Are Happy Employees More Productive?

“Happy employees are productive employees.” “Happy employees are not productive employees.” The topic of employee attitude and job attitude has always been a debatable and confused topic among practitioners even though during periods when employees are being referred to as valuable asset for organizational success and competitiveness.

Employees have attitudes or viewpoints about many aspects of their jobs, their careers, and their organizations. However, from the perspective of research and practice, the most focal employee attitude is job satisfaction.

The most-used research definition of job satisfaction is by Locke (1976), who described it as a state which is enjoyable or positive that results from the appraisal of one’s job or job experiences. Implicit in Locke’s definition is the importance of both affect, or feeling, and cognition, or thinking.

Organizations are social systems where human resources are the most important factors for effectiveness and efficiency. In order to achieve their goals and objectives organizations require efficient managers and employees. Without their personnel efforts and commitment success cannot be achieved by these organizations. Job satisfaction is critical to retaining and attracting well-qualified personnel.

Employee job satisfaction can be described as an attitude that employees have about their organization and job. Methodologically, it can be said that job satisfaction is an employees emotional response which can be compared between actual outcomes and desired outcomes (Mosadeghrad, 2003b).

One of the greatest challenge facing service organizations is possibly pursue for quality service. (Sohal, 1994). Thus finding ways for maintaining and improving service quality is necessary. (Bitner et al., 1994).

In management employee attitude and reactions to organizational change are associated with departmental performance and this considered as an important assumption. In a service business, customer satisfaction is a critical performance indicator along with measures of unit productivity and administrative effectiveness.

In the recent years it has been noticed that the effects of many human resource development factors on business performance has been extensively discussed in business research literature. In service industries, where services are often characterized by an encounter between service providers and customers, the quality and capability of the service providers have a direct, significant effect on the service delivery process and customer satisfaction. The initial interaction, having a great influence on how customers evaluate the service quality, has been better known as the “moment of truth” as customers start to form their opinion and expectation of the service delivery experience (Normann, 1984). This brief encounter can be vital in achieving a reputation for higher quality and continuous business.

PERFORMANCE

What is performance?

Performance is the result of achieving organizational objectives; a yardstick of success. Porter (1980) asserts that the basis of above average performance in the long run is “sustainable competitive advantage”.

Measuring performance

Performance measurement is necessary because it enables firms to take a snapshot of current activity to assess their progress and help refocus strategy. These snapshots must always be compared against others both inside and outside the firm in the following three main ways:

(1) Past performance: recorded successes and achievements in the past.

(2) Benchmarking: contrasting performance against that of other firms.

(3) Goals: comparing achievements with strategic aspirations and expectations.

The problems arise in deciding the criteria by which performance should be measured. Our customers judge quality on a range of objective and subjective issues which are often difficult to pin down. Employee attitude, for example, was ranked as the most important critical success factor to hotel companies, but is difficult to measure accurately.

One answer is the balanced scorecard which is a reporting system which shows financial performance for actions already implemented as well as measures that drive performance in the future. These may be viewed in four perspectives as shown in Figure 2:

• customer perspective
• financial
• innovation and learning perspective
• internal perspective

Customer satisfaction

Customer satisfaction is related to customer loyalty Service providers are expected to increase their service value over time because customers today are very knowledgeable in seeking out new service alternatives and will defect if they are just merely satisfied. ‘Very satisfied’ customers were found to be six times more likely to repurchase than those who were just ‘satisfied” ( Jones and Sasser, 1995). Other studies, such as Gummesson (1993) and Storbacka et al. (1994), also discussed the link between satisfaction and loyalty.

Job satisfaction and job performance

The study of the link between job satisfaction and job performance has a controversial history. The Hawthorne studies, conducted in the 1930s, are often credited with making researchers aware of the effects of employee attitudes on performance. Shortly after the Hawthorne studies, researchers began taking a critical look at the notion that a “happy worker is a productive worker.” Most of the earlier reviews of the literature suggested a weak and somewhat inconsistent relationship between job satisfaction and performance.

