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  • Subject Name : Human Resource Management

Human Resource “HR” Determinants of Customer Satisfaction from a Customer-Based Perspective: An Empirical Study of an Engineering Consulting Firm “ECF” in Sydney - Australia

Acknowledgment

I would like to express my gratitude to the administrators at The Lebanese Canadian University as well as The University Jean Monnet with a special thank you to my thesis supervisor, Prof. Maud Damperat, for her continual support, guidance, and feedback throughout the completion of this thesis.  The friendliness and advice given by Prof Maud are greatly appreciated and will always be cherished.

I am thankful to the financial and moral support made available to me by the Board of Australian Consulting Engineers P/L and their believe in me and my leadership.  A special thank you to all the Seniors who participated in Qualitative analysis.

Special thanks to all my friends and colleagues and especially clients for their patience and understanding.  A special Thank you to Dr. Michel Chaaya, Dr. Kholoud Al Kayid, Carla, Eliza and Terrence for their friendship, assistance and support

I would also like to express gratitude to all the questionnaire respondents who took the time to complete my survey.  It is with their submissions that the results of this study were able to be analysed.

Special thanks to my family in Australia and Lebanon especially to my Sister Dr. Elham Hasham for her encouragement and appreciation of my study.

Warm thoughts to my three precious daughters, Chelsea, Chanelle, and Christelle.  You are my happiness in life.  Thank you for your understanding, love, and support.

Abstract

The retention of clients is essential to the success of any business. With the rapid growth of the construction industry, engineering consultancy firms (ECFs) are beginning to study this area of business to determine the best customer retention strategies.

The aim of this research is to determine how the behaviour of engineering consultants effect client satisfaction and whether this satisfaction leads to client retention and positive word of mouth.  Furthermore, this research aims to shed the light on how the human resource “HR” of a company can influence Customer Satisfaction from a Customer-Based Perspective.Employees’ Motivation may be linked to promoting Clients’ Satisfaction in Small to Medium Engineering Consulting Firms (SMECFs) in the Sydney Basin, Australia. A literature review was undertaken on determinants of customer satisfaction which identified five important behavioural characteristics of engineering consultants. 

Furthermore, this research aims to show how a satisfied workforce will be motivated and will establish rapport to achieve the organisational goals of success and thus improves client relationships and promotes client Satisfaction. An engineering consultancy firm based in Sydney, was used as a case study and a qualitative study was conducted with the aid on some of their Senior engineers and managers to further understand what they believe effects customer satisfaction based on (HR) determinants.  A matrix was established based on their individual response and several questions were added to the Client/Customer Survey.

A questionnaire was designed and distributed to various clients of engineering consulting firms, such as architects, builders and project managers, in Sydney, Australia. This thesis performed a Structural Equation Model (SEM) analysis on hundreds of validated and returned samples in order to investigate the effects that the human Resource (HR) determinants of engineering consultants caused on client satisfaction, as well as the impact of client satisfaction on client retention and word of mouth reputation for engineering consulting firms (ECFs)

Introduction

Context

The construction industry is one of Australia’s fastest growing industries and as a result, the engineering consultancy market has become increasingly competitive. One of the main factors that determine the success of a consulting firm is their clients’ satisfaction (Hecker 1996).  It is therefore important for any organisation to make their customers satisfied as it may lead to ongoing loyalty, repeated business and creating a positive brand for the organisation

The most important resources of an organization are its employees.  Their contribution to the company’s image is very crucial in determining the views that clients keep in mind while thinking about the organization behaviour and actions.  Companies invest great capital to earn the loyalty of their clients, but they sometimes neglect the crucial part of employee motivation and how it needs to be increased to achieve the company’s non-monetary and economic objectives.

According to Akroush and Abu (2012), in today’s market atmosphere where there is so much competition, firms carry out market research to find out the preferences of customers.  Organizations keep close watch on the priorities of the customers and monitor their satisfaction levels so that they can improve their services.  They go on to explain that higher levels of customer satisfaction lead to customer loyalty.  Thus, employees must have the required professional skills so that they can answer all the questions asked by the clients.

