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Causes and Effect of Job Satisfaction on a Company


Q.1) ABC company has heard rumors that some of their workers are dissatisfied with their jobs. You have been asked to explain to management the following: 1) what are the major causes of job satisfaction? 2) Why should management be concerned about the job satisfaction of employees? 3) How would you recommend that ABC Company verify or assess that employees are actually dissatisfied; how can job satisfaction be measured? 4) Once ABC Company has determined that the employees are definitely dissatisfied with aspects of their particular jobs, what are ways they could possibly decrease job dissatisfaction?


Defining Job Satisfaction: Job satisfaction is a pleasurable feeling that results from the perception that one’s job fulfills or allows for the fulfillment of one’s important job values. It refers to an individual’s general attitude toward his or her job. A person with a high level of job satisfaction holds positive attitudes toward the job, while a person who is dissatisfied with his or her job holds negative attitudes toward the job.

What are factors that cause employee satisfaction?

Review of the evidence and research* has identified several factors conducive to high levels of employee job satisfaction; some of these factors are controllable by managers and some are not.

Factors controllable by management

1. Nature of Work

– Task Complexity: jobs that are mentally challenging have been consistently found as a main cause of job satisfaction. Simple, repetitive, less challenging jobs are found to a source of frustration and dissatisfaction in employee.

– Task Meaningfulness: employees’ belief that the work done by them is meaningful and has significance causes job satisfaction in them. Furthermore, giving autonomy to employees make them feel that they can display their competence and make a positive impact to the organization, is another factor in job satisfaction.

– Physical Strain: reasonable amount of physical strain and exertion is another determinant in job satisfaction. This factor is sometimes overlooked in the present age of technology. Fact is that advancement in technology has made physical strain even more undesirable work characteristic.

2. Relationship with Supervisor and Colleagues

People expect more out of work than merely money or tangible achievements. For most employees, work also fills the need for social interaction. The behavior of an employee’s manager is found a major cause of satisfaction. Studies generally find that employee satisfaction increases when the immediate supervisor understands the employees, is friendly, praises for good performance, listens to employees’ opinions, and shows a personal interest in them.

3. Compensation and benefits factors

Employees want pay systems that they perceive as just, unambiguous, and in line with their expectations. When pay is seen as fair based on job demands, individual skill level, and community pay standards, satisfaction is likely to result.

4. Promotion Policies and Career Development Factor

Opportunities for promotion, training programs, and capacity of career development are other factors that cause job satisfaction. Employees seek fair promotion policies and practices. Promotions provide opportunities for personal growth, more responsibilities, and increased social status. Individuals who perceive that promotion decisions are made in a fair and just manner, therefore, are likely to experience satisfaction from their jobs.

5. Working conditions and environment factors

Employees want work environments that support personal comfort and good job performance. Studies demonstrate that employees prefer physical surroundings that are not dangerous or uncomfortable. Most employees also prefer working relatively close to home, in clean and relatively modern facilities, and with adequate tools and equipment. Physical features of workplace like temperature, lighting arrangements, cleanliness, working outdoors, health hazards, sick-building syndrome, social density, privacy in work, all may result in satisfaction or dissatisfaction to employees.

6. Organization development factors

Brand of organization in business field and comparison with leading competitor and potential development of organization is a cause of job satisfaction in employees.

Missions and Vision of organization is another source of job satisfaction if it complies with employee’s personal views and goals.

Factors not controllable by management:

1. Personality

Contemporary research* indicates that employee job satisfaction can be genetically determined. Whether people are happy or not can be found by their gene structure. You either have happy genes or you don’t. Scientific research in the field of psychology has been done to find the relationship of job satisfaction with five traits of personality i.e., Neuroticism, Extraversion, Openness to Experience, Agreeableness, and Conscientiousness. These factors with the exception of Openness to Experience have considerable correlation with job satisfaction, as given in Table 1.

Impact of personality in work can be controlled if the managers make sure their selection process screens out the negative, maladjusted, troublemaking fault-finders who derive little satisfaction in anything job-related. This is probably best achieved through personality testing, in-depth interviewing, and careful checking of applicants’ previous work records.

