empirical study of impact of job satisfaction

7/31/2019 Empirical Study of Impact of Job Satisfaction

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPYRIGHT 2011 Institute of Interdisciplinary Business Research 167

JANUARY2011VOL 2,NO 9

An Empirical Study of Impact of Job Satisfaction on

job Performance in the Public Sector Organizations

Dr. Muhammad Safdar Rehman

General Manager, Human Resources,PEMRA, Islamabad, Pakistan.

Ajmal Waheed, PhD (Corresponding Author)

Assistant Professor,Department of Administrative Sciences,

Quaid-e-Azam University, Islamabad

Note: This piece of research has been conducted as part of PhD research of the firstauthor (Rehman, 2010).

Abstract

The job satisfaction of employees is the most imperative factor in public sector regulatoryauthorities in Pakistan. To enhance the productivity and effectiveness of the employeesone needs to examine what factors influences the job satisfaction. The purpose of thisdescriptive-correlational study was to test link between job satisfaction, job retention andjob performance. Sample of 568 employees from public sector regulatory authorities wasselected for this study. Employing a descriptive-correlative survey method data wascollected through questionnaire. The employees were generally satisfied with their jobs.

This study has explored a relationships showing large effect size correlations (r = 0.52)between job performance and job satisfaction.

Keywords: Public Sector Regulatory Authorities, Job Satisfaction, Job performance, Job

Retention, Job Analysis, Public Sector Employees.

1. Introduction

The topic of job satisfaction of an employee has received considerable attention ofresearchers and managers equally (Gautam, Mandal & Dalal, 2006). The most importantinformation in an organization regarding an employee is a validated measure of his / herlevel of job satisfaction (Roznowski & Hulin, 1992). The most-used research definition

of job satisfaction is by Locke (1976), who defined it as a pleasurable or positiveemotional state resulting from the appraisal of ones jobor job experiences (p. 1304).Implicit inLockes definition is the importance of bothaffect, or feeling, and cognition,or thinking.When we think, we have feelings about whatwe think. Conversely, when wehave feelings, we think about what we feel. Cognition and affect are thus inextricablylinked, in psychology and even in biology. Thus, when evaluating our jobs, as when weassess most anything important to us, both thinking and feeling are involved.

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Of all the major job satisfaction areas, satisfaction with the nature of the job itself whichincludes job challenge, autonomy, variety, and scope, best predicts overall jobsatisfaction, as well as other important outcomes like employee retention (Fried & Ferris,1987; Parisi & Weiner, 1999; Weiner, 2000). Thus, to understand what causes people to

be satisfied with their jobs, the nature of the job itself is one of the first places forpractitioners to focus on. There has been an increasing interest among human resourcemanagement (HRM) academics and practitioners in the degree to which employees aresatisfied with their jobs, and more generally in well-being at job. A number of recentstudies have reported a positive link between employees well-being and productivity(Marks, 2006). This interest in employee well-being has been mirrored in other fields,most notably within the new economics of happiness literature (Layard, 2005).

In order to find out the relationship between HRM practices and job satisfaction, therehas been widespread debate in the literature over the effects of HRM on job satisfaction.

In some studies, job satisfaction has been identified as a key variable mediating anypositive relationship between HRM practices and organizational performance (Guest,2002). In contrast, others have suggested that in Britain, the implementation of HRMpractices has been associated with higher levels of job intensity, and thus lower levels ofjob satisfaction (Green, 2006). Others note that HRM practices adopted as part of a high-performance work system are not primarily designed to increase job satisfaction: inpractice, they may or may not have such an effect (Appelbaum, 2002). It may be the casethat HRM practices impact on individual facets of job satisfaction such as satisfactionwith sense of achievement or satisfaction with pay. Thus, further research is required toassess the actual effects of HRM practices on individual aspects of job satisfaction andoverall job satisfaction.

