Complaint management in hospitality organizations: The role of empowerment and other service recovery attributes impacting loyalty and satisfaction

Abstract

The purpose of this study was to analyze the relationship among employee empowerment and other complaint management procedures concerning guest satisfaction, intention to return, and intention to recommend the firm to others. The results indicated the importance of empowering frontline employees to properly accept, process, and react to complaints for an efficient complaint management strategy. In addition, the results showed that the three critical attributes for overall firm satisfaction, customer loyalty, and intention to recommend the firm to others included welcoming and understanding guest complaints, providing fair compensation, and promptness of complaint handling process. This study will enable hospitality and other service-oriented organizations to identify aspects of their operations that require more investment in order to ensure service improvements that would ultimately lead to better performance.

Keywords

Complaint management customer retention frontline employees empowerment guest satisfaction intention to return intention to recommend to others loyalty service recovery

Introduction

Over the past two decades, the complaint management process was shown to be an important firm process impacting service recovery in hope of guest retention and loyalty. Specifically, earlier recommendations to resolve complaints included the implementation of a good complaint management strategy (Estelami, 2000), and it was suggested that a customer-oriented complaint management process might transform displeased clients into loyal customers (Barlow and Moller, 1996).

Hospitality organizations’ (e.g. hotels, restaurants, etc.) complaints could easily result in disgruntled guests if these claims were not addressed promptly. The compliant process should serve as an opportunity for service improvement and recovery (Heung and Lam, 2003). Hence, the adoption of a suitable complaint management procedure in hospitality organizations could be a crucial marketing instrument for customer satisfaction and retention (Bowie and Buttle, 2011).

While earlier research indicated a connection between effective complaint management procedures and employee empowerment (Sparrowe, 1994; Walker and Miller, 2010), it remained unclear as to the strength of this relationship with outcomes such as guest retention, willingness to recommend the firm to others, and overall satisfaction with the firm once the complaint management process occurred. Thus, this study looked at the relationship among employee empowerment and other complaint management procedures concerning guest satisfaction, intention to return, and intention to recommend the firm to others. In this vain, employees should be empowered with the crucial factors for the complaint’s resolution such as employee training, knowledge, skills, and authority to make certain decisions, which would otherwise be made only by the management team. To assess these relationships, the following sections will provide background on hospitality industry complaint management goals and processes, types of complaints, and employee empowerment as related to complaint management.

Literature review

Not surprisingly, there were diverse definitions for “complaint.” For this study, complaint refers to the expression of displeasure, pain, annoyance, or dissatisfaction toward a company when consumers’ perceived problems with goods or offered services (Barlow and Moller, 1996; Kandampully, 2012). Complaints were usually communicated either orally or in writing; the way complaints were handled after detection usually affected the customers’ satisfaction level (Abbey, 1993; Bennett, 1997; Cook, 2012). Complaints also could be described as a social altercation, initiated to adjust perceptions and outcomes (Sturman et al., 2011). It was not uncommon for a stakeholder to point out any negative experience with an organization or a provided service in order to resolve the problems or concerns with adequate compensation (Stauss and Seidel, 2007). From that point of view, a complaint could be described as a second chance for an organization to reestablish customer satisfaction.

In contrast to a “complaint,” “complaint management” could be described as how companies manage, act, respond to and, afterwards, report customer complaints. The complaint management process usually required a systematic management of customer dissatisfaction (Gewald, 2001). According to Al-Shammarl (2012), complaint management could be a knowledge-based capability used to convert problems into solutions in order to resatisfy customers and recover service failures.

Past studies indicated three constitutive approaches for “complaint management.” The first approach was described as a process- or task-related point of view and was based on progression of several precise functions of a managerial assigned complaint handling process, which must be followed in order to accomplish the expected result (Johnston, 2001; Stauss and Schöler, 2004). The second approach was defined as a system-related consideration. It denoted “complaint management” as a particular department within an organization that was exclusively delegated to treat all customer concerns (Fornell and Wernerfelt, 1988). A third approach was described as the cumulative corporate perspective and based on the overall efforts of an organization to recover service failures (Hansen et al., 1995). Regardless of the approach undertaken for “complaint management,” it was generally agreed to be a systematic combination of activities focused on stabilizing, increasing, or reestablishing a high level of customer satisfaction (Susskind, 2010).

Bearing the above approaches in mind, this study intended to further examine the concept of “complaint management” in the context of hospitality organizations in order to determine key attributes of this process as potential drivers of guest or customer satisfaction, loyalty, and willingness to recommend the organization to others.

Hospitality industry complaint management

As service innovations in the hospitality industry continued to emerge and stakeholders’ demands and complaints continued to occur, it was eminent that managers in the hospitality industry be prepared to continuously enhance their complaint management strategy. Thus, it was not surprising that many firms in the hotel industry indicated guest satisfaction as a top company objective (Jeschke, 2004).

The importance of keeping guests satisfied cannot be overemphasized in any competitive industry. When guests are happy, other stakeholders (e.g. employees, management, shareholders, etc.) will be correspondingly happy because of the implicit opportunity to enhance revenue (Stauss and Seidel, 2007).

