Researchfinalpaper_ME

Levels of employee satisfaction and its relation to work performance, absenteeism
and retention rates the case of “XYZ company”
Abstract
The research is built upon the concepts of job satisfaction and the way it affects various job
features, such as performance, absenteeism and turnover. Building upon other researches in
the field the current work examined this relation through gathering and analyzing primary
qualitative and quantitative data through surveys and an interview. This data was later
examined through using regression analysis, frequency diagrams and averages. While it is hard
to draw a conclusion about the relation between absenteeism and satisfaction, turnover and
performance as well as commitment in general were found to have a positive correlation with
satisfaction, coinciding with the findings of other researchers.
Key words: satisfaction, performance, turnover, retention, employees, job complexity,
commitment, absenteeism, analysis, data
Introduction
Job satisfaction is a crucial issue in the post-industrial age. It is not only of importance in
relation to the quality of life that employees can enjoy but it can also be linked with job
performance, absenteeism and retention rates. There have been many definition given for the
meaning of job satisfaction but one of the most widely accepted definitions is the one given by
Locke(1976) "a pleasurable or positive emotional state resulting from the appraisal of one's job
or job experiences". Another more recent definition come from Hulin and Judge (2003) who
state that job satisfaction is a result of various psychological responses: cognitive, behavioral
and affective. Job satisfaction is considered by academics in the field to be consisted of two
main factors, external and internal or put in the perspective of Herzberg’s contingency theory as
hygiene and motivational factors. The first one being related with factors such as pay,
relationship with colleagues and working condition, while the second one is usually linked with
personal achievements. (Hackman and Oldham 1976)
Generally there is no widely accepted opinion about whether job satisfaction necessary leads
to higher work performance. However, research has shown that the relation between job
performance and job satisfaction is moderate Judge(2001). In general the correlation is stronger
in more complex jobs than in those with lower levels of complexity. Anyway, there has been a
much stronger correlation found between employee satisfaction and turnover and absenteeism.
(Cohen 2007) .
As job turnover and absenteeism is in question this can affect the company’s budget. Usually
there are costs associated with hiring new workers and training them especially in highly
specialized fields of work. (Schlesinger and Heskett 1991). In addition in highly the more
specialized sectors of the economy turnover and absenteeism might lead to worsening the
quality of the services as noted in the case of the health sector in the USA.(Williams and Pots
2010) What is more , the ambiguity related with the link between job satisfaction and
commitment, retention, absenteeism and performance needs to be addressed in further
research in order for a greater clarity to be achieved. In addition, there hasn’t been any
substantial researches done in Bulgaria concerning these issues. And while, national culture
shouldn’t have significant effect on employee satisfaction it would be of benefit for analysts
within the country and abroad.
Therefore in the current paper the next questions are to be examined.

