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A STUDY ON RELATIONSHIP BETWEEN JOB SATISFACTION AND ORGANIZATIONAL COMMITMENT AMONG THE EMPLOYEES OF
BANKING SECTOR IN NEPAL
RAJESHWOR NEUPANE
Associate Professor, Tribhuvan University, Nepal Commerce Campus, Kathmandu, Nepal
ABSTRACT
The prime purpose of this paper is to determine the relationship between job satisfaction and organizational commitment among the employees from banking sector in Nepal. Statistically, it is found that there is a significant relationship between job satisfaction and organizational commitment among the employees of banking sector in Nepal. Based on the results, implications and direction for further studies can be made.
Future researchers can judge the performance of the employees to see how satisfied and committed employees can perform better in banking sector of Nepal. This study; therefore, expects that the findings of this paper may facilitate the decision makers to formulate the banking policies related to job satisfaction amidst the employees in banking sector of the nation.
Keywords: Analysis of Variables, Co-Relation table, Level of Commitment
I. INTRODUCTION
Employee retention is an increasingly important challenge for organizations as the age of the knowledge- worker unfolds. The main characteristic of 21st century world of work is unprecedented levels of talent mobility as employees seek to satisfy their own individual demands, leading to growing concern among organizations about the retention of talented employees. Labor market trends in the banking sector have currently been providing increased level career opportunities for banking professionals all over the world, and recruitment and retention challenges for the organizations that employ these workers. As a result, research focusing on the retention of employees in the banking sector has received considerable attention as compared to that of past few years. Organizations are increasingly stating that employees are their most important asset, and as a result; they are constantly endeavoring to create an employment brand that is attractive to both existing employees and potential talents, while competing in a “war for talent” (Glen, 2006). This has led researchers to emphasize on the importance of reviewing the factors that influence individuals‟ job satisfaction and organizational commitment. Spector (1997) states that job satisfaction influences people‟s attitude towards their jobs and various aspects of their jobs. Job satisfaction is affected by personal and organizational factors, which cause an emotional reaction affecting organizational commitment (Mowday, Steers & Porter 1979). The consequences of job satisfaction include better performance and a reduction in withdrawal and counterproductive behaviors
(Morrison 2008). Since job satisfaction involves employees‟ influence or emotions, it influences an organization‟s well-being with regard to job productivity, employee turnover, absenteeism and life satisfaction (Sempane, Rieger & Roodt 2002; Spector 2008). Hamermesh (2001) viewed job satisfaction as the employee‟s mental classification of job into objective and subjective characteristics. However, Hirschfield (2000) stated, “Intrinsic job satisfaction is how people feel about the nature of the job tasks themselves, whereas extrinsic job satisfaction is how people feel about aspects of the work situation that are external to the job tasks or work itself”.
The key to achieving organizational success largely depends upon motivated employees on the job, and they can be motivated by delivering desired satisfaction. Motivated employees are crucial to an organization‟s success, and therefore, understanding people in their jobs and what motivates them could be a driving force in strengthening organizational commitment (Schein 1996). Organizational commitment has attracted considerable interest as attempts have been made to better understand the intensity and stability of an employee‟s dedication and devotion to the organization (Lumley 2010). Allen and Meyer (1990) identified a link between organizational commitment and employee-turnover, and concluded that employees who were strongly committed to the organization were less likely to leave it.
K. Nath Gangai, R. Agrawal (2014) state that organizational commitment is one of the most important organizational concepts that have widely been examined in managerial literature due to its significance for organizational performance and effectiveness. Organizational commitment is generally confined to as the degree to which an employee is loyal to their organization.
Job satisfaction is crucial problem for all organization no matter whether in public or private organizations or working in advanced or underdeveloped countries. One of the purposes for this degree of interest is that satisfied personnel is reported as committed workers and commitment is indication for organizational output and effectual operations (Robbins & Coulter, 2005). Satisfaction towards job is a sentimental and affecting reaction of a person employee towards job and work environment that arises from the experience of that particular job.
In light of the fact that no extensive research has been conducted linking on the relationship between job satisfaction and organizational commitment, particularly in the Nepalese context. In this regard, this study sets out to add empirical research to the current conceptual base relating to the relationship between these variables as manifested in the banking environment. In this context, this paper attempts to investigate the relationship between job satisfaction and organizational commitment among the employees of banking sector in Nepal.
