Influence of problematic customers on employees emotional exhaustion and turnover intentions

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE HA THU INFLUENCE OF PROBLEMATIC CUSTOMERS ON EMPLOYEE’S EMOTIONAL EXHAUSTION AND TURNOVER INTENTIONS MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE HA THU INFLUENCE OF PROBLEMATIC CUSTOMERS ON EMPLOYEE’S EMOTIONAL EXHAUSTION AND TURNOVER INTENTIONS ID: 22120032 MASTER OF BUSINESS (Honours) SUPERVISORS: PROF DR NGUYEN DONG PHONG Ho Chi Minh City – Year 2014 ABSTRACT Basically, the research not only examines the effect of problematic customers verbally and nonverbally on employees, which can lead to job dissatisfaction and turnover intention, but also to see if perceived organizational justice moderates the influence and to what extent By utilizing a sample of 369 customer service officers in Ho Chi Minh City, Cronbach’s alpha reliability analysis, EFA and multiple regression analysis function was used to have the most accurate data The study results illustrate strong interactions of both abusive and unreasonably demanding customers with employees’ emotional exhaustion It also proves that affecting emotional side of staffs could lead to job satisfaction and turnover intention simultaneously Fortunately, perceived organizational justice negatively moderates the relationship between unreasonably demanding customers and emotional exhaustion of employees Overall, the results help managers to view the organizational dynamic from perspective of staffs Furthermore, Vietnamese enterprises should start to apply more training sections on client service in general and fair and sensible working procedure in specific to balance customer-employee relationship Although there are some limitations in the paper, valuable directions for future and further researches are available Key words: problematic customers, emotional exhaustion, job satisfaction, turnover intention, perceived organizational justice TABLE OF CONTENTS Chapter INTRODUCTION 1.1 Research background 1.2 Research problem 1.3 Research objectives 1.4 Research scope 1.5 Research contributions and implications 1.6 Structure of the thesis Chapter LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 2.1 Theoretical background 2.1.1 Problematic customers 2.1.2 Problematic customers and Emotional exhaustion 2.1.3 Emotional exhaustion and Turnover intentions for cu 2.1.4 Emotional exhaustion and Job satisfaction for custom 2.1.5 Job satisfaction and Turnover intentions for custome 2.1.6 Perceived organizational justice (POJ) 2.2 Proposed model 2.3 Hypotheses summary 2.4 Chapter summary Chapter RESEARCH METHODOLOGY 3.1 Research design process 3.2 Measurement scales 3.3 Sampling 3.3.5 Data collection method 3.3.6 Data analysis method 3.4Chapter conclusions Chapter 4.1Sample analysis 4.1.1Sample description and data clearance 4.1.2Demographics of respondents 4.2Measurement reliability and validity 4.2.1Cronbach’s alpha analysis 4.2.2Exploratory factor analysis (EFA) 4.2.3Regression analysis 4.2.4Final model and Chapter summary Chapter CONCLUSION AND RECOMMENDATIONS 5.1Findings and discussion 5.2Implications and recommendations 5.3Limitations and future research direction References QUESTIONNAIRE APPRENDIX – DESCRIPTIVE INFORMATION APPRENDIX – CRONBACH’S ALPHA APPRENDIX - RESULTS OF MULTIPLE LINEAR REGRESSION LIST OF TABLES Table Survey item summary 23 Table Sample characteristics 32 Table Cronbach's alpha reliability test result 34 Table EFA results – Scales without modification 36 Table KMO and Bartlett’s Test for all variables 38 Table The result of multiple linear regressions of all independent variables and Emotional exhaustion 40 Table The result of simple linear regressions of Emotional exhaustion and Job satisfaction 42 Table The result of multiple linear regressions of Emotional exhaustion and Job satisfaction as independent variables and Occupational turnover as dependent variable 44 LIST OF FIGURES Figure The proposed research model 19 Figure Research design process 22 Chapter INTRODUCTION The chapter contains five sections The first part introduces the background of research, where and why this research takes place Secondly, the purposes of this thesis and the research scope are informed in the chapter Next, some contributions and implications are mentioned And finally, the research structure is addressed at the end of this chapter 1.1 Research background Since 1909, the famous motto of Harry Gordon Selfridge about customer satisfaction “Customer is always right” has been widely used by every business in customer service sector or department Started from the basic