-How does employee satisfaction affect job performance and is there a difference between
the satisfaction and the factors enumerated above within employees with jobs of different type
of complexity?
- Is there a connection between employee satisfaction and absenteeism, employee turnover
and job commitment?
Literature review
Job satisfaction and its relation to job commitment
In a recent study Abu-Shamaa (2015), have found a relatively significant correlation between
job commitment and job satisfaction. What is more, more in their study is also found that there is
a smaller correlation also between job engagement and job satisfaction. Which proves the
statement made by similar researches in various settings and organizations (Field and
Buitentash 2011), (Abujader and Katsioloudes 2015).(Velickovic 2014) However, job
engagement is not always directly linked with the research question of job performance but
there can be a link drawn between job commitment and absenteeism and retention rates.
Job satisfaction and its relation to job performance
As mentioned earlier the relationship between performance and satisfaction are highly
debated. While some researchers see a positive link between performance, satisfaction and
commitment (Newman and Roth 2006), most of the them admitting to the existence of visible
correlation between job commitment and job satisfaction, claim there is a much lesser
correlation being found between productivity and satisfaction(Schmidt, Harter 2002),(Alf,
Bassem 2003). Despite this , other similar researches claim to have found a weaker correlation,
Thorese and Bonno (2001) oppose this view with findings of on average stronger correlation
between productivity and satisfaction in a meta-analysis research. What is more, in their
research Thoresen and Bonno have found that the relation between job satisfaction and job
performance rises with the rise of the complexity of the operations performed by the employees.
Some of the highest correlations were actually observed among scientists and engineers.
Anyway much lower correlation was observed among other highly complex professions such as
clerics and nurses. Therefore the topic of job performance and job satisfaction remains
controversial.
Job satisfaction relating to absenteeism and turnover
As far as the relationship between job satisfaction and absenteeism are concerned.
Researches generally have found less of a moderate relationship than the one between
satisfaction and performance, (Wegge and Schmidt 2010)(Roth and Newman 2006).
Absenteeism levels seem to be affected by satisfaction. However, the relation between
absenteeism and satisfaction can be influenced by other various social-contextual factors.
Drawing on this consideration (Wegge, Schmidt and Diestel 2014) have conducted a research

have researched the connection between satisfaction and absenteeism that accounts for both
foci of job satisfaction and the social context. In their, meta-analysis they have discovered that
while indeed there exist a correlation between satisfaction and absenteeism other social-
conditioning factors might be in play influencing the behavior of the employees. Therefore a
direct link between satisfaction and absenteeism doesn’t always exist.
Researches considering the relation between turnover and satisfaction tend to agree that
there is strong link between the two. There can be various of ways in which employees might be
dissatisfied with their job. Some researches are oriented towards the dissatisfaction from the
content of the job (Saari and Judge 2004),(Goldberg and Waldman 2000) . While other take into
account contextual factors that influence the job satisfaction, which in itself lead to turnover.
One of the main one being bullying in all its varieties. It can negatively effect both absenteeism
and turnover. (Killoren 2014)
Job commitment and job satisfaction
All in all, while generally there is a consensus among researchers about the link between job
commitment and job satisfaction. In a recent study Abu-Shamaa (2015), have found a relatively
significant correlation between job commitment and job satisfaction. In addition Abu-Shamaa
(2015), have found a relatively significant correlation between job commitment and job
satisfaction. What is more, more in their study is also found that there is a smaller correlation
also between job engagement and job satisfaction. Which proves the statement made by similar
researches in various settings and organizations (Field and Buitentash 2011), (Abujader and
Katsioloudes 2015).(Velickovic 2014) Most of the researches on that topic were done in
different environments both in terms nation (Serbia, South Africa and Jordan) and samplewise(
123 by Field and Buitentash(2011) and more than 1030 by Velickovic), so we can expect very
small margin of error. Things seem to be different in relation to the correlation between job
performance and satisfaction. Researchers there seem to lack consensus, some of them claim
a moderate relationship while others claim that the relationship is very weak. What is more, as
later mentioned in the methodology section there is no single objective way to measure job
performance which might be the cause of the inconclusiveness of the results. However, job
engagement is not always directly linked with the research question of job performance but
there can be a link drawn between job commitment and absenteeism and retention rates.
Job satisfaction and job complexity
Anyway, an interesting observation was being made by Thoresen and Bonno (2001), the job
performance seem to be rising with the level of complexity. As others haven’t addressed this in
their works, this phenomenon would need to be further researched in order for solid conclusions
to be drawn. As far as, satisfaction relates to turnover, one part of the researchers examine the
external factors of job satisfaction while the others only the internal ones. However, none of
them has examined this phenomenon as a factor of both internal and external, which can give a
broader understanding of the problem. In regards to the link job satisfaction and absenteeism,
the researchers although providing steady information about the statistical operation conducted,
haven’t mentioned how big their sample was. This can be an issue as a broader sample usually
can give more well grounded results.

