CHAPTER 1
INTRODUCTION
This chapter compile of background of problem in this study, statement of the problem, purpose and objective of the study, research questions and hypotheses, and significance of the study, scope and limitations.
1.1 BACKGROUND OF THE STUDY
Oxford Dictionaries Online defines pay as "give (someone) money that is due for work done, goods received, or a debt incurred" while thefreedictionary.com defines pay as "to give money to in return for goods or services rendered" and the definition from Google is "to give money to in return for goods or services rendered".
Meanwhile, the definition for organizational commitment from BusinessDictionary.com is "the strength of the feeling of responsibility that an employee has towards the mission of the organization" and from the encyclopedia.com, organizational commitment is "an individual's psychological attachment to an organization and desire to remain part of it. It is normally measured by attitudinal dimensions, e.g. identification with the goals and values of the organization; desire to belong to the organization; and willingness to display effort on behalf of the organization. A distinction is sometimes made between affective
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commitment, which involves a sense of loyalty and shared values, and mere continuance commitment, which arises from inertia or the problems of finding alternative employment."
Thus, researchers have examined the psychological mechanisms involved in the perception of pay in order to better understand its motivational impact. Among these mechanisms, distributive justice, which refers to the perceived fairness of the outcomes of decisions, and procedural justice, which represents the perceived fairness of the formal process by which decisions are made are important ones (Folger and Cropanzano 1998). Research indicated that distributive and procedural justice represent major mechanisms through which pay attributes (e.g., level, raises) are judged (Tremblay et al. 2000). When employees perceive the ratio between their contribution and compensation to be favorable as compared with that of relevant others (distributive justice), they are more satisfied with their pay (Folger and Konovsky 1989; Gerhart and Rynes 2003; Greenberg 1982; Livingstone et al. 1995; McFarlin and Sweeney 1992). Similarly, the rules and procedures guiding pay decisions and the information that accompanies their implementation may foster procedural justice, resulting in satisfaction with pay being higher (Folger and Konovsky 1989; Tekleab et al. 2005). All in all, evidence suggests that distributive and procedural justice are key determinants of pay satisfaction.
Huge number of studies shown that there are four facets in pay satisfaction, (Currall et al. 2005; Carraher and Buckley 1996; DeConinck et al. 1996; Heneman et al. 1988; Judge 1993; Judge andWelbourne 1994; Scarpello et al. 1988) which are (1) pay level, (2) pay raises, (3) benefits, and (4) pay structure and administration (the methods used to determine compensation). Heneman and Schwab (1985) argued that these facets represent distinct but related judgments of pay satisfaction. In his example, an employee might satisfied with his/her current salary (pay level) but not satisfied with its evolution over time (pay raises). Pay raise satisfaction has been shown to be more related to procedural justice since it reflects an appraisal of how fair the organization has been in adjusting compensation based on the performance of an employee (Tekleab et al. 2005).
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On the other hand, Meyer and Allen's (1991) multidimensional model of organizational commitment is the most popular and validated thoroughly. Their model includes affective, normative, and continuance components, all of which are thought to contribute to employee retention. Accumulated findings suggest that commitment components exert an influence on membership decisions through different mechanisms. Employees with a strong affective commitment stay with their organization based on the desire to do so, while those with a strong normative commitment stay based on the perceived obligation to do so (Meyer and Herscovitch 2001). Regarding the contribution of continuance commitment to employee retention, one should distinguish among its two sub-components: the perceived sacrifice associated with leaving and the perceived lack of alternatives (Bentein et al. 2005; Dunham et al. 1994; Gakovic and Tetrick 2003; Hackett et al. 1994; Jaros 1997; Meyer et al. 1990; McGee and Ford 1987; Somers 1993; Stinglhamber et al. 2002).
Hence, research indicates that pay satisfaction affecting commitment components through different mechanisms. Affective commitment refers to a sense of identification with and involvement in an organization (Meyer and Allen 1991). It is known to be influenced by positive work experiences and perceptions of support and justice. In this regard, the different facets of pay satisfaction are reflective of the fact that the individual feels valued, recognized, and fairly treated by the organization (Tekleab et al. 2005). This should result in stronger affective commitment. Normative commitment refers to a loyalty and sense of debt toward the organization based on moral obligation and typically develops as a result of socialization practices (Meyer and Allen 1991). Vandenberghe and Tremblay (2008) argued that satisfaction with such facets as pay raise and benefits may be related to normative commitment through the norm of reciprocity because it would signal to the individual that he/she has received a fair amount of resources from the organization, hence creating a sense of indebtedness.
