is something missing from your company's satisfaction package?
TRANSCRIPT
University of DaytoneCommons
Accounting Faculty Publications Department of Accounting
5-2009
Is Something Missing from Your Company'sSatisfaction Package?Deborah S. ArchambeaultUniversity of Dayton, [email protected]
Richard BurgessPerformanceDelta
Stan DavisUniversity of Tennessee, Chattanooga
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eCommons CitationArchambeault, Deborah S.; Burgess, Richard; and Davis, Stan, "Is Something Missing from Your Company's Satisfaction Package?"(2009). Accounting Faculty Publications. 52.https://ecommons.udayton.edu/acc_fac_pub/52
Is something missingfrom your company’ssatisfaction package?
CMA MANAGEMENT 20 May 2009
t comes as no surprise that satisfiedemployees are important to thesuccess of any organization. In
short, higher satisfaction increasesproductivity, improves service levels, andpositively impacts a company’s bottomline. While keeping employees satisfiedshould be an important goal for anyorganization, a recent job satisfactionsurvey by The Conference Board showsthat job satisfaction has actually declinedin the last nine years. So what should acompany to do? Conventional wisdomsuggests that, salary, benefits, and othermonetary factors are important aspectsof keeping employees satisfied. But willgiving these perks to a dissatisfiedemployee resolve the problem? Maybein the short-term, but who hasunlimited stashes of cash to buysatisfaction? Further, this “fix” is oftenshort-term in nature.
Conventional wisdom suggests that, salary,benefits, and other monetary factors areimportant aspects of keeping employees satisfied.But which factors have the biggest impact onoverall satisfaction? While companies focus onthe monetary factors, there are other componentsof the overall “satisfaction package,” that are just asimportant, yet often overlooked.
By Deborah Archambeault, Christopher M. Burgess and Stan Davis
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CMA MANAGEMENT 21 May 2009
CMA MANAGEMENT 22 May 2009
In fact, studies show that whileadequate pay and other monetarybenefits are necessary components ofemployee satisfaction, they are not theonly determinants in maintaining asatisfied workforce. What we havelearned over the past 12 years fromworking with small to medium-sizedorganizations is that employers oftenfocus on monetary solutions, butoverlook low cost or no costopportunities to increase employeesatisfaction. The suggestions thatfollow are just some of the possibilitiescompanies can implement to increaseoverall employee satisfaction.
Importance of factors in the“satisfaction package”
The overall menu of factors thatcontribute to employee satisfaction,hereafter referred to as the“satisfaction package,” includemonetary factors and non-monetaryfactors. Monetary factors are thetypical components of the employeecompensation package that directlyaffect the employee’s pocketbook –e.g., salary, bonus, retirement plan, andbenefit package. Non-monetary factorsare items that do not directly affect theemployee’s net worth, and includefactors such as trust, communication,recognition, challenging work, andpersonal growth.
As part of our work with companies-that want to improve their performancemeasurement systems, we surveyemployees at the beginning of eachengagement and ask them to rate howimportant various “reward/benefit”items are to them. The resultsdemonstrate an incredibly high level ofconsistency from company to companyon what factors employees considermost important. Table 1 presents arank order of these select factors fromsurveys conducted on employees frommany different organizations, rankedfrom most to least important.
In Table 1, non-monetary factorswere ranked as high as or higher thanmany monetary factors. Of particularinterest is the fact that twocommunication-related factors –“receiving positive comments fromsupervisors” and “being able to presentideas to management” – are rated asbeing more important than several
costly items such as cash bonuses,educational programs, parties, andtime off.
Factors that affect satisfaction
As the data in Table 1 shows,monetary factors do matter.Fortunately, so do the non-monetaryfactors. As part of our initialengagement survey, we ask employeesto give us feedback on theirsatisfaction with a variety of individual“satisfaction package” factors in theircurrent job, as well as an assessmentof their overall job satisfaction. Threefactors that have proven to have astrong impact on overall employeesatisfaction are pay, fairnessperceptions, and communication (e.g.,the degree to which employees aresatisfied with the level and frequencyof communication within theirorganization). While that list of threefactors is certainly not exhaustive,focusing on these three factors willdemonstrate how the two non-monetary factors can be used toachieve a higher level of employeesatisfaction without any changes tothe monetary factors. Using thesethree factors, we will next present abrief analysis that illustrates howoverall satisfaction levels are afunction of more than just howsatisfied employees are with their paypackage.
