What Is Employee Satisfaction and Why Does It Matter?

satisfied workers having a break

Employee satisfaction is the level of contentment that a person feels at their job. Also called job satisfaction or work satisfaction, it takes into account several aspects of the employee’s workplace experience, from management and role nature to rewards and company values.

For entrepreneurs, keeping track of this measure is crucial when it comes to growing a venture and maintaining a business reputation. This is because it directly influences your staff’s productivity as well as your business’ perception among your potential customers.

In this article, we’ll go deeper into the importance of employee satisfaction and how to maintain its high levels in the workplace. We’ll also give you tips on how to measure employee satisfaction, allowing you to track it and take any necessary steps to improve it.

Why is employee satisfaction important?

High levels of employee satisfaction can foster productivity, boost the performance of a businesses, and have a positive impact on the reputation of a businesses. We’ll cover how these factors relate to each other in this section.

Employee satisfaction and productivity

Employee satisfaction contributes directly to employee engagement and happiness. In turn, these tend to foster productivity in quite a significant way.

According to a research conducted by the University of Oxford in the UK, workers are 13% more productive when happy. The Harvard Business Review took it a step further and found that staff happiness raised accuracy on tasks by 19%, productivity by 31%, and sales by 37%.

In fact, the concepts are so entwined that this cause-and-effect relationship works both ways: if you give more tools for your employees to be productive, they’ll also feel more satisfied.

For instance, the best time and attendance systems out there can help your employees manage their schedule and make it easier to arrange flexible working hours. In addition, investing in top project management software can streamline your processes, helping your staff focus on the right priorities.

Employee satisfaction and business performance

The positive impact employee satisfaction can have on sales is particularly important considering how the cost of living crisis in the UK is driving two thirds of adults to spend less on non-essentials. In scenarios like these, an investment on a happier, fulfilled staff contingent can contribute to a higher business performance.

The London School of Economics backed this by publishing a study that found employee satisfaction to have a significant correlation with customer loyalty. This is an incredibly valuable asset, but even more so during recession periods when customers contemplate choosing cheaper brands or stop buying them altogether.

Employee satisfaction and business reputation

Failing to give employee satisfaction its due can be massively detrimental to the reputation of your business. The scandals that hit companies as large and diverse as BrewDog and Twitter prove how damaging it can be when you don’t meet the needs of your employees.

On the other hand, championing your staff can help you promote positive values. These values are not restricted to employee satisfaction, but they can lead to a better public image, which attracts potential customers. Business sustainability is another area that you can embrace quite affordably, for example.

A survey carried out by SurveyMonkey, an experience management company, pointed out that 55% of respondents are more likely to buy from a company that shares their values.

What is the difference between employee satisfaction and employee engagement?

Though related, employee satisfaction and employee engagement aren’t the same thing. Employee engagement relates to a person’s drive to perform well at their job. Employee satisfaction is a wider concept and relates to a person’s happiness and satisfaction in the workplace. It touches upon salary, values alignment, company culture, and career goals.

It’s worth noting that these concepts don’t necessarily come packaged together. If you offer valuable benefits (like high salary and work-life balance), but don’t give them a reason to care about their performance, you’ll have satisfied but unengaged employees. Similarly, if you offer meaningful roles your employees believe in but don’t financially compensate them or acknowledge their contributions, you’ll get engaged but unsatisfied employees.

7 ways to improve employee satisfaction

Considering the benefits you can reap from investing in employee satisfaction, it’s fair to wonder where to start. To help you out, we’ve compiled seven top tips that can contribute to the happiness and productivity of your staff.

1. Measure your employee satisfaction

It is best practice to first measure your employee satisfaction to kickstart the improvement process.

Reach out to employees and have honest conversations about what is working and what isn’t. While these aren’t always easy conversations to have, they are necessary and further down in this article we’ll go over ways you can gather the honest thoughts of your employees.

2. Nurture a positive work environment

People spend a considerable amount of time at the workplace, so the relationships they nurture during this period are understandably important from a satisfaction and engagement point of view.

Team-building should be a top priority. According to an article published in the Harvard Business Review, employees that did their work as part of a team are twice as likely to be fully engaged than the ones who work by themselves.

Invest in team-building activities as well as a functional work space. This is likely to encourage your employees to get together, which can strengthen collaboration and productivity. Also, discover and implement ways to show employee appreciation, so you can boost team morale and make your staff feel valued.

3. Champion DEI in your business

Employees value working in environments that champion diversity, equity, and inclusion (DEI), which can increase job satisfaction and performance. According to the HR company Changeboard, employees work 12% harder and are 19% more likely to stay longer with organisations that take this step.

