2.1 - Introduction

This chapter will define job satisfaction and the factors affecting it. Furthermore, the relationship between job satisfaction and productivity will be examined, with the use numerous definitions and theories.

2.2 - Job Satisfaction

According to Stephen Robbins (1999), "No matter how motivated an employee is, his or her performance is going to suffer if there isn't a supportive work environment." Job satisfaction is the outcome of two types of factors: "intrinsic" and "extrinsic" (Herzberg, 1968). Supervisory leadership is one of the extrinsic factors that have a significant impact on employee work attitudes. A leader's positive attitude toward members improves employee attitudes toward work, their leader, and the organization. In turn, members develop intrinsic motivation. A good match between intrinsic and extrinsic motivation results in job satisfaction. However, a fundamental distinction is necessary between the extrinsic (instrumental, material) aspects of employment such as promotion, pay or job security on the one hand, and, on the other, intrinsic (quality of work) aspects such as relations with managers, scope for initiative, and the nature of the work itself.

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Davis & Gardner (2004) and Jones (2006) consistently link the job satisfaction concept with the success of business operations and performance. People who are happy with their jobs exhibit superior job performance (Graen, Novak, & Sommerkamp, 1982; Jones, 2006). Pool (1997) argues that job satisfaction as an attitude that individuals maintain about their jobs, and this attitude is developed from their perceptions of their jobs. Understanding the complexities of different variables that have an impact on job satisfaction is a main goal of research and practice. Achieving this goal may enable managers to learn how employees form the attitudes that affect their job satisfaction.

Not only are employee turnover, customer satisfaction, labor costs, and pretax margins improved by addressing employee satisfaction, but customers, products, and the company itself is also positively affected. Profit and growth are stimulated directly by customer loyalty. Customer loyalty is a direct consequence of customer satisfaction. Customer satisfaction is heavily influenced by customer perceptions of the value of services they receive. Value is created by satisfied, loyal and productive employees. Employees who feel a sense of teamwork and common purpose, a strong commitment to communication, and managerial empowerment are most able, and willing, to deliver the results that customers expect.

Richard Federico, Vice President and National Work-Life Practice Leader at The Segal Company stated that "Employee satisfaction leads to customer satisfaction. When internal customers (employees) are happy, they treat external customers well. Customers will keep coming back for more. This grows the relationship and leads to customer loyalty." [1]

Roy Walters(2009) has developed a Satisfaction Potential checklist which contains nine characteristics that truly define a satisfying job.

The job isn't monotonous, but allows employees to vary tasks.

The job does not waste a person's time and effort. It has been planned in such a way that it can be done without exerting energy uselessly.

Employees are free to plan their work the way they can do it most effectively.

Employees believe they have a reasonable degree of authority over how their work should be done.

[1] - believe they have adequate opportunities for individual growth and recognition.

Employees don't feel too closely supervised, over-instructed or rigidly controlled.

Employees see their job as an integral part of the whole company and each employee is treated as an individual, not merely a cog in the wheel.

The answer to the question, "How am I doing?" comes from the job itself. Thus, employees can correct their own errors and improve their techniques.

Superiors offer feedback without causing embarrassment.

Factors affecting Satisfaction

Factors affecting employee satisfaction can be summed up as follows and will be explained futher afterwards.

Turnover and Absenteeism

Valued Employees

Performance Apprasial

Employee Motivation


Conflict Management

2.2.1 - Turnover and Absenteeism

Most managers feel that employee turnover, absenteeism and employee satisfaction are closely related. Job satisfaction remains a key variable in the prediction of employee turnover (Mossholder, Settoon, & Henagan, 2005). Maloney & McFillen (1986) argued that the more satisfied an employee is the less turnover and absenteeism occurs. According to Wilhelm, Herd, and Steiner (1993), the number one reason people quit is that they are treated poorly by their bosses. Those who remain in their jobs, working for poor bosses, have lower job and life satisfaction, lower commitment, higher conflict between work and family, and psychological distress (Tepper, 2000).

