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Employee Engagement, Satisfaction and Loyalty: Preliminary Findings

January 2019

DOI:10.2991/piceeba-19.2019.78

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CC BY-NC 4.0

Conference: Proceedings of the Third Padang International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA 2019)

Authors:

Syahrizal Syahrizal

State University of Padang

Abror Abror

State University of Padang

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Available via license: CC BY-NC 4.0

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Employee Engagement, Satisfaction and Loyalty: Preliminary Findings

Syahrizal Syahrizal1, Dina Patrisia2, Abror Abror3

1Universitas Negeri Padang, Padang, Indonesia,  syahrizal@fe.unp.ac.id

2Universitas Negeri Padang, Padang, Indonesia,  patrisiadina@yahoo.com

3Universitas Negeri Padang, Padang, Indonesia,  abror094@gmail.com

Abstract

Employee loyalty is an important factor in managing the organisation such as a university.

There are some antecedents of employee loyalty, such as employee engagement and job

satisfaction. This study examines the relationship between employee engagements, job

satisfaction and employee loyalty. This preliminary study has been conducted in a

university in Indonesia. We employed lecturers of one state university in West Sumatera as

the sample of study. We used Structural Equation Model (SEM) Partial Least Square (PLS)

with Smart PLS 3 as the data analysis software package. This study found that employee

engagement has a significant impact on job satisfaction. There is no significant direct effect

of employee engagement on employee loyalty. Surprisingly, we also found that employee

engagement has a significant mediating impact on the link between employee engagement

and employee loyalty. Furthermore, some limitations and future research are discussed.

Keywords: employee engagement, job satisfaction, employee loyalty, structural equation

model (SEM), partial least square (PLS)

Introduction

The higher education sector becomes a highly competitive sector nowadays (Asrar-ul-Haq et al.,

2017). University as one of the higher education entities has to develop innovative programmes, such

as digital based service quality, which might create a better competitive advantage. One important

factor in creating a competitive advantage is human resource management. One of the human

resources in a university is lecturer. There are some indicators of the quality of lecturer. For example,

we can see the quality of the lecturer in his/her ability to teach and his/her loyalty to the university.

Universitas Negeri Padang (UNP) as one of the state universities in Indonesia has also faced the

competition problem. It has to survive and retain its customers. Today UNP has 1125 lecturers and

405 supporting staffs with more than 35,000 enrolled students. One problem in the universities such

as UNP right now is the lecturer’s loyalty. According to Ineson et al. (2013) there are several

influenced factors of employee loyalty, such as employee satisfaction and engagement.

Furthermore, employee satisfaction is not an instant result. Some previous studies have asserted

that there are several antecedents of employee satisfaction, such as employee engagement and self-

efficacy (De Simone et al., 2018, Perera et al., 2018, Suhartanto et al., 2018). Recently, the university’s

management has a program to change the university’s mindset from the teacher’s university to the

research university. This program is in line with the performance contract between rector and the

Directorate General of Higher Education and it will be followed by the contract between rector and

deans in Universitas Negeri Padang. Accordingly to achieve this vision, it should be followed by the

loyalty of lecturer to participate in achieving the university’s vision. However, study on employee

loyalty is still neglected, hence, this study aims to investigate the link between employee loyalty and

its antecedents, including employee engagement and employee satisfaction.

Employee Loyalty

Employee loyalty refers to an employee’s feeling of attachment to his/her employer (Masakure,

2016). According to Ineson et al. (2013), there are some antecedents of employee loyalty, such as

employee commitment, personal satisfaction, work environment, social benefit and monetary

rewards. Furthermore, Lee et al. (2017), Longo and Mura (2011) dan Bhattacharya (2015) assert that

employee will stay in the company when he/she satisfied with his/her job. Employee loyalty can be

Third International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA 2019)

This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Advances in Economics, Business and Management Research, volume 97

713

measured by using some items, including (1) want to do the job more than the organisation

expectation to make sure the organisation successfulness (2) want to make the company as his/her

own carrier (3) care with the organization condition (4) want to stay in the organization (Jun et al.,

2006).

