Introduction

Service delivery in the hospitality industry is inherently multilevel, which involves the interplay of different organisational systems, employee behaviours and customer experiences (Liao & Chuang, 2004). Scholars have emphasised that customer satisfaction and financial outcomes are moulded not only by service encounters but also by the underlying practices of human resource management (HRM) and climates that enable them (Najam et al., 2020). Yet, studies in the hospitality industry have often remained very much fragmented, focusing either on unit-level linkages between HR systems and customer outcomes, or on micro-level processes of employee attitudes, behaviours and well-being (Hu & Oh, 2022).

At the organisational level, the framework extends the service-profit chain by exhibiting how high-performance work systems (HPWS) influence service climate and display rules climate, thereby shaping aggregated employee performance, customer satisfaction and financial outcomes. Service climate implies employees’ shared perception of the organisation’s practices, procedures and behaviours that are rewarded, supported and expected for delivering quality service (Mokhtaran et al., 2014). While the display rules climate refers to employees’ shared understanding of the organisational norms and expectations for expressing emotions during customer interactions, like ‘smile at customers’, ‘stay calm under pressure’ (Ma et al., 2023). At the individual level, the model draws upon the Ability–Motivation–Opportunity (AMO) framework to explain how HPWS shapes employee service performance and emotional regulation, drawing consequences for employee well-being. By bridging these two layers, the model highlights how frontline employee performance aggregates upward to affect organisational outcomes, while simultaneously generating individual well-being consequences.

Theoretical Background

The Service-profit Chain (Organisational Layer)

The service-profit chain provides the core theoretical foundation for the organisational-level relationships proposed in the present model (Heskett et al., 2008). At its core, the service-profit chain posits that organisational practices, systems and internal climates shape collective employee attitudes and behaviours, which subsequently influence customer satisfaction, customer loyalty, and, ultimately, organisational profitability, reflected in financial performance. This perspective emphasises that sustainable financial outcomes are not achieved directly, but rather emerge through a sequential process in which internal organisational conditions drive external customer responses.

Within this framework, organisational-level human resource and management practices—such as HPWS—play a central role in establishing climates that support service excellence. These climates influence shared employee perceptions regarding service priorities, behavioural expectations and performance standards. When employees collectively perceive that their organisation values service quality and supports them in delivering superior service, they are more likely to engage in consistent, customer-oriented behaviours. Importantly, the service-profit chain operates at the collective level, suggesting that it is not isolated individual actions but the aggregated patterns of behaviour across employees that shape customer experiences and organisational outcomes.

This logic is particularly salient in the hospitality industry, where service experiences are produced and consumed simultaneously during face-to-face interactions between frontline employees and guests (Dawson et al., 2023). Unlike manufacturing or technology-driven sectors, hospitality services cannot be stored, standardised or corrected after delivery. As a result, service failures are immediately visible to customers and can have an outsized impact on perceptions of quality and value. The immediacy of service encounters leaves little room for error, making consistency across employees and service episodes critically important.

In this context, the quality of customer experiences depends not only on the behaviours of individual employees, but also on the degree to which service delivery is uniform and reliable across the entire unit or organisation. Aggregated frontline behaviours create shared customer perceptions regarding the organisation’s reliability, trustworthiness and brand credibility. When customers repeatedly encounter courteous, responsive and emotionally appropriate service behaviours, they develop positive evaluations of the organisation as a whole, rather than of individual employees. These evaluations form the basis for customer trust, satisfaction and perceived value.

Over time, positive customer perceptions accumulate and translate into higher levels of customer loyalty, repeat patronage and positive word-of-mouth, all of which are critical drivers of financial performance in the hospitality sector (Sirdeshmukh et al., 2002). Conversely, inconsistent service delivery can undermine customer confidence and erode brand equity, even when individual service encounters are occasionally positive. Thus, financial performance emerges as a downstream outcome of sustained service quality rather than short-term transactional success.

