Analysing relationships among frontline employee perceptions of rewards, attitudes and service quality in banking call centres: an internal marketing perspective.

Abstract

The basic purpose of the research is to understand the significance of internal marketing in influencing frontline employees'job-related attitudes and service quality. Since rewards are considered to be an important compqnent of internal marketing, this research investigates relationships among frontline employee perceptions of rewards (extrinsic and intrinsic), attitudes (three components of organisational commitment viz. affective, normative and continuance, and job satisfaction), and service quality, in banking call centres. In this context, a conceptual model is presented comprising rewards as the antecedentsa, ttitudes as the mediating variables, and service quality of the frontline employees as the outcome variable. The model is empirically tested through a large sample study that is conducted among 4 call centres of a major retail bank in the UK. Following certain qualitative in-depth interviews at the exploratory stage, structural equation modelling (using AMOS) is carried out on 342 useable questionnaires (response rate of more than 50%), to empirically test the proposed framework for the study. The measurement and structural models, after validation and purification, provided satisfactory fit estimates across absolute, incremental and parsimonious measures. The results highlight the importance of rewards, as part of internal marketing, in maintaining employee attitudes, and improving service quality. Intrinsic rewards (like role clarity, training and skill variety) emerged as the most significant of all, as they were found to impact on service quality directly. Extrinsic social rewards (like supervision and team support) were not found to be significant, while the finding regarding extrinsic organisational rewards-service quality relationship was surprising. Although assumed important for perfon-nance, some had no direct effect (pay, and benefits satisfaction, extrinsic exchange), while others (working conditions and promotional opportunities) exerted a negative direct effect on service quality, although the indirect effect of most of these rewards was found to be positive. However, these rewards were considered important for influencing employee attitudes, which in turn influence service quality. In this context, the importance of employee attitudes like affective commitment and job satisfaction is emphasisedfor service quality. The empirical results of the study also reveal that it is the nature of commitment that matters in commitment-service quality relationship. Affective commitment emerged as the only attitude variable to bear a significant positive relationship with service quality. Job satisfaction was not found to impact on service quality directly, although the indirect effect was found to be positive. Normative commitment impacted on service quality indirectly, while continuance commitment was not found to be effective at all. Besides theoretical and methodological contributions, the thesis also provides strong managerial implications and directions for future research in applying internal marketing for improving service quality of frontline employees in call centres. Keywords: internal marketing, rewards, service quality, commitment, job satisfaction, UK banks, call centres, frontline employees.