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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS An Empirical Study of Impact of Job Satisfaction on job Performance in the Public Sector Organizations
Dr. Muhammad Safdar Rehman General Manager, Human Resources, PEMRA, Islamabad, Pakistan. Ajmal Waheed, PhD (Corresponding Author) Assistant Professor, Department of Administrative Sciences, Quaid-e-Azam University, Islamabad

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Note: This piece of research has been conducted as part of PhD research of the first author (Rehman, 2010). Abstract The job satisfaction of employees is the most imperative factor in public sector regulatory authorities in Pakistan. To enhance the productivity and effectiveness of the employees one needs to examine what factors influences the job satisfaction. The purpose of this descriptive-correlational study was to test link between job satisfaction, job retention and job performance. Sample of 568 employees from public sector regulatory authorities was selected for this study. Employing a descriptive-correlative survey method data was collected through questionnaire. The employees were generally satisfied with their jobs. This study has explored a relationships showing large effect size correlations (r = 0.52) between job performance and job satisfaction. Keywords: Public Sector Regulatory Authorities, Job Satisfaction, Job performance, Job Retention, Job Analysis, Public Sector Employees. 1. Introduction The topic of job satisfaction of an employee has received considerable attention of researchers and managers equally (Gautam, Mandal & Dalal, 2006). The most important information in an organization regarding an employee is a validated measure of his / her level of job satisfaction (Roznowski & Hulin, 1992). The most-used research definition of job satisfaction is by Locke (1976), who defined it as a pleasurable or positive emotional state resulting from the appraisal of ones job or job experiences (p. 1304). Implicit in Lockes definition is the importance of both affect, or feeling, and cognition, or thinking. When we think, we have feelings about what we think. Conversely, when we have feelings, we think about what we feel. Cognition and affect are thus inextricably linked, in psychology and even in biology. Thus, when evaluating our jobs, as when we assess most anything important to us, both thinking and feeling are involved.

