Editorial Board

A Refereed Monthly International Journal of Management

Investigating the Ethical Workplace, Employee Commitment, and Active Customer Service by Investigating the Mediating Effect of Policy in the Organization (Case Study: Refah Chain Stores of Fars Province)

Author

Zahra Mahdavipour Department of Management Abadeh Branch, Islamic Azad University Abadeh, Iran

Ali Rezaei Department of Management Abadeh Branch, Islamic Azad University Abadeh, Iran E-mail:- Ali.Rezaei@iua.ac.ir

Abstract

This study examined the mediating effects of organizational policies on the relationship between ethical work and employee productivity (affective commitment and active customer service). The method was descriptive and correlational research using structural equations. The statistical population included 180 sales personnel of the Refah chain stores of Fars Province. According to Morgan's table, sample size was 117. The instrument used in this study was a questionnaire consisting of 23 questions which included the following variables. Data analysis was done on descriptive and inferential levels. At the descriptive level, descriptive indexes (mean and standard deviation) were used to analyze the data. At the inferential level, correlation and structural equation method were used. The results showed that ethical workplace had a negative effect on policy in the reward system and ethical workplace had a positive effect on active customer service and affective commitment; reward system policies had a positive effect on active customer service and negative effect on affective commitment. Moreover, reward system policies had a mediating role between ethical workplace and active customer service.

Keywords : Ethical Workplace, Active Customer Service, Mediating Effects of Organizational Policies.

Introduction:

In an industry, with rapid changes in process and preferences and intense competition, more and more small businesses focus on organizational factors to remain competitive (He et al., 2011; Li et al., 2011). One of these organizational factors is ethical workplace. Ethical workplace is very important for establishing long-term relationships with customers (Schwepker & Hartline, 2005). Focusing on retailer industry, Adams et al. (2001) concluded that employees at all levels have more positive behavior in organizations with ethical workplace than organizations with no ethical workplace.

An overview of ethical and customer service literature supports the need for this study. First, organizational strategy which strives to achieve superior customer services requires the analysis of human resource policies in customer service delivery practices (Crotts et al, 2005). However, studies conducted in the retail industry determine how HRM policies affect customer service behavior (Swimberghe et al., 2014; Ashill et al. 2015; Dimitriades et al., 2007; Xavier et al. 2015) to identify the mechanism by which ethical workplaces influenced by work results, for example, preventive action of customer service (Ashill et al, 2015). Second, this study addresses general mechanisms by which ethical workplace affects attitudes and behavior of employees (Kacmar et al., 2013), particularly on how ethical interactions are related to internal politics (Gotsis & Kortezi, 2010; Vigoda-Gadot, 2007). Third, payment policies and advertisers are a key dimension of these policies (Kacmar & Ferris, 1991). Employee responses and their perceptions of reward systems in a population-dependent society can be different from an individualist society (Kacmar & Karlson, 1997). For example, Chinese managers emphasize more on employee performance when deciding on employee fines (Zhou & Martocchio, 2001). Given the importance of relationships and other related factors (Yamagishi et al., 1998), rewarding practices may be accepted more positively in a collectivist society. These findings need to examine the dynamics of ethical workplace and organizational policies in a collectivist society, as examined in this study.

Literature Review:

Ethical Workplace

In the last two decades, ethical culture and ethical behavior of employees have been at the center of attention. Most scholars emphasize the importance of ethics in the organization and consider ethics and ethical behavior in the workplace to be effective in achieving organizational goals (De-Coninck, 2011; Panaccio & Vandenberghe, 2009). Unethical behaviors such as corruption, discrimination and lack of integrity damage not only people and communities, but also the organization itself (Lopez et al, 2009). In all of these discussions, the importance of ethical standards and the need for ethical standards is considered for directing human behaviors (Axinn, 2004).

