The effect of management commitment to service quality on employees’ affective and performance outcomes

The Effect of Management Commitment to Service Quality on FrontlineEmployees’ Job Attitudes, Turnover Intentions and Service Recovery

Performance in a New Public Management Context

Nicholas J. Ashilla*, Michel Rodb and Janet Carruthersb

aSchool of Business and Management, American University of Sharjah, United Arab Emirates;bSchool of Marketing & International Business, Victoria University of Wellington, New Zealand

(Received March 2008; final version received July 2008)

We present and test a model of behavioural job outcomes grounded in Bagozzi’s(1992) reformulation of attitude theory in the important and novel context of aformer public sector government department that has undergone corporatisation.Frontline employees (FLEs) completed a self-administered questionnaire on howfactors characterising management commitment to service quality (MCSQ) affecttheir job satisfaction and organisational commitment, and how these job attitudesimpact service recovery performance and turnover intentions. Data obtainedfrom the FLEs were analysed using the SEM-based Partial Least Squares (PLS)methodology. Results suggest there is a significant influence of MCSQ on jobattitudes, which in turn influence service recovery performance and turnoverintentions. Implications of the results and further research directions arediscussed.

Keywords: management commitment to service quality (MCSQ); job satisfaction;organisational commitment; service recovery performance; turnover intentions;state-owned enterprise (SOE); frontline employees (FLEs)

Introduction

Frontline employees (FLEs) play a crucial role in service delivery and building

relationships with customers (Babakus, Yavas, Karatepe, & Avci, 2003), and their

attitudes and behaviours towards customers determine customers’ perceived service

quality and satisfaction (Mohr & Bitner, 1995; Yoon, Beathy, & Suh, 2001). Given

the fact that service failures take place, the performance of FLEs in dealing with

service failure (service recovery performance) is identified as an important strategic

issue in the services literature (Bendall-Lyon & Powers, 2001; Ruyter & Wetzels,

2000). Surprisingly, there is a paucity of research examining this variable and its vital

role from a managerial perspective. Addressing service recovery performance is

critical because correctly solving and addressing a customer’s dissatisfaction can lead

to higher loyalty than if the customer had been satisfied first time around (Lorenzoni

& Lewis, 2004; Magnini, Ford, Markowski, & Honeycutt, 2007; Yanamandram &

White, 2006). The services literature also acknowledges the retention of satisfied and

committed FLEs as being critical to business success (Alexandrov, Babakus, &

Yavas, 2007). This is because employee turnover represents a substantial cost for

companies both in tangible and intangible terms, seriously hinders efficient and

*Corresponding author. Email: [email protected]

Journal of Strategic Marketing

Vol. 16, No. 5, December 2008, 437–462

ISSN 0965-254X print/ISSN 1466-4488 online

� 2008 Taylor & Francis

DOI: 10.1080/09652540802480944

http://www.informaworld.com

effective customer service and underlines competitiveness (Alexandrov et al., 2007;

Frank, Finnegan, & Taylor, 2004; Hendrie, 2004).

Given that low levels of service recovery performance and high turnover

intentions represent undesirable outcomes for an organisation, two questions beg

answers: (1) What managerial practices are critical for enhancing the service recovery

efforts of FLEs? (2) What managerial practices are critical for reducing the turnover

intentions of FLEs? Past research indicates that managerial practices in the form of

management commitment to service quality (MCSQ) are a critical determinant of

FLE behaviour in the workplace (Alexandrov et al., 2007; Babakus et al., 2003;

Hartline & Ferrell, 1996). Babakus et al. (2003, p. 3) define MCSQ as ‘employees’

appraisal of an organisation’s commitment to nurture, develop, support and reward

its employees to achieve service excellence’. Against this background, in this study we

develop and test a service recovery performance and turnover intentions model that

is grounded in Bagozzi’s (1992) reformulation of attitude theory (appraisal–

emotional response–behaviour). Specifically we propose that MCSQ generates

affective responses of FLEs’ job satisfaction (feelings towards the job) and affective

organisational commitment (feelings towards the organisation), which in turn

influence FLEs’ perceived service recovery performance and turnover intentions.

With the exception of Babakus et al. (2003) and Alexandrov et al. (2007), there has

been no empirical examination of the relationship between managerial practices and

these important job outcomes using Bagozzi’s (1992) reformulation of attitude

theory.

We address this paucity in the literature in several ways. First, we present and

test a model examining relationships between MCSQ and job outcomes using

Bagozzi’s (1992) theoretical framework in the novel context of a government-owned

company engaged in New Public Management practices. Given the ongoing global

trend towards the corporatisation of former government departments (Brown, Ryan,

& Parker, 2000; James, 2005, 2006) and to a mode of governance known as ‘New

Public Management’ (NPM) where all aspects of public sector production are

transformed to approximate more closely those in the private sector (James, 2006;

Luke & Verreynne, 2006), we suggest that it is timely to consider the applicability of

models examining critical FLE behavioural outcomes to such NPM settings where

service delivery is now subject to competitive market forces (Nwankwo &

Richardson, 1994). ‘Customer sovereignty’ is a central facet of NPM practice

(Rosenthal & Peccei, 2006). The central features of NPM are captured by Hood

(1995, p. 94) as ‘lessening or removing differences between the public and the private

sector and shifting the emphasis from process accountability towards a greater

element of accountability in terms of results’. The process of corporatisation involves

a change in the legal status of a government department to that of a company such

that there should be a net benefit to the community, resulting from equitable services

for consumers through more efficient service delivery from the firm (Devlin, 2006;

Irwin & Yamamoto, 2004; James, 2006).

Second, we extend the work of Babakus et al. (2003) by broadening the construct

of MCSQ. Babakus et al. (2003) identified three indicators of MCSQ in a study of

retail banks. These are training, empowerment and rewards/recognition and are

identified as well-known human resource practices by Pfeffer (1994). However, our

review of the literature suggests there are additional human resources practices that

embody the MCSQ construct as defined by Babakus et al. (2003). Based on this

438 N.J. Ashill et al.

services literature (Heskett, Sasser, & Schlesinger, 1997; Lytle, Hom, & Mowka,

1998; Lytle & Timmerman, 2006; Schneider, Ehrhart, Mayer, Saltz, & Niles-Jolly,

2005; Singh, 2000) and social support theory (Thoits, 1995), we identify three

additional indicators in the form of supportive management, servant leadership and

investment in service technology. We therefore extend the work of Babakus et al.

