Compensation: Impact of Rewards, Organisational Justice on Job Satisfaction and Turnover Intentions in Retail Store Operations – A Study of Delhi and NCR

Pooja Misra, Neeti Rana, Varsha Dixit


Proceedings of the International Conference on Business Management & Information Systems, 2012

Compensation is formulated based on internal consistency and pay level relative to the market. An effective and just compensation policy can act as a stimulant for an organization to gain a competitive edge. Employees’ with perception of higher levels of procedural and distributive justice are more likely to feel obliged and perform their roles by putting in discretionary effort. The fairness of an internally aligned and externally competitive pay structure is judged in terms of organizational justice ie. distributive and procedural justice.

The present study seeks to analyze the impact of Compensation components in terms of Rewards and Benefits and Organizational Justice on Turnover Intentions and the role of Job Satisfaction in terms of Pay. This study has been done for the Indian Retail Industry with special reference to Retail Store Operations. From the study it was seen that Rewards and Organizational Justice in terms of Distributive and Procedural Justice impact Job Satisfaction which in turn affects and could be ascribed as one of the reasons for high attrition rates. In addition, there could be other reasons such as challenging work role, role of supervisor, training and development opportunities etc. which could impact turnover intentions of employees in the Indian Retail industry and the same needs to be further researched. The research also showed that employees believed in having a clear and transparent compensation system reflective of performance and productivity and they were keen that the Management should be willing to address any pay issues. Job satisfaction in terms of pay was seen to be impacted by pay received in relation to referent others and the Management should be conscious of attempting to maintain parity amongst employees and relative to other Companies in the Retail industry. The independent factors of Financial (base pay, merit pay, incentive, bonus etc.), non Financial Reward (discount coupons, employee of the month), Benefits, Distributive and Procedural Justice impact Job Satisfaction which in turn impacts absenteeism and attrition rates in the Retail industry. It is interesting to see that there is no difference in Job satisfaction levels between male and female employees which works in favor of Store Operations

management.Compensation influences key outcomes like job satisfaction, attraction, retention, performance, skill acquisition, co-operation, motivation and turnover intent of employees. Retention and motivation of personnel has become a major concern for HR especially in the Indian Retail industry. Compensation & Benefits have been ascribed to be one of the factors responsible for the high attrition rate. Study of pay and turnover intent, shows that there is a negative relationship between the two factors. Compensation, used as rewards for excellent job performance affect an employee’s job satisfaction level, morale and turnover intentions. In compensation studies, process of social comparison with relevant others are a major determinant of job satisfaction. Put into the context of pay satisfaction, Adams’ equity theory argues that one compares one’s job input/pay ratio with certain referents. Heneman and Schwab conceptualized pay satisfaction as a multidimensional construct. Pay satisfaction is an important determinant of turnover and an employee’s intent to leave the organization.


Compensation, Distributive Justice, Procedural Justice, Job Satisfaction, Turnover Intent

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