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Linking employee loyalty Linking

employee
with job satisfaction using loyalty with job
satisfaction
PLS–SEM modelling
Swati Dhir 1695
OB/HR, International Management Institute New Delhi, New Delhi, India, and
Received 7 March 2019
Tanusree Dutta and Piyali Ghosh Revised 2 August 2019
OB/HR, Indian Institute of Management Ranchi, Ranchi, India Accepted 12 December 2019

Abstract
Purpose – The purpose of the present study is to empirically test a model that illustrates how person–job fit
(PJF), person–organization fit (POF) and perceived supervisor support (PSS) as individualistic factors affect job
satisfaction and employee loyalty in the Indian context.
Design/methodology/approach – A survey of the Indian managerial executives was conducted with a
structured questionnaire to validate the proposed model. Responses of a sample of 220 have been tested using
PLS–SEM modelling approach.
Findings – The factors PJF, POF and PSS are inferred to have significant impact on job satisfaction and also
improve employee loyalty. In comparison to PJF and PSS, POF has emerged as the most influential determinant
of the proposed model.
Practical implications – HR managers can adopt relevant practices and promote organizational policies in
order to have loyal employees. This would also help organizations in increasing overall productivity at both
individual and organizational levels. Recruiters could be provided with necessary tools and measures to find
better and accurate means of mapping POF and PJF.
Originality/value – Establishing PJF, POF fit and PSS as individual-specific constructs, and job satisfaction
as a mediator, leading to employee loyalty, is a significant contribution to research. This study finds uniqueness
in the Indian context, in which these constructs have mostly been explored in isolation or as dyadic relations.
Review of existing studies indicates an overlap of factors that influence both job satisfaction and employee loyalty.
Keywords Quantitative, Employee loyalty, Job satisfaction, Person–organization fit, Person–job fit, Perceived
supervisor support
Paper type Research paper

