Dispelling the modern myth

Abstract

This paper reports some empirical findings which appear to challenge the received wisdom prevailing in the operations management, service management, TQM and HRM literatures, namely, that employee satisfaction and loyalty are key drivers of productivity, efficiency and profit. An empirical study of one of the UK's four large supermarket chains reveals an inverse correlation between employee satisfaction and the measures of productivity, efficiency and profitability, the most profitable stores being those in which employees are least satisfied. Employee loyalty, measured in terms of length of service, also appears to be inversely correlated with productivity and profitability. It also emerges that the pressure to maximise store efficiency may be leading to dysfunctional managerial behaviour at store level. These preliminary findings suggest two imperatives for managers and academics. For managers, it is advocated that they analyse the relationship between employee satisfaction, loyalty and financial performance in their own organisations rather than assuming that the rhetoric of the management literature applies in all operational contexts. For academics, four contingent variables are proposed which distinguish those service contexts in which the assumed relationship may pertain: services where customer contact with staff is high; services where there is little opportunity for technological substitution; services where staff contact is critical to the customer value proposition; and services with high labour costs.

The relationship between employee satisfaction and organisational performance: Evidence from a South African government department

“…The importance of these methods lies in that they elicit satisfaction sentiments from employees themselves (Schneider, Hanges, Smith & Salvaggio, 2003). Employee satisfaction has thus been widely recognised as a predictor of productivity and performance in organisations (Dawal, Taha & Ismail, 2009;Silvestro, 2002).…”

Enhancing Productivity: The Role of Management Practices

“…Another study uncovered a curvilinear relationship between management practices and performance (Maes et al, 2005), indicating that beyond a certain amount or intensity management practices actually diminish performance. Correlational research to ascertain relationships between other workplace constructs and productivity may help inform future research into mediation, such as Geralis and Terziovski (2003) or Silvestro (2002).…”

Authentic Leadership and its Consequences in a Hotel Restaurant Context

“…In addition, loyal employees improve an organization's reputation in the job market (Mayfield & Mayfield, 2002). Enhancing employee loyalty initiates diminishing operational costs and improves customer service, which drives profit growth (Silvestro, 2002). In earlier studies, trust (Clapp-Smith, Vogelgesang, & Avey, 2009), performance (Koo, Kim, & Kim, 2013), and employee loyalty (Ryu, Ryu, & Park, 2015) were proposed as consequences of a superior's leadership and considered distinct characteristics that value human resources and are crucial in the hospitality industry.…”

“…In particular, employee loyalty is essential for efficient human resource management, along with job performance (Barrick & Mount, 1991), and it has a major impact on hotel performance (Silvestro, 2002). Employee loyalty is an effort to truly commit to the organization, and an organization full of loyal employees is likely to achieve organizational goals and provide high quality goods and services to its customers.…”