Productivity, Performance, Customer Satisfaction, and the Organization Financial Performance - Research Paper Example

The effects of Employee satisfaction on Productivity, Performance, satisfaction and the organization financial performance Executive SummaryAccording to modern scientific management theories, Employee satisfaction, Productivity, Performance, Customer satisfaction and the organization financial performance are interlinked. Any changes caused to any one of the above parameters may have strong impacts upon other parameters. Even though an organization may have lot of resources, human resources or the employees seem to be the most vital one because of the necessity of employees in mobilizing all the other organizational resources. In other words, employee performance and productivity is linked with the mission, vision, objectives and goals of the organization. Only the satisfied employee may deliver his maximum productivity for the betterment of the organization. Dissatisfied employees may not perform well and their reluctance in delivering the goods, may affect the customers of the organization. Dissatisfied employees may not treat the customers well which may result in dissatisfaction of the customers and the subsequent drop out of customers. The loss of customers may cause heavy financial damages to the organization. In short, employee performance can make or break an organization. This paper analyses the importance of employee satisfaction and its impacts on Productivity, Performance, Customer satisfaction and the organization financial performance. The effects of Employee satisfaction on Productivity, Performance, Customer satisfaction and the organization financial performance Many of the recent researches have succeeded in establishing strong connection between employee satisfaction and the performances of the organization. Earlier, organizations considered employees or manpower just as another resource like money, material machines etc. However, the development of scientific management theories, developed as a result of comprehensive researches in recent times, proved the employees as the most vital component of organizational success. Studies such as Frederick Reichheld’s “The Loyalty Effect,” (1996) and James Heskett, W. Early Sasser, and Leonard Schlesinger’s “The Service Profit Chain” (1997) conclude that there are direct and quantifiable links between customer service variables (such as satisfaction and loyalty), employee variables (such as satisfaction, enthusiasm, loyalty, commitment, capability, and internal service quality), and financial results (Linking Employee Satisfaction with Productivity, Performance, and Customer Satisfaction, 2003, p.1) Employees are the only active element in an organization. All the other organizational resources are passive and need the support of human element to deliver the goods. In other words employees are the drivers who drive the organizational resources in a particular direction to meet the organizational goals. If the drivers or the employees are incapable of driving the vehicle properly, it is difficult for the organization in reaching the target or meeting the goals. Only the satisfied drivers will keep the vehicle in good condition by driving the vehicle safely and effectively. Dissatisfied drivers will never bother much about the conditions of the vehicle or the negative impacts of crazy driving habits. Proper driving will help the vehicle owner to reduce maintenance cost of the vehicle which will increase his profits. “The Watson Wyatt Worldwide Human Capital Index study suggests that effective human resources practices lead to positive financial outcomes more often than positive financial outcomes lead to good practices” (Linking Employee Satisfaction with Productivity, Performance, and Customer Satisfaction, 2003, p.2). Many people often raise the question - which one evolved first; hen or egg? The same question is asked in the organizational world also – whether good human management practices lead to better organizational performances or better organizational performances lead to good human management practices? The above question often yields mixed answers. This is because of the myths prevailing in organizational world. Some organizations provide better facilities to its employees only when the organization’s financial performances exceed the expectations. On the other hand, well managed organizations are always keen in providing better facilities to the employees irrespective of its financial performances. Paul Krugman, the Nobel Prize winner and the renowned American economist, recently asked American government to increase spending to increase the economic activities in the country and to escape from the recent recession problems. The same economic principle is applicable in the organizational world also. Better investments on human resources will make the employees satisfied and their satisfaction will be reflected in the organization’s future performances. No satisfied employees may work against the interests of the organization whereas dissatisfied employees may work against the organization’s interests. Recent research indicates that employee satisfaction does not necessarily contribute directly to productivity. Satisfaction may be viewed as a passive attribute, while more proactive measures such as motivation levels and brand engagement are viewed as more closely linked to behavioral change, performance, and, ultimately, to bottom line performance (Linking Employee Satisfaction with Productivity, Performance, and Customer Satisfaction, 2003, p.3) Young (2000) and Leach & Westbrook (2000) have also expressed similar opinions. Young has argued that “demotivated employees may experience negative effects on their performances” (Young, 2000, p.2) whereas Leach & Westbrook pointed out that “improper or low motivation at the workplace may decrease morale and satisfaction levels of the employees and their punctuality and attendance could be seriously damaged” (Leach & Westbrook 2000, p.19). Employee motivation can be of two types; intrinsic and extrinsic. Intrinsic motivation is always better compared to extrinsic motivation since it comes from the inner heart. Rewards or better salary can motivate the employees extrinsically whereas better work culture and environment can motivate the employees intrinsically. There is no point in asking the employees to deliver the goods by increasing their salaries and reducing the work facilities. An employee, who is able to achieve flexibility in his work, can deliver more goods even if he gets lesser salaries. Same way, it is not necessary that an employee may increase his productivity when the organization increases his salary along with overtime work. “Even if the individuals have different sets of goals, they can be motivated if they believe their effort leads to