International Journal of Hospitality Management 29 (2010) 711–719

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International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhosman

Service climate and customer satisfaction in a casino hotel: An exploratory case study Anna Kralj ∗ , David Solnet 1 School of Tourism, University of Queensland, Building 39A – General Purpose Nth 3, Cnr Campbell Rd & Blair Dr, St Lucia, Brisbane, QLD 4067, Australia

a r t i c l e

i n f o

Keywords: Casino hotels Service climate Customer satisfaction

a b s t r a c t Given the global escalation in gaming availability, this paper proposes a service management framework for the study of competitive advantage in casino hotels. Using data collected from 303 employees at an Australian casino hotel, an exploratory case study in service climate and customer satisfaction is presented. The findings suggest that while service climate is highly correlated with customer satisfaction, internal dynamics result in significant differences in the perceptions of casino employees versus noncasino employees, highlighting the need to tailor organisational strategies to different types of employees. © 2010 Elsevier Ltd. All rights reserved.

1. Introduction In an era of intensified competition for all businesses, service is now often recognised as a key driver of competitive advantage (Kandampully and Duddy, 2001; Karmarkar, 2004). Competitive advantage can also lead to superior business performance (Hunt and Morgan, 1995; Porter, 1985). Despite knowledge of the links among service, competition and performance, managers often fail to implement service-oriented strategies, and service researchers are lagging in the development of theory to support practical application and implementation of service-led business strategies (Lusch et al., 2007). The innumerable encounters between an organisation’s service employees and its customers form a significant basis for customer evaluations of service quality, a fundamental antecedent of customer satisfaction. In contrast to traditional product management, variability in quality cannot be eliminated, instead this variability is inherent in the service process. An organisation’s orientation toward service, its internal ‘climate’ for service, can positively influence employees’ perceptions and attitudes, and can facilitate the consistent delivery of high levels of service quality. The importance of service is most acute in contexts where the contact between customers and employees is high, such as in the hospitality industry (Schneider, 2004). Although hotel operators have

∗ Corresponding author. Tel.: +61 416 100 028; fax: +61 7 3346 8716. E-mail addresses: [email protected] (A. Kralj), [email protected] (D. Solnet). 1 Fax: +61 7 3346 8716. 0278-4319/$ – see front matter © 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhm.2010.01.005

long acknowledged the need to differentiate themselves from their many competitors through the provision of superior levels of service quality, the casino industry still appears dominated by an ‘if you build it, they will come’ mentality towards customer patronage (Hinch and Walker, 2005). The mere act of building a casino is no longer enough to ensure the attraction and retention of customers. To remain viable, casino operators must also develop new strategies that maintain a sustainable competitive advantage over their many rivals. Differentiation through the service offering is a key way to develop that advantage. The challenge for managers is how to create an environment that supports employees at all levels in the consistent delivery of superior service quality. The purpose of this study is to apply a service management framework to the study of casino hotels and introduce an exploratory research case study that provides a preliminary investigation into the relationship between dimensions of service climate and customer satisfaction in a casino property. Building on this aim, we are particularly interested in establishing if differences exist in perceptions of service climate across departments and if so, gaining some insight into why such differences might exist and what impact they might have on organisational strategies relating to service climate. This paper first discusses the relevance of this study for casino operations, before presenting a conceptual background to the study and then reviewing the literature on service climate. We then present the results of a study conducted within a large casino hotel in Australia. The results of this study are used to propose directions for much-needed future research as well as practical suggestions for casino managers in order that they might build a service advantage through improved internal service quality and intra-organisational functioning.

