THE IMPACT OF PAY SATISFACTION ON JOB SATISFACTION, ORGANISATIONAL COMMITMENT, LOYALTY, AND EMPLOYEE RETENTION – APPLICATION OF SEM APPROACH

Abstract

This study examines the impact of pay satisfaction, job satisfaction, organisational commitment, and loyalty on employee retention at
preschools in Vietnam, an emerging economy in Southeast Asia. Survey data were collected from 289 early childhood teachers in public preschools in Hanoi, the capital of Vietnam. Findings from the structure equation model (SEM) using the AMOS 20 software indicated that pay satisfaction, job satisfaction, organisational commitment, and loyalty directly affect employee retention in Hanoi’s public preschools. The results also showed that pay satisfaction indirectly impacts employee retention through the mediating role of
job satisfaction, employee loyalty, and organisational commitment. Additionally, job satisfaction and organisational commitment indirectly influence employee retention through employee loyalty. As a result, the study offers several implications for public preschool principals to improve pay satisfaction, loyalty, job satisfaction, and organisational commitment to retain teachers in public preschools.