(2003) by examining a more complete set of relevant indicators of MCSQ and

suggest that the joint and simultaneous presence of these variables is critical for

making a significant impact on the service recovery performance and turnover

intentions of FLEs.

Third, we examine the relationship between FLE turnover intentions and service

recovery performance, which the extant literature suggests but has yet to validate

empirically. Intuitively, FLEs with high turnover intentions will not only provide

poor service to customers but also could seriously undermine service recovery, which

is essential for customer retention (Alexandrov et al., 2007; Tax & Brown, 1998).

However, this relationship has yet to be empirically examined in the services

literature.

We begin by discussing the research model used to guide the study and related

literature. Specifically, we describe Bagozzi’s (1992) reformulation of attitude theory

as a general theoretical framework to guide the development of our conceptual

model. In doing so, we present hypotheses that relate MCSQ, job satisfaction,

organisational commitment, service recovery performance and turnover intentions.

Second, we present an empirical study that was conducted in a government owned

company setting. In New Zealand these government owned companies are known as

state-owned enterprises (SOEs), and they are required to operate as successful

businesses (i.e. maximise profits), be good employers and exhibit social responsibility

(Austin, 2005; Luke & Verreynne, 2006). Public sector reform and NPM are

particularly evident in New Zealand, a country that has had a longer history than

other regions of adopting a market based approach to the management of public

services (Erakovic & Wilson, 2006; Sozen & Shaw, 2002). Finally, we present our

results and discuss implications for services researchers and practitioners.

The research model and hypotheses

Bagozzi’s (1992) model links appraisal, emotional response and behaviour in a

sequential process. An individual appraises past, present and future outcomes which

produce particular emotions (affective outcomes) leading to various coping

responses (behaviours), hence the sequence of appraisal, emotional reactions and

coping responses (Schmit & Allscheid, 1995). We classify human resource manage-

ment practices that embody MCSQ as appraisal variables. Consistent with Bagozzi

(1992), these MCSQ appraisal variables are hypothesised to represent an underlying

emotional response or affect towards the organisation. Specifically, our conceptual

framework (see Figure 1) examines the process through which MCSQ influences

FLE job satisfaction (feelings towards the job) and organisational commitment

(feelings towards the organisation), and the relationship between these job attitudes

and two important FLE behavioural outcomes (service recovery performance and

turnover intentions).

Organisational commitment is defined as the relative strength of a person’s

identification with and involvement in an organisation (Jaramillo, Mulki, &

Journal of Strategic Marketing 439

Figure 1. Conceptual model.

44

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.J.

Ash

illet

al.

Marshall, 2005; Mowday, Steers, & Porter, 1979; Steers, 1977). This definition is

consistent with Allen and Meyer’s (1990) concept of affective organisational

commitment, which refers to the strength of an employee’s emotional attachment

to an organisation. Job satisfaction is defined as ‘the pleasurable emotional state

resulting from the appraisal of one’s job as achieving or facilitating the

achievement of one’s job values’ (Locke, 1969, p. 316). Service recovery

performance is defined as FLE perceptions of their own abilities and actions to

resolve a service failure to the satisfaction of the customer (Babakus et al., 2003).

Turnover intentions reflect the subjective probability that an FLE will leave his or

her organisation within a period of time. It serves as an indicator of the extent of

an FLE’s psychological attachment to the organisation (Zhao, Wayne,

Glibkowski, & Bravo, 2007).

The hypothesised relationships among the study variables are developed in the

following paragraphs.

The relationship between management commitment to service quality (MCSQ) and

affective job outcomes (job satisfaction and organisational commitment)

Employee rewards

An important element of service quality is the link between employee compensation/

reward and service delivery performance (Liao & Chuang, 2004; Lynn, Lytle, &

Bobek, 2000; Lytle & Timmerman, 2006; Parasuraman, 1987). Rewards are not only

important in incentivising employees to deliver high quality services, they are also

important in motivating them when dealing with customer complaints (Bowen &

Johnston, 1999; Yavas, Karatepe, Avci, & Tekinkus, 2003). The services literature

suggests that an organisation’s reward structure can have a significant impact on

employee satisfaction and organisational commitment (Bowen, Gilliland, & Folger,

1999; Brown & Peterson, 1993; Farrell & Rusbult, 1981; Heskett, Jones, Loveman,

Sasser, & Schlesinger, 1994; Lawler, 2000). When FLEs perceive rewards systems

and policies as genuine commitments by management, they are more likely to possess

high levels of job satisfaction and organisational commitment. By rewarding

exemplary service efforts, management is aptly demonstrating its commitment to

service quality efforts.

Service training

In the services literature, it is widely reported that employees who do not possess the

requisite job and interpersonal skills fail in providing a high level of service in dealing

with customers’ complaints (Boshoff & Allen, 2000; Hart, Heskett, & Sasser, 1990;

Liao & Chuang, 2004; Lytle & Timmerman, 2006; Yavas et al., 2003). The presence

of customer service training programmes sends a strong signal to FLEs regarding

top management’s commitment to service quality (Babakus et al., 2003). Customer

service training has a direct impact on FLE job satisfaction because of its role in

developing skills to handle service failures effectively (Babakus et al., 2003; Schneider

& Bowen, 1995; Tax & Brown, 1998). Other studies have also demonstrated that

FLEs are more committed to organisations that invest more in customer service

training programmes (Babakus et al., 2003; Lee, Park, & Yoo, 1999; Sweetman,

2001; Tsui, Pearce, Porter, & Tripoli, 1997).


Empowerment

Empowerment refers to the employees’ degree of discretion to make daily decisions

about activities relating to their work (Lashley, 1995). By empowering FLEs,management is demonstrating its commitment to service quality by giving them the

authority and responsibility to deliver excellent service delivery (Bowen & Lawler,

1992; Hart et al., 1990; Hartline & Ferrell, 1996). Empowered FLEs have control

over their work and how the work is done. They also have a great deal of task

autonomy and identify which are desirable job characteristics that improve morale

and job satisfaction (Ackfeldt & Wong, 2006; Ugboro & Obeng, 2000).

