Employee satisfaction surveys are hot. Many Fortune 500 companies now conduct them. But both research and my own discussions with management suggest that employee surveys often fail to deliver on their promise.

Conducting an employee survey isn't easy. Many companies perform these surveys by throwing questions together haphazardly and hoping something great will happen. Often, this approach not only fails to work but can alienate employees.

Before constructing an employee survey, company leaders should be clear on its purpose and committed to acting on its results.

Management often fails to appreciate how the information in an employee survey links to profit. Because an employee survey is an investment in time and money, it requires a return-on-investment analysis to measure its success.

Using employee surveys to enhance profit requires investigating the causal pathways between three linkages that begin with the survey and end with profit.

However, to construct an employee satisfaction survey, you must begin with profit then reason backward to the survey - a process known as backward induction.

The most important step in the employee survey process is establishing its purpose. What are you trying to learn directly from employees that your managers don't already know?

An employee satisfaction survey is the first step in a value chain to create an organizational environment that contributes to profit.

Five areas typically measured in employee satisfaction surveys are: employee involvement, employee growth and development, employee recognition, employee work-life balance, and employee health and safety. I call this the 5-driver satisfaction model.

The missing link

If HR is to become a strategic partner, the data it collects must influence the company's business planning cycle.

To do this, HR/benefits professionals need to relate what they've learned from employee satisfaction surveys to profit drivers like organizational commitment, job satisfaction, morale, productivity, absenteeism and turnover.

This second step is difficult. Ideally, an employee satisfaction survey has identifiers that allow for statistical estimation between what the survey measures and profit drivers, some of which are part of an employee's record. Ideally, a third-party conducts this research to guarantee employee anonymity.

In the absence of statistical analysis, HR and management must hypothesize relationships between the five-driver satisfaction model and the six profit drivers.

For example, if employees rate your company's work-life balance as poor, this probably shows up as a higher rate of absenteeism and employee turnover. For all the parts of the 5-driver satisfaction model, there are sensible causal pathways to each profit driver.

Once pros link employee satisfaction to profit drivers, they must draw a final causal pathway to profit through various revenue and cost metrics.

Say a company receives a low rating in providing employees with growth and development opportunities. This leads to weak organizational commitment, low job satisfaction, low morale and low productivity. How do these influence profit?

Whether this profit question is answerable statistically or intuitively, it still needs addressing because it's impossible to prioritize resource allocations in fixing employee dissatisfactions and determining how much to invest.

To design an employee satisfaction survey, professionals must first prioritize profit drivers by asking which are causing most harm to their companies.

Let's say low employee productivity is a company's top issue. HR pros must ask which parts of the 5-driver satisfaction model have the strongest causal impacts on employee productivity.

Once this is settled, you construct a survey focused on the identified parts of the 5-driver satisfaction model. This backward-induction technique is opposite of how employee satisfaction surveys are normally constructed.

Building better employee satisfaction surveys requires understanding their place in a company's profit-value chain.

Benefits managers need to reason backward from profit to the construction of the employee satisfaction survey. Once pros understand how an employee satisfaction survey relates to profit, the survey becomes a strategic asset that becomes a critical part of business planning.

Contributing Editor Mark Nadler is an economist and professor at Ashland University in Ashland, Ohio. He is a member of The Financial Education Co. and president of Vincuro, a financial stress reduction firm.

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