ISSN: 2312-7694

Zia et al. / International Journal of Computer and Communication System Engineering (IJCCSE)

Impact of Job Satisfaction on Employee Loyalty

Serene Ismail
Department of Business Administration.

Muhammad Zia Ul Haq

Air University

Department of Business Administration.

Air University
Multan, Pakistan

Multan, Pakistan

ABSTRACT -- This study explores the relationship between job

satisfaction and employee loyalty in the context of the
organizational culture, using data from the education and
manufacturing sectors in Pakistan.
DESIGN/METHODOLOGY/APPROACH In order to find the impact
of job satisfaction on employee loyalty, a research was
conducted in four big cities of Pakistan. A structured
questionnaire was used to collect data from a sample of 200
employees of Education and manufacturing sectors. Factor
analysis is applied for the reduction of data and to derive
appropriate model from it. AHP is applied to measure the
critical level and priority level of each construct. Structural
equation modeling (SEM) was used to examine and test the
relationships of antecedents of job satisfaction and employee
loyalty.
Findings The empirical data verifies structural relationships
between employee loyalty and job satisfaction, treating job
satisfaction as a consequence of physical features and as an
antecedent of interactive features. The direct impact of job
satisfaction on employee loyalty, together with its indirect
influence via service features, were tested and supported by the
empirical data.
Keywords -- Job satisfaction, Employee Loyalty, Human
Resource Management

I. INTRODUCTION
One of the biggest challenges in management is the
effective implementation of human resource management
strategies for improving organizational performance. Various
HR strategies have been introduced in service and
manufacturing industries which include job satisfaction, team
empowerment, participatory management and strategic
planning in the field of education and industry in developing
countries like Pakistan. A well-run company usually sees an
average worker as the core source of excellence and output.
Such organizations do not look back at investments, but to
the employees, as the basic source of improvement. An
organization is successful to the extent to which it achieves
its objectives. A valuable organization will ensure that there
is a force of teamwork and sense of contribution and
contentment within the sphere of its manipulation.
How can the problems, such as high turnover of
employees and low profitability of firms, arising from
dissatisfaction of employees in education and manufacturing
2014, IJCCSE All Rights Reserved

sectors of Pakistan can be resolved by studying the elements

measuring job satisfaction and ultimately the loyalty of
employees?
Earlier the relationship between the employee satisfaction
and affecting factors in the public sector of Turkey has been
studied by Ali Turkyilmaz. So keeping in mind, this research,
impact of job satisfaction on employee loyalty is carried out
in private education and manufacturing organizations of
Pakistan.
II. LITERATURE REVIEW AND HYPOTHESIS
2.1 JOB SATISFACTION
Job satisfaction is recognized in many researches,
either as a general sensation about the employment or as an
identified set of disposition about distinctive parts of the
occupation (Spector, 1997). Pearson (1991) explained that
workers forecast their work to supply a sum of characteristics
(eg, salary, promotion and independence) which hold certain
values for employees. In expression of employee satisfaction,
Luthans (1992) talk about five aspects that comprise
payment, nature of work, operational circumstances,
supervision policy and colleagues. While salary is considered
as an external feature, other factors (factors of job
characteristics) are defined as internal factors (Rose, 2003).
McAfee et al. (1995) investigated the effects of discretion,
outcome feedback and process feedback on employee job
satisfaction.
According to Drummond and Stoddard (1991), job
satisfaction contains an evaluation of various job
characteristics. These features are working conditions, wages,
relationships with co-workers and supervisors, organizational
policies and the nature of work itself. According to Bodur
(2002) content of work, age, sex, education, operational
circumstances, location (rural or urban), colleagues, earnings
and working time are some of the factors related to
satisfaction of the work.

a) AGE
There are two schools of thoughts which state
the relationship of employee age with satisfaction arising
from the job in an organization. (Herzberg et al, 1957, Clark
131 | P a g e
Vol. 1 No.04 October 2014
www.ijccse.com

