Rs CHP PR Links Among High

Links Among High-Performance
Work Environment, Service Quality,

and Customer Satisfaction: An
Extension to the Healthcare Sector
Dennis J. Scotti, Ph.D., FACHE, FHFMA, the Alfred E. Driscoll Professor of
Healthcare and Life Sciences Management, Fairleigh Dickinson University, New
Jersey; Joel Harmon, Ph.D., professor of management and research director, Institute
for Sustainable Enterprise, Fairleigh Dickinson University; and Scott J. Behson,
Ph.D., associate professor and chair, Department of Management, Fairleigh Dickinson
University
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[109], (1)
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E X E C U T I V E S U M M A R Y
Healthcare managers must deliver high-quality patient services that generate highly
satised and loyal customers. In this article, we examine how a high-involvement
approach to the work environment of healthcare employees may lead to exceptional service quality, satised patients, and ultimately to loyal customers. Specifically, we investigate the chain of events through which high-performance work
systems (HPWS) and customer orientation inuence employee and customer perceptions of service quality and patient satisfaction in a national sample of 113
Veterans Health Administration (VHA) ambulatory care centers. We present a conceptual model for linking work environment to customer satisfaction and test
this model using structural equations modeling (SEM). The results suggest that
(1) HPWS is linked to employee perceptions of their ability to deliver high-quality
customer service, both directly and through their perceptions of customer orientation; (2) employee perceptions of customer service are linked to customer
perceptions of high-quality service; and (3) perceived service quality is linked
with customer satisfaction. Theoretical and practical implications of our ndings,
including suggestions of how healthcare managers can implement changes to their
work environments, are discussed.
For more information on the concepts in this article, please contact Dr. Scotti at
prof djs@fdu.edu. Work on this project was partly supported by a grant from the U.S.
National Science Foundation (NSF), Innovation and Change Division. Conclusions do
not necessarily represent the views of the NSF. We acknowledge the Veterans Health
Administration (VHA) Ofce of Quality and Performance for providing data used in
this study. The views expressed in this article do not necessarily represent the views of
the Department of Veterans Affairs, the VHA, or the United States government.
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Journal of Healthcare Management 52:2 March/April 2007
healthcare industry. We investigated the

chain of events through which aspects
of work climate, specically highperformance work systems (HPWS)
and customer orientation, inuence
employee and customer perceptions
of service quality and their ultimate
impact on patient satisfaction in 113
Veterans Health Administration (VHA)
centers.
The roles of HPWS and customeroriented work climates as catalysts for
superior service quality and increased
patient satisfaction have received little
empirical investigation within the
healthcare environment. This study
offers empirical justication for the
dimensions of the work environment
that contribute to high performance in
a healthcare setting and yields ndings
that can be used to guide healthcare
managers in their efforts to design and
enhance their organizational practices.
In the following sections, we provide the theoretical foundations of
our linkage model, dene the constructs and measures used, present
our results, and discuss the practical
implications and limitations of our
research.
ealthcare managers seek to improve

overall system effectiveness by
strengthening their value chain, thereby
increasing customer retention and
market share. Better knowledge of
conditions in the work environment
that drive service quality excellence
and customer satisfaction is valuable to healthcare managers. It is
becoming clear that strategic human
resource practices that result in highperformance work environments are
linked with important organizational
outcomessuch as service quality,
customer satisfaction, and loyaltyin
a wide variety of commercial industry
contexts (Dean 2004). Evidence also is
accumulating that customer-oriented
work climates produce superior service
quality and customer satisfaction,
operating independently (HenningThurau 2004) or in conjunction with
high-performance human resource
practices in proprietary rms in retail
services industries (Schneider, White,
and Paul 1998; Yoon, Beatty, and Suh
2001).
In contrast, the mission, design,
and resource constraints of health
services organizations may differ meaningfully from those of rms operating
in the broader services domain, and
many health services providers are
public or not-for-prot entities, rather
than for-prot enterprises. It should
be noted, however, that the existence
and magnitude of such differences may
be anchored more in a priori beliefs
than empirical evidence (Rainey and
Bozeman 2000). The goal of this study
is to determine whether the research
evidence regarding the importance of
work climate can be extended to the
T H E O R E T I C A L F O U N D AT I O N
Linkage research examines and tests
the chain of events that is set into
motion when a strategic or operational intervention is introduced by
management. The origins of linkage
research are rooted in the research of
Benjamin Schneider and his coinvestigators, who demonstrated that employee perceptions of human resource
practices were connected to customer
perceptions of their service experience
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[110], (2)
High-Performance Work Environment, Service Quality, and Customer Satisfaction
involvement, empowerment, trust, goal

