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Employee's rewards

CHAPTER 1

INTRODUCTION

1.0 Overview

In any organization, employee's rewards usually given to attract, motivate and retain the employees to stay longer and contribute a good quality services to ensure the successful of the organization; in other words, rewards play an important role in creating, building and maintaining the commitment among employees with the purpose to ensure high standard of performances and workforce stability. According to the individual - organizational exchange theme, individuals enter the organization with special qualification and skill, desire and goals, and expect in return a work setting where they can use their skill, satisfy their desire, and achieve their goals (Mottaz, 1988). At the minimum, employees expect their organization to provide fair pay, safe working condition, and fair treatment. (Beer, Spector, Lawrence, Mills, & Walton, 1984). It simply implies that employees offer or increase their commitment when organization meets employees' expectation regarding fulfillment of their important needs. Thus, the exchange perspective explains organizational commitment as a function of work rewards and work values (Lambert, 2000; Mottazz, 1988), and suggests the importance of work rewards for continuously encouraging employees. According to exchange theory and reciprocity norm, employees repay the rewards received from organization through increase commitment to the organization, which re-enforce the exchange prevalent in the employee - employer relationship in a mutually beneficial manner (Blau, 1964; Haar and Spell, 2004).

In addition, Vroom, V.H (1964) maintained in his expectation theory that everyone works in expectation of some rewards in both spiritual and material. In the other words, the level of reward influences the quality and the quantity of work, and will response on their commitment to doing the job in the workplace.

Therefore, this paper will study the relationship between various type of rewards (extrinsic/intrinsic) received by the employees and the component of organizational commitment (affective, continuance and normative) focusing on hypermarket (retail industry) in Kota Kinabalu.

1.1 Research Problem

Over the last two decades, much research has explored issues related to effects of employee benefits or rewards at individual levels. On the whole, most studies explored the impact of employees benefits or reward on turnover intention, satisfaction, productivity, mobility, attraction, retention also motivation. Little is known about whether rewards or benefits have impact on organizational commitment, specially in hypermarket (retail industry) in Malaysia context.

Meyer and Smith (2000) had found out that despite the vast literature on job atttitue, the issue of commitment still remain ill-defined and ill-conceptualized. Reseachers argue these dissappointing reseach outcomes are due to a ‘lop-sided' approach towards the study of commitment, which conceptualized as a uni-dimensional construct (Mowday et al., 1982) whereas commitment is actually found to be multidimensional construct comprising three components (Allen and Meyer, 1990). Thus, the relationship between rewards and commitment also required further attention because majority of studies have based their approach solely on the affective component of commitment, negleting the other two; continuance and normative (Dunham et al., 1994; Meyer and Smith, 2000). It is argue that reseach is required to explore further the entencedents, especially, with regard to normative and continuance commitment (Allen and Meyer, 1990; Dunham et al., 1994). Previous study by Neeru Molhotra at el (2007) tends to fill the gaps in the existing literature by doing the comparative effect of extrinsic and intrinsic rewards on the three components of commitment. However, as mention by reseachers, the possible differential antecedent of the three component model of commitment should continue to develop (Culpepper et al., 2004, Hacket et al., 1994; Meyer and Smith, 2000 ; Neeru Molhotra, Pawan Budhwar and Peter Prowse, 2007). Furthermore, it is essential for top management also to understand which rewards mean the most to which employees, given that the bases of thier commitment are distinct. Nevertheless, the great of the greater understanding of this organizational phonemenon increase daily. The major driving force behind this continue recognition of commitment in the management literature for more than three decades is that is often seen as the key of ‘business success' (Benkhoff, 1997).

The retail industry has always suffered from high employee turnover rates. High employee turnover is costly to retailers not only because it increases administrative costs in recruiting and training employees but it also reduces the operational capability of the retailer. Good et al (1988) had noted that the retail industry has one of the highest turnover rates at 30 percent. Turnover rate among retail management trainees, the entry position for retailing graduates, had been especially high with one study reporting the employee turnover rate as high as 49 percent. Yet, as Akehurst et al (1995) had noted, despite the importance of personnel issues in the retail industry, retail employment is a comparatively under-researched area.

It had been suggested that high employee turnover in the retail industry is the result of the unique human resource environment in the retail industry. A career in the retail industry is not appealing to many workers. Coupled with the need to employ large numbers of workers in the industry, the retail industry is forced to employ large number of workers who are not motivated or interested to remain in the industry. This has resulted in high employee turnover rates in the industry. This statement was admitted by HR Manager of Giant and Servay Hypermarket, they've said that turn over rate in their hypermarket quite high where employees reported in and out monthly.

Meanwhile, these day one of the major problems by all companies is the lack of the total commitment from their employees. In Malaysia for example, it is comman complaint that employees are no more loyal as they used to be in the past. As a result of lower commitment, employees leave their companies for slighty higher pay. And to cope with this problem, they have to adopted many programmes and strategies, which tries to restore employee's commitment.

Higher salaries can increase the attractiveness of a job, including in the retailing job (Swinyard et al 1991). To motivate employees, retailers should review their reward policies and ensure that they are still competitive (Levy et al 2001). Base on above analysis, this study tends to examine the relationship between various intrinsic and exrinsic rewards and three component of organization commitment, taking the multidimensional perspective of commitment in retail industry which is hypermarket in Kota Kinablu area.

1.2 Research Question

The study aims to understand the relationship between rewards and organizational commitment among workers in hypermarket (Kota Kinabalu). Accordingly, few main research questions are examined in the research;

  1. Is there a significant relationship between extrinsic rewards (working condition, pay satisfaction, satisfaction with fringe benefits and promotional opportunities) and organizational commitment (affective, continuance and normative) among workers in hypermarket (Kota Kinabalu).
  2. Is there a significant relationship between intrinsic rewards (supervision, training and feedback) and organizational commitment (affective, continuance and normative) among workers in hypermarket (Kota Kinabalu).

1.3 Research Objective

Based on the assumption that employees rewards tend to attract, retain, and motivate employee, which eventually increase employee commitment, the purpose of this study are;

  1. To examine the relationship between extrinsic rewards (working condition, pay satisfaction, satisfaction with fringe benefits and promotional opportunities) and organizational commitment (affective, continuance and normative) among workers in hypermarket (Kota Kinabalu).
  2. To examine the relationship between intrinsic rewards (supervision, training and feedback) and organizational commitment (affective, continuance and normative) among workers in hypermarket (Kota Kinabalu).

1.4 Scope Of The Study

The retail industry is used in this study to measure the relationship between rewards and organizational commitment in the industry. This is because; retail industry is the most important sector in terms of volume and value. Retail has been one of the most active sub-sectors in the Malaysian economy, also the second biggest contributor to the national GDP, contributing RM31,081 million (AUD14,603 million) in 2000 (Eighth Malaysia Plan, 2001). Based on Euromonitor‘s Retailing Report in Malaysia (2008), four main retail formats are hypermarket, supermarket, convenience store, and traditional grocery store; however, this study will only focus on one of retail format which is Hypermarket.

