The Mediating Effect of Employee Loyalty on the Relationship Between Job Satisfaction and Organizational Performance

  • Altanchimeg Zanabazar Faculty of Management, Business School, National University of Mongolia
  • Sarantuya Jigjiddorj Faculty of Management, Business School, National University of Mongolia

Abstract

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.

Author Biography

Altanchimeg Zanabazar, Faculty of Management, Business School, National University of Mongolia

Associate Professor, Management Department, Business school, National University of Mongolia

References

Agho, A. O., Mueller, C.W., & Price, J.L. (1993). Determinants of employee job satisfaction: An empirical test of a causal model. Human Relations. 46(8), 1008-1017. doi: 10.1177/001872679304600806
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.
Published
2021-05-30
How to Cite
ZANABAZAR, Altanchimeg; JIGJIDDORJ, Sarantuya. The Mediating Effect of Employee Loyalty on the Relationship Between Job Satisfaction and Organizational Performance. Jurnal Ilmiah Peuradeun, [S.l.], v. 9, n. 2, p. 467-482, may 2021. ISSN 2443-2067. Available at: <https://journal.scadindependent.org/index.php/jipeuradeun/article/view/530>. Date accessed: 24 jan. 2025. doi: https://doi.org/10.26811/peuradeun.v9i2.530.