Workplaces with rising employee job satisfaction also experience improvements in workplace performance, while deteriorating employee job satisfaction is detrimental to workplace performance. This is according to new research out today by the National Institute of Economic and Social Research for the Department for Business, Innovation and Skills.

The first such UK study, based on the nationally representative 2011 Workplace Employment Relations Survey of workplaces and their employees, found that in workplaces where average employee job satisfaction was rising, employee job satisfaction was found to be positively associated with workplace financial performance, labour productivity, the quality of output and service and an additive scale combining all three aspects of performance.

Workplaces experiencing an improvement in job satisfaction – whether measured in terms of the average level of satisfaction in the workforce, or measured in terms of an increase in the proportion “very satisfied” or a reduction in the proportion “very dissatisfied” – also experience an improvement in performance. By contrast, there was no association between job-related affect and workplace performance.

  • Increasing overall average employee job satisfaction was associated with increases in all four workplace performance measures.
  • Increasing average non-pecuniary job satisfaction was positively associated with changes in all four workplace performance measures.
  • Increasing pay satisfaction, on the other hand, was never positively associated with performance measures.
  • Workplaces with rising job dissatisfaction experienced deterioration in all four performance measures, whereas workplaces with an increase in “very satisfied” employees experienced rising quality of output or service and an increase in the additive performance measure, but not financial performance or labour productivity.
  • Changes in job-related affect (the amount of time feeling tense, depressed, worried, gloomy, uneasy and miserable) were not generally associated with workplace performance.

These findings are consistent with the proposition that employers who are able to raise employees’ job satisfaction may see improvements in the performance of their workplace. These improvements are apparent in profitability (financial performance), labour productivity and the quality of output or service.

Alex Bryson, Principal Research Fellow at NIESR and one of the co-authors of the report, said: “Although we cannot state definitively that the link between increasing job satisfaction and improved workplace performance is causal, the findings are robust to tests for reverse causation and persist within workplaces over time, so that we can discount the possibility that the results are driven by fixed unobservable differences between workplaces. There is therefore a prima facie case for employers to consider.”