1. Introduction
The concept of employee loyalty has been undergoing significant transformations, as the
relationship between an employer and employee in itself is changing. In fact, in a recent
Workforce Survey, around 80 per cent of respondents have reported that their notion of
loyalty in context of work has changed with time (Murdock, 2017). Employees nowadays are
more loyal to their work than they are to their organization. This apart, the new-age
workforce looks for tangible returns from employers and relates loyalty to financial security,
among other factors. In the Employee Financial Wellness Survey 2016, around 54 per cent of
millennials have linked loyalty to their organization in terms of how much the latter cares
about their financial well-being (PWC, 2016).
Employee loyalty is at crossroads in the Indian context as well. The report ‘Employee
Engagement Insights of India, 2013’ by the Corporate Executive Board has reported Indian
workforce to have the lowest employee loyalty in Asia (Sharma, 2014). As growth trends firm
up in job market, India is set to witness the highest attrition rate globally, with the possibility
of one among four employees switching jobs. In the ‘2015 Michael Page India Salary and
Employment Report’, about 82 per cent of the Indian employees have shown inclination to Personnel Review
switch jobs by the following year. Vol. 49 No. 8, 2020
pp. 1695-1711
One out of three employees who took part in the ‘Randstad Employer Brand Research © Emerald Publishing Limited
0048-3486
2017’ has been candid in confessing that he/she is not loyal to any individual sector and could DOI 10.1108/PR-03-2019-0107
PR switch over for better compensation package (Ghosh, 2017). A survey conducted by the
49,8 management consultancy major (Hay Group, 2013) reveals that the concerns among the
Indian employees about fairness of their compensation and career objectives are the key
reasons to switch jobs. Employee turnover rates over the next five years have been
predicted to rise to 23.4 per cent (Biswas, 2013). Further, surveys predict India to have the
highest turnover rate of 26 per cent (Hay Group, 2013), placing it in the eye of the employee
turnover storm.
1696 A scenario that features business success being determined in terms of not only employee
performance but also employee loyalty (Rai et al., 2018) actually warrants research attention to
explore the factors influencing the belongingness of an employee towards his/her organization.
Let us mention at the outset that we have used the term ‘loyalty’ interchangeably with
‘employee loyalty’ henceforth.
Extant literature suggests that satisfaction with working conditions of an organization
could lead to outcomes like reduced likelihood among employees to quit their jobs. The
linkage between job satisfaction and loyalty has received significant attention of researchers
in the past. For instance, Walker and Boyne (2005) observe that employees satisfied with their
jobs become loyal when their organization provides them with a well-defined career path and
with opportunities to learn at work and also grow within the organization. Khuong and Tien
(2013) argue that high employee loyalty may be attained through teamwork, increased
supervisor support, good working environment and high job satisfaction. Some other authors
(e.g., Fosam et al., 1998) have validated that increase in satisfaction at work makes managers
and employees loyal to their organization. However, what makes a job satisfying or
dissatisfying does not depend only on the nature of the job, but also on the expectations that
individuals have of what their job should provide.
Satisfied employees are likely to be more industrious, inspired and dedicated to their work.
Notably, job satisfaction and dissatisfaction are two separate, and sometimes even unrelated,
phenomena (Herzberg and Mausner, 1959). According to Herzberg’s two-factor theory,
intrinsic factors like achievement, recognition, work itself and responsibility are linked with
satisfaction, whereas, extrinsic (or hygiene) factors are found to be linked with dissatisfaction.
Factors that enhance satisfaction at work, as identified by past researchers (e.g., Ngo and
Nguyen, 2016), include teamwork and cooperation, relationship with supervisor, training and
development, rewards and recognition, benefits and working conditions. Similarly, employee
loyalty is boosted by satisfaction with factors like teamwork, relationship with supervisor,
conditions at work, rewards and recognition and cooperation (Khuong and Tien, 2013; Ruch
et al., 2018). The present study aligns with such outcomes of extant research (e.g., Lambert
et al., 2016) and infers about an overlap of factors that influence both job satisfaction and
employee loyalty. This inference has driven us to examine the linkage between these two
constructs in the Indian context, by considering a different set of antecedent variables to
avoid the overlap identified.
Researchers in the past (e.g., Rusbult and Farrell, 1983; Harter et al., 2002) have mostly
studied job satisfaction from the perspective of factors that are offered by an organization
(e.g., pay and aspects of work), over which an individual employee would hardly have any
control. Our study takes a different route by exploring job satisfaction from an individualistic
perspective. It proposes a model in which the individual-specific constructs, namely,
person–job fit (PJF), person–organization fit (POF) and perceived supervisor support (PSS),
contribute to job satisfaction, which consequently leads to employee loyalty. Of these, PJF
and POF come under the umbrella of person–environment fit, which, also referred to as
congruency, is linked to work-related outcomes like job satisfaction (Whiting et al., 2008).
Our article responds to the need to examine the linkage between POF, workplace
characteristics and outcome behaviours of employees, as recommended by Sahu (2018).
Motivation is also drawn from the conclusion derived from reviewing literature that loyalty
and job satisfaction as constructs have mostly been explored in isolation, especially in the Linking
Indian context. employee
The next section features excerpts from existing literature on the selected constructs.
Hypotheses have been drawn based on such review, and a research model has accordingly
loyalty with job
been proposed. Research plan is described thereafter, followed by the results obtained. satisfaction
Findings are discussed in the next section. We have thereafter reported the limitations of this
study as well as scope for research in future, as perceived by the authors. The article ends
with concluding remarks, containing managerial implications of our findings. 1697