What is the likely impact of HRM practices on job satisfaction? It might be expected thatthese practices will have a positive impact on particular aspects of job satisfaction. Somehave pointed to the critical role of HRM policies, such as participatory job practices, onemployees ability to derive a sense of meaning from job and to achieve satisfaction withjob itself (Cartwright & Holmes, 2006). If HRM practices such as team working, upwardcommunication systems and problem-solving groups provide employees with greaterautonomy and greater opportunities to contribute to decision making, then this might beexpected to have a positive impact on other aspects of job satisfaction, particularlysatisfaction with influence. However, Marchington and Wilkinson (2005) argue that thedegree of influence provided by participatory work practices under the umbrella of HRM

is often overstated and that these initiatives result instead in job intensification and higherlevels of stress. Other studies (Boselie et al., 2005) have found that bundles of HRMpractices, implemented together as a high involvement approach to management, can beassociated with higher levels of job satisfaction.

Social Sciences and behavioral research suggests that job satisfaction and jobperformance are positively correlated (Bowran & Todd, 1999). The study of therelationship between job satisfaction and job performance has a controversial history. TheHawthorne studies, conducted in the 1930s, are often credited with making researchers


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aware of the effects of employee attitudes on performance. Shortly after the Hawthornestudies, researchers began taking a critical look at the notion that a happy worker is aproductive worker. Most of the earlier reviews of the literature suggested a weak andsomewhat inconsistent relationship between job satisfaction and performance.

A review of the literature in 1985 suggested that the statistical correlation between jobsatisfaction and performance was about 0.17 (Iaffaldano & Muchinsky, 1985). Thus,these authors concluded that the presumed relationship between job satisfaction andperformance was a management fad and illusory. This study had an important impacton researchers, and in some cases on organizations, with some managers and HRpractitioners concluding that the relationship between job satisfaction and performancewas trivial.

However, further research does not agree with this conclusion. Organ (1988) suggests

that the failure to find a strong relationship between job satisfaction and performance isdue to the narrow means often used to define job performance. Organ argued that whenperformance is defined to include important behaviors not generally reflected inperformance appraisals, such as organizational citizenship behaviors, its relationship withjob satisfaction improves. Research tends to support Organs proposition in that jobsatisfaction correlates with organizational citizenship behaviors (Organ & Ryan, 1995).

In addition, in a more recent and comprehensive review of 301 studies, Judge, Thoresen,Bono, and Patton (2001) found that when the correlations are appropriately corrected (forsampling and measurement errors); the average correlation between job satisfaction and

job performance is a higher 0.30. In addition, the relationship between job satisfactionand performance was found to be even higher for complex (e.g., professional) jobs thanfor less complex jobs. Thus, contrary to earlier reviews, it does appear that jobsatisfaction is, in fact, predictive of performance, and the relationship is even stronger forprofessional jobs.

A better appreciative of job satisfaction and factors linked with it helps managers guideemployees' activities in a desired direction. The confidence of employees is a decidingfactor in the organization's efficiency (Chaudhary & Banerjee, 2004). Thus, it isrewarding to say that managers, supervisors, human resource specialists, employees, andsocieties in general are concerned with ways of improving job satisfaction (Cranny et al.,

1992).Various researchers have investigated the concept of job satisfaction and factorsthat explain how satisfied employees are with their positions. Much of the job satisfactionresearch has focused on employees in the private sector (Niehouse, 1986; Lawler &Porter, 1968; Herzberg et al., 1958). These researchers have found that a variety offactors influence the job satisfaction of employees.

The motivation to probe the degree of job satisfaction arises from the fact that a betterunderstanding of employee satisfaction is desirable to achieve a higher level of


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motivation which is directly associated with their achievements. Recently, the appraisalof employees attitude such as job satisfaction has become a common activity inorganizations in which top management is concerned with the physical and psychologicalwell being of people (Spector, 1997).

