviews conducted.
5.4
Semi-Structured Interviews
Semi-structured interviews are widely used and have even attracted interest. This interest is linked to the expectation that the interviewed subjects’ viewpoints are more likely to be expressed in a relatively openly designed interview situation than in a standardised interview or a questionnaire (Flick, 2002). Semi structured interviews are used in this study to delve beyond what employees answered in the closed ended questionnaire. Hence, interview data is a major source of information for many qualitative studies. Different types of interviews are used for the same purpose; to solicit respondents’ attitudes, feelings, perceptions, and understandings that one cannot see or observe in other ways (Carson et al., 2001). The main theme of these semi-structured interviews was to work along the survey approach to examine the hypotheses that emerged from theory. It was concerned with trying to understand how ordinary people think and feel about the topics of concern to the research. Interviews may allow the researcher to collect a large amount of data and it also allows for immediate follow-up questions and for clarification (Marshall and Rossman, 1989). Interviews were actually helpful in this study because all respondents have similar experiences and the interview viewed the respondents’ experiences regarding the situation under study as an advantage (Frankfort-Nachmias and Nachmias, 1992). The purpose of the interviews is to explore customer responses in detail and to the research propositions and to the main data collection process, the survey questionnaire. A copy of the interview questions is illustrated in Appendix 2. Given that the unique advantage of depth or semi-structured interviews is to collect rich contextual data on individuals rather than problems, at the initial stage of interpretation each interview was treated as unique and a story for each individual was created by giving the informant the opportunity to talk freely about his/her experience at the bank and by encouraging him/her to provide examples of incidents
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and events that might be of importance to the discussion in this research. For example, if the respondent would say that he was unhappy with the training and development programmes provided by the organisation (see, for a similar approach, Johnston, 1997), then the researcher would ask if the respondent could remember a recent incident with regard to training and development programmes that made him unhappy about them. This facilitated an understanding of the context in which individual meaning was created (Fournier, 1998). The following illustrates the actual interview process and general customers’ perceptions regarding the service delivery process and the frontline employees’ qualities.
The Interview Process Customers were interviewed individually for about 15 –30 minutes asking them openended questions regarding their attitudes towards the customer-contact employees’ service
delivery
behaviours
including their
empowerment
(responsiveness,
capabilities, discretion, autonomy) and whether interviewees are satisfied with these aspects or not. The customer informants were given time to elaborate on these issues and to express their perception about employees’ empowerment. Customers as informants were selected randomly and approached when they agreed to an interview. Some were not ready or too busy. In such cases they could not be interviewed. For those who agreed, the interview would take place in a near by rest area, coffee shop, or inside the bank when appropriate. Where the interview was conducted off the bank’s premises, this was normally because the bank environment was either too quiet to conduct a discrete interview, or too crowded. As shown in chapter six, most customer informants expressed positive attitude towards frontline employee reaction, responsiveness and empowerment levels while most customers felt negative towards the bank’s system, rules and regulations. They thought that the bank’s system was to blame for any inefficiencies in service delivery. They seemed to suggest that the system must support the frontline to be more efficient and more proactive.
5.5
Sample
5.5.1 Study Population In general, the population of the current study is all customer-contact staff in the Jordanian retail banking system. The sample unit of this population is one of the
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elements of the study population. It is the respondent who possesses the relevant data and to whom the questionnaire was directed. That is, the staff that deals with the customer and provides bank services to customers almost on a daily basis, in addition to the customers, who may be able to provide more insight into the quality of the service encounter. As such, the sampling unit in this research consists of both customers and customer-contact staff. With customers, ten semi-structured interviews were implemented to solicit their perceptions and evaluations of the customer-contact employees’ capabilities in those banks that they deal with. Twenty interviews also were conducted with customer-contact employees, including tellers, account reps and branch managers. Through the qualitative study, the researcher found that ‘customercontact staff’ encompasses tellers spending most of their time serving customers, while customer reps and even branch managers spend a great deal of their time dealing with customers. An important point to be mentioned is that the population of this study has covered major geographic parts of the country starting from Irbid, the researcher’s city in the north to Al-Karak in the south, through Amman, the capital of Jordan, in the middle.
5.5.2 Sampling Frame The banking sector in Jordan consists of national commercial banks, foreign banks, and specialised credit institutions. Hence, the delivery of banking services involves ample opportunity for contact with customers. Banks also represent environments in which managers work alongside customer-contact employees, which thereby gives managers the opportunity to interact and communicate with customer-contact employees and observe the service delivery process as well. However, national commercial retail banks in Jordan have been selected as the sampling frame. A convenience sample was selected, as the sample members were chosen based on their availability and accessibility (Diamantopoulus and Schlegelmilch, 1997). The researcher tried to cover the whole geographic area of Jordan. As such, the sample was taken from different regions, including south, north and middle (the capital, Amman) of Jordan.
Initiating a sample required a contact to be established with bank branch managers in Jordan to help in facilitating both the qualitative and quantitative research. This
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consisted of gaining access to customers and customer-contact employees in order to conduct both semi-structured interviews and distribution of the survey questionnaire. The researcher tried to use a mail survey but was faced with an unreliable mailing system in Jordan as the same difficulty occurs in many developing countries with a traditional and underdeveloped mailing system. As such, the most recommended approach was the drop and collect method. In order to implement this method and conduct the interviews, the researcher contacted the banks’ head offices in order to get permission to implement the field study. When approaching the head offices, the researcher was confronted with some bureaucratic obstacles and delays that ended up with three outcomes. The first and the most convenient was to drop the survey at the head office where they would distribute the survey in their own way at different branches in the country and promised a full coverage. This outcome, however, was deemed possible with only two of the 16 banks in the sample. The second outcome, and the least convenient one, was to distribute the survey over the different branches by taking a convenience sample of the branches in Jordan and to visit them in person. Upon visiting each branch, the researcher would ask to meet the branch manager and ask for help in distributing the questionnaire after providing an introduction about the researcher, the research and the objectives of the research, including a letter from Nottingham University Business School and Yarmouk University (the researcher’s sponsor) as a document to facilitate the survey implementation and distribution. Most branch managers, when presented by some documents securing the confidentiality of information provided for this study, were very helpful in agreeing to distribute the survey over a number of the frontline employees in the bank. Normally, branch managers would not allow researchers to distribute and collect the questionnaire personally to individual employees; rather they would themselves do the task. In this way, bias is possible when the employee thinks that the questionnaire ends up in the hands of the manager before collection by the researcher. This could probably have been avoided by a mail survey but, as mentioned above, the mail system in Jordan as well as in many Arab countries is still underdeveloped on the one hand, and on the other hand people are not accustomed to using it in research. The third outcome was the rejection of any co-operation with the researcher. However, only one bank rejected the survey or conducting any interviews because of certain circumstances with the bank.
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Table 5.1.
Total Number of Banks in Jordan
Year
No of Banks
No. of Branches
1997
20
451
1998
21
457
1999
21
463
2000
21
469
Source: Central Bank of Jordan
The Sample Size There are many considerations that must be taken into consideration with sample sizes. For example, Hair et al. (1998) caution researchers that sample size can impact on a statistical test by either making it sensitive at small sample sizes or overly sensitive at very large sample sizes. The second point that must be considered is the factor analysis. According to Hair et al. (1998), the researcher generally would not factor analyse a sample of fewer than 50 observations and a general rule of thumb is to have at least five times as many observations as there are variables to be analysed. In this research there are 50 items before factor analysis, which require a minimum of 225 cases to conduct a factor analysis.
The third point is with regard to the sample size in multiple regressions, where the size of the sample has a direct impact on the appropriateness and the statistical power of multiple regressions. As to the general requirement of multiple regression, it is generally common to find that a minimum of 100 observations should be available to use this technique. A final consideration is related to the response rate. However, in drop and pick up methods the response rate is generally high due to the fact that the researcher himself gave out the questionnaire and picked it up from the same respondent(s). As such, the response rate in this study was about 79 percent, which is relatively high in contrast with a mail survey.
Out of 21 banks in Jordan, as illustrated in Table 5.1, there are 16 commercial banks with approximately 3750 customer-contact employees over 350 units distributed as the population study. 20 percent of the population study was covered as a study sample that is recommended by researchers. For the survey, the sample consists of 750 respondents and for the qualitative study 20 customer contact staff were
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interviewed along with 10 bank customers. Branch managers were being contacted and the research was explained to them. The researcher asked for their support, as discussed above, to conduct both semi-structured interviews with bank staff to be distributed, and followed by the survey collected by the researcher. Clear instructions and guidelines of how to fill the questionnaire were also provided. Respondents were asked about their awareness of empowerment (or other related aspects of empowerment) and the other relevant constructs, like knowledge and skill provided, trust and communication, and reward and incentives targeted to improve the employees’ level of autonomy and discretion. Frontline employees were also asked about their attitudes towards empowerment in general, the level of empowerment they have, and the level of satisfaction associated with any level of empowerment. Also they were asked about their impression of the impact of empowerment on customers in terms of satisfaction and service quality perceived by the customers as a sign of satisfaction.
5.6
Questionnaire Design
The foundation of all questionnaires is the question (Frankfort-Nachmias and Nachmias, 1992). However, designing a questionnaire is not an easy task. According to Webb (2000: 198):
A major problem with questionnaires is that too many think it merely a case of typing out a list of questions; this is not the case. A great deal of thought needs to go into the process, some of it before the questions are framed.
The research questionnaire of this study has gone through a careful processes that will be discussed throughout this section. However, this questionnaire tried to translate the research objectives into specific questions, and answers to questions, providing the data for hypothesis testing. There are different types of questions among which openended and closed-ended questions are most common, and they both have their advantages and disadvantages. The questions addressed in this study were closedended questions where the respondents are offered a set of answers and asked to choose the one that most closely represents their views. While answers to closed-
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ended questions can be more elaborate, easy to ask and quick to answer, they require no writing by either respondent or interviewer, and their analysis is straightforward. Their major drawback is that they may introduce bias, either by forcing the respondent to choose from given alternatives or by making the respondent select alternatives that might not have otherwise come to mind (Frankfort-Nachmias and Nachmias, 1992). Such drawback could be minimised by the pilot interviews, pretesting the questionnaire through experts and a sub-sample of the population. However, it is almost impossible to produce a “perfect” questionnaire at a first attempt. Questionnaires, when they are first drafted, are full of questions that are ambiguous, contain cumbersome double negatives, are double-barrelled or are too vague (Webb, 2000). Instructions may be confusing, it may be too long and variables that should have been included may have been omitted. To issue a questionnaire that has not been pre-tested is foolhardy. The pre-test is a way of discovering faults before it is too late (Webb, 2000).
Therefore, the questionnaire had to be piloted using two types of piloting according to Bagozzi (1996) and Williams (1986). First, academic piloting was used to provide data for the development of measuring scales. Bagozzi (1996) suggested that the questionnaire should be reviewed first by a group of experts who are knowledgeable about theory that is going to be tested and the general methodology used in the study. Five academic staff in the UK and USA, and four academic staff in Jordan have done this. Second, questionnaire piloting, which is designed to ensure the efficiency of the questions, had been conducted by piloting the questionnaire on a sample of respondents in Jordan. This procedure resulted in enhancing the questionnaire to arrive at its final and accepted form as shown in Appendix 1.
Hence, the questionnaire was designed based on guidelines set by established methodology texts (see for example Churchill, 1999; McDaniel and Gates, 1999; Frankfort-Nachmias and Nachmias, 1992; Easterby-Smith et al., 1991). The questionnaire, as shown in Table 5.2, was developed to provide the following types of data: 1- Data about respondents’ demographic characteristics including age, gender, experience, educational level and job title or name.
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2- Data related to the degree of empowerment and discretion exercised by the bank staff of the Jordanian banking sector. This part was designed based on a set of questions from the EEQ (Employee Empowerment Questionnaire) (Hayes, 1994; Boshoff and Allen, 2000). Minor modifications were made, as follows: Q1 to Q10 are taken from an instrument used by the above authors; Q4, Q8, and Q10 are reversed. However, Q11 is reversed and modified: instead of “I am encouraged to handle customer problems by myself”,
it became
“current instructions at the bank don’t give me freedom in meeting customers’ needs”. This question was modified because some employees expressed such concern at the piloting of the questionnaire that rules are preventing them from meeting customer needs. Q12, the last question (“Workload reduces the level of service provided to my customers”) in this group, is being added by the researcher because workload in Jordanian banks is a point of concern due to much more reliance on the personal service in contrast to the electronic service (ATMs). 3- Data related to the degree of relationship and trust between staff and their managers. Two items in this part were taken from a scale developed by the QUEST Solution, Quality Survey for Teams (Smialek, 1998). However, the first question was modified to fit individuals rather than team relationships, Q1 “I feel respected by team members” becomes “I feel respected by my supervisor”. Q2 stayed the same. However, the researcher, throughout the process of enhancing the questionnaire, added questions 3 and 4. 4- Data related to the levels of incentives and communication skill perceived by bank’s staff in the banking sector (Smialek, 1998); the QUEST included questions about these four constructs but considering team empowerment not individual empowerment. Thus, the questions taken from the QUEST were modified to fit individual respondents rather than teams. For example, Q17, “I am recognised for my contributions to our team” becomes “I am recognised for my contributions by my supervisor”. The same applies to Q18. However, Q19 and Q20 are only reversed in order to improve the accuracy of 126
filling out the questionnaire by respondents. The same applies to the information section and the skill sections starting at Q21 through to Q35 with Q24, Q26, Q33, and Q35 reversed. Question 30 was added by the researcher during the piloting stage when some respondents expressed the importance of IT and computer technology to the flow of information throughout the bank. 5- Data related to the levels of customer satisfaction and employee satisfaction. Items for this part were initiated by instruments from the general job satisfaction and customer satisfaction scales, including Forgionne et al. (1982). Customer-perceived satisfaction was substantially modified by the researcher throughout the stage of questionnaire design and development but inspired by customer satisfaction instruments in the literature questionnaires.
Again, questionnaire design must take into consideration question formatting, wording, rating and length of questionnaire before pre-testing the questionnaire.
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Table 5.2.
List of Items in the Research Questionnaire
Empowerment 1. I am allowed to do anything to do a high quality job. 2. I have the authority to correct problems when they occur. 3. I am allowed to be creative when I deal with problems at work. 4. I go through a lot of red tape and rigid rules to change things. 5. I have a lot of control over how I do my job. 6. I don’t need to get mgt. approval before I handle problems. 7. I have a lot of responsibility in my job. 8. I am not encouraged to handle job-related problems by myself. 9. I can make changes on my job whenever I want. 10. I Can not take charge of problems that require immediate attention. 11. Can not feel free to meet my customer s needs under the bank’s regulations 12. The work load reduces the service I provide to my customers
Relationship and trust 13. I feel respected by my supervisor. 14. I feel encouraged to take risk. 15. I am not encouraged to solve customer problems on my own. 16.I have good relationships with my supervisor
Incentives 17. My supervisor recognizes me for my contributions. 18. My supervisor expects the best from me. 19. Management does not recognize or reward my effort and contribution in serving the customer. 20. Our managers don’t reward the frontline for their ability and efficiency. Communication and information flow 21. Employees talk openly about ideas of how to serve the customer. 22. Employees actively listen to each other 23. Managers listen actively to employees. 24. I don’t regularly communicate with my supervisor. 25. Conflicts and problems are confronted quickly and solved. 26. I don’t get all the necessary information to do my job in serving the customer. 27. Individuals are kept informed of what is going on in the unit/organization. 28. I know how to get needed information (e.g., whenever the customer needs help). 29. My supervisor encourages me to speak out. 30. The computer communication systems in the bank improve my ability to serve my customers.
Skills and knowledge 31. I receive needed resources on time. 32. I have all the necessary skills to best serve my customer. 33. Management support is not always available when needed. 34. I have full support for taking initiative in serving my customers. 35. My supervisor does not encourage initiative in serving my customers.
Employee satisfaction 36. Generally speaking, I am very delighted with this job. 37. People on this job often think of quitting. 38. I am generally satisfied with the kind of work I do in this job. 39. Most people on this job are very satisfied with t. 40. I frequently think of quitting this job. 41. We don’t feel free to do what we want on this job.
Customer satisfaction 42. Customers rarely complain about the service I provide. 43. Customers I serve ask for me by name when they need to be served. 44.When I serve customers, they are generally happy with the service. 45. Customers general feel that I am responsive to their needs. 46. Customers usually fell I provide them with complete information. 47. Customers respect the fact that I provide them with different alternatives. 48. Customers fell that I know instantly what they ask for. 49. Customers generally feel that I can solve their problems on the spot. 50. Customers like to feel home when served at the bank.
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5.6.1 Translating the Questionnaire The questionnaire was initiated in English language in the UK and translated into Arabic (see Appendix 5) language in Jordan before the fieldwork stage using the back translation approach (Douglas and Craig, 1999). The English version was translated into Arabic and the Arabic version was back translated into English by linguistics in both English and Arabic. The questionnaire was translated into Arabic and then back into English. Differences were resolved as a result of comparison between the Arabic and the English versions.
5.6.2 Question Format The general format is to present all possible answers and to have the respondents check the appropriate categories. As such, the questionnaire, as shown in Appendix 1 at the end of this thesis, allows the respondent to check a box against very clear numbered groups of questions with five rankings for each question starting from ‘strongly agree’ for the first rank to ‘strongly disagree’ for the fifth rank.
Rating Rating is one of the most common formats for questions asked in social science surveys. The rating scale (Frankfort-Nachmias and Nachmias, 1992) is an acceptable rating whenever respondents are asked to make a judgement in terms of sets of ordered categories, such as ‘strongly agree’, ‘favourable’, or ‘very often’ (FrankfortNachmias and Nachmias, 1992). Furthermore, there is almost a consensus in the literature that points of a scale should range from five to nine points (Churchill, 1999; McDaniel and Gates, 1999) and that three or less and eight or more are not good enough. Thus, a 5-point rating scale was used in the study instructing respondents to tick either ‘strongly agree’ which is rated as 5 points, ‘agree’ rated as 4 points, ‘neutral’ rated as 3 points, ‘disagree’ rated as 2 points, and ‘strongly disagree’ rated as 1 point.
