Impact of Employee Happiness on Customer Satisfaction in the Airline Industry

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Human capital plays a crucial role in business success. This study explores the relationship between employee happiness and customer satisfaction in the Airline Industry. It delves into factors such as recognition, financial compensation, developing capabilities, physical work environment, flexible working times, and their impact on enhancing employee productivity and customer perception.

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8 8th thInternational Conference on Management Studies International Conference on Management Studies (ICMS (ICMS- -2022,) June, 10 2022,) June, 10 Authors: Musaab Nasef Naemi www.EUROKD.com

Authors Photos ICMS-2022 2

Authors short biographies Researcher and lecturer with experience in providing management sciences and research studies for human resources, marketing and strategic management. Experience and knowledge of statistical analysis tools to meet the requirements of studies and objectives. Preparing executive plans for business development teams. Expert in using communication channels and organizational skills in productive time management, ICMS-2022 3

Introduction Human Capital is the core element of any business foundation that provides services and products. When human capital is productive and motivated, the business foundation will gain profits, growth and success. To achieve the goals of the business foundation. it requires to please the customer with a product or a service, not just that, it requires to please the process of contact or transaction between customer and employee to receive the highest return. Covering the basic needs for employees will not make them productive, motivated and loyal to the business foundation, there are other factors to fulfill the psychological needs that make the employees productive, motivated and loyal to the foundation, that is happiness. The study focuses on the employee happiness that impact the level of customer satisfaction in Airline Industry, where services and contacts should meet the customer perception, and they should lead to satisfying the customer at every step of action and contact with an employee. ICMS-2022 4

The Literature Review The literature review was divided to six categories, recognition, financial compensation, developing capabilities, physical work environment, flexible working times and employee happiness & customer satisfaction. Where each section represents several views in the field. Previous studies findings also were presented in six appendix tables, where each table represents several studies of the dimension. Recognition:Employee recognition has been identified to be a highly effective motivational instrument, that can have significant positive impact on employee job satisfaction and performance as well as overall organizational performance (Rahim at el. 2011), a key focus of recognition is to make employees feel appreciated and valued (Sarvadi, 2005). Financial compensation: employee compensation has two main components: (1) Direct payments; (wages, salaries, incentives, commissions and bonuses), (2) Indirect payments; (financial benefits, such as: insurance and vacation paid by employers). Dessler (2006), ICMS-2022 5

The Literature Review Developing Capabilities:A learning process relies on individuals interests, capabilities, understanding, personalities, skills and aptitudes. Abilities and skills developed through individual development are generally planned for future application (Pearson & Brew, 2002). Physical work environment: Employees behaviors given their physical environment of work (open-plan offices) may depend on the nature of collaboration, employee characteristics, and employee perceptions of their fit with their physical workspace (Weiss & Cropanzano, 1996). Physical work environment: Individuals who perceive a fit between themselves and their work environments are more satisfied with their job (Jansen & Kristof- Brown, 2006). Flexible working times: Further study by (Hill and colleagues, 2004) found out that a change in one s daily schedule and overtime results in a better life balance are associated with better work-life balance. (Van Der Hulst & Geurts,2001) ICMS-2022 6

The Literature Review Employee happiness :satisfied employees are more apt to be friendly, enthusiastic, attentive, and empathetic toward customers (Beattyet al.,1996; Rafaeli, 1993). Employees, especially those that interact directly with customer must be well trained and taken care of so that they are satisfied and happy with their responsibilities and in turn (Huaman-Ramirez & Merunka, 2019). employee satisfaction was assessed from the customer s perception under the assumption that it could be regarded as a good proxy for true employee satisfaction (Vilares and Coelho,2003). Happiness may be defined as the experience of frequent positive affect, infrequent negative affect and an overall sense of satisfaction with life as a whole (Myers & Diener, 1995). customer satisfaction: is a state where customers are satisfied, whether on the quality of productor the overall interaction experienced by the customer. (W. H. Kim, Cho, & Kim, 2019) Employee customer contact is one of the strongest moderators of the employee satisfaction and customer satisfaction link (Brown and Lam 2008). ICMS-2022 7

The Study The main aim of the study is to investigate the role of determinants factors of employee happiness that impact positively the level of customer satisfaction in Airlines Industry (Emirates Airlines) the study will take three phases, since we have separate date in term of sample size and questionnaires for both employees and customers of Emirates Airlines the first phase will focus on employee happiness that will be tested and checked by its determinists factors (recognition, financial compensation, develop capabilities, physical work environment and flexible working times) the second phase will focus on customer satisfaction that will tested and checked by its practical factors (check-in satisfaction, departure satisfaction, and onboard satisfaction) The third phase will focus on effect of employee happiness on the level of customer satisfaction by joint both models to one model ICMS-2022 8

