Leadership and its effects on Customer Service

Leadership and its effects on Customer Service: Not as simple as we might have thought

Many businesses have shifted emphasis from production to service and, in todays economy, the success of a business largely depends on the quality of service it delivers to its customers. It is therefore crucial that organisations understand what factors can impact on the delivery of excellent customer service.

Recent research conducted by psychologists in Hong Kong sought to investigate the impact that effective leadership and the development of a 'service climate' can have on the quality of service delivered in a range of retail and customer-facing organisations. Considered individually, leadership and 'service climate' can both have a positive impact on the quality of service delivered to customers, which in turn has a positive impact on business success. However if you consider both together, as we shall see later, the relationship they have with customer service may not be so simple.

Effective Leadership

The current researchers focused on perceptions of effective leadership as described by the leaders staff. They conceptualised effective leadership into 3 broad clusters: performance actions that set targets and role model behaviour; maintenance actions that help and support staff to achieve targets; and moral character which builds trust and inspires staff. Numerous studies have demonstrated that effective leadership behaviour (as perceived by staff) is associated with higher customer satisfaction in service organisations. For example, using credible and influential service quality leaders in a bank was associated with more positive attitudes towards service quality initiatives amongst bank tellers and higher customer satisfaction. Likewise, effective leadership has also been shown to affect entire teams attitudes to service quality. Of particular note is that a critical mass of colleagues delivering good service quality has a modelling effect on others - in other words, a leaders efforts in raising service quality can be multiplied in its impact.

Service Climate

An organisations service climate is derived from a consensual understanding of what 'good' customer service actually involves. It is related to the perception that the organisation and its members help and assist customers, which in turn is related to outcomes such as customer satisfaction and repeat business. Again, common sense would predict and research has confirmed that organisations with a 'strong' service climate tend to show higher customer satisfaction ratings.

But it's not that simple

Taken separately, these two factors are clearly beneficial for any service organisation. However, in reality, these two factors are rarely unrelated; most service organisations are going to have some degree of service climate that is overseen by managers, supervisors and other leaders. The researchers in Hong Kong sought to look at how these two factors may impact on one another, and how in turn this may impact on customers' perceptions of service quality.

Firstly, the psychologists found that organisations that have an unfavourable service climate show universally lower customer satisfaction ratings and levels of repeat business. However, such environments also become a backdrop for effective leaders to shine. Under such conditions, trained and competent leaders can successfully empower, motivate and inspire their staff into productive, service-led activities and organisations can still be successful despite a poor service climate.

Secondly, the researchers demonstrated that a favourable service climate can act as a buffer against leaders perceived as being ineffective , limiting the negative impact that a poorly trained or incompetent leader can have.

Finally, whilst the combination of effective leaders and a favourable service climate can bring about excellent business results, the researchers also found a potential conflict. They demonstrated that whilst leaders may be seen as effective by their staff (for example, by setting targets and driving them towards achievement of goals), there is a risk that they may be driving their staff in a different direction from that of the company. That is to say, the leader's actions and behaviours may actually conflict with the objectives of the service climate and this may lead to confusion and a localised move away from the organisation's focus on service quality.

How can Human Assets help?

The quality of service delivered to your customers can be the differentiator between success and failure. The retail industry alone generated £256 billion in sales in 2006 - that is more than the combined economies of Denmark and Portugal. Clearly, there is a lot riding on high quality customer service. This research serves to highlight not only that leaders must be perceived as being effective by their staff, but that they are also driving fulfilment of the business strategy.

Human Assets is a leading business psychology consultancy with a proven track record in identifying and developing effective leaders. Our unique approach to talent identification and development gives careful consideration to both the individual talent and the business strategy. We will ensure you understand not only the traits and behaviours required of your leaders to be effective but also the impact these will have on the achievement of your strategy and vision. Only through an integration of these co-dependent factors, can you truly be sure that your leaders are not only seen as effective but are actually driving your organisation in the right direction.

If you would like to find out more about leadership development, talent management strategies and other ways to achieve success through your people, please contact our consultants on +44 (0)20 7434 2122 or at enquiries@humanassets.co.uk.

References

C. Harry Hui, W. C. K. Chiu, P. L. H. Yu, K. Cheng & H. H. M. Tse (2007). The effects of service climate and the effective leadership behaviour of supervisors on frontline service quality: A multi-level analysis. Journal of Occupational and Organizational Psychology, 80, 151-172.

Newsletter: May 2007