The Impact of Employee Motivation on Service Quality Rendered

Name

University

October 2014

Table of Contents

Chapter One: Introduction………………………………………………………..………….4

Background to the Research………………………………………..………….5

Organizational Background…………………………………………..…………5

Significance of the Problem…………………………………………….………5

Statement of Purpose…………………………………………………….……..6

Statement of the Problem……………………………………………….………6

Aims and Objectives……………………………………………………….…….6

Research Question…………………………………………………………….…7

Dissertation Structure……………………………………………………………7

Chapter Two: Literature Review………………………………………………………….…..8

2.1 Job Performance…………………………………………………………………8

2.2 Employee Motivation…………………………………………………………….9

2.3 Motivational Strategies…………………………..…………………………….11

2.4 Job Satisfaction…………………………………………………………………15

2.5 Customer Service………………………..……………………………………..16

2.6 Customer Feedback…………………………………………………………….21

2.7 Wilkinson Company (Wilko)……………………………………………………23

Chapter Three: Research Methodology…………………………………………………..27

3.1 Research Strategy………………………………………………………………27

3.2 Research Design………………………………………………………………..27

3.3 Data Collection Methods……………………………………………………….27

3.4 Data Collection Instruments……………………………………………………29

3.5 Procedure………………………………………………………………………..31

3.6 Analysis of Data…………………………………………………………………31

3.7 Ethical Considerations………………………………………………………….32

3.8 Limitations of the Research…………………………………………………….32

Chapter Four: Data Analysis and Findings……………………………………………….33

4.1 Data Results……………………………………………………………………..33

4.1.1 Focus Group Interview with Management…………………………..33

4.1.2 Focus Group Interview of Wilko Employees……………………..33

4.1.3 Focus Group with 5 Regular Wilko Customers…………………..33

4.2 Findings and Analysis…………………………………………………………34

4.2.1 Management………………………………………………………….34

4.2.2 Employees……………………………………………………………37

4.2.3 Customers…………………………………………………………….43

Chapter Five: Conclusion and Recommendations………………………………………47

References……………………………………………………………………………………52

Appendices:

Appendix 1 Letter of Intent…………………………………………………………55

Appendix 2 Transcript of Focus Group Interview with Management….……….56

Appendix 3 Transcript of Focus Group Interview with Employees……….……58

Appendix 4 Transcript of Focus Group Interview with 5 Regular

Wilko Customers……………………………………………………..60

List of Figures:

Figure 1. Christofferson & King’s Total Rewards Framework…………………………..12

Chapter One

Introduction

1.1 Background to the Research

Successful businesses maintain a strongly motivated workforce. Such a workforce is essential in sustaining the operations of the business as well as their relationship with customers. Thus, management should have an employee motivation system in place to ensure that their workers are kept satisfied with their jobs.

Retail businesses are more likely to be in close contact with customers. Employees should be well-trained in customer service so that customers will be delighted and come back for more business. Frontline staff such as sales people, are in direct contact with customers and they can be responsible in keeping or losing such customers with the way the deal with them. At the same time, it is management who train these salespeople to handle their jobs well (Saravanaraj et al., 2012). When businesses provide superior service quality, they gain a competitive advantage and this enhances their reputation in a wider context (Sichtmann et. Al., 2011).

However, despite being aware of the fact that frontline employees’ job performance is critical to the success of the business, it has been found that 70% of such workers do not reach their full potential in the performance of their work (Gallup, 2013).

This dissertation explored if there is a link between employee motivation and its impact on customer service. It is assumed that workers who are happy in their jobs are more likely to provide better service to their customers than workers how are not satisfied with their work. Javitch (as mentioned in Vesilind, 2013) argues that:

“Happy workers tend to be more productive. If morale is high, employees

feel that the boss cares about them and cares about the quality of the work

they’re doing. The higher those things are, the higher the profitability and

worker-customer satisfaction.” (p. 60)

1.2 Organizational Background

This dissertation specifically studied the case of a selected Wilko store. Wilko is a chain of retail stores that sell a wide assortment of products such as household essentials, textiles, health and beauty products, stationery, pet products, kitchen and bathroom supplies, and so much more. It has over 300 stores around UK, attracting several customers from all over the land.

1.3 Significance of the Problem

Service-oriented businesses such as the retail business give priority to the quality of customer relationship they provide their customers as it is an essential element in retaining their patronage. If customers are not satisfied with the service rendered by salespersons in a store, they are likely to leave disgruntled and sharing their negative experience with others will create a negative reputation for the store.