Beadles et al (2000) found that job retention was positively correlated with organizationalperformance. Unavoidable turnover is typically viewed as unfavorable to an organization(Campion, 1991). Most research supports the notion that turnover decreasesorganizational performance. Mobley (1982) suggested that turnover might disrupt jobperformance when an employee who intends to leave becomes less efficient, when anexperienced employee leaves, or when time is lost in an attempt to secure a replacement.Empirical research has shown that voluntary turnover is related to lower organizationalperformance (Shaw, Gupta, & Delery, 2002). Other research suggests that turnover canactually improve performance. One potential benefit of turnover is the elimination of

poor performing employees (Price, 1989). Additionally, Staw et al (1986) proposed thatturnover can increase performance if most of the turnover is by employees with very longor very short tenure.

Turnover is a persistent problem in organizations (Abbasi & Hollman, 2000; Price,1989). It is prevalent in every type and size of organization and at every organizationallevel (Abbasi & Hollman, 2000; Beadles, Lowery, Petty, & Ezell, 2000). Abbasi andHollman (2000) go so far as to state that turnover is one of the most significant causesof declining productivity and sagging morale in both the public and private sectors (p.333). Turnover is also very costly for organizations. It is estimated that Americanindustries incur a cost of $11 billion annually as a result of voluntary and involuntary

turnover. This cost is due to termination, advertising, recruitment, selection, and hiring(Abbasi & Hollman, 2000; Mobley, 1982). Turnover also produces intangible costs, suchas declining morale (Abbasi & Hollman, 2000), and the disruption of social andcommunication patterns (Mobley, 1982). Because of this, the study of turnover is a well-researched area and is of major interest in organizational behavior (Beadles et al., 2000).

Research by Allen and Griffeth (2001), Allen et al (2003), and Chiu and Francesco(2003) shows that job satisfaction is a strong predictor of turnover intentions.Elangovans (2001) extensive research shows that job satisfaction predicts bothcommitment and turnover intentions, and commitment predicts only turnover intentions.

It is instructive to note that, according to Jaros et al (1993) and Wasti (2003),organizational commitment depicts the strongest negative relationship with turnoverintentions.

According to Hellman (1997), increasing dissatisfaction in employees results in a higherchance of considering other employment opportunities Seccombe and Smith (1997)found that the factors given by employees as reasons for leaving were centered on issuesknown to affect job satisfaction such as ineffective supervisory relationships and poor


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opportunities for professional development, rather than external environment of whichmanagers would justifiably feel unable to control.

Mounting evidence from the literature suggests that organizational tenure influences jobattitudes and turnover intentions (Abbott, White, and Charles, 2005; Van Breukelen, Vander Vlist, and Steensma, 2004). For instance, Steers (1977) strongly agues that tenure isthe single best predictor of turnover because it represents an employees past behaviorand summarizes his or her relationship with the organization. The attraction selectionattrition hypothesis (Schneider and Reichers, 1983) suggests that individuals are attractedto and selected by organizations that satisfy their needs and goals. In those cases wherethere is a good fit, we expect low levels of attrition and, hence, longer tenure. In cases ofmismatches, however, we should expect high attrition rates and, hence, shorter tenure,provided that other job opportunities are readily available. Thus, tenure is expected tocorrelate with climate perceptions, job satisfaction, organizational commitment, and

turnover intentions.

2. Purpose and Objectives

The purpose of this descriptive-co-relational study was to examine impact of jobsatisfaction on job performance of public sector regulatory authorities. In addition, thisstudy sought to determine the relation between job retention and job performance and jobsatisfaction- job retention. To guide this study the following research objectives wereformulated.

Describe selected demographic characteristics of employees; Describe the employees level of job satisfaction with the job performance; Describe relationships between job satisfaction and job performance; Describe relationships between job retention and job performance; Describe the relationships between job satisfaction and job retention; and, Describe the relationships between job satisfaction, job retention and job

performance.

The sample for this study was employees of public sector regulatory authorities (N =568). Employing a descriptive-correlative survey method and data were collected throughquestionnaire.

