CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
Employee engagement encompasses several key concepts that influence workplace
dynamics, including job satisfaction, organizational commitment, and employee
motivation. Job satisfaction reflects how content employees are with their roles and work
environment. Organizational commitment refers to the emotional attachment and loyalty
employees feel toward their organization. Employee motivation involves the internal and
external factors that drive individuals to perform their tasks. Alongside these ideas,
organizational performance is defined through various dimensions such as productivity,
operational efficiency, and goal alignment. Examining these concepts provides a
foundation for understanding how employee engagement and organizational performance
are conceptually linked.
2.1 Employee engagement
The hospitality industry, a global powerhouse contributing over 11.1 trillion USD
to the world economy ,thrives on employee engagement to deliver exceptional service
However, its demanding nature—characterized by long hours and frequent customer
interactions—often leads to stress, burnout, and disengagements.
Engagement is characterized by absorption, dedication, and vigor. In terms of
absorption, employees who immerse themselves in work tasks often find it challenging to
detach from their responsibilities. In a similar vein, dedication encompasses sentiments of
pride, challenge, significance, and zeal at work
Moreover, engagement, being a motivational state (Frederickson, 2000), has been
linked to proactive behavior at work Engaged employees tend to be more innovative and
excel in roles requiring adaptability. found that engaged employees, as perceived by
customers, exhibit extra-role performance in the hospitality sector.
Employee engagement is associated with a number of desirable individual, team,
and organizational outcomes. Specifically, engaged workers have greater job satisfaction
and commitment, less turnover intentions, greater organizational citizenship behavior and
improved health.
Employee engagement is associated with a positive and constructive state of mind
concerning work, which contributes to the overall development of the organization. It is
an indication of the positive attitude that workers bring to their tasks. Engaged employees
can invest their best efforts into their work when they are dedicated and committed to this
work. Employee engagement is a significant force in an organization that reflects the
degree of staff attitudes toward their work, particularly their dedication and proficiency in
communicating with the organization. Generally, engagement is concerned with the level
and quality of job performance. Additionally, engaged employees are significantly less
inclined to depart from the organization.
2.1.1 Job satisfaction on Organizational performance
Job satisfaction has been perceived principal factor which is closely link with
organizational productivity. Job Satisfaction is the degree which is measuring those
employees resemble their job and those are most certainly not. Judge et al (2017) said
that when employee is satisfied to their job than it creates charming pressure within
organization, motivate employee to job well and organization can get excellent
achievement from them.
Organizations also try to create a pool of satisfied workforce to ensure that
obstructions are not placed on the way of employees to generously commit themselves in
the purse of stated and or emergent organizational goals. However, the total
organizational performance depends on efficient and effective performance of individual
employees who work in the organization. Organizations therefore, look up to their
individual employee performance to gain high performance. This is because; individual
employee’s performance is an important factor that determines organization performance.
When an employee feels satisfied about the job, he/she is motivated to put in greater
effort in his/her job.
Employee satisfaction is closely related to productivity which is then related to
firm profitability. Employee satisfaction has a positive persuade on organizational
performance. Beside this, firm profitability has a reasonable non-recursive effect on
employee satisfaction. Employee satisfaction plays a considerable role in enhancing the
firm profitability and improving operational performance of organizations and quality of
good and services. There is no doubt in it that employee satisfaction is critical to attain
quality and profitability in organization. Employee satisfaction impacts quality at
industry, to achieve quality and profitability at organization, employee satisfaction is
fundamental and without it, organization cannot think of being successful.
Job satisfaction Job satisfaction is one of the most commonly used variables
regarding employee attitude. It refers to “overall evaluative judgments about jobs,
affective experiences at work, and beliefs about jobs”. Job satisfaction has been examined
using two approaches global evaluation and facet evaluation. With global evaluation,
scholars conceptualize job satisfaction as an overall affective and cognitive reaction to a
job.
The relationship between job satisfaction and organizational performance has
attracted considerable attention and discussion. When organizations review its
performances, it uses job satisfaction as one of the measures. An employee who has a
positive attitude toward his or her job will have job satisfaction and a willingness to
commit to his or her organization, thus increasing organizational performance. Under
reasonable conditions, managers will meet employees’ needs to enhance their job
satisfaction so that employees will increase their efforts to attain a good organizational
performance job satisfaction has a significant positive relationship on organizational
performance, which includes financial performance, service performance and behavior
performance.
Job satisfaction describes how contented an individual is with his or her job
(Parvin and Kabir, 2011). Job satisfaction is often assumed to be a pleasurable or positive
emotional state resulting from evaluation or appraisal of one’s job or job experience
(Locke, 1975). Spector (1997) referred to job satisfaction in terms of how people feel
about their jobs and different aspects of their jobs. Job satisfaction is closely related with
many organizational phenomena such as motivation, performance, leadership, attitude,
conflict, etc.
