Literature Review of Maintaining Employee Satisfaction

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Job security is another element which contributes to employee satisfaction. Usually employees may become more satisfied with their jobs and decide to stay in the organization if they know that their jobs are secured. Meltz (1989: p 149) defines job security broadly as "an individual remains employed with the same organization with no reduction of seniority, pay and pension rights." Similarly, Hertzberg (1968) defines job security as the level to which an organization provides stable employment for employees. There are certain agreements made between the employee and employer which prevent the latter from sacking the former without any valid reasons. However, this particular term has different meanings according to the employment laws of each country. In European countries many employees have indefinite contracts which do not guarantee their jobs for life as it becomes difficult for the employer to get rid of an employee.

Organizational Commitment

Another major impact that job satisfaction can have is worker's commitment to the organization and its culture. Organizational commitment is usually defined as the strength of one's identification and involvement with their respective organization (Mowday et al., 1979). Research shows that social involvement predicts organizational commitment where the more involved the individual, the more committed they are (DeCotiis and Summers, 1987). Other studies show that organizational commitment is related to a person's intention to leave and turnover (Shore and Martin, 1989; Tett and Meyer, 1993) as well as theoretically to job performance (Mowday et al., 1974). Essentially, committed individuals are expected to extend greater efforts on the job, having a direct impact on job performance.

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Reward systems are designed and managed to improve productivity and control labor costs (John Bratton and Jeffrey Gold, 2001). The reward system is a major element in determining the psychological contract within an organization, particularly in circumstances of change. By specifying new performance requirements of employees as a result of strategic change, and the rewards employees will receive upon their fulfillment, management define new expectations and so alter the employment relationship (Stiles et al., 1997).

A reward system consists of:

Policies that provide guidelines on approaches to managing rewards.

Practices that provide financial and non-financial rewards.

Processes concerned with evaluating the relative size of jobs (job evaluation) and assessing individual performance (performance management).

Procedures operated in order to maintain the system and to ensure that it operates efficiently and flexibly and provides value for money.

MOTIVATION THEORIES LINK WITH JOB SATISFACTION

Armstrong M & Murlis H (2004) discussed two types of motivation. Intrinsic motivation can be described as 'the process of motivation by the work itself in so far as it satisfies people's needs or at least leads them to expect that their goals will be achieved.' However, extrinsic motivation, as per Armstrong M & Murlis H (2004), is what others do to motivate employees. It happens when management gives such rewards as increased pay, praise or promotion. Motivation theory is important because it helps understand which individual needs that firms have to meet in order to satisfy workers. Abraham Maslow and Frederick Hertzberg, (1995), two dominating scholars of behavioral theory while discussing the relationship between individual motivational factors and job satisfaction, claim that in order for firms to understand what motivates people they must understand basic human needs, both psychological and physical. If employees have needs that are not fulfilled it can be assumed that they will be dissatisfied and thereby eventually leave the organization in search of fulfillment elsewhere.

Maslow's hierarchy of needs links to Job Satisfaction

Abraham Maslow (1954) identified five levels of human needs.

The first level contains physiological needs, which can be viewed as physical comfort, pay and basic working conditions.

The second level concerns safety and job safety.

Social needs, in the third level, relate to factors such as belongingness, friendship and having relationship in the workplace.

The fourth level concerns esteem needs received by employees when the organization and its members recognize a worker's achievement and thereby reach a certain level of status.

Maslow's fifth and final level, the need for self-actualization, is reached when the worker feels that the job itself provides opportunities to pursue own goals and interests.

The logic of Maslow's hierarchy of needs is that when needs in the lower levels are satisfied they trigger needs on the higher levels in a sequential fashion. For example, if the worker receives satisfactory pay it immediately triggers needs on the second level, namely job security. When the worker feels secure enough it triggers social needs such as belongingness on the third level, and so on. Maslow claims that a person who succeeds in self-fulfilling himself or herself expresses the true human nature but states that the effort of self-fulfillment is universal and independent of social, cultural and historical conditions. Maslow's argument for the needed effort of self-fulfillment is not justifiable, even though many or even most people strive towards it, as it is not proven to lay in human nature. This links to Herzberg's thinking, derived from his studies with Mausner and Snyderman that people are satisfied by the intrinsic of their work and that performance leads to satisfaction and not the other way round (Herzberg et al.,2003).

Frederick Hertzberg's two-factor theory

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Frederick Hertzberg's two-factor theory, also known as Hertzberg's Motivation-Hygiene theory is in an organizational context used to identify what motivates people to work and what makes workers satisfied or dissatisfied (Kempton, 1995). The two-factor theory can be characterized as structural since the attitudes of workers are placed in direct relation with the workplace environment. This has great practical use for firms, because the firms can increase job satisfaction by manipulating job characteristics that are commonly under their control.

Hertzberg provides a framework for understanding motivational factors divided into external and internal factors. The external factors are called hygiene factors and are often described as basic factors that need to be met in order not to create dissatisfaction. The internal factors are described as motivational factors, the factors that motivate people to be satisfied through personal growth. In order to foster motivation and satisfaction Hertzberg argues that the internal needs have to be met while external needs should be satisfied in order not to have dissatisfied workers. It is by Hertzberg viewed not enough to satisfy external needs as salary, physical environment, company policy and other basic needs. If firms cannot provide employees with the possibility to fulfill internal needs of personal growth it will become very difficult to foster motivation and satisfaction, thus making it more difficult to retain worker (Kempton, 1995).

