managing employees in the service sector
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MANAGING EMPLOYEES IN THE SERVICESECTOR: A LITERATURE REVIEW AND
CONCEPTUAL DEVELOPMENT
Jonathan R. AndersonUniversity of West Georgia
ABSTRACT: Our economy is slowly shifting from a manufacturing base to a
service base. Yet, management literature has been slow to respond. We know
little about the unique challenges faced by managers in the service sector. This
paper reviews literature on research on management practice and employee
perceptions that lead to positive customer outcomes. Specifically, relational
coordination efforts by a manager are suggested to lead to specific employee
behaviors that have been correlated with customer outcomes. This literature
review and conceptual development are presented here in hopes that future re-
search will take a deeper look at the challenges faced by service sector managers.
KEY WORDS: service management; customer-service employees.
INTRODUCTION
The United States Department of Labor and the Bureau of Labor
Statistics (1999) state that the service producing sector of the economy
is projected to grow by 19.1 million wage and-salary jobs between 1998
and 2008. This represents nearly 95% of total employment growth over
that period. In the later year, the service-producing sector will account
for almost three out of every four jobs in the [United States] economy
(p.1) Additionally it has been noted that the service sector now domi-
nates employment and GNP figures for the United States and, more
broadly, the economically developed world (Bowen & Hallowell, 2002).
As our economy moves from a manufacturing base to a service base,
management scholars have been slow to respond to the unique chal-
lenges faced by service sector firms (Bowen & Ford, 2002). In practice,
despite the long run of service dominance, we still find two things to be
true. One, key indicators of customer satisfaction with services confirm
Journal of Business and Psychology, Vol. 20, No. 4, Summer 2006 (2005)
DOI: 10.1007/s10869-005-9002-5
501
0889-3268/06/0600-0501/0 2005 Springer Science+Business Media, Inc.
Address correspondence to Jonathan R. Anderson, Management and Business Systems,University of West Georgia, Carrollton, GA 30118-3030. E-mail: [email protected]
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that in direct phrasing, Service stinks Second, the academic man-
agement literature still offers little in the way of comprehensive treat-
ment of the differences between managing service organizations and
managing goods-producing organizations (Bowen & Hallowell, 2002).
As the service sector grows, some have even suggested that the
quality of service in organizations is actually declining (Oliva & Sterman,
2001). Yet, as the service sector becomes the dominant sector in our
economy, it is imperative that management scholars better understandthe role of management practice in increasing employee service perfor-
mance (Bebko, 2000; Schlessinger & Heskett, 1991).
Much of the management literature focuses on the distinct nature of
managing in the manufacturing sector (Batt, 2002). Early work in sci-
entific management and human relations focused on management
practices that intend to increase employee productivity (McGregor, 1960;
Taylor, 1911). In a manufacturing setting both the design of the job
(Hackman & Oldham, 1980) and the reward systems (Skinner, 1953) candirectly influence the performance of an employee. Additionally, man-
agement behavior directly influences the production level and quality of
an employee.
A manufacturing organizations output (whatever the widget is)
will eventually end up in the hands of a customer. This customer willbuild an opinion of the organization based on the effectiveness of the
widget. If the widget works, the company is viewed as successful. The
customer may refer friends to the companys products and return formore widgets at a later time. In a manufacturing setting the quality of
the widget is a buffer between variables such as employee attitude,
employee satisfaction, employee performance, and customer perceptions
of the organization. An organization can place many control systems
between the employee and the final widget the customer holds. This is
not the case in the service sector.
Customers perceptions rather than widget quality are the drivingforce behind management practice in the service sector (Maxham &Netemeyer, 2002). Service sector firms are aware that if a customer is
satisfied with the organization, the customer will likely do business with
the firm many times in the future (Curasi & Norman, 2002). Unlike the
manufacturing firm, a service sector firms reputation is built on the
quality of service delivery, not on the quality of a widget. Therefore,
there is no buffer between an employees attitude, an employees satis-
faction, or an employees performance and the customers perception of
the organization. Key participants in any service transaction are service
employees. It is they whom customers meet on entering a department
store or boarding an aircraft. Thus, a single employee may tint a cus-
tomers image of a service enterprise (Rafaeli, 1989). This challenge is
amplified when, as is the case in many service sector firms, the customer
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interacts with an employee who works in the lowest level of the organi-
zation.
As our economy moves from a manufacturing base toward a service
base, it is essential for firms to understand the new economics of service,
[such that] frontline workers and customers need to be the center of
management concern (Heskett, Jones, Loveman, Sasser, & Schlesinger,
1994). Hesket et al. (1994) suggests that this new focus on the customer
as a measure of the bottom line will alter management practice withinorganizations.
Yet, little is known about the influence of a managers behavior on
employee outcomes and how those employee outcomes in turn influence
customer perceptions of organizational performance in a service sector
setting (Tellefsen & Nermin, 2002). Improving customer outcomes
through improved management practice relies on this triadic link.
