High employee turnover can have various negative implications for companies from loss of key knowledge to higher recruitment costs, and much research has been undertaken to understand the causes. Researchers in Taiwan examined the role of employee loyalty in the hospitality sector and its effects on turnover. The results of the study indicate that a number of factors, including reward and learning and development opportunities, can increase employee loyalty and in turn reduce employee turnover.
Key Topics: Employee loyalty; Employee turnover; Reward; Learning and development
Title of Reviewed Article: Contributing Causes Of Employee Loyalty Of Service Personnel In International Hotels
Researchers: Yen-Cheng Chen and Hsin-I Chen (Chinese Culture University), Pei-Ling Tsui (National Taitung Junior College), and Yu-Chih Chiang (Iowa State University).
Publication: The International Journal of Organizational Innovation, 2016, Vol. 9 No. 1, pp. 107- 118.
Setting the Scene
Employee loyalty represents a feeling of attachment to the company and commitment to company goals and values (Mathieu & Zajac, 1990). Employee loyalty is of great importance to most companies as it can, among other things, reduce employee turnover (Stum, 1998), and support long term company growth and profitability (Heskett et al., 2008; Yee et al., 2010).
Research suggests that various factors effect employee loyalty. Employee job satisfaction, which is a positive emotional state resulting from an overall feeling about the job (Spector, 1997) is strongly linked to employee loyalty (Stum, 1998). McDougal and Frame (2004) found that employee loyalty was also strongly related to employee empowerment in the workplace, while reward and incentive have also been shown to positively affect employee loyalty (Gerfin, 2004).
Building on past research, Ineson et al. (2013) developed a five facet model of employee loyalty antecedents relating to the hospitality sector which included an employee’s commitment to their manager and the company, job working conditions, monetary rewards (personal benefit), an employee’s service attitude, and adequacy of career development opportunities. Based on this model, the researchers proposed the following hypotheses:
Hypothesis 1-5 – (H1) Commitment to manager and company (H2) Job condition (H3) Personal benefit (H4) Service attitude (H5) Career development has positive effect on employee loyalty.
How the research was conducted
Data for this study was collected from employees of five 5-star international hotels in Taiwan. Study participants included employees from both management and non-management positions, and with varying ages, tenures, and compensation levels. In total there were 161 randomly selected participants from the five hotels.
Employee loyalty was measured using the Employee Loyalty Scale questionnaire by Ineson et al. (2013). This scale contains 21 items and measures five dimensions of employee loyalty, which are job condition, personal benefit, commitment to manager and company, career development, and service attitude.
Key Research Findings
The results showed that job condition, personal benefit, commitment, and career development all have a positive effect on employee loyalty, and as such Hypotheses 1, 2, 3, and 5 were all supported.
Hypothesis 4, which posited that service attitude has a positive effect on employee loyalty, was not fully supported by the results. Only a weak relationship between these factors was found.
The findings that job condition, rewards, commitment, and career development opportunities all positively affect employee loyalty is largely unsurprising and is broadly consistent with findings of prior research in this area (e.g. Ineson et al., 2013; Silva, 2006).
The finding that service attitude does not affect employee loyalty is rather more surprising, particularly given the importance of service in the hospitality sector in which this study was conducted. The researchers suggest that this finding may be explained by the fact that employees may have a strong service attitude but that this desire to serve can likely be fulfilled as easily in a similar job in another company and therefore is less tied to loyalty to a particular company.
Organizational and Reward Implications
This study further reinforces the effectiveness of various aspects of human resources practices in encouraging greater employee loyalty. The results indicate that companies who provide attractive reward, along with opportunities for training and development, and a good working environment will have greater levels of employee loyalty than those who don’t prioritize these practices.
This study challenges the strategy of some companies with high turnover who employ the approach of not investing in training and development based on the idea that it is wasted resources as employees will leave anyway. What the results of this study suggest is that, rather than being wasted resources, that investment in training and development, along with adequate reward and working environment, can lead to lower employee turnover and greater employee loyalty.
This study adds to the body of research on employee loyalty and further validates some of the organizational factors which encourage it, such as employee rewards. The sample size used in this study was relatively small and specific to the Taiwanese hospitality sector, and so future research would benefit from examining similar factors as this study in a broader context and over a longer period of time.
Source Article: Chen, Y. C., Chen, H. I., Tsui, P. I., & Chiang, Y. C. (2016). Contributing Causes Of Employee Loyalty Of Service Personnel In International Hotels. The International Journal of Organizational Innovation, 9(1), 107- 118.
Published by: The International Association of Organizational Innovation (IAOI)
For further details and access to the full journal article Click Here (subscription or payment may be required).
Heskett, J. L., Sasser, E. W., & Wheeler, J. (2008). The ownership quotient: Putting the service profit chain to work for unbeatable competitive advantage. Boston, Mass: Harvard Business Press.
Ineson, E. M., Benke, E., & László, J. (2013). Employee loyalty in Hungarian hotels. International Journal of Hospitality Management, 32, 31-39.
Mathieu, J. E., & Zajac, D. M. (1990). A review and meta-analysis of the antecedents, correlates, and consequences of organizational commitment, Psychological Bulletin, 108(2), 171-94.
Silva, P. (2006). Effects of disposition on hospitality employee job satisfaction and commitment. International Journal of Contemporary Hospitality Management, 18(4), 317-328.
Stum, D. (1998). Five ingredients for an employee retention formula. HR Focus, 75(9), 9-10.
Yee, R. Y., Yeung, A. L., & Cheng, E. C. (2010). An empirical study of employee loyalty, service quality and firm performance in the service industry. International Journal of Production Economics, 124(1), 109-120.
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