HOLY CROSS COLLEGE OF CALINAN, INC.

THE FACTORS INFLUENCING THE LEVEL OF EMPLOYEE'S LOYALTY IN

EDUCATIONAL INSTITUTIONS

By:
Maasin, Cybill Daniel
Busano, Mary Chris
Dumandan, Richard
Belleza, Jessica

July 2021
 A Research Paper
Presented to the Faculty of College Department
of the Holy Cross College of Calinan

In Partial Fulfillment of the Research

In Business Research

Maasin, Cybill Daniel

Busano, Mary Chris
Dumandan, Richard
Belleza, Jessica

July 2021

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 APPROVAL SHEET

In partial fulfillment of the requirements in Business Research, this Business

Research entitled The Factors Influencing the Level of Employee’s Loyalty in

Educational Institutions prepared and submitted by: Cybill Daniel Maasin, Mary

Chris Busano, Richard Dumandan and Jessica Belleza is hereby recommended for oral

examination, approval, and acceptance.

ALLADIN G. LORO, DBA

Adviser

PANEL OF EXAMINERS

Approved by the panel of examiners, after the presentation of the study with the grade

of PASSED.

KRISKA BEA MAY U. SERENTAS KISSAH A. NERI, CPA

Panel Panel

Accepted in partial fulfillment of the requirements in Business Research.

Date of Oral Examination: July 2021

RIZALITO H. PAGA, PhD

Dean of College

ACKNOWLEDGEMENT
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 First of all, we want to express our deepest gratitude and appreciation for the

willingness and determination towards the completion of this business research.

We would like to thank our adviser/supervisor Mr. Alladin Loro for his guidance and

motivation through the entire process. All of his feedbacks and recommendations made it

possible to overcome our difficulties and constantly improve the quality and finish our study.

We would also like to thank our precious panels members Mrs. Kissah A. Neri and

Mrs. Kriska Bea May Serentas for a very understanding and very direct point of view and

helped to improve our business research paper.

And lastly, we want to show our appreciation to all the people in our surrounding who

have supported and guided us specially God that gives us boost and give us hope in our daily

flow of our way in this business research.

Thank you all!

ABSTRACT

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 The purpose of this study was to dig deeper into the concept of employee’s loyalty,

how it is defined and which factors influencing the level of employee’s loyalty in educational

institutions. The research question that was developed to be answered in this research is as

follows: What is the level of employee’s loyalty in educational institutions in terms of

organizational commitment and job satisfaction, and Which among the factors greatly

influences employee’s loyalty in terms of performance appraisal, rewards management, and

compensation and benefits. In order to answer the research questions and fulfill the purpose, a

quantitative content analysis was conducted through searching articles and literatures in the

internet. In line with some previous studies, the Social Exchange Theory is used in order to

explain the factors influencing the level of employee’s loyalty. This theory, and theories

connected to what employee loyalty is, was used in order to develop conceptual model served

as a foundation for the data collection, empirical findings, and the analysis. Base on the

results gathered from different studies in the level of employee’s loyalty, work environment,

working relationship and human resource policies have a greater impact on employee’s

loyalty. While the factors greatly influence employee’s loyalty is an important element of

loyalty because it is positively related to organizational commitment and negatively related to

turnover intentions, to evaluate the impact of performance appraisal on employee’s

performance.

Keywords: Employee’s Loyalty, Social Exchange Theory

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 TABLE OF CONTENTS
TITLE PAGE i
APPROVAL SHEET ii
ACKNOWLEDGEMENT iii
ABSTRACT iv
TABLE OF CONTENTS v

1. INTRODUCTION
1.1 Rationale 1
1.2 Statement of the Problem 2
1.3 Review of Related Literature 3
1.4 Theoretical Framework 16
1.5 Conceptual Framework 17
1.6 Significance of the Study 18
1.7 Scope and Limitation 18
1.8 Definition of Terms 19
2. METHODS
2.1 Research Design 20
2.2 Ethical Consideration 21
2.2.1 Intracoder Reliability 22
2.3 Data Analysis 23
2.3.1 Sampling Frame 24
2.3.2 Unit of Analysis 24
2.3.3 Coding and Procedure Scheme 24
3. RESULTS AND DISCUSSIONS
3.1 Results and Discussions 26
4. CONCLUSION AND RECOMMENDATIONS
4.1 Conclusions 29
4.2 Recommendations 30
5. REFERENCES
5.1 References 31
6. APPENDIX 38
7. CURRICULUM VITAE 40

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 Chapter 1

INTRODUCTION

Rationale

Employee’s loyalty can be defined as employees who are committed to the success of

their company and believe that working for them is in their best interests. Loyalty signifies a

person’s devotion or sentiment of attachment to a particular object and employee loyalty can

be defined as employees’ commitment to the success of the organization and believing that

working for this organization is their best option (Iqbal, Tufail, & Lodhi, 2015). Loyal

employees are faithful to the organization and do their best in service providing, which has a

direct and significant influence on the service companies’ performance. The longer an

employee works for a company the more valuable they become (Pandy & Khare, 2012).

Employee loyalty has always been an issue and still it is the most intricate problem for

organizations as to how they can increase employee’s loyalty to enhance organizational

efficiency.

Despite being dependent on employee’s loyalty, United States corporations show little

or practically no loyalty to their employees. It is typical for a company to lay off employees

without warning, taking them by surprise. Most employees in corporate America realize that

they can be let go at any time and that management would do their best to hide layoff plans.

Even the expectation of losing one’s job so suddenly, and in quite an intimidating manner,

may be enough to destroy employee loyalty (Aityan, 2012).

Studies conducted on Higher Education institutions were focused on teachers in

government and public owned institutions (Rose, Kumar, & Pak, 2010). Finally, studies on

employee’s loyalty and job satisfaction of college teachers were limited and available on

developing countries such as the Philippines (Ereno & Nunez, 2014) were a huge gap can be

manifested in which public and government owned school are at par with private educational

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institutions in terms of security and tenure, compensation and benefits, and workloads and

conditions (Yamauchi, 2011).

The university is one of the HEIs in Cebu City, Philippines. However, it has been

observed that the turnover rate had been continued to the plaque for years despite an increase

in the investigation into factors affecting such behavior. According to the Human Resource

Department, as of the year 2018 that school turnover rate for the teaching and non-teaching

staff is of 2.43% of the total population.