ISSN: 2312-7694
Zia et al. / International Journal of Computer and Communication System Engineering (IJCCSE)
et al, 1996) suggest that job satisfaction is U-shaped in age,
with higher levels of morality among young workers, but this
decreases after employment novelty disappears and boredom
sets in. Work satisfaction rises again in later life as workers
get used to the role. By contrast, other studies indicate a
positive linear relationship based on age (Lee & Wilber,
1985, Hulin and Smith, 1965; Savery, 1996). In their study
of accountants in Singapore, Ang et al. (1993) reported a
positive linear relationship between age and job satisfaction
(except for a group of respondents for which the relationship
is curvilinear). Metle (1997) also reported a positive linear
relationship in their study of bank employees in Kuwait, as
O'Brien and Dowling (1981. P 49), who suggest that the
"influences associated with aging (eg , higher incomes and
jobs of greater responsibility) tend to increase job
satisfaction. "
Similar results are presented by Oshagbemi (1998, 2000B)
and Hickson (1999), who provide evidence of a strong
relationship between age and job satisfaction of university
professors, and the results indicate that "job satisfaction
declines with advancing age, but in declinerate "(Hickson
and Oshagbemi, 1999, p. 541).
H1 There will be a positive but weak relationship between
employee age and job satisfaction.
b) WORKING CONDITIONS
Working conditions is another factor that
has a moderate impact on the employees job satisfaction
(Luthans, 1992; Moorhead & Griffen, 1992). Work
Conditions
means
the conditions under which the worker performs his work.
Physical factors include working at the workplace, like calm
working environment, aeration, light effects, temperature,
tedious work territories, and work places. Robbins (2001)
argues that conditions of the workplace will affect employee
satisfaction, as they want relaxing physical environment.
H2. There will be a strong and significantly positive
relationship between working conditions and job
satisfaction.
c)

RANK/POSITION OF JOB
Rank, as used in this article, refers to an
individuals job status in an organization. It indicates an
employees job level or job seniority in a particular
occupational classification. Miles et al. (1996) found job
rank is a significant predictor of job satisfaction of the
employees. They examined job as a structural determinant of
role behaviour and suggest that job moderates the
communication job satisfaction relationship.
H3. There will be a strong and significantly positive
relationship between rank/position of job and job
satisfaction.

According to Luthans (1998), salaries not

only assist people to attain their basic needs, but are also
instrumental in satisfying the higher level needs of people.
Pay-systems are becoming a part of the human resource
management, initiative at the enterprise level, to achieve the
objectives of the company with certain set strategies.
Previous research (Voydanoff, 1980) has shown that
monetary compensation is one of the most significant
variables in explaining job satisfaction.
In their study of public sector managers, Taylor and West
(1992) found that pay levels affect job satisfaction, reporting
that those public employees that compared their salaries with
those of private sector employees experienced lower levels
of job satisfaction.
H4. There will be a strong and significantly positive
relationship of salary and incentives with job satisfaction.
2.2 EMPLOYEE LOYALTY
According to Mathieu and Zajac (1990), loyalty is
explained as warmth to the company that could be
recognized an emotional reaction, particularly when a
representative firmly believes in the standards and
managerial decisions and has a strong urge to be in the
organization for a long time. Becker et al. (1995) explained
loyalty as retaining member of organization; an enthusiasm
to hit on high standards of hard work for organization; and a
specific confidence in and acceptability of the principles and
objectives of the association. Loyalty is described as a solid
wish to precede enrolment of the company, which forecasts
a positive part in retaining the members in organization.
According to Kim et al (2005) satisfied employees
are more loyal towards their organizations in contrast to
dissatisfied employees. Low satisfaction creates emotional
misbalance among the employees and they tend to seek new
jobs, or change their current job and careers. High job
turnover, low employee morale and low loyalty towards an
organization is the result of low job satisfaction (Soler,
1998). When job satisfaction increases, the loyalty pattern of
employees tend to progress in a positive direction.
H5. There will be a strong and significantly positive
relationship between job satisfaction and employee loyalty.
2.2 THEORETICAL FRAMEWORK
The theoretical framework is developed with
the help of survey conducted and the literature study done in
order to do the research work that is an extension to the
work already done by various researchers.

d) SALARY AND INCENTIVES

2014, IJCCSE All Rights Reserved

Vol. 1 No.04 October 2014

132 | P a g e
www.ijccse.com

ISSN: 2312-7694
Zia et al. / International Journal of Computer and Communication System Engineering (IJCCSE)

Working
Conditions

Salary and
incentives.

