, . . . . . .. . . .. . . .

William B. Lashbrook is a Senior Research Fellow for

Wilson Learning Corporation. He may be reached at

Wilson Learning Corporation, 7500 Flying Cloud Drive

Eden Prairie, MN 55344.

lSP1 in partnership with the AHRD, is proud to bring you this new feature in Performance Improvement. Every issuean article will be published, report- ing on a research project and showing its practical application. The first sever- al articles in the series are drawn from research papers presented to the AHRD. Michael Leimbach of Wilson Learning Corporation in Eden Prairie, Minnesota, serves as the AHRD editor of “Research and Practice.” I f you are interested in purchasing a copy of the full research presented in this article, please contact ISPI at 202-408-7969.

Employee Satisfaction; and Leaders hip Practices by William B. Lashbrook

t is a popular notion that employee satisfaction is necessary for organi- zational performance. Unfortunately,

most studies that attempt to demon- strate a link between the two fall short (Brayfield and Crockett, 1955; Iaffaldano and Muchinsky, 1985). This has lead some to believe that efforts to improve employee satisfaction will not provide a return on investment to the organiza- tion by way of improved performance or productivity. In this era of increased collaboration, shared responsibility, and participative workgroups, however, it is difficult to imagine that high perfor- mance is possible without a satisfied, fulfilled, and empowered work force (Bradford and Cohen, 1986).

We suggest that the difficulty in finding a relationship between employee satis- faction and business performance is largely due to how satisfaction has been defined. We used a definition of satisfaction that matches current work norms and processes, leading us to believe that there will be a relationship between satisfaction and performance. Thus, in the 14 studies summarized here, we focused on the following three critical questions:

What definition of employee satis- faction is appropriate for and rele- vant to both the employees and organizational performance? Is there a relationship between employee satisfaction and organiza- tional performance such that higher employee satisfaction predicts high- er performance? What can organizations do to improve employee satisfaction?

With respect to this last point, if orga- nizational performance is strongly affected by employee satisfaction, then understanding which characteristics contribute to satisfaction can be critical in improving organizational success. Of all the things an organization can do to affect employee satisfaction, we focused on the day-to-day interactions between employees and their man- agers. We hypothesized that employee satisfaction is largely determined by the work environment and sense of team- work created by the work unit’s leader.

Redefining Satisfaction Satisfaction means different things to different people. Outside of any specif- ic context the word is vague. The dic- tionary defines satisfaction as gratifica- tion of an appetite, most often one associated with happiness and comfort. Bardwick (1991) recently indicated that a focus on employee comfort has created feelings of entitlement within organizations, and feelings of entitle- ment do not create high performance. It is likely that in most of the studies, people responding to the question, “Are you satisfied?” may have inter- preted this question as “Are you com- fortable in your work? Do you feel secure and content?” Although this may not have been the question’s intent, it does make clear why organi- zational performance has not been effectively linked to employee satisfac- tion, We don’t often associate high per- formance with contentment, security, and comfort. We do tend to associate high performance with enjoyment of

performance improvement / vol 36, #5 29

the work, fulfillment in accomplish- ment, and effective work relationships.

We began by examining previous research on employee satisfaction and collaborative work efforts (Lashbrook, 1984). We identified two principle con- texts for satisfaction: personal satisfac- tion and group satisfaction. We feel it necessary to define both personal and group satisfaction because of the criti- cal role that teamwork and joint efforts play in organizational success. In most organizations, few objectives are met through one individual’s efforts. In addition, when people work together in group settings, they are likely to influ- ence each other’s attitudes and beliefs. For example, I might feel personally satisfied, but if I do not perceive satis- faction in others, my actions will be as much guided by that perception as it will by my own feelings of satisfaction.