Empowerment also enhances FLE commitment towards the organisation by

allowing them to make on-the-spot decisions (Iris, 1991). In the services literaturea significant relationship between FLE empowerment and both affective states can

be seen in the work of Ellinger, Elmadag and Ellinger (2007), Liao and Chuang

(2004), Lytle and Timmerman (2006), Salazar, Pfaffenberg and Salazar (2006), Singh

(2000) and Ugboro and Obeng (2000).

Supportive management

Supportive management characterises management concerns and support for

employee work and represents the degree to which they create a facilitative climate

of support, trust and helpfulness (Hartline, Maxham, & McKee, 2000). As FLEsperceive greater support and authority from management, their effort will increase as

well as their sense of obligation to reciprocate. Singh (2000) for example, found that

a supportive management environment builds organisational commitment and job

satisfaction, reduces turnover intentions and enhances employee performance.

Servant leadership

Servant leadership is a practical philosophy, which supports people who choose to

serve first, and then lead as a way of expanding service to individuals and institutions

(Greenleaf, 1970/1991). Servant-leaders set service standards by their own behaviour

and management styles (James, 2005; Lytle et al., 1998) and actively engage inhelping, assisting and meeting the needs of employees within the work setting (Lytle

& Timmerman, 2006; Schneider, 1990). In the services literature, servant leadership

behaviour is identified as a critical and integral ingredient necessary for creating and

maintaining an effective climate for delivering excellent customer service (Heskett

et al., 1997; Lytle et al., 1998; Schneider et al., 2005). Servant leadership has an

impact on FLEs’ job satisfaction and organisational commitment because of its role

in creating an environment conducive to delivering high quality service and handling

customer complaints effectively. Our hypothesis is that leaders who recognise andcommunicate the importance of service quality will induce higher levels of FLE job

satisfaction and increase identification with and involvement in the organisation.

Service technology support

Service technology support encompasses sophisticated and integrated tools provided

by management to employees to free them from routine tasks so that they can devote

more time to customers (Lytle et al., 1998). Service technology may also elicit

positive affective responses by FLEs because information technology has the


potential to streamline processes, make procedures more accurate and efficient and

reduce the risk of human error (Dabholkar, 2000).

In summary, the conceptualisation presented in Figure 1 suggests that training,

empowerment, employee rewards, supportive management, servant leadership and

service technology support will send powerful signals to SOE FLEs regarding

management commitment to service quality. None of these factors on their own are

sufficient to foster job satisfaction and commitment to the organisation (Argyris,

1998; Babakus et al., 2003; Boshoff & Allen, 2000; Bowen & Lawler, 1995; Forrester,

2000). It is the simultaneous implementation of these factors that make a significant

impact on FLEs’ affective states and subsequently on their behaviour. In light of the

above discussion, we present the following hypotheses:

H1: There will be a positive relationship between MCSQ (as manifested by training,empowerment, employee rewards, supportive management, servant leadership andservice technology) and SOE FLE job satisfaction.H2: There will be a positive relationship between MCSQ (as manifested by training,empowerment, employee rewards, supportive management, servant leadership andservice technology) and SOE FLE organisational commitment.

The relationship between job satisfaction and organisational commitment

Job satisfaction is less stable than organisational commitment and is affected by

transitory events (Paulin, Ferguson, & Bergeron, 2006). Numerous researchers have

noted that job satisfaction requires multiple satisfactory job experiences to create high

organisational commitment (Meyer, Stanley, Herscovitch, & Topolnytsky, 2002).

Researchers in the services literature have generally argued that job satisfaction

precedes organisational commitment causally ‘because it is more specific, less stable,

and more rapidly formed’ (MacKenzie, Podsakoff, & Ahearne, 1998, p. 90). On

theoretical grounds, it is contended that job satisfaction precedes organisational

commitment, which develops over time (Meyer & Herscovitch, 2001). Support for this

relationship in the services literature can be found in the work of Alexandrov et al.

(2007), Jones, Chonko, Rangarajan and Roberts (2007) and Paulin et al. (2006).

In light of the above theoretical reasoning and empirical evidence we advance the

following hypothesis:

H3: There will be a positive relationship between SOE FLE job satisfaction andorganisational commitment.

Consequences of affective outcomes (job satisfaction and organisational commitment)

on behavioural outcomes (service recovery performance and turnover intentions)

Effects on service recovery performance

The relationship between job satisfaction and overall job performance has been subject

to much empirical study. Although the most frequently cited meta-analyses (Iaffaldano

& Muchinsky, 1985) suggest there is only a weak correlation between the two at best,

more recent evidence suggests that there is a much stronger relationship (Judge,

Thoresen, Bono, & Patton, 2001; Yousef, 1998). In the services literature, Hartline and

Ferrell (1996) and Yoon et al. (2001) reported a significant positive relationship

between FLE job satisfaction and customer perceptions of service performance. More

recently Babakus et al. (2003) found a significant positive relationship between job


satisfaction and service recovery performance suggesting that when FLEs are satisfiedin their jobs, they perform at a higher level in dealing with service failure. In light of this

more recent literature, we propose the following hypothesis:

H4: There will be a positive relationship between SOE FLE job satisfaction and servicerecovery performance.

Meyer, Paunonen, Gellatly and Jackson (1989) and Mowday et al. (1979) argue that

individuals affectively committed to their organisations perform at a higher level.

Meyer and Herscovitch (2001, p. 316) state ‘the mind-set characterising affective

commitment is desire … to pursue a course of action of relevance to a target’. In the

case of a service failure, the target of desire is the organisation the FLE works for,

and the course of action is addressing the service failure to the customer’s

satisfaction.

Long-term customer relationships can be built with a long-term committedworkforce (Boshoff & Allen, 2000). Thus, the organisational commitment of FLEs

has an important role to play in determining the level of service quality delivered to

customers (Malhotra & Mukherjee, 2004). Two meta-analyses provide evidence of a

significant relationship between organisational commitment and job performance

(Jaramillo et al., 2005; Meyer et al., 2002). In their meta-analyses, Jaramillo et al.

