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1.
International Research Journal
of Engineering and Technology (IRJET) e-ISSN: 2395-0056 Volume: 06 Issue: 11 | Nov 2019 www.irjet.net p-ISSN: 2395-0072 © 2019, IRJET | Impact Factor value: 7.34 | ISO 9001:2008 Certified Journal | Page 372 DETERMINANTS OF EMPLOYEE LOYALTY- A LITERATURE REVIEW S. Annie Priyadharshini1, Dr. J. Clement Sudhahar2 Research Scholar, Karunya School of Management, Karunya Institute of Technology & Sciences, Coimbatore -641114 Professor, Karunya School of Management, Karunya Institute of Technology & Sciences, Coimbatore -641114 ---------------------------------------------------------------------***--------------------------------------------------------------------- Abstract - Employee loyalty plays an important role in every organization. Every organizationssuccessdependsupon the loyalty of the employees because a loyal employee creates value and they are responsible for the success and growth of the organization. The present research study was studied by using secondary data. Almost 32 articles about employee loyalty were reviewed and most of the articles are related to foreign context and few Indian context. Key Words: Organization performance, Employee Retention, Job Satisfaction, Emotional Attachment 1 INTRODUCTION: Skill full and talented workers or knowledge workers are very important for organization and in the same way job satisfaction and employee expectationsarethekeyfactor for the brand image of the organization. Employee loyalty is an emotional attachment of an employee for staying in the particular organization. What are the factors contribute to employee loyalty and how organization is retaining the talented in the organization in spite of the market competitions .The present literature articles explains what are the factors influencing employee loyalty . 2. RESEARCH METHODOLOGY The research was done and the data werecollectedfromtext books, journals and articles. Almost 32 articles about employee loyalty were reviewed and most of the articles are related to foreign context and few Indian context. 3. REVIEW OF LITERATURE (Masoodul Hassan et al., 2013) The researcher aim was to study the relationship between the HR Practices such as empowerment, compensation, appraisal system along with employee satisfaction and loyalty. From the study it is noted that employee Compensation is the factor which creates job satisfaction with the employees and the factor employee empowerment plays an important role in developing employee loyalty among the workers in the organization. Maznah Wan 2010 The researcher examined the factors which influence employee motivation and employee loyalty towards the organization. 185 employees were selected randomly from a manufacturingfirminMalaysia.Thefactors namely peer corporation, working Environment, employee benefits influence employee loyalty Sandra Obilade,(1998)Examinedloyaltyandmotivationof employees after downsizing the sample size for the study was 100 Respondents (18 small businesses in Fairfield County, Connecticut). The study revealed that most of the employees have high loyalty. Certain suggestion by the researcher was that the managements should concentrate employee benefits to increase the morale. Danguole Savareikiene and Laimonas Daugirdas(2009) the main aim of the research is to identify the level of employee commitment to the organization and how motivation strategies can reinforce employee loyalty (affective, economic and normative loyalty). 89 employees from Lithuanian JointStock Company Keliaiwereresearched for this study. The affective loyalty results revealed that majority of the company employees does not clearly understand the vision of the Organization. (Aparna Varma et al., 2018) Examined the impact of job satisfaction and employee loyalty in Unilog ContentSolution Pvt.Ltd.Mysore with of 100 employees. The findings stated that there is a significant positive relationship among Job Satisfaction and Employee Loyalty. Supervisory Support, Career Development, and Job Security are the important predictors of Job Satisfaction and Employee Loyalty. Anne Martensen and Lars Gronholdt (2016), A total of approximately 1500 a large international hotel employees from Denmark, Norway and Sweden were selected for the study. The main aim focused to develop andapplya model of employee loyalty and the determinants of employee loyalty are examined to identify relevant areas of improvement The summary of the research is that in order to improve employee loyalty the organization should concentrate and give importance to certain determinants such as personal development, leadership, job contents creativity, and innovation, and also consumer orientation Kurt Matzler and Birgit Renzl 2006 The study was conducted with 131 Austrian company employees in the energy sector .The researchers say that trust in colleagues and trust in management are the most important predictors of employee satisfaction. Employee Loyalty is influenced by employee job satisfaction.
