How does a financial institution provide excellent service
with the support of knowledge management?
Author: Paul Moens, 10151583
15 November 2013 version 1.0 (final version) MSc. in Business Studies
University of Amsterdam – Amsterdam Business School First supervisor: Ed Peelen
Second supervisor: Mark van der Veen
1.0 Table of contents
1.0 Table of contents ... 2
2.0 Abstract ... 3
3.0 Introduction ... 4
4.0 Literature review ... 9
4.1 Service-‐Profit Chain ... 9
4.2 Customer Experience Quality ... 10
4.3 Definition knowledge management and knowledge management processes ... 11
4.4 Value of knowledge management ... 13
4.5 Knowledge management and organizational benefits ... 14
4.6 Critical Success factors knowledge management and Model ... 16
4.7 Measuring knowledge management ... 18
4.8 Employee satisfaction ... 19
4.9 Customer satisfaction ... 22
4.10 Employee satisfaction and customer satisfaction ... 26
4.11 Organizational efficiency ... 27
4.12 Conceptual model ... 29
5.0 Data and method ... 30
5.1 Research design ... 30
5.2 Quasi-‐experiment ... 30
5.3 Situation ... 31
5.4 Experiment design ... 32
5.5 Target group customers, testers and client processes ... 34
5.6 Questionnaires ... 35
5.7 Operationalizing of knowledge management ... 35
5.8 Operationalizing of organizational efficiency ... 36
5.9 Operationalizing of employee satisfaction ... 37
5.10 Data collection analysis ... 37
6.0 Results ... 39
6.1 Correlations and reliabilities ... 39
6.2 Test of hypotheses ... 40
7.0 Discussion (of results) ... 50
7.1 Limitations and future research recommendations ... 55
7.2 Managerial implications ... 58
7.3 Conclusions ... 60
8.0 References ... 62
9.0 Appendix ... 66
9.1 Appendix A: Rotated Component Matrix and descriptives and correlation table ... 66
9.2 Appendix B: Conditions Critical Succesfactors knowledge management ... 68
9.3 Appendix C: Registration data per customer interaction ... 70
9.4 Appendix D: Questionnair employee satisfaction ... 72
2.0 Abstract
Purpose – Much attention is given in the Dutch financial sector to putting the customer first and making sure that banking is as easy as possible. But research shows that clients often get incomplete or even wrong answers. How is it possible that customers are not serviced as they expect and need to put more effort in solving their issue than expected? The purpose of this study is two-‐fold. First of all to examine the effect of improving the knowledge organization in a financial institution in the field of mortgages, on customer satisfaction but also on organizational efficiency and employee satisfaction. Second, to determine inter-‐ relationships between these constructs so they can eventually be used for customer service organizations to make investment decisions for their organization of knowledge and also to determine and measure the effect of these investments afterwards.
Design/methodology/approach – A quasi-‐experiment approach combined with a survey study was used to examine the change and relationships within knowledge management, employee satisfaction, organizational efficiency and customer satisfaction. An improvement in the knowledge organization in a financial organization (mortgages) was made and the effects of this were measured and analysed. The test and the dataset are unique in its kind. It combines data from the actual customer interaction with the satisfaction score of the employee combined with the actual satisfaction of the customer of this interaction. These values were measured and compared both before and after improving the organization of knowledge.
Findings – This study shows a significant positive change in organizational efficiency, employee-‐ and customer satisfaction when improving its knowledge management organization. Significant relations are proven between knowledge management and operational efficiency, employee satisfaction and customer satisfaction but not for all the hypotheses.
Research limitations/implications – There are limitations to this paper. Although the proposed knowledge management model provides valuable insights with respect to knowledge management, operational efficiency, employee satisfaction and customer satisfaction, further validation of the model and further improvements to the construct are necessary to be able to eventually use this model on a broader basis in the financial customer service industry.
Originality/value – This study combines former research models with a new knowledge management model with an effect on operational efficiency, employee satisfaction and customer satisfaction. These have not previously been combined in a model for customer service. In addition, where current studies remain on a higher, corporate strategic level, this study provides insight into the actual effect of knowledge management on customer satisfaction on an operational level.