By emphasising these sequential linkages, the service-profit chain underscores the strategic importance of managing organisational-level practices and climates that foster customer-focused behaviours and collective service consistency. It highlights that investments in internal systems and climates are not merely operational decisions, but strategic imperatives that support long-term value creation (Hogreve et al., 2021). Accordingly, the service-profit chain offers a robust theoretical lens for understanding how organisational-level HRM practices influence customer outcomes and financial performance within the hospitality industry.

Strategic HRM and HPWS (Linking Mechanism)

HPWS serve as the strategic HRM foundation that links organisational practices to employee attitudes, behaviours and performance outcomes in a systematic and mutually reinforcing manner. Rather than functioning as isolated HR practices, HPWS are conceptualised as coherent bundles of interrelated practices designed to enhance workforce effectiveness and align employee behaviour with organisational objectives. Consistent with prior research, HPWS typically encompass selective recruitment and staffing, extensive training and development, employee empowerment, performance-based rewards and participative decision-making (Huang et al., 2016). The strategic value of HPWS lies not only in their capacity to enhance employee skill sets but also in their ability to shape shared meanings, expectations and behavioural norms across the organisation.

In service-intensive industries such as hospitality, where frontline employees act as the primary interface between the organisation and its customers, HPWS plays a particularly critical role. Hospitality service encounters are characterised by high levels of interpersonal interaction, emotional labour and real-time problem-solving, making employee behaviour a central determinant of service quality and customer satisfaction. Within this context, HPWS functions as a powerful signalling mechanism that communicates organisational priorities regarding service excellence, emotional conduct and customer orientation. Through consistent implementation, these practices convey what the organisation truly values, thereby influencing how employees interpret their roles and responsibilities.

A key outcome of HPWS implementation in hospitality organisations is the development of two interrelated organisational climates: service climate and display rules climate. Service climate reflects employees’ shared perceptions of the extent to which high-quality service is emphasised, supported and rewarded by management. When HPWS prioritise training for service skills, empowers employees to resolve customer issues, and rewards service-oriented behaviours, employees collectively perceive that service excellence is a core organisational priority. This perception fosters consistent service behaviour across units, enhancing reliability and customer trust.

Complementing the service climate, display rules climate captures shared expectations regarding the emotional expressions that employees are required to display during service interactions. In hospitality settings, employees are often expected to exhibit positive emotions such as friendliness, enthusiasm and empathy, regardless of their internal emotional states. HPWS contributes to shaping this climate by establishing clear emotional norms through training, supervision and performance appraisal systems. By clarifying acceptable emotional expressions and providing support mechanisms, HPWS reduces ambiguity surrounding emotional labour demands and promotes uniformity in emotional displays (Min & Hu, 2022).

Together, service climate and display rules climate function as interpretive filters through which employees understand how their work should be performed and evaluated. These climates translate abstract HR practices into concrete behavioural expectations, thereby reducing role ambiguity and enhancing behavioural consistency across employees and service encounters. Over time, the embedding of these climates fosters shared norms and standardised patterns of behaviour that align employee actions with customer expectations and organisational goals. As a result, HPWS lays the foundation for unit-level performance by facilitating coordinated service delivery, enhancing customer satisfaction and supporting favourable financial outcomes.

By emphasising the climate-building role of HPWS, this perspective highlights how strategic HRM systems operate as collective-level mechanisms rather than solely individual-level interventions. In doing so, it underscores the importance of viewing HPWS as a critical driver of organisational alignment and sustained competitive advantage within the hospitality industry.

AMO Framework and Employee Performance (Individual Layer)

The lower layer of the proposed multilevel model draws on the AMO framework to explain the mechanisms through which HPWS influence individual-level employee performance and well-being. The AMO framework posits that employee performance is maximised when individuals possess the necessary abilities, are sufficiently motivated, and are provided with meaningful opportunities to contribute to organisational goals (Bos-Nehles et al., 2023). Rather than treating performance as a function of any single factor, the AMO perspective emphasises the interactive and complementary nature of these three components, suggesting that deficiencies in one dimension may constrain the effectiveness of the others.