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2. Background

2.2. Conceptual foundation

2.1. The casino context

A service organisation’s human resources represent a key ingredient in achieving competitive advantage. According to the resource-based view (RBV) of a firm, competitive advantage and superior firm profitability are often attained through capabilities that are internal to a firm – including expertise, systems, and knowledge (Voola et al., 2004). Apart from the relatively rare scenario of a natural-resource monopoly, the intangible resources of a firm, particularly its human resources, internal functions and processes, are likely to produce a real competitive advantage – because engaged and committed employees who render quality services are difficult for competitors to emulate (Hitt et al., 2001). A key example of this in the hospitality industry is the Ritz-Carlton hotel chain, which is renowned for its unique internal service culture and superior levels of customer service that result in engaged, committed and proud employees, a fiercely loyal customer base and sustained financial returns (Michelli, 2008; Solnet and Kandampully, 2008). The experiences that employees have of an organisation have been linked to customer experiences of the same organisation. Wiley (1996) proposed a linkage research model in service management, and asserted that its purpose is to “identify those elements of the work environment – as described by employees – that correlate, or link, to critically important organisational outcomes such as customer satisfaction and business performance” (p. 330, emphasis in original). The basic premise of the service linkage research model is that when the appropriate leadership values and practices are found in an organisation, employees are likely to be more productive and enthusiastic. This positive state will flow on to customers in the form of satisfaction, which will then lead to improved long-term business performance. For example, a link has consistently been demonstrated between organisational variables, such as employee satisfaction and customer assessments of service quality (Gelade and Ivery, 2003; Schneider et al., 2003, 2005; Harter et al., 2002; Schneider and White, 2004). It is the linkage research model that underlies the conceptual model for the current study (see Fig. 1). It will be hypothesised that, similar to other high contact service contexts, employee perceptions of organisational service climate are positively related to customer satisfaction. Further, certain specific dimensions of service climate will be greater predictors of customer satisfaction. It is also expected that service climate will manifest itself differently in individual departments, in this case, the casino department versus non-casino departments. Consequently, it is likely that different dimensions of service climate will predict customer satisfaction

Competition in the global casino industry has grown significantly in the last three decades. As recently as 1998, a casino industry commentator observed that “the chances that someplace else will become a new Las Vegas are in the category of hitting a ten spot at Keno – very remote indeed [. . .] the world of gambling will continue to revolve around Las Vegas” (Thompson, 1998:21). This comment is now questionable, as evidenced by the rapid advent of Macau in 2006 as the world’s leading gaming destination in terms of gaming revenue (Gu and Siu, 2008; Kale, 2007). Based on the Las Vegas example of creating a highly successful tourism destination of international repute in a remote desert region, casino tourism, once viewed as an ‘evil’ to be avoided, is now frequently used to drive tourism development in destinations (Kim et al., 2002). Around the world, numerous countries have attempted to mirror the benefits derived from casino tourism development as demonstrated in the United States. Prominent examples are found in Australia (Prideaux, 2000), Canada (MacLaurin and MacLaurin, 2003), South Korea (Lee and Kwon, 1997), South Africa (Thompson, 1998), Singapore (Gu and Siu, 2008) and most notably, Macau (Kale, 2007). As a result, casinos face competition not only from other casinos within a destination, but also from other casino destinations and other forms of gambling and gambling-related experiences. The ‘commoditisation’ observed in the hotel industry, where all competitors offer a very similar core product and service offering (Gilmore and Pine, 2002), is also evident in the casino industry. Casino operators consistently rely on gaming promotions that offer high pay-outs, such that customers become de-sensitised to them and can pick and choose which promotion at which property to partake in at any given time (Lucas and Bowen, 2002). The increasing global supply of casinos, combined with the current challenging economic times, makes it necessary to learn more about the nature of casino markets, the drivers of demand, and the determinants of service quality and customer satisfaction (Hinch and Walker, 2005). While research has begun to analyse the market segmentation of casino customers (e.g. Hong and Jang, 2004; Lee and Kwon, 1997; Lee et al., 2006a; Park et al., 2002), much of this has been conducted in Korea and does not specifically address the motivations and satisfiers of these segments. Other casino-related research tends to focus on issues of optimum gaming product mix, sales promotions and physical facilities of casinos (e.g. Lucas et al., 2004; Lucas and Bowen, 2002; Roehl, 1996) and does not consider the impact of employee- or service-related variables.

Fig. 1. Conceptual model.

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in the two employee groups. The following section explores the rationale behind the research hypotheses in greater detail.

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H1d: The relationship between service climate and customer satisfaction is not significantly different across casino and non-casino department employees.

