Post on 16-Jan-2017
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EMPLOYEE SATISFACTION AND
PROFITABILITY FOR SOME SELECTED
TELCOMMUNICATION COMPANIES IN
MOGADISHU, SOMALIA
BY
ALI IBRAHIM JILI’OW
A GRADUATION PROJECT SUBMITTED
INPARTIAL FULFILLMENTS OF THE
REQUAREMENTS FOR THE DEGREE IN
BACHELOR OF BUSINESS
ADMINSTRATION
FACULTY OF BUSINESS
AND ACCOUNTANCY
SIMAD UNIVERSITY
FEBRUARY, 2013
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ABSTRACT A (ENGLISH)
Today's service organizations are shifting from centralized management system to
decentralized management form, reflecting this that service organizations give top
priority to their employees as they are key asset to their organizations, however this study
investigates the relationship between employee satisfaction and profitability for some
selected telecommunication companies in Mogadishu Somalia,
So questionnaires were delivered both management and employees of selected
Telecommunication companies in Mogadishu Somalia to know whether there is
association between employee satisfaction and profitability, so the delivered
questionnaires were contain two parts one for management and the other party for
employees, regardless of where they work.
Nevertheless this study's result reveals that there is an association between
employee satisfaction and profitability but not so strong, however this study also
indicates that that there is no relationship between high pay and employee satisfaction,
high pay may not bring employee satisfaction so employees may be very dissatisfied
earning or gaining high pay however other factors may assist employees to be satisfied as
promotion and recognition therefore this study showed low association between employee
satisfaction and profitability
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ABSTRACT B (SOMALI)
Maanta shirkadaha u adeega bulshada waxey ka soo guurayaan nidamkii ahaa in lag
maamulo shirkadaoo dhan hal meel waxeyna u soo weecdeen in ay noqdeen in la baahiyo
maamulka taasi waxey ka dhigantahay in ay shirkadahu ay siiyee ahmiyad sare
shaqaalahooda,maadaama ay furo u yihiin shirkadahaasi in ay helaa faa iidoyin fara
badan, Si kastaba ha ahaa tee study-gan ama daraasadan waxa ay daraaseyneysaa bal inuu
jiro xirrir ka dhexeya qancinta shaqaalaha iyo in shirkaduhu helaan faa'iidoying,sidaa
darteed baraha daraasadan waxuu u qeybiyay su'aalo qoran (questionnaires) una
qeybiyeen maamulka iyo shaqaalaha shirkadaha la doortay ee isgaarsiinta si loo ogaado
bal inuu jiro xirri u dhexeya in la qanciyo shaqaalaha shirkadahaas ka shqeya iyo in
shirkaduhu helaa faa'iidoyin,kadib markii la falanqeeyay jawaabihii ay bixiyeen
shaqaalaha shirkadaha la dortay ayaa mujinaya in uu jiro xiriir u dhaxeeya in la qanciyo
shaqaalaha iyo in shirkaduhu ay helaan faa iido lakin xirrikani ma ahan mid xoogan
Sidoo kale daraasadan waxey muujineysaa in anuu jirin xirri u dhaxeeya in shaqaaluha ay
helaan mushaar sare iyo iyo in ay noqdaan kuwo qanacsan,si kastaba ha ahaa tee sida
muuqata waxaa jiro doodo la xiriira in hadii ay helaan shaqaaluhu mushaar sare in aaney
keeneyn taasi in ay noqdaan kuwo ku qanacsan shaqadooda taasina waxaa ugu wacan
waxayaabo kale sida in ay helaan in la aqoonsado ama dalacsiin loo sameeyo.isku soo
wada duuboo daraasadan waxey muujineysaa in uu jiro xiriir u dhaxeeya in shaqaaluhu
qancaan iyo in shirkaduhu helaan faa'idooyin farabadan lakin xiriirkaasi ma ahan mid
adag.
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DECLARATION A
“I hereby declared that this thesis is my original work that has not been submitted for a
degree or any other academic award in any University or institution of learning”
I also declare that, to the best of my knowledge, any help received in preparing this thesis,
and all sources used when preparing it have also been acknowledged in this thesis.
NAME OF THE CANDIDATE
ALI IBRAHIM JILI'OW
Signature: ___________________
Date : _____ /________/ 2013
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DECLARATION B
I officially state that I have supervised and read this thesis presented by the above
mentioned candidate, and it conforms to the acceptable standards of academic
presentation and is fully adequate.
I herby also declare that research project was conducted in accordance with degree
requirements, regulations, procedures and University Research Project Manual (RPM).
SUPERVISOR'S NAME
PROF. ABDURAHMAN MOALIM ADDOW (FOD'ADDE)
Signature : _______________________
Date : _____ /________/ 2013
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ACKNOWLEDGEMENTS
I hardly know where to start saying thank you to all those who helped me to complete this
thesis, the successful completion of this thesis would not have been possible without the
support, commitment and cooperation of others. I must first thank to ALLAH
SUBHANAHU WATA'ALA who created me and makes all things possible. Second I
must confess that this project is not my individual achievements, but the result of many
people to whom i shall be forever grateful. First of all i would like to express my deepest
acknowledgement to my supervisor PROF.ABDURAHMAN MOALIM ADDOW
OMAR (FOD'ADDE), Director Center for training and consultancy of SIMAD
UNIVERSITY for his cooperation, assistance and valuable contribution he made through
the successful completion of thesis.
He actually acted the roles of Father, Friend, Lecturer and Advisor, I appreciated
the efforts, commitments, patience, collaboration, cooperation, and professionalism he
made during the initial preparation and completion of this thesis, without him nothing
could ever be brought to a conclusion thank you very much Ustaad certainly i could not
have done it alone. Second my appreciation goes to Al Ustad ABDULAHI OMAR
SALAH Dean, faculty of education in SIMAD UNIVRSITY and chairman of my
panelists Al Ustad ABUKAR M. SAHAL for their efforts, encouragements and good
guidance they provide me at the time of my proposal hearing. I also wish to thank MR.
MOHAMUD AHMED MOHAMED (Emirate) Dean of faculty of Business and
Accountancy for his encouragements and efforts he made at the first stage of this project
by providing us continuous Research Training Programs and pushing us forward to do
our best to reach like this stage,
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We as the Faculty of Business & Accountancy students remember Mr. Emira what we
actually referred to as the Emirate's Research Training Campaign (ERTC)
I also wish to thank all SIMAD UNIVERSITY administration, all faculty Deans,
lecturers, instructors and whole SIMAD staff for their cooperation, respect and good deed
they show while i was in the Campus for studying activities. Really i shall not forget the
good environment friends, colleagues and partners i have got there while i was the
honorable campus, however Special thank is due to the faculty of Business &
Accountancy for their contribution, collaboration and cooperation, Specially i am very
grateful to Al Usad ALI IBRAHIM MOH'ED deputy Dean, faculty of Business &
Accountancy for his advice, wisdom terms, guidance, tolerance and cooperation he did
as well as Mr. ISMAIL ALI YUSUF Research coordinator, Faculty of Business &
Accountancy for his endless cooperation and collaboration.
I also wish to thank all the staff of selected Telecommunication companies in
Mogadishu Somalia, HORMUUD,NATIONLINK,SOMAFONE ANDTELCOM in
particular i wish to express my endless gratitude to a number of people who work in these
companies for their helpful assistance while i was in the process of data collection
particular thanks is due to Eng. Yahye Hassan Ali of Somafone, Eng. Max'ud Max'ed
Yusuf of Nationlink, Mr. Abdinasir Hashi Adam of Telcom, and Mr.Abdihakin Ibrahim
Hassan of Hormud telcom thank you all, As well as, i wish to thank Mr. Max'ed
Abdurrahman Abdule know as (KULU) for his assistance of data analysis and SPSS and
to all my friends where ever they're on the globe who encouraged and supported me in
any circumstance to complete this thesis successfully thank you brothers and sisters.
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Last, but not certainly the least. I wish to extend my loving thanks to my parents who have
always taught me the importance of education and provided me with the financial support that
enabled me to continue in my Under graduate studies at SIMAD UNIVERSITY for their
encouragement morally and materially, from the beginning to the end of this project, and to
all my whole life, however this thesis could not have been written without their daily help,
assistance and encouragement, May Allah bless their good deed, and thank you.
