Chapter One Introduction

1.0 Introduction In a world economy where it is becoming increasingly difficult to protect inefficiency by regulatory means, service firms unable to effectively cater to the needs and wants of customers risk not only losing dissatisfied customers to the competition but also ultimate failure. Service quality has been shown to be a key determinant of customer satisfaction and the key to future success and survival (Desatnick and Detzel, 1993).

Service recovery has been identified as a strategic issue in the services marketing literature. The pivotal role of services quality and excellence in the implementation of services marketing and management programs is well documented (Zeithaml et al., 1996). Definitions include: doing things very right the second time (Ruyter and Wetzels 2000), and the actions that a service provider takes to respond to service failures (Gronroos, 1988; Bitner et al., 1990; Lewis and Spyrakopoulos, 2001; Bendall-Lyon and Powers, 2001). A perceived initial service failure can lead to what Ruyter and Wetzels (2000) describe as disconfirmation (Oliver, 1980), but a successful recovery can restore a dissatisfied customer to a state of satisfaction. In the healthcare sector, service recovery covers a broad and complex range of issues. These can be relatively minor, from length of waiting time in an outpatient department, or ease of securing a car park, to highly complex ones involving clinical competency issues, where because of the high level of credence, quality is extremely difficult for the health consumer to assess. However, what may be considered a potentially minor problem or relatively unimportant moment of truth from the staffs perspective can become a matter of extreme frustration for the health consumer and a key indicator of quality (Rogers et al., 1994; Bendall-Lyon and Powers, 2001). Once negative opinions and attitudes are

formed, these can be hard to reverse, whatever the standard of care following. An understanding of service recovery performance may therefore assist the healthcare organization to anticipate service problems, prevent disasters, and address

patient/customer feelings about their care (Osbourne, 1995; Bendall-Lyon and Powers, 2001). Competitive advantage in service businesses derives largely from the service providers ability to deliver high quality service. Previous research has shown that service quality raises customer satisfaction, which (in turn) relates to repurchase intentions, customer retention, market share, and financial return (Hart et al., 1990; Soteriou and Chase, 2000).

It is estimated that businesses typically lose about 50 per cent of their customers every five years (Mack et al., 2000). Very often service companies spend considerable time, effort and money to attract new customers, and yet they invest very little on retaining existing customers. This practice would probably be reversed if they considered the lifetime retention value of customers. In the hospitality industry, Taco Bell calculates the lifetime value of a loyal customer at around $11,000 (Swift et al., 1998).

Organizations experience an increased risk of losing customers when services fail (Zemke and Bell, 1990). It is acknowledged that occasional mistakes are inevitable in the service delivery process; however, negative post-failure consumer perceptions and behavior may be minimized and possibly even prevented if organizations undertake effective recovery actions (Tax et al., 1998; Andreassen, 2001; Hart et al., 1990; Bailey, 1994). Such actions can often turn dissatisfied consumers into satisfied customers (Boshoff and Leong, 1998), although in some cases attempts at service recovery may reinforce consumers negative views (Hart et al., 1990). This suggests that there may be significant discrepancies in customer expectations of service recovery and the attempted recovery actions undertaken by the service provider.

