CHAPTER 2 LITERATURE REVIEW

Transcription

1 CHAPTER 2 LITERATURE REVIEW 2.1 LEADERSHIP OVERVIEW It is generally accepted today that management can largely be taught to adults either in school or on the job. It is also widely believed that leadership is much more difficult to teach, but consensus on its exact origin stops there. Some people think that genes and early life experiences create leaders. Others point to events later in life. Indeed few questions have caused more heated debate over the years than: Are leaders born or made? A leader is someone who influences others. Leadership is a complex phenomenom involving the leader, the followers and the situation. Perhaps the best way to begin to understand the complexities of leadership is to see more of the ways leadership has been defined. Leadership researchers have defined leadership in many different ways: The process by which an agent induces a subordinate to behave in a desire manner. 42

2 43 Directing and coordinating the work of group members. An interpersonal relation in which others comply because they want to, not because they have to. The process of influencing an organized group toward accomplishing its goals. Action that focus resources to create desirable opportunities. Creating conditions for a team to be effective. Getting results through others (the end of leadership) and the ability to build cohesive, goal-oriented teams (the means of leadership). Good leaders are those who build teams to get results across a variety of situations. A complex form of social problems solving. Due to resolve the contradictory challenge company finding new ways to motivate the employees while simultaneously building employee morale, new approaches to leadership were needed. Achieving grand visions despite the obstacles always requires an occasional burst of energy, the kind that certain motivational and inspirational processes can provide. Such processes accomplish their energizing effect, not by pushing people in the right direction, as a control mechanism often does, but by satisfying very basic human needs: for achievement, belonging, recognition, self-esteem, a sense of control over one s life and living up to one s ideals. These processes touch us deeply and powerfully and elicit a most powerful response.

3 44 According to Cox (2001), there are two basic categories of leadership: Transactional and Transformational. The distinction between transactional and transformational leadership was first made by Downton (1973, as cited in Barnett, McCormick & Conners, 2001) but the idea gained little currency until James McGregor Burns (1978) work on political leaders was published. Since the 1980s some research has been done on Transformational and Transactional Leadership, and become a new paradigm in "the new leadership" (Bryman, 1992). (Bass, 1985) Transformational and Transactional Leadership is not an exclusive process and separated from one another. In another study it was found that Transactional Leadership increasing the lasissez faire leadership in raising the level of sales representative job satisfaction, employee satisfaction, and performance. Transformational Leadership provides a value added for employee satisfaction (Dubinsky, Yammario & Spamgler, 1995). According to Dr. Sugiharto, Chairman of PT Pertamina (Persero) on his presentation in Binus JWC School on February 14 th 2015, a good leader are combination from EQ (Emotional Quotient), IQ (Intelligent Quotient) and SQ (Spiritual Quotient). IQ (Intelligent Quotient), a person intelligent and EQ (Emotional Quotient) is basically the ability to recognize or sense emotions, use emotions to assists thought, understand emotion, and the ability to manage emotions. Daniel Goleman s in his book

4 45 Emotional Intelligence based on his research clearly shows that EQ is the absolute requirement of leadership, due to: Learn principles and practices for improvements in Self-Awareness and Self- Management: self-confidence; self-control; adaptability; initiative. Becoming more socially: empathetic; service orientation to others and the organization. Relationship Management: inspirational leadership practices; change management; conflict resolution skills; teamwork building techniques. Daniel Goleman, writing in What Makes A Leader, says that his findings have shown that the most effective leaders all have a high degree of Emotional Intelligence (EQ). SQ can be defined as the ability to behave with wisdom and compassion, while maintaining inner and outer peace, regardless of the situation. Wisdom and compassion being the pillars of SQ. Number of evidence is growing that Spiritual Intelligence (SQ), Emotional Intelligent (EQ) and Intelligence Quotien (IQ) are in fact major factors in determining the success of both leaders and organisations alike..

