Impact of employee compassion on employee

satisfaction: Mediating role of psychological capital

and Moderating role of psychological contract breach

By

Urooj Shahid

NATIONAL UNIVERSITY OF MODERN LANGUAGES

RAWALPINDI

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 Abstract

The aim of this study was to examine the relationship between several aspects of employee
happiness among academics working in Punjab, Pakistan, and how these variations impact
academicians' overall job satisfaction in a subset of Punjabi universities. Academicians employed
in Pakistani universities licensed by the Higher Education Commission (HEC) made up the
study's population. A total of 350 prospective respondents were selected from 4 universities and
issued questionnaires. Seventy-two percent of the 200 valid surveys that were returned were
answered. The study's findings suggest that there is a salary difference in Pakistan between
private and public universities. Academics at private colleges expressed more satisfaction with
their compensation, oversight, and prospects for advancement compared to those at public
universities. The report provides HR managers and educational institutions with useful advice on
how to compensate, promote, retain, and uphold equity in their firms.

Keywords:

Employee compassion, Employee satisfaction, psychological capital, psychological contract

breach

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 Table of Contents
CHAPTER 1……………………………………………………………………………………5

1.1. Introduction…………………………………………..……………………………….…5
1.2. Gap analysis……………………………………………………………………….…7
1.3. Problem statement……………………………………………………………...….…7
1.4. Research objectives……………………………………………………………....…..8
1.5. Research questions…………………..……………………………………………...…8
1.6. Significance of the study………………………………………………………….……8

CHAPTER 2……………………………………………………………………………………10

2.1. Theoretical basis-social exchange theory…………………………………………………...10

2.2 Employee compassion and employee satisfaction………………………………..…………10

2.3. Psychological capital as a mediator………………………………………………….…..….11

2.4. Psychological contract breach as a moderator………………………………………..…….12

2.5. Psychological contract breach and employee satisfaction………………………………….13

2.6. Theoretical framework……………………………………………………………………...13

2.7. Hypothesis development……………………………………………………………………14

CHAPTER 3……………………………………………………………………………………15

3.1. Research design…………………………………………………………………….……….15

3.2. Population…………………………………………………………………………………..15

3.3. Unit of analysis……………………………………………………………………..………15

3.4. Sample and Sampling Technique……………………………………………………………15

3.5. Data collection…………………………………………………………………...………….16

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CHAPTER 4……………………………………………………………………………………17

4.1. Hayes Process………………………………………………………………………………17

4.2. Demographics analysis. ……………………………………………………………………18

4.3. Instrumentation……………………………………………………………………….……20

4.4. Descriptive Statistics…………………………………………………….…………………22

4.5. Confirmatory Factor Analysis………………………………………………………………23

4.6. Discriminant validity analysis……………………………………………………………….23

4.7. Reliability Analysis of Scales Used…………………………………………………………24

4.8. Regression Analysis…………………………………………………………………………25

4.9. Mediation Analysis…………………………………………………………………………26

4.10. Moderation Analysis……………………………………………………………………....27

4.11. Summary of Accepted/Rejected Hypothesis………………………………………...……28

CHAPTER 5……………………………………………………………………………………30

5.1 Discussion……………………………………………………………………………………31

5.2. Practical Implications………………………………………………………………………..31

5.3. Future Research Directions…………………………………………………………………31

5.4. Conclusion………………………………………………………………………………….32

REFERENCES…………………………………………………………………………..……33

APPENDIX…………………………………………………………………………………….42

Survey questionnaire……………………………………………………………………………42

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CHAPTER NO 1

INTRODUCTION

1.1. Introduction:

A fundamental tenet of social exchange theory is that relationships grow over time into ones that
are mutually dependable, devoted, and trusting (Cropanzano and Mitchell, 2005). According to
social exchange theory, workers are part of a network of links that affects how likely they are to
stay in their current positions or quit (Holtom et al., 2008). The process of showing compassion
involves empathizing with others when they are in distress and helping them by doing what is
necessary to lessen their suffering (Kanov et al., 2004). Since compassion builds and maintains
human communities, it is essential to modern civilization. It exhibits moral excellence and
advances both individual and societal causes (Solomon, 1998; Blum, 1980). Furthermore, as
work is an integral part of life, compassion in the workplace is crucial (Kanov et al., 2004).
Compassionate actions are common in the workplace at all levels, from executives who alleviate
the pain of their team members to office staff who attend to the needs of their coworkers (Frost,
2003). People who are compassionate feel noticed and acknowledged, which lessens workplace
loneliness (Frost et al., 2000). Moreover, it fosters camaraderie among participants (Frost et al.,
2000) and is linked to favorable emotions, perspectives, and conduct in the work environment.
According to research, compassion is a very strong and constructive force in the workplace.

The literature on social interchange at large indicates that there is a considerable correlation
between withdrawal behaviors and employees' judgments of how much their organization values
their contributions and cares about their well-being (Rhoades and Eisenberger, 2002). According
to research conducted in the subject of safety by Kath et al. (2010), employees typically "pay
back" the business by threatening to quit when a good exchange relationship is harmed by
unfavorable perceptions of employee satisfaction. This is consistent with social exchange theory.
Good safety climate was found to be positively connected to the intention to stay with the
organization, even after controlling for perceived risk (Morrow and Crum, 1998).

