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EXTRINSIC REWARDS = / ≠ EMPLOYEES COMMITMENT IN THE HOSPITALITY INDUSTRY?

 Words by: Nik Izzul Islam Bin Azhan Fadzil

The Malaysian government has implemented numerous promotion plans to help the tourism industry to enhance its contribution to the country's economic development. It has implemented a few campaigns, such as, “Cuti-Cuti Malaysia” (Vacation in Malaysia) and “Visit Malaysia Year 2007” to fully realise the potential of the tourism industry. These strategies are implemented as the government understands that the tourism industry has an extraordinary potential of positively impacting the nation’s economy since Malaysia is gifted by an abundance of marvellous natural sights. 

In order to achieve excellence in the tourism industry, one of the biggest components, which is the hotel industry, should be accorded due consideration. The hotel industry plays a very important role. Looking at the growth and development of the hotel industry in Malaysia, and in order to maintain the consistency of its growth, the availability of appropriate human resource with the right skills and knowledge is the biggest focus among hoteliers.  The need for close interaction and effective communication is of paramount importance in the hotel industry for this aspect generally determines the satisfaction of the guests. Moreover, in a highly competitive environment in which the hotel industry is operating nowadays, hotel managers realise that hiring and retaining high performing employees is the key success factor to ensure the demands of high-quality service. Thus, employees with the right skills and knowledge, is the most important asset in the hotel businesses.

 


Several studies with their related statistical evidence, indicate that the employee’s commitment is still a major concern for the hotel industry. Based on annual surveys by the Malaysian Employers Federation, the annual staff turnover rate in the tourism sector in Malaysia is around 75% annually. This issue represents a negative image of the industry - regardless of the reasons of the employee leaving, whether it is due to the employer or the employee.  Many studies have been conducted to identify and understand the factors that lead to a high employee’s turnover rate in the hotel industry. Previous studies have stated that there are several reasons that lead to a high employee turnover in the hotel industry. Issues cited are such as, the challenging working environment, less work-life balance and unfair rewards attained are associated with the high turnover rate among hotel employees. Long working hours and all-season work may be a reason why hotel employees think that the rewards that they receive is not equitable to the efforts that they put in. Thus, employees tend to leave the job or even the industry itself.

    The main reason behind this issue is that there are insufficient rewards to encourage employee’s commitment in this industry. Additionally, from the employee’s view, leaving the hotel or the industry itself is dependent on the feeling of being appreciated by the rewards they receive. Delving into the statistical information provided from previous studies and the government agency, the assumption of this study is that “Extrinsic Reward” is the biggest influencer towards an employee’s commitment. In this study, three variables of extrinsic rewards have been considered, which is, the basic salary, additional pay, and merit pay. The finding shows a positive relationship between extrinsic rewards and employee’s commitment.



Based on the findings, there are a few important aspects, from the theoretical and practical perspectives, as the effect of extrinsic rewards towards operational employee’s commitment at the four (4) and five (5) star hotels was discovered. The elements of the extrinsic rewards that have been tested are, the basic salary, additional pay, and merit pay and these show a significance relationship towards employee’s satisfaction and commitment. As from the practical perspective, the organisation or top management can refer to this study on the importance of extrinsic rewards. They may consider extrinsic rewards as a strategy to retain their employees and reduce turnover. Thus, the hotel industry in Malaysia can have a positive growth as the level of employees’ commitment increases.

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