Understanding this process of management behavior influencing em-
ployee perceptions, and employee perceptions influencing customer out-comes, is critical to improving management practice in the service sector
(Pugh, Dietz, Wiley, & Brooks, 2002). The aim of this paper is to help
scholars better understand management practice in the service sector by
addressing several research questions. First, does a managers behavior
toward an employee influence how the employee perceives the organi-zation and his or her work? Second, does the employees perception of
management and the organization influence how an employee interacts
with a customer and is a customers outcome influenced by the employ-ees perceptions of the organization? Finally, do employee perceptions
have a mediating effect between management practice and customer
outcomes? These questions will be addressed throughout this paper on
the manageremployeecustomer triad level. The intended contribution
of this paper is to identify the relationships between constructs that
provide a framework for understanding and managing employees in a
service sector setting.Organizations in the service sector work continually at building and
maintaining customer loyalty. Many service organizations spend large
sums of money as they work to create customer satisfaction with im-
proved interactions between employees and customers. Yet, it is difficult
to directly measure the influence of these programs on organizational
performance. This paper will add substance and direction to programs
that aim to increase customer outcomes through employee perceptions
and managers behaviors. If an organization intends to create better
relationships between management and employees in an effort to
increase positive customer outcomes, this paper provides a framework for
evaluating customer-service programs and their intended impact on
organizations.
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MANAGING EMPLOYEES IN THE SERVICE SECTOR
Managers in the service sector are faced with increasing challenges.
The span of control of these managers continues to grow, while the de-
mand for customer satisfaction is also on the rise. With more employees
to manage and greater demands on performance, service sector manag-
ers can easily feel restricted in their ability to develop relationships with
employees on the dyad-level. Indeed, managing employees in a servicesector setting provides unique challenges for managers, particularly if
the manager attempts to develop quality dyadic relationships with
employees. Bowen and Ford (2002) suggest that managing employees in
the service sector is different than managing employees in the manu-
facturing sector on several fronts: first, the process of delivering a service
involves the customer in the production process; second, service
employees must respond to each situation in a unique manner; third,
emotional labor is an important part of the work in a service setting;and fourth, service employees not only perform work, they are required
to manage the service delivery process. It is the human element of service
delivery that distinguishes management practice in a service setting
from management practice in a manufacturing setting. A typical em-
ployee in a service setting has direct contact with customers; this cus-tomer contact generally takes place between employees at the lowest
levels of the organization. If a service sector employee is frustrated with
the work environment, this frustration does not only influence the em-ployees performance on the manufacturing line (as it would in a man-
ufacturing setting), it can directly influence a customers perception of
the organization (Schlesinger & Heskett, 1991).
Schneider, Parkington, and Buxton (1980) saw the importance of
linking manager behavior to customer outcomes mediated by employee
performance and perceptions. The authors studied the influence of
organizational culture on employee perceptions and then linked em-ployee perceptions to customer outcomes. They collected data from 23branches of a large bank. Samples of employees and customers from each
branch were surveyed. Each employee was asked to respond to questions
about the culture of the bank, and customers were asked to respond to
questions about the banks service. Correlations between the employee
responses and the customer responses reveal that employees and cus-
tomers generally agreed on the level of service provided to the customer
by the bank; additionally, branch service orientation or service culture
(created by management) correlated with customer perceptions of overall
quality of service. This study suggests that employees can identify the
culture or service orientation of an organization (created by manage-
ment) and that a customers perception of service quality may correlate
with these employee perceptions.
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Building on this work, a series of projects studied the macro-level
relationship between organizational culture or organizational policies
and customer perceptions of organizational performance. This approach
suggests that the culture of service within the organization (created by
management) will lead to higher levels of customer satisfaction. This
relationship has been supported in studies in an insurance organization
(Schlesinger & J, 1991), 57 branches of a large bank (Johnson, 1996), a
hospital setting (Niedz, 1998), and a large retail store (Borucki & Burke,1999). These studies all suggest that a customers perception of the
quality of service is correlated with the service climate in the organiza-
tion. This research builds support for the importance of organizations
building a culture of service in an effort to increase customer satisfaction;
however, it does not speak to the process that managers should follow as
they work to improve employee perceptions and customer outcomes.
