Mployee satisfaction linked to employee productivity and employee retention

I need to write seminar paper reviewing an article. The aper should explain and critically review: how the work relates to previos studies, the research objectives, the methodology used, the data analysed, and the conclusin drawn. One of the main resourses should be The servises, profit, chainby James Heskett. If any other resorses are used bibliografy needs to be provided.
Thats the article I choused. Ill also fax that to you.

Dispelling the modern myth
Employee satisfaction and loyalty drive service profitability

The Authors
Rhian Silvestro, Operations Management Group, Warwick Business School, University of Warwick, Coventry, UK
The author wishes to acknowledge the contribution of Stuart Cross, Head of Strategy Development, Boots the Chemist, Nottingham, and Warwick Business School alumnus, 1997, for his assistance in collecting and analysing the data during the early stages of this research project.
This paper reports some empirical findings which appear to challenge the received wisdom prevailing in the operations management, service management, TQM and HRM literatures, namely, that employee satisfaction and loyalty are key drivers of productivity, efficiency and profit. An empirical study of one of the UK s four large supermarket chains reveals an inverse correlation between employee satisfaction and the measures of productivity, efficiency and profitability, the most profitable stores being those in which employees are least satisfied. Employee loyalty, measured in terms of length of service, also appears to be inversely correlated with productivity and profitability. It also emerges that the pressure to maximise store efficiency may be leading to dysfunctional managerial behaviour at store level. These preliminary findings suggest two imperatives for managers and academics. For managers, it is advocated that they analyse the relationship between employee satisfaction, loyalty and financial performance in their own organisations rather than assuming that the rhetoric of the management literature applies in all operational contexts. For academics, four contingent variables are proposed which distinguish those service contexts in which the assumed relationship may pertain: services where customer contact with staff is high; services where there is little opportunity for technological substitution; services where staff contact is critical to the customer value proposition; and services with high labour costs.
Article Type:
Research paper
Job satisfaction; Loyalty; Productivity; Efficiency; Profitability; Supermarkets.
International Journal of Operations & Production Management
Copyright ©
It has been widely argued in the operations management, total quality management (TQM), human resource management (HRM), and service literatures that improving employee satisfaction and loyalty leads to higher service productivity and profits. Employee satisfaction and loyalty are seen as critical to the capability of service organisations to respond effectively to customer needs, whilst also driving down costs through reduced recruitment and training expenditure and all the cost efficiencies which accrue from skilled workers who are up to speed and familiar with both the tasks at hand and their customers.
Yet there is a noticeable dearth of empirical evidence to support what has become so commonly an accepted part of modern management philosophy. This paper reports the results of a preliminary study of the links between employee satisfaction, loyalty, productivity and profit in one of the UK s four large superstore retailers. Correlation analyses of the links between these four key performance variables reveal a picture which is quite different to that described in the literature and so often expounded by management consultants. For the evidence suggests that the most productive and profitable stores are those where staff are least satisfied and loyal.
This raises the question of whether productivity and profit are being generated in this sector despite rather than because of the management of its human resources; a timely issue, in view of the scrutiny which this sector has recently attracted for its supposed exploitation of the supply network (see for example, Nuki and Bevan, 1998). Having been repeatedly accused of squeezing their suppliers on cost without passing on reduced prices to the end customers, this empirical study signals the possibility that superstores may be pressurising their employees as well as their supply networks.
The received wisdom
The American TQM  gurus , such as Deming (1986) and Juran (1989), are unanimous and unequivocal in the view that increasing process ownership and job satisfaction will yield returns in both quality and productivity. The Japanese quality experts also emphasise the importance of the  human factor in creating an environment for production excellence. Ishikawa (1985, p. 96), for example, claims that Deming prize winning organisations are characterised by  showing respect for humanity, nurturing human resources, considering employee happiness, providing cheerful workplaces . He insists that effective quality control relies on an understanding of the  human drives which include the satisfaction of doing a job well, the happiness which comes from co-operation with others and from personal growth and fulfilment (Ishikawa, pp. 27-8). Shimada (1993) similarly sees  human technology and motivation as being necessary preconditions for production control and improvement, and for outputs including higher quality, low price, growth and profit.
This TQM rhetoric, which directly links employee satisfaction to organisations abilities to sustain long term business growth and profitability, also permeates the HRM literature, as expounded by, for example, Walton (1985) and Guest (1987). As Legge (1995, p. 240) explains:
The rhetoric of high value added or zero-defect products and of  customer care at the organisation-market interface, generally includes a mantra about the importance of well-trained, skilled and committed employees. This is almost tautological & Demands for employees commitment to the organisation and responsiveness to the customer logically demand a reciprocal commitment to the employee and responsiveness to her demands as internal customer.
However, the thrust of Legge s text, as is explicit in the subtitle, Rhetorics and Realities, is that there is a gap between the management rhetoric of these exponents and the realities of implementation. There have been numerous empirical accounts of production environments where, despite the rhetoric of empowerment, new wave manufacturing methods, including TQM and just-in-time (JIT), have in fact led to reduced employee discretion, increased control, peer surveillance and labour intensification (for example, Turnbull, 1988, Delbridge and Turnbull, 1992; Garrahan and Stewart, 1992; Kerfoot and Knights, 1995). Such examples have led critical theorists to argue that TQM and JIT environments, far from increasing employee satisfaction, in fact, generate even more stressful working environments:
& it would be tempting to dismiss moves towards employee involvement under TQM as just another ruse constructed by management to encourage workers to engage more freely in their own exploitation (McArdle et al., 1995).
The organisational behaviour literature of the past decade can therefore be said to have taken a more ambivalent and questioning line with regard to the teachings of TQM and its assumptions about the relationship between employee satisfaction and loyalty, productivity and profit. Indeed Ledford (1999) argues that the continued survival of the  happy productive worker ideology , despite the absence of empirical evidence to support it, is due to an historical convergence of the interests of managers, workers and researchers. From the management perspective, the thesis that hap