II. OBJECTIVE
The major objective of this study is to assess the employees „commitment and job satisfaction and to identify its linkage with job satisfaction and employee commitment of Nepalese banking industry.
III. MATERIALS AND METHODS
To achieve the objectives of the study, descriptive and survey research design has been used. Some statistical tools have been adopted to find out the relationship between job satisfaction and organizational commitment.
The satisfaction of job and organizational commitment were tested executing and undertaking the field research design. In this study, independent variables are job satisfaction and dependent variable is organizational
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commitment. The research design carries the characteristics of qualitative as well as quantitative research. The research is basically exploratory in nature.
The primary data are related to the job satisfaction and the exploration of the organizational commitment in Nepalese commercial banking sector, specially located in Kathmandu Valley. The primary data were collected by means of structured questionnaires. The questionnaires had been distributed to the variables of employees in each unit of commercial banks that contains the Human Resources practices. The total number of respondents were100. The respondents were asked to give their opinion about the existing circumstances of human resources practices in each domain. Questions were structured with the five point likert scale to know the opinion on the practices and some performance variables.
IV. RESULT AND DISCUSSION
There are 29 commercial banks, 72 Development Banks, 46 Finance companies and 41 Micro Financial Institutions all over the country (Nepal Rastra Bank, 2016). The samples selected for the study are only 18 commercial banks. The firm has been selected on stratified sampling basis. The development banks, finance companies and micro credit institutions have not been included in this study. The total number of observation for the study consists of 100 respondents from commercial bank employees.
(Source: Field Survey, 2016)
Table 1 shows the level of job satisfaction and employees‟ organizational commitment in the banking sector of Nepal at a glance. Table shows that employees are moderately satisfied with their job. All factors of commitment fall under moderately agreed band. Composite mean value of commitment is 2.788, which falls under moderately agreed band.
Table 2 is designed to see the level of employees‟ organizational commitment in percentage based on the response of the employees.
Table 1
Descriptive Statistics for the Dimensions of Job Satisfaction and Commitment
Definition Mean Value Alpha Value
Affective Commitment 2.923 .647
Continuance Commitment 2.79
.668
Normative Commitment 2.65 .582
Overall Commitment 2.788 .823
Overall Job Satisfaction 2.644 0.835
(Source: Field Survey, 2016)
Table 2 shows the rate of three components organizational commitment. It shows the distinctiveness of three components of organizational commitment. AC falls even in moderately disagree band too, because there are three negative questions which have higher mean value. It means employees were more committed in terms of affective commitment to their organizations. But other components fall in the moderately agree and moderately high agreed band only. Results reflect that majority of the respondents are moderately high committed and some of the respondents are moderately low committed, and few respondents are moderately committed in terms of affective commitment. Continuance commitment shows that majority of the respondents are moderately committed and some of the respondents are moderately high committed in terms of normative commitment, which exactly falls same as continuance commitment.
It can be observed that overall situation of three components of organizational commitment are in Nepalese sector data show the composite mean score of affective commitment 2.923, normative commitment 2.79 and continuance commitment 2.65. Mean value of affective commitment is high because of reverse questions. Three reverse questions have high mean value. It means there is high affective commitment. The empirically drawn data show the fact that organizational commitment level in the Nepalese banking sector is average.
Here, an attempt has been made to show the relationship between the job satisfaction and organizational commitment and to what extent variables are correlated to each other. Present study aims to assess the impacts of job satisfaction in different types of organizational commitments.
Correlation matrix was computed to assess the extent or degree of relationship in between the factors or the research variables. It shows the interrelationship among the commitment variables and job satisfaction. Table 3 shows the correlation matrix of job satisfaction and different types of employees‟ commitment.
Table 2 Level of Commitment
AC % CC% NC%
Moderately Disagree 33.33 - -
Moderately Agree 16.67 80 80
Moderately high Agree 50 20 20
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In above table 1,2,3,4 denote job satisfaction, affective commitment, continuance commitment and normative commitment respectively.
While observing the above table 4.9, it is noteworthy to mention here that all the variables are positively correlated to each other at 1% level of significance. Table 4.9 shows the correlation between job satisfaction with affective commitment, continuance commitment and normative commitment with corresponding P-values.
