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Evaluating the Effects of Employee Morale in the Sales and Marketing Department at BE-NET During a Department Restructure

Thomson et al (1999) argue that a greater degree of understanding and commitment among staff is a key factor in strong business performance. Indeed, a series of interviews with over three hundred managers and employees showed that the degree of buy in acted to boost employee performance, and thus organisational performance. Within this investigation, Thomson et al (1999) also noted that effective communications and high levels of employee morale helped to drive buy in, and hence by extension business performance. However this was only a small section of the piece and, as Yee et al (2008) noted, the majority of management literature has not investigated the detailed relationships between employee morale and operational performance, As such, they used structural equations modelling to examine a series of businesses in Hong Kong, and discovered that measures of employee morale and satisfaction were significantly correlated with service quality, customer satisfaction, and firm profitability. In addition, they found that profitability levels helped to drive higher levels of employee satisfaction, creating something of a feedback loop. However, within this loop, the main causal factor was the level of employee satisfaction.

Subramony et al (2008) carried out a similar study, although their aim was to assess the extent to which human resource investments, such as competitive pay offerings, would help generate positive performance boosts for organizations. They found that, whilst employees’ perceptions of competitive pay were strong indicators of future productivity levels, employee morale acted to mediate the relationship between pay perceptions and customer satisfaction. This indicates that employee morale alone cannot fully explain organisational performance or customer satisfaction, but it does play an important role in developing a holistic strategy to address both these concerns.

In addition to this, Wells (2007) found that the feedback loop discussed by Yee et al (2008) found that the connection between employee morale and customer satisfaction also tended to be circular. This indicated that efforts to increase customer satisfaction would actually act to influence employee morale, and employees’ views around the companies they work for. This implies that efforts to improve customer satisfaction metrics and profitability will help improve employee morale, and that improving employee morale will act to increase profitability and customer satisfaction in turn. This is further supported by Kiewitz (2004), who studied eight years of data on employee morale and profitability figures from major corporations. This study showed that employee morale was also linked to ‘firm satisfaction’: the ability of a firm to meet its goals, in both directions. In other words, whilst high levels of employee morale lead to a successful firm, working for a successful firm is also a strong predictor of employee morale. In addition to this, Kiewitz (2004) claims that as a firm’s performance improves, it can also offer superior benefits and pay to its employees, thus further reinforcing the lo