Indeed, the customer has a perceived expectation and it is a major factor which effects client satisfaction (Lam et al. 2004).  Some firms may neglect employee motivation, but research has found that the satisfaction of the employee has contribution to the satisfaction of the customer.  Employees should be able to attend to clients’ needs and resolve problems efficiently.  Motivated employees will produce better results in this respect in comparison to discontented employees.

Engineering consultants deal with a variety of clients in their profession. Therefore, it is important that engineering consultants can understand the determinants of client gratification in order to improve their likelihood of project success in the short-term and continual business opportunities in the long-term.

There is much research about the determinants of customer satisfaction, however, they typically focus on product determinants, such as price and quality (Rashvund & Majid, 2014).  Although the concept is similar, client gratification differs from customer satisfaction in that there exists a relationship aspect with clients (Surbhi, 2017). Research investigating the behavioural dimensions of engineering consultants and their impact on client gratification are limited. By understanding how an engineering consultant’s behavioural dimensions impact client gratification, they may make decisions on how to better conduct themselves in their relationships with clients in order to improve the likelihood of project success.

Moreover, according to Homburgh and Rudolph (2001), the relationship between the customer and the respective ECF personnel (contractor) develops a multi stage complex where the parties in business work at the same time and cooperate with respect to in-group networks as depicted in Figure 1.1.  This shows that customer satisfaction can be regarded as a relation specific concept rather than a transaction specific one.  Consequently, the conventional form of consumer relationship models that are being applied in manufacturing various products will not bring forth good results.  The co-operation that exists between the ECF personnel (contractor) and the customer is given prime importance. The customer’s input has a good deal of implications for the outcome of a project. The alteration in project organisation and the difference in each project creates difficulties in understanding the feedback of the customers in the upcoming projects.   Furthermore, they suggest that all the firms in the business supply chain acts as both supplier and customer, and their value creation is the most vital component in the accomplished projects.

Imagine showing the consumer relationships and the group of interactions in the supply chain

Figure 1.1: Consumer relationships and the group of interactions in the supply chain

Source: Homburgh and Rudolph (2001)

According to Stefan and Dogaru (2012), to consider the proper function of the manager, it can be said the factors involved constitute an appropriate style of driving, motivating the middle and lower level employees and developing/carrying on a warm relationship.  Such factors are crucial for leadership and are considered as the ability of the driver to acquire performance on the part of subordinates on individual basis in an organisation.

Employees should perform significant roles in earning clients’ trust.  Companies are facing not only local but also international competition, and thus must invest in implementing more sophisticated technology and developing new products to ensure clients’ satisfaction.  Accordingly, companies need to hire professional consultants and encourage separate departments for brainstorming strategies to deal with competition.

Research Problems and Importance of Research

The present study will evaluate the association between employee motivation and customer satisfaction in ECFs. The research findings of the study will help in finding evidence regarding the relationship between both the variables which will help the organizations in taking adequate steps for attaining desired level of employee satisfaction which will eventually help the organization in improving the reputation of the organization in the business environment.

The findings of the study can prove to be helpful for the employers and the top management of the ECFs. The findings of the study will also increase the base of knowledge in the present literature and will help the further researchers in validating the results for the other organizations in the business environment. The study holds importance for the ECFs because employee motivation and customer satisfaction are important determinants of the success of the organization. Therefore, the study will help the organizations in aiming the objectives of increase in productivity, employee motivation and customer satisfaction of an organization. 

Epistomology

The researcher has adopted the approach of educational research wherein the stream of employee satisfaction and client retention has been introduced as an inquiry to research. In the current research, the area of research will be defined and data will be employed in order to find answers for the questions related to the area of enquiry (Brown 2017)

While analysing the data collection, deductive approach will be employed in order to find specific answers to the research questions. The deductive approach will help the researcher in reaching to a specific conclusion that will increase the knowledge spectrum of the researcher regarding the field of client satisfaction and retention (Fernandes et al. 2017). The findings of the study will also prove to be useful for the readers in collecting information about the important concerns like employee retention in the organizations. 

One of the criterions of ensuring the quality of the research findings is ensuring the validity of the data involved in the analysis process. Data quality is an important factor that can impact the quality of the research findings. Therefore, in order to increase the validity of the research findings of the current study the secondary data has been retrieved from authentic data sources including peer reviewed journal articles. One of the factors that increase the validity of the research findings is the use of pragmatic approach throughout the study (Shaw 2017). Pragmatic research approach is the recommended research approach for the research studies based on topics related to the field of social science.

