HOW IMPORTANT IS MORALE, REALLY? Don't fret unduly about worker unhappiness. Managers should be encouraging a new, higher form of employee dissatisfaction.
By WALTER KIECHEL III REPORTER ASSOCIATE Constance A. Gustke

(FORTUNE Magazine) – A quick one-question test to plumb the accuracy of your managerial assumptions: How, please, does morale -- or job satisfaction, as the experts prefer to call it -- relate to productivity? ''Uhh,'' the average manager would probably respond, ''in general, the happier the worker, the more he will produce.'' If only it were that simple. Observes Frank Landy, a psychology professor at Pennsylvania State University: ''This is probably the single most researched subject in management literature.'' He cites a string of studies that number perhaps 7,000 and stretch back to the early 17th century, when a bureaucrat named Ramazzini in Modena, Italy, noted looks of dismay on the faces of men < cleaning out the city cesspool, interviewed the workers, and wrote a report about their sentiments. The mountain of studies done more recently has begotten mostly mousy, albeit surprising, findings. The experts typically measure job satisfaction -- among academics, the term ''morale'' fell out of favor in the 1930s -- according to employees' answers to the following kinds of questions: How much do you like the work that you do? Your pay? Boss? Co-workers? The company as a whole? Comparing the results with standard measures of productivity, the studies found positive correlations, negative correlations, or no correlation at all. So much for the so-called science of management. THE QUESTION of cause and effect befuddles researchers. ''Positive emotions don't cause productivity,'' concludes Landy. ''It seems more likely that high productivity causes morale. If you look at firehouses in a community, the slowest houses have the lowest morale. There's lots of bickering. The happiest house is the busiest,'' its inhabitants merrily racing off to put out one conflagration after another. No, that's too simple, retorts Kay Snavely, a professor of organizational behavior at Ohio's Miami University. ''The most popular view now,'' she says, ''is that satisfaction is only related to productivity when people feel they have been fairly or unfairly rewarded. You work. You get a reward. If you feel good about it, then your satisfaction may affect your productivity.'' Perhaps the best view is expressed by professor Edwin Locke of the University of Maryland: ''The effects of job satisfaction on productivity are indirect rather than direct.'' Don't let the mild sound of this conclusion mislead you as to the power it packs in the real world. It has spelled the eclipse of the once influential -- at least among the illuminati -- ''human relations'' school of management, which set keeping the employees happy as a primary goal for the people in charge. Says professor Gerald Graham of Wichita State, whose consulting advice to companies reflects the change: ''I used to be much more concerned about job satisfaction. Now my focus is, 'Let's get top-performing employees.' '' Or, with a bit less edge, from professor Murray Barrick of the University of Iowa: ''You have to do specific things to increase productivity, and separate things to improve satisfaction, and the things may not be all that related.'' Neanderthals may be tempted to misread this as an invitation to neglect , workers' feelings altogether. As so often with managers from the big-stone-ax school, this merely leaves them open to being clobbered by a more highly evolved Cro-Magnon type who understands the situation better. For while the experts can't yet establish the precise relationship between job satisfaction and productivity, they are certain that lousy morale can harm the organization, and the worker, in other ways. Professor Locke ticks off a few, each more threatening than the last: You get work avoidance, he says, with employees hanging out at the water cooler or trying to look busy while not really doing anything. Then job avoidance -- people calling in sick or quitting. The troops struggle to adjust psychologically, lowering their expectations, suppressing emotions, abusing drugs or alcohol. They may go on to defiance, talking back, deliberately ignoring rules or the boss's pronouncements. Worst of all is what Locke calls aggression: sabotage, stealing, selling information to competitors, starting rumors, even, heaven forbid, leaking stuff to the press. The best a manager can hope for in such sorry straits is constructive protest: employees who confront their superiors with the problem, or file a grievance, or ask for a raise. Okay, so morale at your outfit isn't that bad -- no workers at the barricades or wrenches thrown into the word processors. It's only, well, slightly bad. Your operation still may be missing a lot, suggests Dennis W. Organ of the Indiana University business school. In particular, it may lack what the professor calls organizational citizenship behavior, those little and not-so-little things that employees won't be punished for failing to do, but that can make life at your shop considerably more pleasant and, one suspects, somewhat