Employees understand fairness and managed by employers

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Fairness between employees within an organization is their foremost priority and main concern. As a worker is being judged on his or her performance and not being unworthy of his effort and contribution, in other words those who put a lot of effort and not get that much of a benefit. Here forth, those employees are unrewarded and unfairly compensated. In this proposal we will discover how employees and employers understand what is fairness and how it can be managed by the employers. Moreover, how it is being judged by both them. The study will cover the human resource management practices in a banking industry in Saudi Arabia where judgmental issues in fairness within the above matter will be in three main areas compensation, performance management and selection. Furthermore, the study will investigate how employee's performance, commitment will be affected by the level of fairness and its relationship with the level of turnover within an organizations workplace.

The first chapter will provide an overview of the study. This chapter includes the background of the study, problem statement, objectives, significance of the study and organization of the proposal.


For companies to be competitive, they must allocate large effort to satisfy and therefore retain their employees; and human resource management practices have to help organizations sustain their effectiveness. Lee and Heard (2000) recommend that organization practices are one of the most important factors that influence employees' intentions to leave, levels of job satisfaction, and commitment to the organization. The findings of the potential study will highlight the importance of effective human resource management practices in promoting the commitment level of employees in the organization.

Fairness is not an easy thing to be convinced toward employees, however, because fairness deceit in the eyes of the beholder. Therefore, happiness of the employees will depend on the decisions made by organization. Perceived fairness of the employees can be one way that employee's can and do assess organization practices. In other terms, the expectations by the employees will look ahead to organizational decisions to be organized fairly and they will estimate the fairness of an organization by each human resource management decision in areas compensation, performance management, selection and the like.

With regard to service industry, fairness issue can be hold true. The most important reason for this is that most service organizations are labor-intensive. Customers and employees are concerned by each other, and customers always evaluate the service after experience it to decide whether they have been fairly treated. On the other hand, employees, as representatives of their organization, are the ones who have personal, direct interaction with customers and they are actually held responsible for the quality of service.

Successful organizations are focusing more on retaining customers. These organizations need to concentrate on their employees' satisfaction and commitment levels since research indicates that when bank front-line employees feel they have been treated fairly, they are more likely to treat customers fairly (Bowen et al. 1999). The result recommends the value of treating employees fairly. It is critical for organizations to design effective and fair human recourse management practices that foster acceptable levels of satisfaction, and also commitment and loyalty to the organization.


The research reported in this thesis required to discover an explanation and result to the problems below:

1) How fairness is being managed by employers within their human resource management practices in order to improve their employees' experience of fairness?

2) How human recourse management practices in the organization affect the employee's level of commitment and settlement?

The study will cover the level organizational commitment and turnover intention as its major decisive factor outcome variables. Organizational commitment has been exposed to be connected to the predictor variables of global distributive fairness, procedural fairness, and interactional fairness (which in turn consist of interpersonal and informational fairness), collectively known as organizational justice, which is among the most extensively used and frequently debated constructs in organizational science (Bradfield & Aquino, 1999).


General Objective

The current study will investigate on how fairness of human resource management practices is being judged by Saudi employees and how these judgments pressure their awareness of commitment to the organization at the same time their intention to quit and leave. Likewise, the connection between the apparent fairness of human resource management practices, organizational commitment and turnover intention.

Specific Objectives

The specific objectives of this research will try to answer the following questions:

How employees understand fairness within the workplace?

Firstly, we will come across at the employees understanding of fairness in the workplace. This objective particularly required us to counter three main questions:

What employees perceived understanding by the insight of fairness in the workplace?

What do employees discriminate to be the most main human resource practices linked with fairness?

To what degree does the apparent fairness of organization practices control

workers dedication and commitment?

Secondly, this point will cover the impact of the apparent fairness of human resource management practices and its effect on different types of organizational commitment.

This point lead to further question: if the perceived fairness of organization practices influences organizational commitment, which is the most significant predictor of organizational commitment?

To what level does the unfairness of human resource management practices power employees' intention to give up?

Lastly, is to evaluate the level of the perceived fairness of human resources management practices and its effect on the level of turnover intentions.


