Enhancing Employees Service Recovery Performance through Trust- Based Management Working Paper In recent years, researchers have paid particular interests in brand orientation, which is the inside-out approach seeking to protect the brand identity (Urde, 1999). This highlights the role of employees in enacting the core brand values embracing its identity. These values reflect the understanding of basic brand concepts which are interpreted into rules/norms that guide behaviours (Baumgarth, 2010). Line managers or supervisor s behaviours have been considered one of the crucial antecedents of employees brand-supporting behaviours (e.g. Wieseke et al., 2009). Existing research has not explored this under the light of service recovery situations although studies have argued that customers whose dissatisfactions are addressed and solved correctly tend to have a higher level of loyalty than those who are satisfied first time round (e.g. Magnini, et al, 2007). Similarly, studies from the leadership theory have investigated the effects of leadership behaviours on followers trust in their leaders and their performance. They were not in the service recovery context nor addressed employees trust in corporate brand. This study endeavours to address this gap by drawing on the distinction between two fundamental approaches to leadership: transactional leadership (TRL) and transformational leadership (TFL) (Bass, 1985). The crucial concept that ties the proposed framework of this study is the notion of employees trust in their line manager and in their corporate brand. The social identity theory (Ashforth and Mael, 1989) is drawn upon to derive the hypotheses about the working mechanisms of these two leadership styles. Brand-specific TRL and TFL Mohart, Herzog and Tomczak (2009) have furthered Bass s (1985) original conception of TFL and TRL towards brand-specific nature of leadership behaviours in an attempt to understand leadership as an antecedent of the specific outcome of follower brand-building behaviour. This domain-specific leadership behaviours seem to be valid when Mullen and Kelloway, 2009) argue that leaders should be task-specific to ensure the success of the outcomes (in other domain-specific versions of TFL, see Barling, Loughlin, and Kelloway, 2002). Based on the leader characteristics of TRL and TFL (see Bass, 1985; Podsakoff et al., 1990), brand-specific TFL is defined as a leader s approach to motivating his or her followers to act on behalf of the corporate brand by appealing to their values and personal convictions (Mohart et al., 2009: 123). Therefore, this study argues that brand-specific TFL will a) act as a role model in living the brand, b) articulate a compelling and unique brand vision that arouse the personal involvement and pride in the corporate brand, c) make followers to rethink their jobs from the perspective of a brand community member to enact the brand s promise and its implications for work in different situations (including service recovery), and 4) teach and coach them to grow into their roles as brand representatives. In contrast, Mohart et al (2009) define brand-specific TRL as a leader s approach to motivating followers to act on behalf of the corporate brand through contingency rewards. Based on their work, this study argues that brand-specific TRL would possess such characteristics as a) specifying behavioural standards as brand representatives for all situations and specifying rewards when role expectations are met, and 2) clarifying what constitutes ineffective performance and punishing employees for not being aligned with the brand standards set by its core values. Hypotheses Development Trust is defined as the willingness to be vulnerable to another party when that party (e.g. line managers and corporate brand) cannot be controlled or monitored (Mayer and Gavin, 2005). When trust exists, individuals are willing to rely on others and demonstrate concern about
one s welfare (e.g. McKnigh, Cummings and Chernavy, 1998) such as corporate brand s welfare. Essentially, trust exists in impersonal (corporate brand) and personal (line manager) forms (Atkinson and Butcher, 2003). Past studies have documented the effects of trust on employees performance (e.g. Han and Harms, 2010). Dirks and Ferrin (2001) argue that trust may not affect behaviours and performance outcomes directly, and the impersonal level of trust (e.g. corporate brand) is more influential on employees identification than the interpersonal trust is. Based on the social identity theory (Mael and Ashforth, 1995), employees who identify with the corporate brand have a sense of oneness and belongingness. They perceive that their fate is intertwined with their corporate brand. Past studies have, thus, indicated the effects of trust in leaders and in organisation on employees organisational identification (e.g. Ho, Kuo and Lin, 2012), which in turn affects employees behavioural outcomes (e.g. de Gilder, 2003). In particular, Ashill, Rod and Carruthers (2008) have found the relationship between employees organisational identification and service recovery performance. Thus, the following hypotheses are formulated: H1a: Employees trust in corporate brand positively affects employees brand identification in a larger magnitude than their trust in line managers does. H1b: Employees brand identification mediates the linkages between both employees trust in leaders and corporate brand, and their service recovery performance. Studies have documented that leadership is one of the antecedents of trust in an organisation setting, which promotes trust between members and leaders and between employees and the organisation (e.g. Vanhala, Puumalainen and Blomqvist, 2011). Two generic leadership philosophies include TRL and TFL. This study proposes that they have to be brand-specific in order to bring about the brand-supporting behaviours of employees even in times of service recovery. Brand-specific is founded on a social-exchange relationship, which leads to trust (Brower, Schoorman and Tan, 2000). Studies have found that TFL is a strong predictor of trust in leader (e.g. Burke et al, 2007). Podsakoff, MacKenzie and Bommer (1996) highlight that TFL possess vision articulation behaviour, they