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How Employee Satisfaction and Productivity are Connected

Are happy employees really more motivated? Research shows a strong connection between employee satisfaction and business productivity — here’s why.


By ActivTrak

Different smiley face expressions in multi-colors to signal employee satisfaction and productivity.

Wondering if employee satisfaction impacts business productivity? Consider the latest Gallup research. According to recent survey results, employee satisfaction hit a low in 2023. Compared to four years prior, people feel more detached from their employers, less connected to company missions and less likely to believe someone at work cares about them.

And it’s costing businesses nearly $2 trillion in lost productivity.

In other words…

Employee satisfaction isn’t just important. It’s inextricably linked to productivity. In this article, we unpack why they're so strongly connected.

What is employee satisfaction?

Employee satisfaction is how fulfilled people are at work. It’s influenced by many factors, from company culture and relationships with coworkers to compensation and career opportunities. Satisfied employees are more motivated, engaged and committed to their work than unhappy employees. 

What is employee productivity?

Employee productivity measures how efficient your organization is at achieving desired outcomes. It looks at how much your employees achieve, how long they take and how many resources they use. Hours worked, team sizes and technology investments all impact productivity.

The connection between employee satisfaction and productivity

Studies have long shown a direct connection between employee satisfaction levels and productivity. When employees feel valued and satisfied, they take pride in their work resulting in greater productivity and better business outcomes. However, these outcomes don't happen by chance. Successful companies are intentional about creating a positive workplace culture that values employee satisfaction. 

Here are a few key findings from different studies that show the relationship between satisfaction and productivity in various forms, along with context on how to improve them and other important workforce metrics.

1. Boost productivity by 40% with flexible work

According to various studies, people who work remotely are 35 to 40% more productive than those who work in traditional office settings. They also make 40% fewer mistakes and are 20% happier than their in-office counterparts. At a time when return-to-office mandates are failing to make companies more money, flexible work is a great option to increase satisfaction and productivity simultaneously.

2. Prioritize the employee experience for 43% lower turnover

Investing in the employee experience is another proven way to increase satisfaction and productivity. One study found the most engaged workforces experience as much as 43% lower turnover than the least engaged. When employees leave, the absence leads to a gap in productivity. Roles are left unfulfilled, or others are tasked with doing more which can accelerate burnout and lead to even more turnover. Prioritizing the employee experience keeps people happy, reduces turnover, and prevents the brain drain that results in lost productivity.

3. Focus on wellbeing for 38% more engagement

When people believe their employer cares about their mental health and wellbeing, they’re 38% more engaged. They’re also 18% more likely to go the extra mile and 17% more likely to be working at the same company in one year. So keeping employees satisfied leads to them putting more into their work, and makes them more likely to stick around longer.

4. Increase retention by 50% with professional development

Offering professional development opportunities provides employees with opportunities to improve their skill set, which can enhance their productivity. Furthermore, offering professional development opportunities can also increase satisfaction by showing employees you’re committed to their long-term growth. Research shows engagement and retention rates are 30-50% higher at organizations with strong learning cultures, so offering professional development opportunities is worthwhile.

5. Shorten the workweek for 71% less burnout

More than 90% of workers are willing to work longer days in exchange for a four-day workweek, and 37% will opt for a shorter workweek even if it means taking a pay cut. The reason? Studies show shorter workweeks reduce burnout as much as 71%. The extra time to rest and recharge makes people more satisfied and more productive at work.

How to measure employee satisfaction and productivity

The above areas are a great place to start, but how will you know if your initiatives are working? Thankfully, you can measure both satisfaction and productivity. However, there is a catch. While it’s tempting to rely on employee satisfaction surveys and feedback, these techniques are based on self-reported sentiments. For more reliable insights, use workforce analytics software to accurately measure employee satisfaction and improve productivity.

Wondering if you’re working employees too hard? Find out for sure with workforce data. Not sure what to change? Lean on productivity management software for recommendations. This method empowers you with real-time data on overtime hours, unbalanced workloads, burnout risks and unnecessary meetings so you know which issues to address and when.

5 strategies to improve employee satisfaction and boost productivity

Improving employee satisfaction is one of the best ways to boost productivity. When you create a work environment that makes people genuinely happy and engaged, output is bound to increase. Here’s how to do it.

1. Create a positive work environment

Creating a positive workplace culture is crucial to employee satisfaction. A positive environment is the first step to cultivating a sense of collaboration and commitment. Whether people work remotely or in the office, the goal is the same: Create a culture where employees feel supported and productivity thrives. Establish trust with employees, talk openly about your workforce data and address issues as soon as they arise.

2. Recognize jobs well done

Rewarding employees for achievements is an excellent way to increase job satisfaction. This might involve a bonus, pay raise or promotion, but the rewards don’t always have to be big. Regularly praising people when they go above and beyond, celebrating milestones and sending “thank you’s” all foster a sense of camaraderie and are highly motivating. 

3. Invest in training and development

For people to be happy and productive, they need to feel good about where their careers are heading. Whether you invest in on-the-job training or cover the cost of learning events, investing in career development shows you’re committed to employees’ long-term success. The result is a more committed, skilled workforce.

4. Prioritize work-life balance

Employees who have the opportunity to rest and recharge are more engaged and productive at work. While you can’t give people work-life balance, you can encourage it. Provide company-wide wellness days, offer mental health benefits and offer generous paid time off policies to support balance and prevent burnout.

5. Experiment with flexible work

Flexible work arrangements empower people to decide where and when they’re most productive. Whether you offer remote work, hybrid work, results-only work or flex time, these arrangements all increase job satisfaction by giving employees a voice.

Measure employee satisfaction and productivity with ActivTrak

Ready to supercharge your organization's productivity through employee satisfaction? ActivTrak’s productivity management and employee engagement software is a great place to start. Assess burnout risk, identify quiet quitting, protect focus time, ensure healthy workloads and more — all based on real-time data. Request a demo to get started today.

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