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Of all the major job satisfaction areas, satisfaction with the nature of the job itself which includes job challenge, autonomy, variety, and scope, best predicts overall job satisfaction, as well as other important outcomes like employee retention (Fried & Ferris, 1987; Parisi & Weiner, 1999; Weiner, 2000). Thus, to understand what causes people to be satisfied with their jobs, the nature of the job itself is one of the first places for practitioners to focus on. There has been an increasing interest among human resource management (HRM) academics and practitioners in the degree to which employees are satisfied with their jobs, and more generally in well-being at job. A number of recent studies have reported a positive link between employees well-being and productivity (Marks, 2006). This interest in employee well-being has been mirrored in other fields, most notably within the new economics of happiness literature (Layard, 2005). In order to find out the relationship between HRM practices and job satisfaction, there has been widespread debate in the literature over the effects of HRM on job satisfaction. In some studies, job satisfaction has been identified as a key variable mediating any positive relationship between HRM practices and organizational performance (Guest, 2002). In contrast, others have suggested that in Britain, the implementation of HRM practices has been associated with higher levels of job intensity, and thus lower levels of job satisfaction (Green, 2006). Others note that HRM practices adopted as part of a highperformance work system are not primarily designed to increase job satisfaction: in practice, they may or may not have such an effect (Appelbaum, 2002). It may be the case that HRM practices impact on individual facets of job satisfaction such as satisfaction with sense of achievement or satisfaction with pay. Thus, further research is required to assess the actual effects of HRM practices on individual aspects of job satisfaction and overall job satisfaction. What is the likely impact of HRM practices on job satisfaction? It might be expected that these practices will have a positive impact on particular aspects of job satisfaction. Some have pointed to the critical role of HRM policies, such as participatory job practices, on employees ability to derive a sense of meaning from job and to achieve satisfaction with job itself (Cartwright & Holmes, 2006). If HRM practices such as team working, upward communication systems and problem-solving groups provide employees with greater autonomy and greater opportunities to contribute to decision making, then this might be expected to have a positive impact on other aspects of job satisfaction, particularly satisfaction with influence. However, Marchington and Wilkinson (2005) argue that the degree of influence provided by participatory work practices under the umbrella of HRM is often overstated and that these initiatives result instead in job intensification and higher levels of stress. Other studies (Boselie et al., 2005) have found that bundles of HRM practices, implemented together as a high involvement approach to management, can be associated with higher levels of job satisfaction. Social Sciences and behavioral research suggests that job satisfaction and job performance are positively correlated (Bowran & Todd, 1999). The study of the relationship between job satisfaction and job performance has a controversial history. The Hawthorne studies, conducted in the 1930s, are often credited with making researchers
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aware of the effects of employee attitudes on performance. Shortly after the Hawthorne studies, researchers began taking a critical look at the notion that a happy worker is a productive worker. Most of the earlier reviews of the literature suggested a weak and somewhat inconsistent relationship between job satisfaction and performance. A review of the literature in 1985 suggested that the statistical correlation between job satisfaction and performance was about 0.17 (Iaffaldano & Muchinsky, 1985). Thus, these authors concluded that the presumed relationship between job satisfaction and performance was a management fad and illusory. This study had an important impact on researchers, and in some cases on organizations, with some managers and HR practitioners concluding that the relationship between job satisfaction and performance was trivial. However, further research does not agree with this conclusion. Organ (1988) suggests that the failure to find a strong relationship between job satisfaction and performance is due to the narrow means often used to define job performance. Organ argued that when performance is defined to include important behaviors not generally reflected in performance appraisals, such as organizational citizenship behaviors, its relationship with job satisfaction improves. Research tends to support Organs proposition in that job satisfaction correlates with organizational citizenship behaviors (Organ & Ryan, 1995). In addition, in a more recent and comprehensive review of 301 studies, Judge, Thoresen, Bono, and Patton (2001) found that when the correlations are appropriately corrected (for sampling and measurement errors); the average correlation between job satisfaction and job performance is a higher 0.30. In addition, the relationship between job satisfaction and performance was found to be even higher for complex (e.g., professional) jobs than for less complex jobs. Thus, contrary to earlier reviews, it does appear that job satisfaction is, in fact, predictive of performance, and the relationship is even stronger for professional jobs. A better appreciative of job satisfaction and factors linked with it helps managers guide employees' activities in a desired direction. The confidence of employees is a deciding factor in the organization's efficiency (Chaudhary & Banerjee, 2004). Thus, it is rewarding to say that managers, supervisors, human resource specialists, employees, and societies in general are concerned with ways of improving job satisfaction (Cranny et al., 1992).Various researchers have investigated the concept of job satisfaction and factors that explain how satisfied employees are with their positions. Much of the job satisfaction research has focused on employees in the private sector (Niehouse, 1986; Lawler & Porter, 1968; Herzberg et al., 1958). These researchers have found that a variety of factors influence the job satisfaction of employees. The motivation to probe the degree of job satisfaction arises from the fact that a better understanding of employee satisfaction is desirable to achieve a higher level of