alignment, training, teamwork, communications, and performance-based
rewards. Organizations that provide
enabling work environments will have
employees who can devote their efforts
to meeting the needs and expectations
of customers, thereby improving service
quality (Pugh et al. 2002; Schneider
and Bowen 1985). The work of prior
investigators offers compelling empir[111], (3)
ical evidence that bundling complementary sets of human resource practices closely resembling HPWS (e.g.,
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facilitative management, resources,
training, communications, teamwork,

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aligned goals, and rewards) positively
affects employees perceptions of their

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ability to deliver high-quality services
* PgEnds: Eject
to their customers in a variety of forprot, retail service settings, including
[111], (3)
insurance (George 1990; Hallowell,
Schlesinger, and Zornitsky 1996), banking (Schneider, Parkington and Buxton
1980; Schneider and Bowen 1985), and
telecommunications (Batt 2002). In the
healthcare context, nurse perceptions
of their ability to serve patients have
been conceptually linked to their work
conditions (Newman, Maylor, and
Chansarkar 2001), and employee development practices have been empirically
connected with hospital staff productivity (Goldstein 2003). Accordingly, the
assumed connection between HPWS
and employee perceptions of service
quality occupies a root position in our
posited chain of linkages.
Customer orientation is dened
as the importance that service providers
place on their customers needs and
expectations relating to a rms service
offerings (Kelly 1992). A compre-
in retail banking. James Heskett and

his collaborators added momentum
and depth to the genesis of linkage research by extending Schneiders models
to include an emphasis on customer
loyalty and protability (see Pugh et
al. 2002 and Dean 2004 for excellent
overviews of the subject). Despite
considerable progress in specifying
and empirically testing various linkage
models, the specic matrix of strategic
human resources management (HRM)
practices that drive the chain reaction
remains unsettled. Progress may lie in
adopting a systems view of HRM that
considers the overall conguration of
HRM practices that best t particular strategies (e.g., enhancing service
effectiveness), rather than examining
the effects of individual practices on
organizational performance (Bowen
and Ostroff 2004). Extending our
understanding of how such an array
of HRM practices may interact with
the creation of a customer-oriented
work climate to spur the chain reaction
is also desirable. Figure 1 shows the
conceptual model to be tested in the
present study. Next, we discuss the
theoretical and empirical underpinnings associated with each path in our
model.
Linkages Among HPWS, Customer

Orientation, and Employee Perceptions of
Service Quality
HPWS, also referred to in the literature
as high-involvement work systems
and high-performance organizations
(Nadler and Gerstien 1992; Lawler,
Mohrman, and Ledford 1995), represents an interrelated and aligned
set of core characteristics, including
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FIGURE 1
Conceptual Model
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hensive commitment to total quality

would involve service-enabling HRM
practices and a focus on customers.
Schneider and Bowen (1993) found a
link between human resource practices
and customer service orientation and
also found that both were related to
employee and customer perceptions
of service quality. They concluded
that service-enabling HRM practices
and a service-oriented climate were
distinct but interrelated organizational
dynamics. Consequently, customer orientation can be viewed as a construct
that partially mediates the linkage between HPWS and perceptions of service
quality. We, therefore, hypothesize
(as shown in Figure 1) that HPWS
will affect employee perceptions of
service quality both directly (H1) and
indirectly via its effects on (H2) and

through (H3) customer orientation
(i.e., a mediated effects model).
Links Among Employee Perceptions of

