The Application of Procedural Justice Principles to Service Recovery Attempts: Outcomes For Customer Satisfaction

Beverley A. Sparks, Griffith University, Australia
Janet R. McColl-Kennedy, The University of Queensland, Australia
ABSTRACT - This study investigates the influence of procedural justice theory on measures of customer satisfaction. Service scenario scripts were devised to depict a service breakdown. The scripts, which varied in terms of (a) level of concern shown by the service provider, (b) whether policy was adhered to, and (c) degree of 'voice’ given to the customer, were pesented to 130 respondents. Respondents were asked to rate their likely level of satisfaction with a range of aspects of the service. Analyzes using between subject MANOVA revealed higher ratings of customer satisfaction when service providers expressed concern and did not follow policy.
[ to cite ]:
Beverley A. Sparks and Janet R. McColl-Kennedy (1998) ,"The Application of Procedural Justice Principles to Service Recovery Attempts: Outcomes For Customer Satisfaction", in NA - Advances in Consumer Research Volume 25, eds. Joseph W. Alba & J. Wesley Hutchinson, Provo, UT : Association for Consumer Research, Pages: 156-161.

Advances in Consumer Research Volume 25, 1998      Pages 156-161

THE APPLICATION OF PROCEDURAL JUSTICE PRINCIPLES TO SERVICE RECOVERY ATTEMPTS: OUTCOMES FOR CUSTOMER SATISFACTION

Beverley A. Sparks, Griffith University, Australia

Janet R. McColl-Kennedy, The University of Queensland, Australia

[The authors would like to acknowledge the Australian Research Council for the financial support provided for this project.]

ABSTRACT -

This study investigates the influence of procedural justice theory on measures of customer satisfaction. Service scenario scripts were devised to depict a service breakdown. The scripts, which varied in terms of (a) level of concern shown by the service provider, (b) whether policy was adhered to, and (c) degree of 'voice’ given to the customer, were pesented to 130 respondents. Respondents were asked to rate their likely level of satisfaction with a range of aspects of the service. Analyzes using between subject MANOVA revealed higher ratings of customer satisfaction when service providers expressed concern and did not follow policy.

INTRODUCTION

Researchers and practitioners have highlighted the importance of the service encounter both in terms of contributing to customer satisfaction and service quality (see for example, Bitner 1990; Brown et al. 1994; Iacobucci, Grayson and Ostrom 1994) and to the overall success of the organization (see for example Bell and Zemke 1988; Heskett, Jones and Schlesinger 1994; Schneider 1991). Increasingly, service firms’ management, as well as customers, are looking for flawless performance in service encounters (Bitner, Booms and Mohr 1994). It is also recognized that the unique features of services such as relative intangibility, and simultaneous production and consumption, make quality control especially difficult (Brown et al. 1994; Zeithaml, Parasuraman, &Berry 1990). As a result, there has been a growing interest in research that focuses on service recovery processes (Johnson 1995). Service recovery techniques may include providing customers with explanations about the service failure, apologizing, empowering staff to resolve problems on the spot, or making offers of compensation (see for example, Bitner 1990; Goodwin and Ross 1990; Sparks and Callan 1996). These activities fall into the domain of the service provider, and thus customers tend to base their service evaluations largely on the behavior of the provider (Bowen and Schneider 1988; Surprenant and Solomon 1987). Indeed, Parasuraman and Berry (1991) point to the importance of the activities of service providers, even to the extent of the way in which the service personnel conduct themselves, what they say to the customer, what they do not say, and how they look. Hence, all of these can influence the customer’s evaluation of the service. Whilst these aspects have been studied, the importance of the way in which the service is recovered still requires study. A useful theoretical framework for investigating customer evaluations of service recovery processes is provided by justice theories (Clemmer 1993; Tyler 1994). This paper outlines this framework and specifically investigates a series of research questions that have been derived from procedural and outcome justice principles and applies them to service recovery behavior.