Although other researchers who have used Hertzberg's methods have failed to arrive at quite such clear-cut conclusions, there is little doubt that the results he drew from his work have had a significant impact on business practices. Other writers tend to think that Herzberg oversimplified satisfaction and dissatisfaction, Herzberg was nevertheless correct in stating that elements of the work and the working conditions affect the level of motivation. In short, regardless of criticisms, Herzberg theory has been extensively read and few hotel managers are unfamiliar with his recommendations.

CLAYTON ALDERFER- ERG THEORY

Alderfer (1972) has come up with a modified need hierarchy model. He condenses Maslow's five levels of needs into three levels based on the core three basic needs: Existence, Relatedness and Growth (Alderfer and Lacy 1972).

Maslow Hierarchy of Needs

Psysiological Needs

Safety

Social

Self Esteem

Self Actualization

Alderfer Erg Theory

Existence

Relatedness

Growth

Figure……. Figure…………….

Maslow hierarchy of needs

Alderfer ERG theory

Herzberg's Two Factor theories

Physiological needs

Existence

Hygiene factors

Safety

Relatedness

Motivators factors

Social

Self Esteem

Growth

Self-actualization

Figure……………..

Source: Management and Organizational Behaviour 4th edition by Laurie J Mullins.

Relationship among Maslow, Alderfer's and Herzberg's theories of motivation

Existence: relates to Maslow's physiological and certain safety needs. As its name suggest existence is concerned with sustaining human existence (Alderfer 1972).

Relatedness: is concerned with maintaining the need for interpersonal relationship. It relates to Maslow's safety, social and covers love and affiliation needs (Lacy 1972).

Growth: deals with the development of potential and covers Maslow's self-esteem and self-actualization needs (Dymond et al 1974).

Alderfer theory is useful as it recognize that a person can be motivated by more than one need at a time. In addition, it explains that if higher-level needs are not satisfied, the person may return to lower level needs as motivators (Lacy et al, 1993). However, on the other fence, it has been noted that this theory fails to distinguish between satisfaction and dissatisfaction (Eysenck and Rogers 1974).

Henceforth, in spite of numerous amounts of literature and research into the most useful methods of motivating people, true human motivation will always be a biased matter. So long as there is freewill, it is highly doubtful that any theory of motivation will work for all people. The total number of theories, needs, and methods of motivation are evidence to this fact. However, the huge body of literature, only partly touched upon which makes remarkable efforts to define and propose the means by which managers, leaders, and authority figures can attempt to form human behavior.

Relationship between employee satisfaction and customer satisfaction

In the hospitality industry, in accordance to marketing mix the most vital ingredient in the product is people. Therefore, each and every service that is being provided by the hotels are just in the way of achieving customer satisfaction. On the other side of the coin, the objective of attaining satisfied customers is only when satisfied employees can deliver quality service.

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Numerous empirical studies show a strong positive relationship between employee satisfaction and customer satisfaction (e.g., Band, 1988; George, 1990; Reynierse & Harker, 1992; Schmitt & Allscheid, 1995; Schneider & Bowen, 1985; Schneider, White, & Paul, 1998; Schneider, Ashworth, Higgs, & Carr, 1996 Johnson, 1996; Ulrich, Halbrook, Meder, Stuchlik, & Thorpe, 1991; Wiley, 1991). As suggested by this wealth of findings, positive changes in employee attitudes lead to positive changes in customer satisfaction.

Some investigations have provided explicit measures of this relationship. For example, a study at Sears Roebuck & Co. showed that a five-point improvement in employee attitudes led to a 1.3 rise in customer satisfaction which, in turn, generated a 0.5 increase in revenues. Brooks (2000) reviewed the relationship between financial success and customer and employee variables (e.g., customer satisfaction, employee satisfaction, etc.) and found that, depending on market segment and industry, between 40 and 80 percent of customer satisfaction and customer loyalty was accounted for by the relationship between employee attitudes and customer-related variables. Similarly, Vilares and Cohelo (2000) found that perceived employee satisfaction, perceived employee loyalty, and perceived employee commitment had a sizable impact on perceived product quality and on perceived service quality (see model below).

Perceived

Employee

Perceived

Commitment

Product Quality

Perceived

Value

Perceived

Employee

Perceived

Satisfaction

Service

Quality

Perceived

Employee Loyalty

Customer

Satisfaction

Figure………………

According to their model, employee satisfaction not only affects employee commitment and employee loyalty, but it also has a twofold impact (i.e., direct and indirect) on critical customer satisfaction-related variables and this has effect on the hotel industry also if put into practice.

Thus, the empirical literature summarized highlights the criticality of the relationship between employee attitudes and customer satisfaction. How employees feel about their job has an impact on their work experience especially in hotel sector, but also on tangible business results such as customer satisfaction, sales, and profit. Employees can strongly contribute to an organization's success by having a customer-centric approach in their work and in their work-related interactions. However, they are more likely to do so if they are satisfied with their job.

Finally, careful consideration should be given to how to create a relationship between employee satisfaction and customer satisfaction. The models presented refer to some important drivers of this relationship. Research on employee satisfaction, furthermore, points to compensation as an essential organizational determinant of job satisfaction.

In sum, Customer satisfaction based compensation should focus on performance dimensions that employees can control, influence, and understand. Without such focus, not only will it be unlikely to affect work behavior, but it will be likely to generate dissatisfaction.

Conclusion

The literature review part of the project is one of the most important ones and this is due to the fact that it provides an overview about the whole topic. As it is in this case much information has been provided about the role of HRM, employee satisfaction and the various factors which contribute to it. In addition to this the impacts of job satisfaction have also been discussed which shows that it is essential to keep employees happy. The opinions of different authors and researchers have been included to support the literature part. Furthermore, there is a section which provides evidence from researchers that have been conducted about this particular topic and demonstrates to what extent the factors that have been mentioned lead to employee satisfaction and the benefits that can be derived from it.