Employee Satisfaction or Service Climate: Which Best Predicts Customer Satisfaction?

A popular framework of organizational effectiveness is othe Service Profit Chain (Heskett, Jones, Loveman, oSasser o& Schlesinger, 1994), which is built around the concept that customer loyalty and satisfaction are leading indicators of profit and revenue growth. Keeping with this perspective, the objective of this article is to examine the relative efficacy of the two predictors of customer satisfaction most often assessed through employee opinion surveys: employee satisfaction and climate for service.

Traditional measures of business success include revenue growth, earnings and return on assets. Such variables are lagging indicators, which some have characterized as a rear-view mirror approach to business performance management (Rucci, Kirn & Quinn, 1998). As a result, many management theorists have shifted their focus to a search for leading indicators of future financial success. By identifying indicators that predict performance, organizations can measure the effectiveness of their strategy proactively and make timely modifications to improve the likelihood of obtaining the desired business outcomes (Ittner & Larcker, 2003).