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An Examination of the Mediating Role of Leader-Member Exchange (LMX) on the Relationship Between Psychological Empowerment and Job Satisfaction in the Casual Hospitality Employment of Western Australia.

Researcher Francesco Sirroli

Supervisors Dr Graeme Ditchburn

Date: Dec, 2009

According to the research, the number one reason why employees leave their job is due to the poor treatment from their employers (William, 2002). Employees who continue working under negligent bosses show lower job and life satisfaction, lower commitment and higher psychological distress (Tepper, 2000). The LMX theory emphasizes the quality of the relationship between leaders and followers and was developed as an alternative to an average leadership style (Liden & Graen, 1980). The theoretical construct is grounded in the social exchange theory and refers to a high degree of mutual influence and obligation between superiors and subordinates (Rai, 2009; Schynsm, Kroon & Moors, 2008). The relationship between a supervisor and an employee can be characterized as high or low in quality, and this can effect employee commitment, satisfaction and turnover (Morrow, Suzuki, Crum, Ruben & Pautsch, 2005).

An investigation of 41 employees in the hospitality industry of Perth, Western Australia, tested the mediating role of Leader-Member Exchange (LMX) in the relationship between Psychological Empowerment and Job Satisfaction. Contrary to expectations, LMX did not mediate the relationship between psychological empowerment and overall job satisfaction as illustrated in Figure 1..

Figure 1: Mediation Model with LMX as Mediator

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Rather, LMX mediated the relationship between psychological empowerment and the extrinsic dimension of job satisfaction as indicated in Figure 2. In addition, LMX is directly related to psychological empowerment and job satisfaction.

Figure 2: Mediation Model with LMX as mediator and Extrinsic Job Satisfaction as dependent variable

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These findings suggest that a good relationship with the direct supervisor can lead to psychological empowerment, and this, in turn, can increase job satisfaction provided that employees are satisfied with their pay, policies and work conditions.

It would be interesting to know how managers feel about the importance of their relationships with their staff. This could give us insight into how things are perceived from the other side of the organization.