The study will improve our understanding of perceived fairness of human resources management practices, organizational commitment and turnover intention. The significance of the study put together fairness and human resources management practices in order to improve the value of their impact on organizational commitment and turnover intention.

In addition, the study assists organizations to efficiently use fairness, one of the key organizational behavior drivers, to control organizational commitment, as well as to design a successful and fair human resource management practices that will build up employees' commitment levels and desire to settle with the organization.

Finally, this study presents insights into how employees distinguish fairness, and will assist managers to recover and get a better consideration of how to boost employees' commitment to an organization and as a result reduce employee turnover.


This study is organized into five chapters. These chapters are briefly discussed as follow:

Chapter 1: Introduction

This chapter provides an overview of the research as a whole. Introduction to the background of the study, the problem statement, objectives of the study, significance of the study and the way this study is organized are disclosed in this chapter.

Chapter 2: Literature Review

This chapter reviews the previous relevant studies that have been published, in order to identify and highlight the important variables that will serve as the foundation on which the theoretical framework for the current study can be built and the hypothesis is developed.

Chapter 3: Theoretical Framework and Hypothesis

This chapter presents the theoretical framework and hypothesis of this study.

Chapter 4: Methodology

This chapter discusses issues pertaining to the process of conducting the research in order to satisfy the objectives of the study. The methodology used in the study is specifically discussed in this chapter. This includes the research design, justification of the setting of the study, sampling and data collection process and method for data analysis.

Chapter 5: Findings and Discussion

This chapter presents the data collected, the results of the analysis, and also discusses the findings of the study.

Chapter 6: Conclusion and Recommendations

This last chapter deals with the discussion of the major findings of the study, their marketing implications and also the limitations of this study. Recommendations for the future studies are also discussed in this chapter




This chapter is devoted to review the literature related to the topic. This chapter is divided into two sections, namely:

Fairness ( Organization Justice )

Human Recourse Management practices

Organizational Commitment

Turnover Intention


FAIRNESS ( Organization Justice )

There has been increasing focus and interest recently on the ways in which individuals determine fairness of treatment by their managers and organizations, and in the relationships between these perceptions and issues of fairness or organizational justice and trust. The implications for ethical practices in organizations are timely and of concern (Kickul 2005). The understanding of how individuals react to managerial and organizational actions, and how these reactions ultimately influence organizational effectiveness is of growing importance as society, not just the constituents of a particular business, is engaging in closer scrutiny of such actions. (Kickul 2005).

Fairness or organizational justice has been labeled as the mortar of social cohesion, and the key to employee motivation (Moorman, 1991). The literature about justice (Adams, 1965; Bies & Moag, 1986; Greenberg, 1990a; Homans, 1961; Thibaut & Walker, 1975) appears to have gone through a number of stages. In the early period of 1949-1965, social justice theories were concentrated on testing principles of justice in general social interaction, not organizations in particular (Greenberg, 1990a). Later, in the 1980s, theoretical models were developed that included variables and issues directly related to organizational behavior. Adopting these models, researchers carried out surveys to explain the role of fairness in organizational settings.

Early studies of justice focused on the concept of 'organizational justice'. Leventhal (1976) defines this as the overall fairness of the organization reward system and the perceived fairness of the actions of individuals responsible for implementing the reward allocation system. Perhaps, in a simpler definition, organizational justice involves people's perceptions of fairness within organizations (Greenberg, 1987a). Adecade later, organizational justice refers to employees' perceptions of the fairness of treatment received from organizations (Cropanzano & Greenberg, 1997).

Bies and Tripp (1995), on the other hand, have characterised fairness as:

The rules and social norms in organization governing: (1) how outcomes should be allocated, (2) the procedures that should be used for decision making and (3) how people should be treated interpersonally. (p.131)

Building on this foundation, Beugre (1998) has suggested a broader definition:

Organizational justice refers to the perceived fairness of the exchanges taking place in an organization, be they social, economic, and involving the individual in his or her relations with superiors, subordinates, peers and the organization as a social system. (p.xiii)

Pursuant to the above, this implies that perceptions of fairness may be considered in relation to (i) distributive fairness, (ii) procedural fairness and (iii) interactional fairness.