2. Theoretical background and hypotheses development

2.1 Employee loyalty
Loyalty of an employee indicates inclination or will to continue with his/her organization
(Solomon, 1992). It is primarily reflective of the involvement and identification an employee
could have with his/her organization (Mowday et al., 1982; Guillon and Cezanne, 2014), with
a willingness to stay. Employee loyalty is an organizational citizenship behaviour that
reflects allegiance to the organization to promote its interests and image to outsiders
(Waqas et al., 2014). It is also a manifestation of organizational commitment, reflecting the
relative strength of an individual’s identification with and involvement in an organization.
However, loyalty cannot be expected without reciprocity. To expect higher level of loyalty
from its employees, an organization must show similar or even higher level of loyalty
towards them.
Loyalty plays a vital role in principal–agent problems; employees who exhibit loyalty
have interests aligned with those of their organization, which lowers agency costs of the latter
(Brown et al., 2011). It is often said that organizations should provide a healthy work
environment in order to attract and retain qualified, highly committed and loyal employees,
because such employees reinforce motivation to act in the best interest of their employer.
Although oftentimes employee loyalty and commitment are used interchangeably, they
are not the same (Tabrani et al., 2018). Loyalty is a kind of faithfulness and trueness; it reflects
a person’s devotion or sentiment to an object, which may be another person or group of
persons, or an ideal, a duty or a cause. It expresses itself in both thought and actions and
strives for identification of the interests of a loyal individual with those of the object. On the
contrary, organizational commitment is multidimensional in nature, involving an employee’s
loyalty to the organization (Joo et al., 2018).
Further, loyalty can be defined as psychological attachment or commitment to the
organization and develops as a result of increased satisfaction. Satisfaction emerges from a
process of internal evaluation, when an employee’s expectation level is met or exceeded.
Employee loyalty develops thereafter, as a generalized emotional attitude towards the
organization, which, in turn, increases sense of commitment towards the organization (Zayas-
Ortiz et al., 2015). Therefore, employees must keep a positive attitude and have loyalty to the
organization, and an attitude of commitment, honesty and cooperation with peers. A suitable
working environment with fair processes contributes to increasing positive organizational
citizenship behaviour and creating a work environment apt for achieving organizational
success (Obedgiu et al., 2017).
Loyal employees refrain from searching alternative job opportunities and are also not
responsive to offers made by other organizations (Turkyilmaz et al., 2011). They exhibit
allegiance to their organization by rising up to its vision and values, investing high level
of efforts and projecting a positive image of the organization to external stakeholders
(e.g., Durkin, 2007; Davis, 2015). Other characteristics of loyal employees include willingness
to work till late, low turnover and better services rendered (e.g., Durkin, 2007; Guillon and
Cezanne, 2014). Absence of employee loyalty, on the other hand, has been found to be
PR detrimental to an organization, resulting in lack of trust, higher absenteeism and turnover
49,8 and inefficient work (Davis, 2015).
Ramanathan and Senthil (2013) have investigated the role of employee loyalty as well as
factors influencing organizational performance. Responses from a sample of 100 employees
across cities in South India revealed that organizational culture is the leading contributing
factor to loyalty, followed by superior leadership style. Sharma and Bajpai (2010) have
conducted a comparative study of public and private sector companies in India, using a
1698 sample of 250 employees in managerial and non-managerial ranks. Results established that
job satisfaction increases (or decreases) when there is an increment (or reduction) in
organizational commitment. This finding underlines the fact that most Indian employees
have an alternate social presentation to their occupation status, and holding work out in the
public is seen to be more secure in terms of professional stability. Several other authors have
also concluded that job satisfaction is the most widely studied construct in the literature
related to loyalty, commitment, turnover and attrition as well as in anticipating other related
behavioural as well as attitudinal outcomes of a job.
Organizations with loyal employees have a significant competitive advantage and a
higher rate of survival compared to organizations with lesser number of loyal employees
(Kim et al., 2016; Rice et al., 2017). Loyal employees are assets to an organization, and their
relation is the key to its success. Employee loyalty depends on the mutual loyalty of employee
and employer. ‘Employers can expect their employees remain loyal – but employers must be
loyal to them’ (c.f. Aityan and Gupta, 2012).

2.2 Job satisfaction

Described as an end-state pleasurable feeling (Drever, 1964; Locke, 1976), job satisfaction
reflects whether employees have a liking or disliking for their jobs (Spector, 1997). The
domain of psychology construes job satisfaction as an emotional perception of an employee,
which makes him/her react with positive or negative feelings. From a sociological standpoint,
it implies how an employee evaluates and thinks about his/her job (Sypniewska, 2014). Job
satisfaction enhances employee morale, which positively influences both their loyalty and job
performance (Harter and Schmidt, 2002; Rajput et al., 2016). Past research (e.g., Vijayabanu
et al., 2013; Aristovnik et al., 2016) also suggests that satisfied employees feel oneness with
their organization and promote cohesiveness at work.
An organization’s performance can be affected if its employees are not satisfied. It is also
evident that job satisfaction leads to increase in organizational performance and that these
two variables are dependent on each other (Lawler and Porter 1967). Toma
zevi
c et al. (2014)
similarly reports a positive correlation between job satisfaction and effectiveness of an
organization. A favourable work environment leads to high level of job satisfaction, and, in
such case, employee retention is also very high. Therefore, job satisfaction means a
pleasurable emotional state or feeling. It is more of a long-term commitment towards the
workplace, rather than being a short-term emotional containment. Job satisfaction has direct
linkage with absenteeism, commitment, performance and productivity as it improves
retention level of employees and reduces the cost of hiring new employees (Murray).

