Financial Performance
The Effects of Employee Satisfaction on Company Financial Performance
“People are our most valuable asset.” “Our employees come first.” “We’re only as strong as our people.” These declarative statements have been a staple of the American workplace for decades. Yet judging by their routine growth strategies, countless senior management teams seem to be in denial of just how accurate those statements are.
While most organizations typically emphasize generating new business and cutting costs, a rapidly growing body of evidence points to an indirect yet undeniable correlation between employee satisfaction and financial performance— a correlation that has significant ramifications on building profits most effectively. Applied properly, these learnings can also influence how organizations approach a variety of interrelated functions, such as business planning and development, employee rewards and recognition, and even the measurement of ROI. This white paper outlines the most current findings on the linkages between employee satisfaction and financial performance, including an overview of the latest research, case studies, best practices and source materials. Yet, as a rising number of astute companies have learned, American business has long overlooked and mismanaged one of its most critical assets: human capital. Ample research makes clear that satisfied employees generate demonstrably superior customer satisfaction and that, in turn, satisfied customers are more profitable ones. In other words, creating a work environment with satisfied and motivated employees has been proven critical to achieving profit goals, delivering on marketing promises and competing over the long term. This concept is gaining attention. Harvard Business Online editor Loren Gary writes: “As labor-related costs consume larger portions of shrinking corporate expenditure pies, companies are increasingly motivated to find ways to demonstrate the ROI of their human capital. And some are beginning
“People are our most valuable asset.” “Our employees come first.” “We’re only as strong as our people.” These declarative statements have been a staple of the American workplace for decades. Yet judging by their routine growth strategies, countless senior management teams seem to be in denial of just how accurate those statements are.
While most organizations typically emphasize generating new business and cutting costs, a rapidly growing body of evidence points to an indirect yet undeniable correlation between employee satisfaction and financial performance— a correlation that has significant ramifications on building profits most effectively. Applied properly, these learnings can also influence how organizations approach a variety of interrelated functions, such as business planning and development, employee rewards and recognition, and even the measurement of ROI. This white paper outlines the most current findings on the linkages between employee satisfaction and financial performance, including an overview of the latest research, case studies, best practices and source materials. Yet, as a rising number of astute companies have learned, American business has long overlooked and mismanaged one of its most critical assets: human capital. Ample research makes clear that satisfied employees generate demonstrably superior customer satisfaction and that, in turn, satisfied customers are more profitable ones. In other words, creating a work environment with satisfied and motivated employees has been proven critical to achieving profit goals, delivering on marketing promises and competing over the long term. This concept is gaining attention. Harvard Business Online editor Loren Gary writes: “As labor-related costs consume larger portions of shrinking corporate expenditure pies, companies are increasingly motivated to find ways to demonstrate the ROI of their human capital. And some are beginning