However, further research does not agree with this conclusion. Organ (1988) suggests that the failure to find a strong relationship between job satisfaction and performance is due to the narrow means often used to define job performance. Organ argued that when performance is defined to include important behaviors not generally reflected in performance appraisals, such as organizational citizenship behaviors, its relationship with job satisfaction improves.

In addition, in a more recent and comprehensive review of 301 studies, Judge, Thoresen, Bono, and Patton (2001) found that when the correlations are appropriately corrected (for sampling and measurement errors), the average correlation between job satisfaction and job performance is a higher .30. In addition, the link between job satisfaction and performance was found to be even higher for complex (e.g., professional) jobs than for less complex jobs. Thus, contrary to earlier reviews, it does appear that job satisfaction is, in fact, predictive of performance, and the relationship is even stronger for professional jobs.

Relationships between attitudes, performance and customer satisfaction

Past research has found positive but weak relationships between employees’ job-related attitudes and performance (Iaffaldano and Muchinsky 1990 ). Recent research has included customer satisfaction as a correlate of employee attitudes and performance, stressing the importance of quality service to organizational achievement (Wiley 1990, Zeithaml et al., 1985). In today’s competitive marketplace, organization effectiveness depends on understanding what customers value and communicating this understanding to employees in the form of employee-performance goals and expectations. ( Crom 1994, Heskett et al.,1994)

In another study of relationships between organizational performance, customer satisfaction, and employee attitudes, (Wiley 1990) studied data from over 200 retail stores. He found that, overall, those stores most favourably described by employees were those most favourably described by customers. In particular, customer satisfaction ratings were strongly and positively related to employees’ descriptions of key aspects of their working environment, especially working conditions, minimum obstacles to accomplishing their work, and a strong sense that supervisors and co-workers stress customer service. A number of employee attitude dimensions were related to customer satisfaction. One such employee attitudinal dimension was effective communication.

Thus this study concerns examining relationships between employee attitudes, performance, and customer satisfaction over time. The goal is to determine the extent to which employee attitudes distinguish between departments and the extent to which these differences are associated with productivity, administrative effectiveness, and customer satisfaction. In general, we hypothesize that work groups differ in employee attitudes and that these differences relate to recently achieved performance and customer satisfaction and also predict future performance and customer satisfaction.

Defining attitude

Secord and Beckman (1969, p. 167) defined attitudes as an individual’s feelings, judgment and predispositions which helps to behave in accordance to his environment. Arnold et al. (1995) indicated that “attitudes reflect a person’s tendency to feel, think or behave in a positive or negative manner towards the object of the attitude”. According to Elizur and Guttman (1976), attitudes toward change in general consist of a person’s cognitions about change, affective reactions to change, and behavioral tendency toward change.

Positive attitudes to change were found to be vital in achieving organizational goals and in succeeding in change programmes (Eby et al., 2000; Martin, 1998; Kotter, 1996; Gilmore and Barnett, 1992).

Indicators of employee attitude:

The concept of the “employees’ attitudes” encompasses a wide range of organizational phenomena (Loscocco and Roschelle, 1991). However, the most significant aspect of this study is the view that employees’ attitudes are “the extent to which people of the organization are able to meet the essential individual needs through their experience to give better performance.” There are various employees’ attitudes that have been selected for inclusion in this study and they will be discussed further.

Job satisfaction:

The first major cause that will be addressed is job satisfaction. In general, HR practitioners recognize the value of the work condition as a cause of employee attitudes, and it is an area HR can help influence through organizational programs and management practices. In addition, one of the most important areas of the work situation to influence job satisfaction the work itself is often overlooked by practitioners when addressing job satisfaction.