Wording The question must be worded so that the respondent understands it. The questionnaire survey has gone under a series of wording and enhancing stages starting with
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presenting the questionnaire to a discussion during a quantitative methodology course given to first-year PhD students at the Nottingham University Business School. Further wording and enhancement phases were also undergone during the translation of the questionnaire by seven academic professors at Yarmouk University in Jordan. Words that are open to interpretation were being either avoided or qualified. Leading questions (questions phrased in such a manner that it seems to the respondent that the researcher expects a certain answer) were also being avoided to minimise distorted responses. Double-barrelled questions (two questions in one) were also prevented to avoid confusing the respondents who might agree with one aspect of the question and disagree with another.
Length and Format It is very important to consider the length of the questionnaire and the time spent by the respondent answering the questions. The researcher in this study tried to make sure that the questionnaire length would not limit respondents from fully filling it out; the approximate length for filling out the questionnaire was about 15 to 20 minutes, which was ensured during the pre-testing stage. Hence, it is widely acceptable to spend 15 to 20 minutes given that the respondent is aware of this length through the introductory paragraph, which was ensured in this study.
Cover Letter After the questionnaire had been constructed, the next step was to include an introductory paragraph to explain the purpose of the survey to the respondents and to encourage a high response rate as shown in Appendix 1 (Frankfort-Nachmias and Nachmias, 1992). The cover letter used in this study attempted to motivate the respondents to answer the questions very seriously. It explained the purpose of the study, clarifying its importance, and the importance of filling out the questionnaire, and ensuring the respondents that the information they provided would be held in strict confidence. In general, the cover letter for a mail or drop and collect questionnaire needs to be more detailed than the introductory statement in a personal interview. In an interview, the interviewer is always there to explain or persuade the respondent should that become necessary (Frankfort-Nachmias and Nachmias, 1992).
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With this questionnaire, the cover letter is all there is, and thus its function is very significant.
5.7
Data Collection
Semi-structured interviews (including piloting the survey) with 20 bank staff and 10 customers started by the end of June 2001 and lasted for one month. The survey was then distributed over a sample of 750 bank staff including frontline staff and different ranks at the bank. The survey was distributed and collected by the drop-off and pickup method to collect 550 questionnaires making a 73 percent response rate. However, 33 questionnaires were discarded either because the questionnaires were not fully completed, major parts were missed or the respondent clearly filled out the questionnaire blindly. However, reversible questions were used in this questionnaire to detect the latter problem. Therefore 517 were usable questionnaires with a 69 percent response rate. It is worth noting that the data collection period started from the end of July 2001 till the end of September of the same year.
Survey Collection Four people, the researcher and three volunteer researchers, one from the University of Jordan and two from Yarmouk University, participated in distributing and collecting the survey. There were only two available ways for collecting the survey. One was by visiting banks’ branches and collecting the survey from each individual branch manager who agreed to collect them from individual employees after filling them out and collecting them in his/her office, or keeping them with one of the staff members of the bank. The second way and the less difficult one was where the bank would agree to collect the survey from all its different branches and would give a certain date for collection at the regional office. Some banks deal with such a matter through their public relations department or by the research and development unit in the bank. One point worthy of mention is that these banks emphasise on the issue of confidentiality and partiality, which secure the respondent’s’ privacy and help avoid any possible biases.
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5.8
Validity and Reliability
The measurement instrument should have acceptable levels of reliability and validity in measuring the target constructs. However, the use of multiple variables, as is the case in this study, focuses attention on the issue of measurement error, the degree to which the observed values are not representative of the true values (Hair et al., 1998). In assessing the degree of measurement error present in any measure, the researcher must address both the validity and reliability of the measure. Validity is the degree to which a measure accurately represents what it is supposed to measure. Reliability, on the other hand, is the degree to which the observed variable measures the true value and is error-free. That is if the same measure is asked repeatedly, for example, more reliable measures will show greater consistency than less reliable measures (Hair, et al., 1998). The validity issue in this section will be discussed first, followed by the reliability issue. The next chapter however, Chapter Six, will presents the empirical evaluation of both reliability and validity.
5.8.1 Validity Analysis Three types of validity tests are recommended by researchers: content validity; criterion validity; and construct validity (Churchill, 1999, Bagozzi, 1996; Parasuraman, 1986).
Face Validity Face validity is the degree to which a measurement seems to measure what it is supposed to (McDaniel and Gates, 1999: 309). The face validity in this research was obtained by the consistent effort of the researcher throughout the questionnaire development process: first by relating to the literature; second by receiving feedback from academics and practitioners locally and abroad (i.e., via e-mail); and third by piloting the questionnaire to capture the right face validity for this research. Content validity or face validity is the assessment of the correspondence of the variables to be included in a summated scale and its conceptual definition (Hair et al., 1998). According to McDaniel and Gates (1999), four steps were recommended to secure the content validity of a research instrument:
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1- Carefully defining what is going to be measured. In this research, this has been done by the literature review phase, which leads to a clear definition of the research issue and objectives of this research.
2- Conducting a comprehensive and thorough literature search and focus groups to identify all possible items to be included in the scale. In this study an exploratory pilot study was conducted with both customers and customer contact employees in order to enhance the questionnaire to be valid in content with the respondents’ understanding and comprehension.
3- A panel of experts can be asked for their comments and ideas regarding the inclusion or exclusion of some items. This step has been done with the help of seven academic staff at Yarmouk University in Jordan to ensure the translation equivalence and contents of the questionnaire. Accordingly, the research questionnaire has benefited much of this procedure by enhancing the translation process by the help of these academics who are very well aware of both the language and culture differences. As such, the researcher is gratified by the help of the panel in redirecting the questionnaire to be more sensible and acceptable to the respondents’ level of communication.
4- Finally, pre-testing the questionnaire. The questionnaire was pre-tested by 20 customer-contact employees in the banking industry in Jordan and respondents were asked to bring forward any comments or difficulties in comprehending any question. The respondents considered the survey questionnaire acceptable after some minor changes.
Criterion Validity Criterion validity can be divided into two subdivisions: concurrent validity and predictive validity. Predictive validity is defined as “the degree to which the future level of a criterion can be forecasted by a current measurement scale” (McDaniel and Gates, 1999: 311). They also defined the concurrent validity as “the degree to which a variable measured at the same point in time as the variable of interest can be predicted by the measurement instrument”. While predictive validity is used in this
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study as shown in section 7.4 in chapter seven, concurrent validity will not be used in this research due to the lack of any previous data to enable the researcher to use the concurrent validity. Several studies have conducted predictive validity without the concurrent validity due to lack of previous data to be used for such validity (Spretizer 1995; Abdelaziz 2001Abou Aish 2001;).
Construct Validity After presenting the content and face validity of the instrument, the next type of validity is the construct validity to be presented in this section and to be empirically examined in Chapter Seven, section 7.5. Construct validity is different from content validity in that it involves relating an instrument to a general theoretical framework in order to determine whether the instrument is related to the conceptual assumptions that are used (Nachmias and Nachmias, 1992). Two types of validity are suggested in the literature: convergent and discriminant validity (Hair et al., 1998; Nachmias and Nachmias, 1992; Diamantopoulus and Schlegelmilch, 1997; Churchill, 1979). Convergent validity assesses the degree to which two measures of the same concept are correlated. In this case the researcher may look for alternative measures of a concept and then correlate them with the summated scale. High correlations here indicate that the scale is measuring its intended concept (Hair et al., 1998). Discriminant validity ensures that the scale is sufficiently different from other similar concepts to be distinct (Hair et al., 1998).
Factor analysis is used to test the construct validity, as illustrated in Chapter Seven. Hence, factor analysis is highly recommended for testing both types of construct validity, as suggested by Peter (1979) and Bagozzi (1996), and it has been commonly used in many marketing and services studies (Parasuraman, Zethimal and Berry, 1988, 1990, 1994; Cronin and Taylor, 1992). Factor analysis, according to Hair et al. (1998), addresses the issue of analysing the structure of the correlations among a large number of variables by defining a set of common underlying dimensions, known as factors. As such, factor analysis technique is used to evaluate both reliability and validity of the construct measure (Bagozzi, 1996). However, there are two primary uses of factor analysis: summarisation and data reduction. In summarisation, factor analysis derives underlying dimensions that, when interpreted
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and understood, describe the data in a much smaller number of concepts than the original individual variables. In this research, the second purpose of data analysis is used to test the validity of the items used in this research. Factor analysis has been conducted for three dimensions, including empowerment, communication and customer satisfaction, to arrive at three factors for empowerment and two factors for communication, as illustrated in Chapter Seven, section 7.5.
5.8.2 Reliability Analysis Reliability analysis is concerned with including a scale that is free from random error, an error that is not produced consistently every time a measurement is taken (Diamantopoulus and Schlegelmilch, 1997). Reliability analysis will be empirically presented in Chapter Seven, section 7.4.2. Reliability is an assessment of the degree of consistency between multiple measurements of a variable. There are a number of different reliability forms. One form of reliability is test-retest, by which consistency is measured between the responses for individuals at two points in time. The objective is to ensure that responses are not too varied across time periods so that a measurement taken at any point in time is reliable (Hair et al., 1998). The more commonly used measure of reliability is internal consistency, which applies to the consistency among the variables in a summated scale. In internal consistency, the individual items or indicators of the scale should all be measuring the same construct and thus be highly inter-correlated (Churchill, 1979; Nunnally, 1978). Internal consistency is assessed through a series of measures, among which Cronbach’s alpha is considered the most widely used measure in assessing the consistency of the entire scale (Nunnally, 1978; Peter, 1979). Accordingly, it is based on the average correlation of items within a test if the items are standardised (Coakes and Steed, 2001). The generally agreed upon lower limit for Cronbach’s alpha is .70 (Robinson et al., 1991; Robinson and Shaver, 1973), although it may decrease to .60 in exploratory research (Robinson et al., 1991). However, in this study Cronbach’s alpha ranges from .63 to .87, as illustrated in Table 7.18 in Chapter Seven. One issue in assessing Cronbach’s alpha is its positive relationship to the number of items in the scale. Because increasing the number of items, even with the same degree of intercorrelation, will increase the reliability value, researchers must place strict requirements for scales with a large number of items.
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5.9
Data Analysis Techniques
Selecting the right statistical methods depends on the nature of the data and the relationship between the method and the research objective. As such, this study will use what is relevant to the research question and framework. The main data analysis techniques used in the research are frequency analysis, factor analysis, and mainly multiple regression technique. The descriptive analysis of the data is used to provide a summary about the respondent’s demographic characteristics using means, frequencies, and standard deviations of the responses. Section 5.10 presents two alternative data analysis methods: Structural Equation Modelling and Multiple Regression Method as the most appropriate data analysis techniques for this type of research. While SEM is viewed as a more advanced statistical approach, multiple regression was selected in this study to provide a means of objectively assessing the degree and character of the relationship between dependent and independent variables by forming the variate of independent variables. Multiple regression provides the researcher with a means of assessing the nature of the relationships between the independent variables and the dependent variable (Hair et al., 1998).
Multiple regression analysis in this research produced the adjusted R2, R, F and p values that were useful in testing the hypotheses. In addition, the qualitative method was used in this study to collect data and reinforce the process by conducting semistructured interviews. The analysis and the findings of the data collected from the semi-structured interviews are presented in the following chapter, Chapter Six. Interviews were analysed and interpreted based on the source and context of data provided. Each interview was treated uniquely, facilitating an understanding of the context in which individual meaning was provided. Finally, effort was also made to identify recurring experiential patterns across interviews as shown across the section in Chapter Six.
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5.10 Method (SEM or Multiple Regression) 5.10.1 Structural Equation Modelling The past few years, have witnessed a dramatic increase in the number of articles and publications using SEM techniques. The reason perhaps is due to the increase in software packages to perform such covariance-based and component-based analysis (Chin, 1998). When applied correctly, SEM-based procedures have substantial advantages over first generation techniques because of the greater flexibility that a researcher has for the interplay between theory and data. However, along with the benefits that SEM provides comes a higher level of complexity (Chin, 1998) and a range of other problems (Cortina, 2002). •
Maximum Likelihood estimation (MLE)
The most common estimation procedure has been found to provide valid results with sample sizes as small as 50, but a sample this small is not recommended (Hair et al 1998) It is generally accepted that minimum sample size to ensure appropriate use of MLE is 100 to 150 (Ding et al 1995):
As we increase the sample size above this value, the MLE method increases in its sensitivity to detect differences among the data. As the sample size becomes large (exceeding 400 to 500), the method becomes “too sensitive” and almost any differences is detected, making all goodness-of-fit measures indicate poor fit (Carmines and McIver, 1981; Marsh et al, 1988; and Tanaka, 1987). Although there is no correct sample size, recommendations are for a sizes ranging between 100 to 200 (Hair et al, 1998). The sample in this research is way above this range (i.e., the sample is 517).
•
Heywood cases
Heywood cases is a common type of offending estimate, which occurs when the estimated error term for an indicator becomes negative, which is an illogical value. In a recent article concerning methodological misunderstandings, Jose Cortina argued “SEM sometimes produces improper values such as negative variances or implied correlations greater than 1. These lead to component matrices, usually
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variance/covariance matrices for measurement and structural errors, that are nonpositive definite” (2002, 253). • Goodness-of-fit Assessing the overall goodness-of-fit for SEM models is not as straightforward as with other multivariate techniques such as multiple regression. SEM has no single statistical test that best describes the “strength” of the model’s predictions. Instead, researchers have developed a number of goodness-of-fit measures that, when used in combination, assess the results from three perspectives: overall fit, comparative fit to a base model, and model parsimony. However, none of these measures (Except the Chi-square statistic) has an associated statistical test. The researcher however, must ultimately decide whether the fit is acceptable (Hair et al, 1998)
5.10.2 Multiple Regression Although SEM is a more advanced statistical approach encompassing an entire family of models including covariance structure analysis, latent variable analysis, confirmatory factor analysis, and LISREL analysis, multiple regression provides a means of objectively assessing the degree and character of the relationship between dependent and independent variables. Multiple regression provides the researcher with means of assessing the nature of the relationships between the independent variables and the dependent variable (Hair et al, 1998). Multiple regression also provides insight into the relationships among independent variables in their prediction of the dependent measure. While SEM as a statistical approach still progressing and evolving, researchers may benefit greatly as the technique keeps improving to encounter recurring problems and difficulties in applying the method. Additionally, multiple regressions with dummy variables (i.e., using the Chow test) allows for an effective way of testing differences for differences across groups.
To summarise, multiple regression has been used in this study for the following reasons. First, this study has a large sample size which suits using multiple regression technique than SEM, where SEM is too sensitive in terms of the Maximum Likelihood Estimation Mentioned above. Second, an exploratory study is conducted because of the cultural differences. Third for the above-mentioned problems
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including the negative variance issue and the goodness of fit problems associated with using Structural Equation Modelling. As such, the use of multiple regression technique in this study is better and more effective given the study sample size and the study context.
5.11. Conclusion This chapter tried to provide an overall view of the methodology adopted in this study, starting by discussing the methodological underpinnings of this research, indicating that this researcher will use both quantitative and qualitative research methods relying more on the survey method to arrive at major findings for this research. This chapter continued to explain the means by which this study will be able to provide answers regarding the empowerment issue in examining the antecedents and outcomes of empowerment. Accordingly, the survey was fully explained using the qualitative phase study to form the basis for establishing a strong research instrument to examine constructs of this research. The questionnaire development and design procedures were discussed and explained using the right format and wording and rephrasing the questionnaire several times to suit the target informants. Furthermore, the questionnaire was initiated in English and translated into the Arabic language to suit the respondents’ language. Proper methodological considerations were taken in translating the questionnaire into the Arabic language. Both monolingual and bilingual methods in both languages were used to ensure an appropriate translation.
While this chapter has introduced the methodology used in this research, including both quantitative and qualitative, the next chapter will focus on the qualitative aspect by presenting and analysing data collected through the interviewing stage of this research.
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Chapter Six
Exploring the Empowerment Relationships and Dimensions
We must not cease from exploration and the end of all our exploring will be to arrive where we began and know the place for the first time
Aristotle
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6
Exploring the Empowerment Relationships and Dimensions
6.1
Introduction
The research hypotheses outlined in Chapter Five are addressed by empirical research based around two forms of data collection methods providing data triangulation to examine the theory established for this research. This chapter presents the findings of the qualitative study generated from interviews with both bank staff and customers in order to gain an additional perspective into the relationships being researched inside and outside the organisation.
This chapter deals with interviewees’ perceptions, soliciting their stories about their experiences inside the organisation (staff) and outside the organisation (customers) in the banking system in Jordan as an integral part of the service sector. The discussion of findings and analysis within this chapter is grounded on the assumption that empowerment construct and its presumed relationships and the importance of such a relationship are possible in the banking industry in Jordan. As such, the interviews in this chapter signal to the importance given to the empowerment construct and to the conditions underlying such an initiative in the banking sector in Jordan. This chapter is considered a qualitative stage along with a more advanced stage in the data collection process, conducting the main research survey. Comments are made on findings which are both expected and unexpected.
This chapter is divided into two parts. The first part considers staff and presents types of informants being interviewed followed by discussing informants’ perceptions of the empowerment dimensions. The empowerment issue is then discussed, dividing along a continuum into three main levels or degrees of empowerment perceived by informants: high, moderate and low levels of empowerment emanating from informants’ stories. Empowerment antecedents are then presented, including four dimensions: trust, incentives, communication, and knowledge. The second part considers customers and presents the empowerment consequences, including employee satisfaction and customer satisfaction. The discussion and analysis sought to find associations and patterns between constructs in this study.
