Relationship Between Employee Satisfaction And Organisational Performance

The impact of employee satisfaction and organisational performance

The main purpose of this study is to find out the relationship between employee satisfaction at the workplace on organisational performance. Secondary research is conducted to get the information related to the employees’ satisfaction at the workplace and detailed analysis is done to show the connection between two variables. Employees’ satisfaction determines the organisational performance to meet the objectives of the organisation. In this study, problem statement of the research area and aim, objectives are stated clearly. In the literature review section, theoretical perspectives of the scholarly articles are reviewed. Data collection method and data analysis are selected in methodology section and secondary data analysis is done based on the research objectives.

Employee satisfaction comes from good salary, compensation, motivation, the interest of work and fringe benefits that the employers provide to the employees. As stated by Abbas et al., (2014), lack of employee satisfaction hinges on fulfilling relationship between management and employees to be productive and it can influence the success of the organisations. Employees become happy when their desires get fulfilled, however, the hostile atmosphere in the workplace does not bring employee satisfaction. When employees do not like to work in the workplace due to lack of job satisfaction, this vibe spreads throughout the workplace. According to Den Hartog et al., (2014), job satisfaction, employee commitment and employee productivity can bring comparative advantage. The employees may leave the organisations and it lowers the employee morale. High turnover can bring the unproductive time for the organisation as it reduces the employee performance. Lack of employee satisfaction can lead to low employee performance and employees spend time gossiping and complaining to fellow workers. As opined by Cullen et al., (2014), lack of employee performance can be observed when absenteeism, conflict among employees, turnover, disorganised employees are increased as well as productivity.

The aim of the research is to explore the impact of employee satisfaction on the performance of the employees in Australia. 

• What are the factors that can bring employee satisfaction within an organisation?
• To what extent employee performance is important for an organisation to bring productivity?
• What is the relationship between employees’ satisfaction on employee performance within an organisation?

Employee satisfaction concept is used to describe if the employees contend and happy or not and employers try to fulfil the needs and desires at work. Employee satisfaction is ensured through injecting employee motivation, positive employees’ morale and employee goal achievement in the workplace (Dusterhoff, Cunningham & MacGregor, 2014). HR managers within an organisation first ask the employees to treat them with respect, empower the employees, recognise their potential and the management needs to offer industry average benefits to the employees. Satisfied employees make a better contribution to fulfilling the objectives of the organisation. Satisfaction brings the best performance of the employees (Fock et al., 2013). The job-related works need to be done in a proper way and organisational policies and practices should be followed to ensure the employee performance.

Theoretical perspectives of employee satisfaction and organisational performance

1. a) Two-Factor theory of Herzberg:

Herzberg stated that motivation and hygiene factors are associated with the job satisfaction in the workplace. Motivation in the workplace is like an inner voice which drives persons to grab the organisational and personal goals (Herzberg, Mausner & Snyderman, 2014). Motivators in the workplace provide satisfaction and these motivators are achievement, responsibility, recognition, work, advancement and personal growth. Improving the motivator factors can increase the job satisfaction of the employees. On the other side, hygiene factors in the workplace are working condition co-workers’ relation, supervisors’ quality, base wage, salary and policies and rules. Hygiene factors are important as without the presence of hygiene factors, the employees get demotivated.

1. b) Discrepancy Theory

Discrepancy theory explains the source of dejection and anxiety in the workplace for the employees. Employees try to fulfil the responsibilities in a workplace that he/she is assigned to do. Once, the employees cannot fulfil the responsibility, they feel anxiety for not being performed well. The hopes and aspirations of the employees do not get fulfilled for not performing well and employees have to learn about their obligations and duties in a workplace (Gayathiri et al., 2013). When staffs fail to receive their achievement and desired goals, they feel agitated. Huang & Rundle-Thiele, (2014) supported this by saying if the employees achieve the desired goals, then the management must praise and rewards the employees.