3.0 Introduction
“Customers services desks of banks answer twenty five per cent of the questions incorrect” (Zuurmond, 2013). They give false or unclear answers, even in response to questions to which the answer is easy to find on the website of the bank. The ‘consumentenbond’ (consumer association) asked the eight largest banks in the Netherlands five questions. The questions were asked ten times, five times by telephone and five times by e-‐mail. Although this research has no scientific foundation it indicates that there are serious problems in terms of the bank’s ability to provide correct information to their customers.
This news doesn’t have a positive effect on the image of the banking sector. Banks already suffer from a negative image from the financial crisis. How can you make sure that the customer is helped uniformly, correctly and gets excellent service by his/her bank, independent of the channel used (e.g. internet, phone, e-‐mail, face-‐to-‐face)? This paper examines how the support through Knowledge Management (knowledge management) contributes to excellent client service by banks to their clients.
In general, there is a permanent shift from product to service-‐oriented organizations. This applies to the banking sector in particular. The customer does not purchase a tangible product. So when the customer needs help or has a problem, is a real moment of truth. The differentiators at this moment are the employee's interaction with the customer and the knowledge available to solve the customer’s problem. If the applicable knowledge is not available, the employee cannot handle the client request properly and therefore will probably lose the goodwill of the client.
To study how supporting this process with knowledge management can contribute to excellence in customer service we combine knowledge from existing literature about service quality with the knowledge from existing literature about knowledge management. This combined literature research and the hypothesis determined from this, are tested with an experiment at a financial institution in mortgages. The institution aims to set the standard in helping its customers manage their financial future. It aims to deliver financial products and services in the way the customers want them delivered: with exemplary service, convenience and at competitive prices.
Important researchers in the field of service quality for customer handling, customer satisfaction and loyalty during the last thirty years include Heskett, Lemke, Zeithelm and Reichheld. They investigated the most important service determinants for a satisfied customer and the effect on
profit and growth. They developed some of the most influential models and tools for measuring these effects.
Literature of knowledge management has progressed over the past 15 years from an emergent concept to an increasingly common functionality in business organizations. As evidence of its maturity as an area of academic study, an increasing number of journals devoted to knowledge management and intellectual capital management have been created” (Zack et al. 2009). Most of the published work in the knowledge management area, discusses researched conceptual frameworks and theoretical models. (Davenport and Prusak, 1998; Jennex & Olfman, 2006). More recent literature even links Knowledge Management to organizational performance and profitability (Kulkarni et al, 2006; Fugate et al., 2009; Gorla et al., 2010; Mithas et al., 2012).
The models shall be further discussed in the literature paragraph. Also, the creation of the model and the constructs will be further described there. From here we derive the research question for this thesis:
To answer this question and ultimately to test the research question on the basis of a model, we divide this question into a number of sub-‐questions.
These sub-‐questions are:
• What is the meaning of knowledge management, employee satisfaction, organizational efficiency and customer satisfaction?
• What conditions should the improvement of the knowledge organization meet?
• What is the added value of knowledge management, employee satisfaction, organizational efficiency and customer satisfaction on the organization itself and its customer?
• What are the relationships and which effects do these have on each other? • How can these constructs be operationalized?
For this study, a conceptual model was constructed. The foundation of the model is based on two renowned scientific models, the Service-‐Profit Chain of Heskett (1994) and the Customer Experience
Research question: What is the effect of improving the Knowledge Management Organization
within FinancialbankX (active in mortgages), on organization efficiency, employee-‐ and customer satisfaction?
Quality model of Lemke (2010). “The Service-‐Profit Chain establishes relationships between internal quality organization, customer loyalty, and employee satisfaction, loyalty and productivity.” This renowned model has been validated by many studies. This model is combined with the Quality Customer Experience model of Lemke (2010). The Customer Experience Quality model shows the relationship between service quality, value for customer and the result for the company (commitment, purchase, retention, WOM) in a holistic approach.