5 46 EQ EQ + SQ IQ PERFORMANCE KNOWLEDGE & SKILLS 20% SQ IQ BEHAVIOR, ATTITUDE, VALUES BELIEFS 80% Picture The Leadership Skills That Every Leaders Need According Dr. Sugiharto, Chairman of PT Pertamina (Persero) (Source: Dr. Sugiharto, Chairman of PT Pertamina (Persero) presentation at BINUS) Based on picture above, a good leader is an combination of EQ + SQ > IQ, which combination, 20% of Performance, Knowledge & Skills and 80% of Character. In other words it is a combination of Hard-skills and Soft-skills of a leader. 2.2 LEADERSHIP THEORY Transformational Leadership Theory Burns distinguished between ordinary (Transactional) leaders, who exchanged tangible rewards for the work and loyalty of followers, and extraordinary (Transformational) leaders who engaged with followers, focused on higher order intrinsic needs, and raised consciousness about the significance of specific outcomes

6 47 and new ways in which those outcomes might be achieved (Barnett, McCormick & Conners, 2001; Cox, 2001; Gellis, 2001; Griffin, 2003; Judge & Piccolo, 2004). The idea of Transformational Leadership was developed further by Bernard Bass, conception of Transactional and Transformational Leadership as opposites on a continuum. He suggested instead that they are separate concepts and that good leaders demonstrate characteristics of both (Judge & Piccolo, 2004, p. 755). Transformational Leadership is a style of leadership where the leader is charged with identifying the needed change, creating a vision to guide the change through inspiration, and executing the change in tandem with committed members of the group. It also serves to enhance the motivation, morale, and job performance of followers through a variety of mechanisms; these include connecting the follower's sense of identity and self to the project and the collective identity of the organization; being a role model for followers in order to inspire them and raise their interest in the project; challenging followers to take greater ownership for their work, and understanding the strengths and weaknesses of followers, allowing the leader to align followers with tasks that enhance their performance. According to Bass, Transformational Leadership encompasses several different aspects, including: Emphasizing intrinsic motivation and positive development of followers Raising awareness of moral standards

7 48 Highlighting important priorities Fostering higher moral maturity in followers Creating an ethical climate (share values, high ethical standards) Encouraging followers to look beyond self-interests to the common good Promoting cooperation and harmony Using authentic, consistent means Using persuasive appeals based on reason Providing individual coaching and mentoring for followers Appealing to the ideals of followers Allowing freedom of choice for followers Transformational leadership is that which; facilitates a redefinition of a people s mission and vision, a renewal of their commitment and the restructuring of their systems for goal accomplishment. It is a relationship of mutual stimulation and elevation that converts followers into leaders and may convert leaders into moral agents. Hence, transformational leadership must be grounded in moral foundations (Leithwood, as cited in Cashin et al., 2000, p.1). Transformational leadership fosters capacity development and brings higher levels of personal commitment amongst followers to organizational objectives. According to Bass (1990b, p. 21) transformational leadership occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and mission of the group, and when they stir employees to look beyond their own self-interest for the good of the group. Together, heightened

8 49 capacity and commitment are held to lead to additional effort and greater productivity (Barbuto, 2005; Leithwood & Jantzi, 2000; Spreitzer, Perttula & Xin, 2005). Transformational leaders elevate people from low levels of need, focussed on survival (following Maslow s hierarchy), to higher levels (Kelly, 2003; Yukl, 1989). They may also motivate followers to transcend their own interests for some other collective purpose (Feinberg, Ostroff & Burke, 2005, p. 471) but typically help followers satisfy as many of their individual human needs as possible, appealing notably to higher order needs (e.g. to love, to learn, and to leave a legacy). Transformational leaders are said to engender trust, admiration, loyalty and respect amongst their followers (Barbuto, 2005, p. 28). This form of leadership requires that leaders engage with followers as whole people, rather than simply as an employee for example. In effect, transformational leaders emphasize the actualization of followers (Rice, 1993). Transformational leadership is also based on self-reflective changing of values and beliefs by the leader and their followers. From this emerges a key characteristic of transformational leadership. It is said to involve leaders and followers raising one another s achievements, morality and motivations to levels that might otherwise have been impossible (Barnett, 2003; Chekwa, 2001; Crawford, Gould & Scott, 2003; Southwest Educational Development Laboratory, 2004).