2.3 Person–job fit

It is always advisable to give an employee a task that best suits his/her competencies and
skills, so as to enhance performance at work (Iqbal, et al., 2012); this is referred to as PJF. PJF
reflects to which extent an employee could be satisfied with his/her job (Vijayabanu, 2016).
Research indicates that PJF helps in fostering a challenging work environment, a committed
workforce (Bowen et al., 1991; Kristof, 1996), better work performance (Edwards, 1991),
greater work commitment (Rousseau and Parks, 1992), positive attitude towards work
(Laschinger and Leiter, 2006; Tinsley, 2000) and, most importantly, enhanced job satisfaction Linking
(Kristof-Brown et al., 2005). employee
PJF has three aspects: congruence fit (i.e., employees and their position share some
similarity), needs–supplies fit (i.e., returns received from a job meet an employee’s
loyalty with job
expectations and demands) and demands–abilities fit (which includes abilities, skills and satisfaction
knowledge of an employee to meet job requirements) (Edwards, 1991). All these components
of PJF have been found in past research to relate positively with job satisfaction. Verquer et al.
(2003) also suggest on the basis of their meta-analysis that PJF is positively correlated with 1699
job satisfaction. Review of literature prompts us to hypothesize that:
H1. Person–job fit is likely to have 
a positive influence on job satisfaction.

2.4 Person–organization fit

Every employee is different and brings varied needs, wants and preferences to work. While
recruiting, an organization checks for compatibility of prospective employees in terms of
whether their skills, values and goals are aligned with it (Chuang and Sackett, 2005). In the
same way, an employee evaluates an organization in terms of compatibility. In fact, Schneider
(1987) argues that an employee is likely to continue with his/her employer if the organization’s
environment and employees seem to be similar to him/her. This is nothing but person–
organization fit.
The concept of POF was first used by Chatman, who describes it as ‘congruence between
the norms and values of organizations and the values of persons’ (1989, p. 339). POF includes
supplementary fit and complementary fit. As per Muchinsky and Monahan (1987), when ‘a
person fits into some environmental context because he or she possesses characteristics
which are similar to other individuals in this environment’, it is known as supplementary fit
(p. 269); when ‘the weakness or need of the environment is offset by the strength of the
individual, and vice versa’, it is known as complementary fit (p. 271). Integrating both
conceptualizations, Kristof (1996) describes POF as ‘the compatibility between people and
organizations that occurs when: a) at least one entity provides what the other needs, or b) they
share similar fundamental characteristics, or c) both’ (pp. 4–5).
POF as a construct is rooted in interactional psychology. This ‘fit’ has been explored with
respect to variables like work group, organization, supervisors, retention, organizational
attraction and turnover intention (Bam et al., 2019). Perception of a sample of insurance
professionals has driven Sahu (2018) to conclude that empowerment of employees at work
explains significant variance in outcome variables like fit with organization and job
satisfaction. The meta-analysis by Verquer et al. (2003) suggests that POF has a medium to
high correlation with satisfaction. Review of past studies has led Tuzun et al. (2018) to posit
that identification with one’s organization and work group contributes to job satisfaction.
However, Arthur et al. (2006) argue that not much is known about how POF influences job
satisfaction. Addressing this gap in literature, we propose our next hypothesis as:
H2. Person–organization fit is likely to influence job satisfaction positively.

2.5 Perceived supervisor support

Among the various dyadic relationships that have been explored at work, the one between
supervisor and employees is the most frequently researched (Van Vianen, 2000). Kreitner
et al. (2002) describe supervisors as ‘agents of an organization, who are responsible for
providing information on organizational goals and values, implementing policies, scheduling
work, setting performance standards and performing appraisals’ (p. 312). Employees attach a
lot of significance to the support, feedback (Kottke and Sharafinski, 1988), encouragement
and concern received from their supervisor (Burke et al., 1992).
PR Any conflict between supervisor and employees refrains the latter from sharing
49,8 innovative thoughts, and also impacts their job satisfaction and work outcomes (Griffeth
et al., 2001). Since they are crucial in providing a structure to the work environment, in sharing
information and also in giving meaningful feedback, supervisors influence the affective
behaviour of employees (Durham et al., 1997), which is translated as ‘perceived supervisor
support’.
PSS has been defined as the perception employees have about their supervisor (or
1700 manager) with respect to assisting behaviours directed towards achieving predetermined
goals, considering their inputs worthy, being concerned about their well-being and conveying
a sense of caring (Eisenberger et al., 2002; Rooney, 2004). In fact, this form of support has been
identified as a job resource in the celebrated job demands–resources (JD–R) model (Demerouti
et al., 2001) and plays a major role in generating job satisfaction (Yukl, 1989). Review of past
academic pursuits directs us to hypothesize that:
H3. Perceived supervisor support is likely to have a positive influence on job satisfaction.
On critically reviewing extant studies, it can be conclusively said that PJF, POF and PSS are all
related to job satisfaction. However, each of these constructs has mostly been explored by
previous researchers in isolation to measure its individual impact on job satisfaction. We have
hence adopted a different approach, in which we propose that the simultaneous presence of all
these three variables would generate job satisfaction. For this, we hypothesize that:
H4. Person–job fit, person–organization fit and perceived supervisor support are likely to
increase job satisfaction.