The two models are combined perfectly and reinforce each other. Lemke’s model (2010) consists of a communication, service and usage encounter-‐ all three lead to a better value for the customer and ultimately have an effect on customer loyalty. Both models contain internal quality, employee and customer satisfaction determinants.
The model of Lemke provides a deepened understanding of the connections between employee organization, organizational efficiency and application of
knowledge. In addition, the actuality of the model really is an advantage. The combined model, as shown in figure 1, consists of the constructs knowledge management, organizational effectiveness, employee and customer satisfaction.
The purpose of this research is two-‐fold. First of all to examine the effect of improving the knowledge organization in a financial institution, active in the field of mortgages, on the customer satisfaction but also on organizational efficiency and employee satisfaction. The scope of this research covers customer service by providing the right informationto employees for them to be able to properly handle customer interactions. The second purpose is to determine the relationships between these constructs (knowledge management, employee satisfaction, customer satisfaction and operational efficiency). The constructed model can eventually be used for making investment decisions regarding improvements of the knowledge organization and also to determine and measure the effect of these investments afterwards.
The academic value of the study can be found in the fact that it combines selected existing research models into a new knowledge management model, which deals with the effects on operational efficiency, employee satisfaction and customer satisfaction. The literature of knowledge management describes relevant relations on a high organizational level (Wernerfelt 1984, Barney 1991, Conner 1991). The problem is that literature does not describe the specific role of knowledge management in the operational handling of customer contact. How can you best serve customers (increase customer satisfaction) with the use of knowledge management? In academic literature the
actual specific link between knowledge management, efficiency, customer satisfaction and employee satisfaction is missing. In this study we try to find this positive effect. These constructs have not previously been combined in a model for customer service. In addition, where current studies focus on higher corporate strategic level, this study provides insight into the actual effect of knowledge management on customer satisfaction.
Its Practical relevance is based on the importance of knowledge management when handling customer interactions and ultimately to increase customer loyalty. In recent years the image of financial sector has been negatively impacted by the financial crisis. It is important to regain the goodwill of the customer. In customer service the company should always handle the customer’s question or complaint correctly. Knowledge management plays an important role in this. It is important that the organization focuses on having the right information available at the right time to support the customer. Knowledge management ensures a solid basis for offering the right service and to eventually offer excellent service and keep the customer satisfied. Practical relevance for this study is that financial companies learn the impact of knowledge management on the operational business and the expected effects when investing in knowledge management.
To answer the question, what effect knowledge management has on service excellence, the following design of this thesis was chosen. The conceptual model is constructed from literature research. The foundation of the model is based on two models, the Service-‐Profit Chain of Heskett (1994) and the Customer Experience Quality model of Lemke (2010). The models are assessed and it is indicated why these models are chosen as the basis of this research. From here the literature about knowledge management and the relationship between service and organizational performance are described. Further discussion takes place regarding knowledge management, employee-‐ and customer satisfaction. The importance of these definitions is given and the hypotheses are formulated.
The constructed model and the hypotheses are tested by a quasi-‐experiment at the mortgages division of a Dutch financial institution. The experiment will be described in the methodology. Extensive attention is given to the requirements of the study and the measures taken to ensure that it complies with the rules of scientific research.
After presenting the results of the experiment, the discussion based on the results answers the hypotheses and the literature will be reviewed. Here, also the managerial implications are given.
The thesis ends with a summary of the research and the answers to the general research question. Recommendations are given for further research based on the findings of this study.
4.0 Literature review
4.1 Service-‐Profit Chain
To determine theconceptual model for this research and answer the research question: " What is the effect of improving the Knowledge
Management Organization within the mortgages division of Financialbank X, on organization efficiency, employee-‐ and customer satisfaction?)" we take the service profit chain Hestkett et al (1994) as a basis.
“The Service-‐Profit Chain establishes relationships between profitability, customer loyalty and employee satisfaction, loyalty and productivity. The links in the chain are as follows: profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer
satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results
primarily from high-‐quality support services and policies that enable employees to deliver results to customers. “
Loyal customers are important because they often increase profitability over time. Loyal customers account for an unusually high proportion of the sales and profit growth of successful service providers. In some organizations, loyalty is measured in terms of whether or not a customer is on the company rolls. But several companies have found that their most loyal customers -‐ the top 20 % of total customers – not only provide all the profit but also cover losses incurred in dealing with less loyal customers (Heskett, et a., 1994).