Currie (2001) suggests that satisfaction is linked to level to which an individual is satisfied with terms and conditions of employment and the factors relates to the physical work environment. For example, an employee may be satisfied with its pay and their relationship with their peers at work or are satisfied with company policy.

Job satisfaction is generally known as a versatile construct which encompasses employee feelings about a range of both intrinsic and extrinsic job elements. It includes important aspects of satisfaction related to pay, benefits, promotion, work conditions, supervision, organizational practices and relationships with co-workers (Misener et al., 1996).

As stated, the work situation also matters in terms of job satisfaction and organization impact. Contrary to some commonly held practitioner beliefs, the most notable situational influence on job satisfaction is the nature of the work itself-often called “intrinsic job characteristics.” Research studies across many years, organizations, and types of jobs indicate that employees give more importance to the nature of the work itself when asked to evaluate different facets of their job such as supervision, pay, promotion opportunities, coworkers, and so forth. (Judge & Church, 2000; Jurgensen, 1978). This is not to say that good salary or effective supervision is not important but rather much more consideration should be given to job satisfaction by ensuring that work is interesting and challenging as possible.

Of all the main criteria of job satisfaction the work’s nature involves job challenge, autonomy, variety and scope with other key results like employee retention. (e.g., Fried & Ferris, 1987; Parisi & Weiner, 1999; Weiner, 2000). Thus, to understand what causes people to be satisfied with their jobs, the nature of the work itself is one of the first places for practitioners to focus on.

Employee satisfaction:

Employee satisfaction is often referred to as job satisfaction. This is to say that employee needs and wants are satisfied when they perceive certain rewards from the organization, including compensation, promotion, recognition, development, and meaningful work, meet or exceed their expectation (Hackman and Oldham, 1980).

The next general point to look at is the notion of wellbeing at work, which (Peccei, 2004) suggests concern an overall sense of happiness, physical and mental health of the workforce. (Currie, 2001). However Warr (2002) argues that job-related wellbeing refers to people’s satisfaction with their jobs in terms of facets like pay, colleagues, supervisors, working conditions, job security, training opportunities, involvement, team working and the nature of the work undertaken.

Among determinants of job satisfaction, leadership is viewed as an important predictor and plays a central role.

leadership style

Among the different factors of job satisfaction, leadership is viewed as an important predictor and plays a central role. Leadership is a management function, which is mostly aimed at people and social interaction, as well as motivating people so that they will work towards achieving organisation’s goals. (Skansi, 2000).

Organization believes that their success is in achieving its goals and objectives and this depends on the managers and their leadership style. By adopting the needed leadership style managers can influence employee job satisfaction, commitment and productivity. Leadership style can be categorized as a variety of managerial attitudes, behaviors, characteristics and skills based on individual and organizational values. (Mosadeghrad, 2003b). It is the ability of the leader to motivate employees do perform to the maximum and is also the extent to which management respects workers, operates with honesty and integrity, promotes efficiency, and has open lines of communication with employees (Aronson et al., 2003).

Leadership styles comprises of autocratic, bureaucratic, laissez-faire, charismatic, democratic, participative, situational, transactional, and transformational leadership (Mosadeghrad 2003b, 2004). If can be noticed that it is not that a certain style of leadership should necessary result in successful organizational behavior. There is need of different styles for different situations and leaders should know which approach to adopt. A leader may have the skills to act effectively in a particular situation but may not able to perform so in another context.

A lot of research stem from research on transformational and charismatic leadership, which have been found to positively affect followers’ performance and attitudes (Bass and Avolio, 1993 and Shamir et al., 1993).

According to Bass (1990, p. 21), transformational leadership takes place when leaders expand and promote the interests of their employees, when they create awareness and acceptance of the purposes and mission of the group, and when they encourage their employees to work towards the benefit of the group and not for their own self interest.

Howell and Frost (1989) found that individuals working under a charismatic leader had higher task performance, task satisfaction, and lower role conflict.

