ACKNOWLEDGEMENT Bismillahirahmanirrahim, Alhamdulillah, great thanks to Allah SWT, with His wills, gives us the opportunity to complete this

study. This study is to find the relationship between satisfaction and loyalty for restaurant employee, by comprehensively gathered through secondary data from various researches, reports and articles that focus on the relationship between job satisfaction and employee loyalty.

Our grateful thanks goes to Mr. Tuan Ahmad Bin Tuan Ismail for his guidance and constant supervision as well as for providing necessary information regarding to this study and also for his support in completing this study that directly and indirectly correcting our mistake in finishing it.

In finishing this study, we benefited greatly and learned so many things. Criticism, constructive suggestions, brainstorming and innovative ideas from Mr. Tuan Ahmad Bin Tuan Ismail and fellow friends helps us a lot in learning as much as we can.

Moreover, deepest thanks and appreciation to our parents, family, and friends for their support, cooperation and encouragement for the study completion, from the beginning till the end.

Last but not least, hopefully, knowledge that weve gained during the time in completing this study, we can apply the knowledge in future time in real working environment effective and efficiently.

ABSTRACT

In competitive environment such as food and beverage industry, delivering high quality service is the key for a sustainable competitive advantage. Satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. However, as in nowadays, as to remain competitive and grow, the satisfaction of employee as much as a customer satisfaction is very crucial to the company. The correlation between customer and employee satisfaction will form a strong foundation of loyalty of customer and employee respectively. As proposed by researchers, the aim of this research was to find of the relationship between job satisfaction and loyalty among restaurant employee. There are four factors that need to be considered such as compensation and rewards, work environment, job security and career development. Each of these factors plays important roles which then can linkage with the employee loyalty. This study was gathered through secondary data from various researches, reports and articles that focus on the relationship between job satisfaction and employee loyalty. From the analysis carried out, it was found out that job security becomes the primary factor that contributes to employees loyalty than followed by work environment. Career development is the third highest contribution to employees loyalty and lastly the lowest contribution was compensation and rewards. The results and findings will endow with additional information relating to employees needs, wants and their satisfaction. It will also add to research since the four most significant factors that have a significant effect on the level of loyalty that experienced by the employees, realizing the significance of the relationship between these four important factors and employees loyalty is important in the food and beverage industry.

CHAPTER 1 INTRODUCTION 1.1 BACKGROUND OF THE STUDY

The top sectors in the Malaysian consumer foodservice industry are the caf/bar segment, the fast food segment and full-service restaurant segment. These three segments of the foodservice market accounted for over half of sales in both value and volume terms. The combination of restaurant business as well as food processing sales in Malaysia is now exceeding RM20 billion annually (Foodservice Profile-Malaysia, Market Analysis Report 2011). In fact, most of entrepreneurs enter in foodservice business which it has many opportunities to gain profit from this industry. The labor force in hotel and restaurant industry is about 800,500 (Guna Tenaga Employment, 2009).

However, the growth is impeded by the high turnover rates of employees in the hotel and restaurant industry. Many organizations in the foodservice industry as well as hotel industry face difficulties in retaining employees since they are unable to classify the factors which contribute to employee satisfaction and the resultant loyalty.

As explained by Kemp & Dwyer (2001), employees are likely to be more motivated and more productive if they feel they can make a valuable contribution to the organization through either contributing new idea, better ways of doing things and participation in decision-making.

Tracey and Hinkin (2008) stated that employee turnover rates are influenced by employee dissatisfaction within the several factors such as job environment and reduce their contribution to the job (Lok & Crawford, 2004).

In opposite, Masri, (2009) stated that satisfied employees are deemed to be an effective labor force and become an important asset for the organization's effectiveness. Thus, the organization should concern about their employees level of job satisfaction because employees satisfaction increase employee retention.

1.2

PROBLEM STATEMENT

In this study, we will discuss about relationship between employees satisfaction and employees loyalty among restaurant employee. We want to find out whether there is any relationship between employees satisfaction and loyalty. Is it employees satisfaction can contribute to their loyalty and it might be decrease employee turnover in specific area which is in restaurant kitchen. Other than that we also want to identify factors affecting employees satisfaction in a restaurants kitchen.