Research Question(s) The main question of the study was: Does employee happiness impact positively customer satisfaction? from the main question, three sets of hypotheses were developed one set of hypotheses is for employee happiness to determine an impact of its factors second set of hypotheses is for customer satisfaction to determine an impact of its factors third set of hypotheses is to determine an impact of employee happiness on the level of customer satisfaction after the service done ICMS-2022 9

Methodology The main aim of the study is to investigate the role determinants factors of employee happiness that impact positively the level of customer satisfaction, in other words, the role of factors that impact employee happiness in which affect positively the level of customer satisfaction in the airlines industry. The investigation was based on a quantitative data collected, the data was collected using two questionnaires, one for an employee and another one for the customer, with alternative answers consisting of intervals worth 1-5. Employee questionnaire was distributed to more than 287 employees at the head quarter of Emirates Airlines in City of Dubai and agencies offices of Emirates Airlines Customer questionnaire was distributed to more than 429 customers at Dubai International Airport, and agencies offices of Emirates Airlines An employee questionnaire was divided into seven groups of questions; the first group is personal information of an employee A customer questionnaire was divided into five groups of questions; ICMS-2022 10

Methodology factors of employee happiness: resignation, financial compensation, develop capabilities, physical work environment and flexible working times. Factors of customer satisfaction: check-in satisfaction, departure gate satisfaction, and onboard satisfaction. Descriptive analysis of the participants in both employees and customers was obtained by using SPSS package, and advanced analysis of the hypothesized factors of the study was obtained by using AOMS package version 26 (Analysis of Moment Structures). Population in this study divided to two-parts, one part is for employees and other part is for customers the total number of employees for the year (2019-2020) was 59519 employees with 172 nationalities. In which 10,785 were cabin crew, 11,242 were flight deck crew, 4300 were pilots, 1,904 were in engineering, and 31,288 were listed as other Population of customers that has been transport is 56.2 million passengers in 2019-2020 through the mean hub in Dubai. ICMS-2022 11

Methodology the models of the study: one model is for employee happiness, second one is for customer satisfaction, and the third one is for joint model for customer satisfaction and employee happiness. Using structural equation modeling: A. Model of employee happiness: Emphapp= B0+ B1appre + B2fincomp + B3develcap + B4wrkenir + B5flexwrk + E A. Model of customer satisfaction: CustSat= B0 + B1checksat + B2departsat + B3boardSat + E A. Model of customer satisfaction (employee happiness): Customer Satisfaction (checksat, departsat, boardsat) = Employee happiness (appre, fincomp, develcap, wrkenir, flexwrk). ICMS-2022 12

Results Employee data: construct reliability was tested using Cronbach alpha which assess reliability through the internal consistency of each variable, [18] of employee happiness yielding .89 is a good indicator of reliability of variables, which is above .70. Multicollinearity test of employee happiness predictor was run, the results showed tolerance is 0.805 which < 1, and VIF is 2.543 is < 5. descriptive statistics of employee happiness observed indicators, mean, standard deviation, maximum, minimum. we removed the anomaly values from the data that effect normality of data Customer data: reliability through the internal consistency of each variable, [9] of customer satisfaction predictors yielding .74, which is acceptable indicator of reliability of variables Multicollinearity test, showed tolerance is 0.857 which < 1, and VIF is 1.166 is < 5. "5" as the maximum level of VIF ICMS-2022 13

Results Employee model we ran the confirmatory factor analysis (CFA) using a full sample of employee. The CFA results showed the model fit of dataset of employee and hypothesized four factors were statistically significant and one hypothesized reported not significant, table below showed the result of goodness of fit: Model fit item Requirement of a fit CMNDF CMINDF < 3 P-Value >0.05 GFI > 0.90 CFI > 0.95 RMSEA < 0.08 Results of test status 2.413 .000 .889 .934 0.07 Good fit large data acceptable Marginal-Fit Acceptable fit Good Fit The structural model of employee happiness is a recursive mode, where all causal effects are in one direction and the model has six constructs and two-level order of laten variables. ICMS-2022 14

Results factor loadings in the model of employee happiness: No. Hypothesis Factor loading R2 P-result 1 *** sig. employee happiness- recognition .90 .81 2 ***sig employee happiness - financial compensation .96 .93 employee happiness developing capabilities 3 .91 .82 ***sig employee happiness physical work environment 4 .50 .25 Not sig employee happiness flexible working times 5 .52 .27 *** sig model of customer satisfaction: We ran a confirmatory factor analysis to empirically test the theoretical model proposed Model fit item Requirement of a fit CMNDF CMINDF < 3 P-Value >0.05 GFI > 0.90 CFI > 0.95 RMSEA < 0.08 Results of test status 1.481 .057 .982 .985 .034 Good fit Excellent fit Excellent-Fit Excellent- fit Excellent-Fit ICMS-2022 15

