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MSQ 17,5

Achieving long-term customer satisfaction through organizational culture


Evidence from the health care sector
Victoria Bellou
University of Macedonia, Thessaloniki, Greece
Abstract
Purpose Customer satisfaction is becoming increasingly important for organisational survival, let alone prosperity. In this context, this study seeks to examine the impact of cultural dimensions on the customer service orientation of employees and recognize potential variations between the perceptions of managerial and non-managerial employees regarding the aforementioned relationship. Design/methodology/approach The study took place in 20 Greek public hospitals, where 749 usable questionnaires were gathered from front-line employees. The questionnaire responses were analysed using descriptive statistics, t-tests, and regression analyses. Findings Findings provide insight into the perceptions of front-line employees regarding the effect that organisational culture dimensions have on customer service orientation. Some effects were uniform for all employees, while others varied depending upon the position occupied by the employee. Other than aggressiveness, decisiveness, and innovativeness that affect all employees, eagerness to identify and full customer needs is inuenced by age and tenure in the case of managers whereas it is affected by emphasis on rewards and outcome orientation in the case of non-managers. Research limitations/implications Owing to the fact that all variables depict employees perceptions, common method variance is likely to exist. Moreover, the strength of cultural traits was not taken into consideration. Practical implications Developing a culture which fosters customer satisfaction can provide a competitive advantage to the organisation. It is, thus, critical for organisational agents not only to have a clear view of the existing culture but also to shape it in such a way that emphasizes customers needs and priorities. Originality/value This is one of the rst comparisons between managers and non-managers, regarding customer service orientation antecedents, and it suggests that convincing all employees to put customer needs rst requires different approaches in different segments of the workforce. Keywords Organizational culture, Customer services quality, Customer satisfaction, Hospitals, Greece Paper type Research paper

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Managing Service Quality Vol. 17 No. 5, 2007 pp. 510-522 q Emerald Group Publishing Limited 0960-4529 DOI 10.1108/09604520710817334

Introduction Porter (1985) suggested that a competitive advantage exists when an organisation maintains an edge over its rivals in retaining customers and in positioning itself to take advantage of environmental changes. Under these circumstances, successful service organisations realize the importance of carefully monitoring and managing of customer satisfaction (Bitner et al., 1994). Satisfaction is an overall customer attitude towards a service provider (Levesque and McDougall, 1996, p. 14) or according to Zineldin (2000) an emotional reaction to the difference between what customers anticipate and what they receive. When customers

are satised, they are more likely to return, while dissatised customers are more likely to go elsewhere (Heskett et al., 1994; Strauss et al., 2001; Zairi, 2000). Since, customer satisfaction is strongly inuenced by the interaction between customers and employees (Boshoff and Tait, 1996), examining employee behaviour is critical. Employee behaviour, though, is strongly inuenced by the operating organisational culture (Chow et al., 2002; Ferris et al., 1998; Pratt and Beaulieu, 1992; Schein, 1996), a system of shared values and beliefs that produces norms of behaviour and establishes an organisational way of life (Koberg and Chusmir, 1987, p. 397). Where the existing literature relates organisational culture and customer satisfaction, those links are either theoretical or indirect (Gowing and Lindholm, 2002; Gupta et al., 2005). Against this background, this study aims to explore the way that culture relates to customer satisfaction in a service setting, based on front-line employees perceptions. However, Darby et al.s (1997) concluded that customer service orientation correlates positively with different measures of customer satisfaction, and consequently it is assumed in this paper that the degree to which front-line employees are oriented towards customer satisfaction is an indicative measure of customer satisfaction. Moreover, since there is some evidence of differences between employees holding managerial and non-managerial positions in terms of organisational culture (Darby and Daniel, 1999; Schneider et al., 1998) and customer service orientation (Babin and Boles, 1996; Martin and Fraser, 2002), this study looked for possible variations in the effect that organisational culture has on customer service orientation, based on job position. Literature review Customer satisfaction in service industries To survive in highly competitive markets, organisations need to provide services that yield highly satised and loyal customers (Westbrook and Oliver, 1991). As Nagel and Cilliers (1990, p. 4) claimed, customer satisfaction is currently the new standard by which customers are measuring business performance. Satised customers are more inclined to be loyal, producing several benets for organisations (Asif and Sargeant, 2000; Hansemark and Albinsson, 2004; Reichheld and Sasser, 1990). First, repeat business generates income. Second, it limits costs related to acquiring new customers, such as advertising, promotion and start-up activities. Third, satised customers often spread the good news and recommend products and services to others. Consequently, customer satisfaction is considered to be a key to organisational survival (Jones and Sasser, 1995), as well as increased market share (Rust et al., 1992) and protability (Heskett et al., 1994). All organisations are faced with the challenge of identifying the critical factors that determine customer satisfaction and loyalty (McDougall and Levesque, 1992). Nevertheless, the service industry has several particularities that need to be taken into account. Services are more or less intangible, their production and consumption are inseparable, customers are at least to some extent active participants in their production process while service production and consumption are simultaneous nroos, 1982, 1988). Moreover, due to the fact that the production process of (Gro services involves employee-customer interaction, it is hard to ensure consistency and reliability (Haysa and Hill, 2000; Jun et al., 1998). For all these reasons, customers perception of the service experience is frequently the only way accurately to estimate quality level of services provided (Babakus and Mangold, 1992).