With the presented issues, it is imperative that this study should be conducted to at

least alleviate the problems on the level of employee's loyalty in an organization specially in

educational institutions.

Statement of the Problem

This study is taken to determine in Influencing Factors of Employee’s Loyalty in

Educational Institutions.

1. What is the level of employee’s loyalty in educational institutions in terms of:

1.1 Organizational Commitment

1.2 Job Satisfaction

2. Which among the factors greatly influences employee’s loyalty?

2.1 Performance Appraisal

2.2 Rewards Management

2.3 Compensation and Benefits

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Review of Related Literature

This section contains the discussion of related studies and literatures that will help to

enhance the discussion of the results of this study.

Educational Institutions

Organizations nowadays strive to achieve the loyalty of their employees more than in

the past, especially among high-tech organizations, banks, health institutions and other

organizations in which the participation and the status of its employees do not depend on the

number of years spent by the employees in a specific organization, but on its qualification

and experience in taking the decisions that affect the future of the organization (Aityan &

Gupta, 2012). Organizational loyalty reflects the willingness of the individual to make the

maximum effort possible for the benefit of the organization and its strong desire to stay in it,

and then accept and believe in its goals and values (Zanini, 2013). In the higher education

institutions, either public or private sector, the issue of loyalty exists. Though, in this regard,

the nature and intensity differ from times to times, country to country institution to institution

and from individual to individual. The loyal and committed teachers may show the

consistency, psychological bonds and stability in their institution, interaction with their

students and specialization in their subjects (Riza, Khan, M., M., Khan I,. Dr. Khan, S., Jan.

F. & Dr.Saif N. 2015).

From rapidly developing process of globalization, different institutions, despite the

economic importance, suffer from diversity of institutional and structural weaknesses which

have forced their capability to yield complete benefit. To implement these processes the in

institutions, the participatory management has to be introduced in which power is shared and

all the individuals are giving opportunities to participate, share and utilize their knowledge

and experience (Badariah, 2011). When arrive in institutional settings, the new employees are

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expected to achieve the institutional goals and objectives by utilizing of their knowledge and

skills (Sima, Tarika, Bhakar & Brajesh, 2010).

Employee Loyalty

Employee’s loyalty has become an issue which is being widely discussed and the

social scientists, in the context of corporate culture, are concentrating to sort out the

prerequisites for the same (Arif, Nadeem, Faiza & Farzana, 2012). Employee loyalty has

been attracted to many scholars since its influence to companies’ growth, productivity of the

business, and performance. Employee loyalty has been attracted to many scholars since its

influence to companies’ growth, productivity of the business, and performance. Employee

plays a central role in attracting, building and maintaining relationships with customers.

Salary factor was affecting employee’s loyalty, based on the survey held by Job Street to

employees in Asia countries. But according to Forbes, 79 percent of employee left their

employee due to lack of appreciation (Herlinda, 2017). According to study held by Delloitte

stated that employee is not an employee only, they are company’s customer and partners,

organizations should create an organization culture that inspired the employee to stay or

become loyalty.

According to Wan (2012), employee loyalty is a psychological attachment or

commitment to the organizations and as a result of increase satisfaction. Loyalty plays a

positive role in retention of members or employee in the organization which characterized by

the strong wish to continue membership of an organization (Turkyilmaz, 2011). A loyal

employee also acts as advocates to customer of the organization’s product, service and image

(Preko & Adjetey, 2013). Employee is a value addition concept for organizations and an

indicator through which the outcomes such as employee productivity, organizational

outcomes and performance of the business firms could be measured (Guillon & Cezanne,

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2014). Kumar and Shekhar (2012) described loyalty as the willingness to put one’s personal

needs aside for the betterment of a relationship. It refers to a person’s preparedness to defend

another person or entity irrespective of the opinion of others. Employees are loyal when they

believe in the objectives of the company, accept the objectives as their own, work for their

common welfare, and want to stay in the company.

Rich, Lepine, and Crawford (2010) investigated that employee loyalty is not a one-

time activity but it is a constant process of knowledge, improvement, action and development

of employees. Employee engagement gives the priority to institutionalized communication. In

the 21st century, employee’s emotional link to work has gained due importance. Open

effective communication policies tend to be vital for development of positive employee

engagement. Bhatla (2011) noted that engagement is a state in which employees are not only

intellectually devoted but also emotionally committed with goals of organization. The

company should follow the open-door strategy in which both upward and downward

communication is suitable communication channels. Commitment levels are high when

employees participate in decision making. Bedarkar and Pandita (2014) recognized that

loyalty of employees with their jobs increases if coordinated and friendly work environment

is provided to them. The significant change in work processes could be done through

technical innovations leading to high productivity.

As argued by Guillon and Cezanne (2014), the concept of employee loyalty has been

given many different definitions. Therefore, they see a need for further research looking into

both the definition of the concept as well as the indicators showing loyalty in employees.

Tomic, I., Tesic, Z., Kuzmanovic, B., & Tomic M (2018) highlight in their study the

importance of the positive relationship between employee loyalty and company performance,

indicating a need to study ways to improve loyalty in employees. With the agreement of loyal

employees being an important factor for increasing organizational performance, more studies

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have been conducted with the aim of investigating factors impacting employee loyalty. Tseng

and Wu (2017) are in their study focusing on factors such as ethical leadership and

organizational identification and therefore suggests future studies to look into other factors

which could have an impact on employees being loyal or not. But most of the company are

still unsuccessful to satisfy their employees and attain their loyalty because they do not know

about what factors that help in getting employee loyalty (Hussain, 2012).

