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The State Of Employee Satisfaction

Why measuring and improving levels of employee job satisfaction and engagement is critical to the success, growth and even profitability of all businesses.

Encouraging Employee Satisfaction

employee satisfactionAlthough committed and loyal employees are the most influential factor to becoming an employer of choice, it should be no surprise that many companies and organizations face significant challenges in developing energized and engaged workforces. Our work on employee satisfaction demonstrates again and again that this does not occur naturally - it can only come about as a result of a deliberate strategy of encouraging, recognizing and celebrating the contributions employees make to their organizations.

So, it's probably worth asking the question - is it worth the effort to maximize employee satisfaction at your organization? We find that, for almost all organizations, the answer is a definite "yes." There is plenty of research to show that increased employee job satisfaction, loyalty and trust in leadership can positively impact a company's bottom line. In fact, the true potential of an organization can only be realized when the productivity of all individuals and teams is fully aligned, energized and committed to successfully accomplishing the goals of the organization. Getting each of your employees to work together to achieve a common objective will clearly be more successful than having them put their own interests ahead of anything else.

As a result, the goal of every company should be to improve the desire of employees to stay in the relationship they have with the company, to continally strive to do their best work and, in turn, to feel a strong sense of job satisfaction and accomplishment at the end of each day. When companies both understand the importance of employee loyalty and start to actively manage how loyal their employees feel - rather than focusing on retention only - they can reap benefits on both sides of the balance sheet. In other words, they can both increase revenue and reduce operating costs!

The Employee Satisfaction Balance Sheet

On the revenue side of the balance sheet, loyal and committed employees are more likely to go "above and beyond" to meet customer needs and are highly motivated to work to the best of their ability. Both of these traits are crucial for continued customer commitment and ongoing revenue and growth for the company. These employees become enthusiastic corporate ambassadors not only with their colleagues, clients and customers but outside of the organization as well.

On the cost side, loyal employees stay longer, resist competitive job offers, do not actively look for other employment and recommend the company to others as a good place to work. These four behaviors positively influence the cost side of the balance sheet because they are leading indicators of employee retention. It's really quite a simple equation - the longer companies keep their employees, the longer they can avoid having to pay to replace them.

To repeat, rather than trying only to retain employees who have already decided to leave (which is the inadvertent policy in many places), organizations should proactively recognize the benefits of understanding, managing and improving employee satisfaction and loyalty. The most successful organizations are those that can adapt their organizational behavior to the realities of the current work environment, where success is dependent upon innovation, creativity and flexibility rather than "this is the way we've always done it." Additionally, the dynamics of today's work environment have to reflect a very diverse population comprised of individuals whose motivations, beliefs and value structures differ vastly from those of the past and even from each another. Arguably, the most valuable, but also volatile, corporate asset is a stable workforce of competent, dedicated and satisfied employees, since such an employee base gives companies a powerful advantage in terms of depth of knowledge and organizational strength.

Guidelines for Building Employee Satisfaction

One of the key steps to understanding and improving employee loyalty is by acknowledging the importance of the following factors in building loyalty and satisfaction:

  • Broadly-defined responsibilities and tasks rather than narrowly-defined job functions. Employees need to know what work they are responsible for and how they will be assessed on that work but also need to be given latitude in how they accomplish these tasks rather than being "micro-managed."

  • Effective and regular performance evaluations, both formally and informally. It's a continual surprise to us how poorly U.S. employees rate their most recent evaluation - if they've had one - because it means that most organizations are missing out on critical tool for encouraging loyalty and job satisfaction. Many new employees have to wait months before their first evaluation simply because their company follows a strict annual schedule - that kind of thinking works against getting the best results from your evaluations.

  • A corporate emphasis on, and dedication to, employee learning, development and growth. Many organizations fail to realize that most employees do not want to feel "stuck" in their jobs or, if they offer educational opportunities, they expect employees to 'self-manage' their own development without guidance from their supervisor or manager.

  • Wide-ranging employee participation in the organization as a whole. A common barrier we hear to feeling fully engaged at work is that the organization is "siloed," with individual employees having little sense of what other departments do or what they are responsible for. Sharing cross-departmental accomplishments and best practices can help overcome this feeling of isolation. Individual employees should see how the work they do benefits the organization as a whole.

