A Contextual Study of Links between Employee Satisfaction, Employee Turnover, Customer Satisfaction and Financial Performance

An essential aspect of the balanced scorecard is the articulation of the links between nonfinancial measures such as employee satisfaction and customer satisfaction and financial measures of performance. However, there is little evidence documenting the link between employee satisfaction and customer satisfaction, and their impact on financial performance. Using cross-sectional data on a sample of more than 500 department stores, this study provides empirical evidence on the effects of employee satisfaction and turnover on customer satisfaction and, in turn, on revenue and cost measures. A contextual analysis of this evidence provides further insights into the sensitivity of these associations to urban or rural location of a store.