Another approach has been to address this question on the em-
ployeecustomer dyad level. That is, how do the perceptions of employeeslead to customer outcomes? In a retail banking setting, an employees
perception of obstacles in the workplace has been correlated with lower
levels of customer satisfaction (Brown & Mitchell, 1993). In a survey of
774 customeremployee transactions in the hotel, restaurant, and air-
lines industries, employee attitudes were correlated with customer out-comes (Bitner, Booms, & Mohr, 1994). In a survey of 160 offices in a
service-oriented organization empirical support was found for a positive
relationship between employee attitudes and customer satisfaction(Schmit & Allscheid, 1995). Using a qualitative approach, a positive link
was found between employee relationship building and repeat customer
satisfaction in a retail sales setting (Beatty, Mayer, Coleman, Reynolds,
& Lee, 1996). Using data from seven different service areas, three diverse
samples, and two methods of measuring a service relationship, results
suggest that a customer who was able to develop a relationship with one
customer-service person was more satisfied than a customer whorepeatedly changed customer contact employees (Gutek, Bhappu, Liao-Troth, & Cherry, 1999). Employee organizational citizenship behaviors
have been linked to higher customer outcomes (Yoon & Suh, 2003); and it
has been found that both climate variables and employee variables play a
central role in determining customer outcomes (Yoon, Beatty, & Suh,
2001). From this literature we can summarize two things. First, there
seems to be a relationship between the culture of an organization or the
policies set by management and employee perceptions of the organization
and management (Piercy, Lane, & Nikala, 2001); and second, there is a
relationship between an employees perceptions and customer outcomes
(Svensson, 2001). However, to date we do not yet understand the
relationship between a managers behavior, employee perceptions, and
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customer outcomes on the triad level. This is one large shortcoming of
current writings on management in the service sector.
MANAGERIAL BEHAVIOR
In the literature, attempts at addressing these questions have used
high-involvement management practices as a proxy for managerial
behaviors. Recent research has linked high-involvement work practices
with an employees perceptions of his or her role in the organization (Wu
& Lee, 2001). High-involvement work practices generally include at leastthree areas of management practice: high skills required by employees,employee discretion, and employee collaboration (Batt, 2002). High-
involvement work place practices are often aimed at encouraging active
employee involvement in work processes. Using high-involvement
workplace practices as a proxy for managerial behavior has allowed
studies on the organizational level to correlate policies with organiza-
tional financial outcomes (Huselid, 1995; Jackson & Schuler, 1995).
Yet, in a service setting it is important for managers to understand
which manager behaviors, not necessarily policies, will elicit in employ-
ees the behaviors that will encourage quality service performance(Humphreys, 2002; Piercy et al., 2001). The concept of relational coor-
dination seems to gather the spirit of high-involvement management
practices on the individual manager level. Relational coordination ad-
dresses the specific managerial behaviors, rather than organizational
policies, that influence the dyadic supervisorsubordinate relationship.
RELATIONAL COORDINATION
Relational coordination is a construct developed recently in the lit-
erature to conceptually identify components of the relationship betweentwo people or two groups. Relational coordination is a two component
process (Gittell, 2000, 2003). First, a manager and an employee develop a
relationship; second, they participate in different types and levels of
communication. Gittell (2003) suggests that the type of relationship an
employee shares with his or her manager consists of three sub-
dimensions: shared goals, shared knowledge, and mutual respect. Addi-
tionally, she divides communication into the frequency, timeliness, andthe problem-solving nature of the communication. These two processes
have a direct impact on employee and organizational outcomes. In her
research in the airline industry (Gittell, 2000, 2001), she links highrelational coordination to employee and team performance measures such
as gate turnaround time and the number of flights that depart on sche-
dule. Her research suggests if a manager and an employee share the same
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idea of what needs to be done and share accurate and timely communi-
cation directed toward problem solving, their relationship and their
productivity will improve. This is consistent with the tenants of exchange
theory in that employees are more likely to perceive that they have an
equal exchange with the organization and their manager if they receive
information that they believe is equal to the demands of the task (Blau,
1964).
An underlying tenant of relational coordination is that the processbegins with the manager. It is the manager that must disseminate
information throughout the organization, and it is often the manager
who sets the standard for communication between him or herself and the
employee. If an employee perceives that his or her manager is open to
developing shared goals and open communication, it is likely, that the
employee will perceive that he or she has a better relationship with the
manager and that they are better able to perform effectively as a dyad.
Relational coordination focuses on the managerial behaviors thatelicit responses from the employee. If managers attempt to garner shared
goals, knowledge, and mutual respect with their employees and they are
willing to engage in frequent, timely, and problem-solving oriented
communication with their employees, the employee will likely perceive
he or she has a higher quality relationship with the manager and in turnhigher service performance.
The two indicators of relational coordination efforts by a manager are
the degree of information sharing with the employee and the amount ofproblem-solving communication engaged in between the manager and the
employee (Gittell, 2000, 2003). Each of these components of relational
coordination can enhance the quality of the supervisorsubordinate rela-
tionship (Sorenson & Savage, 1989). Additionally, the problem-solving
orientation of the communication encourages the employee to be a part of
the process. The nature of this communication sets relational coordination
apart from the human relations era of the past (Miles & Snow, 1984). Thatis, previously human relations experts suggested that employees who arelistened to will perform better. This was the heart of the human relations
movement. Relational coordination suggests that it is not listening to an
employee that makes the difference, but actually sharing information with
them and including them in problem solving. This communication is
distinct from communication in the human relations paradigm in that a
manager actively shares information with the employee that will help
improve his or her performance on the job and vice versa.
