Description
Organizational climate, which consists of employees' perceptions of the events, practices, and procedures in an organization, has been a central focus of a variety of models of organizational behavior. Evidence suggests that when employees have favorable perceptions of their workplace environment the organization performs better than when the perceptions are unfavorable. The processes that link employees' climate perceptions to business unit performance, however, have not yet been thoroughly examined. The purpose of the present study is to investigate a full model of the service-profit chain, which views customer satisfaction as an intervening variable in the relationship between employees' perceptions and financial performance in service firms. The present research also extends the service-profit model by incorporating climate strength, customer satisfaction strength, and employee turnover. It was hypothesized that higher levels of climate, as well as higher levels of climate strength, will be associated with higher customer satisfaction ratings, lower levels of turnover, and greater financial performance. Further, it was hypothesized that customer satisfaction and turnover will mediate the relationships between climate level and financial performance. It was also hypothesized that higher levels of climate strength will be associated with stronger relationships between climate level and customer satisfaction, turnover, and financial performance, than lower levels of climate strength. Additionally, it was hypothesized that higher levels of climate strength will be related to lower variability in customer satisfaction ratings. Finally, the relationship between customer satisfaction and financial performance was hypothesized to be greater when variability in customer satisfaction ratings is low than when the variability is high. A total of 26,399 employees and 178,771 customers from 1,291 business units of a restaurant chain were used to investigate the hypothesized links in the service-profit model. The climate and customer satisfaction measures were developed by the restaurant chain. Factor analyses were conducted to determine final scale composition, resulting in a climate measure consisting of four dimensions, compensation, alignment, teamwork, and management; and a customer satisfaction measure consisting of two dimensions, customer satisfaction with food and other factors. The thirteen hypotheses were evaluated through a path analysis using linear multiple regression analysis. The hypothesized zero-order relationships were statistically tested using correlational and least square regression analyses. The hypothesized mediated relationships were statistically tested using mediated multiple regression analyses. Finally, the hypothesized moderated relationships were tested using hierarchical multiple regression analyses.
