Exploring the Interplay Between Job Satisfaction and Employee Retention in Romania’s Hospitality Sector: A Comprehensive Analysis

Abstract

This study investigates the complex interplay between internal communication, psychological well-being, and job satisfaction, as well as their influence on employee retention and job performance in Romania’s post-pandemic hospitality sector. In this study, data were collected from 350 employees across hotels, restaurants, and resorts. A Covariance-Based Structural Equation Modeling (CB-SEM) approach was employed for the analysis. Findings suggest that both internal communication and psychological well-being are significant positive predictors of job satisfaction. In turn, job satisfaction is a powerful driver of both employee retention and job performance. A key finding is that job satisfaction fully mediates the relationship between psychological well-being and job performance, with no direct effect observed between the latter two constructs. These results underscore that fostering an employee-centric environment is crucial for achieving social sustainability, directly supporting global Sustainable Development Goals (SDG 8: Decent Work and Economic Growth and SDG 3: Good Health and Well-being). Theoretical and practical implications, as well as limitations and future research directions, are discussed.

1. Introduction

The hospitality industry is a cornerstone of Romania’s economy, employing approximately 246,000 individuals in 2023, in various types of accommodation units, restaurants and other food service facilities, which accounts for 4.76% of the country’s total workforce, according to the National Institute of Statistics (INSSE). This sector has witnessed substantial growth in recent years, driven by increased domestic and international tourism, fueled by Romania’s diverse landscapes, rich cultural heritage, and competitive pricing. Popular destinations such as Bucharest, Transylvania, and the Black Sea coast have attracted a rising number of tourists, contributing significantly to the industry’s expansion.

Despite this expansion, the industry faces persistent challenges, including high employee fluctuations [1], skill shortages, and fluctuating service quality, all of which are intricately linked to job satisfaction. The hospitality sector, by nature, is labor-intensive and customer-centric, making employee satisfaction and retention critical determinants of organizational performance and service quality. Turnover rates in this sector are significantly higher than in other industries, due to unsatisfactory working conditions, limited career advancement opportunities, irregular working hours and low compensation. Furthermore, according to the INSSE, Romania’s hospitality sector faces unique retention challenges, with approximately 32% of employees migrating seasonally to Western Europe. Additionally, wages lag 23% below the EU average, making the sector less attractive for long-term employment.

In recent years, the hospitality industry in Romania has also been confronted with unprecedented challenges due to global health crises, economic fluctuations, and shifting societal expectations. The COVID-19 pandemic, in particular, has had a profound impact on the sector, resulting in job insecurity [2], reduced working hours, furloughs [3,4,5] and heightened psychological stress among employees, anxiety or depression [6,7,8]. As the industry recovers, understanding the factors that contribute to employee satisfaction and retention has become more urgent than ever.

Employee-centered practices, such as promoting psychological well-being, empowering staff through participating in decision-making, and fostering transparent internal communication, are increasingly recognized as essential components of sustainable human resource management (SHRM). These practices align closely with corporate social responsibility (CSR) principles as they emphasize the ethical treatment of employees and the promotion of decent work conditions. SHRM goes beyond short-term efficiency goals by investing in the long-term development, well-being, and stability of the workforce—an approach that supports broader organizational sustainability [9].

In the hospitality sector, where service quality and customer satisfaction are directly shaped by employee engagement, SHRM practices can create competitive advantages by enhancing job satisfaction and reducing turnover [10]. Research by Dağlı [11] further illustrates that workplace environment and culture significantly moderate the relationship between job satisfaction, organizational commitment, and customer-oriented behavior, reinforcing the idea that socially sustainable workplaces are more resilient and perform better under market pressures. Moreover, these approaches contribute directly to achieving the United Nations Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth) and SDG 3 (Good Health and Well-Being). The perception that an organization is committed to sustainability can foster a stronger sense of purpose and alignment with personal values, which in turn positively influences employees’ job satisfaction [12]. Thus, integrating sustainability principles into HR strategies is not merely an ethical imperative but a critical driver of long-term business performance and organizational resilience in the hospitality industry. Nevertheless, empirical investigations that quantitatively examine how internal HR practices—such as internal communication, psychological well-being and employee involvement—translate into measurable sustainability outcomes remain scarce. This is particularly true in post-pandemic, service-driven economies like those of Eastern Europe.

This study aims to investigate the mediating role of job satisfaction in the relationship between psychological well-being and job performance, while also examining the direct effects of internal communication on job satisfaction, within the framework of SHRM.

2. Literature Review

Job satisfaction is a concept that has been explored and defined through various theoretical approaches over time. One of the earliest definitions, proposed by Robert Hoppock in 1935, describes job satisfaction as “any number of psychological, physiological, and environmental circumstances which lead a person to express satisfaction with their job” [13]. This broad definition emphasizes the interplay of diverse factors that influence an individual’s sense of fulfillment at work, many of which are particularly relevant in labor-intensive industries like hospitality, where both physical and emotional demands are significant.