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The findings showed that the psychological capital of leaders positively impacted the
psychological capital of their followers. The good feelings that employees felt and those their
followers experienced did not have a substantial cross-level mediation effect. The findings of this
study enhanced studies on employee satisfaction and expanded the social exchange theory. When
it comes to an individual's growth and development, psychological capital especially refers to a
positive mental state that shows itself as efficacy, optimism, hope, and resilience (Luthans et al.,
2007c). The importance of psychological capital in organizational behavior and human resource
management is becoming increasingly widely recognized (Luthans et al., 2007c, 2015; Youssef-
Morgan, 2014). Although there has been a great deal of advancement in psychological capital
studies, there are still certain gaps. In terms of the study's content, earlier research mostly
focused on followers' psychological capital as a factor influencing output variables, such as work
attitude and behavior, as opposed to a variable that can vary from person to person.

The processes via which psychological contract breach results in job performance have gotten
less empirical attention, despite prior studies supporting the association between psychological
contract breach and numerous performance measures (e.g. Turnley et al., 2003). As social
interactions between employers and employees serve as an explanatory framework for
psychological contracts, which is why we examined breach processes from this angle in the
current study. Long-term state variables, or social interactions, between an employee and an
organization might affect how perceptions of contract breaches affect behavior in the future.
Aselage and Eisenberger (2003) did, in fact, suggest combining the ideas of psychological
contract with organizational support. Consistent with this, Guest (1998, p. 660) suggests that we
"shift the focus much more to issues like trust, fairness, and exchange." According to the results
of multiple studies, a psychological contract violation hurts an employee's overall display of
satisfaction (Bolino et al., 2015; Conway et al., 2014; Coyle- Shapiro, 2002; Cruz et al., 2023;
Deng et al., 2018; Griep and Bankins, 2022; Jahanzeb et al., 2020; Restubog et al., 2008;
Rodwell and Ellershaw, 2015; Zafri, 2012; Zhao et al., 2007; Zhong et al., 2023).

The preceding rationale aligns with the COR hypothesis (Hobfoll et al., 2018), which posits that
people will endeavor to preserve their personal resources as a protective tactic when managing
stressful circumstances. Refusing to assist coworkers or the company itself could be interpreted
as protecting one's own resources once a psychological contract is broken. However, since

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employees will suffer twice, this behavioral style can start a vicious loop of resource loss. The
guarantee of reciprocity and assistance from others is lost due to unfulfilled organizational
commitments and a decreased capacity to complete work responsibilities (Jahanzeb et al., 2020).

1.2. Gap analysis:

Employee compassion refers to the genuine concern and support that employees show towards
each other. It creates a positive work environment, leading to higher employee satisfaction.
When employees feel cared for and supported by their colleagues, they are more likely to
experience positive emotions and employee satisfaction (Shanafelt, Goh, & Sinsky, 2020).
Recent studies have confirmed that psychological capital plays a crucial mediating role in
translating the benefits of a compassionate work environment into increased job satisfaction Nie,
T. et al. (2023).

The presence of a psychological contract breach can weaken the positive effects of employee
compassion on job satisfaction. When employees perceive a significant gap between what was
promised and what is delivered, the benefits of a compassionate work environment may be less
pronounced. Conversely, when the gap is small, the positive impact of compassion on
satisfaction is stronger. Recent findings indicate that understanding and addressing psychological
contract breaches are essential for maximizing the positive effects of compassion in the
workplace Nie, T. et al. (2023).

1.3. Problem statement:

Employee satisfaction is crucial for maintaining a healthy work environment, as its absence can
lead to several detrimental outcomes. Firstly, it may result in decreased employee compassion, as
dissatisfied individuals are less likely to empathize with their colleagues or clients. Secondly, it
can contribute to perceived breaches of the psychological contract between employees and their
organization, leading to feelings of distrust and disengagement. Lastly, low satisfaction levels
can diminish employees' psychological capital, affecting their hope, efficacy, resilience, and
optimism. To address these issues, organizations must prioritize strategies that foster employee
satisfaction, such as promoting open communication, providing opportunities for growth, and

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creating a supportive work culture, ultimately leading to a more engaged and productive
workforce.

1.4. Research objectives:

 Investigate the connection between general employee happiness and compassion among
faculty members at private universities.
 Examine the obstacles and problems that academic staff at private colleges encounter while
attempting to foster and demonstrate compassion.
 Examine how teaching compassion affects the organizational well-being of private
universities.
 Assess how organizational practices and policies affect faculty members' expression and
development of compassion in a university setting.
1.5. Research questions:

1. To what extent does the level of compassion among faculty members at private universities
influence overall employee satisfaction?
2. What challenges and issues are faced by faculty members in relation to fostering compassion
within the workplace at private universities?
3. What is the correlation between the promotion of compassion among employees and the
positive impact on organizational well-being?
4. How do organizational policies and practices affect the expression and cultivation of
compassion among faculty members at private universities?

1.6. Significance of the study:

The impact of psychological capital and psychological contract breach as moderators and
mediators of employee compassion on employee happiness is a significant study for a number of
reasons.

• Improving employee well-being

• Developing a positive work environment

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• Increasing organizational results

The impact of employee compassion on employee satisfaction: the mediating role of

psychological capital and the moderating role of psychological contract breach study is important
overall because it can improve organizational outcomes and foster a positive work environment
for employees.