Service Quality, Customer Perceptions
of Service Quality, and Customer
Satisfaction
Common among linkage research
studies is the merging of data collected
from employees and consumers, with a
particular focus on assessing the degree
of congruence between each groups
attitudes toward service quality. Various
studies have shown an association between employee and customer perceptions of service quality delivered and
received in commercial retail service
settings (Schneider, Parkington, and
Buxton 1980; Schneider and Bowen
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[112], (4)
1985). A link between employee and

patient perceptions of service also was
observed in a study of hospital inpatient encounters (Nelson et al. 1989).
This connection is supported by the argument that service providers, by virtue
of their close contact with customers,
are reliable commentators on consumer
needs and expectations (Hennig-Thurau
2004). The simultaneous provision and
receipt of healthcare in a high-contact,
face-to-face, professional-service context
obscures the boundary between employee and customer/patient. Patients
must participate in the care delivery
process and are often cocreators of
their own service. Therefore, the perceptions of employees and customers
regarding service quality are rooted in a
common foundation.
The role of customer perceptions
of service quality as an antecedent of
overall customer satisfaction has been
extensively researched and is widely
accepted in the services marketing literature (Anderson, Fornell, and Lehmann
1994; Churchill and Surprenant 1982;
Cronin and Taylor 1992; Rust and
Oliver 1994). More recently, evidence
has emerged supporting the existence
of a causal connection between service
quality perceptions and patient satisfaction judgments in the healthcare
context (Bigne, Moliner, and Sanchez
2003; Marley, Collier, and Goldstein
2004; Woo et al. 2004). As a result,
there is ample theoretical and empirical
justication to hypothesize afrmative
links between employee-perceived and
customer-perceived service quality (H4)
and between customer-perceived service
quality and customer satisfaction (H5)
as the terminal path in our model.
Finally, we are interested in the

link between customer satisfaction and
customer loyalty. Conventional logic
argues that a customer who is satised
with the quality of services received
will be more likely to declare intentions
to engage in repeat consumption.
Although evidence exists to support
this premise in commercial retail rms
(Hallowell 1996; Rust and Zahorik
1993) as well as in outpatient services
rendered by not-for-prot hospitals
(Baker and Taylor 1997), the link between customer satisfaction and loyalty
has not been consistently established in
the literature. Several studies suggest
that we should be cautious about
assuming linkage between customer
satisfaction and loyalty (Dean 2004).
The factors that inuence customer
satisfaction may differ from those that
determine customer loyalty (Reichheld
1996). Moreover, behavioral intentions
expressed at the point of service may
not reliably predict actual behavior
(Storbacka, Strandvik, and Gronroos
1994).
In light of the fact that this is a
study involving the Department of
Veterans Affairs (VA) healthcare network, in which U.S. service veterans
receive free healthcare, we felt that
incorporating customer loyalty into
our model was inappropriate. The rest
of our model should be applicable
to private and for-prot healthcare
organizations, but customer loyalty in
a publicly funded free service would
probably not yield generalizable information. For this reason we do not
include loyalty in our model, but the
nature and strength of its connection
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[113], (5)
with customer satisfaction is discussed

later when we present our results.
METHODS
Study Participants and Procedure
This study is part of an ongoing research project with the VA and is focused on how changes to the work
environment can affect quality and
customer service. The research reported
here draws on responses from an existing 2001 VHA survey of its employees
and from an existing 2001 VHA customer service survey of its patients.
A total of 74,662 responses to the
condential and anonymous employee
survey (72 percent response rate) were
received from employees in 147 VHA
medical facilities across the United
States. Of the 71,526 respondents that
provided demographic information, 56
percent were professional and technical
staff (versus administrative and backofce workers), the overwhelming majority of whom (approximately 89 percent) were clinical personnel, primarily
nurses and technical support staff. This
survey asked for employee observations
and opinions on a wide variety of topics regarding their work experiences.1
However, a wave of recent VHA reorganizations introduced unreliability in
matching various types of data at the
facility level. Therefore, we conned
our analyses only to those facilities
for which employee survey data could
be reliably paired with other facility
data for 2001. This yielded usable data
from 113 VHA facilitiesspecically,
responses of 59,464 employees. We
then aggregated the data by averaging
the individual responses for each item
within each of the 113 VHA facilities.
Our data collection procedure closely

matches that described in Harmon et
al. (2003).
We also used responses from an
existing 2001 VHA customer service
survey of its ambulatory care patients
at those same 113 facilities. This customer survey followed a stratied,
random sampling design that resulted
in a total of 212,874 respondents (an
average of approximately 5.8 percent
of the total ambulatory care patients of
these facilities; with samples ranging
from 478 customers of the smallest
facility to 10,608 customers of the
largest). This survey asked for customer
observations and opinions on a wide
variety of topics regarding the care
they received at the VHA.2 We then
aggregated the data by averaging the
individual responses for each item
within each of the 113 VHA facilities.
Study Measures and Analysis

