European Journal of Social Sciences Volume 15, Number 1 (2010)

Development of Employee Satisfaction Index Scorecard

Vijaya Mani Professor, SSN School of Management and Computer Applications SSN College of Engineering, Kalavakkam, Old Mahabalipuram Road Tamil Nadu, INDIA 603110 E-mail: vijaya.mani@gmail.com Abstract The paper aims at quantifying the employee satisfaction levels by using Employee Satisfaction Index (ESI). It also attempts to observe if there is any significant change in the ESI of the employees in response to the introduction of treatment variables to improve the current level of satisfaction. This research study was undertaken in an R & D organization near Chennai, where the past employee performance appraisals showed significant trends of employee job dissatisfaction. 150 employees of this firm were surveyed. Various factors that lead to employee satisfaction have been chosen and their influence on ESI has been assessed. This was accomplished through the responses to a questionnaire received from a sample of respondents spanning across different hierarchical levels and various departments in this organization. The top ten important factors that lead to employee satisfaction were identified. Based on these rating scale responses, a scorecard was generated showing the factors that lead to employee satisfaction with their respective weight age.

Keywords: Employee Satisfaction, Score card, Control variables.

1. Introduction
When human resource development is considered as a separate domain, employee satisfaction index is one of the most important aspects that need to be researched over. Brown (2007) speaks about the importance of employee satisfaction in keeping score and further states that the employee satisfaction should supersede the interests of the customer. Researchers have found that satisfied employees (e.g. having a pleasurable feeling resulting from job experience) are more likely to contribute their knowledge (Janz & Prasarnphanich, 2003), improve their job performance (Judge et al., 2001) and tend to be creative and cooperate. It is often argued that satisfied employees are highly motivated, have good work morale, and work more effectively and efficiently. Moreover, satisfied employees are more committed to continuous improvement and quality (Matzler et al., 2004). Dissatisfied employees, in contrast, often hold what they know and are unwilling to share their knowledge. Because organizational agility requires that employees at all levels engage in knowledge-based activities, understanding the reasons for employee dissatisfaction, their expectations and requirements and the directions to implement changes are essential for every organization (Eskildsen and Nussler, 2000; Martensen and Gronholdt, 2001). By doing so, organizations enhance their capabilities to meet increasingly turbulent and uncertain environmental conditions. 1.1. Findings Reported in the Research on Employee Satisfaction Job satisfaction is influenced by a variety of factors. These include job stability, promotion opportunities and satisfactory compensation (Clark & Oswald, 1996; De Santis & Durst, 1996). In 129

