Relationship Between Employee i

Relationship Between Employee Satisfaction and Customer

Satisfaction in Salons Located in Metro Manila

Thesis
Presented to
Mr. Raymond Paderna
Business Management Department
De La Salle University

In Partial Fulfillment
Of the Requirements for
THSBMG1
First Trimester, SY 2009-2010

By:

Miguel Julio S. Estrada

Federico Maria Higino M. Francisco Jr.
Alexis A. Gaudinez
Claire Marie G. Guzman

August 10, 2009

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Acknowledgement

The researchers would like to thank the following for their full support and

understanding.

We express sincere appreciation to Mr. Raymond Paderna for his

guidance and insight throughout the research. He was always there to address

any concerns the group had and gave his all in bringing out the best in our

research.

We gratefully acknowledge Mr. Jeden Tolentino for his advice with our

statistical analysis. We are thankful that he allowed us to consult with him

despite all his other important obligations.

We would also like to thank Davids Salon and all of the employees and

staff members for accommodating us and providing us with the necessary

information which made our data gathering trouble-free.

We express our thanks and appreciation to our family and friends for their

understanding, motivation and patience. Lastly, but in no sense the least, we are

thankful to God Almighty for giving us the strength and wisdom to carry out this

research to the best of our abilities.

 Relationship Between Employee iii

Executive Summary

The link between employee satisfaction and customer satisfaction is not

as axiomatic and undisputable as most, if not all, managers believe so as

pointed out by related literature. In light of this, the paper tries to identify the

effect of employee satisfaction on customer satisfaction in service oriented

businesses, specifically in salons. The paper was structured such that it

determined if there was a relationship between employee satisfaction and

customer satisfaction in salons located around Metro Manila and if

employee satisfaction is a significant predictor of customer satisfaction.

Doing so would help managers better understand the relationship between

the two, thus enabling them to manipulate one in order to positively

influence the other. The main method used to determine the effect of

employee satisfaction on customer satisfaction for the top ten branches

based on sales of one salon in Metro Manila was a multiple regression

analysis. A survey questionnaire was used in order to gather the necessary

data from both employees and customers who were picked using the

stratified random sampling method. After careful analysis, the results

indicate that out of the five identified employee satisfaction indicators

namely general satisfaction, communication, organizational leadership,

corporate culture, and compensation and benefits, only general satisfaction

has a significant effect on customer satisfaction. Also, among the five

employee satisfaction indicators, only general satisfaction and

 Relationship Between Employee iv

communication yielded a positive relationship. Therefore, the researchers

recommend that Davids salon should focus more on improving the general

satisfaction of the employees. Given the fact that it is the only indicator that

showed a significant effect on customer satisfaction, it would be best for the

company to focus on this indicator to be able to achieve a higher level of

employee satisfaction which in return will increase customer satisfaction.

Also, the company should examine the measures that fall under the 4

indicators (communication, organizational leadership, compensation and

benefits, and corporate culture) that do not have a significant effect on

Customer Satisfaction. By doing so, the salon managers would know how

to manipulate these indicators such that they can use them to further

improve customer satisfaction.