STUDYING THE ROLE OF PAY SATISFACTION AS

A RETENTION STRATEGY IN IT INDUSTRY IN

INDIA
Jeeta Sarkar
Doctoral Scholar, School of Human Resource Management
Xavier Institute of Management, Xavier University Bhubaneswar
 FLOW OF THE PRESENTATION
Introduction
Background of the Research
Problem Statement: Why the Study is Centered on IT Industry
Aim and Objectives of the Research
Research Questions
Literature Review and Hypothesis Development
Proposed Model
Proposed Research Methodology
Expected Outcome
 BACKGROUND OF THE RESEARCH
The success of any organization largely depends on its
employees. Attracting talent is not a problem in IT Industry but
to retain that is a challenge. The burgeoning employment
opportunities at Glocal level with better compensation package
provokes the employees to seek employment elsewhere.
Compensation is not only easiest but strategically important
option to both attract and retain the best employees (Carraher,
2011; Judge, Piccolo, Podsakoff, Shaw, & Rich, 2010; Singh &
Loncar, 2010).
 PROBLEM STATEMENT: WHY THE STUDY IS
CENTERED ON IT INDUSTRY?

IT professional compensation has soared, turnover has

rocketed to 15% to 20% annually, job-hopping has become
the norm and only eight out of ten IT positions get filled
with qualified candidates (McNee et al. 1998).
 RETENTION SCENARIO IN INDIA
Chart Title

22%
21% 20%
18% 19%
17%
13.30%
 RESEARCH OBJECTIVES
PRIMARY OBJECTIVE: The general objective of this study is to examine
the role of pay satisfaction on turnover intention in selected IT
Companies in India.
To investigate the relationship between pay satisfaction and turnover
intention of the IT workers in India.
To explore mediating process of affective, normative and continuance
commitment in relationship between pay satisfaction and turnover
intention
To explore the moderation process of attitudes to money in Indian
context and explore the nature of relationship.
 RESEARCH QUESTIONS
Is the multi-dimensional nature of pay satisfaction supported in aIndian
sample?
Are there relationships between pay satisfaction, organizational
commitment, voluntary turnover intention, and attitudes to money in Indian
context? If so, what is the nature of these relationships?
Do attitudes to money moderate the relationship between pay satisfaction
and voluntary turnover intention?
Does organizational commitment mediate the relationship between pay
satisfaction and voluntary turnover intention?
Does pay satisfaction relate to voluntary turnover intention?
Does pay satisfaction relate to organizational commitment?
Does organizational commitment relate to voluntary turnover intention?
(Thereby reducing (partial mediation) or removing (full mediation) the
relationship between pay satisfaction and voluntary turnover intention).
 LITERATURE REVIEW AND HYPOTHESES
Variable Studies Hypothesis
1. Williams et al. (2006); Singh and Loncar, 2010;
Pay Satisfaction Carraher, 2011: pay satisfaction is negatively related Hypothesis 1 : All of the dimensions of pay
and Turnover to and predictor of turnover and turnover intention satisfaction will be negatively correlated with
Intention 2. Tekleab, Bartol and Liu (2005): four dimensions may turnover intention with different effect size
have differential impact on turnover intention
1. Miceli and Mulvey (2000) : a positive relationship Hypothesis 2a: Pay satisfaction will be positively
between pay satisfaction and affective commitment related to affective commitment
2. Perryer et al (2010): affective commitment negatively Hypothesis 2b: Affective commitment will be
Affective
related to turnover intention negatively to turnover intentions
Commitment
3. Vandenberghe and Tremblay (2008): affective Hypothesis 2c: Affective commitment mediates a
commitment found to fully mediate the relationship of negative relationship between pay satisfaction
pay satisfaction and turnover intention. and subsequent turnover.
1. Gelaidan & Ahmad (2013): Satisfaction with pay raise Hypothesis 3a: Pay satisfaction will be positively
and benefits increases through normative commitment related to normative commitment
through the norm of reciprocity Hypothesis 3b: Normative commitment will be
2. Bentein et al, 2005: Employees with a high level of negatively to turnover intentions
Normative
normative commitment feel that they ought to remain Hypothesis 3c: Normative commitment mediates
Commitment
with the organization a negative relationship between pay satisfaction
3. DeConinck (2009): high levels of pay satisfaction and subsequent turnover.
should increase the obligation on the part of employees
not leaving the organization
 LITERATURE REVIEW AND HYPOTHESES
Variable Studies Hypothesis
Continuance 1. Vandenberghe and Tremblay (2008): Pay satisfaction Hypothesis 4a: Pay satisfaction will
Commitment contributes to Continuance commitment be positively related to perceived
2. Lapointe et al., 2011: negative relationship with sacrifice and negatively related to
turnover is greater when continuance commitment is perceived lack of alternatives.
captured via its perceived sacrifice component Hypothesis 4b: Perceived sacrifice
3. Stepina and Boyle (2002): perceived job alternatives commitment and lack of
directly influenced employee intent to leave opportunities will be negatively to
4. Currall et al (2005): higher pay satisfaction suggests a turnover intentions
higher perceived value conferred by the organization Hypothesis 4c: Continuance
which ultimately reduces commitment based on the commitment mediates a negative
absence/lack of employment alternatives or in a loss of relationship between pay satisfaction
valued resources and subsequent turnover.
1. Tang (1995): attitudes towards money relate to pay Hypothesis 5: Attitudes to money
satisfaction. relate to both pay satisfaction and
Attitude to 2. Judge (1993): individuals with lower pay satisfaction voluntary turnover intention, and will
Money but with a positive attitude to money are most likely to moderate the relationship between
quit and thus moderated the relationship between pay pay satisfaction and voluntary
satisfaction and voluntary turnover. turnover intention
 Proposed Model
Attitude to Money

