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SERVICE AGILITY: A CRUCIAL COMPONENT OF SERVICE
STRATEGY

presented by

JOSEPH C. MILLER

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SERVICE AGILITY: A CRUCIAL COMPONENT or SERVICE STRATEGY
By

Joseph C. Miller

A DISSERTATION

Submitted to
Michigan State University
In partial fulfillment for the requirements
For the degree of

DOCTOR OF PHILOSOPHY
Marketing

2010

ABSTRACT
SERVICE AGILITY: A CRITICAL COMPONENT OF SERVICE STRATEGY
By
Joseph C. Miller
This three-essay format dissertation reports two unique studies capturing the

central phenomenon of the agile service transaction. The first study is a qualitative study
of an agile critical incident, in which a paired employee and manager from a single focal
firm describe a transaction in which the customer told them that they “went above and
beyond the call of duty”. The reported factors were analyzed to determine which
managerial actions affected qualities of the front-line employee. In the second
quantitatively-based study, managers and associated employees from a service-oriented
retail firm were surveyed about over-arching managerial strategic tools, such as market
orientation and commitment to service quality, related to tactical factors such as training,

recognition, pay and empowerment, in creating an agile service transaction.

DEDICATION

This dissertation is dedicated to my father, Calvin Miller, Jr. who, I’d like to think, would

have been very proud about all of this.

iii

ACKNOWLEGEMENTS

It is readily apparent to me that I have many people to thank for helping me out at
various stages of this dissertation. Above all, I must thank my committee. I know that,
with me in particular, I haven’t been the easiest of doctoral students to come through the
program. I truly appreciate my committee sticking with me throughout all of the model
propositions, methods ideas, and theoretical quandaries that I’ve dredged up.

Specifically, I’d like to thank Professor Roger Calantone for affording me enough
empowerment to allow for improvisation, yet being steadfast to the research process,
making sure I played by the rules. Thanks to Professor Richard Spreng for introducing
me to the world of services and satisfaction - the ideas that you referred to me were
things that will always stay with me. To Professor Clay Voorhees, I’d like to say a
tremendous thank you for all of the times you sat with me to work things out both before
and after the research, and giving me honest assessments at every phase of the process.
To Professor Morgan Swink, thanks go to you for agreeing to join my committee late in
the process, and giving me, in a rather off—the-cuff comment in a phone call, a great idea
for the qualitative research that I employed in this project which I plan to return to many
times in the future.

I would be remiss if I did not thank all of the doctoral students who were my
colleagues in the Marketing, Operations, Supply Chain, and Management departments
during my tenure at Michigan State University. They are my friends for life, I learned a
great deal from every one of them, and I am very proud to be in their company.

Moreover, I would like to sincerely thank (and perhaps congratulate) the staff of the

iv

Marketing and Supply Chain Management department who so understood my multitude
of plights that I brought them over the years. They won‘t have me to kick around
anymore...

I would like to thank Ken and Matt, a store manager and regional manager of a
chain of specialty retailers who were good enough to allow me to collect data. I don’t
know if they can ever appreciate just how much of a favor they did me.

I would like to certainly say thanks to friends new and old who were so helpful
and supportive to me over these last few years, be it to fix me dinner, schlep me to a ball
game, or simply listen to my ramblings about academia. Among them, I sincerely thank
Sung Hee Park, Tom Erwood, Jamie Wyroba. Dawn Flint, Sherry Mercurio, Dawn
Salisbury and Douglas Miller.

I would like to thank Professor Jerry C umutt, whose program to put me back on
track with the dissertation did more good than he probably will ever realize, and
Professors Neil Hair, Stanley Widrick, and Dean Ash Rao, who, through the utter power
of the strategically posed question, snapped me out of my funk and gave me the gumption
to push this rock over the cliff.

Obvious thanks go to my mother, Dr. Jacqueline Miller Poole, and her husband
Larry Poole, for allowing me to live with them for several weeks at a time while I
completed my dissertation. Their support to me throughout my doctoral program was
monumental.

I’d like to thank my kids, Ella and Louis - El for being the impetus for me starting

the doctoral program, Lou for being the motivation for me to stay in it.

Finally, I would like to thank my wife Anne. From the moment that I emerged
from the basement at our home in Oak Park in late 2003 and fecklessly mentioned to her
that I was planning to apply to doctoral programs, she has been absolutely terrific. She
put up with all of my mood swings, conspicuous absences, floor-pacings, and everything

else that comes with a spouse entering a doctoral program. Thank you, Shug. . .love you.

vi

TABLE OF CONTENTS

LIST OF TABLES ......................................................................................................... ix
LIST OF FIGURES ......................................................................................................... x
Essay 1: Conceptualizing the Agile Service Encounter ....................................................... 1
Purpose of the study ..................................................................................................... 6

Essay 2: The Quick (Agile) and the Dead (Dead): Exploring the Role of

the Manager/Employee Dyad in Creating Agile Service Encounters .................................. 9
Service Strategy ......................................................................................................... 10
Agility ........................................................................................................................ l4
Organizational Behavior Approaches to Agility ........................................................ 15
Agency Concerns in Maintaining Agile Service Delivery ........................................ 19
Setting the Managerial Climate for Agile Service Delivery ...................................... 22
The Employee’s Role in Service Agility ................................................................... 26
Research Questions on the Model of Service Agility ................................................ 28
RESEARCH DESIGN ............................................................................................... 29
Critical Incident Technique ........................................................................................ 30
Data Collection .......................................................................................................... 31
QUALITATIVE SURVEY AND RESULTS ............................................................ 37
Correlation analysis of manager and employee subcodes ......................................... 45
Employees’ and Managers’ Reporting of the Service Agility
Construct .................................................................................................................... 47
DISCUSSION ............................................................................................................ 50
Contributions to Theory and Technique .................................................................... 51
Agency Theory in Service Delivery ........................................................................... 52
Contributions to Practice ............................................................................................ 53
Limitations and Future Applications ......................................................................... 56

vii

Essay 3: Enterprise Agility and Service Quality: Employee Perceptions of

Retailer Flexibility ............................................................................................................. 58
The Agile Enterprise .................................................................................................. 60
Service Flexibility within the Retail Establishment ................................................... 63
The Service Agility Model of Manager and Employee Actions ................................ 67
Data Collection .......................................................................................................... 80
Partial Least Squares (PLS) Path Modeling ............................................................... 82
Measurement Model .................................................................................................. 84
The Bootstrapped Path Model Results ....................................................................... 93
Discussion .................................................................................................................. 95
Limitations and Contributions to Practice ............................................................... 102

APPENDICES ................................................................................................................. 105

Appendix I: Operationalization of Constructs ................................................................. 106

Appendix 11: Critical Incidence Technique Survey — Employee Survey ......................... 109

Appendix III: Critical Incidence Technique Survey — Manager Survey ......................... 112

Appendix IV: Copy of the Initial Email Letter to Store Managers .................................. 115

Appendix V: Copy of the Survey Information Letter Sent to All Store

Employees ........................................................................................................................ 118

Appendix VI: Open Ended Survey Form Distributed to MBA Students

on the Topic of Service Agility ........................................................................................ 120

Appendix VIII: Service Agility Qualitative Study List of Codes* .................................. 125

Appendix IX: Description of Data Critical Incident Study Data Set ............................... 131

REFERENCES ................................................................................................................ 132

References ........................................................................................................................ 1 3 3

viii

LIST OF TABLES

Table Caption Page
I Service Agility Subcode Frequencies — Employees and Managers ............. 39
2 Summary of Significant Findings of Crosstabs/Phi Correlations of

Rewards-) Desire and Preparedness-)Ability Manager/Employee

responses ................................................................................. 48
3 Summary of Significant Findings of Crosstabs/Phi Correlations from

Rewards-)Ability and Preparedness-) Desire Manager/Employee

Responses ............................................................................... 49
4 Construct Composite Reliability (CR) and Item Loadings (Ld.) ................ 86
5 Alpha, Composite Reliability and Correlation Matrix, AVE in diagonal ...... 90
6 Path Coefficients, Bootstrap Sensitivity at 250, 500, and 1000 Resamples.... 93
7 Alternative Model Path coefficients and significance (1000 resample

bootstrap) ................................................................................ l 0 1

ix

LIST OF FIGURES

Figure Caption Page
1 Model of the Manager-Employee Service Agility Dyad ......................... 21
2 Strategy/Tactics Model of Service Outcomes ..................................... 66
3 Path Coefficients of Strategy/Tactics Model ...................................... 92
4 Path Coefficients of Alternative Strategy/Tactics Model ......................... 100

Essay 1: Conceptualizing the Agile Service Encounter

Since "the turn of the last century, the American Economy has increasingly
become subject to the often conspicuous, yet undeniable growth of the service sector.
From 1900 to 1984, the percentage of Americans employed in the service sector
increased from 30% to 74% (Bateson 1989). In fact, nearly two-thirds of the gross
national product in 2002 was attributable to private, service-oriented industries (Hays and
Riggs 2002). With such a significant impact upon the commerce landscape, the
importance of studying services would seem to be readily apparent.

One particular aspect of service studies revealed in the literature within the last 20
years was the identification of which attributes of a service transaction create customer
satisfaction. This search for what creates service quality has manifested itself in the
introductions of some disparate types of measurement techniques geared specifically to
services. One of the earliest forms of service quality measurement, SERVQUAL, is
focused upon the analysis of the gap between a stated score of what was expected of a
particular attribute of a service transaction and the stated score of how the customer felt
that the attribute was performed in a service transaction (Parasuraman, Zeithaml et al.
1988; Zeithaml, Parasuraman et al. 1990; Parasuraman, Zeithaml et al. 1994). In the
SERVQUAL measurement technique, the attributes of the transaction to be measured are
predetermined: tangibles, reliability, responsiveness, assurance and empathy. A
competing means of service quality measurement that has become more attractive in

recent years is importance-performance analysis (IPA). IPA, as its name would imply,

1

basically notes the distance between the importance that a service provider’s customers
place upon particular service attributes and the customers’ assessment of the performance
of those said attributes (Martilla and James 1977; Oliver 1997). Unlike SERVQUAL,
however, in IPA it is left up to the analyst to determine what the relevant aspects of the
service transaction are for his particular service-providing business unit.

What both SERVQUAL and IPA both fail to account for, alas, is the degree of
modification that must take place from one service transaction to the next, in order for the
customer to be able to recognize the interaction as one of “quality”. In other words, in
spite of the attempt to the cover the gamut of the pertinent aspects of the service
transaction via the stipulated attributes of SERVQUAL and the customized attributes of
IPA, the reality of the service transaction, is that what would constitute a “good job” is
highly dependent upon the particular requirements of the individual consumer. This
reality is supported by a 1990 study (Bitner, Tetreault et al. 1990) which found that when
asking customers of service transactions to recall both successful and unsuccessful
service transactions, fully one-hundred percent of these “critical incidents” were directly
related to service transactions involving degrees of reaction and responsiveness that the
service worker either did or did not possess. When asked to recall service quality at a
later time, service customers recalled those incidents in which they required the service
worker to act with a degree of improvisation in order to fulfill the customer’s actual
wishes.

As an example of this point, consider the situation posed by a chair of this
particular dissertation: imagining customers in a queue at a full-service bank. Perhaps in

this example the first customer is, in two hours, going away on holiday, and wishes to

2

withdraw $500 from the bank on her way to the airport. Meanwhile the second customer
wishes to apply for her first home loan, but is concerned about the lengthy procedures,
amass of documents, and seemingly invasive inquiries about her credit that must take
place in order to secure the mortgage. Finally, the third customer wishes to resolve a
dispute with the bank regarding the balance on her personal bank account — the integrity
of which she fears may have been breached by an incidence of identity theft. After the
three transactions are completed, all three customers will be able to report on service
quality through either a SERVQUAL or IPA methodology, but not only are the two
measurement systems likely to yield results that are actionably different (Bacon 2003),
but neither one is equipped in any way to address how well service front-line workers
(tellers, in this case) were able to adapt their understanding of the customer’s situation in
order to make the provided service optimally beneficial at the level of the customer. The
first customer’s requirements were for the bank to perform a basic function, dispensing
funds, to be done in a manner that would allow her plenty of time to catch her plane; so
clearly, speed was the overriding concern for her in this transaction. Her requirements for
what would constitute a quality service transaction would tend to run contrary to those of
the third customer, who wished to resolve a dispute with the bank. This third customer
would need for the bank’s front-line personnel to exhibit a sizeable measure of empathy
and all that it entails: a talent for listening to the customer, an ability to show concern
over the ramifications of the customer’s situation, and a mechanism for resolving the
dispute in a manner with regards to the specificity of the service situation. Furthermore,
while the first customer relies on a speedy transaction, the third customer requires a much

more time-consuming effort in order for the bank’s provided service to be of value. That

3

is true of the second customer as well, but for the bank to be able to serve that customer
in an optimal fashion, it will have to ease her trepidations of the loan application process
by continually maintaining an air of transparency about what the various documents
signify and what the aim is of each procedural step of the loan process. This, too, takes a
time investment on the bank’s part in order to provide the best possible, most usable
service to the customer. However, instead of the empathetic listening qualities that the
service provider should signal to the third customer, the most important quality that the
bank should illustrate to the second is the ability to disseminate information. As an
outcome, the second customer would be informed, and thusly empowered, regarding the
procedures that must transpire that will enable her to reach her desired outcome.

Taking this simple example into consideration, the bank that would invoke a
service strategy involving “speedy, in and out service” might be, in actuality, doing a
disservice to customers of the second and third type, who require a much more intimate
level of service than their policy of quickness would allow. Similarly, the explication
qualities that the second customer type so badly desires in a service provider might
appear to be entirely insensitive to the third type of customer, who requires the service
worker to engage in more listening and empathy.

As illustrated in this example, the front-line worker must possess a sizeable
measure of adaptive capacity in order to satisfy the desires of each customer. Alas, it is
exactly this essential part of the service transaction that has been, thus far, not specifically
addressed in the extant services and service marketing literature. In other steams of
business research, however, both academics and practitioners alike have recognized the

value of strategic agility: the need for firms of all industry types to be able to adapt to
4

changes in their customer needs and their competitive and regulatory environments (Roth
1996; Long 2000). Two things not well addressed in the extant agility literature, however,
are: 1) the need for the front-line service worker to be able to perform this particular agile
behavior, 2) the importance of agility in a service context.

The view of agile behavior driving customer satisfaction concurs with an earlier
study of critical incidents (Bitner, Tetreault et al. 1990) which found that a major driver
of customer satisfaction was not only that the service rendered was of high quality, but
satisfaction was also derived from the customer’s perception of how the service agent
reacted to unforeseen circumstances. In particular, the highest generator of satisfaction
from the Bitner study involved the decisions the service employee made when faced with
core service failure (such as a computer shutdown reducing the functionality of bank
teller windows, or severe weather shuttering virtually all of an airline’s scheduled
flights). Alternatively, the highest degree of dissatisfaction was derived from the failure
of the service worker to act when faced with service failure. Considering that satisfaction
in the 1990 study was not derived in any way from the core service qualities that are
often taught such as reliability and stability and predictability of service delivery
(Goldstein 2003), then those core service components alone clearly are not achieving
customer satisfaction for the firm. The implication of the Bitner study seems to be that
the firm’s heretofore hidden means of eliciting additional degrees of service satisfaction
from the customer base can be derived from the establishment of protocols created
specifically for the purposes of handling unplanned for service scenarios. These
unplanned service scenarios can vary greatly, from an off-the-wall customer service

request to outright system-wide service failure. The handling of the unforeseen in the

5

service context, is the ultimate goal of a firm that establishes a service strategy of agility
(Bitner, Tetreault et a1. 1990).

This particular type of study is quite timely, given the current state of research in
the services in marketing, and can make a true contribution to the body of knowledge in
both the marketing and services realm. Both the topics of “service innovation” and
“engaging customers through innovation and design” were deemed as high priority topics
in a recent publication of the Marketing Science Institute (2006-2008). Rust (2004)
proclaimed in an editorial note that the science of studying service could be advanced if
researchers focused on “designing efficient systems of service delivery” and “training
and motivating service providers.” The calls for addressing these areas are answered in

this research project, making the research to be done both worthwhile and relevant.

Purpose of the study

The aim of this dissertation is to identify this essential component of the service
transaction, service agility. Service agility is defined as “the ability of a service-providing
firm to be able to adjust its resources in order to serve the specific needs of its customer
in the demeanor with which the customer would like to be served.” Because service
agility requires a degree of flexibility from the firm’s front-line service workers, it is, in
part, a strategy for motivating those front-line service workers to be flexible. Thus, the

purpose of this research project is to discover the answer to these research questions:

1) How should service agility be conceptualized in a service transaction?

2) How should service agility be measured?

3) What are some antecedents of service agility?

To address these questions, this dissertation calls upon previous conceptualizations of
agility in three major streams of work: prior conceptualizations of service strategy,
conceptualizations of agility in the operations management/information technology
literatures, and conceptualizations of flexibility and adaptive behavior in the
organizational behavior and human resource literatures. The framework of agile service
planning and the agile service transaction borrows from the three literatures. To
determine if there are other factors that contribute to this agile service transaction,
concepts of service provision and service quality of other leading papers in services will
be introduced in an attempt to determine if such concepts contribute to the
conceptualization of agility posed in this paper.

This dissertation also recognizes an agency problem that arises when service
providers make steps to become more agile. Namely, since the agility of services is
manifested at the level of the service transaction by the front-line service worker, service
firm management will have difficulty in determining: (a) if the service worker is acting
with the optimal behaviors with which to provide agility, and (b) if the service worker has
the ability to behave in the manner which will provide agility at all. Because of this
problem which managers face, this dissertation invokes the framework of agency theory
to fit within the context of the service providing firm.

Additionally, this study will perform analysis at the level of the interface between

manager and employee. This is a departure from most of the studies on service strategy,

7

which tend to discuss service strategy either at the level of the manager exclusively or at
the level of employee and customer.

This three-essay dissertation seeks to explore the conceptualization of service
agility with two studies. The first study, qualitative in nature, explores the concept of
service agility as a function of dyadic actions and behaviors between manager and
employee. This conceptualization of agility is born both of the literatures of managerial
strategy and of organizational behavior. In this study, it is posited that while the agile
service transaction takes place at the interaction of the employee and customer, the
manager has tools available to him/her to incentivize or empower that front-line service
worker to display those behaviors with greater regularity. The manager-employee dyadic
approach to agility is explained through the theoretical lens of agency theory, and is
examined through a paired response of a service worker and his/her direct manager.

The second study explores service agility as borrowed from the operations
literature’s conceptualization of enterprise agility. In this study, agility is conceptualized
as a property of the entire firm; specifically, its ability to adapt to changes in the
marketing environment. In this second study, the outcomes of employee-assessed service
agility and individual service delivery are linked in a partial least squares (PLS) path
model with managerial tactics and firm strategies. This study utilizes the responses of the

employees and their associated managers at a full-service specialty retailer.

Essay 2: The Quick (Agile) and the Dead (Dead): Exploring the Role of the

Manager/ Employee Dyad in Creating Agile Service Encounters

In the human-focused service firm, service quality is derived from the interaction
of employees and customers. The intricacies of this interaction have been shown to be a
major predictor of perceived service quality for the customer (Parasuraman, Zeithaml et
al. 1985), and job satisfaction for the employee (Herzberg 1987). However a major
component to service quality perception is the degree to Which the front-line service
worker was able to adapt his/her service offering in order to customize this service
experience to fit the customer’s needs (Gwinner, Bitner et a1. 2005). The ever decreasing
size of the market-at—large toward “micro-markets” (Day and Montgomery 1999),
supports the notion that firms will seek to serve customers with more customized and
individualized solutions (Peppers and Rogers 1995).

One particularly noticeable gap in the services literature is the juxtaposition of the
customer-focused nature of flexible service delivery with the strategic service strategies
that engender these nuanced, albeit critical interchanges. Due to the greater need of the
supervisor to drive perceived service quality as a means of creating and sustaining
competitive advantage (Vilares and Coelho 2003; Ball, Vilares et al. 2006), this research
would be worthwhile, particularly in the context of service management.