1.3

RESEARCH OBJECTIVE

1. To find out the relationship between satisfaction and loyalty among restaurant employees 2. To identify factors affecting employees satisfaction in restaurant.

1.4

RESEARCH QUESTIONS

Research question are as follow: 1. What are the relationships between compensation and employee loyalty in the restaurant? 2. What are the relationships between working environment and employee loyalty in the restaurant? 3. What are the relationships between job security and employee loyalty in the restaurant?

4. What are the relationships between career development and employee loyalty in the restaurant? 5. What are the relationship between independent variables and dependent variables?

1.5

THEORETICAL FRAMEWORK

In this research the dependent variables is employee loyalty. Whereas the independent variables are employee satisfaction that consist four factors which are compensation and rewards, work environment, job security and career development. All of these variables play an important role to the employee. The variables are used to determine the relationship between employee satisfaction and loyalty in restaurant.

Compensation and Rewards

H2

H1

Work environment

H3

Employee loyalty

Job security

H4

Career development

Independent variable (ID) Figure 1:

Dependence variable (DV)

A conceptual framework describing the factors affecting employees loyalty among kitchen restaurant.

1.6

HYPOTHESES DEVELOPMENT According to Sekaran and Bougie (2009) once the important variables in a situation and

established the relationships among them through logical reasoning in the theoretical framework. Since this research is the secondary data, thus the hypotheses are developed from the previous researcher. Thus, three hypotheses have been developing as below:-

H1: there is relationship between compensation and rewards towards employee loyalty H2: there is relationship between working environment and employee loyalty H3: there is relationship between job security and employee loyalty H4: there is relationship between career development and employee loyalty

1.7

CHAPTER SUMMARY In this chapter, we already explain about the problem statement in our study, which we

want to hope that the finding of this study would assist organization in coming up with planning some strategies which would help create employee satisfaction and loyalty.

CHAPTER 2 LITERATURE REVIEW 2.1 INTRODUCTION

According to Sekaran and Bougie (2010: 38), literature review is where the researchers will identify published and unpublished work from secondary data sources on the topic of interest. Then, they evaluate this entire works in relation to the problems and the documentation of the work itself. This is the chapter where the researchers provide all of the secondary data they used for the references to support all the critical points in this study. This chapter starts with the explanation of employee loyalty. Finally researchers will include the focal point of the study which is employee loyalty and their satisfaction towards the job.

2.2

EMPLOYEE LOYALTY

In this research, the dependent variable is employee loyalty.

2.2.1

Employee Loyalty Nowadays, there are crisis about employee turnover in Food and Beverage

industry. Every organization tries to solve this problem by increasing their employee loyalty. Employee loyalty became priority in the organization in terms of improving organization productivity.

According to Loyalty Research Center (2002), employee loyalty can be defined as the employees believe towards their job and they have no regrets for working in their organization and they are considered it was a best choice for them. Vince (2005) stated

that understanding the employees needs can cultivate the employee loyalty towards the organization.

From Hierarchy of Needs Model, Abraham Maslow believed that human act on their unmet needs according to their urgency at any given moment. Employers should know the needs of their employees to so that they can enhance productivity of the organization. Thus, Kyle (1996) also mentioned that there are some few ways to increase the employees loyalty in the organization. It can be increase their salaries, give bonuses and appreciate their performance by giving rewards, health needs and also important is they satisfy their human and lifestyle needs.

2.3

EMPLOYEE SATISFACTION

In this research, the independent variable is employee satisfaction that consist four factors which are compensation and rewards, work environment, job security and career development.

