Job Satisfaction Has Market Value
hat can you show employees if you can't show them the money? The answer sounds almost simple-minded: Improve job satisfaction. The offer of challenging work in a well-managed environment is necessary to attract and retain the caliber of person who can address the complex problems of the federal government.
The federal government cannot offer the same pay, benefits and stock option programs as employers in the private sector. Computer scientists and engineers, as well as other highly paid professionals, are especially difficult to recruit.
Discouraged by this pay disparity, some federal managers have concluded that they have no options for successful competition with the private sector. However, if managers improve job satisfaction, the federal government would have a better chance of becoming the "employer of choice" again.
Federal employee job satisfaction is declining, according to a survey released recently by the National Partnership for Reinventing Government and the Office of Personnel Management. In 1998, 62 percent of employees answered "favorable" to the question "Considering everything, how satisfied are you with your job?" but in 1999 the response was 60 percent. The 1999 federal employee rating was 2 percentage points below the 62 percent average private-sector favorable response rate. Federal managers are not competing against average companies for talent. They must create a significantly higher level of job satisfaction in order to offset the competitive pay disadvantage.
The survey asked what factors have the largest impact on job satisfaction. Results show that 84 percent of employees who believe that reinvention is a high priority in their offices are satisfied with their jobs. The rate is almost triple the 31 percent satisfaction rate of employees who do not believe their offices stress reinvention. This should come as no surprise. An office where new directions are being charted, new jobs designed, new skills encouraged and more public service provided is an environment in which employees can thrive and grow.
The agency with the most favorable job satisfaction ratings is NASA, at 78 percent. NASA also had the most respondents agreeing with the statement "My organization has made reinvention a priority," at 59 percent. In addition, the agency scored highest on the questions "How satisfied are you with your involvement in decisions that affect your work?" and "How satisfied are you with the recognition you receive for doing a good job?" In contrast, the Immigration and Naturalization Service ranked lowest in job satisfaction ratings, at 45 percent, and only 19 percent of INS employees said reinvention was a priority.
Private-Sector Lessons
Issues that determine federal job satisfaction are mirrored in the private sector. According to an employee study by Frederick Hertzberg, a professor at the University of Utah, achievement, recognition, the work itself, responsibility, advancement and growth lead "to extreme satisfaction." Even today, these factors occur in a well-managed enterprise. And not only do they improve job satisfaction, but they also improve agency productivity and corporate profitability.
The business-consulting firm Watson
Wyatt recently released a report saying companies that have given up systems to control their employees and developed a management style that engenders employee commitment through involvement in executive decisions have achieved, on average, a 7.8 percent increase in their market value. According to the report, "Commitment systems aim to increase productivity through increased employee satisfaction and involvement. They stress decentralization and building employee commitment to the firm. Commitment systems emphasize teamwork and reciprocal loyalty."
The report concluded that "recruiting excellence" is the most important factor in creating stockholder value. An ability to recruit new talent allows companies to achieve a 10.1 percent increase in market value. The three most critical of the recruiting practices identified in the Watson Wyatt report were: hiring professionals "well equipped to perform duties," which has a 2.3 percent impact on market value; designing recruiting efforts to support the business plan, which will lead to a 2.3 percent improvement in market value; and having a reputation as a desirable place to work, which will increase market value by 1.8 percent.
Marcus Buckingham and Curt Coffman, researchers in the Gallup Organization, linked employee satisfaction to companies with a high level of performance in First Break All the Rules (Simon & Schuster, 1999). They studied 24 companies in 2,500 business units and elicited responses from 105,000 employees. Twelve questions were identified that, if answered favorably, predict high employee satisfaction and productivity, profitability, retention and customer satisfaction.
The authors classified the following as the "most powerful" questions:
Those surveyed ranked their answers to these questions 1 to 5, with 5 being the highest. The authors conclude: "As a manager, if you want to know what you should do to build a strong and productive workplace, securing 5s to these six questions would be an excellent place to start."
The question that most closely mirrors "Do I know what is expected of me at work?" in the NPR/OPM survey is "Are you clear about how good performance is defined by your organization?" More than seven out of 10 federal employees said they did not have a clear idea of what constitutes "good performance." Thus, on the question that best predicts employee satisfaction in the private sector, federal employees recorded a mere 26 percent favorable response rate.
Statisticians might argue that the Gallup and NPR/OPM survey results cannot be compared. While it is true that the questions are different, the trend lines in the federal sector track those in the private sector. NASA, the agency with the highest job satisfaction rate, recorded a 42 percent favorable response to the question about whether employees have a clear idea of what constitutes "good performance." And INS, which has the lowest job satisfaction rate, recorded a 21 percent favorable response. The questions may be different, but the results are the same: Employees who are told what constitutes good performance are more productive.
The Next Step
Other questions developed by Buckingham and Coffman are closely tracked in the NPR/OPM survey. Ample data are available to determine what should be done to increase federal employee job satisfaction.
In spite of such evidence, some managers have argued that simply providing employee training will increase job satisfaction. Training has often become the palliative for failing to address other problems in the workplace. Watson Wyatt found, however, that training for higher-level positions that fails to focus on skills needed to perform assigned work results in a 1.9 percent reduction in market value. Training alone is not the answer and may be counterproductive.
Other managers argue it is too difficult to determine what should be done to improve job satisfaction. Job satisfaction is too fuzzy to be a focus of attention, they say, adding that agency money should be spent on producing outcomes, not making employees happier. Employee happiness, though, is not the equivalent of employee job satisfaction. Job satisfaction comes from the intrinsic rewards inherent in interesting and challenging work.
The federal government may not be able to compete on pay, but it can compete in the arena of substantially improving job satisfaction. The real question is whether federal agencies will use the data available to create a competitive advantage in the recruiting war with the private sector. The war will be lost with continued declines in the satisfaction of those who must do the work.
Robert M. Tobias is a distinguished practitioner in residence and director of the Institute for the Study of Policy Implementation at American University. He was president of the National Treasury Employees Union from 1983 to 1999.
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