2.3. Service climate Service climate refers to the organisational policies and practices that support the delivery of service excellence (Lytle et al., 1998). It has been described as the ‘missing’ or ‘integral’ link between internal dynamics and external service performance measures (Andrews and Rogelberg, 2001; Dean, 2004). This concept is receiving considerable attention in the literature as linkages have been identified with desirable business outcomes such as customer satisfaction, customer retention and increased profits (Davidson and Manning, 2003; Lings and Greenley, 2005; Salanova et al., 2005; Schneider and Bowen, 1985; Solnet, 2006; Yoon et al., 2001). The most successful service organisations are systematic in the provision of signals regarding their strategy, staffing and systems in order to align all participants to the same organisational mission (Dickson et al., 2006). As managers cannot supervise every interaction between employees and customers, the existence of a positive service climate will align employee attitudes and behaviours with organisational strategy and enable the achievement of an organisation’s service quality goals (Schneider, 2004). By designing and managing workplace conditions to engender employee satisfaction, commitment and other behavioural and performance-related factors, higher levels of customer satisfaction, perceived service quality and loyalty are facilitated (Paulin et al., 2006). Research supports the idea that organisations with a positive service climate will have higher levels of service quality (Schneider, 1980; Tornow and Wiley, 1991; Wiley, 1991; Johnson, 1996) However, as previous research has found slightly different results, it is argued that the service context must be taken into account when determining the strength of service climate’s ability to predict other business parameters (Dietz et al., 2004; Schneider, 2004; Silvestro and Cross, 2000). Leading researchers assert that the more frequent the customer contact, the more likely that internal dynamics will have an effect on customer satisfaction (Schneider, 2004; Silvestro and Cross, 2000). Schneider and Bowen (1993:39) highlight the “psychological and physical closeness” of customers and employees in the service exchange. It is precisely this closeness that gives internal HR practices “visibility” to the customer (Tornow and Wiley, 1991:113). In casinos, the impact of internal organisational dynamics and human resource (HR) factors on customer satisfaction and service quality is an under-researched area (McCain et al., 2005). Although it would stand to reason that service climate will be strongly related to customer satisfaction given the high contact service nature of a casino hotel environment, the conflicting results from previous research demonstrate that this is not a wise assumption to make. After all, it is always possible that there are elements of the casino experience, such as the pure desire to win, that negate interpersonal service as a an important element in the customer’s interaction with the business operation. We do not believe this to be the case, but it must be investigated. Consequently, as the first hypotheses for our current research problem, we propose that, in a casino hotel context: H1a: A positive relationship exists between the perceptions of service climate and customer satisfaction. H1b: A positive relationship exists between casino department employee perceptions of service climate and customer satisfaction. H1c: A positive relationship exists between the non-casino department employee perceptions of service climate and customer satisfaction.

In large organisations, employees in the various departments experience the organisation differently. Firstly, the nature of roles performed by service employees of different departments, the customer satisfaction associated with those roles, and the interpersonal interaction that are inherent in certain roles influence employee perceptions of what they, and customers, experience at the hands of the organisation (Arnett et al., 2002). Secondly, while policies and procedures are established at an organisational level, they are practiced at a sub-unit level (Zohar, 2000). Social identity theory lends further support to this notion, in that individuals in part derive their identities from the social groups to which they belong, in this case, work groups. As a result, group members will develop similar work-related attitudes as their interactions with each other influence and shape how they collectively interpret organisational activities (Hogg and Terry, 2000; Nishii et al., 2008). By this rationale it also follows that individual sub-units can implement policies slightly differently, giving rise to different perceptions regarding service climate across sub-units within an organisation (de Jong et al., 2005). Indeed, Schneider and Bowen’s (1985) research into employee perceptions in a retail bank found significant differences across different branches located in different geographic areas. The researchers attributed these differences to distinctions in the way organisational policies and procedures were operationalised at each branch. Casino hotels are typically very large establishments, operating multiple departments on shift, so it would be reasonable to expect differences in the perceptions of employees from different departments. To explore this, we propose the following hypothesis: H2: Significant differences exist between the service climate perceptions of casino and non-casino employees. Service climate, although measured by some as a unidimensional construct, more frequently consists of a series of dimensions and continua across a range of service-related components. The existence of a service climate depends on certain foundation issues related to the work context (such as internal service quality received from co-workers, for example) as well as on general facilitative conditions (for example, human resources practices) (Paulin et al., 2006). It is the sum total of all these servicefocused dimensions that determines an organisation’s orientation, positive or negative, towards service excellence (Schneider et al., 1992). In research conducted across a range of industry types, Lytle et al. (1998) identified four broad practices that influence an organisation’s orientation towards service: leadership; human resource management; service systems; and the service encounter itself. Knowledge of which service climate dimensions are integral to key customer outcomes can provide managers with guidelines for which areas of organisational functioning to concentrate on improving. Looking at internal outcomes, Varela González and García Garazo (2006) collected data from Spanish hotels, and found that climate dimensions related to human resources management and the service encounter have the greatest influence on employees’ satisfaction and organisational citizenship behaviours. Also focused internally, a study of Korean hotels by Lee et al. (2006b) found that the dimensions of empowerment, training and rewards positively correlate with desirable employee behaviours and attitudes, such as job satisfaction, organisational commitment and pro-social service behaviours. One study by Solnet and Paulsen (2005) considered the relationship between internal dynamics and external outcomes. In research conducted in the Australian hotel industry, they found that the dimensions of customer treatment

