Promoting employee service behaviour: The role of perceptions of human resource management practices and service culture
Zerbe, Wilfred J; Dobni, DawnAuthor InformationView Profile; Harel, Gedaliahu HAuthor InformationView Profile. Revue Canadienne des Sciences de l'Administration; Montreal Vol. 15, Iss. 2, (Jun 1998): 165-179.
In this study we shed light on the relationship between satisfaction with human resource management (HRM) practices and employee performance. We examined the proposition that employee perceptions of HRM practices predict their behaviour toward customers. Previous writers have based such hypotheses on theory formulated at the level of individual employees, but have used analyses at organizational or aggregate levels. We therefore sought to demonstrate individual-level relationships between employee perceptions and service behaviour. We also sought to contrast the role of satisfaction with HRM practices with that of employees ' perceptions of how service-oriented their organization's culture was, based on the position of marketing theorists that a service culture is fundamental to promoting service behaviour. Our study of airline service employees showed that service culture had a direct effect on self-reported service behaviour, and that HRM practice perceptions had both a direct effect on self-reported service behaviour and an indirect effect through service culture. Specifically, satisfaction with leadership and with work demands were the strongest predictors of service behaviour. Service culture did not moderate the relationship between perceptions of HRM practices and service behaviour Discussion focused on alternative explanations for the relationship between organizational practices and service behaviour and on the implications for organizations wishing to promote service behaviour.
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Supporters of the role of the human resource management function in organizations have long held that effective human resource management (HRM) practices are key to the competitiveness and effectiveness of firms. Indeed, strategic human resource management has been advocated as the way to achieve and ensure such relevance (e.g., Devanna, Fombrun, & Tichy, 1984; Schuler & MacMillan, 1984; Tichy,1983). Kydd and Oppenheim (1990) pointed out that the link between HRM and strategy tends to be either proactive, where human resource planning is part of the formulation of strategy, or reactive, where strategy drives human resource policies. More recently, the debate has been taken up as to whether HRM practices need to be linked to strategy, or can add value on their own (Delery & Doty, 1996). Advocates of the universalistic perspective hold that the relationship between HRM practices and dependent measures of organizational effectiveness is consistent across organizations. Pfeffer (1995), for example, claimed that the empirical support for alternative contingencies is weak, and so a best practices perspective should be favoured. At the same time, others (e.g., Arthur, 1994; Cattaneo & Templer, 1988) have proposed that researchers should investigate the likelihood that the effectiveness of a set of practices may depend on firm strategy.
In this paper we examine and test the relationship between HRM practices and service behaviour and the complementary role of a service-oriented organizational culture, in an organization for which service is an espoused strategy. Our objectives are to evaluate the relative contribution to employee service behaviour of employee perceptions of how they are treated as a result of HRM practices, and of the degree to which their organization emphasizes customer service.
Relating HRM Practices to Employee Behaviour
The HRM literature consistently argues that HRM practices have an impact on employee behaviour and hence on organizational effectiveness. It has been argued that HRM practices affect performance (Heneman, Schwab, Fossum, & Dyer, 1989), productivity (Schuler, 1981), organizational effectiveness (Milkovich, Glueck, Barth, & McShane, 1988), and profits (Scarpello & Ledvinko, 1988), among other things. Schuler and Huber (1990) proposed that productivity is the purpose for and criteria of HRM functions and activities such as personnel planning and job analysis, recruitment and selection, performance appraisal and compensation, training, and improving health and safety, enforcing employee rights, and union-management relationships. Devanna et al. (1984) described these relationships similarly:
Performance is a function of all of the human resource components: selecting people who are best able to perform the jobs defined by the structure, appraising their performance to facilitate the equitable distribution of rewards, motivating employees by linking rewards to high levels of performance, and developing employees to enhance their current performance at work as well as to prepare them to perform in positions they may hold in the future. (p. 41)
They recognized, however, that the relationships between HRM practices and organizational outcomes are for the most part assumed, as opposed to demonstrated. They concluded that the argument that "human resource activities have a major impact on individual performance and hence on productivity and organizational performance" is a "major belief" (p. 51) underlying the role of HRM practices. Empirical demonstrations of the direct effect of HRM practices on organizational outcomes are apparently hard to come by, no doubt partly as a result of the complexity of the relationship and the difficulties posed by measurement and design issues (Becker & Gerhart, 1996).
As Becker and Gerhart (1996) put it, for HRM practices to influence organizational performance they must either improve efficiency or increase revenues. Traditionally HRM has been viewed as a cost to be minimized and hence a source of efficiency gains. More recent views have advocated the use of HRM as a unique source of sustained competitive advantage through its ability to create value in a way that is rare and difficult for competitors to imitate (Baird & Meshoulam, 1988; Becker & Gerhart, 1996; Lengnick-Hall & LengnickHall, 1988).
