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

JOURNAL OF BUSINESS AND PSYCHOLOGY502


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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

J. R. ANDERSON 515


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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).

J. R. ANDERSON 517


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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



19/23

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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