Relationship Between Perceived Organizational Climate And Job Satisfaction

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Relationship Between PerceivedOrganizational Climate and Job SatisfactionbyLOH KOOI CHENGResearch report submitted in partial fulfilmentof the requirements for the degree ofMaster of Business AdministrationMay 1997

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DEDICATIONSpecially dedicated to my beloved parentswho do not understand this work,butfully understand on how to give meTHE BEST in my life.ii

ACKNOWLEDGEMENTSThis work could not have been realized without the participation of many.I amextremely grateful to my dissertation supervisor, Professor Mirza Saiyadain, for hisconstant guidance and invaluable advice throughout the duration of this project. I amgrateful to the organization that allowed me to conduct this research in its premises, toPn. Nor Hayati Bt. YusofT who assisted me in distributing the questionnaires and to allthe participating respondents who took paint to complete the questionnaires for thisstudy.I would also like to express my appreciation to Mr. Ho Peng Yoong who hasspent valuable time to proof-read this work. Last but not least, special thanks to all myMBA coursemates who have helped me in one way or another in overcoming problemsin completing this study.iii

TABLE OF CONTENTSContentsPageTITLE PAGEDEDICATIONIIACKNOWLEDGEMENTSIllTABLE OF CONTENTSIVLIST OF TABLESVIABSTRAKVIIABSTRACTVIIIChapter 1 : INTRODUCTIONI. I Introduction1.2 Definition ofKey Terms21.2. 1 Organizational climate21.2.2 Job satisi1tctionI 3 Organizational Climate and Job Satisfaction71.4 Research Problem7Chapter 2 : LITERATURE REVIEW2. 1 Literature Review92.2 Organizational Climate and Job Satisfaction in the Malaysian Context152.3 Conclusions from Review of the Literature162.4 Theoretical Framework172.4. I Perception of organizational climate182.4.2 Job satisfaction182.4.3 Moderating variables182.4.3.1 Age19iv Years ofservice192.4.3.320Education level202.5 Research HypothesisChapter 3 : METHODOLOGY3. I Measurement213.2 Sample223.3 Data Collection23Chapter 4 : RESULTS4.1 Sample Profile244.2 Perception Organizational Climate244.3 Job Satisfaction254.4 Test ofHypothesis I264.5 Moderating Variables264. 5. l Test of -hypothesis 2Tl4.5.2 Test ofhypothesis 3284.5.3 Test of hypothesis 429Chapter 5: DISCUSSION5. 1 Summary and Interpretation ofResearch Findings305.2 Moderating Variables325.3 Limitations of Study.) )5.4 Future Research34Bibliography35Appendices38.,.,v

LIST OF TABLESTABLEPage4.1Sample Profile254.2Mean and Standard Deviation Estimates274.3Anova (Age)284.4An ova (Years of Service)284.5Anova (Educational Level)29vi

ABSTRAKTujuan penyelidikan ini ialah untuk mengkaji hubungan antara persepsi iklim organisasidan kepuasan kerja di kalangan p ran op r ltor wanita di salah sebuah kilangelektronik antarabangsa di Zone Perdagangan Bebas, Bayan Lepas, Pulau Pinang.Kajian ini juga bertujuan untuk mengetahui samada hubungan ini dipengaruhi oleh umur,jumlah tahun berkerja dan tahap pelajaran. Data diperolehi daripada 111 pengeluaranoperator wanita. Keputusan yang diperolehi daripada kolerasi ( corrlation) menunjukkanterdapat hubungan yang signifikasi antara persepsi iklim organisasi dengan kepuasankerja.Keputusan ANOVA menunjukkan persepsi iklim organisasi adalah sangatmustahak kepada kepuasan kerja tetapi bukanlah di pengaruhi oleh faktor umur, jumlahtahun bekerja dan tahap pelajaran.vii

ABSTRACTThe objective of this research was to study the relationship between perceivedorganizational climate and job satisfaction among the female production operators in oneofthe electronic manufacturing industries located in Free Industrial Zone, Bayan Lepas,Penang, Malaysia.The study also examined if this relationship was influenced bymoderating variables like age, years of service and educational level.obtained from Ill respondents.Data wereCorrelation results indicated that the relationshipbetween perceived organizational climate and job satisfaction was significant. ANOVAresults showed that perception of organization climate was important for job satisfactionbutthe relationship was not influenced by the moderating variables; age, years ofservice and educational level.viii

Chapter 1INTRODUCTION1.1 INTRODUCTIONAs one travels across a continent, one can feel the difference in geography and climate.Similarly, climates are found to vary in every organization. One can feel the differencein each organization's personality, uniqueness, characteristics while moving from oneorganization to another. Each organization has its own unique constellation ofcharacteristics and properties. Organizational climate is the term used to describe thispsychological structure of organization (Dubin, 1984).The interaction between individual personalities and organization's situation creates theumqueness ol each orgamzation.Getfmg a job done is often easier than moving aheadsteadily in the same organization.People always find problems to accept or respond tothe organizational climate that they belong to. A person's satisfaction with his or herjob is related to the organizational climate in which he or she lives, even extending to thearea where one lives (Haller, 1977).Lawler ( 1974), indicated that each organization has a climate which arousesindividual's need for power, affiliation or achievement. Results from the past studiesshow that the organizations with the "achievement climate" are significantly moreproductive and innovative than the organizations with the "power" and "affiliation"climates.

The individual in the organization is faced with several questions on the perception oforganizational setting in which he or she is working.optimum environment for an individual?"personality" of the settings?They want to know; what is theHow dopersonalities relate to theConflicts between individuals and organizations areinevitable.For the individual, there is the important question - which climate suits me best? It isalso a question to which the answer may change with time and with circumstances.People tend to move around to search for an organizational climate that matches theirneeds. For example, the person who likes to participate in decision making may be morecomfortable in a democratic climate than in an autocratic one. Does it also mean thatworking in a climate that suits his/her personality will also lead to a high degree of jobsatisfaction?1.2 Definition of Key TermsThe definition of organizational climate faces problems due to the absence of anadequate theory. However, despite inadequacies, there have been a number of attemptsto account for this process and explain how organizational climates are developed.1.2.1 Organizational climateThere are various ways through which the construct of climate can be defined. One ofthe most widely cited definitions of organizational climate is that by Litwin and Stringer(1968). They viewed organizational climate as:" a set ofmeasurable properties ofthe2

work environment, perceived directly or indirectly by the people who live and work inthis environment and assumed to influence their motivation and behavior".Moran and Volkwein (1992) explained how organizational climates are formed. Theysummarized them into four general categories.They are "the structural," the"perceptual," the "interactive" and the "cultural approach".A brief description ofthese four approaches follows:(1) The Structural ApproachClimate is regarded as an objective manifestation of the organization's structure.Itforms because members are exposed to common structural characteristics of anorganization. As a result of this exposure, they have similar perceptions. The similaritym perceptiOns represents their organization's climate. There are a few problems withthis approach.It cannot account for groups within the same organization formingdifferent climates. Organizational structural characteristics are often inconsistent withthe climate. Inadequate consideration of subjective response to structural characteristicsdoes not consider the interpretative processes of groups in forming climates.(2) The Perceptual Approach.This approach acknowledges that individuals respond to situational variables in a mannerthat is psychologically meaningful to them. Climate is a description of the psychologicalprocesses of organizational conditions. Some of the problems with this approach consistof the perceptual process itselfBy placing the source of climate entirely within the1

individual perceiver, it denies the possibility of a "composition theory" or explanationfor the formation of climate as an organizational property. Secondly, it assumes thatmeaning is something individuals bring to and impose on a situation, rather than createthrough interaction with others.(3) The Incentive Approach.Basic contention in this approach is that the interaction of individuals in responding totheir situation brings forth the shared agreement which is the basis of organizationalclimate. However, this does not consider the broader context, or the extent to which ashared organizational culture influences interaction among group members.(4) The Cultural Approach.According to this point of view, organizational climate is created by a group ofinteracting individuals who share a common, abstract frame of reference (i.e. theorganization's culture), as they come to terms with situational contingencies. Howeverit requires continuing clarification of the relationship between organizational culture andclimate.Joyce and Slocum( 1979) have suggested the following characteristics of organizationalclimate :First, all climates are held to be perceptual and psychological in nature, whether we referto the climate of organization, division, or subgroup of the organization. Therefore,4

