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Corporate social responsibility towards employee loyalty in hotel industry (Case study in Harris Hotel Tebet, Jakarta)

 

How to cite this article:

Wiastuti, Rachel Dyah. (2016). Corporate social responsibility towards employee loyalty in hotel industry (Case study in Harris Hotel Tebet, Jakarta). Proceeding of The 3rd International Hospitality and Tourism Conference (IHTC) and The 2nd International Seminar on Tourism (ISOT). Universitas Pendidikan Indonesia and Univerisiti Teknologi MARA Malaysia. October 10-12th, 2017. Bandung. Indonesia

Corporate social responsibility towards employee loyalty in hotel industry (Case study in Harris Hotel Tebet, Jakarta)

 

R.D. Wiastuti

Bina Nusantara University, Jakarta Barat, DKI Jakarta, Indonesia

rwiastuti@binus.edu

ABSTRACT: The purpose of this paper is to determine the influence of Corporate Social Responsibility (CSR) on employee loyalty. This paper use quantitative approach with hypothesis test. Respondents are hotel employees. A survey was conducted among 110 employees in Harris Hotel Tebet, Jakarta. Primary data collected by survey with close structure questionnaire in optional answer with Likert scale. The data were analyzed using correlation and multiple regression; with three independent variables (CSR economic, CSR environment, CSR social) and one dependent variable (employee loyalty). The result shows that there is a significant value between CSR and employee loyalty in Harris Hotel Tebet. Thus by improving CSR program, hotel will be able to enhance employee loyalty, with the consideration that CSR economic has the most influence, followed by CSR environment, and CSR social as the least one

Keywords: Corporate social responsibility, employee loyalty, hotel

1                      INTRODUCTION

1.1       Background

Corporate social responsibility (CSR) and employee engagement are two of the most discussed issues in the business world today (Gross, 2010). Company’s reputation as a responsible corporate citizen and its involvement in CSR activities is one of the main factors that stimulate employee engagement (CSR Europe, 2010). Krisztina (2013) believe that modern organizations should not underestimate the importance of CSR. Kotler and Lee (2005) defined CSR as a commitment to improve community well-being through discretionary business practices and contributions of corporate resources. The role of CSR on employees is becoming more present in the business world, companies might attract, retain the best work force (Bhattacharya et al., 2008). A previous study identifies that CSR practices perceived by employees are positively related to employee commitment (Brammer et al., 2007). CSR activities can improve the relation with internal stakeholders and can increase the loyalty of a firm’s employees (Portney, 2008). Employee perceptions about CSR practices, can affect loyalty (Rego et al., 2010). CSR activities have an impact on current employees’ commitment towards their employer (Turker, 2008). It is important to understand that CSR can be used as a human resources management strategy for improving organizational commitment and employee retention (Chiang, 2010).

1.2       Purposes of the study

            Therefore, the purpose of this study is to determine the influence of Corporate Social Responsibility (CSR) in economic, environment and social towards employee loyalty in Harris Hotel Tebet, Jakarta. The objectives of the study are to (1) to analyze the influence of CSR economic on employee loyalty, (2) to analyze the influence of CSR environment on employee loyalty, (3) to analyze the influence of CSR social on employee loyalty, (4) to measure employee perception of CSR activities conduct by hotel management, (5) to measure employee loyalty

2                      LITERATURE REVIEW

2.1       Corporate Social Responsibility (CSR)

CSR is a company’s activities in order to handle social issues through economic improvement, improvement of quality of life and reduce the impact of its operations on the environment, follow the laws and regulations in force, which in the long term has the advantage for the company and community development (Fajar, 2010). The Organization for Economic Cooperation and Development defined CSR as a business’s contribution to sustainable development and that corporate behavior must not only ensure returns to shareholders, wage to employees and products and services to consumers, but they must respond to societal and environmental concern and value (Kartini, 2009). Kotler (2006) said that every company should consider two things; business ethics and CSR. Business ethics focused on employee behavior. CSR focused on the contribution that can be given to the interests of society. Both are equally important and a number of companies have appointed high-ranking officials who should be responsible for these two functions.

2.2       Corporate Social Responsibility in Economic

According to Tanari (2009), measurement of CSR economic consist of eight indicators; good financial performance, good capital investment, obey to tax payment, no corruption, no conflict of interest, not in the support for corrupt government, respect to individual intellectuality, not giving funding to politician. Due to prohibition from hotel management, this study uses only six indicators instead of eight. These two indicators were excluded; not giving funding to politician and good capital investment. Furthermore, this will become hypothesis study

H1; CSR economic significantly influence employee loyalty

 2.3       Corporate Social Responsibility in Environment

            According to Tanari (2009), measurement of CSR environment consist of eight indicators; no contamination, no contribution to global warming, no contribution to pollution, no water wasting, no energy inefficiency, no conflict for land ownership, no noise pollution, preserve natural living. Due to prohibition from hotel management, this study uses only five indicators instead of eight. These three indicators were excluded; no contamination, no conflict for land ownership and no noise pollution. Furthermore, this will become hypothesis study

H2; CSR environment significantly influence employee loyalty

2.4       Corporate Social Responsibility in Social

            According to Tanari (2009), measurement of CSR economic consist of nine indicators; no children employed, assurance for employee and surrounding society healthcare, give positive impact to society, provide customer protection, respect diversity, respect privacy, do social activities, responsible for outsourcing process, easy access. Due to prohibition from hotel management, this study uses only six indicators instead of eight. These three indicators were excluded; give positive impact to society, responsible for outsourcing process and easy access. Furthermore, this will become hypothesis study

H3; CSR social significantly influence employee loyalty

2.5       Employee Loyalty

       Loyalty is to put the company’s interests above personal interests (Poerwopoespito, 2002). Loyalty reflected by the willingness of employees to maintain and defend organizations within and outside the work of irresponsible people (Hasibuan, 2003). Loyalty related to the level of trust is a desire to protect and save face for others. When someone has the loyalty and trust of a thing, then that person is willing to sacrifice and faithful to the things that he believed for (Robbins, 2003)

       According Poerwopoespito (2002; 58) loyalty can be described by 10 attitudes; honesty, having a sense of ownership of companies, understand companies’ difficulties, working more than what company requested, creating a pleasant atmosphere in the company, do not leaking company secrets, maintain and enhance the corporate image, efficient, do not inflict demonstrations or protests, do not prejudice against the company.

2.6       Corporate social responsibility in economic, environment and social towards employee loyalty

            Kotler and Lee (2005), defined 14 benefit of conduct CSR, one of them is increasing the ability to attract, motivate and retain employees. While Lako (2011) defined 7 benefit of CSR, one of them is increasing commitment, work ethic, and efficiency and employee productivity. Fig 1 shows conceptual framework of this study

H4: CSR economic, CSR environment and CSR social, all together, significantly influence employee loyalty

3                      METHODOLOGY

3.1       Respondent and data collection method

            Unit analysis is individual whom employee of Harris Hotel Tebet Jakarta. Total hotel employee is 110 people. All population complies as unit analysis of this research. From total 110 questionnaires distributed, of which 97 were returned for a response rate of 88.18 %. However, only 86 set of questionnaires or 78.18 % were properly completed and eventually collated for this study. A drop off method was used in distributing the questionnaire. Interview also conducted with Human Resources Manager of Harris Hotel Tebet to gather CSR database

3.2       Questionnaire design

The questionnaire designed with close questions with optional given answer. Questionnaire consists of seven sections. First sections accumulated demographic details in term of gender, marital status, age, domicile, and length of working. Second sections assessed acknowledgement about CSR in general, consist of four questions. Third section assessed CSR economic that consist of six questions. Fourth section assessed CSR environment that consist of five questions. Fifth section assessed CSR social that consist of six questions. Sixth section  assessed employee loyalty that consist of 15 questions.  Last section assessed conclusion question and suggestion. All sections used five point Likert scale, where ‘1’ represents the lowest agree and ‘5’ represents strongly agree

A pilot study has been conducted to test validity and reliability. Data showed to be reliable with Cronbach’s Alpha value of 0.950. According to DeVellis (2003), if Cronbach’s a value is 0.6 it is “acceptable”, whereas if Cronbach’s a value is 0.7 it is “respectable”. Nunnally (1978) suggests that reliability coefficients (Cronbach’s a) around 0.90 are considered as “excellent”, values around 0.80 for “basic research” and values between 0.5 and 0.60 for “exploratory research”, as cited in (Skudiene & Auruskeviciene, 2012). With Cronbach’s Alpha value of 0.950 for this study, meaning that all CSR and employee loyalty variable are considered as reliable.

Another study conducted for All Corrected Item- Total correlation. With all questions valued bigger than r table of 0.212, meaning that all CSR and employee variable are considered as valid.

3.3       Data analysis method

            This study consists of three independent variables (CSR economic, CSR environment, CSR social) and one dependent variable (employee loyalty). Data were analyzed with SPPS 17.0. Descriptive statistics, correlation analysis and multiple regression analysis were conducted furthermore, as well as hypothesis testing

4                      FINDINGS & DISCUSSION

4.1       Demographic respondent

A review of respondent’s demographic profile reveal that the majority of respondent are male (85%), single marital status (66%), age of 31-40 years old (44%), domicile in Jakarta (66%), and has been working more than five years (40%), as seen in Table 1

4.2       Correlation analysis

Correlation analysis is used to holistically inspect the overall pattern of relationship between the variables (Skudiene & Auruskeviciene, 2012). Correlation analysis used Pearson Product Moment. Table 2 shows the results where cooficient value of CSR1-EL 0.577, CSR2-EL 0.526, CSR3-EL 0.502, all are in a range of 0.5-0.74 that shows CSR has quite strong correlation with employee loyalty. All value showed ** which reflect that the correlation is significant

Table 3 shows a model summary in which the value of R Square is 0.397, which means that the effect of the CSR economic (X1), CSR environment (X2) and CSR social (X3), all together, influence employee loyalty (Y) as 39.7%, while 60.3% influenced by other factors beyond the CSR

Table 1. Profile of respondents

Category Items n %
Gender Male 73 85
Female 13 15
Marital status Single 57 66
Married 29 34
Age < 21 years old 6 7
21- 25 years old 18  21
26-30 years old 13 15
31-40 years old 38 44
Domicile Jakarta 57 66
Depok 9 77
Bogor 7 8
Bekasi 8 9
Tangerang 5 6
Length of working < 1 year 10 12
1-2 year 26 30
2-3 year 3 9
3-5 year 8 9
  > 5 year 34 40

Table 2. Correlation Pearson Product Moment

CSR1 CSR2 CSR3 EL
CSR1 Pearson

Sig (2-tailed)

N

1

 

86

0545*

.000

86

.635*

.000

86

.577*

.000

86

CSR2 Pearson

Sig (2-tailed)

N

0545*

.000

86

1

 

86

.795*

.000

86

.526*

.000

86

CSR3 Pearson

Sig (2-tailed)

N

.635*

.000

86

.795*

.000

86

1

 

86

.502*

.000

86

EL Pearson

Sig (2-tailed)

N

.577*

.000

86

.526*

.000

86

.502*

.000

86

1

 

86

**Correlation is significant at the level 0.01 level (2-tailed)

CSR1 (CSR economic), CSR2 (CSR environment), CSR3 (CSR social), EL (employee loyalty)

4.3       Analysis of CSR Economic and employee loyalty

Based on Table 4, F- count (42.026) > F- table (3.95). This means H1 successfully accepted, CSR economic significantly influence employee loyalty. Table 5 shows CSR social regression coefficient is 1.335; meaning if CSR social increased 100% while other independent variables remain constant, then employee loyalty will increase by 13.35% and vice versa. Constant or intercept of 14.405 which means that in the absence of CSR social, the employee loyalty (Y) is achieved by 14.405

4.4       Analysis of CSR environment and employee loyalty

            Based on Table 4, F- count (35.158) > F- table (3.95). This means H2 successfully accepted, CSR environment significantly influence employee loyalty. Table 5 shows CSR environment regression coefficient is 1.631; meaning if CSR environment increased 100% while other independent variables remain constant, then employee loyalty will increase by 16.31% and vice versa. Constant or intercept of 15.859 which means that in the absence of CSR environment, the employee loyalty (Y) is achieved by 15.859

4.5       Analysis of CSR social and employee loyalty

Based on Table 4, F- count (28.342) > F- table (3.95). This means H3 successfully accepted, CSR social significantly influence employee loyalty. Table 5 shows CSR social regression coefficient is 1.315; meaning if CSR social increased 100% while other independent variables remain constant, then employee loyalty will increase by 13.15% and vice versa. Constant or intercept of 15.561 which means that in the absence of CSR social, the employee loyalty (Y) is achieved by 15.561

Table 3. Model summary for correlation

Model Summary
Model R R Square Adjusted R Square Std. Error
1 .630 .397 .375 6.224

Table 4. Hypothesis summary F value and T value

Hypothesis F-count F-table t-count t-table
H1 42.026 3.95 6.483 1.989
H2 32.158 3.95 5.671 1.989
H3 28.342 3.95 5.324 1.989
H4 17.994 2.72

Table 5. Summary of regression model analysis

CSR Employee loyalty
R Regression
CSR1 (X1) r: 0.577 Y=14.405+1.335X1
CSR2 (X2) r: 0.526 Y=15.859+1.631X2
CSR3 (X3) r: 0.502 Y=15.561+1.315X3
CSR 1,2,3 R: 0.397 Y=10.983+0.956X1+0.928X2+0.005X3

4.6       Multiple regressions analysis

Table 6 shows coefficients for multiple regression analysis, Sig for CSR economic is 0.000 and Sig for CSR environment is 0.038, both are less than Sig 0.05, meaning that CSR economic and CSR environment both significantly influence employee loyalty. While Sig for CSR social is 0.989 which is more than Sig. 0.05, meaning that CSR social do not significantly influence employee loyalty. The result of multiple regression analysis, as shown in Table 6, indicated the effect of CSR on employee loyalty. It was found that only two CSR, CSR economic and CSR environment, that were positively and significantly influences employee loyalty. CSR economic exerted higher influence compared to CSR environment. Table 5 shows three variables CSR all together contribute positively to employee loyalty, with intercept of 10.983, followed with the largest contributor of CSR economic (0.956), second CSR environment (0.928) and the least contributor is CSR social (0.005). This means if all CSR were absence, employee loyalty is achieved by 10.983

Table 6. Coefficient regression model

Coefficients
Model Unstandardized Coefficients Standardized Coefficients t Sig.
B Std. Error Beta
1 (Constant) 10.983 2.498 4.397 .000
CSR1 .956 .258 .413 3.706 .000
CSR2 .928 .440 .299 2.109 .038
CSR3 .005 .403 .002 .013 .989

First section of the questionnaire result can be seen in Table 1 about profile of respondents.

Second section of the questionnaire consists of four questions; (1) Do you acknowledge about CSR in general, and the answer are 30% well acknowledge, 51% acknowledge, 14% quite acknowledge, 5% do not acknowledge, (2) Do you acknowledge CSR activities conduct by hotel management, and the answer are 37% well acknowledge, 49% acknowledge, 13% quite acknowledge, 1% do not acknowledge, (3) Do you acknowledge hotel objective in running CSR activities, and the answer are 26% well acknowledge, 56% acknowledge, 17% quite acknowledge, 1% do not acknowledge, (4) Do you acknowledge CSR activities socialization conduct by hotel management, and the answer are 43% well acknowledge, 50% acknowledge, 5 quite acknowledge, 2% do not acknowledge.

Third section of the questionnaire asks respondent perception due to degree of agrees about CSR economic conduct by hotel management. The results are good financial performance (62.8% agree), obey to tax payment (53.5% agree), no corruption (51.2% agree), no conflict of interest (55.8% agree), not in the support for corrupt government (52.3%), respect to individual intellectuality (57%).

Fourth section of the questionnaire asks respondent perception due to degree of agrees about CSR environment conduct by hotel management. The results are no contamination (55.8% strongly agree), no contribution to pollution (55,8% strongly agree), no water wasting (48.8% strongly agree), no energy inefficiency (51.2% agree), preserve natural living (52.3% strongly agree).

Fifth section of the questionnaire asks respondent perception due to degree of agrees about CSR social conduct by hotel management. The results are no children employed (64% strongly agree), assurance for employee and surrounding society healthcare (48.4% agree), give positive impact to society (54.7% agree), provide customer protection (52.3% agree), respect diversity (52.3% strongly agree), do social activities (47.7% agree)

Sixth section of the questionnaire asks respondent perception due to degree of agrees about employee loyalty from their own point of view. To summarize, there are two indicator that show very low agree score; desire not to find another job (14% less agree) and decision to stay in the company in any possible situation (9.3% less agree).

Last section of the questionnaire asks respondent perception due to degree of importance of implementing CSR in hotel. The results are CSR economic (47.7% very important, 44.2% important, 7% less important, 1.2% not important), CSR environment (45.3% very important, 46.5% important, 8.1% less important), CSR social (51.2% very important, 37.2% important, 11.6% less important)

5                      CONCLUSION

       From all statistic data, it can be summarized that CSR economic, CSR environment and CSR social, either partially or comprehensively, influence employee loyalty with R square 39.7%. The correlation is positive, meaning that if CSR increase, it will increase the employee loyalty, as well as vice versa, if CSR decrease, it will decrease employee loyalty. CSR economic react as the most significant variable towards employee loyalty, followed by CSR environment as the second significant, and CSR social as the least significant. Comprehensively, refer to regression model, the result slightly different. CSR economic and CSR environment do significantly influence employee loyalty, however CSR social shows to the contrary. Due to relatively high employee turnover rate in the hotel industry, it is essential to utilize CSR to gain a competitive advantage in achieving greater profit and growth and as a human resource management strategy to improve employee retention (Chiang, 2010). A wide variety of CSR activities can be seen as influences on a firms’ loyalty of employees (Portney, 2008). Employee loyalty is important to increase company’s return on investments (Niesink, 2010). Thus, improving employee loyalty will eventually bring good impact to the company. One of the strategies to increase employee loyalty is through implementation of CSR activities. Harris Hotel Tebet Jakarta management implements CSR as their strategic path. However, the results of this study show that CSR implementation has significantly influence employee loyalty. To conclude, by applying CSR as one of the company strategic activities, will affect the employee loyalty in positive correlation.

REFERENCES

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Brammer S, Millington A, Rayton B. 2007. The contribution of corporate social responsibility to organizational commitment. International Journal of Human Resource Management 18(10): 1701–1719.

Chiang, Chia-Chun Saprina. 2010. How corporate social responsibility influences employee job satisfaction in the hotel industry. UNLV Theses/Dissertations/Professional Papers/Capstones. Paper 598

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