Ninth AIMS International Conference on Management January 1-4, 2012

Effect of Employee Satisfaction on Organization Performance: An

Empirical Study in Hotel Industry

Bharati Deshpande
bharatidesh123@gmail.com
Kohinoor Business School
Kirti Arekar
Rashmi Sharma
Sonam Somaiya
deshmukh_k123@yahoo.com
bahadur.rashmi@gmail.com
sonamsomaiya3@gmail.com
K. J. Somaiya Institute of Management Studies Research, Mumbai

People Management is an important aspect of organization processes. Every organization in the present
scenario wants to conduct a feedback about employee satisfaction and then take necessary actions on the
feedback provided by the employees. This sense of influence can be very critical element to nature employee
satisfaction. Also this can help to build in employee commitment towards the organization. A well managed
business organization normally considers the average employees as the primary source of productivity gains.
These organizations consider employees rather than capital as the core foundation of business and contributors
to firm development. The study revealed the relationship between employee satisfaction levels and the
performance of the employees on the basis of their satisfaction levels. Employee satisfaction was measured on
parameters like financial benefits, work environment, role clarity, employee relations, employee welfare and
work stress. The sample size taken was 105 across all the departments in a leading of the hospitality sector. A 4
point Likert Scale questionnaire was used for collecting the data. The data analysis showed that the satisfaction
level of the employees in the organization was very high which resulted in the smooth running of the
organization.

Keywords: Employee Satisfaction, Work Environment, Role Clarity & Employee Relation

1. Introduction
Employee satisfaction is the terminology used to describe whether employees are happy and contented and
fulfilling their desires and needs at work. Many measures purport that employee satisfaction is a factor in
employee motivation, employee goal achievement, and positive employee morale in the workplace. Employee
satisfaction, while generally a positive in an organization, can also be a downer if mediocre employees stay
because they are satisfied with the work environment. Factors contributing to employee satisfaction include
treating employees with respect, providing regular employee recognition, empowering employees, offering
above industry-average benefits and compensation, providing employee perks and company activities, and
positive management within a success framework of goals, measurements, and expectations.
Employee satisfaction is often measured by anonymous employee satisfaction surveys administered
periodically that gauge employee satisfaction in areas such as:
 management
 understanding of mission and vision
 financial benefits
 work environment
 role clarity
 employee welfare
 job stress levels

The facets of employee satisfaction measured vary from company to company.

A second method used to measure employee satisfaction is meeting with small groups of employees and
asking the same questions verbally. Depending on the culture of the company, either method can contribute
knowledge about employee satisfaction to managers and employees. Exit interviews are another way to assess
employee satisfaction in that satisfied employees rarely leave companies.