Ethical workplace is one of the important organizational variables which has recently been considered by industrial and organizational psychologists. Organizations use international standards and conventions and organizational instructions and rules to create ethical climate (Goveas, 2011). By studying and analyzing the previous findings, four dimensions have been identified for ethical workplace, including responsive trust, peer behavior, ethical sales, and ethical norms (De-Coninck, 2011).

Organizational Commitment

Organizational commitment is an important occupational and organizational approach which has been a favorite of many scholars over the past years in the fields of organizational behavior and psychology, particularly social psychology. This attitude has undergone some changes over the past three decades; perhaps the most significant change in this domain is related to multidimensional attitude toward this concept rather than one-dimensional attitude. Managers are more interested in knowing the attitudes associated with work and organization. According to studies conducted in this regard, three major attitudes have attracted the most attention of scholars. These three attitudes are: 1) job satisfaction; 2) job involvement; 3) organizational commitment.

The lack of employee sense of belonging to the organization and insufficient precision to perform tasks are major problems of administrative system. Turnover, absenteeism, delay, lack of participation and active labor involvement and low level of human resource performance are the most prominent examples of these problems, which cause a gap between human resources and organizations by their adverse influence. To overcome this problem, promoting commitment is one of the best ways.

There are many definitions of commitment. Commitment can be a kind of requirement which limits the freedom of action. There are many reasons why an organization should increase the level of organizational commitment of its members. First, organizational commitment is a new concept and is generally different from job involvement and job satisfaction. Second, studies have shown that organizational commitment has a positive relationship with implications such as job satisfaction, presence, organizational behavior and job performance and has a negative relationship with job concentration tendency (Bor-Shiuan et al., 2003).

A great deal of research indicates the multidimensional nature of organizational commitment. Therefore, organizational commitment is divided into different types by different thinkers. Allen and Meyer (1990) divide the organizational commitment into the following types:

. Moral or attitudinal commitment

. Behavioral or calculative commitment

. Normative commitment

Active Customer Service

To reduce their uncertainty, buyers tend to get signs about quality of their service. They get results about quality through location, people, price, equipment and communications that they can see. Hence, the task or expertise of someone who provides a service is to make the service tangible. While product marketers tend to add intangibility to the items supplied, service marketers tend to increase tangibility of intangible items (Kotler & Armstrong, 2010).

Satisfied customers are the source of corporate profits. Companies which cannot keep customers satisfied will not survive in the market for a long time. Delivering top-quality products and high-quality customer services will continuously create competitive advantages for the company; including competitive barriers, customer loyalty and distinct products, lower marketing costs, and higher prices. Finally, there is an ethical point about quality; customers are paying us to meet their expectations and we are responsible for them.

Reward

In recent years, the term "compensation for services and advantages" has replaced the reward, which includes not only compensation for services and advantages, but also a sustainable future, personal and career growth opportunities, and a positive workplace. Employees are not just looking for salary; instead, they are looking for an organization which provides a sustainable future, an organization which is equipped with powerful visions of what it wants to achieve and how to achieve it, an organization which knows the way to success; the best people like to work for successful organizations. Positive workplace is also important because people like to work with colleagues and supervisors who respect them and enjoy their work (Zingheim & Schuster, 2011).

Rewards include everything that employees honor in their employment relationship. Reward is a holistic approach used in strategic business context, strategic human resources and organizational culture. External factors are also important because they affect business, human resources, organizational commitment, and competition. A new reward system, such as overall reward, is based on the assumption that not everyone is like one another and they all do not work solely for the purpose of obtaining maximum financial rewards (Azasu, 2009). While money is clearly an important part of the reward, it has increasingly been seen that more than just cash is needed to attract and retain capable people. There are elements in rewards, each of which includes programs, activities, components and dimensions which determine organizational strategy for attracting, motivating and retaining employees. These elements are a toolbox that an organization chooses to add value to both organizations and employees (Silverman & Reilly, 2010).