Table 1 Available meta-analytic correlations between Big Five personality traits and criteria

Big Five Trait

















Job satisfaction*











Job performance†






















Workplace deviance§











Motivation (goal-setting)**











Motivation (expectancy)**











Motivation (self-efficacy)**











Team effectiveness††











Notes: Correlations are based on the most recently published meta-analysis for the corresponding criterion. Dashes indicate unreported information. ρ = estimated true score correlations; SDρ = standard deviation of true score correlations. *Reported in Judge, Heller, and Mount (2002). †Reported in Salgado (2003). ‡Reported in Judge, Bono, Ilies, and Gerhardt (2002). §Reported in Berry, Ones, and Sackett (2007). **Reported in Judge and Ilies (2002). ††Reported in Bell 2007

2. Emotions Regulations

Scientific study* has explored the association between emotion regulation, defined as the conscious manipulation of one’s public displays of emotion, and job satisfaction. Suppression of unpleasant emotions decreases job satisfaction and amplification of pleasant emotions increases job satisfaction by improving the quality of interpersonal encounters at work.

3. Life Satisfaction

One common research* finding is that job satisfaction is correlated with life satisfaction. People who are satisfied with life tend to be satisfied with their job and people who are satisfied with their job tend to be satisfied with life. However, some research has found that job satisfaction is not significantly related to life satisfaction when other variables such as non-work satisfaction and core self evaluations are taken into account.

Why is employee satisfaction important for the organization and the management?

Job Satisfaction can be an important indicator of how employees feel about their jobs and a predictor of work behaviors such as organizational citizenship, absenteeism, and turnover. Further, job satisfaction can partially mediate the relationship of personality variables and deviant work behaviors.

Satisfied employees can add value to organization such as:

– Enhance employee retention

– Increase productivity

– Reduce turnover

– Enhance customer satisfaction and loyalty

– More energetic employees

– Improve teamwork

– Higher quality products and/or services due to more competent, energized employees

Job satisfaction and dissatisfaction has direct impact on organization, which can be seen by analyzing the following:

Job Satisfaction and Productivity*

The evidence suggests that the link between an individual’s job satisfaction and his or her productivity is positive. It turns out the productivity can be affected as much by external conditions as it is by job satisfaction. The link between job satisfaction and productivity is much stronger when we look not at individuals, but at the organization as a whole. When satisfaction and productivity data are gathered for the organization as a whole, rather than at the individual level, we find that organizations with more-satisfied employees tend to be more effective than organizations with less-satisfied employees.

Job Satisfaction and Organizational Citizenship Behavior

Organizational citizenship behavior (OCB) is discretionary behavior that is not part of an employee’s formal job requirements and is not usually rewarded, but that nevertheless promotes the effective functioning of the organization. Organizational citizenship is important, as it can help the organization function more efficiently and more effectively. It seems logical to assume that job satisfaction should be a major determinant of an employee’s OCB.

Job Satisfaction and Customer Satisfaction

Employees in service jobs often interact with customers. Since the management of service organizations should be concerned with pleasing those customers, it is reasonable to ask: Is employee satisfaction related to positive customer outcomes? For front-line employees who have regular contact with customers, the answer is yes. Satisfied employees are more likely to be friendly, upbeat, and responsive—which customers appreciate.

Job Satisfaction and Absenteeism:

One can find a consistent negative relationship between satisfaction and absenteeism, but the correlation is moderate-usually less than 0.40. While it certainly makes sense that dissatisfied employees are more likely to miss work, other factors have an impact on the relationship and reduce the correlation coefficient. e.g. Organizations that provide liberal sick leave benefits are encouraging all their employees, including those who are highly satisfied, to take days off. So, outside factors can act to reduce the correlation.

Job Satisfaction and Turnover:

Satisfaction is negatively related to turnover*, but the correlation is stronger than what we found for absenteeism. Labour turnover is quite strongly correlated with satisfaction when there is high unemployment. Yet, again, other factors such as labour market conditions, expectations about alternative job opportunities, and length of tenure with the organization are important constraints on the actual decision to leave one’s current job.

Workplace Violence and Sabotage:

Dissatisfaction in employees may cause violence and sabotage in workplace. Most violence that involves insiders is triggered by extreme levels of dissatisfaction and stress on part of attacker. Dissatisfied workers may either consciously or subconsciously produce faulty products.

How can job satisfaction be measured?

Job satisfaction is usually measured with interviews or questionnaires administered to the job incumbents in question. Most research is done with questionnaires. This is because interviews are expensive and time consuming to conduct. By contrast, one can survey a large number of people with a paper-and-pencil questionnaires with very little effort or expense. Furthermore, it is easy to quantify and standardize questionnaire responses.

Perhaps the easiest way to assess job satisfaction is to use one of the existing scales which have been carefully developed, and in many studies, their reliability and validity have been established. There are many methods for measuring job satisfaction, few of these are briefly mentioned below:

1. Job Descriptive Index (JDI), created by Smith, Kendall, & Hulin (1969), is a specific questionnaire of job satisfaction that has been widely used. It measures one’s satisfaction in five facets: pay, promotions and promotion opportunities, coworkers, supervision, and the work itself. The scale is simple, participants answer either yes, no, or can’t decide (indicated by ‘?’) in response to whether given statements accurately describe one’s job.

