The Effect of Job Satisfaction on Organizational Commitment: Insight Into Devaraj Agency

The focus of this study is to analyze the general behavior of insurance agents towards job satisfaction, which may build higher levels of organizational commitment. This study is done based on Herzberg’s two- factor theory and more specifically, on Motivators factor. The findings of this project will help agency manager to understand the current level of job satisfaction and organizational commitment of agents towards their agency. Besides that, suggestions also will be given based on the result of the findings.

If the satisfaction level and organizational commitment of insurance agents is low and then many suggestion will be given to solve the problem. If it is otherwise, suggestion will be to maintain or improve further the job satisfaction and organizational commitment of the agents. By this, the agency manager gets suggestions to solve job satisfaction and organizational commitment problem if any or to improve them further. Methodology Numerous of methods are to be used to identify the job satisfaction and organizational commitment of the agents. The method are as followed: Survey

A survey was done with insurance agents from Devaraj Agency.

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The purpose of this survey is to find out the current level of job satisfaction and organizational commitment of the insurance agents. The survey would had 56 questions related to job satisfaction and organizational commitment.

Interviews

An Interview has been held with agency manager and few insurance agents. The purpose of interviewing agency manager is to get information about the human resource strategy, annual turnover rate and his perception on agent’s job satisfaction and organizational commitment.

External sources

The external sources were used in this research. The external sources were Internet and printed materials. These materials were very useful in doing literature review about job satisfaction, organizational commitment and the relationship of them. Introduction Devaraj Agency is one of the oldest Indian insurance agencies in ING Company. The main role of this agency is to sell the insurance as well as investment products of ING Bhd through direct selling techniques. Up to now, 100 over people working as insurance agents in this agency.

However, there was no attempt has been taken to measure the job satisfaction and organizational commitment of the agents in this agency. Job satisfaction means ‘a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences. (Locke, 1976). According to Porter (1968), organizational Commitment is a willingness of employees to exert high levels of effort on behalf of the organization, a strong desire to remain in the organization, and an acceptance of the organization’s major goals and values.

It is important for Devaraj Agency to learn about job satisfaction and organizational commitment of its insurance agents because if agents satisfied with their job, they will have high commitment on their agency and that translate into high job performance and low absenteeism. Literature review Job satisfaction and organizational commitment receive considerable attention from industrial and organizational psychologists, management scientists, and sociologists. Three thousand studies had been done on job satisfaction alone by the time Locke prepared his study nearly 20 years ago (Locke, 1976).

The interest of analyzing job satisfaction and organizational commitment stems from the concern of the behavioral consequences that hypothesized result in job satisfaction and/or organizational commitment. Among other topics, job satisfaction and/or organizational commitment have been shown or argued to be related to productivity, attendance at work, turnover, retirement, participation, labor militancy, sympathy for unions, and psychological withdrawal from work. Job Satisfaction According to Locke (1976, p. 300), job satisfaction is ‘a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences. There are many researchers found that Herzberg’s Two-factor motivation Theory is related with employees’ job satisfaction when apply intrinsic motivators (Cesare and Sadri, 2003;Hellriegel and Slocum, 1998; Slocum and Helliegel, 2009). The intrinsic or motivator factors consist of responsibility, recognition, advancement, achievement, and work itself (Slocum and Helliegel, 2009; Furnham et al. , 2009).

Intrinsic motivator factor is one of the variables that use to find out the positive relationship with job satisfaction (Bhuian and Mengue, 2002). Shaffer et al. (2000) suggested that the satisfaction of work itself relate with job satisfaction while see job satisfactions itself as an individual enjoys on their job which is very much related on the classification of nature of work itself (Pool and Pool, 2006; Couger, 1988 cited in Thatcher, et al. , 2002). Besides this, Herzberg stated in his two factors theory that there are two categorizes of motives for the employees known as satisfiers and dissatisfiers.

He related intrinsic factors with job satisfaction and extrinsic factors with dissatisfaction (Gagne, 200; Sarmad, 2007). Organizational Commitment Organizational commitment has been defined more pragmatically by Porter (1968), who holds that it consists of a willingness of employees to exert high levels of effort on behalf of the organization, a strong desire to remain in the organization, and an acceptance of the organization’s major goals and values. Organizational commitment of the employees has been measured in several different ways and it has been related with many job related variables.

Allen & Meyer (1990) developed a measure of organizational commitment with three major components: Affective component of organizational commitment refers to employees’ emotional attachment, identification and involvement in the organization; the Continuance component refers to commitment based on the costs that employees associate with leaving the organization; and Normative commitment reflects an employee’s feeling of obligation to remain with the organization. Link between job satisfaction and organizational Commitment Job satisfaction has been associated with organizational commitment (Boles, et al. 2007; Pool and Pool, 2007; Brown and Peterson, 1993), which is broadly defined as the “psychological bond between people and organizations” (Buchanan 1974; Tett and Meyer, 1993). The study of Klaus, et al. , (2003) found that there is an effect of work challenging (intrinsic motivation) as a work nature, which can impact on affective organizational commitment. According to Steinhaus & Perry (1996) committed and satisfied employees are unlikely to indicate low performance and are normally highly productive who identify with organizational goals and organizational values (Churchill et al. , (1993).