2.6 Employee loyalty and job satisfaction

Several empirical evidences (e.g., Flecther and Williams, 1996; Wu and Norman, 2006)
suggest that job satisfaction of an employee has positive correlation with his/her loyalty.
Employees who experience job satisfaction not only continue working with the same
employer, but also refer their organization to their acquaintances as a place of work ( Jun et al.,
2006). Conversely, decreased job satisfaction makes an employee seek a new job (Durkin,
2007; Turkyilmaz et al., 2011). Mobley et al. (1979) and Price (1977) have found that employees
who were low on job satisfaction have showed an increased likelihood of leaving their jobs.
This finding has been substantiated by Shaw (1999).
Some researchers (e.g., Chang et al., 2010) have even established job satisfaction as an
antecedent of loyalty. A few have however argued that job satisfaction and employee loyalty
share a weak connection (Prabhakar, 2016). Job satisfaction focuses on the present and past
(Locke, 1976), while employee loyalty is a long-term phenomenon (Chen, 2006; Khuong and
Tien, 2013). Thus, a temporal orientation may be a probable explanation of the weak relation
between these constructs (Khare and Pandey, 2012). Also, loyal employees are more engaged
in and committed to their organization (Dhir and Shukla, 2019). Such mixed findings in extant
research have driven us to investigate the possible link between these two constructs and
hence we hypothesize that:
H5. Job satisfaction is likely to influence employee loyalty positively.

2.7 Uniqueness of the proposed model

Existing studies have already explored the association that PJF, POF and PSS as independent
variables have with job satisfaction and employee loyalty, but such association has mostly
been tested either in isolation or in the form of dyadic functions. In the present study, job
satisfaction has been considered as a function of PJF, POF and PSS, leading subsequently to
employee loyalty (see Figure 1). Integrating PJF, POF and PSS as individualistic factors and
positing job satisfaction as a mediator to check how the former contributes towards employee Linking
loyalty are unique features of our research model, especially in the Indian context. employee
loyalty with job
3. Methodology
3.1 Sample satisfaction
A total of 310 questionnaires were distributed as a part of a survey among managerial
executives working in corporate houses across different industries and sectors of the Indian
economy. Of these, 220 responses, complete in all respect, were returned. Data were
1701
specifically collected from respondents having minimum three years of work experience. For
the present study, all levels of executives, namely, junior, middle and senior, have been
included. This research aims to establish association between loyalty, job satisfaction and
other work-related constructs. Hence, it is presumed that having minimum three years of
experience is needed for employees to perceive loyalty and satisfaction, so that they can
respond to our survey in the most appropriate manner.
Apart from their organizational tenure, respondents were asked to report their age,
gender, educational qualification and the duration they have been working with their
supervisor, all of which were used as controls in our analysis of data. The sample has an
average of 4.5 years of experience, and the majority (62 per cent) is male. Highest
representation (56 per cent) is of middle-level executives, followed by 31 per cent of junior-
level and 13 per cent senior-level executives working in different sectors and industries like
education, electronics, agriculture, chemical, IT and automobiles. Demography of
respondents has emerged to be diverse, and is hence expected to help understand the
relations projected and generalize the findings. Diversity in occupations of respondents was
maintained to increase generalizability of the findings in the Indian context.

3.2 Measurement scales

To validate the proposed model, we have conducted a survey with a structured questionnaire.
The questionnaire had two distinct sections. Demographic details of respondents, including
age, gender, level of management, occupation profile and years of experience, were sought in
the first section. The second section consisted of statements on the selected constructs in the
form of rating scales.
We have used existing standardized scales to measure the selected constructs mainly for
two reasons. Firstly, these scales were originally developed to measure the specific
constructs, and are thus the most appropriate for our study. Secondly, these scales have been
extensively tested, and they show good psychometric properties (Hui and Yee, 2015).
Respondents were asked to rate all items on a five-point Likert-type format anchored between
strongly disagree (indicated by 1) and strongly agree (indicated by 5). Following is a
description of each scale.