2.3.1

Compensation and Rewards In order for the employers to retain their employees, they should provide

compensation and some benefits or rewards to gain loyalty from their staff. Not only their loyalty but the employees are more motivated and hard work while doing their job. Compensation is a statistical term used in balance of payments statistics, national accounts and sometimes in corporate accounts as well. According to Gerhart et. al. (1994), compensation plays an important role as a medium to the relationship between employers and employees. Usually, employees are more depends on salaries, wages and other benefits that they get from employers. In the employers point of view,

compensation decisions influence their cost of doing a business, their ability to sell at a competitive price in the product market. According to Steers and Porter (1991), they stated that the link between rewards that being offered by the company and the way the employers attract their employees to stay working with them are clearly shows that all that are related to compensation package. 2.3.2 Work Environment Other than that, work environment also plays role in enhance employee loyalty. According to Best Practice (2008), workplace can be define as the place which houses workstations and any other place within the area of the undertaking to which the worker has access in the course of his or her employment. Employers should provide the best quality of the facilities, tools and work area should clean and safe. The good work environment can affects the employee productivity, safety and health and psychologically. According on Al-Anzi (2009) study result show over 90% respondents say the quality of their working environment affects their mood and attitude about their work. 89% respondents believe that work environment is very important to fulfill their satisfaction towards their job. Workplace environment affect the employees loyalty and satisfaction that can lead to company productivity. Hughes study (as cited in Al-Anzi, 2009) mentioned that, employees in different organizations have different office designs. Every organization office provides difference lighting and heating arrangements, furniture and spatial arrangements, and also different levels of noise. Ergonomic and comfortable office design can help to motivate employees in order increase their performance substantially. In this chapter, researchers try to relate independent variables and dependent variable. They want to know whether the variables are significant to the

other variables. Each of the aspect is supported with explanations from the secondary data collected by the researchers.

2.3.3

Job Security Based from previous research point of view, Seema et al. (n.d), she found that

there a significant difference between job security and loyalty when job security consider is a factor. Commerce Dictionary.com stated that job security define as the like hood that an employee will keep his or her job for a long time or until retirement and an employees feeling that he has a right to keep his job, or that he will never be made redundant. Other than that, job security defines as the feeling that an employee has of being able to stay in a job as long as he or she wants (Publishing Dictionary.com). Bolman and Deal (1997) as cited in (Gerhardt, 2004) recommended that promotions from an organization would give employees a sense of job security because they support employees to stay with the organization and gain more skills. The organization can give training or any job opportunities to employees so that it can influence the employee to move on and continue work in the organization. The changes of organizational structure and the turn down in job security have affect to the psychological contract linking employer and employee (Holm and Hovland 1999; Schmidt 1999 as cited in Cheng, 2004). In order to determine whether the job of employees secure or not by employee themselves, normally were based on the feeling or psychological for example if they feel their jobs are secure, the level of employee loyalty will be increase and in opposite, if they feel their job or work is not secure, the level of employee loyalty will be decline.

2.3.4

Career Development Career development is a most important determinant of employee loyalty (Mehta,

Singh, Bhakar, and Sinha, 2010). According to Merchant (n.d.), career development means an individual can be and finding a place in an organization where they can express excellence and contribute to the goals of the organization and respected position in which could advance such as promotions and upward mobility. Ginzberg, Ginsburg, Axelrad and Herma (n.d.) mentioned that career developments are influence by the educational process, the emotional factor and individual values. They also state that individual will pursues their career goal through the educational experiences. From Kreisman (2002) point of view, career development is important to retain employee because the availability of skill development opportunities and career movement are key attractors of organizations. So if the organization does not alert about their employees needs and desire to move on, then it became a primary reason for resignation.

2.4

CHAPTER SUMMARY

The researchers have explained about job satisfaction and loyalty towards among restaurant employee. This chapter includes the literature on dependent variables and independent variables which are the relationship between employees satisfaction and loyalty in the restaurant. Then, as the readers read along, they will find three factors that affecting employees satisfaction in their workplace. Each of the aspect is supported with explanations from the secondary data collected by the researchers.

CHAPTER 3 RESEARCH METHODOLOGY 3.1 INTRODUCTION

The researchers are proposing to conduct a study to see the relationship between job satisfaction and loyalty among restaurant employee. Factors that affect the job satisfaction and employee loyalty are compensation and rewards, work environment, job security and career development. Thus, this study was gathered through secondary data from various researches, reports and articles that focus on the relationship between job satisfaction and employee loyalty. This study is done to discover how big the gaps are in the existing factors.

