Employee Satisfaction and Organizational Perfomance

INTRODUCTIONIn his seminal 1976 review of the job satisfaction literature, Locke observed that morethan 3,300 scholarly articles had been published on the topic of job satisfaction. Harter, Schmidt,and Hayes’ search yielded another 7,855 articles having been published between 1976and 2000. As the increase in research studies suggests, the notion that workplace attitudes (e.g.

,job satisfaction) might be positively connected with performance outcomes continues to intrigueacademic scholars as well as practicing managers. The majority of the research examining theemployee satisfaction-performance relationship has been conducted on the micro-level ofanalysis, otherwise known as the individual employee level. For example, research has reported apositive correlation between individuals’ job attitudes and their performance. Moreover, a recent meta-analysis found a substantive correlation between individual job satisfaction and individual performance.As Schneider , Hanges, Smith, and Salvaggio (2003) recently observed, researchers’micro-orientation towards the job attitude-performance relationship is somewhat perplexing,given that the interest in employee attitudes had much of its impetus in the 1960s whenorganizational scientists such as Argyris, Likert , and McGregor suggestedthat the way employees experience their work would be reflected in organizational performance.

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Historically, the job satisfaction-performance linkage has been primarily discussed by theoristsfrom the Socio-technical and Human Relations schools of thought. According to the Sociotechnicalapproach, organizational performance depends oncongruence between the technical and social structures of the organization. Building on thisnotion, the Human Relations perspective posits that satisfied workers are productive workers. Thus, organizational productivity and efficiency isachieved through employee satisfaction and attention to employees’ physical as well as socioemotionalneeds. Human relations researchers further argue that employee satisfactionsentiments are best achieved through maintaining a positive social organizational environment,such as by providing autonomy, participation, and mutual trust. Based on thislogic, employee satisfaction is believed to influence the development of routine patterns ofinteraction within organizations.

Through mutual interactions, employees develop relationshipswith coworkers that also prescribe behavioral expectations and influence behaviors (e.g., normsor informal standards of acceptable behavior). For example, an unhappy employee could beprevented from lowering their performance by control mechanisms (e.g.

, standards ofmeasurement, supervisory influence); however, widespread dissatisfaction among employeescould lead to a strike or sabotage that might hinder an organization’s effectiveness. Alternatively,dissatisfied employees might choose to maintain performance levels (due to control mechanisms)but neglect to inform supervisors of important information that, over time, would result in lowerorganizational effectiveness or efficiency. Thus, employees’ job satisfaction sentiments areimportant because they can determine collaborative effort. Consistent with this reasoning, Likert(1961) has argued that collaborative effort directed towards the organization’s goals is necessaryfor achievement of organizational objectives, with unhappy employees failing to participate(effectively) in such efforts. In sum, available theory supports the contention that the satisfactionlevel of employees (as a whole) may relate to performance at the business-unit and/ororganizational levels.

From a practical vantage, conducting research at the business-unit and/or organizationallevel is believed important because this is the level of analysis at which employees’ survey dataare commonly reported to client organizations (Harter et al., 2002). Empirical research at higherlevel units of analysis (strategic business units or SBUs, across many organizations, etc.) alsoafford applied researchers and managers with the opportunity to establish empirical linkages tosalient outcomes that are directly relevant – including profitability, productivity, efficiency,employee turnover, safety, and customer loyalty and satisfaction. CONCLUSIONThe current understanding of how aggregated employee attitudes influence and areinfluenced by important business outcomes is limited.

Based on the evidence to date, weconclude that employee satisfaction is related to meaningful business outcomes and that theserelationships generalize across companies (and industries). Research efforts directed at furtherexploring these issues are sorely needed, and we believe there is potential for longitudinalresearch in the area of aggregated employee satisfaction. For example, future research shouldemphasize research designs that study changes in employee satisfaction and the causes of suchchanges. Through such longitudinal designs, the connections between aggregated job attitudesand performance can be more fully understood. At this point, evidence of directionality wouldsuggest not only some directionality from employee attitudes to business outcomes (as well asthe reverse) but also a reciprocal relationship in some cases!