Employee commitment

The concept of organisational commitment refers to a person’s affective reactions to characteristics of his employing organization. (Cook and Wall, 1980)

Commitment is an internalised employee belief, often associated with “soft HRM” and a high-trust organisational culture (Mathews and Shepherd, 2002) and is frequently associated with an exchange relationship between the employer and employee.

From the point of view of employees, they commit to an organization in return for certain rewards, which can be extrinsic (salary) and intrinsic (belonging, job satisfaction). Legge (1995) suggests that the attitude conceptualization suggests that dedicated employees have confidence on the organisation’s goals and values, show enthusiasm to put maximum effort and have a strong will to stay with the organization. As such, affective commitment is viewed as an employee’s positive attachment to the employing organisation and a willingness to contribute towards the attainment of organisational goals (Mowday et al., 1979).

It is argued that commitment often establishes an exchange relationship in which individuals attach themselves to the organization in return for certain rewards from the organization (Buchanan, 1974). People join organizations with certain needs, skills, expectations and they hope to find a work environment where they can use their abilities and satisfy their needs. When an organization can provide these opportunities, the likelihood of increasing commitment is increased. It is obvious that this exchange doesn’t mean exploitation of employees. Commitment can be characterized by at least three related factors; a strong acceptance of the organization’s values and goals, a willingness to exert considerable effort on behalf of the organization and a strong desire to maintain membership in the organization.

Other research also indicated that organizational commitment is a better predictor of behavioral intentions than job satisfaction within a change context (Iverson, 1996; Iverson and Roy, 1994). Employees with high organizational commitment are more willing to put more effort in a change project and, therefore, it is more likely to develop positive attitudes towards organizational change (Iverson, 1996; Guest, 1987).

It is in the interests of employers to find means of increasing employee commitment. High levels of organizational commitment lead to several favorable organizational outcomes. These include increased attention to safety practices, increased attendance, fewer grievance filings, larger profit margins, and higher customer satisfactions scores (Thompson, 1996), increased organizational effectiveness (Leung, 1997; Ostroff, 1992), more frequent organizational citizenship behaviors (Mayer & Schoorman, 1992), higher productivity, lower scrap rates, and reduced turnover (Arthur, 1994), improved customer contract retention (Tornow & Wiley, 1991), long-term profitability and shareholder value (Kravetz, 1991) and higher customer satisfaction (Wiley, 1991; Pugh et al, 2002, Terzo, 2005).

Furthermore, employee satisfaction has been positively correlated to service quality, which was then linked to increased customer satisfaction (Pugh et al., 2002). Customer satisfaction has been linked with the financial performance of the company, suggesting that employee satisfaction is linked to financial performance (Terzo, 2005). Further research has shown that satisfied employees have a positive impact on the company’s revenues and profits (Jakobson & Rauch, 2005). Different variables from employees all link to the customer, which links to the company’s profitability and revenue growth (Pugh et al., 2002).

Employee voice has been viewed as an aspect of “high commitment” HRM, and it is considered essential that workers should have the opportunity to express their grievances openly and independently, in addition to being able to contribute to management decision making on task-related issues (Gould-Williams, 2004).

Employee involvement and information sharing is another essential component of the high commitment paradigm. Open communication about business matters ensures workers are informed about organizational issues and conveys a symbolic and substantive message that they are to be trusted in an open and positive manner (Marchington and Wilkinson, 2005).

Thus it can be said that business success requires more than just satisfied and loyal employees. Instead, it demands the kind of employees who are willing to serve as advocates for the organisation, i.e. committed employees. So, employee commitment represents employee dedication to help the company to achieve its goals. It includes manifests like dedication to doing work of high quality, commitment to resolving customers’ problems, the investment of adequate time and effort in the work and the will to recommend the company’s products and services.