This research is, in part, motivated by a desire to explore a “pop-media”
explanation of a workplace phenomenon. A prevailing thought of people who become
managers of a service firm is that, because they have worked up from front-line service

workers, they would display more agile behaviors than the employees they supervise.

9

Research has shown that the highest-performing managers are characterized by a
competency to inspire and demonstrate the intricacies of a job to their employees
(Dulewicz and Herbert 1999). Alternatively, in the 19903, humorist/cartoonist Scott
Adams (1996) coined the “Dilbert Principle” which essentially states that the most
ineffectual members of an operation will be promoted to management, so that in that
supervisory position, they can do the least damage. The question remains, do managers
actually maintain a degree of influence over their employees with regard to creating a
flexible service transaction, or is flexibility in the service transaction purely a component
of the employee’s role?

The purpose of this study is to analyze the agile service transaction, one in which
culminates in the exact needs of the customer being met by the front-line service
employee. In this study, we look not only at the qualities of the worker in the service
transaction, but we also examine what their supervisors do to inspire and support those

agile behaviors.

Service Strategy

“Service strategy” generally refers to a strategy in which the focus on actual
products that a brand might place on the marketplace is reduced while the importance
placed on human interactions implicitly involved with the ownership of said brands is
increased. In the services literature, the notion of service strategy has manifested itself in
a plethora of ways.

At the root of concern in a service strategy is the question; “how does a firm

create a service strategy in order to create competitive advantage?” In a paper describing

10

the methods in Which a business-to-business (B2B) firm in a goods-heavy industry might
wish to employ a service strategy (N eu and Brown 2005), five factors were determined to
be important: 1. the external environment, 2. strategy environment fit, 3. human
resources, 4. structure, and 5. the application of measurement and rewards. The external
environment and the strategy-environment fit factors are crucial, and exist seemingly in
tandem due to the fact that with more complexity, firms need to have more than one
strategy to fit the multiple facets of the difficult environment. In particular, authors Neu
and Brown (2005) determine that even a market orientation strategy, one that aligns the
firrn’s goals with the needs and wants of a target market (Kotler 2003), does not even
address a complex market’s significantly varying customer needs. The only strategy that
will suffice, according to the authors is a “customer centered strategy” that will allow the
firm to focus on the needs of each individual customer, not simply to the overall market
as a single entity. This fits with other research, including Sundbo (2002), who sees the
service industry as a continuum between two familiar extremes —- standardization and
customization. Sundbo (2002) perceives that the service industry is following the trend of
the manufacturing industry, allowing for a separate realm, modularization, which fits
between the two polar opposites. Modularization, in the services context, is best
described as the ability to make discrete, incrementally customized customer creations
through the assembly of various pre-made modules, or a component of a system.

More relevant to the current research are human resource and structure factors in
creating service strategy. Three salient points for the creation of a reliable service strategy
emerge from the standpoint of human resources. First is the ability to adapt frontline roles

to cope with the complex market. In other words, a means for deriving a customer-

11

interacting team that is able to adapt to the whims of each customer put before him is

crucial to a service strategy that will differentiate the focus firm from its competitors.

This view corroborates the implications of both Gwinner et al. (2005) who decry the

importance of employee adaptiveness, as well as the case-based study of Edvardsson and

Enquist (2002) who determine that the success of a prominent service chain was based

largely upon its ability to recreate itself, thereby allowing it to mean different things to its

varied tableau of customers. Neu and Brown (2005) describe the four key roles that the

frontline employees must fill in order to be effective frontline employees. These are:

1)

2)

3)

4)

Serve as a trusted adviser — provide unbiased recommendations to the customer
on how to best achieve the customers best outcome — in other words, act in the
best interest of the customer

Develop a learning relationship with individual customers — have the ability to
get to know customers in such a way that the service agent will be able to better
serve the customer over time through becoming more acclimated to both the
personal attributes of the customer as well as the specific situation of his
utilization of the service.

Lead a collaborative support performance — be willing to collaborate with other
service workers in the firm as well as those in supervisory positions and upper-
level firm leadership in order to “effectively address the broad range of issues that
arise when supporting a complex business system”

Deliver a complex service — have the ability and willingness to take ownership
over the entire gamut of issues likely to arise when delivering service in a

complex market.

12

The second human resources based source of service strategy advantage is found
in the hiring, albeit with a reduced focus on distinctly defined skills, but with a greater
emphasis on behavioral competencies, technical experience, and “attitude.” Once again,
this viewpoint is backed up with statements made in other research papers (Illeris 2002)
stating that the criteria for value for a service employee has much to do with how well
he/she is liked, how easy going he/she is, how much effort the service worker displays,
and how much job satisfaction the worker receives — less to do with the skills the worker
possesses. Thirdly, the ability for the company to train its service worker and (developing
the worker’s technical expertise) is described by Neu and Brown to manifest itself in
different ways: either through formal training at the onset of hire, ongoing training
throughout a service employees tenure, or ongoing learning from more seasoned service
employees over time, can all have a substantial effect on making the service employee
much better suited to handle customer needs effectively and efficiently.

Neu and Brown also make a case for the importance of structure in achieving
service efficacy; but in doing so, they tout the efficacy of an outright lack of hierarchy.
Neu and Brown believe that the most suitable firm structure for serving the complexities
of the service market is one of decentralization, or “the diffusion of decision-making
authority.” This is due to their observation that the most effective means of untangling
the complex market is through the lower-level managers, It is those managers, they posit,
who are in the best position to “read” the market and enact the flexibility to change the

service strategy to accept the newest of market realities. This viewpoint is shared by other

13

researchers who report on service strategy from the standpoint of organizational culture
(Chowdhary and Saraswat 2003).

In such research, culture is based upon maximizing flexibility, while the focus on
work groups has moved away from the “team” concept and more towards the “family”
concept. Instead of having supervisory front-line workers through purely what social
psychologists French and Raven referred to as legitimate power, in the service era, the
focus for the supervisor is to lead by example, leading with a style derived from a
mixture of referent power and expert power (French and Raven 1959). Codified and tacit
structures and processes that once guided workers on ways to perform their tasks are now
illustrated to them by their supervisors. Alternatively, when the front-line service worker
actually services a customer, the flexible structure of the efficient service-providing
organization allows for the supervisor to monitor the worker at a very close, first-person

level, and provide the worker more immediate feedback.

Agility

The position of the current research is, while encouraged by the upper levels of
the organizational chart, agility in the services can only be truly realized at the level of
the interaction of the front-line service worker and the end customer. This
conceptualization of agility is a marked departure from the notion of customer orientation
as described by Kohli and Jaworski (Kohli and J aworski 1990). Kohli and Jaworski’s
description of the customer oriented firm is one in which the “organizational

culture. . .stresses the customer as the focal point of strategic planning and execution”

14

(Deshpande, Farley et al. 1993). Implicit in this definition is that customer orientation is
such that it can be planned for ahead of time, before the actual meeting with the customer
and/or the actual (as opposed to derived) demands of the customer altogether. Our View
of service agility implies that customer needs vary, not merely from one customer to the
next, but from each individual customer’s visit to the next as well. Thus, service agility
relies upon the expertise and adaptiveness of the service worker at the time of the
service’s rendering to provide this crucial component of the service transaction to

maximize the service experience for each customer on each visit.

Organizational Behavior Approaches to Agility

One of the earlier attempts at service agility came from an article in a practitioner
review publication from Christopher Lovelock (1995; 2004) on the topic of how firms
could best compete through the delivery of services to both their internal and external
customers. Lovelock maintained that in any service operation, the firm must be able to
deliver services in a “seamless fashion” even though the firrn’s front-line service
providers would be relied upon to fulfill several different roles to the customer,
depending solely upon the customers’ ever-changing needs. To illustrate the roles that
service providers would have to fulfill, he created a concept that was named “the flower
of service”. The center of this flower model was appropriately named the “core product.”
What surrounded the goods-based center were eight “petals,” representing the roles that
service providers would have to fulfill in order to make the entire transaction
(supposedly) as pleasant as a full, unblemished flower. The petals were named

“Information”, “Consultation,” “Order-Taking." “Hospitality,” “Safekeeping,”

15

“Exceptions,” “Billing,” and "Payment.” Each progressive petal, Lovelock posits,
provides an opportunity for the firm to either build or destroy the relationship with the
customer, thus affecting loyalty and commitment within the relationship.

The acknowledgement of this diverse set of tasks and the recognition that each
step is important does not, however, speak to the reality that some firms are able to
perform services better than others, therefore allowing some firms to leverage services as
a means of deriving competitive advantage. Ueltschy, Laroche et al. (2005) found that the
link between service quality and customer satisfaction was even more salient in cultures
of low context (people across cultural groups tend to treat everyone the same, as opposed
to treating people differently based upon status or position). These particular variables are
important, since service quality and customer satisfaction are both recognized as a means
of generating competitive advantage (Tam 2004). Customers who feel that they
experienced a high-quality service transaction will be willing to pay more for the service
in the future (Homburg, Koschate et al. 2005). To achieve this elusive competitive
advantage, Goldstein (2003) finds that employee development portends an increase in
both customer satisfaction in the service transaction (thus leading to profit) as well as the
employee’s perceived outcomes in satisfaction and future prospects with the company.
To accomplish this, Goldstein posits, development must comprise of three components:
1) work systems, 2) staff training and development, and 3) staff well-being.

The matter of staff well-being was also touched upon in an earlier case study
(Jerome and Kleiner 1995) of Disney Parks — specifically studying the role of employee
morale and motivation. In that heralded firm, each employee is expected to focus on

customer care — even those that never come into direct contact with customers. How they

16

are able to maintain this customer-oriented focus, comes down to the morale of the
employees, which the researchers (Jerome and Kleiner 1995) maintain is done through a
three-pronged approach: 1) increased pay, 2) recognition, and 3) additional involvement
in their job roles.

Finally, work has been done in the area of employee adaptiveness as providing
degrees of customization for the service firm. Employee adaptive behavior has been
shown to be critical in creating customer value (Treacy and Wiersma 1993), increasing
sales performance (Sujan, Sujan et al. 1988; Levy and Shanna 1994), and, from the
perspective of the service worker, both customer satisfaction and service quality
(Suprenant and Solomon 1987).

Gwinner et al. derive two distinct types of adaptive behavior. The first type,
interpersonal adaptive behavior, relies on the notion that there is no single best way to
sell any item, so salespeople will have to change the characteristics of their sales pitch
based upon the customers to whom they sell. Salespersons (or service providers) who are
able to modify their sales presentation based upon the customer standing before him/her
may be, in the longer term, prone to enjoy enhanced interaction, and thusly a more
fruitful service transaction and higher perceived service quality of from the customer
relationship. The components of interpersonal adaptive behavior (as described by
Gwinner et al.) are: 1) sensitivity to others, 2) (ability to) modify self-presentation, and 3)

customer knowledge.

The second type of adaptive behavior is what Gwinner et al (2005) refer to as
“service-offering adaptive behavior.” Service-offering adaptive behavior is based more

on the ability of a frontline service worker to use informational cues from the customer as
17

well as the knowledge of the firrn’s capacities in order to service customer needs as a

means for proposing the correct service package for the customer at a given time.

This alternative form of adaptive behavior comes from two sources: the high degree
of interpersonal contact that service workers and their clientele might be subject to, and
the degree of inseparability of the service to be rendered and the consumption of that
service. More succinctly, high degrees of contact between the two entities invariably
results in expectations being transmitted between the customer and the service worker
(Siehl, Bowen et al. 1992) The service worker then is able to adapt the service offering —
often as the consumer makes use of the service rendered, since the production and

consumption of the service often take place simultaneously (Parasuraman, Zeithaml et al.

1985)

Finally, one particularly well-cited study (Bitner, Tetreault et al. 1990) found that
satisfaction was driven by the response of service workers’ to unforeseen situations. This
view was reinforced by a later study (Bitner 1990) which determined that customer
satisfaction in a service transaction was not driven solely by the core service being
offered. Satisfaction was also driven by many of the peripheral happenstances that
occurred at the time the service was rendered; in particular, the attitude and responses
that the service worker made when the service was performed. As satisfaction is the
ultimate goal of the service worker, the manager’s role in getting that worker to display

the adaptive behaviors most often is critical.

18

Agency Concerns in Maintaining Agile Service Delivery

This paper takes the position that service agility is, at least in part, a manifestation
of the total service strategy of the service-providing firm. The execution of the strategy
involves manipulations upon a targeted group: the firm’s front-line service employees.
Where the employee comes with his own particular set of personal qualities, preferences,
and beliefs about the procedures and responsibilities of his position, it is the role of the
manager to ensure that the employee is in the correct frame of mind to be able to perform
customer-focused agile service transactions, in line with the mission and strategy of the
firm.

An appropriate theoretical lens with which to view this managerial problem is
agency theory. The central problem in any agency arrangement is one in which one
party, known within the theory as the “principal,” has the need to enlist another party,
known as the “agent,” to perform a task on its behalf. The problem for the principal,
however, is that there are several factors that may cloud the principal’s ability to assess
the amount of care and quality that the agent is putting into the task in question (Bergen,
Dutta et al. 1992). (One factor that the principal party has to safeguard against, for
example, is the assumed latent tendency of the agency party to shirk working on the task
in question, should the principal not be monitoring the agent or incenting the agent
appropriately to wish to do the job.) The solution for the principal is to create an efficient
contract with the agent. The contract, if effective, will expressly state rewards for the
agent for performing the task, effectively aligning the goals of the principal with that of

the agent.

19

Agency theory has been applied to several dyadic contexts, including board of
director/CEO (Booth, Cornett et al. 2002), firms/salespeople (Anderson and Oliver 1987;
Krafft 1999; Misra, Coughlan et a1. 2005) franchisor/franchisee (Chow and Frazer 2003),
and even service provider/customer (Singh and Sirdeshmukh 2000). In a service
situation, there is an agency concern residing at the level of the service performance
itself. Here, the principal (assumed by the service manager or supervisor) is enlisting the
help of his front-line employee (playing the role of the agent), in order to perform the
task of providing service to customers. However, the tendency of the service employee to
not provide the needed degree of flexibility or care in service provision that his
supervisor desires (due to a lack of either incentive or desire) describes the agency
problem. One characteristic of this problem regards the cost of monitoring behavior
(Ekanayake 2004). While behavior monitoring constitutes a cost to the service firm,
success in a service transaction cannot easily be defined by quantifiable outputs.
Competent, even excellent service performance can result in service failure (customer
fails co-creation or equipment malfunction) and altematively, a poor service performance
could bring a desired service outcome (customer pays for service although the service
worker was unpleasant). For this reason, the manager is forced to gauge an employee’s
success in fulfilling the principal-agent contract by assessing the employee’s behavior
displayed while in the act of performing the service itself.

At a level above the service delivery interaction between employee and customer,
the service worker is subject to the service climate set by the manager. A critical
component of this climate are rewards, which according to agency theory, is set into the

efficient contract between agent and principal as a means to align the interests of both

20

parties (Bergen, Dutta et al. 1992). If the agent is motivated by the reward, it stimulates
the volitional response of the agent.

A separate concern is the issue addressed by several of the more traditional
researchers in the services field: the ability of the service worker to adapt in order to
effectively perform the service (Bitner 1990; Hartline and Ferrell 1996; Gwinner, Bitner
et al. 2005). Should the service manager wish to assess the success of the behavior of his
front-line service worker, he must understand that a sheer will to do a good job may not
suffice. The manager must monitor the abilities of the employees and secure provisions to

make adjustments to that ability through training.

 

 

° ° F t-I' E I
Managerial Climate m“ “'9 “‘P Oyee

 

 

 

 

 

 

 

 

 

Actions
Rewards Internal De31re
.. l’ . .
Recognrtron rewards 9 desire Willingness .
Pay ’ ‘ Acqurescence

Preparedness ”a. Adaptrveness

j
A

 

 

_ . ’ Interpersonal
Trarnrng Adaptive Behavior

Empowerment prep. -) adapt.

Service Vision SerVice-Offering

 

Adaptive Behavior

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1: Model of the Manager-Employee Service Agility Dyad

21

Setting the Managerial Climate for Agile Service Delivery

The manager’s tools to address this agency problem are described in the left side
of the Service Agility Dyad Model of Figure 1. This side of the model represents climate:
the environment the manager sets in hopes of providing the best, most efficient service
delivery to his/her customers. Within this climate, we propose that the service manager
has two relevant manipulations in setting the climate. The first is in the degree to which
he wishes to prepare the employees to deal with situations that they will face in providing
the best possible service offering to the clientele. This manipulation will be referred to as
the Preparedness Realm of managerial activities. The second regards the rewards the
manager allots the employees for fulfilling service goals or behaviors. This manipulation

will be named the Rewards Realm of managerial activities.

Preparedness

Within the preparedness realm of the model is the spectrum of activities that the manager
can invoke with the desired outcome of enhanced employee capability or knowledge -
generally synonymous with employee training. Training is defined as the set of
educational activities a manager can administer to his employees in order to increase the
competency and knowledge of the employee done to achieve the ends of higher customer
satisfaction. Training provides a conduit through which the firm can provide employees
with both strategies for effective job performance as well as a refreshment of firm
standards, regulations, and values (Kassicieh and Yourstone 1998). Training that is

effective, timely, and meaningful to employees has been shown to directly impact

customer satisfaction with the service encounter (Gonzales. Ellis et al. 1999). For the

22

employees themselves, service training has been found to be a driver of organizational
commitment and job satisfaction (Lee, Nam et al. 2006), strengthening the employee
bonds with the firm.

Employee training takes several forms. Formal training occurs within a preset
block of time, and contains some sort of curriculum with defined educational goals.
Informal training includes teaching initiatives performed by management or senior
employees not in a classroom setting, generally meant to teach trainees a specific task or
job nuance. Training could include competency testing, which is a test to judge the
qualifications of a particular service employee (either pre-hire or post-training) to
perform the particular duties of the position — thereby making the competency test a
hedge for the supervisor against bad service. Finally, training could include mentoring
activities, where the employee is matched with either the manager or a senior employee,
so that the employee can either observe the senior employee performing the tasks of the
position, or alternatively, the senior employee can observe the trainee attempt to perform
the tasks himself.

Additional tasks that the manager can employ in the preparedness range include
giving a certain degree of autonomy to the employees in customer-focused decision
making, termed empowerment. Also, the manager may also instill his own service vision,
best defined by Lytle et al. (1998) as the “extent to which leaders have and espouse a

vision for being a service-oriented organization.”

Rewards

The second manipulation that the manager can use to support a high-quality
service environment is through the provision of delivering rewards for agile service
performance. The act of rewarding employees as a means to get the employees to do a
job on behalf of the manager is the chief concern of agency theory (Eisenhardt 1989;
Bergen, Dutta et a1. 1992; Bartol 1999). The central tenet of agency theory is that in order
to motivate employees in acting in the best interests of the manager, a crucial choice the
manager can make is to either reward the outcomes of the employee (to pay on a per-
piece basis, or to apply a end-of—period bonus to a successful predetermined period of
time, most easily done with the outcomes are easily observable and quantifiable) or to
reward the behaviors of the employee (to pay based upon the desired behaviors observed
by the managers, most easily done when the outcomes are not observable and
quantifiable) (Eisenhardt 1989). In the case of service managers, because of the largely
unquantifiable and subjective measurements of success, compensation for service
industry jobs are largely relegated to rewards based upon behaviors.

A competing theory to agency theory is expectancy theory (Bartol 1999; Sloof
and van Praag 2008). Expectancy theory is predicated upon the valence of a reward that a
worker may receive by performing a particular act or assuming a particular behavior.
While the theory is a management theory, it rests upon the beliefs of the employee that
his particular behavior will lead to a particular outcome (expectancy), that the outcome
will lead to a particular reward (instrumentality), and that the employee would actually
desire the reward (valence). The simplest of awards that can be given to employees in

order to drive motivation include a raise in base pay, the straight salary drawn by an

24

employee. Other possibilities include bonus pay or material gift (a non-monetary physical
reward) compensation.

