The Long-Term Influence of Service Employee Attrition on Customer Outcomes and Profits
Abstract
The authors proposed and tested a model linking service-employee attrition, customer-perceived service outcomes, and financial performance utilizing time-lagged data obtained from 64 business units of a temporary help services (staffing) firm. Using the notion of relational assets, the authors predicted that employee attrition (both voluntary turnover and downsizing) would disrupt the existing stock of relationships between customer-facing employees and their customers, which would have negative effects on customer outcomes and future financial performance of business units. The authors found that (a) the relationship between voluntary turnover and customer-perceived service brand image (SBI) was fully mediated by customers’ evaluations of service delivery, (b) the relationship between downsizing and SBI was fully mediated by the customer orientation levels of the unit staff, and (c) SBI significantly predicted future unit profitability. These findings point to critical factors that leaders must address when experiencing elevated levels of turnover or considering downsizing. These include focusing on developing customer orientation levels among employees through the effective use of selection, training, performance management, and compensation, minimizing employee voluntary turnover by creating positive work environments, and factoring in the long-term costs of downsizing on the organization’s SBI and future profitability.
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Biographies
Mahesh Subramony is an assistant professor of management at Northern Illinois University. His research interests are in the fields of strategic human resource management and customer service and his articles have appeared in scholarly journals including Journal of Applied Psychology, Journal of Organizational Behavior, and Human Resource Management. Dr Subramony received his PhD in Industrial/Organizational Psychology from Central Michigan University in 1999.
Brooks C. Holtom ([email protected]) is an associate professor of management in the McDonough School of Business at Georgetown University. He received his BS and MAcc from Brigham Young University and his PhD in management from the University of Washington, Seattle. His research interests include the attraction, development, and retention of human and social capital.
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