Total rewards to enhance employees’ intention to stay: does perception of justice play any role?

Pages262-280
Date02 December 2019
DOIhttps://doi.org/10.1108/EBHRM-07-2018-0045
Published date02 December 2019
AuthorAlka Rai,Piyali Ghosh,Tanusree Dutta
Subject MatterHr & organizational behaviour
Total rewards to enhance
employeesintention to stay: does
perception of justice play any role?
Alka Rai
NTPC School of Business, Noida, India, and
Piyali Ghosh and Tanusree Dutta
Indian Institute of Management Ranchi, Ranchi, India
Abstract
Purpose The purpose of this paper is to explore how total rewards might influence intentionto stay among
employees of private sector banks in India. A moderated-mediation mechanism is hypothesized, in which a
system of total rewards leads to intention to stay via engagement and organizational justice (OJ) moderates
the linkage of total rewards with engagement.
Design/methodology/approach Perception of employees about the constructs considered has been
assessed by a survey, using a structured questionnaire. Employees of private banks located in the State of
Uttar Pradesh were the population for this study. A total of 17 branches of 7 private banks were covered, and
the number of valid responses was 761. Hypotheses testing has been done with SPSS PROCESS command.
Findings Hypotheses proposing mediation (engagement as mediator between total rewards and
intention to stay), moderation (OJ as moderator between total rewards and engagement) and moderated
mediation have found support.
Practical implications Results obtained direct us to infer that in addition to the amount or value of any
reward, aspects of OJ, such as equity and fairness in allocation of such reward and transparency in the
procedure followed, are likely to influence the effectiveness of total rewards practices in engaging employees
and motivating them to stay with their present employer.
Originality/value This study adds to total rewards literature by highlighting how a total rewards system
can lead to engagement, and consequently to employeesintention to stay. Results establish OJ as an
important attribute to any total rewards package to make the latter more valuable and effective.
Keywords Engagement, Justice, Indian private sector banks, Intention to stay, Total rewards
Paper type Research paper
Introduction
The decision taken by any employee regarding whether to quit his/her organization or
continue with it is influenced by several factors. Eliciting commitment from employees and
retaining themboth are critical issues (Chewand Chan, 2008). Organizationsare continuously
designing and introducing innovative HR practices to deal with such challenges.
Compensation as a high-performance work practice (HPWP) reduces the level of
voluntary turnover (Selden and Sowa, 2015). Rewards and recognition practices feature as
an integral component of compensation. Rewards are considered to be more appropriate for
employee behaviors that exhibit adherence to rules (Hansen et al., 2002). If designed
appropriately, reward systems can lead to challenges, fulfillment and satisfaction or
otherwise to mistrust, perceived inequity and uncertainty (Ganster et al., 2011). Recognition,
on the other hand, is directed to bring out intrinsically motivated behaviors like
commitment, innovativeness and initiatives (Hansen et al., 2002). Rewards and recognition
together serve as an organizational strategy that not only is wide in scope, but also leads to
work-related outcomes. Organizations are hence adopting unconventional and creative
methods to restructure their rewards and recognition programs for engaging and retaining
their workforce. The total rewards system is viewed as a promising way of enriching
rewards and recognition practices to support employee well-being and boost organizational
effectiveness ( Jiang et al., 2009; Hulkko-Nyman et al., 2012).
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 7 No. 3, 2019
pp. 262-280
© Emerald PublishingLimited
2049-3983
DOI 10.1108/EBHRM-07-2018-0045
Received 24 July 2018
Revised 21 October 2018
20 January 2019
Accepted 22 January 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2049-3983.htm
262
EBHRM
7,3
A high-performance work system (HPWS) integrates performance-based practices that
link the exchangeeffort relationship of employees to positive work-related outcomes
(Heffernan and Dundon, 2016). Compensation as an HPWP is inextricably connected with
fairness or justice. Rewards are a key ingredient of fairness perceptions as they impact
multiple types of justice( Jackson et al., 2012, p. 647). Perception of equity is related to some
key HPWS outcomes like pay satisfaction, commitment (Tekleab et al., 2005) and intention
to stay as a job attitude (Roberts et al., 1999; cf. Chew and Chan, 2008). On the contrary,
perceived inequity might increase employee turnover (Kenny and McIntyre, 2005).
Considering the significance of organizational justice (OJ) in determining the
effectiveness of HR practices, this paper aims to answer how total rewards might
influence intention to stay among employees, by exploring the intervening roles played by
OJ and engagement. Overall, a moderated-mediation mechanism is hypothesized, in which
OJ moderates the interconnection of total rewards with engagement, which further
influences employeesintention to stay with their present employer. This model has been
empirically tested on private sector bank employees in India.
Several agencies (including WorldatWork and Corporate Leadership Council) consider
total rewards to be useful in facing the critical challenges of motivating, engaging and
retaining employees. However, empirical research does not provide sufficient instances of
the linkage total rewards might have with work/organizational outcomes like employees
intention to stay. Peluso et al. (2017) point out a dearth of studies on the association of
adoption of a total reward system (TRS) and employee-related outcomes(p. 311). Our
paper addresses this gap and adds the component of OJ to total rewards for engaging
employees at work and thus positively influencing their intention to stay.
The premises of our research model assume that OJ might play a crucial role in the
effective implementation of several HR practices. The essence of our study lies in the
positioning of OJ as a moderator in the proposed mechanism. Empirically validating this
moderation is believed to be a significant contribution to justice literature which has mostly
concentrated on the direct impact of OJ on engagement and employee retention (e.g. Ghosh
et al., 2014; Nakra, 2014). An exception, however, is Oh (2018), who has established justice as
a moderator between HR practices and individual outcomes.
Our proposed moderated-mediation mechanism is expected to serve a few purposes.
First, it would explain how to enhance intention to stay among employees through
engaging them, thus establishing engagement as a key to retain employees. Second, it
wouldhighlighttheroleofOJinthemediationpathofengagementwithitsantecedents
and consequences. The mechanism as a whole would suggest a likely way in which the
constructs of the study might influence each other. Furthermore, considering fairness to
be quintessential in any HR policy and practice, our findings might also be of use in
modeling HR policies.
We have elaborated on the rationale for the context of this study in the very next section.
After this we have presented the theoretical background of the paper, containing the
concepts of total rewards, engagement, OJ and intention to stay. The rationale for
development of hypotheses is built from linkages among these constructs. Research
methodology, testing of hypotheses and results feature next, after which, practical
implications of the results obtained have been discussed. Study limitations, together with
scope for research in the future, are detailed at the end.
Rationale for context of research
Private sector banks have populated the Indian economy since the past three decades,
offering competitive pay structures, innovative products and services and delivery
processes that are supported by technology. These banks are aggressively increasing their
presence by capturing share in saving deposits. However, such share is smaller in
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