(2005) and Meyer et al. (2002) found affective organisational commitment to be a

significant predictor of job performance with the latter study indicating that this

relationship is stronger for FLEs involved in boundary-spanning than in non-customer-contact roles.

Although the extant literature has largely focused on overall job performance, a

limited number of studies have specifically focused on service recovery performance.

Boshoff and Allen (2000) for example, found a significant positive relationship

between the affective organisational commitment and service recovery performance

of retail banking FLEs. More recently, Babakus et al. (2003) found a significant

relationship between affective organisational commitment and service recovery

performance in a study of Turkish banks.

In light of the presented evidence, organisational commitment by the FLEshould have a significant direct impact on service recovery performance. Thus:

H5: There will be a positive relationship between SOE FLE organisational commitmentand service recovery performance.

We also hypothesise a negative relationship between FLE turnover intentions andservice recovery performance, which the extant literature suggests but has yet to

validate empirically. FLEs with high turnover intentions will seriously undermine

their service recovery efforts because they are no longer identifying with and

involving themselves in the organisation. We suggest that this emotional detachment

can influence both the delivery of customer service as well as efforts to address

customer dissatisfaction and complaints. Therefore:

H6: There will be a negative relationship between SOE FLE turnover intentions andservice recovery performance.

Effects on turnover intentions

Four meta-analyses have confirmed that a significant relationship exists between job

satisfaction and turnover intention (Brown & Peterson, 1993; Griffeth, Hom, &


Gaertner, 2000; Tett & Meyer, 1993; Zhao et al., 2007). Furthermore, longitudinal

research has shown that job dissatisfaction results in greater job search and causes

turnover (Fields, Dingman, Roman, & Blum, 2005). In the services literature the job

satisfaction of FLEs has been shown to reduce an employee’s intention to leave the

organisation (Alexandrov et al., 2007; Babakus, Cravens, Johnston, & Moncrief,

1999; Jones et al., 2007; Low, Cravens, Grant, & Moncrief, 2001). Thus:

H7: There will be a negative relationship between FLE job satisfaction and turnoverintentions.

Although meta-analyses have confirmed a significant relationship between job

satisfaction and turnover intentions, they have also shown job satisfaction to have an

indirect affect on turnover intentions through organisational commitment (Brown &

Peterson, 1993; Russ & McNeilly, 1995). Thus, when FLEs perceive satisfaction

from their jobs, they show a favourable attitude towards their workplace and

respond with increased commitment to the organisation. Ultimately, these FLEs will

have a lower intention to leave the organisation. A meta-analysis by Meyer et al.

(2002) has also shown affective organisational commitment to be a significant

predictor of turnover intention and in the services literature; organisational

commitment has been shown to have a significant negative relationship with an

employee’s intention to leave the organisation (Alexandrov et al., 2007; Babakus

et al., 1999; Low et al., 2001). In light of these findings, we propose our final

hypothesis:

H8: There will be a positive relationship between SOE FLE organisational commitmentand turnover intentions.

Research method

Sample and study setting

To collect the data for the study, a total of 160 questionnaires were personally

distributed by the research team to a purposive sample of fulltime FLEs in 20

branches of a former public sector service organisation in Wellington, New

Zealand’s capital city. For the purposes of the study, the individual (FLE) is the unit

of analysis because our focus is on the affective and behavioural consequences of an

organisation’s commitment to nurture, develop, support and reward its FLEs to

achieve service excellence.

Managers of each branch informed their FLEs about the survey and encouraged

them to participate. Participants were assured of confidentiality and allowed to

respond to the survey anonymously during working hours. This organisation

through its 17,000 people operates over 1000 outlets nationwide and delivers a

diversified range of retail services having built up a portfolio of 19 subsidiaries

including postal and courier services, data management, banking, retailing and

management consulting. Our study focuses specifically on those retail orientated

service delivery functions within the SOE that are subject to open market

competition.

The sample of FLEs had boundary-spanning roles encompassing a number of

service delivery functions including postal services, retail banking, registrations and

some merchandising, and spent most of their time dealing with customers requiring

these different services. By the cut-off date for data collection, 97 questionnaires


were retrieved for a response rate of 60.63%. Over three-quarters of the respondents

(78.3%) were female. Just under 55% had secondary education and 28.6% had

college/university education. Respondents were spread across all age groups with

25% of FLEs between the ages of 18 and 24, 24% between the ages of 25 and 34,

19.8% between the ages of 35 and 44, 22.9% between the ages of 45 and 54 and 8.3%

55 years and older. Over half of respondents (58%) had tenures of five years or less,

14.8% had tenures between six and 10 years and 27.3% had been with their bank for

more than 10 years. These profiles were comparable to the total population of FLEs

in the organisation.

To ensure that sample bias and non-response bias were not present, appropriate

comparisons were made between early and late respondents, and between

respondents and non-respondents (Armstrong & Overton, 1977; Mentzer & Flint,

1997). Early and late respondents were compared on all variables of interest, using

traditional t-tests following Armstrong and Overton’s (1977) recommendations.

Unpaired t-tests were used to compare the group means to each other. Differences

between the means were not statistically significant at the 0.05 level, indicating that

there were no differences between the group means of early and late respondents.

Hence, it was assumed that non-response bias was not a problem. At the same time

early and late respondents were compared and following the recommendation of

Mentzer and Flint (1997), 30 non-respondents were contacted and asked five

questions (survey items) relating to the hypotheses. There was no statistically

significant difference between the answers of respondents and non-respondents to

these questions.

