Advanced information technology development in the 4th industrial era is also making a big difference in the distribution industry. The distribution industry is diversifying not only offline but also online sales channels, and this change in the environment is creating competition in the distribution industry. As competition in the distribution industry intensifies, customers' needs and standards are diverse and increasing. As a result, the importance of human resources in the distribution industry is increasing. The role of employees in the rapidly changing market and infinite competition in the distribution industry is changing. Strengthening employees' capabilities is becoming an essential requirement for efficient management of distribution-related areas. In order to overcome the limitations of the distribution sector in a fierce market, enthusiasm for the work of employees is needed, and research such as management and evaluation factors of employees based on capabilities and relationship with corporate performance is very necessary. There is also growing importance on compensation issues to motivate them to maximize their capabilities. Management managers in the distribution industry control human resources management in line with management strategies and design major programs to achieve corporate goals. The goal of a distribution company is to maintain competitiveness, secure competitive advantage, and provide employees with value for their work.
Motivation for employees is driven by external rewards such as salary and promotion, and internal rewards such as performing meaningful tasks. Prior studies have shown that both types of rewards affect outcomes such as engagement, job satisfaction and organizational immersion (Thomas, Ambrosini, & Hughes, 2019). Employees' emotional state of the company directly affects the company's performance. For this reason, distribution companies implement compensation systems as a way to satisfy employees and maintain good talent. While studies on compensation have mainly been conducted on extrinsic compensation, studies on human resources have recently been conducted together with intrinsic compensation as well as extrinsic compensation. By introducing both external and intrinsic rewards, various systems are being introduced to motivate employees to work satisfaction and organizational immersion.
In this study, unlike previous studies, studies have been conducted on the direct effect of compensation schemes on organizational validity. Compensation management in the distribution industry has long been used as a motivation to promote job satisfaction and maintenance of the workforce. However, the relationship between these variables is not clearly defined in the distribution industry due to the lack of empirical research.
Therefore, the study will identify the relationship between the two variables because at this point, the distribution's compensation system can maximize employee immersion and job satisfaction, and the higher satisfaction with the compensation system, the better it will adapt to its job and become immersed in the organization (Greguras & Diefendorff, 2009).
In addition, the study was conducted in consideration of the recognition of distribution fairness as regulatory variables in the above two variable relationships. Fairness in compensation to employees is a sensitive issue, and the importance of compensation is great because it is the price of providing and receiving one's own labor. Studies that view distribution fairness as a role of regulatory variables were mainstream until the 80s, in terms of fairness in wage distribution and fairness in terms of work-related distribution. Since the mid-80s, many studies on fairness have also shown that distribution fairness is an important basis for assessing organizational fairness, increasingly emphasizing the importance of distribution fairness recognition (Mosquera, Soares, & Oliveira, 2020).
Distributive justice is an important matter of how fairly employees perceive the compensation system in the implementation of compensation. If employees are perceived as unfair by comparing compensation with themselves and others, they may cause dissatisfaction with the organization, which may lead to negative effects on organizational immersion and job satisfaction. In the end, employees' positive state of mind about work, pride and unity in the organization, and the relationship of trust between companies and employees depending on their perception of how fair compensation is. Although this recognition of justice is recognized to be important to an organization, there has been no study at all that modulates justice recognition in the relationship between compensation and organizational validity in the distribution industry. Therefore, we believe that there is a need for research on regulatory effects based on prior research, as there are various variables that make up organizational validity.
The purpose of this study is to assess the role of both the satisfaction with the extrinsic and intrinsic rewards of distribution workers in compensation paid to distribution workers in exchange for work. It is intended to understand how it affects organizational validity through fair and distributive justice implementation. In addition, we would like to establish a mechanism to control the relationship between distribution workers' extrinsic rewards, intrinsic rewards and organizational validity, which have not been addressed in previous studies, as distribution justice awareness and consider the organizational contribution of employees.
2. Theoretical Background
2.1. Structural Compensation
Compensation is an important factor for businesses and employees in organizational management. For an organization, it is also a key element necessary to achieve its goals as a means of motivating its members to achieve high performance (Wang, Craighead, & Li, 2014). The compensation for wages, benefits, satisfaction of physiological needs, and self-realization through the organization is called compensation. It is a comprehensive concept in which a worker invests time, effort, technology, etc. for an organization and receives such activities as an economic consideration. In other words, reward means all attractive or positive forms of payment given to the actor for a particular action (Allen & Kilmann, 2011).
In an organization, employees who plan for changes in the organization's corporate objectives and support its changing efforts share ways in which the company moves toward the goal, allowing them to experience meaningful organizational life (Stephen, Stumpf, Tymon, & Richard, 2013). Nicolai (2010) argued that organizational rewards are divided into foreign and intrinsic rewards and that extrinsic rewards are visible, such as salaries and bonuses, and that they are nonmaterial rewards such as empowerment and presentation of possibilities. Milkovich, Newman, and Gehart (2011) stated that the definition of compensation refers to the financial compensation and actual services and benefits those workers receive in employment relationships, and that, depending on the form of compensation, payments received directly in cash, such as direct compensation and incentives, or indirect compensation through services, pension and health insurance.
According to Greckhamer (2011) research on the difference between compensation levels and compensation inequalities, extrinsic compensation includes identity security, remuneration, promotion, performance benefits and benefits, for example, it can be predicted that a promotion will have a positive impact on job performance. He argued that intrinsic rewards include a sense of achievement, fun, opportunity for ability development, self-realization, and participation in decision-making, and that if intrinsic rewards continue, employees will have a strong task force, which can have a positive impact on the achievement of individual work performance as well as the organization's goals.