It is the manager that must actively engage in relational coordina-
tion efforts in manageremployee dyads. It is the manager who must
share information with the employee regarding a transaction. It is the
manager who must include the employee in problem-solving oriented
communication in an effort to build a quality relationship with the
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employee and produce quality work. The level of relational coordination
efforts engaged in by the manager, namely information sharing and
problem-solving oriented communication, will positively correlate with
desirable employee outcomes.
As previously discussed, employee outcomes have been correlated
with customer outcomes in the service sector (Montes, Fuentes, &
Fernandez, 2003; Pugh et al., 2002; Yoon et al., 2001, Yoon & Suh, 2003).
Yet, understanding how relational coordination efforts by a manager willinfluence employee outcomes has not yet been developed. The discussion
that follows identifies four employee variables that are proposed to be
outcomes of relational coordination efforts by a manager. The quality of
the leader-member exchange, employee justice perceptions, self-efficacy,
and role clarity will each be discussed in turn particular to their
relationship with the relational coordination efforts of a manager.
LEADER-MEMBER EXCHANGE
Research on leader-member exchange theory began in the early 1970s
with a series of studies that focused on relationship differences betweensuperiors and subordinates dyads. Prior to this time research in this area
assumed a manager developed similar relationships with all his or her
subordinates (Dansereau, 1995). It was suggested that leaders would act
more openly toward and share more affect with those in the in-group than
those in the out-group. Research began to show that supervisors
discriminated between employees based on individual and situational
characteristics, such as how similar the subordinate was to the superior
and how much affect was shared between the superior and the subordi-
nate. These realizations encouraged researchers to move toward a dyadic
supervisor-subordinate view. Researchers began to look at each superiorand subordinate relationship as being unique. This approach was labeled
the vertical dyad linkage (VDL) (Dansereau, Graen, & Haga, 1975).
Two extensions grew from this original VDL research. First, Graen
and associates began work on the leader-member exchange perspective
(Graen, Johnson, & Orris, 1973), which considers the role of groups in
determining the outcomes of the superiorsubordinate relationship. This
perspective began to explore how and why different superior
subordinate relationships developed. It addressed questions such as how
and why the in-group and out-group members interact differently with
the leader and began to identify contextual factors that influenced the
dyadic supervisorsubordinate relationship.The second stream of research focused on a different model
forwarded by Dansereau and colleagues (Dansereau et al., 1975). They
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aimed their efforts on the antecedents and outcomes of the dyadic
relationship. Their research suggests that the dyadic relationship exists
independent of all other dyads in the organization, and it is worth
studying by itself. If a superior and a subordinate have a working rela-
tionship, it is likely that their relationship has components that are
independent of all other relationships in the organization. They term this
perspective individualized leadership (IL) (Dansereau et al., 1995).
Both streams suggest that each characteristic of the dyad is a result ofactions and perceptions of the supervisor, the employee, and the
dynamics of their relationship and work environment.
Many empirical studies have linked LMX to employee outcome
variables such as subordinate satisfaction, subordinate performance
(Graen, Novak, & Sommerkamp, 1982), career outcomes (Wakabayashi
& Graen, 1984) and decreased likelihood of turnover (Vecchio, 1982). (For
meta-analyses see Gerstner & Day, 1997).
This literature suggests that each relationship between a supervi-sor and an employee has unique features that are worth studying. The
quality of a leader-member exchange has correlated with a number of
employee and supervisor behaviors in a variety of settings (Graen &
Uhlbien, 1995). Yet research has not addressed specific manager
behaviors that lead to an employees perception of the quality of theleader-member exchange. Relational coordination efforts by a manger
seem to begin to fill this gap. As manageremployee dyads share
information and engage in problem-solving oriented discussions, therelationship between the two individuals will begin to change (Kacmar,
Witt, Zivnuska, & Gully, 2003). As managers share information with
employees, the employees will see their managers as helpful and
interested in the employees success. Additionally, as the manager
engages in problem-solving oriented communication with the employee,
the employee will see the manager as a team player and as a helpful
resource. This relationship will develop largely on the degree to whichthe manager engages in relational coordination efforts with theemployee.
The opposite can also be true, if a manager withholds information or
does not engage the employee in problem-solving oriented communica-
tion, the employee will see the manager as a hindrance to performance
rather than a team player. Therefore, it is suggested that the degree of
relational coordination efforts engaged in by the manager will positively
correlate with the employees perception of the quality of the leader-
member exchange.
Proposition 1A: Relational coordination efforts by a manger will
lead to the quality of leader-member exchange perceived by the
employee.