Research Objectives

  • To investigate the literature pertaining to the instigators of client gratification for engineering consulting firms (ECFs).

  • To develop a model that links the causal relationship between the instigators of client satisfaction with customer retention and “word of mouth” reputation.

  • To investigate if client satisfaction increases the likelihood of customer retention and improved organisational reputation through “word of mouth” for ECFs.

  • To provide a set of recommendations for engineering consulting firms to improve their client satisfaction and retention.

Research Questions

  1. What theories can be applied to Small to Medium Engineering Consulting Firms in order to achieve better performance results?

  2. What is the causal relationship between the Behavioural Dimensions of Engineering Consulting Firms and Client Gratification?

  3. What is the link between Client Satisfaction, Client Retention, and “Word of Mouth” reputation?

  4. What benefits can Engineering Consulting Firms (ECFs) achieve from understanding the instigators of client satisfaction?

Literature Review

In order to conduct a research study, it is important to develop a strong theoretical base in order to understand the present concepts on the research topic and find a research problem to be studied in the current research work. Employee Motivation and Customer Satisfaction are two vitals concerns of an organization. The organizations are increasing their efforts in order to ensure the harmony between Employee Motivation and Customer Satisfaction in the organization in order for increasing the chances of its success.  Various research studies have been conducted in order to determine the factors that influence the motivation level of the employees.  However, all these studies use the theories as their bases.  This research study also uses Stewardship Theory, Entrepreneurship Theory and Maslow’s Hierarchy of Needs Theory as its bases (Zaleznik 1997). All the mentioned theories helped the researcher in understanding the concept of employee motivation and determining the factors than can impact the motivation level of the employees as well as concentrating on customer satisfaction.

All these theories identify various factors that influence the satisfaction level of employees in the organization. The theories also helped in understanding the association between the company performance and employee satisfaction. The theories depict the importance of employee satisfaction in achieving the desired objectives of the organization along with ensuring the success of the organization (Zainol et al. 2016). However, the theories present on the research topic were only able to understand the background of the research and do not concentrate any one organization or industry. The present study will help in understanding the concept of employee satisfaction along with its association with customer retention in the organization. Also, the target group of the current research study is Engineering Consulting Firms (Yukl 1989). The findings of the current research study will provide validation for the results of the theories and will also increasing the already base of knowledge on employee satisfaction. 

There are various theories that depict and define the various factors that influence the motivation level of the employees in the organization. According to the Stewardship Theory, there are certain motivational factors that impact the motivation level of employees in the organization (Swarnalatha and Prasanna 2013). The theory states that are certain psychological and sociological factors that impact the motivation level of the managers in the organization. The findings of the theory suggest that managers look for opportunities to grow and achieve higher level of personal development along with self-actualisation while working in the organization. The theory helps in understanding and characterising the motivational factors of managers.  Therefore, the findings of the current study will help in validating the results of the Stewardship Theory.

Another theory is Entrepreneurship Theory which states that employees of the organization tend to increase the chances of success of the organization. The Entrepreneur Theory is defined as the process of the transformation of employees into successful entrepreneurs aligning themselves with the overall goals of the organization.  Such motivated employees create opportunities thereby contributing to organizational success. Several factors influence Entrepreneurial Motivation of employees. Entrepreneurs tend to increase the innovative capability of the employees and helps the organizations in attaining competitive advantage in the business environment. The study states that there are various internal and external factors that influence the motivation level of the employees. According to the theory motivation level of the entrepreneurs can directly contribute to the performance and profitability of the organization. According to the theory when the employees get motivated, they tend to increase their contribution towards the organization. The motivation of the employees is reflected in the increased productivity and positive attitude towards the objectives and goals of the organization. The statements of the study depict that it is important for an organization to increase the motivation level of employees in the organization in order to maintain the innovative capability of the human resource of the organization.

The findings of the current research will further increase the base of knowledge and will also help in finding the association of employee satisfaction with the customer retention (Venkataraman et al., 2019).  However, the research problem of the current research is an extension of Entrepreneur theory because the theory depicts that employee satisfaction can greatly have positive impact on the profitability of the organization which makes it important for the employees to give chances to the employees to be indulged in entrepreneurial activities like self-fulfilment, independence, wealth, and various desired outcome.