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DEDICATION
This thesis is dedicated
To
My mother, brothers
And sisters
And
For my lecturers
Who always guide
Me
With love and
Affection!
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TABLE OF CONTENTS
ABSTRACT A (ENGLISH)................................................................................................II
ABSTRACT B (SOMALI)................................................................................................I1I
DECLARATION A...........................................................................................................1V
DECLARATION B.............................................................................................................V
APPROVAL SHEET.........................................................................................................VI
ACKNOWLEDGEMENTS.............................................................................................V1I
DEDICATIONS ..............................................................................................................X
TABLE OF CONTENTS...................................................................................................XI
CHAPTER ONE
1.0 INTRODUCTION…...................................................................................................................1
1.1 BACKGROUND OF THE STUDY ....................................................................................…...1
1.2 PROBLEM STATEM..........................................................................................................…...3
1.3 PURPOSE OF THE STUDY ..............................................................................................…...4
1.4 OBJECTIVES OF THE STUDY…............................................................................................4
1.5 RESEARCH QUESTIONS.................................................................................................…....4
1.6 SCOPE OF THE STUDY....................................................................................................…...5
1.7 SIGNIFICANCE OF THE STUDY..................................................................................…......5
1.8 OPERATIONAN DEFINATIONS OF VARIABLES................................................................5
CHAPTER TWO: REVEIEW OF RELETED LITERATURE
2.0 INTRODUCTION....................................................................................................…...............7
2.1 CONCEPT OF EMPLOYEE SATISFACTION ........................................................................7
2.2 FACTORS OTHER THAN PAY THAT INCREASE SATISFACTION.................................8
2.2.1PROFITABILITY CONCEPT….….......................................................................................10
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2.3 EMPLOYEE SATISFACTION AND PROFITABILITY.................................................…...11
2.3.1 DEFINING THE VARIABLES IN THE STUDY …............................................................12
2.3.2 PAY..................................................................................................................................…..13
2.3.3 PROMOTION & COMMUNICATION.........................................................................…...13
2.4 PROFITABILITY...............................................................................................…..................14
2.5 THEORETICAL FRAMEWORK.............................................................................................14
2.6 RELATED STUDIES...............................................................................................................15
CHAPTER THREE: METHODOLOGY
3.0 INTRODUCTION..............................................................................................................…...20
3.1 RESEACH DESIGN.................................................................................................................20
3.2 RESEARCH POPULATION.............................................................................................…...20
3.3 SAMPLE SIZE...................................................................................................................…...21
3.3.1 SAMPLING PROCEDURE............................................................................................…...21
3.4 RESEARCH INSTRUMENT..........................................................................................….....21
3.5 DATA GATHERING PROCEDURE...............................................................................…....22
3.6 DATA ANALYSIS..........................................................................................................….....23
3.7 ETHICAL CONSIDERATION..........................................................................................…...24
3.8 LIMITATIONS OF THE STUDY....................................................................................…....25
CHAPTER FOUR: FINDINGS AND DISCUSSIONS
4.0 INTRODUCTION........................................................................................................26
4.1 DEMOGRAPHIC CHARACTERISTICS OF THE RESPONDENTS ......................26
4.2 EMPLOYEE SATISFACTION ..................................................................................31
4.3 PROFITABILITY .......................................................................................................32
4.4 RELATIONSHIP B/W EMPLOYEE SATISFACTION & PROFITABILITY..........34
4.5 DISCUSSION OF THE RESULTS ..........................................................................35
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CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS
5.0 INTRODUCTION .......................................................................................................41
5.1 CONCLUSIONS .........................................................................................................41
5.2 RECOMMENDATIONS ............................................................................................41
LIST OF TABLES AND FIGURES
TABLE 3.1 STUDY POPULATIONS .............................................................................20
TABLE 3.2 SAMPLE SIZE ............................................................................................21
TABLES 3.3 MEAN RANGE & RESPONDENTS‟ INDICATOR FOR INTERP..........24
TABLE 3.4 DEMENTIONS OF PROFITABILITY.........................................................24
TABLE 4.0 GENDERS......................................................................................................26
TABLE 4.1 RESPONDENT'S AGE ...............................................................................27
TABLE 4.2 RESPONDENT'S DIVISION OF WORK ....................................................29
TABLE 4.3 DETAILED DEMOGRADHIC CHARARCTERISTICS ............................30
TABLE 4.4 EMPLOYEE SATISFACTIONS...................................................................32
TABLE 4.5 PROFITABILITY..........................................................................................33
REFFERENCES.......................................................................................................................…...44
APPENDICES ...................................................................................................................….......47
APPENDICE: FACE SHEET.........................................................................................................47
DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS...................................................48
QUESTIONAIRES TO DETERMINE EMPLOYEE SATISFACTION...............................…....49
QUESTIONAIRRE TO DETERMINE PROFITABILITY............................................................50
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CHAPTER ONE
1.0 INTRODUCTION
This study investigates the relationship between employee satisfaction and profitability
for some selected telecommunication companies in Mogadishu Somalia; however this
chapter discusses the background of the study, the problem statement, objectives, research
questions, the purpose of the study, the scope of the study, the significant of the study and
finally the operational definition of the study.
1.1 BACKGROUND
For the past century employee satisfaction has been the spot light of many researchers
and the origin of these research has dates back to 1911 when Fredrick W.Taylor an
expert in the field of management begun to study employee satisfaction roles and duties
of their jobs in order to develop a better way to develop retain and train them (
Taylor.1911).Some years later the importance of employee satisfaction had been clearly
mentioned by Edward Thorndike (1918 cited in Worrell, 2004) who examined the link
between work and satisfaction. Field experts argued that the study of job satisfaction can
be traced back almost 200 years, when the industrial revolution had officially begun to
boom in the United States (Worrell, 2004).
American psycho local association written the motto analysis of job relationship
to job satisfaction (Raymond A. Moller, 1985) The effects of employee satisfaction on
organizational citizenship turn over and effectiveness (Daniel J. Koys, 2006).A number of
studies were conducted last decades about employee satisfaction including study made by
(Alamdar, khan, Mahmud Masarri (2001) Impact of job satisfaction on employee
performance.
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In Africa a study was made in South Africa, the effects of employee on job
enrichment, motivation and evolvement by (Christopher Orpen, 2001).But In the context
of Somalia to the best of my memory I have not been able to discover the existence of
such study and the researcher is now hopeful to conduct such research in the context of
Somalia for the first time. Nevertheless the theoretical framework adopted for this study
is derived from Expectancy theory of motivation. Victor Vroom (1964) developed the
expectancy theory through his study of motivations behind decision making. Expectancy
theory refers to person‟s perception of the probability that efforts will lead to
performance.
Expectancy theory predicts that employee will exert high level of effort if he/she
perceives that strong relationship exists between effort, performance, pay rewards and the
satisfaction of personal goals. So researchers prefer this theory as it reflects strong
relationship between satisfaction and performance as well as the expectation of employee
from the organization. The first time that employees join the organization they expect
promotion, high pay and recognition then their contribution will be high and that is why
researchers prefer this theory as a base for their study. Conceptually employee
satisfaction can be as described as the feelings, attitudes or preferences of individuals
regarding their work (Chen, 2008). Employee job satisfaction is general attitude towards
his or her job (Bruce Millet 2001).Employee satisfaction is simply refers to “how people
feel about their jobs and different aspects of their jobs, It is the extent to which people
like or dislike their jobs” (Spector, 1997, cited in Pamela et al, 2011).The definition of
employee satisfaction in this study as working definition is adopted from (Chen, 2008).
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1.2 PROBLEM STATEMENT
Understanding the impact of employees‟ performance is critical in the service sector,
because the intangibility of services leads customers to rely on employees‟ behavior in
forming opinions about the service offering (Clark, 1997). Satisfied employees are
Precondition for increasing productivity, responsiveness, quality, and customer Service.
