Linkage Research

Linkage research identifies the relationship between employee perceptions of the work environment and objective measures of business performance (e.g., productivity) and other relevant organizational outcomes (e.g., customer satisfaction). Workplace perceptions are typically gathered through employee surveys, and measures of business performance are selected on the basis of what outcomes are relevant to the firm’s strategy. Linkage research serves two purposes. First, it provides organizational leaders with a compelling demonstration of the validity of employee perceptions and the effects of employee opinions on business success. Second, it helps organizations to identify specifically what they should do to improve.

Relationship between Employee Opinions and Business Performance

The history of job satisfaction research has been largely disappointing in its consideration of the seemingly logical belief that happy workers are more productive. Simply put, evidence of the relationship between employee satisfaction and individual productivity was found to be lacking as early as the 1950s and in many reviews of the relationship since then. This surprising lack of relationship can be attributed to several factors, including employees’ lack of discretion in deciding how to perform their jobs and the lack of reliability in individual performance measures. In contrast, linkage analyses are conducted at the level of the relevant organizational work unit. The organizational measures of performance selected may be more reliable and less prone to rating biases than individual ratings of job performance. Organizational measures also reflect the benefit of the aggregate discretionary individual behaviors that affect unit and organizational functioning and may not be captured in traditional individual performance measures.

Cumulative evidence across many linkage studies suggests a compelling picture. Workplace perceptions have been shown to predict financial measures of success (sales, profits), customer satisfaction, turnover rates, safety, and other relevant business outcomes. The findings are robust, although the range of business outcomes represented in the published studies is somewhat limited and comprises mostly customer-focused outcomes. This is partly attributable to the fact that customer-focused industries tend to be organized around common business practices, and business units tend to be easily identifiable and significant in number. Therefore, linkage research has been largely limited to organizations with multiple homogeneous business units (such as bank branches, hotels, and car dealerships).

Which employee opinions matter?

The fundamental challenge in designing employee surveys is choosing the right questions to ask. There are practical limits to the length of employee surveys, and the number of possible topics to be represented is large. Consequently, employee surveys capture how employees perceive the work environment with varying degrees of specificity. In some surveys, questions focus on very specific organizational practices, such as the availability of specific resources such as computers or management support. In other cases, the questions are broad indicators of satisfaction, such as direct ratings of satisfaction with supervision or the degree of autonomy.

Despite these broad differences in specificity, the relationship between survey data and business performance indicators is robust. Questions about employees’ general satisfaction as well as more specific questions about organizational climate are consistently related to organizational outcome measures (at the unit level of analysis). That said, it is considered best practice by many to ask questions that lead to a more direct and actionable interpretation. For example, knowing that 25% of the employees in a job class have received training in a specific operational procedure is more actionable than knowing that 25% of them are satisfied with the overall level of training they have received. Thus, linkage research provides insights into which opinions determine organizational success, but the practical interpretation depends greatly on the specificity of the employee survey questions asked.

Beyond specificity, the breadth of survey content restricts the domain of possible linkage relationships. Few organizational surveys are truly comprehensive; the breadth of questions is restricted by practical considerations and specific interests. Thus, the conclusions that can be drawn are limited to the areas of inquiry represented in the survey itself.

Assumptions of Linkage Research

The value of linkage research is predicated on the reasonableness of certain key assumptions. The first assumption is the availability of measures of business performance that have a common interpretation across organizational units. Consider, for example, that fatality measures have a very different interpretation across different hospital settings. More difficult to assess is the degree to which the specific business measure is influenced by other, more powerful determinants. For example, the variance of sales performance of similar retail stores may be attributable to local influences (e.g., neighborhood socioeconomics), which, in turn, may be correlated with workplace characteristics (e.g., the availability of a qualified labor pool). Thus, other sources of variance may mask the relationship between workplace perceptions and otherwise reasonable measures of organizational success.

The second important assumption centers on the reasonableness of drawing cause-and-effect conclusions from cross-sectional data. For example, a correlation between employee satisfaction and business performance can be attributed to a common underlying causal mechanism. (That is, the two are correlated because they are caused by a third, unspecified variable.) In addition, the direction of causality may be different than expected. For example, job satisfaction may be the result of business performance. (People who work for more successful companies may be more satisfied because business success engenders opportunities that are not otherwise possible.) In fact, some evidence suggests that the relationship is complex and that causal influences run in both directions. To a certain extent, rival hypotheses to the cause-and-effect relationship can be eliminated when studies are conducted in the field over time, but even then, the results can be difficult to interpret and require strong inferences.

A third and more complex assumption regards the meaning of variance of perceptions within organizational units. In part, this is a question about the appropriateness of aggregating individual perceptions to create work unit averages. That is, the interpretation given to the average of employee responses is not necessarily the same as the interpretation given to individual respondent answers. For example, measures of organizational climate are often interpreted as indicators of shared perceptions. In order to work at the unit level of analysis, reasonable agreement within the work units must exist. Otherwise, aggregating the data across individuals serves little purpose because the unit average carries no useful interpretation. (To follow the same example, if there is no consensus among employees in the work unit, there is no climate because there is no basis for shared perceptions.) The degree of consensus within the work unit has diagnostic relevance as well. Specifically, research by Benjamin Schneider and his colleagues demonstrates that both the unit average and the dispersion of perceptions within the unit are independently related to important business outcomes.

The need to demonstrate within-unit agreement does not mean that everyone must see things in an identical manner. Rather, it means there is some reasonable degree of consensus regarding what is true and what is not true about the workplace. Over time, conventional wisdom has developed regarding how consensus should be measured and what is regarded as a minimal level of within-unit agreement.

Summary

Linkage research provides a powerful tool for identifying what can be changed in the work environment to improve organization performance. The methods for conducting linkage research are well documented in the literature, but the realization of benefits depends on management’s ability to ask appropriate questions, interpret the research outcomes, and execute relevant strategies to address those results.

References:

1. Dietz, J., Pugh, S. D., & Wiley, J. W. (1994). Service climate effects on customer attitudes: An examination of boundary conditions. Academy of Management Journal, 47, 81-92.
2. Schneider, B., Salvaggio, A. N., & Subirats, M. (2002). Service climate: A new direction for climate research. Journal of Applied Psychology, 87, 220-229.
3. Schneider, B., & White, S. S. (2004). Service quality: Research perspectives. Thousand Oaks, CA: Sage.
4. Schneider, B., White, S. S., & Paul, M. C. (1998). Linking service climate and customer perceptions of service quality: Test of a causal model. Journal of Applied Psychology, 83, 150-163.
5. Wiley, J. W. (1996). Linking survey results to customer satisfaction and business performance. In A. I. Kraut (Ed.), Organizational surveys: Tools for assessment and change. San Francisco: Jossey-Bass.