Human Assets

Human Resource Outcomes Dictate Business Success

A recent study by Daniel Koys from DePaul University in Chicago adds to the body of research that demonstrates that HR outcomes (such as employee performance andretention) influence organisational effectiveness.

The present study examined this relationship in the service sector.  Data were gathered via employee, manager and customer surveys and organisational records, and the HR outcome measures utilised were: employee satisfaction, organisational citizenship behaviour and turnover.

1. Employee Satisfaction
Research has previously demonstrated a relationship between employee job satisfaction at the unit-level (i.e. group level) and organisational effectiveness.  If a unit's employees share positive attitudes, they will have norms of co-operation and collaboration, which in turn will enhance unit productivity.

2. Organisational Citizenship Behaviour
Employee attitudes alone cannot influence organisational effectiveness; employees must also behave appropriately.  An aspect of job performance is organisational citizenship behaviour, which has been defined to include:

Conscientiousness:  Employees carry out the tasks of their role beyond the minimum requirement
Altruism:  Employees help others
Civic virtue:  Employees positively participate in the political life of the organisation
Sportsmanship:  Employees have positive attitudes and do not complain
Courtesy:  Employees treat others with respect

So how do these behaviours influence organisational performance?  Jointly, they improve group performance because they help people to work together.  This increased group co-operation frees up the supervisor's time as their help is less likely to be needed.  Furthermore, these behaviours also facilitate the co-ordination of activities both amongst team members and across groups.

Organisational citizenship behaviour can also influence customer satisfaction.  For example, conscientious employees act beyond customer expectations, and those exhibiting civic virtue make suggestions to improve quality and customer satisfaction.  In addition, sportsmanship and courtesy can create a positive climate among employees that spills over to customers.  Another study has positively linked these organisational citizenship behaviours with financial results.

• Customer satisfaction
• Profitability

The results of the current study demonstrated that positive employee satisfaction, citizenship and retention in year one influenced customer satisfaction and profitability in year two.  The strongest findings were that organisational citizenship behaviour influences profitability and employee satisfaction influences customer satisfaction.

The study by Koys is further evidence that organisations should continue to invest in HR initiatives and ensure that their employees are satisfied and committed to the organisation. Not only will this have a positive effect on the organisations' financial performance, it will also improve customer satisfaction in service sector organisations, which can indirectly contribute to long-term profits.

Reference
Koys, D.J. (2001) The Effects of Employee Satisfaction, Organisational Citizenship Behaviour, and Turnover on Organisational Effectiveness: A Unit-Level, Longitudinal Study. Personnel Psychology, Vol. 54, 101-114.