2.
International Research Journal
of Engineering and Technology (IRJET) e-ISSN: 2395-0056 Volume: 06 Issue: 11 | Nov 2019 www.irjet.net p-ISSN: 2395-0072 © 2019, IRJET | Impact Factor value: 7.34 | ISO 9001:2008 Certified Journal | Page 373 Jacob Eskildsen and Mikkel Nuèssler 2000 From the study authors concluded that if the organization wants to improve the job satisfaction and employee loyalty the organization must focus on improvement programs such as structured career programmes, bonus programmes, a pay better than similar organizations, a structured approach to leadership, a culture of personal growth anddevelopment in order to enhance the learning capability of the organization. Lu-Ming Tseng, Jui-Yun Wu, 2017 The research was conducted in four financial holding companies in Taiwan and about 520 questionnaires were issued to the financial professionals, 412 respondents returned the survey. The objective is to find the relationship between the two factors such as ethical leadership and employee loyalty. The study reveals ethical leadership is the foundational factors that enable the financial companies to sustain highpsychological contract fulfilment, Organisational identification and employee loyalty. Maha Ibrahim, Saoud Al Falasi, (2014) The researchers conducted the research to find the overall relationship Between “Employee Loyalty” and “Employee Engagement”; and to examine the Relationship between the two dimensions of “Employee Loyalty” namely, “Affective Commitment”(AC)andContinuanceCommitment”(CC)with “Employee Engagement.” Fifty government employeeswere randomly selected and surveyed. Participants wereselected from two Emirates, in the UAEnamely:DubaiandAbuDhabi. Finally the author concluded that organizations and managers need to understand the significant role of loyalty and its impact on employees’ engagement. The higher the level of loyalty, the better chances for employeeengagement which results in increased teamwork, better performance and reduced turnover. Riziki, Agnes Lufungula 2018 The main objective of this study is to analyze the determinant factors of employees ‘loyalty in Cosmas Garage.. Findings show that employee relations, advancement opportunities, work quality, salary, prospect of evolution and working condition affect the loyalty in organizations. The result from thisstudy showed that HR loyalty within the company is determined 80,6% by the satisfaction of employees at work compensation, prospect of evolution,human relations,social benefits, working conditions and training Kirima Lucy Karimi 2019 From the study the researched found that Organization culture of merged firms affects the employees’ loyalty. Employees experienced stress and pressure in interactions as a result of thecombinationoftwo distinctive organizational cultures.Effectivecommunication informing employees about career possibilities gave them strength, confidence and commitment to the new consolidation is a very important aspect the resultsrevealed that if the management involved the employees in the merger process the process would besuccessful andtheway the information about merger is communicated to the employees is very important. Altanchimeg Zanabazar et al., 2018 The researcheraimed to determine how employee satisfaction, retention, loyalty influence the organizational performance of employees working in Wool& Cashmere garment production company in Mongolia. The author stated that satisfiedemployeestend to be loyal and committed to the organization and it has a positive influence towards organisational performance. The results revealed that the increase of job satisfaction their intention continuing their work life with the same organization increases Alexander Preko and John Adietey (2013) analyzed the relationship between employeeloyaltyandcommitment and its impact on the performance of salesexecutivesatbank‟sit also investigates whether sales executives are loyal and enjoy benefits like rest if the employees or not in an organization. The result showed a significant positive correlation between human relation, job content,leadership style, personal growth, innovative and their influence on employee loyalty”. (Shweta Rajput et al., 2016) The impact of job satisfaction on employee loyalty wasresearched with100academicians using questionnaire survey .the researchersfoundthatthere is a significant impact of job satisfaction on employeeloyalty among academicians. And the factorsofjobsatisfactionfrom this research are career growth, motivation, work place environment and self-satisfaction. And factors of employee loyalty are belongingness, job involvement and organizational commitment. (Onsardietal.,2017)The direct influence of compensation, empowerment, and job satisfaction to employee loyaltywas analysed with 149 people from Muhammadiyah University of Bengkulu Indonesia. Compensation, empowerment and job satisfaction has a direct positive effect on employee loyalty. This means higher the employee job satisfaction,the employee loyalty will increase. (Zainuddin Zakaria et.al., 2019) The factors such as training, rewards and benefits and working condition was taken as the determinants toward employeeloyalty and to know which factors have the strongest and dominant effect on employee loyalty wasthemainaim.Thecompanyis located in Johor, Malaysia and data for this study was collected through questionnaires from 260 employees. The organization must give importance to all the factors and. higher level of rewards and benefits, good working condition, training programs byorganizationswill createjob satisfaction and will able to lead a higher level of employee loyalty. Casie Angela Thanos 2015 The objective of this researchis to identify the effect of job satisfaction and employee motivation on employee loyalty. Job Satisfaction has a
3.