Edwin A. Locke (1976) offered a more refined perspective, defining job satisfaction as “a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences” [14]. This highlights the evaluative and emotional dimensions of job satisfaction, which are especially critical in the hospitality sector, where employees’ experiences with customers, supervisors, and colleagues directly shape their perceptions of their roles. Hulin and Judge [15] expanded on this concept, describing job satisfaction as a multidimensional psychological response to one’s job, including cognitive (evaluative), affective (emotional), and behavioral components. This comprehensive approach is highly applicable to the hospitality industry, where the dynamic and interactive nature of the work requires employees to manage complex emotional and cognitive challenges daily. Given the sector’s reliance on human interaction to deliver high-quality services [16], job satisfaction becomes a key factor that shapes not only individual performance but also the broader success and sustainability of the tourism industry [11].

This labor-intensive industry [17] relies heavily on the performance and well-being of its workforce to deliver exceptional service, build customer loyalty, and ensure overall organizational effectiveness [18,19]. While some authors, like Agarwal [20], have found that psychological well-being is influenced by personal and circumstantial factors, others, such as Bayighomog and Arasli [21] have shown that spiritual well-being can have a significant and positive impact on hotel employees` behaviors. Several recent studies have also examined psychological well-being among workers in the hospitality industry, highlighting that the nature of hospitality work—characterized by irregular hours [22,23], high physical and emotional demands [24], unsatisfactory job security [25], and frequent customer interactions—poses unique challenges for maintaining employee satisfaction.

The relationship between job satisfaction and performance has been widely explored by researchers in diverse disciplines [26,27], with significant focus in the fields of organizational psychology, human resource management [28], and home economics, where research on work–life balance has also been extensively conducted. This relationship is often viewed as a critical factor in understanding how employees’ attitudes toward their jobs impact their productivity, quality of work, and overall contribution to organizational success. Numerous studies suggest a positive correlation between job satisfaction and performance, with satisfied employees typically demonstrating higher levels of motivation, engagement, and efficiency in their roles [29]. Among the most important aspects of job satisfaction in the hospitality industry are compensation, work environment, career development opportunities, leadership and work–life balance. Fair and competitive pay is often cited as a fundamental factor influencing satisfaction [30,31] particularly in a sector where wages are generally modest [32]. Beyond monetary rewards, the work environment plays a pivotal role [33]; employees thrive in settings that promote safety, mutual respect, and positive relationships among colleagues and supervisors. Additionally, it is considered that workers feel more satisfied when they are actively involved in decision-making processes and receive suitable job training [23,34], as these factors enhance their sense of agency and competence in their roles. Similarly, opportunities for professional growth and advancement are highly valued, as they enable employees to envision long-term career prospects in an industry often perceived as transitory.

Leadership also emerges as a critical factor [35,36], with effective management practices and recognition of employee efforts significantly boosting morale. Recent studies emphasize that sustainable leadership—a style balancing economic goals with employee well-being and ecological responsibility [37,38]—is particularly effective in hospitality. Such leaders reduce turnover by fostering trust through ethical transparency, skill development, and green HR practices [39]. In Romania, where seasonal migration and wage gaps prevail (INSSE, 2023), sustainable leadership aligns with SDG 8 by addressing decent work deficits while enhancing organizational resilience [9]. In a study conducted by Yang [17], the authors emphasize that fostering employee psychological well-being through supportive work environments, the implementation of wellness initiatives, and the practice of mindful leadership plays a critical role in enhancing both job satisfaction and performance.

Previous research has consistently identified employee job satisfaction as a critical determinant of employee loyalty, job performance, and the overall development and stability of an organization. In the hospitality industry, where employee-customer interactions significantly shape service outcomes, job satisfaction plays a central role in driving both employee retention and service excellence [40,41]. Satisfied employees are more likely to remain loyal, motivated, and committed to delivering high-quality service, a crucial factor in this customer-oriented sector [42]. Moreover, internal communication has been highlighted as a complementary factor that enhances job satisfaction by reinforcing employees’ perceptions of organizational support [43,44,45]. Effective communication fosters a sense of belonging and value, thereby promoting long-term commitment and reducing employee turnover [46,47]. Consequently, internal communication functions not only as a motivational mechanism but also as a strategic tool for workforce stability and the consistent delivery of superior customer experiences.

The study is grounded in several foundational theories that elucidate the relationships between job satisfaction, employee retention, job performance, and psychological well-being in the hospitality sector:

According to Social Exchange Theory [48] when an organization invests in employees through transparent communication, employees reciprocate with increased loyalty and commitment. This principle is central to understanding how effective internal communication can foster a positive work environment and enhance employee perceptions of their organization.

Maslow’s Hierarchy of Needs theory [49] suggests that job satisfaction and performance improve as employees achieve higher order needs like self-esteem and self-actualization. It provides a lens through which to view the importance of psychological well-being in the workplace.

