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EFFECTS OF ORGANIZATIONAL COMMUNICATION SATISFACTION ON JOB PERFORMANCE AND FIRM GROWTH IN SMALL BUSINESSES

C. Glenn Pearce, Virginia Commonwealth University

Gerald J. Segal,

Florida Gulf Coast University

Abstract

While much is known about the relationship between job performance and job satisfaction, the relationship between job performance and communication satisfaction remains relatively uncertain. A small but determined effort has gone forward, Attempting to perpetuate

however, for almost three decades.

these efforts, the authors of this study surveyed a sample of small businesses to measure the effects of employee communication satisfaction on job performance. Analysis of the data showed

communication satisfaction correlating strongly with staff evaluations, but not correlating significantly with job performance itself.

Introduction

Since the 1970s, organizational behavior scholars have focused much attention on factors that might affect job performance. Factors studied include, to a great extent, how job performance relates to job satisfaction (Weaver, 1980, for example) and, less so, to communication satisfaction (Clampitt & Downs, 1993, for example). Much of the lack in job performance-communication

satisfaction research may be due to the lack of interest in

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cross-disciplinary research in organizational communication among human resources management and organizational behavior scholars. Thus far, organizational communication scholars, often working independently in programs removed from business programs, have done the organizational communication research. Human resources

and organizational behavior scholars have focused on other measures related to job satisfaction, such as pay equity and voluntary turnover (Micheli & Lane, 1991; Dalton & Todor, 1993). In addition, apparently no research has used small business owner/managers as respondents, rather than employees and supervisors.

Continuing interest among organizational communication scholars in the organizational communication satisfaction-job performance construct has spanned almost three decades now, though most of the work is anecdotal, quasi-experimental, or a review of existing literature, such as Downs & Hain (1982). Much more

empirical, focused research is needed to investigate the nature of the construct and various dimensions of the factors involved, especially in small businesses.

Literature Review

Beyond the extensive research done in job performance the past few decades, researchers have done some work on the organization communication--job satisfaction construct (Downs, 1977; Foehrenbach & Rosenberg, 1982; Goldhaber, Porter, Yates & Lesniak, 1978; Muchinsky, 1977; Pincus, 1986; Ruch & Goodman, 1983; Thiry, 1977; Walther, 1988). The prevailing evidence Only three studies,

indicates these factors relate positively.

though, have documented correlations specifically between

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organizational communication and job performance (Clampitt & Downs, 1993; Jain, 1973; Pincus, 1986).

Jain's (1973) early study used a questionnaire interview format to examine the relationship between communication effectiveness of hospital supervisors and their job performance as perceived by their subordinates. Effectiveness criteria were supervisor

communication behavior, supervisor-subordinate communication frequency and amount, employee knowledge of policies and procedures, employee communication satisfaction, and nonsupervisory formal communication channels use. Results showed

positive correlations between communication effectiveness and job performance, communication frequency and amount and job performance, and employee communication satisfaction and supervisor job performance.

Surveying 327 hospital nurses, Pincus (1986) measured nine communication factors (See Downs & Hazen, 1977) grouped into three dimensions: informational, relational, and The results showed employee perception

informational/relational.

of organizational communication satisfaction related significantly to both job satisfaction and job performance, though the communication satisfaction-job satisfaction link was stronger than the communication satisfaction-job performance link. The major contributors to both the organizational

communication-job satisfaction relationship and the organizational communication-job performance link were supervisor communication, communication climate, personal feedback, and top management communication. Interestingly, three of the four

contributors comprised the informational/relational dimension,

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which Pincus (1986) described as having "dual focus on both informational and relational aspects of communication." (p. 402) Top management communication, the fourth contributor, was a relational dimension.

Clampitt & Downs (1993) used Downs & Hazen's (1977) communication satisfaction survey to measure perceptions of eight of the nine factors Pincus (1986) measured (all except top management communication). Respondents were 65 employees of a service firm The respondents

and 110 employees of a manufacturing firm.

