Employee Engagement and Organizational Performance: The Mediating Role of Job Satisfaction at Meezan Bank Head Office

Abstract

This paper aims to consider the correlation between employee engagement and their perceived organizational performance with the particular focus on mediating role of job satisfaction in context of Islamic banking in Pakistan. Despite the fact that previous research has revealed explicit inter-relations between engagement and performance, the psychological mechanism behind this interaction has strongly not been studied empirically especially in the faith-based financial institutions. This paper fills this gap by designing and empirically testing a framework of mediation through which the employee engagement is put into performance outcomes via job satisfaction. The adopted research design was quantitative and cross sectional. The collection of data was carried out using a structured questionnaire to the employees who were employed at the head office of Meezan Bank. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to measure and analyze the measurement and structural models. Before testing the hypotheses, reliability, convergent validity and model fit were evaluated and bootstrapping was used to test the significance of direct and indirect effect. The findings show that the positive relationship between employee engagement and job satisfaction (β= 0.875, p < 0.001) and the positive relationship between job satisfaction and perceived organizational performance (β=0.552, p < 0.001) are significant. Job satisfaction was observed to mediate the relationship between employee engagement and performance of an organization partially with most demographic control variables showing insignificant impacts. Such a research has original empirical implications since it confirms an engagement-performance model via mediation in an Islamic banking setting. It provides useful theoretical background and practical advice to the managers planning to improve the performance of the organization by applying employee-oriented approaches and serves as a basis of research in longitudinal and cross-sectoral studies in the further.