To make this happen, look to implement ways to reduce your hiring bias to create a diverse sample of candidates. In addition, make sure the diverse employees joining your company feel welcome and have the same chances of growth as others.

4. Offer fair pay and employee benefits

Fair employee pay greatly acknowledges the extent of their contribution to your company. Pay according to (or above) the market value, and if it’s not within your budget, you can bridge the gap with key benefits. Healthcare and flexible working hours are among the ones you can consider, as well as supporting your staff’s side hustles, so they can earn extra income.

Understandably, paying your employees at the right time and collecting their due contributions (such as the National Insurance) correctly goes a long way towards making them satisfied. To help you stay on top on this, consider investing in solid payroll solutions.

If this could compromise a huge chunk of your budget, it’s worth looking into providers that combine it with other services, such as accounting and payroll software and integrated HR and payroll software.

When choosing benefits, remember to focus on the long-term effects these will have on your staff. While they contribute to your employee’s happiness in the short term, the allure of perks such as free drinks/snacks, or paid social events tends to diminish over time.

5. Recognise your staff’s contributions

Recognition is a powerful, cost-effective way to boost the satisfaction and productivity of your employees. According to the workplace monitoring company Great Place to Work, a genuine “thank you” from a manager has a 69% chance of increasing the effort an employee puts into their role.

Brief your managers to commend co-workers or, if you run a tight operation, do the commending yourself. For larger organisations, it’s worth setting up a public occasion to celebrate individual (and collaborative) wins, like a regularly scheduled meeting.

6. Provide regular feedback

Employees feel a desire to be seen and heard within their workplace not just when they achieve a milestone, but in the regular activities of their role. Providing feedback is a great way to do this. Through feedback, you can praise right courses of action and help correct wrong ones.

The acknowledgement they gain from this can drive up your employee satisfaction, while the tips they gain to better their performance can help tighten their engagement. Analytics firm Gallup, for example, discovered that employees who receive regular feedback are nearly four times more likely to feel engaged than the ones who receive it sporadically.

7. Invest in learning and growth

Career stagnation can be very detrimental to your employee satisfaction, so it’s important to foster your staff’s development. Offer training and learning opportunities so your co-workers can pick up new skills. If this is outside your budget, see what kind of training can be done in-house with the resources you already have.

Upskilling and a career development plan can help drive your employees towards career progression, which boosts engagement — especially among newer generations. A study by recruitment company Robert Walters found that 69% of millennials said career progression keeps them engaged at work.

How to measure employee satisfaction

To develop your strategy to improve employee satisfaction, you need to know how satisfied your staff currently are. You can do so through many methods, but the main ones include:

  • Run surveys

Anonymous surveys are one of the most effective ways to measure employee satisfaction. When designing them, make sure the questions are easy to understand and don’t lead to particular answers. Also, try and keep it short to increase participation. Finally, make sure that you act on the feedback given: if surveys don’t produce visible results, employees will be less likely to respond going forward.

  • Have one-to-one meetings

As these are not anonymous, they aren’t as likely to prompt sincere responses, either out of politeness or fear of retribution. That said, one-to-one meetings are a way for you to find out more about the individual needs and concerns of your employees, plus get to know more about their emotional take on the job, the company, and their aspirations.

  • Set up a suggestion box

It may sound a bit outdated, but suggestion boxes can still be a useful way for you to gauge what is working and what isn’t when it comes to employee satisfaction. You can set up one virtually or physically  just make sure it remains completely anonymous. Similar to surveys, don’t let suggestions go unnoticed. Act on them when possible, or explain in a public forum why a suggestion can’t be taken onboard. The important thing is reassuring your staff that their suggestions are being considered.

Employee satisfaction: key takeaways

Now you know what employee satisfaction is and how it can contribute to your company’s staff engagement, overall productivity, and even business performance. Meeting the needs and expectations of your employees can help ensure they bring their maximum to the table. This will have an positive impact on workflow and your business is bound to fly higher as a result.

Far from being an “extra benefit,” we believe employee satisfaction is a cornerstone of whatever your future business plans are. When your employees lack motivation and are unhappy, they’re not as likely to reach for the goals you set up.

While we’ve recommended a few ways to improve employee satisfaction, we’re confident you’ll find that there are many more options once you reach out to your staff and find out what they’re looking to get from their job.

Written by:
Lucas Pistilli author headshot photo
Lucas is a Brazilian-born journalist and Expert Market’s go-to writer for all things EPOS systems, merchant accounts, and franking machines. Having covered business, politics and technology for many years, he’s driven by his passion for the written word and his goal to help people make well-informed decisions.