Within this framework, HPWS serves as a primary organisational mechanism through which abilities, motivation and opportunities are developed and sustained. From an ability perspective, HPWS emphasises selective recruitment and comprehensive training programmes that enhance employees’ job-relevant knowledge, technical competencies and interpersonal skills. In hospitality settings, this includes training in service delivery, communication, cultural sensitivity and problem-solving, all of which are essential for managing dynamic customer interactions. By strengthening employees’ capabilities, HPWS ensures that frontline staff are equipped to meet both operational and service quality expectations.

From a motivation standpoint, HPWS incorporates performance-based rewards, recognition systems and career development opportunities that encourage employees to exert discretionary effort. These practices foster both extrinsic motivation, through tangible incentives, and intrinsic motivation, by reinforcing a sense of purpose, competence and organisational commitment (Boxall & Macky, 2009). Motivated employees are more likely to engage proactively with customers, demonstrate persistence in service recovery situations, and invest emotional energy into their roles—behaviours that are particularly valuable in the hospitality industry.

The opportunity dimension of the AMO framework is addressed through HPWS practices that promote employee empowerment, participation in decision-making, and access to necessary resources. By granting frontline employees autonomy and discretion, HPWS enables them to respond flexibly to customer needs, personalise service encounters, and resolve issues in real time. This is especially critical in hospitality contexts, where rigid procedures may hinder service responsiveness and negatively affect guest experiences.

In frontline hospitality roles, employees are required to balance operational efficiency with emotional sensitivity, often engaging in emotional labour while maintaining service standards. The AMO framework provides a useful lens for understanding why employees operating within HPWS-rich environments are better positioned to deliver both high-quality service and adaptive emotional responses (Dorta-Afonso et al., 2021). When employees feel capable, motivated and empowered, they are more likely to regulate their emotions effectively, display appropriate affect and sustain positive interactions, even under demanding conditions.

Moreover, the effectiveness of AMO resources is further enhanced when they are embedded within a strong service climate and display a rules climate at the organisational level. These climates provide clear interpretive cues that guide how employees should apply their abilities and motivation in service encounters. When aligned with HPWS, such climates reduce ambiguity and reinforce consistent service behaviours, increasing the likelihood that individual-level capabilities and motivations translate into reliable and customer-focused performance outcomes (Pengekalan et al., 2023). Thus, the AMO framework offers a critical explanatory mechanism, linking HPWS to individual service performance within the broader multilevel model.

Employee Well-being (Individual Outcomes)

A defining characteristic of work in the hospitality industry is the pervasive requirement for emotional labour, which refers to employees’ efforts to regulate their internal feelings and external emotional expressions in accordance with organisational display rules (Hori & Chao, 2022). Frontline hospitality employees are expected to consistently exhibit positive emotions such as warmth, enthusiasm and attentiveness, regardless of their actual emotional states or the challenges they encounter during service interactions. These emotional demands are embedded within daily work routines and form a critical component of service quality, as customers often evaluate their experiences based on employees’ emotional expressions as much as on technical service delivery.

Employees typically manage emotional labour through two primary strategies: deep acting and surface acting. Deep acting involves consciously attempting to align internal feelings with organisationally desired emotional displays, thereby generating more authentic emotional expressions. This approach has been associated with enhanced customer satisfaction, stronger relational bonds and perceptions of sincerity during service encounters (Fatawu & Atingabono, 2024). In contrast, surface acting involves suppressing genuine emotions and merely feigning required expressions, creating a discrepancy between felt and displayed emotions. While surface acting may enable employees to meet immediate service expectations, it often results in emotional dissonance, which has been linked to increased stress, emotional fatigue and burnout over time (Pugh et al., 2010).

Within the proposed model, emotional labour is therefore conceptualised as a double-edged sword that simultaneously contributes to customer experience quality and poses risks to employee well-being (Yang et al., 2023). On the one hand, effective emotional regulation enhances service encounters, reinforces positive customer perceptions, and supports organisational performance. On the other hand, sustained emotional labour—particularly when dominated by surface acting—can deplete employees’ emotional resources, undermining psychological health and long-term performance capacity. This duality highlights the importance of examining emotional labour not only as a performance mechanism, but also as a critical well-being concern.