There are various factors that make employees experience organizational rewards in their work. Allen and Kilmann (2001) said that organizational rewards are divided into intrinsic and external rewards, including non-monetary rewards from the sense of satisfaction, achievement, recognition and encouragement given to individuals after they perform their duties, and wages, bonuses, promotions, and praise from others. Organizational managers need to think about what kinds of rewards are effective for employees and establish a system to provide compensation accordingly. The level of performance varies depending on the type of reward, so organizations will need to have a reward system in place to provide appropriate compensation (Hwang & Jung, 2018).
The study comprises two sub-concepts: material extrinsic compensation and employee support for effort and employee authority permitted by managers to support change. The study was conducted by measuring extrinsic compensation with five factors: salary, promotion, benefits, incentives, qualifications, and opportunities for performing tasks, performance authority, sense of achievement, recognition, and self-realization.
2.2. Organizational Effectiveness
Organizational validity is the result of strategic management. In other words, the extent to which companies realize their goals for human resource management. Organizational validity can contribute positively to all aspects of an enterprise's overall success, market share, profitability, growth rate and innovation.
The positive result of organizational validity is increased competitive advantage and solid performance. As such, organizational validity can also be said to be the ability of an entity to meet the needs of its employees to achieve its objectives (Prayitno, Waluyo, & Suhana, 2020).
In the 1950s, financial position or economic index became the basis for organizational validity. Since then, it has developed a tendency to analyze the social index of employees, including psychological inner thoughts. Koy (2001) shows that organizational validity was studied as three factors: turnover intent, job satisfaction, and organizational civic behavior. Ferreira (2015) studied organizational validity classifying it as job satisfaction, goal orientation, growth, profitability and productivity. Job satisfaction is a state of abstract and subjective emotion about jobs. Personal satisfaction with a job or job involves attitudes or perceptions of job-related factors (Kim & Kim, 2020).
The high organizational immersion of employees in the organization will be linked to high performance, low turnover of employees, and low levels of absence from work. This organizational immersion will determine satisfaction with the job (Lyu & Yang, 2013) also is a continuing process of employee commitment to the organization. If an organization can increase organizational immersion, it means job satisfaction is triggered (Martono, Khoiruddin, Wijayanto, Ridloah, Wlansari, & Udin, 2020). Organizational immersion shows how hard employees work in the organization and want to remain part of the organization. Individuals with the consistency and ability to work optimally for an organization are an important factor in helping the organization grow (Prayitno, Waluyo, & Suhana, 2020).
Organizational attachment to the distribution company, accept and believe in organizational goals and values is becoming an important factor in improving organizational effectiveness. Distributors also need to be willing to provide efforts for the organization and remain loyal to the organization.
Therefore, based on prior research, this study aims to measure organizational validity in two dimensions: job satisfaction and organizational immersion. Job satisfaction was defined as a pleasant and positive emotional state resulting from the evaluation of an individual's job or job experience. Organizational immersion measures the attachment to the organization's goals and values, the willingness of the members to strive for the organization, and the desire to remain a member of the organization.
The measurement tools of Allen and Meyer (1990), which were heavily utilized in the study of organizational validity, were modified and used to suit the target distribution company employee The organization validity measurement was made up of 5 job satisfaction questions and 5 organizational immersion questions, totaling 10 questions.
2.3. Distributive Justice
It is not easy for all employees to be satisfied with the compensation because the organization's resources are limited. Organizational justice recognition is an area that studies the response of employees regarding unfairness by connecting problems with limited resources to organizations. Research on fairness recognition is evolving because it focuses on empirical studies on fairness recognition (Salman, 2013).
Bartol and Srivastava (2016) noted that recognition of fairness in organizational compensation is an important factor in the trust and development of organizations and will be useful in improving their work effectively in team work. Justice awareness has a high impact on members' behaviors and attitudes, and the organization strives to increase the level of recognition and perception of justice recognized by members through various methods and means, including wage schemes and promotion schemes (Greenberg & Lind, 2000)
Justice has been discussed in terms of procedural fairness, distribution fairness, and interaction fairness, but distributive justice has the most influence on relationship quality among various fairness dimensions. The performance-oriented compensation system, which has been drawing attention recently, is representative of the annual salary system and the performance allocation system. Distributive justice, especially in relation to compensation, affects the role and activities of members of the organization (Schminke, Ambrose, & Cropanzano, 2000).
Early studies on distributive justice suggested that organizational members accept the final distribution as justice regardless of the disadvantage if the organization's decision making process is seen fairly. It is said that when members' perception of justice is high, they work with a high level of enthusiasm to be equitable (Saks, 2006). In the hospitality industry, distributive justice has been shown to contribute greatly to improving organizational performance as a positive influence factor on members' job satisfaction (Zohbi- Manrique-de-Lara & Ding, 2017).
Folger and Konovsky (1989) defined distributive justice to the extent that it recognizes how fair distribution is in determining the total amount of compensation. The higher the perception of distributive justice of organizational members, the more enthusiastic they are about their work, aware of the organization's values and goals, become attached to the organization, and enthusiastically participate in organizational activities. When compensation feels more than the sum of various input factors such as effort, responsibility, and experience, employees become aware of justice.
In this study, distributive justice was defined to the extent that employees are given compensation compared to what they have invested in the organization. Based on these prior studies, 6 questions were to be displayed on the Likert 5-point scale by modifying the organization's compensation scheme to suit the distribution company circumstances.
3. Research Methodology
A research model such as
The study was written with the support of a research fund from Hanseo University.
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