(Kaplan 1996, 130)
A number of studies have been made in the context of employee satisfaction in the
literature (Richard A. Murray 1999) (Faward Yarir, 2009), (Rizwan Danish
1999),(Richard W. Y. Yee and T.C. Edwin Cheng). (Price, 2001), (spector 1999).Some
of these Studies have shown that pay is not only a major factor of employee (job)
satisfaction, but there are other factors as recognition, promotion, supervisor,
responsibility and many others.
Compensation alone may not grantee the satisfaction of employees. Even highly
compensated employees may be dissatisfied with their jobs, while an employee with low
level of compensation still be quite satisfied for reasons other than compensation
(Hawthorne1924-1933) (Mayo 1924).Study shows that employee satisfaction has a
positive effect on employee loyalty and profitability of the company and that employee
satisfaction is predicted by internal service quality perceived by employees.
Julie Parmer and Dennis East‟s 1989 study of support staff in twelve Ohio
libraries used the JSS as its basis and found that overall these workers considered
themselves basically satisfied. Organizations that applied these factors promotion,
respect, coworkers, benefits, recognition, responsibility, good supervision and put in
place and make satisfied their employees, but were dissatisfied with operational
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procedures, communication, contingent rewards (sense of appreciation and recognition),
and opportunities for promotion (Murray, 1999)
After all, it seems eminently logical that a happy employee is a “better” employee, which
is often defined as a “more productive” employee (Wansoo and Brandford (2009).
However, thousands of studies have been carried out seeking to establish a positive and
unmistakable correlation between high job satisfaction and high profitability with nothing
conclusive being proven (Richards, 1999).
In this research I shall attempt to address a fundamental question in organization's
profitability: Does employee satisfaction relate to a organization's profitability in high-
contact service industries as Telecommunications where there are direct and close
contacts between employees and customers? If so, what are the factors other than pay that
can enhance the satisfaction level of employees?
1.3 PURPOSE OF THE STUDY
The purpose of this study is to investigate the relationship between employee satisfaction
and profitability for some selected telecommunication companies in Mogadishu Somalia
1.4. OBJECTIVES
The objectives of this study are:
To identify factors other than pay that increase employee satisfaction
To investigate the relationship between employee satisfaction and profitability
1.5 RESEARCH QUESTIONS
What are the factors other than pay that can increase employee satisfaction?
What is the relationship between Employee satisfaction and profitability?
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1.6 SCOPE OF THE STUDY
This study examines the level of satisfaction of Telecommunication employees and
investigates the relationship between employee satisfaction and company profitability for
selected telecommunication companies in Mogadishu, the study will be conducted the
period between 2012 and 2013 cross-sectional design
1.7 SIGNIFICANCE OF THE STUDY
This study will be significant to both business and telecommunication sector.
Telecommunication companies will benefit from this study because they will have an
opportunity to visualize the satisfaction level of their employees by comparing study
results and how their Human resources departments (HRD) handle with their current
employees, besides business and telecommunication sector this study will be used as
academic purposes for further researchers in the field.
1.8 OPERATIONAL DEFINITIONS OF VARIABLES
Employee satisfaction: refers to the satisfaction of the employees with their payment,
Promotion and communication within the organization.
Payment: refers amount of money that the employee gains as compensation as well as the
extent to which such compensation is perceived as equitable also pay.
Promotion: is a reward to employees for work contribution it moves an employee up on
organizational chart.
Profitability: is the ability of an organization to generate profit in a certain period of time
using capital or asset, either from the creditor or the shareholder himself (Van and
Van,1995).Profitability is the same or condition of yielding a financial profit or gain; it‟s
often measured by price to earnings ratios.
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Profitability is the ability of an investment of a company to make profit after cost,
overheads and etc. Company‟s profitability can be measured return on asset, price to
earnings ratios, market share, and return on asset, rerun on common stockholder‟s equity.
Profitability is the total earning (profits) on the optimal foreign asset holding
Brock,Hommes( 1997)Profitability means ability to make profit from all the business
activities of an organization, company, firm, or an enterprise. It shows how efficiently the
management can make profit by using all the resources available in the market.
According to Harward & Upton, “profitability is the „the ability of a given investment to
earn a return from its use.”
According to Longman Contemporary dictionary Profitability is the state of producing a
profit, or the degree to which a business or activity is profitable.
Price earnings ratios: refers to an off-quoted measure of ratio of market price of each
share of common stock to the earnings per share it reflects investor‟s assessment of
company‟s future earnings.
Return on asset: refers to an overall measure of profitability
Market share: refers to the total sales of all brands or products competing in the same
market that is captured by one particular brand or product.
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CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.0 INTRODUCTION
In this chapter the researcher will discuss the literature that related to “the relationship
between employee satisfactions and profitability. The review focuses mainly on the
literature of Employee satisfaction level, Factors other than pay that can increase
employee satisfaction and the relationship between employee satisfaction and
profitability, the relevant theories and concepts that are as basis for this study are also
highlighted.
2.1 THE CONCEPT OF EMPLOYEE SATISFACTION
The success of any organization is directly linked to the satisfaction of the employees
who embody that company and retaining talented people is critical to the success of any
organization (Freeman, 2005). Michael (2008) stated that employee satisfaction level
increases significantly when people receive balance between their work and personal
lives experience. Having a workforce which is committed is vital for organizations as it
will affect the Organization‟s profitability (Mathieu & Zajac, 1990; Allen &Meyer1990).
An employee satisfaction study conducted by Big Builder in 2003 reported that
the “responses in the study point to a clear need for giving employees a greater role in
Business decision.” There needs to be a culture of participation in the organization, and
this in turn creates higher retention (Leibowitz, 2003).
Understanding the impact of employees‟ performance is critical in the service
sector, because the intangibility of services leads customers to rely on employees‟
behavior in forming opinions about the service offering (Clark, 1997.
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Employees with high job satisfaction level will make customers happier so that it will
give a positive influence on customer satisfaction level and this in turn the organization
becomes more profitable, employees who are not satisfied tend to exhibit their unpleasant
emotion to customers as stated by Wansoo and Brandford (2009).
According to luthans (1989) satisfaction can arise from three distinctive factors (a)
emotional response to the working environment (b) the relationship between expectation
and outcome (c) satisfaction with pay. Also spreitzer & kzilos (1997, as 9 cited in Joel
N.light, (n.d) believed that employee satisfaction has been determined to directly related
psychological empowerment.
Employee satisfaction plays a considerable role in enhancing the firm profitability
and improving operational performance of organizations and quality of goods and
services. There is no doubt in it that employee satisfaction is critical to attain quality and
profitability in service industry especially Naseem,S.Malik (2011).
To my point of view enhancing satisfaction level of employee is very important as they
interact directly to the customers, so satisfaction level of employees will be determined by
the service quality provided to customers, this is when customers satisfied then
profitability may result.
2.2 FACTORS OTHER THAN PAY THAT INCREASE EMPLOYEE SATISFACTION
Keeping employees informed and getting them involved indecisions that affect their work
builds trust and feelings of self-worth and this Involvement helps employees feel that they
are trusted and needed, which increases their contributions and production (David Lars
Halverson 2005).
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Historically one of the biggest preludes to study job satisfaction was the
Hawthorne studies, these studies that conducted between 1924- 1933 primarily created to
Alton Mayor of the Harvard Business School and this finding provided strong evidence
that people work for purpose other than pay. Tang et al. (2004) found that pay satisfaction
is a part of job satisfaction, which could lead to higher worker productivity
Factors other than pay that can increase satisfaction can be found in the literature of how
to improve employee satisfaction (Davi Ngo 2009), society of Human resources ( SHRM
2009) Elements of job satisfaction( Robbins, Judge 2006 p,204).According to Paul
Spector employees‟ satisfaction will be increased by the following factors.
1. Pay - amount and fairness or equity of salary
2. Promotion - opportunities and fairness of promotions
3. Supervision - fairness and competence at managerial tasks by one‟s supervisor
4. Benefits - insurance, vacation, and other fringe benefits
5. Contingent rewards - sense of respect, recognition, and appreciation
6. Operating procedures - policies, procedures, rules, perceived red tape
7. Coworkers - perceived competence and pleasantness of one‟s colleagues
8. Nature of work - enjoyment of the actual tasks themselves
9. Communication - sharing of information within the organization (verbally or in
writing).Studies of factors common to successful companies (Porras & Collins, 1994)
indicate that those companies whose goals reflect the interests of both employees and
customers produce better results. Employees who feel a sense of teamwork and common
purpose, a strong commitment to communication, promotion, and managerial
empowerment are most able, an willing, to deliver the results that customers expect
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(“Employee Satisfaction”, 2005). According to Ngo 2009 employees satisfaction can be
increased the following factors organizational development, work itself, compensation
and benefit, appraisal programs, relationship with supervisor, promotion and career
development, working conditions, building corporate culture and many others.
