The Relationship between Employee Satisfaction, Customer Satisfaction, and Financial Performance: An Examination in the Hospitality Industry

Abstract

We examine the relationship between employee satisfaction, customer satisfaction, and financial performance based on data taken from a Japanese hotel company over a six year period, along with literature reviews from the fields of accounting, marketing and organization theory. The originality of this study is based on the longitudinal data collected from a hotel company that is representative of the characteristics of the hospitality sector in regards to the direct interaction that takes place between employees and the customers, as well as the demonstration of the simultaneous relationships between the gross margin per available room, customer satisfaction, service quality, and employee satisfaction. The results provide a valuable basis not only for Japanese hospitality companies using employee satisfaction measures, but also for studies on nonfinancial performance measures such as the balanced scorecard and the service-profit chain.