Long-term customer satisfaction 511

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According to Rust et al.s (1996), customer service is all about perceptions. A service cannot be tested before it is sold, it cannot be stored, returned or exchanged. As a result, customers perceptions of care experience and interpretation of it is what nroos, 2001; Ross, 1995). This is probably the reason why the matters the most (Gro argument that customers are greatly inuenced by their interaction with employees when assessing services provided is gaining increased recognition within the services industry (Boshoff and Tait, 1996). Customer service orientation and customer satisfaction Deshpande et al.s (1993, p. 27) dened customer orientation as:
. . . the set of beliefs that put the customers interest rst, while not excluding those of other stakeholders such as owners, managers and employees, in order to develop a long-term protable enterprise.

Adjusting this approach to front-line service providers in a hospital setting, Daniel and Darby (1997) referred to service providers ability to adjust their service, in order to take patients reality into account. Customer orientation is primarily concerned with the welfare of customers, emphasizing listening to the voice of the customers and delivering solutions based on their best interest and wants (Slater and Narver, 1994). In recent years, several researchers have suggested that organisations focusing their activities on the needs of their customers perform better than those companies that do not, are more likely to accomplish long-term goals and increased nancial performance (Homburg et al., 2002; Gilmore and Carson, 1995; Jaworski and Kohli, 1993; Lytle and Timmerman, 2006; Narver and Slater, 1990). According to Darby et al.s (1997), the degree of customer satisfaction can be specied through the extent to which employees display customer service orientation. Therefore, the present study adopts customer service orientation as a means for gaining insight into customer satisfaction. Moreover, Hartline and Ferrell (1996) suggested that the extent to which employees are oriented towards customer needs is dependent upon the management-employee interface, determined by the operating organisation culture. Organisational culture Schein (1980, p. 111) dened culture as:
. . . a pattern of basic assumptions that a group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.

Subsequent common culture denitions refer to a set of cognitions shared by members of a social unit (OReilly et al., 1991, p. 491) and a unique amalgam of symbols, organisational values, attitude and behaviour patterns, associated practices, and ways of conducting business, creating a distinct entity (Butler et al., 1991; Marcoulides and Heck, 1993), placing more emphasis on values and behavioural patterns which can be safely examined in a quantitative way (Lim, 1995). The type of culture may be decisive for organisations ability to serve its customers. For example, organisations with a humanistic culture value their members by