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2. Literature Review
One of the main functions of Human resource Management is to check whether their employees are satisfied.
Different HR practices are training, performance link pay, salary and other motivational strategies are used by
HR professionals to create job satisfaction amongst its employees. In the past papers every researcher has
defined each variable and to some extends about the relationship of work motivation with job motivation. There
are number of studies which explore importance as well as effect of job satisfaction around the globe. Rizwan
Saleem (2010) further adds there is no secret or tract to motivate people to do good work. It takes just few things
in consideration to create motivation like spending fair time with staff, advice people and give clear expectations
of standard expectation. In his studies which explore the existing trend on job satisfaction and work motivation
around the globe but there is scarcity of this work in the local environment. There are different variables
considered by different researchers as to what leads to employee satisfaction. (Slack 2010) It is very necessary
to firstly to have a clear vision statement and that it has to be rightly communicated to the employees. This
communication will in turn help will improve employee satisfaction.
(Rogelberg) has given a unique feature of time investment and theoretical relevance of meeting to work
attitude. He explored whether organization science should consider employee satisfaction with meeting as a
contemporary important and discrete facet job of satisfaction.
There is indirect relationship between job satisfaction and absenteeism. (Ybema) has examined the
interrelation between registered employee absenteeism, job satisfaction and burnout. Lower job satisfaction
increases absence frequency during the year. Also job dissatisfaction causes burnout and further causes job
dissatisfaction.
Job satisfaction is also based on individual perception, attitude, performance and behavior. (Kaifeng) evaluates
a linkage between management reforms with employee job satisfaction. It cities that managing for results,
operational zed as perceived performance orientation, and innovative culture, is positively related to job
satisfaction, but the relationship is moderated by employees trust in leadership and their perception of the
effectiveness .
(Rizwan, Mohamood) sets the purpose of investigation is to determine the impact of work motivation on job
satisfaction and carried out to explore to what extent the employees are satisifed with different dimensions in
their job in telecom industry. The one of the effect of job dissatisfaction is absentees. (Ybena Jan 2010) in his
research has tried to bring a linkage between the employee absenteeism, job satisfaction and burnout in
longitudinal design with four yearly waves of data. Also further it is found that higher burnout enhances future
time lost due to absence, and lowered future job satisfaction.
It cities that managing for results, operationalized as perceived performance orientation, and innovative
culture is positively related to job satisfaction. (Kaifeng Yang 2010). Researchers have found that satisfied
employees are more likely to contribute their knowledge (Janz 2003), improve their job performance.
Dissatisfied employees on the other side hold what they know and do not share with others. (Eskidsen and
Nuzzler, 2000).
There are few companies which does not have a realistic graps of what their employees actually things. One of
the reasons is the lack of scientific method to measure personal characteristics (Rucchi 1998).
(Schonberger's1990) emphasis a new aspect of internal customer relationship. He is of the opinion that if your
employees are treated as internal customer we can benefit from the cause and effect relation between employee
satisfaction and loyalty.

3. Objectives
The Primary Objectives of this project are:
 To determine the employee satisfaction levels at the organization.
 To determine in which areas are the employees unsatisfied.
 To understand how unsatisfied employees can be made satisfied.
 To give recommendations about employee satisfaction based on the findings of the data.

4. Research Methodology
Primary Research was used for the completion of this project.
To collect the primary data the following things were done.

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 Develop-Design and plan the project-I had designed to carry out a survey on employee satisfaction
through questionnaires.
 Implementation and Operationalisation: The questionnaire on employee satisfaction was designed
accordingly.
 Data Collection Phase: The questionnaire was then handed out to 125 of the 550 employees in the
organization.
 Data Analysis: The data obtained was in Likert scale and it was analyzed using SPSS software.
 Analysis of the data showed the satisfaction levels of the employees in various sectors like financial
benefits, employee benefits, role clarity, work environment, employee welfare and job stress.

5. Sampling
The method of sampling used is proportional stratified random sampling.
Firstly the whole population of employees is divided into departments, and a specific number of employees
from each department were selected for the survey.

6. Analysis of Employee Satisfaction

The analysis was conducted using statistical methods like Anova (F-test), Chi Square test, t-test. If the data
types of both the variables are nominal in nature then a Chi Square is conducted. If one data is nominal in nature
and the other is ratio/interval in nature (but more than two groups are present) then an Anova is conducted and
when one data is nominal in nature and the other is ratio/interval in nature (but only two groups are present) then
a t test (independent) is conducted.

Factor Analysis
Kaiser-Meyer-Olkin (Test to Assess the Appropriateness of using Factor Analysis on Data)
The Kaiser-Meyer-Olkin measure of sampling adequacy is an index for comparing the magnitudes of the
observed correlation coefficients to the magnitudes of the partial correlation coefficients. Large values for the
KMO measure indicate that a factor analysis of the variables is a good idea. For e.g.: in this case the value is
0.879 hence factor analysis can be carried out. Another indicator of the strength of the relationship among
variables is Bartlett's test of sphericity. Bartlett's test of sphericity is used to test the null hypothesis that the
variables in the population correlation matrix are uncorrelated. The observed significance level is .000. It is
small enough to reject the hypothesis. It is concluded that the strength of the relationship among variables is
strong. It is a good idea to precede a factor analysis for the data.

