The Impact of Employee Satisfaction on Business Outcomes

Topics: Customer, Customer service, Employment Pages: 10 (3776 words) Published: April 24, 2007
Let me tell you a little story. Randy, who works for Gunderson as an equipment designer, is an unhappy employee. He has worked for Gunderson for 16 years, first starting out as a AutoCAD designer, drawing freight trains for manufacturing, and moving into an equipment designer position, designing braking systems for freight trains. He has been unhappy in his job for the whole time because of the divide that he feels with his boss. He doesn't have a university degree, and his boss respects him less than the people who have an engineering degree, even though he has studied all of the theory related to braking systems, and is among the best AutoCAD users in his group. Because he feels that his boss respects anyone who has a university degree more than him, he feels unhappy that he doesn't get more recognition in his job. Unfortunately, this story is all too common, because studies have shown that an estimated 22 million workers are presently "actively disengaged", or extremely negative in their workplace. This costs the economy up to $300 billion dollars a year in productivity ("New Book" 1). This paper shows the linkages between employee satisfaction and customer satisfaction and retention and business outcomes, and demonstrates how employee attitudes can be measured and improved upon. Part A describes linkage research, and presents evidence about how employee satisfaction correlates with customer service, market share, revenue generation, and the bottom line. Part B outlines methods to measure employee attitudes such as the use of employee surveys, and how to put measures into place to improve employee satisfaction. Part A: Linkage Research

What are the linkages between employee attitudes about their workplaces and customer service, market share, revenue generation, and the overall bottom line measures of business success? This is an extremely important question, and a whole area of research has been developed to study this question. Linkage research describes this research area, and the linkage research model states that the more certain leadership values and practices are present in a given work environment, the more energized and productive the workforce. This will increase the satisfaction of customers and strengthen the long-term business performance of the organization (Wiley 5). Customer Service

There are linkages between employee attitudes about their work environment and customer service. Marcus Buckingham, who works for the Gallup organization, believes that in order to build the most powerful company possible, the first thing that needs to happen is that every person needs to be able to successfully answer twelve simple questions about the day-to-day realities of their job (LeBarre 5). This includes questions such as "Do I know what is expected of me at work?", "At work, do I have the opportunity to do what I do best every day?", and "Is there someone at work who encourages my development?" (Buckingham 6). Buckingham's team analyzed how the answers to the Q12 (the twelve core questions) shaped business results. The most engaged workplaces (those in the top 25% of Q12 scores) were 56% more likely to have higher-than-average customer loyalty, 38% more likely to have above-average productivity, and 27% more likely to report higher profitability (LaBarre 1). There was also a strong positive correlation shown between employee and customer satisfaction in a retail branch banking survey. The customer survey contained seventy scaled items which measured opinion on bank statements, problem resolution, automated teller machines, tellers, personal bankers, physical branches, perceived value, and overall satisfaction. The strongest correlation was in customer orientation, communication, and confidence (Wiley 7). Because there was a strong correlation with customer service and employee satisfaction, the bank found that it was important to increase employee satisfaction so that their customers...

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Buckingham, Marcus and Curt Coffman. "First, Break All the Rules: What the World 's Greatest Managers Do Differently". Simon & Schuster (1999).
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