Organizational Commitment

Employee’s commitment to an organization or company is often a very important

issue. How important is this, to the extent that some organizations often use an element of

commitment as one of the conditions for holding a position or position offered in job

advertisements? Unfortunately, even though this is very common, it is not uncommon for

employers and employees to still not fully understand the meaning of commitment. Though

this understanding is very important to create conducive working conditions so that the

company can run effectively and efficiently. Employee organizational commitment can take

different forms. As a result, it is often seen as an HR variable which is difficult to define. The

context, direction and development of commitment, as well as the extent to which

commitment influences behavior can result in confusion and debate. Employee’s

organizational commitment has three levels. Employees that are classified within affective

commitment level are been found with and are passionately attached to their organization so

much that they stay with the same company because they desire to stay. Employee with

continuance commitment level, remains with the same employer for number of years because

of the cost involve with leaving are known, so they decide to remain not because they want to

but they need to (Pepe, 2010). Elegido (2013) also defines employee’s loyalty as a deliberate

commitment to promote the best interests of one’s employer, even when doing so may call

for losing some characteristic of one’s self-interest beyond what would be required by one’s

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legal and other moral obligations. The employee expose intrinsic and extrinsic element can

influence an employee loyalty and commitment. Information was collected from employees

in different position and with different educational background. The study used interview

method. One of participant said that the incentive whether it is financial or nonfinancial, is of

great impact on job, she also said that she is lucky because she is in the right position put in

her full efforts at work. Some participant prefer to help others in work place in order to feel

happy, some of them prefer to have financial stability, whereas some of them like to have

enrichment programs and convenience in work place. The study is done by (Chanel, 2015).

Several attempts have been made to define employee organizational commitment.

Perhaps the most comprehensive of those definitions is that of Meyer, Stanley and

Parfyonova (2012) who define commitment using a multidimensional approach and consider

it to have affective, continuance and normative perspectives. The affective dimension of

commitment refers to an emotional attachment to and involvement with an organization

continuance commitment denotes the perceived costs of leaving an organization and

normative commitment refers to the felt responsibility to support and remain a member of an

organization. Park, Christie & Sype (2014) advance that committed employees may be more

likely to engage in organizational citizenship behaviors (OCBs), that is, extra-role behaviors,

such as creativity or innovation which are often what keep organizations competitive and

retain employee’s loyalty. On their part, Visagie and Steyn (2011) related employee

organizational commitment to acceptance of organizational change. Parnini (2011) define

organizational change as an empirical observation in an organizational entity of variations in

shape, quality or state over time, after the deliberate introduction of new ways of thinking,

acting and operating. Visagie and Steyn explain that employee commitment to the

organization is critical when an organization engages in change initiatives, as committed

employees will provide many benefits to the organization undergoing change. These benefits

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include putting in extra effort to ensure that the change succeeds, serving as public relations

representatives during the change and going above and beyond the norm to assist the

organization to function effectively. On the other hand, Demirel and Goc (2013) suggest that

organizational commitment enhances knowledge sharing between employees. They define

knowledge sharing as a process whereby an individual exchanges the knowledge he/she

possesses with other individuals for them to understand, appropriate and utilize that

knowledge. In summary, the various scholars above are unanimous to the effect that

employee commitment is important in so far as enhancing employee job performance is

concerned. This is because it lessens the frequency of employees performing negative

behavior promotes employee’s OCB, reduces employee turnover makes the employees more

ready to accept organizational change and enhances knowledge sharing among the

employees.

Job Satisfaction

Job satisfaction is one of the vital needs of a most employees in any well-structured

organization and vital to all corporate management. It is believed that the prospect business

will depend on the level of employees’ satisfaction. Job satisfaction is a major factor to

enhance and maintain the overall yield of organization and employee’s loyalty by efficient

service and better performance. Job satisfaction has been defined as a pleasurable emotional

state resulting from the appraisal of one’s job an affective reaction to one’s job and an

attitude towards one’s job (Kumari & Pandey, 2011). Kiruthiga & Magesh (2015) studied the

factors of job satisfaction that are strongly related with employee loyalty from 500 hotel

employee. The researchers found key factors to job satisfaction (working environment,

human resource policies, training and development, career building and work relationships)

and employee loyalty (career development, job security and commitment). The researcher

stated that work environment, working relationship and human resource policies have a

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greater impact on employee loyalty. Employee job satisfaction is significant when it comes to

define organizational success, particularly in the service industry. The need to enhance

employee satisfaction is critical because it is the key to better business operations as it

increases long-term employee productivity and retains profitable customers Kurdi, B.,

Alshurideh, M & Alnaser, A. (2020). Employee satisfaction while generally a positive in our

organization can also be a downer mediocre employee's stay because they are satisfied with

our work environment (Bin Hussin, 2011).

According to Khuong, M. N., and Tien, B. D. (2013), Job satisfaction referred to as a

feeling of fulfillment or enjoyment that a person derives from their job. Employees will

contribute to the increase in productivity of business in an organization. By keeping skilled

employees and developing their loyalty, job satisfaction is an important challenge. Gaining

loyalty of an employee is the highest level of positive interpersonal relationships that a

manager in the organization can achieve. Employee job satisfaction generally a positive and

organization can also be a downer mediocre employee's stay because they are satisfied with

our work environment (Bin Hussin, 2011). As indicated by Abdullah (2011), the employees

are more satisfied in their job when they feel appreciated with being rewarded for their efforts

can ultimately be the most successful and it will be beneficial to their companies. Previous

researches have conducted a study on the influence of working environment and employee

compensation, pay and rewards on job satisfaction (Bakotić and Babić, 2013; Malik, Danish

and Munir, 2012; O'Donnell and MirtchevaBroderson, 2015); workers intention to stay

(Guchait and Cho, 2010; Markey, Ravenswood and Webber 2012) and employee retention

(Msengeti and Obwogi, 2015; Rumman, Jawabreh, Alhyasat and Hamour, 2013).

According to Tsai, Cheng and Chang (2010), employee job satisfaction is very

important and organization need to fulfill the need of an employee in order to gain their

satisfaction so to have good and loyal employee. Employee job satisfaction is an approach

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that are pleasurable which resulted from the employee’s performance appraisal conducted by

the management of the organization in giving the employees opportunity to express their

opinion about the general emotion, behaviours and their forms of thinking about their job

scope and workplace condition Guliyev, Avci, Ozturen and Safaeimanesh (2019).

