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Employee Satisfaction and Organizational Perfomance


In his seminal 1976 review of the job satisfaction literature, Locke observed that more
than 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 1976
and 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 intrigue
academic scholars as well as practicing managers. The majority of the research examining the
employee satisfaction-performance relationship has been conducted on the micro-level of
analysis, otherwise known as the individual employee level. For example, research has reported a
positive 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 when
organizational scientists such as Argyris, Likert , and McGregor suggested
that the way employees experience their work would be reflected in organizational performance.
Historically, the job satisfaction-performance linkage has been primarily discussed by theorists
from the Socio-technical and Human Relations schools of thought. According to the Sociotechnical
approach, organizational performance depends on
congruence between the technical and social structures of the organization. Building on this
notion, the Human Relations perspective posits that satisfied workers are productive workers. Thus, organizational productivity and efficiency is
achieved through employee satisfaction and attention to employees’ physical as well as socioemotional
needs. Human relations researchers further argue that employee satisfaction
sentiments are best achieved through maintaining a positive social organizational environment,
such as by providing autonomy, participation, and mutual trust. Based on this
logic, employee satisfaction is believed to influence the development of routine patterns of
interaction within organizations. Through mutual interactions, employees develop relationships
with coworkers that also prescribe behavioral expectations and influence behaviors (e.g., norms
or informal standards of acceptable behavior). For example, an unhappy employee could be
prevented from lowering their performance by control mechanisms (e.g., standards of
measurement, supervisory influence); however, widespread dissatisfaction among employees
could 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 lower
organizational effectiveness or efficiency. Thus, employees’ job satisfaction sentiments are
important because they can determine collaborative effort. Consistent with this reasoning, Likert
(1961) has argued that collaborative effort directed towards the organization’s goals is necessary
for achievement of organizational objectives, with unhappy employees failing to participate
(effectively) in such efforts. In sum, available theory supports the contention that the satisfaction
level of employees (as a whole) may relate to performance at the business-unit and/or
organizational levels.
From a practical vantage, conducting research at the business-unit and/or organizational
level is believed important because this is the level of analysis at which employees’ survey data
are commonly reported to client organizations (Harter et al., 2002). Empirical research at higher
level units of analysis (strategic business units or SBUs, across many organizations, etc.) also
afford applied researchers and managers with the opportunity to establish empirical linkages to
salient outcomes that are directly relevant – including profitability, productivity, efficiency,
employee turnover, safety, and customer loyalty and satisfaction.


The current understanding of how aggregated employee attitudes influence and are
influenced by important business outcomes is limited. Based on the evidence to date, we
conclude that employee satisfaction is related to meaningful business outcomes and that these
relationships generalize across companies (and industries). Research efforts directed at further
exploring these issues are sorely needed, and we believe there is potential for longitudinal
research in the area of aggregated employee satisfaction. For example, future research should
emphasize research designs that study changes in employee satisfaction and the causes of such
changes. Through such longitudinal designs, the connections between aggregated job attitudes
and performance can be more fully understood. At this point, evidence of directionality would
suggest not only some directionality from employee attitudes to business outcomes (as well as
the reverse) but also a reciprocal relationship in some cases!


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