“Important concepts which are used in the service chain are service value and information. Value is a function not only of costs to the customer but also of the results achieved for the customer. Value is always relative because it is based both on perceptions of the way a service is delivered and on initial customer expectations. Customers today are strongly value oriented. Customers tell us that value
means the results they receive in relation to the total costs (both price and other costs to customers incurred in acquiring the service). The insurance company, Progressive Corporation, is creating just this kind of value for its customers by processing and paying claims quickly and with little
policyholder effort.” (Heskett, et a., 1994)
“In order to handle customer problems, service providers must have the latitude to resolve any situation promptly (right information available). In addition, information regarding a customer concern must be transmitted to the service provider quickly. Customers and employees must be encouraged to report rather than suppress concerns. For example, one Boston-‐area Lexus dealer notified its customers, “If you are experiencing a problem with your car or our service department and you can’t answer ‘100% satisfied’ when you receive your survey directly from Lexus, please give us the opportunity to correct the problem before you fill out the survey.”
The model of Heskett states the importance of good service and the relationship between internal quality, employee-‐ and customer satisfaction. It shows the importance of using the right information in handling the client’s request quickly and with minimal effort. The model that has a good fit with the service profit chain is from a current study by Lemke et al (2010): Quality Customer Experience.
4.2 Customer Experience Quality
The Customer Experience Quality model of Lemke et al (2010) shows the relationship between service quality, value for customer and the result for the company (commitment, purchase, retention, WOM) in a holistic approach.
“The customer experience originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction. This experience is strictly personal and implies the customer’s involvement at different levels (rational, emotional, sensorial, physical, and spiritual).” Gentile et al. (2007, p. 397) The model consists of a communication,
three lead to a more positive value for the customer and ultimately have an effect on customer loyalty. So far, this model by Lemke et al, is identical to that of Heskett. Where the encounters of Lemke differ from Heskett is a combination of Employee and internal service quality.
Where the model of Lemke adds something to the model of Heskett is the availability of knowledge and the employee as key differentiator in addition to product quality and usage. This is also reflected in SERVQUAL by Zeithaml (1988). This is a widely used and firmly discussed model for measuring quality of services which also highlights the importance of knowledge in the service to customers. When we combine Heskett et al (1994), Zeithaml (1988) and Lemke et al (2010), the relationship between knowledge, employee, customer satisfaction and ultimately profit and growth is concluded and is used as a basis in this thesis, as shown in figure 4.
In the following paragraphs we discuss the different constructs dealing with to Customer Interactions and we discuss the determining factors within the constructs. Starting with knowledge management, employee-‐ and customer
satisfaction and ending with the conceptual model and the hypotheses resulting from this literature study.
4.3 Definition knowledge management and knowledge management processes
The Oxford dictionary describes knowledge as “a familiarity with someone or something, which can include facts, information, descriptions, or skills acquired through experience or education. It can refer to the theoretical or practical understanding of a subject. It can be implicit (as with practical skill or expertise) or explicit (as with the theoretical understanding of a subject); it can be more or less formal or systematic.” But knowledge isn’t the same as knowledge management.In the literature researched no general consensus on the definition of knowledge management can be distilled. Most cited definitions are: Knowledge management is an integrated, systematic approach to identify, manage, and share all of the department’s information assets, including databases, documents, policies and procedures, as well as previously unarticulated expertise and experience resident in individual officers (Jones, 2003). Knowledge management is also known as a systematic, goal-‐oriented application of measures to steer and control the tangible and intangible knowledge assets of organizations, with the aim of using existing knowledge inside and outside of these organizations to enable the creation of new knowledge, and generate value, innovation and improvement (Wunram, 2000).
This knowledge is embedded and carried through multiple entities including organizational culture and identity, policies, routines, documents, systems, and employees. In many articles knowledge management is also defined as a process. These processes provide more detailed insight into the different constructs in the definitions.