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Schmitt(2002) further added that, "Today's workers have different expectations from the companies they work for and are much less hesitant to leave one job for another if they don't feel those expectations are being met. Job security is less important to today's worker"

However, even though it makes sense that dissatisfied employees are more likely to miss work, absenteeism is a complex variable and is influenced by multiple factors. (Robbins, Odendaal & Roodt (2003). An employee might therefore be absent for various other reasons, than being dissatisfied with the job. These reasons include family responsibilities, genuine illnesses and absence policies governing absence behavior in organizations.

2.2.2- Valued Employees

"What stakeholders say: good companies not only value their staff - they put it into practice as well. This doesn't just mean good pay and conditions, important as they are. It also means listening to staff and getting their ideas and comments before launching yet another initiative. Staff wants companies to ensure their safety and treat them fairly. Companies that invest in their employees' professional and personal development will gain competitive edge over their rivals and a more committed workforce"

[Mike Jeram, National secretary of business and the environment, Unison][2]

[2] - workforce members is a Baldrige core value. As the Criteria booklet (2009) states, "Valuing the people in your workforce means committing to their engagement, satisfaction, development, and well-being." Valuing employee is the most important factor for any company. How they are treated and how much they value the company they work for will have an impact on how the company performs. Nelson (2006) argued that "employees are eager to work hard, but managers need to listen to their needs." In brief, workers are being set up for failure when what they want most is to achieve success through participation but do not have the support of management. As such, there needs to be a culture of participation in the organization, which in turn will create higher retention (Leibowitz, 2003). Calder & Douglas (1999) argue that when employees participate in the organization they feel more valuable, especially when they see the "results stemming from their actions". Nowadays, many industries are taking steps to ensure that employees are fairly treated, over and above regulatory requirements. Graduate programmes and professional development schemes are becoming common to most companies. Benefits such as pensions are standard and many companies are now implementing work/life balance schemes. All these are being done to show how valuable the employees are to a company.

2.2.3 - Performance appraisal

Performance appraisal is usually considered as one of the most important human resource practices (Boswell and Boudreau, 2002; Judge and Ferris, 1993). Fletcher (2002) said that performance appraisal is one of the more heavily researched topics in work psychology.

It has been suggested that Performance Appraisal system should have as main purposes employee development and feedback (Fedor, 1991). And it has been shown that individuals are motivated to seek feedback to reduce uncertainty and to provide information relevant to self evaluations (Ashford, 1986). Guzzo et al., (1985); Kopelman, (1986) and Landy et al., (1982) argued that there is an evidence that performance feedback, if appropriately given can lead to substantial improvements in future performance.

Whitener (2001) added that employees do not always perceive the objective existence of human resource practices as the organisation intends. For instance, whereas the organisation provides the procedures to be adopted in the implementation and administration of Performance Appraisal, it is individual managers who actually manage these procedures.

The setting of goals and feedback are widely said to affect performance positively through enhancing the information and motivation necessary for work performance (Earley et al., 1990). Roberts and Reed (1996) proposed that participation, goals, and feedback increase appraisal acceptance, which in turn affects appraisal satisfaction and as such affects also employee motivation and productivity. Also, systematic performance feedback can impact on intrinsic motivation through increased levels of experienced responsibility of outcomes and knowledge of the actual results of the work. Feedback that is perceived as recognition of good performance can also increase intrinsic motivation because it may enhance employee's perceived competence (Deci and Ryan, 1985)

2.2.4 - Employee Motivation

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"Motivation plays a huge role in any organization or company"- Travis Eck (2010). To understand employee motivation, we first need to know exactly what it means. Kreitner (1995) defined motivation as the psychological process that gives behavior purpose and direction. While Higgins (1994) argued that motivation is an internal drive to satisfy an unsatisfied need. In an organizational context, Robbins and Coulter (1999) defined motivation as 'the willingness to exert high levels of effort to reach organizational goals as conditioned by that effort's ability to satisfy some individual need". In a nutshell it can be concluded that motivation is the inner force that drives us to do something. Unfortunately many organizations fail to understand motivation among individuals, and many individuals fail to understand their own motivation. Thus, it affects both employee and organizational performance.