Employees find the work that they feel interested about and within an organisation, managers can break down the work into smaller teams to give the responsibility to the right persons. In a small business, micromanagement is observed. The employees engage themselves to work in their designated places to avoid the blame of looking for others to give the responsibility (Hussin, 2015). In the workplace, the positive work culture is very important to accomplish the team goal and management needs to ensure that managers cultivate effective team building policy to generate positive work culture. McCann, Graves & Cox (2014) supported this by saying professionals find the growth opportunity in the workplace and they offer soft skills. Moreover, the employees try to find trust in the leadership skills as the leaders must show empathy towards the employees. Right help from the leaders ensures the employee’s satisfaction.  

Human resources are the vital assets for the organisation and employees expect that management would listen to their concerns. When the employees feel that their concerns are addressed by the management, they fell satisfied. According to Nabirye et al., (2015), management must give good pay package, compensation, extrinsic motivation and health and safety infrastructure to attract the employees. Training of employees, employees’ recognition, treating the employees with respect, recognition and industry-average benefits all are essential to meet the satisfaction level. As pointed out by Ram (2013), employee performance deals with strategies of the management and managers allocate the work to the employees. Employees just fulfil these with responsibilities along with comprehensive performance.

Factors affecting job satisfaction and employee performance

In an organisation, the employees expect that communication will be effective with seniors and co-workers, superior-subordinate communication will be good and strategic employee recognition system will also be helpful. In addition, as argued by Shmailan (2016), not only external factors, internal factors like employees’ emotion (emotional dissonance, social interaction), genetics, mood and personality of the employees are an important factor behind the employee performance and satisfaction. The employees can get underpaid within an organisation from what they expect. In an organisation, limited career growth and advancement are other factors that lower the performance and relationship with co-workers are an important factor also. In addition, as stated by Shooshtarian, Ameli & Aminilari (2013), lack of interest of the employees can lower the employee performance and sometimes, the management cannot motivate the employees. Poor management cannot organise, plan and control the organisations, therefore, it can slow down the employees’ performance (Yao, Chen & Cai, 2013).

Based on the theoretical perspective hypotheses of this research are:

H₀: Employee satisfaction cannot impact on employee performance

H₁: Employee satisfaction can impact on employee performance

H₀: Employee performance can influence organisation’s productivity

H₁: Employee performance cannot influence organisation’s productivity

Data collection aim of the research is to find out the employee satisfaction issues in the companies to the industry, companies. This study is descriptive study and it is based on secondary sources to do the in-depth study. In this research, the researcher has used common sources of secondary data. Secondary data are collected from secondary sources like books, journals, articles, government reports, organisational annual reports and websites (Mackey & Gass, 2015). Secondary sources of information are available from previous research and these are all cost-saving and cost-efficient. Secondary data can also present issues and it is economical as it saves expenses of primary data collection.

In this research, the researcher has collected data from ABS Australia and OECD Australia websites. Australian Bureau of Statistics (ABS) is the centre for facts and stats about Australia related information. Industry and organisational related information have been collected from ABS Australia. Premium versions of the reports could not be downloaded because of accessing issues. OECD Australia information has also been gathered for justifying economic growth of industry and companies in Australia. Annual reports of the companies have been downloaded from the companies’ websites. The information and data are focused on secondary analysis of quantitative data, from census and surveys.

Management strategies to improve employee satisfaction and organisational performance

In this research, quantitative data have collected and it has been analysed through qualitative data analysis technique. Taylor, Bogdan & DeVault (2015), mentioned that qualitative data analysis is the procedures and process that are collected from the understanding, explanation and interpretation of the situation and people that are investigating. Qualitative data is based on mainly subjective data and observation of the people (Neuman & Robson, 2014) Qualitative data analysis has been done based on the thematic analysis. The researcher has segregated the collected data into four themes and each of theme been supported by a graph or tables. These data have been collected from annual reports and financial websites have been analysed through statistical analysis. As stated by DeFusco et al., (2015), thematic data analysis is the common form of qualitative data analysis and it mainly focuses on examining, pinpointing and emphasising the recorded data. Themes are mainly pattern that is related to the phenomenon based on research questions. The collected data from secondary sources have been gone through some process before analysis, familiarisation with data, searching of theme, reviewing of the theme, defining the themes in the report. Through qualitative data, the researcher has focused on finding the themes. The same type of data has been collected from ABS and OECD websites. The statistical and percentile data have been amalgamated and presented in Excel graph to visualise the findings.

