Linking Employee Satisfaction with Productivity, Performance, and Customer Satisfaction

Linking Employee Satisfaction with Productivity, Performance, and Customer Satisfaction (downloadable pdf) Data from the Corporate Leadership Council connecting the outcomes of employee satisfaction on customers and finances.

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ESTABLISHING THE LINK: SEMINAL RESEARCH AND OTHER STUDIES

  • Research aimed at quantifying the links between employee satisfaction and customer satisfaction, productivity, and financial performance began in 1980 with Benjamin Schneider’s survey of satisfaction levels of bank customers and employees.
  • Studies such as Frederick Reichheld’s “The Loyalty Effect,” (1996) and James Heskett, W. Early Sasser, and Leonard Schlesinger’s “The Service Profit Chain” (1997) produced the first sets of hard data quantifying these links. Both studies conclude that there are direct and quantifiable links between customer service variables (such as satisfaction and loyalty), employee variables (such as satisfaction, enthusiasm, loyalty, commitment, capability, and internal service quality), and financial results.
  • In 1997, Development Dimensions International (DDI) conducted focus groups, customer interviews, literature reviews, and surveys to determine drivers of an effective service environment. DDI found evidence of a circular relationship between employee satisfaction and retention, and customer satisfaction and loyalty, and increases in company profitability. In addition, employee satisfaction was strongly related to employee commitment and loyalty, and both measures have proven relationships to retention and productivity.
  • In “The Service Profit Chain” (1997), the authors proposed a model that workforce capability, satisfaction, and loyalty would lead to customers’ perceptions of value. Value perception would lead to customer satisfaction and loyalty, which would lead to profits and growth. The study found that employees’ perceptions of their capabilities, satisfaction, and length-of-service were correlated with customer satisfaction.
  • Dr. Thomas Rollins of the Hay Group developed a model linking employee opinion survey results directly with business performance metrics while excluding customer satisfaction measures. Main findings include the following:
    • This model holds that company-wide employee satisfaction results affect business unit employee satisfaction results, which affect business unit financial results, which in turn affect company-wide financial metrics.
    • However, the model also holds that the company-wide financial metrics may also affect company-wide employee satisfaction results, allowing the model to demonstrate correlation, but not causation between the different areas considered.

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