Similarly, if employees are highly satisfied with their work, promotion chances and that derive high level of overall job satisfaction with their jobs they are more likely to be committed to the organization than if they are not satisfied. The focus on this concept was not overstated because job satisfaction and commitment are primary determinants of employee turnover, performance, and productivity (Opkara, 2004). Beside that, Balfour and Wechsler (1996) pointed out that overall organizational commitment is an appropriate and significant aspect to focus on for organizational productivity and performance.

Ayeni and Phopoola (2007) also have found that there is a strong relationship between job satisfaction and organizational commitment. According to them Job satisfaction is mostly determined how well the organization meets employees expectations. According to Cote & Heslin (2003).

Findings

The job satisfaction and organizational commitment survey has been done with the insurance agents in two weekly meetings held in ING Damansara office and ING Klang office. All insurance agents attended the meeting participated in this survey.

The fifth statement in the organizational commitment questionnaire “I really feel as if this agency’s problems are my own, 79 percent of respondent said they agree they do feel the agency’s problem as their problem while 21 percent of respondents said they do not feel so. Thus, the number of respondent agree to the statement is higher than the respondents who disagree. Similar to the previous statement, most respondents “agree moderately” and “agree very much” to this statement. The next statement was “Right now, staying with my agency is a matter of necessity as much as desire”. For this statement also the majority of respondents said that they agree that staying with this agency is a matter of necessity as much as desire.

The percentage of respondent who said agree and disagree was 95 percent of respondents said agree while only 5 percent of respondents said disagree. Of 95 percent of respondents, the largest number of respondents said that they agree moderately and that followed by “agree very much” and then “agree slightly”. For the statement “I do not feel a strong sense of "belonging" to my agency, the number of respondents who disagree is higher than the respondents who agree. 39 percent of respondents and 61 percent of respondents said agree and disagree respectively to the statement. The number of respondents “disagree very much” to the statement. The last statement was “I feel that I have too few options to consider leaving this agency”.

According to the findings, the job satisfaction of the insurance agents in Devaraj Agency is high. The proof is the result of motivator factor questions in the job satisfaction questionnaire. There was 13 motivator factor related questions in the questionnaire. Out of the 13 questions, for 11 questions the insurance agents responded positively while only for 1 question they responded negatively. Positive response means the insurance agents agree to the positive statement about job satisfaction and disagree to negative statement. Example of positive statement in this job satisfaction questionnaire is “I am satisfied with my chances for promotion. ” The overall response of respondents to this positive statement was positive means they gree to the statement. Negative response means the insurance agents disagree to positive statement and agree to negative statement. Example of negative statement in job satisfaction questionnaire that received positive response from respondents was “I have too much paperwork”. It means the respondent agree to the negative statement. Overall, positive response to the questionnaire is higher than the negative response. It means that insurance agents were highly satisfied with their job. As the respondents responded positively to the job satisfaction questionnaire, the same way they responded positively to organizational commitment questionnaire.

In the organizational commitment questionnaire, there were 8 statement related to affective commitment. Out of the 8 statements, the respondents responded positively to all the statements. An example of positive statement and positive response was “It would be very hard for me to leave my agency right now, even if I wanted to” is the positive statement and the positive response is 85. 7% of respondents said agree to the statement. Similarly, the example of negative statement and negative response is I do not feel any obligation to remain with my current employer was the negative statement and negative response was 78. 6% of respondents said disagree to the statement.

The negative statement and negative response shows positive response toward organizational commitment. Based on job satisfaction and organizational commitment questionnaire result, it is proven that there is a strong relationship between job satisfaction and organizational commitment. So, if job satisfaction of an employee is high, the organizational commitment also high. It is what happened in Devaraj agency; the job satisfaction of the insurance agents was high so the organizational commitment also high. Due to the higher organization commitment, the average job performance of the insurance agents was as high as 69% and average agency performance was as high as 87% and turnover rate was as low as 6% low annually.

So, the high organizational commitment of an insurance agent will result in higher job performance, higher overall agency performance and lower turnover rate. Limitation There were two limitations in my research. The first limitation was that not all insurance agents in Devaraj Agency have taken the job satisfaction and organizational commitment survey. The survey only have been done with the agents attended the meeting. So the result of the survey could not be guaranteed, as 100% accurate as the views of the insurance agents who did not attend meeting were not taken. The second limitation in my research was that the connection of job satisfaction leads to organizational commitment could not be proven through the help of job satisfaction and organizational commitment questionnaire.

But the relationship of job satisfaction and organizational commitment has been proved in a way that if job satisfaction of an employee is high, the organizational commitment is also high and it is otherwise if the job satisfaction is low. Recommendation Recommendations were done based on the problem identified through job satisfaction and organizational commitment questionnaire. 1) Hiring more clerical staff Based on the job satisfaction questionnaire, most insurance agents responded that they have to do too much paperwork. It may affect the agents’ job satisfaction. So Devaraj Agency should hire more clerical staff to help the insurance agents to do the paperwork. 2) Revise current code of procedure

Many respondents said through the questionnaire that they are not happy with their current rules and procedures because they make their job difficult. So, the agency manager should bring this issue to ING management and find ways to solve this problem. Revising current rules and procedure would be ideal solution. 3) Introduce more monetary benefits Many insurance agents expressed their concern that there are benefits they do not have which they should have. The benefits such as petro allowance and toll allowance is given to sales people from other company but ING Bhd do not give such benefits to its insurance agents. So Devaraj Agency should bring this issue to ING management. Conclusion

References

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