1.1 Background of the study Service providers are increasingly having to deal with a wide range of social, financial, political, regulatory and cultural challenges (Coulson Thomas, 1997), the impact of which, among other factors, is the demand for greater efficiency, better quality and lower costs (Ovretveit, 2000; Urden, 2002). Hence, quality management has emerged not only as the most significant and enduring strategy in ensuring the very survival of organizations (Ennis and Harrington, 1999), but also a fundamental route to business excellence (Wang and Ahmed, 2001). Health service organizations in Malaysia are no different. There are 117 public hospitals and 224 private hospitals (Malaysian Medical Association, 2002) of varying bed capacity in the country, and the need to increase their competitive edge is becoming more intense. Moreover, due to the availability of information and a better-educated population, the need to measure up is no longer a choice but a necessity in meeting rising expectations from better-informed customers (Lim and Tang, 2000). Although competing for patients may not be the objective of the heavily subsidized healthcare institutions run by the Government, they have a moral responsibility to be fully accountable for the efficient use of public resources (Sarji, 1996). Furthermore, after equipping and modernizing with facilities such as paperless-filmless hospitals, continuing online medical education for staff and teleconsultation linking the diagnostics setup and the patient to physicians (Government of Malaysia, 1997), it is now the aspiration of hospitals to have as large a share as possible of the lucrative healthcare market that is emerging in the region (The Star, 2002). In summary, it is understandable that healthcare organizations in Malaysia, like their counterparts in other countries, are keen to find ways to better manage service quality. Maximizing the utilization of the customer resource and the greatest untapped resource in healthcare (Ferguson, 2000) is one effective way of achieving this goal. According to (Porter, 1985), he suggested that a competitive advantage exists when an organization maintains an edge over its rivals in retaining customers and in positioning itself to take advantage of environmental changes. Under these circumstances,
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successful service organizations realize the importance of carefully monitoring and managing of customer satisfaction (Bitner et al., 1994). Satisfaction is an overall customer attitude towards a service provider (Levesque and McDougall, 1996) or according to Zineldin (2000) an emotional reaction to the difference between what customers anticipate and what they receive. When customers are satisfied, they are more likely to return, while dissatisfied customers are more likely to go elsewhere (Heskett et al., 1994; Strauss et al., 2001; Zairi, 2000). Since, customer satisfaction is strongly influenced by the interaction between customers and employees (Boshoff and Tait, 1996), examining employee behavior is critical. Employee behaviour, though, is strongly influenced by the operating organizational culture (Chow et al., 2002; Ferris et al., 1998; Pratt and Beaulieu, 1992; Schein, 1996), a system of shared values and beliefs that produces norms of behavior and establishes an organizational way of life (Koberg and Chusmir, 1987). Therefore, to survive in highly competitive markets, organizations need to provide services that yield highly satisfied and loyal customers (Westbrook and Oliver, 1991). As Nagel and Cilliers (1990) claimed, customer satisfaction is currently the new standard by which customers are measuring business performance. As such, it often believed that satisfied customers are more inclined to be loyal, producing several benefits for organizations (Asif and Sargeant, 2000; Hansemark and Albinsson, 2004; Reichheld and Sasser, 1990).

1.2 Problem Statement Consumers often experience service delivery problems. As a result, service failure and poor service recovery are a major cause of customer defection (Keaveney, 1995). Researchers have found, however, that a good service recovery is a key factor in building ongoing relationships with customers who were unhappy at their initial encounter (Maxham, 2001; Smith et al., 1999; Tax et al., 1998).

Despite the importance of a proper understanding of service failure and recovery, only recently have researchers investigated these critical areas of service management. One area that has received much attention has been the role of perceived justice in service recovery. Key findings from this stream of research indicate that customers evaluate service recovery in terms of the outcomes they receive and the nature of the interpersonal treatment they receive during the recovery process (McCollough et al., 2000; Smith et al., 1999; Tax et al., 1998; Blodgett et al., 1997). The previously described research has greatly advanced the understanding of service failures and recovery by providing a theoretical framework. Previous research has not, however, investigated the tenants of the framework across various service failure situations, specifically under varying levels of the severity of the service failure. Research on service failure and recovery has generally kept the severity of the service failure constant even though service failures can range from very minute failures to more severe cases (Goodwin and Ross, 1992; Berry and Parasuraman, 1991; Gilly and Gelb, 1982) and perceived severity has been identified as an important factor to consider in service recovery research (e.g. Bell and Ridge, 1992; Limbrick, 1993; McCollough et al., 2000; Smith et al., 1999; Zeithaml et al., 1993).

1.3 Research Objectives To examine the impact of service recovery performance within Malaysias hospitals.

To portray how employee rewards contribute to job satisfaction in Malaysias hospitals.