individual, group or organization climate represents perceptions held by members ofsocial units.Second, all climates are abstract.People normally utilize information about otherpeople, and about the actions of the organization, to form summary climate perceptions.When individuals report on their climate, they sum up either their experiences or theirsense of others' experiences, and then they form a cognitive map of the organization.Third, since climates are perceptual and abstract,they are held to be subject to thesame principles of perceptions as other psychological concepts. When these principlesare utilized in the perception of work settings, a multidimensional description results.Finally, climates are considered to be predominantly descriptive rather than evaluative innature.Then is to say, most ciimate researchers ask Individuals to tell what they see mtheir work environment rather than asking them to label what they see as good or bad.For the purpose of this study, organizational climate refers to a set of properties of theorganizational characteristics and processes that are perceived by employees who workthere and serve as a major force in influencing their job behaviour.1.2.2 Job satisfactionJob satisfaction is defined as individuals' cognitive, affective and evaluative reactionstoward their jobs (Greenberg and Baron, 1993). In simple forms, job satisfactionexplains what makes people want to come to work, feel happy and decide not to quit5

from the job.Thus, job satisfaction or dissatisfaction depends on a large number of factors, rangingfrom where employees have to park their cars and whether the boss calls them by theirfirst name to the sense of achievement or fulfilment that they may find in their work.Nash ( 1985) indicated that job satisfaction is attributed to not one but many factors thatvary in their impact on an individual's satisfaction with life because work varies inimportance from individual to individual.He also found that people who take their job as prime interest, experience high levels ofjob satisfaction. Their job satisfaction will further be enhanced if they are doing workthat uses their skills. In addition to this, job satisfaction is an indicator of an employee'smotivation to come to work whtch may change wtth age and employment cycle.Job satisfaction varies as a function of age, health, number of years worked, emotionalstability, social status, leisure and recreational activities, family relationships, and othersocial outlets and affiliations. Also, personal motivations and aspirations and how wellare they fulfilled can influence the attitude employees have towards their work.For the purpose of this study, job satisfaction was accepted as the end result feelingcaused by a host of factors that cause an employee to say " I am satisfied with mywork".6

1.3 Organizational Climate and Job SatisfactionSeveral authors have noted that climate is a perceptual description of the workenvironment whereas job satisfaction is a person's affective evaluative response toaspects of their job (Hellriegel and Slocum, 1974). However, the relationship betweenthe perception of organizational climate and job satisfaction is one of the issues that hasgenerated a considerable amount of debate among researchers in the field.There isevidence to suggest that climate and job satisfaction by and large correlate, while a fewKeenam and Newton (1984) foundstudies suggest that it may not be so.thatorganizational climate contributed the most variance to job satisfaction.1.4 Reseat·ch Problem'Smce orgamzat10nal cl1mate l1as been found to have some effect on job satisfaction, thisstudy examines if there is a relationship between perception of organizational climateand job satisfaction in one of the multinational organizations located in Free IndustrialZone, Penang, Malaysia. This research will concentrate on the production operators inthe manufacturing company. Female production operators are selected to be the unit ofstudy for this research for the following reasons :1.Production operatorsare in high demand by almost all the industries located inPenang and Malaysia as a whole. The production operators average turnover ratefrom January to December 1995 according to a survey done by ManagementInformation Services Sdn. Bhd.(Compensation Report,Northern region (inclusive Penang, Kedah and Perlis).71996) is 48% in theThe average wage increase

in Malaysia according to this survey is 9.5% in 1996 and expected to be 9.3% in1997. The demand for production operators especially female will not decrease andobviously salary increment and raise of fringe benefits are not the only solution tosustain the production operators.There must be some ways bywhich theorganization can retain the female production operators. Improving the perceptionof organizational climate is perhaps one of the answers.2. Research on perception of organizational climate and job satisfaction is commonlyconducted in the West but this research is not popular in Malaysia.3. Research on perception of organizational climate and job satisfaction is targeted athigher position like manager, engineer, officer, supervisor but not on productionoperator.

