EMPLOYEE LOYALTY AND EMPOWERING LEADERSHIP AS PREDICTORS OF ORGANIZATION EFFECTIVENESS

Abstract

Organization effectiveness is a continuous and ongoing process that depends on multiple constituencies of an organization. Past research studies have indicated that employees are the most important constituency of effectiveness of any organization because employee’s attitude and behavior decide the success of organization’s competitive strategy. Sparrow and Cooper (2014) suggested that organizational effectiveness is associated with employee and their performance. In the knowledge-based economy and service organizations, the nature of work and workplace has been transformed, and the role of employees in determining organization’s success has been acknowledged. Loyal employees can make major contribution to organization efficiency, performance, and productivity if they are organized, developed, and trained in alignment with organizational goals (Esland et al., 2013). Loyal employees are very crucial for any organization because the higher level of loyalty leads to their intention to stay (Book, Gatling, and Kim, 2019), employee engagement (Ibrahim, and Al Falasi, 2014), and extra role play (Coughlan, 2005), which in turn may influence organization effectiveness. Organizational leadership is crucial for all organizations to achieve its goals and objectives (Gozubenli, 2009). Leader contributes to organization effectiveness by developing organizational vision, culture, and relationship with their important stakeholders such as employees, investors, suppliers, etc., (Robertson, Callinan, and Bartram, 2003). More specifically, leaders inspire their subordinates to do the best for the organization. Past research studies have confirmed that leadership style has the potential to influence individual’s ability, belief, and attitude toward the attainment of organizational goals and objectives (Kouzes and Posner, 2007). Although leadership is an important research area, very few empirical studies have examined the impact of leadership on employees’ loyalty and organization effectiveness. Therefore, in this study, we aimed at investigating the impact of employee loyalty and empowering leadership on organization effectiveness. It is an attempt to assess the relationship of key dimensions of employee loyalty (commitment to manager and organization, job conditions, personal benefits, service element and location, career, and status) and empowering leadership with organizational effectiveness. Furthermore, this study examines the mediating role of employee loyalty between empowering leadership and organization effectiveness. The study also scrutinizes the role of certain vital demographic variables such as age, gender, and nature of work (medical and non medical) on the selected variables. To achieve the research objectives based on the identified research gaps, the primary responses were collected from 295 frontline employees working in NABH (National accreditation board for hospitals and healthcare providers) accredited hospitals that are situated in the metro cities of India. The minimum criteria of selecting hospitals for data collection are that the hospital should be NABH accredited and multi-specialty. The employees’ responses were taken using both theonline and offline sources. SPSS and AMOS software were used to analyze the primary data. Furthermore, the statistical techniques such as t-test, one way ANOVA, multiple hierarchical regression, and conditional process macro analysis were used to test the hypothesis. After initial screening of data, the confirmatory factor analysis was performed to check the reliability, validity, and model fit indices. In the next step, t-test, and ANOVA were used to examine the effect of demographic variables (age, gender and nature of work) on employee loyalty, empowering leadership, and organization effectiveness. Further, the multiple hierarchical regression was applied to scrutinize the impact of employee loyalty and empowering leadership along with their respective dimensions. Finally, the conditional PROCESS macro analysis was used to test the mediation effect of employee loyalty between empowering leadership and organization effectiveness. The study results highlighted that in the Indian hospital context, the frontline employees are high on service element and location, commitment to managers and organization, and career and status, but average on job conditions and personal benefit dimensions of employee loyalty. Further, the frontline employees demonstrate average empowering behavior as perceived from their leaders, and are also high on task significance, but average on employee proactivity and goal orientation. Beside this, the frontline employees aged between 21 and 30years have scored high on all dimensions of employee loyalty (commitment to managers and organization, job conditions, personal benefits, service element and location and career and status) compared to employees aged between 31and 40 as well as 41 and above. Contrary to the male frontline employees, the female frontline employees were found to be high on commitment to managers and organization, job conditions, personal benefits, and career and status,, but both the male and female employees have scored same on service element and location dimension of employee loyalty. Furthermore, considering the nature work, the frontline employees working in medical departments have scored high on commitment to managers and organization, job conditions, personal benefits, and service element and location in contrast to the non-medical employees, but both have scored same on career and status dimension of employee loyalty. Furthermore, the frontline employees aged between 21 and 30 years have perceived leaders’ higher empowering behavior in contrast to frontline employee aged 31- 40 and 41 and above. Similarly, the female frontline employees have scored higher on leader’s empowering behavior than the male frontline employees. Likewise, medical employees have scored high on leaders’ empowering behavior in contrast to the non-medical employees. Furthermore, the frontline employees aged between 21 and 30 years have scored high on employee proactivity, goal orientation, and task significance dimensions of organization in contrast to employees aged between 31and 40 as well as 41 and above. Similarly, the female frontline employees have scored higher on employee proactivity, goal orientation, and task significance dimensions of organization effectiveness than male frontline employees. Likewise, medical employees have scored high on employee proactivity, goal orientation, and task significance dimensions of organization effectiveness in contrast to the non-medical employees. In addition, we also found that employee loyalty is a significant predictor of organization effectiveness. Specifically, the four dimensions (commitment to manager and organization, job conditions, personal benefits, and career and status) of employee loyalty jointly influence organization effectiveness except one dimension, i.e., service element and location. Subsequently, we also found that leaders’ empowering behavior is a significant predictor of organization effectiveness, and more specifically, the impact of employee loyalty and empowering leadership on organization effectiveness. It was found that employee loyalty partially mediates the relationship between empowering leadership and organization effectiveness. Based on the findings, this study highlighted many managerial implications. First, the managers of Indian hospitals should focus on improving the quality of communication between the supervisor and subordinate with co-workers by organizing regular training program on communication and interpersonal skills as well as through coaching and mentoring sessions by supervisors. Second, the managers of Indian hospitals should provide ample opportunities to employees for enhancing their existing skill, knowledge and attitude by organizing in house and sponsoring relevant outside programs. These skill development opportunities should be supported with flexible working hours, job security, and personal benefits such as maternity and paternity leave. Further, hospital managers should have defined career path along with good promotional opportunities. Third, the managers must also remember that empowerment is not the solution of all employees’ problems; however, the right implementation of empowering techniques may bring many positive outcomes at the workplace such as goal orientation and proactivity. Therefore, employees should be empowered only if they have the desire to get empowered at the workplace or feel powerless. Further, this study limitation includes cross-sectional research design, less representation of doctors, sample from only NABH accredited hospitals, and self-reported measures. This study also provides useful recommendations to scholars and academicians for conducting more research using longitudinal research designs. Further, data should be collected from more doctors as well as from government, small and single specialty hospitals. Moreover, we also emphasized on designing multilevel analysis along with mediators and moderators.