Employee Satisfaction

Employee satisfaction becomes an important factor because managements’ view on human

resource has changed. In the past, they argued that human resource is only a cost for the company;

whilst, today they assert that human resource is an asset for the business. Some previous studies also

argue that employees may become a competitive advantage which is not easy to imitate by the

competitor (Suhartanto et al., 2018). When the employees satisfied with the company, they will do

their best and it will increase the company’s performance (De Simone et al., 2018). Employee

satisfaction refers to the employee’s feeling about the job based on his/her experience (like or dislike)

(Drydakis, 2017, Asrar-ul-Haq et al., 2017, Coetzee and Stoltz, 2015). Some prior studies argue that

employee satisfaction has some antecedents, such as self-efficacy, employee engagement and social

support (De Simone et al., 2018, Orgambídez-Ramos and de Almeida, 2017, Malinen and Savolainen,

2016). Employee satisfaction has also related to some consequences such as employee loyalty and

organizational citizenship behavior (Ocampo et al., 2018, Xie et al., 2017, Ineson et al., 2013). In

addition, according to Xie et al. (2017), employee satisfaction can be measured by using some

indicators, such as overall satisfaction of the job.

Employee Engagement

Employee engagement is a positive, fulfilling, work-related state of mind that is characterized by

vigor, dedication, and absorption (Schaufeli et al., 2002). It relates to the positive emotional

relationship between employees and their job (Orgambídez-Ramos and de Almeida, 2017).

Accordingly, employee engagement has three main dimensions, including vigor, dedication and

absorption (Orgambídez-Ramos and de Almeida, 2017, Lu et al., 2018). Furthermore, Albrecht and

Marty (2017) have asserted that employee engagement has a close relationship with the psychological

factor, such as satisfaction which has an impact on employee’s performance. Cahill et al. (2015) also

argue that employee engagement will affect the employee’s work-life balance. Albrecht and Marty

(2017) argue that employee engagement can be measured by using four indicators, such as “my job

inspires me”.

Some prior studies have found that employee engagement has a relationship with employee

satisfaction (De Simone et al., 2018, Orgambídez-Ramos and de Almeida, 2017, Ocampo et al., 2018).

For example, Orgambídez-Ramos and de Almeida (2017) have revealed that employee engagement is

one significant antecedent of employee satisfaction. They have conducted their study to 215 nursing

professionals in Portugal. In line with Orgambídez-Ramos and de Almeida (2017), Suhartanto et al.

(2018) have also found that employee satisfaction is influenced by employee engagement. They

studies 408 frontline staffs of retail stores. Moreover, Perera et al. (2018) have investigated 574

teachers in Australia. By using Structural Equation Modeling as the data analysis tools they found

that the teachers’ satisfaction with their job is affected by the teachers’ engagement. Therefore from

the discussion above, we propose a hypothesis that employee engagement has a positive and

significant impact on employee satisfaction (H1).

Employee Engagement and Employee Loyalty

Employee engagement is also related to employee loyalty (Milliman et al., 2018, Karatepe and

Ngeche, 2012, De Simone et al., 2018, Salmela-Aro and Upadyaya, 2018). Milliman et al. (2018) and

Karatepe and Ngeche (2012) have asserted that employee engagement has a relationship with job

embeddedness. When an employee engages with his/her job in the company, he/she will have a better

job embeddedness, whilst, job embeddedness is related to the employee loyalty. Moreover Shahpouri

et al. (2016) have examined the mediating role of work engagement on the link between job resources

Advances in Economics, Business and Management Research, volume 97

714

and turn over intention. They found that work engagement has a significant impact on turn over

intention. On the other hand, turn over intention relates to employee loyalty. Hence, we argue that

employee engagement has a direct impact on employee loyalty. Therefore, we posit that employee

engagement is a significant and positive antecedent of employee loyalty (H2).

Employee Satisfaction and Employee Loyalty

Several previous studies have revealed that employee satisfaction has a significant and positive

influence on employee loyalty (Collins et al., 2014, Masakure, 2016, Ineson et al., 2013). Masakure

(2016) argues that the employees will be loyal to the organisation when they satisfied with their job

and the work environment. Moreover, in marketing context, the prior studies also found that

customer satisfaction will have a positive effect on customer loyalty (Han et al., 2017). Hence, we

argue that employee satisfaction has a significant and positive impact on employee loyalty (H3).

Methods

Sampling and Data Collection Procedures

This preliminary study has been conducted in a state university in Padang West Sumatera. It is a

part of the main study where the study’s population is all permanent lecturers in this university.

However, we have employed only 30 respondents as the samples for this preliminary study. For the

data collection, we used several steps: First, we sent the questionnaires to 30 lecturers who agreed to

participate in this study. Second, we input the data to the SPSS software program.

Measurement

This study has employed three constructs (i.e., employee engagement, employee satisfaction and

employee loyalty). We adopted the measurement for employee engagement from Albrecht and Marty

(2017). The sample of items from this construct is “at my job I feel strong and vigorous”. The

employee satisfaction construct has been adopted from Xie et al. (2017) and Messersmith et al. (2011).

The example of the measurement items is “All things considered, I feel pretty good about this job.”

Finally, the employee loyalty construct has been measured by using three loyalty indicators from Jun

et al. (2006). We employed Structural Equation Modelling (SEM) PLS with Smart PLS-3 to analyse the

data (Hair et al., 2014)

However, before the main analysis, we have done some preliminary tests, such as normality,

heteroschedasticity, multicollinearity and outlier test (Wardi et al., 2018b, Patrisia and Dastgir, 2017)

Result and Discussion

Result

This study has analysed the data by using SEM PLS. However, before the main analysis, we have

conducted some prior tests. For example we examined the validity and reliability of the data. Table 1

shows the construct validity and reliability. We found all the constructs are valid (the Average

Variance Extracted values are ≥ 0.50) and reliable based on two values ( Cronbach’s alpha and

Construct Reliability ≥ 0.70) (Abror and Akamavi, 2015, Wardi et al., 2018a).

Table 1 Construct validity and Reliability

Variable

Cronbach’s

Alpha

Rho

AVE

Employee Loyalty

0.91

0.92

0.95

0.85

Employee Satisfaction

0.91

0.97

0.94

0.84

Employee Engagement

0.90

0.93

0.78

CR= Construct Reliability, AVE= Average Variance Extracted

Moreover, we have also examined the discriminant validity of the constructs by using the square

root of AVE. Table 2 shows the value of square root of AVE in the diagonal should be greater than the

correlation (Hair et al., 2013).

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Table 2 Discriminant Validity

Variable

Employee Loyalty

0.92

Employee Satisfaction

0.72

0.92

Employee Engagement

0.63

0.70

0.88

Note: Diagonal is the square root of AVE

The primary analysis in Table 3 has revealed that the employee engagement has a positive and

significant effect on employee satisfaction (H1). Moreover, the employee engagement has not

significantly affected the employee loyalty (H2). Finally, we also found that employee satisfaction has

a positive and significant impact on the employee loyalty (H3). Surprisingly, even though employee

engagement has no significant direct impact on employee loyalty, it has a significant indirect effect on

employee loyalty through employee satisfaction as a mediator. This finding has been tested by using

Sobel’s Test with significant value 0.005 (< 0.05). for the research model please see Figure 1.

