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Article Excerpt
Results of hypotheses testing using the Leader-Member Exchange (LMX) scale and the Minnesota Satisfaction Questionnaire (MSQ) indicate that 7 out of 12 LMX measures (explaining 98% of the variance) and 6 out of 20 MSQ measures (explaining 71%-79% of the variance) were positive and significant. Satisfaction with supervision had a significant impact on job satisfaction, explaining 80.7% of the variance. In the near future, employee job satisfaction is predicted to be lower than satisfaction with supervision, due to absence of strong intrinsic motivation. Testing hypotheses on these scales also helped predict future employee turnover in the banking industry.
Keywords: leader-member exchange; satisfaction with supervision; job satisfaction; leadership; turnover
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It has been reported that in the United States 77% of employees are unhappy with their current jobs (Lussier & Achua, 2004). Job satisfaction is the outcome of two types of factors: "intrinsic" and "extrinsic" (Herzberg, 1968). Supervisory leadership is one of the extrinsic factors that have a significant impact on employee work attitudes. A leader's positive attitude toward members improves employee attitudes toward work, their leader, and the organization. In turn, members develop intrinsic motivation. A good match between intrinsic and extrinsic motivation results in job satisfaction. The quality of the leader-member exchange (LMX; Liden & Maslyn, 1998; Morrow, Suzuki, Crum, Ruben, & Pautsch, 2005) in this process is critical for organizational success. A poor relationship between leaders and members can cause employees to lose commitment to or satisfaction with their jobs. Turnover experts, both academic and practitioner, have asserted that supervision plays a meaningful role in employee turnover decisions (Maertz & Griffeth, 2004; Morrow et al., 2005).
It is hypothesized that the relationship formed between management and employees and particularly the quality of the LMX relationship have a direct effect on employees' job satisfaction. The aim of this study is to demonstrate a stronger bond between LMX and employee job satisfaction. This study also tries to predict employee turnover based on bad-quality LMX and job dissatisfaction in the banking industry. This study identifies the most significant LMX factors that have a strong impact on overall satisfaction with supervision. This research also identifies predicted level of employee turnover due to low-quality LMX. The same method is used to test the level of job satisfaction. This study tests a model to identify significant intrinsic and extrinsic motivation factors (Herzberg, 1968) that have a strong impact on job satisfaction. Low intrinsic and extrinsic motivation, bad-quality LMX (Morrow at al., 2005), and other motivational forces (Maertz & Campion, 2004) contribute to intention to quit (employee turnover). This research also predicts employee turnover based on job dissatisfaction.
Higher job satisfaction is associated with satisfaction with supervision, but it is possible that high-quality LMX may not be powerful enough to make employees satisfied with their jobs. Even if the quality of LMX is high, other intrinsic and extrinsic factors may contribute to overall job dissatisfaction. Analysis of LMX and job satisfaction in the banking industry suggests that satisfaction with supervision is positively associated with job satisfaction and has a significant impact on it, whereas most intrinsic and extrinsic motivation factors do not contribute to job satisfaction.
In the next section, there is a review of literature on LMX, job satisfaction, and employee turnover that supports the hypotheses that LMX and the Minnesota Satisfaction Questionnaire (MSQ) are applicable to the banking industry. It is also hypothesized that satisfaction with supervision has a significant impact on job satisfaction. In addition, it is hypothesized that low-quality LMX positions subordinates the out-group. Leaders disregard members by any means and/or members disregard leaders too. The out-group position of an employee predicts intention to quit. The following section describes the method used to test the appropriate hypothesized models.
Literature Review
LMX and Satisfaction With Supervision
Over the past decade, LMX has become a widely researched and debated topic (Harris, Harris, & Eplion, 2007; Liang, Ling, & Hsieh, 2007; Greguras & Ford, 2006; Elicker, Levy, & Hall, 2006). The quality of LMX in the workplace can often affect the entire structure and success of the organization. Scandura, Graen, and Novak (1986) have developed LMX theory. This theory explains the quality of each relationship and its impact on organizational outcomes over time (Lussier & Achua, 2004). LMX theory emphasizes the quality of the relationships formed between leaders and followers, rather than just examining the behaviors and traits of the leaders or followers. LMX has been defined as a system of components and their relationships, involving both members of a dyad in interdependent patterns of behavior, sharing mutual outcome instrumentalities, and producing conceptions of environment, cause maps, and values. According to Graen and Uhl-Bien (1995), "Leadership is not only built on the leaders' and subordinates' actions, but on the relationships formed" as well.
In 1986, Dienesch and Liden proposed that LMX relationships may develop in many ways (as cited in Liden & Maslyn, 1998). These relationships are based on three varying amounts of "currencies of exchange." The three currencies of exchange include task-related behaviors (labeled contribution), loyalty to each other (labeled loyalty), and simply liking one another (labeled affect). An exchange might be based on one, two, or all three of these dimensions (Dienesch & Liden, 1986).