The study was conducted in the Kota Kinabalu area using non probability and convenience sampling. Kota Kinabalu was chosen due to the number and large variety of choice of formats available and also its highly dense population in Sabah.

1.4.1 Retail Industry in Malaysia

The rapid expansion of the Malaysian economy over the last few decades, combined with external and social influences has led to a boom in the retail industry. Consequently, the retail industry in Malaysia is highly fragmented, as there are a lot of retailers entering the competitive market each year.

Retail in Malaysia is wide-ranging; from department stores, hypermarket, supermarkets and mini markets, specialty shops, convenience stores, provision stores, pharmacies, medical halls, direct sale, wet market stalls to pavement shops and petrol kiosks (Seventh Malaysia Plan, 1996). Such variety reflects the changing demands and expectations among consumers for better quality products and services.

The retail environment in Malaysia has undergone a continuous and marked change over the decades. New facilities ranging from supermarkets and superstores to retail warehouses and convenience stores have been added to the retail landscape, much at the expense of the traditional shop houses. The retail sector has been very active in the last few years due to the strong economic growth which had led to an increase in income levels and spending power. Furthermore, Malaysia has become a prime target for foreign investors like the Japanese, Americans and Europeans. Participation by foreign investors will support the industry by introducing future products for the higher quality of life as well as environmentally-friendly products.

1.4.2 Definition of Retail

Retailing refers to all activities directly related to the selling of small quantities of goods and services, at a profit, to the ultimate customers for personal consumption and non-business use (Mohd-Said, 1990). Guy (1980) for instance has categorized retail trade into three groups: (a) convenience goods which include groceries and daily provisions; (b) shopping or comparison goods which refer to relatively more expensive items bought at less regular intervals; and (c) specialty goods which are unique items that appeal to customers of the higher income level.

Goldman and Hino (2005) have divided the retail trade depending on size - large scale or small scale. The 13 small scale retailers are also referred to as the traditional retail store where they include the single propriety stores, wet market, and mini market. Whilst the large scale retailers, which are also known as the modern retailers include superstores, department stores, hypermarkets, and discount stores. Nevertheless, according to Miller and Layton (2000), many stores can still be grouped into the following retail types;

A department storecarries a wide variety of shopping and specialty goods, including apparel, cosmetics, house wares, and electronics products. Some departmental stores even attached a supermarket.

A superstore or hypermarketis a very large store that aims at meeting consumers‘total needs for routinely purchased food and non-food items. It carries personal care products, alcoholic beverages and tobacco products, stationary and sewing supplies, hardware items, garden products, some clothing some leisure-time products and offers household services such as dry cleaning, laundry and shoe repairs.

A discount storeis a retailer that competes on the basis of low price, high turnover and high volume.

Supermarketsare large, low cost, low margin, high volume, self-service stores that cater to serve the consumer‘s total needs for food and household products.

In Malaysia, the supervision of the wholesale and retail sector falls under the supervision of the Ministry of Domestic Trade and Consumer Affairs (MDTCA) through the Committee on Wholesale and Retail Trade. The Committee was set up in 1995 to regulate and supervise the industry, including foreign participation in the sector.

1.4.3 Hypermarkets

In Malaysia, the hypermarket has grown rapidly since the 1990s. The emergence of hypermarkets has altered the structure of the distributive trade in Malaysia to some extent. The existence of hypermarkets has allowed the consumers to do their shopping easily with less hassle as they can purchase the grocery products and mass merchandise under one-roof. A research carried out by Euromonitor (2008) revealed that hypermarkets recorded sales of RM6,217 million in 2007, which represents a 263.2 percent increase since 2002. Euromonitor has forecasted that the sales in hypermarkets will reach RM11,199.5 million by 2012. The success of the hypermarket chains is largely due to their low price, wide range of offerings, customer service and strategic location (Seiders and Tigert, 2000; Carpenter, 2008).

The hypermarket industry is dominated by the foreign retailers, namely, Carrefour, Giant, and Tesco. This is because multinational companies have a greater capability in terms of outlet expansion, development of private label products, and offer extensive ranges of products and value-added services. In 2007, the hypermarket market was led by Giant, followed by Carrefour and Tesco (Euromonitor, 2008). The dominance of Giant is largely due to the high number of outlets available in Malaysia.

Despite there being only a few key players, the hypermarket environment is highly competitive. This is because the retailers employ similar positioning strategy in order to attract more consumers. Most of the hypermarket operators compete on pricing and promotion to attract more customers. Some retailers even reduce prices permanently in order to attract more people to the stores. Major promotions and advertisements are some of the key growth strategies utilized

In the hypermarket segment, the main players are foreign owned retailers such as Carefour (France), Makro (Holland), Jaya Jusco (Japan), Tesco (United Kingdom) and Giant (Hong Kong) which account for 46 per cent of the hypermarket sector (Economic Report, 2005/2006). By 2005 there were around 400 foreign supermarkets and hypermarkets spread around the country including the sub-urban areas in Kuala Lumpur and Selangor, and other states such as Perak, Johor, Negeri Sembilan, Melaka, Kedah, Sabah and Sarawak. This retail segment was the best performers among the retail sub-sector with 18.3 per cent growth during first month of 2006 (Economic Report, 2006/2007).

This study was confined to the hypermarket in Kota Kinabalu area. According to Trading Licence Listing(Table 1.1) from Kota Kinabalu City Hall, there are only two hypermarket in Kota Kinabalu, namely Giant and Servey Hypermarket & Parkwell.

Giant Hypermarket, which is owned by Giant Capital Holdings (GCH), is one of the largest hypermarkets in Malaysia. It was founded in 1944 by the Teng family in Kuala Lumpur. It's headquarter is based at Shah Alam, Selangor, meanwhile Sabah-Sarawak-Brunei Regional headquarter is located in Kolombong Outlet, Kota Kinabalu. Giant Hypermarket currently has around 1,000 employee in Sabah itself, and 10,000 employees in total nationwide. There are about 14 outlet store of Giant Hypermarket around Kota Kinabalu; 4 hypermarket, 7 supermarket and 3 superstore. However, this study will only focus in Giant Hypermarket which is located either in Kolombong, 1Borneo, Putatan and City Mall.

Furthermore, Servay & Parkwell are the homegrown Sabah & Sarawak proud success story, operating one of the leading hypermarket Sabah & Sarawak. It is formed in 1979 under Evergreen Trading (1979) Sdn Bhd. Under the group of companies, it encompasses 5 major subsidiaries companies label, they are the retail brands of:

  1. Servay Hypermarket (Sabah) Sdn Bhd
  2. Servay Supermarket Sdn Bhd
  3. Servay Hypermarket (Sandakan) Sdn Bhd
  4. Servay Jaya Superstore Sdn Bhd
  5. Parkwell Departmental Stores Sdn Bhd

Currently, Servay Hypermarket has 10 store outlet around Sabah; 4 hypermarkets, 5 supermarkets and 1 departmental store. However, this study will only focus in Servay Hypermarket in Kota Kinabalu which is located either in Penampang, Putatan, KK Plaza and Likas.

