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Financial Satisfaction, Personal Finance-Work Conflict, and Work Outcomes (Pay Satisfaction, Organizational Commitment, And Productivity), Proceedings of the Association for Financial Counseling and Planning Education, 1999, Kim

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This study focuses on the relationships between financial satisfaction, personal finance-work conflict, and work outcome measures, which include productivity, organizational commitment, and pay satisfaction. The data in this research were collected in February and March 1999 from an insurance company in Wisconsin. A total of 262 questionnaires were used in the data analysis. Significant relationships were found between financial satisfaction, personal finance-work conflict, organizational commitment, and pay satisfaction. This study supports the notion that workplace financial education can help workers handle their personal finances better and improve their financial satisfaction, and that employers can benefit from the workplace financial education by having more satisfied and committed workers.

Personal finance in America is an important issue today. Financial matters are related to individual, family, and work life. Work outcomes reflect worker's attitudes, behavior, and performance at the workplace. Job performance, worker productivity, tardiness, absenteeism, retention, turnover, work commitment, job satisfaction, morale, and loyalty are human satisfaction indicators of employee outcomes at workplaces (Benton, 1998; Family and Work Institute, 1997; Robbins, 1998).

Workers' personal finances are related to work outcomes. Problems in workers' lives affect their psychological states and behavior at work (Family and Work Institute, 1997). Financial concerns spill over into workers' responsibility at the workplace. Brown (1993) suggested that 10% of all employees experience financial difficulties, which, in turn, affect their workplace productivity. Garman, Leech, and Grable (1996) estimated that around 15% of the workers in the United States are experiencing personal financial stress that impact their productivity. Joo (1998) found that a higher level of financial well-being was associated with higher performance ratings, less absenteeism, and less work time loss.

This study focuses on the relationships between financial satisfaction, personal finance-work conflict, and work outcome measures, which include productivity, organizational commitment, and pay satisfaction.

Financial Satisfaction

Financial satisfaction is satisfaction with personal finance. Porter (1990) defined perceived attributes as "an individual's subjective evaluation of his/her own financial situation." She used satisfaction with income, level of living, net worth, general financial management, cash management, credit management, risk management, capital accumulation, and retirement/estate management for perceived indicators of financial well-being. Hira (1986) studied financial satisfaction level among 201 money This paper won the Best Student Paper Award at the AFCPE 1999 Annual Conference Jinhee Kim: Director of Research, National Institute for Personal Finance and Employee Education, 101 Wallace Hall, (0410) Virginia Tech Blacksburg VA 24061, E-mail jikim5@vt.edu, Phone: (540) 231-1896 Fax (540) 231-3250. managers in Iowa. The domains established for her study were satisfaction with money management practices, level of living, level of saving, ability to stay out of debt, ability to pay back money owed, level of assets, willingness to discuss money matters, and ability to meet large emergency expenses. Scannell (1990) analyzed satisfaction with present standard of living, emergency savings, past investments and savings, and general financial situation presently, in 5 years, last year, and next year. Households who used financial management practices had higher satisfaction with their financial situation.

¹This paper won the Best Student Paper Award at the AFCPE 1999 Annual Conference

²Jinhee Kim: Director of Research, National Institute for Personal Finance and Employee Education, 101 Wallace Hall, (0410) Virginia Tech Blacksburg VA 24061, E-mail jikim5@vt.edu, Phone: (540) 231-1896 Fax (540) 231-3250.

Personal Finance-Work Conflict

Personal finance-work conflict is the extent to which personal financial concerns interfere with a worker's workplace responsibility. Since a worker is a personal financial manager, work and personal finance are interrelated. Personal finance interferes with work and work interferes with personal finance.

Examining the relationship between personal finance and work, previous studies relied on the strain-based conflict, and examined the relationship between financial concerns and work outcomes. Financial stress from mismanagement spills over into workers' performance at workplace. Financial problems are the second most important source of employee stress (Cash, 1996). Williams, Haldeman & Cramer (1996) argued that there is a direct relationship between financial problems and productivity. They stressed the indirect effect of personal finance concern on potential turnover. Cash (1996) found a positive relationship between stress level and absenteeism. In spite of these studies, there is little research on how much financial concerns influence workplace behaviors. Joo (1998) found that the level of financial well-being was negatively related to worker's productivity. Orthner and Pittman (1988) found that worker's income adequacy is related to work commitment.

Few studies assess the extent to which how much workers feel their financial concerns interfere with their work life. Since workers manage their personal finance at home as well as at the workplace, personal finances interfere with work as well as work interferes with personal finances.

Work Outcomes

Work outcomes are associated with characteristics of employees, characteristics of their lives off the job, aspects of their personal well-being, and characteristics of their jobs and workplaces (Family and Work Institute, 1997). Robbins (1998) discussed four individual variables: (a) biographical characteristics (i.e. age, gender, marital status, and tenure, ability); (b) intellectual and (c) physical ability; personality (i.e. locus of control, machiavellianism, self-esteem, self monitoring, risk taking, and type A personality); and (d) learning.