There are a number of studies that studied the knowledge management process. Review of the most relevant ones shows that the process of knowledge management is centered broadly on knowledge creation, knowledge sharing, knowledge improvement, and knowledge application. (Hedlund, 1994; De Jarnett, 1996; Quintas et al., 1997; Demerest, 1997; Lettieri et al., 2004; Zolingen et al., 2001; Fong and Choi, 2009)
Knowledge creation
Knowledge creation is adding ‘‘new’’ knowledge to the existing knowledge domain. The capacity to create new knowledge, to disseminate it and to embody it in products, services and systems of the organization is described as knowledge creation by Nonaka and Takeuchi (1995).
Knowledge sharing
Creation of new knowledge hardly has any value if it is not shared among all. Thus, knowledge sharing is of the utmost importance to the performance of knowledge creation and in leveraging knowledge for greater organizational performance (Von Krogh et al., 2000).
Knowledge Improvement
In order to cope with the fast changing environment, improvement or refinement of existing knowledge is absolutely necessary. Without it the organization will be faced with knowledge depreciation, affecting organizational performance. This has been reaffirmed by de Holan and Phillips (2004).
Knowledge retention
“Another facet of knowledge management which is quite valuable to the sample units chosen is the retention of key skills. Building a proper knowledge retention system and to capture the expertise and heuristics of the experts in that particular knowledge domain is a great challenge for today’s organizations” (Liebowitz, 2003-‐2004). 1. Knowledge Creaqon 2. Knowledge sharing 3. Knowledge Improvement 4. Knowledge Retenqon
Figuur 1: knowledge management process
Figure 5: knowledge management process
If the definitions and the different knowledge management processes are compared, most of them contain facets aimed at capturing and managing knowledge. The following definition came from an exploratory survey which was generated through an expert panel. Thirty members of the review board of the International Journal of Knowledge Management were asked to give their definitions of knowledge management: “Knowledge management success is a multidimensional concept. It is defined by capturing the right knowledge, getting the right knowledge to the right user, and using this knowledge to improve organizational and/or individual performance.” (Jennex et al. 2008). This is the most recent
definition and it contains the relation to organizational performance. This definition also contains capturing and managing knowledge but it also has the relation to organizational performance. This is the definition which will be used for this paper.
Knowledge management is more than just making knowledge available or using a knowledge system. Knowledge management is more about the process, how to organize, manage and make the knowledge available to ultimately achieve the given goals. Knowledge management is supportive and not a goal by itself.
4.4 Value of knowledge management
But why is knowledge management so important in the handling of customer requests? In both the elaboration of the Service-‐Profit Chain of Heskett (1984) and the customer experience quality of Lemke (2010) knowledge management is determined as an important pillar in excellent service to the customer. Knowledge management is supportive (steering) in creating, sharing and keeping knowledge up-‐to-‐date so that the correct information for the handling of the customer request is available in the right place:
• The Employee is perfectly supported with the right information to handle the client request quickly, completely and correctly
• Additionally, the knowledge management processes
support the flow of feedback from the customer and employee to policy makers to improve products and processes. This, without inefficient searches for the right information
“Knowledge management is defined by capturing the right knowledge, getting the right knowledge to the right user, and using this knowledge to improve organizational and/or
individual performance.”
“Ultimately, we need knowledge management to help organizations make sense of what they know, to know what they know, and to effectively use what they know”
• Proactively communicate to customers to prevent questions or complaints
This section gives an explanation of knowledge management: Active knowledge management is used to ensure that knowledge is available in the right place, to achieve organizational objectives. It should also indicate the relevant knowledge when handling customer requests for a correct, rapid and sometimes even proactive service to the client.
But why do we need knowledge management? “Ultimately, we need knowledge management to help organizations make sense of what they know, to know what they know, and to effectively use what they know”. (Jennex, 2008). In the next section we take a closer look at the benefits of knowledge management.