Performance Appraisal

Performance evaluation is an important element of loyalty because it is positively

related to organizational commitment and negatively related to turnover intentions, to

evaluate the impact of performance appraisal on employee’s performance, we need to firmly

know what is performance appraisal. Performance appraisal can be defined as an act of

testing, evaluating, measuring and justifying the performance displayed by the employees

during a specific period of time (Meysam Fakharyan, Mohammad Reza Jalilvand, Behrooz

Dini, Ebrahim Dehafarin, 2012). The performance appraisal reflects a performance gap that

needs to be fulfilled, requirement of proper training arises. In the development of any

organization, training plays a cardiac role in order to improve performance which results in

improved productivity and putting the organization in competitive mode (Appiah, 2010).

Training is beneficial for both the organization, by helping it to achieve its desired level of

results, and the employees by equipping them with different knowledge, skill and other

characteristics. If the trainee in a training process is willing and takes interest, the new

knowledge and skill will be acquired quickly and effectively (Sultana, Irum, Ahmed, &

Mehmood, 2012). Performance appraisal system is also necessary to have steady

performance by employees. The appraisal fairness provides perceived fairness to the

employees, elicits employee satisfaction and organizational, performance (Hassan, Nawaz,

Abbas, & Sajid, 2013).

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 The performance appraisal system starts in practiced mainly in the 1940s and with the

help of this system, merit rating was used for the first time near the Second World War as a

method of justifying an employee’s wages (Lillian & Sitati,2011). Performance appraisal is

the systematic evacuation of employees according to their job and potential development.

(Pınar Güngör, 2011) says motivation is the ability of person to modify his/her behavior.

Motivation is a driven force that leads and directed a person toward some specific goals and

remain loyal to the organization. The information gathered and performance appraisal

provide basis for recruitment and selection, training and development of existing staff, and

motivating and maintaining a quality human resource through correct and proper rewarding

of their performance (Lillian, Mathooko, & Sitati ,2011).

The obtained results show that there is significant relationship exist between

Performance appraisal and employee’s performance and motivation makes strong and

clarified the relation between performance appraisal and employee performance. For instance

in researches done by (Fakharyan, Jalilvand,Dini, and Dehafarin, 2012), (Lillian and

Mathooko, 2011).

Rewards Management

Human capital and motivation embedded together which can develop experience, also

skill and knowledge, that can be economic value to the organization. Reward management

has correlation with employee’s loyalty, which it driving force of job satisfaction. Reward

management systems is important component of human resource management system. A

reward recognizes a person’s contribution. People are rewarded financially for the job they

are in base pay and may receive additional rewards related to the level of their performance,

competence or skills contingent or variable pay or their service in the job service-related pay.

They can also receive non-financial rewards such as recognition, praise or the opportunity to

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develop and learn new skills. Employee retention is most critical issue facing employers in

the organization as a result of the shortage of skilled labor, economic growth and employee

turnover. Employee’s loyalty is a concerted action to retain talented people, but there are

limits to what any organization can do. A competitive reward to employees helps improve

their performance and commitment to the organization and subsequently employees remain

in the organization for longer period. (Armstrong, 2012) Reward systems include; salaries

and wages, awards and other forms of recognition, promotions, reassignments, and non-

monetary bonuses like vacations or simple appreciations (Kotelnikov 2010).

Caudill and Porter (2019) opined that reward management systems have a number of

dimensions in which they manifest which include the internal and external environment.

Organizational politics and social factors such as the way people interact will affect how

organizations function and therefore what approach to reward management it adopts for its

employee’s loyalty (Armstrong, 2016). In addition, the organizations in business sector for

example education, social services or media will govern its ethos and therefore influence the

type of people it employs and the degree to which reward management is practiced

(Armstrong and Baron, 2015). The ways in which work is managed and carried out can also

influence pay structure and ultimately the use of reward management systems to make

employee loyal within the organization. Furthermore, Hyland (2017) acknowledges that the

introduction of new technologies may result in new ways of working being adopted and

therefore development of new reward management systems. People and occupations of

employees such as doctors, bankers and entrepreneurs may affect their wants and needs as

they are motivated more by financial reward managements reward management systems

(Newman, 2017). This implies that reward management strategies and policies should take

into account the different needs of the employees.

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 It is a discipline concerned with the formulation of strategies and policies geared at

consistently, fairly and equitably paying people, in accordance with their worth to the

organization and within the legislative framework (Fishers, Schoenfeldt & Shaw, 2014).

According to Bratton and Gold (2018) reward refers to all forms of financial returns and

tangible services and benefits employees receive as part of an employment relationship.

Bratton and Gold (2018) denotes that reward management is about organizations motivating

and compensating an employee for his or her service. Jiang (2017) noted that reward

management does not just concern pay or benefits but a wide range of other non-financial

benefits such as recognition, learning and development amongst others. Armstrong (2017)

posits that reward management aims at achieving the business goals by encouraging,

commitment, high performance, motivating and retaining employees and it equally aims at

aligning the employees’ needs to the reward practices of the business (Ghoshal and Bartlett,

2015). According to Armstrong (2012), reward management is more involved with the

strategies, polices and processes taken into consideration when an organization is recognizing

or rewarding people who contribute positively towards achieving the organizational goals. In

other words, reward management is much concerned about the value given to the employees

who contribute with their skills, experience and efforts to the success of the organization

(Ramlall, 2014). Reward management is not only financial rewards such as pay and benefits,

but it also includes non-financial rewards such as recognition, increased job opportunities and

so on (Armstrong, 2012).

Compensation and Benefits

Someone works to give time, thoughts, and energy to the organization and as a

counter-achievement, the organization must provide appropriate compensation or

compensation to meet the needs of life themselves and their families. Compensation plays an

important role because in general employees want balanced compensation from the company,

13
also expect guaranteed welfare for themselves and also their families while they are still

actively working and be loyal they reach retirement. With a balanced compensation,

employee welfare will be met and it is hoped that employees will get satisfaction so that the

loyalty of employees to the organization will be high.

