A System Dynamics Approach Linking Employee Health, Quality Culture and Organizational Effectiveness

The purpose of this research is to investigate the interactions between organizational effectiveness, quality culture, and employee health. The system dynamics modeling approach is used in order to reveal the complex and dynamic behavior of the system under investigation. Understanding system behavior facilitates policy analysis and management decision-making. The relationships between the three constructs: organizational effectiveness, quality culture and employee health are non linear and during the research a number of dynamic hypotheses were investigated. For example, illness is the main cause for absenteeism, loss of productivity, ineffective learning, which in turn causes even more stress and eventually more illness. As part of the system dynamics approach a conceptual (qualitative) model and a formal (quantitative) model were built. The conclusion from analyzing the dynamic hypotheses of this model was that quality culture had a great impact on the performance of the whole system, especially on employees’ health and on organizational effectiveness. Furthermore, employees’ health and organizational effectiveness concurrently impact each other. However, this research could not show a considerable impact of the employees’ health and organizational effectiveness on the organization’s quality culture. The research contributes to the general understanding of complex production systems, since the three constructs investigated in this research face similar issues, i.e., the trade-off between long-term and short-term goals, consequences of managerial actions that are far apart in time and space, and conflicts between measurable outcomes and subjective outcomes. The research adds to the design of effective social systems, where the products and the services are created in a quality fashion, and individuals experience an environment that is conducive to their well-being.