Table 3 Hypothesis Testing

Hypothesis

Coefficient

Statistic

Value

EmpSat -> EmpLoy

0.55

2.78

0.01

Engage -> EmpLoy

0.24

1.20

0.23

Engage -> EmpSat

0.70

6.76

0.00

Figure 1 Research Model

Discussion

The findings of this study revealed that employee engagement has a significant influence on

employee satisfaction (H1). This finding reflects the previous findings, such as Orgambídez-Ramos

and de Almeida (2017); Ocampo et al. (2018) and Suhartanto et al. (2018) who have examined the link

between employee engagement and employee satisfaction. They argue that when an employee is

engaged with the company, it will affect his/her satisfaction. Accordingly, to make sure that the

employees have a high employee satisfaction, the company has to concern with the engagement

programs. Moreover, Perera et al. (2018) have highlighted that the teacher’s satisfaction has been

affected by the teacher’s engagement. Therefore, employee engagement is a significant and positive

antecedent of employee satisfaction.

The findings highlight that employee engagement has not significantly impacted the employee

loyalty (H2). This finding is not in the lines with some prior studies (Milliman et al., 2018, Karatepe

and Ngeche, 2012, Shahpouri et al., 2016) who argue that employee engagement has a significant

impact on employee loyalty. However, although the employee engagement has no significant direct

Advances in Economics, Business and Management Research, volume 97

716

impact on employee loyalty, it has a significant indirect impact through employee satisfaction as the

mediating variable. Therefore, to increase employee loyalty, the company has to address the

employee engagement, hence, it will have a positive impact on employee satisfaction as a significant

antecedent of employee loyalty.

Finally, we found that employee satisfaction is a significant and positive antecedent of employee

loyalty (H3). This finding is congruent with several prior studies (Masakure, 2016, Ineson et al., 2013).

For instance, Han et al. (2017) and Masakure (2016) have asserted that satisfaction is an antecedent of

loyalty. Therefore, when an employee is satisfied with his/her job, he/she will be loyal to the

organisation. The employees will show their loyalty with some indicators, such as do their job

seriously and want to recommend the organisation to other people.

Conclusions

In conclusion, we have revealed some important findings; including there is a significant direct

effect of employee engagement on employee satisfaction. We also found that employee satisfaction

has a significant impact on employee loyalty. Finally, even though there is no significant direct impact

of employee engagement on employee loyalty, surprisingly, we found a significant direct impact on

that relationship through employee satisfaction as the mediator. Furthermore, this research also has

some limitations, such as the number of samples is still small, hence, for the main study, we suggest

to use a larger sample size. This study has only been conducted in one university and for future

study, it can be extended to some universities in Indonesia to get more generalize results. Finally, this

study only focused on employee engagement and satisfaction as the antecedents of employee loyalty.

For future research, it can be expanded to some new variables, such as self-efficacy and

Organisational Citizenship behaviour (OCB).

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Aug 2018

Integrating the life-span approach with the Job-Demands-Resources (JD-R) model, this study examined the associations between personal and job demands and resources and work burnout and engagement during the early, mid, and late career stages. A further aim was to include novel job-related demands caused by digitalization, globalization and diversity. We also examined the extent to which work engagement and burnout were associated with general well-being, i.e., life satisfaction and depressive symptoms, among employees in different career stages. Employees (N = 1415) from three large organizations participated in the study via their occupational health services. The research questions were analyzed using structural equation modeling. In line with the life-span approach, the results for personal demands showed that, especially during the early career stage, economic problems were associated with work burnout symptoms, whereas during the late career stage caregiving demands were associated with work burnout and, negatively, with work engagement. In line with the JD-R model, job resources were related to work engagement in all career stages and high resilience buffered against the associations between demands and work engagement and burnout. The results for job demands showed that ICT demands were associated with work burnout during the early career stage and multicultural job demands with work burnout during the middle career stage. Finally, work engagement was associated with life satisfaction and work burnout was associated with depressive symptoms in all career stages. To conclude, an integrative life-span framework can be applied in the context of the demands-resources model.

