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Objective
The objective of this paper, in simple words, is to establish the direction of causality between an organizations nancial and market performance measures such as ROA and EPS and its employees attitudes, such as overall job satisfaction, satisfaction with security, pay etc.
by measuring both the variables across a period of 8 years. The nal opportunity for contribution, and perhaps the most crucial one from the perspective of this study, was from the fact that most studies assumed a one directional causality, with the employee attitudes being the cause and the organizational performance being the result. In this study, the authors assume no such direction for causality, and in fact attempt to show that this causality ows in both directions; at times organizational performance being a signicant cause for a certain employee attitude.
Methodology
The authors have adopted a complex methodology for this study, though it was necessary given the nature of the problem being analyzed. They collected data from a consortium of U. S. Companies. The companies in the consortium were large organizations, mostly featuring in the Fortunes list of most admired companies. The time period under consideration was 1987-1995. The number of companies available for analyses varied over these 8 years, with the year 1992 oering a maximum of 35 companies, while the minimum was 12 companies in 1989. The authors measured time lagged correlation between employee attitudes and ROA and EPS using a two pronged approach. They rst assumed one of the employee attitudes (e.g. overall job satisfaction, security, pay etc) to be the predictor of each of ROA and EPS, and then measured the correlation across time periods. Then the roles were reversed, with each of ROA and EPS being the predictor of the same employee attitude. The same process was done for each of the attitudes, and the nal results were compiled (Table 6 in the article).
Results
The result from the analyses conducted by the authors showed that both satisfaction with security and pay had a positive relationship with both ROA and EPS, with the relationship much stronger in the reverse direction, i.e. ROA and EPS proved to be a strong predictor of satisfaction with security and pay, though in case of former, the relationship was equally strong in both directions. Results concerning relationship between overall job satisfaction and the performance criteria created a stir in the research community. The causal directionality from nancial and market performance to overall job satisfaction proved to be very strong. This does not however mean there is no relationship in the other direction; just that in one direction it is stronger. This research demonstrates that employees can derive satisfaction in their work from the fact that their organization is doing well nancially as well as in the stock market.