What is employee satisfaction?
Employee satisfaction is the level of contentment that employees feel about their jobs. It points to how happy they are with their roles and their company. This satisfaction is often a direct result of how job roles fulfill the employee’s needs and desires and is an indicator of the prevailing work culture in a company.
Employee satisfaction is crucial to organizational success as it impacts productivity, and retention and decreases employee turnover. The happier employees are with their jobs, the longer they will stay with a company.
Employee satisfaction is influenced by factors such as compensation and benefits, recognition, engagement, and leadership. Companies have to work to ensure that employee satisfaction is maintained at all times because unsatisfied employees who remain with the company can negatively impact the organizational output. Satisfied employees, on the other hand, develop a positive outlook toward the company that inspires them to perform at their best.
Why is employee satisfaction important?
Employees are a company’s most valuable asset. They are central to the company’s health, influencing everything from performance to output. If employees approach their roles with a positive perception of the company, they are likely to perform well and put in the extra effort. The opposite is also true.
Employees’ feelings about and perception of their role at work affect everything from productivity, sense of belonging, engagement with other colleagues, and submissions to online employee review sites.
Realizing its importance, companies tend to harness metrics and tools, including surveys to track employee satisfaction. The most innovative companies use an employee experience platform that delivers real-time insights into employee sentiment that enables them to respond rapidly to any changes.
In this guide, we’ll explore the following:
- What factors contribute to employee satisfaction,
- How HR can measure employee satisfaction,
- How employee satisfaction affects organizational performance,
- The differences between employee satisfaction and employee engagement,
- And how companies can improve employee satisfaction.
Employee satisfaction vs. employee engagement
Although employee satisfaction and employee engagement are often used interchangeably, they are different.
Employee engagement occurs when employees are inspired and committed to helping companies achieve their goals. Employee satisfaction, on the other hand, occurs when employees enjoy their jobs.
While engaged employees are motivated to show up at work and help the company succeed, satisfied employees may or may not be engaged. They may not care if the company achieves its business outcomes as long as they are happy—so it’s crucial to have both.
The techniques companies use to guarantee employee satisfaction aim to ensure their employees are satisfied and happy with their job responsibilities.
The backdrop for this is often to improve performance.
In contrast, the underlying goal of employee engagement is improved business outcomes. Building a workplace that delivers on these outcomes goes beyond maintaining high levels of employee satisfaction.
The overarching strategy for maintaining organizational health requires having employee engagement at its core. This would involve harnessing solid performance and experience engagement management activities such as clarifying work expectations, improving efficiency through the availability of top-notch tools and resources, providing opportunities for career development, and promoting positive relationships within teams.
Gallup has found that 65% of the U.S. workforce is disengaged. These employees are indifferent about their jobs, and neither like nor dislike their roles. This represents a risky population that could create unpredictable outcomes for businesses.
Employee engagement has to do with motivating your employees and providing them with a goal that’s meaningful. And companies must balance these two concepts (engagement and satisfaction) to retain top talent and acquire market share.
Factors that contribute to employee satisfaction
Companies have to implement the right strategies to improve employee satisfaction. These strategies affect how employees view their companies and whether they would stay or look for a change. Since companies spend more on the hiring process than on talent retention, you may want to determine which of these factors you can implement in your company.
Recognition and reward
Employees who are appreciated at work tend to be happier. People like to be rewarded or recognized for their work. Apart from salaries and bonuses, employees should be recognized for special contributions. Management should create employee recognition schemes and reward systems that applaud employees for their performance. Acknowledging employees’ accomplishments is crucial to maintaining high levels of employee satisfaction.
Learn how rewards and recognition can improve employee experience
Communication and management support
Employees don’t want to be confused—no one does. There should be systems in place to help them find and obtain the right support when they need it. Leadership should ensure two-way communication between employees and management and among employees. The better communication your employees have, the more sense of community they feel. Companies should offer the support necessary for employees to get work done.
Work-life balance
One of the major factors that influence employee satisfaction is how well employees can balance work and life. Does your company support remote working or are employees getting enough time off work? The more a company can encourage balancing work and life, the happier employees will be in their roles.
Job security
Another factor that makes employees satisfied with their jobs is job security. No one wants to wake up one day and find that their jobs are gone. The more certainty they feel about their job lasting through changes in the market, the better they will feel about that job. The same goes for having a job that supports them through the hard times, and that comes with its perks. Employees who feel a sense of security at work tend to love their jobs more.