Rewards are not limited to purely the remunerative sense. Managers may also
offer motivation through the use of recognition and praise (Locander and Luechauer
2005). Interpersonal recognition between supervisor and employee may occur either
through the direct, informal “watercooler talk”, or through more formal means, such as an
award given at a company meeting or gathering (Dutton 1998). Recognition can be
dispersed in a group context as well, as managers may arrange for special recreational
group outings or alternatively treating the employees to some group prize, in exchange
for the fulfillment of a predefined sales or service goal. Recognition comes in several
forms as well, from individual recognition, the singling out of an individual for praise, to
group recognition which is praise received in a group context. A very specific form of
recognition occurs when an individual is given a promotion or increased responsibility as
a reward.

Herzberg’s landmark work in the area of motivating employees (1959) speaks to
both financial and praise-based rewards. The two-tiered typology of factors in Herzberg’s
“Dual Structure Theory,” motivator and hygiene factors, are what he posits are the main
typography drivers of employee satisfaction. However, the two outcomes of the
firlfillment of either of the two factors operate in completely different ways. Hygiene
factors, which include pay and benefits as well as supervision, status, and job security,
are factors which make the job pleasant, but does not drive motivation to perform nor
does it particularly lead to job satisfaction in the long run. Instead hygiene factors lead to

a short-term boost in satisfaction, and perhaps a desire to have the hygiene factor fulfilled

25

again (Herzberg 1987) (pay increases only create the desire for another pay increase).
Alternatively, motivator factors, which include recognition from others, promotion, or
intrinsic factors such as responsibility or the nature of the work itself, were found by
Herzberg to drive job satisfaction. More recent studies do seem to suggest, however, that
both motivator and hygiene factors play an important role to younger modern workers
(Baldonado and Spangenburg 2009), but this paper attempts to seek whether these two
factors play a role in promoting, not job satisfaction, but essentially job performance
within a service context.

It is, in part, the goal of this research to determine if, through the use of both the
Preparedness and Motivation realm, the manager is able to affect the outlook of the front-
line service worker, and thus, force a more agile service encounter with customers. The
front line employee’s attributes that could be affected by their managers are described in

the next section.

The Employee's Role in Service Agility

Like the manager, the front-line service employee has two rather broad .
classifications of manipulations open to him that could affect the service-providing firm’s
ability to fit the exacting needs of the individual customer. It is important to recognize
that unlike the managerial manipulations, the outcome of the employee’s manipulations
have a direct impact on the customer service transaction; however, the model of service

agility generation posits that manager’s manipulations will affect the qualities of the

employee’s manipulations.

26

Adaptiveness

The first employee manipulation refers to the ability of the employee to parlay
customer needs into a positive service outcome. This realm will be referred to as the
Adaptiveness Realm in this paper. This realm encapsulates the propensity of the front-
line employee to provide an agile service delivery — that is, the ability of the employee to
act in a manner that supports agility. This ability is represented by two distinct and
unique types of behavior, both conceptualized by Gwinner et al. (2005).

The first type of behavior represents the degree to which the service worker can
adapt his personality, attitude, or level of involvement in meeting the personality,
attitudes, and needs of each customer. This type of behavior is referred to as
Interpersonal Adaptive Behavior. Gwinner et al. (2005) defined interpersonal adaptive
behavior as “the manner in which the service worker varies the interpersonal aspects of
the encounter with the customer.” Essentially, a front-line service employee would
display interpersonal adaptive behavior whenever he would change his demeanor to
match the apparent demeanor or situation of the customer.

The other behavior in this realm represents the degree to which the service worker
can match the needs of the customer with the product or service offerings of the firm.
This behavior is termed by Gwinner et al. (2005) as service-offering adaptive behavior.
Defined, service-offering adaptive behavior is “the manner in which the service worker
varies the service itself in order to meet the needs of the consumer”. A service worker’s
success in deploying service-offering adaptive behavior is a function of the number of

customers the worker is able to apply the service to.

27

In ternaI Desire

The final realm in the model represents the desire of the employee to actually
perform an agile service. This realm is appropriately referred to as the Internal Desire
Realm in the current research. The desire realm attempts to capture the volition of the
service worker to provide a unique service offering to each customer.

Employee volition is represented by two closely related, but unique behaviors.
The first is an employee’s willingness to be agile, representing the internal nature of the
employee to apply himself to an agile service offering — in other words, the degree to
which the locus of control of agility is placed upon the service offering employee
himself. The other behavior represents a service worker’s acquiescence of the firm ’s agile
strategy. This behavior places the locus of control on the agility performed by the service
worker on someplace higher up in the hierarchy than the front-line service worker —
perhaps the supervisor, or top manager, or the firm culture itself. These qualitative

measures will be, of course, uniquely inspired by the measures developed by Gwinner,

Bitner et al. (2005).

Research Questions on the Model of Service Agility

Once again, the crucial component of this model of service agility rests upon the
notion that while the agile service takes place at the moment of interaction between the
front-line service employee and the customer, this agile transaction can be prepared for
and nurtured through the actions of the manager. Embedded within the motivations for
offering training, for instance, lies the reality that the manager agrees to supply such

training in the hopes that the abilities of the employee will be enhanced. Likewise, the

28

service manager rewards the service worker through pay and recognition, all in an
attempt to boost the desires of the employee to provide the crucial service at the correct
time. The environment the manager creates within this model of service agility is formed
in the hopes that the employee’s actions will be influenced positively when faced with an
opportunity to provide service to a customer. Thus. the five exploratory questions in this
project are:

1) What types of subcategories do managers and employees report in describing

factors leading to agile service transactions?

2) What motivational activities that managers apply to their employees have an

effect on their employees’ desire to perform services in an agile manner?

3) What preparatory activities that managers provide for employees have an

effect on their employees’ ability to perform services in an agile manner?

4) Do managerial rewards have an effect on their employees’ ability to perform

agile services?

5) Do managerial preparatory activities have an effect on their employees’ desire

to perform agile services?

RESEARCH DESIGN
To explore this conceptualization of this Service Agility construct, a qualitatively-
based study based upon a critical incident of an agile service delivery is administered to

pairs of individuals working in a particular service organization. These pairs consist of
29

the front-line employee at the service organization and that service employee’s manager.
The critical incident we asked each subject to recall is a time in which an employee at
their service organization was praised by a customer for extending him/herself while
fulfilling a customer request or need. Specifically, to recall a time in which a customer
specifically claimed that the employee had “went the extra mile,” “went all out,” or “went
beyond the call of duty.” It is made clear to the subjects that what is meant by “going all
out” is that “the employee extended him/herself in order to ensure that the customer’s
specific needs were met and the customer was unquestionably satisfied with the service
performed.” In other words, the aim of this study is for employees and managers to recall
an incident in which an employee performed an agile service maneuver, verified as such

through praise of the ultimate determinant of agile service: the customer.

Critical Incident Technique

While not a true critical incident technique study, but a qualitative study that is
based upon the recollection of a critical incident, the approach for the current research
was nonetheless inspired by the many studies in the services realm starting with the
seminal previous work of Bitner, Booms, and Tetreault (1990). Critical incident
technique (CIT) is defined as “a method that relies on a set of procedures to collect,
content analyze, and classify observations of human behavior” (Gremler 2004). The unit
of analysis in this methodology is predicated on the incident itself. For each subject that
is surveyed using the technique, they are asked to recall an incident, or perhaps tell a
story about a time in which a particular well-defined type of incident occurred, with said

type of incident generally being the crux of what the researcher is attempting to study.

30

“Incidents” have been defined by Bitner (1990) et al. as an observable human
activity that is complete enough to allow inferences and predictions to be made about the
person performing the act. An incident that is critical is one that makes a significant
contribution, either positively or negatively, to an activity or phenomenon (Grove and
Fisk 1997) (Gremler 2004). So in the case of this research, the critical incident to be
analyzed is the behavior that the service worker was performing in order to earn the
praise of the customer.

One of the main advantages of CIT is that it provides a very rich data source due
to the fact that it allows respondents to decide which incidents hold the most importance
and relevance to them (Gremler 2004), thusly it allows the contextual importance of the
response to be directed entirely by the respondent himself (Chell 1998). This is, of
course, largely due to the nature of the survey design of the technique, which does not
presuppose any information that may be relevant to the respondents (de Ruyter, Perkins
et al. 1995). Also, CIT research is inherently inductive in nature, allowing for the analyst
to formulate patterns with several observations which allow for the creation of testable
hypotheses and the creation of theory (Edvardsson 1992). The drawbacks of CIT include
the fact that because CIT relies exclusively upon the memories of the respondents, the
method is heavily subject to recall bias (Michael 2001.) or even memory lapses (Singh

and Wilkes 1996).

Data Collection
The primary means for collecting data for the study was to administer two sets of

surveys to students in marketing classes at a large public research university. The

31

students who were able to participate as subjects in the data collection were those that
were currently or recently employed in a service-industry job.

For each student’s data collection to be a success, he/she was required to return a
pair of surveys. The first survey was completed by the student, who reported on their
experience as an employee in a service industry position. The second survey was to be
given to the students’ supervisors, who likewise discussed the critical incident from their
perspective as a supervisor or manager of a service industry operation. Both surveys were
to be turned in concurrently. For completing the survey and distributing the survey to
his/her supervisor, the student was given extra credit in the marketing class in which the
survey was distributed. If the student did not participate (either because the student did
not wish to complete the survey, or the student did not work in a service field), he/she
was able to complete an alternative project in order to obtain the extra credit as well.

The survey pairs were originally distributed to 90 individuals. The surveys were
distributed to the students before the Thanksgiving break, and the students were informed
that they would have until the week after the break to return the survey. On the date that
the surveys were to be turned in 42 surveys were returned for a response rate of 46.7
percent. After two additional surveys were excluded due to invalid data, the final number
of surveys going into the analysis phase was 40 completed survey pairs - that is, 80
surveys in total were going into analysis, representing 40 firms: 40 managers paired with
40 of their employees.

To begin coding the components of the preexisting grounded theory, the contents
of the MS Excel spreadsheet consisting of all of the responses was subject to the_“Word

Count” function of Atlas.ti, a qualitative analysis software package. Word counts are

32

often used as a means of performing content analysis by itself (Carley 1993), but the
purpose of the word count in this particular case was to provide clues as to the subcodes
that should be created. “Subcodes” refers to the subcategories of factors in the manager-
employee service agility dyad model (the “pay” code could generate subcodes such as
“base rate pay”, “bonus pay” or “material gift compensation” and so forth). From this the
detailed analysis of this information, a considerably large number of subcodes were
created, particularly with regard to the managerially-focused realms of preparedness and
rewards.

Appendix VIII shows the complete listing of the subcodes created in the
codification process of the 40 documents representing the 80 subjects of this study and a
definition of each code. These codes were generated in a manner consistent to previous
research (Bitner, Tetreault et al. 1990; Chung-Herrera, Goldschmidt et al. 2004), in that
the codes of the grounded theory were first given as codes, but an examination of the
tones of the actual responses embedded within the collected data dictates the generation
of appropriate subcodes. It is important to remember that since both employees and
managers were asked the same basic questions (questions about both themselves as well
as the other party in the critical incident), it was critical to segregate the answers provided
by employees from those provided by managers, thus both managers and employees were
given a unique, but nearly identical set of codes. The a priori justification for doing so
being that there would be valuable insight gained from analyzing the frequency of
reporting the various subcodes for managers and employees.

The types of service industries represented by these forty surveyed businesses had

a considerable degree of diversity: 10 of the firms performed some sort of professional

33

services, 4 of the firms were athletic clubs, 6 were nonprofits, 11 of the firms were
retailers, 5 were restaurants/cafeterias, 1 firm was a marketing research firm, 1 was a
ticket box office, 1 of the firms rented automobiles, and 1 was a manufacturer of
appliances. More detail regarding the nature of the collected data is available on
Appendix IX.

Regarding the types of service agility that were witnessed, these were broken into
three large categories inspired greatly by the previous research (Bitner, Tetreault et al.
1990) on service failures. The three types of service agile service agility situations
reviewed were: 1) when the front line service worker performs his regular job duties
using some sort of special level of care (i.e.: speed, meticulousness, or compassion), 2)
When an employee performs some sort of new task because of the needs of a customer,
and 3) when an employee performs a task to recover from a service failure situation.

The data was coded in Atlas.ti version 5 through the interpretation of the answers
to relevant questions within the survey. When a sentence given in an answer contained a
relevant element as described in the grounded theory of service agility, that entire
sentence, when only one element was displayed, or sentence fragment, when multiple
elements were displayed, was flagged with the appropriate code. The main coder first
completely coded all of the data from all 40 pairs of managers and employees. Once that
data was encoded, the main coder then trained a secondary coder on the nature of the
dataset and as well as the model of service agility before coding the dataset herself. The
two datasets and their respective codes for each were then committed to paper in order to
calculate intercoder reliability. The two coders found that there was 90.5 percent

agreement within their two sets of codes.

34

One of the departures from traditional CIT or other qualitative studies in this
research regards the analysis of the data itself. Most CIT studies rely upon survey
responses to facilitate a typology of response types (Gremler 2004); this research project,
however, uses the response types to generate our sub-categories, or “subcodes” of the
pre-established, or “grounded” theory of the service agility construct. Because this
conceptualization of service agility has been pre-established, (specifically that rewards
from the manager engender employee desire. while managerial preparatory actions lend
to spark employee ability), the charge of the research is to explore which aspects of those
of the larger realms of rewards, ability, preparation, and desire are correlated. In other
words, if employees discuss their desire to perform agile service maneuvers, the key to
defending the conceptual model is to seek how often employees, or their paired

supervisors, are discussing what is being done to motivate them as well.

Measuring Manager-focused codes, rewards and preparedness

In order to get information about rewarding techniques the managers used to
motivate their employees, the question was posed to managers (with a similar question
for employees): “What, if anything, do you (or your firm) do to make employees want to
“go beyond the call of duty?” Through use of the word “want,” the question of incentives
is broached to the subjects. To capture the training aspect of preparedness, the question
was posed: “Do you (or your firm) provide training to your employees designed to
prepare them for reacting to these types of events that require them to go above and

beyond the call of duty? If so, please describe such training.” That straightforward

35

question yielded many types of training techniques. So that no managerial factors for
incentivizing agile service transactions were missed, this question was also asked: “What
other factors (other employees, customers, training, etc.) exist that might affect your

employees in delivering this extraordinary service?”

Measuring the Employee-focused codes, adaptiveness and internal desire

An employee’s adaptiveness was designed to be captured by the survey question
“Are you (or your colleague) naturally inclined to do whatever it takes to ensure that the
customer’s needs are met in a customer service transaction? Describe why or why not.”
Here, either the employee or manager is asked to describe the natural ability of the
employee to perform theirjobs with agile behaviors. It is their insight into this natural
inclination, if it at all exists, that will lend itself to a judgment of an interpersonal or a
service-offering adaptive behavior.

An employee’s desire to be agile in their service positions was captured by a
question similar to the ability question, however nuanced quite differently. This question
is: “When you (or your colleague) come to work, do you always want to ensure the
customer’s needs are met? Why or why not?” Here, a question of desire is clearly put
forth. As it happens, often the subjects addressed ability when answering the desire
question and vice versa. These responses were coded accordingly, as it was realized that
although the questions were not addressed correctly, the responses, if lucidly addressing

ability or desire, were nonetheless valuable and valid.

36

QUALITATIVE SURVEY AND RESULTS

Although some of the codes were recorded multiple times in a single survey (for
instance, managers who listed five types of material gifts that are used to motivate
employees would trigger five separate “Material Gift Compensation” codes), each code,
for the purposes of this research was recorded only once per subject.

Shown in Table l, the listing of the percentage frequency of subcodes used for both
employees and managers are shown. A cursory examination of the results finds that
through 40 paired surveys, the frequency of this usage of codes in for managers and
employees are roughly similar. Also included in this table are actual statements from the
employees and managers serving as representative examples of a particular subcode.

As should be expected for a study in which a paired response, and thusly a shared
experience, was obtained, the percentages for the subcodes were generally quite similar.
There were, however, some stark differences that are worthy of note. For instance, in the
rewards realm, the managers mention their material gift compensation as a form of
reward considerably more (47.5%) than do their employees (25.0%). F urthennore, the
managers in our sample had much more of a tendency to mention their rewards through
individual recognition (62.5%) versus their employees (37.5%).

Employees, on the other hand, were more apt to mention an intrinsic form of reward
(25%) than their managers (5%) and even at that discrepancy, the timbre of the
employees statements tended to be more rooted in self-actualization:

”Not (rewarded) financial/y, only a feeling of accomplishment.”

This tone with the employees differs considerably from their managers’ reporting of

intrinsic motivation, who tended to comment at much more of an arm’s length:
37

”No, it is their job to please all customers, and while at work I expect them to do
nothing less than that.”

Employees were also much more likely to state the importance of being assisted with
theirjobs (22.5%) than their managerial counterparts (5.0%). Moreover the employees’
quotes on job assistance tended to be pinpointed to job-specific functions.

”A computer with the Internet is hooked up in our store to show the customers how
to shop online at our website. (Phone) Numbers to other stores. Plenty of information on
our clothes, the fashion style that is in right now, and what will be coming in the future.”

In the preparedness realm, it seems that the managers’ tendency to overstate formal
training (60.0%) as compared to their employees (47.5%) is almost equivalent to their
tendency to understate informal training (47.5% compared to their employees (67.5%).
Perhaps this is attributable to a tendency of the manager to wish to state more of their
training initiatives as formal training in order to lend credence to job legitimacy, while
employees, who perhaps do not hold the same level of involvement in their jobs as do
their managers, would state their training for their positions in a way that would make
them appear to be informal.

Employees, however, were much more likely to remark on the training they received
simply by observing a more senior employee (or a manager) perform a service (22.5% to
10% for managers). This may be attributable perhaps to employees recalling times when
they monitored a senior employee, but those instances may not have been sessions that
were arranged by their manager — the employee himself may have self-selected into

observing the more senior coordinate.

38

Table 1: Service Agility Subcode Frequencies — Employees and Managers

 

 

 

 

 

 

SERVICE EMPLOYEES MANAGERS
Bglgiilg'llifilfii Rubi/:1,“ Qualitative ( 'urnmcnts 8,185.33“ Qualitative ( 'uimrtcrt/x
ABILITY
Interpersonal 47.5 “I try to do what I can to 45.0 ”In (this) present
Adaptive Behavior give them a pleasant economy it takes
experience and a smile for personal contact with
the day. " the customer to make
the feel appreciated for
their patronage. "
Service Offering 20.0 “I want to help them 17.5 “Yes, Rosemary wants
Adaptive Behavior because in general, all of the customer to like the
their questions are things I product and it is
know the answer to and important to keep a sale
can find immediately that if possible. Rosemary
doesn't take lots of effort to wants to keep her
answer and benefits them. " customers loyal to the
brand. "
DESIRE
Acquiescence of 52.5 ”Yes but sometimes it ’s 45.0 "Yes, because their
Firm’s Agile hard when you are dealing success is based on how
Strategy with difficult people, but many racquets they
you just have to remember string. The better they
what the company is about do the more racquets
and just do it with a they string and the
smile. ” more requests they get
to have their racquets
strung by that
employee.
Willingness to be 37.5 “Yes, because it is 50.0 “I think he is inclined
Agile important that the to follow policy but has
customer’s needs are taken asked if he can go
care of and that they leave further than policy
the store feeling assured allows in order to care
that the product will be for the consumer. ”
taken care of "
REWARDS
Pay-Base Rate 7.5 "Ifyou perform well in 17.5 “Yes, extra pay given
Raise your work they can throughout the work
recommend you to move up week. "
a level in your caddie
status, which in turn earns
you more money. ”
Pay-Bonus 15.0 “We have goals every week 20.0 “If they go beyond their
that we are supposed to goal by 25% they
reach when it comes to receive 1%
selling. When we exceed commission. ”

those goals, a bonus and a
percentage of the sale is
added to our paycheck. "

39

Table 1 (cont’d).

