Employee Engagement and Business Performance in the Hotel Industries

in Indonesia

Rainner Marcellino Manurung

R2109D12786174

Research Methods

Module code: UPLMBAM98-47515

October 2023

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Table of Contents

Overview of Hotel Industries in Indonesia...................................................................................... 3

Theoretical and Definition of Engagement......................................................................................4

Individual Antecedents and Consequences of Employee Engagement........................................... 6

Factors Influencing Employee Performance and Turnover Intention..............................................9

Literature Summary....................................................................................................................... 12

Reference....................................................................................................................................... 15

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 Overview of Hotel Industries in Indonesia

The hotel industry in Indonesia has experienced significant growth in recent years, making it an

important sector of the country's economy. According to Yeswa, the hotel industry is one of the

fastest-growing industries in Indonesia, with a deeper relationship with improved service quality

and customer satisfaction (Galang, P, J. et al., 2023). Moreover, the industry's growth has been

accompanied by increased employee engagement, which has been found to have a positive

influence on the hotel industry. In addition to this, several studies have explored the relationship

between employee engagement and various outcomes in different industries. One study

conducted by Taneja highlights the positive relationship between employee engagement and

organizational performance outcomes such as employee retention, productivity, and profitability

(Aminuddin, M, N., Pasinringi, A, S. and Saleh, M, L., 2021). Another study by Rizwan et al.

also found that employee engagement has positive effects on employee turnover intentions,

productivity, firms' financial performance, and customer satisfaction (Toksöz, S., 2021).

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 Theoretical and Definition of Engagement

Grasping the meaning of "employee engagement" is critical for understanding the connection

between that idea and the success of a company. The level of employee engagement indicates

whether or not workers are invested in their jobs and the company they represent. According to

the research conducted by Rizwan et al., employee engagement is a multifaceted notion that

includes both mental and behavioral components.

Kahn, a pioneer in the field, popularized the term "employee engagement" and emphasized the

value of employees making real, lasting connections at the workplace on all levels (physical,

mental, and emotional). An "engaged" worker is one who shows enthusiasm, dedication, and

concentration on the tasks at hand. Employee engagement can be understood better by breaking

it down into its component parts.

According to Kahn, there are three dimensions of employee engagement: meaningfulness, safety,

and availability. Meaningfulness refers to the extent to which employees find their work

meaningful and purposeful. Safety refers to the sense of security and trust employees feel in their

workplace, including having positive relationships with co-workers and being supported by the

organization. Availability refers to the physical and emotional readiness of employees to perform

their work effectively and meet the demands of their roles. Moreover, the construct of employee

engagement is closely related to other key terms such as employee commitment and employee

exchange ideology. Employee commitment refers to the employee's psychological connection

and loyalty to the organization. Employee exchange ideology pertains to the employee's

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conviction in the reciprocal exchange of advantages between themselves and the firm, wherein

they offer their exertions and expertise in return for incentives and prospects for advancement.

Several studies have explored the relationship between employee engagement and business

performance in the hotel industry in Indonesia. These studies have found that employee

engagement positively influences business performance indicators such as profitability, customer

satisfaction, employee retention, productivity, and safety (Sanchez, M, P., 2007). Employee

engagement is believed to have a significant impact on business performance in the hotel

industry in Indonesia. Furthermore, research has shown that several factors can influence

employee engagement in the hotel industry.

Some of these factors include leadership style, organizational culture, job design and autonomy,

recognition and rewards, training and development opportunities, and work-life balance.

Additionally, research has found that workplace safety, positive training and development

opportunities, positive career paths and advancement opportunities, positive work-life balance,

and a positive organizational culture are factors that can contribute to employee engagement in

the hotel industry in Indonesia.

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 Individual Antecedents and Consequences of Employee Engagement

The individual antecedents of employee engagement refer to the factors that influence an

individual's level of engagement in their work and organization. These factors can include

personal characteristics, such as personality traits, motivation, and attitudes toward work.

Research has found that individuals with higher levels of conscientiousness and intrinsic

motivation are more likely to be engaged in their work. Additionally, individuals with positive

attitudes toward work, such as a strong work ethic and a sense of purpose, are more likely to be

engaged. On the other hand, individuals who exhibit high levels of job satisfaction and

organizational commitment are also more likely to be engaged in their work. Seven distinct

outcomes of employee involvement were identifiable. The aforementioned outcomes

encompassed employee trust, employee exchange ideology, organizational identity, employee

satisfaction, and employee commitment.

The initial precursor of the field of employee engagement can be identified as employee trust.