Recognising this tension, the present framework extends beyond traditional performance-centric models by explicitly incorporating employee well-being as a core outcome. This extension reflects the growing consensus that organisational success cannot be evaluated solely through financial metrics, but must also account for the sustainability of employee health, morale and engagement (Arokiasamy et al., 2024). In hospitality contexts characterised by high emotional demands and labour intensity, neglecting employee well-being may yield short-term performance gains at the cost of long-term workforce stability and service quality.

By integrating emotional labour and well-being into the multilevel framework, the model emphasises the critical role of HPWS and organisational climates in shaping how emotional labour is experienced and managed. HPWS can mitigate the negative effects of emotional labour by fostering supportive leadership, providing training in emotional regulation, and promoting a display rules climate that emphasises authenticity rather than forced positivity. Additionally, wellness initiatives, access to psychological support, and recognition of emotional effort signal organisational care for employees, encouraging deeper forms of emotional engagement while reducing reliance on surface acting (Saleem et al., 2024).

Collectively, these practices help ensure that performance improvements derived from emotional labour are sustainable and do not come at the expense of employee well-being. By addressing both the productive and potentially harmful aspects of emotional labour, the model offers a more balanced and human-centred approach to understanding performance dynamics in the hospitality industry.

Model Development

The hospitality and similar service-intensive industries are those that require a very high level of interaction with the customer and where the customer employees are under great pressure due to the emotional demands of the job, as well as performance expectations (Saito, 2025). In such situations, the quality of service provided to customers is no longer the only factor that determines the organisation’s success; the human resource systems’ ability to maintain employee performance and well-being over time has also become a factor (Alqudah et al., 2023). To meet these challenges, the current conceptual model makes a suggestion for a multilevel system that combines the arguments of strategic HRM, service climate and employee well-being to show how HPWS affect both customer and organisational outcomes via employee-level mechanisms (Figure 1).

 

Figure 1. Multilevel Model of Frontline Employee Performance & Customer Outcomes.

Source: Authors (2025).

 

The model fundamentally views HPWS as a prime organisational input with multiple pathways leading to positive employee attitudes, actions and performance. HPWS stands for a coherent system of HR practices such as selective hiring, extensive training, performance-based compensation, employee participation and management that fosters communication, which all aim at improving the AMO area of employees (ability, motivation and opportunity). These practices have a significant impact on the hospitality industry because it is the frontline employees that interact with customers the most; thus, they are the ones who actually implement the HR policies through their service deliveries. Therefore, the model identifies HPWS as the basic factor that drives the perception of climate and individual-level performance outcomes.

The model’s main benefit is that it clarifies the organisational climate as a mediator between HR systems and employee behaviour. Following Bowen and Ostroff’s (2004) HRM system strength and climate views, the model suggests that HPWS create two different but related climates: service climate and climate for display rules. Service climate is the term for the common perceptions of the employees about the organisation’s main focus on service quality, customer orientation and service excellence (Dietz et al., 2004). On the other hand, the climate for display rules communicates common agreements on the emotion expression practices, how employees should handle and show emotions during service encounters (Carrasco et al., 2011). The model thereby differentiates the two climates and accepts that service delivery in the hospitality industry engages technical and interpersonal skills as well as lasting emotional control.

These climates operate as collective sense-making mechanisms, which communicate HR policies in an abstract way and set the expectations and norms in an actual way (Mossholder et al., 2011). The model does not consider that HPWS has a direct and uniform effect on individual behaviour, but rather says that employees react to the organisation’s values and rewards as they perceive them collectively. Thus, service climate and display rules climate act as important channels for HPWS to affect the behaviour of frontline employees, which will be showing through both task-related service behaviours and emotional labour strategies during customer interactions.

On the level of a single person, the model thinks about employee performance as a multidimensional concept that includes both service performance and emotional performance. Service performance is showing the employees’ skills in providing reliable, responsive and customer-oriented service behaviour, while emotional performance indicates the degree to which employees are able to control and show their emotions according to the company’s expectations (Hanafi & Ibrahim, 2018). The model brings emotional performance into the performance construct, which thus reacts to the increasing acceptance that emotional labour is not a marginal activity but a major part of the frontline work in hospitality. Furthermore, the model points out that employee performance is determined not only by personal traits and motivation (as represented by the AMO framework) but also by organisational cues that indicate how much effort and emotion should be put into the service encounters (Kellner et al., 2019).

