The Mediating Effect of Employee Loyalty on the Relationship Between Job Satisfaction and Organizational Performance
One of the key factors for sustaining an organizational performance for any organization is maintaining loyalty and retention of skilled and experienced employees. Therefore, revealing positive and negative factors impacting employee loyalty and taking action for further improvement has been an essential aspect for organizations. The current paper aims at researching how employee satisfaction has an impact on employee loyalty as well as the organizational performance of the organization based on the case of the Mongolian banks. The sample survey involved 400 employees of three banks. The results of the survey demonstrated that employee loyalty can be maintained through increasing employee satisfaction. In the present study employee satisfaction is considered as the independent variable and as mediating factor that served employee loyalty, and organizational performance is taken as the dependent variable. Consequently, reliability tests, correlation, and regression analysis have been carried out to prove our hypothesis. The research results indicate that satisfied employees tend to be loyal and committed to the organization and contributed positively to the organizational performance.
Aityan, S. K. and Gupta, T. K. P. (2011). Challenges of employee loyalty in corporate America. Business and Economics Journal. 2011 (BEG- 55), 2-7.
Altanchimeg, Z & Sarantuya, J. (2018). Impact of employee’s satisfaction in employee loyalty, retention and organization performance. International Journal of Management and Applied Science. 4(7), 51-55.
Bontis, N. & Booker, D. (2007). The mediating effect of organizational reputation on customer loyalty and service recommendation in the banking industry. Management Decision. 45(9), 1426-1445.
Chalim, A. S. (2018). Effect of Job-insecurity, Organizational commitment, Job satisfaction on Turnover intention: a case study of newcomer lecturers at private Islamic Universities in East Java province, Indonesia. Jurnal Ilmiah Peuradeun. 6(2), 199-214. doi: 10.26811/peuradeun.v6i2.284
Chen, Z. X., Tsui, A. S., & Farh, J. L. (2002). Loyalty to supervisor vs. organizational commitment, relationships to employee performance in China. Journal of Occupational and Organizational Psychology. 75, 339-356. doi:10.1348/096317902320369749
Chi, C.G., & Gursoy, D. (2009). Employee satisfaction, customer satisfaction and financial performance: An empirical examination. International Journal of Hospitality Management. 28(2), 245-253. doi:10.1016/j.ijhm.2008.08.003
Fornell, C., & Bookstein, F.L. (1982). Two structural equation models: LISREL and PLS applied to consumer exit-voice theory. Journal of Marketing Research. 19(4), 440-452. doi:10.2307/3151718
Gould-Williams, J.S. (2003). The importance of HR practices and workplace trust in achieving superior performance: A study of public-sector organizations. The International Journal of Human Resource Management. 14(1), 28-54. doi:10.1080/09585190210158501
Hair J.F., Hult G.T.M., Ringle C.M., Sarsted M., 2014, A primer on partial least squares structural equations modeling (PLS-SEM), Los Angeles, SAGE.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis: A Global Perspective. 7th Edition. Pearson Education, Upper Saddle River.
Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology. 87(2), 268-279. doi:10.1037/0021-9010.87.2.268
Khuong, M. N., & Tien, B. D. (2013). Factors influencing employee loyalty directly and indirectly through job satisfaction - A study of banking sector. International Journal of Current Research and Academic Review. 1(4), 81-95.
Kreitner, R., & Kinicki, A. (2001). Organizational behavior. Boston: Irwin/McGraw-Hill.
Latif, M. S., Ahmad, M., Qasim, M., Mushtaq, M., Ferdoos, A., & Naeem, H. (2013). Impact of employee’s job satisfaction on organizational performance. European Journal of Business and Management. 5(5), 166-171.
Locke, E. (1976). The Nature and Causes of Job Satisfaction, in Handbook of Industrial and Organizational Psychology. Chicago: Rand McNally.
Mafini, C., & Pooe, D. R. I. (2013). The relationship between employee satisfaction and organizational performance. SA Journal of Industrial Psychology (SAJIP). 39(1), 1-9. doi:10.4102/sajip.v39i1.1090
Nunnally, J. (1978). Psychometric Theory. New York: McGraw-Hill.
Pander, C., & Khare, R. (2012). Impact of job satisfaction and organizational commitment on employee loyalty. International Journal of Social Science & Interdisciplinary Research. 1(8), 26-34.
Petty, G.C., Brewer, E.W. & Brown, B. (2005). Job satisfaction among employees of a youth development organization. Child and Youth Care Forum. 34(1), 57-73.
Reichheld, F. F., & Cook, Scott. D (1996). The Quest for Loyalty: Creating Value through Partnership. Harvard Business Review Book Series
Ryan, A. M., Schmit, M. J., & Johnson, R. (1996). Attitudes and effectiveness: examining relations at an organizational level. Personnel Psychology. 49, 853-882. doi:10.1111/j.1744-6570.1996tb02452.x
Sarboini, S. (2016). Performance of Employees and Impact on Promotion of Position. Jurnal Ilmiah Peuradeun, 4(1), 103-114. doi:10.26811/peuradeun.v4i1.89
Schneider, B., Hanges, P. J., Smith, D. B., & Salvaggio, A. N. (2003). Which comes first: Employee attitudes organizational financial and market performance? Journal of Applied Psychology. 88(5), 836-851. 10.1037/0021-9010.88.5.836
Turkyilmaz, A., Akman, G., & Pastuszak, Z. (2011). Empirical study of public sector employee loyalty and satisfaction. Industrial Management & Data System. 111(5), 675-696. doi:10.1108/02635571111137250
Walidin, W. (2016). Informal Education as a Projected Improvement of the Professional Skills of Employees of Organizations. Jurnal Ilmiah Peuradeun, 4(3), 281-294. doi:10.26811/peuradeun.v4i3.103
Wan, H.L. (2012). Employee loyalty at the workplace: The impact of Japanese style of human resource management. International Journal of Applied HRM. 6(1), 1-8.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms: (1) Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License (CC-BY-SA) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal; (2) Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal; (3) Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).