INTERNAL COMMUNICATION AND

EMPLOYEE ENGAGEMENT AS THE

KEY PREREQUISITES OF HAPPINESS
Danijela Lalić, Bojana Milić and Jelena Stanković

ABSTRACT

This chapter presents a research model aimed to investigate internal communi-

cation satisfaction (ICS) and employee engagement as prerequisites of employee
happiness. Employee engagement is seen as a dependent variable to ICS and as an
independent variable to happiness. The research is based on quantitative data
collected from 174 employees working in 12 international firms who specialize in
IT and creative industries and have representative office in Serbia. Partial least
squares structural equation modelling is used to identify relationships between
constructs. The results demonstrate that ICS increases employee engagement,
which in turn increases employee happiness. Employee engagement represents
complementary mediation of the relationship between ICS and subjective happi-
ness. The outcomes reveal how organizations can employ an internal communi-
cations strategy in order to enhance engagement of their employees and their
happiness as the ultimate goal. This chapter addresses an understudied topic in the
public relations and strategic communication field and its findings are opening new
questions which may inspire research community to search for detailed explana-
tion of the effect that ICS has on employee happiness.

Keywords: Internal communication; employee engagement; happiness;

UPZIK; UWES-9; subjective happiness scale

INTRODUCTION
Strategic internal communication plays an important role in the process of
engaging employees to achieve organizational goals by building transparency and

Joy
Advances in Public Relations and Communication Management, Volume 5, 75–91
Copyright © 2021 Emerald Publishing Limited
All rights of reproduction in any form reserved
ISSN: 2398-3914/doi:10.1108/S2398-391420200000005007
75
76 DANIJELA LALIĆ ET AL.

fostering trust between management and employees. On the other hand, in the
human resources and organizational behaviour research community, the scope has
been shifted towards investigating the positive aspects of work, making employee
engagement an important subject of numerous studies on work-related well-being.
If strategic internal communication has the capacity to influence the behaviour of
employees, the key question is: how can we use internal communication to
transform engaged employees into happy employees? Even though the positive
effects of both internal communication and employee engagement have been
studied, their impact on employee happiness has not been thoroughly examined.

THEORETICAL PERSPECTIVES
AND RESEARCH QUESTIONS
Internal Communication and Employee Happiness
Happiness at work becomes essential for the development of highly
motivated, dedicated and engaged employees. This is a research topic with a
growing importance among scholars and practitioners, and requires a more
complex and intensive approach. Happiness at work is crucial both for organi-
zation and workers (Salas-Vallina, Alegre, & Guerrero, 2018). There is an
ongoing debate on what is actually happiness at work and how helpful it could be
in a work context (Barrena-Martı́nez, López-Fernández, & Romero-Fernández,
2017; Luthans & Avolio, 2009; Salas-Vallina, López-Cabrales, Alegre, &
Fernández, 2017). Some of the main concepts that aim to improve an employee’s
quality of life at work are job satisfaction, engagement, commitment and well-
being (Salas-Vallina et al., 2018). While well-being has been widely considered in
academic research, happiness in a work context has not been extensively used
among researchers, probably because of difficulties caused in defining and
measuring. Some authors suggest that happiness at work needs to be understood
as a complex concept that combines factors such as engagement, job satisfaction
and organizational commitment (Salas-Vallina et al., 2018). In this chapter, the
overall ‘subjective happiness’ will be examined and measured as a global, sub-
jective assessment of whether one is a happy or unhappy person.
Even though internal communication represents an important part of the
organizational everyday life, the relationship between internal communication
satisfaction (ICS) and employee happiness was not examined before. One case
study (Isfahani, Yarali, & Ali Kazemi, 2012) examined the effects of internal
marketing on employee happiness and found that internal marketing promotes
employee mental health and happiness.

Internal Communication and Employee Engagement

There is an insufficient number of studies that examine the relationship of internal
communication with satisfaction and engagement of employees, especially in a
public relations context (Tkalac Verčič & Pološki Vokić, 2017). In a broader
sense, internal communication represents an intangible part of the organizational
context in which employees may or may not be engaged (Bakker, Albrecht, &
Internal Communication and Employee Engagement 77

Leiter, 2011). One of the main benefits of internal communication is its capacity
to effectively transfer organizational values to all employees and stimulate them
to be more involved in organizational goals (Welch, 2011).
Employee engagement is defined in multiple terms, but in general it includes
numerous organizational incentives to involve employees, business partners, cus-
tomers and other stakeholders in its activities. Many authors agree that one of the
most important drivers of employee engagement is internal communication (e.g.,
Tkalac Verčič & Pološki Vokić, 2017), especially innovative organizational
communication initiatives, open channels of communication, constant feedback and
information sharing (e.g., Bakker & Demerouti, 2008; Caesens, Stinglhamber, &
Luypaert, 2014; Fearon, McLaughlin, & Morris, 2013). There is a consensus among
researchers and academics that effective internal communication has a positive
impact in developing and maintaining employee engagement (Karanges, Johnston,
Beatson, & Lings, 2015; Welch, 2011), as well as a great contribution to the
organization’s productivity, performance and external customer orientation (Downs
& Adrian, 2004; Tkalac Verčič & Pološki Vokić, 2017). It has been found that ICS
is extremely important to highly engaged employees and identified as a prerequisite
to employee engagement (Tkalac Verčič & Pološki Vokić, 2017). However, forced
and unlimited increase of employee engagement can cause negative effects, where
overengagement can be potentially damaging to interpersonal interaction and drive
additional workplace stress (MacCormick, Dery, & Kolb, 2012), while poor
communication reduces the level of engagement (Bedarkar & Pandita, 2014).
Therefore, it is necessary to determine the right measure and intensity of internal
communication that will positively influence employee engagement.

