Job Satisfaction and Firm Performance

Does job satisfaction of employees affect a firm’s bottom line? A new study published in Journal of Applied Social Psychology by Stacey Kesser, Lorenzo Lucianetti, Shani Pindek, Zhu Zhu, and Paul Spector suggests that it does. Conducted in Italy among 31 firms, a link was shown between job satisfaction and firm performance.

Job Satisfaction Affects Employees

Job satisfaction is simply the extent to which people like or dislike their jobs. It is connected to many employee outcomes that affect firm functioning, either directly or indirectly.

• Employee Performance: Satisfied employees perform better than dissatisfied employees. There are many reasons for this but it comes down to the idea that when organizations create positive environments in which people can thrive, they will be happier and more productive.
• Misbehavior: Employees who are unhappy at work are more likely to act out and engage in several forms of destructive behavior. They may avoid work through lateness and unauthorized breaks, create conflicts with other employees, and purposely do work incorrectly.
• Poor customer service: Unhappy employees make for unhappy customers. This can be due to poor service behaviors, but it can also be due to poor attitudes that customers observe.
• Turnover: Dissatisfied employees are at risk for quitting the job. Turnover can be expensive both in terms of recruitment/replacement costs and lost productivity as new employees can take time to be trained and reach potential.

Job Satisfaction and Firm Performance

There are many studies that link the satisfaction of employees to their behavior. Although it makes sense that these behaviors would affect the bottom line, it is possible that expected advantages fail to materialize. What is needed are studies that link the satisfaction of the workforce to firm performance. Such research can be difficult to conduct, and few researchers have attempted it.

The Kessler study looked at the job satisfaction levels of 404 employees from 31 firms to see if it could predict future firm financial performance. What they found was that firms with satisfied employees enjoyed positive financial growth over time, whereas firms with dissatisfied employees experienced the opposite. These results show that there is a link between job satisfaction and firm performance. This means it can be a worthwhile investment to create a satisfying work environment for employees.

Photo by Burak K from Pexels

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