Theoretical background and research problem

The era of “build it and they will come” in the casino industry has now passed due to increasing competition. Traditional marketing of casinos by simply mimicking competitors or following some marketing managers’ experience without taking into account customer needs and market trends has been replaced by a more structured and systematic approach (Klebanow, 2002a). This new approach involves a series of marketing strategies emphasising customer needs and wants, with the intention of satisfying them and making them return. In other words, casino marketing has evolved into a new paradigm – relationship marketing, in which customer loyalty or customer retention becomes the focus of marketing strategy (Baird, 2002; Johnson,

market (Kale, 2005). This market includes domestic and international high-end gamblers or high rollers. A small number of these gamblers often contribute major revenues to casinos (Kale, 2003; 2005; Lucas, Kilby & Santos, 2002), and are referred to as casino key accounts.

Customer retention leads to company profitability. According to Reichheld (1996), a 5 percent increase in customer retention can lead to a 25 to 85 percent increase in a firm’s general revenue. The rate of increase depends on the industry. Basing their study on the number of gamblers who lose in table games each year, Watson and Kale (2003) determined that gambler retention positively impacts on casino profitability. The increase rates vary within different customer segments. The authors particularly indicate that the retention of casino key accounts offers an important contribution to casino revenues.

Service quality has been evidenced as a key antecedent of customer retention in the services marketing literature (e.g., Zeithaml, Berry & Parasuraman, 1996). In the casino industry, it is also regarded as an important factor in casino customer satisfaction and retention (Johnson, 2002), and in seeking a competitive advantage (e.g., Baird, 2002). Researchers such as Farrell, Souchon and Durden (2001) have asserted that service quality is primarily formed by frontline employees’ service behaviour during service encounters. Typically these encounters involve personal interactions between the employee and the customer (Bitner, 1990; Bitner, Booms, & Tetreault, 1990). On the other hand, frontline employee service encounter behaviour is concerned with the employee’s performance evaluation, particularly in relation to service (Singh, 2000). An employee’s service performance is affected by his or her behaviour when interacting with customers. Service quality assessments are related to

employee service performances. From this perspective, employee service performance has implications for customer retention and company profitability.

Research about the management of frontline employees in the services and marketing literature has mostly focused on the consequences of employee service behaviour, including customer perceptions of service quality (e.g., Farrell, Souchon, & Durden, 2001), customer satisfaction (e.g., Winsted, 2000), and customer retention (e.g., Brown & Chin, 2004). Relatively few studies have examined the factors predicting the service performance of frontline employees. Previous research has focused on examining role theory and burnout (e.g., Singh & Goolsby, 1994), which has a direct effect on employee job satisfaction and service performance (e.g., Bettencourt & Brown, 1997). According to Maslach and Jackson (1981), burnout is a psychological condition or syndrome characterised by three dimensions: emotional exhaustion, reduced personal accomplishment, and depersonalisation. Among the three dimensions, emotional exhaustion often occurs in the case of frontline employees involved in interpersonal interactions. It reflects sensory exhaustion due to excessive emotional demands (Maslach & Jackson, 1981).

Frontline employees are particularly susceptible to burnout because they are placed in a boundary spanning position dealing with customers’ demands that cannot always be met by the management (Cordes & Dougherty, 1993). In addition, as Hartline and Ferrell (1993) have pointed out, these employees are underpaid, under-trained, overworked and highly stressed. Burnout often leads to low job satisfaction and employee turnover (e.g., Jayaratne & Chess, 1984). However, the job satisfaction of customer-contact employees positively impacts on their service performance, which affects customer perceptions of service quality and in turn leads to customer

satisfaction and retention. This relationship link has been empirically tested and supported by Brown and Chin (2004). Furthermore, employee turnover increases the costs of both staff recruitment and training.

From the perspectives of company profitability and organizational effectiveness, factors influencing the emotional exhaustion of frontline employees, (a dimension of burnout), may have implications for their service performance. Conceptualised as emotional management skills, emotional intelligence may impact on the employees’ performance. From the customer’s perspective, Hartel, Barker and Barker (1999) have proposed that a frontline employee’s emotional intelligence could affect the process of customer emotional formation and evaluation, which in turn leads to their behavioural intentions. According to Mano and Oliver (1993), service encounters are characterised as emotional variables containing emotional events. The emotions associated with service encounter events influence customer attitudes and behaviours (Hartel et al., 1999). Nevertheless, the employee’s emotional intelligence, involving recognising and managing emotions of others, may help to regulate the formation of customer emotions, which in turn affect their judgement and behavioural intentions (Hartel et al., 1999). Customer reactions reflect how well the employees perform in the context of service encounters. From this perspective, the evaluation of employee performance may be affected by the level of his or her emotional intelligence.

Where it involves recognising and managing one’s own emotions, emotional intelligence may be able to affect frontline employees’ service performance. This is connected with the idea of emotional labour. Abraham (1998) defined emotional labour as managing emotions so that they are consistent with organizational or occupational display rules. The job of frontline employees is characterised as highly

demanding in terms of emotional labour. Emotional labour has its salient benefits for both the organization and for individuals (Rafaeli & Sutton, 1989). However, recent research in this area has been mainly concerned with the detrimental effects of emotional labour, such as high stress, burnout and lower job satisfaction (e.g., Brotheridge & Grandey, 2002; Erickson & Ritter, 2001; Grandey, 2002; Kruml & Geddes, 2000). Displays of emotion may be inconsistent with how the emotional labourer really feels. This can lead to emotional dissonance, with further detrimental consequences. Nevertheless, researchers (e.g., Daus, 2002) have found that emotional intelligence can moderate or ameliorate the negative consequences of emotional labour. It may be anticipated that the exercise of emotional intelligence may help to improve the job performance of frontline employees.

Based on the above discussion, the current study investigates the relationship between emotional intelligence and the service performance of casino frontline employees, specifically those service employees who interact directly with casino key accounts. Hereafter, they are referred to as “casino key account representatives”. Emotional intelligence has been selected as the dominant independent variable in the current study on the basis of the researcher’s professional experience and the research gap which has been previously identified. It is anticipated that any relationships which are identified will have significant implications for facilitating personnel selection and improvement, as well as increasing casino profitability. As previously discussed, employees’ service performance can be regarded as an important indicator of customer perceptions of service quality, and these in turn have been evidenced as vital antecedents of customer retention and company profitability. Emotional intelligence may be a predicting factor in service performance.

The above discussion has identified the research problem and demonstrated a possible link between the primary research constructs. It also highlighted the potential significance of the study. On the basis of the identified research problem, research questions are addressed in the following section.