HRM beats big bucks? The Influence of perceived HRM system strength and pay level on job satisfaction, organizational identification, and turnover intention

This study explores the psychological mechanisms through which perceived HRM system strength and salary levels affect turnover intention from a motivational theory perspective. We examine the mediating effects of job satisfaction and organizational identification on the relationship between perceived HRM system strength and salary, while arguing that salary may trigger different psychological processes between high-salary and low-salary groups. To test our hypotheses, we utilized secondary data from the Human Capital Corporate Panel and conducted structural equation modeling analysis on a sample of 2,566 employees from 500 Korean companies. The results show that both perceived HRM system strength and actual salary reduce turnover intention through job satisfaction and organizational identification. Additionally, we found differences in path patterns between high-salary and low-salary groups. In the high-wage group, salary directly reduces turnover intention without affecting job satisfaction, whereas in the low-salary group, salary only indirectly influences turnover intention through job satisfaction. Our findings strongly suggest that salary functions as a hygiene factor representing extrinsic motivation, while perceived HRM system strength serves as a managerial strategy that can stimulate intrinsic motivation, aligning with traditional motivational theory perspectives. This study emphasizes the practical importance of managing perceived HRM system strength and provides significant practical implications for HRM policy change management.