Rotated Component Matrix

The rotated component matrix divides all the questions into different categories on the basis of their similarity.
The similar questions are clustered together in the matrix. In this case all the questions that were in the
questionnaire have been divided into six categories as shown.

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For the Data Analysis 6 Computed Variables for Job Satisfaction were obtained from Component Matrix
 Financial Benefits
 Employee Relations
 Role Clarity
 Work Environment
 Employee Welfare
 Work Stress

Relationship between Experience and Job Satisfaction

: Job satisfaction is not significantly affected by Experience.
: Job satisfaction is significantly affected by Experience.

Anova Table of “Experience” with “Computed Variables”

Conclusion
From the above table we can conclude that at 5% level of significance, Role Clarity, Work Environment,
Employee Relationship is statistically significant with Experience whereas Financial Benefits, Employee
Welfare and Work Stress are statistically non-significant.
We can conclude that with gaining of experience a significant change occurs in Role Clarity, Work
Environment, and Employee Relationship.

Relationship between Salary and Job Satisfaction

: Job satisfaction is not significantly affected by salary.
: Job satisfaction is significantly affected by salary.

Anova Table of “Salary” with “Computed Variable”

Conclusion
From the above table we can conclude that at 5% level of significance Financial Benefits and Work Stress are
statistically significant with Salary whereas Employee Relationship, Role Clarity, Work Environment,
Employee Welfare and Work Stress are statistically non-significant.
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We can conclude that with change of salary a significant change occurs in Financial.

Relationship between Department and Job Satisfaction

: Job satisfaction is not significantly affected by department.
: Job satisfaction is significantly affected by department.

Anova Table of “Department” with “Computed Variable”

Conclusion
From the above table we can conclude that at 5% level of significance Financial Benefits and Work Stress are
statistically significant with Salary whereas Employee Relationship, Role Clarity, Work Environment,
Employee Welfare and Work Stress are statistically non-significant.
We can conclude that with change of salary a significant change occurs in Financial Benefits and Work Stress.

Measurement of Overall Satisfaction Levels

The overall satisfaction is observed by compiling all the already existing computed variables (financial benefits,
employee satisfaction, work environment, employee welfare, role clarity and job stress) together.

Conclusions
The responses obtained were quantified in a scale of 1-4. The mean and the median values of the responses
given by the respondents are shown above. The high mean and median values suggest that the employees are
overall satisfied.

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Overall Satisfaction in Terms of Salary

Conclusions
The responses were quantified on a scale of 1-4 and the mean values shown above are the mean values of the
responses given by the respondents belonging to that particular salary slab. The mean values suggest that overall
satisfaction in terms of salary is high. But at 5% Level Of Significance the various salary slabs shown above are
statistically not significant to each other and hence the salary slabs will not show significant change if either of
them is altered.

Overall Satisfaction according to Experience

Conclusions
The responses were quantified on a scale of 1-4 and the mean values shown above are the mean values of the
responses given by the respondents belonging to that particular experience slab. The mean values suggest that
overall satisfaction in terms of experience is high. At 5% Level Of Significance the experience slabs shown
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Ninth AIMS International Conference on Management January 1-4, 2012

above are statistically significant to each other and hence the experience slabs will show significant change if
either of them is altered.

Overall Satisfaction according to Department

Conclusions
The responses were quantified on a scale of 1-4 and the mean values shown above are the mean values of the
responses given by the respondents belonging to that particular department. The mean values suggest that
overall satisfaction in terms of experience is high except for F &b Support (2.60) and Loss Prevention
Department (2.50). At 5% Level Of Significance the various departments shown above are statistically
significant to each other and hence the departments will show significant change if either of them is altered.

“T-test” to Determine Overall Satisfaction according to Gender

Conclusions
The responses were quantified on a scale of 1-4 and the mean values shown above are the mean values of the
responses given by the respondents belonging to that particular gender. The mean values suggest that overall
satisfaction in terms of gender is high. But at 5% Level Of Significance gender is statistically not significant.
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