CHAPTER TWO
REVIEW OF LITERATURE
This chapter reviews the literature in three main areas along with a summary: (1)
Importance of organizational loyalty (2) Theories of need and (3) relevant research.
2.1
IMPORTANCE OF ORGANIZATIONAL LOYALTY
Loyalty, as a general term, signifies a person's devotion or sentiment of
attachment to a particular object, which may be another person or group of persons, an
ideal, a duty, or a cause. It expresses itself in both thought and action and strives for the
identification of the interests of the loyal person with those of the object" (Encyclopedia
Britannica, 1998).
Meyer and Allen (1997) suggested that committed employees are perceived to be
those who stay through thick and thin with the organization, attend work regularly, put in
a full day, protect company assets and share organizational goals.
Porter et al (1974) suggested that committed employees tend to be creative and
innovative and are less likely to leave than those who are uncommitted.
Sheridan and Abelson (1983) reviewed job satisfaction as one of two factors that
influence employees to progress in the withdrawal stages or resignation. The two factors
which are job satisfaction or the expected value in the present work and alternative job
opportunity reflect an employee’s intention to quit or to stay.
Miner (1992) described job satisfaction as one strong factor that is able to bring
about positive or negative performance in different ways. It is difficult to foretell the
outcome of job satisfaction or dissatisfaction because individuals respond to job
satisfaction or dissatisfaction in different ways. Another study by Timm, Peterson and
Stevens (1990) suggested that tools that are widely used to measure job satisfaction
degree are area of nature of work, supervision, relationship with colleagues, pay and
opportunity of career advancement.
From the concept of job satisfaction, an individual is satisfied with his job
because of motivation. In general, everyone has his own motivation to fulfill his needs.
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Motivation will create commitment and lead to devotion to his job and organization,
which may possibly lead to organizational loyalty.
2.2
THEORIES OF NEED
2.2.1 Maslow’s Hierarchy of Needs Theory
In the 1940’s, Abraham Maslow developed his Hierarchy of Needs Theory (as
sited in Korakot Mekchaidee, 2005), which is based on assumption that people have five
classifications of needs. These classifications are presented here in hierarchical order,
from the lowest to the highest of needs.
The hierarchy of needs theory suggests that people are motivated through five
levels of needs; physiological, safety, belongingness, esteem, and self-actualization.
Table 1. Summary of Hierarchy of Needs Theory
Level of Need
Physiological needs
Description
People’s primary needs; air, food, shelter, sex and relief of
pain.
Safety needs
Once the physiological needs are met, the individual is
concerned with safety and security.
Belongingness
Also called social needs. After establishing safety, people
look for love, friendship, affection and acceptance.
Esteem
After belongingness is met, the individual focuses on
status, self-respect, recognition, and a feeling of prestige.
Self-actualization
The highest level of needs is to develop one’s full
potential. To do so, one seeks growth, achievement and
advancement.
This can be applicable that to help make an employee feel more loyalty towards
an organization, we must know what that person is looking for. And then give him or her
the opportunity to achieve it, remembering that it is very important to keep them
motivated. Thus, retaining an employee's loyalty does not always require an increase in
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his or her material compensation. Sometimes, all it takes is making the person feel
accepted by the group, or boosting his or her self-esteem, depending on where the person
is as far as the hierarchy of needs is concerned.
2.2.2 Clayton Alderfer’s ERG Theory
Alderfer (1989) extended and simplified Maslow’s Hierarchy of Needs into a
shorter set of three needs: Existence Needs (E), Relatedness Needs (R) and Growth
Needs (G). Unlike Maslow, he did not see these as being a hierarchy, but being more of a
continuum.
Existence Needs: At the lowest level is the need to stay alive and safe, now and in
the foreseeable future. When an individual has satisfied existence needs, he feels safe and
physically comfortable. This includes Maslow's Physiological and Safety needs.
Relatedness Needs: At the next level, once an individual is safe and secure, he
considers his social needs. He is now interested in relationships with other people and
what they think of him. When he is related, he feels a sense of identity and position
within his immediate society. This encompasses Maslow's Love/Belonging and Esteem
needs.
Growth Needs: At the highest level, an individual seeks to grow, be creative for
himself and for his environment. When he is successfully growing, he feels a sense of
wholeness, achievement and fulfillment. This covers Maslow's Self-actualization and
Transcendence.
ERG Theory recognizes that the order of importance of the three categories may
vary for each individual. A company must recognize that an employee has multiple needs
to satisfy simultaneously. According to the ERG theory, focusing exclusively on one
need at a time will not motivate effectively.
In addition, the ERG theory acknowledges that if a higher level need remains
unfulfilled, the person may regress to lower level needs that appear easier to satisfy. This
is known as the frustration-regression principle. This frustration-regression principle
impacts workplace motivation. For example, if growth opportunities are not provided to
employees, they may regress to relatedness needs, and socialize more with co-workers.
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If a company can recognize these conditions early, steps can be taken to satisfy
the frustrated needs until the subordinate is able to pursue growth again.
2.2.3 McClelland’s Acquired Needs Theory
Acquired needs theory was developed by David Mcclelland in 1961. The theory
proposes that people are motivated by their need for achievement, power and
affiliation. Acquired needs theory says that all people have the need for achievement,
affiliation and power, but to varying degrees. People will tend to have one of these needs
that affect them more powerfully than others, and as a consequence affect their
behaviours. The concept of Acquired Needs theory is described below.
Achievers seek to excel and appreciate frequent recognition of how well they are
doing. They will avoid low risk activities that have no chance of gain. They also will
avoid high risks where there is a significant chance of failure.