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JUSTICE
In addition to the quality of the leader-member exchange, an
employees perception of justice in the organization is thought to be an
outcome of the relational coordination efforts of the manager. Organi-
zational justice has received substantial attention in recent management
literature (Folger & Cropanzano, 1998). Organizational justice is rooted
in the theories of cognitive dissonance (Festinger, 1957) and socialexchange (Blau, 1964). Cognitive dissonance theory suggests that indi-
viduals need to reconcile their thoughts, perceptions, and actions. It
suggests that if there is a discrepancy between what someone thinks and
does, or between how someone thinks they should be treated and how
they are treated, this discrepancy will cause cognitive dissonance in the
individuals mind. This cognitive dissonance can be a motivating force for
action within an individual (Festinger, 1957). Social exchange theory
recognizes this and suggests that a perceived inequality in a socialexchange can be a source of cognitive dissonance within an individuals
cognitive processes (Adams, 1965; Blau, 1964).
The policies, processes and actions of managers within an organi-
zation can influence an individuals perception of dissonance and equity
in the workplace (Folger et al., 1998). Authors built on this concept tosuggest that individuals in workplace settings do not have a set standard
for comparison, but compare their standing to others in the organization
and use that as a basis for consistency or dissonance in their mentalprocesses (Adams, 1965). This perception of equity that one employee
develops based on how they are treated compared to similar others in the
organization is the basis for the organizational justice perspective
(Adams, 1965; Folger and Cropanzano, 1998).
Many extensions of this organizational justice perspective have ap-
peared in the literature. Authors have suggested that relative deprivation
can be viewed as a source of both distributive (concerning the amount ofrewards given an individual), procedural (the process of selecting how todistribute rewards) justice, and interactional justice (fairness in the
manageremployee relationship (Skarlicki & Folger, 1997).
An employees perception of justice in the workplace can impact his
or her behavior. One author found that an employees perception of
procedural justice was negatively correlated with employee theft within a
manufacturing facility (Greenberg, 1990). Skarlicki and Folger (1997)
also found that an employees perception of justice in the workplace was
correlated with the likelihood of employee retaliation. This and other
findings suggest that an employees perception of justice in the workplace
influence his or her behavior.
Recent research in organizational justice suggests that organizations
may develop justice cultures. Similar to a service culture, organizations
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can have a culture based on treating employees fairly or not. It may be that
organizational justice is not necessarily the individual level variable it has
been conceptualized as, but may be more of a social contextual variable
(Naumann & Bennett, 2000, 2002). Additionally, research has shown that
this aggregate perception of justice can influence organizational perfor-
mance (Scandura, 1999; Simons & Roberson, 2003). Yet even within
organizational climates, managers can influence organizational justice
perceptions on the dyadic level (Scandura, 1999). Therefore, it is suggestedthat relational coordination efforts by a manager will lead to more infor-
mation sharing and more problem-solving oriented communication
between the employee and the manager. This in turn will lead to higher
justice perceptions by the employee. This is not to say that the employee
will agree with everything the manager says or does, but the employee will
perceive that the process of decisions and the interactions are fairer than
they would be otherwise. It seems that the information flow between the
manager and the employee and the level of problem-solving orientedcommunication they engage in will positively influence the justice per-
ceptions of the employee. It is suggested that the relational coordination
efforts of the manager will positively correlate with the justice perceptions
of the employee.
Proposition 1B: Relational coordination efforts by a manager will
lead to employee perceptions of justice.
SELF-EFFICACY
Each employee in an organization has a certain perception of his or
her ability to perform a given task. An employees confidence in his or her
ability to perform a task can influence the employees performance(Bandura, 1977, 1982). The concept of self-efficacy, or an individuals
belief in his or her ability to perform a task (Gist & Mitchell, 1992), has
long been of interest to researchers in cognitive psychology and
management (Bandura, 1986). Self-efficacy plays a large role in personal
agency or the actions an individual selects to perform. Self-efficacy also is
a direct antecedent to the likelihood of attempting an action and a direct
antecedent to performance (Bandura, 1991).An employees self-efficacy has been linked to performance (Harrison,
Rainer, Hochwarter, & Thompson, 1997), sales volume (Bagozzi, 1978),
hope, optimism (Carifio & Rhodes, 2002), burnout (Salanova, Peiro, &
Schaufeli, 2002) and other employee outcomes. However, tests of the
self-efficacy performance relationship in actual job settings remain limited
(Harrison et al., 1997).
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Bandura (2001) suggests that there has been a paradigm shift in the
way that human decision and control is viewed in the literature. He
suggests that psychology is beginning to understand that human agency
plays a larger role in human behavior than previously considered.
Accordingly, if human decisions are based more on an individuals per-
ceptions than on rewards and punishments as previously considered
(Kreitner & Luthans, 1984), self-efficacy can play a large role in deter-
mining how effectively and efficiently an employee completes his or herwork. If an employee has high levels of self-efficacy, it is likely that the
employee will perform at a higher level. Also this self-efficacy is based
partially on the information the employee has about the task to be per-
formed and the employees ability to handle problems as they arise
(Bandura, 2001).