4.5 Knowledge management and organizational benefits
The knowledge-‐based
theory of this organization considers knowledge as the most strategically significant resource of a company. Its
proponents argue that
because knowledge-‐based resources are usually difficult to imitate and socially complex,
heterogeneous knowledge bases and capabilities among companies are the major determinants of
sustained competitive
advantage and superior
corporate performance.
Originating from the strategic management literature, this perspective builds upon and extends the resource-‐based view of companies. This came from Penrose (1959) and was later improved by others
(Wernerfelt 1984, Barney 1991, Conner 1991).
Figure 7: effect knowledge management on value disciplines of treacy (Zack et al. 2012)
Figure 6: the effect of knowledge management on organizational performance (Zack et al. 2012)
In recent years more studies have been conducted which confirm the relation of knowledge management and organizational benefits. Lee and Yang (2000) conducted a survey which shows that knowledge management enablers influence knowledge management processes, which in turn influence organizational performance through intermediate impacts. Liu et al. (2004) also conclude from a survey study that knowledge management is positively correlated to business performance (profit). Massey et al. (2002) showed at Nortal that knowledge management was applied to new product development process which led to significant improvements in product innovation. The number of studies where knowledge management is determined to make a difference to Business performance is small. “Only a few articles empirically investigate the relationship between knowledge management and organizational performance.” (Michael Zack, James McKeen, Satyendra Singh, 2009). The studies that tested the relationship show a significant relationship, for example in the study of Zack et al. (2009).
In an article written by Fugate et al. (2009) the relationship between knowledge management and organizational performance is also proven. The constructs are named differently but comply with the constructs mentioned by Zack et al. (2012). They show increased efficiency and the likelihood of meeting performance standards for pre-‐defined goals. They also present the notion that a unified front to the customers’ perceived quality of delivering product and service (effectiveness), delivers more value to the customer relative to competitors (differentiation).
Figure 8: effect of knowledge management on organizational performance (Fugate et al., 2009)
From these studies we can conclude that Knowledge management certainly has a significant effect on business performance. Unfortunately, the literature stays on a high management level. To prove the relation between knowledge management, efficiency, employee and customer satisfaction we need to focus on a more detailed operational level. This leads to the first hypothesis:
In the next sections, the constructs knowledge management Organization, Efficiency, Employee-‐ and Customer Satisfaction will be described in more detail.
4.6 Critical Success factors knowledge management and Model
To be able to finally determine the effect of a well-‐designed knowledge management organization regarding efficiency, employee-‐and customer satisfaction, the decisive factors for a well-‐designed knowledge management organization should be known. These factors are described in this section. The phrase ‘critical success factors’ refers to something, which must be implemented if companies want to be successful in a specific field. These factors should be controllable and measurable and few in number (Mosakhani et al. 2010). Despite various studies there is still no definite conclusion of the critical success factors of knowledge management. According to the literature of knowledge management and critical success factors a lot of research is done on these topics. Here the most important are mentioned ( table 1 -‐ critical success factors knowledge management).
Yu et al (2004) Organizational character: Learning orientation, communication, knowledge sharing intention, flexibility.
Information technology: KMS quality, KMS functionality
Managerial support: top management support, knowledge management reward, knowledge management team activity
Jennex & Olfman (2005) Knowledge strategy, motivation and commitment of users, integrated technical infrastructure, organizational culture and structure, common enterprise wide knowledge structure, senior management support, Learning organization, clear goal and purpose for the KMS, Measurement, search, retrieval, and visualization functions of the KMS, work processes, security/protection of knowledge.
Hypothesis 1; An improvement in knowledge management leads to a significant positive change in operational efficiency, employee satisfaction and customer satisfaction.
Wu & Wang (2006) System quality, knowledge or information quality, perceived KMS benefits, user satisfaction, and system use.
Jennex et al (2009) Business processes, strategy, leadership, knowledge management process, KMS effectiveness and efficiency, learning culture, knowledge content.
Migdadi (2009) Management leadership and support, culture, strategy and purpose, measurement, organizational infrastructure, processes and activities, motivational aids, resources, training and education, human resource management.
