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Employee Engagement in Customer Service

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Table of contents

  1. Introduction
  2. Literature Review
  3. Employee Engagement
  4. Types of Employee Engagement
  5. Customer Experience
  6. Conclusion


Today’s business climate is becoming more dynamic, and competition among businesses tightens. For a company to have a competitive advantage, it must think of ways on how to not only attract customers but also to gain their loyalty. It is imperative for a business to give utmost priority to its customers because these are the main reason why a business operates.

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In Kohli and Jaworksi’s study, one cannot underestimate the significance of customer satisfaction and customer retention in strategy development for a market-oriented and customer-focused firm.

In recent research, the focus of the service providers is on the efforts that exceed, rather than simply meet, the expectation level that will lead to customer pleasure and delight. This is one of the reasons why companies are spending consistently in pursuit of innovation – to offer something new and to promote a positive customer experience.

In the Philippines, one of the business sectors that experiencing increased competition is the banking industry. Based on the second Banking Sector Outlook Survey prepared by the Bangko Sentral ng Pilipinas (BSP) in 2018, aside from keeping a high level of liquid assets and increasing capitalization, to protect themselves against sudden market downturns, the country’s financial institutions also need to intensify their client relationship and upgrade personnel capabilities.

Recognizing the fact that industries today have gone customer-oriented, delivering superior customer service that would meet and exceeds customer expectations has become the number one priority of most banks’ management. Thus, for banks to achieve sustainable development, they try to satisfy customers by increasing the perceived service quality

Moreover, the Bangko Sentral ng Pilipinas (BSP), issuance of Circular No. 857 or the BSP Regulations on Financial Institutions (BSFIs) in 2014, guided all financial institutions in proper dealing with consumers, setting minimum standards in the areas of disclosures and transparency, fair treatment, effective recourse, and financial education. Banks are also mandated to develop a Consumer Assistance Management System (CAMS) to properly facilitate the needs and protect the interest of the existing and prospective clients of the Bank.

Provided that the banks in the country are relatively promoting similar products competition among them becomes tough, and delivering top-notch customer service is becoming the deciding factor for the customer in choosing a bank. This is the part where the participation of the employee is regarded as highly important.

According to Attridge et al, employee engagement plays an essential role in sustaining competitive advantage that could improve business results and successful organizational performance. The service quality provided by the employee is considered as a direct reflection of the quality of the organization. It would consecutively affect the customer experience that afterward influences both customer satisfaction and loyalty.

Given the importance of employee engagement in delivering quality service, proponents aim to find out the level of employee engagement in rendering the customer service quality that is strictly applied in the banking industry, and how it influences the customer experience. Recent studies have shown that there is a greater likelihood for customers to choose to do business with the company base on their ability to provide a better all-around customer experience. Hence, customer service is proven a vital element on business operations, and giving importance to the client’s needs, preferences, as well as their grievances, is needed to the success of the business. For more than a decade, many studies revealed that there is a correlation between.

Literature Review

Literature from the various related studies has supported the significance of employee engagement in organizational productivity. Amid the growing competition in the market, businesses have to find a way to continuously operate. Instead of focusing on the trend that is driven by globalization and advances in information technology, most companies today have shifted their direction into managing their customer relationship.

This section summarizes the broad range of related literature and studies to give an in-depth review regarding the relation of employee engagement in rendering customer service quality and its influence on the customer experience.

Employee Engagement

Human resources have long been considered as the most important assets of an organization, the success or failure of the latter is greatly dependent on the employees working on it.

Employee Engagement, as defined by Business Dictionary is the emotional connection an employee feels toward his or her organization. which tends to influence his or her behavior and level of effort in work-related activities.

Many studies had reviewed that employee engagement is a dominant source of competitive advantage, for its strong link with employee performance and business outcomes. In the survey conducted by Customer Experience Blake Morgan, companies with highly engaged employees out-perform their competitors by 147%, which companies that excel at customer experience have 1.5 times more engaged employees compared with the number of companies with poor customer experience. It shows that 89% of the companies in the United State compete primarily on customer experience.

Competitive Advantage for Alderson is the way for business attract customers on a basis of delivered superior value offered in comparison to competitors. The different treatments of engagements, whether at the organizational or individual level may hamper the shaping of competitive advantage resulting for a decrease.

Likewise, Custom Insight viewed employee engagement as the extent to which employee feel passionate about their jobs and drives their performance at work. In addition to that engagement make the employee feel more committed with the organization, and puts discretionary effort into their work.

For Stange, employee engagement is defined as the strength of the mental and emotional connection that employees feel toward their places of work. It is different from the happiness, satisfaction or well-being that employee feels towards their job and workplace.

Attridge et al., argued that employee engagement plays an essential role in sustaining competitive advantage, it is said that employees who have a strong connection with their job, work harder, stay longer, and impact employees that may bring business outcomes such as increased in profitability and revenue.

It is the employee who plays an essential role in delivering a consistent customer experience, as long as they fully understand the company’s strategy and have proper training and morale they would be able to deliver an impactful customer experience.

Types of Employee Engagement

Employee engagement depends on the level of commitment, the employee can be: Actively Disengaged, Actively Engaged, and Not Engaged.

  • Actively Disengaged: Type of employee who isn’t just unhappy at work but also busy acting out their unhappiness.
  • Engaged: It is the employee who works with passion and feel a deep connection to their company.
  • Not Engaged: Employees that essentially “checked out”. They can be described as physically present but mentally absent, they seemed to be working but they are not putting energy or passion on it.

According to Kruse, engaged employees lead to:

  1. Higher service, quality and productivity;
  2. Higher customer satisfaction;
  3. Increased on sales due to repeat business and referrals;
  4. Higher level of profit; and
  5. Higher shareholder returns i.e., stock price

Bolton et al. suggested that service quality determined the differences between customers’ expectations with the service provided by the business and their experience with the service. Thus, there are many studies that emerged supporting the close relationship of service quality and customer experience (customer satisfaction and loyalty).

Customer Experience

According to Lusch et al., value is created by the business through the sales of their service, but from the customer’s point of view, value is created from their experienced and the result of the service they received.

Gentile et al., said that customer experience is created by the contribution of not only customer’s value but also by the contribution of the company providing the experience. It is best described as a “cumulative impact of multiple touchpoints” throughout the interaction of the customer with the company. This means that all events included with the customer journey are already considered as “customer experience”, which business value is being based.

Many authors in literature have supported that customer experience is now providing a new means of competition. A real competitive advantage in the business-to-business marketplace is created through human relationships.

In fact, according to a recent customer service survey conducted by Harris Interactive, it was found out that 88% of consumers prefer dealing with a company with strong customer service than one with the hottest, most innovative product offerings. Likewise, it was reported that 69% of customers that leave one business for another do so because of real or perceived poor service. These simple facts speak volumes about the significance of customer service. To most of customers, the quality of service provided is more important than the product itself.

According to Strohmenger, consumers’ expectations have changed significantly. Customers nowadays want things faster, better, cheaper, and with a higher degree of service. In order to survive the competition, a company must have the knowledge and establish relationships with its customers. A company must become customer-obsessed – understanding, delighting, and connecting with in serving them.

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This only shows, that business trends today have shifted into an “experience economy”, it is then verified the importance for businesses to invest in training and cultural change that would develop interpersonal skills of their human resources.

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