- Summary of Key Findings
- Forum Background
- Past Research
- Theoretical Background
For a complete copy of the study, click here.
For last year’s Summit, a research study was conducted to assess the drivers of employee satisfaction and engagement and the downstream customer and financial implications of these important employee attitudes. This research identified several unique organizational characteristics driving employee engagement, including employee satisfaction, and identified organizational communication as a key driver of employee satisfaction. This research also solidified our understanding of the direct and indirect outcomes affected by employee satisfaction and engagement – namely, customer satisfaction (direct for employee satisfaction), customer behavior (indirect for employee engagement), and financial performance (indirect for both employee satisfaction and engagement).
To follow up this study, the next step is to better understand the other levers available to managers within an organization to improve the key employee attitudes of satisfaction and engagement. These levers potentially include other employee attitudes (e.g., customer service orientation), as well as other organizational characteristics not studied in last year’s study (e.g., role conflict, role clarity, inter-unit coordination), and human resource systems (e.g., selection, compensation, performance management, and training).
The primary goal with this study is to better understand how the complexities of an organization fit together to create an optimally functioning system. The employee attitudes, organizational characteristics, and human resource systems to be studied here could be looked upon as leading indicators within the organization that a satisfied and/or engaged workforce has been created. In addition, these factors may well be directly linked with the antecedents to employee satisfaction and engagement identified in the previous study, providing additional levers for organizations to influence these critical employee attitudes.
The goal with last year’s study was to identify the marketing and financial outcomes directly impacted by the key employee attitudes of satisfaction and engagement. In addition, identification of the direct antecedents for these attitudes was a prescribed goal in order to construct a picture of what a management team needs to have in place to build a satisfied and engaged workforce. What was lacking in the first study was a description of the levers that managers must pull to paint this organizational picture. In other words, the study identified what needed to be there for successfully creating a satisfied and engaged workforce, but not necessarily how to create it.
This Executive Summary provides an overview of the key findings from the study and then provides more specific data to support these findings.
Key findings from the study include the following:
- There is a direct link between human resource systems and organizational culture – i.e., systems related to development, performance management, and compensation operate as levers for managers to influence the organization’s culture
- Employee satisfaction and employee engagement have a unique set of direct organizational climate drivers
- The key drivers impacting employee satisfaction include an employee’s intention to remain in the organization, the skill variety employees are able to exhibit in their job, the level of customer service orientation achieved, and the degree of coordination between units of the organization
- The key drivers of employee engagement include reduced role conflict, proper training, personal autonomy, and the effective utilization of expert, referent, and exchange power by managers
- While satisfaction and engagement have unique 1st order drivers, they share a number of 2nd order drivers
- The crucial takeaway from this finding is that efforts to improve these 2nd order drivers are likely to have valuable downstream effects on both satisfaction and engagement
Overall, there are a number of levers available to managers to influence the key employee attitudes of satisfaction and engagement, and these levers are, in general, more tangible and accessible than the amorphous concepts of organizational culture and employee attitudes.
What is the Forum for People Performance Management and Measurement?
The Forum for People Performance Management and Measurement is a research center within the Medill Integrated Marketing Communications (IMC) graduate program at Northwestern University. It is funded by the Incentive Performance Center, which is made up of a number of top incentive companies and industry leaders dedicated to research and educational programs that improve human performance in business. A central objective of the Forum is to develop and disseminate knowledge about communications, engagement and management such that businesses can better design, implement and manage people-based initiatives both inside and outside an organization.
A number of research initiatives by the Forum are planned over the next several years to investigate the value and importance of employee incentives along with the other key issues of communications, engagement, and management.
The current study will focus on those levers available to the organization to facilitate a satisfied and engaged workforce, and move our understanding further in the direction of understanding both what needs to be in place and how to get there. The previous study provided an understanding of the value of employee satisfaction and engagement – organizations with satisfied employees have an engaged workforce and more satisfied customers, and the engaged workforce leads to customer’s using more of the organization’s products or services. The downstream result of all of this activity is a more profitable organization, a worthy goal for any organizational activity. The lens for this year’s study will be turned inside the organization to provide additional information and clarity for understanding how to optimize the organization to achieve these desired marketing and financial outcomes.
Previous work in this area has helped to understand the value of a satisfied and engaged workforce, and offered an understanding of the organizational characteristics necessary for stimulating these employee attitudes. The present study focuses the research lens tighter on the internal organizational characteristics with a goal of delineating how these characteristics can act as levers for the management team to create the optimal organizational environment for engendering an engaged workforce.
In this section, we will provide a brief background on the organizational characteristics under study and their expected influence on the employee attitudes of interest, primarily satisfaction and engagement. We will address three sets of organizational characteristics: organizational culture, organizational climate, and human resource systems.
Organizational culture has been defined as the set of shared assumptions and beliefs about an organization and its function in the marketplace1 or “the ways of thinking, behaving, and believing that members of a social unit have in common”2. As such, culture has been commonly treated by organizational researchers as a set of cognitions shared by members of a social unit.
According to these previous researchers, an organization’s culture is thought to play a key role in strategy formulation, firm performance, and competitive advantage. Culture may also have indirect effects on performance in benefiting other aspects of an organization. For example, researchers3 have found that organizational culture is linked to service quality and employee performance, both of which have been identified as fundamental links in Harvard’s Service Profit Chain leading to subsequent consumer and financial success indicators.