Typically, a combination of factors influences employees' decisions to stay at their current job. Contributing factors include satisfying work, a sense of job security, clear opportunities for advancement and a compelling corporate mission, combined with the ability to contribute to the organization's success and a feeling that their skills are being effectively used and challenged. Specifically, employees who enjoy their work, identify themselves with their employer and perceive that the company is flexible regarding work and family issues also intend to stay with the organization.

These days, employee loyalty needs to be earned, rather than assumed and must be specific, rather than general - employees are looking at their employment as a means of achieving personal goals rather than simply being the "good corporate soldier" of the past. This means that companies need to express and act on a commitment to develop employees' career objectives by introducing initiatives that make employees believe that their current job is the best path to achieving their career goals.

In particular, consider the following elements of effective strategies designed to build loyalty and retain key employees:
  • Include opportunities for personal growth and invest heavily in the professional development of the best people in the organization.

  • Provide employees with well-defined career paths (including a succession plan), mentors and tuition reimbursement for job-related education.

  • Train employees, even if it makes them more attractive to the competition. Without seeing an opportunity on the horizon, few high potential employees will stay with a company and allow themselves to grow stagnant.

  • Acknowledge non-work priorities by recognizing and responding to employees' needs for greater balance in their lives, since employees will develop loyalty for organizations that respect them as individuals, not just as workers.

The Five "I"s Are Key to Satisfaction

keys to satisfactionAnother approach to encouraging greater employee loyalty is to recognize the value of the five "I"s:

Interesting work. No one wants to do the same boring job over and over, day after day. Although any job will require some repetitive tasks, all jobs should include at least some parts that are of high interest to employees.

Information. Information is power and employees want to have the information they need to know to do their jobs better and more effectively. And, more than ever, employees want to know how they are doing in their jobs and how the company is performing overall. It is vitally important to open the channels of communication in an organization to allow employees to be informed, ask questions, and share information and to inspire them to share the vision of the company.

Involvement. Managers today are faced with an incredible number of opportunities and problems and, as the speed of business continues to increase, the amount of time that they have to make decisions continues to decrease. Involving employees in decision-making, especially when the decisions affect them directly, is both respectful and practical. Not only do those closest to the problem typically have the best insight as to what to do, involving them in decision-making will increase their commitment and improve the success of implementing new ideas or change. Similarly, management needs to follow through on promises and live the values they preach.

Independence. Few employees want their every action to be closely monitored. Most employees appreciate having the flexibility to do their jobs as they see fit. Giving employees latitude and autonomy increases the chance that they will perform as desired, as well as bringing additional initiative, ideas, and energy to their jobs. Employees also need to be encouraged to achieve their best potential.

Increased visibility. Everyone appreciates getting credit when it is due. The occasions to share the successes of employees with others are almost limitless. Giving employees new opportunities to perform, learn, and grow as a form of recognition and thanks is highly motivating for most people.

Optimizing Performance Reviews

Another important strategy for improving loyalty is to implement a systematic process of performance reviews, since effective reviews can simultaneously increase employee morale and productivity. To achieve their primary objectives, such as improving the working relationship between employee and supervisor, performance reviews should be structured so as to:

  • Accurately define the employee's job description and/or responsibilities, including a focus on the skills most important to the employee's job.

  • Discuss the job skills the employee performs well on and identify areas that need improvement so as to fairly summarize their most recent job performance.

  • Set mutual and worthwhile goals, which are the heart of a professional growth plan.

  • Provide useful coaching to improve the employee's performance.

With these objectives, performance reviews can make an important and ongoing contribution to furthering each employee's career.

The Value of a Clear Mission & Direction

Related to the role of performance reviews, another important influence on employee satisfaction is a sense of being led by capable management, with both immediate supervisors and senior management needing to demonstrate a clear sense of direction for the organization. One of the forces that disconnects employees from their companies is management's ever-changing corporate focus. By introducing yet another corporate initiative, employees come to question the credibility of management and the focus of the company. They begin to wonder what the company stands for, where it's going and if the latest initiative is yet another "here today, gone tomorrow" program.