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motivation which is directly associated with their achievements. Recently, the appraisal of employees attitude such as job satisfaction has become a common activity in organizations in which top management is concerned with the physical and psychological well being of people (Spector, 1997). Beadles et al (2000) found that job retention was positively correlated with organizational performance. Unavoidable turnover is typically viewed as unfavorable to an organization (Campion, 1991). Most research supports the notion that turnover decreases organizational performance. Mobley (1982) suggested that turnover might disrupt job performance when an employee who intends to leave becomes less efficient, when an experienced employee leaves, or when time is lost in an attempt to secure a replacement. Empirical research has shown that voluntary turnover is related to lower organizational performance (Shaw, Gupta, & Delery, 2002). Other research suggests that turnover can actually improve performance. One potential benefit of turnover is the elimination of poor performing employees (Price, 1989). Additionally, Staw et al (1986) proposed that turnover can increase performance if most of the turnover is by employees with very long or very short tenure. Turnover is a persistent problem in organizations (Abbasi & Hollman, 2000; Price, 1989). It is prevalent in every type and size of organization and at every organizational level (Abbasi & Hollman, 2000; Beadles, Lowery, Petty, & Ezell, 2000). Abbasi and Hollman (2000) go so far as to state that turnover is one of the most significant causes of declining productivity and sagging morale in both the public and private sectors (p. 333). Turnover is also very costly for organizations. It is estimated that American industries incur a cost of $11 billion annually as a result of voluntary and involuntary turnover. This cost is due to termination, advertising, recruitment, selection, and hiring (Abbasi & Hollman, 2000; Mobley, 1982). Turnover also produces intangible costs, such as declining morale (Abbasi & Hollman, 2000), and the disruption of social and communication patterns (Mobley, 1982). Because of this, the study of turnover is a wellresearched area and is of major interest in organizational behavior (Beadles et al., 2000). Research by Allen and Griffeth (2001), Allen et al (2003), and Chiu and Francesco (2003) shows that job satisfaction is a strong predictor of turnover intentions. Elangovans (2001) extensive research shows that job satisfaction predicts both commitment and turnover intentions, and commitment predicts only turnover intentions. It is instructive to note that, according to Jaros et al (1993) and Wasti (2003), organizational commitment depicts the strongest negative relationship with turnover intentions. According to Hellman (1997), increasing dissatisfaction in employees results in a higher chance of considering other employment opportunities Seccombe and Smith (1997) found that the factors given by employees as reasons for leaving were centered on issues known to affect job satisfaction such as ineffective supervisory relationships and poor
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opportunities for professional development, rather than external environment of which managers would justifiably feel unable to control. Mounting evidence from the literature suggests that organizational tenure influences job attitudes and turnover intentions (Abbott, White, and Charles, 2005; Van Breukelen, Van der Vlist, and Steensma, 2004). For instance, Steers (1977) strongly agues that tenure is the single best predictor of turnover because it represents an employees past behavior and summarizes his or her relationship with the organization. The attraction selection attrition hypothesis (Schneider and Reichers, 1983) suggests that individuals are attracted to and selected by organizations that satisfy their needs and goals. In those cases where there is a good fit, we expect low levels of attrition and, hence, longer tenure. In cases of mismatches, however, we should expect high attrition rates and, hence, shorter tenure, provided that other job opportunities are readily available. Thus, tenure is expected to correlate with climate perceptions, job satisfaction, organizational commitment, and turnover intentions. 2. Purpose and Objectives The purpose of this descriptive-co-relational study was to examine impact of job satisfaction on job performance of public sector regulatory authorities. In addition, this study sought to determine the relation between job retention and job performance and job satisfaction- job retention. To guide this study the following research objectives were formulated. Describe selected demographic characteristics of employees; Describe the employees level of job satisfaction with the job performance; Describe relationships between job satisfaction and job performance; Describe relationships between job retention and job performance; Describe the relationships between job satisfaction and job retention; and, Describe the relationships between job satisfaction, job retention and job performance.