Measurement

In designing the survey instrument the relevant writings in the services literature were

canvassed. Multiple item indicators were employed from this literature and adapted

to operationalise the nine study constructs. Specifically, organisational commitment

was measured using six items from Mowday et al. (1979) and job satisfaction was

measured with six items from Babin and Boles (1998). Employee rewards (three

items), service technology support (four items) and servant leadership (six items)

were measured using items from Lytle et al. (1998). A four-item empowerment scale

was adapted from Hayes (1994). Training (five items) was measured using items

from Rogg, Schmidt, Shull and Schmitt (2001). Supportive management used three

items adapted from Bell, Menguc and Stefani (2004). Finally, service recovery

performance was measured with five items from Boshoff and Allen (2000) and

turnover intentions was measured with three items adapted from Babin and Boles

(1998) and Singh, Verbeke and Rhoads (1996). Responses to the questionnaire items

were elicited on five-point scales ranging from ‘55strongly agree’ to ‘15strongly

disagree’ (see Appendix). All constructs were deemed reflective constructs since the

items reflect the meaning of the construct. Reflective indicators are created under the

perspective that they all measure the same underlying phenomenon (Chin, 1998).

Measurement of service recovery performance via a self-report measure is

justified on the grounds that FLEs are in the best position to evaluate performance

outcomes, and their perceptions typically converge with those of the customers

(Bitner, Booms, & Tetreault, 1994; Schneider & Bowen, 1995; Tax & Brown, 1998).

Furthermore, several comparative reviews of various approaches to performance


measurement support the use of self-report measures (e.g. Churchill, Ford, Hartley,

& Orville, 1985; Harris & Schaubroeck, 1988).

Various control variables were also examined in order to provide a rigorous test

of the hypothesised theoretical linkages. Demographic variables have previously

been examined as antecedents of job satisfaction, organisational commitment,

service recovery performance and turnover intentions (Alexandrov et al., 2007;

Babakus et al., 2003; Parasuraman & Futrell, 1983; van Breukelen, van der Vlist, &

Steensma, 2004). In this study, age and education were measured using five-point

scales, and tenure was measured with an eight-point scale, with higher scores

indicating older respondents, more education and longer experience with the SOE.

Gender was measured as a binary variable (05female and 15male).

Following Babakus et al. (2003) and Forrester (2000), we defined and measured

MCSQ as a multidimensional construct from an FLE perspective. Historically,

MCSQ has been conceptualised and measured from the managers’ perspective

(Hartline & Ferrell, 1996; Sureschchandar, Rajendran, & Anantharaman, 2002).

However, management desires and good intentions do mean little unless employees

see them as such. Specifically, we used the composite scores of each set of items

comprising training, empowerment, rewards, servant leadership, supportive manage-

ment and service technology support since the use of composite scores to represent

the construct as a partial aggregation model acknowledges its multidimensional

nature (Bagozzi & Heatherton, 1994). Strong correlations among training, rewards,

servant leadership, supportive management and service technology support provided

empirical justification for treating five of the six measures as indicators of MCSQ.

Due to the self-report nature of the survey, method variance is identified as a

potential issue. Spector (1987) reported that the most frequently found sources of

method variance in self-reports are acquiescence and social desirability bias. The survey

instrument was also organised into various sections by separating the independent and

dependent variables in an effort to reduce single-source method bias (Podsakoff,

Mackenzie, Lee, & Podsakoff, 2003). Reynolds’ (1982) short form of the Marlowe-

Crowne Social Desirability Scale (Crowne & Marlowe, 1960) was also included in the

survey. Examining the correlations of the social desirability measure with all of the items

used in the study revealed that social desirability bias was not an issue in these data.

A further post hoc test for common method bias, a Harman’s (1967) one-factor

test was also performed. All of the self-report items were entered into a principal

components factor analysis with varimax rotation. According to this test, if a single

factor emerges or one factor accounts for more than 50% of the variance in the

variables, common method variance is present (Podsakoff et al., 2003). Our analysis

showed that no general factor was present.

The next step in data analysis involved model estimation using the soft-modelling

SEM methodology Partial Least Squares (PLS Graph version 3.00). PLS has a

rigorous mathematics base, but the mathematical model is soft in that it makes no

measurement, distributional or sample size assumptions. Lohmoller (1989) notes

that it is neither the concepts nor the models nor even the estimation techniques that

are ‘soft’, only the distributional assumptions. Results are also restricted to

predictive inferences, that is, prediction not causality (Wold, 1985) because

conditions of a closed system are not met. We justify our use of PLS given our

focus on the prediction of the affective and behavioural outcome constructs as well

as a small sample size (Chin & Newstead, 1999).


Means and standard deviations of the measures of the model constructs are

presented in Table 1. Frequency analysis of the 45 items indicated no problems of

floor or ceiling effects in the measurements. Kolmogrorov-Smirnov and Shapiro-

Wilk tests showed that each indicator of the model constructs was normally

distributed. The usable response number (N597) also exceeded the recommended

minimum required for model estimation. PLS requires a minimum sample size that

equals 10 times the greater of (1) the number of items comprising the most complex

formative construct or (2) the largest number of predictors leading to an endogenous

construct (Barclay, Higgins, & Thompson, 1995). In this study, the most complex

regression involved seven predictors leading to the endogenous construct service

recovery performance, thus indicating that the minimum sample requirement for

statistical analysis is 70 usable responses.

The test of the measurement model includes the estimation of the internal

consistency and the convergent and discriminant validity of the instrument items.

The composite reliability of a block of indicators measuring a construct was assessed

with three measures – the composite reliability measure of internal consistency,

Cronbach’s alpha and average variance extracted (AVE). The internal consistency

measure is similar to Cronbach’s alpha as a measure of internal consistency except

the latter presumes, a priori, that each indicator of a construct contributes equally

(i.e. the loadings are set to unity). Cronbach’s alpha assumes parallel measures, and

represents a lower bound of composite reliability (Chin, 1998; Fornell & Larcker,

1981). The internal consistency measure, which is unaffected by scale length, is more

general than Cronbach’s alpha, but the interpretation of the values obtained is

similar and the guidelines offered by Nunnally (1978) can be adopted. All reliability

measures were above the recommended level of 0.70 (see Table 1), thus indicating

adequate internal consistency (Fornell & Bookstein, 1982; Nunnally, 1978). The

average variance extracted scores (AVE) were also above the minimum threshold of

0.5 (Chin, 1998; Fornell & Larcker, 1981) and ranged from 0.544 to 0.757 (see

Table 1). When AVE is greater than 0.50, the variance shared with a construct and its

measures is greater than error. This level was achieved for all of the model

constructs.

