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Table of ContentsAbstract
This research paper determines the impact of Employees' Satisfaction on Customer Satisfaction. This study is based on the Standard Chartered Bank of Pakistan. In this study, the data has been collected from two different questionnaires one is for Employees' perspective and other is for Customer's perspective.
This research has been conducted in Karachi. The target population for this research is the Employee and Customer of Standard Chartered Bank. A sample size of 100 respondents of each type from various locations of Karachi which are Gulshan-e-Iqbal, Gulberg, F.B.Area, D.H.A, and S.I.T.E are collected. Chi-Square test has been used to test the hypothesis at significance level of 95%. Finally, I find through analysis that Employee Satisfaction is a Key factor for the Customer Satisfaction. It has a significant Impact on Customer Satisfaction.
Key Words: Employee Satisfaction, Customer Satisfaction.
Private Banks are playing pivotal role in mobilizing nation's savings. These banks have become the mainstream banking institutions in the country mainly, because of; public sector banks are not playing effective role due to obsolete technology and old dated infrastructure. These banks usually use traditional banking practices which are not suitable in this era of globalization led to the establishment of a handful of private banks. These banks are also failed to meet the service expectations of general public due to their inefficient operation including administrative delay, traditional technology, slow processing of transactions etc. This is one of the main reasons behind the flourish of the Private Banks' numbers within a short period of time which increase competition. Consequently, banks have taken steps to attract customers and adopted a service orientation with a focus on developing customer-employee relationship.
It is a logical approach since an overwhelmingly large proportion of bank customers in Pakistan prefer face to face banking. Taking necessary initiatives to improve the relationship between front line employees of the bank and its customers is of utmost importance in gaining a competitive advantage. Moreover, any new offering from one bank is quickly imitated by other competing banks. In such situation, customer-employee relationships could be used as an important tool for making them distinct from others.
To understand how relationships are formed, need an insight into the factors that contribute to customer satisfaction. Many companies demonstrate a very narrow view of these factors assuming that if they get their core product right and deliver it quickly and conveniently, the customer will be satisfied. As leading customer satisfaction and customer loyalty research suppliers, researcher recognize that the drivers behind customer attitudes and opinions are much more complex than that. Customer satisfaction is a mental state which results from the customer's comparison of a) expectations prior to a purchase with b) performance perceptions after a purchase.
Previous studies shows that Satisfied Employees are more productive, innovative, committed and loyal, which in turn leads to customer satisfaction, which means that employee satisfaction plays a "strong, central role" in predicting profitability and organizational effectiveness. Employee satisfaction is significantly related to service quality and to customer satisfaction, while the later in turn influences firm profitability. Many firms have enthusiastically applied the operation-centric approach and demonstrated that it is an effective means for improving organizational efficiency. Nevertheless, the impact of human resources on operational systems has often been overlooked. The importance of employee attitudes, such as job satisfaction, employee loyalty, and organizational commitment, and their impacts on operational performance have largely been neglected in the extant OM literature (Boudreau, 2004).
However, this study helps to understand the employee's satisfaction play any role or not on customer satisfaction in Private Banks in Pakistan. This study is based on bank Standard Chartered, operating their business in whole country. This is conventional (interest based) Bank. This research conduct in Karachi city, that's why all the branches for research are in Karachi. These banks are located in different area of Karachi.
Standard Chartered Bank Limited
Standard Chartered is the largest and fastest growing International Bank in Pakistan. The Bank has been operating in Pakistan since 1863 when it first established its operations in Karachi.
Standard Chartered now employees over 4,000 people and has a branch network of 162 branches across 41 cities in the country. Standard Charterer's core businesses in Pakistan are in Consumer Banking and Wholesale Banking.
There are significant benefits to be realized from trying to improve an organization's service/quality. And that's why managers devote so much time and money to training programs that "instruct" employees on the specifics of dealing with customers. What these managers don't understand, however, is that such attempts are largely cosmetic. Real improvements in customer service start with providing superior service and support to the employees themselves which manager of most companies doesn't realize. That is the big problem in Pakistan. So the problem statement is: that it is impossible to maintain a loyal customer base without a base of loyal employees.
As mentioned in the problem statement, it is impossible to maintain a loyal customer base without a base of loyal employees. Hence the main objective of this study is to find the relationship of employee and customers either satisfy employee impact or not on customer satisfaction.
Scope of study
This research will identify importance of Employee Satisfaction. The research in this area is very important because there is no trend to satisfy the employee, and to satisfy customer employer offer type of packages and services. If employer realize that for customer satisfaction they must need to satisfy there employee first they may get more profit, A study at Sears Roebuck & Co. showed that a five-point improvement in employee attitudes led to a 1.3 rise in customer satisfaction which, in turn, generated a 0.5 increase in revenues. This study is not limited to the banking industry; it helps all the private and public sector organizations.
