The antecedents of the employee loyalty-customer loyalty relationship

Increasing and maintaining customer loyalty has been shown to enhance service firm profitability. This research focuses on the antecedents of customer loyalty in a large national North American banking organisation, in particular the relationship between employee loyalty and customer loyalty, and further within the organisation, the antecedents of the employee loyalty-customer loyalty relationship. Thus the current research investigates the chain of events from managerial actions to customer loyalty with the aim of identifying relevant managerial practices and their influences within the organisation that lead to customer loyalty. The research provides tangible evidence supporting the importance of providing organisational resources to increase employee loyalty as a means of increasing customer loyalty in service organisations. To achieve this goal, the study suggests that a comprehensive set of managerial practices will enhance an organisation's service climate, foster positive employee attitudes and behaviours in relation to service provision, that impact on employee loyalty, service quality, and ultimately customer loyalty. These practices include support provided by senior leadership, the provision of resources that facilitate effective work practices, a positive management orientation on customers, and the use of employee evaluation and remuneration based on service-oriented behaviours and attitudes. By instituting these managerial practices, management can increase employee perceptions of self-efficacy, employees' beliefs in the abilities to perform well in their jobs, increase employee satisfaction, which in turn drive employee loyalty. These managerial practices also enhance the favourable nature of the organisation's service climate so that customer perceptions of service quality are likely to be more positive. Overall the study provides evidence to support the existence of a chain of events from managerial actions to employee and customer loyalty intentions. Evidence also exists to support the relationship between employee loyalty and customer loyalty, so that higher levels of loyalty within service a service organisation can potentially lead to higher levels of customer loyalty. The implications of the research are that management within service organisations can impact customer loyalty by focussing directly on service delivery issues and by providing a favourable service climate. Managers can also influence employee beliefs about their abilities to do their jobs and the level of satisfaction employees have within those organisational roles. The study also suggests that a service organisation's service climate is an important mechanism by which management can communicate to both employees and customers that a customer orientation is a primary managerial imperative. Finally, the study provides valuable insight into the processes by which employees perceive managerial orientation and support, and how those perceptions influence customer perceptions of service quality and impact on their loyalty intentions towards service organisations.