Correlation Between Rewards and Commitment: An Empirical Investigation of Independent Financial Adviser in Malaysia

Abstract

Do extrinsic rewards able to encourage employee commitment especially those in the professional industry and in high position? The purpose of this research is to critically examine the link between rewards and organisational commitment underpinned by motivation theory; Self-Determination Theory and Regulatory Focus Theory among Independent Financial Advisers (IFAs) in Malaysia. This research used a scaling questionnaire covering 2 categories on a 6-point Likert scale. The survey involved 260 IFAs registered with Securities Commission Malaysia using the SurveyMonkey web tools consisting of 18-item scale for measuring a three-component model of organisation commitment (Affective Commitment, Normative Commitment and Continuance Commitment) and a 14-item scale for measuring a five-component model of rewards (Extrinsic Rewards: Pay Satisfaction, Promotion and Team Support; Intrinsic Rewards: Autonomy and Participation in Decision Making). This research used a measurement model via Structure Modelling Equation (SEM) to find the factor analysis for each latent variable. The hypotheses tested clearly show that rewards have a positive and significant effect on organisational commitment. This research has been able to identify the most practical and effective rewards for IFAs. For extrinsic rewards, prospects of promotion have the most positive effect on employee commitment which can be translated into employee performance. Besides that, autonomy and participation in decision making able can foster intrinsic motivation among IFAs. Overall, employee commitment is one of the antecedent determinants of employee performance.

Keywords: Organisation Commitment, Rewards, Financial Advisers

JEL Classification: M12, M52, M54