3. Methodology

The research design was descriptive-correlative survey method and data were collectedthrough a questionnaire that was developed for this particular research. The section oneof the questionnaire consisted of questions pertaining to the demographic characteristics.Section two of the questionnaire consisted of the employee job Satisfaction, jobperformance and job retention. This Section consisted of an 18-item five-point Likerttype scale with responses varying from 1 (strongly disagree) to 5 (strongly agree).


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Content and face validity were established by a panel of human resources and statisticalexperts. A pilot test was conducted with 45 employees not included in the sample.Questionnaire reliability was estimated by calculating Cronbachs alpha. Reliability forthe overall instrument is placed under Appendix - A.

4. Results

Respondents consisted of 71.1% male and 25.9% female employees. The age of 47%respondents was between 25-35 years and 21% respondents were below 25 years. Mostof the employees (66.4%) had attained a master degree. Almost 44.9% of the respondentswere from middle management, 23.2% supervisory level, 26.9% non-managerial and4.9% top management. Number of years in present organization was from 3-5 years of32.9% and 1-2 years of 26.1%. The majority of the respondents (64.6%) are permanentlyemployed. The contractual employees comprise (31%) respondents. Almost 47.5% of therespondents were from managerial / Administrative category and 28.7% from technicalcategory. Majority of the respondents (67.6%) were directly recruited whereas 28.2%

respondents were promoted.Based on a five point Likert type scale with responses ranging from strongly disagree (1)to strongly agree (5), the overall level of job satisfaction was 3.71 (SD = 0.57). In termsof Table 1 the results indicate that there is a slight mean difference in the levels of jobsatisfaction with job performance (Mean = 3.68, SD = 0.65) and job satisfaction with jobretention (Mean = 3.16, SD = 0.60).

Table: 1. Descriptive Statistics of all Variables

VariablesMinimum Maximum Mean Std. Deviation

Job Performance 1.00 5.00 3.68 0.65

Job Satisfaction 2.17 5.00 3.71 0.57

Job Retention 1.67 4.83 3.16 0.60

Valid N 568 568 568 568

Correlation coefficients were calculated to describe the relationships between jobsatisfaction and job performance, job retention and job performance, job satisfaction andjob retention (Table 2). Correlation coefficients were as follows: Job satisfaction, r =0.52; Job Retention, r = 0.23; and Job satisfaction-Job Retention, r = 0.34. Relationsbetween job satisfaction and job performance were found highly significant whereasother relations were found significant also.

Table: 2. Relationships between Job Performance (JP), Job satisfaction (JS) and Job

Retention (JR)

VARIABLES JP JS JR

Job Performance ( JP )


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Job Satisfaction ( JS ) 0.518(**)

Job Retention ( JR ) 0.230(**) 0.340(**)

N= 568

** Correlation is significant at the 0.01 level (2-tailed)

Regression results have shown that job satisfaction correlates positively with Jobperformance (Table 3). Adjusted R-squared value was found 0.974 which explained 97.4percent of the total variance for dependent variable job performance relating to jobsatisfaction. B value for job satisfaction was 0.985 with standard error of 0.007. P-levelof job satisfaction was 0.000 and t value 145.67. All the values were positive t value witha b value is significant; hence, predictor job satisfaction is making a highly significantcontribution to the study. The smaller the value of significance 0.000 and the larger thevalue of t = 145.67 is also showing the greater contribution of job satisfaction. Beta valuefor job satisfaction was 0.987 which provided a better insight into the importance of job

satisfaction in the study.Table: 3. Regression summary of job performance relating to job satisfaction

ANALYSIS OF VARIANCE

Correlation ( R ) 0.987

R- squared 0.974

Adjusted R- squared 0.974

Standard Error of Estimates 0.604

F ( 21220.972 ) p = .000

BETA B STD.

