Rewarding Organizational Commitment
Organizational commitment by employees is one of the cornerstones of any successful company and has been shown to significantly impact various performance metrics. A study carried out in China sought to investigate the relationship between organizational commitment and turnover intention, as well as with intrinsic, extrinsic and social rewards. The study results suggest that all of the aforementioned reward types are positively related to organizational commitment, while turnover intentions were found to decrease as commitment increased. Findings also suggest that organizational commitment is related to a number of other factors, including training and autonomy.
Key Topics: Organizational commitment; Turnover intentions; Extrinsic rewards; Intrinsic rewards; Social rewards
Title of Reviewed Article: Influence of organizational rewards on organizational commitment and turnover intentions
Researchers: Sajjad Nazir (Ghulam Ishaq Khan Institute of Engineering), Amina Shafi, Wang Qun, Nadia Nazir (Hohai University), and Quang Dung Tran (National University of Civil Engineering).
Publication: Employee Relations, 2016, Vol. 38 No. 4, pp. 596 – 619.
Setting the Scene
Research has established that organizational commitment is important in a number of job factors, such as job performance, lower turnover and absenteeism (Meyer et al., 2002; Riketta, 2002). Organizational commitment is a multifaceted concept, but can broadly be defined as the influence of an employee’s engagement and identification with a company (Newman et al., 2011). Two important elements of this construct are affective and normative commitment. Affective commitment relates to the extent to which employees feel emotionally committed to the company, while normative commitment relates to the feeling that remaining with a company is a responsibility.
Research suggests that companies can increase levels of organizational commitment through rewards (Miao et al., 2013). Social exchange theory indicates that when employees are satisfied with rewards offered by the company, they will exhibit favorable attitudes towards their company, such as through greater organizational commitment (Haar & Spell, 2004).
Organizational rewards can be categorized into three types, namely, intrinsic, extrinsic, and social (Williamson et al., 2009). Extrinsic rewards relate to tangible rewards such as salary and bonuses. Intrinsic rewards relate to more intangible rewards that come from factors such as job satisfaction. Social rewards are those derived from working and communicating with others, such as positive and supportive co-worker and supervisor relationships.
Based on their review of prior research, the researchers proposed a number of research hypotheses:
Hypothesis 1a-b - Satisfaction with extrinsic benefits is positively related to (1a) affective commitment (1b) normative commitment.
Hypothesis 2a-b - Supervisor support is positively related to (2a) affective commitment (2b) normative commitment.
Hypothesis 3a-b - Coworker support is positively related to (3a) affective commitment (3b) normative commitment.
Hypothesis 4a-b - Autonomy is positively related to (4a) affective commitment (4b) normative commitment.
Hypothesis 5a-b - Satisfaction with training is positively related to (5a) affective commitment (5b) normative commitment.
Hypothesis 6a-b - Satisfaction with participation in decision making is positively related to (6a) affective commitment (6b) normative commitment.
Hypothesis 7a-b - There is a negative relationship between (7a) affective commitment (7b) normative commitment and turnover intention.
How the research was conducted
This study was conducted using 202 participants who worked in both managerial and non-managerial positions in public and private-sector companies in the Jiangsu Province of China. Participants worked in education, banking, health care, hospitality, or telecommunication sectors.
The researchers developed a questionnaire for the purposes of this study, which was completed by the participants. The questionnaire covered intrinsic reward, extrinsic reward, social reward, turnover intention, organizational commitment, as well as demographic characteristics.
Key Research Findings
Analysis of the results found that the majority of the researchers’ hypotheses were supported.
Results supported the following hypotheses: 1a, 1b, 2a, 2b, 3a, 4a, 4b, 5b, 6a, 6b, 7a, 7b
Results did not support the following hypotheses: 3b, 5a
The results indicate that satisfaction with intrinsic, extrinsic, and social rewards all result in increased levels of both normative and affective commitment in Chinese employees, with extrinsic rewards being most significant. These results vary somewhat from similar studies which focused on Western companies and found intrinsic rewards to most strongly influence organizational commitment (e.g. Malhotra et al., 2007), but they support research in the Chinese context that indicate that pay and other benefits are central to determining organizational commitment (Chiu et al., 2002; Yu et al., 2003).
In relation to Hypotheses 2a and 2b, a positive relationship was found between supervisor support and both normative and affective commitment, and for Hypotheses 3a, a positive relationship was found between affective commitment and coworker support. These findings are consistent with previous research in the Chinese context (Miao et al., 2013), and highlight the significance of strong and positive workplace relationships.
The importance of autonomy in organizational commitment, as highlighted by the support of Hypotheses 4a and 4b, is consistent with research in both Chinese and Western contexts, which found that employees react positively when they feel empowered in their work (e.g. Malhotra et al., 2007).
The support of Hypotheses 5a and 5b, is consistent with prior research in both the Chinese and Western contexts (Han et al., 2010; Malhotra et al., 2007), which found that enhancing the participation of employees in decision making encourages greater commitment. Similarly, support of Hypotheses 7a and 7b was consistent with prior research findings.
Organizational and Reward Implications
The findings of this study highlight some of the potential differences in how employees of different cultures can behave when met with the same working environments. Particularly in such divergent cultures as Western and Chinese cultures, it is important that HR practitioners and managers are considerate of cultural factors in determining policies, and not assume a one size fits all approach is appropriate.
The results show the importance of various types of reward in driving greater commitment in employees. It is important that HR practices account for the importance of not just tangible rewards, but also intrinsic and social rewards, in the development of organizational commitment. In additional to reward, this research also confirms the importance of various other factors, such as autonomy and involvement in decision making, in organizational commitment, which should also be considered in building a company strategy to enhance organizational commitment.
This research provides further valuable and needed insight into organizational commitment, particularly in the Chinese workplace, highlighting some of the differences in Western and Chinese approaches to work, and this study provides support for a range of factors impacting on organizational commitment, including reward, autonomy, and decision making. Further expansion of this research in future to examine other cultures would provide interesting results.
Source Article: Nazir, S., Shafi, A., Qun, W., Nazir, N., & Tran, Q. D. (2016). Influence of organizational rewards on organizational commitment and turnover intentions. Employee Relations, 38(4), 596-619.
Published by: Emerald Group Publishing Limited
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