Causal Impact of Employee Work Perceptions on the Bottom Line of Organizations

Abstract

Perceptions of work conditions have proven to be important to the well-being of workers. However, customer loyalty, employee retention, revenue, sales, and profit are essential to the success of any business. It is known that these outcomes are correlated with employee attitudes and perceptions of work conditions, but the research into direction of causality has been inconclusive. Using a massive longitudinal database that included 2,178 business units in 10 large organizations, we found evidence supporting the causal impact of employee perceptions on these bottom-line measures; reverse causality of bottom-line measures on employee perceptions existed but was weaker. Managerial actions and practices can impact employee work conditions and employee perceptions of these conditions, thereby improving key outcomes at the organizational level. Perceptions of specific work conditions that engage employees in their work provide practical guidance in how best to manage people to obtain desired results.