Major research has been conducted in order to identify the antecedents and consequences of distributive and procedural fairness in various human resource management practices and organizational behavior. Major human resource management practices include compensation (Greenberg, 1990), performance appraisal (Greenberg, 1991), and personnel selection (Gilliland, 1993). More recently, interactional fairness has been studied as it relates to these practices. Bowen et al. (1999) reported that employees' perceptions of fairness are linked to their acceptance and satisfaction with human resource management decisions. This implies that employees' interpretation of human resource management policies and practices may influence their judgment of fairness. The following section highlights the relationship between these human resource management practices and fairness. These practices are (i) compensation, (ii) performance management, and lastly (iii) recruitment and selection.

Compensation practices

Employee compensation raises concerns for distributive fairness as well as procedural fairness. Lawler (1971) suggests that employees consider their remuneration as equitable when it is proportionate to their input compared to significant others in their social context. Empirical findings have provided strong support for the idea that perceptions of distributive fairness are linked to pay raise satisfaction (Folger & Konovsky, 1989; Martin & Bennett, 1996; McFarlin & Sweeney, 1992). Folger and Konovsky (1989) have proposed that distributive fairness is a good predictor of pay satisfaction while procedural fairness is a more important predictor of organizational commitment and trust in one's supervisor. McFarlin and Sweeney (1992) have also observed a significant causal link between distributive fairness and employees' pay level satisfaction and job satisfaction than procedural fairness. Finally, a separate field study reported by Martin and Bennett (1996) found that distributive fairness is a stronger predictor of benefit satisfaction.

Although some studies show that the relationship between procedural fairness and pay satisfaction is tenuous, other studies (e.g. Lind & Tyler, 1988; Sheppard et al. 1992) claim that providing employees the opportunity to choose a desired compensation form, to participate in the design of a compensation system, to voice the results of compensation decisions, or to receive accurate information can foster a strong sense of procedural fairness and a more positive attitudes toward the organization.

Folger and Greenberg (1985), for example, report that an open compensation system is more likely to enhance perceptions of fairness because information about how others make pay decisions provides important assurance that procedures are not violated. Transparency in an open pay system may discourage abuse and favoritism as well as promote procedural fairness based on consistency and bias suppression. In addition, a recent study conducted by Tremblay, Sire and Balkin (2000) claims that perceptions of distributive fairness are a strong predictor of pay satisfaction and perceptions of procedural fairness are strongly related to employee benefit satisfaction. Their findings demonstrate that perceptions of distributive fairness with regards to pay are more significant than procedural fairness in job satisfaction and satisfaction within the organization.

Of the three types of fairness, perceptions of interactional fairness have received the least attention with respect to compensation. Bies and Moag (1986) have reported that employees' perceptions of their treatment by their supervisors influences their satisfaction with group incentive plans. This may be because supervisors, on behalf of the organization, communicate the group incentive plan design, performance measures criteria, and also the performance results and payout to employees.

Performance management practices

Although limited, there is some empirical evidence linking perceptions of fairness, particularly procedural fairness, to performance management practices. Earlier research (Greenberg, 1986; Landy, Barnes & Murphy, 1978) on the relationship between performance appraisal and fairness found key determinants of procedural fairness in performance appraisal. They are the solicitation of input prior to evaluation, two way communication during an interview, the provision of the opportunity to challenge evaluation, rater familiarity with rate's work, consistent application of standards, frequency evaluation of performance, and the willingness of the supervisor to help the employee to eliminate performance weaknesses.

Landy et al. (1978) suggests that employees were more satisfied with the evaluation process when it was done frequently and even more satisfied with the performance ratings when they agreed with their supervisor as to their appropriate job duties. Relative to this, Folger and Greenberg (1985) found that in comparison with unfair procedures, fair procedures are more likely to engender greater outcome acceptance than unfair procedures. Subsequently, Greenberg (1986) affirmed that inconsistency in the application of performance standards constitutes a source of perceived unfairness.

Employee selection practices

The organizations become gradually more aware of potential consequences of fair selection, one underlying fact will not change: Organizations will inevitably continue to reject hopeful applicants. Given this reality, it seems appropriate to explore factors associated with applicant reactions to selection procedures ( Bernerth, 2006).

Over the past two decades, Address the amount of research investigating selection procedures and fairness perceptions has dramatically increased (cf. Konovsky, 2000). Much of this research has focused on the fairness perceptions of organizational decisions, collectively termed distributive justice, and on the fairness perceptions of the processes used to make organizational decisions, known as procedural justice. Recently, considerable progress has been made to more fully understand the many factors involved in such perceptions ( Bernerth, 2006).

Despite these developments, some potentially important topics have remained largely uninvestigated. For example, only scant attention has been devoted to the role of individual differences, such as applicant personality, influencing fairness perceptions during the selection process. In fact, only recently has there been any attempt to evaluate the role of individual applicant personality in organizational justice perceptions (e.g., Wiechmann & Ryan, 2003). While past research has investigated procedural and environmental cues, the potential study investigates personalities that may predispose individuals to react to selection decisions in predictable ways. Research exploring antecedents to reactions to selection decisions could conceivably help both employers and applicants, as organizational justice principles may serve both equally well (Konovsky, 2000). From a selection perspective, the goal of any selection process is to select the most qualified applicants for the position with regard to fairness.


Organizational commitment has been identified as one of the key factors in understanding employees' work-related behaviors in organizations (Cheng, 2003). For many years, researchers have been defining organizational commitment in different forms. Steers (1977) views organizational commitment as the relative strength of an individual's identification with and involvement in an organization. Mowday, Steers, and Porter (1979) define organizational commitment in terms of two perspectives:

Attitudinal perspective, which regards organizational commitment in terms of affective responses to an organization.

Behavioral perspective which concentrates on the behaviors that bind an individual to an organization.

An individual's internalized moral obligation to the organization can be considered as one component of the attitudinal commitment (Wiener, 1982). Becker (1960) uses the term 'side-bet' to explain behavioral commitment. The term 'side bet' symbolizes the accumulation of investments valued by individuals that would be lost if they were to withdraw from the organization. Becker (1960) refers to commitment as a tendency to remain with an organization based on side bets or the perceived costs of leaving.

In 1982, Mowday, Porter, and Steers added to their original observations, noting that organizational commitment consists of three basic components:

A strong belief in an acceptance of organizational goals and values (identification).

A willingness to exert considerable effort on behalf of the organization (involvement)

A strong desire to stay with the organization (loyalty).

Alternative definitions of commitment include those of Mathieu and Zajac (1990). They classify organizational commitment in terms of affective commitment (people's desire to maintain membership in the organization) and calculative commitment (focus on people's exchange of involvement with the organization in return for rewards and inducements).

However, further research (e.g. Meyer & Allen, 1991; Meyer, Allen & Smith, 1993) has offered a multidimensional model of organizational commitment. Commitment is viewed as a psychological state that characterizes the employee's relationship with the organization and has implications for the decision to continue or discontinue as part of the organization. The argument continues that there are three forms of commitment:

Affective commitment as an emotional attachment to the organization.

Continuance commitment as a perceived cost associated with leaving the organization.

Normative commitment as a perceived obligation to remain in the organization.

Strong affective commitment suggests that employees remain with the organization because they desire to; strong normative commitment implies that the employees feel they ought to stay with the organization; while strong continuance commitment indicates the employees continue employment in an organization because they have few other options. This three dimensional model of commitment attempts to explain the cumulative strength of an individual's connection to an organization because of their wants (affective), their needs (continuance) and their obligations (normative). Greater understanding of an employee's relationship with an organization can be achieved when all three dimensions of commitment are considered together.

Meyer and Allen's (1991) model of commitment has been widely acknowledged as a good measure of the multidimensional nature of commitment and its measurement has been assessed empirically (e.g. Allen & Meyer, 1996; Culpepper, 2000; Meyer et al. 1993). The Meyer and Allen (1991) formulation of organizational commitment has been incorporated from the existing literature: affective commitment (Meyer & Allen, 1984; Mowday et al. 1979); normative commitment (Wiener, 1982) and continuance commitment (Becker, 1960). Commenting on Meyer and Allen's model, Sparrow and Cooper (2003, p.186) state that 'Meyer and Allen are credited with the most well-known clarification for the construct of organizational commitment and its measurement' (p.186). Hence, Meyer and Allen's (1991) model was employed to measure organizational commitment in the present study.

