New research by Dr Andrew Chamberlain and Daniel Zhao, Chief Economist and Senior Economist/Data Scientist, respectively, at Glassdoor the workplace welfare review site and recruitment business, looked at a panel of 293 large employers across 13 industries to explore the link between employee and customer satisfaction.
“There is a strong statistical link between employee well-being reported on Glassdoor and customer satisfaction among a large sample of some of the largest companies today”, the authors write in a Harvard Business Review essay.
“A happier workforce is clearly associated with companies’ ability to deliver better customer satisfaction.”
Effectively, the insight boils down to the observation that each one-star improvement in a firm’s Glassdoor rating corresponds to a 1.3 percentage point improvement in customer satisfaction scores. However, the authors emphasise that in industries “with the closest contact between workers and customers, including retail, tourism, restaurants, health care, and financial services”, the impact was a 3.2 point increase.
Though the authors stress that they are unable to prove causality, there are strong indications. Typically, employee satisfaction rises or falls before change occurs in customer satisfaction.
While frontline customer-facing workers reflect the clearest customer reactions to high workplace welfare, back-end employee satisfaction can also benefit companies if the firms with positive cultures are able to increase the number of interactions between customers and employees. Naturally, the company of note here is Apple.
Moreover, there is a long-term financial benefit for the company’s market value. The authors calculate a ballpark figure of a one-star improvement in Glassdoor ratings can boost long-term market valuations by between 7.8% and 18.9%, based on the expected improvement in customer satisfaction.
Meanwhile, a group of nearly 200 US executives, part of the Business Roundtable, put out a “commitment” about the purpose of American business. While the release makes much of the move away from shareholder primacy, the actual statement merely balances the interests of shareholders among those of customers, and – significantly – employees, suppliers, and the communities in which they work.
“The American dream is alive, but fraying,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable, in a statement. But it doesn’t go far enough. According to some estimates, the highest paid executives make well over 200 times the median pay at their firms. As a result the politics of inequality in organisations is becoming more and more difficult to square with empty promises of broader societal purpose. There are few concrete details about how the Roundtable intends to achieve any of these ideas.
But ultimately, the key phrase may be the generation of “long-term value” for shareholders. It is difficult to invest either in important transformations at a company or to invest in employees when there’s a quarterly results call breathing down your neck. A broader, more conscious and societally minded idea of business purpose requires thinking for the long-term.
Glassdoor, HBR, Business Roundtable; additional content by WARC staff