Many factors affect the quality of customer service such as the kind of training provided to the workers, the personalities of the workers and the motivation workers have for their jobs. This study shall focus on the effect of employee motivation on the service quality rendered by workers at Wilko stores. These stores are accessible and have a steady flow of customers.

Findings of this study would be helpful to managers and workers of business that provide service to their customers such as stores, restaurants, hospitals, barber shops or beauty salons, hotels, and other service-oriented businesses. Motivational theories as well as customer relationship theories shall be studied and applied to the case of Wilko. Effective motivational strategies may be learned by readers so that they can also apply it to their own businesses so that their workers will achieve job satisfaction. It is assumed that keeping workers happy in their jobs will translate to their provision of quality service to customers which will eventually redound to positive outcomes for the business.

1.4 Statement of Purpose

The purpose of this dissertation is to find the relationship between employee motivation and service quality provided to customers at Wilko stores. It shall study the motivational strategies employed by Wilko to achieve job satisfaction of its workers. It will also gain insights from regular Wilko customers as to the quality of service they experience when shopping at Wilko stores.

1.5 Statement of the Problem

Service quality of retail businesses need to be studied thoroughly in order to make improvements and ensure that customers are kept satisfied with it when they shop at stores. One factor that is believed to affect service quality is how employees who provide the service are motivated in their jobs. This study shall explore if employee motivation at Wilko stores has an impact on service quality provided to its customers.

1.6 Aims and Objectives

The main aim of this study was to find the relationship between employee motivation and service quality in Wilko stores. The objectives for this study were as follows:

1.6.1 To review literature on effective motivational strategies and compare it with

the strategies employed by Wilko on its workers.

1.6.2 To review literature on job satisfaction and see if it is achieved at Wilko.

1.6.3 To review literature on customer relationship management and study if

such practices are in place at Wilko.

1.6.4 To find out how customers at Wilko are satisfied with the service quality

rendered at the stores.

1.7 Research Question

This study was interested in finding the relationship between employee motivation and customer service. Specifically, the research question that was pursued was:

“How does employee motivation, or the lack of it, affect the quality of customer service rendered at Wilko stores?”

1.8 Dissertation Structure

This dissertation conducted a case study on the employee motivation at Wilko stores. The Literature Review discusses related theories and practices on employee motivation, job performance and satisfaction as well as customer service. Information about the retail business was gathered from research from its website as well as various materials about it. The chapter on Research Methodology details the methods employed by the study. The Data Analysis and Findings chapter presents the results of the research. Finally, the Conclusion and Recommendation chapter discusses the conclusion and answers the research question. It also explains the association between employee motivation with customer service quality.

Chapter Two

Literature Review

This chapter discusses various theories and practices on job performance, job satisfaction, motivation and motivational strategies as well as customer service. It also provides an overview of the Wilkinson Company (Wilko) as taken from the company website. This literature provides a foundation for the research study and the data gathered was analyzed using some of the concepts and theories discussed in this literature review.

2.1 Job Performance

Zablah et al. (2012) define job performance as “the extent to which an employee contributes to organizational effectiveness given the expectations associated with his/her work role” (p. 25). Employees who identify with their organizations are more likely to feel pride for its success and feel the need to contribute to the organization’s effectiveness. Their identification with the company reflects in how they perform in their jobs and consider such performance as in behalf of the organization (Korschun et al., 2014). Employees who directly deal with customers serve as frontliners who become the face of the companies they represent. They are tasked with being sensitive to the demands of the market, disseminating relevant information to their customers about what their company offers and contributing to the company by delivering quality service to customers that result in customer loyalty (Korschun et al., 2014). The importance of their role as the bridge connecting the customer to the company cannot be emphasized enough. However, the importance of establishing quality relationships between the customer and the service employee can outweigh the customer’s loyalty to the company as a predictor of the business’ growth (Palmatier et al., 2007).

2.2. Employee Motivation

Motivation drives people to be persistent in attaining their goals. It is characterized by a person’s intensity, or how hard a person exerts effort in a certain task that motivates him; direction, or to which particular goal the motivation is headed; and persistence, or how long a person tries to stay within that motivated path. Handy (1999) contends that the aim of motivation research was to encourage people to exert more effort in optimizing their skills. It is believed that if people are well-motivated, they become more productive. This means more likelihood of success. Further, there is less staff turnovers and absenteeism because workers are happy to go to work. This cuts costs for training and recruitment due to the fact that job positions are always occupied by well-motivated and job-satisfied workers (Dawson, 2009).