1.5 Significance of the Study

This research will endeavor to make both a theoretical and practical contribution to the existing literature:-

1.5.1 Significance to Body of Knowledge

This study will contribute additional knowledge to the construct of organizational commitment in relation to extrinsic and intrinsic rewards. Thus far, there is evidence that these rewards are positively related to Organizational Commitment (Neeru Malhotra., et al (2007), Bunmi Omolayo, A.B. Owolabi (2007), Ian O. Williamson at el., (2009), However, it is hoped this study will add to the body of knowledge in terms multidimensional construct of Organizational Commitment among hypermarket employees in Malaysia, especially in Kota Kinabalu.

1.5.2 Significance to Human Resource Practitioners

The significance of this research is aimed to produce some kind of practical guidance and benefits to the human resource managers in to help them better plan and move towards retaining their employees through designing a good and attractive rewards system. It is hoped that this study provides some valuable insights to any retail organization which seeks to create the appropriate work environment or establish the significant organizational rewards which encourage hypermarket employees to be committed to their current organization and continue their service with them.

Additionally, this study might contribute to a better understanding of three dimensional of organizational commitment, and also its role in enhancing employees' sense of attachment and membership to their organization. Therefore, the results of this research may guide human resource managers to incorporate organizational rewards to improve the work environment, motivational level, and retention, enhance O.C. and thereby reduce turnover, increase productivity, and enhance performance. Each committed employee is a vital ingredient to the success of any hypermarket organization.

1.6 Definition of Key Variable

In order to have a sound understanding of this study, the following are the definitions of the key variables for this study.

1.6.1 Rewards

Reward refers to all forms of financial returns, tangible services and benefits which an employee receives as part of an employment relationship (Bratton and Gold, 1994). According to Porter and Lawler (1968), rewards can be divided into two type; intrinsic and extrinsic rewards.

Katz and Van Maanan (1977) have further classified work rewards into three distinct categories of task, social and organizational rewards. Task rewards are intrinsic rewards, while social and organizational rewards are extrinsic rewards.

Extrinsic rewards are those that resulting from extrinsic, non-job-related factors. Social rewards (friendly, helpful and supportive co-workers and considerate supervisors) are those that are derived from interaction with others on the job; while organizational rewards (working conditions, pay satisfaction, benefits, and promotional opportunities) are those that are provided by the organization and are aimed at motivating performance and maintaining membership. On the other hand, intrinsic rewards are inherent in the content of the job itself. They include motivational job characteristics such as feedback (Hackman and Oldham, 1976). Individuals at all levels of the organization recognize the importance of continually upgrading their skills, and regard access to training as a ‘key element in the overall reward package' (Armstrong, 1993: 121). Training is regarded as an important non-financial motivator and thus can be considered as an intrinsic reward.

1.6.2 Organization Commitment

The concept of organizational commitment has been defined in many ways. Zheng Wei Bo et al (2009) had concludes the evaluation of OC from 1960-2009 in different period to defined Organization Commitment. From side-bet thinking till affective dependence even multi-dimension period, commitment author have identified different theories to explain the correlations between the foci of OC and outcome.

Commitment was initially defined and studied as one dimensional construct tied either to one's emotional attachment to an organizational (Porter et al., 1974), or to the costs associated with the exit (Becker, 1960). As work in this area progressed, this view of commitment converged and a new, multidimensional dimension framework was adopted base on three distinct but related form of commitment: affective, continuance and normative (Allen & Meyer, 1990). The affective commitment refer to sn emotional attachment and the involvement with an organization while continuance commitment denotes the perceived costs of leaving an organization (Allen & Meyer, 1991). Normative commitment ia newer addition to commitment to the commitment topology and its views as felt responsibility to support and remain a member of an organization (Allen & Meyer, 1990).

1.7 Summary and Organization Of The Study

This study present in three chapters. Chapter 1 concerned on the study overview, problem statement, research question and objectives, scope and significance of the study as well as definitions of key variables. Whereas Chapter 2 the Literature Review focus on the previous research and discusses the key variable such as extrinsic and intrinsic rewards as independent variables in this study as well as the dependant variable. In Chapter 3 represent the research methodology, in which explain how study is designed in terms of its sample size, data collection method, instrument and data analysis technique.

CHAPTER 2

LITERATURE REVIEW

2.0 INTRODUCTION

Encouraging employees to work and be committed toward achieving organization's goals and objectives is one of the most significant challenges for any management. It involves active relationship with the organization in which employees are willing to give something of them in order to help the organization to succeed and prosper. According to March and Simeon (1958:52), real commitment often evolves into an exchange relationship in which individuals attach themselves to the organization in return for certain rewards or outcomes.

Usually, employees will feel committed when their needs are met and fulfilled by their organizations. According to Maslow (1954), human needs are arranged in a hierarchical order, and once a need is satisfied, the individual move to the next unsatisfied need which now forms the basis for his/her behavior. These needs are the physiological needs (which include food, clothing, shelter, water, and sex), security needs (such as job security, protection of life and property), social needs (such as need for affection, friendship, and sense of belonging), esteem needs (which include need for recognition, accomplishment, achievement, and self respect), and self-actualization needs (which is the need for an employee to reach his/her highest potential at workplace in conquering his/her environment).

Rewards are something given or obtained in return for work done or service rendered. Vroom (1964:134) asserts that the expectation (reward) of employees on task performed motivates and encourages them to be committed. Thus, the higher the expectation of workers, the greater the commitment. On the other hand, the lesser the expectation of workers, the lower the commitment.

2.1 Literature Review & Conceptual Background

2.1.1 Organizational Commitment (OC)

Research on OC spans over four decade and remains an area of interest to both researchers and practitioners. Commitment of an employee to his or her employing organization or known as Organizational commitment (OC), has received much attention in the literature but different definitions continue to be used. Zheng Wei Bo et al (2009) had concludes the evaluation of OC from 1960-2009 as illustrated in Table 2.1. From side-bet thinking till affective dependence even multi-dimension period, commitment author have identified different theories to explain the correlations between the foci of OC and outcomes.

Table 2.1: Evaluation Of Organizational Commitment

PERIOD

SCHOLAR

CONCEPTION FRAME

MAIN IDEA

DEFINITION

Side-Bet Theory

Howard Becker

(1960)

Contractual relation

One dimension

OC lead to turnover

The relationship between employee and organization are base on contract of economy exchange behavior

Affective Dependence

Porter (1974, 1979), Mowday, Steers (1979)

Affective dependence

3 related factor; Strong acceptance, Participation and Loyalty

The relative strength of an individual's identification with and involvement in a particular organization;

· a strong belief in and acceptance of the organization's goals and values;

· a willingness to exert considerable effort on behalf of the organization;

· a strong desire to maintain membership in the organization

Multi-Dimension Period

O'Reilly & Chatman (1986)

Compliance, Internalization and Identification Commitment

Multi-dimension such as turnover, job search, withdraws absenteeism, lateness, job stress, organizational citizen behavior and so on.

Commitment as psychological attachment felt by person for the organization, reflect the degree to which individual internalizes or adopt the characteristics of the organization.