 

SERVICE EMPLOYEES MANAGERS
B 9 £11431“: R S Sui/3:1,“ Qualitative (i 'ammcnls 5.1/77};fo Qualitative ( 'omuwnts
Pay-Material Gift 25.0 “We are rewarded when 47.5 “...Associate of the
Compensation we beat sales goals. We month awards with
are given discount days amenities such as a
and we also get free things close parking spot, $50
occasionally. ” gift card, and flee
haircut at the salon... "
Pay - General 2.5 “Pay well. ” 5.0 “We pay triple the
salary of average
detailers. ”
Recognition — 10.0 “We do have a kudos 17.5 “Gift from hospital
Group Recognition board that another went to all employees
employee may recogni:e after we reached our
you on, but that is about top I 00 status. "
it. "
Recognition — 37.5 “Our managers will come 62.5 “Kudos are shared with
Individual up to us and let us know the employee and
Recognition how much they appreciated his/her co-workers
what we did or inform us of during monthly team
a comment a customer meetings. ”
made. "
Recognition — 12.5 “Other incentives include 5.0 “Raise/ Promotions are
Promotion/ Increase having other common for high
d Responsibility responsibilities that aren't achievers. "

as mundane as calling
people to answer surveys. "

Recognition - 10.0 “Mostly just positive 5.0 “I try to give these
General recognition employees more
fleedom, the best shifts
and verbal
recognition. "
Good Example 17.5 ”They (managers) go 7.5 “Firm culture. Lead by
above the call of duty example "

themselves. My managers
are always there to help.
Influence to always smile
and give good, personal
service to each table. "

Intrinsic 25.0 “Notfinancially, only a 5.0 “No, it is their job to
feeling of please all customers, &
accomplishment. " while at work I expect

them to do nothing less
than that. ”

40

Table 1 (cont’d).

SERVICE
AGILITY

l-I’ir (If.

E M I’L()\ E ES

'57} (r/ I

Qualitative ( 'o/rrments

M A N AC E RS

Qualitative ( 'aut/rrc/itx

 

BEH A\"l()RS

Sit/”It’d“

Sub/ct ‘I V

 

 

Job Assistance 22.5 “A computer with the 5.0 "Keep them
internet is hooked up in (employees) happy and
our store to show the comfortable. ”
customers how to shop
online at our website.
Numbers to other stores.
Plenty of information on
our clothes, the fashion
style that is in right now,
and what will be coming in
the future. "
Reassurance 10.0 “Every so often, my 0.0 -NON E-
manager will talk with me
and make sure I'm doing
everything I can to help the
customer
Threats 2.5 “The only thing they would 0.0 -NON E-
have done is threaten to
fire me if] did a badjob
and was lazy. ”
PREPAREDNESS
Training — 7.5 “Then, on the last day (of 17.5 “Employee removed if
Competency training), I had a two table performance is not up
Testing section to myself " to par after the
completion of three
vehicles. ”
Training — Formal 47.5 “Had three training 60.0 “Mass training of the
Training Period sessions andfollow up beginning of each
session " Semester, w/ handouts
& PowerPoint. "
Training — lnforrnal 67.5 “Informal training. 47.5 “Employee has a
Training Learn(ing) from older binder of information to
employees. Learn(ing) read through of policies
from mistakes. (Utilizing) and how things are
pamphlets with done at window and
information. ” frequently asked
questions for phones. "
Training — Interval 12.5 “Each year thereafter, a 20.0 “Annual sensitivity
Training minimum of 24 hrs of training is required by
continuing education in tax the hospital. ”

law prep is required.
Additional training to
develop & practice
customer service &
interview skills is offered to
employees. Online course
work 24-7 is ongoing. "

41

Table 1 (cont'd).

SERVICE
AGILITY’

”’71 (I,

EMPLOYEES

% (If.

Qualitative ( 'amments

M A N A (i E R S

Qualitative ( 'umruuntx

 

BEHAVIORS

Training — Job
Shadowing
Training -

Observation

Training -
Orientation

Training -
Situational

Training - General

Empowerment

Sit/tier "I x
l 7.5

10.0

2.5

“I shadowed another 20.0
employee for 2 days to
learn how to ring food in
and run it. While I
shadowed the other
employee she let me take a
table and ring food in with
her right with me. "

“ We mainly trained by
observing other students
who worked therefor a
long time. This was more
valuable because we could
see how they approached
recruiters and students,
and not the differences
(Ex: bend over backwards
for recruiters, and
sometimes for students). ”
"One day orientation to
become familiar with
facility policy and
procedure "

10.0

“MSG-OPS training w”
stafl in A ug for DR Staff
Dec & May for Security
stafl Cook training w/ a
Chef at HOTEL. Fish
training w/ Deb. "

”A ll sales associates.
managers, and other
employees are trained on
our merchandise, so If I
don ’t know the answer to a
customer’s question, I can
refer them to someone
else. ”

Ix)
LA

42

Sub/Pets

”New employees
receive mostly on the
job training with a
senior (or junior-level)
employee as trainer or
mentor”

“Mentoring. "

"Orientation day-watch
videos, go through
procedures, discuss
employee theft, fitting
room procedures, and
general walkthroughs. "
“"FIRM NAME
University". Sales
training. Loss
Prevention training.
Operational training.
Cashier training. "

“I'm a new manager at
FIRM NAME and as
right now there is no
formal training, but as
a new manager that is
one of my qualms. “

“ We try to empower
them to make decisions
that are in the best
interest of the
customer. ”

Table 1 (cont’d).

SE RV I('E
AGILITY

I)” U,

E M PLO Y E ES
(1"!)/

Qualitative ( 'u/ruuents

M A N .'\(.' E RS

Qualitative ( 'o/u/rierux

 

BEHAVIORS

Stilt/eels

Sit/tier 'ls

 

 

Service Vision 2.5 “...so ifthey expect good 0
customer service when they
are customers then they in
turn must give good
customer service... "
SITUATION
Employee performs 60 “We recently had a client 57.5 “I recently had a

job duties using
special care

who presented for multiple
testing needs involving not
only lab, but radiology
tests necessary for an
outpatient surgery
procedure. This client
wrote to say how
wonderful it was that the
lab person took the time to
explain the blood drawing
process to her before
performing the procedure.
In addition this employee
took the time to walk this
elderly client to the
radiology suite. ”

43

customer give me a
huge complement on
one of my service
(people) because of
their outstanding work
ethic & personality.
The customer stated the
server was on top of
everything. Had great
communication skills,
and have the right
amount of space
between every time they
checked back on them.
This employee always
goes over and beyond
their duty when
working. They are a
major benefit to our

staff ”

Table 1 (cont'd).

SERVICE
AGILITY
BEHAVIORS

EMPLOYEES

I4?) ()1 I

Qualitative ( 'omments

MANAGERS

Qualitative ( 'ommerux

 

Employee performs
new task

Service failure
recovery

rg‘ll/l/it't'lh
37.5

7.5

”l was taking a phone call
on my given phone day at
work. An older woman
calling that she had not
received her refund. 1 had
advised her that we had
sent her a letter asking for
additional information that
had not been received so
we had denied her refund.
Because she was an older
person, I explained to her
that if she could fax me the
information, I could
process her refund within
30 to 45 days. She also
stated she was going to
Georgia for the winter.
Asked her for her address
down there so that she
could receive her refund
there. The woman thanked
me for helping her out. ”
"A student asked for
chicken wings at night, but
we were out of them. The
student got mad and was
rude to my coworkers... ”

12.5

44

Sill’fi’t'lk‘
30.0

“My employee
Rosemary, who works
at MALL, had a
customer corn in
looking for a specific
product. The store was
out of the product and
the customer was very
upset. The customer
was from Spain and
was looking for this
product to take back as
a gift. Rosemary called
the Oakland store and
ensured that the
product was there. She
then picked up the
product herself and
brought it back for the
customer. ”

“ We received a letter of
thanks over a coffee
maker. The consumer
could not get it to turn
on. Zack was going to
replace the unit but
suggested trying a
different outlet - the
coffee maker worked.
The consumer stated he
was very patient & kind
and did not act as if she
were stupid for not
trying a different outlet
before calling. The rep
was patient and not
condescending. ”

Correlation analysis of manager and employee subcodes

With regard to data analysis of these codes, a crosstabs analysis was employed for
each subcode and a phi correlation was calculated (via SPSS) for each crosstab cell. This
was done for several reasons, chief among them:

1) Each coded subgrouping is assumed to be dichotomous, meaning a

manager or employee either displayed the particular quality defined by the

subcode, or they did not;

2) Unlike the nature of most CIT studies, the data was not obtained by a

single type of respondent (only managers, only employees, or only

customers) the data was obtained from two types of people;

3) The service agility construct is dependent upon the nature that one set

of actions influences another set of behaviors, and;

4) With a sample size of 40 paired individuals, a qualitative description of

results would be less impactful.

One possible criticism of this employed methodology is that it draws a correlation
upon data that relies too heavily upon: 1. memory, 2. the care that the subject took in
completing the survey, and 3. the fact that the drawn correlations rely too heavily on the
recency effect. However, the reality for all of these concerns is that this is not, in reality,
a concern for the employment of correlation techniques in qualitative research, but it is,
in fact a concern for the qualitative research at large and the critical incident technique in
particular. The undertaking of a CIT study implies that the researcher is willing to forgo

any allusions of completeness or bias in order to obtain a sense of “feel” from an actor

45

who was affected by a particular incident. Indeed, the actor may forget factors in the
story, omit certain details, and be biased in his accounting, but that is, at least in part, a
characteristic of the technique. If the actor leaves out a part of the story, than for that
actor, what was omitted was not “critical”. So, by merely correlating the codes of these
critical incidents, the intent is to link the parts of the story that are most relevant to those
who partook in the story itself.

To prepare for analysis of the phi correlation, a file was generated with the codes-
primary-documents-table function of the Atlas.ti software, which generates a Microsoft
Excel file taking each manager-employee pairing as a single record, and each code
subcode represents a field for each record. The coded data was such that if a particular
subcode existed within a dyad, it was coded a ‘1’, and coded a ‘0’ if it did not exist.

Phi correlations are often used in qualitative research when analyzing variables
that take on a dichotomous nature. The method for calculating phi is within the context of

the specialized 2x2 contingency table, and is obtained in the following way (Yaffee):

1 = [(ad) — (bc)]
\/(a + b)(a + c)(b + d)(c + d)

 

 

Where a is the frequency of row 1, column 1 (example: was this employee subcode
expressed in this subject’s response), b is the frequency count of row 1, column 2
(example: was this employee subcode not expressed in this subject’s response), c is the
frequency count of row 2, column 1 (example: was this manager’s subcode expressed in
this subject’s response), and d is the frequency count of row 2, column 2 (example: was

this manager’s subcode not expressed in this subject’s response). In testing for the

46

significance of phi, the researcher relies on the innate relationship between phi and chi-

square (x2). Specifically:

x2
phi — W

Thus, when chi-square is statistically significant, the resulting phi is also significant.

Employees' and Managers’ Reporting of the Service Agility Construct

Because the survey for employees and managers was virtually identical, the
employees’ were able to yield perceptions of their managers’ incentives and training
efforts. Also, managers were able to comment on the adaptiveness and internal desires of
their employees. The most meaningful context in which the phi correlation can be
applied, however, is when the employees’ responses regarding their ability and desire
qualities with their managers’ responses regarding their preparedness and reward
strategies are matched in a lock-step pairing. While this approach contains inherent
problems regarding the individually-contextual manner in which the surveys were
completed, it is true that since the nature of the survey was rooted in a question-and-short
answer format, an attempt at keeping the survey from being to contextual was certainly
present. Overall, this analysis really provides the insight that analyzes the conceptual
model in its truest form: that the qualities that the employee has is nurtured by the

strategic actions carried out by the manager.

47

Table 2: Summary of Significant Findings of Crosstabs/Phi Correlations of
Reward-)Desire and Preparedness-)Ability Manager/Employee responses.

Managerial Rewards and Emplovee Desire:

 
      

Manager-Assessed Reward EmpI()}’CC-.-\\\t‘\\t‘tl lnlcrnul Desiri-

Material Gift Acquiescence of Firm’s Agile Strategy 303*
All forms of Compensation Acquiescence of Firm’s Agile Strategy .347"
Promotion/Increased Responsibility Willingness to be Agile .296*

 

 

 

Managerial Preparedness and Employee Abiligl
\laringer-Assessed Preparedness Empliner—Assessed -\(lapti\ L'Ilt'\\
Competency Testing Service-Offering Adaptive Behavior .263*

Job Shadowing Interpersonal Adaptive Behavior .275*

 

 

Where *=Significant at the 0.1 level, **=Significant at the 0.05 level. ***=Signilicant at the .01 level

It is apparent that there are factors that support some aspects of the theoretical
model —some managerial actions tend to stoke employees desire to perform agile
services, and certain managerial efforts to prepare their workers coincide with the
employee’s adaptiveness. However, there is again disagreement on which components of
the larger set of managerial strategic actions play a role in affecting influence on
employee ability or desire. Regarding managerial rewards and employee internal desire,
when the employee and manager are relegated to reporting their own level of
involvement in an agile service transaction, that mentions by the employee of his
acquiescence of the firm’s agile strategy are met by manager’s reports of some form of
compensation and specifically when they report giving some sort of material, non-
monetary gift to the employees for a job well done. As for the employees self—reporting

their willingness to be agile, when placed in symphony with their manager’s responses, it

48

was now linked significantly with getting a promotion or obtaining increased
responsibility.

With regard to managers’ preparedness strategies and employees level of ability,
when employees’ registered their thoughts on the degree to which they were able to
match their customers’ needs with their firms’ offerings, their managers, in kind, brought

up their strategy of offering competency testing as a means of preparing employees.

Table 3: Summary of Significant Findings of Crosstabs/Phi Correlations from
Rewards-9Ability and Preparedness-9 Desire Manager/Employee Responses.

Managerial Motivation and Employee Abilitv*

 

\lu[lager—\ssessetl Rt‘\\;ll'(l\ limplny cc-Asst‘ssetl \tlupth t‘llt'\\

Group Recognition Interpersonal Adaptive Behavior

 

 

 

Managerial Preparedness and Emplovee Desire*

Manager—Assessed Preparedness Employee-Assessed Internal Desire

   
 

Interval Training Acquiescence of Firm’s Agile Strategy .476***
Situational Training Acquiescence of Firm’s Agile Strategy .362"
Situational Training Willingness to be Agile -.36 l **

 

 

Where ‘=Significant at the OJ level. **=Significant at the 0.05 level. ***=Significant at the .Ol level

Phi correlation of the fourth question, inquiring whether managerial rewards have
an effect on employee adaptiveness, revealed that managerial claims of engaging in
group recognition in the critical incidents study was negatively correlated with employee
interpersonal adaptive behavior. Addressing the fifth question, regarding preparedness
and desire, revealed that managerial recollections of both interval training and situational
training both coincided with employee claims of being in-line with their company’s
service agile strategy, but that same situational training recollections by the managers

was negatively correlated with employees willingness to be agile.
49

DISCUSSION

The purpose of this study was to formulate and test a model of the roles of
managers and employees in creating a flexible service transaction. The notion of a
flexible service transaction was extended beyond that of the employee-customer interface
(Gwinner, Bitner et al. 2005), and instead was placed into a context of managerial actions
influencing the behaviors of those front-line employees in order to motivate them and
engender better customer response. It was theorized that the adaptive behaviors discussed.
by Gwinner et al. in previous work were abilities that could be: I) cultivated in through
various means of training, and 2) was an entity distinct from volition, or, the desire to
actually perform agile services which could be encouraged through motivational
activities performed by the manager.

The question regarding the “Dilbert Principle” (Adams 1996) has, in this research,
begun to be addressed regarding the creation of the agile service encounter. Clearly with
regard to flexible services, the climate set by the employees has influence over the
employees, and thus, over the transaction itself — this is reflected by both the manager
and employee responses. The surveyed employees, when recalling the role that the
manager played in making them actually wish to perform with adaptiveness, did not
“draw a blank” in response. The employees, much to the surprise (or perhaps chagrin) of
the managers, seemed to recall instances where managers displayed their referent power
through actions such as providing job assistance, offering reassurance, or serving as a
good example. This is consistent with the work of French and Raven (1959), who touted

the importance of referent power in the service environment.

50

Moreover, while the managers were more likely to recall instances of formal
training, employees recalled their informal training experiences at more than a 40%
higher rate than their managers, meaning that our employees were influenced more by
learning through serendipity than arranged training. If the employees are actually learning
by these informal sessions, it would perhaps lend to the notion that the manager has set
up an environment for doing so, perhaps through the firm’s market orientation or the

leader’s charisma.

Contributions to Theory and Technique

This paper attempts to explore the gap between the extant service literatures in
employee service delivery and the organizational behavior literatures in creating strategy
to moderate employee behavior. According to Gwinner et al. (2005), the study of
employee adaptiveness using individual antecedents is a worthwhile endeavor, especially
when examining whether organizational factors engender employee adaptiveness. This
research proposes that an important antecedent to adaptive behavior is the climate set by
the manager for the purpose of making a flexible service environment. To test this idea,

the current research offers several theoretical contributions to the literature.

Application of Managerial Climate to Employee Adaptive Behaviors

Through the use of qualitative survey interviews, employee service-offerings and
interpersonal adaptive behaviors were linked to efforts that managers engage in to elicit
those behaviors with greater regularity. The justification for this is to determine whether
those agile behaviors are abilities that are innate, or abilities that can be molded, nurtured,
and controlled. The theory of service agility has been extended past that of the simple

51

employee-customer context. Instead, agile service behaviors are placed in the context of

agile behaviors being encouraged, and perhaps controlled by their managers in charge.

Agency Theory in Service Delivery

Few studies have framed agency theory in the context of services, and fewer still have
framed the agency problem being one between service worker and manager. This theory
is one that addresses very succinctly why a service worker who has the ability to provide
an agile service delivery would choose to not do so (employees’ tendency to shirk, lack
of goal alignment between manager and employee, inappropriate means of rewarding

employee for work done).

Volitional Approach to Employee Service Delivery

Previous research studies have been subject to specification error because they
have not taken the employee’s desire to perform quality services into account. Hartline
and Ferrell (1996) concluded, for instance, that managerial empowerment had a negative
effect on job satisfaction, implying that when managers give employees the ability to
become more directly involved in making critical decisions in their own job, they dislike
their own job more. Such a confound might be explained by the employee’s internal

desire to perform the job.

Dyadic Approach to Critical Incidents

Because this paper focused on the interplay of two actors in creating agile
services, the service manager and the front-line employee, it was necessary to call on
both parties to recall a critical incident from which insight could be drawn. The benefit of

this particular technique is that we are able to analyze not only the qualities of what each
52

party describes, but we are able to analyze the differences in frequency and tone of the

topics discussed on what components comprise the agile service transaction.

Binary Correlation Approach to Critical Incidents

Because we have paired CIT responses, we were able to analyze the correlation
techniques for each code and subcode of the manager-employee service agility dyad
model. Running the dichotomous phi correlation technique enabled an analysis of
instances in which managerial rewards and preparatory actions coincide with employee
ability and desire. This technique is one that, in the future, should be extended to examine

paired sets of qualitative data.