International Research Journal
of Engineering and Technology (IRJET) e-ISSN: 2395-0056 Volume: 06 Issue: 11 | Nov 2019 www.irjet.net p-ISSN: 2395-0072 © 2019, IRJET | Impact Factor value: 7.34 | ISO 9001:2008 Certified Journal | Page 374 positive relationship with Employee Loyalty job Satisfaction determinants are Compensation, Extent to Which They like Their Job and How Content Are They with Their Job. The researcher found that the employeesarenotsatisfied but are still loyal to the company. The dissatisfaction is due to low compensation and disappointment towards theirmanagers. Employee Motivation has a positive relationship with Employee loyalty. Kiruthiga and Magesh 2015 studied the factors of job satisfaction that are strongly related with employee loyalty from 500 hotel employee. the researchers found key factors to job satisfaction (working environment, human resource policies, training anddevelopment,careerbuildingandwork relationships) and employee loyalty (career development, job security and commitment).the researcher stated that work environment, working relationship and human resource policies have a greater impact on employee loyalty. (Iqbal S, et al., 2017) Suggested that any organizations want to succeed in the market place it has to maintain desired levels of benefits, attractive salary packages, maintain a good organizational culture, and satisfy their employees as much as they can. This will increase the employee loyalty and higher retention rates. (Shahram Nasiri et al., 2015) The survey was done with 280 employees of heavy equipment dealerships and 280 customers who had referred to these dealers .The objective of the research is to find the Role of employee loyalty in the success of commercial organizations in the field of heavy equipment dealerships. Quality of the services offeredtothe employees has impact on employee loyalty. Lockwood, 2007 The author highlightedanarticle“Astudy on organizational respect andburnoutinthehumanservices profession. The article highlights that an organization that treats its employees with dignity and respect creates a workplace culture that fosters loyalty and engagement. (Uthyasuriyan et al., 2017) About 100 employees working in Oil and Natural Gas Industry Malaysia were surveyed using Questionnaire to find out the relationship between employee satisfaction and employee loyalty. From the study it was concluded that compensation and benefit is an important determinant that influences loyalty in an organization. (Choi Sang Long et al., 2012) The author pointed out that the major reasons for turnover both at an individual and organizational level, are managerial support, job content, and work-related stress; each impacts the decision to leave the organization. Hence increasing the level of managerial support and also providing advancement opportunities, creating a challenging, yet less stressful work environment to the employees will help to decrease employees’ thoughts of leaving the organization. Most importantly to instill loyaltyandfor employeestosharetheir intellectual capital, organizations must find ways to engage them. (Chen, Ying-Chang etal., 2010) the researcher highlighted the wordings which say “Hiring smart is the first step to developing a loyal, motivated workforce and keeping employee turnover rate at a minimum. Meaning that their