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 satisfaction’s 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
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

10. 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?

11. 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

12. 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

13. 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

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. 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

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. 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

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

25. 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

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

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

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

29. Methodology Instrumentation (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 χ2
(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

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 χ2
(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

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
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.

39. Organizational Commitment
Job Satisfaction
Pay Satisfaction
Turnover Intention

40. 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.

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

42. 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.

43. Continuance Commitmen t
Affective Commitmen t
Normative Commitmen t
Turnover Intention

44. Organizational Commitment
Pay Satisfaction
Job Satisfaction
Affective Commitmen t
Normative Commitmen t
Organizational Commitment
Nature of work
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
Organizational Commitment
Job Satisfaction
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?