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and service failure prevention were among the strongest predictors of customer satisfaction. Building on the notion that differences in perceptions will exist across departments, and then incorporating the multi-dimensionality of service climate, we will also explore this final hypothesis: H3: The service climate dimensions that best predict customer satisfaction will differ for casino and non-casino employees. 3. Method 3.1. Sample and procedure Data for this study was collected from the employees and managers of an Australian casino and hotel. The researchers approached the head of the Human Resources department at the casino hotel and were granted authorisation to conduct a survey of employees as well as face-to-face interviews with key managers from operational departments. This casino hotel is one of the largest hotels in Australia, with a permanent staff of over 2000 employees. In order to ensure the largest possible sample with the least amount of administration, a convenience sample was used. The data collection involved approaching employees in the staff cafeteria while they were on their meal breaks and asking them to fill out the survey in return for a small incentive. The data collection period lasted 8 days. A total of 350 surveys were collected, although 47 were returned incomplete, representing a final result of 303 complete surveys. At the time of data collection, the hotel casino employed 2158 staff, indicating a survey response rate from the entire population of 14%. Following the initial quantitative data collection process, oneon-one interviews were conducted with a selection of managers from the three major operational departments, in order to provide insight into the particularities of employee and customer experiences in a casino hotel environment. Key insights gleaned from these interviews will be presented in Section 5 where appropriate.

satisfaction measure is reliable across a range of industries and service settings, and is more reliable than a single-item measure (Wirtz and Lee, 2003; Eroglu and Machleit, 1990). Levels of customer satisfaction were measured using employee perceptions. It has often been noted that the ‘boundary-spanning’ employees of a service organisation are often best placed to judge the quality of the services the customers are receiving (e.g. Schneider et al., 1980; Sergeant and Frenkel, 2000). Social network theorists (e.g. Granovetter, 1973; Krackhardt, 1992) have long emphasised the effects of contact frequency between two parties. Research conducted by Nelson (1989) at multiple levels of analysis found that increased contact frequency was a significant predictor in shared attitudes. This frequency of contact leads to “vicarious experiences of each other’s behaviors, the mutual exercise of influence and – through other social information processes – the development of similar opinions, beliefs and attitudes” (Dietz et al., 2004:83). Given the high contact service setting in which the current study was conducted, it was considered feasible that employees’ accounts could serve as a realistic substitute for actual customer opinions. Indeed, there is noteworthy previous empirical research that has demonstrated a positive link between employee and customer perceptions of service quality (Schneider and Bowen, 1985; Wiley, 1991). In a comprehensive study of the relationship between components of service climate and facets of customer satisfaction based on a sample of 538 customers and 7944 customers across 57 branches of a large bank, a significant positive relationship was found between employee perceptions of customer attitudes and customer reports of satisfaction. From these results, Johnson (1996) surmised that employee perceptions could serve as a time-effective and cost-efficient proxy of actual customer attitudes. Further, this methodology has been adopted in a service climate study conducted in the Australian hotel industry (Solnet and Paulsen, 2005), as well as in a cross-industry study that included hotels in South Africa (Browning, 2006).

4. Results

3.2. Measures

4.1. Sample characteristics and reliability analysis

The questionnaire utilised in the current study comprised three parts. The first segment addressed demographic variables, the second part explored the perceived service climate of the organisation and the third asked employees their opinions of the level of satisfaction of the organisation’s customers. The first six items were demographic in nature, with the remaining 42 items measured on a 7-point rating scale (1 = strongly disagree; 7 = strongly agree). Service climate measure. To measure service climate at the hotel casino, Lytle et al.’s (1998) validated 35-item scale was used – the full description of the measures is available in the original publication. The scale has been used in other recent studies of organisational service climate, including a study conducted in the Australian hotel industry (e.g. Solnet, 2006; Solnet and Paulsen, 2005; Lynn et al., 2000). Instead of simply obtaining an overall perception of service climate, the scale measures service orientation along ten dimensions, with between two and five questions for each dimension. The ten dimensions are ‘Servant Leadership’, ‘Service Vision’, ‘Customer Treatment’, ‘Employee Empowerment’, ‘Service Training’, ‘Service Rewards’, ‘Service Failure Prevention’, ‘Service Failure Recovery’, ‘Service Technology’, and ‘Service Standards Communication’. Example items for each dimension are included with the reliability statistics presented in Table 2. Satisfaction measure. Customer satisfaction was measured using four questions that were worded differently but essentially had the same meaning. The validity of single-item measures is a subject of constant debate, and there is evidence that this form of customer

