PAY SATISFACTION, JOB SATISFACTION, ORGANIZATIONAL COMMITMENT, AND TURNOVER INTENTION IN TAIWAN BANKING: STRUCTURAL EQUATION MODELING

1
PAY SATISFACTION, JOB SATISFACTION,
ORGANIZATIONAL COMMITMENT, AND TURNOVER INTENTION
IN TAIWAN BANKING STRUCTURAL EQUATION MODELING
2
Introduction to the Problem

• High turnover rate
• Cost
• Knowledge
• Customers
• Taiwanese banking industry

3
Gaps

• Conflicts between different theories and
  empirical studies
• Different countries cultures
• 21st century

4
Purpose of the Study

• To explore the relationship and degrees among
  those factors
• Pay satisfactions role
• To discover the accurate ratio between pay raise
  and turnover intention
• The conflicts between different theories and
  results of empirical studies

5
Definition of Terms

• Pay Satisfaction
• Job Satisfaction Promotion Supervision
  Fringe Benefits Contingent Rewards
  Operating Procedures Coworkers Nature of
  Work Communication

6
Definition of Terms (cont.)

• Organizational Commitment Affective
  Commitment Continuance Commitment Normative
  Commitment
• Turnover Intention
• Domestic Private Bank
• Entry-Level Employee
• Mid-Management

7
Literature Review

• Theoretical Framework 2 Research Questions
• Hypothesized Models 24 Hypotheses

8
Theoretical Framework

• Turnover theory (Steers Mowday, 1981)
• Model of Pay Satisfaction (Lum, Kervin, Clark,
  Reid, and Sirola, 1998)
• Job satisfaction theory (Spector, 1997)
• The three-component model of organizational
  commitment (Allen Meyer, 1991)

9
Theoretical Framework
10
Research Questions

1. What are the socio-demographic characteristics of
   a sample of employees in the Taiwanese banking
   industry?
2. What are the degrees of pay satisfaction, job
   satisfaction, organizational commitment, and
   turnover intention of a sample of employees in
   the Taiwanese banking industry?

11
Hypothesized Models

• Pay satisfaction, job satisfaction,
  organizational commitment, and turnover intention
  model
• Pay satisfactions sub-variables and turnover
  intention model
• Organizational commitments sub-variables and
  turnover intention model

12
H6, H6a, H6b
H5, H5a, H5b
H4, H4a, H4b
H3a
H1, H1a
Hypothesized pay satisfaction, job satisfaction,
organizational commitment, and turnover model
13
Hypothesized pay satisfaction, job satisfaction,
organizational commitment, and turnover intention
model
14
Hypotheses

• H1 Pay satisfaction has a negative relationship
  with employee turnover.
• H1a The amount of extra money given to employees
  can change specific levels of employees turnover
  intention.
• H2 Job satisfaction has a negative relationship
  with employee turnover.

15
Hypotheses (cont.)

• H3 Organizational commitment has a negative
  relationship with employee turnover.
• H4 Pay satisfaction has a positive relationship
  with job satisfaction.
• H4a Pay satisfaction is a mediator between job
  satisfaction and employee turnover.

16
Hypotheses (cont.)

• H4b Job satisfaction is a mediator between pay
  satisfaction and employee turnover.
• H5 Pay satisfaction has a positive relationship
  with organizational commitment.
• H5a Pay satisfaction is a mediator between
  organizational commitment and employee turnover.

17
Hypotheses (cont.)

• H5b Organizational commitment is a mediator
  between pay satisfaction and employee turnover.
• H6 Job satisfaction has a positive relationship
  with organizational commitment.
• H6a Job satisfaction is a mediator between
  organizational commitment and employee turnover.

18
Hypotheses (cont.)

• H6b Organizational commitment is a mediator
  between job satisfaction and employee turnover.

19
Operating Procedures
Hypothesized pay satisfactions sub-variables and
turnover intention model
20
Hypotheses (cont.)

• H2a Promotion has a significant relationship
  with employee turnover.
• H2b Supervision has a significant relationship
  with employee turnover.
• H2c Fringe benefits have a significant
  relationship with employee turnover.
• H2d Contingent rewards have a significant
  relationship with employee turnover.