Research Methodology
The current research uses both quantitative and qualitative primary data.
In order to collect quantitative primary data for the job satisfaction among the employees The
Gallup International workplace audit was used. That method was borrowed by a research
conducted by Harter and Schmidt (2002). This audit is consisted of 12 questions that address
both the overall satisfaction and the employee’s perception of the workplace. The GWA’s 12
provides us with quantitative data that is easy to further statistically analyses, as it uses Likert
scale of 1 to 5, with 1 being extremely dissatisfied an 5 being extremely satisfied.
Since, a part of the current research is to examine whether job complexity affect the levels of
satisfaction. In the current survey the employees are split in 3 groups: employee, engineer and
manager. Employees are considered, those who generally perform physical labor or operate the
machines. Engineers’ tasks consist of taking care of the machines and the software of the firm.
There are also some managers.. The employees(workers) would be considered employees with
low job complexity, the engineers would considered employees with medium to high job
complexity, and the managers would be considered employees with high job complexity.
For the purpose of measuring the levels of job commitment in the organization a questionnaire
that I have borrowed from Abu-Shamma (2015) which was borrowed on beforehand from Lau
(2012).That way primary qualitative data was obtained. The survey consists of 7 questions
each of them targeting the employee’s emotions and perception towards the organization.
Both these questions as well as the GWA’s 12 used Likert scale of 1 to 5. For the purposes of
easing the correlation analysis, the same values were assigned to the current 7 questions as
they were to the GWA’s 12.
The levels of absenteeism, turnover and performance are measured by the reports that I was
supplied with by the company, thus collecting secondary quantitative data. This method is the
middle way taken between two of the most common methods used in the academic field so far.
The first one used by Harter and Schmidt (2002) relies on calculating the revenues and dividing
them by the number of works in order to measure performance and the other one used by
Crossman and Bassem (2003) concentrates on performance self-evaluation by each of the
workers surveyed. The first method might inflate or deflate the objective performance as
revenues are influenced by a majority of factors apart from employee efficiency such as: the
general economic situation, successful or not marketing campaigns, the position of the company
as market leader or a monopolist ect. The other method would have also been problematic as,
the employees might on the first place be influenced by self-serving bias and thus overestimate
their professional performance . What is more, the employees might be as well prone to avoid
admitting any underperformance as they fear that potential results of underperformance might
lead to mass layoffs. Therefore, performance reports were handed by the managers in order for
performance to be examined, thus avoiding any possibilities of under or overstatement of
performance. The report that I was supplied with during this research consisted of the total
number of mistakes that occurred in the course of work over the past year and a half, as this is
the only way “XYZ Company” measures employees performance. For the purpose of
measuring absenteeism and turnover, the company supplied me with the total number of

absences and the number of employees that left the company willingly over the course of the
last year and half. Thus we will be provided with the actual numbers of absences and turnover.
The same thing was done in the research conducted by Harter and Schmidt (2002)
Finally, primary qualitative data was gathered through the use of focus groups. The first set of
questions used were borrowed from a research conducted by Jurgen and Schmidt (2014).
These question aim at additionally examining the levels of employee satisfaction. The purpose
is to check if there is any discrepancy between the quantitative and qualitative research also an
open conversations lacks the rigidness of a survey do that way additional observations and
opinions can be shared. The questions used consist of question addressing the factors of
external satisfaction such as, working conditions, managers colleagues ect. And questions
addressing the internal satisfaction: such as job content and growth opportunities. The focus
groups were homogenous, consisted of only engineers, regular employees and managers so
that the results can be more easily related to the results of the survey.
Population and sample:
The population examine are the employees in “XYZ company” in the city of Plovdiv. Overall the
population consists of over 300 employees currently employed in the company. The sample
consists of 14 employees, 11 engineers and 3 managers. These numbers roughly represent 10
percent of each of the categories of employees. There were 5 people interviewed all together, 2
engineers, 2 employees and 1 manager.
Data gathering method:
For the quantitative research paper leaflets were given to the employees to fill out paper
leaflets. The reason for using this rather classical approach rather than sending the
questionnaire online and using any software that automatically sums up the answers is that
most of the low level employees are not used to using digital technology and many of them
would either be very skeptical towards filling out an online survey or they wouldn’t be able to do
it at all as they don’t use email. Another issue is that, the company could not disclose the private
emails of the employees as the company doesn’t have its own professional email network. In
the process of gathering the qualitative data, three separate focus groups were gathered on a
voluntary basis and interviewed separately during the lunch break. There is no way to know if
the people interviewed in the focus groups were all different people from the ones in the survey.
Thus in fact the number of people sampled might be much higher. During the interviews, while
the engineers and the managers were willing to supply additional information and comments
however the employees found it hard to grasp the questions fully and express a sufficient
answer.
Issues of validity and reliability:

One of the main issues concerned prior to conducting the survey was that a great part of the
employees might not be objective due to the fact that they might be concerned with their future
employmentn. Despite this, since participating in the survey was voluntary there is a much
higher chance on people who are generally dissatisfied to have been more motivated in taking
part as this could be seen as an opportunity for them to voice their opinion. Highly satisfied
workers on the other side, would not be as motivated to express their high levels of satisfaction
since negative affectivity is known to be a powerful motivator. The sample is also generally not
particularly large consisting only of roughly 10% of the total population.
Ethical issues:
One of the main ethical issues concerning this project was confidentiality. Many of the
employees were concerned with expressing negative opinion or dissatisfaction with the
company as this could threaten their position. The manager however, agreed for us to keep full
confidentiality for all the workers apart of few from the managerial staff that apparently were
expressing certain dissatisfaction and were having a professional conflict. According to the
manager he needed this information in order to gain a better understanding of their position.
Anyway, the survey was kept anonymous although all the results were handed to the manager.
Results and data analysis
1.Relationship between job satisfaction and job performance
There was a correlation found between higher job satisfaction and improved job performance. In
order to measure productivity the company aided the current research by stating its measure of
mistakes altogether. XYZ company measures its performance by collecting the numbers of
pages printed wrongfully or mistakenly. Based on the data provided by the company on average
only 0.5% of the daily production can be considered defunct. This can be considered as a very
good performance for level of satisfaction little lower than 2.5 in total.
The questions with the lowest score taken from the job commitment section, and an average
of 1.5. For both questions it can be said that they to smaller or larger extent relate also to the
way the employees view themselves as a part of the organization. Both these question point to
a low willingness to exert effort that can be seen are related to the satisfaction.
The current findings neither necessarily contradicts the findings of (Newman and Roth 2006)
which claims that there is a visible link between the both nor does it support the findings of
(Schmidt, Harter 2002),(Alf, Bassem 2003) who claim a weak correlation. The researches of
these authors has taken place among Bank employees and in the case of Schmidt and
Harter(2002), among manufacturing companies. In both cases as well as the current case the
employees face highly framed work with little or no innovatively or additional effort necessary in
order for performance to be enhanced. However, in the case of the service industry satisfaction

of the employees had proven to have an effect on the customer loyalty and willingness to
buy.(Griffit 2001), (Yeung and Cheng 2004) Salesperson’s work is not as scheduled as that of a
factory worker, therefore the output of the employee would be strongly linked with his effort. To
sum up, the current research coincides to a certain extent with other researchers in field,
however the effect that job satisfaction has on employee performance depends on the nature of
the job.
1.1 Job complexity and its effects on job satisfaction
As mentioned in the methodology those surveyed were divided in 3 groups in relation to their
job complexity
1.1.1 Effects of job complexity on employee(regular workers) satisfaction
The average is being 1.5 for employees(workers) which is less than the total average(1.7). the
frequency diagram(fig1) it can be seen that the most common answer for employees is 1
followed by 2, indicating lower levels of satisfaction.
Fig1
Satisfaction among employees