Meyer & Allen (1984,1990,

1997)

Continuous Commitment & Affective Commitment

OC is pychological state that bind the individu to the organization, its involve three dimensional construct;

· Affective: employees' emotional attachment to, identification with, and involvement in, the organization

· Continuance: based on the costs that employees associate with leaving the organization

· Normative: employees' feelings of obligation to remain with the organization

Normative Commitment

New Development

Cohen (2007)

Two dimension: time be parted of into before (propensity) and after (commitment attitude) one's entry into organization; Commitment be parted into Instrumental Commitment & Affective Commitment

Somers (2009)

Combined influence mechanism theory; 8 commitment profile: Highly committed, AC dominant, CC dominant, NC dominant, AC-CC, AC-NC, CC-NC dominant and Un-Commitment

Commitment was initially defined and studied as one dimensional construct tied either to one's emotional attachment to an organizational (Porter et al., 1974), or to the costs associated with the exit (Becker, 1960). As work in this area progressed, this view of commitment converged and a new, multidimensional dimension framework was adopted base on three distinct but related form of commitment: affective, continuance and normative (Allen & Meyer, 1990). The affective commitment refer to sn emotional attachment and the involvement with an organization while continuance commitment denotes the perceived costs of leaving an organization (Allen & Meyer, 1991). Normative commitment ia newer addition to commitment to the commitment topology and its views as felt responsibility to support and remain a member of an organization (Allen & Meyer, 1990).

Furthermore, the concept of commitment in the workplace is still one of the most challenging and researched concepts in the fields of management, organizational behavior and Human Resource Management. A great deal of research has been devoted to studying the antecedents and outcomes of commitment in work setting. The conceptual and operational development of organizational commitment has affected the conceptualization and measurement of other commitment forms such as commitment to the occupation, the job, the workgroup, the union and the work itself (Cohen, 2003; Gordon, Philpot et al., 1980; Morrow, 1993).

Blau and Boal (1987) discussed two approaches in defining commitment. The first one, referred as behavior approach where the individual viewed as committed to an organization if he/she is bound by past actions of “sunk cost” (fringe benefit, salary as a function of age or tenure) and the second one are referred as attitudinal approach where organizational commitment is viewed as a more positive individual orientation towards the organization; here, organizational commitment is defined as a state in which an employee identifies with a particular organization and its goal, and he/she wishes to maintain membership in the organization in order to facilitate its goals. Attitudinal commitment is affective in nature; employees are emotionally attached to the organization and view their goals and organizational goals are similar.

In summary, OC can be defined as a psychological state characterize an employee's relationship with the organization that has implication for the employee's decision whether to remain or leave the organization. Commitment reflects the employee's acceptance of the organization's goal and willingness to engage in the behavior that is specified in the job description. OC can be considered to be affective response or attitude which link or attach an employee to the organization. In the other words, OC can be defined as the degree to which an employees experiences a ‘sense of oneness' with their organization.

However, for the purpose of this study, the following definition of OC as provided by Allen and Meyer (1990) was used. It has become clear that during the last decade, OC was conceptualizing as multidimensional construct that involve three dimensions as mention before.

2.1.2 Allen's and Meyer's Model of Organization Commitment (OC)

Meyer and Allen (1990) had defined OC as pychological state that bind the individu to the organization. For that extend, they have developed a three component conceptualization of organizational commitment that has been labeled; affective commitment, continuance commitment, and normative commitment.

2.1.2.1 Affective Commitment

Affective commitment refers to the employee's emotional attachment to, identification with, and involvement that an employee has with its organization and goals. It is base on positive feeling or emotion toward the organization. Employees want to remain and are willing to exert effort on behalf of the organization because of the positive work experiences and benefits of the organization. Porter et al (1974) further characterize affective commitment by three factors:-

  1. Belief in and acceptance of the organization's goals and values,
  2. A willingness to focus effort on helping the organization achieve its goals, and
  3. A desire to maintain organizational membership.

Employees who have high levels of organizational identification have enhanced feelings of belongingness to their organization and are more psychologically attached to it. Thus, employees with strong affective commitment remain with the organization because they want to do so (Allen and Meyer 1996).

The antecedents of affective commitment include perceived job characteristic (task autonomy, task identity, skill variety and supervisory feedback), organizational dependability (extent to which employees feel the organization can be counted on to look after their interest), and perceived participatory management (extent to which employees feel they can influence decision on the work environment and the other issues of concern to them). Meanwhile, literature also indicates that both extrinsic as well as intrinsic rewards influence affective commitment (Allen and Meyer, 1990; Angle and Perry, 1983; Loscocco, 1990; Mathieu and Zajac, 1990; Meyer and Allen, 1991; Young et al., 1998).

2.1.2.2 Continuance commitment

Continuance commitment is based on Becker's side-bet theory (1960) and defined as commitment based on the costs that employees associate with if leaving the organization (due to the high cost of leaving). Anything that increases perceived costs such as side-bets, or investments such as losing attractive benefits or giving up seniority based privileges (e.g. pension funds), are generally considered as antecedents to continuance commitment.

Continuance commitmentis the willingness to remain in an organization because of the investment that the employee has with “nontransferable” investments. Nontransferable investments include things such as retirement, relationships with other employees, or things that are special to the organization. Continuance commitment also includes factors such as years of employment or benefits that the employee may receive that are unique to the organization. Meyer and Allen (1997) further explain that employees who share continuance commitment with their employer often make it very difficult for an employee to leave the organization.

Potential antecedents of continuance commitment include age, tenure, career satisfaction and intent to leave. Further, as continuance commitment is based on the ‘side-bets', extrinsic organizational rewards seem to be more highly related to this component of commitment (Mathieu and Zajac, 1990; Meyer, 1997; Wang, 2004)

2.1.3.3 Normative commitment

Normative commitment reflects an individual's feeling of obligation to maintain organizational membership because he/she believes it is morally right to be loyal to, stay in the organization. Employees with strong normative commitment expend their energy on behalf of the organization, because they feel they should do so. Normative commitment can be explained by other commitments such as marriage, family, religion, etc. Therefore when it comes to one's commitment to their place of employment, they often feel like they have a moral obligation to the organization.

The potential antecedents for normative commitment include co-worker commitment (including affective and normative dimension, as well as commitment behavior), organizational dependability and participatory management. Thus, like affective and continuance commitment, both extrinsic and intrinsic rewards are likely to have an impact on normative commitment as well (Meyer and Allen, 1991, 1997).

Meyer, Allen, & Smith (1993) say that the three types of commitment are a psychological state “that either characterizes the employee's relationship with the organization or has the implications to affect whether the employee will continue with the organization”. Meyer et al (1993) continue to say that generally the research shows that those employee's with a strong affective commitment will remain with an organization because they want to, those with a strong continuance commitment remain because they have to, and those with a normative commitment remain because they feel that they have to. Meyer & Allen (1997) define a committed employee as being one “stays with an organization, attends work regularly, puts in a full day and more, protects corporate assets, and believes in the organizational goals”. This employee positively contributes to the organization because of its commitment to the organization.