In this regard, Ivancevich (2010) states that: "Compensation is the Human Resources

Management function that deals with every type of reward individual receive in exchange for

performing organization tasks. That means compensation in return for work done by the

company in the form of rewards for employee work. A similar sentiment was conveyed by

Mondy (2005) and Noe (2010) suggesting that compensation is grouped into two groups,

namely direct compensation and indirect compensation. Direct compensation consists of:

First the salary, financial rewards paid to employees regularly, such as annual, quarterly,

monthly or weekly. Salary is the most important type of award in an organization. Second the

wages are direct financial rewards paid to workers based on working hours, the amount of

goods produced or the number of services provided. So unlike salaries whose amounts are

relatively fixed, the number of wages can change. Salary or wages are given to attract

prospective employees to become employees. Third the incentives are direct rewards paid to

employees because their performance exceeds specified standards. Assuming that money can

be used to encourage employees to work even harder, those who are productive prefer to pay

their salaries based on their work. This requires the ability to determine appropriate

standards. Not too easy to achieve and also not too difficult. Standards that are too easy are

certainly not profitable for the company. While that is too difficult to cause frustrated

employees. The indirect compensation, fringe benefits are additional compensation given at

the discretion of the company to all employees to improve employee’s welfare. For example,

health insurance, life insurance, and housing assistance.

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 For an organization to supervise compensation efficiently, the employer needs to have

a positive influence on the performance of its employee, and understand the various aspect of

compensation as motivators that motivate employees and direct their behavior towards

achieving organizational objectives (Larbi, 2014). Generous reward retain employee and

ultimately lead to job satisfaction, commitment and loyalty. Compensation is the reward that

workers receive for their service or contribution to the organization (Salisu, Chinyio &

Suresh, 2015). Meanwhile, the other author stated that compensation is a systematic approach

to provide monetary value and other benefits to employees in exchange for their work and

service (Berber, Morley, Slavic, & Poó, 2017).

The benefit also referred as indirect compensation because it is given to employees in

the form of a plan (such as health Insurance, organization shares and retirement benefits)

rather than cash (Nyangi, 2011). Employee benefit can be referred to the benefits that are

provided to the employees in addition to their salary Hina, Zamir, & Nudrat, 2014). Benefit

includes packages an employer practices to supplement the cash compensation that

employees receive. In other hand, benefit comprises of health, income protection, savings and

retirement program that provide security for employees and families (Mabaso & Dlamini,

2017). Employee performance can be seen as an activity in which the individual can achieved

the task assigned to it successfully, subject to the usual constraint of the reasonable use of

available resources (Dar, Akmal, Naseem, & Din Khan). Employee performance will

exchange the fate of the organization with the hard work and good performance that will

increase the productivity, and indirectly, increase the profit. Therefore, as the retribution the

employee should be reward.

According to Handoko (2010), the importance of complementary or indirect

compensation payment will benefit the company, one of which is to improve employee

morale and loyalty to the company. Compensation is one of the elements of reward that is

15
provided by company (Siramiati, Surachman, Hadiwidjojo, & Rohman, 2016). Benefit is part

of the compensation; however, it will distinguish by the types of rewards that will be given.

Usually, the compensation will be given as the monetary rewards while the benefits will be

given as non-monetary reward. These two rewards also known as the direct compensation

and indirect compensation. Employee compensation can be seen as all form of financial and

significant benefit received by employees as part of the employment relationship (Odunlami

& Matthew, 2014). Direct compensation can be like salary or wages while indirect

compensation can be as welfare support facility (Purnama, 2017).

Theoretical Framework

This study is anchored from Social Exchange Theory, the Social Exchange Theory

was first developed by American Sociologist George Homas and published on 1958. The

Social Exchange Theory tries to explain the behavior people exhibit when making decisions.

According to Emerson (1976, p. 336), it is the “economic analysis of noneconomic

situations”. The theory regards how people make decisions depending on what outcome they

expect in relation to the amount of effort which has to be put in to get that outcome. One of

the founders of the theory defined this exchange behavior as “voluntary actions of individuals

that are motivated by the returns they are expected to bring” (Blau, 1964, p. 91). These

rewards do not only entail physical returns, but emotional and/or psychological as well.

Homas studied the exchange behavior of people, and he stated five propositions which he

believes explains why people make certain decisions (Homans, 1974). Researchers uses this

study because it states that gain loyalty from employee towards the organization, the

organization should value the employee such as giving incentives or rewards, it also indicates

the behavior of people when making decisions including being loyal to a certain organization

and it implies to employee’s decision depending what outcomes will they get or expect from

16
their efforts from the organizations such as rewards and benefits, performance appraisal and

compensation.

The same study of Shiau and Luo (2012), the theory is mostly used to explain

organizational behavior and the significance norms has on that context. This because an

employee typically expects to be given reciprocal benefits like economic returns, affection,

gratitude and/or trust when they follow the social norms of the organization. When it comes

to employees and the organization, the SET proposes that employees collaborate with their

organizations when they see a possibility of gains for them, or if they see a risk of some sort

of loss if they do not collaborate (Tyler, 2001). Therefore, the theory suggests that employees

will perform best and be most committed to the organization if they have direct rewards or

punishments if they are doing a good, or bad, job (Tyler, 2001). As was stated previously, the

SIT suggests that people will be motivated as long as the social identity the organization

provides increases their self-worth and/or self-esteem. According to the SET this is not

enough, the employees need to feel that there has been an exchange of actual benefits as a

result of their commitment. This as when given the possibility of gaining something of value

to the employee, like a bonus or a promotion, incentives to be committed to do a good job are

created (Tyler, 2001).

Conceptual Framework

A conceptual framework is an analytical tool that is used to get a comprehensive

understanding of a phenomenon. It can be used in different fields of work and is most

commonly used to visually explain the key concepts or variables and the relationships

between them that need to be studied.

In the figure below Employee’s loyalty is being measured by identifying the

influencing factors to employee loyalty. The influencing factors that effect the employee’s

17
loyalty are performance appraisal, rewards management and compensation and benefits.

Employee loyalty are the outcome achieving the level of employee’s loyalty in

Organizational commitment and job satisfaction through providing good performance

appraisal, rewards management and compensation and benefits.

Significance of the Study

This study entitled “Influencing Factors of Employee’s Loyalty on Educational

Institutions” is being created to benefit the following:

Human resource manager. The study will benefit the Human resource manager because it

will help them to know or determine how to maintain employee’s loyalty towards their

institution and affect the worker’s commitment. It predicts the factors influencing the level of

employee’s loyalty.

Future researchers. This research will benefit the future researchers for them to have

reference as related studies to their future studies.