idea that customer complaints should be taken seriously, customer satisfaction has become a critical element for a successful organization Many researchers have explored the link between customer satisfaction and business performance in both firm-level and macro-level analysis (Williams & Naumann, 2011) Employees are coached and trained to be fully aware of meeting customers’ requirements However, the pressure of satisfying these needs sometimes can be stressful, for example in Vietnam, the level of employee intent to stay in the organization is lower than those of other countries in the Asia Pacific Region, although the employee engagement level of Vietnamese companies is much higher (Ruge, 2011) According to Ruge in the presentation to the America Chamber of Commerce in February of 2011, the most possible cause for this can be excessive workload and job pressure Moreover, the highest rates of employee turnover go to Business, Technical support and Production, Operation support with average 12% and 17% in the report for Vietnam Labor Market Overview and Trends (Lu, 2012), which are positions have the most interactions with customers This is beyond common job satisfaction Basically, it is not only about job security, benefits and opportunities for development but also about the feeling that they are respected and protected from verbally abused, threatened with violence or even physically attacked The significance of employee engagement, nevertheless, is not usually considered as an objective for organizations Achieving customer satisfaction, on the other hand, is often the ultimate goal for managers, particularly those in service industries as evidenced by the emphasis on customer satisfaction survey Meeting the demands of customers as much as possible is one of the solutions since satisfaction is based on a customer’s experience of the extent to which a provider fulfills his or her expectations (Gerpott et al, 2001) Nonetheless, not every requirement can be met immediately and be the reason to have unpleasant or problematic customers (Grandey et al, 2004) There is a claim that the bigger customers are the more demanding they become and sometimes, the more unreasonable they can be This happens due to the unequal power between customer-employee relationships as “the customer is always right” and occurs aggression from customers (Allen and Gilbert, 2002, p.551).Unfortunately, most studies, such as Chinh and Anh (2008), Burrows et al (2009), Hau and Thuy (2012), on customer-employee relationship in Vietnam have disregarded the mental side of employees while overestimating the customers’ behaviors and opinions Therefore, these factors can cause emotional exhaustion for customer service officers, who have to deal face-to-face with this problem every day The employee commitment to customer-oriented activities can be negatively affected, which potentially leads to employee turnover Although they want to stay in the company, will they be still willing to customer-related tasks, or will they just leave and find another career path which can be less stressful? In such cases, the role of managers and companies in handling complaints and solving customer-related issues is extremely critical There are possibilities that organizational considerations can moderate these problems by perceived organizational support or justice, which have been demonstrated in various studies about perceived organization justice and work-related attitudes (Elamin, 2012; Howard and Cordes, 2010) 10 Another problem that managers have to overcome as a consequence of emotional exhaustion is low organizational performance As there are several evidences for the positive effects of employee engagement on business performance (Schneider, Macy, Barbera and Martin, 2009), it is said that engaged employees produce ROA, profits and market value that exceeds the replacement costs of assets Starting from high employee retention, businesses will have to spend more cost and time for training new employees who may not be up to par the old ones Since the service quality is unstable, productivity will get worse and customers cannot be happy with bad service In China, there are few studies have been processed based on the interactions of customer behaviors and employee emotional response to observe their influences on the service quality and business performance However, to be the best of our knowledge, in Vietnam nowadays, the problem has not been investigated seriously and been found in not many papers 1.2 Research problem Nowadays, every business is aware of the essentiality of customers to their operations and