CHAPTER 2

LITERATURE REVIEW

2.1. Theoretical basis-social exchange theory

We aim to comprehend the relationship between employee pleasure, psychological capital,

psychological contract breach, and employee compassion based on the social exchange theory.
One of the most effective instruments for comprehending workplace behavior is social exchange
theory, which is the study of human behavior at the micro level utilizing theories from sociology,
psychology, and economics (Homans, 1958). (Malik et al., 2011). Three principles—rationality,
reciprocity, and specificity—are the focus of social exchange theory, which explains the
interactions between employers and employees (Foa and Foa, 2012).

When an organization and its workers create a relationship, the workers exchange their labor and
allegiance to the organization for the benefits provided by the organization (Rhoades and
Eisenberger, 2002). On the other hand, people are likely to end a relationship if they believe it is
not healthy for them (Lai et al., 2014). Due to their lower pay and superior performance
compared to non-substitute teachers, substitute teachers raise concerns about distributive fairness
and may even incite unproductive conduct (Chernyak-Hai and Rabenu, 2018).

The reciprocal linkages between employee compassion, psychological capital, psychological

contract breach, and employee pleasure were, in essence, supported by the three tenets of social
exchange theory. The social exchange theory states that an individual's psychological capital,
psychological contract violation, and employee satisfaction all decrease with increasing
organizational loyalty.

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2.2. Employee compassion and employee satisfaction:

Positive work environments have been found to be significantly influenced by employee

compassion, which is defined as acts of kindness and support among colleagues (Dutton et al.,
2014; Grant, 2008). According to some definitions, compassion is either the "unselfish concern
for the welfare of others" (Radey and Figley 2007, p. 207) or "an attitude toward others, either
close others or strangers or all of humanity; containing feelings, cognitions and behaviors that
are focused on caring, concern, tenderness and an orientation toward supporting, helping, and
understanding the other(s), particularly when the other(s) is (are) perceived to be suffering or in
need" (Sprecher and Fehr 2005, p. 630). In fact, compassion in the private service industry can
be sparked at any time during work when a worker confides in their supervisor about a difficult
situation or a tense client interaction. It can also be sparked more regularly during daily
administrative overload tasks when private service supervisor behaviors can incorporate displays
of tenderness, affection, and caring (Dutton et al. 2006).

H1: Employee satisfaction and compassion are positively correlated.

2.3. Psychological capital as a mediator:

The sensation of control, intentionality, and agentic goal pursuit are shared by hope, efficacy,
resilience, and optimism. According to Luthans et al. (2007), p. 550, they also have "positive
appraisal of circumstances and probability for success based on motivated effort and
perseverance" as a common theme. For instance, those that are upbeat will think they have a
good probability of succeeding. Due to their strong efficacy and confidence, they will
consciously select difficult objectives and have the drive to complete them. Resilience will
enable recovery from setbacks when pathways are obstructed, and hope will encourage the
creation and pursuit of multiple pathways toward those goals.

Furthermore, hope has its own force and paths. Furthermore, while external attributions and
social resources are essential to hope and efficacy, respectively, optimism and resilience are
more outwardly directed psychological resources than hope and efficacy, which essentially share
an internal focus. Beyond these conceptual distinctions, the discriminant validity of these
constructs has also been empirically demonstrated. This can be seen in the positive psychology
literature (e.g., see Alarcon et al. 2013, Bryant & Cvengros 2004, Gallaghar & Lopez 2009,

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Magaletta & Oliver 1999, Rand et al. 2011), as well as in the analysis of Psychological Capital
(Luthans et al. 2007).

There is conflicting evidence regarding the relationship between employee satisfaction and
compassion. A present study gap concerns the paucity of studies that add to institutional data to
comprehend possible pathways between employee happiness and compassion (Inceoglu et al.,
2018). According to this study, a key element of relational transparency employee compassion
significantly predicts employee satisfaction. Employee happiness was greatly impacted by the
implementation of the Psychological Capital interaction and the employee compassion. In order
to address the problem of conventional techniques bias, future study could look at a more reliable
way to measure well-being, including physiological monitoring (Podsakoff et al., 2012). The
association between employee happiness and compassion is mediated by psychological capital.
Employee compassion and employee satisfaction are mediated by psychological contract
violations.

H2: Psychological capital mediates the relationship between employee compassion and
employee satisfaction.

2.4. Psychological contract breach as a moderator:

The employee-organization relationship is frequently conceptualized and empirically evaluated

by researchers as a social exchange relationship in which the organization offers employees
material and socioemotional rewards in exchange for their efforts toward the achievement of the
organization's objectives (Eisenberger et al. 1986; Rousseau 1995). Psychological contracts
theory, which contends that employees' perceptions of the exchange relationships they maintain
with the organization are significantly shaped by the unwritten promises they believe the
organization has made to them regarding training, promotions, job security, or any other factors
not explicitly recognized in written contracts, is based on this conceptualization (Rousseau
1995). According to research, psychological contract promises, also known as perceived duties,
typically start to take shape during an employee's early interactions with the company. These
interactions frequently stem from interactions with recruiters and other organization members
who are active in early socialization (Rousseau 1995). Through interactions with managers
(Rousseau 2001) and coworkers (Dabos and Rousseau 2004), they continue to grow.

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Specifically, organizational fulfillment is difficult in difficult economic times marked by
restructuring, downsizing, technological change, and outsourcing (Robinson and Morrison
2000). This is because psychological contracts are highly subjective and idiosyncratic (Rousseau
2001).

H3: Psychological contract breach moderates the relationship between employee compassion
and employee satisfaction.