9 50 Most leaders think very little about their own leadership style. They "do what comes naturally" when leadership is needed. If they are successful leaders, their instincts usually serve them well. To develop leadership ability, leaders need to be more aware of how they lead. We all have an image of a leader. It can be described by such words as intelligent, courageous, persuasive, skilful, and powerful. You may have heard the myth that Leaders are Born, Not Made! However, numerous leadership studies and programs have shown that individuals with a desire to do so can take steps to learn, practice and improve their leadership capabilities and develop into leaders. The ability to lead effectively is based on a number of key skills. These skills are highly sought after by employers as they involve dealing with people in such a way as to motivate, enthuse and build respect. As a leader there are seven basic principles that a leader should have in order to create a synergy among others (rees, 2001): 1. Simplication Under the principle of simplification, the transformational leader speaks in a clear and practical manner while articulating the direction the team is heading. Specifically, the plan for each project should include more than what needs to be done at the moment. The desired end result should also be vividly communicated so employees know where they, and the project, are heading. By

10 51 knowing and effectively relaying what the project needs to transform into the anticipated result, you eliminate miscommunication and misunderstanding. 2. Motivation Employees need motivation to perform at their best. Under the principle of motivation, you gain the agreement and commitment necessary to elevate your vision. By understanding your employees likes and dislikes, you know what motivates and what doesn t. For example, recognizing and applauding their accomplishments, providing training to increase their knowledge base, establishing a pleasant work environment, giving half-days off for performing above expectations, or providing weekly snacks such as bagels or donuts, can motivate employees into performing at their highest level 3. Facilitation The principle of facilitation requires you to provide your employees with the proper learning tools to elevate the vision to its greatest height. Specifically, workers need stimulating work that challenges and expands their minds and facilitates the desire to keep learning. As a transformational leader, you recognize this principle and work toward improving your employees intellectuality. 4. Innovation Change in a business environment is inevitable. Under the principle of innovation, you courageously recognize the need for change and initiate it accordingly. For example, innovation may include learning and adapting to an upgraded accounting system, or adjusting to an employee who has just been

11 52 promoted to management. As a transformational leader, you effectively show employees why the change is needed, how it will benefit them and the company, and how to embrace it. 5. Mobilization You need the right people to elevate your vision. Transformational leaders know how to assemble the appropriate team to get the job done. This includes enlisting, empowering and equipping qualified team leaders and other willing participants who do not have leadership roles. The transformational leader understands the importance of assigning tasks based on participants characteristics and abilities. 6. Preparation The principle of preparation requires transformational leaders to be infinite students. You must have the introspective ability to keep learning about yourself, alone or with the assistance of others. To maintain a flourishing bond with your employees, you must always be prepared to nurture and support the relationship. This means looking outside yourself, concentrating on what s best for the team, and transferring this energy to your employees so they emulate this behavior. 7. Determination Determination means having the tenacity to finish the race regardless of the hurdles that come your way. The principle of determination requires you to depend on your courage, stamina, strength and perseverance to realize your vision. By displaying endurance, you show employees that hard work pays off

12 53 in the end. In business, a vision is a realistic, convincing and attractive depiction of where you want to be in the future. Vision provides direction, sets priorities, and provides a marker, so that you can tell that you've achieved what you wanted to achieve Transformational Leadership Behavior A transformational leader goes beyond managing day-to-day operations and crafts strategies for taking his company, department or work team to the next level of performance and success. Transformational leadership styles focus on team-building, motivation and collaboration with employees at different levels of an organization to accomplish change for the better. Transformational leaders set goals and incentives to push their subordinates to higher performance levels, while providing opportunities for personal and professional growth for each employee. Transformational leadership fosters capacity development and brings higher levels of personal commitment amongst followers to organizational objectives. According to Bass (1990b, p. 21) transformational leadership occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and mission of the group, and when they stir employees to look beyond their own self-interest for the good of the group. Together, heightened capacity and commitment are held to lead to additional effort and greater productivity (Barbuto, 2005; Leithwood & Jantzi, 2000; Spreitzer, Perttula & Xin, 2005).