more efficient. Such behavior includes helping others, keeping the place clean, putting in more time than is strictly required, sharing information with those likely to be affected, and speaking up at the proper time and place. Still not convinced? All right, maybe you can get away with rampant job dissatisfaction for a while, the experts say, but only in the right circumstances. Employees will have to be fairly well paid, particularly the managerial types, notes Wichita State's Graham, and the tie between pay and performance must be clear. It's important, too, that the troops not have good alternatives elsewhere; once a job opens up somewhere else, your employee will quickly become an ex-employee. As an example of an outfit so situated, particularly on the pay front, Graham points to the executive cadre at ITT under Harold Geneen, never a favorite of the human relations school. Old Hal, the line went, had 'em by their limos. ULTIMATELY, the most telling answer to those who play down the importance of job satisfaction may come from experts who refuse to be confined to the terms of the traditional debate. These folks, increasingly vocal in the past few years, tend to look not so much at narrow measures of productivity but rather at the total performance of organizations, at everything from innovation to customer service. They also refuse to get hung up on correlations. Their approach may be less rigorous scientifically, but it offers more lessons for managers. ''In high-performing companies, people feel they are treated with more respect,'' says Peter Gelfond, a vice president of the Hay Group, a big human resources consulting firm. ''There's more of an egalitarian attitude. And you don't get big differences between top management and the lower-level employees in how they rate the company as a place to work.'' What these experts look for among employees, and what they find at the high- performing outfits, is commitment to the organization and its goals. In this sense, the new boys and girls are reviving the old idea of morale, which transcends individual job satisfaction to reflect the feeling of the entire group. Indeed, one definition of morale is ''a sense of shared direction,'' says Karl Price, a senior consultant with TPF&C, part of the Towers Perrin firm that advises companies on human resources issues. To hear the new school talk, commitment beats satisfaction any day. ''A committed employee is willing to take risks along with the company,'' says Price. ''If the company says, 'We need to change,' the employee is willing to undertake the risk.'' Such willingness can come in beaucoup handy when you're suddenly faced with global competition or the latest bright idea from the new- product development team. By almost all accounts, probably your best bet for obtaining such commitment is a system that gives a lot more say to employees than most companies do now. Duncan the Wonder Horse will spell it out for the retards among you: p-a-r-t- i-c-i-p-a-t-o-r-y m-a-n-a . . . You know the drill by now, but you may question whether your organization is ready for it. Maybe one more testimonial will finally persuade you. Over the past year and a half, Rich-SeaPak, a division of Rich Products Corp., has been introducing just such an approach in its seafood-processing plants on the Georgia coast. No, it has not all been easy, gaining the trust of the workers, helping everyone -- particularly managers -- learn new ways. But the benefits are already apparent. Bill Herzig, vice president for operations and for 17 years a manufacturing guy, tells of a couple of them: ''We used to have an enormous number of cartons that would open up out in the field. The sales force would have to go get some of them back. It was a mess. Now we've got a group, the carton-sealing task force, made up entirely of hourly workers trained in statistical process control and quality control. With the changes they have made, the defective carton rate has gone from 5% to 0.75% to 0.33%.'' Productivity? ''You have to look at the overall trend line,'' says Herzig. ''Sometimes it gets worse before it gets better. But in one two-month period, when we started to get rolling, we had a 20% jump in productivity.'' His overall assessment of the change: ''Intellectually, morally'' -- take note of that -- ''and financially, it's the most satisfying thing I've been associated with in business.'' THIS KIND of revolution does present management with fresh challenges, even with respect to worker satisfaction. Donald Jewell, a professor at Georgia State, has helped not only Rich-SeaPak but also big companies such as Mead and Celanese to put participatory systems in place. He observes, wisely: ''The critical factor is what employees are dissatisfied about.'' Given enough information, and the degree of commitment that usually follows, the troops will get restless about a refreshingly new set of issues: How can we build more quality in at less cost? Why can't we do a better job on customer service? The boss will have to listen hard, talk straight, and help with solutions. But those questions reflect the kind of employee discontent that any manager can live with.