Trust is a concept that has been examined from many angles, leading to nuanced variations in its

definition depending on the setting (Walterbusch & Teuteberg, 2014). Trust, according to

Walterbusch and Teuteberg (2014, p. 8), is "confidence in the good intentions of another person,

group, government, or organization." Having faith in another person and counting on them to

deliver on their promises entails taking some calculated risks. Relational factors, such as

dependability and openness to trusting others, are central to most definitions of trust in the

workplace (Anderson & Costa, 2011). This study's emphasis on diagnostic criteria, perceived

trustworthiness, inclination to believe, cooperative actions, and monitoring behaviors is

consistent with the crew version proposed by Anderson and Costa (2011).

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The notion of exchange ideology is a construct that originates from the broader framework of

social exchange theory, as posited by Scott and Colquitt (2007). According to Eisenberger et al.

(1986), the classical understanding of exchange ideology refers to the extent to which an

employee holds the belief and perception that their work effort should be impacted by the

reciprocation they receive from the organization. According to Byun et al. (2020), exchange

ideology encompasses individuals' perceptions of how their organizations have treated them and

the actual rewards they receive in return for their contributions. According to Byun et al. (2020),

there is a positive correlation between an employee's perception of organizational rewards and

their level of effort exerted. The concept of exchange ideology refers to an individual's

personally held conviction in reciprocity, as described by Kim et al. (2017).

The relationship between employee engagement and business performance in the hotel industry

in Indonesia can be explored through various academic sources.

Symbolic interaction and social identity theory (Jones & Volpe, 2011) are the conceptual

foundations of the idea of organizational identification. The functionalist perspective has been

emphasized extensively in recent writing on organizational identity (He & Brown, 2013). The

term "organizational identification" (Jones & Volpe, 2011, p. 413) refers to an individual's sense

of community and shared goals within an organization. The extent to which employees feel a

sense of belonging to their team or organization can have an impact on their level of integration

into organizational activities (Blader et al., 2017). However, Blader et al. (2017) asserted that the

impact of organizational identity on employee behavior about supporting organizational

performance is not a simple and clear matter. Moreover, prior research (Lee et al., 2015) has

established a connection between organizational identity and several favorable job attitudes,

encompassing heightened job involvement and diminished turnover intentions.

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Over numerous years, the pursuit of employee satisfaction has emerged as a crucial objective that

numerous firms have dedicated resources towards achieving. The concept of employee happiness

has a rich historical background, encompassing the extent to which individual employees

experience contentment within their respective organizations of employment. The level of

happiness can vary across several aspects, such as job satisfaction, satisfaction with working

systems and the work environment, satisfaction with superiors and the management team, and

satisfaction with incentives and benefits provided. Once the employee's pleasure elements are

satisfied, there will be a significant increase in their level of involvement with the organization,

leading to enhanced individual and organizational performance.

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 Factors Influencing Employee Performance and Turnover Intention

Employee trust has been found to have an impact on both employee performance and turnover

intention. However, it is worth noting that employee trust has received relatively less attention

compared to the other relevant components. Several studies have shown a positive relationship

between employee trust and job performance, as well as a negative relationship between

employee trust and turnover intention (Blau & Boal, 1987; Dirks & Ferrin, 2002; Shore et al.,

2008). One study conducted by Costigan et al. found that employees who have higher levels of

trust in their organization are more likely to perform well and have lower turnover intentions.

Another study by Covey and Conant also supports the positive relationship between employee

trust and performance, suggesting that when employees trust their leaders and feel a sense of

security in their organization, they are more likely to be engaged and perform at a higher level.

Similarly, an investigation by Ariyabuddhiphongs and Kahn found that employee trust has a

negative relationship with turnover intention, indicating that when employees trust their

organization, they are less likely to have the intention to leave.

It has been found that contented workers are more productive and less likely to leave their jobs.

Studies have shown that higher levels of employee satisfaction are associated with better job

performance and lower turnover intention (Bakker et al., 2008; De Vries et al., 2016; Tett et al.,

2002). Gloria (2017) did a pioneering study that examined the impact of emotional elements on

employee satisfaction and engagement, to drive organizational outcomes. The study found that

when employees are satisfied with their work environment and feel emotionally connected to

their organization, there is an increase in job performance and a decrease in turnover intention.

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The data supporting the impact of employee commitment on both employee performance and

turnover intention is robust. Several previous research has found a positive correlation between

employee dedication and employee performance (Atmojo, 2012; Dalal et al., 2012; Thamrin,

2012). Employee dedication was consistently identified as one of the most significant outcomes.

The authors of one study (Tnay et al., 2013) admitted that their findings were contradictory.