European Journal of Social Sciences Volume 15, Number 1 (2010) addition it is also observed that social satisfaction and the characteristics of superiors have an effect on employees satisfaction levels (Eskildsen Nussler, 2000; Martensen & Gronholdt, 2001). Further, any shift in the organizational behavior noticed in the employee is a result of a psychological impact of a relevant factor on the subject (Eskildsen et al., 2004). Satisfied workers tend to engage in organisational citizenship behaviour altruistic behaviour that exceeds the formal requirements of their jobs (Schnake, 1991). Earlier research has shown that job satisfaction is one of the best predictors of employee loyalty (Eskildsen & Nussler, 2000; Fosam et al., 1998; Martensen & Gronholdt, 2001; Schiesinger & Heskett, 1991), employee satisfaction and job performance. Thus it is evident that the effective functioning of an organisation depends on employee (Motowidlo, 1993). Morhead and Griffin, 1998 defined employee satisfaction could be defined as the extent of his gratification or prosperity that the former get from their job. Pool, 1997 and Reilly et al., 1991 viewed it as the evaluation of the overall quality by the employee of his present job (Pool, 1997; Reilly et al., 1991). A great deal of the research on this issue has focused on the personenvironment fit paradigm which states that the more a persons work environment fulfills his or her needs, the greater the degree of his job satisfaction (Kristof, 1996; Mottaz, 1985). 1.2. Major Factors that Influence Employee Satisfaction a) Extrinsic Rewards and Equity From Maslows, 1954 work it is evident that extrinsic rewards are bound to enhance the satisfaction of an employee. An abundance of literature has linked extrinsic rewards such as pay (Eskildsen et al., 2004; Liou et al., 1990; Ting, 1997) and fringe benefits (Barber et al., 1992) to increased job satisfaction. Often the subordinates could tend to view the organization at large through their perceptions of their superiors (Kozlowski & Doherty, 1989). Thus, the subordinates that have a high quality relationship with their supervisors will perceive their organization as the one that provides greater support, autonomy and decision-making latitude. Many studies (Daley, 1986;Emmert and Taher, 1992; Eskildsen et al., 2004; Martensen and Gronholdt, 2001, Nachmias, 1988) have shown that positive relationship between supervisors and subordinates contribute to higher levels of job satisfaction, in turn reducing stress and improving job performance. When people perceive an imbalance in their outcome-input ratio relative to others, they may report diminishing job satisfaction and are more likely to leave. Adams (1963, 1965) suggested that people learn about equity correlation between inputs and outputs through socialization and comparison processes with others. Hence the reward system needs to be so designed that it be fair and equitable. b) Autonomy or Freedom at Work Autonomy refers to the extent to which an individual or group of individuals has the freedom, independence and direction to determine what actions are required and how best to execute them (Henderson & Lee, 1992; Manz, 1992; Manz & Sims, 1980). According to job characteristics theory, increasing levels of autonomy will enhance work outcomes in terms of job satisfaction and performance (Campion et al., 1993; Henderson & Lee, 1992), because encouraging autonomy within the workplace heightens employees sense of self-efficacy and their motivation to embark upon and accomplish certain tasks (Conger & Kanungo, 1988). Autonomy is also considered as an important facilitator of knowledge flow among individuals and units in organisations (Nonaka & Takeuchi, 1995; Schulz, 2001). Therefore, autonomy is expected to have a positive impact on employee satisfaction. c) Identity and Corporate Image Corporate image refers to the brand name and the kind of associations that employees get from it. When employees regard the company as having a good image, they tend to perceive a sense of pride and accomplishment. Organisational image has powerful motivational effects on job satisfaction. Research on customer satisfaction has shown that corporate image has a positive impact on customer satisfaction (Gronholdt et al., 2000; Kristensen et al., 2000). Parallel to this argument, it could be 130

European Journal of Social Sciences Volume 15, Number 1 (2010) suggested that corporate image is expected to have a positive impact on the employee satisfaction level. Employees also seek job satisfaction from the social aspects of their work. d) Interpersonal Relations Interpersonal relations among workers may lead to certain group dynamics, which in turn affects organisational productivity and job satisfaction (Eskildsen et al., 2004, Martensen and Gronholdt, 2001). Herzberg (1966) argued that for an employee to be truly motivated, the employees job must be fully enriched where the employee has the opportunity for achievement, recognition, stimulation, responsibility and advancement. Thus, employee development is expected to have a positive impact on employee satisfaction. 1.3. Objective of this Study From the foregoing it is amply evident that employee satisfaction is influenced by a variety of factors. This in turn affects the organizational behaviour of the employees, viz., increase in productivity, organizational commitment, lower absenteeism and turnover. However, few studies have been done so far that provide a managerial tool to measure employee satisfaction and to date many companies do not have a realistic grasp of what their employees actually think. To fill this void, the present study proposes a simplistic ESI (Scorecard) that can explore the factors that affect employee satisfaction. One of the reasons is the lack of a scientific method to measure employee satisfaction (Rucci et al., 1998). The employee satisfaction index (ESI) quantifies the level of satisfaction of employees in an institution. It is derived from the response of the employees to a mix of soft and hard measures adopted by the employers. Each of these responses is assigned a weight based on their importance as a predictive factor for measuring the satisfaction levels of employees. Based on this approach, a scorecard is developed and individual measures relating to employee satisfaction are summarized into an ESI (Tanur, 1995). This article discusses the results obtained by using the data collected from a high-tech, R&D firm. Such firms often find themselves operating in environments fraught with unprecedented, unparalleled, unrelenting, and largely unpredictable change. With extensive experience in sophisticated and innovative design techniques and state-of-he-art process technology, this firm has developed into a capable, highly competitive research organization. Understanding why employee dissatisfaction comes about, the requirements of employees, and the directions to implement changes are essential for this company. We surveyed 150 employees of this firm. Throughout the data collection process, every employee was assured that the responses would be kept confidential and that all results would be presented only on an aggregate level. 1.4. Limitations of this Study The research has limitations viz., (i) The model uses an ESI scorecard and metric that is tailor-made to the worksite and needs to be revised every time it will be used elsewhere. (ii) Nearly 90% of the employees are from Operation and customer service Function and hence the ESI Scorecard and Metric might not be a true representative of the ESI metric for other functions. (iii) Out of the 16 factors, 6 factors were not included in ESI calculation as they contribute 3% towards the ESI individually. The data analysis part was split into four major sections to determine the following aspects.