Job involvement

Job involvement is likely to be affected by aspects of organizational culture. Job involvement is important because of well-established associations with a range of organizational outcome (Gray et al., 2003). It is also found that employees who are more involved in jobs are more satisfied with their jobs and can be expected to be more committed to their organization (O’Driscoll and Randall, 1999). Employees who are highly committed towards their organization are more likely to stay than those who are relatively uncommitted (Tett and Meyer, 1993).

Employee attachment is an important determinant in predicting organizational success. They describe attachment as having a strong affective component-the degree to which the customer or employee has a positive emotional connection with the organization. It is believed that the way employees are treated (HR practices) leads to a shared employee mind set. This, in turn, leads employees to behave in ways (employee practices) that contribute to a customer mindset that, in turn, contributes to a retention and attraction of customers and the resultant competitive advantage.

Therefore, job satisfaction and job involvement are attitudes which are determined by individual’s perceptions of their total job situations, including the physical work environment, the terms and conditions of their employment and the degree to which they are given autonomy, responsibility, authority and empowerment in their jobs (Kersley et al., 2006)

Thus Organisations that promote and maintain commitment, job satisfaction and work-life balance satisfaction (wellbeing) of their employees through the implementation of high commitment HRM practices will benefit most by superior organisational outcomes and productivity through establishing long-term relationships of support and trust with employees. Organisations that do not pay attention to employee wellbeing at work will have in the long term to deal with the effects of less productive employees.

Career satisfaction

Career satisfaction was included since such satisfaction refers to overall affective reaction of individuals to their career (Greenhaus et al., 1990). It is reasonable to expect that high levels of career satisfaction would enhance organizational commitment since employees who are satisfied with their careers should perceive greater benefits in retaining membership in their organization than employees whose career have been less gratifying (Igbaria and Greenhaus, 1992).

Motivation

Herzberg et al.’s (1959) two-factor theory of motivation stated that satisfaction and dissatisfaction are two separate entities caused by different facets of work and they were labeled as “hygiene factors” and “motivators”. Hygiene factors are categorized as extrinsic factors of job design that contribute to employee dissatisfaction if they are not met. Some examples are: supervision, working conditions, company policies, salary, and relations with co-workers. On the other hand motivators are intrinsic to the job and include achievement, development, responsibility and recognition. There is a very old discussion on whether hygiene factors do contribute to job satisfaction. (Furnham et al., 1999; Warr, 1987).

Big five

The big five model include five dimensions of personality traits. These traits are useful in determining the behaviour of individuals. These are: extraversion, agreeableness, conscientiousness, neuroticism and openness to experience.

Furnham (1997) found that extrovert persons are highly motivated by intrinsic factors. It has been seen that extrovert person would respond more quickly to rewards than introverts. There are other examples that shows how personality traits may affect attitudes is an individual openness to experiences and this allow them to be more innovative and thus more satisfied with their job. (Furnham et al., 2005).

Conscientiousness is viewed in earlier findings and suggests that this trait is a constant predictor of job satisfaction. (Furnham et al., 2002). This influence can be explained as conscientious individuals are prone to greater level of intrinsic and extrinsic reward as they are well organized therefore continuously increasing job satisfaction.

Managing Employee Negative Attitudes

Managers can influence employees in having positive attitudes. Employees should understand behaviours so as to help them to change their attitudes. There should be the will to implement changes even if certain disagree with the idea. Moreover the organization must focus on opportunities rather than concentrating on maters that is not working. Like this negative attitudes can be controlled a to a certain extent.

Constraints to achieving positive employee attitude

It is said that everyone should have a positive attitude. In practice it is really difficult to maintain a positive attitude every time. Whenever a problem arises, change in attitude is obvious to such an extent that having negative attitude cannot be avoided. The lack of positive attitude is the root cause of tension, anxiety, demoralization, nervousness and depression. Now a day almost everybody is in tension. Employees are tensed because of job dissatisfaction.

Conflicts

Lack of communication

Adaptation in the working environment