In Australia, major industries are financial industries, business consultancy firm, metals and mining industry, healthcare and pharmaceuticals industry. In each of the industry, many employees are working from both foreign and local. As stated by Kalokerinos, Von Hippel & Henry (2015), Europe and the USA both are struggling in handling the public debts, however, Australia has been handling these issues from 2008 economic downturn.

In the year 2016, a survey has been made on an employee earning, earning of the employee is one of the factors of employee satisfaction. Weekly earning of the employees in the job in average was $1000 and mean weekly earnings of the employees was $1200 (Abs.gov.au, 2018). In Australia, over 24% of the employees did not get leave entitlement and they did not get paid sick leave and holiday leave as well. Apart from employee earning, appreciation at work, good relationship with the co-workers, good work-life balance, job security, company’s financial stability and attractive fixed salaries. One thing is to note that the weekly earnings of the employees were raised by $38 from 2015. In workforce composition, the employees’ satisfaction is associated with the number of hours working, diversity of employment arrangement and a mix of industries and occupations.

Qualitative data analysis techniques

Performance of the employees is judged through how the employees execute workplace the activities. The organisations in Australia in most of the industry assess the performance of the employees in quarterly and annual basis in helping the employees to suggest the areas for development. In the year 2014, 12 million employees undertook training in the workplace to enhance the employees’ performance and this figure increases almost 13% in the year 2016 (Magee, Caputi & Lee, 2016). This enhancement in the training for better performance was partly due to the beginning of the training in the workplace. The organisations in Australia provide external and internal both types of training to improve the employees’ performance.

Industry	2014 (%)	Average spent (%)
Mining	90%	5.2%
Electricity	90%	4.4%
Public administration	90%	3.2%
Finance	89%	3.2%
Construction	84%	2.4%
Recreation	82%	1.9%

In Australia, some of the major factors of employees’ performance are associated with the work-life condition, leadership, working condition and compensation. Australia’s economic condition is among OECD’s lowest government debt in the year 2016. The reasons behind the economic growth are natural resources and location of trade. Therefore, the Australian companies expect that the employees must perform well in financial sector and mining sector.

Australia is a developed nation and companies in Australia provide enough motivation to the employees. Most of the companies provide a better opportunity for the training and development of the employees. Management of Australian companies spent $1,500m on the employee engagement and employees’ recognition. Companies in Australia spent almost $290m for the community engagement (Jimmieson et al., 2016). In addition, 4% of the total income spent by the companies for employees’ motivation in the year 2016 and manufacturing sector spent the highest amount of revenue for employees’ motivation to sell their products.

Companies spent money on recognition scheme and they also spend their money on staff provident fund scheme and leadership scheme as well. The companies in Australia spend their revenue for delegation of reward and staff social gathering scheme. Small businesses in Australia donated almost $260m for the employees’ motivation. Therefore, it is clear that the company is spending maximum amount to the marketing and employees’ motivation so that the employees do not leave the organisations.

The Australian companies believe that manpower is very important for them to increase the productivity of the organisation. Therefore, the companies spend maximum amount on training and motivation of the employees. The companies employ equipment and machines so that the employees must get the accessories and capacity. As stated by Hussin (2016), the management spends money on maintenance of the tools and machinery. The companies spend time for inspection of finished products, production time and time for repair of the equipment. In finance and manufacturing sector, the companies spend maximum amount to gather financial power in order to meet the requirements. The management spends money for movement of materials and man.

The Australian organisations (more than 42%) monitored KPI of the employees and more than 79% of the employees measure the financial factors like sales, market share, profit and ROI. Productivity factors within the organisation are affected by the age group of the employees. If the employees belong to middle age group, the ROI will be returning to the organisations.