The scope of study is not very large due to the shortage of time. I selected Karachi because it has huge population. And people belong to every part of Pakistan found in Karachi. And I can find every class of people in Karachi. I cover different areas of Karachi like, Gulshan-e-iqbal, Gulberg, F.B. Area, D.H.A and S.I.T.E.
Limitations of the Study
Some of the respondents refused to fill the questionnaires.
The responses may vary as some people did not want to come up with real answers.
Difficult to gather primary data as some of the respondents is not taking questionnaire seriously
The people were busy in their own work so they might not have given actual responses.
Limitation of time.
The survey is conducted only in few areas of Karachi; hence the results may vary in other parts of the cities.
Small sample size.
And like any other research the limitation of personal bias of respondents limits the scope of the study.
The findings are based on the survey conducted in the month of June and July; the results may not vary on the basis of months because the study is based on the behavior like satisfaction.
Employee Satisfaction can be defined as how Employee is happy on his work place which can be shown by his Loyalty and Commitment towards their organization.
Customer Satisfaction can be defined as how Customer is happy or agree to purchase the product and Services again, shown by his Loyalty and Commitment towards the Product and Services offered by the Organization.
Employee Satisfaction is crucial for any bank for its strong impact on customer perceptions of service quality and satisfaction. Dell (1991) illustrated customer-employee relationship as a state of customers' overall good feelings when they interact with sellers. Previous studies (Garbarino and Johnson, 1999, Johnson et. al. 2008, Levesque, 1996) suggest two types of customer satisfaction. Overall satisfaction, comes from multiple experiences or encounters with the firm (Bitner and Hubbert, 1994) whereas, encounter satisfaction will result from the evaluation of a single, discrete interaction. Bank customers measure their satisfaction based on a series of encounters or ongoing relationship experiences with the bank's employees. This corroborates (Storbacka et al, 1994) who argued that customers' experiences gathered from all service encounters influence their overall satisfaction. However, customer-employee interaction is more vital in some countries (e.g., the Netherlands, Italy, and Kenya) than in other parts of the world where people do not like to be involved in personal interactions (Gremler and Gwinner, 2000). In Pakistan, as personal relationships hold more influence on customers, it may be assumed that customer-employee relationships have stronger impact on customers' mind for their satisfaction than those countries where personal relationship is not an important factor.
Employees can derive satisfaction from their jobs by meeting or exceeding the emotional wants and needs they expect from their work. Therefore, Managers that can recognize this and understand the many different aspects that are involved in employee satisfaction will be successful at achieving the link between employee satisfaction, customer retention and added profitability. A substantial body of research confirms the positive association between employee and customer satisfaction (Bernhardt et al., 2000; Harter et al., 2002; Koys, 2001; Ryan et al.,1996; Tornow and Wiley, 1991).
A common characteristic of all previous research is that present available dyadic studies have mainly focused on service employees who are in direct and intense customer contact, such as salespeople (Homburg and Stock, 2004, 2005), financial service consultants (Ryan et al.,1996), or service personnel from a restaurant chain (Koys, 2001).
The concept of emotional contagion has been used in marketing research to explain the link between employee job satisfaction and customer satisfaction (Homburg and Stock, 2004; Pugh, 2001;Verbeke, 1997). According to this theory, customers catch certain emotional states of customer-contact employees which are associated with the employee's job satisfaction.
As an example (provided by Homburg and Stock, 2004), the level of experienced job stress is negatively correlated to the employee's job satisfaction. Thus, a highly dissatisfied employee will (unconsciously) exhibit a high level of emotional tension expressed through facial expressions, vocalization, and other observable behaviors. That tension will be felt by the customer and consequently will affect the customer's satisfaction via the process of emotional contagion (Wild et al.,2001). This will create cognitive tension for the customer as well, which in turn reduces the customer's satisfaction-level.
Employees create value for their organizations through the profitable relationships they create with the organization's customers. As the research has shown, loyal customers are profitable customers and loyal customers have an emotional connection with the organization, most often because of the employees at the organization. In order for employee value creation to even be a consideration, the employee must be satisfied with his or her employment situation. Satisfied and loyal employees deliver better customer service, make fewer mistakes, and maintain an emotional connection to the organization for which they work. "A series of service encounters between an employee and a customer will lead to a productive and profitable relationship only if the employee is able to achieve consistently high quality in the encounter" (Heskett, Sasser, and Schlessinger 1997).