performance and performance results in desirable reward” (Prit, 2007). Macky, (2008) has pointed out that in situations where pressures to work longer hours are higher, employees feel overloaded and likely to experience greater dissatisfaction with their jobs which may result in higher stress and fatigue, and greater work—life imbalance (Macky, 2008). Rewards and salaries can motivate the employees up to certain extent only. Most of the current employees are more focused in achieving a work-life balancing rather than over time work of good salary packages. According to Herzberg’s two-factor motivation theory, employees are influenced by; motivational factors and hygiene factors. Hygiene factors are working condition, quality of supervision, salary, status, security, company, job etc whereas the motivational factors are achievement, recognition or interest in the job etc (Two factor theory- Herzberg, Frederick, n. d). The single most important factor contributing to employee satisfaction is the internal quality of the work environment. This internal environment is determined by the employees’ feelings towards their jobs, colleagues, and employers. Employees want to be treated with respect and dignity by colleagues, employers and clients. Employees want to feel that they are part of the team and that they serve a valued function in the operation of the practice. Employees need to have a feeling of mutual respect with both colleagues and employers. Not unlike their employers, employees thrive on responsibility and a feeling of accomplishment. Greater responsibility gives employees a feeling of worth. Responsibility instills in them the feeling that they are trusted and valued by their employers. (Employee Satisfaction & Productivity, n. d. p.1) The employer-employee relations have undergone drastic changes in recent times. Earlier, employees treated their organization only as a workplace because of the bad treatment they received from the employers whereas current employees treat their organization as their own home because of the better treatment and recognition they receive from the employers. This changing perception about workplace motivates employees further to enhance their productivity. Earlier, individual works were encouraged whereas at present teamwork in encouraged in organizations. This is because of the awareness that man is a social animal and he can perform better only in the company of others. Individual work often increases the employee stress level whereas teamwork always reduces the employee stress level. Earlier, autocratic management styles were prevailing in organizations whereas at present democratic management styles are common in current organizations. “Unfair or unjust decision against an employee may lead towards reduction in motivation”(Eberlin & Tatum 2005, p. 2). The above awareness forced organizations to rewrite many of its traditional management principles. The supervisor – subordinate relationship have changed a lot as a result of the changing employee management principles in current organizations. In short, employee satisfaction is taken seriously by current organizations in order to improve the performance of the organization. “Sometimes an employee’s performance will not be consistent with the requirements of the position. If this happens, and normal coaching, counseling and/or training do not bring performance to an acceptable level” (Employee Performance, 2007). Training is necessary for empowering the employees and to make them capable of taking new challenges entering into the organizational world. Empowerment helps employees to respond positively even in unfamiliar situations. Employee satisfaction is not all about providing 100% freedom and liberties to the employees in their assignments. In fact, no employee likes to have such freedom. The employer should provide necessary work environment to the employees to work smart rather than work hard. In order to work smart, employees need proper training. Depending on market segment and industry, between 40 and 80 percent of customer satisfaction and customer loyalty was accounted for by the relationship between employee attitudes and customer-related variables. Moreover, perceived employee satisfaction, perceived employee loyalty, and perceived employee commitment had a sizable impact on perceived product quality and on perceived service quality (Bulgarella 2005, p.2) (Bulgarella 2005, p.2) An organization communicates with its customers through its employees. Customers get attracted to an organization only if they receive better treatment from the employees of that organization. Only the satisfied employees would be able to communicate actively, effectively and positively with the customers. Conclusions Employee satisfaction, Productivity, Performance, Customer satisfaction and the organization financial performances are interlinked each other. Employee satisfaction seems to be the most important pillar upon which the organization should develop its vision and mission. Employee satisfaction may directly affect the customer satisfaction since only the satisfied employees service the customers properly. References 1. Bulgarella C.C. (2005). Employee satisfaction and customer satisfaction. Guide star Research White paper. February 2005. Retrieved from http://meetingmetrics.com/research_papers/whitepaper_cs_es_relationships.pdf 2. Employee Satisfaction & Productivity (n. d.). Retrieved from http://vethelpconsulting.com/staff.PDF 3. Eberlin, R & Tatum, B.C (2005), ‘Organizational justice and decision making: when good intentions are not enough’, Management Decision, vol. 43 no. 7, 4. Employee Performance (2007), Retrieved from http://www.washington.edu/admin/hr/roles/ee/jobperformance/index.html 5. Linking Employee Satisfaction with Productivity, Performance, and Customer satisfaction (2003). Retrieved from http://www.keepem.com/doc_files/clc_articl_on_productivity.pdf 6. Leach, FJ & Westbrook, JD (2000). Motivation and job satisfaction in one government research and development environment’, Engineering Management Journal, vol. 12 no.4, Proquest, Retrieved from http://proquest.umi.com 7. Macky K. (2008), High-involvement work processes, work intensification and employee well-being: A study of New Zealand worker experiences, Retrieved from http://apj.sagepub.com/cgi/content/abstract/46/1 8. Prit, (2007), Employee Motivational Theories and Their Applications in Modern Organizations, Retrieved from http://bizcovering.com/business-and-society/employee-motivational-theories-and-their-applications-in-modern-organizations/ 9. Two factor theory- Herzberg, Frederick, (n. d), Retrieved from http://www.valuebasedmanagement.net/methods_herzberg_two_factor_theory.html 10. Young, BC (2000), Methods of Motivation: Yesterday and Today, Retrieved from http://academic.emporia.edu/smithwil/00fallmg443/eja/young.html Read More