According to Ed Schmitt, “Today‟s workers have different expectations from the
companies they work for and are much less hesitant to leave one job for another if they
don‟t feel those expectations are being met. Job security is less important to today‟s
worker” (Schmitt, 2002).
2.1.1 PROFITABILITY CONCEPT
Management is concerned with maintaining or increasing Business‟s earnings through
attention to cost control, pricing policy, sales volume, Stock management and capital
expenditures. This objective is also consistent with the goal of most businesses.
Profitability is one of the most important objectives of financial management because one
goal of financial management is to maximize the owner‟s wealth (McMahon, 1995).
Profitability is very important in determining the success or failure of a business. At the
establishment stage, a business may not be profitable because of investment and expenses
for establishing the business.
Profitability is crucial indicator for determining the financial position of the firm.
The firm is considered financially weak when its profitability is sliding or the profitability
is weak compared to other firms in the industry (Kieu Minh 2001).Profitability can be found
in the literature (Molyneux 2004) Dynamics of growth and profitability and R.niraj M.
Gupt ,Customer profitability in supply chain .
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PROFITABILITY: is the ability of an organization to generate profit in a certain period
of time using capital or asset, either from the creditor or the shareholder himself (Van and
Van, 1995).
2.3 EMPLOYEE SATISFCATION AND PROFITABILITY
An employee satisfaction and work behavior goes back to the Hawthorne studies
(Roethlisberger and Dickson 1939) – a landmark studies that shared in the organizational
behavior perspective. In spite of decades of research, the findings have remained elusive.
In their meta-analysis, Mathieu and Zajac (1990) concluded that employee satisfaction
has little direct influence on business performance in most instances. Having a workforce
which is committed is vital for organizations as it will affect the Organization‟s
profitability (Mathieu & Zajac, 1990; Allen & Meyer; 1990).
According to Kotler (2007). Employee Job satisfaction will determine the service
quality delivered by the organization to the customers and ultimately will enhance
profitability. Employees with high job satisfaction level will make customers happier so
that it will give a positive influence on customer satisfaction level. On the contrary,
employees who are not satisfied tend to exhibit their unpleasant emotion to customers as
stated by Wansoo (2009) and Brandford (2009).
Employee satisfaction plays a considerable role in enhancing the firm profitability
and improving operational performance of organizations and quality of goods and
services. There is no doubt in it that employee satisfaction is critical to attain quality and
profitability in service industry especially Naseem,Sadia,Malik (2011).
24
An employee satisfaction study conducted by Big Builder in 2003 reported that
the “responses in the study point to a clear need for giving employees a greater role in
business decisions.” There needs to be a culture of participation in the organization,
which in turn creates higher retention (Leibowitz, 2003).The relationship between
employee satisfaction and profitability has been controversy issue and field authors
divided in to two; some argued that there is a direct relationship between employee
satisfaction and profitability whilst others argued that there is no direct relationship
between employee satisfaction and profitability. So researcher will attempt to investigate
these controversies and then will provide his contribution.
2.3.1 DEFINING THE VARIABLES
Employee satisfaction: is simply refers to “how people feel about their jobs and different
aspects of their jobs, It is the extent to which people like or dislike their jobs” (Spector,
1997, cited in Pamela et al, 2011).
According to (Opkara 2002) Employee satisfaction is the outcomes of different factors
like pay, promotion, work itself, co-workers and opportunities for growth. Employee
satisfaction means different thing to different people (Wilson Lear).
Employee satisfaction is measure of how happy workers are with their jobs and working
environment keeping morale high among workers can be tremendous benefit to any
organization. Employee job satisfaction is general attitude towards his or her job (Bruce
Millet 2001)
Employee (Job satisfaction) is simply defined as the affective orientation that an
employee has towards his or her work (Price, 2001).Employee satisfaction is the feelings
people have about their job (Susan M.Field).
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Employee satisfaction is terminology used to describe weather employees are
happy and contented and fulfilling their desires and needs at work (S. H. Field Human
Resources).According to Yangzi, Goedegebuure (2005) Employee satisfaction represents
feelings of the employee about the job, defined as the overall evaluation of working for
the company. According to (Price, 2001).Employee satisfaction is simply defined as the
affective orientation that an employee has towards his or her work.Oxford dictionary
defines satisfaction, the good feeling you have when you have achieved something that
you want to happen do happen, something that gives you this feeling.
2.3.2 Pay: The amount and fairness or equity of salary that employee receives also pay
refers amount of money that the employees gains as compensation as well as the extent to
which such compensation is perceived as equitable
2.3.3 Promotion: Promotion is a reward to employees for work contribution it moves an
employee upward on organizational chart.
2.3.4 Communication: Communication refers to the transfers of information or sharing
information from high to lower level of the organization, telecommunication may be
sharing information within the organization (Richard A. Murry 1999).
2.4 PROFITABILITY: is the ability of an organization to generate profit in a certain
period of time using capital or asset, either from the creditor or the shareholder himself
(Van and Van, 1995).(Brock and Homes, 1997) defined profitability as the total earning
(profits) on optimal foreign asset holding. Profitability is the ability of an investment of a
company to make profit after cost over heads etc.
Business dictionary defines profitability as the state or condition of yielding a financial
profit or gain; it‟s often measured by price to earnings ratio
26
2.5 THEOROTICAL FRAMEWORK
2.5.1 Expectancy theory
The theoretical framework adopted for this study is derived from Expectancy theory of
motivation. Victor Vroom (1964) developed the expectancy theory through his study of
motivations behind decision making. Expectancy theory refers to person‟s perception of
the probability that efforts will lead to performance.
Expectancy theory predicts that employee will exert high level of effort if he/she
perceives that strong relationship exists between effort, performance, pay rewards and the
satisfaction of personal goals. So researchers prefer this theory as it reflects strong
relationship between satisfaction and performance as well as the expectation of employee
from the organization. The first time that employees join the organization they expect
promotion, high pay and recognition then their contribution will be high and that is why
researchers prefer this theory as a base for their study.
2.5.2 Equity theory
John Adams (1963) developed the Equity theory (Cook, 1993, pp 14-18), this is also
another theory that relates to job satisfaction, individuals job satisfaction will be
influenced by how fairly they are treated in an organization, when employees treated
fairly by their organizations then they may satisfy with their management and their
performance will be high nevertheless Equity theory is related to job satisfaction given
that employees will be more satisfied when employees are fairly treated. (Cook, 1993).
2.6 RELATED STUDIES
The studies of the relationship between job satisfaction and job performance have a
controversial history. The Hawthorne studies, conducted in the 1930s, are often credited
27
with making researchers aware of the effects of employee attitudes on performance.
However it is generally agreed that service employees are often the first party to represent
the whole service firm and therefore are pivotal to shaping customers‟ perception of
service quality (e.g., Parasuraman et al. 1985, Hartline and Ferrell 1996).
An employee satisfaction study conducted by Big Builder in 2003 reported that the
“responses in the study point to a clear need for giving employees a greater role in
business decisions.” There needs to be a culture of participation in the organization,
which in turn creates higher retention (Leibowitz, 2003).
Research indicates that employees who are satisfied with their jobs are more likely to stay
with their employers and according to survey, made by society of human resources
suggests that 86% of employees indicated overall satisfaction with their current position,
with 41% of employees reporting they were very satisfied. What‟s more, majority of
employees (58%) reported that the current economic climate has not made any difference
in their level of satisfaction.
Research indicates that employees satisfied with their jobs are more likely to stay with
their employers. Keeping a cadre of happy and motivated employees, however, is often
elusive as the expectations of employees shift. ( societies of human resources,2009).
In their meta-analysis, Mathieu and Zajac (1990) concluded that employee satisfaction
has little direct influence on business performance in most instances.