Herzberg’s Two-Factor Theory [50] claims that job satisfaction and motivation are driven by “motivators,” such as recognition and advancement, which are distinct from “hygiene factors” (e.g., salary, working conditions). This framework helps explain how certain aspects of a job lead to higher performance.

The core idea of Vroom’s Expectancy Theory [51] is that employee motivation is directly influenced by their expectation that their efforts will lead to desirable outcomes. This is particularly relevant for understanding the link between perceived opportunities for reward and an employee’s willingness to perform.

These theories provide a robust framework for understanding the dynamics at play and for formulating the following research hypotheses.

Effective internal communication is vital for fostering a positive work environment and enhancing employee perceptions of their organization. When organizations ensure transparent, timely, and relevant internal communication, employees perceive this as a valuable investment in their well-being and professional understanding. Such communication clarifies roles, provides necessary information for task accomplishment, and promotes a sense of belonging and understanding within the organization, all of which contribute significantly to job satisfaction [52,53]. When employees feel well-informed and connected through effective communication channels, their psychological needs for clarity and connection are met, leading to higher levels of satisfaction. Expanding on the existing studies, this research aims to investigate the impact between internal communication and job satisfaction in the context of the Romanian employees in the hospitality sector, hence formulating hypothesis H1.

H1. 

Effective internal communication has a positive impact on job satisfaction in the hospitality sector.

The psychological well-being of employees is a crucial determinant of their attitude and performance at work, particularly in the hospitality sector where employees constantly interact with customers at the forefront of service [54,55]. This constant interaction makes their psychological state a key factor in ensuring service quality and customer satisfaction, thus influencing their job satisfaction. Numerous studies have demonstrated that psychological well-being is a significant factor influencing job satisfaction and retention [2,56,57]. According to Maslow’s Hierarchy of Needs, psychological well-being (such as self-esteem and self-actualization) must be fulfilled for employees to reach optimal satisfaction and productivity. Studies indicate that when employees experience psychological well-being, they are more satisfied with their jobs and exhibit higher loyalty and commitment to their organizations [17,28,58]. While this connection is well-established, the post-pandemic context has brought about major shifts in work dynamics, especially in industries with a high degree of human interaction like hospitality. By exploring this relationship among hospitality sector employees, our study aims to provide a fresh perspective. Thus, the following hypothesis is suggested:

H2. 

Psychological well-being has a positive influence on job satisfaction in the hospitality sector.

Job satisfaction plays a pivotal role in predicting employee retention, especially in the hospitality industry where employee turnover is high. Studies show that job satisfaction influences employees’ emotional attachment to the organization, which in turn impacts on their likelihood of remaining loyal and reducing turnover intention [41]. When employees’ expectations regarding their job roles, working conditions, and recognition are met, their satisfaction increases, enhancing their organizational commitment. Although the link between job satisfaction and employee retention is well-established, its application to local contexts is not fully documented, particularly within the Romanian labor market. This approach leads to the formulation of our next hypothesis:

H3. 

Job satisfaction has a positive effect on employee retention in the hospitality sector.

Job satisfaction has been widely recognized as a key predictor of job performance across various industries, including the hospitality sector. The relationship between job satisfaction and performance is grounded in several foundational theories. According to Maslow [49], employees are motivated to achieve certain needs in a hierarchical order, starting from basic physiological needs to higher-order needs such as esteem and self-actualization. Once these higher-order needs are met, particularly esteem and self-actualization, employees tend to be more satisfied, resulting in improved job performance as they feel motivated to excel and fulfill their potential. According to Herzberg [50] in the Two-Factor Theory, job satisfaction arises from motivators, which drives employees toward higher performance. In the hospitality industry, recognizing employees’ achievements and providing opportunities for advancement are crucial motivators that enhance performance. Vroom’s Expectancy theory [51] posits that employees’ motivation to perform is influenced by their expectations that their effort will lead to desirable outcomes. When employees perceive that high performance is likely to be rewarded—either through recognition, career growth, or intrinsic satisfaction—they are more motivated to achieve higher levels of performance. Furthermore, empirical studies support the positive association between job satisfaction and job performance. Yang [17] found that satisfied employees exhibit higher productivity, creativity, and customer-oriented behavior in the hospitality sector. Our research extends the existing knowledge by validating the relationship between job satisfaction and employee performance within the hospitality sector, while addressing the limited empirical evidence on this relationship in emerging markets. Thus, the following hypothesis is suggested:

H4. 

Job satisfaction has a positive impact on job performance.

Although most prior research emphasizes a positive relationship between well-being and performance, the post-pandemic context and the specific dynamics of Romania’s hospitality sector may produce more nuanced effects—including inverse or non-linear associations. Recent studies [17], also suggest that emotional balance and supportive environments enhance individual performance. However, there are not many studies in the hospitality sector that rigorously explore the mediating role of job satisfaction between these two variables. Therefore, this study proposes the following hypothesis to validate the mediating effect of job satisfaction, clarifying a key causal link within the hospitality sector:

H5. 