Scholars have been studying motivation of employees and customer satisfaction in different industries. Literature has rarely focused on analysing the relationship between clients’ satisfaction and employees’ motivation in ECF. There is paucity of data that focus on motivational factors for managers, with most of the existing research on managers focusing only on executive compensation (Zain and Saidu 2016). 

Managers are at the core of the implementation of policies outlined by the board of directors as they develop tangible strategies in order to put the plan into practice. Managers are also closer to employees, and as such, they have a greater influence and impact on job performance (Yoon and Suh 2003). Client satisfaction is often an inevitable result of the quality of service that has been rendered and the satisfaction derived thereafter. Therefore, it is the duty of the board and senior management to put in place a system that can effectively motivate employees in order to achieve the customer satisfaction.

Research Methodology

In the first step, the research problem will be identified. The research will focus on establishing whether or not there is a link between clients’ gratitude and managers’ motivation. Although an extensive study has been conducted to examine the motivational factors of employees, very few studies have undertaken a detailed evaluation of the influence of managers’ performance on clients’ gratitude. Against that backdrop, this research seeks to fill the knowledge gap in the particular field. Writing a problem statement is useful in that it will help facilitate the attainment of the objectives of the research study in its entirety.

In the second step, the approach relevant to the current study will be adopted. According to Saunders, Lewis and Thornhill (2015), the two critical approaches to research include deductive and inductive reasoning. Given that this research study will focus on both qualitative and quantitative aspects, it will adopt deductive as well as inductive reasoning. Through deductive reasoning, the endeavour is to develop multiple hypotheses from existing data sourced from literature reviews. Since the research entails making an observation of people’s diverse behaviours, an inductive approach will be adopted in order to better understand the behaviour of managers and establish its link with clients’ gratitude.

In the third step, the most effective research design will be adopted after examining the different types of research designs, before selecting one that is deemed most effective in obtaining pertinent data specific to this research. Meanwhile, this study will use a mixed methods research to analyse the causality and correlation between clients’ gratitude and managers’ motivation. 

In the fourth step, data and other concomitant information pertaining to the motivation of managers would be collected. A survey questionnaire would be selected due to its efficiency and effectiveness in collecting data. More specifically, the selection of a survey questionnaire also attributed to the fact that it would facilitate easy collection of respondents’ feedbacks through web-based survey questionnaires, such as Google Forms and SurveyMonkey via Electronic Document Management (EDM). Another rationale behind the usage of a survey questionnaire is because it can be easily analysed and accommodates larger sample sizes, i.e. 200 respondents. Questions will be developed to test each hypothesis, before being coded on a seven-point ordinal Likert scale with interval measurements.

In the fifth step, data analysis will be conducted using SPSS Statistics and SPSS Amos software programs. More specifically, a descriptive analysis will be adapted to analyse the demographic variables, whereas internal consistency will be measured through the usage of reliability and standard deviation tests. Structural equation modelling (SEM) will be used for the inferential statistics, utilising confirmatory factor analysis (CFA) in order to determine the validity of the various domains of the theoretical framework and confirm the model of hypotheses. Meanwhile, SEM will be structured in such a manner that it follows four vital steps: development of a theoretical model, construction of a path diagram of causal relationships, conversion of the path into a set of structural and measurement models to assess the identification of a structural model, and evaluation of the goodness of fit (Hu et al. 2019).

In the sixth and final step, the findings will distinguish factors that are significant to the motivation of managers from those that are not and also clearly reveal factors that have a greater influence on clients’ gratitude.A sample of 13 was selected in order to identify the factors motivating and impacting the customer satisfaction from the services offered by the organization. Face to face interview was conducted with the 13 respondents.

Results

The findings of the interview will help in identifying the perception of the customers regarding the quality of the products offered by the organization. The interview conducted will also help in estimating the efficacy of ACE engineers for obtaining client satisfaction.

Discussion and Conclusion

The conclusion of the research will be derived on the basis of the findings of the literature review and the findings of the quantitative analysis done.

Limitations and Directions for Future Research

Appendices

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