Person-Job Fit

Employee
Job Satisfaction
Loyalty
Person-Organization
Fit

Figure 1.
Perceived Supervisor Hypothesized
Support research model
PR 3.2.1 Employee loyalty. We have evaluated perception of our sample on this construct with a
49,8 scale developed by Homburg and Stock (2005). This scale has five items. An example is, ‘I
speak positively about my company when talking to customers’. This item reflects that when
an employee is loyal to his/her company, he/she feels positive and inspired, and as a result, he/
she is eager to express positive aspects of the company.
3.2.2 Job satisfaction. To measure executives’ job satisfaction, we have used the
Supervisory Satisfaction Scale of Cammann et al. (1983). This scale comprises three items,
1702 including ‘The job is in general perceived as meaningful and stimulating’, and ‘In general, I
like my supervisor’. Reliability of the scale is quite high.
3.2.3 Person–job fit. PJF has been measured with eight items taken from the original scales
designed by Cable and Judge (1997) and Saks and Ashforth (1997) that are based on demand–
abilities fit and needs–supplies fit. An example is, ‘I believe my skills and abilities match those
required by the job’. We have modified these items in context of work and organization.
3.2.4 Perceived–organization fit. POF has been measured with five items from the scales of
Cable and Judge (1997) and Saks and Ashforth (1997). A sample item is, ’I think the values and
personality of this organization reflect my own values and personality’.
3.2.5 Perceived supervisor support. We have measured PSS by the four-item scale
developed by Kottke and Sharafinski (1988). One of the items is, ’My supervisor cares about
my opinions’.

3.3 Data analysis technique

The proposed research model has been tested through PLS algorithm. Further, subjecting the
entire model to covariance-based structural equation modelling (SEM) has allowed for unique
insights in terms of factorial data. We have used Smart PLS software to analyse the SEM
indices. One advantage of using this method lies in its ability to deal with real challenges in
the nature of data such as data noise, missing data and skewness.

4. Results and analysis

4.1 Confirmatory factor analysis
Table I shows that the model is adequate with all acceptable values of reliability greater than
0.7 for confirmatory purposes, as recommended by experts (e.g., Chin, 1998; Hock and Ringle,
2006). Average variance extracted (AVE) is used as a measure for convergent validity in PLS,
and should ideally be more than 0.5 (Chin, 1998; Hock and Ringle, 2006). AVE values above
0.5 in this study signify that the determinants have the capability of deciphering and
illustrating at least half the variance of their respective indicators.

4.2 Path modelling

4.2.1 Quality of measurement model. Communality values for the selected constructs have
been found to be positive for all blocks (constructs). For accepting any measurement model,

Composite AVE Cross-validated

reliability (Communality) communality index (H2)

Employee loyalty 0.846 0.531 0.315

Job satisfaction 0.852 0.66 0.333
Table I. Perceived supervisor support 0.917 0.736 0.533
Measurement model Person–organization fit 0.927 0.718 0.545
evaluation Person–job fit 0.856 0.624 0.321
values of cross-validated communality index (H2) should also be positive for all the blocks. Linking
Hence, the measurement model is concluded to be acceptable for all the blocks. employee
Tables II and III show the correlations among the latent variables and path coefficients,
respectively. Constructs in Table II show acceptable values of discriminant validity.
loyalty with job
The path coefficients are positive and significant (see Table III). Strong relation between satisfaction
person–job fit and job satisfaction is confirmed by the path coefficient value of 0.495
(significant at p < 0.01), thus supporting H1. Similarly, path coefficients 0.334 and 0.101
(significant at p < 0.01 and p < 0.05, respectively) support the propositions made in 1703
hypotheses 2 and 3. Path coefficient of 0.234 (significant at p < 0.01) also confirms that job
satisfaction is positively related to employee loyalty, hence supporting Hypothesis 4.

4.3 Quality of structural model

Quality of the structural model has been measured by Redundancy Index (see Table IV). The
cross-validated Redundancy Index (Stone–Geisser’s Q2) has been calculated for this purpose
by using blindfolding option in PLS. Positive values of Q2 are acceptable for a good-quality
structural model.
Predictive relevance is demonstrated for all the constructs. Value of R2 suggests that
70.8 per cent of job satisfaction and 65 per cent of employee loyalty are explained by the model.
Moreover, the model has been able to achieve a relatively high level of explanatory power.
Though Goodness-of-Fit (GOF) Index is not an output by Smart PLS, yet it has been
calculated manually by using the formula √(R2 3 Communality). Both the values are seen to
be well within the acceptable range of 0–1.