Service recovery and the use of justice theories

Although firms and customers alike are looking for flawless delivery of service, the possibility of errors arising in the provision of services can not be ruled out. These errors can come about from a variety of sources. First, through a mismatch between customer expectations and delivery of service, second, through not understanding the customer’s needs, third, through not delivering appropriate service standards, and fourth, through not selecting the right service designs and standards (Zeithaml et al. 1990). Nevertheless how the firm manages its response to a customer who experiences a service failure is likely to be a key determinant of that customer’s perceptions of the company and satisfaction levels (Bitner, Booms and Tetreault 1990). As many services are largely intangible it is the perceived quality of the interaction between customer and service provider that influences judgments about satisfaction with a service. Similarly, Brown and his associates (1994) argue that as customers’ expectations increase, there is a need to better understand the front-line service provider role, especially in terms of solving customer problems, gathering information on customer needs and developing on-going relationships with customers. Increased customer expectations about service means that the service provider is not only expected to serve the customer but is also expected to solve customers’ service related problems (see for example, Brown et al. 1994; Pitt and Jeantrout 1994).

The responses and actions of the service provider are likely to be vital to customer satisfaction. Indeed, what has emerged from the related research (Bies and Moag 1986; Clemmer 1993; Goodwin and Ross 1990; Sparks & Callan 1996; Tyler 1994) is that customer satisfaction is not merely based upon the ultimate outcome of the service recovery but also upon the procedures used to reach an outcome. That is, one’s level of satisfaction is derived not only from the outcome itself, but also from the manner in which one perceives they were treated, for instance, were they given a fair hearing, an apology, and an appropriate level of compensation. An important point to emerge from these studies is that while it is likely that some form of compensation is important to all levels of customer satisfaction, the desire to establish and maintain a positive relationship with the firm is also likely to be influential in terms of feelings of satisfaction. Hence, the effectiveness of service recovery techniques may rely upon customers’ evaluations of both the intervention process and the outcomes of this exchange.

Although distributive justice, that is, the notion of perceived fairness of the outcome of the service encounter (Homans 1961; Hocutt, Chakraboty and Mowen 1997), or as Blodgett, Granbois and Walters (1993) describe it, 'perceived fairness of the redress offered by the service provider (for instance, a replacement good, a monetary refund etc)’, procedural justice focuses on how the process was carried out (Shapiro 1993). Indeed, Tyler (1994) notes that it is important to consider the way in which this atonement is carried out, not merely the nature of the compensation. Furthermore, the way in which atonement is carried out is thought to be particularly influenced by relational motives such as politeness, concern for the individual, trustworthiness and neutrality. Therefore, this study focuses attention on the way in which the redress is carried out.

Concern

A key determinant of service quality and customer satisfaction evaluations is service provider empathy (Ziethaml et al 1990; Johnson, 1995). It is proposed that customers’ perceptions of procedural justice will also be influenced by how they feel they are treated. Several studies in management research have found that workers are more willing to accept a decision as fair and acceptable when their input is treated with consideration and respect by their manager (Korsgaard et al. 1995; Shapiro and Brett 1993; Tyler 1994). Consideration tends to be conceived as attentive listening coupled with an attempt to understand the other party’s perspective. Similarly, in a service failure situation, customer satsfaction is likely to be enhanced if a service provider overtly demonstrates concern for the customer throughout the recovery process. Recent research (Hocutt, Chakraborty, & Mowen 1997), found that following a service failure incident customers were most satisfied when service personnel displayed high levels of empathy and responsiveness.

Voice

Other research (Bies and Shapiro 1988; Lind, Kanfer and Earley 1990) reports that process control or voice is also shown to influence perceptions of justice. Voice procedures involve the customer in having an opportunity to express their views or provide input to the decision, whereas, in contrast, customers who do not have this opportunity are said to be exposed to 'mute’ procedures (Bies and Shapiro 1988). It is suggested that the opportunity for individuals to express their feelings about an apparent injustice (to have voice) is also important in influencing levels of satisfaction with the outcome. Goodwin and Ross (1992) report that high customer voice results in greater customer satisfaction, especially when it is accompanied by some tangible compensation. By contrast, a failure to consider customers’ inputs (voice) results in feelings of limited control over what happens, a lack of a sense of fairness, and low overall satisfaction.

