Front line employees in bank of maldives management essay

Introduction:

In today’s competitive business world, as like concern on product quality, service firms have also shifted their focus to deliver ‘quality services’ to attain customer satisfaction. This is because having a base of loyal customers will increase sales and increase market share. However, how hard they may try; mistakes and failures are inevitable in providing service. Mistakes are an unavoidable human feature and thus on service delivery too. As per Bell & Zemke, 1987 defined service failure as “the experience of service result where service reaches lower than customer expectation”. Although poor service delivery may result in loss of customer trust, studies have showed that service recovery paves way for turning angry customers into loyal customers (ref). Having loyal customers has many untold benefits to the service provider such as lower customer price sensitivity, reduced cost on attracting new customers and thus improved organizational profitability. (Rowley, 2005). Accordingly, ‘service recovery’ is an emerging topic of interest among academicians. In short, Service recovery is a crucial factor where most service firms are concerned of nowadays. Most of the literatures of service recovery are customer centric, as how organizations should handle the recovery. In contrast, little research has been done on organizational perspective on how firms should plan to for to perform the service recovery. (eg. Boshoff,2000). How organizations actually design the system in order to provide effective service recovery strategy is one of the area that is focused in this study.From the marketing literature perspectives, studies have been conducted on recognizing the importance of employee inputs on organizational outcomes such as financial performance.(ref). This is very true even within the context of services. Employees’ specially front line employees are the building blocks of the service industries. It is the frontline employees that creates the image of the organization and builds the brand strong by their excellent performance to the customers. The importance of front line employees in service delivery is also one of the wide spoken concepts in services literature. This is been consistent with the study of Jenkins (1992).On the other hand, reviewing the marketing literature, there are extensive researches that reveals the effect of organization variables on frontline employees and their performance. This research intends to focus on this front line performance and its effect due to organizational variables within service recovery context. For an effective service recovery performance of the FLE’s, employee attitude and their perceptions about the organization is vital (ref). For instance, , if the employees feel that managers are not fully committed to the goal of service recovery excellence then the frontline staffs will not also commit themselves to providing it. Moreover, if the firm feels customer complaints are troublesome to the company, then the staffs will also not be much interested in solving the issue effectively. Hence the management needs to understand the features in the organization that affects the employee attitude which in turn affects their performance which is the main objective of this study.

Background of the study:

Importance of Banking:Maldives is a small country which is geographically dispersed into many islands. The current population is about 350,000. The main economy of the Maldives depends on service sector due to limitation of its manufacturing capabilities. Considering the service sector; banking is also an important sector that improves the economy which has been consistent with (Mishkin, 2001). For instance, Maldivian government is in progress of privatizing many state owned firms. In such case, it is the responsibility of Banks to earn investor confidence which will then promote foreign direct investment. Thus ‘service recovery’ is a fundamental element that has to be focused on to improve the economy as banking is a high involvement industry in Maldives.Bank of Maldives PLC is the local bank in Republic of Maldives. It has totally 14 branches which includes branches in Male, the capital of Maldives and as well as in remote islands. As the leading bank in Maldives, Bank of Maldives plays a major role to develop retail banking services. The Bank is fully computerized and provides almost all the banking services needed for the citizens and business establishments in Maldives. Bank of Maldives, shortly called BML commenced its operation on 11th November, 1982. The bank was started as a joint venture between the Government of Maldives and IFCI bank Dhaka.In 1980’s Bank of Maldives being the only local bank in Maldives has mostly focused only on expanding its branches to the rest of the country atolls. But the situation has been changed where the emergence of new banks like Islamic banks has been in progress in the country. Thus BML has shifted their focus of attention on service quality and thus service recovery.The main reason for selecting BML is being the main local bank of the country and its efforts on improving the quality of the services and thus service recovery performance due to new competitions in the domestic market. There forth, the subject would be relevant to test the model proposed.

Employee Performance:

Front line Employee performance:http://www.atypon-link.com/AMA/doi/pdf/10.1509/jmkg.64.2.15.17998?cookieSet=1Front line employees’ performance would be much complex within a service sector context especially financial services such as banking. They are the ones that sell services and also responsible for post sales services such as answering customer questions, adjusting policies based on customer demands. Front line staffs become the primary source of revenue generation in banking sector which in turn also increase the stress to perform well. Thus the frontline employees of Bank of Maldives are chosen for this study to investigate the influence of organizational factors on their service recovery performance and its outcomes.