It stands to reason that employeeswho are highly satisfied with all threeof these factors would naturally beexpected to have higher overall jobsatisfaction. From our surveys,employees that fit this description(e.g., high satisfaction ratings for pay,
Table 1
How important are the following rewards/benefits?Seven-point scale with seven = "Very Important"
Retirement plan 6.59
Insurance benefits package 6.49
Receiving positive comments from your supervisors 6.35
Being able to present your ideas to management 6.07Receiving cash bonuses 6.03
Having your ideas implemented 5.72
Being involved in teams 5.68Employer sponsored education programs 5.68
Social celebrations 5.06Getting extra time off 5.04
Public recognition in newspapers or newsletters 4.28
In fact, studies show that while adequate pay andother monetary benefits are necessary componentsof employee satisfaction, they are not the onlydeterminants in maintaining a satisfied workforce.
CMA MANAGEMENT 23 May 2009
communication, and fairness) had anoverall satisfaction rating of 6.75 on aseven-point scale, where seven is themost satisfied. This is the mostsatisfied group of employees, asexpected. As discussed earlier,however, the problem is thatachieving high levels of paysatisfaction may simply not be feasiblefor the organization.
What may be surprising, however,is that a high overall satisfactionrating is not solely dependent onachieving high levels of paysatisfaction. We have found that evenwith lower levels of pay satisfaction,when employees perceive thatmanagement is dealing fairly withthem and they are satisfied with howmanagement communicates withthem, overall satisfaction levels arestill very high (6.41). In fact, as Table
2 illustrates, fairness perceptions andopenly communicating withemployees can be just as effective ingenerating higher levels of overallsatisfaction when compared to highlevels of pay satisfaction. Forexample, employees who were highlysatisfied with communication, buthave lower satisfaction with pay,scored higher (6.41) than employeeswith high satisfaction with pay andlower satisfaction withcommunication (6.22).
Various combinations of thesesatisfaction package componentsproduce different levels of jobsatisfaction, but the point is clear:employees care about more than justtheir pay. Please keep in mind thatyour satisfaction package can andshould focus on many more factorsthan just these three factors, but thesefactors have proven to be particularlypowerful in their impact on overallsatisfaction, and serve as anillustration as to the role non-monetary factors play in overallemployee satisfaction.
Organizational strategies
If you feel your organization canbenefit from improved satisfactionlevels, try the following simple steps:
• Recognize employees for a jobwell done – both in front of their
peers (if possible) and in a one-on-one setting.
• Solicit employee feedback onways to improve. When possible,implement employee ideas.When not possible, take time toexplain why.
• Correct the perception offavouritism among managers (amorale killer and frequentemployee complaint) when itcomes to promotions, raises, andassignments by establishing clearobjective measures and discussingthe measures with each employeefrom the beginning.
• Be as open as possible when facedwith difficult and unpopulardecisions by sharing the rationalefor the decision. In time,employees will learn to trust yourjudgment knowing you havemade the fairest decision possibleunder the circumstances.
Employees value fairness, opencommunication channels, and a solidmonetary package. As the data shows,two of these factors can be improvedwith little or no additional expense tothe organization. With just a littleeffort and empathy (and maybe sometraining), first-line and mid-levelmanagers can have a remarkableimpact on how satisfied theiremployees are. By clearly laying outprocesses (and following them) andbeing as transparent as possible incommunications, managers build alevel of trust with their employeesthat can melt away the built-upfrustration that grows from years ofsmall raises, vague communications,and unexplained or unfair decisions. n
Drs. Archambeault and Davis are members of theaccounting faculty at the University of Tennessee atChattanooga. They can be reached at [email protected] and [email protected]. Christopher M. Burgess([email protected] ) is thefounder and managing member of PerformanceDelta,LLC, a consulting firm specializing in performancemeasurement improvement in financial institutions.
Table 2
Pay, fairness, and communication vs. Job satisfactionJob satisfaction measured on a seven-point scale with seven = “Highly Satisfied"(n = High Satisfaction, o = Low Satisfaction)
Pay Fairness Satisfaction with OverallSatisfaction Perceptions Communication Job Satisfaction
n n n 6.75o n n 6.41n n o 6.22
o o n 6.15
n o o 5.98
n o n 5.89
o n o 5.72
o o o 5.23
Employees valuefairness, opencommunicationchannels, and a solidmonetary package.