Still another study , recently published by The Forum at Northwestern University, supports the notion that satisfied and engaged employees are essential to the financial success of companies. Dr. James Oakley, now Associate Professor of Marketing at UNC Charlotte's Belk College of Business, led this comprehensive study of these factors across a sample of 100 media companies. His research team surveyed a representative group of employees in each organization and received responses from 5,568 employees, averaging about 60 respondents from each company. They decided on doing the research within one industry in order to prevent some of the problems that occur when collecting data from a heterogeneous sample of businesses. Several different survey instruments were used to measure culture, climate, HR managerial practices, and market characteristics affecting each company.

  • They used R.A. Cooke and D.M. Rousseau’s (1988) definition of organizational culture: “…the ways of thinking, behaving, and believing that members of a social unit have in common.”
  • They defined organizational climate as: “…the way that organizations operationalize their culture in daily routines and behaviors.”
  • HR managerial practices included selection, development, performance management, and compensation.
  • Market characteristics included customer satisfaction, retention, and loyalty. And profitability was used as a proxy for financial success.

The following chart represents key factors that were identified and the positive and negative relationships among these factors.

Satisfaction Engagement Profitability

A major finding was “… a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance.”

Based on their findings, the investigators recommend the following:

  1. Ensure that the employee voice is being heard up and down the organization and that they feel they are making a difference.
  2. Regularly survey employees about the strengths and weaknesses of the organization and take visible action based on that information.
  3. Develop a healthy mix of employee cooperation and competition for the benefit of customers.
  4. Establish clear performance objectives related to the customer experience and recognize employees for achieving those goals.

What I like about this study is that, unlike so many studies done by consulting firms, this research examines intervening variables that explain how and why employee satisfaction and engagement are linked to financial outcomes of companies and how culture and climate contribute to the employee experience as well as the customer experience. Of course, one could still argue that the links are not necessarily causal. It could be that company profitability causes high levels of employee satisfaction and engagement rather than the other way around. But at least in the case of this research there is a compelling theory to go with the data.

The study adds to evidence that is piling up around the impact of employee satisfaction and engagement on organization success. As we emerge from a depressed world-wide economy, the long-term financial success and sustainability of companies will be more important than ever. Therefore, we need to pay greater attention to the conditions that contribute to a positive and supportive work culture. Now, if we can only get leaders to pay attention to these factors in their organizations.