2. Research Methodology
The major research problems addressed in this study were the following: 131

European Journal of Social Sciences Volume 15, Number 1 (2010) (i) What is the current level of Employee Satisfaction in at the organization? and (ii) Is there a significant increase in the same due to introduction of various tools to improve the employee satisfaction levels at the workplace? All constructs were measured at the individual level. Whenever possible, the instruments used to operationalise the constructs were adopted from past research. In designing the questionnaire, a 5point Likert scale (strongly disagree to strongly agree) was used to reduce the statistical problems of extreme skewness (Fornell, 1992). The format and content of the questionnaire were pre-tested and validated using students and faculty members familiar with this issue. The aim was to study the ESI prior to and after the introduction of control variables as well as to determine if there is a significant change brought about by the employee satisfaction enhancement tools. The hypotheses used and tested in this study were as follows: (i) The employee satisfaction is significantly low at the organization. (ii) The employee satisfaction improves significantly after the introduction of the employee satisfaction enhancement tools. (iii) The employee satisfaction does not improve significantly for employees who are not subjected to the employee satisfaction enhancement tools. Quantitative data analysis has been done with the help of the following statistical tools viz., single sample hypothesis testing, double sample hypothesis testing and percentage analysis. The sample population examined in this study comprised 150 employees out of a total of 500 employees. The sample size was determined by using simple random sampling to be 150 by using equation (1). S= (Zs/e)2 (1) Where, S the sample size, Z = 1.96 at 95 % confidence level, s is the population standard deviation (2.16) and e is the tolerable error (0.35)). A questionnaire was so designed as to grade the responses of the employees based on the degree of their agreement on a five point scale. Thus, a total agreement to the aspect of a question was indexed with 5 points while a total disagreement was indexed as 1. The reliability of the questionnaire was tested using the Cronbachs alpha test. Kaiser-Meyer-Olkin and Bartletts tests were performed in order to verify if the data is suitable for factor analysis. Factor analysis was performed in order to indicate the convergent and discriminant validity. The respondents were asked to rate the ten factors on a ten-point scale based on their thought as to which of them contributed more to their satisfaction at workplace. Percentage contribution of each factor to the total cumulative score across all respondents for all factors is calculated which eventually gives the weight of each factor in leading to Employee Satisfaction. From this Sheet, an ESI Score Card was formed which lists the ten factors along with their weights derived from the rating given by the respondents. These results are presented in Table 1.
Table 1:
S No 1 2 3 4 5 6 7 8 9 10

Employee score card

Factors leading to Employee Satisfaction Stress Job Climate Supervisor relationship Training/ Career opportunities/ Skill development Employee Benefits and policies Job Compensation Job Support/Empowerment/ Value and Recognition Communication Company as a place of work Weight (%) 12.27 10.38 9.62 9.26 8.67 7.75 7.49 6.42 6.04 5.85

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European Journal of Social Sciences Volume 15, Number 1 (2010) The indices obtained by using the responses to each question were in turn multiplied with the statistical weights assigned to individual factors under examination. From the above the final ESI was derived by using equation (2). ESI = 0.12S+0.1J+0.09SR+0.09T+0.08EB+0.07Jo+0.07C+0.06JEV+0.06CM+ 0.05Co (2) Where , S-stress, J-Work Environment, SR-Supervisor relationship, T-Training / Career opportunities / skill development, EB-Employee benefits and policies, Jo-Autonomy in Job, C-Compensation & Rewards, EV-Empowerment and Value, CM-Communication, Co-Organizational Image.