13 54 According to the James McGregor Burns in his 1978 book, Leadership, the idea of Transformational Leadership, an effective leader is a person who does the following: 1. Creates an inspiring vision of the future. A compelling vision provides the foundation for leadership. But it's leaders' ability to motivate and inspire people that helps them deliver that vision. What's particularly helpful here is where leaders have expert power. People admire and believe in these leaders because they are expert in what they do. They have credibility, and they've earned the right to ask people to listen to them and follow them. This makes it much easier for these leaders to motivate and inspire the people they lead. Leaders can also motivate and influence people through their natural charisma and appeal, and through other source of power, however, good leaders don't rely too much on these types of power to motivate and inspire others. 2. Motivates and inspires people to engage with that vision. Determination also needed to create a vision, leaders focus on an organization's strengths by using tools such as Porter s Five Forces, Core Competence Analysis, VRIO Analysis and SWOT Analysis to analyze their current situation. They think about how their industry is likely to evolve, and how their competitors are likely to behave. They look at how they can innovate successflly, and shape their businesses and their strategies to succeed in future marketplaces. And they test their visions with appropriate market research, and

14 55 by assessing key risks using techniques such as Scenario Analysis. Therefore, leadership is proactive problem solving, looking ahead, and not being satisfied with things as they are, dynamic instead of static. Once they have developed their visions, leaders must make them compelling and convincing. A compeling visison is one that people can see, feel, understand, and embrace. Effective leaders provide a rich picture of what the future will look like when their visions have been realized. They tell inspiring stories, and explain their visions in ways that everyone can relate to. Here, leadership combines the analytical side of vision creation with the passion of company s shared values, creating something really meaningful to the people being led. 3. Manages delivery of the vision. According to the Hersey-Blanchard Situational Leadership Model, there is a time to tell, a time to sell, a time to participate, and a time to delegate. Knowing which approach you need to use, and when you need it, is key to effective leadership. Leaders must ensure that the work needed to deliver the vision is properly managed either by themselves, or by a dedicated manager or team of managers to whom the leader delegates this responsibility and they need to ensure that their vision is delivered successfully. Leaders also need to make sure they manage change effectively. This helps to ensure that the changes needed to deliver the vision are implemented smoothly and thoroughly, with the support and backing of the people affected.

15 56 4. Coaches and builds a team, so that it is more effective at achieving the vision. Individual and team development are important activities carried out by transformational leaders. To develop a team, leaders must first understand team dynamics. A leader will then ensure that team members have the necessary skills and abilities to do their job and achieve the vision. They do this by giving and receiving feedback regularly, and by training and coaching people to improve individual and team performance. Leadership also includes looking for leadership potential in others. By developing leadership skills within your team, you create an environment where you can continue success in the long term. And that's a true measure of great leadership. Transformational leaders fit well in leading and working with complex work groups and organizations, where beyond seeking an inspirational leader to help guide them through an uncertain environment, followers are also challenged and feel empowered; this nurtures them into becoming loyal, high performers. There are 4 components to transformational leadership (Barbuto (2005); Hall, Johnson, Wysocki & Kepner (2002); Judge & Piccolo, 2004; Kelly (2003); Simic (1998)), sometimes referred to as the 4 I's: Idealized Influence (II) - the leader serves as an ideal role model for followers; the leader "walks the talk," and is admired for this. Charismatic vision and behaviour that inspires others to follow.

16 57 Inspirational Motivation (IM) - Transformational leaders have the ability to inspire and motivate followers. Combined these first two I's are what constitute the transformational leader's charisma. Capacity to motivate others to commit to the vision. Individualized Consideration (IC) - Transformational leaders demonstrate genuine concern for the needs and feelings of followers. This personal attention to each follower is a key element in bringing out their very best efforts. Coaching to the specific needs of followers. Intellectual Stimulation (IS) - the leader challenges followers to be innovative and creative. A common misunderstanding is that transformational leaders are "soft," but the truth is that they constantly challenge followers to higher levels of performance. Encouraging innovation and creativity. Nevertheless, it is clear that general understandings of transformational leadership are dominated by acceptance of the four dimensions set out above. These factors have been confirmed by empirical work in the area (Bass, Avolio, Jung & Berson, 2003, p. 208) Transactional Leadership Theory The transactional leader, a concept introduced by Max Weber in 1947 and then reiterated by Bernard Bass in Transactional Leadership, also known as managerial leadership, focuses on the role of supervision, organization, and group