values, principles, and goals clearly match with the organizational goals and values. CONCLUSION From the research articles the authors from their studies says that there are certain factors positively associated with job satisfaction and employee loyalty. The factors are supervisor support, teamwork, and working environment, fringe benefits. Leadership style, commitment, motivation, belongingness, career development, bonding, jobsecurity, peer corporation, flexible time policies, managers treatments of employees, organizational communication Employee engagement, employee satisfaction, commitment have a positive and significant impact on loyalty. Gender, age, job level, and tenure had only limited influence on loyalty. From the articles it is concluded that “Employee loyalty cannot be taken for granted it must be frosted and cultivated”. REFERENCES 1. Masoodul Hassan, Saad Hassan, Muhammad Farooq Ahmed Khan & Asghar Iqbal (2013), Impact of HR Practices on Employee Satisfaction and Employee Loyalty: An Empirical Study Of Government Owned Public Sector Banks of Pakistan , Middle-East Journal of Scientific Research 16 (1): 01-08, 2013 ISSN 1990- 9233 2. Maznah Wan Omar, Kamaruzaman Jusoff and Harniyati Hussin (2010) Employee Motivation and its Impact on Employee Loyalty , World Applied Sciences Journal 8 (7): 871-873, 2010 ISSN 1818-4952 3. Sandra Obilade, (1998) "Redefining Loyalty: Motivational Strategies and Employee Loyalty in an Era of Downsizing", New England Journal of Entrepreneurship, Vol. 1 Issue: 1, pp.30-40, 4. Danguole Savareikiene and Laimonas Daugirdas (2009) “Forms of Expression of Employee Loyalty” Socialiniai tyrimai / Social Research. 2009. Nr. 2 (16), 86-93 (ISSN 1392-3110) 5. Dr. Aparna J Varma, Kotresh Patil, Ravishankar S Ulle, Dr. A. 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International Research Journal
of Engineering and Technology (IRJET) e-ISSN: 2395-0056 Volume: 06 Issue: 11 | Nov 2019 www.irjet.net p-ISSN: 2395-0072 © 2019, IRJET | Impact Factor value: 7.34 | ISO 9001:2008 Certified Journal | Page 375 6. Anne Martensen and LarsGrønholdt(2006). Internal Marketing: A Study of Employee Loyalty, Its Determinants and Consequences. Innovative Marketing, Volume 2, Issue 4, 2006 7. Kurt Matzler_ & BirgitRenzl (2006) “TheRelationship betweenInterpersonal Trust,EmployeeSatisfaction,and Employee Loyalty” Total Quality Management Vol.17, No. 10, 1261–1271, December 2006 8. Jacob K. Eskildsen & Mikkel L. Nuèssler (2000)“The Managerial Drivers Of Employee Satisfaction And Loyalty Total Quality Management, Vol. 11, No. 4/5&6, 2000, S581- S588 9. Lu-Ming Tseng, Jui-Yun Wu, (2017) "How can financial organizations improve employee loyalty? The effects of ethical leadership, psychological contract fulfillment and organizational identification", Leadership & Organization Development Journal, Vol. 38 Issue: 5, pp.679-698 10. Maha Ibrahim, Saoud Al Falasi, (2014) "Employee loyalty and engagement in UAE public sector", Employee Relations, Vol. 36 Issue: 5, pp.562-582, Emerald Group Publishing Limited ,10.1108/ER-07- 2013-009 11. Riziki, Agnes Lufungula (2018) “Determinant Factors Of Employees' Loyalty At Cosmas Garage In Beni-Drc ,International Education and Research Journal (IERJ),E-ISSN No : 2454-9916 , Volume : 4 , Issue : 4 , April 2018I& Research Journal 12. Kirima Lucy