Results three paths hypothesized tested: No. Hypothesis Factor loading R2 P-result 1 *** sig. customer satisfaction- departure satisfaction .84 .70 2 ***sig customer satisfaction onboard satisfaction customer satisfaction check satisfaction .81 .66 3 .36 .13 Not sig The final model tested an effect of employee happiness on customer satisfaction as follow: No. Hypothesis Factor loading .68 -.96 -.65 -.28 R2 P-result 1 2 3 4 *** sig. *** sig. ***sig not sig. employee happiness- customer satisfaction employee happiness - departure satisfaction employee happiness board satisfaction employee happiness check satisfaction .46 .98 .29 .06 The result of hypothesis test in table above showed that customer satisfaction with factor loading at (.68) is significantly influences by employee happiness, the effect of employee happiness on customer satisfaction is positive and significant. employee happiness was found to have positive effects on customer satisfaction ( =.676, p=0.001). ICMS-2022 16

Discussion Employee happiness model finding indicates that the most important factors that impact employee happiness were financial compensation is loading at (0.96), followed by developing capabilities is loading at (0.91), recognition is loading at (0.90), flexible working times and physical working environment were the least important in terms of influencing employee happiness, The results of the employee happiness model indicate that four hypotheses are statically significant with employee happiness, and they are recognition, financial compensation, developing capabilities, and flexible working times. The fifth hypothesized factor, physical work environment showed not significant. the results of our applied study at Emirates Airline provide evidences that the theocratical model of employee happiness is proven that the proposed factors influence employee happiness. ICMS-2022 17

Discussion Customer satisfaction model finding indicates that the most important factors that influence customer satisfaction were departure satisfaction with loading at (0.84), followed by onboard satisfaction with loading at (0.81), check-in satisfaction is the least important in terms of influencing customer satisfaction. the results of the customer satisfaction model indicate that two hypotheses are statically significant with customer satisfaction, the third hypothesized factor check-in satisfaction found not significant because part of participant s customers, they check-in by themselves, they do not have any contact with employees at this a stage. From the results of the real event that happened between employee and customer in this model, it showed, how the happiness of employee impacts the perception of customer of the service and the relation that had been perceived at each step of the process of traveling. The results of practical customer satisfaction in this model and the previous studies, it provides evidences that the proposed theoretical model is proven that employee happiness is influencing customer satisfaction at Emirates Airlines. ICMS-2022 18

Discussion The final model of the study is linking the direct effect of employee happiness on customer satisfaction the finding of this model indicates that customer satisfaction influence by employee happiness at (.68); departure satisfaction influence by employee happiness loading at (-.96); onboard satisfaction influence by employee happiness loading at (-.65); check-in satisfaction is not influence by employee happiness and it is loading at (-.28). the three factors (check-in satisfaction, departure satisfaction, and board satisfaction) are in inverse position with employee happiness, that is way, they reported negative in model Based on the results of models of the study, I found by the results of applied study at Emirates Airlines. That factor of employee happiness impact positively the level of customer satisfaction, the hypothesized factors of the study are proven statically significant relationship between the factors and its predictors the provides an answer the main question of study. Does employee happiness impact positively customer satisfaction? ICMS-2022 19

Implications A sample of 287 employee participated is statistically adequate for parametric testing, however, the sample is still relatively small to population of employees of Emirates Airlines, this research can provide more valuable information with larger samples of employees, it can provide different applied facts. A sample of 429 customer participated is statistically adequate for parametric testing, however, the sample is still relatively small to population of customers of Emirates Airlines, this research can provide more valuable information with larger samples of customers, it can provide different applied facts. ICMS-2022 20

Implications the study is only focusing on airlines industry and one single company for data collection for both employee and customers, it is more useful and valuable, if we had more companies to participate in the study to generalization the impact. There are other factors might be affecting employee happiness and reflect on customer satisfaction, we did not include in the study, it should be investigated by future researches. ICMS-2022 21

Suggestions for Further Research Emirates airlines recommendations: Emirates airlines offer great benefits for employees, and satisfactory work conditions, management should enhance on the factors that affect employee happiness beside what they have been offered as follow: Non-financial compensation should be given in innovated way above normal offer, there are items should be offered to employees to make them happier such as free access to GYMs, pools, free parties, discounts in restaurants, free sea trips. Free desert trips, and limousine drive. Aviation jobs are sensitive and stressful, management should fix the gap between works schedule and holidays. and prepare monthly work plan for employees and provide more flexible working times. Less stressful work hours. social responsibilities and business ethics factors should be enhanced by the management toward job security of employees by reducing financial compensation and keeping employees at their jobs until Coronavirus disappear ICMS-2022 22

Suggestions for Further Research Future research on the topic of employee happiness affecting customer satisfaction: researchers should aim on factors that has not been investigated in this study, it might have effect on employee happiness such as Cultural dimensions, and social norms. Employee happiness theory is more important to be shaped with the challenges facing the word such an impact of Coronavirus on business input, output and operations, social responsibilities and business ethics factors should be enhanced toward job security of employees. ICMS-2022 23