If an individual is committed to his work and do it good, he needs some sort of employee motivation or motivation factor behind it. In most cases it is the responsibility of the boss or supervisor to motivate his or her employees. When employees are motivated they are more likely to produce at a higher level, create a better product or service and can be fertile ground for innovative ideas.

To motivate employees effectively, managers have to understand what motivates them according to the roles they perform in the company. According to Moorhead and Griffin (1992), "One of the manager's primary tasks is to motivate people in the organisation to perform at high levels". Also, Eck (2010) added that "each and every manager and/or leader should know and work to make sure they keep their employees motivated no matter what place those employee's are in the company". To motivate employees, managers and supervisors need to realize that it is impossible to do so unless they themselves are motivated. If they are constantly looking stressed out and showing no enthusiasm for their work, they will easily pass on these negative effects to their employees.

To help understand what motivates employees, several authors have come with different theories and it is essential that managers know and understand these motivation theories. Motivation theories are primordial in creating incentives that will help employees at all levels in the company to be more motivated. Maslow (1943) introduced one of the first content theories of motivation which is the Hierarchy of needs where he stated that individual needs are grouped into five categories.

Ref: Accessed 19/11/10

The first levels, starting from the bottom, are physiological needs in which basic needs are factors such as food and clothing. The second level is expressed as the need for safety which may include safety throughout the employees' working environment etc. In the middle we find the belongingness factor and this can be formulated as the personal need of an individual to feel a part of a group. The next factor is esteem in which the individual is looking at getting recognition and appreciation for their contributions to the group. The top level factor of Maslow's hierarchy is self-actualization in which the individual has found his meaning in life and fulfills their role at the maximum ability. In brief, Maslow's hierarchy provides managers guidelines to take the individual needs of their employees and forge plans to increase motivation by identifying those plans that would be appropriate for the individuals.

Another content theory of motivation was introduced by Herzberg in 1959 and is known as the Herzberg's Two factor theory. According to his theory, people's motivation are influenced by two sets of factors namely hygiene and motivator factors. His first groups of factors were the hygiene factors which consisted of elements such as pay and benefits, company policy and administration, supervision, status, job security and working conditions amongst others. Herzberg believed that hygiene factors greatly influenced the feelings of dissatisfaction among employees thus at the same time affecting the job performance. The second group of factors identified was the motivating factors which consisted of factors such as achievement, recognition, responsibility, promotion, work itself etc. Herzberg believed that the motivating factors do give satisfaction to employees and eventually lead to employee motivation. But he also added that for the motivating factors to act there had to be the presence of hygiene factors.

Another theory that basically explained what motivated the employees is the Expectancy theory introduced by Victor Vroom(1964) in an attempt to explain why employees choose to follow certain courses of action in organizations, particularly in decision-making and leadership. Actually Vroom believed that employee effort will give way to job performance which in turn will lead to rewards. These rewards motivate the employee and the more they are positive and welcoming, the more motivated they will be.

Clayton Alderfer (1969) then introduced the ERG theory to address the limitations of Maslow's theory. Several studies had shown that the middle levels of Maslow's hierarchy overlap. Alderfer addressed this issue by reducing the number of levels to three. The letters ERG represent the three following levels of needs:

1. Existence refers to the concern with basic material existence motivators.

2. Relatedness refers to the motivation for maintaining interpersonal relationships.

3. Growth refers to the intrinsic desire for personal development.

Ref: Accessed 19/11/10

S. Silva (2009) stated that compared to Maslow's hierarchy, the ERG theory allows for different levels of needs to be pursued simultaneously. Unlike with Maslow's theory, managers need to understand that each and every employee operates with the urge to satisfy different motivators simultaneously. Based upon the ERG theory, leadership which focuses on one need at a time will not motivate their people effectively. Alderfer also stated that according to his theory the individuals may expect to satisfy a higher level of needs and those who are unable to satisfy that level (frustration regression process) will be frustrated and look to satisfy the lower level that seems to be easier to satisfy in view to motivate them.