Past studies in the hotel industry indicated that guests’ perception of service quality and the resulting degree of satisfaction were mostly based on the guests’ experience with the employees, commonly known as the “Moment of Truth” (Bardi, 2011; Carlzon, 1989). Due to the distinctive differences in services offered throughout the hospitality industry, it could be difficult to standardize performances executed by individuals in the same manner as tangible goods were standardized by coded machines (Edvardsson, 1998).

Therefore, due to increased variability in services and customer needs, guest and other stakeholder complaints were inevitable. Guest satisfaction levels were shown to be correlated to the way their concerns were resolved after detection (Dinnen and Hassanien, 2011; Zairi, 2000). Hence, guest or stakeholder discontentment should be detected cleverly, analyzed correctly, and resolved immediately in order to enhance satisfaction (Jeschke, 2004). Considering the fact that only 5% of dissatisfied hotel guests tended to complain, and a larger number departed without complaint; both never to return (Bennett, 1997). Abbey (1993) highly recommended that guests’ concerns should be responded to in a proactive way rather than waiting for the guests to complain. In contrast, about 80% of the resatisfied guests, who had complaints, tended to become loyal consumers and communicated their positive experiences to 20 potential guests (Bennett, 1997). This phenomenon supported Cook’s (2012) assertion that undetected discrepancies concerning services, goods, or an organization’s negative behavior were the most critical reasons for consumers losing confidence in an organization. The result of this loss of confidence was described as customers changing to other alternatives in the marketplace. To avoid this problem, earlier researchers indicated the importance of management’s attention to different categories of complaints. In this context, management’s attention to grievances that were directly communicated to the respective provider, who caused the dissatisfaction as well as indirect complaints that were passively spread as negative word of mouth, cannot be understated.

The goal of complaint management

Haas and Von Troschke (2007) suggested that the ultimate goal of the complaint management process was to increase an organization’s profit by improving guest satisfaction and customer loyalty. Past studies indicated that quick, nonbureaucratic, and polite handling of complaints were shown to enhance customer relations and achieve complaint satisfaction (Stauss and Seidel, 2007). An effective corporate complaint management system also was credited for positive organizational image. It had been proposed that an effective complaint management system demonstrated to the guests that any dissatisfaction would be dealt with proactively and would have a major influence on an organization’s external reputation (Ang and Buttle, 2006). In addition, earlier studies indicated that complaints provided essential information to an organization’s management for improvements and innovations in regard to operational quality (Harrison-Walker, 2001; Stauss and Seidel, 2007).

In addition to satisfaction, past studies indicated that successful handling of complaints had a positive influence on future purchase intentions (McCole, 2004). According to Stauss and Schöler (2004), the economic advantages of complaint management were classified into four beneficial areas: information, communication, attitude, and repurchase benefits. The information benefit was based on evidence obtained from guests’ complaints, which referred to a specific problem area in need of management attention. This helped reduce prospective failure costs as well as enhance the operational efficiency and organizational performances (Bowen and Johnston, 1999; Slack et al., 1998). The communication benefit was based on the oral effect of complaint management (Stauss and Schöler, 2004). Basically, if customer complaints were handled appropriately and solved with an acceptable outcome, customers tended to recommend the organization to others, leading to the acquisition of new customers (Spreng et al., 1995). The attitude benefit was based on the positive change of a customer’s behavior due to achieved complaint satisfaction (Stauss and Schöler, 2004). Delighted customers tended to be more loyal than those who were just “satisfied” (Jones and Sasser, 1995). The repurchase benefit was based on the fact that guests with successful complaint claims remained with the organization instead of realigning with a competitor (Stauss and Schöler, 2004).

Complaint acceptance

Several studies suggested employee skills needed to enhance the perception of complaint acceptance. For instance, the employee receiving a complaint should be able to listen carefully, and try to interpret and understand the guests’ degree of frustration. In order to interpret a guest’s actual degree of frustration, the guests’ body language and gestures should be observed accurately (Andrews, 2008). In addition, the employee should focus on the articulated problem and refrain from being biased in favor of the organization through expressed emotions (Cook, 2012). If the complaints could be rectified by the guest (e.g. TV issues, coffee machine problems, or other room equipment), employees were urged to politely give helpful directions (Andrews, 2008). During the acceptance of the complaint by the employee, an apology alone was not expected to resolve the customer’s concerns. However, employees were highly encouraged to use an apology to reduce the customer’s hostility, which could lead to a quick resolution of the problem (Stauss and Seidel, 2007).

When communicating a complaint, researchers indicated an impact when employees demonstrated sensitivity versus insensitivity during the complaint management process (Stauss and Seidel, 2007). Hence, it was suggested that employees receiving verbal complaints should be open-minded toward criticism, be able to calm the situation down and respond to the issue in a professional way, or offer an immediate remedy that showed a gesture of commitment to the concerned customer (Gardini, 2009). Further, if the issue cannot be resolved immediately, an earlier study suggested the complainant should be continuously informed with frequent updates in regard to the resolution of the complainant’s concerns (Andrews, 2008).