Affective, continuance, and normative commitment are not considered to be separate types of commitment distributed among employees. Rather, they are conceptually distinct and independent components of organizational commitment. An employee's relationship with an organization might reflect varying degrees of all three (Meyer & Allen, 1997). For example, an employee might feel both an emotional attachment to the organization and a sense of obligation to stay, but also might recognize that leaving would be very difficult from an economic standpoint. Another employee might experience a considerable degree of desire and need to remain with the current organization. Organizational commitment develops slowly and gradually stabilizes over time as the employee gains experience with the organization. It is assumed that the development of each commitment component is relatively independent of the other two. Each component may develop as the result of quite different antecedents, and the development of one component does not necessarily affect the level of another component.

2.2 Rewards

Reward refers to all forms of financial returns, tangible services and benefits which an employee receives as part of an employment relationship (Bratton and Gold, 1994). Work rewards according to Herzberg (1966), refer to all the benefits that workers receive from their jobs and are important determinants of employee job attitudes such as organizational commitment and job satisfaction.

According to Porter and Lawler (1968), rewards can be divided into two type; intrinsic and extrinsic rewards. Intrinsic rewards include completion, achievement, autonomy, and personal growth; extrinsic rewards include salary, wages, employee benefits, interpersonal rewards, and promotions (Ivancevich et al., 2005). “Intrinsic rewards are especially important for the development organizational commitment” (Ivancevich et al., 2005, p. 224).

Katz and Van Maanan (1977) have further classified work rewards into three distinct categories of task, social and organizational rewards. Task rewards are intrinsic rewards, while social and organizational rewards are extrinsic rewards.

Extrinsic rewards are those that resulting from extrinsic, non-job-related factors. Social rewards (friendly, helpful and supportive co-workers and considerate supervisors) are those that are derived from interaction with others on the job; while organizational rewards (working conditions, pay satisfaction, benefits, and promotional opportunities) are those that are provided by the organization and are aimed at motivating performance and maintaining membership. On the other hand, intrinsic rewards are inherent in the content of the job itself. They include motivational job characteristics such as feedback (Hackman and Oldham, 1976). Individuals at all levels of the organization recognize the importance of continually upgrading their skills, and regard access to training as a ‘key element in the overall reward package' (Armstrong, 1993: 121). Training is regarded as an important non-financial motivator and thus can be considered as an intrinsic reward.

However, in this study, about seven independent variable was identified in rewards (based on study by Malhotra et al (2007)) and the relationship with three component of commitment, as follow;

2.2.1 Extrinsic Rewards

2.2.1.1 Satisfaction with Fringe Benefits

Fringe benefits stand as an important component of worker compensation. Satisfaction with Fringe Benefits refers to the satisfaction perceived by employees from the fringe benefits package offered by the organization, for example paid leave, pension, healthcare, insurance, vacation, education/training etc. Fringe benefits form an important part of the HR practices employed by organizations to retain a satisfied and committed workforce (Meyer and Smith, 2000; Rust et al., 1996).

2.2.1.2 Pay Satisfaction

Pay satisfaction implies the satisfaction with the amount of pay one gets for the amount of work done, as well as satisfaction with pay compared to the amount paid in similar organizations. Pay satisfaction is determined by two perceptions. The first perception is based on how much pay the employee believes he should receive, and the second perception is based on how much pay is actually received. Employees will be satisfied if the two perceptions are identical (Law & Wong, 1998; Lawler, 1971; Lawler, 1981). Pay is a reward, and “satisfaction with a reward is a function both of how much is received and how much the individual feels should be received” (Ivancevich, Konopaske, & Matteson, 2005, p. 216). In this study, pay satisfaction referred to the perceived level of satisfaction concerning pay and remuneration among workers in Hypermarket.

2.2.1.3 Promotional Opportunities

Promotion is defined as upward movement in an organization's hierarchy (Madsker and Berger, cited in Bagdadli et al. 2006). Promotional opportunities here refer to the adequacy and satisfaction perceived by the employees as regards the promotion policy of the organization, and also as regards the opportunities available for advancement. Opportunities for advancement and career development are crucial, since they form an integral part of the HRM practices that aim to foster organizational commitment among employees (Meyer and Smith, 2000). In fact, satisfaction with promotional opportunities has emerged as one of the most powerful determinants of organizational commitment (Young et al., 1998).

2.2.1.4Working Condition

Working condition can be defined as the surrounding of an employee in a certain work area (Spreckelmeyer, K.F;1993). Organizational researcher has demonstrated that the physical working condition has an impact on outcome variables such as satisfaction, motivation and behaviour (Becker, 1981: Carlopio, 1991; Sundstorm, 1982). Herzberg's two factor theory (motivation and hygiene) also mention that benefits or rewards programme was necessary and sufficient working condition. Since most of employees in Hypermarket spend the best part of their day at work, good working condition offered by organization are likely to be perceived as important reward and should make them more enjoy doing their job and be committed towards their organization.

2.2.2 Intrinsic Reward

2.2.2.1 Supervision

Supervision refers to the extent to which employees perceive their supervisor to be considerate, and are satisfied with him or her. Consideration captures the socio-emotional concern of the supervisor (Singh, 1993), and supervisory consideration refers to leader behaviours concerned with promoting the comfort and well-being of their subordinates (Boshoff and Mels, 1995). Within the context of Malaysian, it is found that most Malaysians are interested in building and maintaining good relationships with the people with whom they work, and they are also motivated if given the opportunity to show and receive recognition and respect from their superiors, peers and subordinates (Asma 1996, Khaliq 2005). Thus, in the Malaysian context, managers play an important role in motivating workers because Malaysian workers place very high importance on interpersonal relations. As observed by Herbig and Genestre (1997) in their study of South Asian countries (including Malaysia), these work values and group orientation towards the maintenance of harmony and avoidance of social behaviors that can damage the cohesiveness, are highly valued. Literature also suggests that employees who have considerate superiors and are satisfied with them will be more committed to their organization than those who do not have such leaders (De Cotiis and Summers, 1987; Mottaz, 1988; Wang, 2004). Good supervision has been found to influence employees' job attitudes (Eby et al., 1999; Lok and Crawford, 2001).

2.2.2.2. Training

Training is perceived both as a significant ‘reward' in the overall development package offered to the employees (Armstrong, 2001) and as an ‘investment' made by the employer (Meyer, 1997), which according to the exchange perspective, is likely to promote feelings of reciprocation and obligation on the part of the employees to stay with the organization. In this context, training is likely to influence the organizational commitment of the employees.

Training can be defined as the organizational activities designed to change employees through the learning process so that they can perform their job efficiently (Maimunah Aminuddin, 2005). All training programme are design either to change attitude, develop skill and impart knowledge. According to Wood and De Menezes (1998); and Chew and Chan (2007), training can be used to enhance job specific skills, correction of deficiencies in job performance and development of employees with abilities the organization might need in the future. There have been instances where trained individuals become more marketable and consequently might leave the organization; contemporary studies have demonstrated that training and development affect job attitudes (Chew and Chan, 2007). The literature has shown that employee empowerment through training activities not only help to develop these employees but also help to enhance their commitment to the organization (McEvoy, 1997)

2.2.2.3 Feedback

Feedback is information about employees' performance that can be use to improve the result and/or underlying process. Usually, feedback received from supervisor in terms of how well the employee's being perform, and includes the recognition and praise received from their immediate superior for good service delivered (Hackman and Oldham, 1976; Young et al., 1998). According to Alexender Hiam (2003), feedback will more clarity when it is specific, accurate, informatics and controllable.