Although much research has been successfully conducted to correlate employee
satisfaction with individual work behaviors such as turnover, absenteeism, lateness, drug
use, and sabotage (Fisher and Locke 1992).However, a 2001 study published in
Personnel Psychology examined whether positive employee behaviors and attitudes
28
influence business outcomes or if the opposite, that positive business outcomes influence
employee behavior, is true. Study findings include the following: Findings support the
idea that employee satisfaction, behavior, and turnover predict the following year‟s
profitability, and that these aspects have an even stronger correlation with customer
satisfaction.
David Lawin (1988) conducted study have shown that companies on the economic
impact of participative work practices and found that among other things, that companies
with broad employee involvement programs and share information perform widely
significantly better than companies that are run in autocratic style. He also found that
training and development have positive effect on employee performance and profitability
(Gordon, 2003).
Although much research in organizational performance has been conducted to investigate
the relationships between quality, customer satisfaction and business performance (e.g.,
Heim and Sinha 2001, Balasubramanian et al. 2003, Nagar and Rajan 2005), research on
the impact of employee satisfaction on operational performance is relatively scarce.
Earlier studies by Brown and Peterson (1993) identified a weak relationship between
employees‟ satisfaction and performance (r = 0.15). Nevertheless, it is reasonable to
expect that this relationship may be stronger in the small and high-contact service
industries. Previous research has also suggested that loyal employees are more eager to
and more capable of delivering a higher level of service quality (Loveman 1998, Silvestro
and Cross 2000).Some researchers have argued that job performance will influence
employee satisfaction, but employee satisfaction will not affect job performance, e.g.,
quality of service delivery (Bagozzi 1980, Brown et al. 1993).
29
Research provides strong evidence to support the fundamental relationship among
employee satisfaction, service quality, customer satisfaction, and firm profitability. This
supports the conceptual framework of the “balanced scorecard” (Kaplan and Norton.
1996), Customer satisfaction has a long-term financial impact on the business (Nagar and
Rajan 2005). Previous research has investigated the linkage of customer satisfaction and
its various outcomes, such as customer loyalty (Stank et al. 1999, Verhoef 2003) and
profitability (Anderson et al. 1994, Mittal and Kamakura 2001). Highly satisfied
customers of a firm are likely to purchase more frequently, in greater volume and buy
other goods and services offered by the same service provider (Anderson et al. 1994).
Customer satisfaction has a positive impact on firm profitability due to a number of
reasons. First, customer satisfaction enhances customer loyalty and influences customers‟
future repurchases intentions and behaviors (e.g., Stank et al. 1999, Verhoef 2003).Organ
(1988) suggests that the failure to find a strong relationship between job satisfaction and
performance is due to the narrow means often used to define job performance.
Numerous studies have shown that dissatisfied employees are more likely to quit their
jobs or be absent than satisfied employees (Judge, 2004). The findings of the research the
impact of employee satisfaction on success of organizations profitability have
Suggested that impact of employee satisfaction on the success of organization is
undeniable (Afshan Naseem1, 2011)
However in developed countries a number of studies have made in the context of
employee satisfaction and profitability, but there are limited studies in developing
countries that attempt to investigate the relationship between employee satisfaction and
profitability particular in Somalia, and to the best of my knowledge i haven't seen such
30
study that has been made, so now i will attempt to fill the gap by investigating the
relationship between employee satisfaction and profitability for some selected
Telecommunication companies in Mogadishu, Somalia.
SUMMARY
This chapter discusses the literature related to “the relationship between employee
satisfactions and profitability for some selected telecommunication companies in
Mogadishu Somalia, the review focuses mainly on the study of the variables as
profitability, Employee satisfaction and sub related variables as pay, Promotion,
communication, responsibility, factors other than pay that increase satisfaction, the
theories and concepts as well as other studies that are related to this study.
CONCLUSION
In this chapter the researcher have presented and discussed many ideas that related to
literature of Employee satisfaction and Profitability, its being highlighted the employee
satisfaction as it contributes to the organizational profitability, the researcher presented
many studies across the world that are related to this study, but most of them conducted
in the developed countries, but unfortunately there are limited studies in developing
countries that attempt to investigate the relationship between employee satisfaction and
profitability particular in Somalia to the best of my knowledge there is no such study that
has been made, so i will attempt to investigate the relationship between employee
satisfaction and profitability for the first time, however i focused on the business sector in
particular telecommunication as there is no such study that has been made so far in
Somalia to the best of my knowledge, however the researcher will fill the gap for the first
time by investigating the relationship between employee satisfaction & profitability.
31
CHAPTER THREE
METHODOLOGY
3.0 INTRODUCTION
This chapter deals with the methodology of the study. It focuses on the research design,
target population, research instrument, sampling technique, sample size, data collection
process, reliability and validity of the instrument, data analysis, ethical consideration and
finally the limitations of the study.
3.1 RESEARCH DESIGN
In this study the researcher employed correlation research design. In correlation research
design researcher was determined whether or not and to what extent of association exists
between two or more variables (oso & onen, 2008). Actually the purpose of this research
was to examine the relationship between variables that exist within this study, so
correlation research design is the best and most appropriate design that researcher
preferred to adopt as it examines the relationship between two or more variables.
3.2 RESEARCH POPULATION
The target populations for this study were 100 Employees from Telecommunication
Companiesin in Mogdishu, Somalia, HORMUUD, NATIONLINK, TELCOM AND
SOMOFONE, respectively as depicted on the following table.
Table 3.1 Research populations
No Companies Evolved Employees
I. HORMUUD 25
2. NATIONLINK 25
3. TELCOM 25
4. SOMAFONE 25
Total population 100
32
3.3 SAMPLE SIZE: The sample size for this study was 80 employees of
telecommunication companies in Mogadishu, Somalia, these employees were selected
from Administration section, Frontline employees, white color workers and blue color
workers 30,25,10,15 respectively.
To determine the ideal sample size for a population, this study used Slovene‟s formula
which is n=N/ (1+ (N*e^2), where n= sample size, N= population size, and e = margin
of error of 5 %. n=100/ (1+ (100*0.0025)) = 80 subjects
Table 3.2 Sampling size
ADMINSTRATION
EMPLOYEES
FRONTLINE
STAFF
WHITE
COLOR
WORKESRS
BLUECOLOR
WORKERS TOTAL
30 25 10 15 80
3.3.1 SAMPLING PROCEDURE
In sampling procedure this study was employed simple random sampling and all the
respondents had an equal chance to participate when responding the questions being
asked. Researcher had chosen simple random sampling because the population is quite
large and also hopeful that this study will be without bias
3.4 RESEARCH INSTRUMENT
In this study researchers‟ main tool for collecting primary data were questionnaires and
interviews so the researcher employed both questionnaires and interviews for collecting
data, The questionnaires used for this study are adopted from Richard A. Murray (1999)
developed earlier by Paul Spector (1980s). But the profitability questionnaires used in this
study were modified by the researcher referring other profitability related articles
33
3.5 DATA GATHERING PROCEDURES
The initial step for data gathering, the researcher requested a letter from student‟s affairs
and registration office confirming that he is conducting the study as academic purposes
and completion for the project proposal for the degree program, then researcher visited
selected companies to find data desired to by introducing himself and then the researcher
explained to respondents what he want to search and then the researcher helped to
respondents to fill the questionnaires without bias.
This study's questionnaire contained two sections, the first section contained only
Employee satisfaction questionnaire, while the second party contained questionnaires for
both Employees satisfaction and profitability, the first part of the questionnaires was
intended for Employee regardless to where they work, while the other party was for those
who work Administration as those who involved directly to sources of organization's
revenue as Finance department, Research & development and Logistics, however the total
questionnaires for this study was eighty questionnaires so researcher had allocated the
questionnaires to selected Telecommunication companies in Mogadishu, Somalia as
follows: HORMUUD thirty, NATIONLINK twenty five, SOMAFONE Ten, and
TELCOM for fifteen respectively.