Research conducted on Call Centre employees' and Customer shows that the private and public call centers' employee and customer relationship link to be either positively or negatively correlated. Meaning that call centers that have high employee satisfaction also have high customer satisfaction and call centers with low employee satisfaction also have low customer satisfaction. Therefore, SQM is of the strong opinion that employee satisfaction impacts customer satisfaction for both the public and private sectors. Furthermore, SQM has demonstrated that a 1% increase in employee satisfaction represents approximately a 2% improvement increase in customer satisfaction. (Mike, 2005).
Many times organizations assume that customers will become satisfied if prices and costs are simply lowered. However, much research has indicated that customers are willing to pay more for service and convenience. Employees create value for their organizations through the profitable relationships they create with the organization's customers. As the research has shown, loyal customers are profitable customers and loyal customers have an emotional connection with the organization, most often because of the employees at the organization. (Anthony, 2007).
Target population and Sources of data:
The target population in this study includes (i) front line employees and key personnel working in the customer service department of the different branches SCB located in Karachi and (ii) customers having account of any type in these banks. Primary data will be collected through two separate surveys. A questionnaire containing both structured and unstructured questions will be developed and administered through e-mail to randomly selected sample elements from the target population (i) above. A second survey would be conducted on a sample of 100 randomly selected customers of these banks from the target population (ii) above. Necessary secondary data such as annual reports, websites, newspaper reports and various other published works will also be collected from relevant sources.
The following hypothesis was developed:
Ho: Employee's Satisfaction has a significant impact on Customer Satisfaction.
The sample is based on employees and customers of Standard Chartered bank. And the size is 100 respondents of each type.
How to collect data
To collect data method of questionnaire based survey is conducted and the question is about the loyalty and commitment of employees and customers behaviors towards the bank.
The SPSS software has help us in the solution of research calculation. Chi-Square test has been used to test the hypothesis at significance level of 95%.
Analysis and Findings
The measurement factors of Employee according to the questionnaire are Job Security, Working Condition, Compensation Packages, Team Leaders, Communication level in Bank with peers and seniors, Customer services providing by the them and Training and Development from the Bank, this factors measure on the scale of satisfaction and the end result which comes in the over all satisfaction level of Employees are shown in the table 1:
Table 1 Satisfaction Level Of Employee
59 % of employees are satisfied by these all factors, 11% of the Employees are neither satisfied nor dissatisfied and 30% employees are Dissatisfied from these factors. Observation Compensation Packages is the main reasons of Dissatisfaction, and some of them are not satisfied with their Team Leaders.
Similarly the measurement factors of Customers, according to the questionnaire are Responsiveness from the front desk Employees, Products and Service Quality, Delivery of Services, Competitiveness and Technical Support from the Bank Employees, these factors also measure on the scale of satisfaction and the end result which comes in the over all satisfaction level of Customer are shown in the table 2:
Table 2 Satisfaction Level Of Customer
42% Customers are Satisfied with the Bank's overall Services, 19% of Customers are neither Satisfied nor Dissatisfied and Finally 39 % Customers are Dissatisfied. Observation shows that this ratio of Dissatisfaction is Because of Product and Service Quality and Delivery of Services.
Table 3 Satisfaction Level Of Customer * Satisfaction Level Of Employee Cross-tabulation
Satisfaction Level Of Employee
Satisfaction Level Of Customer
The Table 3 shows the overall satisfaction of Employee and Customer, 42% employee Satisfaction leads to the 59% satisfaction Of Customers, 19% neutral employee does not effect significantly and Finally 39% Dissatisfied Employees leads to the 30% Customer Dissatisfaction.
table 4 Chi-Square Tests
Asymp. Sig. (2-sided)
N of Valid Cases
The above table 4 gives the test results for the chi-square test for independence. The first row labeled Pearson Chi-Square shows that the value of Ï‡2 is 19.6837 and the degree of freedom is 4. The two-tailed p-value is shown as 0.001, which is less than 0.05, so our hypothesis is accepted and we conclude that there is significant impact of Employee's Satisfaction on Customer Satisfaction.
Keeping in view the results discussed above it can be safely concluded that there is positive association between the Employee satisfaction and Customer Satisfaction. On the basis of results generated by using SPSS software (17th version) and the test applied on it is chi-square, it is found that Satisfied Employees either front desk or not has a significant impact on Customer Satisfaction. If Employee is Satisfied with the Job, He/she would be loyal, and committed with the bank and in the result they are providing good services to their valuable Customers as they perceived, and finally Customer is Satisfied.
Recommendations and Direction for further Research
On the basis of the analysis I recommend that the researcher can be conducted in every field and specially in government sector so that we can find out the reasons of dissatisfaction of customer in this sector similarly the large number of respondent will gives the accurate finding where as the area of this research is very limited based on one city and one bank.
Following this line of thought, I also suggest that researchers examine the relationship between employee satisfaction and company's profitability. For instance, is employee satisfaction a necessary condition for Company's Profitability?