Employee Engagement and Happiness at Work

Relevant literature highlights some of the key benefits of employee engagement,
such as greater work performance (Gruman & Saks, 2011), higher customer loyalty
(Salanova, Agut, & Peiro, 2005), better competitive advantage (Welch, 2011), etc.
In order to sustain a company’s competitive advantage, highly skilled and engaged
workers who are satisfied and motivated in the organization are essential.
Rodrı́guez-Muñoz, Sanz-Vergel, Demerouti, and Bakker (2014) conducted a
study in which they examined whether engagement at work has an impact on
their own and partner’s happiness. They found that daily employee engagement
influenced the daily happiness of partners through the daily happiness of
employees. These results suggest that the benefits of employee engagement extend
further than the employee. A different study (Joo & Lee, 2017) examined and
confirmed the mediating effect of career satisfaction on the relationship between
employee engagement and subjective well-being.

The Mediating Effect of Employee Engagement on the Relationship between ICS

and Employee Happiness
The term engagement is usually related to organizational behaviour, human
resources and management literature about employee engagement studies (Brodie,
Hollebeek, Juric, & Ilic, 2011). According to previous research, the main charac-
teristics of engaged employees are actually their positive attitudes: they are more
78 DANIJELA LALIĆ ET AL.

motivated, highly committed and experience positive emotions and good health
(Bakker & Schaufeli, 2014). Engagement is viewed as an emotional and intellectual
commitment to the organization (Baumruk, 2004; Shaw, 2005) as well as an
employee’s involvement, the satisfaction and enthusiasm about their work (Harter,
Schmidt, & Hayes, 2002). According to most definitions, employee engagement
includes both emotions and behaviour, which affects both the affective and cognitive
state of employees. While some authors suggest job characteristics, social support,
reward and punishment system as engagement determinants (Danish, Sidra, &
Farid, 2013; Miles, 2001; Saks, 2006), others argue that engagement is something
intangible that the employee brings to the work (Harter et al., 2002). Therefore, the
concept of employee engagement is mainly based on individual personalities and
perceptions (Bakker, Tims, & Derks, 2012), and unlike organizational commitment,
employee engagement refers to a short-term employee attitude towards the job
(Tkalac Verčič & Pološki Vokić, 2017). Therefore, theory imposes a conclusion that
engaged employees (should) produce better results and the organization will be more
successful. Hypothetically, in that kind of work environment employees (should) feel
more proud, satisfied and happy. So, the last assumption of this study relies on a
question: if positive emotions and well-being is connected to employee engagement
(May, Gilson, & Harter, 2004) and internal communication is identified as a pre-
requisite to employee engagement (Tkalac Verčič & Pološki Vokić, 2017), whether
and to what extent employee engagement affects the relationship between employee
satisfaction with internal communications and their happiness?
Since the purpose of this chapter is to show how ICS relates to employee
happiness through employee engagement as a mediator of this relationship, it’s
important to review all the relationships in the proposed research model (Fig. 1).

Comm.
climate

Corp.
information

Feedback

Horizontal [+]
comm.
Informal
comm.
Media ICS Happiness
quality

Meetings

Superiors

Engagement

Absorption Dedication Vigor

Fig. 1. Research Model.

Internal Communication and Employee Engagement 79

Based on the research model (Fig. 1), we propose the following research
questions:
RQ1. Is there a significant relationship between ICS and employee happiness?
RQ2. Is there a significant relationship between ICS and employee engagement?
RQ3. Is there a significant relationship between employee engagement and
employee happiness?
RQ4. Is the relationship between ICS and happiness mediated by employee
engagement?