To analyze the influence of staff training on service recovery performance in Malaysias hospitals.

 To examine the impact of teamwork on employee job satisfaction within Malaysias hospitals.

To examine the influence of Empowerment on job satisfaction within Malaysias hospitals.

1.4 Research Questions What is the impact of service recovery performance within Malaysias hospitals?

How does employee rewards contribute to job satisfaction in Malaysias hospitals?

What is the influence of staff training on service recovery performance in Malaysias hospitals?

What is the impact of teamwork on employee job satisfaction within Malaysias hospitals?

What is the influence of Empowerment on job satisfaction within Malaysias hospitals?

1.5 Significance of the Study This paper proposes to investigate a model of service recovery performance in Malaysias hospitals, after expanding earlier research done in the private sector industries. Frontline hospital staffs (administrative and nursing staffs) representing a range of outpatient departments/clinics in Malaysia inner-city hospitals will complete a selfadministered questionnaire on organizational variables affecting their service recovery efforts and job satisfaction in a health-care environment. Data obtained from the
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hospitals would be analyzed using the SPSS 14.0 to obtain the reliability test of Cronbach Alph, regression analysis and other statistical frequencies, which will enable the researcher draw plausible conclusions on the study. The study will also adopt a theoretical approach using the existing service recovery literature as well as the traditional services literature, the conceptual framework and associated research propositions are developed. The effectiveness of recovery encounters will be based on how encounters operate relative to customer expectations and experiences with regard to the recovery activity.

1.6 Limitations of the Study This research study will be limited to the study of the impact of job satisfaction on Service recovery performance in Malaysias hospitals. As such, all necessary information especially the data collection will be done within Malaysias hospitals (findings of this study cannot be applied outside Malaysia). Therefore, the generalization of the study to other countries may not be appropriate. This could be attributed to the fact that; cultural differences, government policy & implementation and many other issues conflicting the appropriateness and relevance to others countries health service sector may exist. Furthermore, the use of questionnaire may be subject to bias as the answers of the respondents were the results taken for analysis. Their response may be subject to their perceptions and opinions and also further, may be colored by how someone feels about the question at hand (Roelen, Koopmans & Groothoff, 2008).

1.7 Chapter Outline Chapter 1 Introduction: This chapter provides the reader with background information of the study. Background of study, problems, research questions, research objectives, nature of the study and significance as well as the limitations of the problem that will be faced by the researcher are clearly stated in the chapter. Chapter 2 Literature Review: This chapter explores past relevant literatures. It basically deals with pertinent literature on the impact of job satisfaction on Service recovery performance in Malaysian hospitals. This section concludes with an overview on how job satisfaction stimulates Service recovery performance towards enhancing productivity across all the Malaysian hospitals. Chapter 3 Methodology and Data Collection: This chapter focuses on the research design that will be used to conduct this research. It further discloses the ways used in analyzing data that will be collected through primary and secondary form, also limitations of the methods used and how the data will be collected. Chapter 4 Data analysis and findings: This chapter outlines results of data analysis, provides discussion of research findings and builds bridges between objectives, findings and relevant literature. The result section summarizes the analysis of the data and present findings of the study with respect to the hypothesis and research questions. Chapter 5 Conclusion and Recommendation: Conclusions and

recommendations are provided in this chapter together with discussions on the contribution of the study to the body of knowledge. This chapter concludes the research and documents the implications of the study with recommendations for future research.

1.8 Chapter Summary Finally, this chapter provides the reader with all the necessary basic knowledge about the service recovery performance in Malaysia and some general ideas and informations about the study. Background of the study, problems, research questions, research objectives, nature of the study and significance as well as the scope/limitations of the problems that will be faced by the researcher are clearly stated in this chapter. The next chapter will go further to discuss on the literature review and explain the relationships that exist between the independent variables and the dependent variable which this study aims at testing through a survey questionnaire to enable the researcher come up with plausible solution to current and practical issues which will improve on service recovery performance in Malaysias hospitals.

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