Job
satisfacti
on

Rank
or
positio
n of
jobAge

Emplo
yee
loyalty

Figure 1 . (Theoretical Model)

III. RESEARCH METHODOLOGY
The research is conducted in four big cities of
Pakistan. The sample comprised of 200 workers in four
cities from both sectors(Education and Manufacturing). The

Likert-type scales or frequency reply formats currently using

fixed choice and are designed for measure attitudes or
opinions (Bowling 1997 Burns & Grove 1997). These
ordinal scales measure levels of agreement / disagreement.
The data is then entered in SPSS16 software for the analysis
purpose. Further Analytical Hierarchal process (AHP) is
used to prioritize the given set of factors. AHP is a multicriteria decision making (MCDM) method was introduced in
1980 by Saaty. MCDM is well known class of decision
making which addresses decision problems that are related
with a number of decision criteria. Afterwards, T-test and
one way analysis of variance (ANOVA) has been used to
compare the means of different factors. Conclusively
following tools have been implemented for data analysis:
Analytical Hierarchal process to prioritize the set of
factors.
One way Analysis of Variance
T-test
Structural Equation Modeling (SEM)
IV. DATA ANALYSIS AND INTERPRETATION

Reliability Statistics

4.1 DATARELIABILITY
Cronbach's alpha is an index of reliability
associated with the variation accounted for by the true score
of the "underlying construct." Construct is the hypothetical
variable that is being measured (Hatcher, 1994).The higher
the score, the more reliable the generated scale is. Nunnaly
(1978) has indicated 0.7 to be an acceptable reliability
coefficient but lower thresholds are sometimes used in the
literature.

Table 1. ( Reliability Statistics )

Cronbach's Alpha

N of Items

.824

43

instrument used for research is survey questionnaire and

sampling is done through convenience sampling method..
Survey questionnaire is developed through vast literary
works review. The questionnaire, in addition to guidelines
was given to male and female through human resource
department or management at work places. The workers
voluntarily filled the questionnaire and returned to particular
division of their organization. The respondents are permitted
to be anonymous. The questionnaire comprised of questions
related to job satisfaction including, working conditions,
salary & incentives, rank of the job and stress. Furthermore,
it includes questions related to personal factors (education,
working years and income) and demographics which include
gender and age.
3.1 RESEARCH TOOLS
The study is survey based on self-administered
surveys used in order to get responses from employees. A
combination of close ended that is, multiple choice and likert
scale questions are used to formulate questionnaire.
Different types of rating scales have been developed for
measure the attitudes directly (ie the person knows their
attitude is being studied). The most used is the Likert scale.

2014, IJCCSE All Rights Reserved

The overall reliability of data is 82% which is greater than

70% and is said to be reliable enough for further analysis.
4.2.1 CRITICAL FACTOR SELECTION STRUCTURE
(EDUCATION)
The critical indices of education sector are
segregated into three tiers. They are critical, supporting and
maintaining factors respectively. The tier I consists of two
variables which are satisfaction with age and promotional
uplift of employees. As suggested by literature, employees
feel that their amount of work given is not satisfactorily with
the span of age. Employees think that chances to grow

Vol. 1 No.04 October 2014

133 | P a g e
www.ijccse.com

ISSN: 2312-7694
Zia et al. / International Journal of Computer and Communication System Engineering (IJCCSE)
further in the profession is more in this sector compared to
other sectors. So the employer should focus more on these
two items so as to have maximum number of satisfied and
loyal employees. The tier II includes ten items that would
lead to dissatisfied employees which should be managed
with the critical factors. These factors are realistic deadlines,
authority to make decisions, fair pay scale, awareness about
opportunities, right amount of recognition, fair salary and
other monetary benefits, satisfaction regarding salary
increments, job security and contribution to companys
missions. It suggests that if employees are given authority to
take part in decision making, then their satisfaction
increases. Reasonable workload given with realistic
deadlines is another contribution towards satisfied
employees. If the employees are paid fairly according to
their work and their jobs are made secure, so the level of
satisfied employees boosts up.
Tier III comprises of remaining variables identified in the
factor analysis that need to be maintained so the satisfaction
of employees is not affected further. However, having the
knowledge of these variables are beneficial in maintaining
the balance between two domains and not making the
dissatisfaction of employees worse.

4.2.2 CRITICAL FACTOR SELECTION STRUCTURE

(MANUFACTURING
The critical indices of manufacturing sector are
also segregated into three tiers. They are critical, supporting
and maintaining factors respectively. The tier I includes two
variables which are fair pay scale and over utilization with
age. According to the literature, if the employees are paid
fairly for the work they do, then their satisfaction level is
also more. Similarly, employees should be given work
keeping the employee age in mind as overutilization with
age results in dissatisfied employees which further leads to
high turnover.
The variables which fall under tier II are twelve in number.
They are professional development, reasonable workload,
job security, right recognition, authority to be a part of
decision making in the organization. Employees should be
given reasonable amount of work in a secure environment so
as to achieve the excellence of satisfied employees.
Employer should keep in mind that right type of recognition
given at an appropriate time leads to highly satisfied
individuals and thus retention increases.
Tier III variables are described as maintaining
variables as they are not given priority, however, they should
be considered by the practitioner and policy makers as they
can help them to make better decisions about the job layout
for the employees. All the remaining variables fall under this
category which should be maintained to raise the number of
satisfied employees and highly loyal individuals.