Independent Variables
The measure we used to assess

strategic human resource practices,
HPWS, is a ten-item scale derived from
the VA employee survey that has been
previously tested and validated (see
Harmon et al. 2003 for a fuller explanation of how this scale was derived
and validated through a series of conrmatory factor analyses). These items
asked employees to what degree they
believed that their workplace exhibited
the characteristics commonly associated
with high-performance work practices
(goal alignment, communication, involvement, empowerment, teamwork,
training, trust, creativity, performance
enablers, and performance-based rewards). Responses to all employee
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TA B L E 1
High Performance Work Systems Construct Items
Item
Mean S.D.
1.
2.61
Employees are rewarded for providing high quality products and services
to customers.
2. Managers let employees know how their work contributes to the
organizations mission and goals.
3. Employees are kept informed on issues affecting their jobs.
4. Sufcient effort is made to get the opinions and thinking of people who
work here.
5. Employees have a feeling of personal empowerment and ownership of
work processes.
6. A spirit of cooperation and teamwork exists.
7. There is trust between employees and their supervisors/team leaders.
8. I am given a real opportunity to improve my skills in the organization.
9. I feel encouraged to come up with new and better ways of doing things.
10. Conditions in my job allow me to be about as productive as I could be.
0.24
3.04 0.18
3.09 0.19
2.70 0.20
2.61
0.19
3.08
2.85
3.19
3.10
3.15
0.18
0.19
0.17
0.16
0.13
survey items were made on a Likerttype scale, with 1 as strongly disagree,

and 5 as strongly agree. Table 1 lists
these ten items along with their facility
means and standard deviations. The
ten-item scale exhibited a Cronbachs
alpha3 estimate of reliability of .97.
Customer orientation was measured
by three items from the VHA employee survey that assessed the degree to which employees believed
their organization was geared toward
accommodating its customers: (1)
Products, services and work processes
are designed to meet customer needs
and expectations; (2) Customers
are informed about the process for
seeking assistance, commenting, and
or complaining about products and
service; and (3) Customers have
access to information about products
and services. The Cronbachs alpha
estimate of reliability for this vepoint, three-item scale was .95.

Employee-perceived service quality
(Employee PSQ) was measured with
a two-item scale derived from the employee satisfaction survey that reects
employees ability to deliver highquality customer service at their workplace. The two items were (1) How
would you rate the overall quality of
work done in your work group? and
(2) Overall, how would you rate the
quality of service provided to veterans
by your facility or ofce? The Cronbachs alpha index of reliability for this
two-item, ve-point scale was .85.
Dependent Variables
Customer-perceived service quality

(Customer PSQ) was measured with
a two-item scale derived from the
customer satisfaction survey. The two
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[115], (7)
items (both on ve-point response

scales ranging from poor to excellent) were (1) Overall, how would
you rate the quality of your most recent visit? and (2) Overall, how
would you rate the quality of care
you have received over the past two
months? The Cronbachs alpha index
of reliability for this two-item, vepoint scale was .98, indicating high
levels of item intercorrelation and scale
reliability.
Customer satisfaction was measured
by a single item from the VHA customer survey: All things considered,
how satised are you with your healthcare in the VA? (1 as completely
dissatised and 7 as completely
satised). Although it is often assumed that multiple-item (or scale)
measures of satisfaction are preferred,
recent evidence suggests that singleitem measures of global satisfaction are
as good or better (Nagy 2002; Wanous,
Reichers, and Hudy 1997).
Preliminary data analysis was conducted using the SPSS 12.0 software
package, and hypotheses were tested
using the AMOS 5.0 software package for structural equations modeling
(SEM). Structural equations modeling
offered us two distinct advantages
over traditional regression techniques:
(1) SEM allowed us to simultaneously
calculate both direct and indirect effects
of the independent variables, and (2)
SEM provided us with statistical tests to
determine the relative t to the data
of our hypothesized model against
alternative models and hypotheses
(Schumaker and Long 1996).
R E S U LT S
Table 2 depicts the correlations between the measures used in this study,
along with their means and standard
deviations. The results of the SEM
analyses are presented in Figure 2. As
can be seen, the results provide support
for our hypotheses that (1) HPWS is
linked to employee perceptions of
their ability to deliver high-quality
customer service, both directly (H1)
[116], (8)
and through their perceptions of customer orientation (H2 and H3); (2)
employee perceptions of customer serLines: 159 to 182
vice is linked to customer perceptions
of high-quality customer service (H4);

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and (3) perceived service quality is
linked with customer satisfaction (H5).

