The Effect of Financial Compensation on Turnover Intention With Affective & Normative Commitment As an Intervening Variable in Employees Edi-Indonesia

Abdullah Nurhasan Rofiqoh; Ronny Ronny

doi:10.38035/dijemss.v6i5.4684

Authors

Abdullah Nurhasan Rofiqoh Universitas Hayam Wuruk Perbanas Surabaya, Surabaya, Indonesia
Ronny Ronny Universitas Hayam Wuruk Perbanas Surabaya, Surabaya, Indonesia

DOI:

https://doi.org/10.38035/dijemss.v6i5.4684

Keywords:

Financial Compensation, Affective Commitment, Normative Commitment, Turnover Intention

Abstract

This study examines the influence of financial compensation on turnover intention by considering the mediating roles of affective and normative commitment among employees of PT. Electronic Data Interchange Indonesia (EDI-Indonesia). The high rate of employee resignations in this company forms a critical background for identifying internal factors that affect employee loyalty and retention. The objective of this research is to empirically test the direct and indirect effects of financial compensation on turnover intention, and to explore the mediating roles of affective and normative commitment in this relationship. A quantitative approach was employed using explanatory research design. Primary data were collected through a survey using a Likert-scale questionnaire distributed to the entire population of permanent employees at EDI-Indonesia, comprising 50 individuals, with a total sampling technique. Data analysis was conducted using Partial Least Squares (PLS) through SmartPLS version 4 software. The results revealed that financial compensation has a significant positive effect on both affective and normative commitment, and a significant negative effect on turnover intention. Furthermore, affective commitment was found to mediate the relationship between financial compensation and turnover intention. However, normative commitment did not mediate the relationship between financial compensation and turnover intention. The findings highlight the importance of a fair and competitive financial compensation structure in enhancing employee loyalty and reducing the intention to leave the organisation. It is recommended that the company strengthens its compensation policy by taking into account the psychological and emotional aspects of its employees. This research provides a strategic foundation for human resource policy development and serves as a theoretical reference for future studies in organisational management.

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