2.3 Relationship between Rewards and Organizational Commitment

Many studies have proved that OC is positively correlated with job performance, job satisfaction, motivation and organizational citizen behaviour while negative associated with turnover and absenteeism (Nazim Ali, Qadar Bakhsh Baloch). However, a little was known about relationship between rewards and commitment. As we know, in organization reward play important roles in build and maintaining the commitment among employees to ensure the high standard of performance and productivity. Beer et al. (1984, p. 117) also mention that “Organisations must reward employees because, in return, they are looking for certain kinds of behaviour: they need competent individuals who agree to work with a high level of performance and loyalty. Individual employees, in exchange for their commitment, expect certain extrinsic rewards in the form of promotions, salary, fringe benefits, bonuses, or stock options. Individuals also seek intrinsic rewards such as feelings of competence, achievement, responsibility, significance, influence, personal growth, and meaningful contribution. Employees will judge the adequacy of their exchange with the organisation by assessing both sets of rewards.”

According to Lawler (2003), there are at least two factors that determine the attractiveness of a rewards; one is how much of the rewards is being offered and the second is how much the individual value the type of reward that is being offered. He argue that the more the individual values the type of rewards and the more of it is being offered, the greater the motivational and commitment potential.

Research findings indicate the importance of both extrinsic and intrinsic rewards in determining organizational commitment (Allen and Meyer, 1990). However, according to Malhotra et al(2007), there are two views prevalent in literature regarding extrinsic and intrinsic rewards. One stream of research supports the view that extrinsic rewards are more powerfully associated with commitment than intrinsic rewards because organizations have more direct control over extrinsic rewards in comparison to intrinsic rewards. Another stream of research supports the view that intrinsic rewards are more powerful determinants of organizational commitment than extrinsic rewards (Brief and Aldag, 1980; Eby et al., 1999; O'Reilly and Caldwell, 1980), and commitment strategies should focus on intrinsic rewards; extrinsic rewards such as compensation, benefits, bonuses and perks, are secondary in nature, and can be used to support such strategies.

The previous researcher regarding the relationship between rewards and OC can be depicted in Table 1.2

2.4 Conclusion

This chapter has presented an extensive review of the literature on the topic of organizational commitment and rewards. It was found from the previous studies that there was a significant relationship between extrinsic (satisfaction with fringe benefits, pay satisfaction, promotional opportunities and working condition) and intrinsic (supervision, feedback and training) rewards and Organizational Commitment (affective, continuance and normative). Base on the finding, it will help the researcher to discuss and to drop off the unbalance situation in term of understanding these relationship, particularly in retail industry which is hypermarket at Kinabalu area. This chapter serves as a guide in formulating the research framework which will be presented in the next chapter.

CHAPTER 3

RESEARCH METHODOLOGY

3. OIntroduction

This chapter outlines the methodology employed in the study. It begins with a review of the theoretical framework. Then, it provides the hypotheses developed in this study. Also, the chapter presents research design, unit of analysis, research location, population and sample, the research instrument, data collection procedures as well as the data analysis technique.

3.1Theoretical Framework

Based on the related theories and literature review presented in the previous chapter, a framework has been developed to investigate the relationship between rewards and organization commitment among workers in hypermarket (Kota Kinabalu).

According to Sekaran (2003:87), “a theoretical framework is a conceptual model of how one theorizes or makes logical sense of the relationships among the several factors that have been identified as important to the problem”. The chosen framework will explore the relationship between independent variable, which is rewards. There are two type of rewards; extrinsic rewards and intrinsic rewards and some researcher has classified rewards into three distinct categories of task, social and organizational rewards. However, in this study about seven independent variable was chosen base on study conducted by Malhotra et al (2007), namely satisfaction with fringe benefits, pay satisfaction, promotional opportunities, working condition, supervision, training and feedback. Whereas, dependent variable is organizational commitment comprises three component which is affective, continuance and normative commitment. Figure 3.1 displays the theoretical framework for this study.

Independent VariablesDependent Variable

Rewards

Extrinsic Organizational

Rewards

Satisfaction With Fringe Benefits

Pay Satisfaction

Promotional Opportunities

Working Condition

Extrinsic

Social Rewards

Supervision

Intrinsic Reward

Feedback

Training

Model Of Organizational Commitment

(Allen & Meyer, 1990)

-Affective (A.C)

-Continuance (C.C)

-Normative (N.C)

Source: Adapted From Malhotra et al (2007)

3.2 Definition of Variable & Hypothesis

There are seven element of independent variable in this study such as satisfaction with fringe benefits, pay satisfaction, promotion opportunities, working condition, supervision, training and feedback.

3.2.1 Satisfaction with Fringe Benefits

Fringe benefits stand as an important component of worker compensation. Satisfaction with Fringe Benefits refers to the satisfaction perceived by employees from the fringe benefits package offered by the organization, for example paid leave, pension, healthcare, insurance, vacation, education/training etc. Fringe benefits form an important part of the HR practices employed by organizations to retain a satisfied and committed workforce (Meyer and Smith, 2000; Rust et al., 1996). Keeping reciprocity norm in view (Haar and Spell, 2004), satisfaction with fringe benefits is likely to enhance all the three components of commitment. Therefore, it is hypothesized that;

H1: There is a significant relationship between satisfaction with fringe benefits and Organizational Commitment.

H1 a: There is a significant relationship between satisfaction with fringe benefits and Affective Commitment (A.C)

H1 b: There is a significant relationship between satisfaction with fringe benefits and Continuance Commitment (C.C)

H1 c: There is a significant relationship between satisfaction with fringe benefits and Normative Commitment (N.C)

3.2.2 Pay Satisfaction

Pay satisfaction implies the satisfaction with the amount of pay one gets for the amount of work done, as well as satisfaction with pay compared to the amount paid in similar organizations. Pay satisfaction has been found to impact on job attitudes significantly (Eby et al., 1999; Loscocco, 1990). Pay satisfaction has been found to affect organizational commitment both positively (Loscocco, 1990; Mottaz, 1988; Tsai et al., 2005) as well as negatively (Eby et al., 1999), although empirical evidence with respect to the three-component model is negligible. In hypermarket where employee turnover is high, pay satisfaction is likely to act as a binding force that would commit theseemployees to the organization, by enhancing all the three components of commitment. Hence, it is hypothesize that:

H2: There is a significant relationship between pay satisfaction and Organizational Commitment.