2. Job In General Scale (JIG) Job In General Scale (JIG, Ironson et al., 1989) was designed to assess overall job satisfaction rather than facets. Its format is same as the JDI, and it contains 18 items. Each item is an adjective or short phrase about the job in general rather than a facet. The total score is a combination of all items.

Advantage of using JIG is that it is quick and easy to use, and disadvantage is that it only gives global measure of job satisfaction and does not provide information about specific facets causing job satisfaction/dissatisfaction.

3. Minnesota Satisfaction Questionnaire (MSQ) The Minnesota Satisfaction Questionnaire (MSQ) is designed to measure an employee’s satisfaction with their particular job. Method includes 100 items measuring 20 facets of job satisfaction. Three revisions of MSQ are available: two long forms (1977 version and 1967 version) and a short form. Long form contains 100 items measuring 20 facets, and short form includes 20 items that best represent each of the 20 scales.

Advantages of this method are it is reliable, valid measure of job satisfaction, easy to use, easy to understand, applicable to any organization, applicable for managers, supervisors, and employees. Disadvantage of this method is that it is very long, and uses 20 different facets and it may not be meaningful to have info on each of them.

4. Satisfied / dissatisfied method In this method, you just send a question form that include:

What is good thing in our company?

What is not good one in our company?

This method is suitable for “emergency events” and you need result in a short time.

To assess and measure job satisfaction in employees of ABC Company I would recommend Job Descriptive method (JDI).

Job Descriptive Index assesses five most important facets of job satisfaction:

* The work itself—responsibility, interest, and growth.

* Quality of supervision—technical help and social support.

* Relationships with co-workers—social harmony and respect.

* Promotion opportunities—chances for further advancement.

* Pay—adequacy of pay and perceived equity vis-à-vis others.

The entire scale contains 72 items with either 9 or 18 items per subscale. Each item is an evaluative adjective or short phrase that is descriptive of the job. Responses are “Yes” “Uncertain” or “No”.

Job Descriptive Index (JDI; Smith, Kendall, & Hulin, 1969) has probably been the most popular facet scale among organizational researchers. It also may have been the most carefully developed and validated, as is well described in Smith et al.’s book. It is easy to use with all types of respondents and is most commonly used measure of job satisfaction. Scales that measure the overall level of job satisfaction and do not measure the specific facet may not help in identifying the main cause of job satisfaction/dissatisfaction.

Job dissatisfaction can be decreased by considering the following factors:

1. Work itself: Job dissatisfaction can be decreased by

– Job rotation

– Job enlargement: knowledge enlargement, task enlargement

– Job enrichment, add complexity to the task to make it challenging

2. Define Role and Expectations:

When an organization makes the decision to fill a new position, it has an idea of what will be expected of the new employee. However, unless these expectations are clearly communicated and role is defined, the result can be disappointing for both the employee and employer. Such situations cause conflict and inefficiencies in the workplace. Therefore, it is very important that the employer establish a mechanism for making sure the needs of the organization are clearly communicated and understood. Role analysis technique can be used to identify and define one’s role.

3. Organization development

– Shared mission or vision: In many organizations, employee doesn’t know what is mission, vision, objects. Building a corporate culture that requires employees to be an integral part of the organization can be an effective way of getting the most from the talents or competencies brought to the organization by each employee.

– Feedback programs: Give employees opportunity to complain to the organization about his work situation. Feedback will help organization to know opinions of their employees.

4. Compensation and benefits:

Policies of compensation and benefits are most important part of organization. But you should build your policies at “suitability” not “the best”.

5. Appraisal program:

You should build the proper evaluation and fair and encourage employees perform work.

6. Relationship with supervisors:

Relationship with management is the key factor often happen dissatisfaction of employees. The company should have policies to:

– Management must be fairly treat the staff

– Ready to help them

– Full training for staff

– Ready to listen and respond to employee

7. Promotions and career development

– Develop programs to promote all titles in the organization

– Develop training programs for employees

– Build programs for career development of each title

8. Working condition and environment

– Build occupational health and safety program.

9. Improvement programs of employee satisfaction

– HR department must have the monitoring methods for improvement programs of employee satisfaction. Many organizations just do appraisal of employee satisfaction but not pay attention to role of monitoring.

– Build solutions to improve satisfaction

– Training all level of management about the importance of satisfaction and methods to increase satisfaction.

