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Title of proposal:
Weighting 25%
Weighting 25%
Weighting 25%
Notes from marker:
Weighting 25%
Agreed Mark
Signatures: Date
Contents
1. Introduction ........................................................................................................................ 7
2.3 Promotion...................................................................................................................... 12
According to the strategic human resource aspect, human resource is considered as the
most important asset of an organization. The human resource is the employees that an
organization has. Employee retention is a vital phenomenon in today’s business
environment and it has become a vital issue and challenge to all the organizations
nowadays. The number of employees leaving the organizations is more than employees
joining the organization. The war of talent will start in the near future because of the
shortage of labour (Holland et.al 2007). As per above statement by Holland retaining
talented employees is very important to the organization but it is a challenge due to
shortage of labour. This is a specific interest for Insurance Sector organizations too.
Therefore it is important to understand how to avoid future employee losses successfully
(Samuel and Chipunza 2009).
Loyalty of an employee is the key challenge in most of the organizations today. With the
increase number of different businesses, organizations and job opportunities available in
those, retaining employees has become a challenge to the organizations. Retention take
place not only with salary, job satisfaction, working environment but also the loyalty that
the employee has towards its organization.
The organization’s success depends on employee loyalty towards it, since whenever an
employee leaves his/her job the organization always partly lose it source of knowledge and
skills that are difficult and costly to acquire therefore it is essential to identify the factors
influencing the loyalty of employees towards the organization in order to rectify those
factors and reduce employee turnover.
1.2. Rationale for the Study
There are various studies that has been conducted in measuring the factors influencing
employees’ loyalty towards the organization in countries like Vietnam, India, Bangladesh,
Iran, Malaysia and Saudi Arabia. There are studies that has been conducted to measure the
relationship between certain factors and employee loyalty in various industries. There are
researches conducted in Sri Lanka on employees’ loyalty that affects performance and job
satisfaction. And a particular study that has been conducted under the name of “An
Investigation of the Employee Satisfaction and Organizational Commitment on Employee
Job Retention in Selected Insurance Companies in Sri Lanka. But there is no research done
in the Insurance Companies in Colombo Sri Lanka to identify the factors influencing
Human Resource Professionals’ loyalty towards organization.
Human Resource Professionals has been chosen to conduct this research since the
researcher is a Human Resource Professional and the researcher is interested to identify
the factors that will influence the loyalty of them towards the organization. Insurance
Companies in Colombo are chosen because, the employee turnover rate in Insurance
Companies are high also the researcher has somewhat access to those professionals and
data collection would be much easier.
This study will help to address the gap in the literature in insurance companies in Colombo.
Findings of this study will help to identify whether there is a relationship between the
selected factors and loyalty of Human Resource professionals towards organization. Also
it will identify which factor affects the most the loyalty of HR Professional, it can be taken
as general among employees who are in other field also, therefore Insurance Companies
can take necessary corrective actions to prevent them.
Furthermore other organizations will also benefit from the results of this research to
evaluate the factors that affect employees and what their level of loyalty is to the
organization, thus solving the problems and drawbacks of their strategies to satisfy and
retain the employees. Finally, this study helps to bridge the gap in Human Resource
Management literature about the relationship between employee job satisfaction and
organizational commitment on employee retention in insurance industry.
The main research objectives to identify which factors affect loyalty of employees
which leads good employees to leave the Organization and to help the management to
take necessary corrective action to mitigate those factors.
b. To be the aid to the other researchers to study the subject more in depth and
students to have a basic understanding towards loyalty.
2. Literature Review
The ancient Chinese built the Great Wall in order to protect themselves against their
enemies’ attacks; yet in the first 100 years of the construction, their enemies managed to
attack them three times and break out a war. The enemies did not climb the wall nor did
they tear it down; they bribed the gate guards and passed through them. The Chinese made
serious attempt to construct a blocking wall, but they did little to train faithful and
conscientious guards. This vividly demonstrates the grave role of human resources in any
organizational system (Saboori, 2014). Employee faithfulness or commitment to
organization is not about the name of the organization or status of the organization or in
which position that the organization in the market but it is purely on how organizations
treat its employees. Employee loyalty is considerable when employees believe that they
have no regrets for working in the organization, and they consider it as the best choice for
them (Loyalty Research Center, 2002).
Vince (2005) had stated that employers should understand employees’ needs, as it could
cultivate employee loyalty towards the organization. Employees are the most determinant
and leading factor that determine the success of the organizations in competitive and
dynamic environment (Kennedy and Diam 2010, Molina and Ortega 2003, Chapman
2009). In above statements from Vince (2005) and Kennedy and Diam (2010), Molina and
Ortega (2003) it is understood that the employees of an organization is the great asset that
must be looked after properly for the success of the business. Employees are not like
machines and they have feelings and expectations it is not possible to get work done
through them like getting work done through machines. Employees expect something in
return for the effort they put in order to retain the organization in future, therefore it is very
important that employers must understand the needs and feelings of employees and
fulfilling them in order to obtain their commitment or loyalty towards the organization.
Income fairness is when employees feel that their compensation accurately reflects the
quality of their work. The perception of a good compensation or income fairness depends
on number of things including the abilities and responsibilities required for the work, the
time and energy put in, as well as how the pay benefits compare to what others receive for
similar work. Income fairness doesn’t mean that all the employees will be paid equally but
paid justly.
According to Mondy (2014) the total compensation of all rewards is provided to employees
in return for the services. Sindik (2011) says if an organization wants to motivate
employees with salary and rewards, it would certainly should have a fair reward system,
stimulating and punishment, otherwise it can cause distortion of human relations in the
company. Motivated and satisfied employees retain longer in an organization, their
commitment towards the organization is higher comparing to new or employees with short
tenure period. When employees feel that they are not paid sufficient compensation for the
contribution given by them to the organization will lead to demotivation and resignation.