METHOD
Data Collection
The quantitative data were obtained through an anonymized online survey in
December 2018. The respondents were recruited from 12 international firms who
specialize in the IT and creative industries and have representative offices in
Serbia.
Computer software is one of Serbia’s main export products. Serbia is globally
acclaimed for being the biggest exporter of raspberries, but the value of exported
software and services is almost twice as big as the export of raspberries. For
example, in 2013, the Serbian ICT industry ranked 40th globally when it comes to
value of exported software, while the overall industry was ranked 79th. This
made it one of the most successful and export-oriented industries in Serbia. The
sector’s export position is constantly rising especially when it comes to the export
of computer and information services, i.e., software development. In 2008, the
value of exported services was €96 million and by 2013 it reached as much as
€265 million, a 165% increase. The Serbian IT market was worth around €410
million in 2013. ICT is considered a priority sector for the Government and it will
increase the support for this sector over the years, especially given the sector’s
strong results in attracting investors and employment. Many key global players
such as Microsoft, SKF Group, Adobe, Oracle, Google, Hewlett Packard, SAP,
IBM, Siemens, Intel, Cisco, NCR Corporation, Erickson and others have already
tapped into this potential, either by establishing their development centres in
Serbia or outsourcing services to local IT companies (Development Agency of
Serbia, 2016).
According to the most visited web site for employment in Serbia, job postings
for the IT industry is one of three categories where job ads were most published.
Despite a large number of job postings, only a small number of candidates
apply, so these jobs are considered scarce (Infostud, 2018a). The research on the
labour market in Serbia showed that IT professionals expect the highest salary
when compared to other industries (Infostud, 2018b). These candidates have
high standards for material and nonmaterial benefits and IT companies must
compete and offer the best work conditions in order to keep their employees
happy and satisfied.
80 DANIJELA LALIĆ ET AL.

The questionnaire was distributed through email to the Internal Communi-

cations or HR representatives of IT companies. Respondents accessed the online
survey through SurveyMonkeyÒ. The final sample size was 174. Sample demo-
graphics which include gender, age, education level, job position and work
experience in current company are presented in Table 1.

Table 1. Sample Demographics.

Characteristics N %

Gender Male 92 52.9

Female 82 47.1
Age ,25 years old 34 19.5
25–30 50 28.7
31–40 80 46.0
41–50 10 5.7
Education level High school degree 28 16.1
College degree 26 14.9
University degree (BA) 62 35.6
University degree (MSc) 54 31.0
Other postgraduate degree 4 2.3
Job position Head of Department 7 4
Team leader 25 14.4
Administrative-managerial position 36 20.7
Senior level position 16 9.2
Medior level position 34 19.5
Junior level position 50 28.7
Associate position 4 2.3
Professional adviser 2 1.1
Work experience in company ,1 year 64 36.8
1–2 years 36 20.7
3–5 years 58 33.3
.5 years 16 9.2

Measurement
In this study, three constructs were measured: ICS, employee engagement and
happiness.
ICS represents the level of employee satisfaction with different aspects of
internal communication: satisfaction with feedback, satisfaction with commu-
nication with superiors, satisfaction with horizontal communication, satisfac-
tion with informal communication, satisfaction with corporate information,
satisfaction with the communication climate, satisfaction with communication
media and satisfaction with communication during meetings. The Internal
Internal Communication and Employee Engagement 81

Communication Satisfaction Questionnaire (UPZIK) is used in order to mea-

sure ICS (Tkalac Verčič, Pološki Vokić, & Sinčić Ćorić, 2009). This portion of
the survey included 32 items and each of the eight dimensions was measured
with four items. Respondents evaluated their IC satisfaction on 7-point Likert
scale with response options ranging from 1 5 ‘extremely dissatisfied’ to 7 5
‘extremely satisfied’.
Employee engagement is defined as ‘Positive, fulfilling, work-related
state of mind that is characterised by vigour, dedication, and absorption’
(Schaufeli, Salanova, Gonzalez-Roma, & Bakker, 2002). The shortened version
of the Utrecht Work Engagement Scale (UWES-9) was used to measure
the level of perceived employee engagement (Schaufeli & Bakker, 2003).
This portion of the survey included a total of nine items with three items
measuring each of the three dimensions. Respondents evaluated their engage-
ment on 7-point Likert scale with response options ranging from 1 5 ‘never’ to
7 5 ‘always’.
To assess the happiness, we adopted four items from Lyubomirsky and Lep-
per’s (1999) Subjective Happiness Scale. Overall subjective happiness is defined as
‘a global, subjective assessment of weather one is a happy of unhappy person’
(Lyubomirsky & Lepper, 1999). With first two items, the respondents are self-
evaluating their level of happiness by using absolute ratings and ratings relative
to peers. The other two items are two brief descriptions of happy and unhappy
persons and respondents are asked to evaluate the extent to which each of these
sentences describes them.

Analysis Method
Partial least squares structural equation modelling (PLS-SEM) is used to identify
relationships between constructs, and it is also used for the explanation and
prediction of target constructs. PLS-SEM works well with small sample sizes. To
determine minimum sample size, we followed ‘10 times rule’ (Hair, Hult, Ringle,
& Sarstedt, 2017). The minimum sample size should be 10 times the maximum
number of arrowheads pointing at a latent variable in the model. In our model,
said latent variable is ICS with eight formative arrows indicating that our min-
imum sample size should be 80. Our sample size of 174 exceeds this number. PLS-
SEM can also handle both formative and reflective measures, and is superior to
composite-based SEM when there is a little a priori knowledge of structural
model relationships (Hair et al., 2017).
The Smart PLS 3 software was used in the statistical analysis (Ringle, Wende,
& Becker, 2015). The analysis followed three steps. First, we validated the first-
order measurement model, and secondly, we validated the second-order mea-
surement model. Finally, we tested the structural model. The repeated indicators
approach was used since it produces smaller biases in the estimation of the
higher-order measurement model. Latent variable scores are used while exam-
ining the structural model.
82 DANIJELA LALIĆ ET AL.