2.5. Psychological contract breach and employee satisfaction:

The unspoken commitments and expectations that exist between employers and employees are
referred to as the psychological contract. When these duties are not fulfilled or expectations are
not met, a psychological contract breach may occur, which may have detrimental effects on
companies and employees alike. Contrarily, employee compassion entails a sincere concern for
the welfare of others, especially coworkers and subordinates. Workplace well-being, employee
satisfaction, and a healthy work environment can all be enhanced by compassionate behavior.
Employers that exhibit compassionate behavior may create a positive work atmosphere where
employees feel more trusted and satisfied. Because they feel appreciated and supported, workers
in such a situation might be less inclined to identify breaches in the psychological contract.
Conversely, workers may be more aware of perceived violations in the psychological contract if
there is a lack of empathy or compassion in the workplace. A failure to provide comprehension
or assistance at difficult periods may intensify sentiments of breach of contract. According to the
results of multiple studies, a psychological contract violation hurts an employee's overall display
of satisfaction (Bolino et al., 2015; Conway et al., 2014; Coyle- Shapiro, 2002; Cruz et al., 2023;
Deng et al., 2018; Griep and Bankins, 2022; Jahanzeb et al., 2020; Restubog et al., 2008;
Rodwell and Ellershaw, 2015; Zafri, 2012; Zhao et al., 2007; Zhong et al., 2023).

H4: Psychological contract breach is negatively related to employees’ satisfaction.

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 2.6. Theoretical framework:

Psychological
Contract Breach

Employee Psychological Employee

compassion Capital Satisfaction

2.7. Hypothesis development:

H1: Employee compassion is positively related to employee satisfaction.

H2: Psychological capital mediates the relationship between employee compassion and
employee satisfaction.

H3: Psychological contract breach moderates the relationship between employee compassion and
employee satisfaction.

H4: Psychological contract breach is negatively related to employees’ satisfaction.

CHAPTER 3

RESEARCH METHODOLOGY

This research study has been following quantitative research method and the details are as under:

3.1. Research design:

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There are two research designs in the social sciences known as “quantitative research” and
“qualitative research”. The quantitative research technique is being used in this study. It is a
comprehensive process with reliable outcomes.

3.2. Population:

The present research population is university staff working in different universities in the private
sectors of Pakistan. In Pakistan, there are 1279 universities overall, employing 112,123 people.
Of them, 62651 are enrolled in private universities, and the remaining number is affiliated with
public universities. Owing to the existing circumstances and resource constraints, we focused on
Pakistani universities in Punjab.

3.3. Unit of analysis:

The unit of analysis is individual as we are studying the supervisors sector, and supervisors
working in different universities are the selected population. It is successful to discern their
perspective and response in order to derive the outcomes.

3.4. Sample and Sampling Technique:

In quantitative research, sampling is a common technique for data gathering. Using this method,
we select a set of people who are representative of the whole population. Individuals employed
by Pakistan's private universities make up the research sample. The group of responders
performs regular tasks and works as active employees in universities in the private sector.
Samples come in two flavors. There are two types of sampling: non-probability sampling and
probability sampling. In the current study, probability sampling was covered. Everybody has the
same chance of being selected for a sample. When researchers gather comprehensive data about
the population, probability sampling is appropriate and useful. The current investigation
employed a basic random sample strategy due to time restrictions and other limitations. One kind
of probability sampling is the simple random sampling technique, which selects data at random
based on potential approaches to respondents.

3.5. Data collection:

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Data was collected through adopted questionnaires. Every variable was provided voluntarily.
Data were collected from November 2023 to December 2023, a span of one month. In the end,
274 surveys were analyzed because a small percentage of the answers were incorrectly
completed or missing, yielding a 74% response rate.

CHAPTER 4

DATA ANALYSIS

4.1. Hayes Process:

Software IBM SPSS 21 and AMOS 21 were used for analysis; such as frequencies, descriptive
statistics, reliability analysis, one-way ANOVA, correlational, and regression analysis. The
following describes the specifics and order of these tests:

1. First of all, we targeted 350 respondents, and then obtained 274 responses.

2. A data sheet for IBM SPSS software was created, containing demographic and instrument
characteristics (variables utilized in the current study). A 5-point Likert scale was employed for
the variables, and various numbers were coded for the demographic data. These code digits were
taken into account for more research.

3. Next, items with reverse codes were changed, and these were used to detect participant
disengagement.

4. Looked for any incorrect entries and missing values in the frequency table. Thus, there can be
no issues with the analysis.

5. Next, use the SPSS to verify each variable's dependability.

6. Next, assess the scales' validity and model fitness using confirmatory factor analysis, or CAF.

7. Proceed for additional analysis and perform a one-way ANOVA to identify the control
variables after the data validity and accuracy have been verified.

8. The next stage that assisted in determining the important relationship between the variables
was correlation analysis.

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9. Regression analysis is used to examine the mediation and moderation effects following
correlation analysis.

10. The Preacher and Hayes process's Model 14 was utilized for the mediation analysis.

11. We used Preach and Hayes process model 14 for moderation analysis.

12. The Preacher and Hayes procedure correlation and regression analysis determine if the
intended offered hypotheses are accepted or rejected.

4.2. Demographics analysis:

This survey measures the following demographics: age, gender, work experience, and
qualification. Since the study focused on supervisors' empathy for their subordinates within the
company, only employees were intended to complete the questionnaires.