3. Results and Discussion

3.1. Validation of the Questionnaire The value of the Cronbachs Alpha Test was 0.732 (> 0.6) showed that the questionnaire used in this study is reliable. The KMO and Bartletts tests indicated that the suitability of the data for the factor analysis. The KMO test indicated high sampling adequacy of 0.757. The Bartletts test of sphericity indicated that there is significant relationship (significant value = 0.000 < 0.05) between the items of the questionnaire . A test was carried out in order to determine whether the current ESI levels are significantly low or high at the organization was carried out in order to determine whether the employee motivational measures yielded the desired results or not ? This test revealed that the prevailing ESI levels were indeed low. Another study was conducted in order to determine whether ESIs are improved significantly among the employees in the control group subjected to various employee satisfactions enhancement tools. Half of the sample of 150 respondents was chosen for this study. The employee satisfaction enhancements tools considered were: (i) stress busters (ii) workshops (iii) an idea a day contest (iv) weekly counseling sessions for superior-subordinates (v) skip interviews for subordinates (vi) weekly training programmes on aspects like advanced excel skills, communication skills, email etiquette etc. (vii) introduction of flextime (viii) extended cab services on saturdays, and (ix) employee helpdesk services to book travel tickets, movie tickets on discount. After two months of introduction of the above said tools again the ESI questionnaires were circulated to the controlled group of 75 respondents and ESIs were determined. These fresh set of ESIs were compared with the ESIs of the 75 employees captured prior to introduction of the tools to determine if there is a significant improvement in their satisfaction levels. A two-sample hypothesis testing done on these two set of ESIs to evaluate if the satisfaction levels of these employees have improved significantly or not indicated that the satisfaction level of employees had improved with the introduction of the satisfaction enhancement tools. The remaining 75 respondents of the original sample of 150 were left free and were not subjected to any of the employee satisfaction enhancement tools. After two months along with the control group they were also asked to take up the survey and their ESIs were also recorded. This was done primarily to determine some other new unidentified extraneous variable had caused a significant increase in the ESIs of the employees other than the 16 factors identified n the beginning of the study. A two-sample-right tail hypothesis test was carried out in order to determine if the ESIs scores of the non-group have not improved significantly over the two months. This test revealed that even the personnel belonging to the non-control did show some improvement in the ESI scores after being subjected to the employee satisfaction enhancement tools over a period of two months. A percentage analysis (Table 2, 3 and 4) clearly shows that the factors 133

European Journal of Social Sciences Volume 15, Number 1 (2010) like job climate, training, supervisor-relationship and stress play a very role in determining the employee satisfaction levels. Further, there is a significant improvement seen in factors like Stress (15%), Employee benefits (8%), Supervisor relationship (14.4%), Training (17%) and job Climate (16.3%) whereas there are no changes in factors like Job, Compensation, empowerment, communication and company. From the results presented in Tables 5, 6 and 7 it is clear that there has been a positive outlook among the employees in the controlled group to the tools introduced to reduce stress levels at work followed by the tools for enhancing employee benefits. There has been a considerable improvement in the employees positive perception towards their relationship with their supervisors and training. Employees seem to have witnessed positive change in the job climate as well post introduction of the tools. Hence the job enhancement tools have contributed significantly in improving the satisfaction levels of the employees at workplace.
Table 2:
S No 1 2 3 4 5 6 7 8 9 10

Percentage contribution of each factor to ESI prior to introduction of control variables

