PAY SATISFACTION AND ORGANISATIONAL TRUST: AN IMPORTANCE-PERFORMANCE MAP ANALYSIS

Using social exchange theory and equity theory, this paper examined the relationship between the four dimensions of pay satisfaction and organisational trust among Malaysian employees. The four dimensions of pay satisfaction are pay benefit satisfaction, pay level satisfaction, pay raise satisfaction,and pay structure and administration satisfaction. Questionnaires were distributed to Malaysians working in several industries. Partial least squares structural equation modeling (PLS-SEM) was used to assess both the measurement and structural model. Results from the structural model revealed that pay benefit satisfaction, pay raise satisfaction, and pay structure and administration satisfaction were positively related to organisational trust. To complement the standard structural model assessment, robustness checks were performed on the structural model in terms of non-linear effects, endogeneity, and unobserved heterogeneity. The checks concluded that there were no issues with regards to nonlinear effects and unobserved heterogeneity. However, the endogeneity test indicated that pay structure and administration satisfaction could be endogenous. Importance-performance map analysis (IPMA) was also performed to gauge the importance and performance of each dimension of pay satisfaction against organisational trust. The IPMA results revealed that pay structure and administration satisfaction was the most important factor yet it attained the lowest score on performance indicating that organisations in Malaysia should make an improvement to their pay structure and administration satisfaction.