If a manager engages an employee in problem-solving oriented
communication, the employee will likely learn through the problem-
solving process. As the employee learns how to better handle problems asthey arise with transactions, the employee will likely feel that he or she
is better able to perform the tasks required by the job. Additionally, as an
employee receives information from the manager concerning the work to
be completed, this information will help the employees confidence in his
or her ability to perform the task. Therefore, it is here suggested thatrelational coordination efforts by a manager (information sharing and
problem-solving oriented communication) will positively correlate with
an employees level of task specific self-efficacy.
Proposition 1C: Relational coordination efforts by a manager will
lead to an employees task specific self-efficacy.
ROLE CLARITY
Like self-efficacy, role clarity is an individual level variable that has
received attention as an antecedent to employee behaviors (Bray &
Brawley, 2002a, b). Banduras (1977, 1982) original work on the social
learning and social cognitive theories suggests that the more clearly an
employee perceives the responsibilities they are expected to accomplish,
the more likely they will put forth the effort to perform. A role is definedas a pattern of behaviors (Tubre & Collins, 2000, p. 155) while role
clarity is a situation in which the expected behaviors designated for a
role are clear (Tubre & Collins, 2000). Low role clarity has been found to
magnify the relationship between high job demands and stress, high job
control and stress (Bliese & Castro, 2000), and role efficacy and perfor-
mance (Bray & Brawley, 2002a, b). Low role clarity has also been linked
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to tension (Jackson & Schuler, 1985) and low job performance (Tubre &
Collins, 2000).
Research in role clarity suggests that it is a critical component in
individual and team performance (Bray & Brawley, 2000, 2002a, b). In a
service setting as managers share information with employees and en-
gage them in problem-solving oriented communication, it is likely that
the employee will perceive that he or she has a better understanding of
his or her role in the work of the organization. The information theemployee receives and the problem-solving oriented communication the
employee engages in with the manager will help clarify for the employee
what he or she is supposed to do. A clear understanding of the nature and
responsibilities concerning the task, received from information sharing
and communication from the manager, will help the employee see how
his or her role fits into the larger picture of the organization. Therefore,
relational coordination efforts by a manager are likely to increase the
role clarity of an employee.
Proposition 1D: Relational coordination efforts by a manager will
lead to an employees perception of his or her role clarity.
These four variables: the quality of the leader-member exchange,perceptions of justice, self-efficacy, and role clarity are all thought to be
outcomes of relational coordination efforts engaged in by the manager. If
the manager is willing to share information with an employee and en-
gage in problem-solving oriented communication with him or her, the
employees positive perceptions of his or her relationship with the man-ager and the organization will increase. Yet, for this relationship to
influence firm performance in the service sector, it is critical for man-
ageremployee relationship to link to customer outcomes. Next, I will
discuss how each of the above employee perceptions link to desirable
customer outcomes.
EMPLOYEECUSTOMER LINKAGES
As organizations adapt into the service sector, a better under-
standing of how to manage employees who provide service directly to the
customer will be increasingly important (Chu, 2002). In fact, as discussedabove, in the service sector a customers perception of the organization
can be a direct result of the customers perception of the employee
(Beatty et al., 1996; Bitner et al., 1994; Griffith, 2001). A customers
willingness to do business with the organization, his or her satisfaction
with the business experience, as well as his or her willingness to speak
highly of the firm to others can directly influence the firms ability to
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retain current and attract new customers (Curasi, & Norman, 2002;
Johnson, Boles, & James, 2001). In a literal sense, customer perceptions
of an organization may become a good measure of firm performance
(Heskett et al., 1994; Heskett, Sasser, & Schlesinger, 1997, 2003). As we
move toward a service economy, customer outcomes will become a good
intermediate-level measure of the viability and success of an organiza-
tion (Lee, Yoo, & Dongkeun, 2000). In a service setting the customer
deals directly with a lower-level employee and the employees percep-tions of the organization will influence this relationship.
Specific employee perceptions may influence how a customer per-
ceives the transaction and the organization as a whole (Liu & Mark,
2001; Palmer & Martin, 2003). The employee perceptions listed above are
thought to influence customer outcomes (Lassk, Cravens, Moncrief, &
William, 2001). Each of these relationships is discussed below.
LEADER-MEMBER EXCHANGE AND CUSTOMER OUTCOMES
One consistent finding in the leader-member exchange literature is
that the employees perception of the quality of the relationship is a good
predictor of work outcomes (Liden, Wayne, & Sparrowe, 2000; Wayne,
Shore, & Liden, 1997). Additionally, the quality of supervision experi-
enced by an employee has been linked to customer outcomes (Griffith,
2001). In a service context as an employee deals directly with a customer,
small changes in the relationship between a manager and an employee
can influence the interaction between the employee and the customer.