RESULTS
Measurement Model
Assessment of First-order Measurement Model
We evaluated the validity of the first-order measurement model by examining
internal consistency, as well as convergent and discriminant validity of all first-
order reflective factors.
The item loadings, Cronbach’s alpha, CR (composite reliability) and AVE
(average variance extracted) values are presented in Table 2. Hair, Black, Babin,
and Anderson (2010) recommend factor loadings ranging from 0.40 to 0.45 for
sample sizes between 150 and 200. All factor loadings are over 0.45 (on average
0.870) which are considered practically significant. We kept all items, because
none of them caused reliability issues. Cronbach’s alpha values were above the
recommended value of 0.700 (Fornell & Larcker, 1981). Composite reliability
varies between 0 and 1, with higher values indicating the higher reliability. All
first-order factors met this criterion of internal consistency.

Table 2. Latent Variable Statistics.

Construct Item Loading a-Value CR AVE

Internal communication satisfaction

Satisfaction with feedback 0.945 0.961 0.860
ICS_1_feedback 0.886
ICS_2_feedback 0.948
ICS_3_feedback 0.926
ICS_4_feedback 0.946
Satisfaction with communication with 0.909 0.935 0.785
superiors
ICS_5_superiors 0.846
ICS_6_superiors 0.926
ICS_7_superiors 0.916
ICS_8_superiors 0.853
Satisfaction with horizontal 0.796 0.867 0.620
communication
ICS_9_horizontal 0.789
ICS_10_horizontal 0.756
ICS_11_horizontal 0.779
ICS_12_horizontal 0.825
Satisfaction with informal communication 0.832 0.888 0.666
ICS_13_informal 0.815
ICS_14_informal 0.761
ICS_15_informal 0.839
ICS_16_informal 0.845
Satisfaction with corporate information 0.867 0.906 0.708
ICS_17_corp_info 0.812
ICS_18_corp_info 0.847
Internal Communication and Employee Engagement 83

Table 2. (Continued)
Construct Item Loading a-Value CR AVE

ICS_19_corp_info 0.870
ICS_20_corp_info 0.836
Satisfaction with communication climate 0.932 0.951 0.829
ICS_21_comm_climate 0.884
ICS_22_comm_climate 0.936
ICS_23_comm_climate 0.898
ICS_24_comm_climate 0.921
Satisfaction with communication media 0.946 0.961 0.861
ICS_25_media_qual 0.920
ICS_26_media_qual 0.947
ICS_27_media_qual 0.950
ICS_28_media_qual 0.895
Satisfaction with communication during 0.918 0.942 0.803
meetings
ICS_29_meeting 0.924
ICS_30_meeting 0.929
ICS_31_meeting 0.873
ICS_32_meeting 0.856
Employee engagement
Vigour 0.921 0.950 0.863
ENG_1_v1 0.946
ENG_2_v2 0.940
ENG_5_v3 0.900
Dedication 0.878 0.925 0.803
ENG_3_d1 0.885
ENG_4_d2 0.915
ENG_7_d3 0.889
Absorption 0.780 0.873 0.698
ENG_6_a1 0.743
ENG_8_a2 0.843
ENG_9_a3 0.912
Happiness 0.878 0.883 0.658
HAPPY_1 0.884
HAPPY_2 0.794
HAPPY_3 0.896
HAPPY_4 0.645

A common measure to establish convergent validity on the construct level is the

AVE, and value of 0.5 indicates that construct explains more than half of the
variance of its indicators (Hair et al., 2017). All factors met this criterion. To
establish discriminant validity, we used Fornell-Larcker’s criterion which compares
square roots of the AVE values with the latent variable correlations. Squared root
of each first-order construct’s AVE is shown diagonally (in bold letters) in Table 3.
84 DANIJELA LALIĆ ET AL.

Table 3. Correlations between First-order Factors.

Construct 1 2 3 4 5 6 7 8 9 10 11 12

1 Satisfaction 0.927
with feedback
2 Satisfaction 0.810 0.866
with
communication
with superiors
3 Satisfaction 0.584 0.623 0.787
with horizontal
communication
4 Satisfaction 0.593 0.591 0.675 0.816
with informal
communication
5 Satisfaction 0.599 0.571 0.665 0.568 0.841
with corporate
information
6 Satisfaction 0.654 0.703 0.787 0.717 0.738 0.910
with
communication
climate
7 Satisfaction 0.612 0.714 0.728 0.683 0.709 0.847 0.927
with
communication
Media
8 Satisfaction 0.669 0.707 0.681 0.720 0.678 0.821 0.829 0.896
with
communication
during meetings
9 Vigour 0.555 0.561 0.477 0.452 0.442 0.448 0.482 0.555 0.928
10 Dedication 0.590 0.672 0.519 0.434 0.451 0.504 0.544 0.596 0.832 0.896
11 Absorption 0.301 0.313 0.447 0.374 0.389 0.381 0.350 0.446 0.602 0.681 0.835
12. Happiness 0.200 0.237 0.256 0.122 0.292 0.154 0.204 0.225 0.545 0.593 0.584 0.811

Notes: Nonsignificant correlations are marked in grey. Square roots of the AVE values are in bold.