Job satisfaction mediates the relationship between psychological well-being and job performance.

Previous research has investigated the direct link between internal communication and employee retention, often highlighting how a transparent and effective information flow can reduce turnover intentions [59,60]. However, the literature emphasizes the need for further investigation of the impact of job satisfaction as a mediator [60]. Thus, we argue that effective internal communication does not impact retention in isolation, but rather by first influencing employees’ satisfaction which, in turn, impacts their intent to remain attached to the organization. By testing this mediating role, we aim to enhance the literature by probing the hospitality sector with respect to the influence of job satisfaction between internal communication and employee retention. Therefore, the following hypothesis is proposed:

H6. 

Job satisfaction mediates the relationship between internal communication and employee retention.

While the positive influence of both internal communication and job satisfaction on job performance is well-documented [59,61], the indirect effect of internal communication on job performance through job satisfaction need further investigation [61]. Hence, this study proposes that job satisfaction serves as a significant mediator between internal communication and job performance. We hypothesize that clear and consistent internal communication enhances employee satisfaction, which in turn fosters motivation and improves performance. Therefore, our next hypothesis is:

H7. 

Job satisfaction mediates the relationship between internal communication and job performance.

Prior research confirms a direct link between psychological well-being and job satisfaction [17,28,58], as well as a direct relationship between job satisfaction and employee retention [62], but the literature lacks evidence of the possible connection between well-being and employee retention. This study aims to address this situation by looking into the possible role of job satisfaction as a mediator between well-being and employee retention. Thus, the following research hypothesis was formulated:

H8. 

Job satisfaction mediates the relationship between psychological well-being and employee retention.

Based on the hypothesis of the study, the following research model has been developed (see Figure 1):

3. Research Method

The quantitative method is used to validate the relationship among factors of job satisfaction, psychological well-being, internal communication, job performance, and employee retention. This study makes use of a non-probability sampling methodology, relying on directories of hospitality employers sourced by the Federation of the Romanian Hotel Industry [www.fihr.ro, accessed on 1 February 2025].

3.1. Questionnaire Design

This study integrates several theoretical frameworks to examine job satisfaction, employee retention, psychological well-being, job performance, and internal communication in Romania’s hospitality industry. Job satisfaction was measured using five items adapted from the scale of Braun et al. [63], focusing on overall satisfaction, interpersonal relationships, achievement, comfort at work, and compensation (

Table 1. Item selection.

Dimension/Factor	Items		Source
Job satisfaction	I am satisfied with my job I am happy with the way my colleagues and superiors treat me I am satisfied with what I achieve at work I feel satisfied because of the comfort I am provided at work I am satisfied with my pay I feel that the implementation of sustainable practices in my workplace enhances my overall job satisfaction	JS1 JS2 JS3 JS4 JS5 JS6	Braun et al. [63] Authors
Job performance	I find practical solutions to problems I adapt quickly to changing situations I assume a sense of ownership and responsibility in the quality of personal performance I strive to meet deadlines I create effective work relationships with others	JP1 JP2 JP3 JP4 JP5	Almutairi et al. [64]
Psychological well-being	I feel mentally and emotionally well in my workplace I have a healthy balance between my work and personal life My work environment supports my psychological well-being I feel comfortable sharing my concerns with colleagues or supervisors I feel that I am able to achieve personal growth through my work Being involved in my company’s sustainability initiatives improves my emotional well-being	PWB1 PWB2 PWB3 PWB4 PWB5 PWB6	Jung et al. [28]; Heimerl et al. [36] Authors
Internal communication	I regularly receive important updates and information related to my job My supervisor is open and transparent in their communication My supervisor listens to my ideas and concerns My supervisor keeps regular communication with me My supervisor values feedback	IC1 IC2 IC3 IC4 IC5	Santos [44]
Employee retention	I intend to stay with this organization for the foreseeable future I feel loyal to my current employer I rarely think about looking for a job at another company I see a future for myself in this organization I would recommend this workplace to others as a good place to work	ER1 ER2 ER3 ER4 ER5	Phuong & Vinh [41]; Yang et al. [17]

). Items assessing job performance were drawn from Almutairi et al. [64] and include indicators such as problem-solving ability, adaptability, responsibility, deadline adherence, and teamwork. To evaluate psychological well-being, five items were adapted and inspired by scales developed in recent studies by Jung et al. [28] and Heimerl et al. [36], with emphasis on emotional and mental health, work–life balance, supportive environments, open communication, and personal growth opportunities. Internal communication was measured using items inspired by Santos [44], reflecting clarity, transparency, feedback inclusion, and interdepartmental coordination. Finally, five items reflecting employee retention intentions were selected from previous research by Phuong and Vinh [41] and Yang et al. [17], capturing future career intentions, loyalty, job-seeking behavior, and organizational commitment. Each item was carefully selected to reflect the conceptual dimensions being tested and ensure validity within the context of Romania’s hospitality sector. Finally, to capture the employees’ perceptions of their employers’ sustainability efforts, two additional items were integrated into the questionnaire by the authors. For all the items the responses were indicated using Likert agreement scale with 5 response options (1—totally disagree to 5—totally agree).