A more recent study carried out by Lawrence and Nohria (2002) ended up in the setting up of the Four Drive theory of Employee Motivation. Basically, this theory is based on research indicating that the four main drivers of employee motivation are the drive to Acquire and Achieve, To Bond and Belong, to be Challenged and Comprehend, and to Define and Defend. The drive to Acquire and Achieve is usually addressed through an external reward system like pay, bonus or recognition. The second drive which is Bond and Belong is based on creating positive personal relationships within the organisation thus creating the sense of belonging and unity. The third drive which is Challenged and Comprehend refers to our natural curiosity which drives us to understand the meaning of things, how to solve and overcome challenges and make considerable contribution in the company. The last drive being Define and defend is when we feel that the company is being threatened by rivals or when change is instituted in the company itself. Basically this drive is based on the protection of what we have created and has belief into. Nelson (2010) added that companies usually focus on the drive to Acquire and Achieve while the other three drives play a more integral part in full employee motivation. He also argued that "the new theory provides a model for employers to look at when they are trying to find ways to increase employee engagement and motivation".

To conclude, Eck (2010) added that "Motivation is a complicated subject to understand because we as people are so individual. Silva (2010) also argued that "the tasks of the managers to motivate the employees are indeed not that easy because each and every employee has got their very own needs that tend to motivate them." However, it is the duty of each manager to understand their employees and think of effective ways to motivate them. It is important to understand where the individual is in their personal development and career. Finding out their behaviors can help the manager understand if motivation is an issue that needs immediate attention. This is where the motivational theories come in handy. They explain how to motivate employees considering what motivates them. On one hand, the Hierarchy of needs theory and Hertzberg's two factor theory explain how the employees are to be motivated by looking at their needs. On the other, Adams (1963) theory helps the managers to achieve greater understanding in the fact that a fair balance between inputs and outputs of employees are primordial. The Expectancy theory too shows that rewards tend to motivate the employees. But, it is to be noted that, all motivation theories, even the Four Drive theory, do state that rewarding and recognizing employees are important in order to motivate employees thus acting as a foundation to greater employee motivation.

2.2.5 Leadership

Northouse (2001) described leadership as "the exchanged relationship between leader and subordinate". An enhanced definition by Fry (2003) argued that "Leadership means the use of leading strategy to offer inspiring motive and to enhance the staff's potential for growth and development."

The level of the leader-employee relationship has an effect on the employee's self-esteem (Brockner, 1988; DeCremer, 2003) and as such on job satisfaction (Chen & Spector, 1991). Chen & Silverthrone (2005) backed this up by also saying that job satisfaction depends on the quality of the relationship between and employee and his employer alongside with the quality of environment and also degree of fulfillment at work. The disadvantages to the agency can be quite high in terms of increased worker stress, decreased productivity, rise in absenteeism and turnover (Keashly, Trott, & MacLean, 1994; Ribelin, 2003).

Singh (1998) added that "considerate leaders have been found to facilitate a group with higher productivity and higher performance" and with "much of the followers having high levels of job satisfaction (Nayab, 2009). Research carried out by Madlock (2008) also showed that leaders who communicate effectively with the group boost employee satisfaction.

2.2.6 - Conflict Management

M.Newman (2009) argues that "Conflict management is one of the most important functions of the manager. By the nature of its operations managers are often among conflicting stakeholders". According to Nobilis (2009), conflicts result from clashes between incompatible attitudes, principles or goals.