Problem of the study:

Effective service recovery leads to more satisfied and even more delighted customers than the customers who receive the service right at the first time (Hart et al., 1990). Acknowledging the importance of service recovery, it is also to be noted that service recovery is a tedious and a sensitive issue to attain customer loyalty. Failure in providing effective service recovery strategy will lead to loss of customers and also negative words of mouth. Thus service recovery is a systematic business process that must be designed properly and implemented in an organization. Effective implementation and thus employee performance is based on the how management put their efforts and support on to achieve certain strategy.Apart from the loss of customers, there is also high probability of loosing employees during service recovery process. This is because job performance also plays a wide role in the voluntary turnover process. (Zimmerman & Darnold, 2009). During service recovery encounter, FLE are the ones who experience pressure from both the complaining customers and also from management side. There creates a situation of ambiguity to them without the management support where it result in frustration and thus voluntary turnover.In the above both cases, there arises a situation where customers as well as employees are in stake when effective service recovery fails. Many researchers have shown that successful service recovery strategy will leads to customer satisfaction, customer loyalty and positive words of mouth. Only few literatures have recognized the importance of HRM practices on attaining successful service recovery performance. Service recovery performance doesn’t just happen. It is based on the management commitment and employees attitudes to attain loyal customers. Employees’ attitudes are based on the employees’ perceptions about the organization factors. This has been consistent with the study of Jenkins (1992), which reveals that the lack of top management commitment is one of the main reasons why many improvement efforts fail. For example, if the employees feel that managers are not fully committed to the goal of service recovery excellence then the staffs who engage with the customers directly will not also commit themselves to providing it. Moreover, if the firm feels customer complaints are troublesome to the company, then the staffs will also not be much interested in solving the issue effectively. Thus this research will evaluate the organizational factors that impacts on service recovery performance of employees. In short, effective service recovery is dependent on both customer and employee inputs (Boshoff, 1997). Hence most importantly, management practices must be supportive in implementing the service recovery strategy successfully on which this research addresses to.

Research Question:

This study intent to address that management practices is also a crucial factor for effective service recovery performance of FLE and their retention. However analyzing all the variable and facets of management practices that supports effective service recovery performance requires time and effort. Thus in this study, chooses to evaluate the selected antecedents that may be best suited to the banking environment by evaluating from the various literatures and the research questions are formulated as follows,What are the components and antecedents of employee performance during service encounter?Which of the selected organizational factors best influence the service recovery performance of the front line employees in Bank of Maldives?To what extent does the customer orientation of the firm have on service recovery performance of FLE in Bank of Maldives?To what extent does rewarding for customer service excellence impacts on the service recovery performance of FLE?To what extent do the selected working environment factors influence the service recovery performance of FLE in Bank of Maldives?What is the outcome of those organizational factors having on service recovery performance of FLE either job satisfaction or intention to leave?

Research Objectives:

To date, studies of service recovery performance have largely focussed on private sectors firms with a few public setting firms.(Eg). This Study on service sercovery focusses on a BML where it is the only public owned bank in Maldives experiencing monopoly power for over 2 decades. On the other hand, the opening of new banks such as islamic banks are on progress in Maldives. Thus this study objective is of two fold.The main first objective of this study is to investigate the potential impact of organizationalvariables on the service recovery performance of front line staff.The second objective is to evaluate the impact of service recovery performance on front line staffs’ job satisfaction and intention to resign by using a large state owned enterprise (BML) as a case in point.

Significance of the study:

Service recovery has been investigated in a number of industries such as hotels, banks and airlines.(ref). However, the influence of organization factors on FLE has been inadequate. This study has attempted to examine the antecedents and outcomes of service recovery performance in a public bank setting in Maldives. This research includes an evaluation of selected organizational factors initially conceptualized by researchers on service recovery performance of FLE of BML. By doing so, this study makes an important contribution to understanding the determinants of service recovery of a banking environment. Understanding the determinants of service recovery performance is necessary as to implement and carry out the service encounter effectively. This is because a service failure second time will lead to loss of customers that can never be retained.From the findings, perceived managerial attitudes such as customer orientation of the firm and rewards and working environment factors like Training, empowerment, role ambiguity and organization commitment are significant predictors of service recovery performance of front line staffs. This suggests that the bank management should facilitate the working environment in the design the service recovery process for to achieve fruitful results.This study is also expected to contribute to both academic and practitioner that it will enhance the understanding of the service recovery performance from an organization perspective. Additionally, this research will answer questions like which organization variable will lead to the best recovery performance? What aspects in the working environment would affect the FLE performance?