perceived all eight communication satisfaction factors as affecting their productivity: co-worker, subordinate, and

supervisory communication; media quality; communication climate; organizational integration; corporate information; and personal feedback. The strongest relationships were between personal

feedback and productivity (M=86.5 on a 100-point scale; SD=12.6) and communication climate and productivity (M=84.5; SD=15.9). Content analysis revealed that respondents defined productivity in at least nine distinctive ways in the service firm and at least eight distinctive ways in the manufacturing firm. ANOVA

followed by secondary analyses with polynomial curves revealed employees of the service firm who deemed supervisors to be low and medium producers felt the personal feedback communication factor had the greatest effect on their productivity, while those employees judged most productive felt personal feedback was less important. Further, these analyses revealed those employees in

the manufacturing firm who felt their supervisor's productivity was high felt the supervisory communication factor had a greater effect on their productivity than those who felt the supervisor's productivity was low; and the same trend was found for the effect

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of communication climate and productivity and media quality and productivity. trends emerged: The researchers concluded that three identifiable (1) organizational communication had an "above

average" effect on productivity, (2) organizational communication satisfaction factors differentially affected productivity, and (3) the effect of organizational communication on productivity varied with job design and information usefulness.

At this writing, the positive relationship between organizational communication and job satisfaction appears to be well documented, while there is less reason to say this about the relationship between organizational communication and job performance. we know much about the factors that compose organizational communication satisfaction and their interrelationships. Strong, Nor do

continuing interest in the construct has appeared in books, conference proceedings, and doctoral dissertations (Downs, Clampitt & Pfeffer, 1988; Downs & Hain, 1982; Hawkins, 1980; Hellweg, 1982; Jenkins, 1977; Kim, 1975; Lewis, Cummings & Long, 1982; O'Reilly & Roberts, 1977; Petelle & Garthright-Petelle, 1985), though few empirical procedures were used.

In summary, investigation of the organizational communication-job performance research indicates a need for further empirical study. The existing research is limited to three studies (Jain,

1973; Pincus, 1986; and Clampitt & Downs, 1993), two of which are dated. None has focused solely on the small business, except a Intensified

portion of Clampitt & Downs (1993) population.

efforts to explain the nature of organizational communication satisfaction as a construct likely would prove beneficial in further developing the theoretical base for sound applications

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research and in determining important research directions.

Problem and Method

The problem of the present study was to examine the effects of employee communication satisfaction on employee job performance and firm growth among small businesses. Available evidence

indicates small firms differ from large and mid-sized firms in important ways that might affect job performance (Hanna, 1988). If higher levels of communication satisfaction result in a healthy and highly productive work environment, both supervisor staff evaluations and firm growth should be high. The hypotheses were:

(1) higher employee communication satisfaction relates to higher supervisor staff evaluations, and

(2) higher employee communication satisfaction relates to higher rates of firm growth.

The study randomly sampled 350 small Virginia firms that mostly had 10 to 100 employees. Drawn randomly from the Virginia

Employment Commission's database, the firms were primarily in the food, apparel, and printing industries. A cover letter asked

that the owner or general manager complete the questionnaire. Including one follow up to the initial mailing followed by telephone calls, respondents returned fifty-six properly completed questionnaires, a response rate of 16.0 percent. Because small businesses are known for an unwillingness to reveal financial information such as that required for this study (Fiorito & LaForge, 1986), we closed the data collection and

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proceeded with the analysis.

Responding firms averaged 47

employees who were 34 years old on the average.

We asked respondents to report their perceptions of employee communication satisfaction using the Downs and Hazen (1977) questionnaire. Prior factor analysis of this instrument found

eight dimensions of communication satisfaction, which were satisfaction with communication climate, superiors, organizational integration, media quality, horizontal and informal communication, organizational perspective, subordinates, and personal feedback. Scale values ranged from "1" (not at all We used 39 of the 40 Downs

satisfied) to "5" (very satisfied).

and Hazen items (1977), deleting a union-focused question because the sample consisted almost entirely of non-union firms.

Because a 16% return rate proved small, we were unable to conduct factor analysis, where four or five times as many observations as variables would be needed (Hair, Anderson, Tatham & Black, 1992). We were able though to calculate Cronbach's coefficient alpha (Cronbach, 1960) for each dimension of communication satisfaction measured and perform correlation and regression analyses.

Results

Table 1 shows Cronbach coefficient alphas for each dimension of the organizational communication construct.

Nunnally (1978) noted that coefficient alphas greater than or equal to .70 are acceptable for research purposes. The eight

dimensions of the construct correlated highly with each other for

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all cross-correlations (p<0.001). 39 items was 0.96.

The coefficient alpha for all

Thus, communication satisfaction proved to be Based on this finding, we

a unitary construct for the sample.

constructed a communication satisfaction index (CSI) by summing all 39 items.

