Does Employee Satisfaction Matter?
Employee satisfaction is widely drawing attention for decades now. Why is it so important thought for organisations to survive? Let’s take a step back and explore the definition of the word satisfaction. Logically it is the pleasant feeling that you get when you receive something you wanted. Integrating that feeling into a work environment for an employee is interpreted as a positive affection towards a job or a situation in a job after an evaluation of its characteristics. In order to objectively discuss the statement why organisations concern about the level of their employees’ satisfaction, one must first understand how employee satisfaction relates to an organisation’s scope. After we fit the “piece in the puzzle”, the benefits an organisation can enjoy from achieving high levels of employee satisfaction become more clear.
Mapping the Links
The last few decades researchers have devoted a lot of effort to prove the connections between concepts that lead to an organisation’s survival and long-term sustainability. Customer perceived value leads to customer satisfaction and to customer loyalty. Customer loyalty drives positive word-of-mouth, new customer acquisitions, and ultimately repeated sales and profitability. Among others, all the above can be strategic drivers of long-term sustainability for an organisation. A lot of studies have proven how employee satisfaction affects positively and indirectly customer satisfaction through an organisational learning culture. Organisations committed to learning show increased rates of internal and external change, can deliver value to customers through innovation and have positive effects on their long-term performance. Culture can act as an ally in strategy execution through effective people planning and promotion of aligned attitudes and behaviors by its employees.
Understanding where the concept of employee satisfaction fits in the organisational framework, can help us examine the reasons for its importance.
People, Learning & Innovation
In recent researches performed on “Best Companies to Work For”, proof was identified that organisations who invest in employee satisfaction enjoy higher long-term value. Overall, everyone recognises that employees can be valuable assets that organisations might leverage upon for survival and attaining competitive advantage. The intangible assets (one of the elements being the “people”) can be a tool of differentiation from the competition in the form of a competitive advantage.
What is a Competitive Advantage Though?
We can easily summarize the definition as the implementation of a strategy which creates value to customers that no current or potential competitor offers. Now a key question here could be how does an organisation acquire and preserve such a competitive advantage? Even if at a present time an organisation has a specific competitive advantage, isn’t it likely that rivals can copy it easily? Especially in such fast digital transforming environments that the internet created for the markets nowadays?
Arguably we can put many ideas on the table for an organisation to integrate in its strategy. From cost reduction to product or service differentiation, from distribution channels to relationship management. The list of options can be long, depending on the context an organisation operates, its size, the competition, the environment trends, the strengths, resources and so forth. What about the speed though that things change at present? Doesn’t it affect the flexibility an organisation should have in order to react and adapt to changes in the environment? Or even better, and if possible, be proactive?
Who is responsible for sensing trends in an organisation’s environment? Who is responsible for planning an organisation’s future? Then, who needs to follow up to that plan? Who needs to be engaged on the day-to-day tasks to assist in achieving the long-term objectives? Who needs to work together as a team to overcome challenges and solve problems? Problems need brainstorming to be solved, right? Who needs to constantly monitor, give and receive feedback, and make corrective actions if alignment is not achieved? At the end of the day, who shall implement systems and mechanisms for such control to exist? Who will power the change? Who needs to accept the change? Questions can be endless.
I can summarise the answer to all the above in one word. People. That is, an organisation’s employees regardless of their level in hierarchy. From first line workers, to team leaders or middle-level managers, to top senior managers; they are all employees.
Connecting the Dots…
Taking into consideration all the above, an organisation is more likely to survive in the long-term if it preserves a competitive advantage, if value is delivered to its customers through products and services, deriving from a corporate culture that is committed to learning and innovating. This chain entails people. People learn. They are the ones who innovate. People carry experiential knowledge. Organisations primarily consist of knowledge workers and due to the fact that it is very critical to continuously build, maintain, and leverage that knowledge, organisational learning is one of the crucial elements of competitiveness. Especially in fast-moving industries where creativity, innovation, discovery and inventiveness are critical elements for success.
Taking into consideration all the above, isn’t it logical to suggest that employees are an important ingredient in the mixture of a learning and innovative culture, which organisations can use to form a competitive advantage that competitors cannot easily copy or acquire? Due to the fact that employees are the core-axis of every organisation and business, they one of the most crucial resource that an organisations can possess. And as quoted by Narayana Murthy in Economic Times, since an organisation’s “assets walk out of the door each evening” it’s important “to make sure that they come back the next morning”. Keeping employees satisfied is a key.
An employee’s satisfaction with a job, relates to job involvement, psychological empowerment, organisational commitment, and productivity. Forbes exhibits how Google emphasises on employee satisfaction and connects recent studies associated with 12% increased productivity. Perhaps more than anything else, Google knows how to innovate since their new product developments move at the same speed as light!
Employee Satisfaction & Organisational Benefits
Once an organisation’s employees experience job satisfaction, involvement, empowerment, commitment and productivity, could there be further benefits besides increased performance, a learning-driven culture and value innovation? Or in other words, if we have satisfied employees, what attitudes, behaviours and trends follow within an organisation, that can affect positively the overall performance? If employees are satisfied with (or at) their job, isn’t it likely that they will be loyal and in parallel not be looking for another job? Doesn’t that affect positively the employee retention? Moreover, won’t they talk positively about their employer and indirectly “market” their organisation? Aren’t these effects related to higher retention rates, acquisition of new employees, and ultimately human resources cost reduction?
I believe everyone who leads an organisation understands nowadays how important it is to have satisfied employees. If that is the case though why we still have dissatisfied people in work environments? Is it maybe because investing in the concept it takes a long time for a market to realise its benefits? Could it be because a small family business owner has his/her own priorities? Or maybe due to lack of proper leadership practices? Or even because organisations hire the wrong people? Why a recent 2019 research in 19 countries with a sample of 190,000 workers (HBR Editors), shows that only 15.8% of employees show engagement at work, and the rest “just go to work”? Reasons again can be many and they require future attention.
The greatest attention for organisations though, should arise from the terminology of the concept satisfaction. Satisfaction comes after the fulfillment of need. An organisation’s environment, customers, products and services change. People change. Everything changes; and so do people’s needs. Some say that organisations should treat their employees as they would expect them treating their customers. That might apply for some organisations still. But how has the way of doing business altered the last 20-30 years? And most importantly how will it evolve? What would the role of the employee be?
How will the increasing trends of freelance workers affect organisations? How pandemics like Covid-19 will shape the future? It is most likely that in any business model organisations will still require satisfied employees to survive. Especially, if they build a model that focuses on organisational learning, employee satisfaction and innovative processes. The rising trends of our times though, indicate that customers will have less and less direct interaction with employees. At the same time people are fond of the “work from home” concept. Thus, shouldn’t future focus be on what systems and mechanisms to have in place so as to continuously ensure employee satisfaction in remote working environments? What would be the new parameters in the employee satisfaction “equation”?
Do questions generate answers?
Just to sum up…
Employees are an important ingredient in the mixture of a learning and innovative culture, which organisations can use to form a competitive advantage that cannot be easily copied or acquired by competitors. Keeping them satisfied is a key component.
An employee’s satisfaction with a job, relates directly to job involvement, psychological empowerment, organisational commitment, and increased productivity.
When employees in an organisation are satisfied, they record increased levels of increased productivity, employee loyalty, employee retention (and thus reduced hiring and training cost), and strong positive marketing via word of mouth.