PAY SATISFACTION, JOB SATISFACTION, ORGANIZATIONAL COMMITMENT, AND TURNOVER INTENTION WITHIN THE BANKING INDUSTRY IN TAIWAN: A STRUCTURAL EQUATION MODELING APPROACH

1
PAY SATISFACTION, JOB SATISFACTION,
ORGANIZATIONAL COMMITMENT, AND TURNOVER INTENTION
WITHIN THE BANKING INDUSTRY IN TAIWAN A
STRUCTURAL EQUATION MODELING APPROACH
Lynn University Doctoral Dissertation Defense
Hearing

• Chin-Chih Wang (Michael)

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
Justification

• Global interest
• Taiwanese banking industry
• Different from previous studies
• Researchable
• Feasible

8
Delimitations and Scope

• The relationship between turnover intention and
  actual departure
• Entry-level employees and mid-management
• Private banks
• May not be applicable to other countries and
  industries

9
Delimitations and Scope (cont.)

• The study did not take into account any
  unpredictable internal and external factors

10
Literature Review

• Theoretical Framework 2 Research Questions
• Hypothesized Models 24 Hypotheses

11
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)

12
Theoretical Framework
13
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?

14
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

15
H6, H6a, H6b
H5, H5a, H5b
H4, H4a, H4b
H3a
H1, H1a
Hypothesized pay satisfaction, job satisfaction,
organizational commitment, and turnover model
16
Hypothesized pay satisfaction, job satisfaction,
organizational commitment, and turnover intention
model
17
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.

18
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.

19
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.

20
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.

21
Hypotheses (cont.)

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

22
Operating Procedures
Hypothesized pay satisfactions sub-variables and
turnover intention model
23
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.

24
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.

25
Normative Commitment
Hypothesized organizational commitments
sub-variables and turnover intention model
26
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.

27
MethodologyResearch Design

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

28
MethodologySampling Plan

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

29
MethodologyInstrumentation

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

30
MethodologyInstrumentation (cont.)

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

31
MethodologyInstrumentation (cont.)

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

32
MethodologyInstrumentation (cont.)

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

33
MethodologyData Collection Procedures and
Ethical Aspects

• Permissions to use and translate scales
• Institutional Review Board of Lynn University
• Translation
• Listed all 1,503 branch offices
• Randomly selected 80 branches

34
MethodologyData Collection Procedures and
Ethical Aspects (cont.)

• Total accessible
• Participants contacted outside the bank in a
  public area
• Package with a consent form, survey questionnaire
  and grip-seal envelope

35
MethodologyData Collection Procedures and
Ethical Aspects (cont.)

• No personal identifiers
• Each survey coded with a number
• Participants completed the survey voluntarily and
  anonymously

36
MethodologyData Collection Procedures and
Ethical Aspects (cont.)

• The IRB has been notified at the end of the study
  
• Data stored in a locked depository box for a
  period of five years
• Destroy

37
Methodology Methods of Data Analysis

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

38
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.

39
Methodology Methods of Data Analysis (cont.)

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

40
Methodology Goodness-of-Fit Example
41
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
42
Methodology Goodness-of-Fit Example
43
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
44
Results

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

45
Results

• Research Question 1
• What are the socio-demographic characteristics
  of a sample of employees in the Taiwanese banking
  industry?

46
Frequency and Percentage of Gender
98 (27.6)
257 (72.4)
47
Frequency and Percentage of Age
48
Frequency and Percentage of Education Level
49
Frequency and Percentage of Working Years
Working Years Frequency Frequency Percentage
1 52 14.6 14.6
2 67 18.9 18.9
3 46 13.0 13.0
4 25 7.0 7.0
5 26 7.3 7.3
6 23 6.5 6.5
7 19 5.4 5.4
8 17 4.8 4.8
9 12 3.4 3.4
10 9 2.5 2.5
11 10 2.8 2.8
12 10 2.8 2.8
13 6 1.7 1.7
50
Frequency and Percentage of Working Years (cont.)
Working Years Frequency Frequency Percentage
14 1 0.3 0.3
15 8 2.3 2.3
16 5 1.4 1.4
18 1 0.3 0.3
19 1 0.3 0.3
21 3 0.8 0.8
22 1 0.3 0.3
23 1 0.3 0.3
24 3 0.8 0.8
25 6 1.7 1.7
29 1 0.3 0.3
31 1 0.3 0.3
32 1 0.3 0.3
Total 355 100 100
51
Frequency and Percentage of Position Level
52
Frequency and Percentage of Job Title
53
Frequency and Percentage of Monthly Salary
54
Results

• Research Question 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?