The sample for this study was employees of public sector regulatory authorities (N = 568). Employing a descriptive-correlative survey method and data were collected through questionnaire. 3. Methodology The research design was descriptive-correlative survey method and data were collected through a questionnaire that was developed for this particular research. The section one of the questionnaire consisted of questions pertaining to the demographic characteristics. Section two of the questionnaire consisted of the employee job Satisfaction, job performance and job retention. This Section consisted of an 18-item five-point Likert type scale with responses varying from 1 (strongly disagree) to 5 (strongly agree).

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Content and face validity were established by a panel of human resources and statistical experts. A pilot test was conducted with 45 employees not included in the sample. Questionnaire reliability was estimated by calculating Cronbachs alpha. Reliability for the overall instrument is placed under Appendix - A. 4. Results Respondents consisted of 71.1% male and 25.9% female employees. The age of 47% respondents was between 25-35 years and 21% respondents were below 25 years. Most of the employees (66.4%) had attained a master degree. Almost 44.9% of the respondents were from middle management, 23.2% supervisory level, 26.9% non-managerial and 4.9% top management. Number of years in present organization was from 3-5 years of 32.9% and 1-2 years of 26.1%. The majority of the respondents (64.6%) are permanently employed. The contractual employees comprise (31%) respondents. Almost 47.5% of the respondents were from managerial / Administrative category and 28.7% from technical category. Majority of the respondents (67.6%) were directly recruited whereas 28.2% respondents were promoted. Based on a five point Likert type scale with responses ranging from strongly disagree (1) to strongly agree (5), the overall level of job satisfaction was 3.71 (SD = 0.57). In terms of Table 1 the results indicate that there is a slight mean difference in the levels of job satisfaction with job performance (Mean = 3.68, SD = 0.65) and job satisfaction with job retention (Mean = 3.16, SD = 0.60). Table: 1. Descriptive Statistics of all Variables
Minimum 1.00 2.17 1.67 568 Maximum 5.00 5.00 4.83 568 Mean 3.68 3.71 3.16 568 Std. Deviation 0.65 0.57 0.60 568

Variables Job Performance Job Satisfaction Job Retention Valid N

Correlation coefficients were calculated to describe the relationships between job satisfaction and job performance, job retention and job performance, job satisfaction and job retention (Table 2). Correlation coefficients were as follows: Job satisfaction, r = 0.52; Job Retention, r = 0.23; and Job satisfaction-Job Retention, r = 0.34. Relations between job satisfaction and job performance were found highly significant whereas other relations were found significant also.

Table: 2. Relationships between Job Performance (JP), Job satisfaction (JS) and Job Retention (JR)
VARIABLES Job Performance ( JP ) JP JS JR

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Job Satisfaction ( JS ) Job Retention ( JR ) N= 568 ** Correlation is significant at the 0.01 level (2-tailed) 0.518(**) 0.230(**) 0.340(**)

Regression results have shown that job satisfaction correlates positively with Job performance (Table 3). Adjusted R-squared value was found 0.974 which explained 97.4 percent of the total variance for dependent variable job performance relating to job satisfaction. B value for job satisfaction was 0.985 with standard error of 0.007. P-level of job satisfaction was 0.000 and t value 145.67. All the values were positive t value with a b value is significant; hence, predictor job satisfaction is making a highly significant contribution to the study. The smaller the value of significance 0.000 and the larger the value of t = 145.67 is also showing the greater contribution of job satisfaction. Beta value for job satisfaction was 0.987 which provided a better insight into the importance of job satisfaction in the study. Table: 3. Regression summary of job performance relating to job satisfaction
Correlation ( R ) R- squared Adjusted R- squared Standard Error of Estimates F ( 21220.972 ) p = .000 ANALYSIS OF VARIANCE 0.987 0.974 0.974 0.604 BETA Intercept Job satisfaction ( JS ) B STD. ERROR 0.007 t P-VALUE

0.987

0.985

145.67

0.000

Regression results have also shown that job retention correlates positively with Job performance (Table 4). Adjusted R-squared value was found 0.951 which explained 95.1 percent of the total variance for dependent variable job performance relating to job retention. B value for job retention was 1.132 with standard error of 0.011. P-level of job retention was 0.000 and t value 104.46. All the values were positive t value with a b value is significant hence predictor job retention is making a highly significant contribution to the model. The smaller the value of significance 0.000 and the larger the value of t = 104.46 is also showing the greater contribution of job retention. Beta value for job retention was 0.975 which provided a better insight into the importance of job retention in the study. Table: 4. Regression Summary of Job Performance Relating to Job Retention
Correlation ( R ) R- squared Adjusted R- squared Standard Error of Estimates F ( 10912.766 ) p = .000 ANALYSIS OF VARIANCE 0.975 0.951 0.951 0.832