Personal satisfaction. One criticism of previous definitions of satisfaction is that satisfaction was treated as a uni- tary construct. Therefore, in an effort to provide more clarity, we defined per- sonal satisfaction as a multidimension- al construct consisting of the following elements:

the individual’s satisfaction with himself or herself on the job, the individual’s satisfaction with the job itself, the individual’s satisfaction with his or her relationships with coworkers, and the individual’s satisfaction with the way in which he or she is lead.

Group satisfaction. As an element of employee satisfaction, communication is critical to creating a culture of high performance. If individuals do not communicate whether they are satis- fied, the work culture will not support individual satisfaction. Therefore, we chose to concentrate on those things that employees could talk about on the job as follows:

the value or importance of the orga- nization’s purpose, involvement in individual goal-setting, recognition and rewards individuals receive,

Figure 1 . Elements of Leadership Behavior.

support individuals receive from

feedback individuals receive about leaders, and

their performance.

By combining personal and group satis- faction into a single dimension of satis- faction, we create a measure that more appropriately reflects current beliefs about effective and fulfilling work envi- ronments. To differentiate this measure from more traditional measures of sat- isfaction, we call this work-unit satis- faction.

The Leader’s Role in Improving Employee Satisfaction In redefining satisfaction to more appropriately reflect the current high- involvement workplace, we also rede- fined satisfaction less as an organiza- tional construct and more as a group or work-unit construct. With this perspec- tive, the actions most likely to affect work-unit satisfaction are the actions of an individual’s direct supervisor or manager. Therefore, in trying to deter- mine the causes of satisfaction in the work place, we focused on the work- unit manager. Twenty-eight separate leadership behaviors were identified from previous research (Lashbrook, 1984). These behaviors defined five critical leadership practices that were the focus of this study as shown in Figure 1.

Study Description

From the previous research on work- unit satisfaction and leadership behav- iors, we constructed a survey for all study participants. It was designed as an upward appraisal of leadership practices (respondents evaluated their direct supervisors’ behavior) and a self- assessment of work-unit satisfaction (how personally satisfied they were and their perceptions of the satisfaction of other members in their work units).

Measuring the relationship between work-unit satisfaction, leadership prac- tices, and business performance also requires reliable measures of perfor- mance. It is difficult, if not impossible, to identify useful measures of perfor- mance that are consistent across indus- tries or even across organizations with- in an industry. As a result, the relation- ships among satisfaction, leadership, and performance were examined in 14 separate studies with each study using its own unique measure of perfor- mance.

For each of these studies we worked closely with teams from organizations to identify existing measures of perfor- mance or devise new measures if none existed. All studies focused on identify- ing measures meaningful to how the organization defined business success. Figure 2 summarizes the relevant char-

30 performance improvement / rnayljune 1997

1. Savings and loan

2. Insurance

3. Banking

4. Insurance

5. Banking

6. Insurance

7. Automotive sales

8. Transportation

9. Automotive sales center

10. Transportation center

11. Computer manufacturer

12. Technology service

13. Telecommunications

14. Hospitality

Percent change in total savings, average size of new and transferred accounts. First-year premiums, increase from previous year in first-year premiums, and total premiums. Customer perception of the accuracy, courtesy and timeliness of service. Percent of targeted production and total production. Customer perception of friendliness and efficiency of service. Number of life premiums, total volume, and production credits. Customer satisfaction, sales volume, area registrations, dealerships. Percent of sales volume goal, length of sales cycle, salesperson retention. Customer satisfaction, sales volume. Customer perceptions of friendliness and efficiency. Chip rejection rate, communication of down-time. Customer perceptions of friendliness and efficiency. Gross margin and percent of quota achieved. Room occupancy, repeat business, customer satisfaction.

55 branches

10 agencies

20 branches

14 sales units

53 branches

12 agencies

10 dealerships

15 sales units

33 dealerships 13 centers

57 shifts

9 branches

19 sales off ices

8 hotels

Figure 2. Summary o f study populations.