17 58 performance; transactional leadership is a style of leadership in which the leader promotes compliance of his/her followers through both rewards and punishments. Unlike transformational leadership, leaders using the transactional approach are not looking to change the future, they are looking to merely keep things the same. Leaders using transactional leadership as a model pay attention to followers' work in order to find faults and deviations. A simple assumption about Transactional Leadership: People are motivated by reward and punishment. Social systems work best with a clear chain of command. When people have agreed to do a job, a part of the deal is that they cede all authority to their manager. The prime purpose of a subordinate is to do what their manager tells them to do. The transactional leader works through creating clear structures whereby it is clear what is required of their subordinates, and the rewards that they get for following orders. Punishments are not always mentioned, but they are also well-understood and formal systems of discipline are usually in place. The early stage of Transactional Leadership is in negotiating the contract whereby the subordinate is given a salary and other benefits, and the company (and by implication the subordinate's manager) gets authority over the subordinate. When the

18 59 Transactional Leader allocates work to a subordinate, they are considered to be fully responsible for it, whether or not they have the resources or capability to carry it out. When things go wrong, then the subordinate is considered to be personally at fault, and is punished for their failure (just as they are rewarded for succeeding). The transactional leader often uses management by exception, working on the principle that if something is operating to defined (and hence expected) performance then it does not need attention. Exceptions to expectation require praise and reward for exceeding expectation, whilst some kind of corrective action is applied for performance below expectation. Whereas Transformational Leadership has more of a 'selling' style, Transactional Leadership, once the contract is in place, takes a 'telling' style. A person who is largely motivated by money and simple reward, and hence whose behavior is predictable. In practice, there is sufficient truth in Behaviorism to sustain Transactional approaches. This is reinforced by the supply-and-demand situation of much employment, coupled with the effects of deeper needs, as in Maslow s Hierarchy. When the demand for a skill outstrips the supply, then Transactional Leadership often is insufficient, and other approaches are more effective in other words it is situational.

19 Transactional Leadership Behavior This type of leadership is effective in crisis and emergency situations, as well as for projects that need to be carried out in a specific way. Transactional leaders are expected to do the following: "Set goals, articulate explicit agreements regarding what the leader expects from organizational members and how they will be rewarded for their efforts and commitment, and provide constructive feedback to keep everybody on task" (Vera & Crossan, 2004, p. 224). Transactional leaders focus on increasing the efficiency of established routines and procedures and are more concerned with following existing rules than with making changes to the structure of the organization. Thus, they operate most effectively in organizations that have evolved beyond the chaotic, no-rules stage of entrepreneurial development that characterizes so many new companies. Transactional leadership establishes and standardizes practices that will help the organization reach maturity, emphasizing setting of goals, efficiency of operation, and increase of productivity". Within the context of Maslow s hierarchy of needs, transactional leadership works at the basic levels of need satisfaction, where transactional leaders focus on the lower levels of the hierarchy. Transactional leaders use an exchange model, with rewards being given for good work or positive outcomes. Conversely, people with this

20 61 leadership style also can punish poor work or negative outcomes, until the problem is corrected. One way that transactional leadership focuses on lower level needs is by stressing specific task performance. Transactional leaders are effective in getting specific tasks completed by managing each portion individually. Transactional Contingent reward has a positive relationship to the employee with commitment, satisfaction and performance (Goodwin, Wofford, and Whittington, 2001). Transactional leaders are concerned with processes rather than forwardthinking ideas. These types of leaders focus on contingent reward (also known as contingent positive reinforcement) or contingent penalization (also known as contingent negative reinforcement). Contingent rewards (such as praise) are given when the set goals are accomplished on-time, ahead of time, or to keep subordinates working at a good pace at different times throughout completion. Contingent punishments (such as suspensions) are given when performance quality or quantity falls below production standards or goals and tasks are not met at all. Often, contingent punishments are handed down on a management-by-exception basis, in which the exception is something going wrong. Within management-by-exception, there are active and passive routes. For example, when you start a new project, you will probably have lots of enthusiasm for it, so it's often easy to win support for the project at the beginning. However, it can be difficult to find ways to keep your vision inspiring after the initial enthusiasm