Good working conditions
The working environment is one of the major motivating factors that make employees happy about their jobs. This translates to having all the tools that help them get work done and working with a team that is positive, encouraging, and supportive rather than toxic. The more healthy relationships employees can build at work, the better they will feel about their jobs.
Clear expectations
Knowing what to expect and what they ought to accomplish in their roles can help employees perform at their best. When they can do this, they feel a sense of purpose that translates to the positive emotions of enjoying their jobs. Setting clear expectations for your employees can be a means of keeping them engaged, but it can also translate to employee satisfaction.
Providing feedback
Just like setting expectations, providing valuable and constructive feedback can help employees feel like their work is being noticed and is making an impact. Continuous communication with team leaders and supervisors on what they should be doing can keep employees on track. It creates a work environment that’s healthy when feedback is followed with appreciation or steps to improve, and this also leads to employee satisfaction.
Measuring employee satisfaction
Measuring employee satisfaction entails prioritizing employee feedback and addressing issues raised by employees on a consistent basis. Here are some ways to do so effectively.
Surveys
Companies use surveys to measure employee satisfaction. New approaches like pulse surveys are now replacing the annual company-wide survey.
With pulse surveys, companies target specific teams such as sales teams, operations, and so on. These surveys do not send the same questions to everyone. By focusing on departments, pulse surveys provide management with better and more relevant, actionable feedback. And they should be conducted frequently so that the information they provide is timely.
With these surveys, leadership can measure employee satisfaction within different departments quickly enough to take actions that resolve any issues before they grow.
The most innovative companies use an employee experience platform that delivers real-time insights into employee sentiment that enables them to respond rapidly to any changes.
Exit interviews
You can also conduct exit interviews to find out what employees leaving your company were unhappy about. Using surveys, employees can let you know which part of the work culture they were unsatisfied with and provide feedback on how you can improve the workplace experience of other employees.
Meetings
You can conduct company-wide meetings with employees to learn more about what they would like you to change. You can also make these meetings individualized. When an employee expresses displeasure about something at work or is experiencing a decrease in their productivity levels, scheduling meetings with them can be a way to seek feedback and help resolve any issues. Such meetings can be headed by their supervisor, team lead, head of the department, or a member of management.
Informal feedback
Managers can also evaluate employee performance and provide them with informal feedback throughout the year. When an employee is experiencing workplace dissatisfaction, it can slip into their work and impact their engagement and performance. Providing them with feedback can help the manager find aspects of their work that could be improved. Resolving concerns that employees might raise during this process can help improve satisfaction.
Tracking attendance
Absenteeism can indicate employee dissatisfaction. When an employee constantly misses work, it may point to other issues within the company. These could include bad leadership, poor working conditions, and more.
You can keep track of employees’ attendance to find out whether they are experiencing job dissatisfaction. Employees who think their jobs are a source of stress are more likely to miss work often.
If you find that an employee is always absent, talk to their manager, supervisor, and team members to find out the nature of the problem associated with their roles. You should also speak with the employee to find out what is going on and address the absenteeism immediately.
Employee turnover rate
You can measure employee satisfaction by looking at the turnover rate. If workers are unhappy with their jobs, they would tend to look elsewhere. A high rate of employee turnover may indicate a problem with the work culture. Finding out why your employees are leaving can help you address the problem.
How employee satisfaction affects organizational performance
Employee satisfaction impacts how a company performs in the market, whether they attract new customers regularly and can retain these customers. Employee satisfaction can also affect product quality, making it an essential organizational metric that HR needs to continuously measure. The level to which your employees are content with their jobs affects how they perform, which can affect engagement and productivity.
Here are ways in which employee satisfaction can affect company performance.
Increased productivity
Employee satisfaction makes employees more productive. In fact, a study at the University of Warwick shows that happy employees are more productive by 12% while unhappy employees are 10% less productive. As such, employee satisfaction has a huge effect on productivity. Large companies like Google invests in programs that enhance employee satisfaction with the goal of making their workers happier and, therefore, more productive.
Motivation
While engaged employees have higher levels of motivation, keeping employees happy can help boost their motivation. Unhappy employees will naturally lack the motivation to get any work done
Better retention
When employees feel appreciated, they tend to stay longer with their companies. Employee satisfaction leads to higher levels of retention, enabling companies to retain top talent. An employee who is unhappy with their job is more likely to leave. And replacing employees is costly.
