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

Introduction to the Problem High turnover rate Cost Knowledge Customers Taiwanese banking industry

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

Purpose of the Study To explore the relationship and degrees among those factors Pay satisfaction’s role To discover the accurate ratio between pay raise and turnover intention The conflicts between different theories and results of empirical studies

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

Definition of Terms (cont.) Organizational Commitment Affective Commitment Continuance Commitment Normative Commitment Turnover Intention Domestic Private Bank Entry-Level Employee Mid-Management

Literature Review Theoretical Framework & 2 Research Questions Hypothesized Models & 24 Hypotheses

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)

Theoretical Framework Pay Satisfaction Job Satisfaction Organizational Commitment Turnover Intention Promotion Communication Supervision Nature of work Coworkers Operating Procedures Fringe Benefits Contingent Rewards Affective commitment Continuance commitment Normative commitment Theoretical Framework

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

Hypothesized Models Pay satisfaction, job satisfaction, organizational commitment, and turnover intention model Pay satisfaction’s sub-variables and turnover intention model Organizational commitment’s sub-variables and turnover intention model

Pay Satisfaction Employee Turnover Job Satisfaction Organizational Commitment H2 H3 Supervision Communicatio n Nature of work Coworkers Operating Procedures H2a H2b H2c H2d H2e H2f H2g H2h Affective commitment Continuance commitment Normative commitment H3b H3c Fringe Benefits Contingent Rewards Promotion H6, H6a, H6b H5, H5a, H5b H4, H4a, H4b H3a H1, H1a Hypothesized pay satisfaction, job satisfaction, organizational commitment, and turnover model

Organizational Commitment Pay Satisfaction Turnover Intention Job Satisfaction Organizational Commitment H1, H1a H2 H3 H4, H4a, H4b H5, H5a, H5b H6, H6a, H6b Hypothesized pay satisfaction, job satisfaction, organizational commitment, and turnover intention model

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.

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.

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.

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.

Hypotheses (cont.) H6b: Organizational commitment is a mediator between job satisfaction and employee turnover.

Fringe Benefits Turnover Intention Contingent Rewards H2b H2c H2d Coworkers Nature of work Communication Supervision Promotion H2a H2e H2f H2g H2h Operating Procedures Hypothesized pay satisfaction’s sub-variables and turnover intention model

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.

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.

Continuance Commitmen t Turnover Intention Normative Commitmen t Affective Commitmen t H3a H3b H3c Normative Commitmen t Hypothesized organizational commitment’s sub-variables and turnover intention model

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.

Methodology Research Design Quantitative, Non-experimental study Explanatory and Correlational survey

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

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

Methodology Instrumentation (cont.) Job Satisfaction Job satisfaction measured by modified Job Satisfaction Scale (Spector, 1985) 32 items

Methodology Instrumentation (cont.) Organizational Commitment Organizational commitment measured by modified Three-Component Model (TCM) Employee Commitment Survey (Meyer, Allen, & Smith, 1993 ) 18 items

Methodology Instrumentation (cont.) Turnover Intention Turnover intention measured by modified Turnover Questionnaire (Kim, Price, Mueller, & Watson, 1996) 4 items

Methodology Methods of Data Analysis EXCEL, SPSS 14.0, and AMOS 6.0 Descriptive statistics, Confirmatory Factor Analysis, and Structural Equation Modeling (SEM)

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.

Methodology Methods of Data Analysis (cont.) Confirmatory Factor Analysis Goodness-of-Fit Criteria Absolute Fit Measures Incremental Fit Measures Parsimonious Fit Measures

Methodology Goodness-of-Fit Example

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 χ2 445.76 (p<.001) p>.05 Degrees of freedom df 98 ≥0 Chi-square/ degrees of freedom ratio χ2/df 4.55 2 to 5 Goodness-of-fit index GFI .87 >.90 Root mean square error of approximation RMSEA .10 <.08 Incremental fit measures Adjusted goodness-of-fit index AGFI .82 Tucker-Lewis index TLI .83 Normed fit index NFI Comparative fit index CFI .86 >.95 Parsimonious fit measures Parsimonious normed fit index PNFI .68 >.50 Parsimonious goodness-of-fit index PGFI .63

Methodology Goodness-of-Fit Example

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 χ2 134.57 (p<.001) p>.05 Degrees of freedom df 44 ≥0 Chi-square/ degrees of freedom ratio χ2/df 3.06 2 to 5 Goodness-of-fit index GFI .94 >.90 Root mean square error of approximation RMSEA .08 <.08 Incremental fit measures Adjusted goodness-of-fit index AGFI .90 Tucker-Lewis index TLI .93 Normed fit index NFI Comparative fit index CFI .96 >.95 Parsimonious fit measures Parsimonious normed fit index PNFI .63 >.50 Parsimonious goodness-of-fit index PGFI .53

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

Research Purposes, Hypotheses, and Results The relationships among pay satisfaction, job satisfaction, organizational commitment, and turnover intention 1. Pay satisfaction has a negative relationship with turnover intention. Rejected 2. Job satisfaction has a negative relationship with turnover intention. 3. Organizational commitment has a negative relationship with turnover intention. Supported 4. Pay satisfaction has a positive relationship with job satisfaction. 4a. Pay satisfaction is a mediator between job satisfaction and turnover intention. 4b. Job satisfaction is a mediator between pay satisfaction and turnover intention. 5. Pay satisfaction has a positive relationship with organizational commitment. 5a. Pay satisfaction is a mediator between organizational commitment and turnover intention. 5b. Organizational commitment is a mediator between pay satisfaction and turnover intention. 6. Job satisfaction has a positive relationship with organizational commitment. 6a. Job satisfaction is a mediator between organizational commitment and turnover intention. 6b. Organizational commitment is a mediator between job satisfaction and turnover intention.

Organizational Commitment Job Satisfaction Pay Satisfaction Turnover Intention

Research Purposes, Hypotheses, and Results (cont.) The relationships among pay satisfaction’s sub-variables and turnover intention 2a. Promotion has a significant relationship with turnover intention. Rejected 2b. Supervision has a significant relationship with turnover intention. 2c. Fringe benefits have a significant relationship with turnover intention. 2d. Contingent rewards have a significant relationship with turnover intention. N/A 2e. Operating procedures have a significant relationship with turnover intention. 2f. Coworkers have a significant relationship with turnover intention. 2g. The nature of work has a significant relationship with turnover intention. Supported 2h. Communication has a significant relationship with turnover intention.

Contingent Rewards Operating Procedures Fringe Benefits Coworkers Turnover Intention Supervision Nature of work Promotion Communication

Research Purposes, Hypotheses, and Results (cont.) The relationships among organizational commitment’s sub-variables and turnover intention 3a. Affective commitment has a significant relationship with turnover intention. Supported 3b. Continuance commitment has a significant relationship with turnover intention. N/A 3c. Normative commitment has a significant relationship with turnover intention.

Continuance Commitmen t Affective Commitmen t Normative Commitmen t Turnover Intention

Organizational Commitment Pay Satisfaction Job Satisfaction Affective Commitmen t Normative Commitmen t Organizational Commitment Nature of work Turnover Intention

Recommendations for Future Study Other factors Measurements

? Office Location Pressure Job Performance Personality Traits Working Loads Pay Satisfaction Socio-demographic Characteristics Organizational Commitment Job Satisfaction Working Hours Non-Telecommuters Turnover Intention ? Leadership Styles Personal Situation Empowerment Telecommuters Trust Enterprise Culture Burnout Working Status Training

Recommendations for Future Study (cont.) Different groups, industries, cultures, or countries. Turnover intention and the actual departure of an employee

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