Customer satisfaction has dominated much of the recent service literature (Zemke, 1989; Heskett, 1990; Zeithaml, 1990, Berry; 1991). This literature suggests that to deliver high levels of customer satisfaction, organizations must identify, measure, and manage the internal elements that produce it. The first part of this paper identifies some of the elements within an organization hypothesized to affect customer satisfaction. We call these the eight components of internal service quality. By measuring these components, managers may be able to determine which actions are required to improve customer satisfaction. This knowledge may then enable managers to take a proactive, rather than reactive, approach to customer satisfaction.
Internal service quality (defined for this purpose as employee satisfaction with the service received from internal service providers) has received little attention in the empirical literature, although certain aspects of it have been discussed theoretically as far back as Barnard (1938). Only in the past decade has it begun to be examined as a holistic concept. Yet internal service quality remains complex, in part because its composition can vary for different organizations at different times. In short, which internal services are important, and how important their quality is, depends on an organization's tasks and employees. Despite this variability, we believe (supported by the quality and service literatures) that internal service quality has basic components important to most organizations.
This paper also explores the relationship between internal service quality and job satisfaction, one important indication of an organization's work environment. We propose that internal service quality is important because it relates to both customer satisfaction and job satisfaction. This dual relationship may begin to explain the observation that while job satisfaction may not lead to customer satisfaction directly, service firms rarely have satisfied customers without having satisfied employees.
Internal Service Quality
Internal service quality's cross-disciplinary nature may explain why it remains relatively unexplored empirically. The eight components of internal service quality that we have identified fail to fit neatly into the traditional functional disciplines of management. The academic and popular writers addressing internal service quality tend to work from a multidisciplinary perspective. Heskett (1990), Zeithaml (1990), Berry (1991), and Hart (1992), among others, discuss all eight of these internal service quality components and their effects on employee and customer satisfaction. Garvin (1988) and Zemke (1989) also discuss several of these components.
Although these authors approach internal service quality from different perspectives, they share a fundamental underlying belief that organizations attempting to deliver service quality to their external customers must begin by serving the needs of their internal customers. As Heskett (1990), Zeithaml (1990), and Garvin (1988) have been particularly influential among both academics and practitioners, their work is outlined below.
Heskett's (1990) discussion is predicated on the Service Profit Chain (see Heskett, 1994), a causal model based on the proposition that 1) internal service quality drives 2) employee satisfaction, which enables the delivery of 3) high value service, resulting in 4) customer satisfaction, leading to 5) customer loyalty, which in turn produces 6) profit and growth. These ideas are closely linked to those of this paper which tests a portion of the model by linking measures of internal service quality to a relatively new summary measure of the work environment called service capability. Service capability is defined as an employee's perception of his or her ability to serve the customer. As has been shown elsewhere, service capability is a more direct antecedent of customer satisfaction than more traditional measures of the work environment such as employee morale, loyalty, and satisfaction.
Heskett (1990) provides several case-study examples that support the importance of internal service quality. The organizations examined lead their industries in results delivered for customers, and (often) financial performance. Heskett demonstrates that while the importance of specific internal-service-quality components may differ for individual organizations, leading service firms rely on exemplary internal service quality in the eight components discussed in this paper to deliver consistently high levels of value to customers.
Zeithaml (1990) and her co-authors also discuss internal service quality as it relates to their model of service-provider gaps (the gaps measured by the SERVQUAL instrument). The components of internal service quality comprise several of what these authors call "the antecedents of service-provider gaps." That is, internal service quality problems are described as responsible for many of the …