Perceived Person–
Employee Job supervisor organization Person–
loyalty satisfaction support fit job fit

Employee loyalty 0.729 – – – –

Table II.
Job satisfaction 0.735 0.813 – – –
Correlations and
Perceived supervisor support 0.618 0.621 0.858 – – discriminant validity of
Person–organization fit 0.721 0.753 0.641 0.847 – latent variables*
Person–job fit 0.720 0.789 0.616 0.714 0.790 (Fornell–Larcker
Note: All the coefficients are significant at p > 0.05. *Discriminant validity: square root of AVE on diagonal. criterion)

Hypotheses Path coefficient Result

H1 Person–job fit → job satisfaction 0.495** Supported

H2 Person–organization fit → job satisfaction 0.334** Supported
H3 Perceived supervisor support → job satisfaction 0.101* Supported Table III.
H4 Job satisfaction → employee loyalty 0.234** Supported Path coefficients
Note: Path coefficients are standardized beta coefficients. **p < 0.01, *p < 0.05. among latent variables

Cross validated redundancy index Q2 R2 GOF

Table IV.
Job satisfaction 0.264 0.708 0.683 Structural model fit
Employee loyalty 0.44 0.65 0.587 indices
PR 4.4 Mediation effect of job satisfaction
49,8 PLS algorithm of Smart PLS, the default standard procedure to calculate path coefficients,
has been used to evaluate the structural model (see Figure 2). Values of path coefficients
suggest positive influence of job satisfaction on employee loyalty.
Person–organization fit is seen to affect employee loyalty more than either person–job fit or
perceived supervisor support (see Table V). The total impact of person–organization fit (0.386)
implies that one-unit change in this construct would improve the employee loyalty index by
1704 0.386. This total impact has been computed by summing up the direct effect on employee
loyalty and indirect impact on job satisfaction (50.308 þ 0.334 3 0.234). On a similar note,
when the direct and indirect effects of the other determinants were calculated, we found that
person–job fit has the second largest effect (0.344), suggesting that a one-point increase in
person–job fit would increase the employee loyalty index by 0.344 points. Also, the direct effect

PJ 1

PJ 3
0.744
0.665
PJ 4
0.271
0.853
PJ 5
0.725
0.601
PJ 6 Person Job Fit
0.806
0.495
PJ 7R 0.228

JS 1 EL 1
PJ 8 0.677
0.852 EL 2
JS 2 0.898 0.708
0.234 0.798
0.846
0.650 0.715 EL 3
JS 3
PO 1 0.683
0.334 Job Satisfaction 0.554 EL 4
0.308
PO 2 0.815 Employee Loyalty
0.832 EL 5
PO 3 0.883
0.831
0.875 0.101
PO 4 0.140
Person
PO 5 Oraganization Fit

PSS 1

0.905
PSS 2
0.905
0.928
PSS 3 0.668
Figure 2.
Path coefficients PSS 4R Peceived
Supervisor Support

Table V. Determinants Employee loyalty

Total effect of one-
point change in Perceived supervisor support 0.163
determinants on Person–organization fit 0.386
Employee Loyalty Person–job fit 0.344
of job satisfaction (0.234) indicates that increasing job satisfaction by one point would increase Linking
the employee loyalty index by 0.234 points (refer to Figure 2). Overall, person–job fit, person– employee
organization fit and perceived supervisor support are inferred to have significant impact on job
satisfaction and also improve employee loyalty.
loyalty with job
satisfaction
5. Discussion
Discriminant validity of employee loyalty (0.729) is seen to be less than the correlation value 1705
(0.735) between employee loyalty and job satisfaction, though the difference is minimal. It is
possible that employees interlink the level of job satisfaction with their loyalty intentions,
because of which they are not able to draw a strong line between the two. The results of
path coefficients depicted in Table III show that job satisfaction directly influences
employee loyalty.
All the hypotheses have been accepted. However, comparison of path coefficients
supports stronger correlation between person–job fit and job satisfaction (0.495, p < 0.01) than
between person–organization fit and job satisfaction (0.334, p < 0.01). The path coefficient
between perceived supervisor support and job satisfaction has a low value of 0.101 (p < 0.05),
which shows a positive yet moderate correlation. Positive correlation, though not very strong
(0.234, p < 0.01), is also established between job satisfaction and employee loyalty. To sum up,
the structural model indices support the overall quality of the measurement model.
Findings on the whole suggest that PJF, POF and PSS all positively influence job
satisfaction, which consequently increases loyalty. However, in comparison to PJF and PSS,
POF has come out to be the most influential determinant of our model. This finding matches the
POF theory, that provides explanation of the compatibility an employee has with his/her
organization (Kristof, 1996). Attitude and behaviour of an employee both are largely influenced
by the extent of congruence that employee characteristics would have with the characteristics
of an organization (Hoffman and Woehr, 2006; c.f. Sahu, 2018). The significant association
established between PSS and job satisfaction aligns with the social information processing
theory (Salanick and Pfeffer, 1978), according to which workers who relate well with their
managers and colleagues reportedly have high job satisfaction (Westover and Taylor, 2010).

