The relationship between employee

satisfaction and customer satisfaction

Hoseong Jeon
Hallym University, Chuncheon, Korea, and
Beomjoon Choi
California State University, Sacramento, California, USA

Abstract
Purpose This study aims to examine whether the relationship between employee satisfaction (ES) and customer satisfaction (CS) is bilateral or
unilateral based on dyadic data. In addition, it seeks to examine the role of moderating variables which have incremental impacts on this link.
Design/methodology/approach The authors conducted an empirical test on this relationship in an educational service context. Structural equation
modeling was employed to test the hypotheses.
Findings Results indicate that employee satisfaction leads to CS but CS did not affect ES, which suggests that the relationship between ES and CS is
unilateral rather than bilateral. The findings also demonstrate that the dispositional variables (i.e. self efficacy, cooperative orientation) moderate the
impact of ES on CS.
Research limitations/implications This study provided theoretical implications for the ES-CS relationship.
Practical implications This finding suggests that top level management in the service industry must take an active role in recruiting employees who
are confident in their abilities and who display pro-social dispositions.
Originality/value The linkage between ES and CS has been previously examined but the findings have been inconsistent. The authors used dyadic
data to investigate the relationship between ES and CS and found the influence of ES on CS but not vice versa.

Keywords Employee satisfaction, Customer satisfaction, Self efficacy, Cooperative orientation, Perceived fairness, Supervisory support, Employees,
Customers

Paper type Research paper

An executive summary for managers and executive
readers can be found at the end of this article.
Efforts to enhance customer satisfaction have been considered
critical by many organizations, particularly those in the service
sector (Schmit and Allscheid, 1995) and hence, have been
researched by numerous studies. Despite vast research
previously conducted on the relationship between the
employee satisfaction and customer satisfaction, Schmit and
Allscheid (1995) assert that further conceptual and empirical
evidence is needed to reveal the relationship between
employee satisfaction and customer satisfaction.
In previous research, employee satisfaction (hereafter ES)
has been frequently measured by asking customers
perception of employee and customer satisfaction (hereafter
CS) also has been measured by employees via survey. Though
the use of indirect measures in assessing ES and CS is quite
common, it still remains unclear whether this practice is
appropriate. As an alternative attempt to measure customer
and employee satisfaction more accurately, Schmit and
Allscheid (1995) employed dyadic data from both the
customer and employee surveys and simultaneously estimate
The current issue and full text archive of this journal is available at
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Journal of Services Marketing
26/5 (2012) 332 341
q Emerald Group Publishing Limited [ISSN 0887-6045]
[DOI 10.1108/08876041211245236]
both employee and customer model. They assumed employee
job satisfaction was influenced by the work climate produced
by the customers, linking employee model and customer
model simultaneously. But each model was estimated based
on different level of data: The employee model was based on
the individual level, whereas customer model was based on
data collected at the multiple offices of a service-oriented
organization. As such, previous research which attempt to
identify the ES-CS relationship had potential limits in gauging
the focal constructs.
To show a comprehensive framework depicting the
interplay of ES-CS, the present study tested the ES-CS
relationship in the causal models which incorporates key
constructs instead of just considering focal variables (i.e. ES
and CS) (Brown and Lams, 2008). In an attempt to uncover
the link between ES and CS, this paper reviews information
derived from relevant prior research and investigate whether
the relationship between employee satisfaction and customer
satisfaction is bilateral or unilateral. This study also examines
the role of moderating variables which have incremental
impacts on this link.
Hypothesis development on ES-CS relationship
The influence of ES on CS
The influence of employee satisfaction on customer
satisfaction has received considerable attention in marketing
literature and practice in recent years. It has been argued that
behavior of satisfied employees plays an important role in
shaping customers perceptions of business interactions
(Spiro and Weitz, 1990). This phenomenon may occur as