Employee empowerment and the concept of complaint ownership

Employee empowerment was widely accepted as a contemporary human resource management tool and was believed to embolden personnel to be creative at executing daily tasks, while effectively resolving guests’ complaints (Walker and Miller, 2010). It had been proposed that three important forms of empowerment were evident in the service sector. The first form was described as empowerment through participation: This form of empowerment focused on the delegation of decision-making between different levels of ranking within an organization. The second form (empowerment through commitment) focused on involving employees in operational goals in order to foster job satisfaction and employee retention. Finally, the third form (empowerment through delayering) focused on the reduction of organization’s hierarchical levels in the decision-making processes in order to speed up the decision-making processes. This form of empowerment appeared to create the basic tenet of the concept of complaint ownership. This empowerment type emboldened employees to be productive at executing daily tasks, with the necessary authority to effectively resolve guests’ complaints (Lashley, 2001). By accelerating the complaint management process without depending on higher hierarchical levels of authorities, guests’ perceived the employees as competent and informed beings (Mullins, 2001; Stauss and Seidel, 2007).

The delayering process of empowerment leads to the complaint ownership concept. This concept was based on the idea that the first employee to be informed about a guest’s problem was responsible for processing the problem (Mowatt, 2010). As soon as a complaint had been voiced to an employee, the employee was expected to accept it, listen carefully, and handle the complaint appropriately. Further, any employee who was confronted with a complaint was expected to accept it immediately and attend to the customer’s request regardless of who caused the problem. Therefore, in order for the concept of complaint ownership to be operative, employees must be empowered and prepared to be responsible for accepting complaints, even if the problem was not related to their department (Sparrowe, 1994).

Bearing the above in mind, earlier studies indicated that employees be endowed with the necessary training, skills, knowledge, and authority to make the appropriate decisions to resolve the complaint and ensure that employee empowerment was successful (Mowatt, 2010; Stauss and Seidel, 2007; Walker and Miller, 2010).

Complaint processing

Complaint processing was described as the actual course of action used to resolve the compliant from a guest’s perspective (Stauss and Seidel, 2007). According to Meffert and Bruhn (2009), instead of simply focusing on the final outcome of the procedure, the complaint processing step should be established as a major key for a high level of complaint satisfaction.

As such, there may not be one best way for processing complaints and, therefore, the complaints could be processed in several ways. One way of complaint processing was described as solving a customer’s problem or concern immediately without consulting any further authorities. In this case, the informed employee (complaint owner) was able to restore a customer’s satisfaction by apologizing or offering adequate compensation without consulting any further authorities (Lohse, 2001). The second way, according to Lohse (2001), required the guidance of the appropriate authorities within the organization that would provide the necessary information to resolve the problem or concern. However, the complaint owner still had to conclude the issue by communicating the conclusion to the affected customer. A third option required a responsible department; hence, the previous complaint owner would be completely excused from the matter (Stauss and Seidel, 2007). Regardless of the way an organization intended to process its complaints, frontline employees should be informed and well trained about their pertinent responsibility in regard to processing complaints (Johnston and Mehra, 2002).

Complaint reaction

A complaint reaction, as described by researchers, was the resolution of the customer’s problems or concerns in terms of an appropriate response or compensation (Meffert and Bruhn, 2009). The appropriate response or compensation used to calm down a complaint must be decided by the organization and should be dependent on the type of customer problem (Stauss and Seidel, 2007).

According to Meffert and Bruhn (2009), the three common responses or compensations in relation to customer complaints included the following:

Monetary compensation: This might be a partial or full refund for the product or performed service failure.

Replacement or reparation: This type of compensation was usually applied in matters of material goods that could be replaced for a better substitute.

Official apology: This type of compensation was usually used for service recovery. It was an immaterial type of compensation based on a formal apology as well as a detailed statement of the organization’s explanation for the occurred defect. This response was often accompanied by a small present to demonstrate appreciation and regret to the affected guest.

Regardless of the type of response or compensation employed, the conduct of the contact employees had been suggested as a very critical element for service recovery. Hence, earlier researchers indicated a need for well-trained and empowered employees in reacting to different types of complainants to resolve them effectively (Stauss and Seidel, 2007).

Hypotheses

Based on earlier studies, it could be surmised that a complaint management strategy and well-designed process were important to complaint handling satisfaction, as well as continued satisfaction with the firm and customer loyalty. Thus, the following hypotheses were divided as follows: (1) compliant management attributes impacting satisfaction with the complaint management process and (2) complaint management attributes impacting (a) satisfaction with the firm, (b) intention to return, and (c) intention to recommend to others.

Satisfaction with the complaint management process

Previous studies indicated that guests felt more appreciated with their claim when employees took immediate responsibility for the occurred problem (Mowatt, 2010; Stauss and Seidel, 2007). If employees were taking responsibility of the stakeholders’ complaints, instead of consulting with their supervisors or managers before doing anything, the complaint management procedure would be accelerated (Mowatt, 2010). Accelerating the complaint management procedure by the complaint owner would enable the organization to avoid deferments and provide a resolution of problems or concerns to the customer’s satisfaction (Stauss and Seidel, 2007). Bearing the above in mind, Hypothesis 1 stated:

H1 : Guests who are (not) forwarded to another person or department will feel less (more) welcomed and less (more) understood.