4.3 MODEL FIT

Structural equation modeling is used to check the
complex relationship among the variables. These variables
might have direct, indirect or intermediary effect on each
other.
Table 2 (Goodness of Fit Test)
Goodness of Fit Test
Required Value

Author

Fitness Index

Daire et al 2008

Chi-Square Pvalue
CMIN/DF

>0.05

.504

2.00-5.00

.971

GFI
RMSE

>0.90
<0.08

.976
.000

AGFI
RMR

>0.90
<0.08

.947
.022

IFI

>0.90

1.001

NFI
CFI

>0.90
>0.90

.958
1.000

NNFI

>0.90

1.002

(Schumacker&
Lomax, 2004)
(Byrne, 1994)
(Browne, Cudeck,
Bollen, & Long,
1993)
(Byrne, 1998)
(Hu &Bentler,
1998)
Hu &Bentler,
1999)
(Bentler-Bonett)
(Hooper et al.,
2008)
Hu &Bentler, 1999)

Results

So the results prove that the anticipated model has an

excellent fit with the above defined values. The above
results showed that the value of chi-square, GFI, RMR, IFI,
SEM is related to path analysis. In path analysis path
diagram is drawn with the help of software named IBM
AMOS software is used to measure the estimates for the
hypothesized relationships.
NFI and CFI lies in the acceptable region. Therefore, we
can say that this proposed model have a sufficient ability to
reproduce a data.
COMPARITIVE ANALYSIS:
The study is conducted on two different sectors.
So the comparative analysis is required to do on both
education and manufacturing sector.
Comparison based on AHP (independent variables):
Table 3 (AHP )
Sector 1 (education)

Sector 2 (manufacturing)

Employee Age

Salary and Incentives

Professional Development

Employee Age

Results show that Employee age and professional

development of employees play an important role in
determining job satisfaction of employees in education
sector whereas salary and incentives and employee age
determines satisfaction level in manufacturing sector.
Comparison based on SEM:

2014, IJCCSE All Rights Reserved

Vol. 1 No.04 October 2014

134 | P a g e
www.ijccse.com

ISSN: 2312-7694
Zia et al. / International Journal of Computer and Communication System Engineering (IJCCSE)
Table 4 (Comparison based on SEM)
Sector 1

Hypothesis

(education)

Sector 2

Hypothesis

[2]

(manufacturing)

Empowerment
and
Participation
Working
Conditions

Rejected

Empowerment
and Participation

Rejected

Rejected

Working
Conditions

Rejected

Professional
development

Support
ed

Professional
development

Supported

Salary and
Incentives
Relation with
co-workers
Rank/position
of job

Support
ed
Support
ed
Rejected

Salary and
Incentives
Relation with coworkers
Rank/position of
job

Supported

Employee age

Rejected

Employee age

Rejected

Stress

Support
ed
Support
ed

Stress

Supported

Employee loyalty

Supported

Employee
loyalty

[3]

[4]

[5]
Rejected
Rejected

[6]

[7]

[8]

V. CONCLUSIONS
Number of elements has been distinguished to enhance
satisfaction level of employees. These elements have been
reconsidered in time, and job satisfaction determinants
informative content is still insufficient. This has created a
calculated model and it is tested in developing nation to
evaluate the variables that may advance job satisfaction of
employees in private sector mainly education and
manufacturing. It is evident that employee loyalty and
contentment of job are very vital for the prosperity of private
sector. This study analyzed the variables influencing
employee satisfaction and loyalty in private sector of
Pakistan. Variables selected for employee contentment are
working conditions, salary and incentives, rank/position of
job and age
The outcome reveals that there is a significant relationship
between job satisfaction and employee loyalty. By testing
the variables, this research shows a significant approach to
valuable attitude. From this study, it is evident that
professional development, salary and incentives, relations
with co-workers and stress are main constraints that result in
satisfied workforce with a willingness to continue with the
existing working organization. The relation between
dependent variables, job satisfaction and employee loyalty
were implied on the statistical scale in the SEM.
References

[9]

[10]

[11]

[12]
[13]
[14]

[15]

[16]

[17]

Employee Commitment And Employee Productivity.