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BETA Intercept Job retention ( JR ) B STD. ERROR .011 T

p-VALUE

0.975

1.132

104.46

0.000

Regression Analysis for Jon satisfaction and job retention together with Job performance (Table 5) revealed that adjusted R- squared was found 0.975 which is a high effect size. It explained 97.5 percent of the total variance. The overall p-value is <0.001 which shows that job satisfaction and job retention has highly significant effect on job performance. Table: 5. Regression summary of job performance relating to job satisfaction and job retention
Correlation ( R ) R- squared Adjusted R- squared Standard Error of Estimates F ( 11163.20 ) p = .000 BETA Intercept Job satisfaction Job retention 0.806 0.185 0.804 0.215 0.034 0.039 23.763 5.454 0.000 0.000 B STD. ERROR T p-VALUE ANALYSIS OF VARIANCE 0.988 0.975 0.975 0.589

5. Conclusions The survey reveals that demographic factors such as age, degree, job status, job category, job level, mode of appointment and total years service has an impact on job satisfaction which implies that based upon age, degree, job status, job category, job level are stable with regard to their job performance. Nonetheless, demographic characteristics facilitated the discovery of less number of employees in public sector regulatory authorities by gender. As mentioned in the introduction, the relationship between job satisfaction and job performance had a controversial history. Most of the earlier reviews of the literature suggested a weak and somewhat inconsistent relationship between job satisfaction and performance. A review of the literature in 1985 suggested that the statistical correlation between job satisfaction and performance was about 0.17 (Iaffaldano & Muchinsky, 1985). Correlation between job satisfaction and job performance in this study was 0.52
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which does not support to the previous findings. This study had an important impact on researchers, and in some cases on organizations, with some managers and HR practitioners concluding that the relationship between job satisfaction and performance was trivial. In addition, in a comprehensive review of 301 studies, Judge, Thoresen, Bono, and Patton (2001) found that when the correlations are appropriately corrected (for sampling and measurement errors); the average correlation between job satisfaction and job performance is a higher 0.30. This finding is supportive of current study sampling and measurement as results of job satisfaction and job performance (0.52) is a higher than 0.30 Thus, contrary to earlier reviews, it does appear that job satisfaction is, in fact, predictive of job performance and the relationship is stronger. Previous work of Fried & Ferris (1987); Parisi & Weiner (1999); and Weiner (2000) envisaged that major job satisfaction areas includes, satisfaction with the nature of the job itself, including job challenge, autonomy, skill variety and scope, best predicts overall job satisfaction, as well as other important outcomes like job retention. Correlation between job satisfaction and job retention in this study is (r = 0.34) which is statistically significant. Hence these finding support the work of Fried and Ferris (1987); Parisi and Weiner (1999); and Weiner (2000). Job satisfaction, which shows organizations interest in the compensation and career growth of the employee, has a direct influence on an employees commitment to the organization, which in turn affects employee retention and employee productivity and finally results in increased job performance. This is in conformity with the finding of Igbaria and Greenhaus (1992). Since most of the professionals in the organizations were in their mid career, they look for career growth. More than pay, prime value is given to growth opportunities. If there is scope for career growth in the organization, employees feel attached to the organization and remain longer and contribute towards organizational success. The influence of organizational commitment on employee retention and productivity is very much in consistency with previous studies (Becker, 1960; Allen & Meyer, 1996; Mowday et al., 1979). Organizations that are interested in a long-term relationship with employees reap the rewards in financial terms through increased productivity and long term affinity of the employee with the organization. It is really inspiring to observe that expenditure on employees is not an overhead, but a long-term investment for greater long-term returns. Although salary package is a major cost in the public sector regulatory authorities, good compensation packages have a direct positive impact on job satisfaction and job retention for highly qualified and trained manpower to enhance the productivity of the organization. This is in agreement with the Harvard approach that all HRM practices should lead to cost effectiveness (Beer et al., 1984). This reveals that a well-designed compensation system can reduce operating costs. It might be through enhancing the commitment of employees to contribute more to the organization. Higher pay may not always increase operating costs if it is used to enhance overall productivity of the organization. Many previous studies found compensation and rewards to be the major factor deciding the organizational commitment of employees (Steers, 1977; Mowday et al., 1982; Angle, 1983; Mottaz, 1988). Compensation might be a major criterion for