Scope and Limitation

This study is focusing on influencing factors of employee’s loyalty in educational

institutions. In addition, this study is to evaluate the employee’s loyalty and the researchers

will be gathering from literatures, journals, research papers and etc. Using the internet. The

researchers included the local and international topics from the literatures, journals, research

papers and etc. The year of the publications of the data that we gather are only ranging from

18
2010 to 2021.So that the researchers will be more enlightened and has more convenient

sources.

Definition of Terms

Employee’s Loyalty – Employees of the educational institution’s loyalty is usually seen as a

virtue, albeit a problematic one. It is constituted centrally by perseverance in an association to

which a person has become intrinsically committed as a matter of his or her identity.

Performance Appraisal - systematic evaluation of the performance of employees and to

understand the abilities of a person for further growth and development in the educational

institutions.

Rewards Management - Reward management deals with the strategies, policies and

processes required to ensure that the contribution of people to the organization is recognized

by both financial and non-financial means.

Employee’s Job Satisfaction - how content or satisfied employees are with their jobs in

Educational Institution

Employee’s Organizational Commitment – Employee commitment is defined as the level

of enthusiasm an employee has towards his/her tasks assigned in educational institution. It is

19
the feeling of responsibility that a person has towards the goals, mission, and vision of the

organization he/she is associated with.

Chapter 2

METHODS

In this chapter, it is expected to see the research design, ethical consideration and

data analysis consisting of sampling frame, unit of analysis and coding and procedure

scheme.

Research Design

This study will use the quantitative content analysis. Quantitative content analysis is a

research design in which features of textual, visual, or aural material are systematically

categorized and recorded so that they can be analyzed. Content analysis is the process of

coding, which involves following a set of instructions about what features to look for in a text

and then making the designated notation when that feature appears. Conducting a successful

content analysis requires careful attention to unitizing (segmenting the texts for analysis),

sampling (selecting an appropriate collection of units to analyze), reliability (different

researchers making codes consistently), and validity (using a coding scheme that adequately

represents the specified phenomena) (Coe & Scacco, 2017).

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 Quantitative research design is being use in this study in order to get a closer view and

analysis of the participants in order to know the factors that affect employee’s loyalty. The

design allowed the researchers to study to world as it naturally occurs, without manipulating

it and unobtrusive so that there will be little influence on the naturally occurring behavior.

Quantitative content analysis design will be utilized in this study since the researchers

perceive its significance in determining the employee’s loyalty in the institution.

Ethical Consideration

Ethical considerations can be specified as one of the most important parts of the

research. Dissertations may even be doomed to failure if this part is missing. The importance

of selecting an appropriate research method is the importance of the ethical consideration

around conducting research. Fleming (2018) highlights some ethical dilemmas commonly

encountered as an 'insider researcher,' including the power differential and ongoing

relationships with participants.

There are several reasons why it is important to adhere to ethical norms in

research. First, norms promote the aims of research, such as knowledge, truth, and

avoidance of error. Second, since research often involves a great deal of cooperation and

coordination among many different people in different disciplines and institutions, ethical

standards promote the values that are essential to collaborative work, such as trust,

accountability, mutual respect, and fairness. Finally, many of the norms of research

promote a variety of other important moral and social values, such as social responsibility,

human rights, animal welfare, compliance with the law, and public health and safety

(Resnik, 2020).

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Plagiarism. Appropriation of content from other persons without giving credit

appropriately. Plagiarism is the stealing of the thoughts, practices, effects, or words of

another person without providing proper credit. So the basic ideas seem to be that

someone takes the work of someone else purposely, whether in the form of an idea, a

process, data, results, or text, and presents it as their own instead of crediting the person

whose ideas, results, or words it is (Helgesson & Eriksson, 2015). The researchers will

assure that all information gathered and the contents that are present in this paper were

properly credited and acknowledged.

Academic Fraud. Academic fraud (academic dishonesty) is defined as numerous forms of

conduct that provide students with improper benefits, including cheating, plagiarism, theft,

and fabrication of something related to academic activity. Academic fraud is characterized

as the use of public offices in the academic sector for private benefit, in particular with

regard to accreditation of courses and institutions, access examinations and transfers

between institutions, certificates and diplomas, university/college examinations (Muhsin,

Kardoyo, Arief, Nurkhin & Pramusinto,2015). The researchers will guarantee a research

paper which does not practice any fabrication, plagiarism and theft throughout the making

process of this paper.

Misrepresenting the results. Misreporting of outcomes is described as incomplete or

insufficient reporting of outcomes in a manner that could be falsely deceive the reader. In

particular, this form of spin includes selective reporting of statistically relevant findings,

ignoring results that contradict or counterbalance the original theory, and deceptive

display of results by selecting metrics and figures (Boutron & Ravaud, 2015). The

researchers commit to the honesty of the results and guarantee an unbiased finding.

Intracoder Reliability

22
 Following the literature on reliability and validity, one can distinguish between

random and systematic error. Reliability has been an essential concern in content analysis in

which strategies will be used to ensure reliable coding when conducting reliability test

(Krippendorf, 2013). On the other hand, the researcher and adviser used several techniques to

enhance the current study's reliability. The first research adviser has done peer checking. The

research team tried to collect data from various scholarly research and articles applied to the

approach. The study's progress and process were reported and discussed through frequent

sessions between the second researcher and the research validator. Other teachers also

checked the encoding process and access to categories. The researcher will provide a clear

and detailed description of the context, selection, data collection, and analysis process.

Data Analysis

Kothari (2015) define data analysis as a process of editing, coding, classifying, and

tabulating collected data to make them amenable. Therefore, data analysis involves

systematic processing of data to make them useful and be able to present and convey

meaningful message to the general public. In this study qualitative content analysis which

analyzed by on basis which are the factors influencing the level of employee’s loyalty in

educational institutions, the levels of employee’s loyalty at educational institutions, which

factors is greatly influences employee’s loyalty and contents of the subject under study. By

using content analysis the researchers will be able to determine the factors influencing the

level of employee’s loyalty in educational institutions.