Limitation of the study:

Overview of the chapter:

Methodology:

Introduction:

The Purpose of this study is to investigate the potential impact of organizational variables on service recovery performance of front line employees’ and its outcomes in a state owned monopoly bank. This chapter will begin with research design which describes the nature of the research and the methods being used to understand the results. Specifically, this chapter will illustrate the population and sample, survey design, data collection techniques and statistical analysis methods used to analyze the collected data and test the hypothesis.

Research Design:

Basically a research falls into two categories which are qualitative and Quantitative. The purpose of this study is to examine the relationship of Organizational variables to that of service recovery performance of FLEs’. There forth this study chooses to do quantitative research.as it is to test the relationship between the organization variables and the service recovery performance.

Instrument:

The method used in this study was survey system. The survey questionnaire was designed with closed ended questions which are used to gather data relating to the organizational dimensions and service recovery performance of the front line staffs. There are totally seven organizational variables and two outcomes and the service recovery performance variable which totally comprises to 9 variables this survey addresses. This study has adapted the research instrument developed by Boshoff and Allen (2000). This instrument was selected to be appropriate for this study because it has been already tested on a banking environment. Moreover, this instrument was widely cited in services marketing literature. Additionally it also has been tested on private sectors such as restaurants and public health care settings. eg. Hoffman et al., 1995; Yavas et al., 2003.Thus in short the instrument is already proved for reliability and validity.The survey questionnaire comprised of three parts. Part A comprised of questions to know the personal profiles of the respondents. This includes age, gender and experience. Knowing the personal profiles of the respondents will help to understand the research more appropriately. Part B and C comprises the adapted version of Boshoff and Allen,2000 survey instrument. Moreovoer relevent literatures were also canvassed to check the more reliable items for a banking environment.(For eg, Lucas et al., 1990 )For the purpose of this study, the original questionnaire was adapted to 9 variables which consists of totally 40 items. Minor modifications were used with the scale items to relate it to the banking environment. The statements of the questionnaire were asked to rate based on 5 point likert scale indicating score of 5 for strongly agree, 4 for Agree, 3 for nuetral, 4 for disagree and 5 for Strongly disagree. All the statements of the instrument were phrased in a positive manner inorder to reduce the confusion for readers but yet however sacrificing the possibility of errors.

Sample:

In general, Bank of Maldives has 14 branches totally spread within the islands of which 4 branches are from capital city, Male’. Moreover in total there are about 382 front line staffs in total of which about 188 front line staffs are working in Male’ branches as per data obtained from their HR staff (January,2010).To achieve the purpose of the study, data were collected from the front line employees of bank of Maldives focusing on the capital city branches. The focus group is accepted as they are the one who is exposed to upcoming competition from other banks more than the employees from other island branches. Moreover, the employees from the capital city will have high level of customers contact that front line staffs from the other island branches. From the service marketing literatures reviewed above it is revealed that front line employees are the ones that are more likely to address the service failure. Thus the focus group is considered to be relevant for this study. (Write some literature about the importance of FLE)About 180 Questionnaires were distributed to front line staffs of Male’ branches of BML as a survey form by contacting with their HR manager. The Questionnaire was distributed on hand to the employees and collected at the spot. This process was started on March 20th and commenced on April 4rth where almost all the 4 branches front line employees were surveyed. The manager of each branch requested their cooperation and assured them there is no risk involved. Thus is it ensured that there will be no bias of fear. The responses were then entered into an excel file.The measuring Instruments:Write a table indicating the literatures referred for the items in the questionnaire.Dependent variable – literature referredIndependent variableOutcomes variables

Research Framework:

This study indicates that service organizations should provide the necessary support to the front line personnel as firms human resources practices influences the service that customers receive.( Bowen and Ostroff 2004; Schneider and Bowen 1993). More extant literatures have focused on how customers can be retained during service recovery encounter.(ref). This particular study concentrates on the outcomes of front line employees during service recovery encounter and the organization variables that influence their service recovery performance.There forth, based on the review of various literatures, the following model of Boshoff and Allen, 2000 is replicated in this study with minor adaptations. This model as explained above has been proved for its reliability and validity and has been the mostly cited study in services marketing literatures. Service recovery being the dependent variable and the organizational variables that influence the service recovery performance of the employees are divided into two contexts. That is perceived managerial attitudes and the second context being the perceptions based on the working environment. These two contexts have sub variables where the variables for perceived managerial attitudes are customer orientation of the firms and rewards for customer service excellence. Secondly the variables for working environment are staff training for customer service, Empowerment, Role ambiguity and Organizational commitment. The outcomes due to the service recovery performance are intentions to resign and job satisfaction.