If an employee has a positive relationship with his or her manager,
the employee will likely carry this relationship on to the customer. If an
employee feels comfortable discussing problems with his or her manager
and is engaged by the manager in information sharing, the employee will
likely engage in these same behaviors with the customers he or she deals
with. These employeecustomer relationships will directly influence thecustomers perception of the employee and the organization as a whole.
On the other hand, if an employee perceives that he or she has a low
quality relationship with his or her supervisor, the employee may man-
ifest the negative outcomes from that poor relationship in the manner inwhich the employee treats customers. Frustration, dissatisfaction and
the uncomfortable feelings that are often associated with an uncom-
fortable manageremployee relationship may cause the employee to treat
the customer with less respect and may cause the employee to pay less
attention to the details of the transaction. These employee behaviors will
in turn lower desirable customer outcomes.
Proposition 2A: An employees perception of the quality of leader-
member exchange will lead to customer outcomes.
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JUSTICE AND CUSTOMER OUTCOMES
Justice perceptions of an employee have been linked to outcomes on
the organizational (Simons & Roberson, 2003), climate (Naumann &
Bennett, 2000), group (Naumann & Bennett, 2002), manageremployee
dyad (Scandura, 1999), and individual (Cheng, Jiang, & Riley, 2003;
Fields, Pang, & Chiu, 2000) levels. An employees perception of justice
can influence employee productivity, counterproductive employeebehaviors, organizational citizenship behaviors and other employee
outcomes variables (Cohen-Charash & Spector, 2001). Similarly, a cus-
tomers perception of justice in the transaction process has been associ-
ated with customer outcomes (Maxham & Netemeyer, 2002, 2003). Yet
the explicit link between an employees perceptions of justice in the
organization and customer outcomes is still underdeveloped.
As employees develop perceptions of the organization, justice theory
suggests that these perceptions are based on at least three foci: theprocesses within the organization (procedural justice), the interactions
between employees in the organization (interactional justice), and the
distribution of rewards and punishments throughout the organization
(Moorman, Blakely, & Niehoff, 1998; Niehoff & Moorman, 1993). If an
employee perceives that the organization is treating him fairly, it islikely that the employee will feel some obligation to put forth quality
work for the organization. In a service context, this suggests that the
employee would work to provide better service to the customer. Theopposite would also be true. If an employee perceives that the organi-
zation and his or her direct manager is not dealing justly with him or her
self, this perception will lead the employee to perform a lower quality of
service toward the customer and in turn lower customer outcomes.
Therefore, it is suggested that an employees perception of justice in the
organization will positively correlate with customer outcomes.
Proposition 2B: An employees perception of justice will lead to
customer outcomes
SELF-EFFICACY AND CUSTOMER OUTCOMES
An employees perception of his or her ability to perform a given
task, or level of self-efficacy has been correlated with many employee
level variables such as learning (Martocchio & Judge, 1997), job perfor-
mance (Prussia, Anderson, & Manz, 1998), job satisfaction (Gardner &Pierce, 1998; Prussia et al., 1998), sales performance (Krishnan, Boles, &
James, 2002), workplace attitudes (ONeill & Mone, 1998), work-related
stress (Jimmieson, 2000), equity, and burnout (Van Yperen, 1998). In
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many cases it has been used as a mediating variable between previously
connected individual-level variables (Staples, Hulland, & Higgins, 1999).
Several attempts have been made at linking employee perceptions of
self-efficacy to customer outcomes (Hartline & Ferrell, 1996; Hartline,
Maxham, & McKee, 2000; Susskind, 2000; Waldersee & Luthans, 1994).
However, it seems that self-efficacy is a necessary but not sufficient
condition to motivate an employee to perform quality customer service.
As an employee goes about his or her business in a service sectororganization, the confidence the employee has in his or her ability to
perform the tasks required will directly influence the work done. As the
relationships above suggest, an employees self-efficacy directly influ-
ences his or her performance. This relationship is critical to investigate
in service sector organizations. As customer outcomes are critical to a
service firms success, an employees self-efficacy is a critical component
in developing positive customer outcomes. If an employee has a high level
of task specific self-efficacy, the employee will manage his or her rela-tionship with a customer smoothly. The employee will have the confi-
dence to work smoothly through challenges or obstacles that occur
throughout the transaction. The opposite is also true. If an employee has
a low level of self-efficacy, the employee will likely be uncomfortable
managing the transaction and as obstacles arise, the employee may notrespond as quickly or as clearly to the customer. If an employee lacks the
confidence needed to perform a task, the customer will likely become
frustrated with the employees inability to perform. Therefore, it issuggested that the employees level of self-efficacy will positively corre-
late with customer outcomes. Yet it is recognized that self-efficacy alone
is not a sufficient condition for producing high levels of customer-service
quality by an employee.
Proposition 2C: Employee task-specific self-efficacy will lead to
customer outcomes.
