Job satisfaction and organisational commitment: Implications for the banking industry

By Dr. Lew Tek Yew

Job satisfaction as a significant determinant of organisational commitment has been well documented in numerous studies. Hence, managers in today’s organisations place great importance on the job satisfaction of their employees.

This is because employees who are satisfied are more likely to be committed to their organisations. These employees, in return, are more likely to take pride in organisational membership, believe in the goals and values of the organisation, and exhibit higher levels of performance and productivity.

Highly satisfied and committed employees in the banking industry delivering high service quality levels to the customers is of paramount importance because it is a service business where the employees are often seen as an integral part of the service experience.

In services industries such as the banking industry, the link between job satisfaction employees and organisational commitment has also been well demonstrated by the ‘service profit chain’ which shows an explicit link that satisfied employees will be motivated to remain loyal to their employers and are also more productive. As a result, they will deliver high quality service and, in the process, greatly enhance customer loyalty. In short, employee satisfaction can contribute to customer loyalty through a series of links referred to as the ‘service profit chain’.

In addition, earlier studies on organisational commitment (for example, Meyer and Allen 1984) have suggested that older employees tend to be more committed to an organisation since they are likely to experience greater satisfaction with their jobs.

The concept of organisational commitment has been defined in many ways. Steers (1977) was among the first to view organisational commitment as an employee attitude and as a set of behavioral intentions; the willingness to exert considerable effort on behalf of the organisation and a strong desire to maintain membership in the organisation.

According to Mowday, Steers and Porter (1979; 1982), the concept of organisational commitment can be characterised by at least three factors: (a) a strong belief in, and acceptance of, the organisation’s goals and values, (b) a willingness to exert considerable effort on behalf of the organisation; and (c) a strong desire to remain in the organisation.

The researchers define organisational commitment as the strength of an individual’s identification with the goals of an organisation’s multiple constituencies. It is about positive involvement, which is integral to developing shared goals and objectives in a particular organisation. In short, organisational commitment can be considered to be affective responses or attitudes which link or attach an employee to the organisation.

Over the last decade, it has become clear that organisational commitment is a multi-dimensional construct that involves three dimensions: affective, continuance and normative.  This conceptualisation of organisational commitment is commonly known as the Meyer and Allen’s (1991) Three-Component Model of Organisational Commitment.

Affective commitment refers to the employee’s emotional attachment to the organisation.  Employers with strong affective commitment remain with the organisation because they want to do so.

Continuance commitment refers to the extent to which the employee perceives that leaving the organisation would be costly. Employees with strong continuance commitment remain because they have to.

Normative commitment, meanwhile, refers to the employee’s feelings of obligation to the organisation and the belief that staying is the ‘right thing’ to do. Employees with strong normative commitment remain because they feel that they ought to do so (Meyer and Allen 1991).

In sum, the most desirable profile of organisational commitment amongst employees, especially those involved in the banking industry which demands continuous good service from the employees, is affective commitment and is the most prevalent theme in the Meyer and Allen (1991) model.

Meanwhile, the significance and importance of the concept of organisational commitment in terms of leading to beneficial organisational and desirable outcomes, such as increased effectiveness, reducing absenteeism and turnover, has been documented by many studies.

These positive linkages between organisational commitment and desirable organisational outcomes may be due to organisational commitment being considered to be the result of the individual-organisation relationship, where individuals attach themselves to the organisation in return for certain valued rewards or payments from the organisation. Following this logic, it is therefore likely that job satisfaction is a dominant factor influencing organisational commitment of employees.

Most studies have also found a positive relationship between age and job satisfaction. However, some recent evidence suggests that the assumed direct relationship between age and job satisfaction may be questionable. Older employees may experience a downturn in job satisfaction, suggesting a curvilinear relationship between age and job satisfaction. Meanwhile, there are other past studies that have suggested that job satisfaction may be independent of age or may be inversely related to age.

Age has also been shown to have a positive relationship with organisational commitment.   This may be due to the logic that, as workers grow older, alternative employment opportunities become limited, making their current jobs more attractive.

Meanwhile, as younger employees often make job choices on the basis of income and career potential, the commitment of younger workers is likely to be more affected by disappointment with pay and promotion opportunities compared to the commitment of older employees who have already achieved their career advancement and income potential.

In contrast to younger employees, older employees have higher needs for affiliation and lower needs for achievement. Older employees highly value close friendships with their co-workers for emotional support to cope with various adverse life events and they view the organisation as a source of social satisfaction due to the strong social ties they establish with the other members of the organisation.

The differences in values held by older and younger employees affecting their level of organisational commitment is consistent with the views of Maslow (1970) that middle-aged employees are devoted to the fulfillment of social needs, whereas young adults are consumed by the need for economic security. It may thus be reasonable to view age as a moderating factor in the relationship between job satisfaction and affective commitment.

Hence, this article provides valuable insights for the managements of banks in Malaysia and the Asia Pacific region in creating motivated and committed workforces able to meet the demands of their organisations and excel in their service to meet their ever-demanding customers.

Dr Lew Tek Yew is a senior lecturer in management at the School of Business at Curtin Sarawak. He has published more than 30 journal articles and conference papers. His research interests include human resource management practices, perceived organisational support, employee commitment and turnover. He can be contacted at +60 85 443939 ext. 3123or by e-mail to lew.tek.yew@curtin.edu.my.

Share this