Do satisfied employees increase customer satisfaction?

A new study from the University of Missouri  suggests that CEOs who pay attention to employees’ job satisfaction will boost both customer satisfaction and repeat business.

Christopher Groening, assistant professor of marketing, said his study shows that, in fact, “The link between customer satisfaction and customer loyalty is almost twice as strong when you have high employee satisfaction compared to when (employees) are not satisfied with their jobs.”

This finding suggests that companies that want to increase customer satisfaction need to pay more attention to those factors that tend to impact employee satisfaction.  A 2009 survey conducted by the Society for Human Resource Management (SHRM) looked at 24 factors believed to relate to employee satisfaction, and found that employees identified these five as most important:

  • Job security,
  • Benefits (especially health care), with the importance of retirement benefits rising with age of the employee,
  • Compensation/pay,
  • Opportunities to use skills and abilities, and
  • Feeling safe in the work environment.

The next five most important satisfaction factors for employees were:

  • Relationship with immediate supervisor,
  • Management recognition of employee job performance,
  • Communication between employees and senior management,
  • The work itself, and
  • Autonomy and independence.

(Factors that were not strongly connected to employee satisfaction included: “the organization’s commitment to a ‘green’ workplace, networking, career development opportunities, paid training and tuition reimbursement programs, and organization’s commitment to professional development.”)

A separate study of white-collar workers, conducted in 2010 by the National Business Research Institute, found that employee satisfaction is impacted by perceptions of opportunity, stress, leadership, work standards, rewards, and authority, findings consistent with SHRM’s study results.  

You can find many more studies online, on employee satisfaction. They deserve some thought, particularly when it comes to employees who deal directly with your customers. If they get low pay, have little authority, get no recognition for their efforts, and see no path to advancement, how committed can they be to your business?

A new Consumer Reports’ survey finds that 65% of respondents say they are “tremendously annoyed” by rude salespeople and 64 percent have left a store at least once in the past 12 months, because of poor service. The cost of replacing customers who walk away (I link to one, but there are dozens of studies on this topic) may well exceed the cost of giving employees what they need to be positive and customer-responsive brand ambassadors. 

The SHRM survey suggests that smart hiring that matches people with your needs and culture, competitive pay and benefits, attention to employee safety, and hiring and training managers who support and show they care about team members, may be the fastest and most direct route to customers satisfaction – and increased sales.

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3 Responses to Do satisfied employees increase customer satisfaction?

  1. Jon says:

    Nice piece, thanks for sharing Michele. I have been sold on the importance of the good health of the customer/employee encounter as a driver of enterprise success ever since I saw a Gallup presentation on Human Sigma. Well worth a read if you haven’t seen this before: http://www.gallup.com/consulting/17575/humansigma.aspx

  2. I love the related ‘5 rules’ . Thanks for adding this resource to the post.

  3. ..Employee Satisfaction Research…….Few would argue that the most valuable resource of any organisation is its people…Staff well-being and their level of satisfaction and engagement has been found to directly impact on organisational performance and ultimately organisational success. It is an obvious statement but high employee satisfaction levels can reduce employee turnover. Dissatisfied employees tend to perform below their capabilities result in high turnover of staff and leave their jobs relatively quickly and are not very likely to recommend your company as an employer…Employee satisfaction research gives employees a voice and also allows the pinpointing of problematic areas leading to the raising of staff satisfaction levels developing and reviewing of staff management and optimising corporate communications…

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