ROLE CLARITY AND CUSTOMER OUTCOMES
Role clarity has been correlated with many employee perceptions
such as higher order need fulfillment (Teas, Wacker, & Hughes, 1979),
social network position (Morrison, 2002), proactive information seeking
(Morrison, 1993), work demands, work support (Bliese & Castro, 2000),
and role performance (Bray & Brawley, 2002a; Tubre & Collins, 2000). Itseems the more clearly an employee understands his or her role in the
organization, the better they will fit socially and the better they will be
able to perform.
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In a service sector setting, an employees ability to understand how
the employee fits into the firm is critical to quality service delivery and
desirable customer outcomes. If an employee understands what his or
her role is in the organization, it is likely that the employee will be able
to answer questions put forth by customers. An employee who has high
role clarity will be comfortable in filling his or her position in the
organization and this comfort will correlate with desirable customer
outcomes.The opposite is also true. If an employee does not understand his or
her role, the employee will not feel comfortable answering customer
questions. The customer may see or hear the employee face questions or
requests with uncertainty. The employee will be less able to directly
answer questions or give guidance to the customer. This lack of clarity in
the employee will cause the customer to question the organization and
the employee. Therefore, it is suggested that an employees level of role
clarity will positively correlate with customer outcomes.
Proposition 2D: An employees role clarity will lead to customer
outcomes.
CUSTOMER OUTCOMES
Many customer outcomes have been identified and studied in the
literature. Several authors correlated the level of involvement that a
customer had in the transaction process influenced the customers
satisfaction with the transaction (Goodman, Fichman, Lerch, & Snyder,
1995). Maxham and Netemeyer (2003) found that an employees
perception of organizational justice in the workplace and shared values
with the organization lead to the customer a customers willingness toperform extra-role behaviors, satisfaction with the transaction,
willingness to discuss the product with others and purchase intent.
Additionally, Maxham and Netemeyer (2002) found that positive
perceptions of satisfaction with the organization, likelihood of positive
speaking about the firm, and repurchase intent all decreased with
failed service attempts. As firms continually rely on service sector
business to improve their bottom lines, it seems that customeroutcomes, as they relate to a given transaction with an organization,
will become more relevant to management practice and firm perfor-
mance. Customer variables of particular interest to firm performance
are: overall satisfaction with the firm, favorable word of mouth (or
willingness to speak highly of the firm), and purchase intent (Maxham
& Netemeyer, 2002, 2003).
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MODERATORS IN THE MODEL
Like most conceptual relationships in management, the propositions
stated above are likely to be found only under certain conditions. First,
the transfer effect of relational coordination efforts by a manager to
perceptions of an employee is more likely to take place if the manager is
intelligent, able, and motivated. Similarly, the longer a manager has been
in a supervisory position the more likely the manager will be to find valuein communication and quality relationship-dyads. For these reasons, the
above variables serve as moderators in the relationship between rela-
tional coordination efforts by a manager and employee perceptions.
Additionally, the transfer effect of employee perceptions of the organi-
zation into quality customer-service behaviors will depend on the intel-
ligence, ability, and motivation of the employee. Tenure is also a
consideration. The longer an employee has been in the service sector the
more exposure the employee will have to the customer-service process andthe more likely the employee will be to understand and value behaviors
that produce high-levels of customer satisfaction. Indeed employee
intelligence, ability, motivation, and tenure will moderate the relation-
ship between employee perceptions and customer outcomes, such that the
higher each of these variables is the more likely employee perceptions willtranslate into quality customer-service employee performance. Intelli-
gent, able, motivated and experienced supervisors and employees provide
a clear channel of communication to transfer behaviors and perceptionsfrom the manager through the employee to the customer (Figure 1).
SUMMARY AND CONTRIBUTION
The contribution of this paper is to provide a theoretical framework
for future research on management practices in the service sector,
SupervisorRelational Coordination
Employee
Leader-MemberExchange
Justice
Self-Efficacy
Role Clarity
Customer
Complete Transaction
Satisfaction
Reciprocity
Moderators:Supervisor Tenure,Intelligence, Ability
and Motivation
Moderators:Employee Tenure,Intelligence, Ability
and Motivation
Figure 1
Conceptual Model
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particularly the relationship between management practice, employee
perceptions, and customer outcomes. Specifically I suggest that a man-
agers relational coordination efforts will positively correlate with an
employees perception of the quality of the leader-member exchange,
justice, self-efficacy, and role clarity. Additionally it has been suggested
that these employee perceptions will positively correlate with the cus-
tomer outcomes of satisfaction, willingness to speak favorably about the
firm, and willingness to do business with the firm. Finally it is suggestedthat the managers behavior will lead to customer outcomes mediated by
an employees perception of the quality of the leader-member exchange,
justice, self-efficacy, and role clarity. This framework provides a review of
literature and conceptual development for future research in managing
service sector employees. It is presented here in hopes that future re-
search in the management literature will focus on the distinct nature of
managing employees in the service sector.
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