Descriptive statistics of the sample are presented in Table 1. It should be noted that, despite the convenience sampling technique used, the breakdowns in the sample by gender and by department are representative of the actual breakdowns within the staff population of the casino hotel. Cronbach’s alpha was calculated for the total, 35-item, service climate scale, with a result of 0.97, an indication that the reliability of the scale is high. Although the scale has previously been tested for reliability, it was considered appropriate to repeat the tests given the unfamiliar casino hotel context. As Lytle et al.’s (1998) SERV*OR scale is designed to measure ten unique dimensions of service orientation, Cronbach’s alpha was then calculated for the items that compose each individual dimension. Again, the results were strong, and are displayed in Table 2. Although the reliability coefficients presented in Table 2 are all higher than the generally accepted minimum reliability level of 0.7 (Dewberry, 2004), caution should be taken that some of the dimensions are limited because they are only two-items, namely ‘Employee Empowerment’ and ‘Service Rewards’. In such cases, it is quite possible to get a high reliability coefficient as the items are measuring an inter-related construct, but they may also be measuring a small part of that construct which the data fails to identify. This is known as ‘bloated specifics’ (Cattell, 1966). Interestingly, both two-item dimensions display the lowest alpha levels of all the dimensions. Finally, the alpha coefficient was calculated for the 4-item customer satisfaction scale (this collapsed scale is hereafter referred to as Overall

A. Kralj, D. Solnet / International Journal of Hospitality Management 29 (2010) 711–719 Table 1 Sample demographic statistics. Variable

Frequency

%age

Table 3 T-test results: differences in perceptions of service climate dimensions between employee groups. Casinoa

Age Under 20 20–29 30–39 40–49 50 or over

21 124 88 44 26

6.9 40.9 29.0 14.5 8.6

Gender Male Female

140 163

46.2 53.8

67 29 64 87 56

22.1 9.6 21.1 28.7 18.5

Department Food and Beverage Hotel Casino Other

111 60 110 22

36.6 19.8 36.3 7.3

Employment status Casual Permanent part-time Permanent full-time Salary Contract/agency

118 73 85 25 2

38.9 24.1 28.1 8.3 0.7

Tenure Under 6 months Between 6 months and l year Between 1 and 3 years Between 3 and 10 years 10 years or more

Satisfaction). This scale also presented a high reliability score of 0.94. 4.2. Data analysis In order to test Hypotheses 1a, 1b, and 1c, the correlation coefficient was calculated between ‘Overall Service Climate’ (the collapsed scale computed from all 35 items measuring service climate) and ‘Overall Satisfaction’ (OS). At the organisational level, ‘Overall Service Climate’ (OSC) had a strong and significant positive correlation with OS (r = 0.76, p < .01). When considering only the responses of casino employees, OSC also displayed a strong and significant positive correlation with OS (r = 0.63, p < .01). The same was found when considering only non-casino employees (r = 0.69, Table 2 Cronbach’s alpha – service climate dimensions. Service climate dimension Example of item

Cronbach’s alpha

Customer Treatment

0.86

“Employees go to the extra mile for customers” Employee Empowerment “Employees often make important decisions without seeking management approval” Service Technology “Technology is used to build and develop higher levels of service quality” Service Failure Prevention “We go out of our way to prevent customer problems” Service Failure Recovery “We provide every customer with a written service guarantee” Service Communication “Every employee understands all the service standards that have been instituted by all departments” Service Vision “There is a true commitment to service, not just ‘lip service”’ Servant Leadership “Management constantly communicates the importance of service”

0.75

0.92

0.87 0.88 0.87

0.89 0.91

715

Non-casinob

Dimension

Mean

SD

Mean

SD

t-Statisticc

df

p-Value

Treatment Empowerment Technology Prevention Recovery Communication Vision Leadership Rewards Training

4.56 3.33 3.66 4.11 3.67 3.89 3.65 3.95 3.72 4.22

0.99 1.41 1.35 1.30 1.12 1.15 1.36 1.08 1.38 1.27

5.58 4.46 4.46 5.50 4.74 4.92 5.01 5.20 4.92 5.30

0.74 1.24 1.29 0.83 1.05 1.02 1.11 0.97 1.23 1.11

9.40 7.00 5.08 10.09 8.25 7.80 8.89 10.02 7.55 7.44

179.75 203.67 218.13 160.90 215.68 205.21 191.99 207.48 204.91 203.31

.00 .00 .00 .00 .00 .00 .00 .00 .00 .00

a b c

n = 110. n = 193. Equal variances not assumed.

