employee satisfaction importance

Influence of digital transformation on employee satisfaction in SME's

Digitization has taken the world by storm. A major step towards digitization started in various industries and enterprises. The work is now being done, faster, more precisely, and with ease. However, we cannot deny the fact that an organization is run by the people and not by technology. Little is known about the influence digital transformation and digital culture have on employees. To reimagine a business digitally, the employer needs to have a clear digital strategy to help the people of the company to adapt to the changing work culture. Subsequently, it should support the enterprise to bring about more innovations. The digital transformation thus comprises a digital process and digital culture.


Employee satisfaction is defined as the term used to describe the happiness and contentment of the employees of an enterprise and the fulfillment of their desires and needs at the work front. It is an important factor in the employees’ motivation, goal achievement, and morale at work. Employee satisfaction is, therefore, the degree of happiness of a worker in his/her working environment and the nature of the work. Digital transformation is the adaptation of professional methods and practices by an organization to help sustain and effectively perform in the increasingly digital world. Experts emphasize that digital transformation should be accompanied by digital maturity so that the enterprise can respond to the changes in the workflow appropriately, and the technology can also mature gradually.

Influence of Digital Transformation

Employee satisfaction is quantified in terms of work motivation, job satisfaction, employee reaction to the job, and employee readiness for the job. We can divide it further into skill variety, task identity, significance, autonomy, and interaction with others. All these factors are readily influenced when digital transformation takes place. Other factors include the field of work, management, payment, and colleagues’ interaction. SMEs already use digital tech, but there is always room for improvement. With a faster workflow and optimization more opportunities are created. However, the new regulations of data protection pose a great risk in digitization, which is further aggravated by cybercrime. Also, knowledge transfer among individuals is inconsistent in the case of digital transformation. SMEs have flat hierarchies which help in faster decision making and new products can be readily introduced in small budget companies with cost-benefit use. These two factors are the main drivers of digital transformation in SMEs.

The Pros

Digital technologies improve the work-life balance of employees with facilities like home office and flex time, which betters employee satisfaction. Researchers suggest that digital transformation can facilitate access to information and engages the work role of employee. It supports and enhances creative ideas, productivity, innovation, efficiency, and perceived knowledge exchange among peers and co-workers. A foolproof digitization plan creates initiatives in the employees by facilitating their work.  It also bridges the gap between IT and business operations for better marketing strategy. Research shows that employees strongly support digital transformation for its role in enhancing employee vision, involvement, and trust. It is also seen that employee communication and strategy building is has a negative influence because of digital transformation. The most strongly influenced factor in employee satisfaction due to digitization is task identity. Employees are more willing to contribute ideas for improvement, with a strong sense of autonomy and people-dealing skills, which makes them more satisfied. Often digital transformation helps in the assessment of the employees to determine the digital maturity of the enterprise. Thus, it eases the load on the employees by modeling the process best understood by them. Digital transformation works with employees in five steps- promotion and support, creativity building, commitment to transformation, user-centric procedures, and data-driven enterprise.

The Cons

Conversely, it also has many repetitive, routine, and even skillful tasks resulting in the replacement of employees by technology. It also promotes excessive involvement with work, which can cause burnout and negatively affect employee satisfaction and the resultant chain of events. Digital transformation also brings about a digital mindset in the organization, which keeps on fuelling the competitiveness of an organization leading to negligence in employee welfare. A company can also tend to rely more on digitization and less on employees leading to more employee releases.

Key Factors

Digital transformation has a better chance of successful adoption when the employees are knowledgeable. Research shows a direct positive relation with employee communication. Employee trust and knowledge have an indirect but positive connection with business and IT alignment. Adaptation to digitization is frequently challenged by organizational or even at times departmental culture. Older employees have a somewhat indifferent attitude, sometimes, even resisting the change in their work technique. Younger employees are claimed to be fast learners and more welcoming to digital transformation. Therefore, employee age is considered a major factor. Because of these ramifications, many organizations tend to tread on uncharted territory, not able to orient themselves to digital transformations. It is thus imperative that the process is considered as blending and that a company is digitally integrated rather than transformed. The business strategy of a company should merge with information technology assistance into a digital business strategy. Therefore, there should be a systematic approach to formulating the digital transformation process to enable competitive strategies, keeping in mind certain parameters. These parameters are the 4S’s- “scope”, “scale”, “speed”, and “sources of business creation and capture”.


Digitization requires a systematic approach to create active competency and fluidity so that business capture models are readily built to pursue value in a constantly evolving and challenging market. it should fish out opportunities from the market.