332
 The relationship between employee and customer satisfaction
Hoseong Jeon and Beomjoon Choi
satisfied employees are more apt to be friendly, enthusiastic,
attentive, and empathetic toward customers (Beatty et al.,
1996; Rafaeli, 1993).
According to the concept of partner effects, a person is in
some way, verbally or nonverbally, influenced by the
characteristics and behaviors displayed by his or her
counterpart (Dolen et al., 2002). Additionally, the contagion
effect explains how satisfied employees influence others
around them to feel good (Hatfield et al., 1993). As such,
Schneider and Bowen (1985) said that employee job
satisfaction is positively related to customers perceptions of
service. This notion suggests that employees who have higher
levels of job satisfaction also believe they are able to deliver
excellent service (Schlesinger and Zornitsky, 1991). It is also
expected that happy or satisfied employees are more inclined
to share these positive emotions with customers (Brief and
Motowidlo, 1986). This was also consistent with Brown and
Lam (2008) who provided the empirical evidences showing
the robust relationship between employee job satisfaction and
customer satisfaction. Thus, the following hypothesis is
proposed:
H1-1. Employee satisfaction will positively influence
customer satisfaction.
The influence of CS on ES
Compared to the influence of ES on CS, the impact in the
opposite direction (from CS to ES) is supported by a few
theories such as the social exchange theory (Konovsky and
Pugh, 1994) and the psychological contract theory (Robinson
and Morrison, 1995). Central to these conceptions is the
norm of reciprocity (Netemeyer et al., 1997): Customers
satisfied with their counterpart will engage in cooperative
behavior as reciprocation for those who have benefited them
(Bateman and Organ, 1983; Schnake, 1991). Beatty et al.
(1996) and Gremler and Gwinner (2000) found that
customers who developed a bond with the employees also
were likely to care about employee wellbeing. If customers like
the performance of the employee and express gratitude or
satisfaction, in turn, it is also expected to lead to a higher level
of employee satisfaction (Dolen et al., 2002). In other words,
positive reinforcement from customers increases the
satisfaction of sales employee (Beatty et al., 1996). In a
similar vein, Bitner et al. (1990) posit that customers inputs
make important contributions to enhancement of service
quality, leading to employee satisfaction. Goodwin and
Gremler (1996) also argue that employees are concerned
about customers feelings and are pleased when customers
display appreciation for quality service. Based on these
notions, this study argues that customer satisfaction
influences the job satisfaction of their counterpart. Therefore:
H1-2. Customer satisfaction will positively influence service
providers job satisfaction.
Sample and procedures
This study was administered with the cooperation of one of
leading private education companies in Korea. This company
has a business model of providing educational services
through private tutors who visit the customers homes on a
regular basis. Private education services in Korea can be
regarded as a commercial exchange because customers pay for
the education services received and private tutors are
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Journal of Services Marketing
Volume 26 Number 5 2012 332 341
considered service employees to their customers (Williams
and Anderson, 2005; Yi and Gong, 2008). Educational
services seem to be good contexts for testing our research
purpose as the customers could interact with employee on a
regular basis and can observe the counterparts. To test these
hypotheses, dyadic data incorporating both the customer and
the corresponding employee were developed. This study
recruited the customers and the corresponding private tutors
to test the ES-CS link.
The surveys were administered as follows: First, 500
customer samples were randomly selected from about 50,000
customers nationwide. Questionnaires were sent to 372
customers who agreed to participate in the survey. After one
month, 285 questionnaires were returned to us. It turns out
that the sample represents the customer pool appropriately
based on similarity of demographics between the final sample
and the population. Second, the survey for employees was
administered. Those who correspond to customers who
respond to surveys were recruited for the purpose of probing
the ES-CS relationship. Since there are no multiple customers
from a single tutor, it could be said that customers are not
nested within tutors. Finally, 227 samples (227 pair of
customers and corresponding employees) were used in the
final analysis after discarding the incomplete questionnaires.
Measures
This study used measures for key variables from existing
studies and literature by slightly modifying them into the
context of the current study (educational service). All
constructs were assessed by multiple items using five-point
scale ranging 1 strongly disagree to 5 strongly agree.
Figure 1 explains the simultaneous model considering both
employee and customer perspectives.
Employee model
This study examined five constructs in the employee model.
Each was role ambiguity, role conflict, job satisfaction,
commitment, and intent to stay. Used were items developed
by Ho et al. (1997) to assess employee role ambiguity and
role conflict. Also, this study measured employee job
satisfaction with the items proposed by Netemeyer et al.
(1997) and Hartline and Ferrell (1996). Commitment, the
employees identification with organization, was assessed with
the items developed by Ganesan and Weitz (1996). Intent to
stay was measured by items established by Good et al. (1996).
Customer model
In the customer model, five different constructs were
considered: interaction quality, outcome quality, customer
satisfaction, trust, and customer loyalty. Interaction quality
and outcome quality were measured by applying an adapted
version of Brady and Cronins (2001) model tailored for the
context of educational service. Customer satisfaction was
assessed by adapting the items of Mano and Oliver (1993)
and Bettencourt (1997). These items were used to measure
customers responses to service experience with the employee.
Customer trust was measured by the four items proposed by
Ramsey and Sohi (1997). This study also defined customer
loyalty as the customer having intention to do the business
with the organization in the future and engaged in positive
word-of-mouth communication about it. Customer loyalty
was assessed by modifying items developed by Zeithaml et al.
(1996).
 The relationship between employee and customer satisfaction
Hoseong Jeon and Beomjoon Choi
Figure 1 Comprehensive model based on dyadic data
Analysis
Structural equation methodology was applied to test the
hypothesized model. In order to specify the model, each of the
constructs was represented by multiple measures. The first
step in the model testing was to conduct a multiple items
reliability and validity check by applying confirmatory factor
analysis to confirm if the multiple items sufficiently measure
the proposed constructs. Next, the hypothesized model was
assessed by estimating the standardized path coefficients for
each proposed relationship.
Reliability and validity checks
The first step of the reliability and validity check was to
confirm the overall goodness-of-fit indices of the
measurement model. In Table I, this study presents the
results for both the customer model and the employee model.
Since the GFI and AGFI may contain inconsistencies due to
sampling characteristics (Hoyle and Panter, 1995), this study
substituted two fit indices with TLI and CFI. x2 and RMSEA
are also included as fit indices since it is generally
recommended to incorporate at least 4 indices to confirm
general fitness (Kline, 1998).
In conducting confirmatory factor analysis, added were
related variables such as customer satisfaction in the employee
model and employee satisfaction in the customer model. The
indices of employee model include the following results: the
chi-squire statistic was 367.5 with 194 degree of freedom,
comparative fit index (CFI) was 0.989, TLI was 0.986, and
the root mean square error of approximation (RMSEA) was
0.063. The fitness of customer model was x2155 247:3,
CFI 0.995, TLI 0.993, RMSEA 0.051. According to
the outcomes, the model fitness was adequate for both models
because the values of CFI and TLI in the 0.90 range have
been known as the adequate fit for these indices and RMSEA
is lower than the criteria proposed by Browne and Cudeck
(1992).
The reliability and inter-correlations of the constructs are
reported in Tables I-III. Given that this study consisted of
dyadic data, this process conducted within each domain. In
Table I, the evidence of internal consistency is provided by the
composite reliability. It is regarded as a less constraining index
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Volume 26 Number 5 2012 332 341
for measuring internal consistency compared to Cronbachs
alpha (Homburg and Giering, 2001). All values are higher
than the criteria proposed by Venkatraman (1990), as Table I
shows, the composite reliability ranged from 0.627 to 0.883.
Also, the correlations (F estimates) among the latent
variables are included in Tables II and III. Table II contains
the outcomes of the employee model and Table III presents
the results of customer model. This study performed test of
discriminant validity among the factors based on F estimates.
Table II showed that there are no correlation estimates which
comprise 1 in confidence intervals (F ^ 2SE) at the employee
model. Also, the AVE values were greater than the squared F
coefficients (Bagozzi and Yi, 1988). Thus, it could be said
that all measurements achieved criterion for discriminant
validity (Anderson and Gerbing, 1988). The values of
correlation estimates ranged from 2 0.483 to 0.844. In the
customer model, the confidence intervals of all F values
(F ^ 2SE) were also under 1 and the square roots of AVE
values were greater than the F coefficients. These outcomes
also explained that all estimates achieved the criterion for
discriminant validity in the customer model. Table III shows
that the values of correlation estimates ranged from 0.419 to
0.850 in the customer model.
Results
According to the model fitness analysis, our hypotheses
linking the employ model with the customer model fit
well ( x2 (584) 939.4, CFI 0.987, TLI 0.985,
RMSEA 0.052). The overall fit of the structural model
was adequate, and the standardized path estimates indicate
significant relationships among the constructs. In Table IV,
this study present the results of the structural equation model
depicted in Figure 1. All paths were statistically significant
with the only exception occurring in the path from customer
satisfaction to job satisfaction. Since the unilateral model can
be nested in the bilateral model, the improvement in fit is
assessed by comparing the chi square difference between the
bilateral model and each unilateral model.
The model testing is conducted by comparing the baseline
model (i.e. bilateral model) with the test model (i.e. unilateral
model) in which imposes a relationship of zero on the path
 The relationship between employee and customer satisfaction Journal of Services Marketing
Hoseong Jeon and Beomjoon Choi Volume 26 Number 5 2012 332 341

Table I The Composite reliability of employee model and customer model

Composite reliability
Role Role Job Interaction Outcome Customer
ambiguity conflict satisfaction Commitment I-T-S quality quality satisfaction Trust Loyalty
Employee model 0.757 0.627 0.761 0.883 0.742
Customer model 0.761 0.697 0.742 0.863 0.856

Table II AVE and correlation among the latent variables in the employee model
Role ambiguity Role conflict Job satisfaction Commitment I-T-S
n Standard error n Standard error n Standard error n Standard error n Standard error
Role ambiguity 1.000
Role conflict 0.249 0.011 1.000
Job satisfaction 20.483 0.022 20.422 0.020 1.000
Commitment 20.524 0.010 20.638 0.014 0.795 0.022 1.000
I-T-S 20.357 0.030 20.538 0.035 0.679 0.050 0.844 0.039 1.000
Average variance extracted (AVE)
Employee model 0.723 0.606 0.680 0.775 0.719

Table III AVE and correlation among the latent variables in the customer model
Customer
Interaction quality Outcome quality satisfaction Trust Loyalty
n Standard error n Standard error n Standard error n Standard error n Standard error
Interaction quality 1.000
Outcome quality 0.619 0.028 1.000
Customer satisfaction 0.850 0.025 0.692 0.030 1.000
Trust 0.505 0.019 0.419 0.024 0.485 0.019 1.000
Loyalty 0.502 0.025 0.495 0.034 0.445 0.024 0.786 0.029 1.000
Average variance extracted (AVE)
Customer model 0.737 0.644 0.730 0.758 0.729

Table IV Standardized path estimates and t-value Table V Test of model comparisons
Estimate SE t-value df Dx21
Employee model Bilateral model vs unilateral model (from CS to ES) 1 3.7 *
Role ambiguity ! job satisfaction 2 0.455 0.125 2 3.640 Bilateral model vs unilateral model (from ES to CS) 1 0.5
Role conflict ! job satisfaction 2 0.425 0.234 2 1.816
Note: *Means p , 0.10
Job satisfaction ! commitment 0.802 0.116 6.913
Job stisfaction ! customer satisfaction 0.133 0.050 2.660
Commitment ! intent to stay 0.859 0.224 3.834 supporting H1-1. On the other hand, the chi square
Customer model difference between the unilateral model assuming a path
Interaction quality ! customer satisfaction 0.762 0.114 6.684 from ES to CS and the baseline model indicates that adding a
Outcome quality ! customer satisfaction 0.433 0.048 9.020 path from CS to ES does not improve its fit. Therefore, H1-2
Customer satisfaction ! trust 0.503 0.110 4.572 was not supported.
Customer satisfaction ! job satisfaction 0.051 0.116 0.439
Trust ! loyalty 0.785 0.110 7.136 Discussion
H1 provided partial support for our conceptions derived from
Notes: t -values of 1.65 or greater are significant at the 0.05 level, and the previous studies related with the ES-CS relationship. The
t-values of 1.96 or greater are significant at the 0.01 level influence of employee satisfaction on customer satisfaction
was found to be significant, supporting H1-1, but the path
from customer satisfaction to employee satisfaction (H1-2)
from ES to CS or on the path from CS to ES at the bilateral was not significant. This partial support indicates that the
model. The results of these comparisons, reported in Table V, relationship between employee satisfaction and customer
indicate that failure of the path from ES to CS causes it to fit satisfaction is unilateral rather than mutual. Given no
the data significantly worse than the baseline model, significance of customer satisfaction on employee

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 The relationship between employee and customer satisfaction
Hoseong Jeon and Beomjoon Choi
satisfaction, employee satisfaction seems to be affected less by
customer satisfaction, possibly more by other factors (e.g. pay,
co-workers, and supervisor). Simply stated, the results show
that employees job satisfaction leads to an increase in
customer satisfaction, however, not vice versa.
Brown and Lam (2008) found variables such as service
characteristics, research contexts, and study methods
moderated the relationship between ES and CS, but
employees disposition and work climate factors which were
proven to be critical variables in the domain of employee
satisfaction research were not included. Hence, we investigate
how dispositional variables moderate the relationship between
ES and CS.
Hypothesis development on moderating effect
Dispositional variables
Personality factors have been known to account for the
differences in job attitudes (Staw and Ross, 1985). Among
various dispositional variables, this study posits that self
efficacy acts as a moderating variable. Self efficacy is a core
concept in social cognition theory (Yi and Gong, 2008) and
refers to individuals judgments that they have capabilities to
perform their job or fulfill duty appropriately. Self efficacy also
pertains to judgments about what one is capable of doing a
task with whatever skills one possesses (Bandura, 1986).
McKee et al. (2006) said that individuals who have more
confidence in their abilities tend to exert more effort to
perform particular behaviors, persist longer in order to
overcome obstacles and set more challenging goals than those
who have less confidence in their abilities. It is also expected
that people with high self efficacy generally set a higher level
of outcome expectations and are more likely to achieve their
desired outcomes (Pereay et al., 2004). As such, employees
with higher self efficacy are expected to show more confidence
in their abilities and are more likely to provide quality service
to the customers. This, in turn, is expected to lead to a higher
level of customer satisfaction. Therefore:
H2-1. Employee self efficacy moderates the ES-CS
relationship: For employees who score high on self
efficacy, employee satisfaction will be more positively
related to customers satisfaction.
A persons social orientation often shows his or her willingness
to cooperate (Declerck and Bogaert, 2008). This disposition
has been regarded as distinct personal trait compared to other
traits since Kurzban and Houser (2001) showed that
individual differences in cooperative behavior were not
correlated with other personality factors such as the Big
5. Iedema and Poppe (2001) suggested that social value
consists of five different constructs: cooperation,
individualism, competition, altruism, equality and maximin.
Among these constructs, cooperation is considered the most
pro-social oriented social value and it also leads to pro-social
behaviors (Iedema and Poppe, 2001).
Given that cooperative orientation may lead to service
employees discretionary behavior which is often accompanied
by delivery of high quality service (Bettencourt, 1997; Groth,
2005), this study argues that cooperative orientation
moderate the relationship between ES and CS. That is,
employees with more cooperative orientation will be more
likely to engage in pro-social behavior and this will, in turn,
lead a higher level of cooperation, helpfulness, and kindness
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Volume 26 Number 5 2012 332 341
(Lengnick-Hall et al., 2000). This cooperative orientation
will, in turn, improve customer satisfaction. Therefore:
H2-2. The employees cooperative orientation moderates the
ES-CS relationship: For those individuals who score
high on cooperative orientation, the corresponding
employee satisfaction will be more positively related
to customers satisfaction.
Organizational variables
Supervisory behaviors have been found to exert important
effects on job satisfaction of employee (Corner et al., 1989;
Kohli, 1985). In general, supervisory behaviors are
categorized into three types: person-organization fit,
organizational justice, and supervisory supports (Netemeyer
et al., 1997). In the present research, organizational justice
and supervisory support were our focal points and hence, this
study investigates whether organizational justice (in
particular, perceived fairness) and supervisory support
moderate the impact of ES on CS.
The notion of reciprocity suggests that when employees
perceive fair treatment from the organization, they respond by
delivering high quality service to their customers. Empirical
studies also suggest that fairness perceptions affect job
satisfaction, which, in turn, positively affect job performance
(Dubinsky and Levy, 1989; Livingstone et al., 1995). Based
on these principles, this study predicts employees who
perceive fairness via appropriate rewards at the workplace
are more willing to deliver high level of services in interaction
with customers and this, in turn, increase customer
satisfaction. Therefore:
H2-3. Perceived fairness in reward allocation moderates the
ES-CS relationship: For those who score high on
perceived fairness, employee satisfaction will be more
positively related to customers satisfaction.
Employees perception about supervisory support, the degree
of support and consideration an employee recognizes from a
supervisor (Netemeyer et al., 1997), often influences their job
satisfaction (Wofford and Liska, 1993). The path-goal theory
also suggests job satisfaction is highly related to leadership
support (Brown and Peterson, 1993; Podsakoff and Hui,
1993). This indicates that a leader can increase employee
fulfillment and their job satisfaction by constructing more
fluid paths and help them attain their career goals (Churchill
et al., 1993). According to Ilies and Scott (2006), increased
satisfaction causes employees to engage in behaviors which
could be critical for organizational success as long as their
personal goals are aligned with organizational support. Thus,
this study posits that employees with high perceptions of
leadership support deliver a higher quality of customer
service, and this will also enhance customer satisfaction. For
this reason, the following hypothesis is proposed:
H2-4. Supervisory support moderates the ES-CS
relationship: For those who score high on perceived
supervisory support, employee satisfaction will be
more positively related to customers satisfaction.
Employee self efficacy was measured using four items developed
by Sujan et al. (1994). This scale measures the degree to which
employees feel confident with their job skills and their abilities to
successfully perform their job. Employee cooperative
orientation was measured from the employees perspective.
 The relationship between employee and customer satisfaction
Hoseong Jeon and Beomjoon Choi
Modified were three items from Bettencourts (1997) model to
create better fit for the situation of educational services.
Perceived fairness in relation with reward allocation was
measured by use of 3 scales from Netemeyer et al. (1997). This
study measured supervisory support by adapting 4 items
proposed by Netemeyer et al. (1997) and Babin and Boles
(1996). Figure 2 explains our research schemes in this study.
Results
The reliability of the constructs is reported in Table VI.
Evidence of internal consistency is provided by the composite
reliability since it is a less constraining index compared to
Cronbachs alpha (Homburg and Giering, 2001). All values
are higher than the criteria proposed by Venkatraman (1990).
The purpose of this study is to examine how the effect of ES
on CS differs according to the employees disposition and
work climate factors. To compare parameters across groups,
variance must be measured in a common metric for all groups
(Yoo, 2002). When testing the quality of factor loadings, the
present research imposed equality constraints on factor
loadings across the two groups, with fixed and free
parameters remaining consistent with that specified in the
baseline model for each group. As shown Table VII, full
metric invariance was supported; the chi-square differences
between the non-restricted model and full metric invariance
model were insignificant in the each moderator variable.
This study verifies hypotheses through the chi-square
difference test (Dx2 ). This test has two steps. The first step is
to develop a constraint model by imposing an equality
constraint on the focal link. The second step is to compare the
chi-square between the free model and the constraint model.
The respondents were divided into two groups of high vs low
score based on the median of aggregated data representing
moderating variables (Stone and Hollenbeck, 1989) and
compared group differences to our focal link. With regards to
self efficacy, H2-1 predicted that this disposition would
moderate the effect of ES on CS. The result show that the
higher self efficacy, the greater impact of ES on CS
(Dx21 3:5, p , 0:10) though it was marginally significant.
The results also indicate that when the higher cooperative
orientation group is compared to the lower counterpart, a
Figure 2 Comprehensive model explaining moderating effect
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Volume 26 Number 5 2012 332 341
Table VI The composite reliability of moderating variables
Composite reliability
Self Cooperative Perceived Supervisory
efficacy orientation fairness support
0.705 0.772 0.777 0.899
greater impact of ES on CS is shown (Dx21 3:0, p , 0:10),
supporting H2-2 though this was marginally significant.
Unlike our expectations, H2-3 and H2-4 were not supported.
The results of the analyses are reported in Table VIII.
Discussion
Our results indicate partial support for the moderating effect
within H2. While H2-1 and H2-2 were marginally supported,
H2-3 and H2-4 were not supported. The culmination of our
outcomes asserts that dispositional variables moderate the
relationship between ES and CS, yet the same does not hold
true for organizational variables. Testing of H2-1 and H2-2
suggests that personal traits influence emotional interactions
between employees and customer. This is because satisfied
employees with high self efficacy or cooperative orientation
are more likely to display positive emotion, which stems from
job satisfaction, in interacting with customers. However,
unlike our predictions, organizational variables such as
supervisory support and perceived fairness did not moderate
the relationship between ES and CS. Organizational variables
may have little impact in helping employees job satisfaction
turn into higher quality service in interaction with customers
which also leads to higher level of satisfaction. The results
indicate that the personal trait of satisfied employees
facilitates efficacious interactions with customers but the
perception about organizational activities only have
diminutive effects on transferring employee satisfaction to
the customer. Our findings reinforce the importance of
recruiting the right employee especially in the educational
service business.
 The relationship between employee and customer satisfaction Journal of Services Marketing
Hoseong Jeon and Beomjoon Choi Volume 26 Number 5 2012 332 341

Table VII The test for metric invariance

Cooperative
Self efficacy orientation Perceived fairness Supervisory support
n df n df n df n df
Full metric invariance (x2 ) 1,727.7 1,196 1,784.7 1,196 1,733.1 1,196 1,743.8 1,196
Non restricted model (x2 ) 1,690.1 1,170 1,758.9 1,170 1,694.4 1,170 1,726.4 1,170
Dx226 37.6 25.8 38.7 17.4
Note: Dx226 value of 38.9 or greater are significant at the 0.05 level

Table VIII The results for the effect of moderating variables in ES-CS Theoretical and managerial implications
link The contribution of this current study is to relate the ES-CS
link to comprehensive models employee models and
High group Low group customer models which were proved in previous research.
Path Path The findings of this analysis are consistent with the service-
estimates estimates Dx2(1) profit chain perspective proposed by Heskett et al. (2008). It is
n t-value n t-value n df noteworthy to demonstrate that the relationship between
Dispositional variables employee satisfaction and customer satisfaction is unilateral
Self efficacy 0.209 2.718 0.034 0.574 3.5 1 * rather than mutual. Our reasoning regarding this unilateral
Cooperative orientation 0.314 2.340 0.076 1.595 3.0 1 * relationship is as follows: Employee satisfaction and customer
satisfaction may have different antecedent variables. Customer
Organizational variables satisfaction may be determined depending on interaction with
Perceived fairness 0.144 2.218 0.055 0.732 0.9 1 employees and emotional bonding or connection during the
Supervisory support 0.189 2.353 0.055 0.848 1.7 1 interaction, whereas employee satisfaction seems to be less
affected by customer satisfaction. Perhaps employees perceive
Note: *Means p , 0.10
that customer evaluations are not relevant to their job
satisfaction, which are more likely to be determined by
factors such as salary, work environment, co-workers,
Great discussion and conclusion supervisors, and benefits. Simply put, customer satisfaction
may not be critical in forming employees job satisfaction.
This study identifies the ES-CS relationship by relating According to our results, it is possible that previous research
customer satisfaction to employee performance model. Some which supported reciprocal effects from CS to ES might be
of the previous research probing this link was criticized for the caused by methodological limitations measuring the
practice of measuring focal variables. For example, employee relationship ES and CS.
satisfaction was assessed from the customers perception The results also show that dispositional variables were
under the assumption that it could be regarded as a good found to be moderating the ES-CS relationship marginally.
proxy for true employee satisfaction (Vilares and Coelho, These findings could be interpreted that satisfied employees
2003). Different from previous research, the present research with high self efficacy or cooperative orientation might be
was conducted based on dyadic data incorporating both the more inclined to share these emotions with customers. When
customer and the corresponding employee as the unit of the affective state interacts with personal traits, it generates
analysis. episodic behaviors such as discretionary action and extra role
The results of H1 suggest that the ES-CS relationship is behavior. This finding also suggests that top level
unilateral rather than mutual. In particular, using dyadic management in the service industry must take an active role
data, this study found out employees job satisfaction leads to in recruiting employees who are confident in their abilities and
customer satisfaction but not vice versa. This finding is who display pro-social dispositions.
noteworthy because a possible common method bias has
been ruled out in the present study since it has been Limitations and future research
Although the results of the current study have little concern
analyzed based on dyadic data. We also examined the
for common method variance, there are some other problems
variables which moderate the relationship between ES and
that may limit the implications of study. First, by using
CS. For a hypothesis testing, two key variables
educational services to probe the ES-CS relationship, the
dispositional variables and organizational variables were outcomes of this study might be applicable in the educational
identified. Self-efficacy and cooperative orientation are service context. Further studies in other types of services
considered dispositional variables while perceived fairness seem necessary to generalize the outcomes of this study.
and supervisory support are considered organizationally Another potential problem with the current study is the
related variables. This study found only dispositional relative simplicity of the comprehensive model tested. The
variables self efficacy and cooperative orientation number of the variables examined in this study was relatively
marginally moderate the effect of ES on CS. This indicate small when considering that there were many other aspects in
that the higher the self efficacy/cooperative orientation, the relation to personality traits or organizational variables. To
greater the impact of ES on CS. further our understanding of the relationship between

