Evaluating the Effects of Employee Morale in the Sales and Marketing Department at BE-NET During a Department Restructure
Thomson et al (1999) argue that a greater degree of understanding and commitment among staff is a key factor in strong business performance. Indeed, a series of interviews with over three hundred managers and employees showed that the degree of buy in acted to boost employee performance, and thus organisational performance. Within this investigation, Thomson et al (1999) also noted that effective communications and high levels of employee morale helped to drive buy in, and hence by extension business performance. However this was only a small section of the piece and, as Yee et al (2008) noted, the majority of management literature has not investigated the detailed relationships between employee morale and operational performance, As such, they used structural equations modelling to examine a series of businesses in Hong Kong, and discovered that measures of employee morale and satisfaction were significantly correlated with service quality, customer satisfaction, and firm profitability. In addition, they found that profitability levels helped to drive higher levels of employee satisfaction, creating something of a feedback loop. However, within this loop, the main causal factor was the level of employee satisfaction.
Subramony et al (2008) carried out a similar study, although their aim was to assess the extent to which human resource investments, such as competitive pay offerings, would help generate positive performance boosts for organizations. They found that, whilst employees' perceptions of competitive pay were strong indicators of future productivity levels, employee morale acted to mediate the relationship between pay perceptions and customer satisfaction. This indicates that employee morale alone cannot fully explain organisational performance or customer satisfaction, but it does play an important role in developing a holistic strategy to address both these concerns.
In addition to this, Wells (2007) found that the feedback loop discussed by Yee et al (2008) found that the connection between employee morale and customer satisfaction also tended to be circular. This indicated that efforts to increase customer satisfaction would actually act to influence employee morale, and employees' views around the companies they work for. This implies that efforts to improve customer satisfaction metrics and profitability will help improve employee morale, and that improving employee morale will act to increase profitability and customer satisfaction in turn. This is further supported by Kiewitz (2004), who studied eight years of data on employee morale and profitability figures from major corporations. This study showed that employee morale was also linked to 'firm satisfaction': the ability of a firm to meet its goals, in both directions. In other words, whilst high levels of employee morale lead to a successful firm, working for a successful firm is also a strong predictor of employee morale. In addition to this, Kiewitz (2004) claims that as a firm's performance improves, it can also offer superior benefits and pay to its employees, thus further reinforcing the loop.
Whilst the papers above have all looked at the positive impacts of employee morale on organisational performance and customer satisfaction, Abbott (2003) looked at the potential negative impacts. This piece showed that the relationship between employee morale and profitability did not imply significant negative impacts for a company where morale was very low, and in some cases even showed positive impacts to the bottom line. This is because, in some industries, the workload is so high and potential for redundancy is so great that the lower employee morale falls, the harder employees will work to keep their jobs. Whilst this will not necessarily apply to all contexts, Abbott's (2003) work shows that employees may still work hard to maintain customer satisfaction and maximise profits simply because to do otherwise would result in them losing their jobs.
With regards to employee morale during times of chaos, the Journal of European Industrial Training (2003) found that any major changes, such as redundancy programmes, are very difficult for employees to handle, and falls in morale can be both large and bad for productivity. This is exacerbated by the fact that many companies fail to equip their managers with the necessary motivational and personal skills to help maintain morale. This is important as managers are often the first point of contact for employees with concerns, and hence play a key role in maintaining relatively high morale levels during times of chaos. This indicates that morale can be maintained during a time of crisis, but only if organisations invest in the right training for their managers, to help them communicate with their teams in the most effective way, as well as to deal with the emotions that said team will be experiencing (Journal of European Industrial Training, 2003). O'Brien (2008) also claims that, during tough economic times, managers need to maintain a focus on productivity and performance, whilst also looking to maximise employees' quality of life. As part of this, managers should help their subordinates to take control of their morale and motivation, and show them a way to get through the crisis using focus and discipline. In addition, managers should look to emphasise and demonstrate the importance of team work, and how individual performance should feed into team performance, in order to maintain morale and performance within their teams (O'Brien, 2008).
- Abbott, J. (2003) Does employee satisfaction matter? A study to determine whether low employee morale affects customer satisfaction and profits in the business-to-business sector. Journal of Communication Management; Vol. 7, Issue 4, p. 333.
- Journal of European Industrial Training (2003) UK managers are ill-equipped to handle job cuts, says survey. Journal of European Industrial Training; Vol. 27, Issue 8, p. 438.
- Kiewitz, C. (2004) Happy Employees and Firm Performance: Have We Been Putting the Cart Before the Horse? Academy of Management Executive; Vol. 18, Issue 1, p. 127-129.
- O'Brien, T. (2008) Substance over style: The myth of managing employee morale during tough economic times. Public Relations Tactics; Vol. 15, Issue 6, p. 17.
- Subramony, M. Krause, N. Norton, J. and Burns, G. N. (2008) The Relationship Between Human Resource Investments and Organizational Performance: A Firm-Level Examination of Equilibrium Theory. Journal of Applied Psychology; Vol. 93, Issue 4, p. 778-788.
- Thomson, K. de Chernatony, L. Arganbright, L. and Khan, S. (1999) The Buy-in Benchmark: How Staff Understanding and Commitment Impact Brand and Business Performance. Journal of Marketing Management; Vol. 15, Issue 8, p. 819-835.
- Wells, R. M. J. (2007) Outstanding Customer Satisfaction: The Key to a Talented Workforce? Academy of Management Perspectives; Vol. 21, Issue 3, p. 87-89.
- Yee, R. W. Y. Yeung, A. C. and Cheng, T. C. E. (2008) The impact of employee satisfaction on quality and profitability in high-contact service industries. Journal of Operations Management; Vol. 26, Issue 5, p. 651-668.