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1.2 STATEMENT OF THE PROBLEM
Pay satisfaction is an employee's feeling of pleasure toward his or her pay. Researchers has been identified four facets of pay that lead to satisfaction, the pay level, pay raise, benefits and pay structure and administration which means the methods used to determine compensation (Heneman and Schwab, 1985). A set of questionnaire, the Pay Satisfaction Questionnaire (PSQ) also developed to measure employee's satisfaction towards each facets. Researches done by scholars from worldwide setting (eg. Curralet al. 2005; Carraher and Buckley 1996; Heneman et al. 1988; Judge and Welbourne 1994) ensured PSQ's validity and reliability.
Definition for organizational commitment by Allen and Meyer (1996) is the "psychological link between an employee and his of her organization that makes it less likely that the employee will voluntarily leave the organization." Hence, huge number of research in the field has been carry out worldwide which is aimed to locates the antecedents and the correlations with variables like turnover and absenteeism. Thus, the leading model, Three-Component Model (TCM) has been developed by Meyer and Allen (1993) and Organizational Commitment Questionnaire (OCQ) was initially developed by Porter and Smith (1970) to measure employee commitment to their organization. Studies related to commitment has been widely studied by scholars by relying on these model and concept.
Since the level of commitment and satisfaction towards pay can be measure independently, this indicating that their cause - effect relationship remain subjective. However, pay satisfaction can be one of the most influencing factors in predicting organizational commitment, studies in foreign settings ensured the relationship between pay satisfaction and commitment level. Nevertheless, there are lacks of concurrent evidences in Malaysia especially in educational setting. Hence, this study is carry out to investigate the relationship between pay satisfaction and organizational commitment among academic staffs in Politeknik Pasir Gudang.
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1.3 PURPOSE OF THE STUDY
This study is carry out to identified the overall pay satisfaction level and overall commitment level among academic staffs in Politeknik Pasir Gudang. Furthermore, the relationship between pay satisfaction and organizational commitment will be determined. In addition, this study will identify the dominant factor(s) or facet(s) which influence most in the relationship.
People knew about the existence of pay satisfaction and commitment, but most of them (researcher believed) did not know how to measure them, especially the facets and dimensions and sub-dimensions inside these two variables. Questions in the questionnaire enabled respondents gain some idea about how pay satisfaction and commitment were measured.
Also, the present study is to investigates the relationship between pay satisfaction and organizational commitment among academic staffs. By identifying the relationship between these two variables, employees and employers from other field have a reference, at least at some degree, about how pay satisfaction affecting or influencing commitment level, and some ideas about how to improve to gain higher state of satisfaction and commitment level.
From this study also, the dominant factor(s) or facet(s) which influencing most in the relationship will be determined. Dominant factor(s) is valuable and it will be the important key from employers or management teams to increase the commitment level of their employees.
Lastly, the study of relationship between pay satisfaction and organizational commitment in Politeknik Johor Bahru are intended to answer the following research questions.
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1.4 RESEARCH QUESTIONS
1.4.1 What are the overall pay satisfaction level among academic staffs in
Politeknik Johor Bahru?
1.4.2 What are the overall commitment level among academic staffs in Politeknik
Johor Bahru?
1.4.3 What are the satisfaction level of academic staffs in Politeknik Johor Bahru
toward their pay level, pay raise, benefits and pay structure/administration?
1.4.4 Is there any relationship between pay satisfaction and organizational
commitment among academic staffs in Politeknik Johor Bahru?
1.4.5 Did pay level positively related to organizational commitment among
academic staffs in Politeknik Johor Bahru?
1.4.6 Did pay raise (pay system) positively related to organizational commitment
among academic staffs in Politeknik Johor Bahru?
1.4.7 Did benefits (pay form) positively related to organizational commitment
among academic staffs in Politeknik Johor Bahru?
1.4.8 Did pay structure or administrative positively related to organizational
commitment among academic staffs in Politeknik Johor Bahru?
1.4.9 What is (are) the dominant factor(s) affecting or influencing the pay
satisfaction - commitment relationship?
1.5 OBJECTIVES OF THE STUDY
1.5.1 To determine the overall pay satisfaction level among academic staffs in
Politeknik Johor Bahru.
1.5.2 To determine the overall commitment level among academic staffs in
Politeknik Johor Bahru.
1.5.3 To determine the satisfaction level of academic staffs in Politeknik JB toward
their pay level, pay raise, benefits and pay structure/administration.
1.5.4 To investigates the relationship between pay satisfaction and organizational commitment among academic staffs in Politeknik Johor Bahru.
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1.5.5 To investigates the relationship between pay level and commitment among
academic staffs in Politeknik Johor Bahru.
1.5.6 To investigates the relationship between pay raise (pay system) and
commitment among academic staffs in Politeknik Johor Bahru.
1.5.7 To investigates the relationship between benefits (pay form) and commitment
among academic staffs in Politeknik Johor Bahru.