Contributions to Practice

The results of the qualitative survey showed that both managers and employees
were able to name a wide range of categorized entities that fell under managerial
motivational activities and preparatory activities. For preparation, managers and
employees designated not only formal training sessions, but also recognized informal
training, as well as various forms of observational training. training through orientation
activities, and situational training as preparatory factors which were both recallable and

judged worthy of mention. Some findings to consider for managers include:

Employees Consideration of Material Gifts as a Motivational Technique
Employees in our survey claimed material gift compensation at nearly half the

rate that their managers reported it. There are a number of potential conclusions that

could be drawn from this finding, perhaps the most obvious being that employees are not

as likely to derive motivation from the reward of a material gift. This could be due to the
53

fact that the employees often do not value the gift, or alternatively, that they do not attach
the value of the gift to their level of service delivery. However, one could ponder whether
the employees of service firms who offer them these gifts consider them so deeply
ingrained into the experience of working for their particular service firm, that they have
wholly incorporated the gift as a “perk” — the gift is just seen as a part of the operating
working environment. The fact that the correlation exercise related material gift mentions
by the manager to the employees acquiescing to their firm’s agile strategy seems lend

itself to this interpretation.

Difiering Perceptions of Individual Recognition

Managers and employees face a wide gap in how they perceive the dissemination
of individual recognition to their employees. Over 60 percent of managers surveys
reported individual recognition as a motivation technique while only 37.5 percent of
employees did so. It is entirely possible that the employee is unmoved by the recognition
that they receive from their managers. More likely. however, is that while managers pay
individual recognition to their employees, they do not pay such recognition to every
employee who shows agile service qualities every time. Employees, when considering
individual recognition, may only be speaking of their own experience. The employees
asked themselves “Did I experience individual recognition?” and not “Does my manager
give individual recognition?” The question that was asked in the survey (“What does
your manager do to make you ‘ go beyond’?) allowed the employees to frame the question

in a more personal way.

54

The Role of [ob Assistance

Employees were much more likely to answer the question of their managers’ role
in the context of the most basic of managerial tasks — providing the employees with the
resources to perform the tasks of theirjob with peak efficiency. While managers were
considerably more likely to mention their role in directly rewarding employees with
praise or compensation, virtually none of them saw their role as resource provider having

a motivational outcome for the employees.

The Efl'ect of Training on Internal Desire

One surprising finding from the phi correlation is that managerial mentions of
their training efforts coincide with employees’ statements indicating that they have
“bought in” to their firms’ position on service delivery. The logical extension, in this
case, is that employees are not receiving exclusively procedural instruction at those
training sessions. The training sessions are, in fact. a means by which the employees are
indoctrinated into the service culture of their firm. The fact that situational training is
negatively correlated to mentions of an employee’s personal willingness to be agile lends
support to this as well. Recall that when employee responses were coded with
“willingness to be agile”, the responses were absent any mention of firm goals or team
outcomes. In other words, training sessions administered well past a service employee’s

hire date leads to a better team player.

Group Recognition, [ob Shadowing and Adaptiveness
Another unexpected finding was that managers’ responses on motivation

registering group recognition were negatively correlated with employee responses

55

suggesting interpersonal adaptive behavior. This finding would directly seem to suggest
that if an employee is not motivated directly through his own singling out, then it is a
poor solution for managers in solving the agency problem between manager and
employee. However, it is interesting that job shadowing, which is the partnering (and thus
not individually-based) of another employee as a training mechanism is actually
positively correlated to interpersonal adaptive behavior. This would seem to suggest that
when employees are prepared by watching more experienced members, the adaptive
behavior that they witness stays with them, but when the employees are recognized, they
wish to be singled out for their efforts, and not have their accomplishments shared among

their colleagues.

Limitations and Future Applications

One limitation of this study was that only positive agile transactions were
captured. A worthy study would have been to have subjects recall and discuss a time in
which an employee was scolded for not being agile at all. Capturing these negative
experiences would perhaps have offered insight into a situational analysis of factors that
comprise negative experiences in addition to positive ones.

Another limiting factor of this study is that it is fully contained in the context of
person-to-person service delivery. A future research direction might be for social
scientists to study the agility of non-human service delivery, such as computer and web
applications, technological devices, and so forth. Furthermore, one could research service

agility in situations where the buyer and seller never meet face-to-face, such as in online

56

transactions. Again, a critical incidents approach might serve as an excellent means for
studying this phenomenon.

Finally, we might add customer experience to the analysis as well. Customer
satisfaction is a fundamental component to the well being of the service firm in particular
(Oliver 1997), and might involve a qualitative analysis of both the consumer’s
expectations before the service encounter as well as their perceptions of the service

performance afterwards.

57

Essay 3: Enterprise Agility and Service Quality: Employee Perceptions of
Retailer Flexibility

An established bellwether of successful marketing is the ability for the firm to
adapt its offerings to the needs of its clientele. In an increasingly diverse market,
customers will continue to seek personalized solutions to fulfill their increasingly
complex needs (Gwinner, Bitner et al. 2005). This is a trend that will continue into the
foreseeable future, as changes in technology lend itself to an ever-evolving knowledge
economy, consistently producing an ever-fragmented marketplace (Day and Montgomery
1999). Because of this all too apparent reality, firms are forced to find ways of becoming
more flexible to suit the tastes of their customers, else they will languish, relegated at best
to an economy long past.

For the human-focused service retailer however, this drive for adaptability creates
a special problem. In such organizations, the face of the firm is the front-line service
employee. There, success rides upon the workers field of expertise and sense of
discretion. Thus, on a transaction-by-transaction basis, the charge of detecting a need to
adapt a service offering or an interpersonal demeanor lies primarily with the service
worker. Yet, the firm’s need to detect sweeping, wholesale changes in consumer demand
and tastes is the province of the executives at the very top echelon of the service
providing firm.

Consider the modern full-service bank. Adaptive behavior for each individual
branch worker is critical, as they serve customers who require not only different services

to be performed, but different demeanors for how they should be performed as well. The

58

customer who needs to apply for a mortgage refinancing will require the bank employee
to act with a certain degree of compassion, while the customer who requires a worker to
handle a morning deposit will need a certain measure of accuracy, and so forth.

But that sort of flexibility only exists in the day-to-day. To ensure that the
employees that serve those customer are well trained, and well-rewarded for performing
good services, there must be a branch manager who is committed to providing service
quality to the customers at her locale, who thusly is willing to make sure that her
employees are subject to the experiences and perks that will ready and motivate them to
perform agile services.

Taking another step back from this mural, there is another level of service agility
within our bank as well. Consider the fact that that as customer tastes change, the service
offering nature of the bank has to change as well (in merely a quarter century, the
primary means of everyday banking has changed from in-person banking, to ATM
banking, to online banking, to banking by smart phone).These bank’s top management
must sense these changes and the bank’s operations and market offerings must adjust to
meet consumer demand.

The purpose of this study is to explore the nature of this multi-faceted approach to
flexibility in the service firm. Specifically, this research seeks to address three questions
regarding service quality within the service-providing retail establishment:

1) What is the relationship between service employees’ assessment of their service
performance and their perception of their firm’s ability to adapt its service

offering?

59

2) Are service retail managers’ perceptions of their firm’s market orientation
affected by their perceptions of their desire to perform service quality?
3) Are service retail managers’ desire for service quality related to their employees

perceptions of the managers’ tactics to engender service quality?

To examine these research questions, we model employee and manager
perceptions of their retail firm’s service agility and market orientation, respectively. The
model is based upon findings from the analysis of a brief literature in enterprise agility,

which follows:

The Agile Enterprise

The operations stream of literature takes a strategic approach to agility, borne not
from the management of human capital, but instead from the manipulations of firm
operations in order to achieve this agility. The entire outlook of agility in the strategic
realm is that agility is a process that is planned and controlled from the top levels of the
organization and adopted throughout the organization either through changes in policy or
changes in culture.

The agility concept in the strategic realm was first discussed in the early to mid
19905 when a series of books and articles began to make an impact in the publications of
industrial engineeringjoumals. Thusly, these works formulated the zeitgeist of thought in
this topic felt to this day. In these publications (Youssef 1992; Nagel, Naim et al. 1994;

Kidd 1995; Booth 1996; Preiss 1997), there was a major focus on what exactly

60

constituted the construct of agility. Many of the papers of this time allowed such aspects
of agility to be included in its definition as adaptability, use of technology, and
concurrency.

In one of the more recent publications on the evaluation and generation of firm-
level flexibility (Sharifi and Zhang 2001), agility is described as the “ability to sense,
respond to, and exploit anticipated or unexpected changes in the business environment. In
order to achieve this degree of agility, the authors first provide a conceptual model of
agility. This model consists of three main factors: agility drivers (those factors that
necessitate the need for a firm to become agile), agility providers (tools that the firm may
employ in order to achieve greater degrees of agility, and agility capabilities (the factors
by which actual agility is realized).

The science of agility experienced a rebirth, so to speak, as the idea was taken on
by those of an information technology with operations background. The quintessential
paper on this stream of research was part of a series of papers written in order to
determine the totality of the effect that information technology has on the firm
(Sambamurthy, Bharadwaj et al. 2003). In this paper, Sambamurthy et al. determined that
IT had played an important role in the facilitation of three disparate levels of agility, but
the main contribution of the paper is in the identification of three distinct types of agility.
These levels of agility as described by Sambamurthy et al. are:

1. Customer: The ability of a firm to glean new ideas from their customer base in

order to adjust their product to the liking of the customers in which they serve.

61

2. Partnering: The ability to leverage the knowledge base and capabilities of all of a
firm’s partners (suppliers, distributors, logistics providers and so forth) in order to
explore and exploit innovation opportunities.

3. Operational: The ability of a firm to accomplish greater degrees of speed,

accuracy and economies of scale in taking advantage of innovation.

An implicit theme throughout all three levels of agility proposed by the
Sambamurthy model is a heavy importance placed upon firm innovation. This focus is
repeated in earlier works in which the lead author was involved as well, for instance a
paper that focused on how to facilitate innovation through the increase of “change-
readiness” in organizations that can be achieved from prudent investments in information
systems (Clark, Cavanaugh et al. 1997).

One of the more recent works in this particular field (Overby, Bharadwaj et al. 2006)
describes “enterprise” agility as the ability of the firm to possess two distinct capabilities:
first the firm must be able to sense environmental change relevant to its arena of
expertise, and second it must be able to respond to the market in order to place itself in
the best possible position in order to take advantage of the environmental change. The
importance on innovation is again apparent in this work, as the authors describe firms on
a 2x2 continuum of “sensing” and “responding” abilities. Companies high in both sensing
and responding (the authors of this work use Wal-Mart as an example) have not only the
expertise and communication channels in place to recognize a change in the environment,
but they also have the innovation skills and implementation channels in place to react to

such challenges. Overby et al. further suggest that companies that are low in sensing but

62

high in responding are too reliant on outsourced entities in doing their work, while firms
that are high in sensing, but low in responding either suffer from an excess of risk
aversion or tend to overanalyze changes in the environment without the sentience to act
on them.1

The operations literature has also begun to explore the nature of agility in certain
service arenas as well. One particular work (Menor, Roth et al. 2001) explores the role of
agility in the retail banking sector. In that paper, the theoretical lens employed was the
resource-based view of the firm. The assumption of the resource based view is that a firm
will hold a competitive advantage over its peers if it is able to secure resources that are
valuable and rare, and hold a sustained competitive advantage if the resources it holds are
both inimitable and non-substitutable (Barney 1991). Finally, Menor et al.(Menor, Roth
et al. 2001) find that the more agile bank will be able to leverage greater ‘resource

competencies’ than its lesser agile counterparts, with more efficient distribution channels,

more flexible service capacity and a ‘heightened workforce flexibility’ as well.

Service Flexibility within the Retail Establishment

Because of its highly competitive nature (Homburg, Hoyer et al. 2002) as well as
its colossal size in the US. (www.census.gov). researchers have found the retail industry
has been worthy of attention for some time. While other drivers of retail performance,

such as market orientation (Kara, Spillan et al. 2005) , and promotions (Ailawadi, Harlam

 

‘ The authors recall the many innovations brought out by Xerox’s Palo Alto Research Center (PARC) but
never sought for patents, because of alternative, conflicting in-house strategies. These same innovations
(such as the mouse, Ethernet, and the GUI interface) were effectively “stolen” by other companies while

Xerox PARC failed to act on the eager marketplace.

63

et al. 2006), given the considerable amount of influence wielded by the leader of a retail
establishment, the role of the manager’s effect on store performance could be examined
more thoroughly (Arnold, Palmatier et a1. 2009).

Lusch and Serpkenci (1990) found that managers’ personal work habits (such
as inner direction and achievement orientation) played a significant role in both their own
sense of job satisfaction as well as the performance of their establishments. However, in
an age of increased importance on services, the role of the manager undergoes a shift
from that of “product provider” to one of “solution provider” (Davies, Brady et al. 2006;
Lusch, Vargo et al. 2007; Arnold, Palmatier et al. 2009). The service manager finds
himself in a bind with regard to implementing these services throughout his domain,
however. Lusch et a1. (2007) suggest that some (but not all) of the customer support tasks
of employees in the retail establishment must be standardized to decrease the variability
of the quality. The problem for the manager, as posed by Bolton et al. (2006) is, “how do
firms maintain a low quality variance through standardization, while still maintaining a
high average quality?”

Essentially, this means of achieving an average high quality relies upon
employees having the leeway to break away from a standard service offering when
necessary in order to serve a customer’s specific need. Previous research has shown that
the ability to drive a high service quality comes from a hybridized arrangement of the
climate set by the manager and the internal desires and degrees of adaptiveness of the
employee (Miller, Calantone et al. 2009). Particular components in setting this climate
included various forms of training (such as specifically-designated formal training

sessions, serendipitous informal training sessions, job shadowing of senior employees, or

64

competency testing on job tasks) and rewards as a means of goal fulfillment (such as pay
raises, bonus pay, material gifts, praise, or promotion). Kara et al (2005) argue that
manager’s who are ingrained into the market orientation of their firm will be more apt to
commit to creating such an environment, as the market oriented firm is more apt to
respond to and utilize such an environment (Kohli and Jaworski 1990). Hartline and
Ferrell (Hartline and Ferrell 1996) find that the service manager’s commitment to service
quality is essentially the keystone that drives employees to achieve both a greater
personal sense of satisfaction with their own position as well as a enhanced sense of

service quality from their customers.

65

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The Service Agility Model of Manager and Employee Actions

The model proposed in Figure 2 represents the three phases of service delivery.
The first phase, on the left side of the model, represents the service manager’s strategy.
Strategy, with regard to services, is defined as the broadest level of service planning
possible. At the strategic level of managerial operations, the manager is defining his
vision for the delivery of services. These represent the overarching ideals for his long-
term service vision. In the model, this strategy manifests in two ways, by a representation
of the firm’s service strategy and a representation of the individual manager’s beliefs
about service. The service strategy for the firm is represented by the manager’s beliefs
about his own retail chain’s market orientation and for the manager it is operationalized
by the manager’s assessment of his own commitment to service quality.

The middle section of the model represents service tactics. Whereas strategy is a
broad picture of the service manager’s service vision, tactics are the tools by which the
service manager will satisfy that strategy. Tactics are the manipulations that the manager
may employ in order to see his strategy take hold. In this model, these service tactics are

represented by four unique constructs:

1. Recognition that the service manager lauds upon his front-line service workers,

presumably in congratulations for either displaying desirable service behaviors or

having desirable service outcomes.

67

2. Financial rewards the service manager bestows upon the front-line service
worker, presumably exclusively to reward the worker, again for encouraged
service behaviors and/or service outcomes.

3. Training the service manager allots his front-line service workers.

4. Empowerment the service manager affords his front-line service workers
allowing them to freely adapt the service offering to the customer’s specific

needs.

The rightmost section of the model represents the service outcomes. Here,
outcomes are the culmination of the tactics’ effect on the service delivery process. These
outcomes are represented by two unique constructs: employee service delivery, and
service agility. Employee service delivery is characterized by the employee’s assessment
of their own service performance. Service Agility, however, is a property of the firm.
Service Agility in this an extension of enterprise agility - it is characterized by the ability

of the firm to adjust its service offerings to the demands of its clientele.

Marketing Orientation and its efiect on Managerial Commitment to Service
Quality

Market orientation rests upon the notion of the marketing concept (Kotler 2003),
which posits that if a firm is to be able to maintain a strategic advantage over its
competitors, it should be able to detect and interpret customer needs more effectively that
its set of competitors. The charge of market orientation, then, is to determine which

attributes of the market-minded, competitively-advantageous firm exist that contributes

68

most toward its ability to serve these real (stated) and implied (tacit) customer needs best.
The attributes toward market orientation have been conceptualized in the past as being
derived from both cultural and behavioral sources (Homburg and Pflesser 2000). The
cultural view of market orientation focuses on the established norms and values that an
organization shares that ultimately affects the behaviors of each worker in their everyday
tasks (Narver and Slater 1990). Alternatively, the behavioral perspective of market
orientation is rooted in the performance of those tasks themselves that ultimately lead to
the generation and dissemination of market intelligence (Kohli and Jaworski 1990).
Because this particular research focuses largely upon the firm-level strategy, firm policy,
and firm-specific results instead of the individual, assumed in this paper is the
Operationalization of the cultural view of market orientation.

The extant literature has outlined several positive outcomes of being a market-
oriented firm. Some of these outcomes are very concrete - such as organizational
performance (be it purely financial performance or performance as gained through the
increase in market share) (Hult and Ketchen 2001). Other outcomes are more ethereal in
nature, such as excess rents of customer satisfaction degrees that a firm might receive
(Jaworski and Kohli 1993) or the perceived quality of its products or services (Brady and
Cronin 2001).

Kara, Spillan, and DeShields (2005) find that market orientation is a significant
predictor of sales goal achievement, implying that managers of market oriented firms will
have engaged in goal setting behavior and setting policies to meet those goals. Further,
Kasper (2002) finds that market orientation facilitates service quality. Market oriented

organizations have an easier time generating service quality due to the “employee-

69

oriented, results-oriented, professional, pragmatic, and balanced between a tight and
loose control system” nature of the culture of such firms. Sinkula (1994) provides insight
into the generation of such a culture, finding that the market oriented firm performs well
at setting norms that enable open communication and coordination. Dukewicz and
Herbert (1999) support lends support here as well, finding that the highest performing
managers are characterized by their ability to relate to, and subsequently teach and inspire
their subordinates.

Finally, Chiou and Chang (2009) find that market oriented firms are better suited
for collaboration between managers and employees, which supports the notion that such
firms maintain a culture of internal openness. The results of such an open culture were
also covered within the same study, finding that market orientation is responsible for
greater service quality as well as enhanced customer service.

The current research seeks to determine if the retail manager’s assessment of his
own firm’s market orientation is positively related to his assessment of his own personal
commitment to driving service quality for the employees under him. We posit that if the
manager assesses his firm’s degree of market orientation highly, he will believe that the
intemal channels exist to deliver messages to the employees which enhance their
knowledge, create goals and give them the appropriate attitude. Thusly, those managers
will be more “locked-in” to the provision of service quality. As posited by Overby et al.
(2006), the market oriented manager is one who will both access and process market
intelligence, but will also disseminate this information across the entire firm — and in so

doing, adjust the climate of the firm to match the market.

70

H1: Managers’ perceptions of their firm’s degree of market orientation

have a positive, direct effect on their own commitment to service quality.

Commitment to Service Quality and Service Tactics Variables

In addition to market orientation, the other latent variable reported by the
managers of the service firms regards their commitment to running a quality service-
providing organization. Unlike market orientation, commitment to service quality is not a
measure of the philosophy of the organization, but it is a measure of the manager or
supervisor himself. In previous research, commitment to service quality was seen as an
attribute held by the front-line service worker (Parasuraman, Zeithaml et al. 1985), a
notion largely contributing to the notion that the optimal lens with which to view service
quality is exclusively relegated to that of the front-line worker/customer interaction.

Other research has shown, however, that when managers take on an active role in
leading the service team, the manager can influence customer service in the organization
(Ahmed and Parasuraman 1994). Managers who are able to participate with their
employees in creating a service culture, being demonstrate in their conceptualizations of
customer care, can influence employees to give a similar level of care (Mohr-Jackson
1993; Hartline and Ferrell 1996). So when discussing a strategy for service quality, it is
clear that a manager’s decision to commit to service quality is clearly of utmost
importance.

