It has been quite a challenging task for the Human Resource Management people to design such strategies which will transform the workforce as motivated and retained for high performance work organization (Thompson, 2004). HRM makes continuous efforts to develop such policies which will motivate the human resource for sustained competitive advantage (Barney’s, 1991, Wright, et al., 1994). These efforts must include incentives, pay packages which makes an employee more comfortable and committed with the organization. HRM also needs to understand the implications of the different incentive plans for different organizational levels.
Employee satisfaction is the most frequently researched area in the management sciences (Schneider and Brief, 1992). Employees will stay longer with the company “Higher retention of the right caliber of employees creates a stable and experienced labor force that delivers higher service quality at lower cost (Guthrie, J.P. 2001), this leads to higher customer retention and of course increased productivity with profitability. Researchers have also tried to further this relationship that a satisfied employee will be instrumental in keeping the customers satisfied thus yielding increased profitability (Bain and Co, 1991).
Another way of understanding the importance of employee is that customer satisfaction can only be achieved through employee satisfaction. For example, Berry (1981) states that whether managing customers or employees “the central purpose remains the same; the attraction of patronage through the satisfaction of needs and wants”. In both cases individuals and organizations are involved in exchange. The nature of what is exchanged may vary, but the importance of satisfying needs and wants remains constant, meaning that the management of employees is often similar to the management of customers.
After realizing that employees may be viewed as customers, it seems important to know whether the field of customer satisfaction measurement has developed any insights recently that can be applied in the employee setting. In fact, the quality revolution has prompted an explosion in customer satisfaction research and recent years have brought impressive gains in merging the field of customer satisfaction (traditionally focusing on consumer psychology and paying little attention to managerial application) with the field of service quality.
The purpose of this paper is to show how several of these recent advances in customer satisfaction measurement can be applied usefully in the context of employee satisfaction and retention. This requires a change of management paradigm, from employees as replaceable and low paid servants to employee as customer. Employees must not be viewed as not just someone who must listen to management, but also as someone who management must listen to.
The theory of reasoned action asserts that attitudes lead to intentions which lead to behaviors’. This theory has received a great deal of empirical support (Ajzen and Fishbein, 1980; Hom and Hulin, 1981; Steele and ovalle, 1984), and explains the similarity between the psychological mechanisms underlying customer and employee retention. High satisfaction results in an intention to remain in the economic exchange with the organization. Intentions translate directly to behavior, suggesting that employees are indeed similar to customers when it comes to satisfaction and retention.
Effectively measuring and improving employee satisfaction is very critical for the existence of an organization. Since businesses are becoming more competitive and employees with the rare skills and abilities needed to become competitively advantageous are becoming scarce and management can no longer effort to see employees as replaceable inputs (Miles and Creed, 1995). Now management has to see employees as valuable contributors who are real source of knowledge and strength for a viable and...