55
Scores of Job Satisfaction Survey (JSS)
Job Satisfaction Survey (JSS) Items (N 355) Mean
Pay dimension score (possible range 4-24) 12.76
Promotion dimension score (possible range 4-24) 11.96
Supervision dimension score (possible range 4-24) 16.11
Fringe Benefits dimension score (possible range 4-24) 12.86
Contingent Rewards dimension score (possible range 4-24) 13.85
Operating Conditions dimension score (possible range 4-24) 12.55
Coworkers dimension score (possible range 4-24) 18.05
Nature of Work dimension score (possible range 4-24) 14.40
Communication score (possible range 4-24) 14.06
Total score (possible range 36-216) 126.60
56
Scores of Three-Component Model (TCM) Employee
Commitment Survey
Three-Component Model (TCM) Employee Commitment Survey (N355) Mean
Affective Commitment dimension score (possible range 6-42) Affective Commitment dimension score (possible range 6-42) 25.76
Continuance Commitment dimension score (possible range 6-42) Continuance Commitment dimension score (possible range 6-42) 25.49
Normative Commitment dimension score (possible range 6-42) Normative Commitment dimension score (possible range 6-42) 21.46
Total score (possible range 36-216) 72.71
57
Score of Turnover Questionnaire

• Average score (possible range 4-20) is 11.45

58
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
59
Job Satisfaction
Organizational Commitment
Pay Satisfaction
Turnover Intention
60
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
61
Operating Procedures
Contingent Rewards
Fringe Benefits
Coworkers
Turnover Intention
Supervision
Nature of work
Communication
Promotion
62
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
63
Continuance Commitment
Normative Commitment
Affective Commitment
Turnover Intention
64
Pay Satisfaction
Job Satisfaction
Normative Commitment
Affective Commitment
Nature of work
Organizational Commitment
Turnover Intention
65
Research Purposes, Hypotheses, and Results
(cont.)
Research Purposes Hypotheses Results
Turnover intention recovery 1a. The amount of extra money given to employees can change specific levels of employees turnover intention. Supported

• A total of 89 of 355 participants (25) stated
  that they agree or strongly agree that they
  plan to leave their banks as soon as possible.
• A total of 73 of the high turnover intention
  group (82) stated that they would change their
  turnover intention if their monthly salary were
  increased.

66
Reliability and Validity of JSS, TCM, and
Turnover Questionnaire

• Cronbachs alpha
• Factor loading

67
DISCUSSION

• Interpretations
• Practical Implications
• Conclusions
• Limitations
• Recommendations for Future Study

68
Interpretations

• Socio-Demographic Characteristics
• The Degrees of Pay Satisfaction, Job
  Satisfaction, Organizational Commitment and
  Turnover Intention
• The Relationships among Pay Satisfaction, Job
  Satisfaction, Organizational Commitment, and
  Turnover Intention

69
Interpretations (cont.)

• The Relationships among Pay Satisfactions
  Sub-Variables and Turnover Intention
• The Relationships among Organizational
  Commitments Sub-Variables and Turnover Intention
  
• Turnover Intention Recovery

70
(No Transcript)
71
Pay Raise and Turnover Recovery Rates
Extra money Extra money Pay raise rate Pay raise rate Turnover intention recovery rate Turnover intention recovery rate
30 3 3 0 0  
60 5 5 3 3  
90 8 8 7 7  
120 11 11 9 9  
150 13 13 56 56  
180 16 16 61 61  
210 19 19 63 63  
240 21 21 70 70  
270 24 24 70 70  
300 27 27 87 87  
330 29 29 87 87  
360 32 32 89 89  
390 34 34 89 89  
420 37 37 90 90  
450 40 40 97 97  
480 42 42 97 97  
510 45 45 100 100  
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Practical Implications

• Educational level
• Working hours and work load
• Turnover rates
• Organizational commitment
• Reduce turnover intention
• Turnover Intention Recovery

73
Conclusions

• Pay satisfaction and turnover intention
• Job satisfaction and turnover intention
• Organizational commitment and turnover intention
• Pay satisfaction and job satisfaction
• Pay satisfaction and organizational commitment

74
Conclusions (cont.)

• Job satisfaction and organizational commitment.
• Organizational commitment is a mediator
• Nature of work
• Affective commitment and normative commitment
• Turnover Intention Recovery

75
Limitations

• Sample size
• Data collection period
• Survey instruments
• Contingent rewards, operating procedures, and
  continuance commitment

76
Recommendations for Future Study

• Other factors
• Measurements

77
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
78
Recommendations for Future Study (cont.)

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

79

• Comments or Questions?