The model not only considers individual outcomes but also includes cross-level aggregation processes by connecting the individual performance of employees to the aggregated performance of employees at the unit or organisational level. This aggregation is a translation of the overall service quality that customers perceive through several interactions rather than through the performance of isolated employees (Hong et al., 2016). Therefore, the aggregated employee performance is considered to be a close factor influencing customer satisfaction, which then leads to financial performance outcomes such as revenue growth, repeat patronage and profitability (Tiana et al., 2022). This chain of events mirrors and expands the service-profit chain logic while being incorporated into a more extensive HRM and climate-based framework.

The pivot point of the model is the explicit integration of employee well-being as a key outcome rather than a secondary or assumed by-product, as in traditional performance-centric frameworks. Employee well-being is treated as a complex and diverse multidimensional construct comprising both psychological well-being (e.g., stress, burnout, emotional exhaustion) and social well-being (e.g., sense of belonging, interpersonal support and social functioning at work) (Sonnentag, 2015). The model suggests that a direct connection exists between the employee performance, especially emotional performance and well-being, thus acknowledging that continuous emotional labour, even if effective in terms of service, may lead to psychological and social costs. By this, the framework not only recognises the ‘dark side’ of high-performance in service roles, but also disputes the idea that superior customer outcomes always coincide with employee health (Kloutsiniotis & Dimitrios, 2020).

Recognising employee well-being as a co-occurring result together with customer satisfaction and financial performance represents an indication and theoretical change toward more sustainable models of organisational effectiveness. Instead of only regarding well-being as an antecedent or a moderator, the model assigns it as an effect resulting from HR systems, climates and performance demands. This perspective is consistent with current discussions in HRM about the necessity for ‘mutual gains’ systems that integrate organisational performance with employee sustainability, especially in service sectors with high emotional demands (Rondi et al., 2021).

One more aspect that sets the model apart is its multi-layered structure, which clearly connects organisational, climate, individual and outcome levels. The model, by indicating these levels and their connections, answers the demand for deeper theoretically rooted, multilevel research in HRM and hospitality management. It also lays out a very clear way for testing through the (Kaushik & Mukherjee, 2021) empirical hierarchy or multilevel modelling techniques that are representative of the nested character of the service organisations.

To sum up, the model introduced is a unifying framework that connects the three domains of strategic HRM, service management and occupational well-being, considering that service excellence, financial performance and employee well-being, goes beyond efficiency and offer a broader and more sustainable view of organisational success in service-intensive industries.

Organisational-level Linkages

At the organisational level, HPWS operate as strategic bundles of practices that shape the service context (Kaushik & Mukherjee, 2021). HPWS signal an organisation’s commitment to both service quality and the regulation of emotional display, thereby promoting a service climate and a display rules climate. These climates function as collective frames of reference, aligning employee behaviours with customer expectations and strengthening the overall consistency of service delivery (Takeuchi et al., 2009).

Service and display rules climates subsequently influence aggregated employee performance by shaping shared norms and behavioural patterns across frontline staff (Hui et al., 2007). When employees collectively enact high standards of service and emotional regulation, these behaviours accumulate into unit-level performance outcomes. This collective performance serves as a direct predictor of customer satisfaction, which, in turn, becomes the foundation for organisational profitability, which is all about the financial outcomes (Kozlowski & Ilgen, 2006). Thus, the organisational layer of the model underscores the cascading impact of HRM practices through climates, aggregated employee behaviours and customer evaluations (Rogg, 2001).

Individual-level Linkages

At the individual level, HPWS enhance employees’ capacity to deliver superior service through the interrelated mechanisms articulated by the AMO framework. The AMO perspective provides a robust explanatory lens for understanding how HR practices translate into individual performance by emphasising that employees are most effective when they possess the necessary capabilities, are sufficiently motivated, and are provided with opportunities to apply their skills in meaningful ways. Within HPWS, training and development initiatives strengthen employees’ abilities by enhancing job-related knowledge, service competencies and interpersonal skills. In hospitality settings, such training often extends beyond technical tasks to include communication skills, cultural awareness and service recovery techniques, all of which are essential for managing diverse and dynamic customer interactions (Arulsamy et al., 2023).