As all P-values are less than 0.01. So they are strongly correlated with each other. Correlation between job satisfaction and affective is 0.979, correlation between job satisfaction and continuance commitment is 0.962 and correlation between job satisfaction and normative commitment is 0.945. Correlation between variable is more than 90% thus, we can say that job satisfaction and different type of commitments are strongly correlated to each other.
Relationship between job satisfaction and employees‟ organizational commitment are tested using the regression model. Job satisfaction is regressed with the variables of commitment to see their relationship and relative importance.
Taking affective commitment as dependent variable (Y) and job satisfaction as independent variable (X).
Independent variable job satisfaction is regressed with affective commitment to assess the relative importance of the independent variable. The regression equation has been estimated as:
Y = 0.122+ 0.973X P = (0.028) (0.000) t = 2.236 47.765
R Square = 0.959 d.f. = 98
Regression coefficient of job satisfaction is 0.122 which shows the rate of change in affective commitment with the change in one unit of job satisfaction.
The p-value of regression coefficient of job satisfaction is 0.028 which is significant at 0.05 level of significance with 98 d.f.
The R square is 0.959. It means 95.9% of the total variation is explained by this model. The P value of ANOVA table is 0.000 with 0.05 level of significance that also supports the model under this study.
Table: 3 Correlation Table
S. No. Variables
1 2 3 41
Job satisfaction 12
AffectiveCommitment 979** 1 1
3
Continuance Commitment0.962** 0.986**
1
4
NormativeCommitment
0.945** 974** 993**
1
**. Correlation is significant at the 0.01 level (2-tailed).
The above calculation shows that there is a significant relationship between job satisfaction and affective commitment that means job satisfaction enhance affective commitment.
Taking continuance commitment as dependent variable (Y) and job satisfaction as independent variable (X).
Independent variable job satisfaction is regressed with continuance commitment to assess the relative importance of the independent variable. The regression equation has been estimated as:
Y = 0.179 + 0.956X P = (0.016) (0.000) t= 2.449 35.081
R square = 0.926 d.f. = 98
Regression coefficient of job satisfaction is 0.179. Which shows the rate of change in continuance commitment with the change in one unit of job satisfaction?
The P value of the regression coefficient of job satisfaction is 0.016 which significant at 0.05 level of significance with 98 d.f.
The R square is 0.926. It means 92.6% of the total variation is explained by this model. The P value of ANOVA table is 0.000 with 0.05 level of significance that also supports the model under this study.
The above calculation shows that there is a significant relationship between job satisfaction and continuance commitment that means job satisfaction enhances affective commitment.
Taking Normative Commitment as dependent variable (Y) and job satisfaction as independent variable (X).
Independent variable job satisfaction is regressed with Normative Commitment to assess the relative importance of the independent variable. The regression equation has been estimated as:
Y = 0.219 + 0.938X
P = (0.015) (0.000) t= 2.486 28.529 R square = 0.893 d.f. = 98
Regression coefficient of job satisfaction is 0.219 which shows the rate of change in normative commitment with the change in one unit of job satisfaction.
The p-value of the regression coefficient of job satisfaction is 0.015 which is significant at 0.05 level of significance with 98 d.f.
The R square is 0.893. It means 89.3% of the total variation is explained by this model. The P value of ANOVA table is 0.000 with 0.05 level of significance that also supports the model under this study.
The above calculation shows that there is a significant relationship between job satisfaction and normative commitment that means job satisfaction enhances normative commitment.
Taking Total Commitment as dependent variable (Y) and Job Satisfaction as independent variable (X).
Independent variable job satisfaction is regressed with Total Commitment to assess the relative importance of the independent variable. The regression equation has been estimated as:
= 0.173 + 0.956X P = (0.012) (0.000)
t= 2.548 37.644
R square = 0.935 d.f. = 98Regression coefficient of job satisfaction is 0.173 which shows the rate of change in total commitment with the change in one unit of job satisfaction.
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The p-value of the regression coefficient of job satisfaction is 0.012 which is significant at 0.05 level of significance with 98 d.f.
The R square is 0.935. It means 93.5% of the total variation is explained by this model. The P value of ANOVA table is 0.000 with 0.05 level of significance that also supports the model under this study.
The above calculation shows that there is a significant relationship between job satisfaction and total commitment that means job satisfaction enhances total commitment
.