Turnover
Pay Satisfaction

Affective Commitment

Continuance Commitment

Normative Commitment
 Proposed Research Methodology
Design quantitative, non-experimental, correlational, and cross-
sectional
Subjects: Employees of selected IT organizations
Gender: Both men and women
Target Population Marital Status: Married and Unmarried
Age: 25 55
Tenure: 0-8 years
Sampling Technique non-probability, convenience sampling

Data Collection a primary survey with a structured questionnaire using a Likert

Technique scale of 15 with 5 being the most important and 1 least
important
 Proposed Research Methodology
demographic questionnaire: to accurately summarize the sample

Pay Satisfaction Questionnaire (Heneman & Schwab, 1985): an eighteen-item questionnaire that is
composed of four dimensions measuring satisfaction with pay level (four items), satisfaction with benefits
(four items), satisfaction with pay raise (four items), and satisfaction with pay structure and
administration (six items).

turnover intention Questionnaire (Roodt, 2004): an adapted six-item questionnaire adapted from the
Measuring 15-item scale developed using two components of turnover intention namely intention to leave and
Instruments intention to stay

Bentein et al.s (2005) adapted version of Meyer et al.s (1993) organizational commitment scales:
include affective commitment (six items), normative commitment (six items), the perceived sacrifice facet
of continuance commitment

Money Ethics Scale (Tang, 1992) : a thirty-item questionnaire with six subscales, namely: good; evil;
achievement; respect (self-esteem); budget; and freedom (power)
 Proposed Research Methodology

Data Analysis structural equation modeling using LISREL 8.80 Student

Technique
Fit of the Model Chi-Square,
Root Mean Square Error of Approximation (RMSEA),
the Non-Normed Fit Index (NNFI), and the
Comparative Fix Index (CFI).
The model fit is represented by non-significant Chi-Square, RMSEA
< .080, NNFI > .95, and CFI > .95
 Expected Outcomes
Even though there are large amounts of literature existing about the dimensionality
of pay satisfaction, Heneman and Judge (2000) pointed out that almost all of the
studies on pay satisfaction dimensionality have been conducted on American samples
(p.84). Therefore, it is of great value to explore the dimensionality of this construct within
Indian Samples.
The study will also be exhaustive in nature to measure all four dimensions of Pay
Satisfaction, 3 components of Organizational Commitment and 6 dimensions of attitude
to money in India.
Further, the intended study will also explore psychological underpinnings of attitude to
money on the IT professionals in India that will go a long way to understand the reason
for intention to quit for higher compensation at the cost of career growth.
Thank You