Convergent validity is demonstrated when items load highly (loading.0.50) on

their associated factors. Individual reflective measures are considered to be reliable if

they correlate more than 0.7 with the construct they intend to measure. In the early

stages of scale development, loading of 0.5 or 0.6 is considered acceptable if there are

additional indicators in the block for comparative purposes (Chin, 1998). In the

preliminary measurement model, the empowerment composite measure was included

in the measurement of the MCSQ construct but had a loading below the acceptable

level of 0.5 and was subsequently dropped from the MCSQ factor. One item was also

dropped from the organisational commitment construct (‘I find my values and

XYZ’s values are very similar’) due to poor measurement properties.

Table 1 shows the items belonging to the constructs for the revised measurement

model. The factor loadings indicate that the composite indicators of the MCSQ

construct are highly reliable. Although similar in magnitude, a comparison of the

loadings indicates that servant leadership is the most reliable indicator, followed by

supportive management, rewards, training and service technology support. One item

measuring service recovery performance had a loading close to the 0.50 threshold

(0.547) for the item ‘Considering all the things I do, I handle dissatisfied customers


quite well’. However, this item was retained as a measure for three reasons. First, it

was conceptually meaningful to measure service recovery performance with this item

(Boshoff & Allen, 2000). Second, service recovery performance was measured by

four other items that had high acceptable loadings. Third, this item did not have a

higher loading on any other construct in the measurement model.

Table 1. Convergent and discriminant validity of the model constructs.

Variable Factor loading

MCSQ

ic50.91 Mean53.41

a50.89 SD50.76 AVE50.67

Supportive management 0.8342

Training 0.8131

Servant leadership 0.8487

Rewards 0.8332

Service technology support 0.7650

Job satisfaction

ic50.95 Mean53.58

a50.95 SD50.82 AVE50.76

pleasant 0.8765

satisfied 0.8320

enthusiastic 0.9023

enjoyment 0.8389

like 0.8981

worthwhile 0.8700

Organisational commitment

ic50. 89 Mean53.38

a50.89 SD50.79 AVE50.68

Loyalty 0.7118

Proud 0.8513

Talk up 0.8317

Best 0.8159

Care 0.7092

Service recovery performance

ic50.85 Mean53.68

a50.74 SD50.59 AVE50.54

Handle 0.5474

Complaining 0.7761

Unresolved 0.7643

Thrill 0.8393

Most loyal 0.7293

Turnover intention

ic50.89 Mean52.57

a50.89 SD50.71 AVE50.73

Resigning 0.8678

Too much 0.7974

Another job 0.8931

Note: ‘ic’ is internal consistency measure; AVE is average variance extracted.


Adequate discriminant validity of the reflective measures was established and

evaluated by examining the cross-loadings of the constructs and measures. All

constructs in the estimated model fulfilled this condition (see Table 2). Overall, the

revised measurement model results provided support for the reliability, and

convergent and discriminant validities of the reflective measures used in the study.

Overall, the revised measurement model results provided support for the

reliability, and convergent and discriminant validities of the reflective measures used

in the study.

Results

Consistent with the distribution free, predictive approach of PLS (Wold, 1985), the

structural model was evaluated using the R-square for the dependent constructs and

the size, t-statistics and significance level of the structural path coefficients. The t-

statistics were estimated using the bootstrap resampling procedure (100 resamples).

The results of the structural model are summarised in Table 3.

The results show that without the control variables the structural model explains

23.1% of the variance in job satisfaction, 65.0% of the variance in organisational

commitment, 29.3% of the variance in service recovery performance and 47.0% of

the variance in turnover intentions. As can be seen in Table 3, MCSQ depicts a

significant positive relationship with job satisfaction and organisational commit-

ment. Thus Hypotheses 1 and 2 are supported. The path coefficients suggest that the

relative influence of MCSQ is stronger on job satisfaction than organisational

commitment. The structural model results also indicate a significant positive

relationship between job satisfaction and organisational commitment, thus

supporting Hypothesis 3. Also, at higher levels of job satisfaction and organisational

commitment, FLEs perform at higher levels in dealing with service failures.

Hypotheses 4 and 5 are also supported. Interestingly, the relative impact of job

satisfaction on service recovery performance is stronger than for organisational

commitment. In addition our findings support a significant negative relationship

between FLE turnover intentions and service recovery performance thus supporting

Hypothesis 6. Job satisfaction also has a significant negative impact on turnover

intentions, thus supporting Hypothesis 7. Finally, there is no relationship between

organisational commitment and turnover intentions. Job satisfaction does not have

an indirect affect on turnover intentions through organisational commitment. Thus,

Table 2. Correlation among reflective construct scores (square root of AVE in the diagonal).

MCSQ Job

satisfaction

Organisational

commitment

Service recovery

performance

Turnover

intentions

MCSQ 0.820

Job satisfaction 0.481 0.872

Organisational

commitment

0.523 0.791 0.825

Service recovery

performance

0.037 0.414 0.427 0.735

Turnover

intentions

20.363 20.680 20.550 20.069 0.854


even though FLEs perceive satisfaction from their jobs and show a favourable

attitude towards their workplace by responding with increased commitment to the

organisation, this does not translate in lower intentions to leave the organisation.

Hypothesis 8 is therefore not supported.

Our main findings are consistent with or without the control variables in the

model. In addition, the total effect of MCSQ on service recovery performance is .27,

which is the sum of its indirect effects through job satisfaction (.486.475.22) and

organisational commitment (.186.285.05). Hence, MCSQ exerts a stronger

influence on service recovery performance through the mediating role of job

satisfaction relative to organisational commitment.

The control variables improved the explained variance by 8.6% in service

recovery performance, 3.4% in turnover intentions, 6.8% in job satisfaction and 2.6%

in organisational commitment. The control variables jointly accounted for 11.4% of

the variability in MCSQ. However, our findings further show that with the exception

of education, none of the control variables demonstrated a statistically significant

impact on the model constructs (p,.05). Higher educated FLEs reported lower levels

of MCSQ (r52.346) indicating that educated FLEs have less favourable perceptions

of MCSQ. This negative correlation may be attributed to the fact that the majority

of educated FLEs surveyed had been working for the SOE for a short period, where

MCSQ is perceived as being relatively new. Higher educated FLEs also reported

higher levels of commitment to the organisation (r5.170) and higher levels of

performance in dealing with service failures (r5.287).

