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Rhian Silvestro: Warwick Business School, University of Warwick, Coventry, UK, and
Stuart Cross: Boots the Chemist, Nottingham, UK
Introduction
Heskett et al.'s service profit chain (1997) stipulates that there are "direct and strong" relationships between profit; growth; customer loyalty; customer satisfaction; the value of goods and services delivered to customers; service quality and productivity; and employee capability, satisfaction, and loyalty. They have collected empirical evidence from some 20 large service organisations, lending support to many of the linkages in the chain; however they appear not to have subjected any single organisation to an analysis of all the linkages in the chain.
One of the UK's major supermarket chains has adopted a service strategy which is based on the central assumptions of the service profit chain, namely, that employee satisfaction and loyalty in turn generate customer satisfaction and loyalty, which are taken to be key drivers of growth and profitability. This paper reports the outcome of a preliminary performance analysis of a small sample of this company's stores, in order to evaluate the service profit chain as a model for linking the drivers of business success.
The study involved reviewing the company's performance measurement systems and collecting measures of each link in the service profit chain. Correlation analysis was then conducted in order to substantiate the links stipulated in the model.
The service profit chain
Heskett et al.'s service profit chain (Figure 1) stipulates a series of causal relationships which result in profit performance and growth. Its implications for managers is clear and radical, if not new: the contribution and performance of employees is critical to the provision of customer service and business performance. The model is based on themes which have prevailed in the TQM literature for almost half a century, as well as in the more recent service management literature. Many of the TQM "gurus" claim that process ownership will lead to employee satisfaction which in turn results in higher levels of both quality, productivity and business performance (e.g. Deming, 1985, Ishikawa, 1985). Links between employee and customer satisfaction have also repeatedly been made in the service quality literature. Early contributors include Marriott, founder of the American hotel chain, famously quoted as saying "you can't make happy guests with unhappy employees" (Hostage, 1975) and...