Productivity

Productivity refers to the overall effectiveness and performance of individuals or organizations (Katzell & Yankelovich, 1975). Benton (1998) suggested rewards, coworkers, management competence, the intrinsic quality of the work itself, promotion, opportunities, and other social external conditions as determinants of job performance.

Job performance has been used to measure worker productivity. Measuring performance determines how specific behaviors match predetermined performance standards (Benton, 1998). Most job performance is not easy to measure. Performance can be measured by someone's immediate superior, peer, self-evaluation, or immediate subordinates (Robbins, 1998). Self-reported job performance can be measured by asking workers to rate the quality and the quantity of their work performance (Katzell, Thompson, & Guzzo, 1992; Netemeyer., Boles, & McMurrian, 1996); however, self-evaluation can be easily biased as workers often give high marks on their own performance evaluation.

Organizational Commitment

Organizational commitment reflects the linkage between work and worker. Work commitment is defined as "the strength of an individual's identification with and involvement in a particular organization" (Porter, Steers, & Monday, 1974). Schechter (1985) developed an organizational commitment questionnaire of continuance commitment and value commitment. Mayer and Schoorman (1992) used Schechter's two organizational commitment measures to predict worker's behavioral outcomes at the workplace. They found that turnover was significantly more correlated with continuance commitment, while performance, organizational citizenship behaviors, and satisfaction were significantly more correlated with value commitment (Mayer & Schoorman, 1998).

Work commitment has been found to be associated with worker, job and organizational characteristics. Glisson and Durick (1988) assessed the following effects of characteristics of the workers (years in the organization, years of experience, age, sex, education, salary), job-task characteristics (role conflict, role ambiguity, skill variety, task identity, task significance), and organizational characteristics (workgroup size, workgroup budget, organization age, workgroup age, leadership, residential services, and residential/walk-in).

Pay Satisfaction

Pay satisfaction is a multidimensional construct. Schwab (1985) hypothesized five components of pay satisfaction which are pay level, pay raises, benefits, structure and administration. Research found that pay satisfaction is determined by not only actual salary but workers' characteristics such as their personal standards of comparison (Rice, Philips, & McFarlin, 1990).

Methodology

Data Collection

The data in this study was collected in February and March 1999 from an insurance company in Wisconsin. Subjects in this study were 476 workers from the payrolls of the insurance company. A pre-assessment questionnaire was mailed to all employees. The mail survey procedure outlined by Dillman (1978) was used. A cover letter, which introduced the research study and assured confidentiality and stressed the need for participation was sent along with the survey questionnaire in a business envelope. One stamped return envelope and an index card for entering a free drawing were placed in the envelope. Those who wanted to enter the free drawing for $200 submitted their names and addresses with the answered questionnaire. A week after the first survey was mailed, a thank-you-and-reminder postcard was mailed. In the first mailing and postcard mailing, 476 questionnaires and postcards were mailed to all the workers. To appeal for a return, a replacement questionnaire was sent with a shorter letter three weeks after the first questionnaire mailing. To avoid duplicate mailings to the respondents, names of the first respondents were deleted from the initial mailing list. In the second mailing, 330 packages were sent. A total of 270 were returned; however, eight returned questionnaires were not usable and 262 were used in data analysis.

Sample Characteristics

Table 1 shows the descriptive data on the sample. The respondents were primarily white (97.7%). More than half (59.5%) were female, 60.5% were in their first marriage, while 43.4% had beyond a bachelor's degree. The average age of the workers was 38.89. Median annual income was $60,001 to $70,000.

Measures

Financial Satisfaction Satisfaction with personal finances has been defined as a subjective evaluation of one's personal finances. The four items were developed based on previous published literature for this study (Joo, 1998; Kratzer, Brunson, Garman, Kim & Joo, 1998; Porter, 1990; Shinn, 1992). The scales included satisfaction with present financial situation, income adequacy, debt, and saving and retirement. The responses were coded on a 4 point Likert-type scale, 4 = agree to 1 = disagree. Negatively worded items were recorded. The average of the summed items was 10.66 (S.D. = 2.80). A sample item is " I am satisfied with my present financial situation." Higher score meant a higher financial satisfaction. Conbach's alpha was .78.

Personal Finance-Work Conflict

A personal finance-work conflict measure was developed for this study to measure the extent to which personal financial concerns interfere with a worker's workplace responsibility. This variable theoretically came from various measures developed and used to assess the family-work conflict in previous literature (Family and Work Institute, 1997; Judge, Boudreau, & Bretz, Jr., 1994; Netemeyer et al., 1996).

The four items were adapted from Netemeyer et al. (1996)'s family-work conflict scale and rephrased for personal finances instead of family. These items measured the extent to which money matters interfere with workers at their workplace. Each item was coded on a 4-point Likert-type scale, 4 = agree to 1 = disagree. The four items were summed (M =5.70, S. D. = 1.30). For example, the item was "I have had to put off doing things at work because of personal money matters." Cronbach's alpha for the four-item index was .92.