1.1.2 Effects of job complexity on engineers’ satisfaction
The average of the satisfaction for engineers was found to be 2.5 which is above the total
average. In the case of both of the engineers and the employees the standard deviation is
around 0.9, taking into account that in the sample, this can be considered as generally evenly
distributed data. In figure 2 above we can see that engineers’ satisfaction peaks at two and
keeps stable at the numbers indicating higher satisfaction.
Figure 2
1.1.3 Effects of job complexity on manager’s satisfaction
The average of the satisfaction amongst managers was found to be 2.4,since the sample was
very small standard deviation is not to be considered. The frequency diagram(figure 3) is
skewed to the right with lower levels of satisfaction(1 and 2 being prevalent).
Fig 3
1.1.4 Comparison
Levels of satisfaction among engineers
Satisfaction among managers

It can be seen that in the case of employees(fig1) with less complex tasks the most common
answer is 1 followed numerically by each next number respectively, thus demonstrating the
general dissatisfaction compared to the case of the engineers(fig2) were the most common
answer is 2 indicating much higher satisfaction. The levels of satisfaction of the managers (fig3)
though is not that clear, both answers with 1 and 2 are very common. All in all, the highest
average is that of the engineers who have medium to job complexity followed by the managers
who have even higher job complexity. What is more, based on the frequency diagrams again
most satisfied seem to be the engineers followed by the managers.
Although, it was concluded through the usage of averages that manager have a medium level
of satisfaction in should be noted that in the case of the managers the standard deviation is
quite big, taking into an account that the sample is of only 3 managers, it can be concluded that
a bigger sample is needed in order for this particular case. Anyway, the current findings suggest
that indeed satisfaction rises with job complexity, as researchers (Thoresen and Bonno, 2001)
suggest.
2.Job satisfaction and job commitment
Job satisfaction was found to raise job commitment.
In order to examine these correlation the average of each of the sets of data derived through
the quantitative survey were split between the question concerning job commitment and job
satisfaction.
The R squared found in the regression is very low , below 0.1. However, such low values are
acceptable in regressions that feature human behavior and this doesn’t mean definitely that
there is a lack a of correlation. The P value found however is much below 0.01 which means
that the data is statistically significant enough to be taken in consideration.
Commitment= 1.87+0.02Satisfaction. (see Appendix 2)
Drawing on the regression the current results to a great extent coincide with the general
scientific consensus, (Field and Buitentash(2011) , (Velickovic,2014). There is an observable
correlation between commitment and satisfaction. In the regression analysis one issue was
faced commitment rises with 0.02 with every next input of satisfaction. This is not particularly
high correlation however, the regression also proves that there exist a correlation.
2.1 Job Satisfaction and its effect on absenteeism
Higher levels of job satisfaction has been found to reduce levels of absenteeism. The average
satisfaction for all surveyed was found to be 2.3 which is little bellow of what would be an
absolute average(2.5). The standard deviation is very low signifying an evenly distributed data.
Therefore, we can say that employees are decently satisfied.
The company provided information about the absenteeism levels. Absences are less than 0.01
percent of the total working hours. It can be said that in the case of XYZ company the relatively
medium levels of satisfaction hasn’t had much effect of absenteeism rates.
The current findings of an existing correlation between absenteeism and satisfaction to an
extent disprove the findings of moderately strong correlation between absenteeism and
satisfaction developed by some scientists. (Wegge and Schmidt 2010)(Roth and Newman
2006). However the current results in fact endorse the claims made by Wegge, Schmidt and
Diestel (2014) that absenteeism can be influenced a broad specter of social-conditional factors.