In an effort to examine fully the impact of MCSQ on service recovery

performance and turnover intentions, a further test was conducted by examining a

direct path from MCSQ to these behavioural job outcomes, in addition to the

indirect or mediated paths as shown in our conceptual model. The results of this

Table 3. Structural (inner) model results.

Proposed

effect

Path

coefficient

Observed

t-value

Sig.

levela

Effects on job satisfaction

(R-square50.231)

H1. MCSQ + +0.481 +4.4987 ****

Effects on organisational commitment

(R-square50.650)

H2. MCSQ + +0.184 +2.1730 **

H3. Job satisfaction + +0.702 +9.3661 ****

Effects on Service Recovery Performance

(R-square50.293)

H4. Job satisfaction + +0.478 2.9833 ***

H5. Organisational commitment + +0.281 +1.8734 **

H6. Turnover intentions – +0.400 +3.2710 ***

Effects on turnover intention

(R-square50.470)

H7. Job satisfaction – 20.657 26.4114 ****

H8. Organisational commitment – 20.035 20.3657 NS

a p-values: **** .001; ***,.010; **,.050. NS – not significant.


alternative model showed that the direct link between MCSQ and service recovery

performance was significant (b5.267, p,.05) while the link between MCSQ and

turnover intentions was not significant (b52.050, p..05). These findings and those

of the main PLS model suggest that MCSQ has both a direct and indirect effect on

service recovery performance. The MCSQ–service recovery performance link is

therefore partially mediated by FLE job satisfaction and organisational commit-

ment. In contrast, the non-significant direct relationship between MCSQ and

turnover intentions in the alternative model and the significant MCSQ–job

satisfaction–turnover intentions link in the main PLS model suggests that FLE job

satisfaction is a full mediator of MCSQ on turnover intentions.

Finally, we performed the Stone-Geisser test of predictive relevance to assess

model fit in PLS analysis (Geisser, 1975; Stone, 1974). Q-square is a measure of how

well the observed values are reproduced by the model and its parameter estimates. Q-

square greater than 0 implies that the model has predictive relevance, whereas Q-

square less than 0 suggests that the model lacks predictive relevance. In our main

PLS model, Q-square is 0.65 for job satisfaction, 0.43 for organisational

commitment, 0.32 for service recovery performance and 0.45 for turnover intentions.

Discussion

By using FLEs in the novel context of an SOE setting, this study examines the

underlying process through which a broad set of MCSQ variables generate affective

responses of job satisfaction (frontline employee feelings towards the job) and

organisational commitment (frontline employee feelings towards the organisation),

which in turn directly influence their service recovery performance and turnover

intentions. To our knowledge, our study is a first examining those managerial

practices important for enhancing the service recovery efforts of FLEs in SOEs, and

those managerial practices necessary for reducing FLE turnover intentions.

The present study supports studies in non-SOE settings where there is a longer

history of being commercially focused (Babakus et al., 2003; Boshoff & Allen, 2000).

There are however, some interesting differences. Our results suggest that MCSQ has

a direct beneficial effect for both job satisfaction and organisational commitment but

with the impact being significantly stronger on job satisfaction. The study results

also suggest that training, employee rewards, supportive management, servant

leadership and service technology jointly affect service recovery performance

through the partial mediating roles of FLEs’ job satisfaction and organisational

commitment. However, these MCSQ variables exert a stronger influence on service

recovery performance through job satisfaction relative to FLEs’ organisational

commitment. In addition, the MCSQ variables jointly affect FLE turnover

intentions through the mediating role of FLEs’ job satisfaction only.

The finding pertaining to the impact of MCSQ on FLE service recovery

performance through job satisfaction relative to organisation commitment is

opposite to that reported by Babakus et al. (2003) and Frederick Reichheld’s

argument that FLEs’ loyalty is more critical than their job satisfaction in delivering

excellent service (Finnie & Randall, 2002). The results of our study clearly

demonstrate that FLE job satisfaction is more important than organisational

commitment in delivering higher levels of service recovery performance. There is

indirect support for this finding in the private sector where Payne and Webber (2006)


found employee job satisfaction and not affective organisational commitment to be a

significant predictor of job performance (specifically service worker organisational

citizenship behaviour). In addition, Lee, Nam, Park and Lee (2006) found job

satisfaction and not affective organisational commitment to be a significant

predictor of role-prescribed customer service behaviour. More compelling support

can be found in the work of Kim (2005) in a study of public sector workers. This

research found that both job satisfaction and organisational commitment had a

significant impact on organisational performance but job satisfaction was a

significantly stronger predictor with more than three times the b of organisational

commitment. We suggest that these private and public sector findings demonstrate

that the SOE under study is an organisation that straddles both public and private

sectors in terms of the work attitudes of its FLEs.

Although job satisfaction has a significant influence on FLE turnover intentions,

no such relationship is evident between organisational commitment and turnover

intentions. This finding is supported by Jaramillo, Mulki and Solomon (2006) who

argue that organisational commitment becomes an insignificant predictor of

turnover intention when the effect of job satisfaction is taken into consideration

and that this is consistent with longitudinal research indicating that job

dissatisfaction causes turnover (Bretz, Boudreau, & Judge, 1994; Fields et al.,

2005). Although the literature shows that turnover intentions often reflect one’s

attitude towards the organisation and negative events within the organisation may

cause a person to leave, turnover intentions can also be influenced by the availability

of alternative jobs (Zhao et al., 2007). Given that FLEs in this study do not perceive

low levels of organisational commitment (mean53.38), the non-significant relation-

ship between organisational commitment and turnover intentions could be explained

by the largely retail-orientated customer services that form the focus of FLE work

within the SOE under study, and the abundance of alternative retail-oriented

customer service jobs that exist for these FLEs. Finally, the measurement of turnover

intention in our study could also explain the non-significant finding. One of the items

measuring turnover intentions is more specific to job search behaviour and Hom and

Griffith (1995) and Hom, Caranikas-Walker, Prussia and Griffeth (1992) have found

that job search is not a precursor to turnover intentions and that the two behaviours

may be inversely related.