Table of Interpretation

Scale Mean Range Interpretation

5 4.51-5.00 Very High

23
 4 3.51-3.50 High

3 2.51-3.50 Moderate

2 1.51-2.50 Low

1 1.00-1.50 Very Low

Sampling Frame

The researchers are basing in secondary data. Secondary data was collected from

different sources like magazine, journals and research papers. The researchers collected the

primary data by using survey method, a structured questionnaire is designed covering

different dimension of influencing factors of employee’s loyalty in educational institutions. A

duration of 2 to 4 months is suitable for this analysis because 2 to 4 months is long enough to

collect data from the reviewed literature. To generate a broad sample, a variety of reviewed

literature will suffice. The subject of peer-reviewed literature is on the issue at hand.

Unit of Analysis

Unit of analysis is defined as the unit of analysis that is supposed to be used for data

analysis based on the study design Wimmer &Dominick (2011). Deciding on the unit of

analysis is a very important decision because it guides the development of codes as well as

the coding process. The researcher will look for the information’s that is needed in the study.

Furthermore, this study aims to determine on what are the factors that are greatly affects the

24
loyalty of an employee to the organization so that it will be used as a bases in the managers of

the organizations. After gathering the information’s from the different sources such as from

the journals in the internet and other reliable data sources that will be needed in the study.

The conclusion of the study will be formulated then, in which it can help the managers to

become more active in dealing with their employees, and for them also to know on how

important to keep the employees in the organization.

Coding Procedure Scheme

A content analysis was conducted where recording/coding served as the unit of

analysis. Researchers will use dummy coding in coding the data gathered. When categorical

variables (e.g., sex, geographic location, ethnicity) are of interest in prediction, dummy

coding is used. To convey all the necessary information on community membership, dummy

coding uses only 1s and 0s. The researcher enters a 1 with this sort of coding to mean that an

individual is a member of a category, and a 0 otherwise (Salkind, 2010). Researchers will

code 0= not observed and 1=observed if an indicator was mentioned in the reviewed

literature.

For the coding of the data, the researchers will make a table since table is a categorize

from columns and rows.

25
 Chapter 3
RESULTS AND DISCUSSION

This section includes the presentation of the researchers' findings from their data

collection. Here you'll find discussions about the study's research issues, as well as visual

representations and tables to help you understand them better. Studies based on a review of

relevant literature are often provided to demonstrate influencing factors affecting employee’s

loyalty in educational institutions with the study's findings.

Research problem #1

What is the level of employee’s loyalty in educational institutions in terms of?

Table 1: Shows the result of level of employee’s loyalty in terms of level of employee’s

organizational commitment and level of employee’s level of job satisfaction.

Level of Employee’s loyalty Level of Mean Interpretation

26
 Level of Organizational 2.50 Low
Commitment
Level of 3.50 High
Job Satisfaction

The table above stated the level of employee’s loyalty in educational institutions,

which the researchers is basing into 2 studies, which it is has a result basing into it. Within

the level of employee’s loyalty in terms of the level of organizational commitment it has a

level mean of 2.50 which determine according to the table of interpretation is “Low”. While

in the other hand the employee’s level of job satisfaction towards loyalty has a level mean of

3.50 which determine according to the table of interpretation “High”.

Factors that Frequency Total

Greatly Mean
Influence Study 1 Study 2 Study 3 Study 4 Study 5 Average
Employees
Loyalty
Performance 3 2 1 3 4 2.6
Appraisal
Reward 2 2 3 0 2 1.8
Management
Compensation 3 2 0 2 0 1.4
and Benefits
As studied and stated by Kiruthiga & Magesh (2015) the factors of job satisfaction

that are strongly related with employee loyalty from 500 hotel employee. The researchers

found key factors to job satisfaction (working environment, human resource policies, training

and development, career building and work relationships) and employee loyalty (career

development, job security and commitment). The researcher stated that work environment,

working relationship and human resource policies have a greater impact on employee loyalty.

Which it has a relation about the competence, development, ethical leadership and rewards.

Research Problem #2

27
Which among the Factors greatly influences employee’s loyalty?
Table 2: Shows the result of factors that is greatly influences employee’s loyalty

From the table above, it shows the factors greatly influences employee’s loyalty

which analyzed according to its indicators namely, Performance Appraisal, Reward

Management and Compensation and Benefits. Based from the result, it shows that the

Performance appraisal is the top factor the greatly influences employee’s loyalty with

an average mean of 2.6. This was followed by the reward management as the second

factor greatly influences employee’s loyalty with an average mean of 1.8. The least

factors greatly influence employee’s loyalty is the compensation and benefits with an

average mean of 1.4. Thus, this result affirms to the study of (M., Fakharyan, M., Jalilvand,

B., Dini, & E., Dehafarin, 2012) which states that performance evaluation is an important

element of loyalty because it is positively related to organizational commitment and

negatively related to turnover intentions, to evaluate the impact of performance appraisal on

employee’s performance, we need to firmly know what is performance appraisal.

They also highlighted that performance appraisal is an act of testing, evaluating,

measuring and justifying the performance displayed by the employees during a specific

period of time.

The study was the first focus on relating status and factors greatly influences

employee’s loyalty and found that for employee’s who are being loyal to the organization,

they are demonstrating the organization system of having performance appraisal, rewards

management and compensation and benefits. The study highlighted that, the common result

from their finders is that performance appraisal has a great factor that employee’s loyalty is

attained, then the reward management and compensation and benefits as the sequence result

of this study.

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 Chapter 4

CONCLUSION AND RECOMMENDATION

This chapter presents the summary and conclusion derived in the conduct of the study

which is probe on the factors influencing the level of employee’s loyalty in educational

institutions. It also provides the recommendation that can be pursued by the future

researchers and human resource managers.

Conclusion

Based on the results of the study, the level of employee’s loyalty is observed through

the employee’s job satisfaction which it has a high result in interpretation with the mean of

(3.50). It is said that the work environment, working relationship and human resource policies

have a greater impact on employee’s job satisfaction which it is resulting to their satisfaction

and resulting to employee’s loyalty towards the organization. In the influencing factors there

is 3 indicators which is it resulted to the Performance Appraisal greatly influence employee’s

loyalty. The average mean of the indicators of influencing factors Performance Appraisal

(2.6), Reward Management (1.8), and Compensation Benefits (1.4). This shows that

employee’s evaluation is important because it is positively related to organizational

29
commitment and loyalty. Therefore, the researchers concluded that employee’s job

satisfaction has a high level of impact towards the level of employee’s loyalty and the

performance appraisal is greatly influencing the employee’s loyalty towards the institutions.

Institutions or organizational behavior is a persistent issue which requires continuous

monitoring so that the behavioral pattern could be kept in tune with the changing

requirements. Employee’s loyalty is one of the critical factors which are demanded from

every employee. Some concerted efforts are needed by the management to keep the loyalty

live and active.

Recommendation

The future researchers can find a huge body compact literature on the topic spread

across the research paper and used it for further future research. Likewise, the most powerful

contribution of this is the research models that extracted from the literature and used it as a

guideline conduct current research study. The same model can further be used by the

researchers after the minor changers according to the context.

The educational institutions can use this research for them to know what is the level

of employee’s loyalty and improve their systems on how to maintain employee’s loyalty from

this research perspective.

30
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Appendix 2: Coding Draft

Research Problem #1

Level of Employee’s Study 1 Study 2 Total Mean

loyalty

Level of Organizational 2 3 2.50

Commitment

Level of Job Satisfaction 4 3 3.50

Research Problem #2

Which among the factors greatly influences employee’s loyalty?

Significant word or
Studies phrase (code) Theme Frequency

38
 Promotion
Attendance Performance appraisal 3
Creativity

Strategies Rewards Management 2

Study 1
Benefits given to the Compensation and 3
employee’s Benefits
Salary
Insurances
Job Experience Performance Appraisal 2
Productivity
Years of working Rewards Management 2
Study 2 Faithfulness

Salary Rate Compensation and 3

Benefits
Leadership Performance Appraisal 1
Skills
Study 3 Time Managements

Incentives Rewards Management 3

Allowance
Company Performance Performance Appraisal 3
Service Quality
Maintaining
Competitiveness in
Study 4
time

Cost Reduction Compensation and 2

Benefits

39
 Employee’s Performance Appraisal 4
Commitment
Providing good
services
Study 5
Employee’s
satisfaction
Faithful Rewards Management 2

Curriculum Vitae

CYBILL DANIEL DALANGIN MAASIN

Campo 3 Purok 3-C Talomo River, Calinan, Davao City
Cell #: 09564695582
e-mail address: redviper3211@gmail.com

PERSONAL INFORMATION

NICKNAME: Cham-Cham
BIRTH DATE: 21 December 1999
BIRTH PLACE: Davao City
AGE: 21
NATIONALITY: Filipino
RELIGION: Roman Catholic
CIVIL STATUS: Single
FATHER’S NAME: Danilo A. Maasin
MOTHER’S NAME: Alma Villa D. Maasin

EDUCATIONAL BACKGROUND

TERTIARY: HOLY CROSS COLLEGE OF CALINAN

Bachelor of Science in Business Administration
Major in Human Resource Management

40
 Datu Abing St, Calinanl, Davao City
2019-Present

SECONDARY: CALINAN NATIONAL HIGH SCHOOl

Duyac St, Calinan, Davao City
2013-2018

PRIMARY: CALINAN CENTRAL ELEMENTARY SCHOOL

Penano St., Calinan, Calinan District, Davao City
2009-2012

Curriculum Vitae

JESSICA PAGATPATAN BELLEZA

Purok 14, Yellowbell Street, Mintal, Davao City

Cell #: 09085513717
e-mail address: bellezaj24@gmail.com

PERSONAL INFORMATION

NICKNAME: Ikang
BIRTH DATE: 16 October 1999
BIRTH PLACE: Davao City
AGE: 21 year’s old
NATIONALITY: Filipino
RELIGION: Roman Catholic
CIVIL STATUS: Single
FATHER’S NAME: Victor P. Belleza
MOTHER’S NAME: Vilma P. Belleza

EDUCATIONAL BACKGROUND

TERTIARY: HOLY CROSS COLLEGE OF CALINAN, INC.

Bachelor of Science in Business Administration

41
 Major in Human Resource Management
Datu Abing St, Calinan, Davao City
2018-Present

SECONDARY: TUGBOK NATIONAL HIGH SCHOOL

Durian St. Tugbok Proper, Tugbok Davao City
2012-2018

PRIMARY: BALINGAENG ELEMENTARY SCHOOL

Balingaeng, Davao City
2006-2012

Curriculum Vitae

MARY CRIS SASUMAN BUSANO

Prk. Bagong Lipunan Tawantawan Baguio District Davao City
Cell #:09679379844
e-mail address: marycrisbusano25@gmail.com

PERSONAL INFORMATION

NICKNAME: In
BIRTH DATE: 25 December 1999
BIRTH PLACE: Davao City
AGE: 21
NATIONALITY: Filipino
RELIGION: Roman Catholic
CIVIL STATUS: Single
FATHER’S NAME: Eligio Busano
MOTHER’S NAME: Ma. Clarita Busano

EDUCATIONAL BACKGROUND

TERTIARY: HOLY CROSS COLLEGE OF CALINAN

Bachelor of Science in Business Administration

42
 Major in Human Resource Management
Datu Abing St, Calinan, Davao City
2019-Present

SECONDARY: Maria Cristina P. Belcar Agricultural High School

Tawantawan Baguio District Davao City
2012-2018
PRIMARY: TAWANTAWAN ELEMENTARY SCHOOL
Tawantawan Calinan, Calinan District, Davao City
2011-2012

Curriculum Vitae

RICHARD GARROTE DUMANDAN

Purok 24 Teacher’s Village, Calinan, Davao City
Cell #: 09508943244
E-mail Address: richarddumandan@gmail.com

PERSONAL INFORMATION

NICKNAME: Ricky
BIRTH DATE: January 3, 1991
BIRTH PLACE: Davao City
AGE: 30
NATIONALITY: Filipino
RELIGION: Roman Catholic
CIVIL STATUS: Married
FATHER’S NAME: Manuel A. Dumandan
MOTHER’S NAME: Susan G. Dumandan (Deaseased)

EDUCATIONAL BACKGROUND

TERTIARY: HOLY CROSS COLLEGE OF CALINAN

Bachelor of Science in Business Administration
Major in Human Resource Management
Datu Abing St., Calinan, Davao City 43
2018-Present
SECONDARY: CALINAN NATIONAL HIGH SCHOOL
Duyac St., Calinan, Davao City