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Table 6.1
Informant’s Profile
Number
Gender and age
Position
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
M, 45-55 M, 24-35 M, 24-35 F, 24-35 M, 45-54 F, 24-35 M, 39-44 M, 24-35 M, 24-35 F, 45-54 F, 24-35 M, 54-65 M, 25-34 M, 45-54 M, 44-55 F, 24-35 F, 45-54 M, 45-54 M, 24-35 F, 24-35 F, 24-35 M, 24-35 F, 24-35 M, 45-54 M, 44-54 M, 45-54 M, 44-54 Female, 24-35 M, 24-35 M, 24-35 M, 24-35 F, 34-45 M, 24-35 M, 39-44 F, 34-45 M, 24-35 M, 44-54 M, 24-35 M, 34-45 M, 34-45 M, 24-35 M, 24-35
Manager Manager Teller Credit Manager Teller Teller Manager Teller Teller Invest manager Customer Manager Acc-rep Manager Manager Credit-manager Sales manager Manager Teller Teller Teller Teller Acc-rep Teller Manager Manager Manager O.M Teller Customer Teller Acc-rep Teller Assis manager Teller Acc-rep Manager Teller Acc-rep Teller Teller Teller
6.2
Bank number 1 1 2 5 3 4 5 5 6 9
Bank branch A C A D B C F F B A
9 8 8 1 5 10 9 5 6 4 3 8 3 2 1 1 6 3 2 4 5 3 9 7 3 4 1 5 5 4
B A B C C A C E B B A A D A A C A B B E B D A A C A B A D D
Section and context 6.3.1 levels of empowerment = = = = = = = = = = = = 6.3.2.1 = = = = = = = 6.3.2.2 = = = = 6.3.2.3 = = 6.3.2.3 = 6.3.2.4 = = = 6.3.3.1 = = = = =
Nature of Informants Interviewed
While the main research survey was directed at bank’ customer-contact staff, the interviews were conducted with bank staff and customers (as illustrated in Table 6.1) in order to get additional insight into the perceived customer satisfaction with regard to staff behaviours and capabilities and to get the staff perspective.
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Table 6.2 Characteristics of Customer-Contact Staff in Jordanian Banks Informants
Attributes
Customer
Ordinary
bank
customer
without
any
particular segment. Manager
Branch
manager-
performing
contact duties along with
customer-
administrative
responsibilities for the branch. Tellers
Those who are mainly performing customerservice responsibilities
Others
This is including account representatives, credit managers and other assistants who are performing customer-service responsibilities along with other related tasks.
As discussed in the methodology chapter, Chapter Five, interviews were conducted with 20 bank staff, including both managers and employees, and 10 customers. As shown in the above table, the interviews were conducted with different customers and different employees. The customers were ordinary customers holding routine or nonroutine transactions with the bank because the purpose was only to seek customers’ perceived satisfaction levels towards the frontline staff behaviours and capabilities during service encounters and service delivery. Customer interviews were used for the customer satisfaction part. Employees interviewed were tellers, managers, account representatives, credit managers, assistant managers and others. The reason all these people were considered in the interview process was because their jobs included customer-contact responsibilities. For example, even branch managers deal with customer problems to a certain extent in addition to their administrative responsibilities at the bank. Therefore, the interviews covered all these ranks in order to establish more knowledge of the relationships under study and to try to arrive at the true pattern of those relationships.
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6.3
Informants’ Perceptions of Dimensions – Staff Interviews
the
Empowerment
Semi-structured interviews were initiated with customer contact employees (from 14 Jordanian banks), including tellers, account representatives and branch managers, to explore the actual relationships between the empowerment antecedents and the empowerment outcomes. There are differences of perceptions, for example, between managers and frontline staff but they all share the same duties of dealing with customers on a daily basis with different levels and intensity. The data provided by informants indicated that they have similar views and perceptions regarding many aspects and they sometimes have mixed experiences of the issues being discussed.
We will review in each of the following sections the different issues discussed with informants concerning the dimensions of the study, starting with the core issue regarding their perceptions about the empowerment issue, and then the following sections
will
discuss
the
antecedents
of
empowerment,
including
trust,
communication, incentives, and skill or knowledge, and finally, the consequences of empowerment, including employee satisfaction and customer satisfaction.
6.3.1 The Empowerment Issue This section aims at examining the extent to which empowerment exists in the banking industry in Jordan. In general, interview questions did not make direct reference to the term empowerment to avoid sensitising respondents, and questions focused instead on addressing aspects of empowerment, such as flexibility, capability and authority to provide the same meaning of the empowerment for the informants. Informants in the following discussion told their stories about the different levels of empowerment existing in their branches. Their responses range on a continuum between a low, moderate and high level, as discussed below.
High Level Some informants indicate that there are high levels of empowerment in their organisations. The following excerpts taken from branch managers and tellers indicate that empowerment is highly perceived in their branches (reference codes are illustrated in Table 6.2 at the end of this chapter where, for example, M stands for
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manager, T stands for teller, B stands for bank number, BR stands for branch number).
We make sure that the employee is capable of dealing with the customer. We train the staff in order to use their minds instead of relying heavily on instructions and on the system. We urge them to be creative and innovative but we expect mistakes because we are all human and we do make mistakes sometimes. 1-Male, 34-45 (M, B1, BR.A)
In conclusion, I believe that now, more than ever before, the staff and the tellers are carrying more responsibilities because of the increasing number of services offered by the banking system. With such responsibility, they carry more dependability and freedom to act and this is good for staff and management as well. 2-Male, 44-55 (M, B1, BR.C)
I think there is a transition from the traditional banking system to a new one. Before, in order to cash a cheque you needed to get your supervisor’s approval on it, which made life difficult for you and for your customer. All this now is in the past. The teller does it all, which makes me, and the customer more satisfied and you know, the most important thing for the average customer is the speed of service. 3-Male, 24-35 (T, B2, BR.A)
These excerpts are typical of a favourable reaction by a number of informants from both tellers and branch managers or sometimes those in between these levels. However, more managers than tellers seem to express their favourable perception. As such most of the informants, especially managers, perceive a positive transition in the banking system from the stage of total control and more routine of the job to a more varied job and job enlargement.
The cashier’s job no longer exists. Now called the teller who can deal with and provide a wide range of customer services. This enables the 145
frontline staff to be more knowledgeable and capable than before. By doing different tasks, their jobs are becoming more interesting and meaningful. 4-Female, 24-35 (Credit Manager, B5, BR.D)
Moderate Level While the above two types of informants provided favourable perceptions towards the empowerment in their organisations, another segment of informants was less extreme and more moderate in describing the level of empowerment in their branches. As such, the researcher described their views as moderate. Informants under this view recognise the boundaries to empower the frontline staff but they also see a wide range of opportunities for staff to be empowered and use their initiative and intuition to satisfy themselves and satisfy the customer.
When we talk about flexibility and authority we have to understand that in the banking system it is different and it is not easy because we are dealing with money, people’s money. On the other hand, we have more flexibility at the point of contact with the customer. That is not in changing the service process but in treating the customer with respect and courtesy and this needs so much flexibility and capability. 8-Male, 24-35 (T, B5, BR.F)
Many informants share this view and realise the limitations of empowerment by the fact that they can do with the social aspect and the interpersonal relationship at the point of contact with the customer but they cannot do with the system and structure.
To tell you the truth, in the technical aspect of the banking system, there is a very slight chance for delegation or autonomy simply because of the structure and the regulations set by those at the top. I enjoy working with the customer because the bank policy or instructions cannot dictate to me the way to deal, treat, respect and respond to my clients. Knowing the client in person and anticipating what he wants is good and brings happiness for him.
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9-Male, 24-35 (T, B6, BR.B)
This informant realised his limits in changing the system and bending the rules but he explores an opportunity at the point of contact with the customer suggesting that his authority and flexibility at this point is very significant for him and for the customer. There are however customers who support this view. The last section on customer satisfaction presents some informants’ stories that support this finding (Gronroos, 1994; Gummeson, 1987). Hence, this view might be popular among managers as well as customers who understand the system and recognise the importance of rules and regulations in the banking system to avoid any type of fraud.
Going beyond the rule book might be difficult but employees can use their own way of doing things differently within the rule book, and they will feel satisfied. For example, I use flexibility with my boss when I decide on the right time to talk to him and on how to persuade him of a certain idea. 10-Female, 45-54 (Investment Manager, B9, BR.A)
Not only staff, even some customers who perceive the customer contact staff in a very positive way, hold the same view. Although, customers’ stories were not included in this section, a related experience is told in section 6.3.3.2 to reveal that some customers perceive that rules are for the interest of both the bank and the client. Accordingly, a bank manager revealed a similar experience indicating that his staff enjoy so much freedom in deciding how to please their customers within the bank’s rules and regulations.
If there is no possibility of empowerment and flexibility or authority in changing the system or the rules, there is a big chance to change yourself and become creative in explaining the different services that the bank provide to the customer. How to explain and demonstrate, requires some creativity and innovation on the part of the staff and we do encourage and support that. 12-Male, 54-65 (M, B9, BR.B)
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These informants choose to recognise the boundaries of the system in terms of rules and regulations that do not leave much scope for staff empowerment. Moreover, some informants have provided justifications for such close structure and have gone one step further to see an opportunity for more empowerment and flexibility in dealing and treating the customer in respect, courtesy, and hospitability.
I appreciate the issue that you (the researcher) are trying to raise here and I am still influenced by many business and management theories that I was exposed to during my years of study at the university. Now I am in the field, not at the university, so I try to create my own way, my own empowerment, I excuse my managers for the lack of authority that we see and have but I have my own empowerment.
(When asked for clarification, the informant answered):
I respect the fact that my supervisors have to apply their rules but I have to be flexible and use my own way of dealing with my customers. You know, I feel good when solving their problems, explaining different alternatives to them, smiling and respecting them. This way we build our own interpersonal relationships and at the end of the day I do not violate my management rules and regulations – in peace with everyone. 13-Male, 25-34 (Account Rep, B8, BR.A)
While this informant seems to justify the lack of empowerment in one aspect, he seeks empowerment at the point of contact with the customer where control and rules are minimal. He seeks empowerment in his own way, in the way he treats, respects, smiles and perhaps chats with customers. This might suggest that the customercontact employees can have flexibility at the point of contact with customers, according to Czepiel (1990), where they can build interpersonal relationships with them and even know them sometimes by name.
In this group, both managers and frontline staff were represented. The recognition of moderate levels of empowerment appears to be equally present among frontline staff
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and managers. This perception was different under the high level as well as the low level discussed in the following section. Low Level of Empowerment While some informants felt that there is a high or moderate level of empowerment practised at their branches and they thought that customer contact employees are becoming more flexible and more empowered, many others see it differently.
I think we all suffer from red tape, rigid rules and regulations, the banking system does not allow its staff any freedom to act. Even managers are not allowed to do what they want, and how do you expect someone to give freedom to his people if he himself does not own it. I think such a situation will first affect the customer and then the organisation itself. 5-Male, 45-54 (T, B3, BR.B)
There is a very close supervision around here. The bank now works towards improving the employee’s performance through training and stuff like that, but I think this will never work without trust and delegation. Everything is written for you and you can do nothing outside what is being written. 6-Female, 24-35 (T, B4, BR.C)
These two excerpts are particularly insightful because the informants expressed their negative feelings towards the rigidity of rules and regulations and the need to give them more freedom to act in order to provide better service for the customer. It is not only the frontline staff who had such perception but also some assistant managers or branch managers who share a similar view about this situation but it is worth noting that more frontline staff appear to feel negatively empowered. Freedom is limited and there is not much opportunity for innovation and there is no place around here for recognition. I hate people telling me what to do and what not to do and how to do it all the time. And this will have a huge impact on our clients. 7-Male, 39-44 (M, B5, BR.F) 149
This informant as a branch manager expressed a negative view resenting the status quo of limited freedom and empowerment. This suggests that he would rather have more freedom for himself and his employees if they were to perform a better job for the organisation and the customer as well.
Considering these two different views, one could establish a comparison between these two perceptions. In the first instance, that of those who hold the perception that the level of empowerment is high at their branches, it can be expected that more managers than tellers would reveal such a perception. However, in the second case, with those who felt that the level of empowerment is low at their branches, this was reported by more tellers than managers. Such a distinction between managers and frontline employees’ perceptions could be attributed to their positions within the branch. Managers tend to think that the level of empowerment is high perhaps because they are closer to the management side. Bias therefore, is expected on their side by trying to reveal that their subordinates are being given the freedom and participation expected. Accordingly, because they are managing the branch, it is possible that they would tend to be more positive and reveal that they give their employees the freedom they need and the involvement needed as positive behaviours of managers to give freedom instead of control and close supervision. Such scepticism has been clearly raised in the words of Chris Argyris (1998) observing that:
The change programmes and practices we employ are full of inner contradictions that cripple innovation, motivation, and drive. At the same time, CEOs subtly undermine empowerment. Managers love empowerment in theory, but the command-and-control model is what they trust and know best (98).
The very same scepticism has also surfaced in many informants (i.e., the above three excerpts) in this study when putting the blame on the system, rules and regulations or what has been described by Argyris as the command-and-control model.
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On the other hand, tellers see it differently because they are much closer to the scene and they face the customer who requires a problem-solving person delegated enough to solve his/her problem quickly without any delay.
Both of these views, the low level and the high level, can be demonstrated on polar extremes where one believes there is a bias towards the system in providing employees with freedom and flexibility and the other at the other extreme viewing the organisation as lacking enough autonomy or delegation for its employees. Notwithstanding that there were informants who expressed either his/her favourable or unfavourable view, other informants provided a more moderate and simple view. They view the banking sector as a part of the financial services system as one of the most critical and sensitive organisations where employees do not deal with service provision per se but they also deal with money, which is subject to fraud and mishandling. Hence, regulations and instructions are necessary.
6.3.2 Empowerment Antecedents The previous section discussed the different point of views regarding empowerment in the banking system in Jordan. While having different viewpoints, informants appear to observe the empowerment concept and to recognise its importance.
I think we are talking about a very important and perhaps a hot issue here. Unlike ours, modern organisations do involve their employees in everything. They participate in decision-making, in profit sharing and in many different ways. I think we need to change because if we do not change the gap will keep widening and we will never be able to catch up in the new global competition. To some extent we recognise the need for giving our staff more authority and discretion but we need to step in the right direction and to start acting more than talking. 14-Male, 45-54 (M, B8, BR.B)
This was one of the top managers explaining the importance of empowerment and some of its related aspects including decision-making and employee involvement and participation. In addition, in viewing most of the previous excerpts, one can observe
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that informants do understand the empowerment and its related aspects. They have recognised either the lack or the existence of those aspects, which suggests that it is an important issue that requires some more systematic efforts to study it in practice and at the academic level.
As mentioned in the introduction of this chapter, this research has utilised both survey-designed instrument and qualitative research methods in triangulation to examine the theory discussed in the literature review of this thesis. Furthermore, the qualitative study has shed light into other issues that will be discussed in due course while looking at the main assumed and proposed antecedents and consequences introduced in the theoretical background of this research.
Four antecedents were proposed to lead or support the state of empowerment among customer-contact employees in the banking sector in Jordan. Trust, incentives, communication, and skill or knowledge are the main antecedents that are being discussed with informants.
6.3.2.1 Trust Trust is viewed in the literature (Spreitzer and Mishra, 1999) as one of the most important antecedents to empower customer-contact staff and viewed sometimes as a precondition to empowerment. Such importance is being proposed in this research through both survey and interview results. Informants recognised the importance of the trust issue between managers and employees. However, interviewees suggested different views regarding this dimension and its practicality in the banking sector. Particularly, they often tried to associate between trust and empowerment.
One informant put it this way:
Trust is very important between the staff and their manager because the mistake my employee makes is mine too. So I make sure that we trust each other and we help each other, because if we help one another this will enhance the trust factor between the parties involved. 15-Male, 44-55 (Manager, B1, BR.C)
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Trust is being viewed as an essential ingredient of collaborative effort (Costigan et al., 1998). This is the case with the above informant when he tried, as a manager, to link trust with cooperation and mutual interest between himself as supervisor and employees and that trusting the employee will reduce the chance to make errors and mistakes. This same informant viewed the level of empowerment (in section 6.3.1) as being relatively high in the branch that he works at suggesting that there is some positive association between the two perceptions regarding trust and empowerment. Furthermore, an organisational climate of trust enables employees to deliver their ideas and feelings, use each other as resources, and learn together (Costigan et al., 1998). A similar perception was revealed when the following informant tried to demonstrate the actual relationship with her supervisor stating that:
Traditionally, employees used to face barriers and walls when they want to see their supervisors but now they sit next to them and they work as partners. Look at me; for example, I sit with you, without (the manager) permission and he sees that, I answer all your questions without even asking for his/her permission. What do you call this? It is because we both trust each other not because of disrespect or this or that. 16-Female, 24-35 (Credit Manager, B5, BR.D)
One of the more interesting observations from this story is the positive association, which apparently exists between trust and its outcomes. The informant is linking between trust and the benefits of this trust demonstrating the positive relationship between herself and her manager to the extent that they work as associates or partners. The empowerment level that this informant sees is also high as has been revealed when discussing the empowerment issue. Consistently, she expressed a positive perception towards empowerment in section 6.3.1. She suggested then that the staff job is becoming more interesting and meaningful due to her becoming more capable, knowledgeable and flexible.
One of the informants, a branch manager, stated the importance of trust and gave a vivid example at the time of the interview when another member of staff phoned him and asked about a certain transaction for a client. The manager replied: 153
Look at the client history and you judge. I will leave it to you and I am sure you know better than me on this. 17-Female, 45-54 (Sales Manager, B10, BR.A)
This story told by this informant seems to capture two related constructs identified in this research, empowerment and trust. The above excerpt very well suggests the positive link between empowerment and trust. As such, the manager is not only trying to give the employee a lesson in using his/her own personal judgment but also trusting him/her to do the right thing, even better than the manager himself. This is however, not the only trend with all interviews. Just like this informant, most informants stressed the importance of trust but some of them were more pragmatic in describing the actual level and degree of trust practiced in the banking sector, that relies more on regulations to substitute for trust.