10. Employees by themselves

– Hiring the right employees

– Clearly defined and communicated employee expectations.


References marked with an asterisk indicate studies included in the answer.

*Timothy A. Judge, Daniel Heller and Michael K. Mount. Five-Factor Model of Personality and Job Satisfaction: A Meta-Analysis. Journal of Applied Psychology 2002, Vol. 87, No. 3, 530-541

*Ste´Phane Co ˆ Te and Laura M. Morgan. A longitudinal analysis of the association between emotion regulation, job satisfaction, and intentions to quit. Journal of Organizational Behavior. 23, 947-962 (2002)

*Timothy A. Judge, Daniel Heller and Michael K. Mount. Five-Factor Model of Personality and Job Satisfaction: A Meta-Analysis. Journal of Applied Psychology 2002, Vol. 87, No. 3, 530-541

*John A. Wagner III & John R. Hollenback. Organizational Behavior, Securing Competitive Advantage, 5E. by South-Westrn, 2009

* Robbins, Stephen P., and Timothy A. Judge. Organization Behavior. 12th ed. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2007. 156-158.

*Steven G. Westlund and John C. Hannon. Retaining Talent: Assessing Job Satisfaction Facets Most Significantly Related To Software Developer

Turnover Intentions. Journal of Information Technology Management Volume XIX, Number 4, 2008

Q3) Compare and contrast the rational decision making model with the bounded rationality model of decision-making. In what ways does the theory of bounded rationality differ from the rational model and what are the characteristics of each? Which do you feel is a better representation of decision-making and why?


The rational decision-making model is sometimes referred to as the rational economic model as it includes a primary assumption of economic rationality, that is, the notion that people attempt to maximize their economic outcomes, where alternative with the highest expected worth is selected as preferred alternative.

Rational decision making processes consist of a sequence of steps designed to rationally develop a desired solution. Typically these steps involve:

1. Verify, Define, and Detail the problem: The first step is to recognize a problem or to see opportunities that may be worthwhile. A rational decision making model is best employed where relatively complex decisions have to be made.

2. Identify the Criteria: What is relevant and what is not relevant to the decision? What do you need to know before you can make a decision or what will help you make the right one?

3. Analyzing the situation: What alternative courses of action may be available to you? What different interpretations of the data may be possible?

4. Developing options: Generate several possible options. Be creative and positive.

5. Evaluating alternatives: What criteria should you use to evaluate? Evaluate for feasibility, acceptability and desirability. Which alternative will best achieve your objectives?

6. Selecting a preferred alternative: Explore the provisional preferred alternative for future possible adverse consequences. What problems might it create? What are the risks of making this decision?

Assumptions made by rational decision-making model

There are six assumptions of the rational decision-making model:

– Problem clarity: The decision maker is assumed to have complete information regarding the decision situation.

– Known options: Identify all the relevant criteria and can list all the viable alternatives. The decision maker is aware of all the possible consequences of each alternative.

– Clear preference: The criteria and alternatives can be ranked and given weight to reflect their importance.

– Constant preferences: The specific decision criteria are constant and that weights assigned to them are stable over time.

– No time or cost constraints: The rational decision maker can obtain full information about criteria and alternatives because it is assumed that there are no time or cost constraints.

– Maximum payoff: The rational decision maker will choose the alternative that yields the highest perceived value.

Rational decision making model presupposes that there is one best outcome. The search for perfection is frequently a factor in actually delaying making a decision. Such a model also presupposes that it is possible to consider every option and also to know the future consequences of each. While many would like to think they know what will happen, the universe often has other plans! It is also limited by the cognitive abilities of the person making the decision; how good is their memory? How good is their imagination? The criteria themselves, of course, will be subjective and may be difficult to compare. These models require a great deal of time and a great deal of information. And, of course, a rational decision making model attempts to negate the role of emotions in decision making.

Bounded Rationality Decision Making Model

Bounded Rationality theory accepts the notion of bounded rationality and suggests that people act only in terms of what they perceive about a given situation. Because these perceptions are frequently imperfect, most organizational decision making does not take place in a world of complete certainty. Rather, the behavioral decision maker is viewed as acting most often under uncertain conditions and with limited information. Organizational decision makers face problems that are often ambiguous, and they have only partial knowledge of the available action alternatives and their consequences. As Herbert Simon states: “Most human decision making, whether individual or organizational, is concerned with the discovery and selection of satisfactory alternatives; only in exceptional cases is it concerned with the discovery and selection of optimal decisions.”