Chapter 2LITERATURE REVIEW2.1 Literature ReviewThere has been a long standing interest as well as controversy on the study oforganizational climate among organizational researchers.The reason organizationalclimate is considered to be important is because of its proposed relationship to otherorganizational phenomena.Relationships have been found between organizational climate and job satisfaction, jobperformance, leadership behaviour and the quality of work group interaction (Schnake,1982). In addition to this, organizational climate has been shown by numerous studiesto intluence the attitudes and behaviours of individuais in organizations (Fieid andAbelson, 1982).Schneider and Snyder ( 1975) studied the relationship among two measures of jobsatisfaction, one measure of organizational climate, and seven production and turnoverindices of organizational effectiveness in 50 life insurance agencies (N 522)formanagers (n 45), assistant managers and supervisors (n 209), secretaries andstenographers (n 79), in-house trainees (n 146) and brokerage trainees (n 43). Thisstudied argued that a logical and empirical distinction between the concepts oforganizational climate and job satisfaction is possible if:9

I. Organizational climate is conceptualized as a characteristic of organization which isreflected in the descriptions employees make ofthe policies, practices and conditionswhich exist in the work environment, and2. Job satisfaction is conceptualized as an affective response of individuals which isreflected in the evaluations employees make of all the individually salient aspects oftheir job and the organization for which they work.In exploring similarities and differences between a measure of climate and two measuresof satisfaction it was shown that (Schneider and Snyder, 1975) :I. Responses to two measures of satisfaction were more related to each other than theywere to the responses to a measure of climate.2. Respondents, when grouped by position level within an organization, tended toagree more on the climate of their agencies than they did on how satisfied they were.3. Climate and satisfaction perceptions were more highly correlated for people in somepositions than for people in other positions.4. Those persons who described the climate of their agencres m what wouldtraditionally be thought of as the most "positive" sense were not necessarily the mostsatisfied.10

5. Neither climate nor satisfaction perceptions were strongly related to availableproduction data.6. Satisfaction perceptions tended to be more closely related to the turnover dataavailable for the year following the administration of the questionnaire than wereclimate perceptions.LaFollette and Sim (1975) studied to find out whether organizational climate isredundant in job satisfaction.Their respondents, total 1161 employees,includedregistered nurses, licensed practical nurses, nurse aids, technologists, therapists,dietitians, technicians, clerical, building and janitorial services.The respondentsprovided a rich environment m terms of the variety of skills and professionsencompassed in one organization.The result shows that organizational climate andorganizational practices were found to be related·to job satisfaction. However, d1mateand · thesatisfaction/performance relationship, which did not tend to support the redundancyhypothesis.Pritchard and Karasick ( 1973) explored theinfluence of climate on behaviour byexploring the construct validity of a measure of climate and presenting data on therelationship between climate and job performance and satisfaction as well as the effectsof interactions between climate and individual differences in values on performance andsatisfaction. They examined 76 managers from two organizations. Their findings thatorganizational climate is highly related to individual job satisfaction than to individualperformance, holds important significance.II

This study provided strong evidence to the finding that satisfaction relates positively toindividuals' perceptions of the supportiveness and friendliness of the climate, howeffectively it deals with its operating and competitive problems, how well the climaterewards its employees, and the degree of democratization achieved in the organization.If the climate possesses these charact ristics, it is likely that job satisfaction will also bepresent.However, if the dominant values of the firm are not consistent with highperformance, (for example, an over emphasis on social relationships), one may notexpect both performance and satisfaction to be related because such a climate willreward behaviour that is not necessarily related to effective performance.One of the most important sets of findings from this study suggested that theoreticallythe relationship of climate to job behaviour and attitudes is best described as acombination of predictor and moderator variables depending on the climate factorexamined.Certam climate charactensflcs directly predictedsatisfaction with theclimate.A highly supportive climate is likely to be associated with higher satisfaction for mostmanagers, regardless of individual personality characteristics.Yet, a climate low incentralization of decision making affects managers differentially. Managers high in needfor autonomy andneed for order tended to perform better in a highly structuredclimate.Muchinsky ( 1977) carried out a study to examine the relationships among measures oforganizational communication, organizational climate and job satisfaction. Six hundredand ninety five employees of a large public utility constituted the sample.12The results