The work of Meyer and colleagues (Meyer & Allen, 1991; Meyer et al. 1993; Meyer, Stanley, Herscovitch & Topolnytsky, 2002) indicates that employees experience different degrees of each dimension of commitment. For instance, employees who have more positive work experiences tend to have stronger affective commitment than those whose experiences are less satisfactory. This research will provide managers to pay attention to their employees' specific nature of commitment in order to maintain their loyalty to the organization.

Previous research demonstrates a positive relationship between organizational commitment and the perception of fairness in the workplace (Dailey & Kirk, 1992; Konovsky et al. 1987; Sweeney & McFarlin, 1993); and organizational commitment has been found to be the most important predictor of turnover intention (Khatri, Fern & Budhwar, 2001; Porter, Steers, Mowday & Boulian, 1974). According to Porter et al. (1974), individuals who are committed to an organization are less likely to quit than those who are uncommitted. Individuals who are committed to an organization also tend to perform better. Commitment appears to decrease turnover and increase organizational effectiveness.

Steers (1977) agrees that low organizational commitment leads to high turnover. Job

satisfaction and organizational commitment are found to negatively affect turnover

and turnover intentions (Hollenbeck & Williams, 1986) and are positively related with each other (Bluedorn, 1982). In addition, Bratton and Gold (1999) suggest that a high labor turnover rate could be a sign of a low level of organizational commitment. In other words, employee turnover is reduced if the commitment to the organization is enhanced. Thus, organizational commitment is of particular importance where organizations are trying to retain their high performing workers. And for this current research focused on the effect of perceived fairness of banking industry practices on organizational commitment, it was essential to investigate the determinants of organizational commitment.


The study of Mobley, Griffeth, Hand, and Meligno (1979) strongly indicates that intentions to quit predict turnover. Hom and Griffeth (1991) define turnover intention as the relative strength of an individual's intent toward voluntary, permanent withdrawal from the organization. The turnover intention model developed by Mobley (1977) proposes that job dissatisfaction actually inspires thoughts about quitting and eventually leads to actual quitting. The initial thoughts create the intention to search for alternatives (other job opportunities) which is followed by actual searching. If alternatives are available, individuals will evaluate and compare the alternatives with the present job. If the comparison favors the alternatives, behavioral intention to quit will be stimulated, followed by actual withdrawal from the present organization. Horn and Griffeth (1991) argue, therefore, that the turnover intention process consists of three main stages: thought of quitting, intent to search and intent to quit.

With regards to the relationship between fairness and turnover intention, there are researchers who support the negative relationship between fairness and turnover intention (Berg, 1991; Dailey & Kirk, 1992; Lind & Tyler, 1988; Price & Mueller, 1981; Randell & Mueller, 1995). Generally, employees who experience unfairness in an organization will be more tending to quit. The researchers comment that distributive fairness is more related to turnover intention than procedural fairness.

A recent study by Parker and Kohlmeyer III (2005) claims that fairness perceptions, particularly in allocation decisions, affect turnover intention through the intermediaries of organizational commitment and job satisfaction.

However, a study by Lind and Tyler (1988) suggests that employees are more likely to leave their organizations if they feel that evaluation procedures are unfair. A field study by Masterson and Taylor (1996) has discovered that procedural fairness perceptions predict intentions to leave the organization.

However, it is important to note that employees who feel unfairly treated may decide to stay despite apparent unfairness due to other factors, such as the availability of attractive alternatives.


Extended with organizational factors, the effects of demographic variables on perceptions of fairness were considered, given that demographic variables play a role in changing one's perception of fairness. The effects of the perceptions of fairness by demographics have been subject to considerable attention. The under will be some of the major findings for each demographics affect.