As they claim in their research national or corporate culture might be a much stronger factor
influencing absenteeism. Which should be a topic to be further examined.
2.2 Job satisfaction and its effect on turnover
Satisfaction was found to reduce turnover. As examined earlier in the paper the average of the
total satisfaction is 2.1 which is less than the potential average. While the levels of absenteeism
seemed to be insignificant, the same can not be claimed about the levels of turnover in the
company. Based on the information granted over the last year 10% of the staff has been
replaced, after they quitted voluntarily.
During the qualitative research one of the questions addressing job satisfaction was whether the
individual would shift his current position with another one in the same company if the payments
is kept the same. While the managers and the engineers were firm in their decision that they will
like to remain in their positions and would like to keep doing their activity. However, the
employees were more than willing to switch their position. Therefore we can see that lower level
employees have a lower degree of internal satisfaction. What is more, 4 out of the 5 employees
interviewed said that they will leave their current position if there are problems with their
payment. Therefore this can be interpreted as that employees would be willing to change if they
are externally unsatisfied which adds up to the correlation found in the statistical analysis
The findings concerning turnover however strongly coincide with the findings of researchers
such as (Saari and Judge 2004),(Goldberg and Waldman 2000).
Conclusions
Overall, most of the findings in the current research coincided with those in the literature.
There are few exceptions that require more scrutiny in further potential researches. For example
manager’s satisfaction was lower than that of engineers, although they can be considered
having higher job complexity. What is more, performance was found to be influenced by job
performance but this result have to be compared to results in other industries as there can be
potential differences.
Limitations
The sample used for this research was very limited, there were only 28 employees surveyed
and 5 interviewed. What is more there was only one company that participated in the research
which gives a very limited perspective. The company used for the survey was a manufacturing
company and this didn’t give the opportunity to examine companies in other sectors such as
the service and sales sectors which would give a better idea of how satisfaction affects
productivity. Of course there were also limitations of financial and timely nature a potential
thorough study would not only need more participants but also funding and time.

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Appendix 1 (interviews summary)
Cristi(engeneer)
1. Yes I am satisfied as whole however, there are small issues like short lunch breaks, the
work is very intensive and I get sore eyes from the monitor
2. Yes (no additional comments)
3. Yes as long as you really want to work
4. Yes(no additional comments)
7. I do feel that the job is a way to manifest myself , it is very intellectually stimulating and
demanding.
8. If no one understands me and no one gives his fare share. If no one values your efforts
9. No I am a responsible person
10. Only if the job i am offered is my hobby, payment is not that important satisfaction is
more important, good management is crucial
Hristo (engeneer)
2. Some organisational issues but it takes time, client work is more important
3. Medium, some things could be done better
7. Genrally yes, organisational issues
8. Lack of proper payment
9. No although I thought about it, I am not such of person
10. I have considered it, boredom is a factor
Peter(manager)
1. So-so , there are some organisationa issues

7. Yes for most of the things
8. I like my job but lower payments can be an issue
9. No (no additional comments)
10. No (no additional comments)
Dimitar(worker)
Yes (no additional comments)

4.
8. No idea , Maybe
9. No never
10. HMM, never thought about it but maybe yes
Lyubo(worker)
1. Yes (additional comments)
2. Organisational issues
3. Yes
4. Yes
5. Yes
6. Yes I am very satisfied
7. Yes
8. In case of financial issues yes
9. No didn't even think about it
Maybe depending on the job
Appendix 2
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.016409
R Square 0.000269
Adjusted R Square-0.00488
Standard Error0.982076
Observations 196
ANOVA
df SS MS F Significance F
Regression 1 0.050393 0.050393 0.05225 0.819435
Residual 194 187.1078 0.964473
Total 195 187.1582
CoefficientsStandard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%Upper 95.0%
Intercept 1.871817 0.153635 12.18352 9.96E-26 1.568808 2.174827 1.568808 2.174827
satisfaction 0.016462 0.072017 0.228582 0.819435 -0.12558 0.158499 -0.12558 0.158499

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