The effect of pay equity on organizational commitment in higher education institutions in Bangladesh

Pay inequity seems to be a major concern at private universities in developing countries. Therefore, this study, drawing on equity and relative deprivation theories, aims to investigate the role of pay equity in shaping the organizational commitment of university faculty members in Bangladesh. It used the convenience sampling method with a structured questionnaire. Participants in the study were 254 full-time faculty members, including lecturers, assistant professors, associate professors, and professors from private universities in Bangladesh. A t-test comparing different categories of faculty members showed no noteworthy distinctions between their responses regarding pay equity and organizational commitment. Then, the study employed variance-based structural equation modeling (PLS-SEM) to analyze the data and validate the research model. According to the findings, internal pay equity positively and significantly affects affective (β = 0.327, p < 0.05) and normative commitment (β = 0.579, p < 0.05). Moreover, external pay equity is significantly associated with affective (β = 0.488, p < 0.05) and continuance commitment (β = 0.492, p < 0.05). However, the impact of internal pay equity on continuance commitment (β = 0.150, p = 0.165) was insignificant. Similarly, the relationship between external pay equity and normative commitment (β = 0.170, p = 0.263) was also insignificant. The findings indicate that higher education institutions can stimulate the organizational commitment of academics by promoting pay equity.