3.2. Data Collection

The target population is made by individuals currently employed in Romania’s hospitality industry, including those working in hotels, restaurants, and resorts. The most important reasons for using non-probability sampling methods are the savings in cost and time, particularly when targeting active professionals within a specific sector. However, previous studies suggest that probability of sampling does not always yield more accurate results and may be impractical in certain research contexts [34]. Data were collected through an online survey conducted between February and May 2025. The questionnaire was distributed electronically to hospitality employees across Romania via professional networks, email invitations, and social media platforms relevant to the tourism and hospitality sector. The choice of an online format ensured broader geographic coverage and allowed respondents to complete the questionnaire anonymously and at their convenience. After incomplete surveys were discarded, a sample of 350 participants remained.

4. Results

To evaluate the complex relationship among the latent variables a two-step approach was followed using a Covariance-Based Structural Equation Modeling (CB-SEM). This methodology is well-suited for this study as it allows for simultaneous assessment of both measurement and structural models. The first step involved refining the measurement model to confirm the validity and reliability of the latent constructs, which included an item reduction strategy to enhance the model`s parsimony and overall fit. Given the adequate sample size (N = 350), the CB-SEM was deemed optimal for establishing methodological rigor and enhancing the generalizability of the findings. Subsequently, the structural relationship between these refined constructs were assessed to validate the hypothesized pathways. This rigorous, theory-driven approach ensures a stringent evaluation of the model and enhances the generalizability of the findings.

4.1. Descriptive Statistic

4.1.1. Respondent Information

A total of 361 questionnaires were collected, but after a rigorous data cleaning process, which involved the exclusion of incomplete or inconsistent responses, 350 valid questionnaires were retained for analysis. The final sample size not only exceeds those used in previous studies [31,34], but also meets the recommended minimum for structural equation modeling, thus ensuring the statistical validity of our analysis.

The demographic structure of the sample indicates a relatively even age distribution across three key segments: 20–29 years (32.2%), 30–39 years (30.5%), and 40–49 years (26.8%). Only 10.5% of respondents were aged 50 or older, highlighting a predominantly young and mid-career workforce, which is typical in the service-intensive hospitality industry. Regarding the gender of the respondents, the results show that 67.7 percent were female employees and 32.3 percent were males. This gender imbalance reflects broader employment patterns in the sector, particularly in various operational roles within the hospitality industry, which tend to attract more women.

In terms of educational qualifications, 48% of participants own a university degree, while 40% reported having completed vocational education, most likely aligned with the operational demands of hospitality services. An additional 12% indicated other forms of education or training (courses in specializations other than tourism).

Professional experience varied considerably among respondents. Most respondents had over 7 years of work experience, with 30.3% having 7–10 years and 37.2% having more than 10 years, while only 10.8% had less than 3 years of experience and 21.7% had between 4 and 6 years. As for organizational context, 59.4% of respondents were employed in hotels (among these employees 38% are working in 4–5 hotels, 20% in 1–3 star hotels, 1.4% in other types of accommodation), whereas 22% worked in restaurants and 18.6% indicated employment in other hospitality-related businesses such as and coffee-shops and catering services. The high prevalence of hotel employees in the sample may reflect the sector’s larger employment capacity and structured operational frameworks. Taken together, these findings provide a comprehensive demographic and professional profile of the respondent group and reinforce the relevance of the hospitality industry as a dynamic and diverse employment domain in the post-pandemic context.

Table 2. Respondent background.

Characteristic	Number	Percentage
Age
20–29 year old 30–39 year old 40–49 year old 50 year old	113 107 94 36	32.2 30.5 26.8 10.5
Gender
Female Male	237 113	67.7 32.3
Education
Vocational school University Other	140 168 42	40.0 48.0 12.0
Years of experience
<3 years 4–6 years 7–10 years >10 years	38 76 106 130	10.8 21.7 30.3 37.2
Type of company
Restaurants Hotels Other	77 208 65	22.0 59.4 18.6

shows the respondents’ information.

4.1.2. Reliability of the Data Collected

Cronbach’s alpha was used to test the internal consistency and reliability of the items used to measure each latent construct in the structural equation model (SEM). This coefficient reflects the extent to which items in a scale are correlated, thus capturing the coherence of the underlying dimension. According to Nunnally and Bernstein [65], a Cronbach’s alpha value above 0.70 is considered acceptable, indicating that the scale is reliable and suitable for further analysis. The results are displayed in

Table 3. Cronbach alpha result.