Lindner & Wald (2010) Culture & leadership (informal networks, mistake tolerance, project culture, management commitment), organization & process (controlling knowledge management activities, institutionalization multi PM/knowledge management, maturity PM methodology), ICT support (systems communication, systems storage).
Table 1: critical success factors knowledge management
If the critical success factors of the different writers are compared closely we notice a resemblance. Most of them came from case
studies or surveys but aren’t empirically validated. The fact that so many different critical success factors have been determined also indicates that there isn’t a clear view on which to choose.
DeLone and McLean compiled a taxonomy of six IS success categories. This is an empirically validated model and used often in
practice as an information system model. From this point Kulkarani et al. (2007), Seddon (2007) and Jennex et al. (2008) made adjustments to this model and named it the knowledge management
Success model. The measures were validated and the associations between them were empirically tested.
This model consists of the constructs Explicit knowledge use, Perceived usefulness of knowledge sharing, user satisfaction, knowledge content quality, knowledge management system, knowledge management system quality and Organizational support. The difference between the IS and knowledge management model is that ”IS researchers have recognized that knowledge is a multidimensional construct with more complex characteristics than those of information. One perspective defines knowledge as an object to be stored, manipulated” (Kulkarani et al., 2007). Most critical success factors are implemented in the model. The ones that aren’t presented in the model are Knowledge strategy, clear goal and purpose for the KMS, Business processes and training and education. These are just as important. It is important to know which factors should be implemented for a successful knowledge management organization.
In this section, the critical success factors of a knowledge management organization are explained and if these factors are utilized properly they would ultimately lead to the benefits belonging to knowledge management. We extensively discussed knowledge management, the knowledge management process and the critical success factors. The reason for this is that this is the basis for the improvements. We need to know what needs to be improved but ultimately we need to measure it objectively.
All previously mentioned factors raised by the various authors were extensively studied and summarized in the chosen factors.
These factors are Knowledge Strategy, Leadership, Incentive, clear goal and purpose for the critical success factors, business processes, Knowledge Contact Quality, knowledge management System Quality and training & education and knowledge use. These critical success factors are important because all of these factors have to be covered for a successful implementation of the knowledge management organisation.
4.7 Measuring knowledge management
In order to measure knowledge management in the model, the critical success factors should be operationalized. This is difficult because there is no format readily available for this in literature. In order to ultimately determine and measure knowledge management, a translation is made from the customer critical success factors taken from trade literature, combined with practical research which was done in the organization itself by more experienced departments.
As mentioned in the previous section the critical success factors are Knowledge Strategy, Leadership, Incentive, clear goal and purpose for the KMS, business processes, Knowledge Content Quality, knowledge management System Quality and training & education and knowledge use. Practically speaking we are going to measure per customer interaction after an improvement is made in the knowledge organization. Because this is only a test on a small scale this means that we cannot measure every customer critical success factor. Because the change in knowledge management is practically (operation) a change in the used knowledge system we will measure Knowledge content quality, knowledge management System Quality and knowledge use. From both internal and external research, the critical success factors are formulated as questions.
-‐ Was the information sought available in the knowledgebase? (knowledge use); -‐ Did you find the information? (knowledge management content quality); -‐ Time the search took (knowledge management system quality);
-‐ Is the information that you have found complete to handle the customer request? (knowledge management content quality).
These factors will be used to measure the construct knowledge management and will be used in the hypothesis.
4.8 Employee satisfaction
Employee satisfaction is how happy a person is with his job. Academics and human resource professionals generally make a difference between affective employee satisfaction (Thompson, 2012) and cognitive employee satisfaction. Affective employee satisfaction is the extent of pleasurable emotional feelings individuals have about their jobs overall, and is different to cognitive employee satisfaction which is “based on comparisons which do not rely on emotional judgments, but instead on evaluations of conditions, opportunities or outcomes” (Moorman, 1993) as particular facets of their jobs, such as pay, pension arrangements, working hours, and numerous other aspects of their jobs (Thompson, 2012). Cognitive employee satisfaction does not assess the degree of pleasure or happiness that arises from specific job facets, but rather gauges the extent to which those job facets are judged by the job holder to be satisfactory in comparison with objectives they themselves set or with other jobs. While cognitive job satisfaction might help to bring about affective employee satisfaction, the two constructs are distinct, not necessarily directly related, and have different antecedents and consequences.