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choosing an organization, but, once they are part of the organization, employees look for vertical and horizontal growth in the organization. This is not to say that high compensations are unimportant, rather, it is that much can be done to influence job satisfaction by ensuring job succession planning. On the other hand, there has been an increasing interest among human resource management (HRM) academics and practitioners in the degree to which employees are satisfied with their jobs, and more generally in well-being at job. A number of recent studies have reported a positive link between employees well-being and productivity (Marks, 2006). Results of present study also support the findings of Marks. The results showed that the job satisfaction have a highly significant influence on job performance. Particularly, the more satisfied a job holder is with his / her job, the more important he / she regards the organizational skills and cognitive skills as in the job, and the higher level of technological skills, organizational skills and cognitive skills he / she displays at job. The vast majority of literature examines turnover as the dependent variable and focuses on factors that predict turnover (Campion, 1991). Though, it is also important to consider turnover as the independent variable, a topic that is studied only infrequently. One important issue is the effect of turnover on subsequent job performance in the organization. Another important issue is what moderates the turnover-performance relationship (Staw, 1980). The positive correlations of job retention was found with job performance r = 0.23 in this study. Research by Allen and Griffeth (2001), Allen et al (2003), and Chiu and Francesco (2003) have shown that job satisfaction is a strong predictor of turnover intentions. The present study has shown a positive significant correlation between job retention and job satisfaction r = 0.34 This reflect that due to satisfaction with the current job is an indicators to predict employee turnover in the organizations may be low in finding another job due to a positive experience with their organizations policies. The empirical data has suggested that the most significant retention predictors were associated with job succession planning and job security rather than compensations and other monetary rewards. Correlations between job retention and job succession planning was found r = 0.37 and job retention with job security was r = 41 whereas correlation between job retention and job evaluation was r = 0.28 which is relatively low as compare to job succession planning and job security. These results were consistent across the board among all age groups, gender, educational level and job status, as no statistically significant differences were found. This study has explored a relationships showing large effect size correlations between job performance and job satisfaction (r = 0.52). This highly positive significant relationship is an addition to the literature on Human Resource Management particularly in the context of Pakistan a non-western country. The findings reported in this study make a valuable contribution to the awareness of understanding the concept of job satisfaction and the impact of job satisfaction and job retention on job performance. However, additional research is needed to further investigate the potential relationship and effect these variables and other variables have on job satisfaction. It is hoped that the relationships to the employees job performance are found in this research can contribute to a great extent
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to improve the level of employees job satisfaction and job retention in public sector regulatory authorities.

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Appendix - A Variable items with Alpha

Job Performance My present job gives me the opportunity to enhance my performance on job My present job has a direct impact on achieving the organizational objectives My job performance outcomes are consistent with the goals of the organization My good performance on job is rewarded financial terms My good performance on job is given formal appreciation by the higher ups The job performance evaluation system is objective Job Satisfaction My present job gives me internal satisfaction I am respected because of my job My job gives me a sense of fulfillment I can seek my peers help regarding my job I will recommend this job to a friend if it is advertised /announced I feel cared for by my organization Job Retention I will continue in my present job even if I am paid less Had my job met my expectations I would have given it my best. I like my job because it is totally monotonous in nature I joined this job because I had no other options I can consider changing my job in the next 12 months I would like to reach my superannuation in my present organization Alpha

0.77 ( 6 items )

0.72 ( 6 items )

0.57 ( 6 items )

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