1. HORMUUD 30
2. NATIONLINK 25
3. SOMAFONE 10
4. TELCOM 15
TOTAL 80
34
By making sure that all questionnaires were filled appropriately and sometimes
explaining if need be. Then the researcher distributed the questionnaires then researcher
retrieved questionnaires for confirmation within one week from the date of distribution
and all the questionnaires that were delivered checked completely weather the
questionnaires were filled out or not then researcher were determined acceptable ones
from defects.
3.6 DATA ANALYSIS: In this study quantitative data analysis was preferred so
researcher was employed (SPSS) Statistical Package for Social Science for data analysis,
to describe the variables in the study the researcher used descriptive statistics and finally
researcher were used correlation for father explaining the relationship between Employee
Satisfaction and Profitability.
To analysis deeply the data collected from employee satisfaction and profitability the
researcher preferred to use two dimensions one for employee satisfaction and the other
for profitability, however the following table may assist data analysis and interpretation
for current research for variables such as Employee satisfaction and profitability so the
researcher do this to make results simple and understandable so the following table shows
the two dimensions of this study
Employee
Satisfaction
Dimension
1=Strongly
Disagree
(SD)
2=Disagree
(D)
3=Neutral
(N)
4=Agee
(A)
5= Strongly
Agree
(SA)
Profitability
Dimension
1=Low (L) 2=Medium
(M)
3=High
(H)
------- ----------
35
Table 3.3 Mean range and respondents’ indicator for interpretation
To analyses and interpret the data collected from the respondents, the researcher used
another dimension, because dimensions that is used to measure employee satisfaction
and profitability just as you can refer to this study's questionnaires are different so
researcher make this other dimensions to measure profitability however the following
table show dimensions of profitability
Mean Range and Respondents’ Indicator for Interpretation to Profitability
Mean range
Respondents mode Interpretation
1.00 -1.67 L Poor
1.68 -2.35 M Good
2.36 -3.03 H Very good
3.7 ETHICAL CONSIDERATION
An ethical issue throughout the project was researchers‟ main priority by keeping the
privacy and confidentiality of study‟s respondents in the public. the respondents‟
Mean range
Respondents mode Interpretation
4.24 – 5.04 Strongly Agree Excellent
3.43 – 4.23 Agree Very Good
2.62 – 3.42 Neutral Good
1.81 – 2.61 Disagree Fair
1.00 – 1.80 Strongly Disagree Poor
36
personality and their information will be confidential all the time and data they have
offered were used only for academic purposes, privacy and confidentiality of secret
information or data were managed privately and hundred percent confidential with
individual respect privately and collectively
3.8 LIMITATIONS OF THE STUDY
Every work that‟s being done might have its limitations and this study is not exempted
however researcher will have the following potential limitations, Sample and sampling
size, Techniques used for data collection, Language Barriers of the respondents,
There were some questionnaires that were filled in appropriately and eventually dropped
out, also researchers failed to have pure financial data from the selected companies
37
CHAPTER FOUR
FINDINGS AND DISCUSSIONS
4.0 INTRODUCTION
In chapter three researcher focused on mainly the methodology that is being followed
during this study, however in this chapter the researcher presented Demographic data of
the respondents, Data presentation and analysis, Major findings of the study and finally
the researcher will present the discussions that relates to it.
4.1 DEMOGRAPHIC CHARACTERISTICS OF THE RESPONDENTS
This data has been collected from the employees of selected Telecommunication
companies in Mogadishu Somalia, however the respondents of this study came from
different field of the respected companies with different characteristics and experience so
researchers devoted many times persuading these respondents that the data that is being
collected will only be used for academic purposes and will be hundred present
confidential by not affecting their current jobs in any way or form, however the structure
or shape of this study's respondents may look as follows as gender, age job title or
division of work, nevertheless the following table shows the demographic characteristics
of respondents
4.1.1 RESPONDENT'S GENDER
Gender Frequency Percent
1. Male 66 82.5%
2. Female 14 17.5%
Total 80 100%
Table 4.0 Gender
38
Based upon the gathered questionnaires the majority of this study's respondents were
males even though there has been dramatic change in the labor market for female
workers, really female workers are much more than we experienced in few years ago
4.1.2 AGE OF RESPONDENTS
Respondent's age Frequency Percent
1. 20-30 46 57.5%
2. 31-40 21 26.25%
3. 41-50 10 12.5%
4. Above 51 3 3.75%
Total 80 100%
Table 4.1 Age of the respondents
82.50%
17.50%
Gender
Males
Females
39
The majority age of this stud's respondents is between twenty to thirty years as you can
see the above diagram
4.1.2 RESPONDENT'S DIVISION OF WORK
Respondent's division of work
Frequency Percent
1. Finance Department 13 16.25%
2. Sales & Marketing 21 26.25%
3. Human Resources 8 10%
4. Operations 10 12.5%
5. Engineering 16 20%
6. Regional development 4 5%
7. 0ther 8 10%
Total 80 100%
57.50%26.25%
12.50%
3.75%
Age of respondents
20-30
31-40
41-50
Above 51
40
Table 4.2 Respondent's division of work
The following diagram shows the respondents division of work however this study's
respondents work in different divisions of the organizations.
As the above table indicates this study's respondents work mostly sales and marketing
department and it seems however that organizations invest a lot of dollars in sales and
marketing in order to have a large market share and generate a lot of profit.
16.25%
26.25%
10%
12.50%
5%
20%
10%
Division of work
Finance depart.
sales & marketing
HRM
Operations
Reginal dev.
Engineering
Others
41
TABLE 4.3 DETAILED DEMOGRAPHIC CHARACTERISTICS
DEMOGRAPHIC CHARACTERISTICS FREQUENCY PERCENT (%)
GENDER
Male 66 82.5%
Females
14
17.5%
TOTAL
80 100%
AGE 20- 30 years 46 57.5%
31- 40 years 21 26.25%
41 years and above 13 16.25%
TOTAL
80 100%
DIVISION OF
WORK
Finance Department 13 16.25%
Sales & Marketing 21 26.25%
Human Resource 8 10%
Operations 10 12.5%
Engineering 16 20%
Regional Development 4 5%
Others 8 10%
TOTAL 80 100%
Sources: Primary Data 2013
The above table shows detailed demographic characteristics of the study respondents so it
contains Gender of the respondents whether Male or females, Age of the respondents and
42
finally this table displayed the division of work of each respondents so as the table above
shows the respondents work different divisions however as this study indicates the
majority of this study respondents work in sales and marketing department.
4.2 EMPLOYEE SATISFACTION
Employee satisfaction plays a considerable role in enhancing the firm profitability and
improving operational performance of organizations and quality of goods and services.
There is no doubt in it that employee satisfaction is critical to attain quality and
profitability in service industry especially Naseem,S.Malik (2011).
Keeping employees informed and getting them involved indecisions that affect their work
builds trust and feelings of self-worth and this Involvement helps employees feel that they
are trusted and needed, which increases their contributions and production (David Lars
Halverson 2005).
The first objective of this study was to investigate whether there is a relationship
between employee satisfaction and profitability for some selected telecommunication
companies in Mogadishu Somalia and weather there is a relationship between employee
satisfaction and profitability, as well as if there is factors other than pay that can satisfy
employee satisfaction, so respondents were asked to indicate whether and to some extent
they agree or disagree to questionnaires provided by ticking the number that exactly
reflects or close to their opinion however the result that researcher collected from the
respondents were as follows
43
TABLE 4.4 EMPLOYEE SATISFACTIONS
Source: Primary Data 2013
According to the above table the overall mean scored by this study's respondents were
2.93 with standard deviation of 1.331 and this reflects that employees somewhat satisfied
their jobs but their satisfaction level isn't high.
