Exploring the Possibilities for Quality Improvement : An Internal Customer Perspective

Surveys of service quality are usually based on the analysis of external customers’ expectations and perceptions, neglecting the attitudes and expectations of internal customers. However, internal customers have a very important role in the service quality system, especially in the service industry. In higher education, the role of internal customers is particularly important. Service quality in higher education depends mainly on the competences and performance of the faculty. Accordingly, the main goal of this study is to explore internal customers’ perceptions of service quality in higher education and to define possible quality improvements. Higher education service quality is analysed using a modified SERVQUAL instrument, adjusted for the higher education context. Exploratory factor analysis is used to define key service quality dimensions. Furthermore, the results are compared based on personal and institutional characteristics. In addition, this study includes an analysis of faculty satisfaction with the working environment and working conditions at higher education institutions. The results provide useful information for the management of higher education institutions, which can be used in the design and customization of quality plans aimed at fulfilling the needs and expectations of their internal customers.


Introduction
Service quality is usually related to customer satisfaction.The most important customers of an organization are its external customers or consumers.However, the role of internal customers is equally important, especially in the service industry.Internal customers, or employees, may have significant impact on the service provisioning results and external customers' satisfaction.
The human interrelationships that shape customers' expectations and perceptions dominantly affect quality (Behra & Gundersen, 2001).More engaged faculty and students are important determinants of education quality (Newswier & Borrego, 2009).Faculty engagement and commitment create a culture and an environment that encourage student involvement.Faculty who challenge their students to solve more complex problems and who collaborate with students on their projects create an environment that encourages student involvement and, consequently, improve student learning outcomes.The behaviour of the faculty shapes students' approach to learning, which then affects students' outcomes (Nelson Laird et al., 2008).The faculty's service quality perceptions and job satisfaction influence students' satisfaction and results.Therefore, it is important to measure and strive to improve internal customer satisfaction.
The aim of this paper is to explore how faculty perceive service quality and to examine the level of their satisfaction with their job and working environment.The findings of the study provide valuable insight into quality improvement initiatives for HEI management.

Literature Review
In the higher education system, the role and responsibility of faculty is very important.Their behaviour and attitudes affect the HEI results (Ryan et al., 2011), and their approach to teaching affects students' approach to learning (Trigwell et al., 1999).Job satisfaction drives faculty's effectiveness and attitudes.Satisfied faculty are more involved in teaching and extracurricular activities, creating a favourable environment for the development of positive faculty-student interactions.Moreover, faculty satisfaction is related to students' engagement, results, cooperativeness, promotion, and research publication (Rosser, 2004).Therefore, faculty satisfaction is a significant determinant of HEI service quality and students' learning outcomes.
Faculty satisfaction consists of the level of their satisfaction with students, colleagues, and management (Rosser, 2004).Among faculty, a high level of satisfaction with their students is related to their overall job satisfaction.Other determinants of faculty satisfaction include earnings, working conditions and regulations, and job security.Ryan et al. (2011) showed that the most significant determinants of faculty job satisfaction are the job itself, earnings, relations with management, quality of and relations with students, and institutional culture and climate.Chen et al. (2006) developed an employee satisfaction model for higher education that includes the following concepts: HEI vision, respect, motivation and feedback, management system, earnings and benefits system, and working environment.They found that employees in higher education are focused on high earnings and a fair promotion system.Snipes et al. (2005) concluded that job satisfaction includes satisfaction with management, job, earnings, promotion opportunities, colleagues, and customers.Rosser (2004) stated that the perceived quality of the working environment has a significant influence on faculty satisfaction and consists of individual characteristics, job-related issues, and satisfaction.These constructs affect faculty behaviour and their decision to leave or keep the job.Chang et al. (2010) examined whether the support provided to the faculty influenced their effectiveness.In their study, support for the faculty consisted of teaching resources, administrative support, and expert support.Effectiveness was measured using a course design, strategies for teaching, technology in teaching, class organization, interpersonal relationships, and an examination system.The authors confirmed a positive but weak relationship between perceived faculty support and teaching effectiveness.
Evidently, faculty satisfaction has a very significant influence on HEI service quality and students' results.Previous studies showed a positive effect of faculty satisfaction on faculty effectiveness and behaviour (Rosser, 2004).These attitudes and behaviours shape the organizational culture at the HEI.The faculty culture, including their roles and expectations, affects students' learning and engagement (Umbach & Wawrzynski, 2005).This culture moderates students' perceptions of their outcomes, knowledge, and practical skills.According to some studies, faculty have the most significant influence on students' study experience (Umbach & Porter, 2002).Snipes et al. (2005) conducted research on 351 employees and 8667 customers of higher education to determine the specific aspects of job satisfaction with the most significant impact on perceived service quality.Their results showed that managerial efforts related to internal customer job satisfaction, such as perceptions about the job, may have the most significant influence on service quality compared with other satisfaction aspects.Earnings, potential awards, and operations have lesser influence on service performance compared with internal aspects of faculty satisfaction.Thus, the results indicate that faculty who are more satisfied with their customers provide a higher level of service quality.From the management perspective, to improve service quality employment, the selection of candidates should focus on those who are more customer-oriented.Trivellas and Dargenidou (2009) pointed out that faculty satisfaction leads to higher quality in tangible aspects.Moreover, faculty satisfaction positively affects two quality dimensions: academic and access.These two dimensions include the attitudes, behaviour, and competencies of the faculty and are closely related to their satisfaction.Furthermore, faculty satisfaction moderates the behaviour and effectiveness of faculty and consequently influences students' results (Rosser, 2004).Faculty behaviour can influence the following students' results: intrinsic motivation (Chang et al., 2010), active and collaborative learning (Wolf-Wendel et al., 2009), engagement and results (Chang et al., 2010;Kember, 2009;Umbach & Wawrzynski, 2005), and students' satisfaction (Trivellas & Dargenidou, 2009).Faculty satisfaction moderates the attitudes and behaviours that significantly shape students' behaviours and engagement and simultaneously affect the quality of the higher education service.

