UNIVERsm MALAYSIA SABAH

BORANG PENGESAHAN STATUS TESIS

lUOUL FAKTOR MOTIVASI YANG MEMPENGARUHI KESETIAAN PEKERlA 01 INOUSTRI HOTEL KOTA KINABALU

IlAZAH MASTER OF HUMAN CAPITAL MANAGEMENT (MHCM) SESI PENGAlIAN 2009 - 2010

saya, TOH PEl SUNG mengaku membenarkan tesis sarjana ini disimpan di Perpustakaan Universiti Malaysia Sabah dengan syarat - syarat kegunaan berikut:

1. Tesis adalah hak milik Universiti Malaysia Sabah. 2. Perpustakaan Universiti Malaysia Sabah dibenarkan membuat salinan untuk

tujuan pengajian sahaja. 3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan

pertukaran Institusi Pengajian Tlnggi. 4. TIDAK TERHAD.

~. Penulis: Toh Pei Sung Alamat: No 2, Lorong Raja Udang

3B, Kingfisher Park, 88400 Kota Kinabalu, Sabah.

Penyelia: Dr. Awangku Hassanal Bahar Pengiran Bagul

Tarikh: 28 Julai 2010

Disahkan oleh,

Catatan: Tesis dimaksudkan SEBAGAI TESIS Ijazah Doktor Falsafah dan Sarjana secara penyelidikan atau Disertasi bagi pengajian secara kerja kursus dan penyelidikan atau laporan Projek Sarjana Muda (LPSM)

MOTIVATIONAL FACTORS THAT INFLUENCE THE LOYALTY OF EMPLOYEES IN THE HOTEL

INDUSTRY IN KOTA KINABALU

TOH PEl SUNG

PERPUSTAKAAN UNNERSITI MAlAYSIA SARAH

THESIS SUBMITTED IN FULFILLMENT FOR THE DEGREE MASTER OF HUMAN CAPITAL

MANAGEMENT (MHCM)

SCHOOL OF BUSINESS AND ECONOMICS UNIVERSITY MALAYSIA SABAH

2010

DECLARATION

I hereby declare that the material in this thesis is my own except for quotations, excerpt, equations, summaries and references, which have been duly acknowledged.

28 July 2010

ii

~. Toh Pei Sung

PE2008 - 8418C

NAME

MATRIC NO

TITLE

DEGREE

VIVA DATE

CERTIFICATION

TOH PEl SUNG

PE2008 - 8418C

MOTIVATIONAL FACTORS THAT INFLUENCE THE LOYALTY OF EMPLOYEES IN THE HOTEL INDUSTRY IN KOTA KINABALU

MASTER OF HUMAN CAPITAL MANAGEMENT (MHCM)

28lUNE 2010

DECLARED BY

1. SUPERVISOR Dr. Awangku Hassanal Bahar Pengiran Bagul

iii

ACKNOWLEDGEMENT

I would like to express my deepest and sincere gratitude to my supervisor, Pengiran

Dr. Awangku Hassanal Bahar Pengiran Bagul who has been so good and being a

reliable supervisor to me. He has dedicated his valued time to supervise me in order

to produce this paper, with his professional advice. He believed in my work and

never stop support me in my work.

Towards the most important person in my life, both of my parents, I would

like to take this opportunity to extend my gratitude for always support my decision

and never leave me behind alone. Without their support, it was impossible for me to

pursue and finish my master degree. In addition, a sincere thank you to all my

friends for helping me in their own way until this research is finish. Their support

had led to the completion of this dissertation.

Rnally, thank you to all people who gave me support and advice in doing my

dissertation paper.

iv

ABSTRACT

MOnvATlONAL FACTORS THAT INFLUENCE THE LOYALTY OF EMPLOYEES IN THE HOTEL INDUSTRY IN KOTA KINABALU

The tourism industry has gained prominence in Malaysia and with the global nature of the industry, transformation in issues including human resource constantly evolving for the better. This study analyzes the employment loyalty by examining intrinsic motivation factors in the star rated hotel industry in Kota Kinabalu. Issues such as high labor turnover and hard to retain the hotel employees due to the nature of work in the hotel industry give added insights to this issue. Loyalty is regarded as attitudinal that employees who are satisfied with their job are more likely to engage in a relationship with their employer. Thus, employees who are satisfied with their job are being motivated by intrinsic motivation such as advancement, recognition, responsibility, career growth, and the work itself. In addition, gender has no moderating effect on the relationship between loyalty and intrinsic motivation. The methodology for this study is using quantitative approach. The findings of this study which responsibility and work itself are identified as the two most important factors to motivate hotel employees. The study recommends that the hotel management should understand their employees' needs in order to motivate employees to ensure a higher degree of commitment.