A manager’s commitment to service quality is, in essence, the degree to which the

manager himself is immersed in the philosophy of performing high quality services, and

71

is able to relate to his employees the importance of putting effort into giving high-quality
service transactions, and willingly consults individuals outside of his organization for
assistance on service quality issues. Managers who are able to commit to this a high
thought mode for services in their operations will be the same who best understand the
importance of each element necessary to support these services as well.

While there are product-centered concerns for the manager in maintaining a high
level of service quality, this research seeks to explore the human-centered concerns that
face the manager — specifically, inspiring their employees to provide quality services on
behalf of the manager. Generally, this research tests how the employee perception of their
service delivery is affected by the goals set indirectly by their managers through rewards
systems, and the intemal-support that the manager affords the employee. These are

specifically detailed in the following section.

Recognition

Recognition is the degree to which the worker perceives the employees of his firm
are praised. Locander and Luechauer (2005) find that managers who engage in
recognizing the employees find that their employees derive motivation from such praise.
This is consistent with the work of Herzberg (1959) who found that recognition is a
motivating factor in his “dual structure theory”. Motivating factors are those that
employees will work to achieve as a reward. In other words, Herzberg found that
employees will work in order to be rewarded through recognition by their superiors. That
recognition can manifest in an informal setting, such as a brief kudos delivered during a

relaxed “water cooler talk” between supervisor and employee, or it can be more formal,

72

such as receiving an award for quality service at a organization-wide meeting (Dutton
1998). Caballero (1988) found in a study of recognition rewards, that even though such
rewards were often good more for symbolic rather than intrinsic value they were valuable
for driving employee results.

In the current study, we posit that if a manager perceives his own commitment to
providing service quality under his watch highly, the workers under him will sense their
manager’s ease in praising them for doing a good job. The high-performing service
manager will understand that positively reinforcing good service behaviors is a means to
ensure that the cyclical nature of improvement in a market oriented firm continues to
revolve.

H2: Managers’ commitment to service quality has a positive, direct effect

on their employees’ perceptions on the degree of recognition they receive

from managers when perfomting quality service.

Financial Rewards

Financial rewards are defined as the degree to which employees perceive they are
compensated fairly for their outputs on the job. For there to be an effective reward policy,
the employee will have to see that the pay that he receives in relation to others in his local
work group maintains an equal ratio to the responsibility and work outputs that each
employee perceives they are contributing to the firm as related to that employee’s

perceived work outputs and responsibility.

73

While the notion of pay has been covered many times in an agency theory context
(Ross 1973; Eisenhardt 1989; Bartol 1999; Deckop and Mangel 1999; Misra, Coughlan et
al. 2005), within the realm of services it seems to nearly be a consensus, at least through
extending agency theory to a services context, that the efficient means of compensating
employees is through the use of salary, and not commission or bonus (Miller, Calantone
et al. 2009). This is due to the fact that in a service operation, particularly a human-
focused service in a retail context, the variability of the human element makes it
excessively difficult to gauge success based on output (although they try, through
implementation of programs such as customer satisfaction contests and the like).

Here, we posit that as employees believe that they are more fairly rewarded, they
will assess their own service delivery higher. Herzberg’s seminal work (1959) disagrees
with this sentiment, arguing that pay raises are an ineffective means of driving employee
internal desire, as it just leads to the desire for another pay raise. We feel, however, that
the employees will feel more valued if they feel they are paid higher, and thusly will
engage in a higher degree of service delivery to adjust for the money that they are
earning.

H3: Managers’ commitment to service quality has a positive, direct effect

on their employees’ perception of the financial rewards they receive from

managers when performing quality service.

74

Training

Training in the current research is the degree to which employees feel as if they receive
timely and position-relevant training. Training has been shown several times in the
literature to be linked to employee performance (Honeycutt and Stevenson 1989;

C hristiansen, Evans et al. 1996; Farrell and Hakistan 2001).

The effect of training on both a competent workforce as well as its outcome of
improved customer experience has been well established by the extant literature. Training
has been found to be the means by which the information sharing conduit between
manager and employee in a market-oriented firm is actualized (Kassicieh and Yourstone
1998). Gonzales. Ellis et al. (I 999) found that meaningful training for employees relates
positively to greater service encounter satisfaction for customers. On the employees side,
the outcome of training has been shown to reinforce the bond between worker and
organization. as it drives both employeejob satisfaction and organizational commitment
(Lee. Nam et al. 2006).

We feel that the manager who is committed to service quality will naturally want
to train employees to be able to carry out that service successfully. The notion of training
is paramount to the manager who is successful in a market-oriented firm (Chiou and
Chang 2009). Managers who do not perceive committed to service quality, however, will
be also those who do not subscribe to their retail firm’s market orientation efforts,
according to the model, they won’t see their employees as agents for driving customer
satisfaction through service quality. Instead, they will see their employees as “warm
bodies” who simply must keep the shelves stocked. keep the store clean, and do all of the

things that keep the store from collapsing.
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H4: Managers’ commitment to service quality has a positive, direct effect
on their employees’ perception of the amount of training that they receive

from their managers.

Empowerment

Empowerment is the degree to which employees perceive that they are allowed to
improvise service solutions for the goal of achieving customer satisfaction. An oft-used
definition of empowemtent is “a situation in which the manager gives the employee the
discretion to make day-to-day decisions about job-related activities (Conger and Kanungo
I988; Hartline and Ferrell 1996). By granting empowerment to employees, the manager
places the locus of control on driving service quality to his employees, relinquishing this
control himself (Hartline and Ferrell 1996). Empowered employees have been shown to
be more enthusiastic about the performance of their jobs which, in turn, leads to increased
customer satisfaction (Brown, Homer et al. 1998). Empowered employees have been
linked to greater adaptive behaviors, being able to change their behaviors to match
customer-specific demands (Scott and Bruce 1994).

Finally, empowered employees have been linked to higher degrees of
organizational commitment (Lee, Nam et al. 2006) which is consistent with the notion of
greater employee involvement in market oriented firms (Karatepe, Yavas et al. 2007).

Our position is that the manager who believes himself to be committed to service
quality, will be one that willingly engages their employees in training in order to be

competent, adaptive. knowledgeable. and infused with the proper attitude. These

76

employees are also motivated from rewards such as recognition and they are paid a fair
wage for the work they do (and they maintain valence for other rewards the manager may
offer). These employees are ones that the manager is enough comfortable with to allow
them to improvise a service offering during a customer interaction. The successful high-
touch service manager understands that the greater the degree of empowerment that exists
for service staff, the better it is for both employee and customer.

H5: Managers’ commitment to service quality has a positive, direct effect

on their employees’ perceptions on the degree of empowerment that they

receive from managers when performing quality service.

The Tactical Variables and Service Delivery

Service delivery is defined as a front line service worker’s assessment of the
quality of his/her own service performance. Crucial to the composition of service
performance is the employee’s perception of the satisfaction experienced by the
customers they serve. Essentially, the challenge of the service worker is not unlike the
challenge of any other, to convert inputs (service offerings, customer desires, situational
context) into outputs (satisfied customers, happy management) (Chen, Tsou et al. 2009).
In the case of the front-line service worker, however, he is in a unique position, because
of the inseparability of the service transaction and the service’s consumption, to

immediately gauge the success of his conversion of inputs to outputs.

77

But as discussed before, delivering services for customers using the same personal
mannerisms, attitudes or contexts conceivably does not yield the same degree of
satisfaction for all customers. Although Lusch et al. (2007) admonish managers that they
must standardize processes in service delivery, other research (Bitner, Tetreault et al.
1990; Gwinner, Bitner et al. 2005; Miller, Calantone et al. 2009) clearly support the
notion that employees empowered to be flexible within a service transaction leads to
greater customer satisfaction. It may be appropriate, then, to think of the service delivery
construct as the degree to which each individual worker perceives his own “personal
flexibility” in satisfying customers.

Thus, the tactics the manager invokes in order to make his service vision a reality
for his entire department, or outlet, or organization, would have a like effect on the
individual as well. Thus greater recognition, better pay, more training, and more
empowerment given to the service worker would naturally seem to make the customer

better off.

H6: Employees’ perception of the degree of recognition they receive from
managers has a positive, direct effect on their perception of the quality of
their service delivery.

H7: Employees’ perception of the financial rewards they receive from their
managers has a positive, direct effect on their perception of the quality of

their service delivery

78

Hg: Employees’ perception of the amount of training that they receive
from their managers has a positive, direct effect on their perception of the
quality of their service delivery.

Hg: Employees’ perception on the degree of empowerment that they
receive from managers has a positive. direct effect on their perception of

the quality of their service delivery.

Employee Service Delivery and Firm Service Agility

The service agility construct differs from that of service delivery in that as
opposed to a self-assessment, service agility represents the service worker’s assessment
of his retail firm’s ability to change its orientation in order to deliver a service to a
customer tailored to that customer’s individual situation, needs, and desires. It is the
purpose of this research to posit that it is service agility that is the true goal of the
manager when creating service strategy for the entire team of service workers working
under him. It stands to reason that the employees’ perceptions of the managers tactics, put
in place to achieve such an end goal like a more flexible service offering, would
ultimately have an effect on their perception of the goal itself.

Service agility, in the case of this particular project, is an organization-wide
concept, and all of the questions rely upon the assessment of the employee to address the
level of flexibility at the firm level. This is the view of agility that is consistent with

conceptualization of agility in the operations literature. that agility is not a characteristic

79

of merely the individual service worker, but it is a property held by the firm at large
(Martin 2000; Narasimhan, Swink et al. 2006).

Gwinner et al. (2005) make the connection that the behavior employees exhibit to
give high quality service is an example of an organizational citizenship behavior (OCB) —
which are behaviors that improve the effectiveness within an organization but are not
rewarded by that organization (Podsakoff and Mackenzie 1994; Van Dyne, Graham et al.
1994). Such behaviors have been hypothesized to raise employee morale and encourage
greater teamwork and cooperation among employees (Podsakoff and Mackenzie 1994). It
would stand to reason that employees that illustrate the behaviors of OCB, are themselves
having a greater sense of camaraderie with coworkers and therefore more positive and
confident that their firm exhibits similar behaviors with regard to the fulfillment of
service.

H10: Employees perception of the degree of the quality of their service delivery

has a positive, direct effect on their perception of their retail firm’s ability to adapt

to fit customer needs.

Data Collection

Data was collected from a specialty retailer of sporting goods and equipment,
with a location concentration primarily in the eastern United States. The data collection
was focused upon a subset of those stores in the upper Midwest, consisting of a regional

manager’s domain of thirteen stores.

80

The survey administered at these branches was designed to be taken online. At
this chain, like at many “big box” retailers, the back room of every outlet housed a
personal computer (PC), used primarily for inventory purposes. These PCs at each retail
outlet were connected, via network cable, to an intemet connection. To complete the
survey, store employees and managers were led into a common employee break room,
where they were instructed to complete the survey.

To protect the identities of the individual survey takers, a system was designed
which allowed for all the front line employees and managers to be awarded a unique
code. The respondents input that code at the commencement of the survey, so the
employees would never have to attach their own name to a survey. This was achieved by
generating two sets of codes each based upon a preset numerical algorithm: envelope
code and survey code. The envelope code was displayed on the outside of the sealed
envelope containing the survey invitation. The survey codes, the codes that the
employees would use to access the survey to tell the researchers who they were without
divulging their name, were placed upon survey invitation letters themselves. Upon the
first visit to the each location, signifying the commencement of the data collection for
that particular locale, the store’s roster listing was perused, and each employee was
logged on a sheet containing both the survey codes as well as the envelope codes. Each
relevant employee at the participating locations received these survey letters. When the
employees and managers logged into the online survey either at work or at home (the
website address was, of course, included on the survey invitation letters) the first
question, asking for the employee’s code served as the means by which the employee

could be tagged later.
8 1

The means by which the employees were attached to their managers was done by
simply asking the employee within the surveys to divulge their direct, managing
supervisor. This had to be done, both for the purposes of later being able to link the
employees with their managers, as well as for the purpose of placing a unique,
unwavering personality in the mind of each subject. One particular issue divulged in the
pretest was that during the course of completing the survey, some of the respondents
asked for some clarification as to who exactly they should be writing about. Asking the
employees to identify their direct manager lends to the hope that their answers would be
in the context of one particular person.

In all, of the thirteen stores included in the district, ten stores offered their
participation. The survey garnered responses from 35 unique managers, both store
managers and assistant managers and 1 15 unique employees throughout all of the stores.
The number of useable surveys, largely due to the state of completion of the surveys took
the totals down to 27 managers and 88 employees. Finally, because of the fact that not
every employee who took a survey had an associated manager who took the survey, we

were left with 77 employees matched with 27 managers.

Partial Least Squares (PLS) Path Modeling

To test the model, a partial least squares (PLS) path methodology is used. Partial
Least Squares path analysis is a modeling technique that enables analysts who possess
data sets previously not amenable to other causal modeling techniques, such as
covariance-based structural equation models (Hulland 1999; Haenlein and Kaplan 2004).

The essence of the analytical approach of this variance-based technique lies in the

82

creation of a weighted approach used to maximize the explained variance of the
dependent variables. While in the more traditional path modeling methodology, SEM,
there are strict assumptions on the nature of the data as well as target recommendations
on the sample size, in PLS, because it is a limited-information approach (Dijkstra 1983)
these stipulations such as assumptions about the scale of measurement, or the scale of
measurement are not set into effect (Fomell and Bookstein 1982). Further, because these
assumptions are not made in PLS, the methodology is robust against skewness,
multicollinearity, and specification error (Cassel, Hackl et al. 1999).

In order to perform a PLS estimation model, the process is begun by calculating
the case values where the latent, “unobservable variables are estimated as exact linear
combinations of their empirical indicators” (Dijkstra I983; Haenlein and Kaplan 2004).
After this, the next step is to formulate weights for each case value, in an attempt to
capture the greatest swath of explained variance of each of the dependent variables in the
model. This done, the next step of the technique is to formulate values for the latent
constructs, which are made up of a weighted average of the construct’s indicators. The
most crucial aspect of PLS stems from the estimation of case value weights and their
subsequent implementation in creating latent construct values (Haenlein and Kaplan
2004)

The implementation of weighted case values in the technique is justified, because
there is no theoretical justification for indicators to have the same contributory strength
within each latent variable. In fact, one critique of equal weighting (McDonald 1996)
posited that the usage of equal weighting, so long as the number of indicators for each

construct was not excessively large, accounts for entirely arbitrary results.

83

The next step of the technique involves the performance of OLS regressions upon
the values of the latent construct values, followed by the calculation of explained
variance and path coefficients. Following this, a test of significance on these regressions
are created using a resampling procedure, such as bootstrapping (Haenlein and Kaplan
2004)

Partial least squares analysis stands as a unique alternative to the most common
forms of SEM, the more generally accepted covariance-based approach. As opposed to
the covariance-based approach of traditional structural equation modeling, the variance-
based PLS approach is more appropriate when dealing with a smaller sample size,
conducting exploratory research, or when the number of indicators that exist per latent

variable are excessively large.

Measurement Model

According to Ilulland (1999), the three components critical to report when
describing a PLS structural model are measures which speak to item reliability,
convergent validity, and discriminant validity. While the path scores for the model itself
are central to the ability of the model to defend the theorized nomological nature of the
construct relationships, it is only by speaking to these three components that we are able

to actually discern whether the measures used are valid at all before doing so.

Item Reliability
In a PLS path model, item reliability is assessed through the examination of
simple correlations of a measure with its’ respective construct (Hulland 1999). Some

84

researchers endeavor to accept items with loadings of no less than 0.7 since with such a
score, the item would have more in common with the construct, through shared variance,
then the item would have error variance (Carmines and Zeller 1979). However, the
practice of multi-item measures often yields loadings of less than 0.7, due to a plethora of
reasons. Nunnally (1978) suggests that even if the researcher holds a strong theoretical
reason for keeping items as construct components. items of less than 0.4 or 0.5 will yield
little explanatory power and will bias the estimates of the constructs that link to the focal

construct, and should summarily be dropped.

85

Table 4: Construct Composite Reliability (CR) and Item Loadings (Ld.)

(’oustruet

 

Market .90 .79
Orientation
.88
.91
.78

Mgr. Commitment .97 .90
to Service Quality
.80

.96

.87

.95

.96
Recognition .94 .88
.90
.89
.88
Financial Rewards .94 .92
.90
.91

.87

Our firm 's strategy/or competitive advantage is based on our
thorough understanding ofour customer needs.

All of our managers understand how the entire business can
contribute to creating customer value.

Our firm ’s market strategies are to a great extent driven by our
understanding of possibilities for creating value for customers.
Our firm responds quickly to negative customer satisfaction
information throughout the organization.

[feel strongly about irrrproving the quality of my organization ’5
services.

I enjoy discussing quality-related issues with people in my
organization.

I gain a sense of personal accomplishment in providing quality
services to my customers

I explain to all of my employees the importance of providing high-
quality service to our customers.

Providing high-quality services to our customers should be the
number one priority at (this firm).

I am willing to put in a great deal of efibrt beyond what is normally
expected of me in order to help (thisfirm) deliver high-quality
services to our customers.

I really care about the quality ofmy organization ’s services.

When an employee goes "above and beyond " the call ofduty. (firm)
gives that employee public recognition.

Employees are given public acclaim when they assist customers in a
service crisis situation.

Employees who are able to assist customers despite a service/allure
in the organization are respected

Employees that per orm well are recognized within the company.

Employees that extend themselves so that the customer is made happy
are rewarded.

Employees are given rewards/or helping customers with specialized
requests.

Employees who are recognized as “go-to " people during customer
crises are rewarded.

We often reward employees financially for great performance.

86

Table 4: (cont’d).

Training

Empowerment

Employee Service
Delivery

Firm Service
Agility

.94

.96

.95

.9I

.9l

.89

.90

.88

.90

.86

.88

.87

I receive training to enhance my ability to deal with unforeseen
consequences ofservice transactions.

(this firm) believes that trainingfront-line employees is crucial to
understand customer needs.

I have spent a lot of time in training sessions that simulate realistic
customer service requests.

During training sessions, we work on exercises that highlight flexible
meansfor completing a service when the normal means are
unavailable.

I have complete/reedom in my work.
I am permitted to use my own judgment to solve customer problems.
Initiative is encouraged of employees at (this firm).

I always try to provide great customer service.

Customers are usuallv satisfied with the quality ofservice I provide.
I respond well to customers ' basic requests.
The basic service I provide is excellent.

Generally, (this/inn) is able to recognize changes in customer needs.

Generally, (this firm ) is able to adjust the provided services in order
to satisfy changes in customer needs.

Once the firm has determined a strategy to change its service
delivery, the changes are felt throughout every facet offirm
immediately.

The strategic vision of thefirm is flexible enough to handle changes
in the business environment.

Ourfirm has the appropriate competency to be able to handle
changes in service delivery.

In order to attain better model fit, while still utilizing several measures, the

researchers decided to heed the advice of C armincs and Zeller (l 979) and omit any items

with less than a 0.7 loading. The results of the loadings of the reduced constructs are

given in Table 4.

87

Convergent Validity

Convergent validity represents the ability of a construct to reflect the real-world
phenomenon you are attempting to measure. In a multi-item scale, or construct, if
convergent validity is high, it portends that the individual items throughout the data set
tends to “behave” the same way. Convergent validity becomes more important as there is
no generally acceptable valid standard means for measuring a particular phenomenon
(Summers and Mackay 1977).

The two generally accepted means of measuring convergent validity for
researchers using a PLS path model are: l) C ronbach’s alpha, and 2) composite
reliability, a measure of internal consistency developed by Fornell and Larcker (1981).
Where alpha is a nonstatistical coefficient measuring the degree of consistency within a
construct, Fornell and Larcker’s internal consistency measure actually captures the
characteristic of item loadings in reporting the construct reliability. Nunnally (1978)
suggests that for both forms of convergent validity, C tonbach’s alpha as well as
composite reliability, the values for each construct should be kept above 0.7, since the
values obtained by both measurements are so similar (Hulland 1999). Of course,
Nunnally’s suggestion of 0.7 was applicable for reliability in the early. more
experimental phases of the research process.