ERROR

t P-VALUE

InterceptJob satisfaction ( JS ) 0.987 0.985 0.007 145.67 0.000

Regression results have also shown that job retention correlates positively with Jobperformance (Table 4). Adjusted R-squared value was found 0.951 which explained 95.1percent of the total variance for dependent variable job performance relating to jobretention. B value for job retention was 1.132 with standard error of 0.011. P-level of jobretention was 0.000 and t value 104.46. All the values were positive t value with a bvalue is significant hence predictor job retention is making a highly significantcontribution to the model. The smaller the value of significance 0.000 and the larger thevalue of t = 104.46 is also showing the greater contribution of job retention. Beta valuefor job retention was 0.975 which provided a better insight into the importance of job

retention in the study.Table: 4. Regression Summary of Job Performance Relating to Job Retention

ANALYSIS OF VARIANCE

Correlation ( R ) 0.975

R- squared 0.951

Adjusted R- squared 0.951

Standard Error of Estimates 0.832

F ( 10912.766 ) p = .000


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BETA B STD.

ERROR

T p-VALUE

Intercept

Job retention ( JR ) 0.975 1.132 .011 104.46 0.000

Regression Analysis for Jon satisfaction and job retention together with Job performance(Table 5)revealed that adjusted R- squared was found 0.975 which is a high effect size. Itexplained 97.5 percent of the total variance. The overall p-value is


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which does not support to the previous findings. This study had an important impact onresearchers, and in some cases on organizations, with some managers and HRpractitioners concluding that the relationship between job satisfaction and performancewas trivial.

In addition, in a comprehensive review of 301 studies, Judge, Thoresen, Bono, and Patton(2001) found that when the correlations are appropriately corrected (for sampling andmeasurement errors); the average correlation between job satisfaction and jobperformance is a higher 0.30. This finding is supportive of current study sampling andmeasurement as results of job satisfaction and job performance (0.52) is a higher than0.30 Thus, contrary to earlier reviews, it does appear that job satisfaction is, in fact,predictive of job performance and the relationship is stronger.

Previous work of Fried & Ferris (1987); Parisi & Weiner (1999); and Weiner (2000)envisaged that major job satisfaction areas includes, satisfaction with the nature of the job

itself, including job challenge, autonomy, skill variety and scope, best predicts overall jobsatisfaction, as well as other important outcomes like job retention. Correlation betweenjob satisfaction and job retention in this study is (r = 0.34) which is statistically significant.Hence these finding support the work of Fried and Ferris (1987); Parisi and Weiner(1999); and Weiner (2000).

Job satisfaction, which shows organizations interest in the compensation and careergrowth of the employee, has a direct influence on an employees commitment to theorganization, which in turn affects employee retention and employee productivity andfinally results in increased job performance. This is in conformity with the finding ofIgbaria and Greenhaus (1992). Since most of the professionals in the organizations werein their mid career, they look for career growth. More than pay, prime value is given to

growth opportunities. If there is scope for career growth in the organization, employeesfeel attached to the organization and remain longer and contribute towards organizationalsuccess. The influence of organizational commitment on employee retention andproductivity is very much in consistency with previous studies (Becker, 1960; Allen &Meyer, 1996; Mowday et al., 1979). Organizations that are interested in a long-termrelationship with employees reap the rewards in financial terms through increasedproductivity and long term affinity of the employee with the organization. It is reallyinspiring to observe that expenditure on employees is not an overhead, but a long-terminvestment for greater long-term returns.

Although salary package is a major cost in the public sector regulatory authorities, goodcompensation packages have a direct positive impact on job satisfaction and job retentionfor highly qualified and trained manpower to enhance the productivity of theorganization. This is in agreement with the Harvard approach that all HRM practicesshould lead to cost effectiveness (Beer et al., 1984). This reveals that a well-designedcompensation system can reduce operating costs. It might be through enhancing thecommitment of employees to contribute more to the organization. Higher pay may notalways increase operating costs if it is used to enhance overall productivity of theorganization. Many previous studies found compensation and rewards to be the majorfactor deciding the organizational commitment of employees (Steers, 1977; Mowday etal., 1982; Angle, 1983; Mottaz, 1988). Compensation might be a major criterion for


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choosing an organization, but, once they are part of the organization, employees look forvertical and horizontal growth in the organization.