displaying concern for their well-being, growth, and development and stress the need for cooperation. Such a culture is more effective than one that emphasizes power, control and competition (Cooke and Rousseau, 1988; Wilkins and Ouchi, 1983). As Kotter and Heskett (1992) proposed, employees in humanistic settings are more likely to be satised and loyal and hence willing to contribute to their organisation. In this way, employees are willing to get actively involved in their organisations, support major initiatives and changes (Rousseau, 1990) and become enthusiastic about providing customers with services of high quality (Gittell, 2002; Schneider and Bowen, 1995). Consequently, the expectation is that organisational culture will impact on customer service orientation. Previous literature suggests variations between employees perceptions regarding the desirable form of organisational culture, based on whether they hold a managerial or a non-managerial position (Schneider et al., 1998). Such variations could be attributed to their different role within the organisation. For instance, non-managerial employees are the ones offering services directly to the customers whereas managerial employees are only indirectly linked to those services, by encouraging and supporting the non-managerial employees. Furthermore, employees in managerial positions deal with more pressure and a greater number of competing demands. They are often required to make decisions on their own, are held responsible for their subordinates performance and need to respond in a timely manner to problems that arise (Martin and Fraser, 2002). It is thus likely that employees perceive the organisational reality, aims and priorities in different ways, based on the characteristics of their job position. Therefore, the anticipation is that front-line employees will perceive the effect of organisational culture on customer service orientation in a different way, based on their job position. Methodology Sample and procedure Because researchers cannot easily access employee databases in Greece, this study employed a personal questionnaire administered to employees. For this reason, 1,000 questionnaires were randomly distributed in 20 public hospitals, dispersed around major Greek cities. Only rst line personnel (doctors, nurses and front-line administrative staff) were included in the study, as their behaviour would seem to be decisive for customers views of the service quality rendered (Darby, 1999). About 762 (76.2 per cent) questionnaires were returned, with 749 (74.9 per cent) being fully and correctly completed. About 62.8 per cent of the respondents were female and 71.4 per cent were between the age of 25 and 44. Moreover, 35.2 per cent were doctors (university, specialist, and trainee), 45.6 per cent were nurses (with university or college education) and the rest were employed in administrative positions. In terms of tenure, 67.5 per cent had been working in the same working position for more than six years. Finally, 78.4 per cent had permanent employment contracts and 43.8 per cent had subordinates. Measures Organisational culture. The most widely known instruments for measuring organisational culture are the organisational culture inventory (OCI) (Cooke and Lafferty, 1989), the competing values model (Quinn and Rohrbaugh, 1983), and the organisational culture prole (OCP) (OReilly et al., 1991).

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Xenikou and Furnham (1996) reported the OCI as the most internally reliable instrument. In terms of this study, however, OCP was preferred over OCI due to its relatively small size (54 items compared with 120 items) as well as the fact that all of its dimensions clearly relate to service quality and customer satisfaction (aggressiveness, outcome orientation, team orientation, decisiveness, attention to detail, innovation, supportiveness, and emphasis on reward). OCP includes 54 questions, asking employees to rate the extent to which the employing organisation emphasizes certain values and norms. Items cover a range of organisational characteristics, including exibility, team orientation, fairness, taking the initiative, praise for good performance, social responsibility, and competitiveness. Cronbachs a for the overall scale was 0.94 while the values for the subscales appear in Table I. Customer service orientation Six items developed by Ashill et al.s (2005) were used to measure employee perceptions regarding customer service orientation. Sample items included This hospital measures patient satisfaction on a regular basis, This hospital is totally committed to serving its patients well, and A reputation for good service is stressed in my hospital. Cronbachs a for the scale was 0.75. Control variables In addition to job position, age, gender, and tenure were also examined as control variables, in an attempt to rule out possible inuences on the relationships examined. Findings and discussions Descriptive statistics for the dimensions of organisational culture, customer service orientation and control variables are presented in Table I. It can be seen that the mean scores for cultural dimensions vary between 2.53 and 3.16, decisiveness being the least prominent and aggressiveness the most prominent characteristics of organisational culture in Greek public hospitals. Greek public hospitals seem to underestimate the importance of attention to detail, outcome orientation, team orientation and decisiveness, as there are not among the key priorities for front-line employees. But the demands of hospital life suggest that front-line employees in hospitals need to cooperate; no single doctor or nurse alone can provide everything required. They also need to be decisive, as delays can often affect patients adversely. Finally, given the complexity of human organisations and the seriousness of health problems, attention to detail is an imperative; details make a difference while mistakes can at best harm the quality of life, if not threaten life itself. Unfortunately, the customer service orientation displayed is also rather limited (3.32 on a ve-point Likert scale), implying that there is still a lot that needs to be done in order to meet customer needs. Such a nding is in line with Jakubowski and Busses (1998) work, who suggested that hospitals in the European Union are severely challenged due to their inability to provide services of high quality. Table I also presents Pearsons correlations for all the variables examined. With the exception of outcome orientation, which correlates negatively with customer service orientation, all organisational culture dimensions correlate positively. Some signicant correlations are also shown between cultural dimensions and control variables, revealing the different views of organisational culture that are taken by different individuals.