Factors leading to Employee Satisfaction Stress Employee Benefits Supervisor Relationship Training Working Environment Autonomy in job Compensation & Rewards Empowerment Communication Organizational Image % Contribution 13% 7% 14% 16% 16% 9% 6% 6% 7% 6%

Table 3:
S No 1 5 3 4 2 6 7 8 9 10

Factors leading to employee satisfaction

Factors leading to Employee Satisfaction Stress Employee Benefits Supervisor Relationship Training Job Climate Job Compensation Empowerment Communication Company % Contribution 15% 8% 14% 17% 16% 8% 5% 5% 7% 5%

Table 4:
S No 1 5 3 4 2 6 7 8 9 10

Percentage increase in the individual factor scores post introduction of the enhancement tools
Factors leading to Employee Satisfaction Stress Employee Benefits Supervisor Relationship Training Job Climate Job Compensation Empowerment Communication Company % Change 22% 16% 14% 13% 12% 0% 0% 0% 0% 0%

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Table 5:
Questions 1 2 3 4 5 6 7 8 9 10

ESI Score sheet

X1 0.859 0.982 0.859 0.982 1.350 0.982 0.736 0.859 0.859 1.104 X2 1.141 0.726 0.934 0.934 1.038 0.830 1.038 0.830 1.038 1.141 X3 0.673 0.673 0.866 1.058 0.866 0.673 0.866 0.770 0.673 0.866 X4 0.648 1.389 0.741 0.834 0.926 1.111 0.741 0.648 0.834 1.204 X5 0.347 0.520 1.041 0.347 0.520 0.867 0.954 0.434 0.260 0.780 X6 0.697 0.697 0.697 0.620 0.775 0.852 0.697 0.465 0.620 0.387 X7 0.824 0.450 0.525 0.450 0.375 0.300 0.375 0.225 0.450 0.450 X8 0.770 0.193 0.385 0.449 0.578 0.642 0.706 0.706 0.578 0.385 X9 0.785 0.242 0.362 0.423 0.423 0.242 0.242 0.242 0.242 0.362 X10 0.585 0.176 0.410 0.410 0.527 0.176 0.234 0.176 0.176 0.410 ESI 7.331 6.047 6.819 6.505 7.376 6.675 6.588 5.353 5.728 7.090

Table 6:

ESI score sheet for controlled samples

ESI Before 7.33 6.05 6.82 6.51 7.38 6.67 6.59 5.35 5.73 7.09 6.85 6.89 6.15 6.48 5.53 6.23 5.49 6.67 6.46 6.64 5.50 6.65 5.99 4.81 6.13 5.74 6.67 6.01 6.29 6.48 6.50 5.68 5.91 6.06 6.30 6.87 6.79 After 8.13 7.06 7.94 7.34 8.77 8.07 7.89 6.75 6.64 8.29 8.20 7.36 7.13 7.19 6.15 7.30 5.80 7.38 6.81 7.32 5.73 7.64 6.58 5.19 6.34 6.42 7.21 6.83 7.17 6.55 7.25 6.07 6.21 6.04 6.79 7.27 7.52 Respondent 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 ESI Before 7.55 7.31 6.48 6.69 6.97 6.58 5.82 6.43 6.40 7.19 6.38 5.88 7.11 7.65 6.84 6.45 7.68 7.16 6.66 6.67 7.50 6.96 6.80 7.84 7.42 6.91 7.60 7.75 6.98 7.51 8.00 7.88 7.14 7.05 7.63 6.61 8.34 7.25 After 7.53 7.68 6.81 7.31 7.48 7.08 6.77 6.73 7.44 7.49 7.35 6.87 8.10 8.10 7.45 6.69 7.96 7.37 7.17 6.90 8.62 7.57 7.63 8.44 8.02 7.26 8.69 8.06 7.72 8.02 8.45 8.60 8.01 7.15 8.91 7.20 8.77 7.78