1. Savings and loan 2. Insurance 3. Banking 4. Insurance 5. Banking 6. Insurance 7. Automotive sales 8. Transportation center 9. Automotive sales

10. Transportation center 11. Computer manufacturing 12. Technology service 13. Telecommunications 14. Hospitality

AVERAGE

.63

.89

.50

.84

.44

.85

.82

.94

.32

.56

.49

.50

.38

.59

.63

40% 79% 25% 71 yo 19% 72% 67% 88% 10% 31 yo 24% 25% 1 4% 35% 43%

Figure 3 . Satisfaction to performance multiple regression results.

acteristics of the organizations and the measures of performance. The organi- zations were distributed across three broad industry groups: financial ser- vices (banking, savings and loans, insurance); manufacturing (computers and automotive); and service (trans- portation, hospitality). Performance measures were defined at the work-unit level (the manager’s shift, branch, or department) and included financial per- formance (revenue, profit margins, sales volume), customer satisfaction, and quality control measures.

Similar methods were employed in each of the studies. Work-unit satisfaction data were collected from all work-unit members as part of a broader study of leadership practices and emphases. In addition, work-unit performance mea- sures were gathered for roughly the same time period. We made an effort to secure data from several performance periods (e.g. several shifts, several weeks of customer satisfaction data) to ensure reliable indicators. All employees in a work unit were involved in the study. Each work unit contained between three and 10 employees. The total population consisted of approxi- mately 2,000 employees across the 14 studies.

The performance and satisfaction mea- sures were submitted for a stepwise multiple regression analysis with per- formance as the independent variable and satisfaction the dependent variable. This analysis resulted in a regression coefficient (R) indicating the degree to which the satisfaction measures could predict performance.

Results Results will be discussed in relation to the two central research questions. First, we will examine the relationship between work-unit satisfaction and business performance. Then we will examine the relationship between work-unit satisfaction and leadership practices.

performance improvement / voI36, #5 31

1. Savings and Loan 2. Insurance 3. Banking 4. Insurance 5. Banking 6. Insurance 7. Automotive sales 8. Transportation center 9. Automotive sales

10. Transportation center 11. Computer manufacturing 12. Technology service 13. Telecommunications 14. Hospitality

AVERAGE

.78

.81

.90

.81

.89

.84

.81

.91

.89

.80

.75

.85

.84

.77

.83

61 Yo 6 6 % 81 Yo 6 6 % 79% 71 Yo 66% 8 3 % 79% 6 4 % 5 6 % 72% 71 % 59% 69%

Mission Recognition Recognition support Recognition Mission support Recognition Goals Recognition Feedback Feedback support Feedback

Figure 4. Leadership to satisfaction multiple regression results.

Employee Satisfaction and Business Performance Figure 3 shows the regression coeffi- cients for each of the studies. There was great variability between the studies. Regression coefficients ranged from .32 (Study 9) to .94 (Study 8). Even with the lowest regression value, however, the studies indicate that the relation- ship between satisfaction and perfor- mance is significant and that satisfac- tion accounted for between 10 percent and 88 percent of the variability in per- formance.

The majority of studies had regression coefficients between 5 0 and .85, sug- gesting that the relationship between satisfaction and performance generally accounted for 25 percent to 7 2 percent of performance variability. It is likely that different organizations and differ- ent industries will place differing emphasis on satisfaction, so variability between studies should be expected.

The 14 studies indicate that there is a significant and meaningful relationship between business performance and employee satisfaction as defined by work-unit satisfaction. The results sug- gest that organizations, regardless of

Studies indicate that there is a significant and meaningful relationship between business performance and employee satisfaction as defined by work-unit satisfaction. industry, could improve organizational performance by improving the level of work-unit satisfaction among employ- ees.

Leadership Practices and Satisfaction We used the same multiple regression analysis to determine the relationship between leadership practices and employee satisfaction. The results are shown in Figure 4. There was much less variability between studies in this analysis than in the analysis of satisfac- tion and performance. All of the regres- sion coefficients were between .75 and .91, indicating that between 56 percent and 83 percent of the variability in sat- isfaction can be attributed to the work- unit manager’s leadership practices. The multiple regression analyses also allowed us to identify the individual leadership practice that contributed

most to the relationship with satisfac- tion based on the beta-weights of the five leadership practice dimensions. These practices are also listed in the table.