v

ABSTRAK

lndustri pelancongan telah menjadi terkenal di Malaysia dan isu - isu transformasi termasuk sumber manusia telah berkembang menjadi lebih baik dengan sifat global industry ini. Kajian ini adalah untuk manganalisis kesetiaan terhadap pekerjaan dengan mengukur faktor motivasi intrinsik di industri hotel bertaraf bintang di Kota Kinabalu. lsu - isu seperti kos tenaga buruh yang tinggi dan sifat pekerjaan hotel industry ini yang menyebabkan kesukaran untuk mempertahankan pekerja hotel telah menambahkan lagi perce psi terhadap isu. Kesetiaan dikenalpasti sebagai sikap pekerja yang berpuas hati dengan pekerjaan mereka di mana lebih cenderung untuk ter/ibat dalam hubungan dengan majikan mereka. Oleh itu, pekerja yang sentiasa berpuas hati dengan pekerjaan mereka kerana dimotivasikan dengan kemajuan, pengiktirafan, tanggungjawab, pertumbuhan kerjaya dan pekerjaan itu sendiri. Selain itu, jantina tidak mempengaruhi ke atas hubungan antara kesetiaan dan motivasi intrinsik. Metodologi kajian ini adalah menggunakan pendekatan kuantitatif. Tanggungjawab dan pekerjaan itu sendiri telah dikenalpasti dalam hasil kajian ini sebagai dua faktor yang paling penting untuk memotivasi pekerja hotel. Kajian ini memberi cadangan bahawa pengurusan hotel harus memahami keperluan pekerja mereka bagi memotivasi pekerja supaya untuk memastikan tahap komitmen yang lebih tinggi.