Sample characteristic’s details are following:

Age:

One of the categories that respondents occasionally find awkward to publicly share is age. Age-
related data was gathered in ranges for the respondents' convenience. Table 4.1 demonstrates that
the majority of respondents were between the ages of 26 and 33. This indicates that 62.4% of
respondents were in this age range, 31.8% were between the ages of 18 and 25, 4.7% were
between the ages of 34 and 41, and just 1.1% of the workforce was 50 years of age or older.

Table 4.1: Frequency by Age.

Age Frequency Percent

18-25 87 31.8
26-33 171 62.4
34-41 13 4.7
50 and above 3 1.1
Total 274 100.0

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Experience: Different experience time period ranges were designed in order to gather
information on the respondents' experiences, allowing each respondent to easily identify the
precise duration of their experience in the relevant sector. Table 4.2 illustrates that the majority
of respondents (56.6%) had experience ranging from five to ten years, followed by 37.6% with
experience ranging from eleven to sixteen years, 4% with experience ranging from seventeen to
twenty-two years, 1.1% with experience ranging from twenty-three to twenty-eight years, and
only.Seven percent of those surveyed said they had worked for 36 years or more.

Table 4.2: Frequency by Experience.

Experience Frequency Percent

05-10 155 56.6
11-16 103 37.6
17-22 11 4
23-28 3 1.1
36 and above 2 0.7
Total 274 100.0

Gender: Because gender distinguishes between male and female in a given population sample, it
is also regarded as a significant demographic factor. Gender equality is maintained by keeping
gender as a highlight. Although efforts have been made in this study to ensure the privilege of
gender equality, it has been noted that the proportion of male supervisors to female supervisors is
still noticeably higher. The gender distribution of respondents is seen in Table 3.3, where 77.7%
of respondents are men and the remaining respondents are women.

Table 4.3: Frequency by Gender.

Gender Frequency Percent

Male 213 77.7
Female 61 22.3
Total 274 100.0

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Qualification: The primary factor that both contributes to national prosperity and the necessity
of being globally competitive is education. Because education creates so many fresh and
distinctive avenues for achievement, qualification is a dynamic aspect of the demographics.
Table 3.4 demonstrates that the majority of respondents had a bachelor's degree, accounting for
39% of the total respondents selected as a truly representative sample of the entire population.
Among the responders, 30.3% held a master's degree. One percent of the 274 respondents held a
PhD, while 29.6% of respondents held an MS or MPhil degree.

Table 4.4: Frequency by Qualification.

Qualification Frequency Percent

Bachelor 107 39.0
Master 83 30.3
MS/M.Phil. 81 29.6
PhD 3 1.1
Total 274 100.0

4.3. Instrumentation:

Only supervisors are permitted to offer information regarding all of the following: psychological
capital, employee satisfaction, psychological contract breaches, and employee compassion.

Measures:

Each item on the questionnaire is to be completed on a 5-point Likert scale: 1 = (strongly

disagree), 2 = (disagree), 3 = (neutral), 4 = (agree), and 5 = (strongly agree). Additionally, there
is an additional scale with the following values: 1 = (never), 2 = (rarely), 3 = (sometimes), 4 =
(frequently), and 5 = (always). These scales were all approved after undergoing reliability
testing.

With four sections demographics, employee compassion, psychological capital, psychological

contract breach, and employee satisfaction the questionnaire consists of 41 questions in total. In
order to ensure that the information provided by the participants is kept private and enhance the

18
accuracy and authenticity of the results, demographic data, which includes the variables Gender,
Age, Qualification, and Experience, will also be gathered.

319 out of the 350 surveys that were sent were returned. There were 274 (78.3%) surveys in total
that were included in the data analysis to show the outcomes. The questionnaires that were
rejected were those that lacked sufficient information, rendering them unsuitable for the research.

Employee Compassion:

A six-item scale developed by Aguinis, Nesler, Quigley, and Tedeschi (1994) was used to
analyze the influence of employee compassion. Participants rate their responses on a 5-point
scale. On a Likert scale, 1 represents strongly disagree and 5 represents strongly agree.

Psychological Capital:

A 24-item measure developed by Luthans, Avolio, et al. (2007) was utilized to analyze the
influence of psychological capital. Participants rate their responses on a 5-point scale. Likert
scale: 1 represents strongly disagree, while 23 represents strongly agree.

Psychological contract breach:

In order to analysis the impact of psychological contract breach we have used 5 item scale
proposed by Robinson, S. L. & Morrison, E. W. (2000) has been used. Participants rate their
responses on a 5-point scale. Likert scale: 1 represents strongly disagree, while 4 represents
strongly agree.

Employee satisfaction:

In order to analysis the impact of employee satisfaction we have used 6 item scale proposed by
Ambrose ML, Schminke M (2009) has been used. On a five-point Likert scale, with 1 denoting
strongly disagree and 5 denoting strongly agree, participants rank their responses.

Examples of the sample items are:

I'm happy with my employment; My employee listens intently when other members discuss their
problems; To date, my employer has fulfilled nearly all of the recruitment-related promises it

19
made. I also feel comfortable assessing long-term problems and coming up with solutions for
them, as well as confidently representing my work area in meetings with management.

Table 4.5: Instruments.

