Internal quality drives employee satisfaction

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Part of the service-profit chain business model, this relationship between internal quality and employee satisfaction can give you a new understanding on how you can engage and retain employees.

You’ve probably already heard of the service-profit chain theory, which was advanced in the nineties by Harvard University researchers James L. Heskett, Thomas Jones, Gary Loveman, W. Earl Sasser, and Leonard Schlesinger. These are its premises:

  • Internal service quality drives employee satisfaction
  • Employee satisfaction drives loyalty
  • Employee loyalty drives productivity
  • Employee productivity drives value
  • Value drives customer satisfaction
  • Customer satisfaction drives customer loyalty
  • Customer loyalty drives profitability and growth

Source: Harvard Business Review

There are no shortcuts to increasing profitability. All the links are equally important and they depend on each other.

For me, internal quality has many dimensions, some of which are not part of the original service-profit chain theory. Let’s take a look.


In the original theory, internal service quality is a link of the service-profit chain. Researchers measured it by analyzing workplace design, job design, employee selection and development, employee rewards and recognition and customer service tools.

“What we call the internal quality of a working environment contributes most to employee satisfaction. Internal quality is measured by the feelings that employees have toward their jobs, colleagues, and companies. What do service employees value most on the job?”

It seems that in this case, internal quality equals employee engagement, the way we understand it today.

When I think of internal quality, I have in mind product/service, processes and work experience. I think that delivering internal quality on these aspects inspires employees to stay and deliver external quality.


It’s about believing in what your company offers. As part of the organization, an employee has ownership of your product or service, to some extent.

If the company makes a product or provides a service, a simplistic view is that the employee made a product or provided a service. Because the employee is part of the company. He is the company, from a cultural standpoint.

So how does the quality of the product/service influence employee satisfaction?

The same way a parent’s happiness levels spike when you tell them their baby is gorgeous.

In order to increase employee satisfaction, you want your employees to feel like what they are providing is a qualitative product or service. That it matters, that it makes a difference, that it’s their baby and it’s gorgeous.

If you offer quality in your product or service, you provide meaningful work and that’s the main driver for employee engagement and employee satisfaction. A work that has intrinsic value and is an achievement on its own.

When your employees care about your product/service, they invest part of themselves, working harder and providing a bigger value. They will care more and that will, in return, increase their workplace satisfaction.


When talking about improving employee engagement in an organization, we often mention autonomy and freedom. We encourage managers to allow employees to manage their own space and time to achieve both performance and satisfaction.

But this autonomy does not imply chaos and confusion. No matter how small your business is, you need to have procedures and protocols. You need to have a framework; an efficient project management tool can help you achieve this.

The degree to which employees are satisfied working for a company is strongly influenced by the way their work is organized.

And this can mean several things; for example the quality of recruitment and preparation processes so that one can efficiently work with a colleague because he has the skills and abilities required. Or the quality of internal communication processes that allow for a given degree of transparency.

In their research of process-oriented organizations, Peter Willaert, Joachim Van den Bergh, Jurgen Willems and Prof. Dirk Deschoolmeester talk about the strong link between culture and quality of process…

Source: Blog–Hppy

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