You know, this is a bank and we deal with money, it is a very vulnerable issue. There has to be rules and trust is very critical here, I don’t mean that we don’t trust our people but trust is limited. For example I trust my people in terms of respecting their customers and treating them right. I trust them in absorbing the customer anger or stress for example but I cannot trust them when it comes to money transactions. 18-Male, 45-54 (M, B9, BR.C)
Another informant supported the same view:
Trust is based on personal relationships but to the extent that does not come against rules or the system. 19-Male, 24-35 (T, B5, BR.E)
These informants seem to suggest that trust can be provided for certain tasks and held back when performing other duties. It seems that one can describe these two different tasks as soft tasks and hard tasks. The soft tasks are those related mainly to employeecustomer interpersonal and social interactions outside any formal transaction whereas
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hard tasks are those governed by rules and regulations where monetary transactions are mainly involved.
Every service has its limits in terms of trust; we have more freedom and trust in social relationships than any other formal transactions that are subject to rules and regulations. There are for example no rules to control my judgment in how to deal with my client. I mean my manager gives me all her trust in terms of speed of service when people are in the queue. He never asked me why you have that many people waiting for the service on the line. Simply, because he trusts me on this. But when there is something that has to do with money I have to abide by the rule and everyone is happy. 20-Female, 24-35 (T, B6, BR.B)
When viewing the stories told about empowerment and trust one might observe that informants who feel that the level of empowerment is high in their banks also perceive trust to be relatively high. This might suggest that those branches that have some degree of empowerment also have similar degrees of trust between staff and their supervisors. However, this might not be the case in all situations. Some informants hold different perceptions about the issue of trust as well as the issue of empowerment. Another informant expressed her dissatisfaction with the system indicating that the rules are so rigid and do not leave any place for trust. Rules, according to this informant, can be made more flexible and less controlling.
Trust is based on the degree of implementing the rules, I mean people here trust their rule book more than anything else because they themselves are not trusted by their managers and so on. The whole organisation is based on distrust and regulations. I am sure they can find a way to make rules more flexible and less constraining. I must tell you also that rules don’t apply to everyone, you know what I mean, double standards, is the word. 21-Female, 24-35 (T, B4, BR.B)
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This informant seems to have the same evaluation of both trust and empowerment. Earlier, in section 6.3.1, she did not see enough degree of empowerment applied at the branch level and in this section she also does not see enough trust between managers and staff and she seems very pessimistic about the relationship between managers and employees. It is evident so far that there is some degree of consistency in perception regarding the levels of empowerment and trust which supports the assumption that empowerment is a construct that is probably influenced by trust along with other dimensions.
Nevertheless, most of the informants recognised the importance of good staffsupervisor relationships. The stories told indicated that they have mixed perceptions of the actual relationship with their supervisors and the organisation as a whole. Some informants seem to accept the status quo; others view trust and good relationships as a daily fact in their organisations where others resent the status quo and recognise the need for change and for more flexible rules that would improve the relationship between managers and their employees.
6.3.2.2 Incentives Incentive is the second antecedent assumed to affect the level of empowerment among customer contact employees. Heskett, et al. (1997) explain the association between incentives and taking “ownership” of customers’ problems. Moreover, it is expected that rewards and incentives form a precondition for empowerment of customer-contact employees in order to take more responsibility in solving problems and pleasing customers. Informants of the following excerpts observe a link between these elements and they tried to talk about incentives with regard to the impact of incentives on empowerment or customer satisfaction. In spite of this many informants perceive their banks as lacking the right incentives and the right level of empowerment.
I think yet, there is no place for participation, involvement or incentives to do anything on your own, not only at this place, but the same all around our organisations.
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Listen to this: I was recently selected as the best employee of the year. The next step is for my supervisor to send this in writing to the headquarters in order to be honoured at the end of year ceremony. Two months have passed and still the recommendation is waiting in his desk. I keep asking him to send it off but he is always delaying it and yet he is still delaying. First I was happy when I was selected and now I began to lose interest. These people do not value incentives or rewards, not to mention participation and discretion. 22-Male, 25-34 (Teller, B3, BR.A)
In the above excerpt, the informant’s supervisor is ignoring the initiative and trying to overlook his employee’s right in receiving his reward. This incident seems to negatively influence the informant’s motive to use any more initiative or to be more empowered in his performance. Accordingly, this informant is suggesting an association and link between incentives and empowerment. He perceives the situation as frustrating and he does not see any practice of empowerment or incentives by his supervisor. This however, suggests that there is some type of direct relationship between empowerment and incentives. At least, this story suggests that when incentives are disregarded empowerment does not happen.
Other informants also carry similar feelings about the incentives aspect in their banks and that incentives, if found, have no impact on performance or satisfaction.
To tell you the truth, incentives or rewards around here have nothing to do with performance, customer satisfaction or efficiency. There is some type of reward but they don’t lead anywhere and they don’t build employee satisfaction or customer satisfaction and if they do it is only for the short term not for the long term. 23-Female, 24-35 (Account Rep, B8, Br.A)
I can tell you that there is no job satisfaction and there are no equal opportunities in these institutions. There is maybe some degree of trust regarding some non-monetary incentives (i.e., pat on the back) but there is no satisfaction regarding the monetary incentives. Promotions for 157
example are not based on fair and systematic procedures. And you know, these issues, money and other incentives, go hand in hand and I think they are very important for us if we want to please our customers and if they want us to take on more responsibilities at work. 24-Male 45-54 (T, B3, Br.D)
Interestingly, informants see much importance in pleasing the customer if they are being treated fairly and given the right incentives, but they don’t see this as being practised in reality by their managers or the bank’s system. However, when interviewed, few managers have the same perceptions while other have different perceptions about the degrees of incentives exercised by the organisation. The following informant, when asked about the incentives programmes, replied:
We care about our people and we want them to be ambitious, skilful and knowledgeable. These are the bases for the employee’s competence. We encourage our staff to ask if they don’t know. It is very important to have loyalty, commitment, and sacrifice. That will lead to recognition based on achieving targets. There are incentives and recognition based on performance and capability. We do not have a specific and comprehensive incentive programme and I think no one does in this area. But we do not let down any member of staff who works harder and shows creativity. 25-Male, 45-54 (M, B2, BR.A)
The above story from a branch manager informant suggests that they have no systematic or comprehensive incentive or reward programmes for the staff. He suggests that they take good care of their staff and they provide incentives but he declared that they do not have incentive programmes, nor does anyone else. However, when compared with frontline employees’ stories about incentives, managers tend to be more positive than tellers. More tellers, for example, speak of a lack of the right incentives at their units. This discrepancy between staff and managers’ stories is perhaps due to one of two reasons. The first reason perhaps is due to the fact that managers tend to be biased and answer the question favourably. The second
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justification, which is more logical than the former, is related to the fact that not all banks have the same degree of incentives and some banks try to invest so much in motivating their employees because they recognise the importance of satisfaction and commitment for both the staff and their customers.
If we don’t satisfy our staff we will never satisfy our customers because they spend most the their time with the customer not with me. Thus, trust, autonomy, skill and incentives are all important measures. When we talk about incentives, I think people come here mainly for money. But, besides money, they should feel that they satisfy their inner needs by having a meaningful job. For example, routine jobs are very stressful so we should avoid that. They should feel that their work is important to them so they get both types of incentives, money and ego or self esteem. You know, if their morale is low, they will, one day, leave without saying goodbye. You know, the other day, one member of staff wanted to leave the job because his family is going to Egypt, so he came and said goodbye to everyone and he was so sad to leave to the extent that his eyes were full of tears – I cannot forget that moment. 26-Male, 45-54 (M, B1, B.A)
Overall analysis of the above stories suggest that staff feel the reality of insufficient levels of rewards and incentives and if there are some types of incentives they are not clearly designed and structured. When discussing the different antecedents of empowerment (e.g., trust, knowledge, communication and incentives) with managers or frontline staff, incentives was the only aspect that informants were trying not to talk about or to link with empowerment. Two different explanations might be plausible here. The first one is that incentives were not satisfactory, and the other justification is that actual incentives given to employees were not perceived as relevant to empowerment. Along with the later justification, while many researchers associate incentives and empowerment (Hart et al., 1990; Spreitzer, 1995; Hesterly et al., 1990; Lawler, 1990; Miles and Creed, 1995), Argyris (1998) argues that empowerment can never be developed or created by external commitment and that providing employees with incentives such as higher compensations, better career paths, “employee of the month” and recognition awards only creates external 159
commitment rather than internal commitment or empowerment. However, while incentives may enhance and reinforce empowerment, empowerment cannot totally rely on rewards, according to Argyris (1998).
6.3.2.3 Communication The majority of informants perceive communication in their banks as of one way communication, that is, a downward type of communication, where information mainly flows from the top to the bottom of the organisation.
We provide different and new services all the time. Therefore we first communicate about these services to our people and then we want them to participate with us in communicating them to the customer. We also meet with our employees every two or three days to provide them with all the information they need and we encourage our staff to ask if they don’t know. 27-Male 44-54 (M, B1, B.C)
This excerpt is typical of a downward communication approach. In this, we see how management is providing everything and how the information is only flowing from the top to the frontline. However, according to Grönroos (2000), communication should be concerned with the process of sharing information and listening to each other, and not relying on persuasion and manipulation. Therefore, a true dialogue, according to Grönroos (2000), between the relationship partners has to emerge, away from the manipulative, one-way type of communication. Accordingly, the following informant suggested the importance of open communication. But he went on to describe that “open communication” as:
We have open communication specially in educating the frontline employees about new services that the bank provides. We educate our employees about the right way or the best way of how to deal with the customer and how to inform him and communicate to him and introduce the new services. 28-Female, 24-35 (O.M, B6, BR.A)
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This informant is in line with the previous informant. They seem to acknowledge the importance of communication but they seem only to talk about initiating that communication irrespective of the type of dialogue described by Grönroos (2000).
Another informant described the importance of information flow by stating that:
Information increases the employee’s experience at work. Information flows to all the units of the bank and reaches all administrative levels. But we should do more to get us more involved by encouraging us to give feedback and flow of information back and forth instead of just acting as a receiver. 29-Male, 24-35 (T, B3, Br.B)
This informant stressed the importance of communication and flow of information but added that it should be two-way communication rather than just one-way. Thus, parties involved have to communicate about different ways of creating and fulfilling solutions to customer needs and of handling activities (Grönroos, 2000). Likewise, customers told their stories in regard to communication difficulties or information blocks. This is illustrated clearly by one customer informant in section 6.3.3.2, under the discussion about customer satisfaction.
While some informants perceive an ineffective degree of communication exercised by the banking sector in Jordan, other informants see it from a different angle.
We have feedback directly and indirectly from the customer. This feedback is regarding the customer satisfaction, dissatisfaction or complaints. Some of this feedback goes directly to the manager which in turn makes a good relationship with him and this also improves our self esteem and morale, and the same feedback we get right away by the smile and mutual respect with our customers. 30-Male, 24-35 (T, B2. Br.B)
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Other informants still express their dissatisfaction about the degree of communication practised by their supervisors and their banks and those who hold this view hold the same perception about the level of empowerment which suggests that those who see low level of empowerment perceive similar levels of communication and flow of information in their banks. This, however, is the case with the following informant who said that:
The bank ignores the staff and they don’t even bother to tell you for example about the bank’s growth, success, expansion, or difficulties that the organisation faces. I would like to know for example what the bank has accomplished for the last year. Yes we receive specific information but it is good to get a general idea or perspective. 31-Female, 34-45 (Account Rep, B4, Br.E)
Overall, the informants expressed their awareness of the importance of communication. Communication at the studied banks does not seem to extend beyond conveying rules, regulations or instructions necessary for the job. In particular, informants who perceive high levels of empowerment do perceive high levels of communication and incentives and those who perceive low levels of communication and incentives see low levels of empowerment in their banks. For example, one of the informants who perceived low levels of empowerment stated that:
In this bank, supervisors communicate what they like to communicate. They communicate instructions and they tell you what to do, what is for them, not what is for us. I have been working for different banks for some time and I have never received information about the bank’s overall goals, success, or on the other hand the problems they face. They only tell you very specific tiny things but they don’t try to reveal the whole picture. 32-Female, 24-35 (T, B4, BR.C)
Accordingly, many informants commented on the lack of two-way communication, which is consistent with the more bureaucratic systems where communication is only downward and empowerment is insufficient. Therefore, what is missing is the two162
way communication and the communication that leads to reaching through to the customer where the customer participates in the communication process. It seems that communication is performed sometimes without any programmed and planned efforts to design specific communication tools and procedures and policies. Thus, communication needs to be institutionalised and programmed.
Nevertheless, informants who perceived a high level of empowerment in their units perceived the same levels for the conditions of trust, and incentives, along with communication.
6.3.2.4 Knowledge Like incentives and communication, knowledge and skill are very important to enhance the staff ability in serving the customer and building confidence among customer-contact staff (Thomas and Velthouse, 1990; Spreitzer, 1995; Goodale and Koerner, 1997) Most informants appreciate the significance of knowledge in the organisation but they also have different viewpoints about this dimension. They might have different attitudes in terms of the applicability of the construct in their real life. Some members of staff, for example, feel that they are doing very routine work to the extent that they believe that they cannot get, or perhaps they need, more skill or experience. Others feel that their organisations cannot afford to get them out of their jobs, on training programmes, for the sake of improving and developing their skills and their overall knowledge.
I know a client for five years who asked me personally for a loan from the bank. I have to approach my boss and try to persuade him about my friend’s request for a loan. I know for sure if I do not have the skill, knowledge and ability of knowing my customer well, I am sure without these qualities, my boss would turn me down. But he told me it is your responsibility. So everything was fine, my friend got what he wanted and I am sure he is a good man. 33-Male, 24-35 (Teller, B5, Br.B)
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There are some issues, besides experience and skill, arising from the above excerpt. The informant’s personal relationship or friendship with the client put him in a position to satisfy his needs. In addition, the employee had a chance to use his own judgment by being sure that his friend is trustworthy; therefore the manager made him responsible for that. But again, the years of experience and skill (interpersonal skills) lead him to be in a position to be a proactive person and not just sit there and work as a machine. He was able to explain to his manager with information and knowledge about the subject matter and then made him approve this. This might suggest a positive association between empowerment and knowledge and that lack of skill, expertise or knowledge will lessen the chance to provide different alternatives for the customer or to suggest the best solution. Nonetheless, some employees may perceive the degree of skill or knowledge differently.
About skill, I can tell you that every time there is a new product the staff must be trained on it and those who get trained do the training for their colleagues but the problem is that there is no motive among the staff to be trained or even to attend the training programmes. Besides, the training effort is very narrow. 34-Male, 39-44 (Assistant Manager, B3, BR.D)
I can assure you that many people around here got the ability to learn and excel but the problem that limits their ability to do that is that they are adjusted to use their minds on memorising things rather than understanding, perhaps because the job is routine, therefore, they lack the ability to develop different alternatives for the client 35-Female, 34-45 (T, B9. Br.A)
These stories suggest that bank’ staff value the importance of the knowledge dimension suggesting that it is very important for the staff member to use his/her intuition to understand things rather than memorising. Indeed, understanding things enables the individual to better use his/her own judgment or capability to come up with different solutions to any problem. The following informant adds a different view, which means that there are still differences from one bank to another in terms of skill and the use of that skill by the employee. 164
Skill and experience at the bank taught me how to take care of my customer and how to build good relationships with these guys. You know, I see them every day and I think sometimes and admit that I really care about my client more than this organisation that I work for and get my salary from. I don’t know the answer for this. I try to personalise and customise the service by giving every client what he wants. Skill leads to higher levels of trust and higher levels of productivity and higher customer service quality. After these years of working at the bank I have become more knowledgeable and able to do my job in a better way. 36-Male, 25-35 (Account Rep, B7, Br.A)
Interestingly, informants associate skill, experience and customer care and customer relationships. The more interesting point in the above story is that the source for such customer care and relationship is not necessarily the supervisor but the interaction itself. That is, the daily interaction between the staff and the customer made this employee obliged to care about his customer more than his employer and this seems to increase with the increase of experience and skill.
6.3.2.5 Summary The overall analysis of the above four antecedents of empowerment suggests to a certain degree that trust, incentives, communication, and knowledge are associated with empowerment. It is evident from informants’ stories that the higher level of empowerment at any bank, the higher levels or degrees of trust, incentives, communication, and knowledge. One of the informants expressed a general view regarding the whole relationship:
I (myself) like to do my work and even do good work without people asking me and even before people ask me to do it. I believe if you ask my colleagues they all will tell you the same thing. But the problem is, do we have the right rewards if we hold more responsibility? Do we have the right information and skills needed to do extra and creative work? Do we have above all and most importantly the trust of our 165
supervisors? Do we have the right climate to be responsive when dealing with our customers? I think the answers to these questions are very well known to you and to everybody! 37-Male, 24-35 (T, B6, BR.B)
The above informant is trying to link empowerment with the right climate to produce empowerment. He is suggesting a positive relationship between staff capability and trust, rewards, information and skills. While informants revealed their feelings towards the antecedents of empowerment, they also had something to say about the consequences of empowerment as discussed in the following section.
6.3.3 Empowerment Consequences The assumption is that employees who have greater choice regarding how to do their own work have been found to have high job satisfaction and thus contribute to high performance (Spreitzer et al., 1997). People who feel they have a degree of control over their work are also less likely to feel alienated (Seligman, 1975). As such, employee satisfaction is expected to be the immediate result of employee empowerment, and customer satisfaction to be the end result of the employee satisfaction.