Variable	Items	Cronbach’s Alpha
Job Satisfaction	JS1, JS2, JS3	0.70
Job Performance	JP1, JP2, JP3	0.81
Psych. Well-being	PWB1, PWB2, PWB3	0.84
Internal Communication	IC1, IC2, IC3	0.75
Employee Retention	ER1, ER2, ER3	0.81

.

All five constructs demonstrated acceptable to good internal consistency, with Cronbach’s alpha values ranging from 0.70 to 0.84. Specifically, psychological well-being (α = 0.84), job performance (α = 0.81), and employee retention (α = 0.81) showed strong reliability, while job satisfaction and internal communication (α = 0.70 and 0.75, respectively) met the minimum threshold for reliability.

4.2. Data Analysis

4.2.1. Measurement Model Results

To evaluate the convergent validity and internal consistency reliability of the measurement model, we assessed Cronbach’s Alpha, Composite Reliability (CR), and Average Variance Extracted (AVE) for each latent construct. According to Fornell and Larcker [66], convergent validity is considered adequate when AVE above 0.50 and CR is greater than 0.70. The CR values ranged from 0.834 to 0.932, so they are above the recommended value, confirming adequate construct reliability (See

Table 4. Convergent Validity Analysis.

	Cronbach’s Alpha	CR	AVE
Job Satisfaction	0.70	0.867	0.685
Job Performance	0.81	0.932	0.821
Psychological Well-being	0.84	0.878	0.707
Internal Communication	0.75	0.834	0.629
Employee Retention	0.81	0.869	0.690

). The AVE values vary from 0.629 and 0.821, surpassing the recommended cutoff of 0.50 and thus demonstrating that, for each construct, the proportion of variance explained by the latent variable was greater than the variance due to measurement error. The discriminant validity of the constructs was assessed using the Fornell-Larcker criterion. While most of the constructs demonstrated adequate discriminant validity, the analysis revealed two exceptions: the correlation between job satisfaction and job performance (0.854) and the correlation between psychological well-being and job performance (0.905) were above their respective square roots of AVE. However, these strong associations are not uncommon in behavioral studies within high-interdependence industries and are theoretically expected. Given the fact that the overall model fit indices remain strong, this overlap is considered a limitation of the current model rather than a fatal flaw, and it does not materially compromise the validity of the structural relationships. (See

Table 5. Discriminant Validity.

	Job Satisfaction	Job Performance	Psychological WB	Internal Communication	Employee Retention
Job Satisfaction	0.827
Job Performance	0.854	0.906
Psychological WB	0.551	0.905	0.841
Internal Communication	0.510	0.362	0.510	0.793
Employee Retention	0.631	0.316	0.348	0.393	0.831

).

4.2.2. Structural Model Results (CB-SEM Approach)

To ensure a robust evaluation of the structural model, a two-step approach was followed. First, we refined the measurement model to confirm the validity and reliability of the latent constructs and then we assessed the structural relationships between these variables. Initially, the scales for measuring the latent variables in our model were adapted from existing literature and comprised five items each. However, to enhance the model’s parsimony and overall fit an item reduction strategy was employed prior to conducting structural equation modeling. This item selection process was guided by several key statistical criteria. We evaluated the standardized factor loadings (λ) for each item, retaining only those indicators that demonstrated a strong contribution to their corresponding latent variable. We also assessed the scale’s internal consistency (Cronbach’s Alpha), considering for exclusion those items whose removal would have substantially improved the scale’s coherence. The final decision was motivated by the need to achieve a superior model fit, by improving key fit indices (CFI = 0.932, TLI = 0.910, RMSEA = 0.075, SRMR = 0.048) and by reducing potential sources of model misspecification. Following this approach, we selected the three most effective items for each latent variable, based on their strong factor loadings and their ability to contribute to a more reliable model. This practice is consistent with established methodologies in Structural Equation Modeling, which recommend retaining a minimum of three high-quality indicators per latent factor to ensure construct validity while maintaining a manageable and interpretable model structure [67,68].

As a result, the final measurement model consists of 15 observed variables across five latent constructs—job satisfaction, job performance, psychological well-being, internal communication, and employee retention—each measured by three theoretically grounded and statistically robust items. The structural model was analyzed to test the proposed hypotheses regarding the relationships between the latent constructs (Figure 2). The results of the path analysis are presented in

Table 6. Results of the structural model analysis.

Path	Standardized β	SE	t-Value	p-Value	Supported
H1: IC → JS	0.640	0.088	6.879	<0.001	Yes
H2: PWB → JS	0.264	0.042	3.671	<0.001	Yes
H3: JS → ER	0.759	0.240	4.710	<0.001	Yes
H4: JS → JP	0.834	0.203	4.609	<0.001	Yes

, and the interpretations are detailed below.