Our findings suggest several guidelines for managerial action in this SOE under

study that has made the transition from public to private sector corporate

governance. MCSQ is a significant predictor of FLE job satisfaction and

organisational commitment and both affective outcomes are significant predictors

of their service recovery performance. However, given the relatively stronger impact

on service recovery performance, job satisfaction should be identified as a critical

work lever and receive priority from management in this SOE. The effect of MCSQ

on FLE turnover intentions is also transmitted through job satisfaction. Such actions

as explicitly designing and establishing organisational policies pertaining to

education/training, employee reward systems, service technology support, as well

as creating a service climate that fosters supportive management and servant

leadership behaviours should facilitate a higher job satisfaction and therefore higher

service recovery performance and lower turnover intentions. Internal marketing

within the SOE should emphasise management commitment to training, rewards,

supportive management, servant leadership and service technology simultaneously,


and communicate clear organisational policies about each. By not taking into

consideration all of these variables, managerial action to improve individual and

organisational performance may fail. Babakus et al. (2003) state that these

managerial initiatives will not be effective on their own. For example, the provision

of service technology support, training programmes and employee rewards systems

will not be effective unless they are aligned with appropriate supportive management

and servant leadership behaviours (Lytle et al., 1998; Lytle & Timmerman, 2006;

Schneider, White, & Paul, 1998). Similarly, Forrester (2000) and Hart et al. (1990)

argue that training is unlikely to produce the intended results unless reward

mechanisms are also in place.

Conclusions and future research

By expanding earlier research in private sector industries, our study investigates a

model examining the relationship between MCSQ variables and affective and

behavioural job outcomes in a former public sector government department that has

undergone corporatisation. We contribute to the extant services literature by

conceptualising and operationalising MCSQ with a more complete set of indicators

and examining a model linking MCSQ variables, affective and behavioural job

outcomes. By doing so, the study makes an important and clearly articulated

contribution to understanding the determinants of service recovery performance and

turnover intentions in a former government department that has undergone

corporatisation and has transitioned to NPM practice. To date no attention has

been given to an examination of those managerial practices critical for improving

FLE service recovery efforts and reducing turnover intentions in SOEs. Our research

addresses this paucity.

Overall, our measurement results were acceptable in terms of reliability and

validity. However, a methodological limitation should be noted in that while many

of the expected relationships have been observed here and are consistent with a

theory of causality, these relationships do not demonstrate causality, since

alternative explanations cannot be ruled out.

We make the assumption that employee self-assessment of service recovery

performance and turnover intentions provide reasonable proxies of actual service

recovery performance and turnover given that FLEs are in the best position to

evaluate behavioural job outcomes. Future research should examine actual service

recovery performance and turnover. This would entail a survey of customers with the

objective of ascertaining their views on service recovery efforts and their resultant

satisfaction, or lack of it, as well as drawing upon objective turnover data from

company records. Our results also open the door to investigate other SOEs that have

followed the corporatisation process as well as those who are in the early throws of

transitioning to a ‘NPM’ orientation.

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Appendix. Questionnaire items

Employee rewards

(1) I receive positive recognition when I excel in serving customers.

(2) We have financial incentives for service excellence.

(3) My promotion depends on the quality of service I deliver.

Staff training

(1) At XYZ, training programmes focus on how to improve service quality.

(2) At XYZ, sufficient time is allocated for training.

(3) At XYZ, sufficient money is allocated for training.

(4) At XYZ, training programmes are consistently evaluated.

(5) At XYZ, the training is useful.


Empowerment

(1) I am encouraged to handle customer problems by myself.

(2) I do not have to get management’s approval before I handle customer

problems.

(3) I am allowed to do almost anything to solve customer problems.

(4) I have control over how I solve customer problems.

Service technology support

(1) I have the necessary technology support to serve my customers effectively.

(2) We have ‘state of the art’ technology to enhance our service quality.

(3) Sufficient money is allocated for technology to support my efforts to

deliver effective service.

(4) My branch manager works hard to make our systems and processes more

customer friendly.

Supportive management

(1) My branch manager is very concerned about the welfare of those under him

or her.

(2) My branch manager is willing to listen to work-related problems.

(3) My branch manager can be relied on when things get difficult at work.

Servant leadership

(1) Management regularly communicates the importance of service quality.

(2) Management regularly spends time ‘on the floor’ with frontline staff.

(3) Management is constantly measuring service quality.

(4) Management provides leadership into creating quality service.

(5) Management provides resources, not just ‘lip service’ to enhance my ability

to provide excellent service.

(6) Management shows they care about service by constantly giving of

themselves.

Organisational commitment

(1) XYZ has earned my complete loyalty.

(2) I am proud to tell others that I work for XYZ.

(3) I find that my values and XYZ’s values are very similar.

(4) I talk up XYZ to my friends as a great organisation to work for.

(5) XYZ inspires the very best in me in the way of job performance.

(6) I really care about the future of XYZ.


Job satisfaction

(1) My job is very pleasant.

(2) I am highly satisfied with my job.

(3) I am very enthusiastic about my work.

(4) I find real enjoyment in my work.

(5) I definitely like my job.

(6) My job is very worthwhile.

Service recovery performance

(1) Considering all the things I do, I handle dissatisfied customers quite well.

(2) I do not mind dealing with complaining customers.

(3) No customer I deal with leaves with problems unresolved.

(4) Satisfying complaining customers is a great thrill to me.

(5) Complaining customers I have dealt with in the past are among today’s

most loyal customers.

Turnover intentions

(1) I never seriously think about resigning.R

(2) It would not take too much to make me resign.

(3) I will probably be looking for another job soon.

Note: Response to each item is measured on a five-point scale from 55strongly agree

to 15strongly disagree.R item reverse-scored.


The effect of management commitment to service quality on employees’ affective and performance outcomes

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