Table 4
Multiple Regressions: Job Satisfaction and Commitment Variable
(Source: Field Survey, 2016)
Table 4 shows the relationship between job satisfaction and all components of commitment. Job satisfaction can explain more variation of affective commitment.
Table 5 ANOVA Table
Job satisfaction
Sum of Squares d.f. Mean Square F Sig.
Between Groups 0.593
3
0.198 1.097 0.354
Within Groups 17.313
96
0.180
Total 17.906 99
Source: Field Survey, 2016
Description
Coefficient P-value R squareJob Satisfaction & Affective Commitment 0.973 0.028 0.959 Job Satisfaction & Continuance Commitment 0.956 0.016 0.926 Job Satisfaction & Normative Commitment 0.938 0.015 0.893
Job Satisfaction & Total Commitment 0.956
0.012 0.935
(Source: Field Survey, 2016)
The above table shows the fact that the employees are more committed in terms of affective and continuance commitment. But in terms of normative commitment, the employees are less committed. However, mean score does not show more fluctuation in theses regards.
The P value of ANOVA is significant at 0.05 levels having 96 degree of freedom with 1.097 F value of job satisfaction. This suggests that there is no statistical difference of opinion on these factors. So, the case can be generalized.
The P value of ANOVA is significant at 0.05 levels having 96 degree of freedom with 1.923 F value of affective commitment. In terms of continuance commitment ANOVA is significant at 0.05 levels having 96 degree of freedom with 2.046 F value. While looking at normative commitment the P value of ANOVA is significant at 0.05 levels having 96 degree of freedom with 1.898 F value. This suggests that there is no statistical difference of opinion on these factors. The case can therefore be generalized.
V. CONCLUSION
The overall findings of the study have enlightened on how the job satisfaction of the individual employees in the banking relates to their levels of organizational commitment. There is another noticeable findings that shed light on the new knowledge gained from observing the relationship between specific job satisfaction factors and the affective and normative commitment of the participants may be useful in the attraction, selection, placement,
ANOVA
Sum of Mean
Squares d.f. Square F Sig.
Affective Commitment Between Groups
1.002 3 0.334 1.923 0.131
Within
Groups 16.680 96 0.174
Total 17.683 99
Continuance Commitment
Between Groups
1.062 3 0.354 2.046 0.112
Within
Groups 16.611 96 0.173
Total 17.673 99
Normative Commitment
Between Groups
0.989 3 0.330 1.898 0.135
Within
Groups 16.681 96 0.174
Total 17.670 99
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development, reward and remuneration of talented employees in the banking sector. The results of this research paper suggests that in order to create a favorable working environment that encourages people to stay with their respective organizations, managers need to review the existing pay practices so as to offer fair pay, provide challenging and meaningful work tasks, and foster positive co-worker relationship. Since the present study is limited to the participants employed in Nepalese banking institutions, the results cannot be generalized to other Nepalese occupational contexts.
The results of this paper can be helpful to conduct the future research efforts by obtaining a larger and more representative sample of participants in banking sector in Nepal. The research design used here is exploratory in nature, and it can yield no statements about causation. The observed associations between the variables have therefore been interpreted rather than established. This study should be seen as a step towards making a positive contribution to the retention of valuable staffs in the Nepalese Banking context.
Result of the study shows that employees of Nepalese banking sector get job satisfaction moderately. The mean value (2.644) is more than average and falls on the moderately agree band. Level of three components: affective commitment, normative commitment and continuance commitment have been observed individually in the Nepalese Banking Sector. The result shows that there is average level of employee commitment in the Nepalese banking sector. While observing separately to the components of commitment, affective commitment is found inferior with mean score 2.923 and normative commitment is found strong with mean scored 2.65 than other components of commitment.
The result indicates that there is significant correlation between job satisfaction and affective commitment (r=0.979, P < 0.01), job satisfaction and continuance commitment (r = (V) 62, P < 0.01), job satisfaction and normative commitment (r = 0.945/P <0.01). All P values are less than 0.01 and correlation between variable is more than 90% thus, we can say that job satisfaction and different types of commitment is/strongly correlated to each other.
The results from the current research indicate that there is a strong, positive correlation between organizational commitment and job satisfaction amongst employees from banking sector. The level of job satisfaction and organizational commitment; however, are causes for concern. Given the close link between organizational commitment and job satisfaction, it is possible that many employees are possibly staying in the profession due to limited alternatives.
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