The enjoyment of work itself and one’s earnest desire to achieve his set goals reflects a person’s motivation (Dawson, 2009). Two kinds of motivation have been identified. One is intrinsic, which means it is an inner motivation that provides for the individual a sense of fulfilment, and the other is external motivation, which are elements from outside the person such as rewards or approval from others. Deci & Ryan (1985) defined intrinsic motivation as “the activation or energization of goal-oriented behavior within an individual due to internal factors within a person rather than due some external factors acting on the individual” (cited in Brown & Huning, 2010, p. 1). This implies that intrinsic motivation is more effective than extrinsic motivation in ensuring that a worker is more productive in his job. This is echoed in the study of Gyanmudra and Vijaykumar (2007). They conclude that job satisfaction can be improved if money is not the only reason for working. They found apart from emphasizing concrete motivational factors such as cash incentives, job promotions, etc. focusing on more intrinsic factors such as the pride and fulfilment derived from one’s good work, the self-respect gained from such work and other boosts to self-esteem can enhance motivational levels. However, not everyone benefits from such external motivators. Using intrinsic motivation by allowing workers to enjoy what they do or even take part in decision-making processes will engage them more in their jobs. Nelson (as mentioned in Vesilind, 2013) argue that soliciting the opinion of employees as well as supporting them when they make mistakes and involving them in decisions that affect them are huge motivators for them to do their jobs better. Gyanmudra and Vijaylkumar (2007) also add that workers’ values should be congruent with the company’s so that they know why they are doing what they do in their jobs and why they need to be good at it. Environments imbued with positive interpersonal relationships encourage workers to work harder towards their goals. In doing so, they achieve job satisfaction. Gyanmudra & Vijaykumar (2007, p. 18) summarize their predictors for worker motivation as follows:

pride in one’s work;

incentives;

transparency;

infrastructure;

working atmosphere;

stimulating and challenging job;

people and work that gives self-respect

According to Gyanmudra & Vijaykumar (2007), not everybody is motivated by monetary incentives. Deci & Ryan (1999) claim that there are three motivational determinants for work motivation namely: the perception of autonomy, the perception of competence and the perception of relatedness. They explain that autonomy provides a feeling of power of being in control and whatever consequence that comes after their actions are due to the choices they make. Competence is one’s effectiveness in tasks and how they deal with challenges around them. Finally, relatedness is being connected to others which bring about a feeling of belongingness. All three determinants interplay as predictors for motivation and job satisfaction.

2.3 Motivational Strategies

Dawson (2009) explains that a well-motivated workforce results in better work productivity which can translate to more sales and profits. Since workers are happy at work, they are not prone to absenteeism and keep on reporting for work in order to achieve set targets. Management should come up with a variety of motivational strategies to keep employees eager to work. Examples of such strategies are as follows.

2.3.1 Total Reward System

A motivation framework designed by Christofferson and King (2006) proposes both monetary and nonmonetary rewards to employees who perform well in their jobs. Known as the Total Rewards System, key elements valued by employees are integrated such as their pay, benefits, their learning and development and even their work environment (Brown, 2001). These motivating elements effectively attract, retain and encourage employees to achieve the desired business results, thereby also benefitting the organization. Further, the elements of development and career opportunities, which are similar to Brown’s (2001) framework of learning and development, performance and recognition and work-life balance, have been added by Christofferson and King (2006) to the Total Rewards System.

Figure 1. Christofferson & King’s Total Rewards Framework

2.3.1.1 Key Elements:

2.3.1.1.1 Salary

The most concrete reward for one’s work is the salary, which is the monetary component of the Total Rewards System. This includes the base pay, the annual bonuses, the long term incentives, and company shares and profit sharing, if applicable. The employee needs money for his practical needs to sustain him in his work. Gyanmudra and Vijaykumar (2007) contend that job satisfaction is determined by the employee’s pay satisfaction and his need for career growth. Hence, if workers are satisfied with their salaries and derive opportunities for professional advancement, then they are likely to appreciate their jobs and what it provides for them.

2.3.1.1.2 Benefits

As employees get to prove their worth in the organization, they are rewarded with certain benefits such as pension, holidays, perks and flexibility of time in their work schedules. Receiving benefits enhances workers’ sense of belonging to the organization, however, such benefits may only be enjoyed after a certain duration that the employee has rendered service.