6.3.3.1 Employee Satisfaction Empowerment could enhance the level of satisfaction among customer-contact employees. Fulford and Enz (1995) found that empowerment may contribute to an employee’s job satisfaction and suggested that the importance of empowerment in enhancing employee job satisfaction should not be underestimated because dissatisfied employees are more likely to provide poor service. Accordingly, the following interviews with bank’s staff illustrate the relationship between perceptions of empowerment and employee job satisfaction. One of the informants expressed his satisfaction as a result of relying on his own judgment in the following excerpt:
I like calculated risk-taking and using one’s own judgement and for that only I have received about 26 warnings from my superiors. Do you 166
think I care? The reports that I got are all excellent and they recognise that. 38-Male, 44-54 (M, B3, Br.C)
This story suggests that this informant is using his initiative and own judgement, which produce both good performance appraisals and self-satisfaction for doing what he thinks is right, regardless of the warnings that he receives. However, those warnings stem from the total reliance and commitment to the rules and red tape mentioned in section 6.3.1, overlooking the possibility of bending the rules that might result in better performance outcomes. This story further suggests that rules sometimes work against the good performance of those individuals who like to use their own competence and capability to produce better results. Those rules or regulations may hinder their ability in doing the task differently with better outcomes. At the same time doing the job differently may bring more satisfaction to those individuals who try to break the routine of the system. This simply suggests that empowerment and using one’s own initiative and intuition appears to be directly associated with more staff job satisfaction. Another informant indicates that the satisfaction is only at the point of contact with the customer.
I think that the only flexibility we enjoy is in the point of contact with the customer. We enjoy only part of that contact which is the social part. We chat, have fun and sometimes we make friends. This however, might be difficult sometimes, specially, at the end of the month, when it gets very busy. 39-Male, 24-35 (T, B4, Br.A)
Similarly, many informants of both customers and bank employees talked about the social and interpersonal relationship between the customer and the bank employee in the Jordanian and Arab culture. Many customer interviewees implied that they would like to feel at home when they enter the bank. Accordingly, the customer-contact staff would like the customer to know him by name and vice versa.
If we don’t do that we feel very stressful because the job itself is sometimes very stressful, so when we have the time we like to chat with 167
our customers and sometimes we even tell jokes and the customer leaves the bank smiling. Other times we treat the customer, you know, the coffee is available all the time at some sections of the bank. For example if you go to the manager’s office, you might drink more than one cup of Arabic-coffee. You feel good, the customer feels good and we all win. 40-Male, 34-45 (Account Rep, B1, Br.B)
It has already been mentioned in the first section (section 6.2.1) that empowerment can be exercised in the interpersonal relationship aspect at the point of contact with the customer. In exercising social and interpersonal relationships with customers, the customer-contact staff might use their competence in satisfying the customers’ needs and solving their problems. This type of empowerment in the social aspect seems, according to the above stories, to bring some type of satisfaction to the customercontact staff. This simply suggests that there is a direct and positive relationship between staff satisfaction and empowerment.
While a number of informants expressed their satisfaction at the point of contact with the customer, some informants expressed their dissatisfaction against the management treatment in terms of incentives and job security.
One of the most important things for the staff is job security. Tell me, how can I feel satisfied when my mind is preoccupied by such a problem. Another problem is that there are no performance targets. I like a challenging job in order to be satisfied. What I mean by this is that I need someone to tell me do this and leave me with it until I finish it. 41-Male, 34-45 (T, B5, Br.A)
This informant is seeking a challenging job and he assumes that a challenging job would bring more satisfaction with it.
I like the job. It brings some satisfaction with it, especially when handling different tasks at different times but one of them I like most: 168
that is dealing with fund transfers because there is more flexibility in such a task and more dependability. 42-Male, 24-35 (T, B5, Br.D)
The job itself could be the source of satisfaction for employees like the above informant. Job variety could be more motivating than routine jobs. It seems that this informant is trying to link between his satisfaction, his flexibility and dependability and the type of job as a source of all this. Other informants try to link between their customer’s satisfaction and their own satisfaction.
I feel that when I satisfy my client I myself become satisfied, but sometimes it gets very busy so you cannot satisfy anyone. Besides, lack of good incentives is too bad to the extent that I think of quitting sometimes. I feel that the top management does not know about our problems and does not feel our needs. So, this may affect the customer indirectly. 43-Male, 24-35 (T, B4, Br.D)
This story suggests that employee satisfaction or dissatisfaction hinges on the employee’s empowerment level in satisfying the customer and that customer satisfaction may lead to employee satisfaction. In summary, the above stories suggest that empowered members of staff appear to be more satisfied than those who are not empowered, suggesting that there might be a positive relationship not only between trust, incentives, communication, and skill and knowledge, but also between empowerment and employee satisfaction.
6.4
Customer Satisfaction – Customer Interviews
This part of the chapter presents the customer side of the discussion. In addition to semi-structured interviews with bank’ staff, ten customers were also interviewed in order to add the customer’s perspective of the bank’s customer-contact staff. As such, section 6.3.3.1 signifies the link between the employee satisfaction and empowerment through the words of the bank staff. This section tries to look at the other side, the customer himself, interviewing customers to see whether they confirm what has been
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stated in the above section, and what they think about the customer-contact staff. While many bank staff stated that rules and red tape are obstacles against empowered personnel, customers seem to propose similar views concerning such issues.
The most frustrating thing we face with these institutions is the rule and the system, especially, their credit and mortgage regulations. Male, 44-55, Customer
This informant conveys the same perception that was stated earlier in section 6.3.1 by staff informants regarding rules and regulations in the banking sector, and financial services in general. In the earlier section rules were perceived to hinder staff empowerment and in this section customers describe rules as impeding their satisfaction because customers, for example, may not be able to get a mortgage from a bank with out some rules to structure the mortgage process. However, in the following story the customer informant tends to describe the customer-contact staff in a favourable manner.
The problem that annoys me is that these banks are always busy and crowded. Employees are good, courteous, and flexible, but they cannot do much when the bank is crowded, especially at the end of the month. Female, 54-65, Customer
This informant feels that the customer-contact staff is flexible and courteous, which seems to bring satisfaction to that informant if the bank was not busy and crowded. Some informants, when asked about their opinion of the customer-contact staff, replied:
I am a client of more than one bank, staff are good, the problem is with the customer. Their expectations are not so practical, they want speedy service and they are impatient at all times. The problem is, you find some of them don’t even remember their account numbers which delays the process. For this, I don’t personally, as a customer, see any problem with the bank, the customer is making the problem. Male, 24-35, Customer 170
I have dealt with this bank for about 20 years, their people are good, flexible, quick and they meet my expectations. I know that they are restricted by rules and that, in my opinion, is in the interest of the client in order to look after his/her money. For example, one time I asked them to give me a cheque book for my boss. They refused but they made me understand why they refused and that it was a security issue. They only asked me to bring my boss’s approval and everything was just fine. Female, 24-35, Bank Customer
People at the bank are quick, courteous, and capable. This is what matters most. Appearance is also important. Employees are well educated and trained but their authority is encumbered by the restrictions of rules. Thus, more authority is needed to speed up the delivery process. Female, 24-35, Customer
These informants convey their satisfaction about the customer-contact staff and see that authority and capability are required to speed up the service delivery process, which might be an issue for many customers of routine transactions at the bank. They do not like to wait too long and they believe that if the customer-contact staff are not fully empowered, this might slow down the routine decision-making process and delay is possible. Specifically, this might be true, because if the customer-contact staff had more authority and autonomy in performing tasks that would speed up the service delivery process and would therefore bring more satisfaction to both the customer and the staff.
The most important thing for me is speed because I have routine transactions with the bank. I do not care if they smile or not. All I care about is the service quality, reliability, and doing the job right. Speed is also important. Male, 21-25, Customer
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Informants continue to blame the system for their extensive rules and regulations but acknowledge the staff as competent and effective, as described by the following informant.
I just cannot stand this; they made me pay 5 JDs (Jordanian Dinar) to get an extra bank statement. The direct employee is good, I have no comment on that but the bank’s policy is not good. At some other banks you can get the same service for free. Male, 34-45, Customer
I have dealt with this bank for 10 years; the employee is very good in terms of speed, courtesy, performance, flexibility and authority, and responsiveness. All these years, I don’t recall any problem, tension or even any complaint, I feel satisfied and happy every time I see these guys, I have no problem with them at all – good people. Female, 24-35, Customer
These excerpts continue to say the same thing about the customer-contact employee and the system, describing the customer-contact employee in a positive way and the system in an unfavourable fashion. This might suggest that customer satisfaction might be influenced by the frontline staff attitude and behaviour and that this is probably linked with employee satisfaction. This argument supports an earlier theoretical discussion relating to the importance of functional service quality versus technical service quality or soft dimensions versus hard dimensions (see chapter two, section 2.21). However, not all customer informants have the same perceptions. The following two informants might be extremely affected by negative impressions concerning all institutions including the banking sector.
Our institutions are very bad, banks are no different, they don’t care about the customer, and they do not look or see his/her problems. They deal with customers as numbers. The service is moody according to their preferences. Male, 44-55, Customer
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This informant seems to criticise service providers and reports that the service is moody and inefficient. However, poor customer service and ineffective service delivered by service employees can be the source of dissatisfaction expressed through the words of the above informant. These quotes suggest that customer-employee interactions do in fact influence overall customer satisfaction. Even when the customer is annoyed by the banks’ policies or rules, positive interactions and treatment by the customer-contact employee influence the customer’s level of satisfaction.
I have been for 15 years a customer for a certain bank that I would rather not mention the name of. Now I have left that bank and started with another one. You know what happened? Insufficient information may contribute greatly in harming any customer like myself. I was loyal to that bank for 15 years but finally they fail to provide the direct staff with the necessary information. The necessary information that I mean here is very simple; it is the recent interest rate. For example the interest rate was 15% while I thought it was only 12%. The teller failed to inform me of the change. This made me leave them for good. I think it is the employee’s mistake as well as his boss. Male, 44-55, Customer
The lack of communicating timely information to the customer might end up creating a great deal of dissatisfaction. The reason for lack of communicating important information to the customer might be attributed to that employee’s inability to be responsive. It might also be due to lack of confidence and authority to inform the customer of up-to-date information that might be of great importance to the customer. While some informants perceive an ineffective degree of communication exercised by the banking sector, other informants put the blame on the bank’s system.
The bank’s system is very complex and they don’t care about their customers. But we cannot say the same about the frontline because they have nothing to do with the system.
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Male, 54-65, Customer
It all depends on the type of customer, I mean if you are a profitable customer they respect you more and you get a cup of coffee. I can see that when I enter the bank, which is very good, I like it. Male, 34-45, Customer
This informant provides an interesting note to the discussion. The customer is a contributing factor according to his story, which all depends on the type of customer, if he is profitable or not. However, the more interesting conclusion is that some customers tend to have more expectations than it would ever be possible to meet. For example, some customers, according to the previous stories, wish to eliminate all rules governing the mortgaging service delivered by the bank, which might cause the bank many financial difficulties in the collection process. Therefore, banks and financial institutions in general cannot guarantee unlimited satisfaction for their customers. However, closely related to this research is the customer satisfaction with the bank staff, which seems interestingly to have some consensus among most informants in this study. Moreover, some informants extend their satisfaction to cover the service and the service provider in a favourable way.
I like my bank; they are very friendly people with a friendly atmosphere. I want to ask you myself, who would you like to be served by?… To tell you the truth, I always like it and feel good when I am served by people who smile, feel good, happy, dynamic, and helpful. Female, 24-35, Customer
This excerpt suggests that employee satisfaction may influence customer satisfaction. As such, the above informant seems delighted to deal with more satisfied employees who reveal positive attitudes towards the customer and those who feel good and proud. Such customer-contact-employees’ attitudes seem to link with the level of empowerment. More specifically, empowered employees are able to express positive attitudes. These positive attitudes in turn influence customer’ satisfaction. A similar conclusion by Farrell et al. (2001) suggests that employees’ service behaviours are influenced by employees’ job satisfaction and moods at work (Kelley and Hoffman, 174
1997) which will therefore influence customers’ satisfaction and perceptions of service quality (Bitner et al., 1990; Parasuraman et al., 1988, 1985)
In recent empirical research, Yagil and Gal (2002), presented a compelling rationale examining the role of control and empowerment in mediating the relationship between service climate and customer satisfaction in service organisations. They found customer satisfaction is positively influenced by service workers’ empowerment and control of the service situation. Closely related, Fulford and Enz (1995 p.175) concluded that: “while the direct connection between perceived empowerment and performance may be weaker than the speculative popular literature claims, the costs of dissatisfaction, poor citizenship, guest dissatisfaction, and reduced loyalty are very high”. Hence, developing a sense of empowerment in employees may pay dividends in the short term by increasing employee job satisfaction and in the long term by increasing customer satisfaction (Fulford and Enz 1995).
Viewing the above stories and evidence suggests that there is a relatively direct link between the antecedents of empowerment; trust, incentives, communication, and knowledge and the consequences of empowerment being the employee satisfaction and customer satisfaction. Through these mixed experiences and perceptions of different informants, one can come up with a number of suggestions about the customer’s point of view in the following summary.
6.5
Conclusion
This chapter reports the perceptions provided by customer-contact employees and customers to investigate the researched relationships in this study. The following chapters however will present a different method of investigating the same relationships. Using two different methods of investigation will provide a stronger support for the propositions guiding this research. Before introducing the second method, the quantitative analysis phase of this research in the following chapters, a number of points are worth presenting as the summary for this chapter.
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The central tendency of these excerpts seems to be positive towards the bank’s staff and negative towards the organisation’s system and structure. Some of the above informants think that bank staff are flexible, reliable, and responsive but they perceive rules and regulations as barriers created by the system, hindering the employees’ empowerment and freedom to provide better service quality. Some of them are concerned with speed of service, respect, authority and capability. They think that crowded banks might be a problem but they seem to appraise banks and employees for their courtesy, and friendship. A number of insights can be revealed out of the above experiences. Of particular interest were:
Social and interpersonal relationships between customers and employees. This factor is considered as a very important element of improving customer and employee satisfaction. As such, the employee is trying to use this dimension to improve the service quality through the functional aspect rather than the technical aspect. Moreover, customers perhaps feel the benefits of a social relationship with bank staff. Such benefits may include confidence, personal recognition, customer familiarity, and friendship. More support for such findings can be cited from three empirical studies, which examine the nature and importance of benefits customers derive from the relationship with the frontline staff. Among the benefits customers may derive, Beatty et al. (1996), Beatty (1999) and Gwinner et al. (1998) identified functional and social benefits. Their findings indicated that confidence and social benefits were most important to customers. Confidence benefits included the sense of reduced anxiety and risk, faith in the trustworthiness of the service provider, and knowing what to expect. Social benefits included aspects such as personal recognition, customer familiarity and friendship. In fact such benefits were sometimes revealed and suggested through the discussion with both customers and staff informants in this research and perhaps considered as an important means of enhancing and maintaining a staff-customer relationship.
Rules and regulations. It has been suggested by several informants that rules and regulations are considered as barriers to empowerment and discretion of customercontact employees. Rules and regulations seem to hinder the staff capability in improving the technical and functional quality of the service delivery. Consistent with this, Randolph (2000) argues that people can never empower themselves in hierarchal 176
environments. He states that “my research in over 25 companies and with hundreds of people in those companies during the last 15 years suggests that it is futile to wait for people to become empowered in a command and control organisation” (p.98). In such environments they will not take the risks and they lack the skills, attitudes, and behaviours needed to act empowered.
Work load seems to also affect the customer-contact staff’s responsiveness and flexibility. When banks are busy there is no time for the employee to enhance the service delivery in terms of speed and relationships with the customer simply because there is no time for interpersonal interactions or relationships.
The speed factor. Most customers prefer fast service delivery, particularly in transactional services.
The experience and the skill are important dimensions of empowerment, as well as incentives and trust.
Communication and flow of information seem to be important to informants during the interviews, suggesting that empowerment and capability among customer-contact employees would be enhanced by informing the service employee of task-related information as well as organisational-related developments. An important factor to be taken into consideration also is the IT and technology in advancing the capability of the customer-contact employees. In his 15 years of research, Randolph (2000) found that people without information could not be empowered to act with responsibility; once they have information, they are almost compelled to act with responsibility. Sharing information seems to tap a natural desire in people to want to do a good job and to help make things better. With current information technology capabilities, there is no reason why anyone throughout an organisation cannot have ready access to any information they need to do a better job. Open information signals to people that they are trusted and valued colleagues with management. This element is vital if empowerment is to be achieved. Information sharing according to Randolph is a necessary ingredient in rebuilding and enhancing the trust throughout the organisation. It allowed people to gain a clearer picture of the challenges facing
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organisations and to discover how success would be based on a new and demanding sense of responsibility for everyone in the company.
Overall, while those interviews revealed mixed perceptions and experiences towards the antecedents and consequences of empowerment, most interviewees recognised the importance of these dimensions. They view trust, communication, incentives, skill and knowledge as significant influences on the extent to which they feel empowered and this in turn appears to lead to employee and customer satisfaction. Hence, satisfied customer-contact staff seems to influence customer satisfaction and the nature of employee-customer interactions seems to substantially influence the overall satisfaction of customers.
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Chapter Seven
Descriptive Analysis
179
7
Descriptive Analysis
7.1
Introduction
This chapter will focus on providing an overview of the descriptive analysis of the data. The discussion of the respondent’s demographic dimensions will provide some clear understanding of the customer-contact employees investigated in this study, and help prepare for a better understanding of the analysis in general.
This chapter covers five sections. Section 7.2 will describe some of the demographic characteristics of the sample, such as gender, age, education, job title, and respondents’ qualifications. The next section will discuss the customer-contact employees’ level of empowerment including subsections on the dimensions of empowerment, employee-supervisor relationships and degrees of trust, incentives, communication, skills and resources, employee satisfaction, and customer satisfaction. Such analysis will provide a better view to more understanding and explaining the forthcoming analysis. The empirical results of validity and reliability will be discussed in Section 7.4. A summary of this chapter will be provided as a conclusion.