Mean SD (0.76) 0.68 * * (0.77) 0.67 * * 0.69 * * 0.67 * * 0.56 * * 0.57 * * (0.63) 0.60 * * (0.64) 0.71 * * 0.57 * * 0.54 * * 0.63 * * 0.57 * * 0.52 * * (0.77) 0.56 * * 0.62 * * (0.74) 0.59 * * (0.68) 0.58 * * 0.67 * * 0.67 * * 0.55 * * 0.54 * * 0.91 0.93 0.79 0.91 1.01 0.79 0.89 0.90 0.54 * * 0.53 * * 0.46 * * 0.80 0.56 * * 0.48 2 0.01 2 0.02 2 0.05 2 0.04 0.04 0.07 0.86 0.04 0.11 * * 0.01 0.05 1.82 0.03 0.11 * * 0.50 2 0.09 * 2 0.12 * * 2 0.06 2 0.10 * * 0.67 * * 0.68 * * 0.69 * * 0.55 * * 0.55 * * (0.84) 0.78 * * 0.72 * *

11

12

13

3.16 3.14 3.13

Aggressiveness Supportiveness Innovativeness Emphasis on rewards Attention to detail Outcome orientation Team orientation Decisiveness Customer service orientation Gender Age Tenure Job position

3.07 3.03 2.80 2.68 2.53

3.32 1.63 2.78 4.47 1.43

0.48 * * 0.42 * * 0.43 * * 0.52 * * (0.75) 0.02 2 0.04 2 0.01 2 0.05 2 0.01 0.06 0.04 0.01 0.02 0.10 * * 2 0.02 0.01 0.01 2 0.03 0.01 0.04 0.03 0.70 * * 0.01 2 0.03 2 0.01 2 0.04 0.01 0.04 2 0.15 * * 2 0.14 * *

Notes: *p , 0.05; * *p , 0.01

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Table I. Descriptive statistics and Pearsons correlations for all variables

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Specically, both age and tenure correlate signicantly with innovativeness (R 0.11, p , 0.01 and R 0.11, p , 0.01, respectively), suggesting that the older employees are and the more time they have spent at a front-line position, the more likely they are to try to nd new ways to better serve customers. In relation to job position, it appears that managers are more likely to give emphasis to aggressiveness (R 2 0.09, p , 0.05), supportiveness (R 2 0.12, p , 0.01), and rewards (R 2 0.10, p , 0.01) than non-managerial employees. As mentioned above, the rst objective of this study was to examine the extent to which organisational culture can predict customer service orientation, in an attempt to provide insight into customer satisfaction. According to Table II, ve out of eight cultural dimensions and two control variables are important customer service orientation predictors in a service setting (R 2 0.42, F 89.23, p , 0.001). Apparently, aggressiveness, decisiveness, innovativeness, outcome orientation and emphasis on rewards signicantly impact on the extent to which front-line employees put customers interests rst. Furthermore, age and job position also signicantly inuence employees perceptions of customer service orientation. Such a nding implies that front-line employees, regardless of job position, recognize that being competitive, making quick decisions and tying objectives with rewards enhance the organisations orientation towards serving customers. In contrast with this, they tend to believe that when greater emphasis is placed on outcomes, the less they are inclined to take their customers needs into consideration. Although such a nding may seem strange, an outcome orientation approach would suggest that serving as many customers as possible is benecial, and this may be linked with a reduction in service quality and a failure to address the individual needs of patients. Repeating multiple regressions separately for supervisors and subordinates revealed both similarities and differences. Both believe that to a greater or lesser extent aggressiveness, decisiveness, and innovativeness have a signicant effect on their customer service orientation. Yet supervisors are also inuenced by age (b 0.18, p , 0.001) and tenure (b 0.12, p , 0.05) whereas subordinates are inuenced by outcome orientation (b 2 0.24, p , 0.01) and emphasis on rewards (b 0.12, p , 0.05).

All employees Aggressiveness Decisiveness Innovativeness Outcome orientation Emphasis on rewards Age Job position Tenure Adjusted R 2 F-ratio 0.29 * * * 0.28 * * * 0.23 * * * 2 0.16 * * 0.10 * * 0.07 * 0.08 * * 0.42 89.23 * * *

Step 2 Supervisors 0.26 * * * 0.26 * * * 0.22 * * * 0.18 * * * 0.12 * 0.43 63.83 * * *

Subordinates 0.30 * * * 0.29 * * * 0.25 * * * 2 0.24 * * 0.12 *

Table II. Results of regression analyses for patient service orientation, based on overall culture and position within the organisation

0.41 45.26 * * *

Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001; entries are signicant standardized regression coefcients