exert a significant effect on employees organisation identification. Their characteristics facilitate their followers internalisation and acceptance of the collective interests and values. Therefore, this study argues that brandspecific TFL could induce employees brand identification because TFL possess vision articulation behaviour, which fosters the acceptance of group goals. Also, brand-specific TFL could facilitate their employees internalisation and acceptance of the brand values. Hence, based on the aforementioned arguments, the following hypotheses are developed: H2a: Employees trust in leader is the mediating factor on the linkage between brandspecific TFL and employees brand identification. H2b: Employees trust in corporate brand mediates the effect that brand-specific TFL has on employees brand identification Unlike brand-specific TFL, brand-specific TRL steer employees towards perceiving their relationship with the corporate brand as an outcome of an economic exchange due to the emphasis on contingent rewards and punishment. While the study of Pillai, Schriesheim and Williams (1999) has indicated no relationship between TRL and follower s trust in both organisation and leader, recent studies (e.g. Bass et al, 2003) have found that employees trust their leaders when they believe they are fairly recognised and rewarded. This is in line with what brand-specific TFL attempts to achieve as they make clear what employees could expect to receive for the work that they do (Greenberg, 1996). Thus, they fulfil the employees perceptions of the corporate brand s obligations and relational contracts, thereby enhancing employees trust in the corporate brand as in the case of what Whitener (1997) has argued in an organisation setting. Prior research has also documented TRL s effects on organisational identification (e.g. Pillai et al, 1999) although the magnitude of its effects is smaller than TFL s. Under this light, this study has proposed the following hypotheses:
H3a: Brand-specific TRL positive affects employees trust in line managers and in corporate brand in a smaller magnitude than brand-specific TFL does. H3b: Employees trust in their line manager and corporate brand act as a mediator of the relationship between brand-specific TRL and employees brand identification. Apart from inducing trust and identification from employees, both brand-specific TRL and TFL affect employees behavioural outcomes. The study of Mohart et al (2009) has measured the effects of both brand-specific leadership styles on employees brand champion behaviours and found interactive effects of both leadership behaviours. However, this is not within the service recovery context as their measurement of performance implicates the overall performance, which does not include the situation when service recovery performance is accounted for. Smith, Montagno and Kuzmenko (2004) observed that leaders could adjust their leadership behaviours to specific context; therefore, they can be an agenda-focused pragmatist at one time or a benevolent leader at other times. Therefore, this study argues that both brand-specific leadership styles provide additive contributions to employees service recovery performance. As formulated above, employees brand identification provides a plausible mechanism through which their trust in both corporate brand and line managers, driven by these leadership patterns, influences service recovery performance. Therefore, the following hypothesis is introduced: H4: Brand-specific TFL and TRL are both positively and independently related to employees service recovery performance through the partial mediating influence of trust and brand identification of employees. (Please see appendix 1 for the proposed conceptual model) Research Methodology A survey was conducted with employees, particularly those interfacing customers, across different posts and branches within one reputable corporate bank brand in Thailand. The participating bank demonstrates an attempt to living the brand promise, thereby striving to convert dissatisfied customers to the satisfied ones. A preliminary interview with senior management was conducted to help the authors gain insights into its corporate brand values and service recovery standards. These insights are useful to formulate a questionnaire although most scales were developed based on previous research (e.g. Mayer and Gavin, 2005; Mohart et al, 2009; Ashill et al, 2008) in order to ensure reliability and validity. 312 questionnaires were distributed to 15 sampled branches across the capital city and metropolitan areas as they have a high level of customer contacts. 238 questionnaires were returned, making a response rate of 76%. The data will be analysed using Structural Equation Modelling. Implications The notion of trust in corporate brand has not yet been integrated in the leadership and the social identity theories. Within the branding literature, this has not been explored from the employees perspective. Through the cross-disciplinary nature, this study offers empirical evidence of the effects of leadership behavioural patterns on employees trust in line managers and corporate brand within the services setting. It will also extend these literature streams towards the service recovery context as existing studies focused on the overall performance and/or organisational citizenship behaviours, which do not necessarily represent service recovery performance. From the practitioner s perspective, this study will enable managers to understand how to enhance employees service recovery performance that are aligned with their brand promise through their ability to induce followers trust. Furthermore, they can also enhance their employees trust in corporate brand, which will create a spill-over effect from employees to customers, thereby affecting customers level of trust in the corporate brand. Finally, managers would benefit from embracing the brand-specific TFL approach while appreciating the potential effects of brand-specific TRL.
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Appendix 1: Proposed Conceptual Model TFL Leadership TRL Leadership Corporate Brand Trust Line Manager Trust Brand Identification Service Recovery Performance