A by-product of being forwarded to others and a lack of responsibility for a complaint was thought to increase the length of time for complaint resolution. Specifically, earlier research indicated guests felt more appreciated when employees took immediate responsibility for the occurred problem (Mowatt, 2010; Stauss and Seidel, 2007); and, the duration of the complaint management process was critical in establishing complaint management satisfaction (Meffert and Bruhn, 2009; Stauss and Seidel, 2007). Therefore, Hypothesis 2 stated:

H2 : Guests experiencing a more prompt complaint management process are more satisfied with the complaint management process.

In addition to the length of time it took to resolve complaints, the customer’s perceptions of inadequately informed or trained employees to resolve customer complaints appeared to drive dissatisfaction within the complaint resolution and the complaint process. In general, employees must be trained to know several stages of operational procedures in order to provide high-quality guest service (O’Fallon and Rutherford, 2011). By following a specified procedure, with consideration for the individual’s innovativeness as adapted to the particular incidents, complaints would be overcome (Al-Shammarl, 2012). If an employee lacked knowledge in regard to resolving a particular complaint, the complainant could perceive the employee as incompetent, which could lead to establishing a negative perception of the employee (Mills and Law, 2004). As a result, the handling of the complaint management procedure could end in displeasure due to unsatisfactory compensatory value (Egan, 2008). Following earlier studies, Hypothesis 3 stated:

H3 : Guests who perceive the respective employee as not being informed about internal standards and policies will be less satisfied with the overall complaint handling.

While many hotels had been criticized for not empowering their employees to professionally respond promptly to guests’ concerns (Heung and Lam, 2003), earlier researchers suggested that staff members should be trained and empowered to offer appropriate solutions to complaints without consulting a supervisor as most guests were expecting an immediate resolution (Mowatt, 2010; Stauss and Seidel, 2007). Hence, a certain amount of authority should be given to staff members in order to enhance the guests’ experience. Unauthorized employees, who were not empowered to offer compensation for service complaints, left employees with little or no opportunity to show “goodwill” and with remorse over guests’ complaints (Meffert and Bruhn, 2009). Based on earlier notions of the importance of empowerment in handling complaints, Hypothesis 4 stated:

H4 : Guests who perceive the employee as not being authorized to make decisions will be less satisfied with the overall complaint handling process.

Overall firm satisfaction and customer loyalty

Hypotheses 1–4 above described various complaint management process attributes that could individually affect guests’ perceptions of the complaint handling processes. In addition, the attributes could also affect (1) the guests’ overall satisfaction with the organization, (2) whether or not they will return, and (3) whether or not they will recommend the firm to others. Thus, people who were not satisfied with the complaint management processes could develop a negative perception of the organization, which could affect several desired consumer behaviors. Further, the study hypothesized that some complaint process attributes would be primary drivers of firm satisfaction. Bearing the above in mind, Hypotheses 5a and 5b articulated the following relationships:

H5a : Guests that are more satisfied with complaint management process attributes are likely to be more satisfied with the organization.

H5b : Specific complaint management process attributes can be identified as primary drivers of guest satisfied with the organization as a whole.

Organizations with a good complaint management process might transform displeased customers into loyal customers (Barlow and Moller, 1996). According to Heung and Lam (2003), complaints that could result in disgruntled guests should serve as an opportunity for service improvement. Thus, the implementation of an effective complaint management procedure could be a crucial marketing instrument for stakeholders (customer) satisfaction and retention (Bowie and Buttle, 2011). Cook (2012) indicated a discrepancy in regard to a firm’s negative aspects concerning behaviors, goods, or services. These were vital reasons for customers to lose loyalty and, thus, switch to marketplace substitutes. Based on earlier studies, Hypotheses 6a and 6b articulated the following relationships:

H6a : Guests that are more satisfied with complaint management process attributes are more likely to return to the hospitality organization.

H6b : Specific complaint management process attributes can be identified as primary drivers of guests’ likelihood to return to the hospitality organization.

If an unnoticed discrepancy occurred in an organization from negative behavior, goods, or services, this could become a vital reason for customers to lose loyalty and switch to substitutes in the marketplace (Cook, 2012). Then, what would be the likelihood that the guest would recommend the organization to others? The intent of the study was to examine the above question through Hypotheses 7a and 7b. This was done by examining the impact a complaint management process, based on specific attributes of the process, had in regard to the likelihood that the disgruntled guest would recommend the hospitality organization to others. Formally stated:

H7a : Guests that are more satisfied with complaint management process attributes are more likely to recommend the hospitality organization to others.

H7b : Specific complaint management process attributes can be identified as primary drivers of guests’ likelihood to recommend the hospitality organization to others.

Methodology

The study used survey methodology to assess consumer experiences during recent hospitality organization visits where complaints were encountered. In essence, the participants were asked to (1) assess elements of the hospitality firm’s complaint management process as well as their satisfaction with the handling of the complaint, (2) their satisfaction with the firm after the complaint process, and (3) whether or not they would return to the firm or recommend it to others. The survey questionnaire utilized for this study was based on reviews from prior studies (Bowie and Buttle, 2011; Meffert and Bruhn, 2009; Mowatt, 2010; O’Fallon and Rutherford, 2011; Oliver, 1996; Stauss and Seidel, 2007). Items in the final questionnaire were made up of (1) some forced choice questions regarding customer complaints, promptness of complaints, how they complained, where they complained, loyalty to the organization, case (complaint) recovery time, and if they were forwarded to another person or department; (2) multiple answers questions regarding the reasons for customer satisfaction–dissatisfaction; (3) a five-point Likert scale, which ranged from 1 = “Strongly Disagree” to 5 = “Strongly Agree,” was used to measure overall complaint handling and general satisfaction with the organization; and, (4) demographic questions regarding customer’s age and gender.