This value should be the same or greater than the factor’s highest correlation with
any other construct and all of our first-order factors met the criteria.

Assessment of Second-order Measurement Model

Our model had two second-order factors: reflective factor (ICS) and formative
factor (employee engagement). Sarstedt, Hair, Cheah, and Becker (2019) suggest
that particular attention has to be paid to validating higher-order factors where
the higher-order measurement model is defined by the relationship between the
higher-order factor and its lower-order dimensions.
To establish convergent validity for reflective factor ICS, we assessed the
loadings of eight reflective dimensions. The loadings of all factors are signifi-
cant, and the common rule of thumb is that the standardized loading should be
0.708 or higher in order to establish indicator reliability (Hair et al., 2017). All
Internal Communication and Employee Engagement 85

Table 4. Second-order to First-order Loadings (Bootstrap Analysis with 5,000

Samples).
Original b Mean b STDEV T Statistics p Value

ICS → Feedback 0.813 0.813 0.033 24.86 0.000

ICS → Superiors 0.847 0.848 0.025 34.423 0.000
ICS → Horizontal 0.831 0.834 0.028 29.727 0.000
ICS → Informal 0.807 0.807 0.033 24.493 0.000
ICS → Corporate information 0.806 0.809 0.029 27.925 0.000
ICS → Communication climate 0.923 0.923 0.013 73.204 0.000
ICS → Media quality 0.906 0.905 0.013 70.45 0.000
ICS → Meetings 0.901 0.901 0.013 67.983 0.000

first-order dimensions met this criterion (see Table 4). For assessing the higher-
order construct’s reliability and validity, we followed Sarstedt and colleague’s
guidelines (2019). By using indicator loadings and average correlation between
factors (0.870), we manually calculated the relevant statistics for assessing the
higher-order construct’s reliability and validity. These results provide support
for the ICS’s internal consistency reliability, since Cronbach’s a (0.982), Dijkstra-
Henseler’s rho (rA 5 0.977), Jöreskog’s rho (rc 5 0.976) and AVE (0.732) are
above the recommended threshold of 0.708.
The three-step procedure for validating the higher-order formative construct
of employee engagement proposed by Hair et al. (2017) is followed. First, we
assessed the convergent validity by running a redundancy analysis. In this type
of analysis, one or more questions are used as an endogenous single item to
validate the formative measure of employee engagement. Since there is no
global item included in the survey, we used an item that captures the content
domain of the construct, based on its factor loading: ‘At my work, I feel
bursting with energy’. The path factor of 0.901 between formative and reflective
construct exceed of the desired value of 0.80 (Hair et al., 2017), which translates
into an R2 value of 0.81. The convergent validity for higher-order formative
construct employee engagement is established. In the next step, we tested for
potential collinearity issues between lower-order components of employee
engagement. The analysis of measurement model produces the following VIF
(variance inflation factor) values: 3.278 for vigour, 3.992 for dedication and
1.942 for absorption which are lower than a VIF value of five that indicates
collinearity issues. Finally, we assessed the relevance and significance of the

Table 5. Heterotrait–Monotrait Ratios.

1 2

1. ICS
2. Employee engagement 0.659
3. Happiness 0.309 0.761
86 DANIJELA LALIĆ ET AL.

relationships between the lower-order components and employee engagement.

Employee engagement weights are calculated with bootstrap analysis (5,000
samples with no sign changes) and represented with path coefficients. We find
that weight for vigour is 0.413, while weights for dedication (0.394) and
absorption (0.299) are somewhat smaller, but all results are statistically sig-
nificant (p , 0.01).We retained all lower-order constructs and with previously
presented results we established the validity of the reflective-formative higher-
order construct of employee engagement.
Discriminant validity of first-order factor happiness and two second-order
factors ICS and employee engagement was assessed by examining HTMT ratios.
As presented in Table 5, all HTMT values are below threshold of 1.

Structural Model
To calculate path coefficients and determine the value of R2, we used the
Consistent Smart PLS algorithm, since reflective second-order factors are present
in the model. To test for statistical significance, the Consistent Bootstrapping
method was employed. The structural model is presented in Fig. 2.

Fig. 2. The PLS Analysis of the Research Model.