Neutrality

Another influence on how customers perceive the fairness of the service recovery process is the neutrality of the decision making process (Tyler 1994). Goodwin and Ross (1990) argue that consumers generally associate following procedures, as opposed to doing something different for the individual customer, as being fair. Consequently this notion of following procedures is associated with higher quality service. Similarly, Leventhal (1980) points out that perceptions of consistency are an important basis upon which people make judgments about fairness. This finding would suggest that the adoption and implementation of a policy for dealing with service failures would be considered to be fairer than if policy were not adhered to. However, the influence of neutrality is still unclear from the literature and raises questions of whether a customer would rather: (a) be treated on a case by case basis, or (b) be treated in accordance with an application of a set of policies and procedures.

Outcome justice

The perceived outcome justice associated with service breakdowns is also important. However, of most relevance to this study is the extent to which customers will be satisfied with an outcome where different standards of procedural justice are present. It is argued that even when the outcome remains cnstant the manner in which it is perceived by the customer will be influenced by the procedural issues, resulting in quite different levels of satisfaction with the outcome.

Review of the literature raises a number of research questions that are addressed in this study and are outlined below.

Research questions

R1: Does expressed concern by the service provider for the customer’s situation result in higher customer satisfaction with the treatment, procedures and outcome (both as perceived and as compared to what is normally expected)?

R2: Does the opportunity for a customer to voice an opinion result in higher levels of customer satisfaction, especially with the outcome?

R3: Will the use of standard policies to guide service provider responses lead to higher levels of satisfaction, especially with the treatment and the outcome satisfaction?

METHOD

In order to answer these research questions the following method was employed. A 2x2x2 between-subject experimental design was used to investigate three dimensions of procedural justice on varying elements of customer satisfaction. One hundred and thirty undergraduate business major students from a large university participated in the study. Forty two per cent were male. The mean age of respondents was 23 years.

Stimulus materials:

Scripts. A service scenario script was devised to test the influence of three independent variables: (1) expressed concern; (2) customer voice; and (3) neutrality of service provider behavior. The script described a service situation where a guest was checking out of a hotel and communicates dissatisfaction with the stay in terms of the quality of the service and some inaccuracies on the account. Care was taken in designing the scenario to construct service failure situation that could not be rectified. For example, upon checking out of a hotel a guest complains "last night the room service was dreadfully slow." The respondent received one of eight versions which varied by the level of concern (high or low), customer voice (present or absent) and neutrality (high or low).

These scenarios were developed through observation with hotel checking out procedures at major hotels in the area. The scenarios were drafted and a panel of experts reviewed them checking for authenticity. An expert panel was used again to chec that the measures of independent variables matched with the definitions. Eighteen experts were specifically asked to match the respective phrases with the terms: concern/ low concern; neutral/not neutral; low value/moderate value; voice complaint.

Operationalization of independent variables.

Concern. Concern was operationalized as high or low as follows: High concern included the service provider using two statements at different points in the script as follows "You know customers are very important to us. We care about all our customers and let me assure you we are concerned about this." AND "As I said we are concerned about what’s happened." Low concern included the service provider using two statements at two points in the script "These things happen from time to time. Things sometimes go wrong in hotels. That’s a fact." (receptionist shrugs shoulders). AND "As I said things sometimes go wrong."

Customer voice. Customer voice was operationalized as present or absent. In the customer voice version the two statements were used: one by the service provider-"We would like you to fill out a customer complaint form. You see, our hotel wants to know what you think. Could you spare a few moments and write down the details of your complaint on this form. Thanks." AND one by the customer - "This hotel really needs to do something about its service. It’s not good enough to treat customers this way." In the version without customer voice the statements were omitted. Thus, in the voice condition there was more opportunity for customers to have input.