In gender for instance, several researchers (Elliot & Meeker, 1986; Kahn, Nelson & (Iareddert, 1980; Major & Deaux, 1982) recommended that females are more inclined toward equality or even self sacrificing patterns of return distribution while men tend to follow a norm of equity. Women react less negatively than men when they are treated unfairly by a partner (Major & Deaux, 1982). Sweeney and McFarlin (1997) in turn note that procedural fairness makes more of a difference to females in terms of the effect on their stay intention than it does for males. Furthermore:

• The relationship between distributive fairness and satisfaction is stronger for males than females

• Procedural fairness is a more important predictor of commitment for females than

for males

• Distributive fairness is a stronger predictor of commitment for males than females.

Overall, it appears that women rely on more formal procedures and systems to obtain various organizational outcomes because of a history of discrimination and sex role stereotyping, in addition to lacking access to the informal mechanisms than men often utilize to access pay raises and promotions.

In occupational status for example, Giacobble-Miller (1995) in comparing reactions of labor and management toward distributive fairness note that the former perceive pay as unfair, whereas the latter perceive pay as fair. According to Lansberg (1984), upper and middle level managers view equity-based allocation of a hypothetical windfall pool of bonus money as more fair than equality or need-based allocation. Lower level management from the same organizations, however, endorses equity allocation significantly less, and equality allocation significantly more than higher.

With regard to organizational tenure, Leventhal, Karuza, and Fry (1980) argue that group members hold more positive attitudes toward allocation procedures that ensure stability. Likewise, Lerner (1970) claims that as people become familiar with existing procedures, they begin to accept them. However, this assumption has been empirically contradicted by Beugre (1998) who argues that there is a negative correlation between organizational tenure and perceptions of systemic fairness.

In summary, research suggests that the above factors are important variables enhancing perceptions of fairness in the workplace. They should be considered by

managers in the course of developing appropriate strategies for managing organizational fairness.


The literature review in the present study revealed an important gap in the literature on organizational justice and human resource management practices. Despite the large substantial literature on the independent effects of both organizational justice and human resource management practices, little is known about how the perceived fairness of human resource management practices is understood and how this in turn influences employees' attitudes and behavior. Nor was there a study which examined the effect of the fairness of human resource management practices (particularly in compensation and benefits, and performance management as well as seletion) on the different types of organizational commitment as well as the intention to quit. Research that addresses this knowledge gap may suggest ways to retain talented employees so that they may be more effectively targeted.


This chapter reviewed past findings about fairness perception, fairness of human resource management practices, selection, organizational commitment, and turnover intention. Based on the literature research findings, this study examines the impact of the perception of fairness in terms of compensation and benefits and the impact of perfonnance management and selection on types of commitment and turnover intention. The literature also captured the relationship between human resource management practices and there affect on organization commitment and turnover intentions. Past demographic studies is also covered in the literature part.




It is necessary to come up with conceptual framework that derives from the fact that employees perceptions of human resource management practices will influence their judgment of fairness which in turn affects their commitment to the organization or turnover intention. This current study will be aimed to observe the impact of fairness in two main areas of companies in the banking industry practices: compensation and performance management practices as well as selection, which affect employees' commitment and also intention to quit.


Figure 3.1: Theoretical Framework for examining impact of fairness on the human resource management practices and the turnover intention of the employees. (next page)

Fairness of Compensation

Fairness of Performance Management

Fairness of Selection

Saudi Demographics

Turnover Intention

Organization Commitment

In this framework the independent variables are fairness of compensation, fairness of performance management and fairness of selection. The dependent variables are organization commitment and turnover intentions. The moderating variable is Saudi demographics


According to the theoretical framework illustrated, twelve general hypotheses were developed for the purpose of examination and fulfilling the objective of the study. Coming back to the objectives, one of it was is to look and examine the relationship between the fairness of human resource management practices and organizational commitment. And to support it, a number of studies support the relationship between perceptions of fairness and organizational commitment, and have specified the contribution of procedural fairness to organizational commitment (Folger & Konovsky, 1989; McFarlin & Sweeney, 1992; Sweeney & McFarlin, 1993).

Organizational behavior research has focused on the relationship between different dimensions of fairness and the uni-dimensional measure of organizational commitment. Such research has established the existence of direct relationships between the different dimensions of fairness and organizational commitment (Moonnan, 1991).

Alexander and Ruderman (1987) support the proposition that employees who experience unfairness in an organization will be more inclined to leave. They report that employees express their intentions to leave when they are unfairly treated, especially with regards to the outcome distribution.

