Employee satisfaction hasn't always been front and centre for HR. But in 2024, the profession will be increasingly focusing on this concept — both as a way of taking the temperature of an organization, and driving its success.This article explains what employee satisfaction actually is and why it's essential for businesses. We'll then go on to explore how managers can enhance employee satisfaction, the impact of employee satisfaction on job performance, and methods to measure it effectively.What is employee satisfaction? Employee satisfaction is a pretty straightforward term that means exactly what you think. There's nothing particularly complicated about it — it simply means how happy an employee is in their employment. All aspects of the job can affect employee satisfaction, including the tasks staff need to complete, the compensation or employee benefits they receive, and their work environment and relationships with colleagues. It's also influenced by the employee's broader sense of fulfillment, motivation, and alignment with the company's goals and values. Note that the term 'employee satisfaction' is often used interchangeably with 'job satisfaction', but should not be confused with 'employee engagement'. While employee satisfaction focuses on overall happiness and contentment, employee engagement delves deeper into their emotional connection and commitment to their work. So while employee satisfaction often leads to employee engagement, they're not actually the same thing.Why is employee satisfaction important?Employee satisfaction is, most obviously, important to the employee first. Most people spend most of their waking lives at work, and if that's an unhappy experience, then even a good salary won't make up for it.High levels of employee satisfaction are also important for the employer for a number of reasons. 1. ProductivityFirstly, happy employees are usually more productive and make a greater contribution to the company's success. That's because when employees are content with their work, they're more likely to go above and beyond their job descriptions, leading to increased efficiency, better quality work, meaningful collaboration and more creative solutions to problems.2. LoyaltySatisfied employees are also more likely to be loyal. That makes them more likely to stay with the company over the long term, reducing the high costs of turnover and recruitment. It also makes them more likely to recommend their employer to other potential recruits, helping the firm to lure the best talent.3. Better healthEmployee satisfaction is closely linked, too, to physical and mental well-being. When employees are content, they experience less stress and burnout, resulting in improved overall health and reduced absenteeism. How can managers increase job satisfaction of employees?There are a number of ways that managers can help increase employee satisfaction — one of the most important being communication. All too often, employees feel like they're being kept in the dark about what's really going on in the company, and that can seriously lower morale. This feeling can, of course, instantly be alleviated through clear, consistent, open and honest communication. That means, for example, providing clear expectations, offering constructive feedback, and keeping employees informed about company goals and changes. Another way to boost employee satisfaction is through recognition. Recognizing employees' efforts and achievements, where it's deserved, is a simple and cost-free way to boost people's spirits. Recognition is often given in a formal and organized manner, such as the giving of awards or bonuses. But simple and consistent verbal praise can be just as effective in making employees feel valued. Employee satisfaction can also be raised by encouraging and facilitating professional development. No one likes to feel like they're stuck in a job or see themselves doing the same thing for the rest of their life.That's why offering employees opportunities for growth and development through training and skill-building is vital to boost their levels of satisfaction. For many people, it's the relationships they forge at work that can make the biggest impact on their levels of happiness. So it's also important that managers work to foster a positive work environment, where there's a culture of respect, collaboration, and open communication.Finally, employees want to have a life outside of work too. So providing flexible schedules or remote work options that help them to achieve a healthy work-life balance can also make a big impact on employee satisfaction. How does employee satisfaction affect job performance? Employee satisfaction has a direct impact on job performance in several ways. Satisfied employees are more motivated to excel in their roles, leading to increased productivity and better performance. They're also usually more engaged in their work, making them more focused, committed, and willing to invest their energy in the success of the business. Happy employees are also more likely to contribute creative ideas and solutions, driving innovation within the company. If they're customer-facing, they also tend to provide better customer service, which can enhance customer satisfaction and loyalty towards the company as a whole. They're also more likely to contribute positively to team dynamics, fostering collaboration and synergy among team members. How to measure employee satisfaction We all know employee satisfaction when we see it, but how do you actually go about measuring something as amorphous as satisfaction? In fact, the HR profession has developed a number of systematic ways to do so. And, although there's no single, universally agreed method of measuring employee satisfaction, there are a number of techniques that are commonly used. One popular method is by asking your employees questions, either via detailed surveys, simple pulse surveys, focus groups, team surveys, meetings, one-to-one interviews or other feedback channels. The nature of the questions obviously needs to be considered carefully and will vary from firm to firm. But one of the most common approaches, which gets right to the heart of the matter, is to ask: "On a scale from 1-10, how likely are you to recommend this company as a place to work?" This allows you to measure what's called the Employee Net Promoter Score (eNPS). Employees who answer 9 or 10 are known as Promoters, 7-8 are Neutral and 0-6 are Detractors. To calculate your eNPS, you subtract the percentage of Detractors from the percentage of Promoters. Scores between 10 and 30 are considered good, while anything above 50 is seen as excellent.A similar approach is the Employee Satisfaction Index (ESI), which involves these employees answering these three questions on a scale of 1-10.How satisfied are you with your job? How well does your job meet your expectations?How close is your workplace to your ideal job? If you're not able to survey your employees, an alternative way to measure employee satisfaction is to extrapolate it from absenteeism rates. The formula is: Absenteeism Rate = (Number of Days Absent / Total Workdays) x 100. A high rate often correlates with lower employee satisfaction, although of course other factors may be an influence. Another statistic that can give you an idea of employee satisfaction levels is the turnover rate, as lower turnover rates are often indicative of higher employee satisfaction. The formula is Employee Turnover Rate = (Number of Employees Who Left / Average Number of Employees) x 100.Employee satisfaction is not just a buzzword — it's a critical factor in the success of any business. Happy employees are more likely to stay, perform well, and contribute positively to the company's culture and bottom line. By understanding what employee satisfaction is, why it matters, how to improve it, and how it affects job performance, businesses can create a work environment that fosters success for both employees and the organization as a whole.Regularly measuring employee satisfaction ensures that companies can adapt and evolve to meet the changing needs and expectations of their workforce, ultimately leading to sustainable growth and success. About YuLifeYuLife is an employee benefits and wellbeing app that’s reimagining the insurance industry by protecting lives, rewarding living and inspiring life. We’re on a mission to transform traditional insurance into a life-enhancing experience each employee will value and use daily. How does it work?Our award-winning app uses behavioral science and game mechanics to reward your people for living well while offering protection in case of crisis. And with our top-rated employee assistance program, your team gets access to mental, financial and social support, nutritionists, life coaches and more to help them live their best lives.Because we believe that your employees should benefit from their insurance from day one – and that wellbeing should be accessible every day, for everyone.Request a demo for your team today.