3.2

SOURCES OF DATA

The researchers gathered the data through books and research papers. The books and research papers were collected from Tun Abdul Razak library (PTAR), Perpustakaan Tun Uda (PPAS). The rest of the research papers were taken directly from multiple Internet websites and also PhD dissertation. Robertson (2007) defined research paper as a study that involves the survey of a specific sphere of knowledge with an aim of producing the best possible and most competent argument regarding that topic.

3.3

DATA COLLECTION METHOD

According to Sekaran and Bougie (2010: 184), secondary data is the information collected by somebody other than the researcher who is conducting the present study. The data can be accessed through the Internet, or read-through of recorded or published information. In

this study, researchers only use secondary data. The researchers did the collections by reviewing all the relevant literatures that they can find to be included in this research report.

3.4

DATA ANALYSIS

All the relevant secondary data will be utilized, filtered and extracted for the study of restaurant. There are three factors that being consider. Thus, all the data will be systematically arranged according to three factors. From there, the researchers can determine how big the gaps are on the existents factors. Lastly, conclusions and models can be derived from the foundations of the study.

3.5

CHAPTER SUMMARY

This chapter is all about how the researchers are want to conduct their research to obtain all the relevant findings so that they can achieve all of the research objectives. The researchers include all the relevant information of their research design and methodology to give the readers detailed insight of each step in conducting this study. It starts with the classification of the study and ends with the steps of how the researchers are going to collect their data. In conclusion, the researchers hope that the readers will convinced that this study can be done and completed with the execution of all the steps proposed in this chapter.

CHAPTER 4 FINDINGS 4.1 INTRODUCTION

In this chapter, the researcher wants to analyze all the total accumulation of relevant data from literature review before this which related to the relationship between job satisfaction and loyalty among restaurant employee. Then, it will represent the finding of the relationship between career development, job security, and work environment. The finding is very important in order to determine whether the hypothesis that has been made earlier is meeting with the result of the research.

4.2.1

Findings on the Relationship between Job Satisfaction and Loyalty among Restaurant Employee

At this point, the researcher focused on finding of the relationship between job satisfaction and loyalty among restaurant employee. There are four factors that need to be considered such as compensation and rewards, work environment, job security and career development. Each of these factors plays important roles which then can linkage with the employee loyalty. Referring to the literature review that was discussed in the chapter two, job security becomes the primary factor that contributes to employees loyalty than followed by work environment. Career development is the third highest contribution to employees loyalty and lastly the lowest contribution was compensation and rewards. Based on the previous research, job security come as first factor, second is workplace environment and followed by career development and lastly compensation and rewards. Majority of the employees feels that job security is the most important factors because

they can escape from their financial problems. It is because; employers offer them a job security as a guarantee that they cannot easily being terminated of fired. The employers can gain the employees loyalty by offering them a job security and it can lead to the increases of productivity and profit to the company. Dolman and Deal (1997) recommended that promotions from within an organization would give employees a sense of job security because they support employees to stay with the organization and add extra skills. When the employers take care of their employee welfare, the employee will feel that they are responsible to be loyal with their company. Job security can be either compensation, benefits and so on. All of these can guarantee the employee loyalty because of their daily expenses is becoming increasing from one day to another. According to Herriot and Pemberton (1996) found that the employee will offer working hard and loyalty in exchange of employer provided job security to them. According to Gonyea and Goognis (1992) stated that individual will stay with a company that clearly consider and cares for their health, location, family dual career, career priorities which is life stage needs and other personal needs. A good workplace environment can make their employee feel comfortable to do their task efficiently. Whereas according to Miller, Erickso and Yust (2001) stated that employees feel get benefited by workplace environment that provide sense of belonging. As a result, the employee will stay with the organization with a long period of time because of good work environment. According to Cheng (2004) states that the managing core employees effectively is identifying employees needs. When employee goes to work, they bring together their aspiration and spirit to the workplace so that they can do their job better and can satisfy their employer. When the organization can fulfill their need, then the employee will feel committed to do

