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A popular topic du jour in management seminars is the effect of employee turnover on a company's bottom line. It is well recognized that when an employee decides to leave, the resources expended in their recruitment and training leave right along with them, and the company is obliged to spend the same resources again on a new employee.
In addition to retraining costs, employee turnover has another effect on the bottom line, one that receives much less attention. This is the negative effect of employee turnover on customer satisfaction. A recognized expert in the field, Jill Griffin, in her book "Customer Loyalty" (Jossey-Bass, 1995), states, "Employees who are committed to their jobs, who are well provided for by their employers, and who feel valued are much more likely to serve customers well and to help the business success."
To achieve the goal of attracting and retaining loyal customers, a company must therefore make an investment in its employees' satisfaction. A good first stop towards this end is an employee satisfaction study. But what kind of survey and, more importantly, what kind of analysis?
Traditional employee surveys simply ask employees to rate their satisfaction with their job overall, and with a series of components such as pay, prospects for advancement, vacation time, supervision, etc. The ratings are then tabulated and the findings are provided to management, whereupon decisions are made.
This is certainly a viable approach, and one that will provide a snapshot of the status quo. However, the analysis is based on looking at each individual factor, without trying to tease out the relationships between them with regard to overall job satisfaction. And working with these relationships is very revealing: What employees say drives their satisfaction and what actually affects the way they perceive their jobs are often two very different things.
Studies have shown, for example, that while most employees feel compensation is a major driver of their job satisfaction, in fact aspects like positive feedback from management and increased process ownership have an even greater impact.
Surveys designed to utilize statistical techniques such as multiple regression analysis are required to sort out these complex factors. Taking the employees' satisfaction ratings and using mathematical relationships, multiple regression analysis determines what combination of factors has the most influence on job satisfaction.
Once the combinations of factors are identified and their relationship to overall satisfaction understood, the employees' satisfaction ratings can be related to importance, and an action plan developed. For example, suppose we have identified four major factors in employee satisfaction: Compensation, Advancement Prospects, Management Feedback, and Flexible Hours. We can map out the importance and satisfaction data in four quadrants, with a strategic action indicated for each.
So, to follow our example, Advancement Prospects is an important driver of overall job satisfaction, and employee satisfaction is low. Company management needs to take action and focus on improving this area. On the other hand, Mangement Feedback, also an important driver of satisfaction, is highly satisfactory. The action here is to promote the area as one of the company's strengths.
Our analysis provides clear direction on where investments in employees will have the greatest impact and where they will be less valuable.
There are collateral benefits as well. Employee buy-in is more likely because a survey of this kind illustrates how seriously the company takes the opinions of its workforce. To reap the full rewards, it is vital that steps based on the survey's findings be taken quickly and conspicuously. Seeing the effects of their input as soon as possible after that input has been given will increase the employee's faith in their influence and process ownership; that in turn means the actions taken have a better chance at success.
Investing in the satisfaction of your employees will pay dividends both in money saved, by maintaining and retaining a loyal workforce, and in money earned, by maintaining and retaining loyal customers.
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