Employees will start looking for new employment to gain much rewards for the effort they
put in.
2.3 Promotion
Promotion is an identification and motivation to the employees who perform well in the
organization. According to Allen & Tuselman (2009) another way for organisations to
encourage loyalty in their employees is through offering prospective careers such as
promotions in the near future. In their research, Allen and Tüselman (2009) found that an
employee who feel dissatisfied with their current situation could still remain loyal to their
employer if there are opportunities for them to be promoted. Creating a proper career path
and developing employees to reach that path is one of the responsibilities of the employer,
performers must be identified and recognized in order to retain them in the organization.
Apparently, lack of career development and opportunities for promotion were key aspects
associated with employee turnover (Ineson & Berechet, 2011), indicating poor employee
loyalty. Abdullah et al. (2009) confirmed that opportunity for career development has
increased the tendency of employees to become loyal to the organization. It implies that
the employees feel they have future endeavour with the organization. Therefore, career
development is seen as an important determinant in assessing employee loyalty.
A positive working environment is always filled with fun, friendship affection between
employees together; recognition and encouragement. A positive working environment will
always increases job satisfaction and employee loyalty towards the organization. It is
shown that working environment is a critical factors in determined the level of employee
job satisfaction (Chang et al., 2010; Jun et al., 2006).
1. Is there any relationship between income fairness and the loyalty among the HR
Professionals in Insurance Companies?
2. Is there any relationship between promotion and the loyalty among the HR
Professionals in Insurance Companies?
3. Is there any relationship between training and development and the loyalty among the
HR Professionals in Insurance Companies?
4. Is there any relationship between working environment and the loyalty among the HR
Professionals in Insurance Companies?
The theoretical framework was adapted from the research conducted in Vietnam on
Factors influencing the Organizational loyalty of Employees by Ngoc Thanh Trinh
(Brian). This framework will be modified to Sri Lanka Context.
3.3 Hypotheses
This research will be a descriptive research, because the researcher will be collecting data
of HR Professionals to understand their profiles and the factors influencing loyalty towards
the organization. The research will be cross-sectional, because we recognise that most
research projects undertaken for academic courses are necessarily time constrained.
Both online survey through survey monkey and hard copies will be circulated for those
who are unable to do it through online. There are 12 structured questions under four
independent variables that is Income Fairness, Promotion, Training and Development,
Working Environment. But this sampling might not provide 100% accurate data, since the
questionnaires are filled by humans.
4.4 Reliability & Validity
To ensure the reliability and the validity of the data collection, the questions will be
structured in a simple and understandable manner – using Likert Scale. To check the
consistency of the questionnaires it will be given twice to 4 people selected from the
sample with an interval of 4 days to see the reliability of the questionnaire and further if
needed, questionnaire will be refined and modified accordingly.
4.5 Constrains
The employee loyalty is influenced by many factors, but in this research, author will be
focusing only on four variables taken into consideration for evaluation will be limited as
the author will be considering the factors used in the research by Ngoc Thanh Trinh (Brian)
in 2014 on the same study that is Income Fairness, Promotion, Training and Development
and Working Environment due to time limit, accordingly the employee’s loyalty survey
will be limited to the scope of work-related issue. Also the study will be conducted in
Insurance Companies based within Colombo only with a limited number of respondents
due to limited time and budget. Further delimitation is that often employees are unaware
of their loyalty towards the company and may unintentionally answer wrong when filling
the survey questionnaire.
Abdullah, R., Karim, N. A., Patah, M. O. R. A., Zahari, H., Nair, G. K. S. & Jusoff, K. (2009).
The linkage of employee satisfaction and loyalty in hotel industry in Klang Valley, Malaysia.
International Journal of Business and Management, 4(10), 152-160.
Allen, M. & Tüselman, H.J. (2009). All powerful voice? The need to include ‘Exit’, ‘Loyalty’
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Chang C., Chiu C. and Chen A. C. 2010. The effect of TQM practices on employee satisfaction
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Hewitt Associates. (2004). Employee engagement higher at double digit growth companies.
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Respondents are anonymous and information about individual answers will not be reported.
Please carefully read these instructions before completing the questionnaire.
Dear Respondent,
As a part of Research Project for my MBA degree, this research is conducted by London
Metropolitan University student Princy John for her MBA to find out the factors influencing
Human Resource Professionals loyalty towards the organization who are employed at
Insurance Companies in Colombo, Sri Lanka.
This is study is intended for educational purpose only not for any commercial purposes. The
information gathered via this questionnaire will be kept confidentially and used only for this
study. Also information will be kept anonymously.
Income Fairness
1. My current income is appropriate with
my ability and contribution to the
organization therefore my loyalty
towards the organization is high.
2. I think the organization I am working
pays income very fair.
3. I absolutely live well with my current
income.
Promotion
1. My Achievements in the Organization
are visible and always recognized by the
Management
2. I am satisfied with my career
development within the organization
3. I have many opportunities to get
promoted in my organization.
Training and Development
1. The organization is very interested in the
training of personnel and development
of the HR Professionals’.
2. I was participating in the training
program of the organization according
to job requirements.
3. The training program in accordance
with my ability and after training, my
work skills are more advanced.
Working Environment
1. My work environment is safe,
comfortable and equipped properly.
2. My workload is reasonable and I can
keep a reasonable balance between my
work and personal life.
3. I am satisfied with the current working
environment of the organization.