Some studies mentioned that unfairness has the highest impact on turnover intention (Dailey & Kirk, 1992; Lind & Tyler, 1988). Employees are more likely to quit the organization if they feel that evaluation procedures are unfair. Perceptions of fairness are positive related to turnover intention. That is to say, if the decision making process is found to be unfair, employees are likely to form the intention to withdraw. Masterson and Taylor (1996) and Greenberg (1990) both report that procedural fairness perceptions predict intention to quit the organization.

Coming all to these findings, the following hypotheses were developed:

H1: There is a significant relationship between fairness of compensation and organizational commitment

H2: There is a significant relationship between perceptions of fairness of performance management and the organizational commitment.

H3: There is a significant relationship between perceptions of fairness of compensation and turnover intention.

H4: There is a significant relationship between perceptions of fairness of performance management and turnover intention.

H5: There is a significant relationship between perceptions of fairness of selection and organizational commitment.

H6: There is a significant relationship between perceptions of fairness of selection and turnover intention.

H7: The relationship between fairness of compensation and organizational commitment is moderated by Saudi Demographics

H8: The relationship between fairness of compensation and turnover intention is moderated by Saudi Demographics

H9: The relationship between fairness of performance management and the organizational commitment is moderated by Saudi Demographics

H10: The relationship between fairness of performance management and turnover intention is moderated by Saudi Demographics.

H11: The relationship between fairness of selection and organizational commitment is moderated by Saudi Demographics.

H12: The relationship between fairness of selection and turnover intention is moderated by Saudi Demographics.




This chapter will describe the research method, investigation procedure, and tools that were used in data gathering and analysis for this study. The research approach will be a quantitative study in order to ascertain and be able to describe the characteristics of the variables of interest as discussed in the literature review. The following aspects are discussed in this chapter.

Sources of Research Data

Data Collection Method

Sampling Process

Data analysis


Data requirements of this study were derived from two main sources, which are primary data and secondary data.

Primary Data

Primary data refer to data observed or collected from first-hand experience by the researcher on the variables of interest for the specific purpose of the study (Sekaran, 2003). A specific questionnaire based on the previous studies is developed to gain valuable data to answer the hypothesis tested. The survey questionnaires are distributed and self administered.

Secondary Data

Secondary data is collecting and possibly processing data by people other than the researcher in question conducting the current study (Sekaran, 2003). Common sources of secondary data for this study were obtained from the library research such as library journals, online journals, academic journals, books and websites.. Nevertheless, the secondary data were inadequate to answer the research question as identified in the previous section. Therefore, collecting primary data is a reasonable step.


A structured questionnaire will be developed to test the previously stated hypothesis and data was collected from the respondents in the main local banks in the capital city of Saudi Arabia.

The data in this potential study will be collected by means of both online survey and printed questionnaire. The online survey will first administered by questionnaire with self-replied envelope. Their arrival times will thus marginally different. In order to get an unbiased result, there was a need to examine if different batches of data collected were comparable. The data collected through different channels needed to be confirmed to ensure that the data gathered randomly from the same population had been completed without a sampling error (Scheaffer, Mendenhall & Ott, 1995).

The questionnaire will be distributed in various departments and several banking firms regarding their perceptions of the fairness of those human resource department practices that are concerned with compensation and performance management practices and selection as well. Researcher's contact number will be stated in the questionnaire for the use of the respondents, just in case they did not understand the content and the meaning.

The greater central province is the largest province of Saudi Arabia. Its capital is Riyadh. This regions were chosen due to their proximity and high density of population as well as major local banckes are located over this area. This central area contains of 1005000 km² and home to over 9,360,157 million people (Saudi 2004[update] census) and comprises major residential units as well as commercial firms.


Sampling Method

A Non-probability and convenience sampling technique are the sampling method used for this research purpose. In Non-probability technique we can select our samples with our personal judgment. Convenience Sampling is one of the most common types of Non-probability sample, not because such samples are necessarily easy to recruit, but because the researcher uses whatever individuals are available rather than selecting from the entire population. It is least expensive and least time consuming of all sampling techniques, the result of that is accessible, easy to measure and cooperative and can be used for focus group, pretesting questionnaire, or pilot studies (Sekaran, 2003).