It has been told that tendency to pay incentive payments is due to recent organizational challenges; although success rates of these payments vary from organization to organization, they play an important role in employee motivation and performance (Giancola, 2009). Human resource experts and other executives have found that a decent reward system (a combination of monetary and non-monetary rewards) can lead to valuable commercial outcomes, ranging from improved motivation and job satisfaction, employee loyalty and labor ethics to improved personal and organizational performance (Heneman, 2007).

Performance is one of the key subjects in design of reward systems. Nevertheless, performance measurement practically seems to be a major challenge in reward systems (Gibbs et al, 2011). Job performance is defined as a kind of personal behavior to meet expectations, organizational regulations, and role requirements at the time of membership in the organization (Zaheer et al, 2008).

Conceptual Model

In this model, ethical workplace is an independent variable and active customer service and affective commitment are dependent variables and reward system policy is also used as mediating variable. The relationship between variables will be examined in the form of five hypotheses.

Figure 1: Conceptual mode (Patrica et al, 2017)

Hypotheses

Hypothesis 1: ethical workplace has a negative effect on reward system policies.

Hypothesis 1: ethical workplace has a positive effect on active customer service.

Hypothesis 3: ethical workplace has a positive effect on affective commitment.

Hypothesis 4: reward system policy has a positive effect on active customer service.

Hypothesis 5: reward system policy has a negative effect on affective commitment.

Hypothesis 6: reward system policies mediate the relationship between ethical workplace and active customer service.

Hypothesis 7: reward system policies mediate the relationship between ethical workplace and affective commitment.

Materials and Methods:

The methodology of this study was descriptive (non-pilot) and correlational research using structural equations, because this study examined the relationship between variables through a causal model.

Statistical Population

The statistical population included 180 sales personnel of the Refah Chain Stores of the Fars Province, as shown in the table below.

Sample and Sampling

Considering that total number of employees in the Refah Chain Stores was 180, according to the Morgan table, sample size was set at 117. Table 1 shows sampling method. In this study, random-cluster sampling method was used. As rate of return of questionnaire was less than 100%, the number of questionnaires distributed was 20% more than the minimum required; that is, 126 questionnaires were distributed. To reduce the rate of return, the author distributed more questionnaires.

Measurement Instruments

The questionnaire was comprised of 23 questions which included the following variables: active customer service, ethical workplace, reward system policies, and affective commitment, which were selected from previous questionnaires (Lau, 2017). Reliability and validity of the instruments were examined using Cronbach's alpha coefficient, composite reliability and confirmatory factor analysis. The results showed acceptable reliability and validity of the instruments.

Methods

First, the questions were inserted in the Google Form online; after contacting the central store and acquiring permission and coordinating with financial management, the questionnaire was given to authorities and then personnel through automation. After 2 months, output of the filled questionnaires was taken online. Content validity, confirmatory factor analysis, discriminant validity and convergent validity were used to check validity. Cronbach's alpha coefficient, composite reliability and average variance extracted were used to check reliability. To assess content validity, the questionnaire was submitted to several specialist professors in the field of research to examine the questionnaire in terms of content validity.

In CFA using partial least squares, it is necessary to study structural validity to determine whether the markers chosen to measure the constructs are accurate enough. That is, factor load of each marker with its construct should be higher than 1.96. Convergent validity was used to check that each marker has the highest correlation with its construct compared to other constructs. To examine this, cross factor load was used. To determine reliability, composite reliability index was used. Reliability means that different respondents perceive the questions similarly. In CFA, composite reliability coefficient is also used; values above 0.6 for each construct shows its adequate reliability.

Data Analysis

Descriptive and inferential tests were used to analyze the data. In the descriptive part, percentage, mean and standard deviation were used; in the inferential part, the Pearson correlation test and structural equations were used by partial least squares (PLS). To analyze the data, SPSS and PLS software were used.

Results

Kolmogorov-Smirnov test was used to test normality of the data. Levine test was used to evaluate convergence of the variables. Fornell-Larker index was used to examine diagnostic or discriminant validity. CV-redundancy was used to evaluate quality of the model. To test the hypotheses, SmartPlus 2 software was used.