6. Study limitations and future research directions

Representativeness of our model is limited for two reasons. Firstly, the factors identified in
generating job satisfaction and loyalty are not exhaustive. A more exhaustive list of such
factors, keeping their overlap under control, could lead to further interesting insights.
Secondly, this is a cross-sectional study and hence does not take into consideration temporal
effects. However, replicating the study using longitudinal data could further validate the
relations we have proposed and tested. Furthermore, research conducted on diverse sample
could help generalize our findings.

7. Conclusion
Job satisfaction is a widely researched factor for organization success. Our study focuses on
the relation of job satisfaction and its three influencing factors, namely, PJF, POF and PSS,
with employee loyalty. Results clearly show a positive relation between job satisfaction and
employee loyalty. Further, empirical testing depicts that there is a significant relation
between the independent variables and job satisfaction. Organizations should hence pay
more attention to the aforementioned factors to increase employees’ satisfaction with job, and
this might enhance their loyalty, which would help any business to survive in the current
competitive scenario.
Retaining key employees being a serious challenge encountered by organizations in a
volatile business environment, it is worthwhile to understand that POF is instrumental in
PR generating job satisfaction and in enhancing loyalty. If an employee finds the right kind of
49,8 alignment between the values, beliefs and prevalent assumptions of an organization and his/
her personal values and beliefs, his/her likelihood of staying with the organization increases.
Thus, a potential employee might be interested in the profile offered by a prospective
employer, and may consequently even join the organization. But to generate loyalty in him/
her, the employer needs to ensure person–organization fit.
Implications of our study offer some useful suggestions to organizations to foster a
1706 supportive climate that would further enhance employee loyalty and help in successful
sustainability of organizations with satisfied employees. By effectively understanding the
relations established in this article, HR managers can adopt relevant practices and promote
organizational policies in order to have loyal employees. This would also help organizations
in increasing overall productivity at both individual and organizational levels. Recruiters
could be provided with necessary tools and measures to find better and accurate means of
mapping POF and PJF.
PSS has been confirmed to be catalytic in generating job satisfaction. Supervisor support
refers to actions conveying caring, promoting well-being of employees or assisting them in
achieving their work goals (Rooney, 2004). It is imperative to generate positive perception
among employees about the support provided by their supervisors; such support would help
employees in achieving their work goals and thus be satisfied with their jobs. Organizations
are hence recommended to develop a supportive work environment in which supervisors can
have the opportunity to conduct meetings with employees at regular intervals to discuss both
work- and non-work-related issues.
Organizations could implement strategies like encouraging supervisors to participate in
training and development programmes on employee relations, problem-solving, support and
empathy development. Through such interventions, supervisors can become more capable to
provide appropriate support towards their subordinates. Further, establishing smooth
communication channels may help to resolve grievances and to recognize and satisfy the
needs of employees (Tang and Tsaur, 2016). In fact, supervisors can act as role models for
peers to provide support to their colleagues. Rewards and recognition schemes can also be
designed for supportive supervisors. Beyond enriched jobs, presence of supportive
supervisors is essential to establish a positive work environment (Rai et al., 2018), which
could thus foster both job satisfaction and loyalty among employees towards the
organization.
Notably, majority of Indian businesses are either family-run or promoter-led. According to
the Credit Suisse Family 1000 report of 2018, India holds the third position globally in terms of
number of family-owned businesses. Many such businesses today have evolved into world-
class business corporations and have also expanded their presence overseas. Such
organizations are driven by the aspirations of their owners through basic values of mutual
trust, cost consciousness, profitable growth and quick decision-making. Employees in these
organizations are motivated by the ability to relate with businesses similar to that of the
promoters’ expectations, and this is where loyalty and dependability play a huge role.
The work culture of any organization is dependent on an individual’s experience in the
organization, and largely on supervisor support. As owner’s behaviour and loyalty towards
employee become the deciding factors for organizational success, it is, therefore, necessary
for the owner to maintain a loyal behaviour to inspire employees to reciprocate in the same
manner.

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Corresponding author
Swati Dhir can be contacted at: swati.dhir@imi.edu

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