Survey instrument
Service quality is usually measured with the SERVQUAL (service quality) instrument.This instrument measures a ISSN 2039-9340 (print) Mediterranean Journal of Social Sciences MCSER Publishing, Rome-Italy Vol 5 No 13 June 2014 customer's expectations and perceptions by using 22 items for each variable (Parasuraman et al., 1985).The analysis of the SERVQUAL results divides service quality into five dimensions: tangibles, reliability, assurance, responsiveness, and empathy.Critics of this approach argue that it is not necessary to measure expectations because these are already included in customer's perceptions (Grönroos, 2001).Thus, based on the perception-only approach, the SERVPERF (service performance) instrument was developed.This instrument is a modification of SERVQUAL and includes only 22 items related to customer's perceptions.Some researchers have shown that SERVPERF is a better instrument for measuring service quality (Cronin & Taylor, 1992;Firdaus, 2006b), whereas others have demonstrated that both instruments are valuable and useful (Bayraktaroglu & Atrek, 2010;Brandon-Jones & Silvestro, 2010;Brocado, 2009).
Based on the service performance paradigm, Firdaus (2006a) developed an instrument for measuring service quality in the higher education context, which is called HEdPERF (higher education performance).This instrument consists of 41 items that measure five service quality dimensions: nonacademic, academic, reputation, access, and study programmes.Because HEdPERF has proven to be reliable instrument for measuring higher education service quality, it was used for the purpose of this study.The instrument items are presented in Appendix 1.Along with the questions in the HEdPERF instrument questions, the research questionnaire included items related to satisfaction with job and with working environment.These items were modified according to Snipes et al. (2005).

Sample
The survey was conducted by using an online questionnaire administered in all HEIs in Croatia from May to October 2012.In total, 821 academic staff from 93 HEIs answered the questionnaire.At that time, there were 133 HEIs in Croatia.Thus, most of the HEIs in the country were included in the research.Of the 821 respondents, 44% were males and 56% were females.Almost all of the respondents (95%) were full-time employees at the HEIs and came from public HEIs (90%).Regarding work, the respondents were from the fields of social science (31%), technical science (24%), humanities (13%), biomedicine and health (9%), biotechnology (9%), natural science (9%), interdisciplinary studies (3%), and arts (2%).

Methods
Principal component analysis (PCA) on the HEdPERF items was done with PASW Statistics 18.A Likert scale with values ranging from 1 to 7 was used, with 1 representing complete disagreement with the statement and 7 indicating complete agreement with the statement.Principal component analysis was used to define key service quality dimensions in Croatian higher education based on faculty perception.Prior to implementing the PCA, we checked the suitability of the collected data for factor analysis.After inspecting the correlation matrix, we found the existence of a large number of correlation coefficients equal to or more than 0.3.The Kaiser-Meyer-Olkin criteria, with a value of 0.963, and Bartlett's test, which was shown to have a statistical significance of 1%, supported the suitability for factor analysis of the data collected through the survey.
The second part of the analysis included structural equation modelling based on the partial least squares (PLS) algorithm.All estimations in this study were conducted with the SmartPLS 2.0 software (Ringle et al., 2005).Estimations were conducted on mean-centred data by using the path weighting scheme.Pre-modelling activities included a thorough explorative data analysis.PASW Statistics 18 was used to check the normality of the data and to calculate other descriptive statistics.This analysis enabled an examination of the relations between perceived service quality dimensions and faculty satisfaction with job and with working environment.