21 62 fades, especially if the team or organization needs to make significant changes in the way that they do things. Leaders recognize this, and they work hard throughout the project to connect their vision with people's individual needs, goals, and aspirations. One of the key ways they do this is through Expectancy Theory. Effective leaders link together two different expectations: 1. The expectation that hard work leads to good results. 2. The expectation that good results lead to attractive rewards or incentives. This motivates people to work hard to achieve success, because they expect to enjoy rewards both intrinsic and extrinsic as a result. Other approaches include restating the vision in terms of the benefits it will bring to the team's customers, and taking frequent opportunities to communicate the vision in an attractive and engaging way. Active management-by-exception means that the leader continually looks at each subordinate's performance and makes changes to the subordinate's work to make corrections throughout the process. Passive management-by-exception leaders wait for issues to come up before fixing the problems. Laissez-faire; The leader provides an environment where the subordinates get many opportunities to make decisions. The leader himself abdicates responsibilities and avoids making decisions and therefore the group often lacks direction. With transactional leadership being applied to the lower-level needs and

22 63 being more managerial in style, it is a foundation for transformational leadership which applies to higher-level needs. 2.3 EMPLOYEES SATISFACTION THEORY An engaged employee is a person who is fully involved in, and enthusiastic about, his or her work. In his book, Getting Engaged: The New Workplace Loyalty, author Tim Rutledge explains that truly engaged employees are attracted to, and inspired by, their work ( I want to do this ), committed ( I am dedicated to the success of what I am doing ), and fascinated ( I love what I am doing ). Satisfied employees care about the future of the company and are willing to invest the discretionary effort, see the organization succeeds because they believe that their succeeds lies in their company s succeeds. As shown in the picture follow, the Maslow s Hierarchy of Needs that shown the directly influences of the famous Maslow s theory with Employee Engagement. Maslow argued in his theory that individuals needed to satisfy their basic needs such as warmth, safety and security in order to then realize their own personal growth and development. The same theory can be applied to how an organization treats and engages with their employees. For many people the basic needs of a job are that the salary, especially if

23 64 we see blue-color worker, the paycheck that allows them to pay the bills and live a lifestyle they have become accustomed to. Having a sense of financial independence is innate in almost all of us with very few people brave enough to run a risk and disregard monetary reward in favor of other factors. For many of us this is SURVIVAL. Picture The Maslow s Hierarchy of Needs Applied to Employees Satisfaction or Engagement (Source: Toward a Psychology of Being Abraham H. Maslow) Next come a sense of stability and what is commonly known as job SECURITY. Given the volatile nature of the job market, most people fear the thought of losing their job and the prospect of having to join the unemployment line. Whilst the

24 65 concept of a job for life is all but dead, people generally crave security and structure in the workplace and much like salary would put this above other aspects of a job for some people. Many larger employers have no issues satisfying those needs, especially when it comes to higher level positions. A big company recognizes the importance of attracting the best talent. But what do you do once you have them? This is where Maslow s needs theory really comes into play. The next level in the needs hierarchy is a sense of BELONGING and holding trust and acceptance within a group. Organizational structures generally follow a team principle so creating a sense of camaraderie should just come naturally. Employees need to feel like they are part of something bigger but that they are also valued and their contribution is valuable to the business. This can only be achieved by instilling those beliefs from the top-down whilst also creating a sense of parity between staff and senior management. This leads us on to the thing that really enables individuals to engage with their job and the company they work for a sense that their contribution is IMPORTANT. This feeling of significance, especially within a large company is absolutely vital if a member of staff is going to feel any real affinity and advocacy towards their paymasters. If you make your staff feel as though they are integral to the company s values and goals then that s when you have reached the high engagement you will be expecting only rising company s share prices and financial performance. To achieve this employer or a leaders have to displaying a genuine concern and interest in their