7.2
General Demographic Analysis
Describing the relationship between a sample and its population is very significant and, in order to convey such a relationship, we must be able to describe it in terms of characteristics that are common to both, the sample and its parent population (Oppenheim, 1992). Therefore, this section is mainly concerned with presenting a descriptive analysis of the sample to provide an overview of the respondent characteristics. It aims to provide a brief description of the respondents’ demographic variables. Thus, descriptive analysis will be utilised to evaluate the respondents according to the following characteristics.
7.2.1 Gender In this study 73.1 percent of the respondents were males while females accounted for only 26.9 percent. This is a usual distribution in the civil workforce in services in
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Jordan. Around only one-third of the civil workforce comprises of women. (37 percent of the civil service workforce in Jordan is women). (The highest percentages are in education – 53.1 percent – and in health – 45.6 percent.)* The percentage of working women in other sectors is far less than these two sectors. This is due to the contrast in banking systems in western countries where such figures might be reversed. In Jordan, as well as many other Arab countries, the men account for the majority of jobs due to many considerations. Firstly, the nature of the Arab and Jordanian conservative and religious society, where women are not expected to work in male-dominated organisations. Secondly, women tend to accept more traditional secretarial jobs and work, for example, in the health or education sectors, probably due to having less contact with men, being consistent with the Islamic culture.
7.2.2 Age Given the study population, the sample was biased towards the middle age groups accounting for 66 percent, as shown in Table 7.1. However, young and old people are less represented, with 13.9 percent for employees of 25 year old or less, and only about 21 percent for those above 40 years of age. This suggests that customer-contact employees consist mostly of the middle age group between the ages of 25 and 40. However, finding fewer customer-contact workers among the younger age group of less than 25 years is due to the fact that banks and many financial organisations hire only employees with college or university degrees with some experience. 85 percent of customer-contact employees at the bank hold a college or university degree as shown in Table 7.2 in the following section. And even after the recruitment process, the employee has to spend some time in training and working in the back office before handling customer-contact positions. On the other hand, older age employees tend to be promoted to perform more administrative or managerial jobs at the bank with a lesser degree of contact with customers.
* Study by Civil Service Commission in Jordan, 2000
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Table 7.1 Frequency Distribution of Age
Age
Frequency
25 years or less
Percent
72
13.9
26-40 years
341
66.0
41-49 years
87
16.8
50 years or more
17
3.3
517
100.0
Total
7.2.3 Education As shown in Table 7.2 below, it is very interesting to notice that over 85 percent of customer-contact employees at the bank are holding either a four-year university degree or a two-year college diploma, mostly in business or managerial sciences. There are influxes of university or college graduate students each year seeking jobs where the supply is a lot higher than the demand. This might suggest that availability of staff is not a major problem. On the contrary, such organisations even reject applications of post-graduate degrees and select from those with a higher-grade average and higher qualifications. In spite of this, the right skill or knowledge is more important than the level of education because graduate students might have the right degree but lack the sufficient skills required for the job that come out of training and experience.That is why we can see that there is only 6.6 percent of the sample with high school level or less. On the other hand it is very much evident and logical that only 6.6 percent of the sample are at a higher level of education (Master or Ph.D). People with such qualifications would either work in academic institutions or hold higher ranks, whether working for a bank or any business organisation. Overall, the level of education in this study may work as a source of competitive advantage for the organisation. As more people hold higher levels of education, the more one can observe a flexible workforce with more capability of handling the work with better understanding of the customer needs and problems.
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Table 7.2 Frequency Distribution of Education Education
Frequency
Percent
34
6.6
Diploma
150
29.0
Bachelor Degree
299
57.8
34
6.6
517
100.0
High School or Less
Higher Studies Total
7.2.4 Job Title As shown in Table 7.3 customer-contact employees holding jobs as tellers, account for 51.3 percent of the sample. Account representatives and credit staff account for 31.1 percent, branch managers account for 7.2 percent. Other job titles account for 10.4 percent of the sample. Tellers account for the highest percentage of the sample because they are the main target group and the ones who work fully in direct contact with the customer with minimal administrative or managerial activities. However, branch managers account for only 7.2 percent, as shown in Table 7.3, because they simply work and spend most of their time directing and supervising others rather than working in direct contact with the customer. Nevertheless, managers at branch level deal with some customers, particularly those with special requests or those making more profit. Account representatives and credit personnel, as shown in the table below, come next to the tellers in terms of representation of the sample. They account for 31.1 percent of the sample because they work with customers as well as in performing paper, administrative and managerial activities. However, over 10 percent of the sample did not indicate their specific job title, perhaps due to security reasons and for the desire to be anonymous. That is the case with many employees, specifically in small branches where the respondent will be easily identified by disclosing his/her job title.
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Table 7.3 Frequency Distribution by Job Title Job Title
Frequency Percent
Teller
265
51.3
Account reps
161
31.1
Branch manager
37
7.2
Other
54
10.4
Total
517
100.0
7.2.5 Subject Background As shown in Table 7.4, the sample is skewed to the respondents holding business and managerial science degrees at about 70 percent of the total sample. About 30 percent of the sample is divided between social and humanities, 4.6 percent, information systems, 1.9 percent. 24.6 percent percent of the sample did not specify their qualification. However, such a distribution is very much expected due to the fit between the managerial and business education and the tasks of the banking and financial services in general. That explains the 70 percent of staff obtaining degrees in business, finance, marketing or other managerial sciences. Generally speaking, financial service institutions are more likely to attract higher candidates within banking, finance or business-related areas than from other fields of study.
Table 7.4 Frequency Distribution by Respondent Qualification Qualification
Frequency
Percent
356
68.9
Social Sciences and Humanities
24
4.6
Information System
10
1.9
Others
127
24.6
Total
517
100.0
Admin. Sciences
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7.3
Customer-Contact Employees’ Empowerment and Antecedents
Level
of
In this section the empowerment level among customer-contact employees is being illustrated with four researched conditions leading to the expected level of empowerment. All items in all the factors were measured according to a five-point scale (1 = strongly disagree; and 5 = strongly agree). The analysis is provided based on individual factors to provide detailed and specific information about a group of related items in each dimension.
7.3.1 The Dimension of Empowerment As shown in the methodology chapter, section 5.6, the empowerment scale is based on the EEQ (Employee Empowerment Questionnaire) by Hayes (1994), and Boshoff and Allen (2000). However, minor modifications were made to some items as illustrated in section 5.6.
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Table 7.5
The Respondents’ Perceptions of the Level of Empowerment.
(Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
Percentages n
1. I am allowed to do anything to do a high quality job. 2. I have the authority to correct problems when they occur. 3. I am allowed to be creative when I deal with problems at work. 4. I go through a lot of red tape and rigid rules to change things. 5. I have a lot of control over how I do my job. 6. I don’t need to get mgt. approval before I handle problems. 7. I have a lot of responsibility in my job. 8. I am not encouraged to handle job-related problems by myself. 9. I can make changes on my job whenever I want. 10. I cannot take charge of problems that require immediate attention. 11. I cannot feel free to meet my customers’ needs under the bank’s regulations 12. The work load reduces the service I provide to my customers
Mean S.D Median Mode
517
Disagree 1&2 34.0
Neutral 3 16.1
Agree 4&5 49.9
3.21
1.09
3
4
517
34.2
19.1
46.6
3.13
1.05
3
4
517
21.1
20.5
58.4
3.46
1.01
4
4
517
18.0
15.3
66.7
2.31
1.05
2
2
517
10.3
10.6
79.1
3.96
0.90
4
4
517
62.3
18.6
19.1
2.45
1.02
2
2
517
5.4
6.0
88.6
4.15
0.79
4
4
517
46.0
23.2
30.8
3.16
1.07
3
4
517
74.5
17.2
8.3
2.14
0.89
2
2
517
50.9
22.6
26.5
3.29
1.05
4
4
517
37.7
23.2
39.1
2.98
1.08
3
2
517
19.7
15.1
65.2
2.34
1.12
2
2
This table illustrates that the respondents in the banking sector tend to be neutral in viewing the level of empowerment they enjoy at work. They feel that they are not sure if the level of empowerment is enough. On the other hand, they are not sure (3.21), as shown in the table above, about the right level of authority given to them in doing all they can do to secure a high-quality job or whether they are being encouraged to solve job-related problems (3.15). Respondents are relatively not sure (3.13) that they have enough authority to solve problems when they occur. This can be explained by the fact that customer-contact employees expect to be given more 186
authority and responsibility than they currently have and they feel that they have more capacity to handle problems at work than they are actually given. To this end, many of the informants declared the need for more discretion and freedom to deal with the customers. One informant, for example, stated that:
I feel sometimes that we lack the right level of discretion and empowerment to deal with our customers, they (supervisors) like you to be under their control and supervision. Sometimes I want to be free and serve my clients in my own way, this will make both of us happy.
This may be further explained by the following items where respondents are a little more positive of their own creativity in problem-solving circumstances (3.46). They feel that they hold more responsibility in their jobs (4.15) and they are relatively neutral of whether workload reduces the service quality they can provide to customers (3.29). All this is perhaps due to their self-initiative as a result of their education and qualification levels. It is possible that the educational and qualification levels will stimulate the challenge among employees to try to solve problems on their own with more self-confidence and efficacy. However, when customer-contact employees, as represented by the sample being studied, evaluate the existing rules and regulations, the need to take the manager’s authorisation in solving problems and the freedom to make changes when necessary, they tend to describe these elements unfavourably (2.31, 2.45 and 2.14, respectively). This is explained by the fact that strict rules and regulations to protect customers’ accounts and to avoid any type of monetary or transactional errors govern the banking system. Accordingly, some interviewees in the previous chapter, Chapter Six, presented such an analogy. This justification was supported by the actual interviews with bank employees and managers. For example one of the informants in Section 6.3.1 under the moderate view suggested that:
Well, this is a bank, where we work with money not tools or equipment that can be fixed or repaired if anything went wrong!. Any mistake in the bank will cost money, that is why we have to work under so many restrictions. 187
7.3.2 Employee-Supervisor Relationships The source of the scale used to measure the degree of trust between the staff and their supervisors is taken from the QUEST Solution (Smialek, 1998), as discussed in the questionnaire design in Section 5.4.2 in Chapter Five. Two items in this part were taken from a scale developed by the QUEST Solution, Quality Survey for Teams (Smialek, 1998), and two items were developed through the process of developing the questionnaire by the researcher.
Table 7.6
The Respondents’ Perceptions of the Trust and Relationship
between the Managers and the Employees (Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
Percentages n
13. I feel respected by my supervisor. 14. I feel encouraged to take risks. 15. I am not encouraged to solve customer problems on my own. 16.I have good relationships with my supervisor.
517
Disagree 1&2 4.6
Mean S.D
Median
Mode
Neutral 3 7.5
Agree 4&5 87.8
4.12
0.79
4
4
517
27.1
21.5
51.5
3.29
1.05
4
4
517
52.0
23.2
24.8
3.32
1.06
4
4
517
3.1
9.3
87.6
4.14
0.75
4
4
The respondents in this table rated favourably the level of relationships between the employee and his/her supervisor. While respect and good relationships were rated high, at 4.14 and 4.12 respectively, second and third statements regarding risk-taking and taking initiative in solving customer problems rated less favourably (3.29, 3.32). Thus, employees are less certain of the fact that their managers would encourage them to take the initiative. Therefore, they do not perceive their managers to be ready to trust them to work without relatively close supervision and follow-up. Because it was possible that relationships will differ, for example, between mangers and tellers and managers and account reps or between male and female, a t test was conducted that did not reveal any significant differences in trust and relationships between mangers, tellers, account representatives or between males and females.
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7.3.3 Incentives The source of the scale used to measure incentives is based on the QUEST scale (Smialek, 1998), as discussed in Section 5.6. This scale was originally developed to measure team empowerment. It was, however, modified in this study to suit individual empowerment.
Table 7.7
The Respondents’ Perceptions of the Level of Incentives Provided by the Bank
(Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
17. My supervisor recognises me for my contributions. 18. My supervisor expects the best from me. 19. Management does not recognise or reward my effort and contribution in serving the customer. 20. Our managers don’t reward the frontline for their ability and efficiency.
Percentages
Mean
S.D
Median
Mode
n
Disagree 1&2
Neutral 3
Agree 4&5
517
14.5
13.5
72.0
3.73
1.00
4
4
517
2.7
6.4
90.9
4.22
0.70
4
4
517
40.0
25.7
34.2
2.98
1.19
3
4
517
37.3
23.4
39.3
2.90
1.18
3
4
In this table employees appreciated the rewards and incentives being provided by their supervisors. They did not rate the reverse statements favourably; that is, they were not certain that their supervisors would not recognise their performances (2.98) and they were also unsure that managers would or would not reward frontline employees for their capabilities (2.90). On the other hand, respondents, to a certain extent, believe that their supervisors appreciate their contribution (3.73) and they highly think that their supervisors expect the best out of them (4.22).
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7.3.4 Communication The communication and information scale was also developed based on the QUEST scale, which was used for items starting from question 21 to question 35, including the communication part. Questions 24 and 26 were reversed.
Table 7.8
The
Respondents’
Perceptions
of
the
Level
of
Communication and Information Flow at the Bank (Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
Percentages n
21. Employees talk openly about ideas of how to serve the customer. 22. Employees actively listen to each other. 23. Managers listen actively to employees. 24. I don’t regularly communicate with my supervisor. 25. Conflicts and problems are confronted quickly and solved. 26. I don’t get all the necessary information to do my job in serving the customer. 27. Individuals are kept informed of what is going on in the unit/organisation. 28. I know how to get needed information (e.g., whenever the customer needs help). 29. My supervisor encourages me to speak out. 30. The computer communication systems in the bank improve my ability to serve my customers.
517
Disagree 1&2 48.2
Mean S.D Median Mode
Neutral 3 14.1
Agree 4&5 37.7
3.11
1.13
3
4
517 517 517
13.5 23.4 57.6
17.4 23.4 19.9
69.1 53.2 22.4
3.67 3.33 3.40
0.91 1.05 1.01
4 4 4
4 4 4
517
18.8
15.9
65.4
3.56
0.96
4
4
517
64.4
17.0
18.6
3.52
0.97
4
4
517
30.9
25.3
43.7
3.14
1.06
3
4
517
7.4
13.9
78.7
3.87
0.78
4
4
517
15.5
18.6
66.0
3.61
0.96
4
4
517
2.9
6.2
90.9
4.25
0.75
4
4
Roughly, the respondents, to some extent, rated most of the elements of communication in a favourable way. The item of “the information system in the bank improves my ability to serve my customers” was rated highest. The mean was 4.25 with over 90 percent of the respondents agreeing or strongly agreeing to the role of the computer and IT in improving their ability in serving customers. This further indicates how the use of information technology in the banking system, albeit in its infancy, is welcomed by bank employees who perceive it as a way of improving service process and service delivery. Respondents, however, are not so sure whether they talk openly about ideas of how to serve the customer (3.11). While this does not imply that employees don’t care about their customers, rather the absence of a climate to encourage discussion might indicate how much they are involved with the routine 190
of the job and not really concerned with providing ideas and ways of how to serve the customer better. On the other hand respondents do not have strong opinions regarding three related items: “managers listen to employees” (3.33), “I don’t regularly communicate with my supervisor” (3.40) and “Individuals are kept informed of what is going on in the bank” (3.14). While communication between supervisors might be considered as a source of information for employees, it is not the only source. Employees would communicate with their peers and rely on fixed rules and regulations to perform their jobs. Moreover, supervisors would not want to share what they might consider as irrelevant information. For some managers, any thing outside the specific job duties of an employee is considered irrelevant and therefore does not concern the employee.
Respondents rated more favourably statements such as “respondents actively listen to each other” (3.67). This is probably because customer-contact employees work in direct contact with each other whereas co-operation and communication between each other is important. “Conflicts and problems are confronted quickly and solved” (3.56). In this item customer-contact employees tend to believe that they can handle and solve problems because they can get the required information to solve customer-related problems (3.52) from colleagues, supervisors or organisational policy or rules. Moreover, employees know how to get needed information (3.87), particularly to solve customer problems, and their managers encourage them to speak out (3.61) in such situations. This perhaps is when the problem is related to the customer or to the job itself. Because of the increasing competition in banking and financial services in general, bank staff started to work and communicate in favour of serving the customer better. Thus, when it comes to the customer, the employee is encouraged and provided with information to please the customer.
7.3.5 Skills and Resources Similar to trust and incentives, the skills scale was also taken from the QUEST Solution developed by Smialek (1998). However, Questions 33 and 35 were reversed to test for the respondents’ accuracy of completing the questionnaire as recommended by researchers.
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Table 7.9
The Respondents’ Perceptions of the Level of Skills and Resources at the Bank
(Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
Percentages n
31. I receive needed resources on time. 32. I have all the necessary skills to best serve my customer. 33. Management support is not always available when needed. 34. I have full support for taking initiative in serving my customers. 35. My supervisor does not encourage initiative in serving my customers.
517
Disagree 1&2 6.8
Mean
S.D
Median
Mode
Neutral 3 10.1
Agree 4&5 83.2
3.98
0.79
4
4
517
1.4
4.8
93.8
4.22
0.59
4
4
517
34.2
27.1
38.7
2.88
1.05
3
4
517
22.1
22.2
55.7
3.40
0.99
4
4
517
61.5
21.9
16.6
3.50
0.96
4
4
In terms of skills and resources, respondents believe that they receive needed resources on time (3.98) and they also seem to believe emphatically that they have all the necessary skills to best serve the customer (4.22). This perhaps is related to the previous section where the employees are provided with the required information when dealing with customers. Resources are no different. Employees may receive incentives and systematic training and development, as the interviews pointed out, specifically in two dimensions: job-related and customer orientation.
The following statements: “supervisors’ support is not always available when needed” (2.88) and “I have full support for taking initiative” (3.40) may seem inconsistent with other statements shown in the table. This, probably, shows how much employees are concerned about getting support on a continuous basis to meet their levels of initiative and qualification.