Motivation is cultivated through HPWS practices such as performance-based rewards, recognition systems and career advancement opportunities, which reinforce desired service behaviours and encourage discretionary effort. These motivational mechanisms not only provide extrinsic incentives but also foster intrinsic commitment by signalling that service excellence is valued and rewarded by the organisation. In parallel, empowerment practices embedded within HPWS expand employees’ opportunities to contribute meaningfully by granting autonomy, encouraging participation in decision-making, and providing access to resources necessary for effective service delivery. Together, these ability-, motivation- and opportunity-enhancing practices equip employees with the psychological and material resources required to consistently engage in service excellence (Browning, 1998).

Employees operating within supportive organisational climates and possessing high levels of AMO are more likely to demonstrate effective service performance at the individual level (Alqudah et al., 2021). Such performance encompasses not only task-related service behaviours, such as efficiency, accuracy and responsiveness, but also the regulation of affect in accordance with organisational display rules. In hospitality contexts, employees are expected to manage their emotional expressions carefully, displaying warmth, empathy and positivity during service encounters (Lucas, 2002). When AMO resources are strong, employees are better positioned to regulate their emotions effectively, delivering service that appears both competent and emotionally authentic.

Importantly, individual-level service performance has implications that extend beyond immediate customer outcomes. While successful service delivery can foster a sense of personal accomplishment, pride and professional identity, the emotional demands inherent in hospitality work introduce a potential tension between performance and well-being. Emotional labour, particularly when it involves sustained regulation of feelings and expressions, represents a double-edged sword for employees (Gilsa et al., 2013). Surface acting, characterised by inauthentic emotional displays that conflict with internal feelings, can deplete emotional resources over time, leading to emotional exhaustion, stress and diminished well-being. In contrast, deep acting—where employees genuinely attempt to align their emotions with organisational display expectations—has been shown to reduce emotional dissonance and promote more positive psychological outcomes (Rafiq et al., 2020).

The AMO framework helps explain why HPWS can influence not only performance outcomes but also employee well-being. When HPWS foster sufficient abilities, sustains motivation and provides opportunities for autonomy and support, employees are less likely to rely on surface acting and are more capable of engaging in deep acting strategies. Consequently, well-designed HPWS can help balance the dual objectives of high-quality service delivery and employee well-being, ensuring that individual performance gains are sustainable rather than achieved at the cost of long-term psychological health (Tsoukatos & Rand, 2007).

Cross-level Integration

The proposed model underscores the dynamic and reciprocal interplay between organisational-level and individual-level processes in shaping performance outcomes within the hospitality industry. Individual service performance does not occur in isolation; rather, it is embedded within a broader organisational context and accumulates across employees to form unit-level performance. When frontline employees consistently engage in high-quality service behaviours, their collective actions establish patterns of reliability, responsiveness and emotional consistency that customers experience at the unit or organisational level. These aggregated behaviours form the foundation for customer satisfaction, loyalty and ultimately financial success (Garrido-Moreno et al., 2024).

This aggregation process highlights the importance of viewing service performance as a multilevel phenomenon. Individual employees may vary in skills, motivation and emotional regulation, but organisational systems and climates shape the extent to which such variability translates into consistent service outcomes. HPWS operate simultaneously across levels by influencing individual capabilities and behaviours while also fostering shared perceptions, norms and climates at the organisational level. Through this dual influence, HPWS align individual efforts with collective service goals, enabling organisations to deliver standardised yet flexible service experiences (Wang et al., 2021).

Importantly, the model illustrates how organisational-level practices cascade downward to shape individual experiences, while individual behaviours simultaneously feed upward to influence organisational outcomes. For example, service climate and display rules climate provide interpretive frameworks that guide how employees apply their abilities and motivation during service encounters. In turn, repeated individual-level service behaviours reinforce these climates over time, creating a feedback loop that strengthens organisational consistency. This dynamic cross-level interaction demonstrates that HRM effectiveness depends not only on the design of practices but also on their integration across organisational layers.

