Why Employee Satisfaction Surveys are Good for Business -- Now More Than Ever

By Elliott D. Brown, Principal
Elliott Brown & Associates
Merit Resource Group Strategic Business Partner

As the economy begins to strengthen, many managers are going to have a rude awakening. Turnover among their employees, including some of their best, will significantly increase, and recruitment may become more difficult.

These employers may be puzzled about why this is happening, especially because they've seen and heard little in the past three years to suggest discontent among their people.

Some will attribute the loss of employees to the improving economy and the greater availability of job options. While this may partially account for the situation, there may well be another, more fundamental explanation: They really don't know what their employees are thinking and feeling about their work experience. And they don't know because they haven't asked.

As HR professionals, you know that the cost of replacing just one $50,000 a year manager can be $50,000 to $100,000 or more when hiring, training costs and lost productivity are accounted for. One would think, therefore, that the investment of $25, $50, or even $100 per employee to reduce turnover would be a no-brainer. Yet many companies fail to make that investment.

Why is this so? Our experience has shown us that there are three primary reasons why company leaders fail to conduct employee surveys:

• they feel comfortable that they know what their employees are thinking
• they don't believe the benefits of a survey outweigh the costs
• they are concerned that issues will arise that they can't, or don't want to, address

My response to reason one is simple: If you think you know what's on the minds of your employees, but you haven't given them a safe way to express it, you're probably wrong. In my more than thirty years of experience, both as a manager and a consultant, I've seen this statement proven time and time again.

Even the best, most progressive, most humanistic and well-meaning managers need to recognize that their position in the organization's power structure will discourage the kind of open and honest communication that they desire, work to create, and rightfully deserve. While we would like employees to take responsibility for their suggestions, issues or criticism, it is only by providing a way for them to do so anonymously that we can ensure that they will express themselves freely and honestly.

Regarding reason two -- that the benefits don't outweigh the costs -- I've already indicated above how retaining even one middle manager saves more than the cost of performing the survey. While perhaps impossible to prove, given the existence of so many other variables, experience suggests that a well-designed survey combined with an effectively executed follow-up plan has a positive impact on employee retention. Companies that take the time to survey, and take action to remedy problems, send a powerful message to employees that they are valued, one of the most fundamental elements contributing to employee retention.

And there are many more benefits.

When employee surveys are regularly conducted, and their results are acted upon, they not only help improve retention, they also:

• act as an early-warning system, enabling you to uncover existing or potential problems before they get out of hand
• help you identify and remove barriers to employee productivity
• help you to better understand your employees' expectations
• enable you to understand their reaction to recent changes, new projects or initiatives, and new products or services
• reinforce a culture that says employees' opinions are respected
• involve everyone in the company in the continuous improvement process
• enable you to measure your progress in improving employee satisfaction
• assist you in making resource allocation decisions

So ask yourself, do you know how your employees would answer the following questions?

• Are they and their opinions valued?
• Do working conditions support peak performance?
• Do they have the tools, technology, skills, information, and other resources they need to do their jobs well?
• Do they feel supported by co-workers, supervisors and Management?
• How do they feel about communication and teamwork within the organization?
• What do they think of your company's products and services?

If you don't know the answers to these questions, straight from your people, you're squandering a key opportunity to improve your business results. After all, your people are your most valuable asset. Their collective knowledge, skills and insights are your greatest resource.

Employee surveys are not just for improving employee satisfaction, however; they help you improve customer satisfaction as well.

The relationship between employee and customer satisfaction is not always clearly understood. While most companies recognize that customer loyalty is a key to their success, many of them miss the essential fact that employee satisfaction is a key to customer satisfaction. Satisfied employees create satisfied, loyal, and more profitable customers.

In their Harvard Business Review article, "Putting the Service-Profit Chain to Work," James Heskett and his colleagues maintain that:

The internal quality of a working environment drives employee satisfaction, which results in employee loyalty, which enhances productivity, which creates value for the customer, which largely influences customer satisfaction, which results in customer loyalty, which stimulates profitability and growth.

In addition to this linear chain, however, there is an important circular element as well.Customers feel better when they're dealing with happy employees, and employees' satisfaction is naturally enhanced when they deal with loyal, satisfied customers.Such customers are friendlier, easier to serve (even if their expectations are high), and more patient and understanding if a problem arises.This circular relationship dramatically magnifies the power of the chain.If nurtured properly, it can build upon itself, creating an upward spiral of increasing employee and customer satisfaction.

Too many organizations have yet to discover this relationship between satisfied employees and satisfied customers, and fail to recognize the competitive advantage of a satisfied workforce.They continue to believe that customers are unaware of and unaffected by the internal environment they create for their employees.They view investments in employee satisfaction and even in employee quality as too "soft" and unprofitable when compared with more tangible investments.

On the other hand, organizations that measure employee satisfaction recognize that the performance of their employees in treating customers well mirrors their own performance in treating employees well.They know that demotivated, mistreated, mistrusted, and undervalued employees can't be expected to deliver superior service to customers. If you're unsure of this, take a moment to think about your own experiences dealing with obviously unhappy employees of companies with which you've done business.

The third reason why companies fail to conduct surveys -- that issues may arise that the company won't or cannot address -- involves some misconceptions. The first misconception is that surveys create employee expectations that any (if not all) problems identified by the survey will be fixed by management. My experience has shown that employees don't necessarily expect problems or concerns to be fixed, but they do want them to be acknowledged and addressed. They want to know that they've been heard, and they want an honest response, even if the response is to tell them why a particular issue is not going to be addressed. Moreover, when there are problems that do need to be remedied, there is often the opportunity to involve the employees themselves in the process of identifying solutions and participating in their implementation.

The second misconception is that improving employee satisfaction necessarily involves the undertaking of costly changes, particularly in pay and benefits.These elements do, of course, influence employee satisfaction and need to be reviewed regularly.But improving elements of employee satisfaction often requires little or no financial investment.Better communication with employees can often have a significant impact, and other remedial efforts aimed at bettering working conditions, supervisory skills or interdepartmental teamwork, for example, may involve procedural changes and educational programs requiring fairly small expenditures.

In my work, I have never come across a company that focuses on employee satisfaction at the expense of its customers.But it is not unusual to find companies focusing on their external customers while paying too little attention to the needs of their employees.Companies that act in this way fail to recognize that, at a time of growing product commoditization, their employees are often the most important delivery vehicle of customer satisfaction, and the one that can best differentiate them from their competitors.

Taking the time to better understand your employees' thoughts and opinions, and tapping into their reservoir of experiences and insights, can be one of the best investments you can make in the long-term success of your organization.

For a free list of the critical steps to a successful survey process, request "Nine Critical Steps" from surveys@merithr.com. Please also include your contact information.
Elliott Brown is Founder and Principal of Elliott Brown & Associates, a San Francisco-based consulting practice specializing in measuring and improving employee and customer satisfaction.

©2005 Elliott Brown.All Rights Reserved.