Structural Equation Modeling for Testing the Impact of Organization Communication Satisfaction on Employee Engagement

By Iyer, Suryanarayan; Israel, D. | South Asian Journal of Management, January-March 2012 | Go to article overview

Structural Equation Modeling for Testing the Impact of Organization Communication Satisfaction on Employee Engagement


Iyer, Suryanarayan, Israel, D., South Asian Journal of Management


Communication satis/action plays a very crucial role in achieving employee engagement in organizations. It becomes even more significant and relevant in the context of the recent global crisis wherein organization's focus on employee engagement was high and was aimed towards employee retention and motivation, using the second-generation analytical technique structural equation modeling, the present study examines the relationship between various components of organization communication satisfaction and various components of employee engagement. A modified version of the Downs and Hazen's communication satisfaction questionnaire was administered on 235 personnel in the Information Technology (IT) /Information Technology Enabled Services (ITES) industry in India. The scale was tested for reliability and validity using confirmatory factor analysis. The results indicate that organization communication satisfaction has a positive impact on employee engagement. The study findings have strategic implications for organizations with regard to laying a greater emphasis on increasing communication satisfaction through various human resource interventions, both at macro and micro levels in the organization.

INTRODUCTION

Employee Engagement (EE) has been drawing a lot of importance in various organizations in recent times. A global workforce study conducted by Tower's Perrin in 2007-2008 revealed that only 21% of the employees were engaged. A more disturbing finding of the study was that 38% of the employees were partly to fully disengaged. The study also concluded that companies with the higher levels of EE are able to retain their valued employees as also achieve better financial results. Similarly, Gallup has also conducted a study on EE and found that 29% of employees are actively engaged in their jobs, 54% are not engaged, and 1 7% are actively disengaged. Many researchers have studied and have found that EE predicts employee outcomes, organizational success and financial performance (Harter et al, 2002; and Bates, 2004). Similarly, Hewitt Associates (2005, p. 1) have also established a strong relationship between EE and profitability through higher productivity, sales, customer satisfaction and employee retention. Unfortunately though, a lot of literature available is only those from consulting firms and there is very little theoretical or empirical research available on EE.

Today, as a result of continuous organizational restructuring (mergers, acquisitions and downturn imperatives), it is commonly observed that organizations are resorting to right sizing strategies. Every Chief Executive Officer (CEO) accords topmost priority to engage the employees who survive the layoffs. Research indicates that there is a decline in engagement levels and that there is deepening disengagement among employees today (Bates, 2004; Richman, 2006; and Saks, 2006) . It has also been reported th?t the majority of workers today, roughly half of all Americans in the workforce are not fully engaged or they are disengaged leading to what has been referred to as an 'engagement gap' that is costing US business $300 bn a year in loss of productivity (Kowalski, 2003; Bates 2004; Johnson, 2004; and Saks, 2006). Further, with the world becoming a global market place, where every thing is becoming a commodity, people and their talent are the key differentiators to an organization's ability to service its customer. Managing disengaged employees or non-engaged employees in a customer facing role is therefore, very crucial to the success and profitability of the business. Lockwood explains, "As organizations move forward into a boundaryless environment, the ability to attract, engage, develop and retain talent will hence, become increasingly important".

In addition to the various literatures available from consultants, there have been a few researches conducted on the antecedents and consequences of EE and also on "What is employee engagement? …

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