Abstract:

This study focuses on a company’s labour investment efficiency (CLIE) as outcome of employee satisfaction indicating how companies mitigate workforce challenges. Prior research is inconclusive regarding the relationship between these two concepts. One stream suggests that satisfied employees are likely to commit to companies, reducing the latter’s exposure to labour market frictions. Another stream argues that employee empowerment may lead to satisfied but entrenched employees, which would be detrimental to company value. To address this, the article uses CLIE as a measure for capturing the efficiency of labour investment that has originally been developed in financial economics. Empirically, the study is built on first-hand employee perceptions from 177,879 reviews across 303 UK companies vocalised on Glassdoor. The results show a positive association between employee satisfaction and CLIE. The article contributes to research investigating the determinants of investing efficiently in workforce, adding the important perspective of individual employee perceptions of work.This study focuses on a company’s labour investment efficiency (CLIE) as outcome of employee satisfaction indicating how companies mitigate workforce challenges. Prior research is inconclusive regarding the relationship between these two concepts. One stream suggests that satisfied employees are likely to commit to companies, reducing the latter’s exposure to labour market frictions. Another stream argues that employee empowerment may lead to satisfied but entrenched employees, which would be detrimental to company value. To address this, the article uses CLIE as a measure for capturing the efficiency of labour investment that has originally been developed in financial economics. Empirically, the study is built on first-hand employee perceptions from 177,879 reviews across 303 UK companies vocalised on Glassdoor. The results show a positive association between employee satisfaction and CLIE. The article contributes to research investigating the determinants of investing efficiently in workforce, adding the important perspective of individual employee perceptions of work.

Please choose your submission type: Full Paper

Primary Track: Financial Management

Keywords: Corporate Finance

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Dr. Galina Goncharenko