Beyond extending traditional service-profit logic, the model makes a critical theoretical contribution by explicitly incorporating employee well-being as a central outcome alongside customer satisfaction and financial performance. Conventional service-profit frameworks primarily emphasise the instrumental role of employees in generating customer and financial outcomes, often underplaying the long-term human costs associated with emotionally demanding service work. By integrating well-being into the model, this framework recognises that sustainable organisational success depends on maintaining the psychological health, engagement and resilience of frontline employees (Gómez et al., 2023).

This perspective highlights the dual responsibility of HRM systems: to foster service excellence that enhances customer experiences and organisational performance, while simultaneously safeguarding employee well-being. HPWS that achieve this balance enable organisations to sustain high service quality without exhausting their workforce. Consequently, the model offers a more holistic and ethically grounded understanding of performance dynamics in the hospitality industry, emphasising that long-term competitive advantage arises from the alignment of organisational effectiveness and employee sustainability.

Discussion

This model makes a substantive contribution to both the HRM and services management literatures by advancing a multilevel framework that explicates how organisational systems and climates are translated into meaningful outcomes for both customers and employees (Renkema et al., 2017). By explicitly theorising cross-level relationships, the model integrates organisational-level HR architectures with individual-level psychological and behavioural processes, thereby addressing a long-standing divide between strategic HRM research and micro-level studies of employee experience (Andersén & Jansson, 2024). This integration is particularly relevant in service-intensive contexts such as hospitality, where frontline employees act as the primary interface between organisational strategies and customer experiences. Consequently, the model enhances theoretical clarity regarding how HPWS operate in practice, moving beyond assumptions of uniform effects to capture the mechanisms through which HR systems shape daily service encounters (Wang & Jiang, 2024).

Second, the model extends the traditional service-profit chain by explicitly incorporating employee well-being as a central and non-negotiable outcome of organisational systems (Andersén & Jansson, 2024). While the service-profit chain has traditionally emphasised customer satisfaction, loyalty and financial performance, it has paid comparatively less attention to the sustainability of the workforce responsible for delivering service quality. By integrating employee well-being into this framework, the model challenges performance-centric perspectives that implicitly tolerate high levels of stress, burnout and emotional exhaustion among frontline employees. This extension is particularly important in hospitality settings, where sustained emotional labour and rigid display rules are common and can impose significant psychological costs on employees (Lu et al., 2022). Prior research has frequently prioritised customer-related outcomes while underestimating or overlooking the cumulative human costs associated with prolonged emotional regulation demands (Elganas & Sheppard, 2019). By positioning employee well-being alongside customer outcomes, the model reframes organisational effectiveness in more holistic and ethically grounded terms, recognising employee health and sustainability as integral to long-term organisational success rather than as secondary considerations (Laily et al., 2019).

Third, the model foregrounds the role of service climate and display rules climate as critical mediating mechanisms through which HPWS exert their influence on both employee and customer outcomes (Tran Huy, 2023). Whereas much of the strategic HRM literature focuses primarily on the design and presence of HR practices at the systems level, this framework emphasises the importance of collective interpretations and shared meanings that emerge within work units. These climates serve as the ‘translation mechanisms’ that convert formal HR policies into informal norms, expectations and behavioural standards that guide employee conduct during service interactions (Cherkos & Shuka, 2025). By adopting a climate-based perspective, the model aligns with broader organisational climate theory and highlights how employees collectively make sense of organisational priorities, particularly with regard to service quality expectations and emotional regulation norms. This shared sense-making process reinforces consistent service delivery while also shaping how employees manage emotional labour demands in customer-facing roles (Lo et al., 2024).