We compared responses on the Downs & Hazen (1977) questionnaire to the outcome measures: performance. evaluation of staff members and firm

For staff evaluation, we used the criteria Myers productivity, work quality, attendance, Scale values ranged from "1"

(1992) suggested:

safety, conduct, and job longevity.

(substantially below expectations) to "5" (substantially exceeds expectations). Cronbach's alpha for the six staff evaluation We summed the six staff evaluation measures

measures was 0.87.

to create a staff evaluation index (SEI).

For firm growth, we used Chandler & Hanks (1993) criteria: market share, cash flow, and sales volume. Following Chandler & Hanks

(1993), we used broad performance categories to enhance response rates. Cronbach's coefficient alpha for the three firm growth We summed the three measures to form a

measures was 0.85.

performance index (PI).

The CSI, SEI, and PI indexes served as main-effect variables for correlation and regression analysis. Pearson correlation

analysis (see Table 2) found CSI correlating positively with SEI at the .001 level (p<0.001). Thus, higher employee communication

satisfaction was strongly related to higher staff evaluations. However, CSI did not correlate significantly with PI. Interestingly, CSI was not significantly related to firm age or

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number of employees.

There was, though, a significant negative

correlation between firm age and PI; older firms had lower growth rates than newer ones.

Regression analysis (see Table 3) used CSI (communication satisfaction index) as the independent variable and SEI (staff evaluation index) as the dependent variable. This model was

significant (p<0.0001) with an R-square of 40.0 percent.

Discussion, Implications, and Recommendations

The strong relationship between the CSI (communication satisfaction) and the SEI (staff evaluations) agrees with Jain's (1973), Pincus's (1986), and Clampitt & Downs, (1993) similar finding with differing populations and firm sizes. When

communication satisfaction was low, managerial evaluations of staff productivity, work quality, attendance, safety, conduct, and job longevity were low.

Though sample size precluded factor analyzing the dimensions of the communication satisfaction questionnaire, more work with small business populations is warranted, though data on firm growth may be hard to get. Small firms have high numbers of sole

proprietorships, partnerships, and private corporations not required to report financial information publicly, which they often choose not to do. Because jobs in small firms tend to

include more and more varied job duties than they do in larger firms, researchers might examine these variations. study, the CSI did not correlate with PI. Yet, in this

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A possible explanation for differences in findings between previous studies and the present one is that this study used owner/manager assessments of employee job performance and communication satisfaction levels, while other studies (Jain, 1973; Pincus, 1986; and Clampitt & Downs, 1993) used employee assessments. workers. Jain (1973) and Pincus (1986) used hospital

Clampitt & Downs (1993) worked mostly in manufacturing,

though some of Clampitt & Downs (1993) respondents did work in a small service firm. workers, in 47 firms. The present study used only service firm

As expected, firm age related negatively to firm growth rates; historically, firms grow more slowly as they age (Hanks, et al., 1994). Because procedures among the four studies differ, direct Yet, despite these problems, the four

comparisons are difficult.

studies, done over nearly three decades, concluded organizational communication satisfaction relates positively to job performance.

With an increasingly competitive business environment, small firms such as those we surveyed, must foster a work environment that enhances human resource effectiveness in ways that build adequate communication satisfaction levels among employees. Based on available research done with larger firms (Jain, 1973; Pincus, 1986; Clampitt & Downs, 1993), these factors include co-worker, employee, and supervisory communication; media quality; communication climate; organizational information, corporate information, and personal feedback. One bright prospect is that

the ongoing technological revolution has brought affordable communication systems to small businesses and made them more competitive with larger firms. For this reason, futurists such

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as John Naisbitt now predict that smaller firms will control the world economy in the twenty-first century because they will have competitive communication systems, and because of their smaller size, can better personalize customer service (Pospisil, 1994). Kaplan, Johnson, Pearce & George (1997) found, however, that small firms are slow to adopt new communication systems; and if this is true, small firm owners and managers will need to alter that critical behavior to assume a leadership mantle.

Conclusion

The conclusion is drawn that higher employee communication satisfaction levels relate to higher supervisor staff evaluations in small firms. Firm growth rates, though, did not relate to

communication satisfaction levels in the present study; and no similar studies were found for comparison with this finding, perhaps because of the difficulty in acquiring financial data on small firms. Fierce domestic and world competition in most

industries calls for business owners and managers to seek ways to improve communication satisfaction levels among their employees as a way to improve job performance, and thus competitiveness.

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