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The impact of employee satisfaction on quality and profitability in high‐contact service industries
Author(s) -
Yee Rachel W.Y.,
Yeung Andy C.L.,
Cheng T.C. Edwin
Publication year - 2008
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2008.01.001
Subject(s) - profitability index , customer satisfaction , business , service quality , marketing , customer retention , job satisfaction , extant taxon , empirical research , tertiary sector of the economy , service (business) , economics , management , finance , evolutionary biology , biology , philosophy , epistemology
The extant operations management literature has extensively investigated the associations among quality, customer satisfaction, and firm profitability. However, the influence of employee attributes on these performance dimensions has rarely been examined. In this study we investigate the impact of employee satisfaction on operational performance in high‐contact service industries. Based on an empirical study of 206 service shops in Hong Kong, we examined the hypothesized relationships among employee satisfaction, service quality, customer satisfaction, and firm profitability. Using structural equations modeling, we found that employee satisfaction is significantly related to service quality and to customer satisfaction, while the latter in turn influences firm profitability. We also found that firm profitability has a moderate non‐recursive effect on employee satisfaction, leading to a “satisfaction–quality–profit cycle”. Our empirical investigation suggests that employee satisfaction is an important consideration for operations managers to boost service quality and customer satisfaction. We provide empirical evidence that employee satisfaction plays a significant role in enhancing the operational performance of organizations in the high‐contact service sector.