show that some of the dimensions of organizational communication (trust, onality-lateral,satisfactionwithcommunication) were significantly related to all or most ofthe climate dimensions, whileother dimensions of communication (gatekeeping, overload, written modality, othermodality) were unrelated to any climate dimensions.The correlationbetween thecommunication dimensions of trust, influence, desire for interaction, accuracy,directionality-lateral, and satisfaction with communication correlated significantly withall or most of the job satisfaction dimensions, while the communication dimensions ofoverload and written modality were not significantly related to any job satisfactiondimensions.Downey et. a/ ( 1975) carried out a study to test the proposition that organizationalclimate interacts with individual personality in influencing job satisfaction andperformance.The subjects m this study were 92 managers from one Industrial firm.These· managers represented different hierarchical levels and functional areas in the firmand were with the organization for at least five years prior to the study.The results showed that individuals with personality needs that require social contact andinterdependence with others and who perceive the organization's climate as openand empathetic (in a human relations sense) and also setting high standards forachievement were more highly satisfied with their supervisor and pay than were thoseindividuals with a similar personality needs structure but who perceived theorganization's climate as closed, bureaucratic and impersonal.Individuals who werehighly self-confident and who perceived that the organization clearly assignsresponsibility and has clear-cut policies were more satisfied with their co-workers than13

were individuals (regardless of their self-confidence) who perceived organization asunstructured. The same, however, was not true for those individuals who perceived theorganization's climate as structured, but who were less self-confident.The highly sociable individuals tended to be dependent on their environment formeaning, values and rewards. Highly sociable managers who perceived their climate ashaving a reward system characterized by encouragement, lack of threats, and generallyhumanitarian, performed better than those managers who perceived their climate in asimilar manner but were less sociable.Friedlander and Margulies ( 1969) using perception data from an electronics firm, studiedthe multiple impact of organizational climate components and individual job values onworkers' satisfaction. They found that climate had great impact on satisfaction withinterpersonal relationships on the job, a moderate 1mpact upon safisfacf10n w1threcognizable advancement in the organization and relatively less impact upon selfrealization from task involvement.Koys and DeCo tis ( 1991) exam me twokinds of climate:psychological andorganizational. The former was studied at the individual level of analysis while the latterwas studied at the organizational level.Both aspects of climate were considered to bemulti-dimensional phenomena descriptive of the nature of employees' perceptions oftheir experiences within an organization. Two researches were conducted separately on367 respondents from managerial employees and 84 of managerial and professional mployees.From over 80 differently labelled dimensions reported in the literature,:hey found that only eight dimensions of climate generally corresponded to each other.14

They were autonomy, trust, cohesiveness, pressure, support, recognition, fairness andinnovation.Agno (1993) found from 405 employees that the degree of which employees liketheir job was influenced by a combination of characteristics of the environment(opportunity), the job (routinization and distributive justice) and personality variables(positive affectivity and work motivation).2.2 Organization Climate and Job Satisfaction in the Malaysian ContextStudies on the organizationa1 climate in the Malaysian context are not many. In one ofthe studies,Poon andAinuddin (1990),examined the relationships betweenorganizational climate factors and measures of job satisfaction and job performance.Data were obtained from 462 employees of a large manufacturing company. The studyindicated that organizational climate was significantly related to job satisfaction but hadlittle effect on how employees view their own job performance. From the correlationanalysis result, it can be seen that a clear positive relationship existed between risk,warmth and consideration, clarity of structure, performance standards, rewardorientation and employees' overall satisfaction. The climate dimension of accountability,individual responsibility, egoism, conflict avoidance, and intimacy were, however, foundto be inversely related to satisfaction.Othman and Abdullah (1991) looked into areas like organizational climate, motivationand work values in influencing the productivity.They carried out a case study in fivecompanies. The result showed that varies management .style, techniques and policies15