International Review of Business Research Papers , Vol.3
No.2 , 54 68.
Ang, K. G. (1993). The impact of age on the job satisfaction
of accountants. Personnel Review , no.22, 31-9.
Ampofo-Boateng, K. M. (1997). Employees adaptation to
technological changes in a multinational corporation in
Malaysia, innovation in technology management the key to
global leadership, PICMET97: Portland. Portland: PICMET.
Becker, T. R. (1995). The multidimensional view of
commitment and theory of reasoned action: a comparative
evaluation. Journal of Management, , Vol. 21 No. 4, , pp. 61738.
Bhatti, K. a. (2007). Impact of employee participation on job
satisfaction,
employee
commitment
and
employee
productivity. International Review of Business Research
Papers, , Vol. 3 No. 2.
Clark, A. O. (1996). Is job satisfaction U-shaped in age?
Journal of Occupational and Organizational Psychology ,
no.69, pp. 57-81.
Cummins, R. (1990). Job stress and the buffering effort of
supervisory support . Group and Organizational Studies , Vol.
15 No. 1, pp. 92-104.
Cummins, R. (1990). Job stress and the buffering effort of
supervisory support . Group and Organizational Studies , Vol.
15 No. 1, pp. 92-104.
Hickson, C. a. (1999). The effect of age on the satisfaction of
academics with teaching and research. International Journal
of Social Economics , Vol. 26, , pp. 537-44.
Jun, M. C. (2006). TQM practice in maquiladora: antecedents
of employee satisfaction and loyalty. Journal of Operations
Management , Vol. 24,, pp. 791-812.
Landsbergis, P. (1988). , Occupational stress among health
care workers: a test of the job demands-control model. Journal
of Organizational Behaviour , Vol. 9,, pp. 217-40.
Luthans, F. (1998). Organisational behavior.(8th ed.). India:
McGraw-Hill.
Luthans, F. (1992). Organizational Behaviour, 6th ed. New
York, NY,: McGraw-Hill.
McAfee, B. Q. (1995). The effect of discretion, outcome
feedback, and process feedback on employee job satisfaction.
Industrial Management & Data Systems , Vol. 95 No. 5, pp. 712.
Metle, M. (1997). The relationship between age and job
satisfaction: a study among female bank employees in Kuwait.
International Journal of Management , 14, pp. 654-66.
Miles, E. P. (1996). Job level as a systemic variable in
predicting
the
relationship
between
supervisory
communication and job satisfaction,. Journal of Occupational
and Organizational Psychology , Vol. 69, , pp. 277-92.
Naumann, E. (1993). Antecedents and consequences of
satisfaction and commitment among expatriate managers.
Group & Organization Management, , Vol. 18 No. 2,, pp. 15387.

[1] Ali Turkyilmaz, Gulsen Akman, Coskun Azkan (2007).

Impact Of Employee Participation On Job Satisfaction,

2014, IJCCSE All Rights Reserved

Vol. 1 No.04 October 2014

135 | P a g e
www.ijccse.com

ISSN: 2312-7694
Zia et al. / International Journal of Computer and Communication System Engineering (IJCCSE)
[18] Oshagbemi, T. (1998). The impact of age on the job
satisfaction of university teachers. Research in Education ,
Vol. 59, pp. 95-108.
[19] Rose, M. (2003). Good deal, bad deal? Job satisfaction in
occupations. Work, Employment and Society , Vol. 17 No. 3, p.
506.
[20] Rutledge, T. (2006). Getting engaged: the new workplace
loyalty. Natcon papers, . pp. 1-12.
[21] Soler, C. (1998). The relationship of organizational structure
and job characteristics to teachers job satisfaction and
commitment (Doctoral dissertation, St Johns University,
1998). Dissertation Abstracts International, , Vol. 60, , pp. 4273.

2014, IJCCSE All Rights Reserved

[22] Terry, D. N. (1993). Effects of work stress on psychological

wellbeing and job satisfaction: the stress-buffering role of
social support. Australian Journal of Psychology, , Vol. 45 No.
3,, pp. 168-75.
[23]

Tett, R. a. (1993). Job satisfaction, organizational

commitment, turnover intention, and turnover: path analyses based

on meta-analytic findings. Personnel Psychology , Vol. 46,, pp.
259-93.

Vol. 1 No.04 October 2014

136 | P a g e
www.ijccse.com