The impact of employee satisfaction on customer satisfaction: Theoretical and empirical underpinning

Abstract

Employee satisfaction is significant when it comes to define organizational success, particularly in the service industry. The need to enhance employee satisfaction is critical because it is the key to better business operations as it increases long-term employee productivity and retains profitable customers. The purpose of this study is to observe and test practically the relationship between employee satisfaction and customer satisfaction. The study discusses five employee variables that impact on customer satisfaction, namely, communication and rewards as well as employee loyalty, retention and commitment. A set of hypotheses were then developed theoretically and tested practically using the SEM-PLS approach. In conclusion, it was found that customer satisfaction had a causal relationship with employee satisfaction and an understanding of the employees' satisfaction role was extremely important in this context. The paper also discusses further findings from the study as well as suggests future related research areas.