On the other hand, it seems that respondents are relatively biased towards their supervisors in statement number 35, “My supervisor encourages initiative in serving
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my customers” (3.50). Employees seem to complain less about their supervisors than their dissatisfaction with the whole system in the banking service. They know that their direct supervisors have nothing to do with the system in terms of rules and regulations and they seem to have good relationships with their supervisors, as indicated by item number 16 in Table 7.6 “I have good relationships with my supervisor” (4.14).
7.3.6 Employee Satisfaction The scale used here is based on the general job satisfaction scale taken from Forgionne et al (1982). However, the customer satisfaction questionnaire was substantially modified by the researcher (as indicated in Chapter Five) throughout the lengthy process of developing and designing the questionnaire.
Table 7.10
The Respondents’ Perceptions of the Level of Employee Satisfaction at the Bank
(Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
Percentages n
36. Generally speaking, I am very delighted with this job. 37. People on this job often think of quitting. 38. I am generally satisfied with the kind of work I do in this job. 39. Most people on this job are very satisfied with it. 40. I frequently think of quitting this job. 41. We don’t feel free to do what we want on this job.
Mean S.D Median Mode
517
Disagree 1&2 25.5
Neutral 3 16.2
Agree 4&5 58.2
3.38
1.14
4
4
517
38.5
22.6
38.9
2.93
1.12
3
4
517
18.8
10.4
70.8
3.60
1.01
4
4
517
27.7
44.1
28.2
2.97
0.92
3
3
517
56.7
15.3
28.0
3.33
1.24
4
4
517
38.9
19.3
41.8
2.92
1.12
3
4
In the first statement “I am very delighted with this job” 25.5 percent either disagree or strongly disagree, 16.2 percent are neutral and 58.2 percent either agree or strongly agree. The overall mean was 3.38. This does not show that employees dislike their jobs but might indicate that they are not so delighted because in another statement “I am generally satisfied with the kind of work I do in this job” the mean was 3.60, which means that they are somehow satisfied with their jobs. However, employees
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might see themselves unrealistically when revealing a maximum degree of satisfaction, leaving no room for unmet demands or desires.
When respondents are asked about their perception regarding other employees (“people on this job often think of quitting”), they reflect their neutral stance (2.93). This may be because respondents feel reluctant to judge others’ degree of job satisfaction. This explanation is supported by another statement, “most people on this job are very satisfied” (2.97). Again, respondents try to stick to their neutral stance because they would express their own views rather than revealing what others might think or perceive as job satisfaction.
When respondents checked the statement “I frequently think of quitting this job” the mean was 3.33. Respondents seem neutral and not able to make a decision whether to quit or not. That is because quitting a job affects ones’ being and living demands. So, quitting a job is a very tough decision to make. That is why people would be reluctant to make such decisions. One of the negative consequences of such a decision is to end up not finding an alternative job. Therefore, such a level of satisfaction is just enough to keep them in their jobs. Respondents are not sure “if they feel free to do what they want to do on their jobs” (2.92). This indicates that there are things that employees want to do but might or might not be able to do. This, partially, is due to the work situation where employees are not free to do what they want to.
7.3.7 Customer Satisfaction It has been suggested that employees’ perceptions could be solicited to find out about customer needs and expectations (Goodale and Koerner, 1997; Schneider and Bowen, 1999). Alternatively, or in addition, employees can ask customers to clarify how they feel about the company’s services in satisfying their needs. Organising a focus group or individual interviews with customers to discuss needs-based issues is often productive and can be followed by surveying, as done in this study (Schneider and Bowen, 1999).
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The customer satisfaction scale for this study consists of nine items developed to measure the customer-contact employees’ perception regarding customer satisfaction. Goodale and Koerner (1997) provided strong evidence for soliciting such data from the frontline staff rather than the customers themselves. Again, the questions on customer satisfaction were modified and developed throughout the stages of developing the questionnaire and piloting it. Table 7.11
Perceptions of the Level of Customer Respondents’ Satisfaction at the Bank
(Measured on Scale 1 & 2 = Disagree; 3 = Neutral; 4 & 5 = Agree) Statement
Percentages n
42. Customers rarely complain about the service I provide. 43. Customers I serve ask for me by name when they need to be served. 44.When I serve customers, they are generally happy with the service. 45. Customers generally feel that I am responsive to their needs. 46. Customers usually feel I provide them with complete information. 47. Customers respect the fact that I provide them with different alternatives. 48. Customers feel that I know instantly what they ask for. 49. Customers generally feel that I can solve their problems on the spot. 50. Customers like to feel at home when served at the bank.
Mean
S.D
Median Mode
517
Disagree 1&2 29.2
Neutral 3 11.2
Agree 4&5 59.6
3.38
1.19
4
4
517
8.7
17.6
73.7
3.87
0.86
4
4
517
1.0
7.7
91.3
4.19
0.62
4
4
517
1.0
8.3
90.7
4.12
0.58
4
4
517
1.4
13.0
85.7
4.07
0.64
4
4
517
3.3
15.1
81.6
3.96
0.70
4
4
517
2.3
18.4
79.3
3.96
0.69
4
4
517
6.4
25.9
67.7
3.74
0.79
4
4
517
5.0
12.8
82.2
4.09
0.81
4
4
Generally speaking, the respondents’ perception about customers’ satisfaction was relatively high except for the first item. In spite of the literature support for soliciting the customer satisfaction through the customer-contact employees (Schneider, 1983; Schlesinger and Zorntisky, 1991), there is a possible bias here due to directing the 195
questions at the employees who might rate their customers’ satisfaction favourably. However, the first item, “Customers rarely complain about the service I provide” (3.38) was relatively low in relation with other items in this section. This is perhaps because employees think that customers may sometimes complain about the service they provide. Other statements in this table show that customers ask for the employee by name (3.87) and this is supported by the interviews that some customers would like to be served by a particular employee to the extent that they might postpone the service until that employee is present. Respondents think that their customers are generally happy with the service they provide with a high mean of 4.19. Customers also feel that the employee is responsive (4.12). Complete information is provided to the customer (4.07), and different alternatives are presented to the customer (3.96). All these statements might suggest that the customers’ perception of the customercontact employee is significant, specifically in regard to responsiveness, and flexibility of the employee. Customer-contact employees feel that customers appreciate the fact that the employee is so responsive and intuitive to the extent that they know instantly what the customer would ask for (3.96).
On the other hand, “customers generally feel that I can solve their problems on the spot” (3.74) indicates that respondents are relatively positive that customers appreciate solving their problems on the spot.
Finally, “customers like to feel at home when served at the bank” (4.09). That is, they like to be respected and not ignored. Even if the service is delivered very efficiently they still look for some personal treatment, disliking any negligence by the service provider.
7.4 Reliability Analysis and Validity 7.4.1 Validity Analysis “Validity is the extent to which a scale or set of measures accurately represents the concept of interest” (Hair et al, 1998). This indicates whether the measurement actually measures what is supposed to be measured. In marketing research methodology, researchers suggest four types of assessment procedures (face validity,
196
content validity, criterion validity and construct validity) to be undertaken (Churchill, 1999, Bagozzi, 1996; Parasuraman, 1986).
1-Face Validity Face validity is the degree to which a measurement seems to measure what it is supposed to (McDaniel and Gates, 1999: 309). The face validity in this research was obtained by the consistent effort of the researcher throughout the questionnaire development process: first by relating to the literature; second by receiving feedback from academics and practitioners locally and abroad (i.e., via e-mail); and finally by piloting the questionnaire to capture the right face validity for this research. Piloting the questionnaire was thoroughly discussed in Section 5.6. The questionnaire was pre-tested through experts and a sub-sample of the population using academic piloting and questionnaire piloting (Bagozzi, 1996; Williams, 1986), as discussed in Chapter Five under the questionnaire design (see Section 5.6).
2- Content Validity Content validity is the assessment of the correspondence of the variables to be included in a summated scale and its conceptual definition (Hair et al, 1998). According to McDaniel and Gates (1999), four steps were recommended to secure the content validity of a research instrument:
1- Carefully defining what is going to be measured. In this research, this has been done by the literature review phase, which leads to a clear definition of the research issue and objectives of this research.
2- Conducting a comprehensive and thorough literature search and focus groups to identify all possible items to be included in the scale. In this study an exploratory pilot study was conducted with both customers and customer-contact employees in order to enhance the questionnaire to be valid in content with the respondents’ understanding and comprehension.
3- A panel of experts can be asked for their comments and ideas regarding the inclusion or exclusion of some items. This step has been done with the help of seven academic staff at Yarmouk University in Jordan to ensure the translation equivalence
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and contents of the questionnaire. Accordingly, the research questionnaire has benefited much from this procedure by enhancing the translation process with the help of these academics who are very well aware of both the language and culture differences. As such, the researcher is gratified by the help of the panel in redirecting the questionnaire to be more sensible and acceptable to the respondent’s level of communication.
4- Finally, pre-testing the questionnaire. The questionnaire was pre-tested by twenty customer-contact employees in the banking industry in Jordan, asking the respondents to bring forward any comments or difficulties in comprehending any question. The respondents considered the open-ended questionnaire acceptable after some minor changes.
3- Criterion Validity As discussed in Chapter Five (Section 5.8), Criterion validity can be divided into two sub-divisions: concurrent validity and predictive validity. Predictive validity is the main type of criterion validity and defined as “the degree to which the future level of a criterion can be forecasted by a current measurement scale” (McDaniel and Gates, 1999: 311). Concurrent validity is “the degree to which a variable measured at the same point in time as the variable of interest can be predicted by the measurement instrument”. To assess the predictive validity of the main instrument of this study (empowerment), respondents were asked whether they have the authority to correct problems whenever they occur (item number 2), assuming they can do that in the present as well as in the future. The predictive validity was conducted through calculating the coefficient of correlation between this item and a summated scale of the empowerment dimension. The resulting coefficient was 0.73 for empowerment with a significant level at 0.01 confirming the predictive validity for the empowerment dimension.
4- Construct Validity This type of validity is defined as “the degree to which a measurement instrument represents and logically connects, via the underlying theory, the observed phenomenon to the construct” (McDaniel and Gates, 1999: 311). Construct validity in this study will be the main assessment of validity, as discussed in Section 5.8.1 in
198
Chapter Five, which can be divided into two types of validity: convergent and discriminant validity. Convergent validity is “the degree of association among different measurement instruments that imply to measure the same concepts”, while discriminant validity is the lack of association among constructs that are supposed to be different (McDaniel and Gates, 1999). Both convergent and discriminant validity must be present for construct validity (Bagozzi, 1996; Parasuraman, 1991; McDaniel and Gates, 1999).
Construct validity, as discussed in Chapter Five, relates an instrument to a general theoretical framework in order to determine whether the instrument is related to the conceptual assumptions in the study. It has been suggested then that factor analysis is recommended to test the construct validity of all the variables included in the research questionnaire. Fifty items were developed, supporting theoretical grounds to measure the research dimensions. The results of the factor analysis of the empowerment dimensions in the Jordanian banking industry are presented in the following sections and tables.
Factor Analysis for the Empowerment of Customer-Contact Employees Factor analysis was used to identify underlying dimensions where no variables cross load as shown in Table 7.12 (e.g., Spreitzer, 1995), a feature critical for discriminant validity. Those single dimensions created by factor analysis of empowerment are responsiveness, control and discretion. Grouping items that are not different from each other, on the other hand, ensures convergent validity. For example, responsiveness, as shown in Table 7.12, is a distinctive factor by three similar and related elements, including: I am allowed to do almost anything to do a high quality job, I have the authority to correct problems when they occur and I am allowed to be creative when I deal with problems at work. The same apply for the control factor and the discretion factor. Hence, there is high correlation between these elements as a sign of convergent validity.
Furthermore, twelve items have represented the empowerment dimension. To test the construct validity of these twelve items, factor analysis was undertaken using Varimax rotation, during five successive trials, where three factors were extracted in
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the final round. In assessing the statistical significance, the acceptable factor loading is 0.30 for a sample size of 350 or more, according to Hair et al (1998). The sample size is 517 in this study and the factor loading is higher than 0.30. Table 7.12 below shows the final factor structure.
Table 7.12
Factor Analysis for the Empowerment Dimension
Scale items (1)
Component Responsiveness
Allowed to do
0.693
Authority to correct
0.767
Creativity when dealing with problems
0.683
Control
Discretion
Control over how I do
0.679
Responsibility in my job
0.841
Encouraged to handle problems
0.734
Make changes on my job
0.701
Being in charge of problems
0.694
Feel free to meet customer needs
0.747
•
59.785 percent is the percentage of variance explained.
(1) the wording of the items on the table are condensed versions of the wording used in the actual questionnaire.
The total amount of variance is an important measure of fitness in each factor analysis solution and it is not uncommon to be less than 60 percent (Hair et al, 1998). Therefore the three factors in this table explained 60 percent of the variation in the data.
The solution after five trials showed acceptable results, as illustrated in the table. Nevertheless, it is the best possible factor structure to represent the empowerment dimension after extracting three factors, renamed as responsiveness in the first factor, control in the second factor, and discretion in the third factor. While the
200
empowerment dimension was expected to be a unidimensional construct, these three factors, to a great extent, match the empowerment dimension defined in this study.
Reason for Exclusion The reasons for these trials and the forced choice of taking out three items from the original questionnaire and the first trial are explained in the following table (7.13) but one of the latent factors behind this is probably the cultural difference. The empowerment dimension has been measured by the same items in western cultures and these items are actually being borrowed from such studies as Hays (1994), who designed the Employee Empowerment Questionnaire (EEQ). Boshoff and Allen (2000) and Niehoff et al (2001) have also developed similar instruments with some minor differences. The possible justification for the different results is that this study has been conducted in the Jordanian culture for the first time and respondents are not acquainted with such dimensions in terms of empowering the workforce and giving them more discretion at work like their counterparts in the west. The statistical justification for the exclusion of three items in the factor structure is further illustrated in the following table.
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Table 7.13
Reason for Excluding Items from the Empowerment Dimension
Items
Reason for Exclusion
Going through a lot of red tape to change
Cross-loading.
things. I don’t need management approval to
Shows very little variance with other items (low
handle problems.
communality).
The workload reduces the service I
Shows very little variance with other items (low
provide to my customers.
communality).
Factor Analysis for Trust The trust dimension was to be represented by five elements as shown in Table 7.14. To test the construct validity of these five items, factor analysis was undertaken, as shown in the table below, using Varimax rotation where only one factor was extracted. This factor explained 59 percent of the variation in the data. As such, the final structure fits very well with customer-contact employees’ perception of the trust and relationship with their supervisors.
Table 7.14
The Factor Analysis for Trust
Scale Items
Trust
I feel respected by my supervisor
0.87
I feel encouraged to take risks
0.76
I am not encouraged to solve customer problems
0.57
I have good relationships with my supervisor
0.84
59 percent is the percentage of variance explained
Factor Analysis for Incentives Like the trust dimension, the incentive dimension was factor analysed producing only a single dimension. The incentive dimension has been represented by four elements, as shown in the factor analysis table below. This single dimension explained 59
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percent of the variation in the data. Moreover, this factor fits very well with customer-contact employees’ perception of the incentives dimension. Table 7.15
The Factor Analysis for Incentives
Scale Items
Incentives
I am recognised for my contributions by my supervisor
0.79
My supervisor expects the best from me
0.60
Management does not recognise or reward my
0.82
effort and contribution in serving the customer Our managers do not reward the frontline for their
0.85
ability and efficiency
59 percent is the percentage of variance explained
Table 7.16
The Factor Analysis for Communication Supervisoremployee communication 1
Scale items
Employees talk openly about ideas of how to serve the
Information flow 2
0.753
customer Managers listen actively to employees
0.771
I don’t regularly communicate with my supervisors
0.709
I know how to get needed information
0.711
My supervisor encourages me to speak out
0.725
The computer communication systems in the bank
0.820
improves my ability to serve my customers
Factor Analysis for Communication The communication dimension has been represented by ten items in the original questionnaire. To test the construct validity of these ten items, factor analysis was undertaken using Varimax rotation, during three successive iterations, where two
203
factors were extracted in the final round. In assessing the statistical significance, Table 7.16 above shows the final factor structure. The two factors in this table explained 61 percent of the variation in the data.
This solution is relatively analogous to the empowerment factor structure in that the results are close to average after three trials with moderate commonality and relatively average loadings in the final structure. Nevertheless, it is the best possible factor structure to represent the communication dimension after extracting four items. Thus, these two factors, to a great extent, match the communication dimension defined in this study and renamed as the supervisor-employee communication for the first factor which represents four items, and information-flow for the second factor which represents two items.
Reason for Exclusion The communication factor has been measured by the same items in other studies without any alteration and with stronger construct validity and these items are actually being borrowed from studies such as Smialek (1998), who developed the Quality Empowerment Survey for Teams (the QUEST solution). A similar instrument was developed by Johlke and Duhan (2000). The only difference is that Smialek’s scale was used to fit team members and therefore the items were modified to fit individual employees rather than teams. The possible justification for the different results is that this study has been conducted in the Jordanian culture for the first time and respondents may have different attitudes towards these variables. However, the statistical reasons for the exclusion of the four items in the factor structure is further illustrated in the following table.
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Table 7.17
Reason for Excluding Items from the Communication Dimension Items
Reason for Exclusion
Employees actively listen to each other
Low shared variance
Conflicts and problems are confronted quickly and solved
Cross-loading
I don’t get all the necessary information to do my job in serving the customer
Cross-loading
Individuals are kept informed of what is going on in the unit/organisation
Cross-loading
64 percent variance was explained
Factor Analysis for Skills and Knowledge Factor analysis for skills and knowledge has produced one factor, except for one item: that is, I have all the necessary skills to best serve my customers, which loaded on another factor on its own. However, one element, according to Hair et al, cannot be detached by a single factor. Thus, it was included with one dimension, as illustrated in Table 7.18.
The single component factor of knowledge and skills explained 64 percent of the variation in the data. Moreover, the final structure fits the frontline employees’ perception regarding the level of skill and knowledge.