The H1 hypothesis is strongly supported by the data. The path from internal communication to job satisfaction is highly significant and positive (β = 0.640, p < 0.001). This finding underscores the critical role of transparent and effective communication in fostering higher levels of job satisfaction. A significant positive path was found from psychological well-being to job satisfaction (β = 0.264, p < 0.001) and so the H2 hypothesis is supported. This result suggests that an employee’s psychological state is a meaningful, albeit less powerful, predictor of their overall job satisfaction. The H3 hypothesis is exceptionally well-supported and provides robust evidence that job satisfaction is a primary driver of employee retention in the hospitality sector. The path between job satisfaction and employee retention is highly significant, with a positive coefficient of β = 0.759 (p < 0.001).

The fourth hypothesis (i.e., H4) stated that job satisfaction has a positive impact on job performance received empirically robust support since the model reveals a significant and positive path between job satisfaction and job performance (β = 0.834, p < 0.001). This result reinforces the widely accepted notion that satisfied employees are more likely to exhibit higher performance levels.

By employing bootstrapping the mediating effects were analyzed (See

Table 7. Results of mediation analysis.

Path	Standardized β	95% CI	Supported	Mediation Type
H5 (PWB → JS → JP)	0.220	[0.051, 0.298]	Yes	Full Mediation
H6 (IC → JS → ER)	0.486	[0.400, 1.262]	Yes	Full Mediation
H7 (IC → JS → JP)	0.534	[0.293, 1.168]	Yes	Full Mediation
H8 (PWB → JS → ER)	0.200	[0.068, 0.338]	Yes	Full Mediation

). Therefore, the fifth hypothesis showed that the indirect effect of psychological well-being on job performance, as mediated by job satisfaction, is statistically significant (β = 0.220). The 95% confidence interval [0.051, 0.298] does not include zero, confirming the significance of this path. The identified full mediation effect suggests that psychological well-being influences job performance primarily through its positive impact on job satisfaction, supporting H5.

The analysis provides strong support for H6, demonstrating that the indirect effect of internal communication on employee retention, mediated by job satisfaction, is statistically significant (β = 0.486). The confidence interval [0.400, 1.262] does not contain zero, confirming the validity of this relationship. The full mediation effect suggests that effective internal communication enhances employee retention by first increasing job satisfaction. Our findings confirm that H7 is supported, as job satisfaction significantly mediates the relationship between internal communication and job performance. The indirect effect is statistically significant (β = 0.534), with a 95% confidence interval [0.293, 1.168] that does not include zero. This full mediation effect highlights that clear communication fosters job satisfaction, which is a powerful driver of enhanced employee performance.

The results show strong support for H8, confirming that job satisfaction is a significant mediator of the relationship between psychological well-being and employee retention. The indirect effect is statistically significant (β = 0.200), and the 95% confidence interval [0.068, 0.338] does not include zero. This full mediation effect demonstrates that psychological well-being improves employee retention by first creating a more satisfied and engaged workforce.

In summary, the findings validate the proposed theoretical framework and highlight the central role of job satisfaction in improving both performance and employee retention. Particularly, the positive link between job satisfaction and retention underscores a strategic pathway for advancing the social sustainability of hospitality businesses by fostering loyalty, trust, and long-term human capital investment.

5. Discussion and Implications

5.1. Discussion of Results

This research examined the interrelations among internal communication, psychological well-being, job satisfaction, job performance, and employee retention within Romania’s hospitality sector, offering a comprehensive view of how internal human resource dynamics influence organizational sustainability. The current research provides strong empirical support for the proposed sequential mediation model, as all five hypotheses were confirmed by the data collected from hotel employees. The findings highlight that effective internal communication (H1) and psychological well-being (H2) are both significant and positive predictors of job satisfaction. These results are consistent with prior research which shows that transparent communication strengthens employees` sense of belonging and trust [44,59,69], while psychological well-being enhances engagement and satisfaction at work [17,55]. This also aligns with a study by Roy [70] which demonstrated that employees who experience lower levels of stress and higher psychological well-being tend to exhibit superior performance, which in turn contributes to increased job satisfaction. Hence the findings strengthen the already documented relationship between the two variables, this evidence supporting the notion that a positive mental state is a key antecedent to both effective job execution and a higher level of employee contentment. Therefore, our findings suggest that a healthy emotional state is a prerequisite for feeling satisfied in one’s role within the high-demand hospitality sector.

Our research results also demonstrate that job satisfaction has a strong positive effect on employee retention (H3) and job performance (H4), supporting earlier evidence that satisfied employees are more committed and perform at higher levels [27,41,60,61]. This outcome reveals a critical strategic pathway toward enhancing the social sustainability of hospitality businesses by fostering employee loyalty, trust, and long-term human capital. The scientific contribution of this study lies in its ability to provide a data-driven blueprint for managers, demonstrating that investing in employee satisfaction is not merely an ethical imperative, but a direct driver of both organizational resilience and sustained economic success.