Smart PLS offers SRMR value in order to evaluate the model’s goodness-of-
fit. The SRMR for our structural model was 0.073 which is below the recom-
mended threshold of 0.08. We checked the structural model for collinearity issues
by examining the VIF values of all predictors in the structural model. We found
that both ICS (VIF 5 1.000) and employee engagement (VIF 5 1.726) showed
no collinearity issues in the structural model since their VIF values are below the
conservative threshold of 3.
The R2 values of endogenous latent variables employee engagement (0.421)
and happiness (0.523) can be considered moderate. To obtain the effect sizes, we
examined the f 2 values for all combinations of endogenous constructs. ICS has a
Internal Communication and Employee Engagement 87

strong effect on employee engagement (0.726), employee engagement has a

strong effect on happiness (0.888), while ICS has no effect on happiness, since the
f 2 is below 0.15 (0.070).
By looking at the path coefficients, we find that employee engagement is
the most important (0.855) followed by ICS on employee engagement (0.649).
We find that path coefficient between ICS and happiness has a negative value
(20.241), suggesting a negative effect of ICS on happiness. We examined the
indirect effect which is calculated as the product of the two effects (0.649 3 0.855
5 0.555). The total effect is calculated as sum of direct and indirect effect (20.241
1 0.555 5 0.314). Although the direct effect has a negative sign, the total effect is
still indicating the relevance of ICS in explaining happiness. This type of result
suggests that the relationship between ICS and happiness is mediated by
employee engagement. Mediating effect will be analyzed in the next section. After
running the consistent bootstrapping procedure (5,000 samples, no sign changes)
and assuming a 5% significance level, we found that all relationships in the
structural model are significant.
To assess the predictive relevance of the path model, we ran the blindfolding
procedure. The Q2 values of both predictive constructs are above zero
ðQ2ICS 5 0:500; Q2Eng: 5 0:296Þ which provides clear support for the model’s pre-
dictive relevance regarding endogenous latent variables. Finally, we assessed the
q2 effect sizes. These had to be calculated manually (Eq. 1) with the Q2Excluded
values obtained from model re-estimation when deleting a specific predecessor.
Equation (1): Calculating q2 effect sizes

Q2included 2 Q2excluded
q2 ¼ (1)
1 2 Q2included

The ICS has an original Q2 value of 0.500. When employee engagement is

deleted from the model and the model is re-estimated, the ICS Q2 value drops to
0.089. The q2 effect size for the relationship between ICS and happiness is 0.177,
which suggests that that ICS has a medium predictive relevance for happiness.

Mediation Analysis
To test for mediation, the indirect effect from ICS to happiness through employee
engagement is examined. It is a product of the path coefficient from ICS to
employee engagement and path coefficient from employee engagement to
happiness. We found that the mean value (0.555) for indirect effect is significant
(t 5 9.081; p , 0.01). Since both the direct effect between ICS and happiness and
indirect effect between ICS on happiness through employee engagement is sig-
nificant, we conclude that employee engagement partially mediates the ICS to
happiness relationship. In order to determine the type of mediation, we followed
the procedure presented by Zhao, Lynch, and Chen (2010). Since the direct effect
between ICS and happiness is negative and the indirect effect is positive, we
conclude that employee engagement represents complementary mediation of the
relationship from ICS to happiness.
88 DANIJELA LALIĆ ET AL.

DISCUSSION AND CONCLUSION

In this chapter, we extend the literature on predictors of an employee’s subjective
happiness by proposing the research model in which the relationship between ICS
and employee happiness is mediated by employee engagement. The first-order
measurement model met the criterion for internal consistency, convergent and
discriminant validity. Both formative and reflective second-order measurement
models met the reliability and validity requirements. Discriminant validity for
first-order factor of happiness and second-order factors of ICS and employee
engagement was established. Structural model showed sufficient goodness-of-fit
and all variables showed no collinearity issues. We found that all relationships in
the structural model were statistically significant, where the relationship between
employee engagement and happiness is found as most important followed by the
relationship between ICS and employee engagement, while the relationship
between ICS and happiness is found to be the least important and with a negative
sign, suggesting a negative effect. The results of total effects analysis suggested
that the relationship between ICS and happiness is mediated by employee
engagement. Mediation analysis confirmed these results concluding that
employee engagement represents complementary mediation of the relationship
between ICS and happiness.
Zhao et al. (2010) argue that the both types of partial mediation (competitive
and complementary) are of equal theoretical interest. Our unexpected and
theoretically unfounded negative effect of ICS on happiness can be explained
with complementary mediation of employee engagement. Zhao et al. (2010)
indicate that ‘if the direct effect is substantially larger than the indirect effect, the
effect to be mediated would appear to be of the wrong sign’. Based on these
results, we conclude that ICS increases employee engagement, which in turn
increases employee happiness. The complementary mediation of employee
engagement also identifies an unexplained direct effect, meaning that there is an
alternative mediator whose sign matches the negative sign of the direct effect
between ICS and employee happiness and that mediator was not the subject of
this research. We find these results to be important to the research community in
terms of shedding more light on internal communication and its impact on
organizational behaviour and employee well-being. These results also represent
the step forward in the research of employee happiness.
The results of this research can help organizations to employ an internal
communications strategy to achieve employee engagement and their happiness
as the ultimate outcome. For example, the dimension of ICS, satisfaction with
communication with superiors, had the highest positive correlations with two
dimensions of employee engagement (vigour and dedication). These results
indicate that creating an internal communication strategy where employees
on managerial positions are available to their subordinates and understand
their problems will have a positive effect on employee engagement. These
employees will be energetic, dedicated with a strong sense of self-worth. On the
other hand, the dimension satisfaction with horizontal communication had
the strongest positive correlation with absorption. These results indicate that the
Internal Communication and Employee Engagement 89

success of communication between colleagues can make employees feel

immersed in their work. As the final result, the subjective happiness of
employees will be increased.