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Further, the overall t for the structural * PgEnds: Eject
equations model (chi-square of 6.9,
df = 5; p > .05; CFI = .99; RMSEA =
[116], (8)
.06) is excellent, indicating that this
model accurately reects the underlying
data and that no signicant indirect or
direct effects are present in the model
except those that are hypothesized.
HPWS had a strong direct effect
( = .74) on employee perceptions of
whether the organization is oriented
toward customer service. Further, HPWS
had both a direct effect ( = .21) on
employee perceptions of being enabled to provide high-quality customer
service and a total path effect on this
variable (i.e., both direct and indirect
through the customer-orientation path)
of = .60.
We also found a signicant relationship ( = .66) between employee
perceptions and customer perceptions
of service quality. Further, 44 percent of
the variance in customer perceptions
of service quality can be explained by
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TA B L E 2
Descriptive Statistics and Correlation Coefcients for Study Variables
Variable
Mean
S.D.
1.
2.
3.
4.
5.
2.90
3.59
4.16
3.83
5.69
0.17 (.97)
0.13 .74* (.95)
0.13 .60* .68* (.85)
0.14 .29* .37* .66* (.98)
0.13 .14
.25* .50* .73* n/a
High-performance work systems (15)

Customer orientation (15)
Employee-perceived service quality (15)
Customer-perceived service quality (15)
Customer satisfaction (17)
Notes:
1. * denotes that the correlation is statistically signicant at p< .05
2. Scale reliabilities (Cronbachs alpha) are listed in parentheses on the diagonal.
3. Sample size for all correlations is 113 facilities.
[117], (9)
knowing the employees perceptions.

Finally, as expected, customers perceptions of service quality is a strong
driver of their satisfaction, with a direct
effect of = .73. Fully 53 percent of
the variance in customer satisfaction
can be explained by the other variables
in the model.
Considered collectively, a signicant portion of customer satisfaction
can be explained through employee
perceptions that managers at their
facilities empower employees and
create a positive enabling environment
for them to deliver high-quality customer service. HPWS were found to
have a total path effect on customer
satisfaction of = .29. This means
that all the ripple effects of HPWS
on customer orientation and employee
and customer perceptions add up to a
sizeable effect. Specically, our results
show that for every 1 standard deviation increase in HPWS (i.e., from the
50th percentile to the 84th percentile),
a facility will show an associated .29
standard deviation increase in customer
satisfaction.
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Several post-hoc analyses were

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performed to supplement the SEM
model. First, computational limitations

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prevented us from adding specic
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service attributes that may have contributed to formation of quality percep[117], (9)
tions directly to the model. However,
supplemental analysis revealed the
strongest correlates of Customer PSQ
were courtesy/respect, condence/trust
in provider, communication, and clinic
efciency (r = .70, .53, .53, and .50,
respectively; p < .05 for all). These
ndings are largely consistent with
those obtained from a study of hospital
inpatients conducted by Scotti and
Stinerock (2003). Second, because of
generalizability concerns, we did not
add customer loyalty directly to our
model. However, we did nd a strong
correlation (r = .73, p < .001) between
customer satisfaction and patients
responses to the following question
that closely maps customer loyalty:
If you could have free care outside
the VA, would you choose to come
here again (1 as denitely would
not, and 4 as denitely would).
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FIGURE 2
Results of the Structural Equation Modeling Analysis
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[118], (10)
Notes:
1. All path coefcients are statistically signicant at p< .05
2. VAF is variance accounted for
3. The model presented in Figure 2 represents a good t to the data. Specically, the following
statistics are all indicative of goodness of t: (1) the chi-squared for the model is 6.921 with
5 degrees of freedom (p = .23; with nonsignicance, p > .05), indicating that the model is not
statistically different from a perfect-tting model); (2) the CFI index is .99 (values over .90 indicate good t); (3) the NNFI (Tucker-Lewis index) is .98 (values over .90 indicate good t); and
(4) the RMSEA is .06 (values at or below .08 indicate good t).
Third, using a measure of average treatment cost reported in Harmon et al.