EXHIBIT 1

SAMPLE SCRIPT FOR HIGH CONCERN, HIGH VOICE, LOW NEUTRALITY

Neutrality. Neutrality was operationalized using two statements: High neutrality conditions included the service provider using two statements: "Look, in circumstances like these it’s company policy to ..." AND "Yes, the hotel likes to make sure that all our customers are treated the same." Low neutrality conditions included the service provider using two statements: "I’m not supposed to do this, but I’m going to do a special favor for you ..." AND "I know my supervisor won’t like it but you’re more important than company policy. So I’m going to do a special favor for you."

Outcome. Outcome was controlled in this study and held constant with the service provider offering a 50% reduction in accommodation charges for the inconvenience. This was the same across all scenarios.

Procedure

A standard procedure for evaluating the script material was adopted for all subjects. Respondents were asked first to complete a brief set of background questions prior to reading the stimulus material. The researcher read a standard dialog in which respondents were told that they would read a script based on a real service event involving an interaction between a service provider and customer in a service breakdown situation. After reading the script, respondents were asked to rate a series of satisfaction scales. All items were rated on a i-polar seven-point scale:

Would be most dissatisfied (1) / satisfied (7) with the way the receptionist treated me.

Would be most dissatisfied (1) / satisfied (7) with the procedures used by the receptionist.

Would be likely to feel treated in a way worse (1) / better (7) than expected.

Would be quite dissatisfied (1) / satisfied (7) with the outcome.

TABLE 1

MULTIVARIATE AND UNIVARIATE EFFECTS

Manipulation checks

Prior to conducting the main study a number of manipulation checks was performed. First, as indicated above, a panel of eighteen experts was used to match the independent variable term and the phrase. Specifically, participants were required to read over eight items representing the independent measures (these were listed on the left-hand column of a table) and then read over classifying items on the right hand column of the table and asked to match them. All eighteen experts matched them correctly.

Second, in the main study, respondents were asked to rate the degree of concern shown toward the customer by the service provider. A t-test revealed those subjects who read the high concern version rated service provider concern for the customer significant higher than those who read the low concern version (Ms 5.32 vs 3.84, t=5.79, p<.001). For the neutrality measure, a t-test revealed those subjects who read the high neutrality version of the script rated the service provider as following policy compared to the low neutrality version (Ms 6.02 vs 2.50, t=14.89, p<.001). Finally, for the customer voice variable, subjects were asked to indicate whether the customer had an opportunity to express an opinion about the service. Results reveal those subjects who read the high voice condition reported that the customer had more opportunity to express an opinion than the low voice condition (Ms 4.27 vs 3.74, t=1.78, p=.077). This last variable was not as clear cut as the others, however, it was deemed acceptable given the general direction of the means.

RESULTS

A 2 (concern) x 2 (voice) x 2 (neutrality) between-subject multivariate analysis of variance (MANOVA) was used to examine differences in ratings on the four satisfaction items.

As shown in Table 1, there was a significant multivariate main effect for neutrality and concern. For the neutrality main effect, two of the univariate items were significant: satisfaction with the treatment and satisfaction with the outcome. Respondents who were exposed to the scenario reflecting a lower level of neutrality expressed more satisfaction with the treatment than those exposed to the high neutrality condition (Ms 4.52 vs 3.96, respectively). Similarly, respondents expressed more satisfaction with the outcome of the service interaction when exposed to the low versus the high neutrality condition (Ms 5.30 and 4.75, respectively). There was no significant effect for customer voice (p>.05).

In the case of the concern condition, all four univariate items were signficant as shown in Table 1. Respondents indicated they were more satisfied with the treatment (4.81 vs 3.66), more satisfied with the procedures used (4.72 vs 3.92), were treated better than expected (4.87 vs 3.98) and were more satisfied with the outcome (5.28 vs 4.79) when exposed to the high concern condition.