their work. Besides that, the employee also will feel excited to do their task. A good design of workplace should make our employee and employer feel comfortable to do their work. When workplace environment has a well designed work area, the employee will become more productive, loyalty and satisfaction with their work condition. Seema et al. (2010) stated that career development is a most determinant of employee loyalty. This is because through career movement the employee will get new experience and also can increase their skill. According to Nusbaum (n.d), career development can increase in employee chances for advancement and increased employee loyalty and can lead to a more effective organization. In order to retain employee loyalty, the management needs to increase the employee job satisfaction as to avoid employee turnover and profitability. According to Jackson, Donald, Sirianni and Nancy (2009), the good one way to service employee is through career development because it can help increase in their customerfacing roles. Moreover, career development is important to retain employee because the availability of skill development opportunities and career movement are key attractors to organizations and if an organization does not recognize the individuals need and desire to grow, then development becomes a primary reason for resignation (Kreisman 2002).According to a study conducted by Ahmad et al. (2010), employees are highly likely to feel rewarded and motivated when they know that they are able to get fair pay with regards to the amount of work that they do. The employees of the hotel industry are more motivated and loyalty to the hotel industry if they have been fairly rewarded as the return of the amount of work they do to the industry. In addition, members of an organization should also receive rewards that are in accordance with their personal need. According to Babakus et al. (2003), the perceptions that employees have with regards to

their reward climate influences their attitudes towards their employees. The finding of Rahman et al. (2011) indicated that the employee loyalty is affected by the employee generation which is Generation X (born between 1996 and 1982) and Generation Y (born between 1978 and 1994). Generation X has the tendency to be more loyal towards their employers than Generation Y. But their loyalty is not for a long time as long as the company can fulfill their need. When the employee is satisfy with their job, they will tend to be loyal with the organization.

4.2

CHAPTER SUMMARY

This chapter focuses on the discussion of the results or findings that researchers have disclosed based on the literature review they had. Referring to the literature review, the research findings on the relationship between job satisfaction and employee loyalty has been exposed. There were four factors that need to be considered such as career development, compensation and rewards, job security and work environment. Thus these factors have been clearly identified. From there, readers can see the clear findings for each factors and each of the information included here were filtered and extracted from the chapter of literature review.

CHAPTER 5 CONCLUSION 5.1 INTRODUCTION

This final chapter is a conclusion of the study based on the objectives of the research and the review of the findings. Based on these two parts, the fulfillment of the objectives can be achieved by reviewing the findings as a whole. And lastly, the researchers will summarize all the details in this chapter, and hence, ending this report.

5.2

RESTATEMENT OF OBJECTIVES

The objectives of this research are as follows: 5.2.1 To find out the relationship between satisfaction and loyalty among restaurant employees 5.2.2 To identify factors affecting employees satisfaction in restaurant.

5.3

REVIEW OF THE FINDINGS

As a conclusion, it is stated that there are four primary factors that affecting employees satisfactions which are job security, work environment followed by career development and lastly compensation and rewards. It can provide a tremendously positive result in increasing the level of satisfactions and also loyalty among restaurant employees. It is also a well-established fact that satisfied employees and led to long term business success in terms of employees loyalty, productivity and organizational profits.

In whatever conditions and situations, employees normally will seek the job security that offered by the employer. Job security is the most important dimension in creating the employees

loyalty. Nevertheless, all independent variables cannot be neglect and seen blindly. This is because, the entire factor that contribute towards employees loyalty, are correlation between each other although the job security is most factors that can lead to loyalty but the other factors also contribute greatly in gaining the employees loyalty in a particular establishment.

By emphasizing on the four most significant factors that have a significant effect on the level of loyalty that experienced by the employees, realizing the significance of the relationship between these four important factors and employees loyalty is important in the food and beverage industry.

5.4

CHAPTER SUMMARY

This chapter is a summary of the findings as a whole and from this part the readers can clearly see for themselves on how every single objective was fulfilled right from the literature review until this chapter. In other words, the researchers want to lay out the conclusion in explaining the objectives of the study, and the reviewing of the findings. Then, all of those findings will be integrated into a model that depicted the whole research. It is the researchers hope that this research would be able to shed some light to the public as well as foodservice establishment in terms of their general knowledge regarding the factors that affecting employees loyalty in restaurant area.