Hypothesis 1: ethical workplace has a negative effect on reward system policy.

Figures 2 and 3 show the fitted model with standardized coefficients and t-values. As shown in the figure, the direct path coefficient of ethical workplace and reward system policy is -0.382 (t=4.669); therefore, the direct path coefficient is significant at 95% confidence level. Thus, it can be concluded that ethical workplace has a negative effect on reward system policy. Therefore, the first hypothesis is confirmed.

Table 1: results of first hypothesis

Hypothesis 2: ethical workplace has a positive effect on active customer service.

Figures 2 and 3 show the fitted model with standardized coefficients and t-values. As shown in the figure, the direct path coefficient of ethical workplace and active customer service is 0.465 (t=4.490); therefore, the direct path coefficient is significant at 95% confidence level. Thus, it can be concluded that ethical workplace has a positive effect on active customer service. Therefore, the second hypothesis is confirmed.

Table 2: results of second hypothesis

Hypothesis 3: ethical workplace has a positive effect on affective commitment.

Figures 2 and 3 show the fitted model with standardized coefficients and t-values. As shown in the figure, the direct path coefficient of ethical workplace and affective commitment is 0.403 (t=4.787); therefore, the direct path coefficient is significant at 95% confidence level. Thus, it can be concluded that ethical workplace has a positive effect on affective commitment. Therefore, the third hypothesis is confirmed.

Table 3: results of third hypothesis

Hypothesis 4: reward system policy has a positive effect on active customer service.

Figures 2 and 3 show the fitted model with standardized coefficients and t-values. As shown in the figure, the direct path coefficient of reward system policy and active customer service is -0.192 (t=1.733); therefore, the direct path coefficient is not significant at 95% confidence level. Thus, it can be concluded that reward system policy has no positive effect on active customer service. Therefore, the fourth hypothesis is not confirmed.

Table 4: results of fourth hypothesis

Hypothesis 5: reward system policy has a negative effect on affective commitment.

Figures 2 and 3 show the fitted model with standardized coefficients and t-values. As shown in the figure, the direct path coefficient of reward system policy and affective commitment is -0.279 (t=2.916); therefore, the direct path coefficient is significant at 95% confidence level. Thus, it can be concluded that reward system policy has a negative effect on affective commitment. Therefore, the fifth hypothesis is confirmed.

Table 5: results of fifth hypothesis

Hypothesis 6: reward system policy mediates the relationship between ethical workplace and active customer service.

Figures 2 and 3 show the fitted model with t-values. As shown in the figure, t=1.132; therefore, the direct path coefficient is not significant at 95% confidence level. Thus, it can be concluded that reward system policy does not mediate the relationship between ethical workplace and active customer service. Therefore, the sixth hypothesis is not confirmed.

Table 6: results of sixth hypothesis

Hypothesis 7: reward system policy mediates the relationship between ethical workplace and affective commitment.

Figures 2 and 3 show the fitted model with t-values. As shown in the figure, t=3.541; therefore, the direct path coefficient is significant at 95% confidence level. Thus, it can be concluded that reward system policy mediates the relationship between ethical workplace and affective commitment. Therefore, the seventh hypothesis is confirmed.

Table 7: results of seventh hypothesis

Figure 2: final model to test hypotheses with standardized coefficients

Figure 3: the final model to test hypotheses with t-values

Figure 4: the final model

Table 1: references used to develop the questionnaire

Conclusion:

The results of structural equations in the first hypothesis showed that impact size of ethical workplace is negative and significant on reward system policy. Therefore, ethical workplace has a negative effect on reward system policies. The results of this hypothesis are consistent with Lau et al. (2017). The results of this hypothesis are also consistent with Andrews et al. (2010). According to results of this hypothesis, it can be concluded that if management decision follows ethical standards and focuses more on empathy and less on individual interests, then the management system will not look for political work and will not set reward policies based on individual interests.