21
Hypotheses (cont.)

• H2e Operating procedures have a significant
  relationship with employee turnover.
• H2f Coworkers have a significant relationship
  with employee turnover.
• H2g The nature of work has a significant
  relationship with employee turnover.
• H2h Communication has a significant relationship
  with employee turnover.

22
Normative Commitment
Hypothesized organizational commitments
sub-variables and turnover intention model
23
Hypotheses (cont.)

• H3a Affective commitment has a significant
  relationship with employee turnover.
• H3b Continuance commitment has a significant
  relationship with employee turnover.
• H3c Normative commitment has a significant
  relationship with employee turnover.

24
MethodologyResearch Design

• Quantitative, Non-experimental study
• Explanatory and Correlational survey

25
MethodologySampling Plan

• Target Population (78,336)
• Accessible Population (46,157)
• Probability and Two-stage Total Accessible
  Sampling Plan
• Questionnaire 68 questions in 5 sections

26
MethodologyInstrumentation

• Pay Satisfaction
• Pay satisfaction measured by modified pay
  sub-dimension of Job Satisfaction Scale (Spector,
  1985)
• 4 items

27
MethodologyInstrumentation (cont.)

• Job Satisfaction
• Job satisfaction measured by modified Job
  Satisfaction Scale (Spector, 1985)
• 32 items

28
MethodologyInstrumentation (cont.)

• Organizational Commitment
• Organizational commitment measured by modified
  Three-Component Model (TCM) Employee Commitment
  Survey (Meyer, Allen, Smith, 1993 )
• 18 items

29
MethodologyInstrumentation (cont.)

• Turnover Intention
• Turnover intention measured by modified Turnover
  Questionnaire (Kim, Price, Mueller, Watson,
  1996)
• 4 items

30
Methodology Methods of Data Analysis

• EXCEL, SPSS 14.0, and AMOS 6.0
• Descriptive statistics, Confirmatory Factor
  Analysis, and Structural Equation Modeling (SEM)

31
Methodology Methods of Data Analysis (cont.)

• Descriptive statistics and reliability scores
  calculated by SPSS 14.0, and structural equation
  modeling (SEM) analysis used AMOS 6.0.

32
Methodology Methods of Data Analysis (cont.)

• Confirmatory Factor Analysis
• Goodness-of-Fit Criteria
• Absolute Fit Measures
• Incremental Fit Measures
• Parsimonious Fit Measures

33
Methodology Goodness-of-Fit Example
34
Methodology Goodness-of-Fit Example (cont.)
Goodness-of-fit statistics Values Desired range of values for a good fit
Absolute fit measures
Chi-square test ?2 445.76(plt.001) pgt.05
Degrees of freedom df 98 0
Chi-square/ degrees of freedom ratio ?2/df 4.55 2 to 5
Goodness-of-fit index GFI .87 gt.90
Root mean square error of approximation RMSEA .10 lt.08
Incremental fit measures
Adjusted goodness-of-fit index AGFI .82 gt.90
Tucker-Lewis index TLI .83 gt.90
Normed fit index NFI .83 gt.90
Comparative fit index CFI .86 gt.95
Parsimonious fit measures
Parsimonious normed fit index PNFI .68 gt.50
Parsimonious goodness-of-fit index PGFI .63 gt.50
35
Methodology Goodness-of-Fit Example
36
Methodology Goodness-of-Fit Example (cont.)
Goodness-of-fit statistics Values Desired range of values for a good fit
Absolute fit measures
Chi-square test ?2 134.57(plt.001) pgt.05
Degrees of freedom df 44 0
Chi-square/ degrees of freedom ratio ?2/df 3.06 2 to 5
Goodness-of-fit index GFI .94 gt.90
Root mean square error of approximation RMSEA .08 lt.08
Incremental fit measures
Adjusted goodness-of-fit index AGFI .90 gt.90
Tucker-Lewis index TLI .93 gt.90
Normed fit index NFI .94 gt.90
Comparative fit index CFI .96 gt.95
Parsimonious fit measures
Parsimonious normed fit index PNFI .63 gt.50
Parsimonious goodness-of-fit index PGFI .53 gt.50
37
Results