Table 7.18
Factor Analysis for Knowledge and Skills
Scale Items
Skill and knowledge
I receive needed resources on time
0.60
I have all the necessary skills to best serve my customer
0.74
Management support is not always available when needed
0.73
I have full support for taking initiative
0.72
My supervisor does not encourage initiative
0.65
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Factor Analysis for Employee Job Satisfaction The employee satisfaction dimension, as perceived by the customer-contact employees, has been represented by six items in the original questionnaire. Factor analysis was undertaken using Varimax rotation. One factor was extracted without singling out any item (see Table 7.19 below). This single factor has explained 61.2 percent of the variation in the data. The single factor structure fits well with customer-contact employees’ perceptions of the satisfaction level at their bank.
Table 7.19
Factor analysis for Employee Satisfaction
Scale Items
Employee Satisfaction
I am very delighted with this job
0.83
People on this job often think of quitting
0.77
I am generally satisfied with the kind of work I do in this job
0.78
Most people on this job are very satisfied with it
0.75
I frequently think of quitting this job
0.82
We do not feel free to do what we want on this job
0.74
61.2 percent variance was explained
Factor Analysis for Customer Satisfaction Similarly, factor analysis is conducted for the customer satisfaction dimension to test for the relationship between the customer satisfaction construct and the assumed items under this dimension.
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Table 7.20
Factor Analysis for Customer Satisfaction Item Scale
Component 1
When I serve customers, they are happy with the service
0.772
Customers feel that I am responsive to their needs
0.805
Customers feel that I provide them with complete information
0.824
Customers respect the fact that I provide them with different alternatives
0.788
Customers feel that I know what they ask for
0.837
Customers feel that I can solve their problems on the spot
0.703
The customer satisfaction dimension, as perceived by customer-contact employees, has been represented by nine items in the original questionnaire. To test the construct validity of these nine items, factor analysis was undertaken using Varimax rotation. One component factor was extracted, after the deletion of three items because of their low communalities, specifically the case with the first item, “customer rarely complains about the service I provide”; that has a very low level of shared variance with the other elements. The other items, “customers I serve ask for me by name when they need to be served” and “customers like to feel at home when served at the bank” also have been removed for their low communalities and cross-loadings, as illustrated in the following table:
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Table 7.21
Reasons for Excluding Items from Customer Satisfaction
Items
Reasons for Exclusion
Customer rarely complains about the service I provide
This item has the lowest communality among all other items.
Customers I serve ask for me by name when they need to be served
This item has a low-shared variance in relation to other items in this factor structure.
Customers like to feel at home when served at the bank
This item has also low communality with other items in the group.
After the deletion of these items, the single component explained 62.29 percent of the variation in the data. Moreover, the final factor structure fits very well with frontline employees’ perception of their customer’s satisfaction. Generally, the results of the construct validity indicate that empowerment, communication, and customer satisfaction involve deleting items in order to get clear factor structure to arrive at convergent and discriminant validity. However, other dimensions provide evidence of convergent and discriminant validity without deleting any times (i.e., trust, employee satisfaction, knowledge).
7.4.2 Reliability Analysis The internal consistency of the scale in this study is using Cronbach’s alpha. There are a number of different reliability coefficients and one of the most commonly used is Cronbach’s alpha, which is based on the average correlation of items within a test if the items are standardised (Coakes and Steed, 2001).
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Table 7.22 Empowerment factors Empowerment dimension
Reliability Analysis; Cronbach Alpha
Variables measured Responsiveness
Cronbach Alpha 0.7479
Number of items 9
Control Discretion Trust
Single dimension
0.7316
4
Incentives Communication
Single dimension Employee-supervisor communication
0.7680 0.7407
4 6
Information-flow Skills and knowledge
Single dimension
0.6310
5
Employee satisfaction
Single dimension
0.8718
6
Customersatisfaction
Single dimension
0.8736
6
Reliability is an assessment of the degree of consistency between multiple measurements of a variable. There are a number of different reliability forms. One form of reliability is test-retest, by which consistency is measured between the responses for individuals at two points in time. The objective is to ensure that responses are not too varied across time periods so that a measurement taken at any point in time is reliable (Hair et al, 1998). The more commonly used measure of reliability is internal consistency, which applies to the consistency among the variables in a summated scale. In internal consistency, the individual items or indicators of the scale, should all be measuring the same construct and thus be highly inter-correlated (Churchill, 1979; Nunnally, 1978). Internal consistency is assessed through a series of measures among which Cronbach’s alpha is being considered the most widely used measure in assessing the consistency of the entire scale (Nunnally, 1978; Peter, 1979). It is based on the average correlation of items within a test if the items are standardised (Coakes and Steed, 2001).
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Table 7.23 Empowerment factors Empowerment dimension
Cronbach’s Alpha Coefficients
Variables measured
Cronbach Alpha 0.7751
Number of items 3
0.6128
3
Trust
0.7316
4
Incentives Communication
Employee-supervisor communication
0.7680 0.7552
4 4
Information-flow
0.4280
2
Skills and knowledge
0.6310
5
Employee satisfaction
0.8718
6
Customersatisfaction
0.8736
6
Responsiveness
Control
Table 7.23 above illustrates the reliability coefficients for the items in this research instrument showing satisfactory levels, supporting the argument that the instrument was reliable in terms of the internal consistency. Thus, the generally agreed upon lower limit for Cronbach’s alpha is 0.70 and it may decrease to 0.60 in exploratory research (Robinson, et al, 1991). Information flow has limited value perhaps because it has the least number of items with only two items. However, alpha coefficient could not be applied for any scale with less than three items as according to Peter (1979), because Cronbach’s alpha has a positive relationship to the number of items in the scale. Therefore, it will be very low for scales that contain less than three items.
7.5
Conclusion
This chapter introduced the descriptive data analysis for the demographic factors in the research instrument after the process of data collection. Generally, this chapter makes a contribution in describing the relationship between the sample and its population, describing such a relationship in terms of characteristics (i.e. gender, age,
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education etc…) that are common to both the sample and the population. The descriptive analysis with simple statistical indicators as the Mean, Standard deviation, and the Median, for example, provided insight into the respondents’ perceptions toward empowerment, trust, communication, knowledge and other dimensions in their organisations. Accordingly, the first section started by illustrating and describing the demographic variables in frequency tables using SPSS to show the basic statistical relationships. Furthermore, this chapter began to introduce the basic statistical analysis of the research dimensions. The factor analysis was also included to validate the measurement instrument. The last section discussed the reliability including the internal consistency procedure.
In addition, a t test was conducted to examine any differences across sub groups (e.g., job types, male v female, managers v employees). Results of the t test however, did not reveal significant differences between sub groups. Finally, the results indicated that the measurement instrument used in this chapter enjoys a satisfactory degree of both reliability and validity and the data collected for this research could be valid and reliable for further analysis to arrive at the findings of this research by investigating the research propositions.
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Chapter Eight
Data Analysis The Antecedents and Consequences of Empowerment
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8
The Antecedents Empowerment
8.1
Introduction
and
Consequences
of
The previous chapter presented the descriptive statistics including the demographic characteristics of respondents and summarised information on main variables of this research. The previous chapter also presented validity results including face validity, content, criterion and construct validity, along with analysis of reliability results of the measurement instrument. The objective of this chapter is to provide a discussion of the hypothesis testing concerning the antecedents and consequences of the empowerment of customer-contact employees using the multiple regression technique. This chapter begins with an analysis of the basic assumptions of the regression technique, including the test of normality, linearity, and homoscedasticity, followed by an assessment of multicollinearity. Subsequently, the results of regression models based on both the hypothesised measures and the measures that emerged from factor analysis are discussed. Finally, the chapter considers the issue of structural breaks between different groups of respondents.
8.2
Testing the Assumption of Multiple Regression
Multiple regression analysis is a statistical technique that can be used to analyse the relationship between a single dependent variable and several independent variables and the objective of multiple regression analysis is to use the independent variables to predict the single dependent value selected by the researcher (Hair et al, 1998).
The variables in this study have been classified into both dependent and independent variables demonstrating causal relationships between a set of dependent and independent variables. In such a relationship, empowerment is examined as a major dependent variable influenced by four main independent variables: trust, incentives, communication and skill or knowledge. The empowerment dimension is acting also as an independent variable leading to employee satisfaction where employee satisfaction is leading to perceived customer satisfaction. In such a causal relationship, multiple regression is an appropriate technique to be used. Therefore, the
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assumptions underlying multiple regression analysis apply both to dependent and independent variables and to the relationship as a whole (Hair et al, 1998). In multiple regressions, independent variables are identified, and these act collectively in predicting the dependent variable. This necessitates assessing the assumptions not only for individual variables but also for the variate (the independent variables) itself (Hair et al, 1998). Moreover, the assumptions of regression analysis need to be examined in order to check whether errors of prediction are caused by data characteristics not accommodated by the regression model or by the absence of a true relationship among the variables (Hair et al, 1998) As such, there are three basic assumptions. These basic assumptions will include the tests of normality, linearity, and homoscedasticity. However, one might often expect that practically, the data will not perfectly and fully satisfy all these basic assumptions, particularly the case with data collected about behavioural constructs like the ones in this study. Nevertheless, Hair et al (1998) assert that multiple regressions can be used as long as the data do not significantly violate these assumptions.
8.3.1 Normality The most fundamental assumption in multivariate analysis is normality. Perhaps the most frequently encountered assumption violation is non-normality of the dependent or independent variables or both (Hair et al, 1998). If the variation from normality is significant, the resulting statistical tests are likely to be invalid. Normality can be tested graphically using histograms for individual and multiple variables as well. Normality of multiple variables (multivariate normality) indicates that individual variables are normal and their combination as well (Hair et al, 1998). The simplest diagnostic test for normality is a visual check of the histograms that compares the observed data values with a distribution approximating the normal distribution. This method is the most common and simple, particularly with a large sample like the one used in this study. Histograms for seven variables, as shown in Appendix 4, were produced using SPSS. Examining these histograms revealed no severe departure from normality for most of the variables. The normal probability plot is a more reliable approach (Hair et al, 1998), At the multivariate level, the normal probability plot was used in this research, as shown in Appendix 4, which compares the cumulative distribution of the actual data values with the cumulative distribution of the normal
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distribution. Viewing these graphs showed that the residual line closely follows the diagonal, and the plotted data values are compared with the diagonal with no substantial departure. Therefore, analysis suggests that non-normality in this study is not a major problem and the regression variables are found to broadly meet the assumption of normality.
8.3.2 Linearity Linearity concerns the nature of the relationship between the dependent variable and the independent variable. The change in the dependent variable is consequent on a change in an independent variable. According to Hair et al (1998) change should be constant across the range of values for the predictor variable. The importance of this assumption is that correlation represents only the linear association between variables and non-linear effects are not represented in the correlation. The presence of nonlinear affects may decrease the strength of the relationship (Hair et al, 1998).
As an integral part of the regression analysis, Scatterplots were utilised in this study to assess the degree of linearity and to detect any non-linear pattern in the data. Simple scatter plots for six independent variables were produced using the SPSS package. The scatter plots (see Appendix 4) showed an acceptable degree of linearity, taking into consideration that the perfect linearity in behavioural associations is not possible.
8.3.3 Homoscedasticity Homoscedasticity is an assumption related primarily to dependence relationships between variables (Hair et al, 1998). As such, the dependent variable(s) may exhibit equal levels of variance across the range of independent variable(s) (Hair et al, 1998). This assumption is necessary because the variance of the dependent variable should not be concentrated in only a limited range of the independent values (Hair et al, 1998). The test of homoscedasticity is best examined graphically (as in this study) by plotting the residuals against the standardised predicted values (Hair et al, 1998) as shown in Appendix 4. In this study, SPSS was used to test graphically for the degree of heteroscedasticity by plotting the studentised residuals against the standardised
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fitted value. Five regression models were diagnosed showing no strong existence of heteroscedasticity
Therefore
the
statistical
graphical
plot
suggested
that
heteroscedasticity was not a major problem.
8.3.4 Multicollinearity Simply, multicollinearity refers to the correlation among three or more independent variables. It reduces any single independent variable’s predictive power by the extent to which it is associated with other independent variables (Hair et al, 1998: 156). Multicollinearity however, does not undermine basic regression but it might inflate standard error so that the coefficient estimate is less likely to be significant.
Two of the more common measures for assessing multicollinearity problems are the tolerance value and its inverse, and the variance inflation factor (VIF). These measures tell us the degree to which each independent variable is explained by the other independent variables (Hair et al, 1998). Tolerance is the amount of variability of the selected independent variable not explained by the other independent variables. Thus very small tolerance values (and large VIF values because VIF = 1/tolerance) denote high collinearity. A common cut off level is a tolerance value of 0.10 to 0.50, which corresponds to a VIF value of 10 to 2. High tolerance value indicates little collinearity and, when approaching zero, indicates that the variable is almost totally accounted for by the other variables. The tolerance values in each model show that in no case does multicollinearity explain more than 10 percent of the variance on any independent variable. Thus, the level of multicollinearity in this data is acceptable.
As such, after taking the assumptions of multiple regression into consideration, as discussed in the preceding sections, the data are ready for testing the hypothesis of this research by estimating three regression models. This will be discussed in the following sections. The objective of this chapter is to discuss and present the antecedents and consequences of empowerment through the hypothesis testing discussion and results.
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8.4
The Antecedents of Empowerment
Four organisational antecedents have conditioned staff empowerment in this study. These four antecedents (skill and knowledge, incentives, communication, and trust) have been discussed throughout the thesis. Thus, empowerment is the dependent variable and the four antecedents act as independent variables. The hypotheses and measurement assumed that empowerment would be a unidimensional construct. However, the factor analysis, discussed in Chapter Seven, has produced three dimensions for the empowerment construct. The first factor was the control factor with three items. The second factor was the responsiveness factor with four items. The third factor was the discretion factor with two items. Figure 8.1 will illustrate the empowerment model with its original relationships (assuming empowerment to be unidimensional) and Figure 8.2 will portray the model with its revised dimensions as a result of the factor analysis stage with three distinct dimensions to empowerment and two dimensions to communication. Although these changes do not undermine the basic model proposed in the thesis, they do imply that the links between empowerment and its antecedents may be a little more complex than originally proposed.
Figure8.1. The Original Model
Trust Incentives
Empowerment
Knoweldge Comm
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E-S
C-S
Figure8.2. Diagram of the Antecedents and Consequences of Empowerment*
Antecedents
empowerment revised
consequences
T
Control
I
Employee Satisfaction
K Responsiveness
C-I Discretion Customer Satisfaction
I-F
Before presenting the regression analysis with the dimensions that emerged from the factor analysis, the analysis will be conducted using the measurement approach that was originally proposed (i.e. treating empowerment as unidimensional). This approach provides an inductive test of the original hypotheses by imposing a
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measurement structure and also allows for more explanatory work on the emergent measurement structure.
8.4.1 The Assumed Measurement Structure The research started with empowerment and communication as unidimensional variables. Therefore, the hypothesis was developed to reflect such a unidimensional approach in both empowerment and communication as well as in other dimensions in the basic model of this research. However, the exploratory factor analysis stage of this research indicated that the empowerment and communication variables are more complex than was expected before conducting the empirical stage of this study. As a result, testing the hypothesis as originally specified becomes more complex. Thus, for purposes of completeness and clarity the researcher intends to adopt a dual strategy. The data analysis in this section will test all the dimensions according to the expected measurement, as unidimensional variables. This is before turning to the next section and treating empowerment and communication as a multidimensional construct. Thus, according to the original assumption, trust (T), incentives (I), communication (C), and Knowledge (K) positively influence employee empowerment (EE). Testing this hypothesis requires one regression model, as shown below. Thereafter, employee satisfaction (ES) is influenced by employee empowerment (EE) requiring another regression model. The third model is represented by perceived customer satisfaction (CS) being influenced by employee satisfaction (ES). Additionally employee empowerment (EE) has a direct impact on customer satisfaction (CS).
The basic hypotheses are concerned with the impact of four independent variables namely, knowledge or skill, communication, incentives, and trust on the empowerment of customer-contact employees. Likewise, the interest also is in finding the impact of empowerment as an independent variable on the perceived satisfaction of customer-contact employees and finally finding the impact of satisfied, empowered employees on the satisfaction of their customers.
The first model was estimated as follows, using multiple regression.
EE = f (T, I, C, K)
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The first regression suggests that empowerment should be seen as a function of trust, incentives, communication and knowledge. The results are presented in Table 8.1.
Table 8.1.
Regression of Empowerment and its Antecedents
Model Trust
Std. Error 0.033
Beta 0.264
t 6.173
Sig. 0.000
VIF 1.748
Incentives
0.033
0.037
0.754
0.451
2.318
Communication
0.049
0.264
4.958
0.000
2.727
Knowledge
0.042
0.241
5.424
0.000
1.896
Dependent variable: Empowerment. R = 0.682, Adjusted R Square = 0.462, F =111.571, P< 0.01
The overall regression is significant and the hypothesised antecedents (trust, incentives, communication and knowledge) explain 46.2 percent of the variation in empowerment. However, Table 8.1, above, shows that there is a significant relationship between three dimensions of empowerment, trust, communication and knowledge, where the incentive dimension is not significantly related to the empowerment dimensions: P = .451. Therefore, trust, communication, and knowledge have a positive impact on empowerment and the size of its standardised coefficients (Beta) suggests that all are similarly important.
ES = f (EE) The second regression suggests that employee satisfaction should be seen as a function of empowerment. The results are presented in the following table (8.2).
Table 8.2.
Regression of Empowerment and Employee Satisfaction
Model B Empowerment 0.899 Employee satisfaction
Std. Error 0.058
Beta 0.566
t 15.595
Sig. 0.000
R=0.57, R2= 0.321, Adjusted R Square= 0.32, F= 243.214, P < 0.01
Table 8.2 above shows a significant and positive relationship between employee empowerment and employee satisfaction (P