These differences are quite logical and can be explained by the characteristics of the different job positions. For instance, as managers grow old and spend more time in the organisation, they care more about serving customers, probably because they become more mature, they are more experienced and they realize the importance of customer satisfaction for the overall results and performance to a greater extent. However, employees are the only ones who consider that an emphasis on rewards is an important customer service orientation probably due to the fact that managers motives and incentives are usually tied to overall objectives and they believe that outcome orientation limits their ability to serve customers in the best possible way, as they are the ones who are often being pushed to increase quantity. Managerial implications Based on these ndings, organisational culture signicantly affects employees eagerness to serve customers. As a result, it is important that organisational agents shape culture in an effective way, by emphasizing aggressiveness, decisiveness, innovativeness and rewards but diminishing outcome orientation. Steps for promoting customer service orientation among front-line employees directly include employee involvement practices, facilitative management styles, and decentralized decision-making. Moreover, effective communication in all directions and through all media is also vital. As Kepner and Tregoe (1976) claimed that establishing a culture that ensures individuals free access to a supply of information enhances the satisfaction of customer needs. Of course, assessing and adjusting standard operating procedures to certain quality levels is also an imperative. This culture, however, should not only guide the way work is approached but also the priorities set within the organisation, in terms of organisational goals and vision. This is why, in case of major organisational initiatives, organisational agents need to be committed and supportive leaders (Beer and Walton, 1990; Hershock et al., 1991; Garvin, 1991). In order to achieve successful implementation of initiatives, it is important that human resource management practices are designed accordingly, by recruiting and selecting applicants that t the organisation and effectively inducting newcomers into organisational operations, procedures, and standards (Eiriz and Figueiredo, 2005). Special emphasis needs to be given to performance appraisal systems and rewards and remuneration. In terms of performance appraisal, the introduction of 3608 performance appraisal systems would actively take into consideration customers views of the service experience, helping front-line employees to realize the importance of service quality for achieving individual and organisational goals. Concerning rewards, satised employees are more motivated, more proud of their jobs and thus more likely to attain increased levels of customer satisfaction (Gremler et al., 1994; Heskett et al., 1997; Porras and Anderson, 1981). As Sasser (1976) stated, a successful service company must rst sell the job to its employees before it can sell services to its customers. In addition, in todays highly competitive era, much more than skilled personnel is required; front-line employees need to be performers rather than workers, willing to engage in extra-role behaviour (Yoon and Suh, 2003). In relation to the differences that were revealed between managerial and non-managerial front-line employees, it seems that less pressure should be put on the latter in terms of quantity of outputs. Furthermore, it is important that incentives are offered and also that rewards are tied to customer service.

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Limitations and directions for future research As is the case for all studies, this study has some limitations that need to be taken into consideration when interpreting the results. First of all, employees assessed both organisational culture and customer service orientation. As a result, one cannot be certain that there was no common method variance. In the present study, customer service orientation was adopted as a means for measuring customer satisfaction. Even though this is not atypical of studies undertaken because of the practical considerations related to undertaking research in organisations ratings by actual customers would be of the utmost signicance. Even so, it is worth mentioning that employee surveys focusing on organisational policies, practices, and procedures appear to be valid, when trying to predict customer perceptions regarding satisfaction and service quality. A positive relationship between employee and customer experience regarding service quality has been reported in previous studies (Burke et al., 1996; Schneider and Bowen, 1995; Schneider et al., 1996, 1998). Finally, although a coherent and distinctive organisational culture can provide the basis for a competitive advantage, it can also be a burden when introducing initiatives (Harris and Ogbonna, 2002). It is therefore important that the strength of the culture is examined before making rm suggestions about the importance of culture in securing high-quality service. Despite these limitations, it is strongly believed that the ndings of this study provide a platform for understanding the impact of organisational culture on meeting customers needs. Future research on enhancing customer service orientation could focus both on an organisational context factor including organisational climate and human resource management practices and on individual characteristics like personality traits and skills. Conclusions Owing to increased competition, ensuring survival in the long run requires adjustments which are oriented towards achieving maximum customer satisfaction (Reichheld and Sasser, 1990). In this context, this study intended to unveil the effect that an operating culture has on customer service orientation, in an attempt to provide insights into the determinants of customer satisfaction within a services setting. The ndings suggest that when trying to predict the degree to which front-line employees are oriented towards satisfying patients needs, organisational culture, job position and individual characteristics can be very important.
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Long-term customer satisfaction 521

MSQ 17,5

522

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