LIMITATIONS AND FUTURE RESEARCH

The main limitation of this research is that it is cross sectional and not longitu-
dinal, so the causal relationships in our structural model could rather be inferred
than proven. As previous research of ICS on employee engagement noted, it also
fails to capture interventions in internal communication strategies (Tkalac Verčič
& Pološki Vokić, 2017). The second limitation refers to data collection. In this
research, the data were collected from businesses in one industry in the same
cultural context. While PLS-SEM makes no assumptions about data, it would be
recommended to include organizations different from IT and creative industries
were satisfaction and happiness of employees is not assumed. Even though the
minimum sample size was exceeded, the bigger and culturally diverse sample is
required, so the results can be generalized and compared within the wider pop-
ulation. Lastly, we examined the general subjective happiness of employees. Since
the organizational life presents only one part of life, future research should focus
on investigating work-related happiness.
Despite the progress made in this chapter, with the above-mentioned limita-
tions and proposals for improvement, there are still many unexplored fields for
future studies that would explain the direct effect between ICS and employee
happiness by searching for new mediators.

ACKNOWLEDGEMENT
This research is supported by the Ministry of Education, Science and Technological
Development of the Republic of Serbia, Grant no. 47028.

REFERENCES
Bakker, A. B., Albrecht, S. L., & Leiter, M. P. (2011). Key questions regarding work engagement.
European Journal of Work & Organizational Psychology, 20(1), 4–28.
Bakker, A. B., & Demerouti, E. (2008). Towards a model of work engagement. Career Development
International, 13(3), 209–223.
Bakker, A. B., & Schaufeli, W. B. (2014). Work engagement. In P. C. Flood & Y. Freeney (Eds.),
Organizational behaviour volume of the Blackwell encyclopedia of management. West Sussex:
John Wiley & Sons.
Bakker, A. B., Tims, M., & Derks, D. (2012). Proactive personality and job performance: The role of
job crafting and work engagement. Human Relations, 65(10), 1359–1378.
Barrena-Martı́nez, J., López-Fernández, M., & Romero-Fernández, P. M. (2017). Socially responsible
human resource policies and practices: Academic and professional validation. European
Research on Management and Business Economics, 23(1), 55–61.
Baumruk, R. (2004). The missing link: The role of employee engagement in business success.
Workspan, 47(1), 48–52.
90 DANIJELA LALIĆ ET AL.