Productivity

Productivity was measured by a self-report of quality and quantity of job performance, and performance ratings from an employee's supervisor the previous year. Various scales have been used to measure a worker's productivity in previous studies (Katzell et al., 1992; Netemeyer et al. 1996; Robbins, 1998). Two items measuring the quality and quantity of job productivity were adapted from Netemeyer et al. (1996)'s. The questions were (a) "how do you rate yourself in terms of the quality of your performance at work" and (b) "how do you rate yourself in terms of how much work you accomplish?" Performance ratings from bosses were also asked. The three items of productivity measure used a 5-point scale (ranging from 1-poor to 5-excellent) and summed. Cronbach's alpha for three items were .72 (M = 12.59, S. D. = 1.54).

Organizational Commitment

Organizational commitment as a construct reflects a general affective response to the organization as a whole (Mowday, Steers, & Porter, 1979). In this study, organizational commitment was assessed by a six-item measure, taken from Mayer and Schoorman's (1992) value commitment questionnaire. Using 4-point Likert-type scales (from agree = 4 to disagree = 1), respondents were asked to indicate the extent of their feelings about the organization. The six items were summed with a higher score indicating a higher level of positive organizational commitment. A sample item was " I am proud to be a member of this organization." Cronbach's alpha for six items was .90 (M = 18.94, S. D. = 3.67).

Pay Satisfaction

Pay satisfaction was measured with a 4-item pay satisfaction scale from the Job Satisfaction Survey (Spector, 1994). A summated rating scale was used with a 4-point scale (from agree = 4 to disagree = 1). A sample item was " I feel I am being paid a fair amount for the work I do." Cronbach's alpha for four items was .85 (M = 10.39, S. D.= 2.96).

Results

Demographic variables such as gender, education, age, work years, household income, and household size, and financial satisfaction were included in regression analyses. Four regressions were run to determine if any significant relationship existed between financial satisfaction, personal finance-work conflict, and work outcomes (productivity, pay satisfaction, and organizational commitment).

Personal Finance-Work Conflict

The regression equation included financial satisfaction and demographic variables. Household size and financial satisfaction were significant variables in the regression equation. The results showed that around 11% of the total personal finance-work conflict score was predicted by these variables. Those who had a larger household size and were less financially satisfied, showed higher personal finance-work conflict. Workers with high levels of financial satisfaction tend to not have financial matters with their jobs.

Productivity

As shown in Table 4, in this regression analysis, financial satisfaction was not significant in predicting productivity. Only household income was the significant variable. Household income was positively related to productivity. Financial satisfaction was not related to productivity. The R Square indicates that there are other factors that explain the variance of worker's productivity.

Organizational Commitment

Table 5 shows the regression results of financial satisfaction with organizational commitment. A regression analysis showed a significant relationship between financial satisfaction and organizational commitment. Workers with high levels of satisfaction with their personal finances tend to be more committed to the organization at which they work.

Pay Satisfaction

Financial satisfaction and work years were significant factors in predicting pay satisfaction and organizational commitment. Work years were negatively related to pay satisfaction. Workers who were highly satisfied with personal finances were more satisfied with payment controlling for their household income. These results supports previous studies that determined that pay satisfaction is determined not only by actual salary but workers' characteristics.

Discussion

This study was designed to examine the relationship between personal finances and work outcomes. Financial satisfaction is related to workers' behaviors and attitudes at workplace. The measures for personal finance-work conflict, productivity, organizational commitment, and pay satisfaction were developed for this study.

This study found some relationships between financial satisfaction, personal finance-work conflict, productivity, organizational commitment, and pay satisfaction. Even though demographic variables such as gender, education, household income, family size, age, and work year were not consistently significant variables, financial satisfaction showed significant relationships with the three dependent variables of personal finance-work conflict, organizational commitment, and pay satisfaction.

Workers who are less satisfied with their personal finances report more conflict between money and work. This result supports the idea that workers' financial problem spill over into work area. However, productivity did not show any significant relationship. Financial satisfaction was also related to pay satisfaction. Workers who were satisfied with their personal finances were more satisfied with their payments controlling for household income. Workers who handle money better feel like they are well paid. Organizational commitment was also related to personal financial satisfaction. Workers who were more satisfied also tended to be more committed workers. These findings suggest that employers can increase workers' pay satisfaction and commitment to their organization by educating employees to manage and improve their personal finances.

The regression results suggest the existence of other factors. This study suggests further study on more variables. Very low variances in responses were found in all four measures. Respondents replied that they have low personal finance-work conflict, high productivity, high organizational commitment, and high pay satisfaction. This may limit further data analysis. These results were consistent with a previous study (Joo, 1998; Kratzer et al., 1998). This might result from the fact that all constructs were measured by the self-report and respondents' concern about the employer's accessibility of the data.

Some of the results in this study were not significant as the literature. Although financial satisfaction explains the variance of personal finance-work conflict, pay satisfaction, and organizational commitment that have been related to workers' job productivity in previous studies, there were no significant relationship between productivity and financial satisfaction. These results suggest more discussion and future study. Also, regression analysis showed that demographic variables were not significant factors in predicting the four work outcome measures. In this paper, all possible variables, which were suggested by the previous studies, were not included. More extensive analysis is recommended in the future.

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Appendix

Pearson Product Moment Correlation of Work Outcome and Other Variables

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