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TABLE OF CONTENTS

PAGE

TITLE

DECLARATlON ii

CERTlFICATlON iii

ACKNOWLEDGEMENT iv

ABSTRACT v

ABSTRAK vi

TABLE OF CONTENTS vii-x

UST OF TABLES xi

UST OF FIGURES xii

UST OF APPENDIX xiii

CHAPTER 1: INTRODUCTlON

1.1 Overview 1-3

1.2 Problem Statement 4-5

1.3 Research Question 6

1.4 Objectives 6

1.5 Scope of Study 6

1.6 Significance of the Study 7

1.7 Definition of Terms Used 8

1.7.1 Loyalty 8

1.7.2 Motivation 8

1.7.3 Advancement 8

1.7.4 Recognition 8

1.7.5 Responsibility 8

1.7.6 Career Growth 8

1.7.7 Work Itself 9

1.7.8 Demographic 9

1.8 Organization of Dissertation 9

1.9 Summary 10

vii

CHAPTER 2: LITERATURE REVIEWS

2.1 Introduction 11

2.2 Loyalty 11-14

2.3 Motivation 14-15

2.3.1 Herzberg's Motivation - Hygiene Theory 16-18

2.3.2 Advancement 19

2.3.3 Recognition 19-21

2.3.4 Responsibility 21-22

2.3.5 Career Growth 22

2.3.6 Work Itself 22-23

2.4 The Relationship between Loyalty and Motivation 24-25

2.5 Demographic 26

2.5.1 Gender 26

2.6 Summary of the Main Literature Reviews 27-30

2.7 Summary 31

CHAPTER 3: METHODOLOGY

3.1 Introduction 32-33

3.2 Research Framework 34

3.2.1 Dependent Variable: Loyalty 35

3.2.2 Independent Variable: Intrinsic Motivation 35-36

3.2.3 Moderating Variable 36

3.3 Hypotheses 37-38

3.4 Research Design 38-40

3.5 Sampling Design 40

3.5.1 Sampling Size 41-42

3.6 Instrument and Measurement 43-44

3.7 Data Collection Method 44

3.8 Data Analysis 45

3.8.1 Hypotheses Analysis Method 45

3.9 Summary 46

viii

CHAPTER 4: RESULTS

4.1 Introduction

4.2 Respondents Profile

4.3 Reliability Analysis

4.4 Descriptive Data

4.5 Hypotheses Testing

4.6 Summary of Rndings

CHAPTER 5: DISCUSSION AND CONCLUSION

5.1 Introduction

S.2 Recapitulation of Study

5.3 Discussion and Implications

5.3.1 Advancement and Loyalty

5.3.2 Recognition and Loyalty

5.3.3

5.3.4

5.3.5

Responsibility and Loyalty

Career Growth and Loyalty

Work Itself and Loyalty

5.3.6 Gender on the relationship between Intrinsic Motivators and Loyalty

5.4 Umitation of the Study

5.5 Suggestion for the Future Research

5.6 Conclusion

BIBUOGRAPHY

Appendix A

Appendix B

AppendixC

Appendix D

AppendixE

Appendix F

AppendixG

ix

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47-48

49

50-51

52-57

57-58

59

59

60

60-61

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62-63

63

64

65

65

66

67-68

69-76

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78-83

84-85

86-87

88-89

90-91

92-93

Appendix H 94-95

Appendix I 96-97

Appendixl 98 Appendix K 99

Appendix L 100-105

Appendix M 106-110

x

LIST OF TABLES

PAGE

Table 2.1: Summary of Literature Reviews 27-30

Table 3.1: Sample Size for a Given Population Size 39

Table 3.2: The Total Population of Operational Employees in Star Rated 41 Hotel Industry, Kota Kinabalu

Table 3.3: Total Number of Hotel Participants 42

Table 3.4: A Likert 5 Scale Response 43

Table 3.5: Statistical Analysis Method 45

Table 4.1: Profile of Respondents 48

Table 4.2: Reliability Analysis for loyalty and Advancement, 49 Recognition, Responsibility, Career Growth and Work Itself

Table 4.3: Descriptive for Independent and Dependent Variables 50

Table 4.4: Multiple Regression Analysis of Intrinsic Motivator and 52 Loyalty

Table 4.5: Hierarchical Regression Analysis on Gender 56

Table 4.6 Summary of Findings 57

xi

Figure 3.1:

Figure 4.1:

LIST OF FIGURES

The Framework of the Motivation Factors that Influence the Loyalty of Employees in Hotel Industry in Kota Kinabalu

The Percentage of Respondent Rate for Gender

xii

PAGE

34

48

LIST OF APPENDIX

PAGE

APPENDIX A Cover Letter 77

APPENDIX B Survey Questionnaire 78-83

APPENDIX C Frequencies - Profile of Respondents 84-85

APPENDIX D Reliability - Loyalty 86-87

APPENDIX E Reliability - Advancement 88-89

APPENDIX F Reliability - Recognition 90-91

APPENDIX G Reliability - Responsibility 92-93

APPENDIX H Reliability - Career Growth 94-95

APPENDIX I Reliability - Work Itself 96-97

APPENDIX J Correlations 98

APPENDIX K Descriptive Analysis 99

APPENDIX L Multiple Regression - Intrinsic Motivators 100-105 (Advancement, Recognition, Responsibility, Career Growth and Work Itself) and Loyalty

APPENDIX M Hierarchical Regression 106-110

xiii

CHAPTER 1

INTRODUCTION

1.1 Overview

Tourism is defined as activities of person travelling to and staying in places that

outside from their location for business, vacation and other purposes not related to

an activity from and within the place visited which not more than one year

consecutive year (Page, 2009). In addition, tourism is also an industry providing

services to travelers, from transportation to accommodation to entertainment and

additional services such as currency exchange (Lomine and Edmunds, 2007).

Therefore, it is one of the most dynamic sectors of the world economy.

According to World Travel and Tourism Council, 2000; cited by ILO, 2001

which stated that worldwide employment in tourism is estimated at 192.2 million

jobs that will grow to 251.6 million jobs in 2010. In other words, tourism is offering

new employment opportunities that focused on service industries which include

transportation services, hospitality services such as accommodations including

hotels and resorts, and entertainment such as amusement parks, shopping malls

and others which may assist in developing and modernizing the economy.