The sample used in this study was a convenience sample of consumers in public areas, such as shopping centers, food courts, pedestrian zones, and universities in Germany. The sample selection for this study totaled 473 participants. The sample was 50.1% male and 49.1% female; in terms of age, the age group distribution was relatively equally distributed with the following: 18–24 years (19.2%), 25–30 years (24.3%), 31–40 years (18.4%), 41–50 years (16.1%), 51–64 years (12.5%), and 65 + years (9.5%).

Measurement

The survey instrument measured several aspects or attributes of the complaint management process; these served as independent variables for the analysis in this study (described in the section below). To test for relationships among the complaint management attributes, four measures were used as dependent variables in the tests of hypotheses (described below).

Complaint management process attributes (independent variables)

Based on a review of the literature in the survey development, the study ended up with seven complaint management process attributes that served as independent variables. Participants were asked to evaluate the following aspects concerning the overall complaint handling and rate them on a five-point scale ranging from strongly agree to strongly disagree. In this study, the attributes included: (1) the number of times the guest was forwarded to another person or department during the complaint process, (2) guest awareness of complaint channels to articulate their concern, (3) if the guest felt welcomed and understood when voicing the complaint, (4) if the respective employee seemed to be very anxious and did not listen carefully, (5) if the respective employee seemed to be informed about internal standards for addressing guest complaints, (6) if the respective employee was authorized to make a decision regarding the guest’s complaint, (7) if the employee offered a fair value of compensation, (8) if the guest was satisfied with the promptness of the overall procedure, and (9) the length of time it took for the complaint to be fully resolved.

Attribute #1 used a scale of 0–3 to assess the number of times the guest was forwarded (0 = not forwarded, 1 = once, 2 = twice, and 3 = more than twice). Attributes #2 through #8 used a five-point scale ranging from 1 = strongly disagree to 5 = strongly agree. Attribute #9 had six possible responses for the time it took to full recovery ranging from 1 = less than 30 min, 3 = within a day, 4 = within a week, and 6 = still waiting for a response.

Dependent variables

Loyalty

The dependent variables in regard to returning to the hospitality organization or recommending the hospitality organization to others were measured by forced choice questions. The respondents were asked if they would return to the company and if they would actively recommend the company to others. The responses to the above questions were based on two binomial responses, Yes or No. This measure represented a forced-choice questions approach to measuring loyalty. These choices were coded numerically for hypothesis testing.

Overall handling of complaint

Respondents were asked to rank their perceptions of the overall handling of the complaint management process relative to the complaint management attributes. The ranking of their perceptions of the overall handling of the complaint management process was based on a five-point scale (1 = very dissatisfied, 2 = dissatisfied, 3 = neither satisfied nor dissatisfied, 4 = satisfied, and 5 = very satisfied).

Overall (general) satisfaction with the hospitality organization

Similar to the overall handling of complaint, the respondents were asked to rank their perceptions of the overall handling of the complaint management process relative to the complaint management attributes. The ranking of their perceptions of the overall handling of the complaint management process was based on a five-point scale (1 = very dissatisfied, 2 = dissatisfied, 3 = neither satisfied nor dissatisfied, 4 = satisfied, and 5 = very satisfied).

Data analysis

Data analysis was performed using SPSS 20.0 for Windows™ (IBM SPSS Inc., Chicago, IL, USA). To test hypotheses and to sort out the relationships among complaint management attributes as drivers of complaint handling satisfaction, firm satisfaction, return visits, and recommendation behavior, the study used two approaches. First, the study used a linear regression to test Hypotheses 1–4. Stepwise regression analysis was used to test Hypotheses 5a and 5b to allow an examination of the contribution of each attribute prior to developing the equation and without a priori knowledge of the likely contribution of each attribute (Hair et al., 2009).

Two dependent variables had binomial responses, Yes or No: (1) Would you return to the company? and, (2) Would you actively recommend the company to other people? Due to this dichotomy, binary logistic regression was used to test Hypotheses 6a and 6b and 7a and 7b, to assess the best set of complaint management process coefficients that would predict belonging to a particular category (plans to return to the company in the future and plans to recommend the company to others).

Results

The results were divided into three main sections: (1) linear regression results, (2) stepwise regression results, and (3) logistic regression results.

Linear regression results

The first hypothesis (H1) examined the relationship between people who were forwarded to another person or department and their feeling of being welcomed and understood with their concern. H1 was not supported (see Table 1); there was no significant relationship between people who were forwarded to another person or department and their feeling of being welcomed and understood with their concern.

Table 1.

Guests’ feeling welcome and understood (DV) regressed on guests forwarded to others (IV).

H1 attribute	St. beta	St. error	t	F
Guest forwarded to others	.02	.08	.28	.08
R	.02
R²	.00

Note: The dependent variable of guest feels welcome and understood (N = 274).