In this section, the findings of the above section are discussed and reviewed with literature. The main purpose of this study is to find out the relationship between employees satisfaction and employees’ performance in the Australian context.

The findings show that employees perform well if their needs are fulfilled by the companies. The employees’ first desire is the good salary and compensation. Employees want responsibility in the workplace to be more productive and significant sense of satisfaction in the workplace brings out productivity. In Australia, the management needs dedication from the employees without any absenteeism and less turnover. Employees can give referrals for new recruitment and it reduces the recruitment cost for the organisation. In Australia, the age-difference of the employees is high and aged-workforce works in the management. The employees expect growth in the organisation; however, a procedural change is not seen in the Australian workplace. In the financial sector of Australia, the employees work safely and in an integrated way as the financial sector provides large capitalisation as mentioned in McCann, Graves & Cox (2014). In mining sectors of Australia, the employees work safely and Australia ranks 2^nd place in the mining industry in the world as it has huge natural resources.

Employee performance is responsible for employee motivation strategy of the organisations. In Australia, the companies provide job satisfaction, achievement, rewards and recognition to the employees. These inject employee motivation, teamwork and respect. According to Nabirye et al., (2015), employee performances are comprised of employee satisfaction and motivation. Productivity is the contribution of small account for the bigger purposes of the organisation. These findings also go consistently with the results from literature by Ram (2013). Productivity is lower for Australian region as aged-employees’ percentage is high in Australia and strategic plans, skills, supply chain and environmental management provide a contribution to effective productivity.

Conclusion

The aim of the research is to find out the impact of employee satisfaction on the performance of the employees in the Australian industries. Three research questions are given to underpin the research aim successfully.

The first question is about factors of employees’ satisfaction within an organisation, the employees expect fair behaviour from the management with good perks and compensation. These add satisfaction. The employees remain to focus on organisational activities and the employees feel attached towards the organisation.

The second question is about employee performance can bring productivity as meaningful works can motivate the employees and good communication flow among the employees is needed to become satisfied. In addition, hands-on-management means combine goals for the employees to meet the objectives of the organisation. Positive management practices and framework help to grab the goals of the organisations, expectations and measurement.

The third question is about the relationship between employee satisfaction on employee performance. When the employees remain within the organisation, the companies expect higher revenue and less operation cost. Satisfied employees contribute well to the work process and it supports the employers’ needs. If the employers’ do not meet the requirement of the employees, the productivity levels get lowered. The result is same as to the previous literature by Abbas et al., (2014).

The first limitation of the research is that it has been done on the general basis of Australian companies, not a specific industry or company. There are two variables in this research study; however, these variables have not been linked with any specific organisations.

The second limitation of the research is that it has been done based on secondary data as official and websites statistics may reflect on their perspectives. These documents may lack the authenticity and biases may be there which they cannot omit.

The findings from secondary sources confirm that companies give good work environment, training and incentives to the employees. The employees only face lack of engagement and productivity issues.

In the Australian companies, employees’ engagement is needed as engaged staffs invest extra hours in office works and they take the initiative to do something for the success of the organisation. In order to engage the employees in the workplace, the companies need to take inspiring leadership as leaders need to provide opportunities for growth. Engaged employees can adequately use their skills and they are encouraged as well.

In the Australian context, increasing employees’ productivity is very important as in small businesses of Australia, the companies face productivity issues. The average age group in the Australian businesses is high and the fresher do not get the opportunity to flourish. The companies should match the tasks to skills. The companies need to communicate effectively with the employees and the management should keep clear goals.

 This study focuses on overall Australian companies across all sectors, however, in future; research could be made on a selected industry in order to underpin the concept of employees’ satisfaction and employee performance. Small and medium-size companies need to be aware of the employees’ satisfaction issues as well by providing the necessary things to the employees. It can be suggested that future study on employee productivity can be also made based on primary data collection to show the direct impact on the employees.

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