4.3 PROFITABILITY: This variable is used as dependent variable so as to know how
profitability relates to Employee satisfaction as well as to identify to some existent
EMPLOYEE SATISFACTION Mean
Standard
Deviation
Interpretation
a. Communications seem good within
this organization 3.61 1.238
Very good
b. I don‟t feel my efforts are rewarded
the way they should be 2.62 1.158
Good
c. I feel I am being paid a fair amount for
the work I do. 3.04 1.400
Good
d. There is little chance for promotion on
my job. 2.91 1.275
Good
e. I‟m satisfied with my chances for
promotion 3.35 1.442
Good
f. My immediate supervisor is quite
skilled doing his/her job
3.32 1.329
Good
g. My supervisor pays me little interest
as his subordinate 2.61 1.355
Fair
a. The goals of this organization are not
clear to me 2.45 1.395
Fair
b. I often feel that I do not know what is
going on within the company 2.50 1.387
Fair
Overall mean 2.93 1.331 Good
44
wheatear high pay may result high performance/profit for some selected
Telecommunication companies in Mogadishu Somalia, however the respondents were
asked whether their companies are generating high profit or not and also whether pay has
significant positive or negative relation to job Satisfaction, how ever the responses
answers were collected, analyzed carefully and described using means and researchers
summarized in the table below
Table 4.5 Profitability
a. PROFITABILITY Mean Standard deviation Interpretation
b. As the industry's return on
equity grows this firm's return
is getting 2.50 0.777
Very good
c. The annual average profit of
this company is 2.13 0.776
Good
d. The price earnings ratio of
this company is 2.07 0.785
Good
e. How high is the return on
asset of this company? 2.00 0.643
Good
f. What is the gross margin level
of this company? 1.90 0.662
Good
g. The annual operating margin
of this company is 2.23 0.817
Good
h. This company's inventory
turnover is actually 2.13 0.900
Good
i. The sales growth of this
company is 2.17 0.791
Good
j. How could you value this
company's dividend coverage? 1.60 0.563
Poor
Overall mean 2.08 0.746 Good
45
According to results in above table the overall mean to this study shows 2.08 with
standard deviation of 0.746, indicating that the profit for selected companies are
generating is somewhat middle, however this means that profit that selected companies
are actually generating is neither huge nor small so researcher concluded that the profit
that these companies are generating is middle level.
4.4 RELATIONSHIP BETWEEN EMPLOYEE SATISFACTION & PROFITABILITY
Based on objective one and its analysis of this study the researcher found out that over all
employee satisfaction mean indicate 2.93 which indicates that employees of the selected
companies are somewhat satisfied with their jobs, while the overall profitability mean is
2.08 showing good situation that indicates the selected organizations are generating for a
normal profit, However with mind of researcher's first objective that is to investigate the
relationship between employee satisfaction and profitability for some selected
telecommunication companies in Mogadishu Somalia, and the due to the normality issue
of this research, however the researcher selected Spearman's rho which is used the Order
Correlation coefficient, rs, is a non-parametric measure of the strength and path of
association that be present between two variables measured on at least an ordinal level,
however figure 4.7 shows Correlation Analysis under spearman‟s rho
46
FIGURE 4.6 CORRELATION ANALYSIS UNDER SPEARMAN’S RHO
Employee
satisfaction Profitability
Spearman's rho Employee
satisfaction
Correlation
Coefficient 1.000 .128
Sig. (2-tailed) .0001
N 80 30
Profitability Correlation
Coefficient .128 1.000
Sig. (2-tailed) .0001
N 30 80
**Correlation is significant at the 0.01 level
4.5 DISCUSSION OF THE RESULTS
The researcher had found that there is a positive association between employee
satisfaction and profitability but not strong enough, and the association between the two
variables showed a normal statistically significant results, however the result was
rs=0.128, p<.0005 according to Kasetsart (2010), the rs=0.124 recommended only a low
correlation. A Spearman's Rank Order correlation was run to decide the relationship
between employee satisfaction and profitability because the one of the research objectives
is to investigate the association between the two variables for this study
EMPLOYEE SATISFACTION
Employee satisfaction is terminology used to describe weather employees are happy and
contented and fulfilling their desires and needs at work (S. H. Field Human Resources)
Job satisfaction is simply how people feel about their jobs and different aspects of their
jobs. It is the extent to which people like (satisfaction) or dislike (dissatisfaction) their
jobs. (Spector, 1997)
47
According the previous research, job satisfaction was defined as the overall assessment
of positive emotions related to an individual‟s work (Martin & Schinke, 1986).
Employees who are satisfied with their jobs tend to be more involved in their employing
organizations, and more dedicated to delivering services with a high level of quality.
Previous research has also suggested that loyal employees are more eager to and more
capable of delivering a higher level of service quality (Loveman 1998, Silvestro and
Cross 2000). According the previous research, job satisfaction was defined as the overall
assessment of positive emotions related to an individual‟s work (Martin & Schinke,1986).
An employee satisfaction study conducted by Big Builder in 2003 reported that the
“responses in the study point to a clear need for giving employees a greater role in business
decisions.” There needs to be a culture of participation, promotion, communication in the
organization, which in turn creates higher retention (Leibowitz, 2003).Tang et al. (2004)
found that pay satisfaction is a part of job satisfaction, which could lead to higher worker
productivity.
According to Ngo 2009 employees satisfaction can be increased the following
factors organizational development, work itself, compensation and benefit, appraisal
programs, relationship with supervisor, promotion and career development, working
conditions, building corporate culture and many others. Since job satisfaction as a concept
has intrinsic value but it is also related to other significant variables such as performance,
absenteeism and turnover. While there is no proof that job satisfaction has a causal
relationship with absenteeism or performance or turnover,
Muchinsky (1993) claims that there is an association between high levels of job
satisfaction and certain levels of the fore mentioned variables. By increasing levels of job
48
satisfaction, companies might achieve less absenteeism, less turnover and better
performance (Muchinsky, 1993). In support of the utilitarian approach the key focus for
most managers is on productivity, hence it follows that they are in favour of a workforce
that is satisfied as opposed to one that is dissatisfied (Organ, 1990).The old model, which
states that a happy worker is a productive worker “was rejected as simplistic” (Organ,
1990). Employee job satisfaction is an individual process in that satisfaction is a measure
of how a job satisfies needs or complies with values (Muchinsky,1993).According to
Muchinsky (1993), job satisfaction in a group can yield different results to job satisfaction
in an individual, since job satisfaction is an individual response.
According to this study recognition and promotion can play a key role to enhance
the satisfaction level of employees and retention them but high pay to employees
according this and other studies shows that high pay may not result high satisfaction.
Some authors urged that Compensation alone may not grantee the satisfaction of
employees. Even highly compensated employees may be dissatisfied with their jobs,
while an employee with low level of compensation still be quite satisfied for reasons
other than compensation (Hawthorne1924-1933) (Mayo 1924).
According to Tang et al. (2004) found that pay satisfaction is a part of job satisfaction,
which could lead to higher worker productivity some times, however this study didn't
show strong association between high pay and employee satisfaction. Studying Employee
satisfaction has been controversy issues among the field authors for the last centuries and
that there is tangible conclusion about it does not existing yet because it obviously
involves the behaviors of the people.
49
However human being are not same in structure, behavior, emotion culture, religion,
belief and everything so a lot of people including myself believe that these factors
mentioned above can certainly effect the satisfaction level of employees in one way or
another, however I can't say as researcher these factors can affect absolute satisfaction
level of the entire employee but some authors and i still insist that the above mentioned
factors can affect the satisfaction level of employees. Therefore this study also shows that
there may be factors other than pay that can increase employee satisfaction, it's already
known that good communication between employee and organizations management can
enhance the relationship between Organization's employees and management.
PROFITABILITY
Profitability means ability to make profit from all the business activities of an
organization, company, firm, or an enterprise. It shows how efficiently the management
can make profit by using all the resources available in the market.
According to (Van and Van, 1995) profitability is the ability of an organization to
generate profit in a certain period of time using capital or asset, either from the creditor or
the shareholder himself. However, the term „Profitability‟ is not synonymous to the term
„Efficiency'. Profitability is an index of efficiency; and is regarded as a measure of
efficiency and management guide to greater efficiency.
Profitability is the ability of an investment of a company to make profit after cost,
overheads and etc. Company‟s profitability can be measured return on asset, price to
earnings ratios, market share, and return on asset, rerun on common stockholder‟s equity.
Profitability is the total earning (profits) on the optimal foreign asset holding
Brock,Hommes( 1997).
50
Profitability is one of the most important objectives of financial management because one
goal of financial management is to maximize the owner‟s wealth (McMahon, 1995).Thus,
profitability is very important in determining the success or failure of a business. Due to
the importance of profitability, Edmister (1970) among other researchers have suggested
that small firms need to concentrate on profitability.