Contribution plays a major role in LMX. It refers to the perception of the amount, direction, and quality of work-oriented activity each member puts forth toward the mutual goals of the dyad. Loyalty occurs when a good-quality LMX relationship is reciprocated by both leader and member. Liden and Maslyn (1998) state that loyalty has been discussed in previous research as instrumental in determining the types of tasks that are entrusted to members. Leaders are more likely to ask loyal members to take on tasks that require independent judgment or responsibility. The third currency, mutual liking, or affect, is considered to be extremely important as the relationship develops (Dienesch & Liden, 1986). This dimension of LMX can be hindered or developed. Affect occurs if the leader and subordinate enjoy being around each other and enjoy being in each other's company, developing commitment and friendship through work interactions.
Liden and Maslyn (1998) discussed in more detail the three currencies listed above and added a fourth currency, "professional respect." LMX theory suggests that the quality of a leader-member dyadic relationship predicts more positive organizational outcomes than do the traits or behaviors of supervisors (Burns & Otte, 1999). Based on the quality of the formed relationship between the leader and follower, the subordinate is placed within an "in-group" or "out-group" (Dansereau, Graen, & Haga, 1975; Truckenbrodt, 2000). Literature classifies employees as in-group and out-group based on employee self-reports and supervisor information.
In-group subordinates are those employees who have created high-quality relationships with their supervisors, characterized by mutual trust, respect, liking, and reciprocal influence (Liden & Maslyn, 1998). Out-group subordinates are those employees who have low-quality or bad relationships (Morrow et al., 2005) with their immediate supervisors, and in contrast to in-group subordinates, they comply with only the bare minimum requirements when it comes to the employment contract. Their relationships with immediate supervisors are characterized by "limited reciprocal trust and support, and few rewards" (Truckenbrodt, 2000).
Member Job Satisfaction
The Hawthorn studies were concerned with improvement of worker productivity through employee job satisfaction. Contemporary companies are actively benchmarking the Southwest Airlines strategy whereby employee job satisfaction is first and customer satisfaction second, which assumes that satisfied employees are more willing to satisfy customers better. Research (Davis & Gardner, 2004; Herzberg, 1968; Hunter, 2007; Jones, 2006) consistently links the job satisfaction concept with the success of business operations and performance. People who are happy with their jobs exhibit superior job performance (Graen, Novak, & Sommerkamp, 1982; Jones, 2006). Pool (1997) defines job satisfaction as an attitude that individuals maintain about their jobs, and this attitude is developed from their perceptions of their jobs. Understanding the complexities of different variables that have an impact on job satisfaction is a main goal of research and practice. Achieving this goal may enable managers to learn how employees form the attitudes that affect their job satisfaction. Weiss, Dawis, England, and Lofquist (1967) developed a five-item instrument called the Minnesota Satisfaction Questionnaire, or MSQ, that suggested five essential dimensions for measuring job satisfaction: the job itself, pay, promotion opportunities, supervision, and coworkers.
The two different types of measures of the 20-item MSQ are the satisfaction scales, one intrinsic and one extrinsic (Herzberg, 1968). The intrinsic satisfaction scale contains 12 different questions that deal with achievement, ability utilization, doing things for others on the job, and type of work. Intrinsic measures are those belonging to a work-related objective that is essential but not dependent on external processes. The extrinsic satisfaction scale consists of 8 items that deal with the way company policies are handled, the quality of the working conditions, accomplishment or praise for a job done, and others.
Employee Turnover
In 2006, employee turnover in the finance and insurance sector was among the lowest in the entire U.S. economy: 15.5% (NOBSCOT Corporation, 2006). Even though the turnover rate in the banking industry is high among the tellers, it is relatively low among the full-time employees. Job dissatisfaction and low-quality LMX are not the only reasons employees make decisions to quit. They have many other good and bad reasons relevant to both voluntary and involuntary turnover (Maertz & Campion, 2004). In some cases, voluntary turnover is due to reasons that, in other cases, would result in involuntary turnover. That is, instead of firing employees, companies create intolerable conditions that lead to voluntary turnover. Those conditions include low extrinsic motivation and low-quality LMX. If there are perfect hygiene factors in the organization (Herzberg, 1968)--extrinsic work motivation, high intrinsic motivation, good-quality LMX, psychological contact, commitment to people or groups, behavioral commitment, and moral or ethical values about staying (Maertz & Campion, 2004)--then employee turnover will be low; the reverse is true if these factors are not present.
According to Wilhelm, Herd, and Steiner (1993), the number one reason people quit is that they are treated poorly by their bosses. Those who remain in their jobs, working for poor bosses, have lower job and life satisfaction, lower commitment, higher conflict between work and family, and psychological distress (Tepper, 2000). This statement in itself suggests the need for more research and study in the realm of LMX and employee job satisfaction.
Graen, Liden, and Hoel (1982) proved that good-quality LMX is negatively related to turnover. Vecchio and Gobdel (1984) indicated that good-quality LMX is negatively related to intended turnover. According to Gerstner and Day (1997), the quality of LMX is negatively related to intended turnover and to actual turnover, according to Griffeth, Hom, and Gaertner (2000). Harris, Kacmar, and Witt (2004)...
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