Learning and development opportunities such as training, on the job learning, performance management, career development and succession planning may yield more long-term outcomes for both the employee and the organization. For the employee, engaging in learning programs increases their market value because they are consistently updated about the latest trends in the business and become actively involved in contributing to its growth. Brown & Hunning (2010) agree and claim that if an employee adopts a learning goal orientation, and if he focuses on improving his abilities; then he is likely to achieve job satisfaction even if he is not intrinsically motivated. This is because of his intrinsic desire for the job due to the learning it brings him.

2.3.1.1.3 Work Environment

Employees need a work environment that is conducive to productivity. Elements in the workplace that motivate workers include its effective leadership, open communication, involvement of everyone in the work setting, work-life balance and recognition for a job well done. Edwards et al. (2008) suggest maintaining positive working relationships in the workplace in order to sustain a mutually beneficial relationship with the organization. If an employee perceives fair treatment from his supervisor and co-workers, he reciprocates with helping others in also performing well in their jobs. However, if the employee detects inequality within the workplace, then he may choose not to perform at his best in his job.

Total Reward Model is recommended for companies to emulate. Although it may be difficult for some companies to include all key elements, they can just customize the model to their needs and capabilities. The model is effective in encouraging productivity of workers which also translates to better performance of the organization.

2.4 Job Satisfaction

When workers enjoy their jobs, they achieve job satisfaction (Brown & Hunning, 2010). This satisfaction develops organizational loyalty in such employees which prevent absenteeism and employee turnover (Porter, 1997). Fried and Ferris (1987) assert that job satisfaction can partially mediate differences in personalities and deviant work behaviours. Job satisfaction is firmly related to productivity (Weiss, 2002; Porter, 1997).

Predictors of job satisfaction have been identified by Gyanmudra & Vijaykumar (2007) as follows: “communication and information flow; interpersonal relationship; manner in which their efforts are appreciated; level of job security; personal growth and development; methods of conflict resolution; organization climate; quantity of work expected/allotted; rewards for work done; and degree of motivation” (p. 21). On the other hand, dissatisfaction in jobs are usually due to the quantity of work expected from or assigned to workers, as well as constant stress.

The factor of age has also been identified as one that affects job satisfaction. Crites (1969) suggests a “u-shaped satisfaction cycle” which reflects a developmental trend in a person’s career. When a person begins working at the age of 20, his ideals are high as well as his level of satisfaction. However, as he advances in age and reaches his 30’s, his satisfaction dips low. Eventually, satisfaction rate rises again by his mid-career. On the contrary, Kalleberg and Loscocco (1983) believe that it is more of a linear relationship instead of a U-shaped one. They claim that as people get more adapted to their jobs and develop the skills needed to complete their tasks, their purposes become more closely matched to the work because of the time and effort they spend on it. Hence, as people get older and progress through their career life, job satisfaction likewise increases.

One’s happiness in the workplace determines their job satisfaction (Judge et al., 2001). Weiss (2002) and Rain et al. (1991) agree with the related point that employee job satisfaction and employee motivation are closely linked. Human resources are the most important assets that any organisation can be proud of (Rain et al., 1991; Fried and Ferris, 1987). Workers utilize and turn resources into products that the organisation needs in order to be more efficient and effective in meeting customers’ expectations.

2.5 Customer Service

“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not interruption in our work—he is the purpose of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to serve him.”

–Mahatma Gandhi, 1980 (cited in Fall, 2005)

The essence of true customer service was reflected in Gandhi’s statement, and customer service providers should take heed. This statement enlightens providers with the correct attitude and makes them appreciate their customers more. According to Fayerman (2002), customer relationship management (CRM) is “an enterprise-wide business strategy designed to optimize revenue and customer satisfaction by organizing the institution around customer segments” (p. 58). This entails changes in most organizations in order to suit their behaviours and attitudes towards customer satisfaction. It would result in transformation of organizations so it can better select, attract, retain and even grow customers.

Pozza & Noci (2006) simply define customer relationship management (CRM) as “an organizational effort aimed at improving customers’ retention through a better management of the relationship lifecycle” (p. 144). Simply put, even if organizations focus on its business, human relations should not be neglected, if the business is aimed towards success. Ledingham (2005) describes relationship management as a process of managing relationships between an organization and its internal and external publics. Internal public refers to the people within the organisation – co-workers, superiors, staff, etc. and external public refers to customers, suppliers, etc., basically, people outside the organisation that still deals with the people in the organisation. Such relationships established between the organisation and its publics can impact the economic, social, cultural or political well-being of the other (Ledingham, 2005).