Affiliation seekers look for harmonious relationships with other people. They will
thus tend to conform and shy away from standing out. They seek approval rather than
recognition.
Power seekers want dominance to control other people (for their own goals) or to
achieve higher goals (for the greater good). They seek neither recognition nor approval
from others, only agreement and compliance.
To motivate employees with a high need for achievement, give them non-routine
challenging tasks, with clear and attainable objectives. Give them fast and frequent
feedback on their performance. Continually give them increased responsibility for doing
new things, in order to help them strive for success. To motivate employees with a high
need for affiliation, be sure to let them work as part of a team. They derive satisfaction
from the people they work with, rather than the task itself. Give them lots of praise and
recognition, and delegate responsibility for orientation and the training of new employees
to them. They make great buddies and mentors. To motivate employees with an
increased need for power, let them plan and control their own jobs as much as
possible. Try to include them in decision making, especially when they will be affected
by the decision. They tend to perform best alone, rather than as a team member. Try to
assign them to a whole task, rather than just a part of it.
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2.2.4 Hertzberg’s Two-Factor Theory
Another theorist, Frederick Herzberg, performed studies to determine which
factors in an employee’s work environment caused satisfaction and dissatisfaction in
order to understand more about employees’ attitudes. He proposed the two-factor theory,
also called the motivation-hygiene theory, in the 1960s, which combined lower-level
needs into one classification he called hygiene or maintenance; and higher-level needs
into one classification he called motivators. This theory suggests that an individual’s
relation to work is basic and that one’s attitude toward work can very well determine
success or failure.
The two-factor theory proposes that people are motivated by motivators rather
than maintenance factors. The theory includes both maintenance-extrinsic factors and
motivators-intrinsic factors.
Maintenance factors are also called extrinsic motivators because maintenance
comes from outside the person and the job itself. Extrinsic motivators include pay, job
security, working conditions, fringe benefits, titles and relationships. These factors are
related to meeting lower level needs.
Motivators are called intrinsic motivators because motivation comes from within
the person through the work itself. Intrinsic motivators include achievement, recognition,
challenge and advancement. These factors are related to meeting higher level needs.
This theory can be applicable with employees through their motivation to money,
pay, and other important extrinsic motivators, but these are not the best
motivators. Intrinsically motivated employees are enthusiastic and eager to succeed, and
they bring their own self motivation to the work at hand.
2.3
RELEVANT RESEARCH
Many research studies have been conducted to study whether there is a
relationship between job satisfaction and employees’ loyalty to the organization. The
results demonstrated that job satisfaction in the area of career advancement, nature of
work, compensation, job security, supervisory and interpersonal relationship has an
obvious connection on employees’ loyalty to the organization:
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Abdullah (2009) conducted a Linkage of Employee satisfaction and Loyalty in the
Hotel Industry in Klang Valley, Malaysia by using a survey.
A closed- ended
questionnaire was used in order to assess employee satisfaction and employee loyalty in
hotels in Malaysia, which participated in this study.
The findings underlines the
important that there is linkage between employee satisfaction and employee loyalty. In
other words an increase of employee satisfaction could actually result in increased
employee participation and has the potential of making both the employee and employer
equally loyal to the company. The results showed that basic employee satisfaction is
dependant on benefits package, training and development, relationship with supervisor,
working conditions, teamwork and cooperation, recognition and rewards, empowerment
and communication, whereas employee loyalty is a result of the satisfaction that stems
from satisfaction variables such as, recognition and rewards, working conditions,
teamwork and cooperation, and relationship with supervisor.
The Institute of Chartered Accountants in Australia (2007) conducted Employee
Loyalty Research: Should I stay or should I go?, to explore what Chartered Accountants,
under the age of 35 thought about their employment experiences and what influenced
their employment decisions and to better understand its young members’ employment
decisions. The Institute surveyed 281 Chartered Accountants under the age of 35, in June
2007, from around Australia via phone and online methodology. The findings of the
latest research into employee recruitment and retention suggest a need for challenging
work and guaranteed career paths. There is an expectation that high remuneration, senior
roles and work/life balance go hand-in-hand. And also there is a perception that it is the
employer’s responsibility to establish the employee’s career path.
Noppakhun
Kasantikul
(นพคุณ
กสานติกลุ , 2549) conducted research into
organizational commitment of the staff at Suranaree University of Technology. The
results of this thesis revealed that all the areas of organizational factors, such as task
structure and chain of command, warmth and support, tolerance of conflict, autonomy,
security versus risk, training and development emphasis, rewards system and recognition,
showed a positive relationship with the staffs’ areas of the organization commitment.
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Phakinee Dokmaingam (ภคินี ดอกไมงาม, 2546) conducted research to study Factors
Related to the Organizational Commitment of Secondary School Teachers in SchoolBased Management Pilot in Bangkok Metropolis. The results showed that organizational
structure, policy in human resource management, task characteristics, supervisory
management style, relationship among members in organization, and compensation had
statistically significant positive relationships with organizational commitment and
organizational structure.
Supaluck Liamvarangkoon (ศุภลักษณ เหลี่ยมวรางกูร, 2537)’s research study, “Loyalty
in Organization at Sub-Inspector in the Police General Hospital” looked at loyalty in the
organization, and problems and working conditions of police officers in the Police
General Hospital. This study used theories of loyalty in organization, including factors
like commitment in organization and job satisfaction as a framework of the study. The
research result revealed that loyalty and factors affecting organizational health such as
job security, welfare and belonging to the organization were major factors which were
closely related to police officers’ loyalty to the Police General Hospital.