Convergent validity for the model as presented is discussed in Table 2. There, one
can clearly see that all of the constructs surpass the 0.7 level on both the Alpha and
composite reliability scales. The lowest-scored, most troublesome construct seems to be
that of empowerment, registering a mere 0.77 score for Alpha, and 0.85 on composite

reliability. In all, these seem to be acceptable scores for convergent validity.

88

Further, other researchers (Dillon and Goldstein 1984) propose that Average
Variance Extracted (AVE) a measure of shared variance within a latent variable is a
reliable measure of convergent validity as well. As long as a construct’s AVE is .50 or
above, then the majority of the variance within that construct is not attributable to error.
Table 5 illustrates that for this test of convergent validity, all of the latent variables pass,

with the construct for market orientation doing so marginally.

89

Table 5: Alpha, Composite Reliability and Correlation Matrix, AVE in diagonal

 

 

Wariabre a . 1 2 3 4 5 6 7 8 |
1. Market Orientation .85 .90 .70
2. Mgr. Commitment to Service Quality .96 .97 .77 .83
3. Recognition .91 .93 .04 .24 .79
4. Financial Rewards .92 .94 .07 .17 .75 .81
5. Training .92 .94 .21 .32 .42 .49 .82
6. Empowerment .82 .89 .26 .25 .36 .22 .27 .73
7. Emp. Service Delivery .94 .96 .10 .10 .06 .12 .32 .34 .86
8. Service Agility .93 .94 .28 .38 .35 .32 .53 .14 .32 .77

 

90

Discriminant Validity

Discriminant validity is a measurement describing the degree to which the items
of one construct tend to differ from the measures of some other construct within the same
model. In other words, while convergent validity measures the degree to which the items
‘act’ the same for a particular construct, discriminant validity measures the degree to
which the items for a particular construct ‘act’ differently from the constructs of any
other model.

Testing discriminant validity, according to Fornell and Larcker (1981), is to
utilize Average Variance Extracted (AVE), which measures the average variance shared
between that of a construct and its measures. Ideally, the square root of a construct’s
AVE should be greater than the intercorrelations of the focal construct and any other
construct, thereby showing that the greatest amount of variability within the construct is
found within the construct itself, and not via combination with some other construct. The
diagonal values of the correlation matrix of Table 5 displays the AVE, and a cursory
examination reveals that the discriminant validity for this model surpasses the

stipulations of Fornell and Larcker.

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The Bootstrapped Path Model Results

To determine the significance of the paths in the model, a bootstrapping approach
was applied in the SmartPLS (Ringle, Wende et al. 2005) software. Bootstrapping allows
researchers who, due to the techniques they are attempting to apply, are unsatisfied with
their current sample size, to simulate a larger sample size by redrawing records already in
the sample, and in this case in particular, place the drawn record back into the sampling
pool to potentially be picked again. By randomly selecting all of the records in the sample
over a large number of trials, the sample becomes much more robust, and the researcher

decreases his risk of type II error (Brown, Homer et a1. 1998).

Table 6: Path coefficients, Bootstrap Sensitivity at 250, 500, and 1000 Resamples.

 

 

Significance
Relationship CS 250 500 1000 R2 Support

H1: Market Orientation -) Mgr. Commt. To Service .775 ** ** ** .60 X
H2: Mgr. Commt. To Service Qual. —) Recognition .244 "‘ ** ** .06 X
H3: Mgr. Commt. To Service Qual. -> Financial Rewards .169 * * .03 X
H4: Mgr. Commt. To Service Qual. -> Training .316 *"‘ ** ** .09 X
H5: Mgr. Commt. To Service Qual. -) Empowerment .254 ** *"‘ ** .06 X
H6: Recognition —> Employee Service Delivery -.272 .21

H7: Financial Rewards -> Employee Service Delivery .107

H8: Training —) Employee Service Delivery .291 * * * X
H9: Empowerment -) Employee Service Delivery .345 * * * X
H10: Employee Service Delivery -> Service Agility .324 ** ** ** .10 X

 

Note: CS 2 Completely Standardized Path Coefficient
*p<.05, **P<.01

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The advice of the software creators was taken, and three bootstrap trials were run,
one at 250 resamples, one at 500, and one 1000 resample bootstrapping run. The resulting
t-scores for the three trials for the paths were not particularly disparate. Applying
generally-accepted alpha values of 0.1 , 0.05, and 0.01 to the trials revealed that virtually
all of the relationships maintained the same significance across the three trials (as
illustrated in Table 6). The only two issues of note across the three trials were: 1) that the
relationship between commitment to service quality and financial rewards was not
significant at the .05 level at a bootstrapping of 250 where it was at the higher resampling
trials, and 2) the relationship between commitment to service quality and recognition was
taken from a significance of .05 to .01 between the 250 and the 1000 resample trial.
Because more trials allow for a more robust model, the 1000-sample model was chosen

to represent this model.

Support for Research Hypotheses

The results of the PLS path model at 1000 bootstrapped samples show that the
manager’s perception of firm market orientation was strongly positively linked to their
personal commitment to service quality, H1 is supported. Meanwhile, the manager’s
commitment to service quality is positively linked to all four of the employee’s
perception of the manager’s tactical variables: recognition. financial rewards, training.
and empowerment. H2, H3, H4, and H5 are all supported 0 with H4 (training) and H5

(empowerment) being notably so (significant at a=.01 for all three trials.

94

H6 is not supported. Moreover, surprisingly, the employees’ perception of their
manager’s recognition tactic actually trended negatively (significant at a=.l, in fact) with
their assessment of their service delivery. H7 is also not unsupported — the employees’
perception of their manager’s financial rewards does not significantly relate to employee
service delivery. Training and empowerment do relate positively to service delivery,
however, so H8 and H9 are supported, both at a=.05 level. Finally, an employee’s service
delivery very strongly relates to the employee’s acknowledgement that their firm is able
to flexibly adapt its service offering to meet the changing needs of their customers. H10

is supported at a=.Ol (even at (1:001) level.

Discussion

Service quality exists at several levels for a service-based retailer. This paper
assumes the generation of service quality to come from three distinct echelons. At the
lowest level, the one most readily apparent and visible to the customer: the ability of a
service representative to provide the most helpful, timely and efficient service with the
attitude and level of support desired. by the individual customer. At the next level, service
quality is generated as the manager of the retail establishment provides support for the
customer’s service experience with an environment that supports well-trained,
empowered, motivated employees.

At the third, most ethereal level, service quality is generated through the top-level

strategies of the top management team of the retailer. At this level, service quality is

95

determined by firm flexibility, the ability to change its service offering or product mix to
meet the changes in the customer palate.

This research project has two main purposes. The first is to determine the extent
to which the front-line service employee juxtaposes his perception of the quality of his
own service delivery with his perception of the ability of his firm to adjust its’ own agile
service offering. The second purpose is to determine the extent to which managers of the
retailer’s outlets liken their perception of the degree of the firm’s market orientation to
their own personal level of commitment to maintaining service quality for themselves and
all of the employees under them.

The researchers decided it best to allow the managers to speak for the marketing
orientation in their firm instead of their employees. Managers, they determined, would be
better able to speak to their firrn’s maintenance of open lines of communication between
all members of the organization, and allowed for the goal-setting, culture-transferring,
and open-communication endemic of the market-oriented retail firm. In a likewise
fashion, the researchers thought the employees who serve on the front-lines of the retail
environment, and are best able to gauge the degree to which the customer experience is
effectively served, are also therefore best suited to assess the degree of service agility that
is held by their retail firm.

The results of this study reveal that our managers’ perception of their firm’s
market orientation was shown to coincide very significantly with the stated degree of
commitment the managers held towards maintaining service quality in their
organizations. In other words, if they saw their firm as market oriented, they were more

apt to be committed to driving service quality themselves. If managers truly believe that

96

their firms are not gifted in understanding customer needs or driving customer value, they
are also unlikely to be driven to “take the ball and running with it” assuming ownership
for service quality for their own flock.

Similarly, the front-line employees’ assessment of their service delivery was tied
strongly to their assessment of their firm’s ability to wholly adapt its format to reflect
changes in consumer tastes, needs, and whims. If the service employee assessed his
abilities in customer service highly, they tended to believe that the top management team
supported their efforts when customer tastes change. Likewise, if the employee rated the
service quality he drove as poorly, he tended to think that the retail chain itself did a poor
job in adapting to customer needs as well.

Marketing orientation is not a dichotomous procedure — firms cannot be market
oriented merely by a simple, quick decision to do so. Morgan and Berthon (2008)
eloquently refer to market orientation as a “cyclic process of information acquisition”
about customers, and by extension, employees — implying a process of ongoing
improvement. It is not difficult, from the results above to see how poor service could
indeed be a “process of ongoing destruction” as well. On the employer side of the model,
poor service delivery would be met with a perception that the firm doesn’t perform poor
services as well, which would demotivate the employee, stripping him of any internal
desire that he might have to perform quality service transactions in the future. On the
manager’s side, if the manager doesn’t see any efforts to engage in a process of ongoing
improvement to assess customer needs, then the manager won’t see any need to actually
commit to providing the elements that make up the environment for engendering quality

customer service himself.

97

As for the manager’s tactics, it is pleasing to see that our managers’ commitment
to service quality was matched by the perceptions that their employers held regarding the
tactics used to create such service quality. If the manager regarded himself with high
service quality, his employees, likewise, noticed and were more apt to regard the
manager’s the consequences of that commitment: high degrees of recognition, pay (for
performance, hopefully), training, and empowerment.

Problematic in this model, however, was the reckoning of the manager’s tactical
efforts with the instrurnentality of such deeds: the employees’ assessment of their own
service delivery. While training and empowerment were both found to be positively
linked to an employee’s service delivery, financial rewards was not nearly positively
linked at a statistically significant level, and recognition was nearly significantly
negatively linked to an employee’s service delivery.

A potential explanation for this apparent confound is that while training and
empowerment would actually contribute to an employee’s desire to fulfill the
components of his job well, an. notion supported by the “Dual Structure Theory” of
Herzberg (1959), financial rewards have no effect on service delivery. These financial
rewards fail to register on service delivery perhaps because service retail jobs in general,
and perhaps the service retail firm surveyed for this study in particular, are ones that tend
to pay front-line service workers relatively low wages in relation to the amount of work
asked of them to do. Further, recognition may be negatively related to service delivery in
a service retail position due to the fact that in this particular service retail firm, the
employees have a desire to simply “do their job and get out of here,” minimizing all

contact with their supervisors or superiors on the job, even at the expense of attaining

98

position-affirming praise. An argument against this explanation, however is that
recognition, much like empowerment or training. is also a derivation of one of
Herzberg’s motivator factors from his Dual Structure Theory (Herzberg 1959). In short,
Herzberg found that employees should derive motivation to perform well in their work to
draw more recognition in the future. Perhaps this particular finding is an anomaly of the
particular retail firm that was analyzed.

With regard to the relative insignificance of financial rewards and service
delivery, it is entirely likely (and indeed probable) that the pay structure for the service
firm is fixed in advance, regardless of how much promise or flash each individual
employee displays in the service of the store’s customers. The employee, therefore,
doesn’t see any adjustment in pay depending on his work output. This reality tends to
lend support to the existence of an unmeasured (in this model) exogenous variable that
reflects the employees’ degree of intrinsic motivation that they get in performing their
job. As Herzberg (Herzberg 1987) postulates, the motivation for work is simply the work
itself.

One question that the researchers considered that began a post-hoc phase of
analysis was whether financial rewards and training were really functions of the manager
that oversaw the employee’s, or whether, like many. if not most service retail firms, were
functions more of company policy. Many service firms designate the amount of training
and the exact schedule of raises to be given to employees, and they dictate such work
rules to the managers at each locale. The researchers thought that a competing model

should be constructed to reflect that possible reality.

99

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In the model shown in Figure 4, the constructs from the main model are
rearranged, so that a causal link exists between: 1) orientation and rewards and 2)
orientation and training. This is justified because market orientation, which is assessed by
the retail store managers, is an assessment of customer focus at the level of the firm, not
an assessment of the individual manager. The findings from the measurement model and

a 1000 resample bootstrapping of the results are found in Table 7.

Table 7: Alternative Model Path coefficients and significance (1000 resample
bootstrap)

 

 

Relationship CS Sig. R2 Support

Market Orientation Mgr. Commt. to Service Qual. 0.775 ** .60 X
Market Orientation Financial Rewards 0.074 .01
Market Orientation Training 0.208 .04

Mgr. Commt. to Service Qual. Recognition 0.243 ** .06 X
Mgr. Commt. to Service Qual. Empowerment 0.255 ** .07 X
Financial Rewards Employee Service Delivery 0.121 .22
Training Employee Service Delivery 0.289 * X
Recognition Employee Service Delivery -0.282

Empowerment Employee Service Delivery 0.348 * X
Employee Service Delivery Service Agility 0.324 ** .11 X

 

Note: C5 = Completely Standardized Path Coefficient, R

*p<.05, **P<.01

Here, we see just through employing an “eyeballing” approach, the model is not
as fit as the main model. Moreover, one fewer path is now significant — the link between
market orientation and financial rewards is now insignificant. Although there is

justification for the creation of this model (due to structure of the retail industry), there is

101

no real benefit with regards to fit over the main model. There is no reason to believe that
financial rewards are not a function of the manager and not the firm, nor is it at all
unlikely that the retail managers arrange for training themselves without the benefit of
help from their corporate headquarters. In fact, if the retail service firm were indeed
market oriented, which the model attempts to account for, the managers would indeed,
not rely on permission from the corporate office in order to train or reward their

employees.

Limitations and Contributions to Practice

The scope of the current research is limited. Only ten stores from one retail service firm
were surveyed and analyzed. However, given the charge of the research, this limited
scope is a benefit, not a curse. What we are attempting to model is not actual,
generalizeable measures on firm market orientation or firm service agility. What we are
attempting to model are the perceptions of market orientation and service agility given
the work environments that retail store managers’ and retail front-line service employees’
experiences. While in most studies, the inclusion of more firms implies a more general
view of intrafirm relationships, here in this model. we show that different employees
within a firm may be experience the same general day-to-day of working for the same
firm, but the unique experiences they have in working within that firm shape their
perceptions of support that they are given at the very top echelon of decision making.
While we did not have a sample size that was necessarily large, a tremendous
contribution the field is that we were able to obtain and analyze dyadic data between

supervisor and employee and include both within a path model.

102

Service Strategy Focus

In a previous study on the adaptive behaviors of service employees (Gwinner, Bitner et
al. 2005), the authors counseled that a weakness of their current study was that they did
not factor into their analysis a factor of firm strategy or managerial practice. The current
research has included such analysis, requesting managers comment on their retail firm’s
degree of market orientation and the employees to speculate on their firm’s degree of

enterprise service agility.

Importance of Training

As a previous study regarding agile service transactions found (Miller, Calantone et al.
2009), training, specifically situational and interval training are predictors of an
employee’s degree of “buy in” into the fimr’s agile strategy. This study tends to bear out
those results as well. Employees perception of training they receive is linked both to the
employee’s perception of their own service delivery as well as the perception of the

firm’s agile strategy as well — the only tactical variable to do so.

Role of Empowerment

Empowerment allows for the employee to take a more active role in their own
position (Hartline and Ferrell 1996) which ultimately leads to greater job satisfaction. A
previous study in psychological empowerment (Spreitzer 1995) found that empowered
employees have more motivation to do theirjobs well than unempowered employees,
while Luria et al. (2009) found that empowered employees were both more likely to
handle service failures without involving a manager, as well as report those service
failures to their manager afterwards.

103

In the current research, it is revealed that empowerment is positively aligned with
the employees’ perception of their own service delivery, but unrelated to their
perceptions of the firm’s degree of adaptiveness to the market. This may be due, frankly,
to the degree to which they see their own empowerment being a function of the leeway of
their supervisor, or that of the culture of the firm at large. Again, front-line employees
have a very small view of the establishments for which they work. Their knowledge of
their firm’s organization-wide efforts to engender an empowered workforce could
conceivably be lost on the employees themselves. as they might attribute such efforts (or

lack thereof) to simply a trait of their supervisors.

104

APPENDICES

105

Appendix I: Operationalization of Constructs

 

 

Construct

Definition

 

 

Operationalization

 

Marketing Orientation
Pelham and Wilson
(1996)

Degree to which the
manager perceives that the
firm “exhibits a corporate
culture that effectively and
efficiently creates value for
buyers

1'0

All our functions are responsive to
service larger markets.*

Our firm’s strategy for competitive
advantage is based on our thorough
understanding of our customer needs.
All of our managers understand how the
entire business can contribute to creating
customer value

Information on customers, marketing
success, and marketing failures is
communicated across functions in the
firm.*

If a major competitor were to launch an
intensive campaign targeted at our
customers, we would implement a
response immediately.*

Our firm’s market strategies are to a
great extent driven by our understanding
of possibilities for creating value for
customers

Our firm responds quickly to negative
customer satisfaction information
throughout the organization.

Top managers frequently discuss
competitive strengths and weaknesses.*
We frequently take advantage of targeted
opportunities of competitors’
weaknesses.*

 

Commitment to
Service Quality
(Mowday, Steers et al.
1979; Hartline and
Ferrell 1996)

106

I feel strongly about improving the
quality of my organization’s services.

I enjoy discussing quality-related issues
with people in my organization.

I gain a sense of personal
accomplishment in providing quality
services to my customers

I explain to all of my employees the
importance of providing high-quality
service to our customers.

I often discuss quality-related issues with
people outside of my organization.*
Providing high-quality services to our
customers should be a number one

 

priority of my organization

I am willing to put in a great deal of
effort beyond that normally expected in
order to help my organization deliver
high quality services to our customers.
The way I feel about quality is similar to
the way my organization feels about
quality.*

I really care about the quality of my
organization’s services.

 

Recognition

Degree to which the
employee perceives the
workers in his firm are
praised

is)

b)

When an employee goes “above and
beyond” the call of duty, this firm gives
that employee public recognition.
Employees are given public acclaim
when they assist customers in a service
crisis situation.

Employees who are able to assist
customers despite a service failure in the
organization are respected.

Employees that perform well are
recognized within the company.

 

Financial Rewards

Degree to which
employees perceive they
are compensated fairly for
their outputs on the job.

l0

9)

Employees that extended themselves so
that the customer is made happy are
rewarded.

Employees that are given rewards for
helping customers with specialized
requests.

Employees who are recognized as “go-
to” people during customer crises are
rewarded.

We often reward people financially for
great performance.

 

Empowerment
(Hartline and Ferrell
1996)

Degree to which
employees perceive that
they are allowed to
improvise service solutions
in order to achieve
customer satisfaction

IQ

b)

l have complete freedom in my work.

I am permitted to use my own judgment
to solve customer problems.

Initiative is encouraged of employees at
this firm.

At this firm, I do my work the way I
think is best.*

 

Training
(Lytle, Hom et al. 1998)

Degree to which
employees feel as if they
receive timely and
position-relevant training.

107

ix)

b)

Every employee receives training that
enhances his/her ability to deal with
unforeseen consequences service
transactions.

Every employee spends much time in
training sessions that simulate
customizable customer service requests.
Front-line employees have supervisors to

closely work with them and teach them
“onthejob”.

During training sessions, we work on
exercises that highlight alternative means
for completing a service when the
normal means are unavailable.

This firm believes that training front line
employees is crucial to later
understanding customer needs.*

 

Service Delivery

The employee’s
assessment of the quality
of his/her own service
performance

10

1 always try to provide great customer
service.

Customers are usually satisfied with the
quality of service I provide.

1 respond well to customers’ basic
requests

The basic service I provide is excellent.

 

Service Agility

Ability ofthe firm to tailor
a service offering based
upon the specific, evolving
needs of the customers it
serves.

