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U.K. Research Confirms Tie Between Employee Satisfaction and Business Health

By Jun 22, 2005

Employees who are more engaged by their jobs improve the bottom line, according to a U.K. study.

The Employee Engagement study by research firm Melcrum reinforces the results of a U.S. study conducted last year by the Forum for People Performance Management and Measurement, (Nov. 24, 2004 P&I).

Melcrum surveyed 1,000 H.R. and corporate communications professionals and conducted 40 case studies and found that half its respondents attribute improvements in employee retention and customer satisfaction to employee “engagement” or incentive programs. A third report higher productivity and discretionary behavior, and credit incentive programs. Respondents also report improvements in employee advocacy (cited by 28%), profitability (27%), absenteeism (25%) and status as “a great place to work” (27%).

Nearly three-quarters (74%) of respondents first focused on employee engagement between 2000 and 2004 and have seen improvements in performance each year. Only 36% have a dedicated employee engagement program; 64% treat employee engagement as a general philosophy that’s applied to people practices, per Melcrum.

The U.K. findings dovetail with conclusions reached last fall by The Forum for People Performance in its study, The Impact of Employee Attitudes on Market Response and Financial Performance. That study found that there is a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance; and organizations with engaged employees have customers who use their products more, and increased customer usage leads to higher levels of customer satisfaction.

The Forum is part of the Department of Integrated Marketing Communications in the Medill School of Journalism at Northwestern University.

A separate study conducted last year by the Washington, DC-based International Society for Performance Improvement, found that the right incentive programs can boost performance among teams of employees by as much as 44%, and among individual workers by as much as 25%.