Notably, our findings reveal that job satisfaction fully mediates the relationship between psychological well-being and job performance (H5). This result provides a significant theoretical contribution by clarifying a key causal mechanism that was not well documented, particularly within the hospitality sector. While previous studies have suggested a link between these variables, our research demonstrates that well-being alone may not directly translate into improved performance unless accompanied by a high level of satisfaction [71,72,73]. This aligns with the sequential mediation mechanism proposed in recent hospitality studies [17], which emphasizes the role of satisfaction as a key pathway through which well-being influences productivity.

Our findings for H6 matched previous research [60], confirming that job satisfaction significantly mediates the relationship between internal communication and employee retention. The positive and statistically significant indirect effect suggests that effective communication enhances job satisfaction, which is a key driver of workforce retention. The results for H7 confirm that job satisfaction full mediates the relationship between internal communication and job performance. This result strengthens prior research [61], as the positive and statistically significant indirect effect suggests that clear and open communication enhances job satisfaction, which is a key driver for higher employee productivity and overall performance.

Finally, the results for the last hypothesis (i.e., H8) expand on previous research exploring partial effects for psychological well-being and job satisfaction [17,28,58] and job satisfaction and employee retention [62] by showing the mediating link between psychological well-being and employee retention.

5.2. Theoretical and Practical Implications

This study contributes to the theoretical framework by providing new information and a comprehensive model that clarifies the relationships between the variables under study within the Romanian hospitality sector. Although previous research has established links between internal communication, psychological well-being, and job satisfaction, this study is among the first to empirically test a sequential mediation model that positions job satisfaction as a full mediator between internal communication and psychological well-being on one hand and employee retention and job performance on the other hand. By confirming this model, our study fills a research gap by providing empirical evidence for these specific variable relationships within an under-researched geographic and industry context. This research also provides new insights into the integration of sustainability principles into human resource management, reinforcing the argument that employee-centric practices are fundamental to achieving social sustainability.

The direct positive relationship between internal communication and job satisfaction, as well as the mediating effect of job satisfaction between internal communication and employee retention, demonstrates the applicability of Social Exchange Theory in the hospitality sector. This evidence adds to the body of literature, highlighting a theoretical framework that can be successfully applied in other contexts as well.

Furthermore, the significant relationships observed in our model underscore how a combination of core motivational theories can thoroughly explain employee behavior. The positive link between psychological well-being and job satisfaction aligns with both Maslow’s Hierarchy of Needs Theory and Herzberg’s Two-factor Theory, suggesting that intrinsic needs are crucial antecedents of contentment. Subsequently, job satisfaction`s dual effect on job performance and employee retention is a finding consistent with Vroom’s Expectancy Theory, as it reinforces that a positive internal state is prerequisite for sustained effort and commitment.

In summary, our results indicate that an effective combination of adequate internal communication and psychological well-being is key to achieving job satisfaction, with subsequent effects on employee performance and retention.

In terms of practical implications, our research shows that internal communication and employee well-being are crucial tools for the success of hospitality organizations. These findings underscore the importance of adopting a SHRM perspective. Leaders with decision-making powers should, therefore, prioritize implementing open communication channels and well-being programs not just as standalone initiatives, but as integral components of a long-term SHRM strategy. This commitment is a strategic imperative for fostering higher levels of job satisfaction, which, in turn, will lead to better organizational outcomes, such as increased employee retention and performance. The results suggest that managers should not only focus on providing these initiatives but also ensure they translate into a higher level of employee satisfaction. In this context, organizations should create tools to assess the positive and less positive aspects that affect internal communication, promoting fluid, two-way, and effective communication channels that support long-term employee well-being and satisfaction.

5.3. Limitations and Future Research Directions

This study also has several limitations. Firstly, the study used a non-probability sampling method, thus the findings cannot be generalized to the entire population of employees in hospitality. Future research should focus on applying probability sampling techniques in order to generalize the findings.

Secondly, the fact that we could not demonstrate discriminant validity between certain variables (job satisfaction, job performance and psychological well-being), indicates a conceptual overlap that should be addressed by refining measurement instruments in future research. The exclusion of certain items related to sustainability from the final model, while necessary to achieve statistical fit, also represents a limitation. This suggests that more robust scales are needed to integrate employee perceptions of sustainability without compromising the model’s validity. Future studies should focus on developing such scales to better capture the intricate relationship between sustainability initiatives and employee well-being and satisfaction.

Thirdly, the data of this study were obtained from employees working in the hospitality industry in Romania, considered holistically. Together with its cross-sectional design, the study may limit the understanding of the importance of each part making up the hospitality industry. Future research should therefore consider evaluating constituents of the industry, such as hotels or restaurants or resorts. Furthermore, longitudinal designs should be envisaged to better understand causal relationships and include samples from other countries to enhance the external validity of the model. Additionally, utilizing qualitative approaches, such as in-depth interviews or focus groups, could provide a more nuanced understanding of the mechanisms through which sustainable practices influence employee perceptions and behaviors.