1

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).

25

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

60

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