p < .01). Based on these results, Hypotheses 1a, 1b and 1c were supported. Hypothesis 1d aimed to uncover whether significant differences existed in the relationship found between OSC and OS between casino and non-casino employees. To accomplish this, Fisher’s rto-z transformation, a test of significant differences between two correlation coefficients (Shahani, 1969), was conducted. The resulting z-value was not significant (z = 0.86, p = 0.39), thus also lending support to Hypothesis 1d. T-tests were conducted to investigate Hypothesis 2. The mean OSC scores were 3.92 (SD = 0.96) for casino employees and 5.05 (SD = 0.78) for non-casino employees. The OSC perceptions of casino and non-casino employees were compared using independent samples t-tests, and significant differences were found between the perceptions of the two employee groups t (190.07) = 10.54, p = .00. Table 3 presents the results of the independent samples t-tests comparing perceptions of each of the ten service climate dimensions between the employee groups. For each dimension, the casino employees have significantly lower (less positive) perceptions than non-casino employees. The t-test results comparing the perceptions of OSC and individual service climate dimensions across employees from each department confirm Hypothesis 2. To investigate Hypothesis 3, two regression models were generated using stepwise regression, one for each group of employees. In each model, OS was the dependent variable and each of the ten service climate dimensions were entered as the independent variables. Multicollinearity between explanatory variables was not a main concern for this study, as all VIF values were less than 3. A statistically significant model was obtained for both employee groups. Table 4 summarises the effects of service climate dimensions on OS, based on employee group. The casino model accounted for 55% of variance in OS, while the non-casino model explained 57% of the variance in OS. For both casino and non-casino employees, four service climate dimensions were retained as significant predictors of OS in the models. However, the only service climate dimension that was a significant predictor in both models was ‘Customer Treatment’. For casino employees, ‘Service Failure Recovery’ was the greatest predictor, followed by ‘Customer Treatment’, ‘Employee Empowerment’ and ‘Service Technology’. For non-casino employees, ‘Service Vision’ was the greatest predictor, followed by ‘Servant Leadership’, ‘Customer Treatment’ and then ‘Service Failure Prevention’. The inconsistencies in predictor dimensions across the two groups of employees lend partial support to Hypothesis 3. Interestingly, for casino employees, the service climate dimension ‘Employee Empowerment’ is inversely related to OS. It would usually be surmised that empowered employees would be positively related to customer satisfaction. In the casino context

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Table 4 Regression models: service climate dimensions that predict customer satisfaction. Unstandardized coefficients