Variables Source Items

Employee compassion
Psychological capital
Psychological contract breach
Employee satisfaction
Aguinis, Nesler, Quigley, & 6
Tedeschi, 1994
Luthans, Avolio, et al., 2007 24
Robinson, S. L. & Morrison, 5
E. W. (2000)
Ambrose ML, Schminke M 6
(2009)

4.4. Descriptive Statistics:

Basic information about the collected data, such as sample size, minimum, maximum, mean, and
standard deviation of the data, is presented via descriptive statistics. Table 4.6 displays the
descriptive statistics for the psychological capital, psychological contract breach, employee
satisfaction, and employee compassion variables.

Table 4.6: Descriptive Statistics.

Variables N Min Max Mean Std. deviation

Employee 274 1.13 5.00 2.98 .79
compassion
Psychological 274 1.08 5.00 3.54 .75
capital
Psychological 274 1.00 5.00 2.95 .58
contract breach
Employee 274 1.40 5.00 3.68 .81
satisfaction

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4.5. Confirmatory Factor Analysis:

IBM AMOS was utilized to verify the measurement model's fitness. The process of examining
relationships between observable and latent variables in measurement models is known as
confirmatory factor analysis (CFA).

Confirmatory factor analysis was used in the current investigation to validate the measurement
model. The five latent variables employee compassion, psychological capital, psychological
contract violation, and employee satisfaction were tested by adhering to Anderson and Gerbing's
(1988) recommendations. Fit statistics were examined, including Chi-Square, degree of freedom
(DF), (CMIN), incremental fit index (IFI), Tucker-Lewis coefficient (TLI), and comparative fit
index (CFI). The first model has met the threshold requirements, as shown in Table 4.7. The
model's fitness is indicated by the RMSEA value of.042, which is less than 0.05, the chi-square
value of 1.503, which should be less than.3, the value of IFI, which is.917, which is greater
than.90 or closer to 1, the TLI, which is.909, which is also greater than.90 or closer to 1, and the
CFI, which is.916, which is also greater than.90 or closer to 1, all demonstrate good fit.

Table 4.7: Measurement Model.

CMIN DF Chi-Square RMSEA IFI TLI CFI

Initial 2074.323 1380 1.503 .042 .917 .909 .916
model

4.6. Discriminant validity analysis:

Discriminant validity analysis has been utilized to ascertain the relationship between employee
happiness and compassion, the moderating effect of psychological contract breach, and the
mediating role of psychological capital in order to validate the validity of the proposed
hypotheses. To ascertain the kind of variation between the two variables and whether or not they
change at the same time, discriminant validity is investigated. Discriminant validity analysis
basically does not contain correlations between two or more variables because it is different from
regression analysis.

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 The discriminant validity analysis uses the Pearson correlation range, which spans from -0.1 to
0.1, to determine the kind and degree of relationship. Because of this, we can determine the
magnitude value and use it to extrapolate the correlation's distance from zero to determine the
strength of the relationship between two variables. If the correlation is far from 0, there is a
strong relationship between the two variables, and vice versa. The values that are close to zero
indicate that the variables do not correlate. A positive or negative sign indicates the type of
relationship. A direct link occurs when there is a positive sign indicating that an increase in one
variable leads to an increase in another. Conversely, a negative sign denotes an indirect
relationship one in which a rise in one variable will result in a fall in another.

Table 4.8 shows the association between the variables in the study. Employee compassion has a
negative and significant correlation (r = -0.517, p = 0.013) with employee psychological capital
and a positive and significant correlation (r = 0.337, p = 0.003) with employee contentment.
There is a somewhat significant link between employee compassion and employee happiness (r =
0.455, p = 0.000). Employee satisfaction and psychological contract breach have a low and
significant connection (r = 0.256, p = 0.000) and a negative and large correlation (r = -0.396, p =
0.000), respectively, with psychological capital. There is a weak but significant association
between psychological contract breach and employee satisfaction (r = -0.222, p = 0.012).

Table 4.8: Correlation Analysis.

Variables 1 2 3 4 5 6 7 8
Employee 0.033 0.214 0.076 0.107 -
compassion
Employee 0.112 0.031 0.088 -0.084 -0.517** -
satisfaction
Psychological 0.031 0.048 -0.049 -0.045 0.337** 0.256** -
capital
Psychological 0.068 0.006 -0.068 -0.132 0.454** -0.396** -0.222** -
contract breach
*Correlation is significant at the 0.05 level (2-tailed)

**Correlation is significant at the 0.01 level (2-tailed)

22
4.7. Reliability Analysis of Scales Used:

When a particular object is tested multiple times, reliability is the process of consistently
providing the same results each time. Scale reliability refers to the scale's capacity to produce
consistent findings after being tested several times. I have performed a reliability test using
Cronbach alpha, which provides information on the internal reliability of the variables as well as
whether they are related to one another or measure a single construct. The range of a Cronbach
alpha is 0 to 1. The scale's dependability to measure the construct it is intended to measure
increases with increasing value. When measuring the chosen set of constructs, an alpha value
above 0.6 is regarded as reliable, and a value below 0.6 as less reliable. The Cronbach alpha for
each scale used to collect the data is displayed in Table 3.6. For the items utilized in the study,
every Cronbach alpha value is greater than 0.6. The employee compassion and psychological
contract breach items, both of which have values of 0.9, indicate that these two scales are
extremely trustworthy and should be employed in this study given the Pakistani setting.

Table 4.9: Scale Reliabilities.