Karimi (2019) Effects of Business Mergers on Employee Loyalty in Selected Companies Listed at the Nairobi Securities Exchange”, Global Journal of Management and Business Research: E Marketing Volume 19 Issue 1 Version 1.0 Year 2019,Type: Double Blind Peer Reviewed International Research Journal, Publisher: Global Journals, Online ISSN: 2249-4588 & Prin“t ISSN: 0975-5853 13. Altanchimeg Zanabazar, & Sarantuya Jigjiddorj (2018)“Impact Of Employees Satisfaction In Employee Loyalty, Retention And Organizational Performance” International Journal of Management and Applied Science, ISSN: 2394-7926 Volume-4, Issue-7, Jul.-2018 14. Preko, A., &Adjetey, J. (2013) “ A Study on the Concept of Employee Loyalty and engagement on the Performance of Sales ExecutivesofCommercial Banksin Ghana International Journal Of Business Research And Management, (IJBRM), Volume (4) : Issue (2) : 2013 15. Shweta Rajput, Mayank Singhal, Shiv Kant Tiwari (2016) Job Satisfaction and Employee Loyalty: A study of Academicians. Asian J. Management. 7(2): 105-109. 16. Onsardi. Moch. Asmawi , Thamrin Abdullah(2017) “The Effect Of Compensation, Empowerment, And Job Satisfaction On Employee Loyalty” International Journal of Scientific Research and Management (IJSRM),Volume:5,Issue:12,Pages:7590-7599 17. Zakaria, Z., Mohamad, M., Noh Abd Majid, M., Ulfa Abdul Aziz, N., & Mat Rashid,K.(2019).TheMediating Effect of Job Satisfaction on Employee Loyalty: A Case Study of a Developer Company in Malaysia. KnE Social Sciences, 3(13), 1018–1029 18. Casie Angela Thanos 2015 “The Effect Of Job Satisfaction And Employee Motivation On Employee Loyalty (Case Study Of Pt Kimia Farma Apotek In Sam Ratulangi, Manado) Jurnal Berkala Ilmiah Efisiensi Volume 15 No. 04 19. Kiruthiga.V & Magesh.R (2015) “Rouse Employee Loyalty Through Job Satisfaction” AustralianJournal of Basic and Applied Sciences, 9(10) Special 2015, Pages: 273-280, ISSN:1991-8178 20. Iqbal S, Guohao L, Akhtar S (2017) Effects of Job Organizational Culture, Benefits, Salary on Job Satisfaction Ultimately Affecting Employee Retention. Review Pub Administration Manag 5: 229. doi:10.4172/2315-7844.1000229 21. Shahram Nasiri, Reza Najafbagy, Amir Ashkan Nasiripour (2015) The Impact of Employee Loyalty on the Success of Commercial Organizations: A Case Study on the Dealerships of Heavy Equipment in Iran. Journal of Human Resource Management. Vol. 3, No. 3, 2015, pp. 27-32. doi: 10.11648/j.jhrm.20150303.12. 22. Nancy R. Lockwood (2007) Leveraging Employee Engagements for Competitive Advantage: HRs Strategic Role. HR, Magazine, 52(3), 1-11. 23. Uthyasuriyan, A., Talwar, P , Oon, Y.B. & Rusli Ahmad (2017) “The RelationshipBetweenEmployee Satisfaction and Loyalty: A Cross Sectional StudyinOil and Natural Gas Industry” Journal of Cognitive Sciences and Human Development. Vol.2(2),16-25, March 2017. 24. Choi Sang Long, Musibau Akintunde Ajagbe, Khalil Md Nor & Ebi Shahrin Suleiman(2012) “The Approaches to Increase Employees’ Loyalty:AReview on Employees’ Turnover Models, Australian Journal of Basic and Applied Sciences,6(10):282-291,2012, ISSN 1991-8178 25. Chen, Ying-Chang(2010) Structural Investigation of the Relationship between Working Satisfaction and Employee Turnover” The Journal of Human Resource and Adult Learning Vol. 6, Num. 1, June 2010
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