Analysis and Results
Principal component analysis revealed the existence of five components.The solution with five factors explained 60.95% of the total variance in faculty perception of service quality.To interpret the solution with five factors, an oblique rotation of factors was implemented, given that the correlation matrix of the components showed a correlation with individual absolute values of 0.3 or above.The factors selected in the analysis were: academic, which included the accountability of academic staff at HEIs; nonacademic, which included items related to the accountability of nonacademic staff at HEIs; facilities of the HEI; access, which included counselling services and service approachability and reliability; and reputation of the HEI.As shown in Table 1, all service quality dimensions have a Cronbach's alpha value above 0.7.The alpha values were also calculated for satisfaction dimensions.For faculty job satisfaction, the alpha value was 0.89; for faculty satisfaction with work environment, it was 0.79.Faculty perceived the academic dimension to be the most satisfying attribute of service quality, followed by access and the nonacademic dimension.HEI facilities and reputation were the worstperforming dimensions.The factor structure is slightly different from that in the original research conducted by Firdaus (2006a).According to the results shown in Appendix 1, faculty connected many items related to the study programmes with the HEI reputation, whereas facilities were separated from reputation.Moreover, some items that were included in the access dimension in the Firdaus research were included in the academic dimension.We then assessed the reflective measurement model (Table 2).The composite reliability (CR) scores for the reflectively identified exogenous and endogenous constructs indicated high internal consistency.The average variances extracted (AVE) were close to or exceeded the cutoff value of 0.5, thus indicating sufficient convergent validity.Furthermore, the constructs met the Fornell-Larcker criterion of discriminant validity (Henseler et al., 2009).An examination of the absolute standardized outer loadings further revealed a sufficient level of indicator reliability.Although not all the loadings exceeded the cutoff value of 0.7, scores above 0.5 can be considered acceptable when the respective constructs are measured by other indicators as well (e.g., Chin, 1998).Figure 1 shows the path model and relationships in the proposed model, and Table 3 provides information about the significance of the proposed relationships between focal variables.The results indicated statistical significance for most of the proposed relationships.All four service quality dimensions were shown to affect faculty satisfaction with the work environment.The strongest influence existed between working environment satisfaction and access, reputation, and nonacademic dimension, whereas the relationship between other service quality dimensions and working environment satisfaction was weak.Overall job satisfaction was positively related to HEI reputation, access, and nonacademic dimension.Job satisfaction had no significant correlation with facilities and academic dimension.However, these influences may be indirect, moderated by faculty satisfaction with the working environment.Among the service quality dimensions, the most important determinant of job satisfaction was institutional reputation, followed by access and the nonacademic dimension.Overall job satisfaction was driven mostly by satisfaction with the work environment.

Figure 1. Relationships between service quality and faculty satisfaction -path diagram
There are several limitations to this study.First, the results of the study refer to the Croatian higher education system and cannot be generalized to other populations.Moreover, the study is based on the subjective assessment and perceptions of faculty, which may have an impact on the results.For example, faculty might have assessed the academic dimension with the highest ratings because it is related to their responsibilities, performance, and competencies.Third, this study includes an assessment from only one customer group in the higher education system.More relevant conclusions can be drawn if assessments from other customer groups (e.g., students, graduates, administrative staff, and employer representatives) are included.

Conclusion
Internal customers are a very important link in the service quality chain.In the higher education system, the role of internal customers is especially important.Their behaviour and approach to work may affect students' results and satisfaction.Moreover, their research activities and scientific achievements increase the HEI reputation.Satisfied faculty are a source of competitive advantage because only satisfied employers can achieve excellent results.Therefore, it is extremely important to evaluate faculty satisfaction and perceptions about higher education service quality.In this study, faculty assessed the academic, access, and nonacademic dimensions as the most satisfying, whereas facilities and reputation received the lowest ratings.However, faculty related some access items with the academic and nonacademic dimensions, and study programme items were included in the reputation dimension.Another surprising result was faculty's assessment of facilities and reputation.The HEI infrastructure and facilities depend on institutional strategy and budgetary constraints, and faculty cannot initiate changes in this service attribute.However, faculty have a significant amount of freedom in creating and reviewing study programmes.Keeping this in mind, the management of Croatian HEI must encourage faculty to regularly monitor and update their courses.
To enhance service quality, managers in the Croatian HE system should focus on improving facilities and building up institutional reputation.Given the decreasing government funding due to the poor economic situation of the country, HEIs can seek other funding sources through cooperation with industries and business communities.This cooperation may have a positive effect, not only in obtaining investment in facilities but also in enhancing the HEI reputation and faculty satisfaction.Moreover, increased marketing activities are needed at Croatian HEIs in order to emphasise the good practices that are being implemented.
All service quality dimensions have significant positive impact on faculty satisfaction.The key drivers of faculty satisfaction are institutional reputation and access, and satisfaction with working environment.A stimulating working environment has a higher influence on overall faculty satisfaction.Accordingly, the HEI management needs to ensure good working conditions and encourage collaboration and teamwork.The implementation of proposed service quality initiatives may help the management of Croatian HEIs to achieve their quality management goals and improve their performance.Furthermore, enhanced faculty satisfaction will positively influence their reputation (which was one of the lowest-performing service quality dimensions).To conclude, by focusing on the satisfaction of internal customers, institutions may achieve their service quality goals and improve their reputation and performance.

Table 1 .
Results of the PCA analysis -Service quality dimensions

Table 2 .
Results of the PLS analysis -model fit

Table 3 .
Results of the PLS analysis -path coefficients and significance testing