Although the two-way interaction was not significant at the p<.05 level, the trend was in the significant direction (see Table 1). As Figure 1 illustrates, customers’ satisfaction with the treatment they received remained much the same irrespective of the neutrality shown by the service provider when accompanied by expressed high concern (Ms HC/LN=4.8, HC/HN=4.82). However, the effect is quite different when expressed concern is absent. Under this condition customer satisfaction with the treatment is higher if accompanied by low levels of neutrality (Ms LC/LN=4.24, LC/HN=2.96). A similar pattern exists for satisfaction with the outcome of the service encounter, although mean satisfaction was generally higher overall. Customers’ satisfaction with the outcome they received was much the same irrespective of the neutrality shown by the service provider when accompanied by expressed high concern (Ms HC/LN=5.31, HC/HN=5.24). In contrast, when the service provider is perceived as expressing less concern customer satisfaction with the outcome is higher if accompanied by low levels of neutrality (Ms LC/LN=4.24, LC/HN=2.96).

FIGURE 1

INTERACTION FOR NEUTRALITY AND CONCERN

DISCUSSION

The overriding conclusion from this study is that service provider concern is of particular importance in shaping customer satisfaction evaluations. This result further supports recent work by Hocutt and her associates (1997) in demonstrating that the degree to which a service provider shows concern significantly influences customers’ evaluation of the service. This is especially so in the levels of satisfaction expressed by customers about the manner in which they are treated. In general, this finding confirms the early work of Bowen and Schneider (1988) and Surprenant and Solomon (1987) and the later work of Parasuraman and Berry (1991), Bies and Moag (1986) Clemmer, Goodwin and Ross and Tyler (1994) in that they point to the importance of the way service providers interact with customers not just in terms of the outcome.

An interesting finding to emerge from this study is the evidence that suggests consumers prefer to be treated differently from others. In particular, the degree to which the outcome was seen to be a result of unbiased policy versus a special favor had an impact on customer satisfaction. It is possible that people perceive an outcome more favorably so long as the ratio of inputs to outputs is in their favor. That is, individuals are more likely to accept, even prefer, inequity when the result is to their advantage. This may be a reflection of the saying "the customer is always right." Other research (Bitner, Booms, Tetreault 1990) has found service provider flexibility to impact upon service evaluations. Similarly, it is also possible, although somewhat speculative, that the high neutrality condition was seen as inflexible and therefore resulted in lower levels of customer satisfaction.

This study lends further support to the idea that, within a service setting, procedural issues influence people’s satisfaction with the outcome independent of the actual outcome (Lind & Tyler 1988). In this study the outcome remained constant across all conditions. However, satisfaction with the outcome varid depending upon both the level of concern and neutrality shown. Although somewhat tentative, the results point toward a trend that when neutrality is low (outcome presented as a special favor) level of concern (high or low) is relatively unimportant. However, as neutrality increases (policy is invoked) it seems the level of concern expressed by the service provider becomes more critical in affecting customer satisfaction. The findings are in line with the conclusions recently drawn by Johnson (1995) that an important component of effective recovery is that staff appear to 'put themselves out’ to solve a service problem.

Based on past research (Bies and Shapiro1988; Lind, Kanfer and Earley 1990 and Goodwin and Ross 1992), it was expected that customer 'voice’ would influence levels of customer satisfaction. However, no significant effects were found. It is possible that respondents felt that the customer was already demonstrating voice in that they took the opportunity at the time of check out to voice their concern about the room service and more generally about the way the hotel treated its customers, even though they were not asked explicitly to do so. Further, it may be that service provider concern and neutrality had an overriding effect thus obscuring the influence of voice.

Limitations

This study sought to investigate the impact of elements of procedural justice upon levels of customer satisfaction. The results must be viewed with some caution due to the student sample and experimental design used. Further research needs to be undertaken to test the hypotheses using more representative samples, and more naturalistic methods. In addition, future studies could test other variables including the gender combinations of provider-customer, types of compensation provided, and a wider range of different service problems. The interaction effect reported in the paper is to be viewed cautiously until further research replicates the finding.

Conclusion

Procedural justice theories were used in this study to investigate issues of service recovery. The results indicate that such theories are relevant to service situations. In particular, the expressed concern shown by service providers has an instrumental effect upon customer satisfaction with both the process and outcome. The degree to which the service provider indicated the following of policy also influenced customer satisfaction with the treatment received and the outcome.

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