1.5.8 To investigates the relationship between pay structure/administration and
commitment among academic staffs in Politeknik Johor Bahru.
1.5.9 To determine the dominant factor(s) in the pay satisfaction - organizational commitment relationship.
1.6 HYPOTHESES
1.6.1 There are no relationship between pay satisfaction and organizational commitment among academic staffs in Politeknik Johor Bahru.
1.6.2 There are no relationship between pay level and organizational commitment
among academic staffs in Politeknik Johor Bahru..
1.6.3 There are no relationship between pay raise (pay system) and organizational
commitment among academic staffs in Politeknik Johor Bahru.
1.6.4 There are no relationship between benefits (pay form) and organizational
commitment among academic staffs in Politeknik Johor Bahru.
1.6.5 There are no relationship between pay structure/administration and
organizational commitment among academic staffs in Politeknik Johor Bahru.
1.6.6 There are no dominant factor(s) in the pay satisfaction - organizational
commitment relationship.
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1.7 SCOPE OF THE STUDY
This study is focused on the academic staffs in Politeknik Johor Bahru in the issue of the relationship between pay satisfaction and organizational commitment. It involved 100 participants in the range of age 25 to 55 years old, 42 were males and 58 were females, 87 (87%) were Malays, 4 (4%) were Chinese, 2 (2%) were Indians and 7 (7%) were from other races. Also, respondents are varied from marital status, educational background, and years of service in Politeknik JB.
Results and findings of the study was collected via a set of questionnaire that distributed to academic staffs in Politeknik JB from November to December on year 2010. This study only includes questions related to demographic background, pay satisfaction, and organizational commitment. Other problems or elements which not related to this issue is not included in the scope of study. This is a way to ensure only related data is collected to make this research meaningful. Irrelevance information might confuses researcher when analyzing the data.
1.7 SIGNIFICANCE OF THE STUDY
This study is significance to all unit related, such as researchers, Politeknik Johor Bahru, and also important for knowledge enlargement.
1.7.1 SIGNIFICANCE TO THE RESEARCHER
This study will help researcher to know more about pay satisfaction and organizational commitment and the relationship between this two psychological variables. By having the knowledge about how these psychological mechanism operating and influencing each other, authorized parties can take necessary actions
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to increase the commitment level and also the satisfaction level. Besides that, this study enabled researcher to study deeper on organizational commitment, which is one the interesting in psychology study. This paper also provides future researchers the core value in conducting similar research.
1.7.2 SIGNIFICANCE TO POLITEKNIK JOHOR BAHRU
This study also beneficial for Politeknik JB in term of quality. This study enabled participants aware about their satisfaction level toward their salary and their commitment level toward their organization. Also, the teaching quality can be improve if authorized parties take into consideration on the results of the study. Educators always playing an important role as a role model to their students, their behaviors and attitudes will be followed by their students and these might put some impacts on students' future. High level of commitment promising a high level of passion towards their daily tasks, hence, educators can remain their positive affects on their students.
1.8 LIMITATIONS
The sample of this study is drawn from academic staff in Politeknik Johor Bahru and because of the nature of sample, findings or results from the study cannot be generate to population other than Politeknik JB's academic staff.
In addition, the sincerity and honesty of the respondent is questionable. Because some of the question in the questionnaire is consider sensitive to our Asian culture, answers for question such as "I feel very little loyalty to this organization" and "Often, I find it difficult to agree with this organization's policies on important matters relating to its employees" are controversial.
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1.9 CONCEPTUAL DEFINITION
Following is the definition of conceptual about organizational commitment and pay satisfaction:
1.9.1 ORGANIZATIONAL COMMITMENT
Most scholars define organizational commitment as a bond between an individual (the employee) and the organization (the employer), through his own definition of commitment (Buchanan, 1974).
Bateman and Strasser (1984) stated that organizational commitment has been defined as "multidimensional in nature, involving an employee's loyalty to the organization, willingness to exert effort on behalf of the organization, degree of goal and value congruency with the organization, and desire to maintain membership".
Organizational commitment is "a psychological state that (a) characterizes the employee's relationship with the organization, and (b) has implications for the decision to continue or discontinue membership in the organization" (Meyer & Allen, 1991). Allen and Meyer (1996) further stated that organizational commitment is "a psychological link between the employee and his or her organization that makes it less likely that the employee will voluntarily leave the organization".
Porter et al. (1974) proposed that organizational commitment represented an individual's (a) belief in and agreement with the company's goals and values, (b) willingness to exert effort toward accomplishing the company's goals, and (c) strong desire to maintain employment at the present organization.
