Job Satisfaction and Employee Loyalty: A Causal Relationship Examined with the Use of Structural Equation Modelling
Job Satisfaction and Employee Loyalty: A Causal Relationship Examined with the Use of Structural Equation Modelling

Summary/Abstract: Objective: Identification of the impact of job satisfaction on employee loyalty.Research Design & Methods: A quantitative approach was applied. Critical analysis of literatureand an expert panel was used to identify variables. A questionnaire study was carried out onlineon the sample of 419 administrative and office employees. Structural equation modelling wasused to examine the existence of the assumed relationship.Findings: It has been proved that job satisfaction is a multidimensional construct. It is composedof three elements: 1) career development including the possibilities of training, development,realisation of passions and non-pay benefits, 2) physical job conditions including ventilation,bathrooms, social back office, noise and temperature level, as well as ergonomic standards ofequipment, aesthetics of the workplace and 3) interpersonal relations covering relations withco-workers and supervisors, as well as social communication in the workplace. Each of thesedimensions turned out to impact employee loyalty and this impact is statistically significanton a level α = 0.001. The strongest impact occurs in case of the two intangible factors: careerdevelopment (1.024), then interpersonal relations (0.902). For physical working conditions theimpact is noticeably weaker (0.211).Implications / Recommendations: It turned out that employee loyalty is strongly impacted bythe intangible factors of the work environment. This observation may constitute an importanthuman resources management tool for managers and in particular in the process of motivatingthe employees.Contribution: Confirming the assumed relationship between the revealed dimensions of jobsatisfaction and employee loyalty with the use of a sophisticated multidimensional statisticalanalysis.

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