In the service sector, research in a wide range of organizations and employing a variety of methodologies has found support for a positive relationship between employee perceptions of organizational practices and customer ratings of organizational effectiveness (e.g., Tornow & Wiley, 1991; Ulrich, Halbrook, Meder, Stuchlik, & Thorpe, 1991; Wiley, 1991). Ulrich et al. (1991), for example, argued that selection, hiring, appraisal, promotions, and reward administration practices can be used to "increase the shared mindset among employees and customers" (p. 91), which leads to customer attachment and competitive advantage. Schneider and Bowen (1985) found that employee perceptions of HRM practices were significantly related to customer perceptions of service quality. They proposed that when employees "feel well treated by management's human resource practices, they can devote their energies and resources to effectively treating clients."
Schneider and Bowen (1985) studied organizational practices in bank branches. It may well be, in fact, that the relationship between HRM practices and strategic outcomes is strongest in service organizations. In manufacturing or goods-producing organizations, profitability or quality may be more directly affected by investments in technology or manufacturing-process controls. In such situations, quality may depend only marginally on employee behaviour (such as when employee input is only a small part of an automated production process), so that, in fact, the relationship between HRM and effectiveness may well be constrained. Furthermore, the endemic characteristics of service limit the use of technological measures to improve quality. For example, while technological innovations such as electronic databases may improve the support employees receive in providing service, technology cannot replace face-toface employee-customer interaction. Schlesinger and Heskett (1991) stated that the old industrial model of service "flies in the face of what service-sector customers many times value most: the things that technology cannot do at all or as well as thinking human beings" (p. 74), even though they admitted that automated teller machines are an exception. Indeed, it has been argued that in service organizations quality improvement must be focused on the selection, training, compensation, and socialization of employees (Lovelock, 1985; Schlesinger & Heskett, 1991; Schneider & Bowen, 1985, 1995). Services are intangible, customers are active participants in their production (Mills, Chase, & Margulies, 1983), and services tend to be produced and consumed simultaneously, relative to goods (Czepiel, 1980; Lovelock & Young, 1979). As a result, they cannot be inventoried, they cannot be repaired or discarded if faulty, and the development of valid measures of their output is difficult (Mills & Moberg, 1982; Ward, 1973). Efforts to promote service quality must therefore be based on managing employee behaviour before the customer-employee interaction, rather than measuring service outcomes after the fact (cf. Mills, 1986). In other words, service quality must be promoted through the appropriate management of human resources (Lovelock, 1985; Schneider & Bowen, 1985).
In this study we shed light on the relationship between satisfaction with human resource management (HRM) practices and employee performance. We examined the proposition that employee perceptions of HRM practices predict their behaviour toward customers. Previous writers have based such hypotheses on theory formulated at the level of individual employees, but have used analyses at organizational or aggregate levels. We therefore sought to demonstrate individual-level relationships between employee perceptions and service behaviour. We also sought to contrast the role of satisfaction with HRM practices with that of employees ' perceptions of how service-oriented their organization's culture was, based on the position of marketing theorists that a service culture is fundamental to promoting service behaviour. Our study of airline service employees showed that service culture had a direct effect on self-reported service behaviour, and that HRM practice perceptions had both a direct effect on self-reported service behaviour and an indirect effect through service culture. Specifically, satisfaction with leadership and with work demands were the strongest predictors of service behaviour. Service culture did not moderate the relationship between perceptions of HRM practices and service behaviour Discussion focused on alternative explanations for the relationship between organizational practices and service behaviour and on the implications for organizations wishing to promote service behaviour.
View Image - Resume Enlarge this image.
Resume
Supporters of the role of the human resource management function in organizations have long held that effective human resource management (HRM) practices are key to the competitiveness and effectiveness of firms. Indeed, strategic human resource management has been advocated as the way to achieve and ensure such relevance (e.g., Devanna, Fombrun, & Tichy, 1984; Schuler & MacMillan, 1984; Tichy,1983). Kydd and Oppenheim (1990) pointed out that the link between HRM and strategy tends to be either proactive, where human resource planning is part of the formulation of strategy, or reactive, where strategy drives human resource policies. More recently, the debate has been taken up as to whether HRM practices need to be linked to strategy, or can add value on their own (Delery & Doty, 1996). Advocates of the universalistic perspective hold that the relationship between HRM practices and dependent measures of organizational effectiveness is consistent across organizations. Pfeffer (1995), for example, claimed that the empirical support for alternative contingencies is weak, and so a best practices perspective should be favoured. At the same time, others (e.g., Arthur, 1994; Cattaneo & Templer, 1988) have proposed that researchers should investigate the likelihood that the effectiveness of a set of practices may depend on firm strategy.