The second hypothesis (H2) was supported (see Table 2); there was a significant relationship (F = 79.93, p < .001) between people experiencing the entire complaint management process as not prompt enough and their satisfaction with its duration (ß = .48, p < .001). In other words, guests experiencing the entire complaint management process as not prompt enough were not satisfied with complaint management process. This relationship explained 23% of the variance in the guests’ satisfaction with the firm’s complaint management process.

Table 2.

Guests’ satisfaction with complaint process (DV) regressed on length of complaint management process (IV).

H2 attribute	St. beta	St. error	t	F
Length of process	.48***	.84	8.942	79.93***
R	.48
R²	.23

Note: The dependent variable of promptness satisfaction (N = 274). ***p<.001.

Hypotheses 3 and 4 were also supported (see Table 3) (F = 21.45, p < .001); there was a significant relationship between people who perceived the respective employee as not being informed about internal standards and policies and their satisfaction with the overall complaint handling (ß = .32, p < .01). Similarly, there was a significant relationship between people who perceived the employee as not being authorized to make decisions and their satisfaction with the overall complaint handling (ß = .45, p < .001). Overall, these two attributes explained 19% of the variance in the guests’ satisfaction with the firm’s complaint management process. The tests indicated the two-way interaction for these two attributes was nonsignificant; results indicated empowerment attributes of employees perceived as being informed of company policies and authorized to make decisions positively impacted the guests’ satisfaction with the complaint process.

Table 3.

Guests’ satisfaction with complaint process (DV) regressed on employees informed on policies and employees authorized (IVs).

H3 and H4 attributes	St. beta	St. error	t	F
Employee informed on policies	.32**	.14	2.11	21.45***
Employee authorized	.45***	.12	3.84
Two-way interaction	-.28	.04	-1.34
R	.44
R²	.19

Note: The dependent variable of complaint process satisfaction (N = 274). ***p<.001.

Stepwise regression results

A caveat of stepwise regression was the potential impact of multicollinearity among independent variables. The basic concept of stepwise regression was to allow the researcher to determine the contribution of each independent variable prior to creating the regression equation. The independent variables with the most contribution were added first. Then additional variables were increased if the additional contribution increased by a significant amount of variance above the already included variable(s). To assess the impact of multicollinearity when using techniques such as stepwise regression, a two-step process considering the condition index and the regression coefficient variance-decomposition matrix was recommended in addition to inspection of Variance Inflation Factors (VIF) and tolerance (Hair et al., 2009). In using this process and with a condition index threshold value of 15 and coefficient threshold of .90 or above, no multicollinearity issues were present in the results of the stepwise regression equations used in this study (e.g. Hair et al., 2009).

Table 4 provides results of stepwise regression on which complaint management process variables impacted the DV—“how satisfied are you with the company after the case was resolved?” The test included nine complaint management process attributes; four complaint management process attributes were significant predictors of overall satisfaction with the company (promptness of the overall procedure, employee offered a fair value in compensation, guest felt welcome and understood when voicing the complaint, and the employee was authorized to make decisions about the guest complaint (empowerment)). It also was interesting to note that this group of attributes explained about 53% of the unique variance (R²= .53, F = 76.45, p < .001) in overall firm satisfaction. The “promptness of the overall procedure attribute was the strongest predictor” (ß = .47, p < .001), followed by “employee offered a fair value in compensation” (ß = .24, p < .001), “guest felt welcome and understood when voicing the complaint” (ß = .19, p < .001), and the “employee was authorized to make decisions about the guest complaint” (ß = .18, p < .001).

Table 4.

Overall firm satisfaction (DV) regressed on complaint management attributes (IVs).

All attributes	St. beta	St. error	t	F
Promptness satisfaction	.47***	.06	7.89	76.45***
Offered fair compensation	.24***	.05	4.97
Felt welcome and understood	.19***	.05	3.90
Employees authorized to make decisions	.18***	.05	3.86
R	.73
R²	.53

Note: The dependent variable of overall satisfaction with the firm (N = 274). ***p<.001.

Binary logistic regression

Two logistic regression analyses were run to predict (1) if guests will recommend a hospitality firm to others and (2) if guests will return to a hospitality firm based on specific attributes of the complaint management process. Due to the exploratory nature of this analysis, logistic regression was run using a forward stepwise approach.

“Recommend to others” results

A test of the model that included three predictors against a constant only model was statistically significant (Table 5), indicating that the set of predictors reliably distinguished between those willing to recommend the hospitality firm to others and those not willing to recommend (chi square = 26.99, p < .000 with df = 1). The chi square tests indicated that the model with predictors was significantly different than the model with no predictors (null hypothesis); and, in the case of this stepwise model, the addition of three predictors provided significantly more predictability than the model with two predictors.

Table 5.

Intention to recommend or not recommend (DV) regressed on complaint management attributes (IVs).

Attributes	B	SE	Wald	df	Sig.	Exp(B)
Felt welcome and understood	1.03	.21	23.55	1	.000	2.79
Fair compensation	1.81	.29	39.52	1	.000	6.17
Promptness satisfaction	1.35	.29	20.99	1	.000	3.85
Constant	–12.16	1.56	60.79	1	.000	.000

Variables were entered using forward stepwise approach.