2.1.2 Organizational commitment on Organizational performance
Commitment is a promise to yourself or to others reflected in the action. Commitment is
a complete acknowledgment, as the true attitude that comes from the character and out of
one’s self. Commitment will encourage self-confidence, and morale runs the task towards
a change toward the better. Organizational commitment is a psychological state that
characterizes employees’ relationships with the organization or its implications that affect
whether employees will remain in the organization or not identified in three components:
affective commitment, continual commitment and normative commitment.
Commitment to the organization is an aspect that plays an important role in an
organization, because the commitment to the organization can affect the improvement of
effectiveness and work efficiency. According to Northcraft and Neale (1994: 73)
generally employees who have a high commitment to the organization will show more
effort in doing the task. Zurnali (2010: 56) said that organizational commitment is a
strong and strong feeling of a person towards the goals and values of an organization in
relation to the role of efforts to achieve the goals and values.
Organizations achieve their objectives when competent and committed employees
are engaged [17]. Getting committed employees who are competent and ready to give in
their best in the pursuit of the objectives of the organization has been one of the problems
facing most organizations especially in the service industry.
Sharma and Bajpai [18] assert that employees are regarded as committed to an
organization if they willingly continue their association with the organization and devote
considerable effort to achieving organizational goals. The high levels of effort exerted by
employees with high levels of organizational commitment would lead to higher levels of
performance and effectiveness of both the individual and the organizational levels
Employee Performance is defined as the attained outcome of actions with the skills of
employees who perform in some situation [19].
Today’s competitive business environment has made it even more pertinent for
organizations to maintain a highly committed workforce. This is because committed
employees pull together in one direction to improve their performance at both the
individual and team levels (Andrew, 2017). Thus, committed employees are capable of
improving the fortunes of the organization through their improved work behavior.
Organizations value commitment among their employees because it is typically
assumed to reduce withdrawal behavior, such as lateness, absenteeism and turnover
(Irefin& Mechanic, 2014). Hence, there is no doubt that these values appear to have
potentially serious consequences for overall organizational performance. Despite the
consensus in acknowledging the benefit of employee commitment to organizational
performance, employee commitment is not automatic. Hence, employee commitment has
become one of the most popular work attitudes studied by practitioners and researchers.
Akintayo (2010) and Tumwesigye (2010) noted that one of the reasons why commitment
has attracted research attention is that, organizations depend on committed employees to
create and maintain competitive advantage and achieve superior performance.
2.1.3 Employee motivation on Organizational performance
According to Maslow, employees have five levels of needs (Maslow, 1943):
physiological, safety, social, ego, and self-actualizing. Maslow argued that lower level
needs are first satisfied before the next higher level need would motivate employees.
Herzberg’s work categorized motivation into two factors: motivators and hygiene.
Motivator or intrinsic factors, such as achievement and recognition, produce job
satisfaction whereas hygiene or extrinsic factors, such as pay and job security, produce
job dissatisfaction.
Vroom’s expectancy theory is based on the belief that employee effort will lead to
performance and performance will lead to rewards (Vroom, 1964). Rewards may be
either positive or negative. The more positive the reward the more likely the employee
will be highly motivated.
Adams’s equity and justice theory states that employees strive for equity between
themselves and other employees (Adams, 1963, 1965). Inequity comparisons result in a
state of dissonance or tension that motivates an employee to engage in behavior designed
to relieve tension (e.g., raise or lower work efforts to re-establish equity, leave the
situation that is causing inequity).
Motivation is an important research topic in organizational psychology and
organizational behavior theory and refers to the mental state or mental process that
encourages specific work behaviors and leads to goal-directed behavior [56]. On the
other hand, intrinsic motivation refers to the factors that motivate organizational members
to do what they want to do or obtain intrinsic rewards [57].
Employee motivation has a significant impact on both employees and the organization's
performance. However, some studies indicate that employee productivity or job
performance is not only influenced by motivation, and the latter does not necessarily lead
to improved organization performance.
A motivational employee is responsive of the definite goals and objectives he/she must
achieve, therefore he/she directs its effort in that direction. Rutherford (1990) reported
that motivation formulates an organization more successful because provoked employees
are constantly looking for improved practices to do a work. Getting employees to do their
best work even in strenuous circumstances, is one of the employees most stable and
greasy challenges and this can be made possible through motivating them.
2.2 Ideas and Concepts of Organizational performance
For organizations, performance is one of the ways to measure the extent of its
effectiveness. The need for the ability to set goals and objectives to achieve its
performance and how to improve the overall organizational performance is undoubtedly
the most important organizational goals and objectives. Definition and measurement of
performance is a challenge for researchers because organizations have many, frequently
conflicting, goals indicated that performance is often used to measure the overall status of
the organization and its related policies.
Organizational performance in its simplistic state is the realization of organizational
objectives. It is important that organizations have measurable objectives as this has been
found to be integral to employees’ engagement and commitment toward the organization.