• 1,704 surveys were distributed
• 392 responses were received
• Response rate was 23
• 37 responses were invalid
• N 355

38
Research Purposes, Hypotheses, and Results
Research Purposes Hypotheses Results
The relationships among pay satisfaction, job satisfaction, organizational commitment, and turnover intention 1. Pay satisfaction has a negative relationship with turnover intention. Rejected
The relationships among pay satisfaction, job satisfaction, organizational commitment, and turnover intention 2. Job satisfaction has a negative relationship with turnover intention. Rejected
The relationships among pay satisfaction, job satisfaction, organizational commitment, and turnover intention 3. Organizational commitment has a negative relationship with turnover intention. Supported
The relationships among pay satisfaction, job satisfaction, organizational commitment, and turnover intention 4. Pay satisfaction has a positive relationship with job satisfaction. Supported
4a. Pay satisfaction is a mediator between job satisfaction and turnover intention. Rejected
4b. Job satisfaction is a mediator between pay satisfaction and turnover intention. Rejected
5. Pay satisfaction has a positive relationship with organizational commitment. Rejected
5a. Pay satisfaction is a mediator between organizational commitment and turnover intention. Rejected
5b. Organizational commitment is a mediator between pay satisfaction and turnover intention. Rejected
6. Job satisfaction has a positive relationship with organizational commitment. Supported
6a. Job satisfaction is a mediator between organizational commitment and turnover intention. Rejected
6b. Organizational commitment is a mediator between job satisfaction and turnover intention. Supported
39
Job Satisfaction
Organizational Commitment
Pay Satisfaction
Turnover Intention
40
Research Purposes, Hypotheses, and Results
(cont.)
Research Purposes Hypotheses Results
The relationships among pay satisfactions sub-variables and turnover intention 2a. Promotion has a significant relationship with turnover intention. Rejected
The relationships among pay satisfactions sub-variables and turnover intention 2b. Supervision has a significant relationship with turnover intention. Rejected
The relationships among pay satisfactions sub-variables and turnover intention 2c. Fringe benefits have a significant relationship with turnover intention. Rejected
The relationships among pay satisfactions sub-variables and turnover intention 2d. Contingent rewards have a significant relationship with turnover intention. N/A
The relationships among pay satisfactions sub-variables and turnover intention 2e. Operating procedures have a significant relationship with turnover intention. N/A
2f. Coworkers have a significant relationship with turnover intention. Rejected
2g. The nature of work has a significant relationship with turnover intention. Supported
2h. Communication has a significant relationship with turnover intention. Rejected
41
Operating Procedures
Contingent Rewards
Fringe Benefits
Coworkers
Turnover Intention
Supervision
Nature of work
Communication
Promotion
42
Research Purposes, Hypotheses, and Results
(cont.)
Research Purposes Hypotheses Results
The relationships among organizational commitments sub-variables and turnover intention 3a. Affective commitment has a significant relationship with turnover intention. Supported
The relationships among organizational commitments sub-variables and turnover intention 3b. Continuance commitment has a significant relationship with turnover intention. N/A
The relationships among organizational commitments sub-variables and turnover intention 3c. Normative commitment has a significant relationship with turnover intention. Supported
43
Continuance Commitment
Normative Commitment
Affective Commitment
Turnover Intention
44
Pay Satisfaction
Job Satisfaction
Normative Commitment
Affective Commitment
Nature of work
Organizational Commitment
Turnover Intention
45
Recommendations for Future Study

• Other factors
• Measurements

46
Office Location
Pressure
Job Performance
Personality Traits
Working Loads
Pay Satisfaction
Socio-demographic Characteristics
Job Satisfaction
Organizational Commitment
Working Hours
Non-Telecommuters
Turnover Intention
?
Leadership Styles
Personal Situation
Empowerment
Telecommuters
Trust
Enterprise Culture
Burnout
Working Status
Training
47
Recommendations for Future Study (cont.)

• Different groups, industries, cultures, or
  countries.
• Turnover intention and the actual departure of an
  employee

48

• Comments or Questions?