Friday, February 22, 2013

Happy Employees equals Happy Customers, Greater Profits

Below are five articles reprinted from Science Daily on how keeping your employees happy improves your customer's satisfaction and your business's bottom line.  It's proof of the old business saying, "your employees will treat your customers the way you treat them." 

~ Jim

1.  To Boost Customer Satisfaction, Pay Attention to Employee Job Satisfaction
Science Daily, June 1, 2011 — Previous studies have shown that customer satisfaction plays a key role in the health and future success of any company. When customers are satisfied, they keep coming back to the same store and invite their friends to do the same. Now, a new study from the University of Missouri has found that CEOs who pay attention to employees' job satisfaction are able to boost both customer satisfaction and the number of customers that intend to purchase products from the store.

"You might think that as an owner, you only need to pay attention to the customers, providing them with what they want. Yet, we found that keeping your employees satisfied with their work experience, providing them with challenges and allowing them to have a sense of ownership in the business can have a tremendous effect on customer satisfaction and loyalty," said Christopher Groening, assistant professor of marketing in the Robert J. Trulaske, Sr. College of Business. "The link between customer satisfaction and customer loyalty is almost twice as strong when you have high employee satisfaction compared to when they are not satisfied with their jobs. This double-positive finding stands in contrast to the idea that a firm can neglect to satisfy their employees as long as they pursue customer satisfaction."
Following his study, Groening recommends the following actions, based on answers from the employee survey questions, to increase employee satisfaction:

  • Train and empower employees so they have the tools to make decisions. This allows them to make decisions that are beneficial for the company and each individual customer.
  • Hire managers who serve as examples and can mentor with employees.
  • If a company policy is established, it should be honored by managers as well as employees.
  • Managers should help employees know what is expected in order to advance in the company.
  • Create good working atmospheres. Offer incentives or intangible benefits, such as flexible working hours, if possible.
Story Source:  H. Evanschitzky, C. Groening, V. Mittal, M. Wunderlich. How Employer and EmployeeSatisfaction Affect Customer Satisfaction: An Application to FranchiseServices. Journal of Service Research, 2010; 14 (2)
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2.  Happy Employees the Key to Success for Organizations

Science Daily Aug. 14, 2010 — We spend a lot of our waking time at work, so it's not surprising that work has an influence on our well-being: Numerous studies have linked general attitudes towards work to mood outside of work and health outcomes such as coronary heart disease. However, psychological scientist James K. Harter of Gallup, Inc. and his colleagues found that employee perceptions of work conditions may also have a big impact on the bottom line of employing organizations.
. . .employee perceptions of work conditions may also have a big impact on the bottom line of employing organizations.
In this study, the researchers examined data from more than 2,000 business units (e.g., retail stores, factories, sales offices) of ten companies. The data consisted of employee satisfaction surveys, employee retention rates, customer loyalty, and financial performance of the organizations. Analyses of the data were conducted to identify relationships between employee job satisfaction and outcome measures of the organizations.
The results indicate that if employees have positive perceptions of their jobs, their organizations benefit with ~
  • higher employee retention,
  • increased customer loyalty, and
  • improved financial outcomes.
The researchers offer that one way managers can help boost job satisfaction and help their organization may be to clarify employee expectations as to what the organization is working to achieve and the role they play in achieving those outcomes.

Story Source:  
  1. Manon Mireille LeBlanc, Julian Barling. Workplace Aggression. Current Directions in Psychological Science, 2004; 13 (1): 9 DOI: 10.1111/j.0963-7214.2004.01301003.x
  2. H. R. Bowles, M. Gelfand. Status and the Evaluation of Workplace Deviance. Psychological Science, 2009; 21 (1): 49 DOI: 10.1177/0956797609356509
  3. Paul E. Spector. Employee Control and Occupational Stress. Current Directions in Psychological Science, 2002; 11 (4): 133 DOI: 10.1111/1467-8721.00185
  4. J. K. Harter, F. L. Schmidt, J. W. Asplund, E. A. Killham, S. Agrawal. Causal Impact of Employee Work Perceptions on the Bottom Line of Organizations. Perspectives on Psychological Science, 2010; 5 (4): 378 DOI: 10.1177/1745691610374589
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3.  Carrots, Not Sticks, Motivate Workers
Science Daily June 20, 2012 — What motivates people to work harder: The promise of reward or the threat of penalty?  A new study co-authored by Karen Sedatole, associate professor of accounting in MSU's Broad College of Business says “it's the carrot -- and not the stick -- that drives productivity.”