Ex)

b)

Generally, this firm is able to recognize
changes in customer needs.

Generally, this firm is able to adjust the
provided services in order to satisfy
changes in customer needs.

Once the firm has determined a strategy
to change its service delivery, the
changes are felt throughout every facet
ofthe firm immediately.

The strategic vision ofthe firm is
flexible enough to handle changes in the
business environment.

Our firm has the appropriate competency
to be able to handle changes in service
delivery.

 

108

Appendix 11: Critical Incidence Technique Survey - Employee Survey

Employee Service Survey
Gaining insight into employee’s extraordinary consumer service behavior is the goal of
this survey. The survey should take about 20 — 30 minutes to complete. Please take your

time and be ensured that your responses will remain confidential.

The questions on this survey are all open-ended and boxes are provided for your
responses. In many cases you may be able to provide a short answer for a response, but it
is critical for this research that you go into as much detail as possible when responding to
these questions. Please take your time on each question and provide as much detail as

you can recall for each response. Thanks again for all of your help!

#1) Please provide the name and location of the service provider that you work for (i.e.,

Kellogg Center on MSU’s Campus, Douglas J Salon, Albert St., East Lansing, MI).

#2) Approximately how long have you worked for this provider?

#3) In the space below please explain in detail how you were trained to perform your job
at this service provider. In responding to this question please list all formal training
(designate training session arranged by your company), informal training (on the job

“learn as you go” training), courses taken, or mentoring that you received.

109

#4) To answer the following questions please reflect on a recent time when a customer of
your firm commended you or a fellow employee for “going all out” or “going beyond the
call of duty” in performing a service. Assume “going all out " or jgoing beyond the call
d duty " to mean that the employee extended him/herselfin order to ensure that the
customer ’s specific needs were met and the customer was unquestionably satisfied with
the service performed. In the space below please describe the situation and exactly what

happened.

#5) When (approximate date and time of the day) did this incident happen?

#6) What circumstances led to this situation?

#7) How did the customer behave before. during. and after this experience?

#8) Are you (or your colleague) naturally inclined to do whatever it takes to ensure that

the customer’s needs are met in a customer service transaction? Describe why or why

not.

#9) When you (or your colleague) come to work. do you always want to ensure the

customer’s needs are met? Why or why not?

#10) What, if anything, do your manager(s) do to make you want to “go beyond the call

of duty?” Please list below

110

#1 1) What about the customer made you (or your colleague) want to “go beyond the call

of duty”? Please list below.

#12) What other factors (other employees, customers, training, etc.) helped or hurt you
(or your colleague) in delivering this extraordinary service?

#13) Have you (or your colleague) received training designed to prepare you for reacting
to these types of events that require you to go above and beyond the call of duty? If so,

please describe such training.

#14) Are you rewarded when you “go above and beyond the call of duty” at work? How

so?

111

Appendix III: Critical Incidence Technique Survey — Manager Survey

Manager Service Survey
Gaining insight into employee’s extraordinary consumer service behavior is the goal of
this survey. The survey should take about 20 — 30 minutes to complete. Please take your

time and be ensured that your responses will remain confidential.

The questions on this survey are all open-ended and boxes are provided for your
responses. In many cases you may be able to provide a short answer for a response, but it
is critical for this research that you go into as much detail as possible when responding to
these questions. Please take your time on each question and provide as much detail as

you can recall for each response. Thanks again for all of your help!

#1) Please provide the name and location of the service provider that you work for (i.e.,

Kellogg Center on MSU’s Campus, Douglas J Salon. Albert St., East Lansing, MI).

#2) Approximately how long have you worked for this provider?

#3) In the space below please explain in what sort of training you provide to your service-
providing employees. In responding to this question please list all formal training
(designate training session arranged by your company), informal training (on the job
“learn as you go” training), courses taken, or mentoring that is provided to employees.

Please indicate the frequency of this training, if possible.
112

#4) To answer the following questions please reflect on a recent time when a customer of
your firm commended one of your employees for “going all out” or “going beyond the
call of duty” in performing a service. Assume “going all out or “going beyond the call
fl duty " to mean that the employee extended him/herself in order to ensure that the
customer ’s specific needs were met and the customer was uni/Lestionably satisfied with
the servicgerformed 1n the space below please describe the situation and exactly what

happened.

#5) When (approximate date and time of the day) did this incident happen?

#6) What circumstances led to this situation?

#7) How did the customer behave before, during. and after this experience?

#8) Is the employee of this situation naturally inclined to do whatever it takes to ensure

that the customer’s needs are met in a customer service transaction? Describe why or why

not.

#9) To the best of your knowledge, does this employee always want to ensure the

customer’s needs are met? Why or why not?

113

#10) What, if anything, do you (or your firm) do to make employees want to “go beyond

the call of duty?”

#1 1) In your opinion was it a good thing that the employee acted so flexibly in order to

best serve the customer? Why or why not?

#12) What other factors (other employees, customers, training, etc.) exist that might

affect your employees in delivering this extraordinary service?

#13) Do you (or your firm) provide training to your employees designed to prepare them

for reacting to these types of events that require them to go above and beyond the call of

duty? If so. please describe such training.

#14) Are employees rewarded when they “go above and beyond the call of duty” at

work? How so?

114

Appendix IV: Copy of the Initial Email Letter to Store Managers

Dear RETAIL ESTABLISHMENT WITHHELD Managers,

Thank you once again forjoining me on today's conference call. As promised here is an email
detailing the talking points and issues of today’s conference. Specifically, I will provide you

with the following information:

Action Items: Need tasks to be completed by store management

Overview of the Survey Processes: Complete review of the survey procedures for

management, employee, and customer surveys

Timeline for Survey Project: Desired schedule for completion of the survey project

ACTION ITEMS

To get this project started, we need some initial information and commitments from the store

managers. Specifically, we need the following:
Reply email that includes:

1) Contact information for each manager and their anticipated work schedule and availability
for these dates ......

2) If possible, a listing of all of the active employees at each store location, and the job title.

OVERVIEW OF THE RESEARCH PROCESS

115

1) I (Joe Miller) will call you to inform you that he will be visiting your stores beforehand.

2) While there, I will distribute envelopes to all employees — each of which contains a
password to enter the survey, and a special employee code.

3) I will place a link on your break room computers to the online survey. Employees and
managers can simply click on that link to begin the survey. There is a unique link to
THREE different surveys (one for managers, one for assistant managers, one for

employees).

Employee Surveys -

1) Survey takes about 30-45 minutes to complete.

2) Over the next two weeks, all regular employees and managers must arrange a time
to take the survey

3) The link to the survey is also included in the employee letter so employees may (for
whatever reason) take the survey at home, on their own time.

4) Individual employee information will be kept confidential, but what data will be given will
be aggregated across employees per store, under a particular assistant managers, and
so forth.

6) Managers may commence the Employee survey as soon as envelopes are distributed.

Manager Surveys - Concurrent to the employee survey process, the managers are
also required to complete surveys, The purpose of the manager survey is crucial, as it allows us

to identify perceptions and expectations gaps between manager and employee

1) Manager surveys are to be completed in a similar fashion to the employee surveys.

116

There are two sets of manager surveys: 1) a survey for the head store manager, and 2) a
survey for the assistant store manager. These surveys are both accessible through the

website on www.xxxxxxsurvevs.com

 

The manager surveys should also be completed within two weeks.

Managers may commence the manager surveys as soon as envelopes are distributed.

117

Appendix V: Copy of the Survey Information Letter Sent to All Store Employees

Dear RETAIL ESTABLISHMENT WITHHELD Employee,

By way of introduction, my name is Joseph C. Miller, and I am the lead researcher on a
cooperative project RETAIL ESTABLISHMENT WITHHELD has entered into with Michigan State
University. The goal of this project is to: 1) determine what drives quality service here at Gander
Mountain, 2) determine what means we can take to serve our customers even better in the
future, 3) understand how you, our valuable employees, feel about performing services for our
customers. Researchers at Michigan State University, in turn, will use the answers you supply on
this project to perform scholarly research to gain a better understanding of the agile service

firm.

For this project to be successful, we require input from you. We would very much like to
ask you about your experiences working here at RETAIL ESTABLISHMENT WITHHELD. This survey
is online, and at some point over the next two weeks, we would like you to arrange a time to
take the survey on the computer in the back room. Your managers have been advised that you
are to have time to complete this survey, so there should be no problems with approval to do
so. To take the survey, just click on the red ”Q” to begin. The survey should take between 30-45

minutes to complete.

118

If, for some reason, you would like to complete the survey at home, at your leisure, that

is entirely acceptable. In this case, please navigate to the following website:

http://wwwxxxxxxsurvevs.com/emplovee.

It is crucially important to for you to understand that for this project, surveys submitted
by employees will remain confidential. The names of the employees who complete a survey will
not be shared with RETAIL ESTABLISHMENT WITHHELD management, unless the employee
specifically requests it so. However, MSU researchers do require each employee to include their

names so that they can be assured that they have captured a valid survey.

Both RETAIL ESTABLISHMENT WITHHELD management as well as MSU’s Broad School of

Business wishes to extend appreciation in advance for your cooperation on this exciting project.

yaflz

Joseph C. Miller

PASSWORD: xxxxxxxxx

EMPLOYEE ID

119

Appendix VI: Open Ended Survey Form Distributed to MBA Students on the Topic
of Service Agility
Posed Question:

In today’s business environment, firms are increasingly focusing on service
strategy as a means for differentiating its brands in the competitive marketplace. By
‘service strategy’, we are referring to a strategy in which the focus on the actual product
of the brand reduced, while the importance of any human interactions implicitly involved
with the ownership of said product (information, consultation, hospitality, order-taking,
and billing) is increased.

One of the major issues of invoking a service strategy is the reality that the
manager of the service-providing organization must run allow his organization to be agile
enough to provide different qualities to different customer requests. For instance, think
about customers in line at a bank — depending on what service the customer wishes to
have done, the bank needs to be agile enough to provide speed to one customer,
compassion to the next, accuracy to the next, and so forth. Of course, this agile quality
will ultimately be carried out, not by the high level managers of the firm, but by the front-
line service workers who ultimately have the highest level of contact with the customers.
These service workers ultimately have to display a degree of what has been termed
“adaptive behavior” in order to focus on the needs of each individual consumer and
provide the exact service that is needed every time.

As a manager of an organization that is enacting a service strategy, please
describe the techniques you would use in order to ensure that the front-line employees are

displaying adaptive behavior in dealing with customer concerns. Please feel free to touch
120

upon topics such as training, trust, risk preference, innovation, customer input,

competition, and employee evaluation.

Responses:

OEOOI

In keeping with the bank example the first thing I would do as a manager is enact
appropriate guidelines. For example, although you want the front-line employees to have
the ability to be adaptive, you also want them to provide the same level of service as it
relates to similar requests. If a customer wants to make a deposit there should be a

standardized procedure in place for that particular request.

Training reinforce(s) the ability to recognize when a situation is standard and requires a
standardized response and when it is not. When it is not the employee should not only be
aware of the company goals but the purpose behind those goals and additionally how her
performance is contingent upon the achievement of those goals. As a result, the company
will see different adaptive behaviors by different employees, but all of those behaviors

will be performed with the same end goal in mind

013002

Any time I have been charged with developing and training a service-related staff
I have begun with an in-depth verbal description of the types of customers that the
service employees might encounter (i.e.: this type of customer will expect this type of

service, etc.). By providing a realistic preview of the position and the types of

121

interactions that the employees will have, the employee will get an initial glance at just
how agile they will have to be. Secondly, I ask them to think back on the interactions
that they’ve had in the past with service employees. I ask them questions regarding both
good and bad interactions: What service were you hoping to receive? What was the
source of the issue? How long did the service take to be performed? If there was an issue,
how long did it take to resolve? Was it resolved? How was it resolved? If it was a
pleasant experience, list reasons why, etc. Personalizing the service issue enables the
employee to realize that their actions have an impact on people; that they’re not just
working in a bubble.

In addition to teaching the actual mechanics of how to perform their job, I also
have a period of time in which the new service employee shadows an established star
employee to witness moments of service agility and outstanding overall customer service.
This activity teaches the new employee the kinds of behaviors that I expect of them. In
addition, it further personalizes the employee-customer relationship by enabling the new
employee to observe the behaviors and reactions of customers when they receive agile or
exceptional customer service.

Next, I stress to my new employees that I am there for them (as well as the other,
well-established employees). It is critical to have support and resources in a service-
related industry. In other words, there are no dumb questions and, more than likely,
someone else has gone through a similar situation. I also make it known that I am very
willing to hear suggestions from both them and the customers with which they interact.

Improvement is impossible without open and honest communication.

122

OEOO3

Initially training would play a major role to give the employee the skills to be agile and to
be able to service the variety of customer needs. Further, top management needs to
incentivize that kind of agile and flexible responses of the employee. This adaptive
behavior needs to be communicated clearly and often to employees to stress its
importance in meeting customers’ needs. Additionally, management needs to be open to
feedback and ideas of employees. Managers need to learn from these front line
employees about what works and what does not that take that knowledge and implement
it throughout the organization. Employees need to be held accountable to this way of
doing business. With employee evaluations and must have support to correct any
deficiencies in their performance. Just as important employee satisfaction with their jobs
needs to be considered to ensure that employees are satisfied with their jobs, which
directly translates to how well they treat their customers. If employees get the proper

respect, pay, (and) attention, they will give that same level of attention to their customers.

OE004
1) Do random customer satisfaction surveys before people leave
2) Incentives — Tie some or all compensation to their satisfaction scores.
3) Ensure proper training (empowerment)
4) Properly communicate goals of organization
5) Seek feedback from front-line employees

6) Have the manager monitor periodically.

123

 

OEOOS

Since the “perfect” employee is not always standing at the door waiting to be hired,
training is key. If employees are well-rounded in their training & familiar with the
business & tasks they are to perform, they should be able to tackle any obstacles they
face. The employee should trust their own abilities and the ability of those around them to
maintain ease & cut down on competitiveness. Customer input should be valued b/c
ultimately the employee is there to serve the customer input should be regularly sought &

reviewed.

OEOO6

A big part of encouraging excellent customer service would have to include an
exceptional training program that included role playing, frequently asked questions, and
how to handle a variety of situations. Furthermore, ongoing feedback would be a must
and it should be linked to their compensation package. While I would take into
consideration, a comment box, I would rely on my own observations and 360 degree peer
evaluations to truly evaluate their customer service abilities. I would also implement
morale boosting activities that would encourage these positive behaviors and form social

norms.

Appendix VIII: Service Agility Qualitative Study List of Codes"r

(Adaptiveness) Interpersonal Adaptive Behavior — Speaking to the ability of the

employee to change his demeanor to match that of the customer

(Adaptiveness) Service Offering Adaptive Behavior — Speaking to the ability of the

employee to match the services of the firm to the needs of the customer

(Internal Desire) Acquiescence of Firm's Agile Strategy -— Speaks to the fact that the
employee understands the service delivery goals of the firm and carries them out to

uphold those goals.

(Internal Desire) Willingness to be Agile — Speaks to the intrinsic desire that the

employee may have to carry out a flexible, tailored service to the customer.

(Reward) (Pay) Base Rate Raise — Reward is given to the employee by the manager

through a raise in the base rate of pay.

(Reward) (Pay) Bonus — Reward is given to the employee by the manager through the

payment of some special payment, usually given at some regular, often annual period of

time.

125

(Reward) (Pay) Material Gift Compensation — Reward is given to the employee by the

manager through the awarding of some sort of material, non monetarily based gift.

(Reward) (Recognition) Group Recognition — Reward is given to the employee by the
manager in a group context, awarding employees in a group without singling out the

work performance of any one group member.

(Reward) (Recognition) Individual Recognition -— Reward is given to the employee by
the manager in an individual context, awarding high-performing individual employees

within a group setting.

(Reward) (Recognition) Promotion/Increased Responsibility — Reward is given to the
employee by the manager through the assignment of greater responsibilities in the
employee’s job, or alternatively, a higher job title with a justifiable base rate pay increase
to match the new title.

(Reward) Good Example - Reward is given to the employee by the manager when the
manager him/herself, or someone closely related to the manager provides the employee

with a model for success.

(Reward) Intrinsic — Reward is not derived from external sources whatsoever, but
motivation is instead derived from the employees on innate desires to perform quality

services.

126

(Reward) Job Assistance — Reward is given to the employee by the manager by assuring
the employee that when the employee finds him/herself in a troublesome situation, the

manager will be there to lend assistance.

(Reward) Pay — Reward is given to the employee by the manager by more money, not

specifically through base rate or bonus pay.

(Reward) Reassurance — Reward is given to the employee by the manager through
praising the behaviors of the service worker, even when the actual outcomes may not be

particularly desirable.

(Reward) Recognition — Reward is given to the employee by the manager through by
some means of recollection that a good work was done, not specifically in an individual

01' group COIIICXI.

(Reward) Threats — Reward is given to the employee by the manager when the manager
gives some sort of threat to his employee, usually regarding the nature of said employee’s

future prospects with the firm.

(Preparedness) (Training) Competency Testing — The manager prepares the employee
for providing quality service by giving a preconstructed test to the employees regarding

the concepts of relevant information in the performance of the position.

127

(Preparedness) (Training) Formal Training Period -— The manager prepares the
employee by requiring, usually at the onset of the employment, the employee to attend a
dedicated, demarcated program, designed to turn out a competent individual for the

particular position.

(Preparedness) (Training) Informal Training — The manager prepares the employee by
putting the employee to some training, but the training itself is not a set-aside, distinct

entity from the job itself (i.e. “learn as you go” training)

(Preparedness) (Training) Interval Training - The manager prepares the employee by
setting aside time to for the employee to attend training sessions at regularly-planned
intervals (often 3 months, 6 months, or one year), each training session focusing on some

new concern or aspect of service performance, important to the firm at the time.

(Preparedness) (Training) Job Shadowing — The manager prepares the employee by

assigning trainees to observe and assist, or “shadow” more senior employees.

(Preparedness) (Training) Observation — The manager prepares the employee by

watching the employee handle service situations and offering critiques as necessary.

(Preparedness) (Training) Orientation — The manager prepares the employee by
designating a short period of time where the employees is given a lecture on work rules,

policies and procedures.

128

(Preparedness) (Training) Situational Training — The manager prepares the employee

through the provision of training for a particular real-world scenario.

(Preparedness) Empowerment — The manager prepares the employee by allowing the

employee some degree of self-direction.

(Preparedness) Service Vision — The manager prepares the employee by indoctrinating

the employee with the firm’s policy of customer care.

(Preparedness) Training — The manager prepares the employee by providing training,

the type unspecific.

(Situation) Employee performs job duties using special care — Situation is such that
the employee was singled out by the customer for doing his normal job duties but with a

certain attitude or demeanor, such as ‘compassion’ or ‘speed’.

(Situation) Employee performs new task - Situation is such that the employee was

singled out by the customer for performing a task that is outside of the normal duties

regularly performed by the employee.

129

 

(Situation) Service Failure Recovery — Situation is such that the employee was signaled
out by the customer due to the employee’s response following some sort of breakdown in

the service delivery.

130

Appendix IX: Description of Data Critical Incident Study Data Set

40 service firms represented:
Professional Services: 10

Athletic Clubs: 4

Nonprofit Organizations: 6

 

 

 

Retailers: 10
Restaurants: 5
Survey Research Firms: 1
Ticket Box Offices: 1
Auto Rentals: 1
Manufacturers: 1

Employees’ Tenure Managers’ Tenure
0 > 6 Months: 7 O > 6 Months: I
6 Months > I Year: 8 6 Months > 1 Year: I
1 Year > 2 Years: 8 I Year > 2 Years: 3
2 Years > 3 Years: 5 2 Years > 3 Years: 4
3 Years > Up: 1 l 3 Years > 6 Years 15
6 Years > 10 Years: 0 6 Years > 10 Years: 8
Over 10 Years: 1 Over 10 Years 8

 

 

131

 

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