This is not to say that high compensations are unimportant, rather, it is that much can bedone to influence job satisfaction by ensuring job succession planning. On the other hand,there has been an increasing interest among human resource management (HRM)academics and practitioners in the degree to which employees are satisfied with theirjobs, and more generally in well-being at job. A number of recent studies have reported apositive link between employees well-being and productivity (Marks, 2006). Results ofpresent study also support the findings of Marks. The results showed that the jobsatisfaction have a highly significant influence on job performance. Particularly, the moresatisfied a job holder is with his / her job, the more important he / she regards theorganizational skills and cognitive skills as in the job, and the higher level oftechnological skills, organizational skills and cognitive skills he / she displays at job.

The vast majority of literature examines turnover as the dependent variable and focuses

on factors that predict turnover (Campion, 1991). Though, it is also important to considerturnover as the independent variable, a topic that is studied only infrequently. Oneimportant issue is the effect of turnover on subsequent job performance in theorganization. Another important issue is what moderates the turnover-performancerelationship (Staw, 1980). The positive correlations of job retention was found with jobperformance r = 0.23 in this study.

Research by Allen and Griffeth (2001), Allen et al (2003), and Chiu and Francesco(2003) have shown that job satisfaction is a strong predictor of turnover intentions. Thepresent study has shown a positive significant correlation between job retention and jobsatisfaction r = 0.34 This reflect that due to satisfaction with the current job is anindicators to predict employee turnover in the organizations may be low in finding

another job due to a positive experience with their organizations policies.The empirical data has suggested that the most significant retention predictors wereassociated with job succession planning and job security rather than compensations andother monetary rewards. Correlations between job retention and job succession planningwas found r = 0.37 and job retention with job security was r = 41 whereas correlationbetween job retention and job evaluation was r = 0.28 which is relatively low as compareto job succession planning and job security. These results were consistent across theboard among all age groups, gender, educational level and job status, as no statisticallysignificant differences were found.

This study has explored a relationships showing large effect size correlations between jobperformance and job satisfaction (r = 0.52). This highly positive significant relationship isan addition to the literature on Human Resource Management particularly in the context ofPakistan a non-western country. The findings reported in this study make a valuablecontribution to the awareness of understanding the concept of job satisfaction and theimpact of job satisfaction and job retention on job performance. However, additionalresearch is needed to further investigate the potential relationship and effect thesevariables and other variables have on job satisfaction. It is hoped that the relationships tothe employees job performance are found in this research can contribute to a great extent


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to improve the level of employees job satisfaction and job retention in public sectorregulatory authorities.

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Appendix - AVariable items with Alpha

Job Performance Alpha

My present job gives me the opportunity to enhance my performance on job

My present job has a direct impact on achieving the organizational objectives

My job performance outcomes are consistent with the goals of the organization

My good performance on job is rewarded financial terms

My good performance on job is given formal appreciation by the higher ups

The job performance evaluation system is objective

0.77

( 6 items )

Job Satisfaction

My present job gives me internal satisfaction

I am respected because of my job

My job gives me a sense of fulfillment

I can seek my peers help regarding my job

I will recommend this job to a friend if it is advertised /announced

I feel cared for by my organization

0.72

( 6 items )

Job Retention

I will continue in my present job even if I am paid less

Had my job met my expectations I would have given it my best.I like my job because it is totally monotonous in nature

I joined this job because I had no other options

I can consider changing my job in the next 12 months

I would like to reach my superannuation in my present organization

0.57

( 6 items )


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empirical study of impact of job satisfaction

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