The cost of employee turnover can be significant and could cause a company to pay anywhere from 30% to 400% of an annual salary, depending on the level of that employee. The higher the seniority of an employee, the more expensive it is to replace them. The smart thing for companies to do is to work on talent retention. Employee satisfaction is pivotal for achieving this.
Improved culture
Employee satisfaction levels reflect the workplace culture of a company. If employees are unhappy with their jobs, it may be because there are aspects of the job they don’t like or the work environment is unfavorable for them. Improving employee satisfaction is a great way to improve work culture and ensure a company’s health.
Higher customer satisfaction
Employees who love their jobs will treat customers well. They would be willing to provide customers with all the support that they need. Similarly, employee satisfaction can affect product quality, making your customers find your products more or less functional. If your products are unable to meet buyers’ needs, customer retention will be affected.
The more supported customers feel, the more likely they are to stay with your company and likely buy more products. Improving employee satisfaction can lead to higher customer satisfaction.
Download our eBook to learn How Employee Engagement Improves Customer Experiences
Increased profitability
The better employees perform, the more profitable a company will be. Satisfied employees put in their best effort to help a company achieve its goals. They show up at work inspired and ready to ensure that the company realizes its objectives.
And companies that achieve customer satisfaction through positive employee satisfaction helps them stand out in the market, surmount challenges, and achieve sustainable growth.
How to improve employee satisfaction
Employee satisfaction is a priority for every company. Companies are trying to make their employees feel like they have joined the right company and are in the right positions. HR must ensure that company policies are fostering employee satisfaction and are able to maintain this trust.
Here are some best practices that you can implement to improve employee satisfaction in your company.
Foster open communication
Encourage communication between employees on all levels and between employees and management. Employees should be able to let leadership know either directly or through their managers, supervisors, and team leads if something isn’t working well for them.
HR should implement standardized measures for supporting employees and fostering communication. Being able to lodge a grievance and do so promptly can enhance employee satisfaction. Open communication is one way to ensure that employees are getting all the help they need.
Provide opportunities for development
A study by Pew Research found that companies experienced the highest rate of employee turnover in 2021 compared to employee turnover rates over the last 20-years. Employees stated having fewer opportunities for advancement as a reason for leaving their jobs.
Similarly, an Engagement Report by Tiny Pulse found that only 25% of employees say their companies offered adequate development opportunities. Once employees feel like there is nothing to aspire to in their current jobs, they tend to seek greener pastures. Companies have to prioritize career advancement and provide growth opportunities to ensure that employees stick around and work with the company for longer. If HR has been able to attract top talent and employees that are a good fit for the company, finding ways to make these employees stay will benefit the company.
Foster positive work-life balance
Today’s employees favor positions that allow them to balance work and life. Companies should implement policies and measures that help employees feel that they have that balance.
When their lives revolve around work or work begins to encroach, employees are less likely to be satisfied with their jobs. HR should partner with leadership to develop techniques that foster work-life balance. This could include remote working, providing vacation opportunities, bonuses, days off to recharge, and so on.
Show appreciation
Employees crave appreciation at work. If an employee has achieved something substantial, exceeded expectations, or did something extraordinary they should be appreciated. Appreciation can take the form of rewards, company-wide recognition, accolades, or more structured systems offering time off or even trips. Earning recognition of any kind keeps employees happy and motivates them to do even better at their jobs.
Flexible work
Providing employees with flexible schedules is a great way to boost employee satisfaction. Also, employees should feel like they have control over their jobs and are contributing to the outcomes they produce. The feeling of importance when they work makes employees happy about their jobs. It also keeps them engaged so that they are able to perform excellently.
Address concerns promptly
HR should be swift in addressing employee satisfaction concerns. When issues are not resolved, and feedback is not provided on an ongoing basis, you will find that employees begin to indulge in attitudes that are detrimental to the company, such as absenteeism. When concerns are not addressed immediately, employees begin to avoid their jobs essentially because they are not satisfied.
Offering support, resolving issues, and providing feedback regularly can help employees feel seen and heard, thereby improving employee satisfaction.
To learn more about how Simpplr can assist you in enhancing employee satisfaction, request a demo today!