The results of hypothesis testing showed that impact size of ethical workplace is positive and significant on active customer service. This finding is consistent with Lau et al. (2017). According to results of this hypothesis, when the workplace is based on ethics and focuses more on collective interests rather than individual interests, it improves performance of people and customer needs are more addressed.

The results of structural equations showed that impact size of ethical workplace is positive and significant on affective commitment; this is consistent with Giancola (2016) and Lau (2017). The results of this hypothesis show that when organizational principles and regulations are based on principles and regulations of professional institutions, others are more important and instrumentalism is less important, people will feel belonging to the company and will consider the company as a part of themselves.

The results of structural equations showed that impact size of reward system policy is positive and significant on active customer service (β=-0.192 and t=1.733). Therefore, it can be concluded that there is no significant relationship between reward system policy and active customer service. The results of this finding are inconsistent with Tsai & Tang et al. (2008), as this hypothesis was not confirmed and did not conform to previous findings.

The results of structural equations showed that impact size of reward system policy is negative and significant on affective commitment. The results are consistent with Vigoda (2007) and Lau (2017); thus, it can be concluded when there is political work in the organization and reward systems are based on political work and personal interests, affective commitment of employees will decrease and employees will not feel belonging to the organization.

The results of structural equations showed that the indirect path coefficient of this relationship was not significant at 95% confidence level; therefore reward system policies did not mediate between ethical workplace and active customer service. Therefore, the sixth hypothesis was not confirmed. When collective interests prevail in the workplace, mediation of reward system policies does not lead to active customer services. Given that the fourth hypothesis examining the effect of reward system policy on active customer service was rejected, rejection of this hypothesis can be explained by rejection of the fourth hypothesis.

The results of structural equations show that the indirect coefficient is significant at 95% confidence level. Therefore, it can be concluded that reward system policies mediate between ethical workplace and affective commitment of employees. Therefore, the seventh hypothesis was confirmed. The results of this hypothesis are consistent with Lau (2017). Therefore, when people follow ethics in the organization and the most important concern of people is collective interests, political work will decrease in the organization and emotional involvement will increase.

Implications:

1. Prefer collective interests to individual interests and set organizational culture so that people pay more attention to collective interests. For example, pay more attention to team rewards.

2. Set the organizational culture so that people in the workplace commit to frameworks, norms and ethics in the organisation.

3. In order to increase collectivist culture in the organization, managers should not pay attention to flattering servile people to strengthen collectivist culture in the organization.

4. To meet ethics in the organization, managers should hold continuous trainings in relation to professional business moral in the workplace.

5. Managers should commit to ethical frameworks, because people learn from them.

6. Payment and promotion policies should be consistent with rise in rank so that employees do not feel that the climate is political.

7. Since political climate does not exist, payments should be based on performance. According to studies conducted, successful organizations set payment and reward based on performance.

8. Reduce over-control and bureaucracy in the organization. Studies show that more people are playing politically in organizations which have strict rules.

9. Commit to organizational justice and perceived justice. This means that people in the organization may misunderstand payments and rewards, thus managers are advised to transparently explain the payments to others.

10. Promotion policies should be implemented so that people do not feel the political climate in the organization.

Limitations:

Certainly, the main limitation of any research project can be the inability to generalize the results to other statistical populations. The present study is not an exception to this and the results cannot be generalized to other populations.

Limitations on implementation of the questionnaire in terms of unwillingness to respond by some sample members, the lack of adequate accuracy in answering questions and the biases which some sample members may have in answering some of the questions are other limitations of the present study.

Implications for future studies:

As noted, this study was carried out in the Refah chain stores. It is suggested that the model presented in this study be run in other chain stores, Hypers and other industries throughout the country and its results be compared with the results of this study.

The approach of this study was quantitative. It is suggested that future studies use a qualitative approach to provide models for identifying reward policies and ethical climate.

Future authors can add other variables, such as organizational commitment, leadership style, etc. to the model and test it.

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