Employee Surveys

Employee Satisfaction vs. Customer Satisfaction

    iResearch is experienced in helping clients implement employee surveys & human resource surveys. The focus of most corporate feedback systems is customer satisfaction. Of course, this is critical. But often overlooked or under emphasized is the importance of employee satisfaction. The question isn’t whether one is more important than the other? What’s important is the link between customer satisfaction, employee satisfaction, and profitability.

The Link between Employee Satisfaction and Customer Satisfaction

Studies have shown that companies that make customer and employee satisfaction a priority tend be more profitable, have greater brand value, and enjoy stronger growth. These companies have a core belief that today’s employee satisfaction, employee engagement, and employee loyalty will influence tomorrow’s customer satisfaction. This linkage, often called the Value Profit Chain, can impact both the revenue and cost side of a business.

The Revenue Side of Employee Satisfaction

Understanding the link between employee satisfaction and customer satisfaction is critical to the success of any organization. The key factors in this linkage are:

  • Winning the hearts and minds of employees, leading to a more engaged work force
  • Fostering loyalty through high levels of employee engagement
  • Delivering higher levels of customer service through satisfied, engaged, loyal employees
  • Improving customer satisfaction through higher levels of customer service
  • Enhancing brand value, increasing profits, and stimulating growth through
    higher customer satisfaction levels

It should come as no surprise that loyal and committed employees are highly motivated and more likely to go the extra mile to meet customers’ needs. These traits are essential to continued customer commitment and the long-term growth of your company.


Too often we measure everything and understand nothing. The three most important things you need to measure in a business are customer satisfaction, employee satisfaction, and cash flow. If you’re growing customer satisfaction, your global market share is sure to grow, too. Employee satisfaction gets you productivity, quality, pride, and creativity. And cash flow is the pulse — the key vital sign of a company.

- Jack Welch, GE


The Cost Side of Employee Satisfaction

The cost side of employee satisfaction relates to employee engagement, employee retention, and the cost of vacancy. Research has shown that loyal and engaged employees remain in their jobs longer, resist competitive job offers, do not seek other employment opportunities, and recommend your company to others as a good place to work.

Employee Engagement

An engaged employee is one that is fully involved and enthusiastic about his or her work. These employees care about your company’s future and, more importantly, they are likely to invest discretionary effort to ensure your company’s success.

Research shows that, at any given time, only 15% to 30% of employees are 100% engaged in their work. If your company was a sports team with 11 play-ers on the field, what are the odds of winning with only 2 to 3 fully engaged players?

Employee Retention

Employee retention, a fundamental measure of a company’s health, is critical to the long term success of your business. If retention is low it is safe to assume that other employees of your company also may be looking for new jobs. Exit surveys with departing employees can provide valuable information to help manage and retain your remaining workforce.

Estimates of the costs to replace employees are up to 100% of annual salary for middle managers and up to 200% of annual salary for executives. Added to this are new employee training expenditures, the costs of lost knowledge, and the costs of searching for and evaluating new candidates.

As demographics shift in the coming years, the U.S. labor pool is expected to shrink, further increasing the importance of employee retention. Over the next several years, the 76 million people born between 1946 and 1964 (Baby Boomers) are expected to retire in large numbers.

The generation that follows (Generation X) is composed of just 44 million people, nearly
half the Boomers’ numbers.   


The most engaged workplaces are 50% more likely to have lower turnover, 56% more likely to have higher-than-average customer loyalty, 38% more likely to have above-average productivity, and 27% more likely to report higher profitability.

- Marcus Buckingham,The Gallup Organization


This shrinking labor pool will have broad implications for staffing and will dramatically elevate the value of employee retention.

Calculating Cost of Vacancy (COV)

In light of an increased emphasis on cost containment it is important that we do not overlook Cost of Vacancy (COV). Given that salaries are categorized as expenses on a balance sheet, the loss of a position often is viewed as a short-term expense reduction. However, the true cost losing key employees is considerable. Research indicates that COV ranges from $7,000 to $12,000 per day—and, in some cases, considerably more.

The Bottom Line

Employees are one of your company’s most valuable assets.  Dedicated, loyal, and thoroughly engaged employees go one further—they offer your company a true competitive advantage.  Satisfied employees deliver higher levels of customer service, and the resulting satisfaction leads to increased profits and growth.  Companies that understand and embrace the linkage between em-ployee and customer satisfaction will be positioned to reap the rewards of that knowledge.

Call today to find out how iResearch can help you to benchmark, monitor, and improve employee engagement and satisfaction.


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