Bedarkar, M., & Pandita, D. (2014). A study on the drivers of employee engagement impacting
employee performance. Procedia – Social and Behavioral Sciences, 133, 106–115.
Brodie, R., Hollebeek, D., Juric, B., & Ilic, A. (2011). Customer engagement: Conceptual domain, funda-
mental propositions, and implications for research. Journal of Service Research, 14(3), 252–271.
Caesens, G., Stinglhamber, F., & Luypaert, G. (2014). The impact of work engagement and worka-
holism on well-being – The role of work-related social support. Career Development Interna-
tional, 19(7), 813–835.
Danish, R. Q., Sidra, R., & Farid, A. (2013). Effect of perceived organizational support and work
environment on organizational commitment – Mediating role of selfmonitoring. Advances in
Economics and Business, 1(4), 312–317.
Development Agency of Serbia. (2016). Serbia’s ICT industry putting the ICT into perspective.
Retrieved from https://ras.gov.rs/uploads/2016/02/ict-industry-in-serbia.pdf. Accessed on April
3, 2019.
Downs, C. W., & Adrian, A. (2004). Assessing organizational communication: Strategic communication
audits. New York, NY: The Guilford Press.
Fearon, C., McLaughlin, H., & Morris, L. (2013). Conceptualising work engagement – An individual,
collective and organizational efficacy perspective. European Journal of Training and Develop-
ment, 37(3), 244–256.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable vari-
ables and measurement error. Journal of Marketing Research, 18(1), 39–50.
Gruman, J. A., & Saks, A. M. (2011). Performance management and employee engagement. Human
Resource Management Review, 21(2), 123–136.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis. Upper
Saddle River, NJ: Prentice-Hall.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A primer on partial least squares
structural equation modeling (PLS-SEM). Los Angeles, CA: SAGE Publications.
Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit level relationship between employee
satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied
Psychology, 87(2), 268–279.
Infostud. (2018a). Veliki porast broja oglasa – najtraženiji trgovci, IT stručnjaci i mašinci. [A large
increase in the number of job postings, the most wanted are: Retail workers, IT experts and
machine engineers.]. Retrieved from https://poslovi.infostud.com/za-medije/Veliki-porast-
broja-oglasa-najtrazeniji-trgovci-IT-strucnjaci-i-masinci/50017. Accessed on April 3, 2019.
Infostud. (2018b). Istraživanje: Najpoželjniji poslodavac. [Research survey: The most desirable employer.].
Retrieved from https://poslovi.infostud.com/docs/istrazivanje-najpozeljniji-poslodavac-promo-
izvestaj.pdf. Accessed on April 3, 2019.
Isfahani, A. N., Yarali, M., & Ali Kazemi, A. (2012). Analyzing the influence of internal marketing on
employee happiness case study: Nilou Tile Company, Isfahan. International Journal of Aca-
demic Research in Business and Social Sciences, 2(9), 167–178.
Joo, B. K., & Lee, I. (2017). Workplace happiness: Work engagement, career satisfaction, and sub-
jective well-being. Evidence-based HRM: A Global Forum for Empirical Scholarship, 5(2),
206–221.
Karanges, E., Johnston, K., Beatson, A., & Lings, I. (2015). The influence of internal communication
on employee engagement: A pilot study. Public Relations Review, 41(1), 129–131.
Luthans, F., & Avolio, B. J. (2009). The point of positive organizational behavior. Journal of Orga-
nizational Behavior, 30(2), 291–307.
Lyubomirsky, S., & Lepper, H. S. (1999). A measure of subjective happiness: Preliminary reliability
and construct validation. Social Indicators Research, 46(2), 137–155.
MacCormick, J. S., Dery, K., & Kolb, D. G. (2012). Engaged or just connected? Smartphones and
employee engagement. Organizational Dynamics, 41(3), 194–201.
May, D. R., Gilson, R. L., & Harter, L. M. (2004). The psychological conditions of meaningfulness,
safety and availability and the engagement of the human spirit at work. Journal of Occupational
and Organizational Psychology, 77(1), 11–37.
Miles, R. H. (2001). Beyond the age of Dilbert: Accelerating corporate transformations by rapidly
engaging all employees. Organizational Dynamics, 29(4), 313–321.
Internal Communication and Employee Engagement 91

Ringle, C. M., Wende, S., & Becker, J. M. (2015). SmartPLS 3. Boenningstedt: SmartPLS GmbH.
Retrieved from http://www.smartpls.com. Accessed on April 10, 2019.
Rodrı́guez-Muñoz, A., Sanz-Vergel, A. I., Demerouti, E., & Bakker, A. B. (2014). Engaged at work
and happy at home: A spillover–crossover model. Journal of Happiness Studies, 15(2), 271–283.
Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial
Psychology, 21(7), 600–619.
Salanova, M., Agut, S., & Peiro, J. M. (2005). Linking organizational resources and work engagement
to employee performance and customer loyalty: The mediating role of service climate. Journal
of Applied Psychology, 90(6), 1217–1227.
Salas-Vallina, A., Alegre, J., & Guerrero, R. F. (2018). Happiness at work in knowledge-intensive
contexts: Opening the research agenda. European Research on Management and Business
Economics, 24, 149–159.
Salas-Vallina, A., López-Cabrales, Á., Alegre, J., & Fernández, R. (2017). On the road to happiness at
work (HAW): Transformational leadership and organizational learning capability as drivers of
HAW in a healthcare context. Personnel Review, 46(2), 314–338.
Sarstedt, M., Hair, J. F., Cheah, J. H., & Becker, J. M. (2019). How to specify, estimate, and validate
higher-order constructs in PLS-SEM. Australasian Marketing Journal, 27(3), 197–211.
Schaufeli, W. B., & Bakker, A. B. (2003). Utrecht work engagement scale: Preliminary manual. Utrecht:
Occupational Health Psychology Unit, Utrecht University.
Schaufeli, W. B., Salanova, M., Gonzalez-Roma, V., & Bakker, A. B. (2002). The measurement of
engagement and burnout: A two sample confirmatory factor analytic approach. Journal of
Happiness Studies, 3, 71–92.
Shaw, K. (2005). An engagement strategy process for communicators. Strategic Communication
Management, 9(3), 26–29.
Tkalac Verčič, A., & Pološki Vokić, N. (2017). Engaging employees through internal communication.
Public Relations Review, 43(5), 885–893.
Tkalac Verčič, A., Pološki Vokić, N., & Sinčić Ćorić, D. (2009). Razvoj mjernog instrumenta za
procjenu zadovoljstva internom komunikacijom [Development of the internal communication
satisfaction questionnaire.]. Društvena istraživanja: časopis za opća društvena pitanja. [Journal
for General Social Issues.], 18(1–2), 175–202.
Welch, M. (2011). The evolution of the employee engagement concept: Communication implications.
Corporate Communications: An International Journal, 16(4), 328–346.
Zhao, X., Lynch, J. G., Jr., & Chen, Q. (2010). Reconsidering Baron and Kenny: Myths and truths
about mediation analysis. Journal of Consumer Research, 37(2), 197–206.