During this analysis, eight cases were removed being deemed as excessive outliners, which, if left in the analysis, could significantly affect the results (N = 264). Removal was based on an inspection of the standardized residuals and those that exceeded 2.58 were removed (Agresti, 1996: 583). Once the outliers were removed, logistic regression was recalculated. This analysis resulted in Nagelkerke’s R2 of .691 indicating a moderately strong relationship between predicting and grouping of cases. Overall prediction success was 85% (94.6% for recommend and 65.2% for nonrecommend). The Wald criterion demonstrated that the predictors of “welcome and understood” (p = .000), “fairly compensated” (p = .000), and “satisfied with the promptness of the process” (p = .000) made significant contributions to predictions of guests’ willingness to recommend the firm to others. To further support this model, an inspection of the classification plot demonstrated the desired U-shaped distribution indicating the grouping predictions were well differentiated with recommend and nonrecommend cases clustered at each end showing correct classification (Agresti, 1996).

The EXP (ß) provided a measure of the extent to which increasing the predictor by one unit influenced the odds of plans to recommend the hospitality firm to others. For guests’ feeling welcome and understood in the complaint management process, when guests felt one unit more satisfied with this attribute, they were 2.79 times more likely to belong to the plan to recommend group. An increase in fair compensation satisfaction increased the odds of being in the recommend group by 6.17 times and an increase in promptness satisfaction increased the odds of being in the recommend group by 3.85 times.

“Return to hospitality firm” results

A test of the model that included three predictors against a constant only model was statistically significant (Table 6), indicating that the set of predictors reliably distinguished between those willing to return to the hospitality firm and those not willing to return (chi square = 29.69, p < .000 with df = 1). The chi square tests indicated that the model with predictors was significantly different than the model with no predictors (null hypothesis); and, in the case of this stepwise model, the addition of three predictors provided significantly more predictability than the model with two predictors.

Table 6.

Intention to return or not return (DV) regressed on complaint management attributes (IVs).

Attributes	B	SE	Wald	df	Sig.	Exp(B)
Felt welcome and understood	1.02	.20	25.90	1	.000	2.77
Fair compensation	1.61	.26	38.96	1	.000	5.02
Promptness satisfaction	1.12	.27	17.42	1	.000	3.08
Constant	–10.89	1.34	65.73	1	.000	.000

Variables were entered using forward stepwise approach.

During this analysis, five cases were removed being deemed as excessive outliners, which, if left in the analysis, could significantly affect the results (N = 269). As with the recommendation model, outlier removal was based on an inspection of the standardized residuals exceeding 2.58 (Agresti, 1996: 583); once removed, logistic regression was recalculated. This analysis resulted in Nagelkerke’s R2 of .654 indicating a moderately strong relationship between predicting and grouping of cases. Overall prediction success was 86.6% (95.1% for return and 67.9% for nonreturn). The Wald criterion demonstrated that the predictors of “welcome and understood” (p = .000), “fairly compensated” (p = .000), and “satisfied with the promptness of the process” (p = .000) made significant contributions to predictions of guests’ planned to return. To further support this model, an inspection of the classification plot demonstrated the desired U-shaped distribution indicating the grouping predictions were well differentiated with return and nonreturn cases clustered at each end showing correct classification (Agresti, 1996).

Based on the EXP(ß) statistic, an increase of three predictor attributes by one unit of satisfaction provided an increase in the odds of plans to return to the hospitality firm. Specifically, when guests felt one unit more satisfied with feeling welcome and understood in the complaint management process, guests were 2.77 times more likely to belong to the plan to return group. An increase in fair compensation satisfaction increased the odds of being in the return group by 5.02 times and an increase in promptness satisfaction improved the odds of being in the return group by 3.08 times.

Discussion and conclusion

Given the variability of service or experience delivery in hospitality organizations, it could be assumed that at least some level of guests’ complaints was inevitable. Hence, earlier research in business and hospitality literature articulated the importance of firms having an effective complaint management strategy and process (Bowie and Buttle, 2011; Sparrowe, 1994; Walker and Miller, 2010). The current study extended this research area by more clearly assessing primary drivers of hospitality guest satisfaction with the complaint management process and the overall firm. Further, the results of this study provided practical information on primary drivers of customer loyalty and potential for spreading positive word of mouth to others based on their experience in how the complaint process was handled at the frontline level.

Given the limited resources of all firms and a desire to maximize the use of those firm resources, the ability to empirically define meaningful relationships among complaint management process characteristics and desired guest behaviors could benefit all hospitality organizations.

First, the study did not find a relationship between forwarded guests to another person or department with guests’ feeling of being welcomed and understood during the complaint process. This finding may indicate that the impact (positive or negative) of guests being forwarded to someone else to deal with the complaint depended on the type of complaint, the guests, and the desired outcomes. Second, the study found a relationship between promptness and satisfaction with the complaint management process. Not surprisingly, this finding indicated guests’ desired a prompt resolution to issues during their hospitality experience. Additionally, promptness was a key driver of overall satisfaction with the firm, customer loyalty (return), and recommending the firm to others.

Interestingly, whether or not guests felt employees handling their complaint were informed of policies had an impact on guest satisfaction of the complaint process. But, it was not one of the key drivers of overall firm satisfaction, customer loyalty, or recommendation to others. While this appeared to be associated with an effective complaint management process by guests, the training issues did not appear to be associated with broader consumer behaviors with the firm. This attribute may be a more secondary driver of behaviors such as positive word of mouth, return visits, and feelings of overall firm satisfaction.