(2003), we found that patient resource
consumption was negatively correlated
with perceived service quality (r = .23,
p < .05) and satisfaction (r = .30, p
< .01). In other words, facilities with
higher customer-perceived service quality and customer satisfaction tended to
also have lower treatment expenditures.
Lastly, it should be noted that we ran
the SEM model with patient count
included as a covariate to determine

whether the size of the facility affected
the relationships in the model. We
found that patient count had a nonsignicant relationship with patient
perceptions of service quality, did not
account for additional variance in the
model, and did not change the values
of any of the hypothesized paths between constructs. Thus, we can be condent that the relationships we found
apply to facilities of varying sizes.
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DISCUSSION
Contributions of the Study
We are aware of no published studies
that have empirically veried the entire
chain of effects from organizational
practices to service quality to customer
satisfaction in a healthcare setting.
The linkage model tested in our study
offers convincing statistical support for
the substance and sequence of events
that connect organizational practices
with patient attitudes. Moreover, the
study underscores and adds empirical
weight to the role played by service
quality as a variable that integrates
the connections between organizational and consumer behavior within
a healthcare context.
The relationship between HPWS
and cost efciency was established in
a recent study using VHA facilities as
the research setting (Harmon et al.
2003). Our investigation extends this
research by demonstrating a strong link
between HPWS and patient perceptions of service quality and satisfaction
using a similar set of VHA facilities.
Further, we found in this study that
enhancing service quality and customer
satisfaction, rather than inating costs,
contributed to cost efciency. We have
also shown that the inuence of HPWS
on customer outcomes is partially
mediated by customer orientation
and is fully mediated by employees
perceptions of the quality of service
they are capable of delivering.
Prior research on the determinants
of patient satisfaction has focused
on inpatient encounters. Our study
focuses on ambulatory care centers, a
setting that has received relatively little
attention, notwithstanding the fact that
the majority of healthcare is delivered

on an outpatient basis. To the extent
that most HRM practices and customer
service attitudes examined in this study
hold relevance to inpatient services
as well, we have reason to believe the
results should be transferable to acute
care rendered to conned patients.
Implications for Managers

The ndings reveal that specic sets of
managerial practicesHPWS and customer orientationfunction as engines
that propel the evolution of a work environment in which the perceptions of
employees are aligned with the service
experiences they provide to patients
and translate into enhanced patient
satisfaction. The interrelated practices
constituting HPWS and customer orientation represent organizational factors
that are amenable to direct managerial
intervention and control in implementing a competitive service strategy for
high-contact healthcare encounters.
To foster a high-performance work
environment with a strong customer
orientation, the importance of customer service must be incorporated
into the mission statement. Management must continuously emphasize the
importance of customer service, clearly
dene customer service objectives, and
solicit input from patients regarding
their perceptions of service encounters.
Once achieved, a customer-oriented
work environment must be reinforced
by strategic HRM practices that nurture a high-performance climate of
service excellence. Several managerial
actions are conducive to cultivating
customer-oriented high-performance
work systems.
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[119], (11)
The service climate of a healthcare

organization is determined by the people that it hires. Accordingly, the centrality of customer service to the organizations mission should be reected
in job advertisements, job descriptions,
and job interviews (Crotts, Dickson,
and Ford 2005). After the process of
recruitment and selection of service
employees is complete, managers must
continue to inculcate a strong sense of
service responsibility through orientation and training programs; senior
managers should be present at these
sessions to add visible credibility to
and emphasize the importance of
service excellence. Once hired and
acculturated, service providers must be
empowered to address, and if possible
to resolve, patient complaints on a
real-time basis, while being recognized
and rewarded for doing so. Naturally,
reasonable limits should be imposed
on such empowerment to preserve an
appropriate balance between clinical
discipline and patient comfort.
A willingness to listen to the customer is one of the dening features
of a customer-oriented work climate.
Having heard the voice of the customer, health services managers should
promptly communicate information
needed to help healthcare providers
improve their level of service quality.
Our study supports the argument that
service providers, by virtue of their
frequent and close contact with patients, are reliable sources of insight
into the needs and expectations of their
customers. Managers should explicitly
acknowledge this truth and survey the
opinions of front-line providers as
part of their regular market research