Standardized coefficients

Predictors

B

Std. error

Beta

t-Statistics

p-Value

VIF

Model statistics

Casino employees Recovery Treatment Empowerment Technology

0.543 0.302 −0.211 0.193

0.091 0.086 0.660 0.080

0.539 0.266 −0.266 0.232

5.991 3.494 −3.200 2.405

.000 .001 .002 .018

1.926 1.380 1.640 2.215

F: 33.114, R2 : 0.558

0.305 0.194 0.165 0.155

0.055 0.063 0.072 0.073

0.388 0.216 0.139 0.147

5.541 3.070 2.276 2.114

.000 .002 .024 .036

2.182 2.200 1.668 2.160

F: 64.050, R2 : 0.577

Non-casino employees Vision Leadership Treatment Prevention

however, there are two factors that would contribute to such an inverse relationship. First, the working environment is highly regulated and supervised and as a result employees are not given latitude to make their own judgements in order to remedy service situations. Second, fair and transparent outcomes for the customer would in part depend on consistent and universal application of rules. As employee empowerment increases, customer satisfaction would decrease. It could be that the casino environment is one where employee empowerment is not a critical human resources success factor. 5. Discussion and conclusion The over-arching research question, that of whether a positive relationship exists between service climate and customer satisfaction in a casino hotel setting, was answered in the affirmative. Further, regardless of the department within the casino hotel that an employee belongs to, the relationship between perceived service climate and customer satisfaction is still significant and strong. As customer satisfaction has been demonstrated to link with key business performance indicators such as profitability, word-of-mouth behaviours and return intentions (e.g. Tornow and Wiley, 1991; Rust and Oliver, 2002; Rucci et al., 1998; Spinelli and Cavanos, 2000), the positive and significant relationship between service climate and customer satisfaction found in this study underscores the importance of creating an internal climate for service in the quest for competitive advantage in casino hotels. While this broad initial finding has its merit, the corroboration of the hypotheses that notable differences exist between the perceptions of casino versus non-casino employees warrants further attention. It is one thing to state that a positive service climate will lead to positive levels of customer satisfaction in a casino hotel, as has been found in other industries, yet it is another to truly understand the underlying processes that are necessary to develop such a service climate. It is affirmed from the divergence of opinions between the different sections of employees in this case study that the internal dynamics of an organisation do generate varied attitudes and opinions in employees. It is necessary to understand how and why these differences develop before being able to effectively manage the internal climate of an organisation. This study found differences in the service climate dimensions that best predicted customer satisfaction across the casino and non-casino employees. The only dimension that was a consistent predictor for both groups was ‘Customer Treatment’. A closer examination of this dimension reveals that it concentrates on how the employees themselves deal with the customer, rather than how the organisation’s systems serve the customer. It has been argued that, when making assessments of customer satisfaction, employees often attribute more importance to the ‘moments of truth’

that they directly deliver than to the underlying service processes that enable service delivery (Grönroos, 1998, cited in Solnet and Paulsen, 2005). This is reflective of the defensive attribution process – whereby people will attribute good results to the things that are within their control, and bad results to the things others control (Campbell and Pritchard, 1983). Further, this is consistent with the notion that customers equate service quality with the employee who delivered the service (Schneider and Bowen, 1985). Given that this finding is none too surprising, it is the differences, rather than the similarities, between predictor dimensions across employee groups that reveal more interesting insights about the internal dynamics of this casino hotel. For non-casino employees, ‘Service Vision’ was the greatest predictor of customer satisfaction. This dimension forms part of the ‘Service Leadership Practices’ category of Lytle et al.’s (1998) service orientation. It can be argued that service climate begins with an organisation’s service vision, and this vision is reinforced through the service leadership that is practiced by its management. Hu et al. (2009) argue that delivering increased service quality necessarily involves ensuring that a hospitality organisation’s employees fully understand the goals of the company. It could be inferred from the results of this study that the non-casino employees at least are aligned with management’s service vision. In contrast, the service climate dimension ‘Service Failure Recovery’ was the greatest predictor of customer satisfaction amongst the casino employees. Service failures in a casino context overwhelmingly mean outcomes that are to the financial detriment of the customer and, left unaddressed, could constitute serious regulatory breaches on the part of the casino. Naturally, rectifying such service failures efficiently and effectively has a sizeable impact on customer satisfaction. That employee empowerment is negatively related to customer satisfaction for casino employees was indeed a significant finding, and lends more weight to the argument that human resource procedures cannot be applied universally regardless of context, even within the one establishment. Another major finding of this study was that casino employees had lower (more negative) perceptions of service climate than employees from the non-casino departments. Individual interviews with operational managers at the casino hotel confirmed this finding. Generally, the non-casino managers spoke of positive and ‘engaged’ attitudes from staff towards the organisation and its service orientation which resulted in largely harmonious working relationships. In contrast, the casino managers spoke of a prevailing ‘us and them’ relationship between staff and management, and some comments were made that organisational initiatives would often be viewed negatively or even suspiciously. Indeed, the casino employees were highly unionised and had, according to one account, been involved in industrial action at some stage in the past, while the non-casino employees were more indifferent toward the union.