25 66 staff s progression and development within the company. When employees have access to opportunities this is meeting their SELF-ACTUALISATION needs and will enable employees to be highly successful and become an asset to the organization, inspiring others along the way. Simple summary from above Maslow s theory would be employees can provide the pathway to profits and growth. While according to Robbins (2001) job satisfaction is defined as a person's general attitude towards their work. This definition contains broad understanding. In other words, job satisfaction is a complex summation of a number of elements of the work that distinguished and separated from each other (job discrete elements). If referring to George & Jones (2002), a collection of job satisfaction and beliefs people feelings about the job. Others believe it is not so simplistic as this definition suggests and instead that multidimensional psychological responses to one's job are involved. Researchers have also noted that job satisfaction measures vary in the extent to which they measure feelings about the job (affective job satisfaction) or cognitions about the job (cognitive job satisfaction). Disclosure of employee dissatisfaction can be delivered in four ways: 1. Voice Response (active and constructive, giving advice). 2. Response Loyalty (passive: do not do anything / constructive: expectations of improved conditions). 3. Response neglect (passive: do not want to know / destructive: let conditions deteriorate)

26 67 4. Response Exit (destructive: employee exit / active: looking for a new job) Howell and Dipboye (1986) sees Employee Satisfaction overall as the degree satisfaction of employees likes and dislikes on various aspects of the job. In other words, job satisfaction reflects employee s attitude towards work. (Munandar, 2001). Satisfaction is generally considered the difference between what is expected or desired compared to what is actually experienced across a number of disciplines (Festinger 1942; 1954) Discrepancy Theory John Locke (1969) Job satisfaction is the perceived difference between what a person actually receives and what he wants to receive. However level of aspiration is not measure in this theory. The expectation of an individual are the real measure of his job satisfaction in this theory. A discrepancy is a perceived difference between an adopted anchor and a personal understanding of accomplishment along the same dimension (Locke 1969; Oliver 1981). The anchor can be set by social pressure, established employment goals, personal expectations, threshold requirements, free markets, or any agency or existing bias (Micholas 1985). The perceived discrepancy can result in a number of reactions that are emotive or active, including an adjustment or dismissal of the anchor, a change in the perception of accomplishment, or a resulting belief that leads to a particular attitude or action.

27 Affect Theory Edwin A. Locker s Range of Affect Theory (1976) is arguably the most famous job satisfaction model. The main premise of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a job. Further, the theory states that how much one values a given facet of work moderates how satisfied/dissatisfied employees becomes when expectations are/aren t met. When a person values a particular facet of a job, his satisfaction is more greatly impacted both positively (when expectations are met) and negatively (when expectations are not met), compared to one who doesn t value that facet Maslow s Hierarchy of Needs Maslow's hierarchy of needs is a it s known as "A Theory of Human Motivation". Each need in the hierarchy are interrelated rather than sharply separated. The pyramid contains what Maslow called "deficiency needs" or "d-needs" the most fundamental in the four layers of the pyramid. Maslow devides the needs into: 1. Physiological needs Physiological needs are the physical requirements for human survival or the essential needs, indeed very important. If these requirements are not met, the human body cannot function properly and will ultimately fail. Such as air, water and food. 2. Safety needs

28 69 It s a feeling for being safe or other words with their physical needs relatively satisfied, the individual's safety needs take precedence and dominate behavior. This needs include: Personal security Financial security Health and well-being Safety net against accidents/illness and their adverse impacts 3. Love and belonging The sense of belonging and acceptance feeling among their social groups, regardless whether these groups are large or small. Humans need to love and be loved both sexually and non-sexually by others. This need for belonging may overcome the physiological and security needs, depending on the strength of the peer pressure. 4. Esteem The need to feel respected; includes the need to have self-esteem and selfrespect. Esteem presents the typical human desire to be accepted and valued by others. In other words recognition. Maslow devides this need into two: 1. Higher version The "higher" version manifests itself as the need for self-respect. Such as strength, competence, mastery, self-confidence, independence, and freedom. This "higher" version takes precedence over the "lower" version because it relies on an inner competence established through experience.