Research has also discovered a detrimental impact of employee commitment on turnover

intention, which aligns with the initial understanding of employee commitment as the employee's

intention to stay with the organization (Ahmad, 2010; Aydogdu & Asikgil, 2011; Meyer & Allen,

1991; Yi et al., 2011; Zopiatis et al., 2014).

In addition to trust, satisfaction, and commitment, organizational citizenship behavior has also

been linked to employee performance and turnover intention. Organizational citizenship behavior

refers to discretionary behaviors that are not explicitly part of employees' job descriptions but

contribute to the overall well-being of the organization. Several studies have found a positive

association between organizational citizenship behavior and employee performance (Menguc et

al., 2018). Furthermore, research has shown that employees who engage in organizational

citizenship behavior are less likely to have intentions to leave the organization (Ahmad, 2010;

Aydogdu & Asikgil, 2011; Meyer & Allen, 1991; Riad et al., 2016; Tsoumbris & Xenikou, 2008;

Wasti, 2003).

The final relationship examined in this context is the correlation between employee engagement

and employee performance, encompassing both employee engagement and turnover intention.

This association has undergone extensive examination, yet there are notable deficiencies in the

existing body of research. Several research reviews and meta-analyses have examined the impact

of employee engagement on employee performance and turnover intention. A review examining

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the initial studies on the subject discovered that employee engagement was associated with a

detrimental impact on turnover intention (Saks, 2019).

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 Literature Summary

The hotel industry in Indonesia has undergone substantial expansion, establishing itself as a

crucial component of the nation's economy. Employee engagement plays a crucial role in

driving growth as it has a favorable impact on important business performance metrics including

profitability, customer satisfaction, employee retention, productivity, and safety. Employee

involvement is a complex concept that encompasses various aspects, such as emotions, thoughts,

and actions.

Kahn pioneered the notion of employee engagement, which is distinguished by vigor,

commitment, and deep involvement in one's job. The concept is further subdivided into three

dimensions: meaningfulness, safety, and availability. Meaningfulness pertains to the degree to

which employees perceive their work as significant and worthwhile, safety relates to the feeling

of security and confidence employees experience in their work environment, and availability

refers to the employees' physical and mental preparedness to carry out their work efficiently.

Employee engagement in the hotel business can be influenced by various aspects, such as

leadership style, corporate culture, job design and autonomy, recognition and rewards, training

and development opportunities, and work-life balance. Workplace safety, training and

development opportunities, career advancement prospects, work-life balance, and corporate

culture are key factors that foster employee engagement in the hotel business in Indonesia.

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Employee engagement is influenced by various factors such as personal traits, motivation, and

work-related attitudes. Studies have discovered that persons who possess elevated degrees of

conscientiousness, intrinsic motivation, positive attitudes, job satisfaction, and organizational

commitment are more inclined to be actively involved in their work. Seven discrete results of

employee participation were identified: employee trust, employee exchange ideology,

organizational identity, employee satisfaction, and employee commitment.

Exchange ideology pertains to an employee's conviction in the reciprocal treatment they receive

from their firm, which can influence their level of effort and overall performance.

Organizational identification refers to the feeling of belonging and cohesion among employees

inside a company, which can influence their level of involvement in various activities.

Nevertheless, the precise influence of corporate identity on employee behavior remains

uncertain, although it has been associated with increased job involvement and decreased turnover

intentions.

Ensuring employee satisfaction is a vital goal for companies, which includes factors such as job

satisfaction, work systems, work environment, superiors, management team, and incentives and

benefits. Contentment with these components results in heightened engagement with the

institution, improving both individual and organizational effectiveness. Factors impacting

employee performance and turnover intention include employee trust, satisfaction, commitment,

organizational citizenship behavior, and engagement.

Research has shown that there is a direct correlation between employee trust and job

performance, as well as a decrease in turnover intentions. Research has indicated that

employees who have confidence in their leaders and experience a sense of security within their

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firm are more inclined to exhibit high performance and exhibit reduced inclinations to leave.

Enhanced employee satisfaction is correlated with improved work performance and reduced

turnover intention.

Organizational citizenship behavior, which refers to voluntary actions that benefit the

organization, has been associated with employee performance and the inclination to leave the

organization. Studies have discovered a direct correlation between corporate citizenship

conduct and employee performance, indicating that employees who exhibit this behavior are less

inclined to depart from the firm.

Ultimately, exchange ideology, organizational identity, employee happiness, commitment,

organizational citizenship behavior, and engagement are significant determinants that impact

both employee performance and turnover intention.

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