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The casino managers suggested various reasons for why the segregated stance had developed between staff and management. One such reason was the ‘politics’ of shift work – to a large extent, staff were not able to choose their working hours, and the shift work nature of the casino demanded a 24-h rotating roster for many. Exceptions to this rule were sometimes granted for a variety of reasons, often seemingly arbitrarily, which would be a constant source of friction. The repetitious yet well-paid nature of the job was another reason cited – the casino employees would earn less money if they were to choose a different job, yet there are few opportunities for advancement if they stay. The general feeling amongst all managers interviewed is that casino employees held the organisation ‘to blame’ for their situation, with resultant effects on employee attitudes, perceptions and attributions regarding organisational strategies. There are very few studies that have specifically dealt with working life in casinos, or the experiences, attitudes and behaviours of casino employees. Wittmann (2006) conducted a series of interviews with casino employees in Mississippi and reported the recurring themes of the repetitive yet well-paid nature of the job, exposure to gambling, the existence of a social ‘casino family’, a sexualised working environment, and an ‘us and them’ attitude towards management. Bai et al. (2006) found a neutral level of organisational commitment and an only slightly positive level of employee satisfaction in the one Las Vegas casino they studied. They attributed the findings to poor communication between management and front-line staff as well as limited employment engagement strategies. In Macau, Kale (2007) argued that casino employees are paid better than employees from other industries, and as a result the job attracts a wide range of candidates who may not be best suited to the position, or aligned with a casino organisation’s goals in terms of high quality service delivery. While the findings of these isolated studies certainly resonate with the results of the current study, the paucity of work in this area merely highlights the need for further investigation into the internal organisational dynamics of casinos and resulting employee attitudes and behaviours. 5.1. Managerial implications Leaving aside for a moment the differences in working environments and perceptions of the casino and the non-casino employees and concentrating instead on the similarities, the results of this study would suggest that customer satisfaction is highly dependent on the treatment of the customers by the employees. The results also demonstrate the relationship between internal organisational dynamics, i.e. a climate for service, and customer satisfaction, an important business outcome. Developing a service climate, where management and customer goals are in congruence, will provide employees with the resources and support they need to dedicate their attention to fulfilling the customers’ expectations. While this finding in itself is not new, it is the first time it has been applied to the casino context. The underlying implication is that service can be applied as a source of competitive advantage in the casino industry, and given the magnitude of expansion in the industry, service quality is likely to quickly become a central concern. At this stage, all that exists is an intuitive link between HRM and climate, as theory to explain the responsible mechanisms for how climate develops in an organisation is currently lacking (Bowen and Ostroff, 2004). Schneider et al. (1998) did, however, identify two critical conditions that must exist as a platform in order for a climate for service to develop in an organisation. First, departments must serve each other well internally; and second, internal systems must facilitate work without obstacles, whether they be from resource restrictions or unsupportive supervisory and/or HR practices. In other words, if inter-departmental support is high, and the

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entire organisational strategy is oriented around facilitating service delivery, the foundations exist for a positive climate for service. As tempting as the low set-up costs may appear, managers are advised to avoid the “coffee mugs and posters” approach to improving service quality, as such superficial programs will have no lasting effect on organisational outcomes (Schneider, 2004:149). Not only does there need to be a match between vision, mission and reality, managers’ actions must also align with the prescribed organisational vision and mission (Dickson et al., 2006). This broad approach to developing a service climate does not take into account the contextual nuances of individual industries and organisations. Casinos are, by their very nature, large and complex establishments employing a multitude of staff, who execute very diverse roles, around the clock. The current study alludes to influencing factors that impact on the employment relationship of casino employees that are possibly unique to the job. The clear divergence in perceptions of casino and non-casino employees in this sample emphasises that implementation of organisational policies and procedures is susceptible to variation across departments, and employees in different areas are likely to perceive their environment differently to others. Research into human resource management has highlighted the differences in attitudes and perceptions of different employees within a firm, and that human resource policies and practices cannot be universally applied within a firm to gain the same behavioural outcomes from all employees (Conway, 2004). The results of this study highlight the need for management to tailor policies, or at least the implementation of policies, for each department, so as to gain the desired impact on service outcomes. This would include improving communications in order to avoid HR practices being misinterpreted – the regular conduct of surveys and discussion groups can help reduce the gap between what management intends and what employees actually experience. 5.2. Limitations and directions for future research Designed as an exploratory research case study in order to encourage a new focus for the study of casino management, this study offers many opportunities and directions for future research. First, a replica study could be conducted in multiple casino organisations, both within one country, and across different casino destinations. Secondly, future studies could survey the opinions of employees on service climate, matched against the opinions of actual customers with regards to their satisfaction. A third direction for future research is to investigate the impact of specific HR strategies and/or practices on generating service climate. This study considered the overall relationship between service climate and customer satisfaction, without considering the mediating effect of employee variables such as satisfaction, organisational commitment or service performance – future research could include such variables. Given the salience of employee perceptions in this field of research, a further research direction that would be interesting to investigate is the attributions employees make with regards to why organisations implement the HR practices that they have, and how this impacts on perceptions of service climate, and then, customer satisfaction. With sustainable long-term profitability being an ultimate goal of any business, it would also be valuable to link internal service climate with external customer satisfaction and explore their effects on important financial measures such as revenue generation and profit margin. There were three limitations of the present study. First, the research focused on a single casino hotel therefore results may not be generalisable to other casino hotels. Second, the use of convenience sampling may have produced a sample that was not representative of the population. Third, the use of employee responses to measure customer satisfaction, although supported

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