Variables Cronbach’s Alpha Items

Employee compassion 0.90 6
Psychological capital 0.75 24
Psychological contract breach 0.90 5
Employee satisfaction 0.72 6

4.8. Regression Analysis:

Although we have used correlation analysis to examine the relationship between the variables
used in the study, we are unable to solely rely on this method as it only reveals relationships
between variables that are supported by insufficient data and does not reveal relationships that
are coincidental. Regression analysis is therefore absolutely necessary to gather reliable proof of
a variable's reliance on another variable. In essence, regression analysis shows how much one

23
variable depends on the independent variable the one that the dependent variable is being
regressed against.

The current study put out the idea that compassion among employees positively affects employee
satisfaction. The study's first hypothesis is strongly supported by the data in Table 4.2. Since the
LL 95% Confidence interval and the UL 95% Confidence interval (0.8058, 0.2637) do not
include a zero. Thus, the study's first hypothesis is accepted.

Table 4.10: Regression Analysis for Direct Effect of Employee Compassion on Employee
Satisfaction.

Variables B SE t P LL 95% UL 95%

CI CI
Constant 1.220 0.288 4.23 0.003 0.6534 1.7873
Employee 0.5347 0.1377 3.8834 0.0001 0.8058 0.2637
Compassion
→
Employee
Satisfaction
n = 274, Control variables were, Gender, Age, Experience and Qualification, *P < 0.05; **P <
0.01

4.9. Mediation Analysis:

We can conclude that psychological capital mediates the relationship between employee
compassion and employee satisfaction, and our second hypothesis is thereby accepted. Table
4.11 illustrates the mediation results of indirect effects of employee compassion on employee
satisfaction through psychological capital. The upper and lower limits of the 95% confidence
interval are 0.0592 and 0.3026, respectively, and zero is not present. A high degree of
significance is also found in the entire model at F = 23.81 and p = 0.00. It is noteworthy to
observe that the correlation between employee satisfaction and compassion among employees
weakens when the mediator is removed from the IV-DV relationship. This demonstrates how the
mediator connects the relationship between IV and DV and offers compelling evidence in favor
of accepting Hypothesis 2.

24
4.10. Moderation Analysis:

According to the study's third hypothesis, there is a moderating effect of psychological contract
breach on the relationship between employee satisfaction and compassion. This means that a
large psychological contract breach will result in a weak relationship between employee
satisfaction and compassion.

Table 4.11: Mediation Analysis Results for Psychological Contract Breach.

Effect of IV Effect of M Direct Effect of Indirect Effect Bootstrap

on M on DV IV on DV in of Results for
Presence of M IV on DV Indirect Effects
β t β T β t β LL 95% UL 95%
CI CI
-0.191** -14.6 -0.70** -12.1 0.534** 3.88 0.1734* 0.0592 0.3026
n = 274, Control variables were, Gender, Age, Experience and Qualification, *P < 0.05; **P <
0.01;

(IV = Employee Compassion, M = Psychological Contract Breach and DV = Employee

Satisfaction).

We can conclude that psychological contract breach moderates the relationship between
employee compassion and employee satisfaction based on Table 4.12, which shows that the
interaction term between employee compassion and employee satisfaction moderates on the
relationship between employee compassion and employee satisfaction has the upper and lower
limits of -1.01 and -0.155, and zero is not present in the 95% confidence interval. The negative
sign means that the moderator is changing the relationship's direction, making the association
between employee satisfaction and compassion negative if psychological capital is large.

Table 4.12: Moderation Analysis Results for Equity Sensitivity on Relationship of Employee
Compassion on Employee Satisfaction.

Variables β SE T P LL 95% UL 95%

CI CI
Constant 1.220 0.288 4.23 0.003 0.6534 1.7873

25
Employee -0.1342 0.0410 -3.2733 0.0001 -1.01 -0.155
Compassion
×
Psychological
Capital →
Employee
Satisfaction
n = 274, Control variables were, Gender, Age, Experience and Qualification, *P < .05; **P < .01

4.11. Summary of Accepted/Rejected Hypothesis:

Hypotheses Statement Result

H1 Employee compassion is Accepted

positively and significantly
related with employee
satisfaction
H2 Psychological capital mediates Accepted
the relationship between
employee compassion and
employee satisfaction
H3 Psychological contract breach Accepted
moderates the relationship
between employee
compassion and employee
satisfaction in such a way that
if Psychological contract
breach is high than
relationship between

26
 employee compassion and
employee satisfaction

CHAPTER 5

DISCUSSION and CONCLUSIONS

5.1 Discussion:

The influence of compassionate employees on job satisfaction is a complex and ever-evolving

field of study in organizational psychology and management. In order to comprehend the
intricate relationship between employee pleasure and compassion, this debate examines the
potential mediating role of psychological capital as well as the moderating role of psychological
contract breach. Kind relationships improve the workplace culture by encouraging a feeling of
community, unity, and well-being among staff members. This will therefore probably improve
job satisfaction. Employees' psychological capital may grow as a result of compassionate
workplace relationships. Workers who feel compassion may become more resilient, have a more
optimistic attitude, and have more self-confidence. In turn, these psychological tools can
improve work satisfaction. Depending on how much the psychological contract has been broken,
the effect of employee compassion on satisfaction may differ. The beneficial effects of
compassion may be mitigated when workers believe that there has been a breach in their
psychological contract. On the other hand, a strong psychological contract might enhance the
benefits of compassionate relationships.

5.2. Practical Implications:

 Organizations should prioritize fostering a culture of compassion, promoting positive

interactions among employees.
 It may be advantageous to fund initiatives that build psychological capital because they could
act as a conduit for the good benefits of compassion.