existence And Vietnamese organizations also acknowledge this matter This requires full researches from various aspects of the firms, which include the interactions between customers and the ones who directly provide the care and service – customer service officers Unfortunately, as mentioned previously in the last session, for Vietnam market, there are a large number of local studies from clients’ perspective but not so many from employees’ side It is extremely significant to understand the effect of customers, especially over demanding ones, on staffs and how to deal with them Will it actually relate to employee’s emotions and to what extend? Will it cause a more serious problem for a business – turnover intention? Therefore, it is indispensable to investigate influence of problematic customers on employee’s emotional exhaustion and turnover intentions 77 Scale: OCCUPATIONAL TURNOVER INTENTION Reliability Statistics OT1 OT2 OT3 Item-Total Statistics OT1 OT2 OT3 Mean 9.8699 78 Scale: JOB SATISFACTION Reliability Statistics 847 JS1 JS2 JS3 JS4 Item-Total Statistics JS1 JS2 JS3 JS4 Mean 11.0461 79 APPRENDIX – FACTOR ANALYSIS Scale: ABUSIVE CUSTOMER KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix Factor AC1 562 AC2 827 AC3 841 AC4 799 AC5 672 Extraction Method: Principal Axis Factoring a factors extracted iterations required 80 Scale: UNREASONABLE DEMANDING CUSTOMER KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix Factor DC1 785 DC2 630 DC3 782 DC4 788 DC5 666 DC7 681 Extraction Method: Principal Axis Factoring a factors extracted iterations required 81 Scale: EMOTIONAL EXHAUSTION KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix EE1 EE2 EE3 EE4 EE5 EE6 EE7 EE8 Extraction Method: Principal Axis Factoring factors extracted iterations required Total 82 Scale: DISTRIBUTIVE JUSTICE KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix Factor DJ1 697 DJ2 857 DJ3 764 Extraction Method: Principal Axis Factoring a factors extracted 12 iterations required 83 Scale: PROCEDURAL JUSTICE KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix PJ1 PJ2 PJ3 PJ4 PJ5 PJ6 PJ7 PJ8 Extraction Method: Principal Axis Factoring a factors extracted iterations required Total 84 Scale: OCCUPATIONAL TURNOVER INTENTION KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix Factor OT1 923 OT2 791 OT3 908 Extraction Method: Principal Axis Factoring a factors extracted iterations required 85 Scale: JOB SATISFACTION KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor Extraction Method: Principal Axis Factoring a Factor Matrix Factor JS1 579 JS2 948 JS3 884 JS4 667 Extraction Method: Principal Axis Factoring a factors extracted 10 iterations required 86 Scale: ALL VARIABLES KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Total Variance Explained Factor 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 87 25 26 27 28 29 30 31 32 33 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance a Pattern Matrix AC1 AC2 AC3 AC4 DC3 DC4 DC5 DC7 EE1 EE2 EE3 EE4 EE5 EE6 EE7 EE8 DJ1 DJ2 DJ3 PJ1 PJ2 PJ3 PJ4 PJ5 PJ6 PJ7 88 PJ8 OT1 OT2 OT3 JS2 JS3 JS4 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser a Normalization a Rotation converged in iterations Factor Correlation Matrix Factor Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization 89 APPRENDIX - RESULTS OF MULTIPLE LINEAR REGRESSION Model a Predictors: (Constant), DC_PJ, AC, DJ, AC_DJ, DC, PJ, DC_DJ, AC_PJ R a 688 Model Regression Residual Total a Dependent Variable: EE b Predictors: (Constant), DC_PJ, AC, DJ, AC_DJ, DC, PJ, DC_DJ, AC_PJ Coefficients Model (Constan t) AC DC DJ PJ AC_DJ AC_PJ DC_DJ DC_PJ a Dependent Variable: EE a 90 Collinearity Diagnostics Mod el a Dimen sion a Dependent Variable: EE Model a Predictors: (Constant), EE R a 569 Model Regression Residual Total a Dependent Variable: JS b Predictors: (Constant), EE Model (Constant) AveEE 91 a Dependent Variable: JS Model a Predictors: (Constant), JS, EE R a 573 Model Regression Residual Total a Dependent Variable: OT b Predictors: (Constant), JS, EE Model (Constant) EE JS a Dependent Variable: OT ... 2.1.1 Problematic customers 2.1.2 Problematic customers and Emotional exhaustion 2.1.3 Emotional exhaustion and Turnover intentions for cu 2.1.4 Emotional exhaustion and Job satisfaction... Table The result of simple linear regressions of Emotional exhaustion and Job satisfaction 42 Table The result of multiple linear regressions of Emotional exhaustion and Job satisfaction as independent... UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE HA THU INFLUENCE OF PROBLEMATIC CUSTOMERS ON EMPLOYEE’S EMOTIONAL EXHAUSTION AND TURNOVER INTENTIONS ID: