The Effect of Motivation on Employee Retention in Hospitality Industry:

Moderating Effect of Relationship Quality with Direct Manager

Brandy Yuqi Wang (1155031779)

1. Introduction

People are the most important element in service sector; individual employee’s relationship with direct manager

plays an essential role in his or her job (dis)satisfaction and thus retention or turnover decision. Observed in the author’s

internship in Hyatt Regency Sha Tin, Hong Kong, one of the managers quitted his job after a heated argument with his

direct manager, who had been known as a highly motivated employee. According to industrial interviews, turnovers due

to management relationship breaking ups are not uncommon in hotels, where various job conflicts intertwine with

interpersonal encounters between managers and subsidiaries. Previous studies have indicated motivation being a major

reason for job satisfaction and employee retention. This research proposes employees’ relationship with direct manager as

a moderator for such an effect, as witnessed in real life cases.

Given the service nature in hospitality industry and thus the significance of employee retention, this research

would hopefully benefit hospitality industry leaders, hotel managers, human resource professionals, hospitality educators

and the coming generation of talents who will be dedicated in hospitality industry dealing with both intrinsic and extrinsic

relationships.

2. Literature Review

2.1 Employee Retention

Employee retention refers to encouraging employees to remain in the organization for the maximum period of

time (Griffeth & Hom, 2001) or until the completion of the project. (Das &Baruah, 2013) Dubey and Patil (2015) defined

it as an organization’s ability to retain its employees.

Employee retention can be represented by retention rate indicating the percentage of employees an organization

kept in a given period. Employee retention is regarded the opposite of employee turnover. Employee retention is essential

for organizations because of talents’ productivity, already-made investment, high cost of new hiring and training,

likelihood for resigned talents to join competitors, etc. (Management Study Guide, 2016) For its great significance,

employee retention is selected to be the dependent variable in this research.

2.2 Motivation

Motivation refers to “the reasons underlying behavior” (Guay et al., 2010). Broussard and Garrison (2004) define

motivation as “the attribute that moves us to do or not to do something”. Lai (2011) defines motivation as the reasons

underlying behavior that is characterized by willingness and volition. Sangaran and Garg (2012) defines motivation as the

internal process leading to behavior to satisfy needs.

Motivation is researched in this study as the independent variable.

2.3 Job Satisfaction

Job Satisfaction is defined by International Encyclopedia of the Social & Behavioral Sciences 2015 as a positive

or negative evaluation one makes about one's job or job situation. Encyclopedia of Business and Finance 2001 defines it

as workers’ sense of achievement and success. Locke and Lathan (1976) define it as pleasurable or positive emotional

state resulting from the appraisal of one’s job or job experience. Lussier (2008) also regards job satisfactions are a set

attitude towards work. Job satisfaction implies doing a job one enjoys, doing it well, and being suitably rewarded for one's

efforts. Job satisfaction further implies enthusiasm and happiness with one's work. This research propose that job

satisfaction is a mediator between motivation and retention, in other words motivation leads to job satisfaction, thus

results in job retention.

2.4 Relationship Quality with Direct Manager

Relationship quality with direct manager has seldom, if not never, been separately researched as a single variable

in hospitality study. Therefore it is necessary to refer similar concepts from other disciplines to conceptualize relationship

quality with direct manager for this research.

In sociology, relationship refers to two people whose behaviour is interdependent in that a change in behaviour in

one is likely to produce a change in behaviour of the other. (Berscheid and Ammazzalorso, 2004) Relationships developed

in organizational work settings, initiated by members of similar or like personalities, social preferences, social or

economic status, job positions, personal interests, or cultural backgrounds are referred to as coworker relationship.

(Johnikin, 2011) Relationship with direct manager could be regarded as a special type of co-worker relationship with

unequal status or power. Relationship quality (RQ) is a concept originated from the area of relationship marketing. Three

agreed dimensions by previous studies are satisfaction, commitment and trust. (Crosby et al., 1990; Lagace et al., 1991;

Dorsch et al., 1998; Kumar et al., 1995; Gronroos, 1990; Wray et al., 1994) Fincham and Rogge (2010) conceptualized

relationship quality into two dimensions—positive and negative evaluations of relationships.

Based on previous researches, this study defines relationship quality with direct manager as one’s positive or

negative evaluation of the relationship with direct manager whom it reports to in the work place, a positive one indicates

satisfaction, commitment and trust derived from the interaction.

In this research an individual employee’s relationship quality with his or her direct manager is proposed to be a

moderator for the effect of motivation on job satisfaction and thus employee retention, as illustrated below:

3. Links between Variables

3.1 Links between Motivation, Job Satisfaction and Employee Retention

Maslow (1954) states that motivation results from the satisfaction of higher human needs in Hierarchy of Needs,

like social, esteem and self-actualization needs, which indicates a close link, or even reciprocal causation, between

motivation and job satisfaction. As human nature tend to approach happiness and sustain satisfactory status, it is also

logical that individual is less likely to leave a job where one is motivated and satisfied.

According to Herzberg (1987), job satisfaction relates to what an individual does, which is regarded to the core of

job nature. Such factors have the capacity to gratify employees’ needs as achievement, competency, status, personal

worth, and self-realization, thus making individual happy and satisfied. They are the key to employees’ motivation, and

Herzberg named them as “motivators”. Thus Herzberg has established a direct link between motivators/motivation, job

satisfaction and employee retention.

Motivation plays an important role in employee satisfaction and eventually employee retention . (Management

Study Guide, 2015) Sangaran & Garg (2012) also examined that motivation leads to satisfaction, which then lead to

retention. A tourism study has also supported motivator factors (as defined by Herzberg) such as “image of the tourism

industry” and “development opportunities” indicate job retention (Martin, Mactaggart & Bowden, 2006).

Hauskneht et al. (2009) developed a content model of 12 retention factors and received responses from 24,829

employees in the leisure and hospitality industry. The most frequent reason for employee retention was job satisfaction

(51% respondents). Various studies also found job satisfaction is a significant predictor of employee turnover (Egan et al.,

Motivation(independent variable)

Relationship Quality with Direct Manager (moderator)

Job Satisfaction (mediator)

Employee Retention (dependent variable)

2004; Wright and Bonett, 2007). On the other hand, Price and Mueller's study (1986) found that employee turnover can be

affected by job satisfaction. Lack of job satisfaction is a predictor of quitting a job (Alexander, Litchtenstein and

Hellmann, 1997; Jamal, 1997). 

Therefore, when a job serves well an employee higher needs such as achievement, competency, status, personal

worth, and self-realization, making him or her happy and satisfied, the employee gets motivated and then tend to stay in

the job in order to sustain the happiness or satisfaction, resulting in a higher retention rate. Thus the links between

motivation, job satisfaction and employee retention can be concluded.

3.2 Link between Relationships Quality with Direct Manager and Employee Retention

According to Herzberg, relationship quality with direct manager belongs to “hygiene factors”, another separate set

of elements would lead to job dissatisfaction and thus turnover (Herzberg, 1987), indicating a direct link between

relationship quality with direct manager and employee retention.

Researchers have identified a significant negative influence on workers intent to leave as it pertains to their view

of leadership and supervisory support within the organization (Cho et al., 2009). Allen, Shore, and Griffeth (2003) found

that perceived organizational support (POS) and supportive leadership practices were significantly negatively correlated

with intentions to leave. The theoretical process of the formation of these cognitions places job dissatisfaction as

antecedent to search intentions, followed by intentions to quit (Crossley et al., 2007). Therefore a positive and supportive

relationship with direct manager is highly called in order to improve employee retention.

According to Bass and Riggio (2006), effective transformational leaders decrease followers’ intentions to leave by

showing that a fundamental agreement exists between “the goals and values of the group, follower, leader and

organization”. They contend employees who believe their personal needs are being met through a leader’s individualized

attention and consideration will be less likely to leave the organization.

Previous studies in hospitality industry have also identified some key factors relating to turnover like the quality

of co-workers (Lee, Huang & Zhao, 2012), management‐owner conflict (Birdir, 2002), and supervisory challenges

(Meier, 1991). While development feedback from supervisors is a significant predictor of retention intention. (Joo & Park,

2010) As relationship with direct manager could be regarded as a special form of coworker relationship, the relationship

quality with one’s direct manager has a direct impact on employee retention in hospitality industry.

4. Conclusion and Managerial Implications

Individual employee’s motivation lead to job satisfaction and thus employee retention, while one’s relationship

quality with his or her direct manager moderates the effect of such a relationship. That is to say, an individual employee is

most likely to stay in the job when both motivation and relationship quality with direct manager are positive; an individual

employee is least likely to stay when both motivation and relationship with direct manager are negative; when motivation

is positive but relationship with direct manager is negative, the employee would like to stay but possibly “have to” leave

the job once the relationship with direct manager totally breaks up, as the real case in Hyatt Regency Sha Tin, Hong

Kong; when motivation is negative but relationship with direct manager is positive, the employee would tend to leave, but

possibly to stay, or to work longer than planned, due to the appreciable or enjoyable relationship with the direct manager,

given other conditions equal.

Apart from employees’ motivation and job satisfaction, it is important to note the significance of direct manager’s

influence on the perception between the organization and his or her employees. Managers ought to improve emotional

intelligence, reforming leadership and communication styles catering to new generation of talents. They can also meet

employees’ needs through individualized attention and consideration.

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