Alternative model to rational decision making model based on the theory of bounded rationality called the administrative model is actually a critique of the rational model. Simon says the rational model is prescriptive or normative, the way it is supposed to be, rather than the way it is. Simon presented the administrative model as a realistic antidote, the way it really is. Administrative model he says is the way decisions are actually made.

Simon coined a term of Satisficing – means settling for the first alternative that seems to meet some minimum level of acceptability. Search for a needle in the haystack. Optimize is to look for the sharpest. Satisfied is to search until you find the needle that is just sharp enough to do the job.

He says there are limits on decision making:

Bounded rationality: imperfect information about goals and courses of action and relation of means to ends;

Bounded discretion: constraints on optimizing, prior commitments, moral and ethical standards, laws, and social standards;

Bounded rationality recognizes that it is impossible to comprehend and analyze all of the potentially relevant information in making choices. The only possible way of coping with the complexity of the world is to develop techniques, habits and standard operating procedures (SOP) to facilitate decision making. Widely shared SOP’s are institutions.

Habit–Routine responses and behaviors based on reinforcement e.g. brushing your teeth in the morning.

Technique–Ways to deal with generalized situations e.g., read reviews before selecting a hotel.

SOP–group and organizational rules for decisions e.g., our firm reorders when inventories reach one month of recent sales.

Which model better represents decision-making?

Rational decision making model provides a guideline of what managers ideally should be doing, but it does not represent what managers actually do. When decision makers are faced with a simple problem and few alternative courses of action, and when the cost of searching out and evaluating alternatives is low, the rational model provides a fairly accurate description of the decision process. However, such situations are the exception. Most decisions in the real world do not follow the rational model. For instance, people are usually content to find an acceptable or reasonable solution to their problem rather than an optimizing one. Most decisions in the real world do not follow the rational model. People are usually content to find an acceptable or reasonable solution to their problem rather than an optimizing one. Thus decision makers may rely on bounded rationality, satisficing, intuition, and judgment shortcuts in making decisions.

In an ideal situation, manager faces a clearly defined problem, knows all possible action alternatives and their consequences, and then chooses the alternative that offers the best, or “optimum,” solution to the problem. This optimizing style is an ideal way to make decisions. This rational approach is normative and prescriptive, and is often used as a model for how managers should make decisions. However, Behavioral scientists are cautious about applying rational decision theory to many decision situations. They recognize that the human mind is a wonderful creation, capable of infinite achievements. But they also recognize that human beings have cognitive limitations that restrict their information-processing capabilities. Information deficiencies and overload compromise the ability of decision makers to achieve complete certainty and otherwise operate according to the rational model. Human decision makers also operate with bounded rationality. Bounded rationality is suggests that, while individuals are reasoned and logical, humans have their limits. Individuals interpret and make sense of things within the context of their personal situation. This makes it difficult to realize the ideal of rational decision making. As a result, the rational model does not give a full and accurate description of how most decisions are made in organizations.


References marked with an asterisk “ * ” indicate studies included in the answers.

*John A. Wagner III & John R. Hollenback. Organizational Behavior, Securing Competitive Advantage, 5E. by South-Westrn, 2009

* Robbins, Stephen P., and Timothy A. Judge. Organization Behavior. 12E. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2007. 156-158.

* John R. Schermerhorn, Jr., James G. Hunt, Richard Osborn. Organization Behavior. 7E. John Wiley & Sons, Inc, 2002

Q.4) Discuss goal-setting theory and its major conclusions. How do major conclusions of goal setting inform managers, or how can managers apply what research on goal setting has found in managing employees?


Goal Setting Theory

The prime axiom of goal setting theory is that specific, difficult goals lead to higher performance than when people strive to simply “do their best”, (Locke, 1966; Locke & Latham, 1990). Goals play an important part in high performance work environments. Goal setting is the process of developing, negotiating, and formalizing the targets or objectives that a person is responsible for accomplishing.

The model uses elements of expectancy theory to help clarify the implications of goal setting for performance while taking into account certain moderating conditions, such as ability and task complexity.

Locke’s research showed that there was a relationship between how difficult and specific a goal was and people’s performance of a task. He found that specific and difficult goals led to better task performance than vague or easy goals.

Telling someone to “Try hard” or “Do your best” is less effective than “Try to get more than 80% correct”. Likewise, having a goal that’s too easy is not a motivating force. Hard goals are more motivating than easy goals, because it’s much more of an accomplishment to achieve something that you have to work for.

Locke and his colleagues spend considerable time on research* and studied the effects of goal setting, which can be concluded as:

– Specific goals increase performance, under certain conditions

– Difficult goals, when accepted, result in higher performance than do easy goals

– Feedback leads to higher performance

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