H2 a: There is a significant relationship between pay satisfaction and Affective Commitment (A.C)

H2 b: There is a significant relationship between pay satisfaction and Continuance Commitment (C.C)

H2 c: There is a significant relationship between pay satisfaction and Normative Commitment (N.C)

3.2.3 Promotion Opportunities

Promotion is defined as upward movement in an organization's hierarchy (Madsker and Berger, cited in Bagdadli et al. 2006). Promotional opportunities refer to the adequacy and satisfaction perceived by the employees as regards the promotion policy of the organization, and also as regards the opportunities available for advancement. Opportunities for advancement and career development are crucial, since they form an integral part of the HRM practices that aim to foster organizational commitment among employees (Meyer and Smith, 2000). In fact, satisfaction with promotional opportunities has emerged as one of the most powerful determinants of organizational commitment (Young et al., 1998). The literature indicates that employees tend to be more committed towards their organization if they perceive enough opportunities available for their advancement (Loscocco, 1990; Meyer and Smith, 2000; Motta, 1988; Young et al., 1998). Hence, it is hypothesize that:

H3: There is a significant relationship between promotion opportunities and Organizational Commitment.

H3 a: There is a significant relationship between promotion opportunities and Affective Commitment (A.C)

H3 b: There is a significant relationship between promotion opportunities and Continuance Commitment (C.C)

H3 c: There is a significant relationship between promotion opportunities and Normative Commitment (A.C)

3.2.4 Working Condition

Working condition can be defined as the surrounding of an employee in a certain work area (Spreckelmeyer, K.F; 1993). Organizational researcher has demonstrated that the physical working condition has an impact on outcome variables such as satisfaction, motivation and behaviour (Becker, 1981: Carlopio, 1991; Sundstorm, 1982). Herzberg's two factor theory (motivation and hygiene) also mention that benefits or rewards programme was necessary and sufficient working condition. Since most of employees in Hypermarket spend the best part of their day at work, good working condition offered by organization are likely to be perceived as important reward and should make them more enjoy doing their job and be committed towards their organization. Thus, based on such an assumption it is hypothesize that:

H4: There is a significant relationship between working condition and Organizational Commitment.

H4 a: There is a significant relationship between working condition and Affective Commitment (A.C)

H4 b: There is a significant relationship between working condition and Continuance Commitment (C.C)

H4 c: There is a significant relationship between working condition and Normative Commitment (N.C)

3.2.5 Supervision

Supervision refers to the extent to which employees perceive their supervisor to be considerate, and are satisfied with him or her. Consideration captures the socio-emotional concern of the supervisor (Singh, 1993), and supervisory consideration refers to leader behaviours concerned with promoting the comfort and well-being of their subordinates (Boshoff and Mels, 1995). Literature suggests that employees who have considerate superiors and are satisfied with them will be more committed to their organization than those who do not have such leaders (De Cotiis and Summers, 1987; Mottaz, 1988; Wang, 2004). Good supervision has been found to influence employees' job attitudes (Eby et al., 1999; Lok and Crawford, 2001). Based on such a belief, it is hypothesized that:

H5: There is a significant relationship between supervision and Organizational Commitment

H5 a: There is a significant relationship between supervision and Affective Commitment (A.C)

H5 b: There is a significant relationship between supervision and Continuance Commitment (C.C)

H5 c: There is a significant relationship between supervision and Normative Commitment (N.C)

3.2.6 Training

Training is perceived both as a significant ‘reward' in the overall development package offered to the employees (Armstrong, 2001) and as an ‘investment' made by the employer (Meyer, 1997), which according to the exchange perspective, is likely to promote feelings of reciprocation and obligation on the part of the employees to stay with the organization. In this context, training is likely to influence the organizational commitment of the employees.

Training is considered essential for employees in Hypermarket. Training refers to employees' perceptions as regards to induction and continuous and regular training received by them for providing quality service. Study by Ahmad and Bakar (2003) on Malaysian managers had/was found that training was found to be significantly and positively related with affective, narrative and overall organizational commitment (employee motivation, 349). Thus, it is hypothesized that:

H6: There is a significant relationship between training and Organizational Commitment

H6 a: There is a significant relationship between training and Affective Commitment (A.C)

H6 b: There is a significant relationship between training and Continuance Commitment (C.C)

H6 c: There is a significant relationship between training and Normative Commitment (N.C)

3.2.7 Feedback

Feedback is refers to employees' perceptions of the feedback received from their supervisor in terms of how well they are performing, and include the recognition and praise received from their immediate superior for good service delivered (Hackman and Oldham, 1976; Young et al., 1998). The literature suggests that feedback is an important job characteristic affecting employees' organizational commitment. Feedback provides the intrinsic motivation, and is an important motivational characteristic that influences job design (Armstrong, 2001). Effective feedback reduces stress as it helps employees to cope with the pressures of hypermarket work and thus, is likely to enhance their commitment, as increased stress has been found to be one of the main causes of lower commitment and employee turnover in retail industry. Hence, it is hypothesize that:

H7: There is a significant relationship between feedback and Organizational Commitment

H7 a: There is a significant relationship between feedback and Affective Commitment (A.C)

H7 b: There is a significant relationship between feedback and Continuance Commitment (A.C)

H7 c: There is a significant relationship between feedback and Normative Commitment (N.C)

Whereas the element of dependent variable use in this study is Organizational Commitment which are comprises of affective commitment, continuance commitment and normative commitment.

3.2.8 Affective Commitment

Affective commitment is defined as the emotional attachment, identification with, and involvement that an employee has with its organization and goals. Employees want to remain, are willing to exert effort on behalf of the organization because of the positive work experiences and benefits of the organization. Porter et al (1974) further characterize affective commitment by three factors:-

  1. Belief in and acceptance of the organization's goals and values,
  2. A willingness to focus effort on helping the organization achieve its goals, and
  3. A desire to maintain organizational membership”.

Employees who have high levels of organizational identification have enhanced feelings of belongingness to their organization and are more psychologically attached to it. Thus, employees with strong affective commitment remain with the organization because they want to do so (Allen and Meyer 1996).

3.2.9 Continuance Commitment

Continuance commitment is based on Becker's side-bet theory (1960) and is defined as commitment based on the costs that employees associate with leaving the organization (Meyer and Allen, 1991). Anything that increases perceived costs, such as side-bets or investments such as losing attractive benefits or giving up seniority based privileges (e.g. pension funds), are generally considered as antecedents to continuance commitment.

3.2.10 Normative Commitment

Normative commitment reflects an individual's feeling of obligation to maintain organizational membership because he/she believes it is morally right to be loyal to, stay in the organization. Employees with strong normative commitment expend their energy on behalf of the organization, because they feel they should do so. Normative commitment can be explained by other commitments such as marriage, family, religion, etc. therefore when it comes to one's commitment to their place of employment they often feel like they have a moral obligation to the organization.

3.3 Research Design

This study aims to investigate the relationship between rewards and organizational commitment among workers in hypermarket (Kota Kinabalu). This section provides an overview of the research design which includes the unit of analysis, research location, sampling design as well as the research instrument, data collection procedures and data analysis techniques that were used in this study.

3.3.1 Unit of Analysis

Basically, this research focuses on individual unit of analysis in order to examine the relationship between rewards and organizational commitment within this organization. Unit of analysis refer to all employees in Hypermarket (Kota Kinabalu).

3.3.2 Research Location and Population

This study was confined to the hypermarket in Kota Kinabalu area. According to Trading Licence Listing(Table 1.1)from Kota Kinabalu City Hall, there are only two hypermarket in Kota Kinabalu, namely Giant and Servey Hypermarket & Parkwell.