The effect of workplace spirituality on hospitality employee engagement, intention to stay, and service delivery

Article

Jun 2018

A key challenge facing hospitality organizations is how to retain and engage frontline employees who play an important role in influencing customer satisfaction. Although engagement has recently received considerable attention from scholars, much still remains to be learned about its intrinsic motivation and work meaning antecedents. Workplace spirituality has been conceptualized as offering new insights into how individuals experience a deeper level of intrinsic work motivation and engagement. This study found that workplace spirituality has a direct effect on employee engagement and intention to stay in a study of 292 employees in a U.S. hospitality organization. Engagement was found to be related to employees' service delivery, but not to their intention to stay. In doing so, this study provides new insights into the intrinsic work motivation antecedents of engagement and is the first investigation to empirically assess the joint effects of workplace spirituality and engagement on employee service delivery and intention to stay.

The link between tourism involvement and service performance: Evidence from frontline retail employees

Article

Feb 2018
J BUS RES

Despite the increasing attention on employee performance, empirical research to explain the consequences of employee involvement in tourism on their service performance has been overlooked. This study proposes new insights into theoretical concepts and evaluates the empirical evidence on the direct relationship between tourism involvement and employee service performance and its indirect relationship through work engagement and job satisfaction in the context of retail. To test the proposed model, this study applies variance-based structural equation modeling partial least squares (PLS) with a sample of 408 frontline store employees in Bandung, Indonesia. The results reveal that tourism involvement directly affects service performance. Further, this study confirms that the linkage between tourism involvement and service performance is partially mediated by work engagement and job satisfaction. The theoretical and managerial practices consequences of these findings are discussed.

The trickle-down of work engagement from leader to follower: The roles of optimism and self-efficacy

Article

Dec 2017
J BUS RES

The present research seeks to explore how and when leader work engagement trickles down to the follower. Relying on social learning theory, we hypothesize that optimism mediates the relationship between leader work engagement and follower work engagement. Follower self-efficacy is supposed to strengthen the effect of follower optimism on work engagement. In a sample of 707 employees from 72 teams in Chinese enterprises, we tested the hypotheses using Hierarchical Linear Modeling (HLM). The results suggest that leader work engagement is positively related to follower work engagement and that follower optimism significantly mediates the relationship. Moreover, follower self-efficacy strengthens the positive relationship between follower optimism and work engagement as well as the indirect effect of leader work engagement on follower work engagement via follower optimism. Theoretical and practical implications are further discussed.

The role of job satisfaction, work engagement, self-efficacy and agentic capacities on nurses' turnover intention and patient satisfaction

Article

Nov 2017
APPL NURS RES

Background Nurses' voluntary turnover is a worrying global phenomenon which affects service quality. Retaining nursing staff within a hospital is important to eliminate the negative influence of voluntary turnover on the quality of care and organisation costs. Objectives This research helps explain nurses' voluntary turnover by analysing the role of self-efficacy, agentic capacities, job satisfaction, and work engagement on hospital turnover intention, and to study the relationships between these variables and patient satisfaction. Setting and participants This study gathered data from 194 nurses and 181 patients from 22 inpatient wards at two hospitals in southern Italy. Results Correlation analysis revealed that job satisfaction, work engagement, self-efficacy and agentic capacities were positively interrelated and negatively correlated with turnover intention. Path analysis showed that self-efficacy, some agentic capacities (anticipation and self-regulation), job satisfaction, and work engagement had direct or indirect effects on nurses' turnover intention, and that job satisfaction exerted a stronger effect on turnover intention. Also, patient satisfaction was positively correlated with nurses' job satisfaction, work engagement, self-efficacy, self-regulation and anticipation and negatively correlated with nurses' turnover intention. Conclusion Results highlighted the importance of implementing actions (for example through feedforward methodology and the goal setting technique) to improve self-efficacy, self-regulation skill, work engagement and job satisfaction in order to reduce nurses' turnover intention and increase patient satisfaction with nursing care.

Managing employee retention and turnover with 21st century ideas

Article