contributed to the productivity of these companies. Some of the more pertinent humanand technological factors that had significantly influenced and enhanced the productivitylevels of the respective companies were: dynamic organizational climate, employees'positive work values and opportunities for them to fulfil their needs in their work-relatedactivities.Saiyadain ( 1996) conducted a research to study the correlates of job satisfaction amongMalaysian managers. Specifically, the influence of six personal characteristics (gender,marital status, age, education, annual income and experience) and four organizationalfactors (supervisory style, organizational commitment, organizational politics and workstress) on job satisfaction was examined. Data were collected on 256 and 3 86 managersfor two separate studies.The results showed that gender and marital status did notinfluence job satisfaction.Age, years of education and experience were found to be"lmeafly related to job satisfaction with significant deviation from linearity. Increase inincome corresponded with increase in job satisfaction. As far as organizational factorsare concerned, supervisory style and organizational politics and work stress correlatednegatively with job satisfaction.The organizational factors tended to explain jobsatisfaction more than personal characteristics.2.3 Conclusions from Review of the LiteraturePerception of organizational climate and job satisfaction are related, but what is thenature of this relationship?](j

I. Individuals with different value systems are more satisfied in different climates, andthat an individual's satisfaction with different aspects of work depends on differentmixes of climate components.2. The more an area of work is valued, the higher is the relationship between theclimate and satisfaction.3. Different climates contribute to different levels of job satisfaction from experiments.2.4 Theoretical FrameworkThis study is designed to examine the relationship between perception of organizationalclimate and job satisfaction and the effect of the biographic factors on this relationship.The following theoretical frame work is proposed.Independent VariableDependent VariableJob SatisfactionOrganizationalClimateAgeears of ServiceEducation levelFor the purpose of this research, organizational climate is used as independent variableand job satisfaction as dependable variable. The relationship between organizational climate and job satisfaction is moderated by age, years of service and education level.17

2.4.1 Perception of organizational climateThe organizational climate construct is based on the assumption that individuals within agiven subsystem or organization and at a given hierarchical level should have similarperceptions about their climate (Hrebiniak and Lawrence, 1972).For the purpose of this study, organizational climate has been operationalized in terms ofthe perception of such aspects of organization as structure, responsibility, reward, risk,support, standards, conflict and identity.2.4.2 Job satisfactionThere is adistinction between overall job satisfaction and satisfaction with variousfacets of the job. Since ·satisfaction -with -one facet of the job "may ·be -difficult to 1solatebecause of the complex ways in which it may be intercorrelated with other facets, anoverall measure of satisfaction may provide more dependable data.Overall jobsatisfaction describes a person's overall affective reaction to the set of work and workrelated factors (Dunham, 1984)2.4.3 Moderating variablesHellriegel and Slocum (I 974) concluded that many of the climate studies lack asystematic effort to determine whether perceptions of climate vary significantly whenevaluated on the basis of such objective individual measures such as age, sex, years ofservice, organization practices and education level. Hence for the purpose of this18

study, age, years of service and education levelhave been included as moderatingvariables. AgeAs individuals get older, the life and working experiences gathered by them influencetheir perception of organizational climate as compared to a relatively younger person.Research shows that the younger workers tend to be less satisfied with t

1.2. 1 Organizational climate 1.2.2 Job satisi1tction I 3 Organizational Climate and Job Satisfaction 1.4 Research Problem Chapter 2 : LITERATURE REVIEW Page II Ill IV VI VII VIII 2 2 7 7 2. 1 Literature Review 9 2.2 Organizational Climate and Job Satisfaction in the Malaysian Context 15 2.3 Conclusions from Review of the Literature 16

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