Hotel regarded as travel related organization which serves as

interrelationship in accommodation sectors that has become a dominant industry

within the travel industry. On the other hand, the travel industry defined as the

combination of organizations in both public and private which involved in the

development, production, and marketing of products and services in order to serve

the needs of travelers (Choy, Gee, & Makens, 1997). Besides that, direct providers,

support services or developmental organizations are the businesses and

organization that categorized as components of the travel industry. In other words,

hotel would be direct provider of services to travelers, support services for the

operations of the hotel that may include local suppliers of basic products and

developmental organizations which include government agencies that have approval

power over whether a hotel will be built (Choy, Gee, & Makens, 1997).

The industry employs a large quantity of young and female employees and

has a large number of part time and seasonal workers. This is supported by Evans,

campbell, & Stonehouse, (2003) which characterize the industry as a large quantity

of female employees, a large quantity of young employees, a large number of part

time and seasonal workers, increasing of labour turnover rates, difficulty in

recruiting workers, low intensity of training and less paid. In other words, these are

the characteristic of hotel industry which contribute to the problems and resulting in

different perceptions for individual employees.

Furthermore, the hotel industry has been known as a potential prospect for

the growth of the service industry in Malaysia. However, the growth is slow down by

the high labor turnover rates in the hotel industry. According to Simms et aI., 1988;

Riley et al., 2000; cited by Riley, ladkin, & Szivas, 2002, there is strong proof that

hotels tend to operate weak internal labor markets. Many organizations in the hotel

industry face the problems in retaining employees since they are unable to identify

the factors which contribute to employee loyalty. In addition, employee turnover is

high and it is more focus on people oriented which requires large amounts of

human effort to produce the services. Therefore, the hotel industry is characterized

by poor job security, poor salary, over time and less opportunities for promotion

(Byrne, 1986; Knight, 1971; cited by Siu, Tsang & Wong, 1999) due the nature of

work in the hotel industry.

In addition, according to Sarabahksh et aI., 1989; Hsieh et aI., 2004; Cited

by Simon & Annie, 2009 which addressed that long working hour, shift: duties and

serving demand from customers in hotels has become a phenomenon in the

hospitality industry. It shows that hotel employees have less flexibility to have

power over their time and duty roster. It is understandable that a hotel job is

operated 24 hour day and is highly labor intensive. Everyone is assigned to come

for a duty at a certain time slot per day. Employees are allocated into the roster for

maintaining the service although they are in holiday. According to Simon and Annie,

(2009), hotel employees have limited flexibility on setting their own working

schedule.

2

As mentioned in literature, hospitality services can be concluded that it share

a number of common characteristics which are labor intensive nature, high labor

turnover, low job security, low pay, shift duties, and low flexibility working hours.

In line with aforementioned, it had shows the nature of the hotel industry of being

people-oriented and often deal with high labor turnover which need the cooperation

of all parties involved to reduce the problems. The nature of the hotel industry as

mentioned above become the barriers of attracting potential employees to work

longer within the industry. Due to this reason, it is important to understand what

will motivate employees to remain for loyal within the hotel industry. Human

motivation is a very complex subject and many theories such as Maslow's (1954)

needs hierarchy, Douglas McGregor's (1960) theory x and theory y and Frederick

Herzberg's (1959) motivation and hygiene theory have been developed with respect

to its use in the work environment.

In this researCh, it is interesting to study about the motivation factors that

influence the loyalty of employees in the hotel industry. It is because there are

issues arise that labor turnover is high in the hotel industry. Besides that, it is hard

to retain employees due to the nature of work in the hotel industry. Apart from that,

it is important to do the research which attempted to fill the gap by researching to

understand and examine the motivational factors which would actually make hotel

employees engage with their employer.

3

1.2 Problem Statement

The problem statement in this study is "What are the motivation factors that

influence hotel employees to be loyalty?" The research issues which mentioned in

below have creates the statement of problems in this study.