The current study utilizes Cooke and Rousseau’s (1988) cultural model which identifies four different cultural types found in organizations: Cooperative, Competitive, Passive, and Aggressive. We will address each type in turn.
Cooperative Culture. Members of organizations with cooperative cultures are encouraged to set goals, take initiative, and work together to attain personal and organization objectives. Cooperative styles imply a high valuation on individuals and are expected to be associated with greater decision authority and greater confidence that the distributed authority will not be abused. Cooperative norms encourage behaviors such as goal attainment, enjoying one’s work, and maintaining one’s personal integrity and standards.
Competitive Culture. In organizations with competitive cultural norms, members are typically rewarded for taking charge and being in control. In such organizations, winning is often highly valued and members are rewarded for out-performing each other. Such an approach has been used effectively in designing sales force incentives and other compensation schemes. A competitive culture encourages decisiveness, rewards achievement, and creates an environment of high expectations. On the other hand, an overly competitive culture can inhibit effectiveness by reducing cooperation and promoting unrealistic standards of performance.
Passive Culture. In organizations where a passive culture dominates, conflicts are avoided and members feel as if they must agree with, gain the approval of, and be liked by others. Such organizations tend to be conservative, traditional, and bureaucratically controlled, where members are expected to follow the rules and make a good impression. This type of work environment can limit organizational effectiveness by minimizing constructive expression of ideas and opinions, suppressing innovation, and stifling flexibility.
Aggressive Culture. Aggressive norms minimize influence at lower levels by emphasizing adherence to directives and authority. Aggressive norms promote such behaviors as procrastination, inflexibly following rules and procedures, waiting for direction from superiors before acting, and could also cause service quality to become confused with winning power and pointing out the flaws of others.
Organizational climate reflects the way that organizations operationalize their culture in daily routines and behaviors4. Organizational climate represents workers perception of their objective work situation, including the characteristics of the organization they work for and the nature of their relationships with other people while doing their job.
Issues regarding an employee’s role in the organization, training, inter-unit coordination, empowerment, autonomy, skill variety, and customer service orientation are the key climate factors of interest in this study. Clearly defined roles with little bureaucratic conflict, along with a proper degree of autonomy and empowerment create a sense of value for employees. In addition, appropriate training, the ability to utilize a variety of different skills, and a feel of significance also create a viable environment to focus on the customer. However, without coordination across the organization, this will all break down.
Key managerial systems identified in previous research include selection, development, performance management, and compensation systems5. In drawing prospective employees to fit the organization’s strategies, successful managers select hires based on those traits. Training and development further enhances the development of those skills and the acquisition of new, trainable skills. Human resource initiatives aimed at providing employees with the necessary skills and tools to deliver customer value cannot be viewed as costs, but rather must be regarded as investments with high and measurable returns. Previous theory also states that one of the primary keys to developing a strong organization lies in the way employees are compensated and rewarded. For example, when compensation systems are keyed to market driven indicators, appropriate behavior is reinforced.
This current Forum for People Performance study is an attempt to add to the compelling evidence of these previous studies by specifically inquiring about a critical employee attitudes and linking them with their organizational culture, climate, and human resource system.
There are two broad approaches to organizational studies – one can sample organizations across industries or within industries. There are some problems with mixing organizations across industries, including the difficulty in constructing items to measure the same concept in different contexts. In addition, while the heterogeneity obtained by sampling organizations from a variety of industries provides valued generality, it also creates unwanted noise in the data that may obscure the effects one is searching for. Thus, for this research we selected the within industry approach to maximize item interpretability across organizations, as well as to avoid some of the undesired effects of organizational heterogeneity.
All of the organizations selected for study are involved in the U.S. media industry. In seeking to obtain as representative a sample of organizations as possible, one hundred organizations were selected from the media universe in the United States in a stratified random sampling procedure. The universe, representing approximately 1,500 organizations, was divided into six strata based on market size, region of the country, and organizational size. The stratification increases confidence that this sample of organizations generalizes to the industry level, and the homogeneous sample provides a viable context for understanding the nature of the conceptual relationships under study.
All research instruments, with the exception of financial performance data, were survey based. All analysis conducted on the data involved OLS regression performed in multiple stages. All data was aggregated to the organizational level for analysis.
For a complete copy of the study, click here.
1 Barney, J.B. (1986), “Organizational Culture: Can It Be a Source of Sustained Competitive Advantage?,” Academy of Management Review, 11(3), 656-665.
2 Cooke, R.A. and Rousseau, D.M. (1988), “Behavioral Norms and Expectations: A Quantitative Approach to the Assessment of Organizational Culture,” Group & Organization Studies, 13 (3), 245-273.
3 Klein, A.S., Masi, R.J., and Weidner, C.K. (1995), “Organization Culture, Distribution and Amount of Control, and Perceptions of Quality: An Empirical Study of Linkages,” Group & Organization Management, 20 (2), 122-148.
4 Deshpandé, R. and Webster, F.E. (1989), “Organizational Culture and Marketing: Defining the Research Agenda,” Journal of Marketing, 53 (1), 3-15.
5 Huselid, M.A. (1995), “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance,” Academy of Management Journal, 38 (3), 635-672.