activities.
We invite the managers attention
to the importance of team building.
Based on her study of surgical inpatients, Gittell (2002) found that
relational coordination (analogous
to teamwork) among service providers
is most likely to inuence customer
satisfaction and loyalty in settings
where the provider-client interface
is characterized by reciprocal interdependence between tasks, high levels of operational uncertainty, and
time-constrained demands for service
delivery. Health services organizations clearly exhibit these characteristics; therefore, the need for managers to foster a spirit of teamwork
and interdepartmental cooperation is
paramount.
Early strides toward elevating customer service will be short-lived if performance is not properly reinforced. A
percentage of pay and bonuses should
be based on the accomplishment of
service objectives, and a clear message
should be communicated to front-line
employees that promotions will be
predicated on customer satisfaction.
If bonuses are to be awarded based
on team performance, then the team
members should be involved in hiring
decisions that will affect their group.
We conclude by pointing out that
managers must measure progress along
the way, recognizing that changing
their organizations work environment
takes time and dedicated effort.
Limitations of the Study

Several limitations of our ndings
should be acknowledged. First, even
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though considerable diversity existed

across the VHA facilities involved in
this study, all the organizations are part
of a single, large, government organization. The extent to which similar results
would be obtained in the private sector
remains unclear. Second, employee and
customer perceptions were conveniently
obtained from existing survey data.
Even though the face, content, and
construct validities of our survey-based
measures appeared to be very good, the
measurement instruments themselves
were not specically constructed with
the studys purposes in mind, and a
separate validation study of the HPWS
measure was not performed before
the analyses. Third, HPWS and service
quality were assessed solely through
perceptual measures, which are subject
to assessors distortions, rather than
through more objective indicators.
Although it can be argued that how
employees perceive work practices may
be the most valid measure to use for
this line of inquiry, and that employees
and customers are subject-matter experts on service quality, we are unable
to conrm with this study how well
these perceptions reect reality. Finally,
the research design advises caution in
drawing inferences about causality, because multiple, time-ordered perceptual
measures necessary to establish causal
relationships were not used.
Future Research
We advocate further research that examines linkages in acute care inpatient
settings as well as research comparing
results in public healthcare systems
(e.g., the VHA, state and municipal
systems) with those obtained in notfor-prot and for-prot healthcare organizations. While most of the variables
specied in our model are relevant to a
range of settings, the discrete linkages
quite likely vary in strength. Furthermore, future research should seek
to illuminate the multidimensional
drivers of perceived customer service
quality and their relative importance.
Enhanced understanding of the aspectlevel determinants of service quality
assessments would offer practicing
healthcare managers greater instruction
on where and how resources should be
directed.
In addition, the question remains
whether customer satisfaction leads to
superior economic returns on investment. It is well established that satised customers represent the potential
for repeat service utilization and also
are a valuable source of referrals and
ideas for new business opportunities.
Moreover, retaining a current customer
is less costly than recruiting a new
one (Rust and Zahorik 1993). Thus,
strategies that succeed at retaining
customers should ultimately result in
higher prots (or surpluses) through
enhanced patronage combined with
reduced operating expenses. Further
research is needed to test the linkage
between patient satisfaction and nancial performance and to elaborate
the sequence paths that form any such
connection.
Notes
1. The employee survey asked workers about their overall satisfaction
with the VA, their appraisal of service
quality, and their perceptions about
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various dimensions of work climate,

such as rewards/recognition, involvement, development, innovation, customer orientation, supervision, planning/measurement, respect/fairness,
diversity, information/communication,
conditions/resources, and teamwork.
2. The customer survey asked veterans to
evaluate various aspects pertaining to
the nature and quality of their service
experiences during recent visits to a VA
clinic, including waiting time, clinic
organization, communication, courtesy, involvement in decisions, continuity of care, and condence/trust
in providers, culminating in global
appraisals of quality and satisfaction.
3. Cronbachs alpha is a statistical index
that measures how well a set of items
measures a single unidimensional
underlying construct. Cronbachs alpha
ranges from 0 to 1.0, with 1.0 indicating the highest level of reliability or
condence one has in the measure being used. If the various items measuring a construct are highly correlated,
leading to an alpha approaching 1.0,
this is evidence that the measure is
reliable, because all of the items are
measuring the same construct.
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Employee-Level Analysis. International
P R A C T I T I O N E R
A P P L I C A T I O N
Daniel J. Messina, Ph.D., FACHE, LNHA, senior vice president and chief operating
ofcer, CentraState Healthcare System, Freehold, New Jersey
n this era of heightened market competition and consumerism, it is critical to