There was significant variation between organizations as to which leadership factor contributed most to predicting satisfaction. In fact, all five practices made the largest contribution in at least one of the studies. Although recogni- tion was the one most frequently iden- tified (five of the 14 studies), feedback and support were also frequently iden- tified (each identified in three of the studies), as was mission (two of the studies). Goals were identified as the largest contributor in one study.

Figure 5 provides a summary of the results from these 14 studies. The aver- age regression coefficients clearly indi-

32 performance improvement / may/june 1997

Leadership Practices

Work-Unit Sat isfact i o n

R=.63

Wo rk-U n it Performance

Productivity Quality Service

Figure 5. Relationship between leadership practices, satisfaction, and performance.

Employee satisfaction contributes significantly to business performance and that the leader’s actions may be the primary determinant of employee satisfaction.

cate that employee satisfaction con- tributes significantly to business perfor- mance and that the leader’s actions may be the primary determinant of employ- ee satisfaction.

There was some variation between studies in these relationships. Although variations existed between organiza- tions in the emphasis they placed on satisfaction, there were also differences in study design that might play a role in the differences among studies. For example, in Study 9 the principle mea- sure of performance was sales volume across 33 dealerships. Differences in area demographics, population buying patterns, and so forth were likely to have a significant impact on sales per- formance unrelated to satisfaction. In a similar study, Study 7, we also included as a performance measure the dealer’s share of area registrations. This is a measure of market share for the auto- motive dealership industry and is less susceptible to extraneous influences. In this study, the relationship was much

stronger. In examining the differences between studies we came to the follow- ing several general conclusions:

Multiple measures of performance in a study provide a more reliable indicator than single measures of performance. Measures that cross several defini- tions of performance (financial, cus- tomer satisfaction, quality) are more reliable than measures of a single definition of performance. With multiple measures of perfor- mance and a sample size of more than 15 work units, there was a clos- er, more reliable, relationship between business performance, sat- isfaction, and leadership practices.

Many companies survived through the 1980s because they were willing to make some tough choices. They elimi- nated nonprofitable or nonstrategic parts of their business, eliminated lay- ers of management, and laid off many employees. In this decade they are ready to stimulate the organization

toward growth and take advantage of the recovering world economy, but they are finding that the past 10 years of downsizing and restructuring has had a toll on the remaining work force. There are new and powerful levels of fear and caution. Personal survival instincts are not providing the energy for using the leaner organizations appropriately. Many companies and their employees have emerged from the ’80s financially stronger but emotionally bankrupt.

In a business environment that requires employees who are flexible, creative, and willing to take risks, it is necessary to find ways to help workers feel ful- filled and empowered in their work. These studies suggest that the single biggest contributor to these feelings of fulfillment, empowerment, and satisfac- tion lie in the day-to-day relationship employees have with their organiza- tions’ leaders. Leaders who show a con- cern for their employees’ well-being, who want to see them grow and devel- op, who value the connection between individual work activities and the greater good, will have these types of employees. Managers who don’t are well-advised to reconsider how they lead.

References

Bradford, D. L. and Cohen A. R., Managing for Excellence. New York: John Wiley and Sons, 1984. Bardwick J., Danger in the Comfort Zone. 1991.

Brayfield, A. H. and Crockett, W. H. “Employee Attitudes and Employee Performance,” Psychological Bulletin,

Iaffaldano, M. T. and Muchinsky, P. M., “Job Satisfaction and Job Performance: A Meta-Analysis,” Psychological Bulletin, vol. 97, pp.

Lashbrook, W., A Model of Participative Leadership. International Communications Association Conference, Organizational Communication Division, 1984.

V O ~ . 52, pp. 396-424, 1955.

251-273, 1985

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