"Our findings show what carrots work better than sticks -- in other words, workers respond better to bonuses than penalties," Sedatole said.

"Employees who receive bonuses for their efforts will work even harder, increasing productivity and potentially bolstering profits," Sedatole said. "But those subjected to penalties tend to distrust the supervisor and, because of that, work less hard."

"Employees who receive bonuses for their efforts work harder.
"But those subjected to penalties tend to work less hard."

Examples of penalties in the business world include pay reduction, demotion and sanction or other disciplinary action, such as a salesperson with lower performance getting less territory to work.

Story Source:  Margaret H. Christ, Karen L. Sedatole, Kristy L. Towry. Sticks and Carrots: The Effect of Contract Frame on Effort in Incomplete Contracts. The Accounting Review, 2012; : 120615093512009 DOI: 10.2308/accr-50219
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4.  Going Green Boosts Employee Morale
Science Daily Feb. 1, 2011 — In a global recession, most people are thankful to have a job, but a new study suggests that employees are more likely to be satisfied with their jobs if they are working for a company that is perceived to be "green." The financial performance of companies fails to correlate with employee happiness.

Cassandra Walsh and Adam Sulkowski, both of the Charlton College of Business at University of Massachusetts Dartmouth, wanted to know whether employee morale is typically affected when a company is perceived as taking steps to be more environmentally benign, or whether the company's financial performance has a greater effect on employee happiness.

"The results of the analysis indicate a significant positive relationship between employee satisfaction and level of perceived environmental performance," the team says. "This study does not find a significant relationship between employee satisfaction and firm financial value."

This research suggests that companies would be well-advised to engage in communication efforts such as sustainability reporting (also known as corporate social responsibility -- CSR -- reporting, or environmental, social, and governance -ESG -- reporting). By credibly communicating about environmental performance and positive efforts to become more environmentally benign, a company is likely to improve employee recruitment, retention, and morale.

Story Source:

Reprinted from materials provided by Inderscience Publishers, via EurekAlert!, a service of AAAS.
Journal Reference: Cassandra Walsh and Adam Sulkowski. A greener company makes for happier employees more so than does a more valuable one: a regression analysis of employee satisfaction, perceived environmental performance and firm financial value. Int. Environ. Rev., 2010, 11, 274-282

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5.  Benefits of Taking Your Dog to Work Not Far-Fetched

Science Daily Mar. 30, 2012 — Man's best friend may make a positive difference in the workplace by reducing stress and making the job more satisfying for other employees, according to a Virginia Commonwealth University study.
Stress is a major contributor to employee absenteeism, morale and burnout and results in significant loss of productivity and resources. But a preliminary study, published in the March issue of the International Journal of Workplace Health Management, found that dogs in the workplace may buffer the impact of stress during the workday for their owners and make the job more satisfying for those with whom they come into contact.

The VCU researchers compared employees who bring their dogs to work, employees who do not bring their dogs to work and employees without pets in the areas of stress, job satisfaction, organizational commitment and support.

"Dogs in the workplace can make a positive difference," said principal investigator Randolph T. Barker, Ph.D., professor of management in the VCU School of Business. "The differences in perceived stress between days the dog was present and absent were significant. The employees as a whole had higher job satisfaction than industry norms."
Story Source:   Randolph T. Barker, Janet S. Knisely, Sandra B. Barker, Rachel K. Cobb, Christine M. Schubert. Preliminary investigation of employee's?dog presence on stress and organizational perceptions. International Journal of Workplace Health Management, 2012; 5 (1): 15 DOI: 10.1108/17538351211215366

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The Entrepreneur's Bookshelf ~
The more you know about small business management and financing before you start, the more likely you are to succeed.  That's why I urge anyone thinking of starting a business to contact their local Small Business Development Center or Community College.  I have also organized this bookshelf for you at Powell's Books, the world's largest single site new and used bookstore, featuring the latest books on small business start-ups, marketing, and small business money management.   
A Selection Related to this Post:

Click on this link to see all the selections on ~

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  1. This comment has been removed by a blog administrator.

  2. This is a pretty awesome and alternative post! All I have been reading about is the standard; open communication lines, giving employees feedback. Obviously they're important point. It's just been refreshing reading this. Thanks

    Gena F | Vantaggio HR