Empowering frontline employees to make decisions to deal with guests’ complaints appeared to impact guests’ satisfaction with the complaint management process and overall satisfaction with the hospitality firm. Therefore, the complaint management attribute of employees being authorized to make decisions was a key element in an effective complaint strategy.

In addition to promptness in the complaint management process, three additional attributes appeared to be associated with a sense of satisfaction with the hospitality firm. The perception of fairness in offered compensation was one key driver of overall satisfaction along with feeling welcome and understood when voicing a complaint and having employees that appeared authorized to make decisions on their own to address complaint issues. These four primary drivers of firm satisfaction seemed to be at the heart of good hospitality service and were particularly important when dealing with guests’ complaints.

Three of these attributes were shown to be primary overall firm satisfaction drivers and also were drivers of customer loyalty and recommendation when well executed during the complaint process. Specifically, guests, who felt welcome and understood when voicing a complaint and who received fair compensation and were satisfied with the complaint process promptness, were likely to be included in the group that planned to return to the firm and recommend to others. This finding indicated that ensuring these attributes as primary aspects of a compliant management strategy were good investments for positive guest behaviors.

Implications recommendations and limitations

Although there are numerous studies on responses to complaint management, customer satisfaction, and satisfactory service recovery, this study empirically identified some of the primary factors of hospitality guest satisfaction with the complaint management process and the overall organization. Further, the results of this study provided practical information on primary drivers of customer loyalty and potential for spreading positive word of mouth. This is an important finding because the combination of customer satisfaction, satisfactory service recovery, customer loyalty, and positive word of mouth not only helps to attract new customers but also assists in enhancing the revenue centers of the hospitality industry.

An effective complaint management process could have substantial implications for the success of hospitality organizations. Firms that focused on having well-trained and empowered frontline employees were more likely to yield positive outcomes when a guest complaint arose. Specific attributes such as making guests feel welcome and understood during the complaint process, being able to determine fair compensation for any issues that arose, and assurance of a quick response to handling any issues were key drivers of a successful complaint management strategy.

Some of the implications of this study are that hospitality and other service-oriented organizations must be prepared to invest in training their frontline employees enough to assume the necessary skills and empowerment to properly accept, process, and react to complaints for an efficient complaint management strategy. Whereas, in the past, many studies on drivers of customer satisfaction focused on its impact on customer loyalty, the current study also indicated that guests, who felt welcome and understood when voicing a complaint, who received fair compensation and were satisfied with the complaint process promptness, were more likely to be loyal and recommend the hospitality organization to others.

The implications of this study are applicable to a wide range of service-oriented organizations and indicate the importance of an efficient complaint management program. Once a problem occurs, the way in which the frontline employees handle the situation can influence the consumer’s satisfaction, loyalty, and likelihood to recommend the organization to others. Several specific recommendations follow from these findings. Though some of these recommendations have been articulated previously, these recommendations are supported by multiple empirical analyses.

First, hospitality and other service-oriented organizations should develop an efficient complaint management program. The focus of such a program should be on training frontline employees who deal with disgruntled customers about the importance of incorporating the findings of this study in their complaint management process.

Second, hospitality and other service-oriented organizations should invest in their frontline employees’ skills and empower them to be able to determine and award fair compensation for any issues that arise for the assurance of a quick response to complaint handling.

Third, hospitality and other service-oriented organizations should not undermine the importance of enhancing their relative budget allocations for complaint management activities. Such budget allocations should be viewed as investments to ensure service improvements that would ultimately result in more income for the organization’s revenue centers.

While the current study shed valuable light on the issue of complaint management in hospitality, it was not without limitations. First, the sample was restricted to Germany. While the researchers believed the findings using this sample were generalizable to other western locations, threats to external validity could not be totally ruled out due to national culture differences as well as needs and expectations of hospitality services. Further, the survey methodology was based on perceptions at one point in time. It would be interesting to determine if perceptions of the complaint management process and customer behaviors changed due to time between the incident and later decisions to return to the firm.

Future research should address these limitations. Additionally, future research in this area should consider differences based on hospitality industry sector (lodging, foodservice, meetings, etc.), type of complaint (major or minor), and price–expectation relationships with complaint behavior.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

Godwin-Charles A Ogbeide (PhD) is an Associate Professor in the Department of Food, Human Nutrition and Hospitality Management at the University of Arkansas. His research interest include leadership and organizational Performance; consumer satisfaction and complaint management; meetings, events, and tourism stakeholders Management; and destination marketing management.

Stefanie Böser is a former student of the University of Heilbronn. She now works for the University of Mannheim.

Robert J Harrinton (PhD) is a Professor of Hospitality and Wine Business Management at Carson College of Business Washington State University – Tri-Cities Campus. His research interests include hospitality strategic management, hospitality and culinary innovation, culinary tourism, consumer behavior, and food and wine/drink pairing.

Michael C. Ottenbacher (PhD) is a Professor in Hospitality Management and Marketing at Heilbronn University in Germany. His research interests include innovation, culinary tourism, restaurant management, and consumer behavior.

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