Meyer and Allen (1991) and Dunham et al (1994) identified three types of commitment as follow:
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i) AFFECTIVE COMMITMENT
Affective commitment is defined as the emotional attachment, identification, and involvement that an employee has with its organization and goals (Mowday et al, 1997; Meyer & Allen, 1993). Porter et al (1974) further characterize affective commitment by three factors (1) "belief in and acceptance of the organization's goals and values, (2) a willingness to focus effort on helping the organization achieve its goal's, and (3) a desire to maintain organizational membership".
ii) CONTINUANCE COMMITMENT
Continuance commitment is the willingness to remain in an organization because of "nontransferable" investments by the individual. Nontransferable investments include things such as retirement, relationships with other employees, or things that are special to the organization (Reichers, 1985). Continuance commitment also includes factors such as years of employment or benefits that the employee may receive that are unique to the organization (Reichers, 1985).
iii) NORMATIVE COMMITMENT
Normative commitment (Bolon, 1993) is the commitment that a person believes that they have to the organization or their feeling of obligation to their workplace. Weiner (1982) discusses normative commitment as being a "generalized value of loyalty and duty". Meyer and Allen (1991) supported this type of commitment prior to Bolon's definition, with their definition of normative commitment being "a feeling of obligation". It is argues that normative commitment is only natural due to the way we are raised in society. Normative commitment can be explained by other commitments such as marriage, family, religion, etc. therefore when it comes to one's commitment to their place of employment they often feel like they have a moral obligation to the organization (Wiener, 1982).
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Meyer, Allen, & Smith (1993) say that the three types of commitment are a psychological state "that either characterizes the employee's relationship with the organization or has the implications to affect whether the employee will continue with the organization". Meyer et al (1993) continue to say that "research shows that those employees with strong affective commitment will remain with an organization because they want to, those with strong continuance commitment remain because they have to, and those with strong normative commitment remain because they fell that they have to."
Meyer & Allen (1997) define a committed employee as being one "stays with an organization, attends work regularly, puts in a full day and more, protects corporate assets, and believes in the organizational goals". This employee positively contributes to the organization because of its commitment to the organization.
1.9.2 PAY SATISFACTION
Pay satisfaction is determined by two perceptions. The first perception is based on how much pay the employee believes he should receive, and the second perception is based on how much pay is actually received. Employees will be satisfied if the two perceptions are identical (Law & Wong, 1998; Lawler, 1971; Lawler, 1981). Pay is a reward, and pay satisfaction is "satisfaction with a reward that function both of how much is received and how much the individual feels should be received" (Ivancevich, Konopaske, & Matteson, 2005).
Reinforcement theory (Skinner, 1953) suggests that pay acts as general reinforcer since people learn from life experiences that a primary need, such as food or shelter, can be satisfied if money is obtained. Meanwhile, pay has been considered an important reward to motivate the behavior of employees in organizational science (Taylor, 1911).
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Heneman and Schwab (1979) suggested that pay can be broken into four distinct categories: pay level, pay raise (pay system), benefits (pay form) and pay structure/administration. And pay satisfaction is the level of satisfaction concerning each category of pay as below:
Pay level is the average of several wages or salaries in the organization. The average may be based on individual pay rates for a single position or on pay averages for a number of positions.
Pay raise (pay system) is the methods used to determine pay raises for individuals.
Benefits (pay form) is the type of pay that is received by the employee. Pay may be viewed as direct remuneration for time worked or performance, or it may be viewed as indirect remuneration in the form of fringe benefits or services.
Pay structure/administration is the methods used to determine the remuneration plans for individuals.
1.10 OPERATIONAL DEFINITION
Following is the definition of operational about organizational commitment and pay satisfaction:
1.10.1 ORGANIZATIONAL COMMITMENT
In this study, organizational commitment stand for the overall level of commitment among academic staffs in Politeknik Johor Bahru, Malaysia. A set of questionnaire that adopted and adapted from OCQ and TCM to measure the overall level of organizational commitment.
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1.10.2 PAY SATISFACTION
In this study, pay satisfaction refers to the level of satisfaction towards pay level, pay raise, benefits and pay structure/administration among academic staffs in Politeknik Johor Bahru, Malaysia. A set of questionnaire that adopted and adapted from PSQ to measure the overall level of satisfaction towards the pay received and each facets of pay.
Satisfaction towards pay level is the satisfaction toward several wages or salaries received.
Satisfaction towads pay raise (pay system) is the satisfaction toward the methods used to determine pay raises for individuals.
Satisfaction toward benefits (pay form) is the satisfaction towards the type of pay that is received by the employee. Pay may be viewed as direct remuneration for time worked or performance, or it may be viewed as indirect remuneration in the form of fringe benefits or services.
Satisfaction towards pay structure/administration is the satisfaction towards the methods used to determine the remuneration plans for individuals.
"organizational commitment." A Dictionary of Business and Management. 2006. Retrieved October 01, 2010 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O18-organizationalcommitment.html