Giant Hypermarket, which is owned by Giant Capital Holdings (GCH), is one of the largest hypermarkets in Malaysia. It was founded in 1944 by the Teng family in Kuala Lumpur. It's headquarter is based at Shah Alam, Selangor, meanwhile Sabah-Sarawak-Brunei Regional headquarter is located in Kolombong Outlet, Kota Kinabalu. Giant Hypermarket currently has around 1,000 employee in Sabah itself, and 10,000 employees in total nationwide. There are about 14 outlet store of Giant Hypermarket around Kota Kinabalu; 4 hypermarket, 7 supermarket and 3 superstore. However, this study will only focus in Giant Hypermarket which is located either in Kolombong, 1Borneo, Putatan and City Mall.

Servay & Parkwell are the homegrown Sabah & Sarawak proud success story, operating one of the leading hypermarket Sabah & Sarawak. It is formed in 1979 under Evergreen Trading (1979) Sdn Bhd. Under the group of companies, it encompasses 5 major subsidiaries companies label, they are the retail brands of:

  1. Servay Hypermarket (Sabah) Sdn Bhd
  2. Servay Supermarket Sdn Bhd
  3. Servay Hypermarket (Sandakan) Sdn Bhd
  4. Servay Jaya Superstore Sdn Bhd
  5. Parkwell Departmental Stores Sdn Bhd

Currently, Servay Hypermarket has 10 store outlet around Sabah; 6 hypermarkets, 3 supermarkets and 1 departmental store. However, this study will only focus in Servay Hypermarket in Kota Kinabalu which is located either in Penampang, Putatan and Likas dan KK Plaza.

Kota Kinabalu is the most developed region in Sabah also as capital of Sabah, where most of the commercial, business and industries can be found in this area. Nevertheless, most of the modern retail establishments are also located in this area. Yearbook Of Statistic, Sabah 2009 was estimated total of 24, 276 employed population in wholesale and retail trade category are working in Kota Kinabalu area, which is the highest in Sabah. Kota Kinabalu also was chosen by reseacher, it is because the reseacher live and working in Kota Kinabalu.

3.3.2.1Sampling Frame

As mention before, there are two hypermarket in Kota Kinabalu, namely Giant and Servay & Parkwell. Sampling frame is acquired from Giant and Servay & Parkwell website which was providing the list of store location base on types of retail; either hypermarket, supermarket or super store, together with telephone number and address. From the list, there are about 8 hypermarket outlet has been identified around Kota Kinabalu, however the subject matter or element for sampling was choose collectively because of quick, convenience and the location area is near to researcher office, easy to locate and less expensive in term of transportation.

3.3.2.2Sampling Size

As such, the sampling method used for this research is non-probability convenience sampling to conduct the research. According to Uma Sekaran and Roger Bougie (2009), convenience sampling refers to collection of information from members of population who are conveniently available to provide it. The reason for choosing convenience sampling is base on easy accessibility of management and employees in hypermarket in nearby area.

In this study, a minimum sample size about 278 respondents was targeted. According to interview via telephone with HR Manager of Giant Hypermarket, currently they has around 1,000 employee in Sabah itself, however, about 350 employees was counted in Kota Kinabalu area. Whereas, Servay Hypermarket estimated a total of 300 employees working in Kota Kinabalu area ( Servay HR Manager).

According to Krejcie and Morgan (1970) as cited by Uma Sekaran & Roger Bougie (2009), size decision was greatly simplified by providing table that ensure a good decision model. As referring the table 1.3 (sample size for a give population size) that they have mention, this study was targeted about 278 respondent from a total of 650 employees in Giant and Servay Hypermarket.

For the data collection, questionnaires will distribute to individuals who are working in Giant and Servay hypermarket, in all level or job position.

3.3.3Research Instrument Design

For this study, the research instrument was a six-page self-administered questionnaire, including a separate cover letter to introduce the nature of the study to the respondents. The questionnaire was adapted from Malhotra et al (2007) who was studied about linking rewards to commitment of four UK call centres.

The questionnaire contained three sections; the first section, section A, requests demographic details about the respondent including gender, age, race, level of education, marital status, current job position, income, length of employment at current job and employment status. This information is useful for providing descriptive statistics on respondents.

Section B and C utilized the 5-point Likert Scale, an interval scale, which requires the respondents to indicate their levels of agreement and disagreement by circling the number which best represents their opinions and perceptions. The strength of agreement or disagreement can be reflected in the score assigned (Cooper and Schindler, 2006; Sekaran 2003).

1

2

3

4

5

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

Table 3.2 : Point Likert Scale Response

Section B contained 18 questions to measure seven independent variables or rewards examined in this study. B-I focused on Satisfaction With Fringe Benefits; B-II on Pay Satisfaction B-III Promotion Opportunities, B-IV on Working Condition, B-V focused on Supervision B-VI focus on Training and B-VII was focused on Feedback. The third section, section C, contained 18 questions which examined respondents' level of perception of three model of organizational commitment, the dependent variable. These measures were based on the reduced 18-item scale by Allen and Meyer (1991).

3.3.4Selection Of Measure

3.3.4.1Organizational Commitment

This was measured using the revised 18 item scale of Meyer et al (1993). This scale has been extensively and reliably used in a number of studies for measuring the three components model of commitment (Jacobsen, 2000; McDonald and Makin, 2000) and has been well accepted for demonstrating high reliability and validity.

3.3.4.2 Extrinsic Rewards

Working condition and were measured by a two-item scale developed by Malhotra et al. (2007). Pay satisfaction was measured with a three-item scale also developed by Malhotra et al. (2007) where the extrinsic job satisfaction scale used by Boshoff and Allen (2000) and the Job Satisfaction Survey develop by Spector (1997) were used. Satisfaction with fringe benefits was operationalized and measured with a two-item scale drawn from Spector's (1997) Job Satisfaction Survey. Promotional opportunities were operationalize using two-item scale, with the items drawn from scales used by Mottaz (1998) and Young et al.

3.3.4.3 Intrinsic Rewards

Feedback was measured with a three-item scale developed by Hackman and Oldham (1976) and Young et al. (1998) and Training was measured by a three item scale, generated by Boshoff and Allen (2000). Whereas Supervision was operationalized from an adapted scale base on House and Dessler (1974), which as earlier been tested by Teas (1981) and Singh (1993).

3.4 Data Collection Prosedure

The surveys were distributed via personal contacts, networks and their extended networks. The survey questionnaires will be hand delivered and by meeting with their HR Manager in this organization.

3.5 Data Analysis Method

The data collection through the questionnaire will be analyzed using the Statistical Package for Social Science (SPSS) program. Data will be analyze using descriptive statistics to provide a summary of respondent profiles. Whereas, multiple linear regression technique will be use to examine the relationship between independent variables and dependent variable.

3.6 Summary

This chapter has presented the research methodology for this study. This chapter has clarified the following aspects of this study including theoretical framework research hypotheses, research design, unit of analysis, research location and population; sampling design and sample size. Also, the chapter presented the research instrument design, data collection procedures and finally, the data analysis technique.


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