Employees are therefore skeptical at best - and cynical at worst - about their company's perpetually shifting focus. Without a constant, long-term strategic vision, organizations risk confusing, bewildering, depressing and disconnecting with their employees. Within an environment of ever-changing focus, employees find it hard to see a strong link between their role and the company's core purpose. Alternatively, communicating a company's shared vision and establishing a shared mission with employees are important means of enhancing employee commitment. Employees feel a stronger sense of job satisfaction when they agree with the strategic decisions, especially when they are involved in developing the strategic direction.

In addition to establishing and communicating a strategic vision for the company, loyalty also requires building a partnership between management and employees and creating an environment of mutual respect, involvement and open communication. Maintaining open lines of communication with employees will enable senior management to keep up with their changing needs into the future.

Recent studies have shown that managers, whether front-line supervisors, project leaders, team captains or senior management, actually have more power than anyone else to reduce unwanted employee turnover because the most important factors driving employee satisfaction and commitment are largely within the direct manager's control. These include providing recognition and feedback regularly, offering opportunities to learn and grow, helping to ensure fair compensation reflecting an employee's contributions and value to the organization, fostering a good work environment, and above all, recognizing and respecting the uniqueness of each employee's competencies, needs, desires and working style.

At the supervisory level, though, managers also need to strike the right balance between using a more employee-centered leadership style, under which their employees are welcome to participate in making decisions (i.e., "leadership through collaboration"), but without going so far as to abdicate responsibility for decision-making. When the participatory approach becomes excessive, employees may feel that they are being given more responsibility than their positions should require and, thus, can feel overworked or underpaid for the work expected.

Reducing Employee Turnover

Employee turnover dear boss i quitIt is critically important to recognize that, when employees indicate the intention to leave, they generally act on that intention. This means that attrition can be predicted through survey measurement, which gives employers an important "window of opportunity" to foresee and address talent loss within specific departments by changing the environment that is causing employees to leave. Here at Insightlink, the "Change Seekers" within our Loyalty Matrix are the employees who are most zt risk of leaving within the coming years.

There is evidence that the biggest gaps between those who intend to stay and those who intend to leave can be best summarized as (1) the opportunity for employees to use their skills effectively and (2) differing perceptions of the leadership ability of senior management. In conjunction with these key differences, projections have shown that improvements in the areas directly related to turnover can lead to a potential 5% decrease in actual turnover, which has real financial benefits for any organization.

Did you realize that employees change jobs much more often for better career options and training opportunities than they do for more money and better benefits? In fact, seeking opportunities for the long term rather than just the current job has much more influence over job change than monetary compensation - this is further evidence that money is a satisfier, but not a driver, of employee loyalty. Similarly, it is not salary that makes a committed employee. Compensation packages, while important, have become secondary to the employees' desire to be challenged, to contribute, to be recognized and to know how they will fit into the organization.

However, this is not to claim that pay and benefits are unimportant. There are strong correlations between compensation, benefits plans and employee commitment. It should not be surprising, though, that the compensation plans with the strongest link to employee commitment are those that give employees a stake in the future success of the organization. Compensation plans in general and bonus plans in particular help drive commitment to the organization when employees both understand the program and believe it to be fair. It is also worth noting that the way an organization distributes money indicates what management really wants and believes, including sending a message to employees as to whether the company truly pays for performance.

In short, then, there are five actions organizations should take to reduce attrition and improve employee satisfaction:
  1. Demonstrate to employees that the company cares about them, wants them to advance in their careers and will help them satisfy their need for personal growth.
  2. "Walk the talk" by not only communicating the corporate strategy but by also ensuring that it is applied consistently throughout the organization, including making the rewards system consistent with strategic goals.
  3. Watch for and eliminate all inconsistencies between promoting a belief in employees and managerial behavior or policies that undermines that commitment.
  4. Fight attrition with smart training that is not only relevant but helps broaden employee experiences and provides development opportunities.
  5. Weed out poor managers because at least some employees leave their jobs because they are unhappy with their bosses - remember the adage that "people don't leave their jobs, they leave their managers." Although we don't think this is widely the case, it does contribute to turnover.
We started this summary with the question of whether it's worthwhile to encourage employee satisfaction. We hope that, through this article, we've not only shown why it's worth it but also given some useful advice on how to achieve the highest level of employee satisfaction at your organization.


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