In this paper we examine and test the relationship between HRM practices and service behaviour and the complementary role of a service-oriented organizational culture, in an organization for which service is an espoused strategy. Our objectives are to evaluate the relative contribution to employee service behaviour of employee perceptions of how they are treated as a result of HRM practices, and of the degree to which their organization emphasizes customer service.
Relating HRM Practices to Employee Behaviour
The HRM literature consistently argues that HRM practices have an impact on employee behaviour and hence on organizational effectiveness. It has been argued that HRM practices affect performance (Heneman, Schwab, Fossum, & Dyer, 1989), productivity (Schuler, 1981), organizational effectiveness (Milkovich, Glueck, Barth, & McShane, 1988), and profits (Scarpello & Ledvinko, 1988), among other things. Schuler and Huber (1990) proposed that productivity is the purpose for and criteria of HRM functions and activities such as personnel planning and job analysis, recruitment and selection, performance appraisal and compensation, training, and improving health and safety, enforcing employee rights, and union-management relationships. Devanna et al. (1984) described these relationships similarly:
Performance is a function of all of the human resource components: selecting people who are best able to perform the jobs defined by the structure, appraising their performance to facilitate the equitable distribution of rewards, motivating employees by linking rewards to high levels of performance, and developing employees to enhance their current performance at work as well as to prepare them to perform in positions they may hold in the future. (p. 41)
They recognized, however, that the relationships between HRM practices and organizational outcomes are for the most part assumed, as opposed to demonstrated. They concluded that the argument that "human resource activities have a major impact on individual performance and hence on productivity and organizational performance" is a "major belief" (p. 51) underlying the role of HRM practices. Empirical demonstrations of the direct effect of HRM practices on organizational outcomes are apparently hard to come by, no doubt partly as a result of the complexity of the relationship and the difficulties posed by measurement and design issues (Becker & Gerhart, 1996).
As Becker and Gerhart (1996) put it, for HRM practices to influence organizational performance they must either improve efficiency or increase revenues. Traditionally HRM has been viewed as a cost to be minimized and hence a source of efficiency gains. More recent views have advocated the use of HRM as a unique source of sustained competitive advantage through its ability to create value in a way that is rare and difficult for competitors to imitate (Baird & Meshoulam, 1988; Becker & Gerhart, 1996; Lengnick-Hall & LengnickHall, 1988).
In the service sector, research in a wide range of organizations and employing a variety of methodologies has found support for a positive relationship between employee perceptions of organizational practices and customer ratings of organizational effectiveness (e.g., Tornow & Wiley, 1991; Ulrich, Halbrook, Meder, Stuchlik, & Thorpe, 1991; Wiley, 1991). Ulrich et al. (1991), for example, argued that selection, hiring, appraisal, promotions, and reward administration practices can be used to "increase the shared mindset among employees and customers" (p. 91), which leads to customer attachment and competitive advantage. Schneider and Bowen (1985) found that employee perceptions of HRM practices were significantly related to customer perceptions of service quality. They proposed that when employees "feel well treated by management's human resource practices, they can devote their energies and resources to effectively treating clients."
Schneider and Bowen (1985) studied organizational practices in bank branches. It may well be, in fact, that the relationship between HRM practices and strategic outcomes is strongest in service organizations. In manufacturing or goods-producing organizations, profitability or quality may be more directly affected by investments in technology or manufacturing-process controls. In such situations, quality may depend only marginally on employee behaviour (such as when employee input is only a small part of an automated production process), so that, in fact, the relationship between HRM and effectiveness may well be constrained. Furthermore, the endemic characteristics of service limit the use of technological measures to improve quality. For example, while technological innovations such as electronic databases may improve the support employees receive in providing service, technology cannot replace face-toface employee-customer interaction. Schlesinger and Heskett (1991) stated that the old industrial model of service "flies in the face of what service-sector customers many times value most: the things that technology cannot do at all or as well as thinking human beings" (p. 74), even though they admitted that automated teller machines are an exception. Indeed, it has been argued that in service organizations quality improvement must be focused on the selection, training, compensation, and socialization of employees (Lovelock, 1985; Schlesinger & Heskett, 1991; Schneider & Bowen, 1985, 1995). Services are intangible, customers are active participants in their production (Mills, Chase, & Margulies, 1983), and services tend to be produced and consumed simultaneously, relative to goods (Czepiel, 1980; Lovelock & Young, 1979). As a result, they cannot be inventoried, they cannot be repaired or discarded if faulty, and the development of valid measures of their output is difficult (Mills & Moberg, 1982; Ward, 1973). Efforts to promote service quality must therefore be based on managing employee behaviour before the customer-employee interaction, rather than measuring service outcomes after the fact (cf. Mills, 1986). In other words, service quality must be promoted through the appropriate management of human resources (Lovelock, 1985; Schneider & Bowen, 1985).
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