The Technical Assistance Research Program (TARP) studied the cost of getting new customers as compared to retaining current ones and found out that it is five times more expensive to obtain a new customer than to keep a current one. It was also revealed that at least 50 percent of consumers who experience problems will not complain or contact the organisation and simply take their business elsewhere. Their statistics report that the average organisation loses 10 to 15 percent of customers per year due to bad service experiences.

Businesses which provide products and services to customers should make an effort to be customer-oriented. Rindfleisch and Moorman (2003) define customer orientation as “a set of behaviours and beliefs that places a priority on customer’s interest and continuously creates customer value” (p. 422). Such behaviours make customers feel important and valued and is enough to make them come back for repeat business. Consumers are more apt to return (or stay) if they feel some kind of a personal connection to the product, service, or organization. It is but normal for customers/ consumers to desire individualized, personalized service combined with individualized, personalized information. If customer service is not fulfilled, then they move on to another company which can (Fall, 2005). TARP research also reveals that those customers who experience bad service will tell as many as 16 friends about the negative experience. Another study conducted by the White House Office on Consumer Affairs indicates that 13 percent of dissatisfied customers will tell 20 people about it and that this multiplier effect redounds to loss of revenue (Fall, 2005).

The key element here is to keep customers satisfied. Popli (2005) claims that the best measure of quality of one’s service or product is customer satisfaction. Satisfaction, in this view is a function of perceived performance and expectations (Kotler & Fox, 1995). It should be the goal of businesses to go beyond the expectations of customers. When customers are delighted or highly satisfied, it creates an emotional bond with the company, not just a rational preference, and this result in high customer loyalty. This loyalty may push customers to speak highly of the business to others, actively endorsing it to them and it becomes the best form of advertising. It has been established that the best form of advertising is by word-of-mouth testimonies of happy customers.

Aside from making the effort to retain current customers, there is likewise value in wooing back customers who have left. This is especially important for retail businesses such as Wilko. However, many companies do not attempt to make win-back strategies a priority in their marketing programs. One reason is that they may believe lost customers are equivalent to dead opportunities. It is much easier to justify that the customer’s exit was something they had no control of and therefore, it is impossible to attract that customer’s business again. However, most customers have no special reason for leaving and if only asked back for their business may be willing to return (Vtrenz). Another reason why companies do not attempt to win back their lost customers is pride. Since win back strategies risk getting negative feedback from lost customers, it means having to admit being wrong. Some companies simply refuse criticism, no matter how constructive it may be. By putting pride aside, there is much to learn from listening to customer feedback. Companies learn ways to improve their products or services to better please even discriminating customers.

A company, exerting additional win-back efforts, is two to three times more likely to gain business with inactive or lost customers than from new prospects. Apart from revenue gains, the company regains goodwill and minimizes the negative word of mouth typically associated with defected customers (Vtrenz).

However, if efforts to win back customers do not bear fruit, it is still beneficial to keep things positive and keep the door open for future business in case they reconsider. Customers who leave for reasons such as price or perceived better quality of a competitive service may realize that it isn’t really a better fit for them after all and may eventually re-engage with the old company. It is also likely that their needs change and that they might be in a better position to appreciate the old company. Bottom line is keeping professional relationships with lost customers positive so it increases the probability that they will renew business ties in the future (Vtrenz).

Customers should also be updated with new features of the business through its marketing strategies. Harmonious relationships with customers should be sustained by businesses if they are to be kept loyal to the brand and not jump to the competition. Gronroos (1997) defines relationship marketing as the

“identification, establishment, maintenance and enhancement of the relationship with the client and other stakeholders when necessary, and even to terminate the relationship at a profit so that objectives of all parties involved are met through mutual exchange and fulfilment of promises” (p. 14).

Businesses should keep the customers updated with the services they offer and ensure that such services are results of their innovation and continuous search for better ways to serve its customers. Included in such innovation is the introduction of fresh marketing schemes that can excite and sustain customers’ interest (Durking & Lawlor, 2001).

Modern consumers have access to multiple overlapping sources that they use to help them decide on what to buy. Both offline and online sources are utilized actively and are not restricted to a single uniform path when shopping (Powers et al., 2012). Convenience and relaxation are foremost in their priorities so shopping on their own terms is preferred especially when it comes to the time and place to shop. Confidence in being in con