Hypothesis:

This study examined the antecedents and outcomes of employee performance during service recovery encounter. That is first of all, this research explored the relationship between organizational variables and service recovery performance specifically in the service context.

Perceived managerial Attitude:

Customer service orientation is one of the managerial attitudes that influence the employee performance. At organizational level, this customer orientation variable acts as a vehicle for employees’ that creates motivation and support to performance. This is consistent with Boshoff and Allen, 2000 which described customer orientation as “information forces within a firm that influence employees’ discretionary behavior”. Customer orientation of a firm will provide necessary support and information for employees to carry out the activities in terms to satisfy customer and also to retain customer. Thus it is hypothesized as,H1: Customer orientation of the firm positively influences the service recovery performance of the front line employees of BML.Employee rewards is an essential component that influences an organizations service orientation. It is considered to be an important element that links to employee performance as per Berry,parasuraman and Zeithmal, 1994;Heskett, Sasser and Hart, 1990; Schenider and Bowen,1995). This is because when front line employees are not rewarded for recovery encounter then they won’t have much interest in doing a recovery effort effectively. This is also been consistent with the study of Johnson, 1996 which reveals that rewards strongly influence the levels of customer satisfaction. Thus rewards are not only important to deliver high quality services but also important to motivate employees in delivering the recovery efforts too. It is therefore hypothesized as,H2: Rewarding employees for effectively handling the recovery encounter will exert a positive influence on the service recovery performance of front line employees.

Perceptions of the working environment:

Staff training:

Many past literatures have recognized the importance of training front line employees to deal with different types of customers and their needs. Heskett (1991) reveals that investment in training of front line employees is like investment to machineries. Specifically investing in service skills such as being courtesy, helpful at the time of complaining customers would increase the performance of the employees and thus prevents the loss of angry customers. There forth front line employees must be trained especially in interpersonal skills so that they can effectively deal with the angry customers.According to the study of Bitner et al. (1990), indicates that almost 42.9% of customers responded dissatisfaction because of the employees’ inability or unwillingness to respond in service failure situations. The study reveals that the customers negative reactions to unprompted and unsolicited employee behaviours. It is clear from Bitner et al. (1990) that it is not the quality of the core service or the failure situation that causes the loss of customers most of the time. Indeed it is the attitude and the behavior of the front line employees towards the customers either verbally or nonverbally that causes dissatisfied customers. Even though there is debate among many managers that training front line employees is useless as due to high turnover of front line employees, it is proved from various literatures that training front line employees acts as a competitive advantage. This is because training not only develops the skills and talents necessary to provide the service efficiently but also helps to show that the top management is committed and supportive to the employees to carry out their actions.( Babakus et al,2003).It is therefore hypothesized that,H3: Training employees to handle customer complaints will exert a positive influence on the service recovery performance of the front line employees of BML.

Empowerment:

The second work environment factor identified in the adapted model is “Empowerment”. Empowerment is defined as an “active work orientation where an individual wishes and feels able to shape his/her work role and context” (Spreitzer 1995, p. 1444). In case of service failure, it is the front line staff that is responsible to turnaround the service failure into a success of retaining the customers. Since FLE being crucial in such service recovery encounter, it is important to empower them to respond appropriately as per the situation. This is because according to the study of (X), time of response of the FLE is a very critical element that spins the angry customers into delightful customers. If the employees are not empowered then the process of service recovery would be a failure where FLE needs to obtain approval from the management for even most basic decision.(Boshoff and Allen,2000). This brings the customers into a state of more frustrated. Schlesinger and Heskett (1991) also reveal that it is important to empower the front line staffs to avoid the cycle of failure during the service delivery process.Empowered employees will act quickly and effectively as possible because they have the authority and responsibility to meet the customer needs. Empowerment provides employees the flexibility to make on the spot decisions which is very essentially during service failure situations.(Hartline and Farrell 1996, p.56). By making on the spot decisions by front line staffs based on situations will minimize the frustration of customers. Therefore, it is hypothesized as,H4: Empowerment to handle customer complaints will exert a positive influence on the service recovery performance of the front line employees of BML.

Role Ambiguity:

Data Collection Techniques:

Data analysis Procedure:

Conclusion: