The Missing Link

Many previous studies have been unable to establish a strong relationship between
workforce satisfaction and customer satisfaction. By contrast, this study found
evidence of a significant relationship between the two by recognizing a crucial intervening variable: employee behavior. 

Understanding the importance of employee behavior (specifically, employee retention and responsiveness to customers), and its place in the chain, is crucial to uncovering the keys to profitability.

Satisfied employees typically stay with a store longer, resulting in employees building up their bank of knowledge and skills. This, in turn, improves the store’s ability to provide highquality service, resulting in satisfied customers. In a similar vein, satisfied employees tend to provide better service; at the store level, employees providing improved service tend to encourage similar efforts by fellow workers—again leading to increased customer satisfaction.  And, finally, satisfied customers generally lead to greater profitability, through increased repeat business, customer retention, and referral of new customers (Heskett, et al., 1994)3. This last link in the service-profit chain has been illustrated through evidence of profit and sales (Bernhardt, Donthu, & Kennett, 2000)2 and return on investment (Anderson, et al., 1994).

Weighing Relevant Factors and Evaluating Context

Because workforce satisfaction is not directly related to financial performance, targeted efforts to improve employee satisfaction will not n