Satisfied workers add up to profit and productivity

In the restaurant business, happy employees equal happy guests, which equal more profit.

That equation summarizes recent research by Dennis Reynolds, associate director and Ivar Haglund Distinguished Professor at the School of Hospitality Business Management. Reynolds scrutinized the financial information and collected employee and guest satisfaction data at 36 casual-theme restaurants nationwide, seeking the factors driving productivity.

He was hoping to explain why same-brand restaurants in similar settings can have significant differences in productivity. In addition to satisfaction, he included variables such as number of seats, fixed and variable expenses, sales and net profit.

“We found that employee satisfaction resulted in better guest satisfaction, which boosted the bottom line,” Reynolds said. “It is really common sense, but we are developing a holistic productivity model, one with variables not considered previously — like job satisfaction as a determinant of productivity and guest satisfaction as an additional indicator of overall productivity.”

Previous research has demonstrated that employee pay is only one dimension of employee satisfaction, he said. If employees are treated with respect, and if they enjoy their work, that satisfaction can outweigh their wages. This is important given earlier findings that suggest operational productivity, which includes profit as an output, is enhanced by improved employee satisfaction.

Reynolds’ research will be published this spring in the International Journal of Hospitality Management.

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