Employees are an important asset as being utilized in workplace in order to

achieve organizational goals. Most managers consider employees to be costs and

treat them as liability despite the frequently statement is that "employees are our

greatest assets" (Bassi and McMurray, 2004). That is, treating employees as assets

can produce positive returns in the long term. However, the critical issue in hotel

industry is concerning with the hoteliers' ability to retain employees (Susskind et aI.,

2000, Hinkin and Tracey, 2000). Retaining employees can reduce the cost of hiring

and training for new employees (Bedeian et aI., 1992). Thus, it is fact that the issue

of loyalty has increased attention in tourism and hospitality research in recent years

(Shoemaker and Lewis, 1999; Oppermann, 1999; Shoemaker and Bowen, 1998;

cited by Weber, 2001). Therefore, loyalty of employee plays an important role in

providing the successful business in the hotel industry. In addition, highly

motivated staff and loyalty of employees are contributing to the success of the hotel

which not only due to its unique location according to speech by Y.A.B. Chief

Minister, Datuk Seri Musa Haji Aman at 25th anniversary celebrations of Hyatt

Regency Kinabalu. Apart from this, there is a need for further study to find out the

factors which would actually make employees stay in Hotel.

On the other hand, labor turnover rate is estimated between 60% and 300%

annually in the hotel industry of worldwide (Foley, 1996; cited by Ady Milman, 2003).

Turnover can decrease customer service levels and lower company profits (Hom et

aI., 1988; Reichheld, 1993; cited by Valentine, 2000) and linked to rising employee

recruitment and training costs, job satisfaction, low levels of employee morale and

customers' perceptions of service quality (Gray et aI., 2000).

4

Furthermore, there has been little research on understanding the loyalty of

employee related to motivation factors. There are researchers have attempted to

uncover key reasons why those in the hospitality industry leave their works and

have offered suggestion to combat such turnover-related issues (Hogan, 1992;

Woods and Macaulay, 1989; Dermody et aI., 2004; Pearson & Stalcup, 2001; cited

by Seonghee, Johanson & Guchait, 2009). However, there are lacks of research to

focus on motivation factors that influence the loyalty of employees in the hospitality

industry such as hotel.

Lastly, the demographic differences may determine employees' perceptions

of the motivational factors to stay loyalty in organization. It is because how

employees feel about their work environments may vary due to employee

characteristics, and these differences may determine their perceptions of the

motivational factors to commit with their employer (Vecera and Franek, 2008; cited

by Chang & Kelly, 2009). Other researchers also found out the differences according

to demographic characteristic towards the loyalty of employees (Chang & Kelly,

2009). That is, different background of demographic can influence employees'

perceptions of the motivational factors to stay loyalty in hotel.

5

1.3 Research Question

The research question is important to be used as a framework of study or guideline

in order to accomplish the task significantly and adequately. To complete the task,

there are few questions used to identify and examine. The following questions

should be answered in this research study.

a. What are the significant relationship between intrinsic motivation and

loyalty?

b. What are the moderating effect of demographic gender on the

relationship between intrinsic motivation and loyalty?

1.4 Objectives

The aim of this study is to study employment loyalty by examining motivation

factors in hotel industry. The specific objectives of this study are as follows:

a. To identify the Significant relationship between intrinsic motivation and

loyalty.

b. To understand the moderating effect of gender on the relationship

between intrinsic motivation and loyalty.

1.5 Scope of Study

The scope of study in this research paper was carried out among operational

employees that consist of Housekeeping servers, Food & Beverage Services servers,

and Front Office servers in star rated hotel Kota Kinabalu, Sabah. The research site

that has been chosen is in Kota Kinabalu area. It is because it is a centre of major

tourist destination and a popular international gateway to East Malaysia (Angie,

2007). In this research, simple random sampling will be used as sampling technique

approach to gather the data information. Apart from this, employees have an equal

and known chance of being selected (Sekaran, 2003). The total population of

operational employees in star rated hotel industry, Kota Kinabalu is 1,671. The

sample size of this study is 310 operational employees (Sekaran, 2003). The

questionnaires will be distributed to the respondents in order to accomplish the task

significantly.