29 70 2. Lower version The "lower" version of esteem is the need for respect from others. This may include a need for status, recognition, fame, prestige, and attention. 5. Self-actualization This level of need refers to what a person's full potential is and the realization of that potential. Maslow describes this level as the desire to accomplish everything that one can, to become the most that one can be. Individuals may perceive or focus on this need very specifically. Employees have the need to satisfy the needs hierarchy at different levels. Employee contracts (laborer) more orientated on meeting survival needs (physiological), whereas a person who has more skills and knowledge seek satisfaction in the fulfillment of self-realization. A person who has had enough on wages earned (physiology) then he will try to satisfy higher needs. However the human mind and brain are complex and there s no similarity between each individuals, the complexity of brain may inflict different motivations from various levels of Maslow's hierarchy occur at the same time. In addition to the three requirements above, this theory also explains that the individual needs to start from the first requirement. However, these needs can occur simultaneously. For the clear picture, we can see from the Maslow s Hierachy picture as follow:

30 71 Picture Maslow s Hierarchy of Needs (Source: Toward a Psychology of Being Abraham H. Maslow) ERG Theory (Existence Relatednes - Growth) ERG theory argues that there are three groups of basic needs, namely the need for Existence, Relatedness and Growth. Requirement is the existence of basic material needs to remain. These needs are physiological and safety needs such as Maslow. Interconnected needs is another individual desires. These needs include social needs and awards. While the need for growth is intrinsic desire for personal development. These needs include the needs of Maslow's self-actualization and intrinsic part of self-esteem. In addition to the three requirements above, this theory also explains that the individual needs doesn t have to start from the first requirement. However, these

31 72 needs can occur simultaneously. If the satisfaction of the higher needs are disturbed, then the lower needs will pushed to reach the level of satisfaction. Application of the motivation process is, a manager must know all the third needs and tried to balance the needs of all three requirements. So the staff can develop motivation in work Herzberg s Theory (Two Factor Theory) He argued that there were certain factors that a business could introduce that would directly motivate employees to work harder (motivators). However there were also factors that would de-motivate an employee if not present but would not in themselves actually motivate employees to work harder (hygiene factors) Motivators are more concerned with the actual job itself. Hygiene factors are factors which surround the job rather than the job itself. Herzberg believed that businesses should motivate employees by adopting a democratic approach to management and by improving the nature and content of the actual job through certain methods. Factors in Determining the Satisfaction: a. Intrinsic factor: 1. Achievements and Recognition Employees Placement accordance employees talents will encourage employees to work well. And this will have a positive impact on institutions with increased productivity. But the reward system should

32 73 also be developed considering employee also requires recognition for they achievements (Hezberg.1992). 2. Responsibility Workers will be satisfied if it can carry out duties in accordance with the responsibilities assigned or even exceeded (Gibson, 1985). 3. Advancement and the possibility of developing Rewards or recognition such as career path to employees it is needed because it can improving the employees status or level of work. If possible can be given the opportunity to participate in further education. It would increase their value and improve the professionalism of employees (Hezberg, 1993). 4. Skills diversity A wide variety of skills to do the job it is necessary. The more variety of skills used, the less tedious the work (Gibson, 1985). 5. The meaning work (Work Itself) If employees felt that the task is important and meaningful they dedicated or provide an important contribution to job satisfaction (Herzberg 1993). 6. Autonomy The work that gives employees freedom in terms of decision making, lack dependent and opportunity to make decisions more quickly will cause job satisfaction and empowerment for employees. b. Extrinsic factors

33 74 1. Salary or Fair wage Money has different meanings to different people. For some money can be a symbol of achievement, success and recognition / awards. The amount of salary earned significantly represent the freedom to do what you want to do. If deemed salary is too low, the workforce will feel dissatisfied and the other way around (Munandar, 2001). 2. Relations among employees The greatest level of job satisfaction is when there is harmonies or positive relationship among super-ordinate and sub-ordinate or horizontal relationships between colleagues. 3. Supporting peers Whenever employees needed to work as a team, if they have peers who supportive than their job satisfaction can arise and it will motivated employees. 4. Supporting working environment Environment playing an important roles in one organization, according to Munandar (2001), office environment such as office lay out, lighting, etc that make people uncomfortable will effecting their working performance. 5. Procedure and company policies Company administration systems and policies that easy to understand by employees can motivated employees to be dedicated in their work, full responsibility without feeling insatiability.

34 75 6. Supervision quality It is important for supervisor to implemen their best performed according their skills, and playing fair role among others, making judgment in the most manners and fair as possible, instead of looking for weaknesses and mistakes their employees. Since they are the sub-ordinate role model, so giving an good example is needed, as JF Kennedy said, Practice what you preach