Based on the profitability measures presented by Westerfield and Jaffe (1999) and by
Cohen (1989), the main factors influencing profitability include revenue, costs and
capital. In general, revenue is determined or influenced by marketing, sales management
and new product development, whereas cost and capital are mainly affected the financial
management practices.
According to Muchinsky (1993), the relationship between job satisfaction and
performance has sparked much interest because most organization would like to have
workers that are satisfied as well as productive Early views of the relationship between
job satisfaction and performance can be summarized in the statement “a happy worker is
a productive worker”(Robbins, 1996).
Nevertheless in this study profitability measures were determined by using
Price earnings ratio: it compares the price of a share to earnings per share
Dividend cover: shows the number of times profits „cover‟ the dividend
Return on sales: this tests how efficiently a company is running its operations by
measuring the profit produced per pound of sales.
Return on assets: it shows you how well a company uses its assets. A high return on
assets usually means the company is managing its assets well.
Return on equity: measures how well a company earned money for its investors
51
The gross margin: gives you a picture of how much revenue is left after all the direct
costs of producing and selling the product have been subtracted
Sales growth: Sales growth focuses on how high is firm's market share extends
The operating margin: looks at how well a company controls costs, factoring in any
expenses not directly related to the production and sales of a particular product.
The above mentioned elements were used to measure the profitability positions of the
selected Telecommunication companies
The major findings of the present research suggest that there is an existence of employee
satisfaction as well as significant association between employee satisfaction and
profitability for some selected Telecommunication companies in Mogadishu Somalia, this
study also indicates that there is factors other than pay that can enhance the satisfaction
level of employees among these factors is employees' compensation particular pay so
according this study and many others high pay may not reflect high satisfaction but other
factors as employee empowerment, good supervisor, communication, promotion, and
many others may enhance the satisfaction level of employees and when done it
appropriately employees can suddenly feel sense of belonging and that they are part of the
organization and when this happens employees will not spoil anything but rather worry
about how to improve the organization in order to be competitive and be the highest in the
industry.
52
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
5.0 INTRODUCTION
In this final chapter the researcher focused on the conclusion and recommendation of the
research that is being conducted. In the first section of this study the researcher presented
conclusion of the research project, section two presents the recommendation from the
researcher and lastly section but not the least, the researcher will suggests father studies
related for this research
5.1 CONCULUSIONS
The researcher have found out that there is a weak association between employee
satisfaction and profitability for some selected telecommunication companies in
Mogadishu Somalia as well as this study shows that other factors other than pay that can
increase employee satisfaction can exists, but according to this study and many others that
is conducted for the last two centuries didn't show strong association between employees
performance and high pay indicating that high pay may not reflect high satisfaction.
5.2 RECOMMENDATIONS
In service industry particular Telecommunications companies where ever they work the
interaction between company's employees and customers are unimaginable, this means
that the interaction between employees and customers is ninety nine percent is more than
those with the company's' management do with the customers and this reflects how ever
that employees are the imagines that drive forward to service organizations, so they are
the keys that makes possible companies to remain and competitive in the market but to
the negative side employees can demolish and destroy easily with the organizations assets
53
through careless, ill work, absenteeism, theft, using organizations asset for personal
purposes and many forms. However if it's the employees who can improve and destroy
the companies so the researcher would have liked to recommend in order for
organizations to generate high profit in any circumstances and remain competitive they
should form an
1. An environment that creates good relationship between the two parties,
organizations can not serve its customers as whole without talented tolerance, and
skilled work force.
2. There should be a trust between the two parties, organizations should trust its
employees and as well as employee should trust organizations management in
order to create a platform that reflects well trustful.
3. Organizations should provide empowerment in order for employees possible to
make miner decisions for their area of work by not waiting simple decision from
the top management
4. Good communication is highly appreciated both inside and outside of the
organization and this communication should be free all the time and simple
5. Organizations should provide promotions to their employees doing a certain job a
decade without promotion will ultimately bring about dissatisfaction and then turn
over would be the result.
6. Good and prompt payment is recommended to employees but this doesn't
necessarily mean it can increase satisfaction level of employees so organizations
should balance what the employees doing to it and what role can play
organizations payment for the employees
54
7. Employees should take care of the organizations assets by not using organizations
assets as company's vehicles, finance and other equipment for personal purposes
in one way or another; they are trusted to these equipments or assets so special
care should be given by them to the organizations assets and equipments.
8. miss use of organization's assets, fraud and destructions of these assets should be
protected
9. It's the employees who can satisfy or dissatisfy organizations customers so
managers should consider internal customers to survive external customers
otherwise organization will lose its position this is a good news to competitors
55
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APPENDICES
APPENDIX A: QUESTIONNAIRES
Dear sir / Madam
As part of my graduation project I would have liked to gather some information from you
which obviously will help me in my study, I am under graduate students from SIMAD
UNIVERSITY Bachelors of Business Administration; however the title of my study is
Employee satisfaction and profitability for some selected telecommunication
companies in Mogadishu, Somalia.
I would be appreciated to help me by filling this questionnaire and the results of this
questionnaire will be used only for academic purpose and will not affect your current jobs
in any way or form, all the information obtained this questionnaires will be treated with
the strictest confidence. The structure of this questionnaire is as follows:
section A, section B and section C-section: A contains the Demographic characteristics
of respondents, Section: B contains Questionnaire to determine Employee satisfaction
Section: C contains Profitability Questionnaire
The researcher have arranged the questionnaires into two forms; the first part named
section one contains questionnaires for both Employee satisfaction and profitability, its
intended to fill the administrators of selected Telecommunication companies in
Mogadishu Somalia, while the second party section two that contains only demographic
characteristics of respondents and Employee satisfaction is intended to fill the staff of
selected Telecommunication companies.
Finally we would like to Thank for your time for filling this questionnaire, however if
you have any queries please don't hesitate to keep in touch any time!
59
SECTION A: DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS
INSTRUCTIONS: PLEASE TICK (√) YOUR GENDER
AND AGE FOR THE FOLLOWING STATEMENTS
A. RESPONDENT'S GENDER
I .Male
II. Female
B. RESPONDENT'S AGE
1. 20- 30 2. 31- 40
3. 41- 50 4. Above 51
PLEASE TICK (√) YOUR ORGANIZATION
A. HORMUUD A
B. NATIONLINK B
C. SOMAFONE C
D. TELCOM D
PLEASE TICK (√) DIVISION YOU WORK
1. Finance Department 1
2. Sales & Marketing 2
3. Human resources 3
4. Operations 4
5. Engineering 5
6. Regional development 6
7. Other 7
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SECTION B: EMPLOYEE SATISFACTION QUESTIONAIRE
Instructions: I request you kindly that you select or thick (√) the best alternative that
exactly reflects or close your opinion for the following statement on five point Licker
scale. Again thanks for your time and contribution for filling this questionnaire.
Strongly Disagree Disagree Neutral Agree Strongly Agree
1 2 3 4 5
NO Pay 1 2 3 4 5
1. I feel I am being paid a fair amount for the work I do.
2. I don‟t feel my efforts are rewarded the way they
should be
Communication
3. Communications seem good within this organization
4. The goals of this organization are not clear to me
5. I often feel that I do not know what is going on within
the company
Supervisor
6. My immediate supervisor is quite skilled in doing
his/her job
7. My supervisor pays me little interest as his subordinate
Promotion
8. There is little chance for promotion on my job.
9. I‟m satisfied with my chances for promotion
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SECTION C: PROFITABILITY QUESTIONNAIRES
Instructions: I request you kindly that you select or thick (√) the best alternative that
reflects or close to your opinion. L for low, M for medium and H for high
LOW (M) MEDIUM (M) HIGH (H)
1 2 3
Thank you very much for giving me a chance to respond my questionnaires,
Really you have been the most helpful!
NO Profitability Questionnaire L M H
1. The price earnings ratio of this company is
2. How could you value this company's dividend
coverage?
3. As the industry's return on equity grows this firm's
return is getting
4. How high is the return on asset of this company?
5. What is the gross margin level of this company?
6. The annual operating margin of this company is
7. This company's inventory turnover is actually
8. The sales growth of this company is
9. The annual average profit of this company is