Sample Size

Sample size used by previous researchers varies from 87 (Knight, 1999) to 1000 (Watson and Wright, 2000). For the proposal at hand, a sample is to seek opinions and insights from at least 300 bank employees across various departments and several banking firms regarding their perceptions of the fairness of those human resource practices that are concerned with compensation and performance management practices as well as selection. A sample size that is too small might affect the generalizability of the results, whereas a sample size that is too large will not be feasible for the researcher to complete the data collection due to time constraint.



As Sekaran (2003) notes that once the necessary data has been collected from a representative sample of the population, the next step is to analyze them to test the research hypotheses.

In this positional study, SEM has been chosen as the major statistical technique for model testing in the present analysis and is used confirm or modify the results of SPSS analysis.

SEM is considered a comprehensive statistical approach to testing hypotheses about relations among observed and latent variables (Hoyle, 1995). In particular, SEM examines a set of relationships between one or more observed independent variables, either continuous or discrete, and one or more dependent variables, either continuous or discrete, both of which can either be factors or measured variables (Jodie, 2000). SEM incorporates both factor analysis and path analysis (Kaplan, 2000).

Another reason for employing SEM in the present study is that it offers unique advantages compared with other statistical techniques. For example, in contrast to

other multivariate analyses that assume no measurement errors in estimating independent variables, SEM explicitly incorporates measurement error in its analysis.

With regard to the moderating variable, we attempt to utilize the moderator regression analysis. In this analysis, a moderator variable is included in the regression models. A moderator variable can be the independent qualitative or quantitative variable that has effects on the relationship between the endogenous and exogenous variables. Similarly, in correlation analysis, a moderator variable is a third variable that has impacts on the correlation between two variables. Moreover, moderator variable is broadly used in the causal relationships as well. In this case, if x is the predictor variable and y is a cause variable, then z is the moderator variable that affects the casual relationship between x and y. The moderator variables usually measure the casual relationship using regression parameters.

An important aspect of the moderator regression analysis is how moderator variables can be measured. In the literature, the moderation effect is usually represented by the interaction effect between the x and z variable. In a multiple regression equation, the moderator variable can be described as follows:


In equation (1), the interaction effect between x and z (or parameter) measures the moderation effect. Obviously, the equation (1) represents the linear relationship between variables y, x, and z. However, when the relationship is non-linear, moderation effect may be represented as an example using following equation


In the equation above, the relationship between the endogenous and the exogenous variables is non-linear, so and show the interaction effect. In a repeated measure design moderator, the variable can also be used. In multi level modelling, if a variable predicts the effect size, that variable is called the moderator variable.

It is worth noting here that there are some methods to identify the moderator variable such as: subgroup analysis and moderated regression analysis. In subgroup analysis, to determine the moderator variable, the sample is split into subgroups on the basis of the third variable. In this method, to identify the moderator variable, regression analysis is employed to investigate the relationship between the predicator variable and the criterion of each subgroup variable. In this approach, goodness-of-fit value helps to identify the moderator variables. Unlike other studies, in this study, we attempt to rely on other selection criteria like Swartz Bayesian and Akaike information criteria as well. As mentioned above, another method for identifying the moderator variable is the moderated regression analysis. To explain how this analysis works we write following set of equations




To determine the moderator variable using above set of equations, one should test the statistical significance of interaction variable xz. If the coefficient on interaction variable is found to be statistically significant, then the variable can be used as moderator variable. Otherwise, one should not take this variable as a moderator variable.

In this study, we utilize the SPSS statistical package.


With regard to the time and cost estimates, as any research has its limitation in terms of budget because to collect this information from participant would expensive. In addition such research will be time consuming to find the appropriate sampling population and collecting data. Anyhow the table below will show the time location and the process of carrying this research in next page.

Week 50

Week 45 to 49

Week 36 to 45

Week 34 to 36

Week 29 to 33

Week 19 to 29

Week 14 to 18

Week 4 to 14

Week 1to4

Plan Project

Literature Review

Proposal Written

Submission Proposal

Data Collection



Report Writing

Preparation and Presentation

Submission of Report