Respondent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

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Table 7: ESI score sheet for uncontrolled samples
ESI Before 6.64 6.39 6.68 6.80 6.41 6.39 7.64 5.17 6.09 5.85 6.64 6.40 6.78 6.46 6.83 6.40 5.78 6.77 7.76 6.65 5.38 6.72 6.31 7.56 6.76 6.48 6.51 6.39 5.83 7.61 6.98 6.48 7.11 6.51 7.43 6.09 7.63 After 6.08 6.07 6.43 6.67 6.30 6.10 7.44 4.48 6.09 5.66 6.17 6.21 6.41 6.19 6.20 5.87 5.37 6.29 6.94 5.47 4.87 6.20 5.52 6.25 6.14 6.32 6.30 5.74 5.83 7.12 5.95 5.77 6.71 6.25 6.94 5.97 7.63 Respondent 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 ESI Before 6.26 7.25 5.98 6.36 6.24 6.34 6.31 7.09 6.03 6.16 6.64 6.47 5.70 5.83 6.38 6.71 6.84 6.01 6.42 6.13 6.40 6.76 6.05 5.88 5.41 5.93 5.67 6.27 5.55 6.67 6.82 5.79 7.19 11.23 10.42 10.04 9.93 11.33 After 6.26 7.25 5.98 6.36 6.24 6.34 6.31 7.09 6.03 6.16 6.57 6.37 5.70 5.83 6.30 6.71 6.84 5.61 6.34 6.05 6.40 6.76 6.05 5.88 5.41 5.93 5.67 6.27 5.55 6.67 6.82 5.79 7.19 11.23 10.42 10.04 9.85 11.33

Respondent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

4. Conclusions and Recommendations

People are the most important asset of any organization. We tend to spend an inordinate amount of time and energy focusing on customer experience, without giving enough thought to employee satisfaction. Yet employee satisfaction is paramount because it will determine the success or failure of any organization. Moreover, satisfied employees are more motivated and hard working than dissatisfied ones. Collectively, these individuals achieve higher levels of job performance, which in turn increases organisational productivity and profitability. Employee satisfaction is improved when developmental needs are met and concerns are shared openly. Employees who are satisfied and motivated perform better, leading to improvement in the quality of their work In return; these productivity and profitability gains will allow the organisation to provide more rewards to its 136

European Journal of Social Sciences Volume 15, Number 1 (2010) employees. That is, treating employees as a valuable asset for organisations provides a win-win foundation for both employees and organisations. Therefore, the first priority for an organisations knowledge management should be to manage the employee satisfaction level. The ESI score which shows the employee satisfaction level is a step towards achieving organizational effectiveness. From a managerial perspective, it is crucial to know what factors influence employee satisfaction. However, this is not an easy task because human nature is very complex. Worse, failure to do this would increase employee frustration and result in poorer performance. The current level of employee satisfaction measured in terms of ESI is significantly low at the organization. It is found that factors like stress, job climate, training, supervisor-relationship, employee benefits, job, compensation, employee empowerment, communication and company are the major contributors of employee satisfaction. To address this issue, the ESI score card was developed which will help in devising programs aimed at satisfying emerging or unmet needs. Based on the statistical analysis performed with the data collected via questionnaires the following suggestions were given to the organization. All basic tools used in the project plus tools as considered appropriate by the management is to be introduced to enhance the employee satisfaction in the company ESI values for each employee should be calculated periodically in order to spot any early signs of dip in the satisfaction levels of the employee Regular feedbacks need to be given by the Human Resource Department on the ESI values of each employee to the department head for better tracking and control Human resource department needs to conduct one on one review with employees whose ESI scores are reducing to arrest attrition effectively Furter studies could be carried out in order to distinguish between factors that motivate or factors and that lead to a better hygiene in order to gain deeper insights into this problem. Herzberg (2002) suggested that factors involved in producing job satisfaction (motivators) are distinct from the factors that lead to job dissatisfaction (hygiene). The motivating factors are intrinsic to the job, while hygiene factors are extrinsic to the job.

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[40] [41] [42] [43] [44]

[45]

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