Why is employee satisfaction important? An important finding for organizations to note is that job satisfaction has a rather tenuous correlation to productivity on the job. This is a vital piece of information to researchers and businesses, as the idea that satisfaction and job performance are directly related to each other. Where performance can be moderated by job complexity, such that for high-‐complexity jobs the correlation between satisfaction and performance is higher than for jobs of low to moderate complexity (Judge et al., 2001). Additionally, one longitudinal study indicated that among work attitudes, job satisfaction is a strong predictor of absenteeism, suggesting that increasing job satisfaction and organizational commitment are potentially good strategies for reducing absenteeism and turnover intentions (Cohen et al, 2007). Employee satisfaction eventually even drives to employee loyalty. In two studies in insurance and other financial service companies low employee turnover was found to be linked closely to high customer satisfaction (Heskett et al., 1994). There is also an interaction with customer satisfaction (Heskett, 1994), “employees who have higher levels of job satisfaction also believe they are able to deliver excellent service” (Schlesinger and Zornitsky, 1991). In section 4.9 about customer satisfaction and employee satisfaction this relationship is described more in-‐depth.
The conclusion is: A satisfied employee leads to more productivity, less absenteeism, increased loyalty and will deliver excellent service.
Many studies have focused on the antecedents of employee satisfaction (e.g. Agho et al. 1993; Matzler et al. 2004; Christen, Lyer and Soberman 2006). For example, Matzler et al. (2004) cited five variables, part of the job quality construct, that have positive impacts on employee satisfaction: superior, remuneration, responsibility, firm and recognition. Other studies focus on the role of empowerment. Spreitzer et al. (1997) indicates that empowerment has a strong impact on employee satisfaction. Other elements are the manager and responsibility. An increased role of employees in the knowledge process, helping to keep the information up-‐to-‐date and giving input for process improvements, has a positive effect.
Other factors that influence job satisfaction consist of environmental and individual factors. For this research we only look at one of the factors that influence employee satisfaction and that is one of the Environmental factors: Communication overload and communication under-‐load. One of the most important aspects of an individual’s work in a modern organization concerns the management of communication demands that he or she encounters on the job (Krayer et al., 1986). Demands can
be characterized as a communication load, which refers to “the rate and complexity of communication inputs an individual must process in a particular time frame.” (Farace et al., 1977). Individuals in an organization can experience communication overload and communication under-‐ load which can affect their level of employee satisfaction. Loveman (1998) found an increase in the productivity of workers by making knowledge accessible to all employees and therefore increasing employee satisfaction.
Heskett states that (1994) “Internal quality of a working environment contributes most to employee satisfaction. Heskett found that this was increasingly the ability and authority of service workers to achieve results for customers.” An example given was a telephone sales and service company’s employees which were backed by a sophisticated information system that puts complete customer information files at their fingertips the instant they receive a customers’ call. They were more satisfied than comparable companies.
So the determining factors for more satisfied employees when handling customer requests with support of knowledge management are:
• Responsibility, recognition and empowerment: giving the employee a greater involvement in the knowledge process and in improving customer processes (Spreitzer et al., 1997)
• The support to the employee in the handling of customer requests in available knowledge: There is a negative effect between information overload and employee satisfaction. Providing knowledge the right way supports the employee in fulfilling his job (Krayer et al., 1986; Farace et al., 1977). This involves the use of the entire system, not only the knowledge base in the smaller sense of the word.
• The support to the employee in the handling of customer request in training: Training to develop the right skills to handle client interaction (Loveman, 1998). This is training in general and not just about the knowledge system. It involves all the training in order to properly deal with customer interactions and by improving KM this training has a better advantage.
• The degree of satisfaction of customers. Being confronted with many unpleasant customer contacts has a negative effect on the employee (Heskett, 1994)
The conclusion is that access to well organized and more complete knowledge base reduces frustration among users. In addition, by active participation of the users in the knowledge process,