338
 The relationship between employee and customer satisfaction
Hoseong Jeon and Beomjoon Choi
employee satisfaction and customer satisfaction, more
variables need to be included in the model by obtaining
more information from both employees and customers.
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About the authors
Dr Hoseong Jeon is an Associate Professor in the Department
of Business Administration at Hallym University. He received
an MA in Advertising at Michigan State University and PhD
in Business Administration at Seoul National University. His
current research interests include customer relationship
management, advertising effects and determinants of
customer loyalty. Dr Jeons research has been published in
the journals such as Journal of the Academy of Marketing
Science.
Dr Beomjoon Choi is an Assistant Professor of Marketing
at the College of Business Administration, California State
University, Sacramento. He earned his PhD from the
University of Kansas. Dr Chois recent research includes:
sequential decision making, marketing communication,
prejudice, service failure and recovery. Dr Chois research
has been published in numerous journals such as International
Journal of Electronic Commerce, Serviced Industries Journal, and
Journal of Education for Business. Beomjoon Choi is the
corresponding author and can be contacted at:
bchoi@csus.edu
Executive summary and implications for
managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of the article. Those with a
particular interest in the topic covered may then read the article
 The relationship between employee and customer satisfaction
Hoseong Jeon and Beomjoon Choi
in toto to take advantage of the more comprehensive description of
the research undertaken and its results to get the full benefit of the
material present.
You might think that a service employee who feels happy with
his or her job will have an attitude towards the customer
which makes that customer feel good about themselves. In
other words one persons demeanour would have a positive
affect on the other more simply, that employee satisfaction
leads to customer satisfaction. And youd be right to think
that. You might even think its common sense.
You might also think that the reverse is true that a
customers satisfaction with the service delivery affects the
employees satisfaction. Maybe you might even think that that
was common sense too. But youd be wrong. At least
according to research conducted in an educational service
context in Korea (where private tutors visit customers homes
on a regular basis) which suggests that the employee
satisfaction (ES) customer satisfaction (CS) relationship is
unilateral rather than mutual. In short, it found that
employees job satisfaction leads to customer satisfaction
but not vice versa.
This might be because employee satisfaction and customer
satisfaction may have different antecedent variables.
Customer satisfaction may be determined depending on
interaction with employees and emotional bonding, whereas
employee satisfaction seems to be less affected by customer
satisfaction. Perhaps employees perceive that customer
evaluations are not relevant to their job satisfaction, which
are more likely to be determined by factors such as salary,
work environment, co-workers, supervisors, and benefits.
Consequently, customer satisfaction may not be critical in
forming employees job satisfaction. It is possible that
previous research which supported reciprocal effects from
CS to ES might be caused by methodological limitations
measuring the relationship ES and CS.
Study results show that dispositional variables were found
to be moderating the ES-CS relationship marginally. These
findings could be interpreted that satisfied employees with
high self efficacy or cooperative orientation might be more
inclined to share these emotions with customers. When the
affective state interacts with personal traits, it generates
episodic behaviors such as discretionary action and extra role
behavior. This finding also suggests that top level
management in the service industry must take an active role
in recruiting employees who are confident in their abilities and
who display pro-social dispositions.
In The relationship between employee satisfaction and
customer satisfaction, Hoseong Jeon and Beomjoon Choi
tested two key variables which might moderate the
relationship between ES and CS dispositional variables
and organizational variables. Self-efficacy and cooperative
orientation are considered dispositional variables while
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341
Journal of Services Marketing
Volume 26 Number 5 2012 332 341
perceived fairness and supervisory support are considered
organizationally related variables. This study found only
dispositional variables marginally moderate the effect of ES
on CS. This indicates that the higher the self efficacy/
cooperative orientation, the greater the impact of ES on CS.
The influence of employee satisfaction on customer
satisfaction has received considerable attention in marketing
literature and practice in recent years. It has been argued that
behavior of satisfied employees plays an important role in
shaping customers perceptions of business interactions. This
phenomenon may occur as satisfied employees are more apt
to be friendly, enthusiastic, attentive, and empathetic toward
customers.
According to the concept of partner effects, a person is in
some way verbally or nonverbally influenced by the
characteristics and behaviors displayed by his or her
counterpart. Additionally, the contagion effect explains how
satisfied employees influence others around them to feel good.
As such, it has been said that employee job satisfaction is
positively related to customers perceptions of service. This
notion suggests that employees who have higher levels of job
satisfaction also believe they are able to deliver excellent
service. It is also expected that happy or satisfied employees
are more inclined to share these positive emotions with
customers.
Compared to the influence of ES on CS, the impact in the
opposite direction, although not supported by this research,
has had support of theories such as the social exchange theory
and the psychological contract theory. Central to these
conceptions is the norm of reciprocity: Customers satisfied
with their counterpart will engage in cooperative behavior as
reciprocation for those who have benefited them. Previous
research found that customers who developed a bond with the
employees also were likely to care about employee wellbeing.
If customers like the performance of the employee and express
gratitude or satisfaction, in turn, it is also expected to lead to a
higher level of employee satisfaction. In other words, positive
reinforcement from customers increases the satisfaction of
sales employee.
The results here applied in the context of an educational
service might not, of course, be applicable elsewhere. Also,
the number of the variables examined in this study was
relatively small when considering that there were many other
aspects in relation to personality traits or organizational
variables. To further our understanding of the relationship
between employee satisfaction and customer satisfaction,
more variables need to be included in the model by obtaining
more information from both employees and customers.
(A precis of the article The relationship between employee
satisfaction and customer satisfaction. Supplied by Marketing
Consultants for Emerald.)
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