From a practical standpoint, the model offers important implications for hospitality organisations seeking to achieve high service standards without compromising employee well-being. It suggests that HPWS should be intentionally designed to balance performance objectives with sustainable human outcomes (Wang & Jiang, 2024). HR practices such as supportive supervision, authentic and transformational leadership, employee voice mechanisms, wellness initiatives and resilience-building programmes can play a crucial role in buffering the strain associated with emotional labour, while maintaining service excellence (Andersen et al., 2025). Moreover, the model advocates for organisations to adopt a broader set of performance metrics that encompass both customer-related indicators—such as satisfaction, loyalty and repeat patronage—and employee well-being indicators, including burnout, engagement and psychological health (Saito et al., 2024). This dual measurement approach enables a more accurate and comprehensive assessment of organisational effectiveness, supporting long-term sustainability and responsible management practices rather than short-term performance gains alone (Moldavska & Welo, 2019).

Conclusion and Future Research

The suggested multilevel model reveals the dual and mutual dependence of HPWS on the organisation performance and employee well-being fields within the hospitality sector at the same time (Park et al., 2023). The linking of HR systems at the organisational level and the climate of service at the same level to the individual-level psychological and behavioural mechanisms is a big step forward to a more scholarly view, as it not only draws a line from strategic HRM to service management and occupational well-being research but also from the latter to the former. The process of reshaping the co-dependent and dynamic role of HPWS in the two-fold outcomes of organisational performance and employee well-being is at the heart of the moving from single-level analyses to complex, cross-level processes of HR practices impact on both employee experiences and customer-facing outcomes (Bowen & Ostroff, 2004), which the framework responds to. This integrative approach has a positive impact on the theoretical coherence by classifying HPWS as socially embedded systems that determine not only productivity but also the quality of health, motivation and service delivery behaviours of the employees.

The empirical testing of the theoretical model through high-quality multilevel research designs is a prerequisite for the adoption of the nested structure of the hospitality organisations as a key element in future studies. Besides, different data sources, such as service personnel, managers, patrons and organisational performance records, would make it more difficult for the researchers to prove the proposed cross-level linkages. To give an example, survey data of employees could be combined with the metrics of customer satisfaction and financial indicators to assess if the increase in employee well-being leads to an enhancement in service quality and organisational performance.

Moreover, the longitudinal research designs would assist the researchers in investigating the temporal dynamics between HPWS, organisational climate, employee well-being and customer outcomes. Such methods would push the literature past static, cross-sectional snapshots and provide a deeper understanding of the time span of the influence of HR systems over, including potential lagged or reciprocal effects.

Future inquiries in this area can occur by analysing the contextual moderators that play a role in the strength, direction or consistency of the suggested relationships. One example for this is the national culture, which might impact service display rules and emotional labour expectations from employees, thereby altering perceived HPWS at the individual level. Similarly, market segment differences, such as luxury versus budget hospitality, can lead to varying customer service quality expectations, thereby affecting the influence of employee well-being on performance.

The leadership style factor is another boundary limitation, as supportive or transformational leadership may help in implementing and signalling the policies and practices effectively. Theoretical implications in hospitality management are made by linking the HR architectures at the organisational level with the employee experiences at the individual level (Vasudevan & Mahadi, 2017). It is asserted that HR systems should be designed in such a way that they would neither solely focus on customer satisfaction and financial performance nor overlook the protection and enhancement of employee well-being. The concept is particularly relevant in service-intensive industries where high emotional labour demands, workforce turnover and performance pressures are a common scenario. Eventually, the model provides a route to more sustainable and responsible management practices, thus positioning employee well-being not as a secondary outcome but rather as a central long-term driver of organisational success (Gupta, 2024).

Acknowledgements

The authors hereby acknowledges the submission of my article titled ‘A Multilevel Model of Frontline Employee Performance and Customer Outcomes in the Hospitality Industry’ to the Indian Institute of Foreign Trade (IIFT) for consideration in the forthcoming edited volume/publication. The author confirms that this manuscript is an original work and has not been published previously, nor is it under consideration for publication elsewhere. All sources of information have been duly acknowledged, and ethical guidelines pertaining to academic integrity have been strictly followed. The author sincerely appreciates the opportunity provided by IIFT to contribute to this scholarly work and looks forward to the review process.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

ORCID iDs

S.M.R.K. Illangarathne  https://orcid.org/0009-0004-8210-2007

Chathuni Jayasinghe  https://orcid.org/0000-0002-6986-8401