Financial benefits, profitability and organizational learning are some ways to assess
organizational performance. The burden of achieving performance within an organization
lies directly on the leadership of the organization, as they are required to make and
implement decision/strategies that will result in achieving the goals and objectives of the
organization.
According to RBV, competitive advantage derived from unique internal resources
such as green human capital—can lead to improved organizational performance. In this
context, organizational performance is influenced by how effectively a company uses its
resources to achieve strategic objectives, particularly those related to sustainability.
Employees with strong environmental awareness and sustainable innovation skills
contribute to the company's operational efficiency, reduce costs, and improve resource
utilization.
Organizational performance refers to the overall effectiveness and success of a
company in achieving its goals and objectives. It includes factors such as productivity,
profitability, customer satisfaction, innovation, and employee retention (Robiantoet, al.
2020). Strong organizational performance is crucial for long-term success and
competitive advantage. Organizations that prioritize employee development and
recognition experience higher levels of engagement (Sepahvand, & Khodashahri, 2021).
Offering opportunities for skill enhancement, career advancement, and mentoring
programs show employees that their growth is valued. Additionally, recognizing and
rewarding employee achievements, both big and small, boosts morale, motivation, and
overall engagement, resulting in enhanced organizational
2.3 Employee engagement and Organizational performance
Employee engagement refers to the emotional commitment and active
involvement of employees towards their work, organization, and its goals, while
organizational performance represents the overall effectiveness, productivity, and success
of the organization.
Theoretical perspectives and arguments were utilized to explore the association
between employee engagement and organizational performance. Various theories,
including the Job Demands-Resources Model, Self-Determination Theory, Job
Characteristics Theory, and Kahn’s Engagement Theory, were employed to examine the
impact of employee engagement on organizational performance.
Job Demands-Resources Model This model suggests that engagement is
influenced by job demands (such as workload and time pressure) and job resources (such
as autonomy, social support, and opportunities for growth). Engaged employees perceive
their job resources as sufficient to meet the demands, leading to positive outcomes such
as increased job satisfaction, motivation, and performance [20, 33, 42]. According to the
JD-R model, work engagement is shaped by the equilibrium achieved between the
demands and resources present in a job [42]. This equilibrium ultimately manifests as
vigor, dedication, and absorption, which can be considered as dimensions of employee
engagement [25].
The Self-Determination Theory (SDT) revolves around the inherent drive and
psychological requirements of individuals [5]. When it comes to involvement, SDT pro
poses that the levels of devotion and engagement can be understood through the
fulfillment of psychological needs such as autonomy, competence, and relatedness [56].
If employees perceive a sense of independence in their work, feel skilled and
accomplished, and enjoy positive social interactions and connections, they are more
inclined to exhibit dedication and complete absorption in their assigned tasks [18].
Job Characteristics Theory This theory argues that certain job characteristics
influence engagement and performance [2]. According to this theory view, key job
characteristics include skill variety, task identity, task significance, autonomy, and
feedback [37]. Engaged employees are more likely to experience meaningful and
challenging work, leading to higher levels of performance and satisfaction [24]. The Job
Characteristics Model places great emphasis on the significance of particular job
characteristics in promoting employee engagement. Vigor, dedication, and absorption are
regarded as the end results of meaningful and stimulating work [32].
Kahn’s Engagement Theory, developed by William A. Kahn, provides a
comprehensive framework for understanding employee engagement [46]. According to
Kahn, engagement is a psychological state that occurs when individuals bring their full
selves, both physically and emotionally, to their work roles [29]. It goes beyond mere job
satisfaction and involves a deep sense of connection, fulfillment, and involvement in
one’s work. Kahn, provides a framework for understanding employee engagement and its
dimensions, including vigor, dedication, and absorption.
Employee engagement has emerged as a critical factor influencing organizational
performance and success in the modern workplace. Defined as the emotional
commitment an employee has towards their organization and its goals, employee
engagement goes beyond mere job satisfaction to encompass a deep sense of
involvement, enthusiasm, and dedication to one's work and the organization as a whole.
From a human resource perspective, employee engagement is seen as a strategic
imperative that directly impacts various facets of organizational functioning, including
productivity, innovation, customer satisfaction, and financial performance. Engaged
employees are more likely to go above and beyond their job requirements, contribute
innovative ideas, and exhibit higher levels of job performance and commitment,
ultimately driving organizational success.
Employee engagement is the emotional commitment and level of involvement
that employees have towards their work, colleagues, and the organization as a whole
(Guo & Hou, 2022). It goes beyond mere job satisfaction and reflects a deep connection
that motivates employees to go above and beyond their basic responsibilities. Employee
engagement is influenced by various factors such as workplace culture, organizational
communication, managerial styles, trust, respect, and leadership (Stewart et al., 2019). An
engaged employee is aware of the business context and works with colleagues to improve
performance within the job for the benefit of the organization (Hui et, al. 2020).
Improving employee engagement positively affects an employee's job performance and
organizational profitability.