the success of healthcare organizations to understand the major drivers of patient
and employee perceptions of service quality. Creating a work climate that leads
to high levels of perceived service quality and patient satisfaction should be a
top priority for healthcare managers. But what is the correct path to follow? The
article by Scotti, Harmon, and Behson brings us one more step toward mapping
the course we should travel in this journey.
This article examines the effects of work environment on healthcare service
quality and customer satisfaction. The authors study the sequence of events
through which HPWS and customer orientation affect employee and customer
perceptions of service quality and their resulting effect on patient satisfaction in
113 VHA centers. Although the research ndings may be principally applicable to
VHA facilities, they provide lessons that apply and extend to the general healthcare
industry: There is a link between work environment and employee perceptions
of delivering high-quality customer service, and there is a link between employee
perceptions of customer service, customer perceptions of high-quality customer
service, and customer satisfaction.
In addition to the ndings that HPWS had a strong direct effect on employee
perception, one of the articles most interesting results related to the ripple effects
of HPWS and customer orientation. These factors are shown to exert a progressive
inuence, as their impact manifests itself through subsequent linkages in the chain
model. As demonstrated by the authors, a signicant portion of customer satisfaction can be explained through employee perceptions that managers at their respective organizations empower employees and thus develop a positive supportive
environment that provides the framework for exceptional high-quality customer
service.
The authors have raised our awareness of the interplay between the work environment and customer satisfaction. With limited existing research that has tested
the relationship between organizational work environment, service quality, and
customer satisfaction, the authors identify several opportunities for healthcare
executives to make practical use of the study ndings. They emphasize the necessity
of a complete and deep understanding of a high- performance work environment,
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and the importance of hiring for attitude, making communication produce results,
and aligning performance for sustained customer service.
In summary, this research demonstrates the link between the workplace, service
quality, and customer satisfaction in the ambulatory care environment, an area of
focus that needs to be high on the radar screens of practicing healthcare executives.
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Links Among High-Performance

Work Environment, Service Quality,

Journal of Healthcare Management 52:2 March/April 2007

healthcare industry. We investigated the

ealthcare managers seek to improve

High-Performance Work Environment, Service Quality, and Customer Satisfaction

involvement, empowerment, trust, goal

training, communications, teamwork,

affects employees perceptions of their

in retail banking. James Heskett and

Linkages Among HPWS, Customer

Journal of Healthcare Management 52:2 March/April 2007

hensive commitment to total quality

indirectly via its effects on (H2) and

Links Among Employee Perceptions of

High-Performance Work Environment, Service Quality, and Customer Satisfaction

1985). A link between employee and

Finally, we are interested in the

Journal of Healthcare Management 52:2 March/April 2007

with customer satisfaction is discussed

Our data collection procedure closely

Study Measures and Analysis

The measure we used to assess

High-Performance Work Environment, Service Quality, and Customer Satisfaction

survey items were made on a Likerttype scale, with 1 as strongly disagree,

estimate of reliability for this vepoint, three-item scale was .95.

Customer-perceived service quality

Lines: 117 to 159

Journal of Healthcare Management 52:2 March/April 2007

items (both on ve-point response

of high-quality customer service (H4);

linked with customer satisfaction (H5).

High-Performance Work Environment, Service Quality, and Customer Satisfaction

High-performance work systems (15)

knowing the employees perceptions.

Lines: 182 to 220

Several post-hoc analyses were

model. First, computational limitations

Journal of Healthcare Management 52:2 March/April 2007

Lines: 220 to 245

Third, using a measure of average treatment cost reported in Harmon et al.

included as a covariate to determine

High-Performance Work Environment, Service Quality, and Customer Satisfaction

the majority of healthcare is delivered

Implications for Managers

Lines: 245 to 258

Journal of Healthcare Management 52:2 March/April 2007

The service climate of a healthcare

part of their regular market research

Limitations of the Study

Lines: 258 to 271

High-Performance Work Environment, Service Quality, and Customer Satisfaction

though considerable diversity existed

Lines: 271 to 281

Journal of Healthcare Management 52:2 March/April 2007

various dimensions of work climate,

of Spanish Public Services. Journal of

Lines: 281 to 319

High-Performance Work Environment, Service Quality, and Customer Satisfaction

Journal of Healthcare Management 48 (6):

Lines: 319 to 365

Journal of Healthcare Management 52:2 March/April 2007

Employee and Customer Outcomes: An