6

1.6 Significance of the Study

This study helped the management would find that monetary rewards not only can

make the employees to work loyalty within hotel industry because it is only

temporary rewards that considered by employees as entitlements and it does not

motivate employees to achieve or feel a sense of loyalty to the organization within

industry. In fact, extrinsic motivators such as monetary rewards do not create

commitment to a set of values or to learning. There are others factors that can

motivate employees in order to retain and attract them to work loyalty within the

industry which is intrinsic motivators that identified by Herzberg's view.

Besides that, this study may help the management in hotel industry, Kota

Kinabalu to understand the environments of employees needs. It is important to

understanding of employees' expectations of their work environments in order to

retain employees as human capital. Employees are an important asset as being

utilized in workplace in order to achieve organizational goals. Therefore, a better

understanding of employees needs can improve their human capital management

practices to be more effective and effiCient.

Furthermore, this study also may helped the management to develop their

training programmes, benefit packages, performance appraisal and work system

more effective and efficiency. They can aim at developing loyal employees because

this leads to a more lengthy tenure. Loyalty of employees plays important roles in

providing successful business within hotel industry which can reduce the turnover of

labor and can produce positive returns in long term periods.

Finally, the results and findings in the study can be used as a reference for

further investigation about the factors that influencing the loyalty of employees in

the hospitality industry. Therefore, researcher can do an extensive review based this

results and findings for the future research. It is because this study suggests the

Significance factors that highly motivate them which influence employees to be

loyalty.

7

1.7 Definition of Terms Used

Key terms used in this study have specific definition in general context for better

understanding as mentioned below:

1.7.1 Loyalty

Loyalty is defined by an attitudinal measurement of feelings in engagement with

their employer and willing to put higher efforts.

1.7.2 Motivation

Motivation is defined by individual's preferences which associate with intrinsic

motivator such as advancement, recognition, responsibility, career growth and work

itself.

1.7.3 Advancement

Advancement can be defined as self advancement and positive advancement with

expected or unexpected that provided by employer in the organization.

1.7.4 Recognition

Recognition can be defined as positive appreciation from employers, supervisors,

peers, and subordinates.

1.7.5 Responsibility

Responsibility can be defined as opportunities of freedom to make decisions that

acknowledged by employer.

1.7.6 career Growth

Career growth can be defined as opportunities to learn new skills and knowledge

that provided by employer in the organization.

8

1.7.7 Work itself

Work itself can be defined as the degree of tasks and assignments which is

interesting and sense of self accomplishment.

1.7.8 Demographic

Demographic is referring to individual characteristic of employees which determine

employees' perception of motivational factors to stay loyalty in hotel.

1.8 Organization of Dissertation

These sections organized into five [5] chapters. Chapter 1 discussed the overview of

the study, problem statement, objectives of the study, research question, scope of

the study, significance of the study, definition of terms used and organization of the

dissertation.

Chapter 2 which is literature reviews consists of introduction, loyalty of

employee, motivation theory about Herzberg's Theory and followed by motivational

factors such as advancement, recognition, responsibility, career growth and work

itself. Next is the relationship between loyalty and motivation. Then, it is followed by

demographic and lastly is summary.

Chapter 3 outlines the research methodology and framework that used in

collecting and analyzing the data. It is divided into few sections which consists of

introduction, research framework, hypotheses, research deSign, sampling deSign,

instrument, data collection method, data analysis method and lastly is summary.

Chapter 4 focused on analyses the results of the study. It is consists of

introduction, profile of respondents, reliability analysis, descriptive data, testing of

hypotheses and lastly is summary of the findings.

Chapter 5 is mainly on discussion and conclusion based on the finding of this

study. A brief introduction followed by recapitulation of study, contribution of study,

limitation of the study, suggestion for future research and a final conclusion.

9

1.9 Summary

In summary, chapter one is discussing about overview of the study which related to

the tourism and hotel indusby. It is followed by the problem statement which the

issues arise in the hotel indusby. Then, it is comes out with objectives of the study

which is based the problem statement. Next, research question also have been

outlined to guide the study. Scope of the study and Significance of the study also

have been discussed in this chapter. Furthermore, definition of terms used is also

diSCUssed which about the key terms of the study and organization of the

dissertation is discussed which about outline of the chapter and lastly, summary of

the chapter also been discussed.

10

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