Conflict can be destructive or constructive depending on how it is managed, and what strategies are used for solving it. According to Nobilis (2009) , the positive effects can be in terms of:

Better ideas produced

Can turn people to other approaches

Stimulated interest and creativity

Testing and development of new capabilities.

The negative effects would on the other hand be:

Rejection of defeat. One defends his stand.

Increased distance between people

Biased attitudes resulting from own interest

Distance instead of team development

Mutt (2009) added that "conflict management in the workplace develop the harmonious relationship among employees" and that to manage it the first step would be to identify the different conflicts a person has experienced and then identify the appropriate ways to solve the problem. M.Newman (2009) points out that it "is important to conduct negotiations with a view to reaching mutual agreement" as "the result of negotiations is the plan to solve the problem, identifying the proportion of partners' participation in its decision and the mutual promises of concrete action."

2.3 Job Satisfaction and Employee Productivity

2.3.1 - Introduction

In the manufacturing sector, productivity can be defined as a measure of output from a production process, per unit of input. Productivity may be conceived of as a metric of the technical or engineering efficiency of production. According to Miller (2008), Productivity refers to "the amount of output produced in a specific amount of time". He also added that "Conducting productivity measurements are important for companies because it gives them a detailed view of how individuals or sectors in their company is fairing in relation to the revenue and profit reports"

2.3.2 Productivity v/s Satisfaction

M.Perry (2010) argues that "employee productivity is a necessary debate to any company, because it's connected to the achievement and performance that can be achieved by employee. In which, it can influence the company performance too."

Attempting to understand the nature of job satisfaction and its effects on work performance is not easy. For at least 50 years industrial/organizational psychologists have been wrestling with the question of the relationship between job satisfaction and job performance. Researchers have struggled to demonstrate that the two are positively related -i.e. "a happy worker is a good worker".

The relationship between job satisfaction and performance is an ongoing debate and is often qualified as controversial because happy workers may not necessarily be productive workers. At the individual level it would be more accurate that productivity is likely to lead to satisfaction as the more they produce the more rewards they will reap and this will lead to greater satisfaction and so on. If we move from the individual's level to that of the organization's, there is accrued support for the original satisfaction -performance relationship. When satisfaction and productivity data are gathered for the organization as a whole, rather than at the individual level, it is found that the organizations with more satisfied employees tend to be more effective than organizations with fewer satisfied employees. Studies have focused on individuals rather than on the organization and at individual level measures of productivity do not take into consideration all the interactions and complexities in the work process. So although we might not be able to say that a happy worker is more productive, it might be true that happy organizations are more productive.

Measures of productivity

Productivity varies from market to market and industry to industry. Different industries may share identical productivity measures, but no two have the same kind of measures all the way through. Miller (2008) argues that "no matter what market or system is being scrutinized; only one thing is being measured and that is the output"

Miller (2008) also gave productivity measures according to industries and these will be listed below.

Manufacturing industry

Productivity measure can include the volume of the product that you are producing.

The total number of product you produce in a year may be considered as your productivity level.

Service Industry

- Measure the number of client turnovers. (Quantitative data)

- Measure customer satisfaction. (Qualitative Data)

Sales Industry

Measuring the sales performance of the entire company or an employee.

Calculating the total amount of sales in monetary unit

Quantitative v/s Qualitative Measurement

Qualitative data is a categorical measurement expressed not in terms of numbers, but rather by means of a natural language description. On the other hand, Quantitative data is a numerical measurement expressed not by means of a natural language description, but rather in terms of numbers. 

Qualitative Data

Deals with descriptions.

Data can be observed but not measured.

Colors, textures, smells, tastes, appearance, beauty, etc.

Qualitative → Quality

Quantitative Data

Deals with numbers.

Data which can be measured.

Length, height, area, volume, weight, speed, time, temperature, humidity, sound levels, cost, members, ages, etc.

Quantitative → Quantity