27
 Preserving the beneficial effects of compassion on contentment requires tracking and
resolving cases of psychological contract violations.

5.3. Future Research Directions:

 More empirical research is required to confirm the suggested connections and investigate
other variables that might affect the relationship between worker satisfaction and
compassion.
 Studies with a longitudinal design may shed light on how these associations are dynamic
over time.

5.4. Conclusion:

Firstly, the mediating role of psychological capital suggests that the positive influence of
employee compassion on employee satisfaction is partially explained by the enhancement of
psychological capital. Optimism, resilience, self-efficacy, and hope are examples of positive
psychological resources that may be strengthened and developed by compassionate employees.
When coworkers or managers show compassion, employees may feel better mentally prepared to
handle obstacles at work, which raises their level of job satisfaction overall.

Second, the relationship between employee happiness and compassion may depend on how
much employees believe their psychological contract has been broken, according to the
moderating function of psychological contract breach. When there is a perceived betrayal of the
unspoken, reciprocal expectations between workers and their employer, a psychological contract
is broken. Within the framework of this investigation, a greater degree of psychological contract
violation might mitigate the beneficial influence of staff empathy on contentment. Workers may
find it difficult to get the most out of caring relationships if they believe that their company is not
living up to its expectations.

The study concludes that there is a significant positive correlation between employee happiness
and compassion among employees, and that this link is influenced by both moderating and
mediating factors. Because psychological capital plays a mediating function, it is crucial to
cultivate positive psychological resources in workers by showing compassion. In the meanwhile,

28
in order to fully reap the benefits of employee compassion on satisfaction, firms must resolve
psychological contract breaches, as indicated by the moderating role of psychological contract
violation. Employees and the company as a whole stand to gain from a more encouraging and
fulfilling work environment, which can be created by recognizing and controlling these
dynamics.

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 APPENDIX

SURVEY QUESTIONNAIRE

The following survey questions are based on the variables under investigation.

Employees of Punjab, Pakistan's higher education system are doing this study. This study, which
involves personnel in higher education, aims to determine the mechanisms underlying
transformational leadership, task conflict, process conflict, and organizational effectiveness. As
the study's researchers, we guarantee the privacy of your answers to the questionnaire and
interview.

Please Tick your responses using the following scale:

1. Strongly disagree

2. Disagree

3. Neutral

4. Agree

38
5. Strongly agree

Your cooperation is earnestly solicited for carrying out an effective research.

Gender:  Male Age:  18-22

 Female  23-27
 28 and above

Martial Status:  Single Name of institution:

 Married

Level of education:  Bachelors Experience:  1-5 years

 Masters  6-10 years
 MPhil /MS  11-15 years
 PhD  16 years and
above

Employee satisfaction

1 2 3 4 5
1. I am satisfied with this job.
2. My opinions are respected at work.
3. I am satisfied with the recognition I get for the work I do.
4. I am satisfied with the way my pay compares with that for
similar jobs in other firms.
5. I am satisfied with the personal relationship between my boss
and his/her employees.
6. I am satisfied with the way my boss handles employees.

Employee compassion

39
 1 2 3 4 5
1. My employee pays careful attention when other members
talk about their troubles.
2. If my employee see other member going through a difficult
time, the team tries to be caring toward that member.
3. My employee likes to be there for members in times of
difficulty.
4. My employee notices when members are upset, even if they
do not say anything.
5. My employee tries to comfort members who feel sadness.
6. My employee’s heart goes out to members who are unhappy.

Psychological contract breach

1 2 3 4 5
1. Almost all the promises made by my employer during
recruitment have been kept so far.
2. I feel that my employer has come through in fulfilling the
promises made to me when I was hired.
3. So far my employer has done an excellent job of fulfilling its
promises to me.
4. I have not received everything promised to me in exchange
for my contributions.
5. My employer has broken many of its promises to me even
though I have upheld my side of the deal.

Psychological Capital

1 2 3 4 5

40
1. I feel confident analyzing a long-term problem to find a
solution.
2. I feel confident in representing my work area in meetings
with Management.
3. I feel confident contributing to discussions about the
company’s strategy.
4. I feel confident helping to set targets/goals in my work area.
5. I feel confident contacting people outside the company (e.g.,
suppliers, customers) to discuss problems.
6. I feel confident presenting information to a group of
colleagues.
7. If I should find myself in a jam at work, I could think of
many ways to get out of it.
8. At the present time, I am energetically pursuing my work
goals.
9. There are lots of ways around any problem.
10. Right now I see myself as being pretty successful at work.
11. I can think of many ways to reach my current work goals.
12. At this time, I am meeting the work goals that I have set for
myself.
13. When I have a setback at work, I have trouble recovering
from it, moving on.
14. I usually manage difficulties one way or another at work.
15. I can be “on my own”, so to speak, at work if I have to.
16. I usually take stressful things at work in stride.
17. I can get through difficult times at work because I’ve
experienced difficulty before.
18. I feel I can handle many things at a time at this job.
19. When things are uncertain for me at work, I usually expect
the best.
20. If something can go wrong for me work-wise, it will.

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21. I always look on the bright side of things regarding my job.
22. I’m optimistic about what will happen to me in the future as
it Pertains to work.
23. In this job, things never work out the way I want them to.
24. I approach this job as if “every cloud has a silver lining”

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