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An examination of current compensation and performance appraisal
practice among hotel employers in Malaysia: A preliminary study
J. Lahap, S.M. Isa, N.M. Said, K. Rose & J.M. Saber
Universiti Teknologi MARA, Penang, Malaysia
ABSTRACT: This paper seeks to examine the current compensation and performance appraisal practice
among hotel employers in Malaysia. It was known that effective Human Resource Management practice
is crucial to any organization ergo act as a catalyst to other sub-department in hotel establishment.
The main activity of the department is to recruit, select, remunerate and appraise employees. Moreover,
HRM department also performs tasks such as planning, controlling and organizing human resources.
Therefore, to have effective and efficient HRM practice is inescapable. The finding of the study reveals
that the practice of compensation and performance appraisal among hotel employers in Malaysia meets
the industry requirement and standard, however, needs some improvement.
Keywords :
Human Resource Management practices, compensation, performance appraisal, hospitality
and tourism
1 INTRODUCTION
(policies, procedures) and Human Resources
Management practices (Lahap, O'Mahony & Sil-
litoe, 2010). Proper Human Resources Manage-
ment practice can alter employee's intention to
leave their job, influence the level of job satisfac-
tion and employees' commitment towards their
employer (Arnett, Laverie & McLane, 2002). An
excellent Human resource management is prima-
rily able to reduce problem relating to employ-
ees' performance, employees' job dissatisfaction,
employees' turnover rate and employees' absentee-
ism (Lahap, O'Mahony & Dalrymple, 2013). For
many years, the Malaysian Tourism Industry had
shown a dramatic improvement, thus enables it to
compete with the neighbor countries. However, a
recent study reports that the monetary compensa-
tion paid by hotel employers to hotel employees in
the sector is known to be unsatisfactorily (Lahap,
et al., 2010). In addition, hotel employees work for
long hours and received only a day off in a week.
These factors have caused many hotel employ-
ees refuses to perform their job effectively, to the
extent quit their job. Furthermore, working in the
hotel sector is enervated, therefore, absenteeism
and employee turnover were known to be the main
issue (Gounaris, 2008; Phonsanam, 2010).
The top three leading contributors to the inflow
of foreign exchange in the Malaysian economy is
the Tourism sector, it was estimated that the busi-
ness were believed to worth MYR 60.6 billion in
2013 (approximately USD19.5 billion) (Tourism
Malaysia, 2012). The hospitality industry is also
considered part of the Tourism sector and it can
be categorized into three segments; transportation
services, accommodation and tourist destination
(Hayes & Ninemeier, 2009). Kuala Lumpur was
ranked as the seventh most visited destination
in the world (Euromonitor Report, 2010). The
development and growth of the Hospitality and
Tourism industry in Malaysia promotes Kuala
Lumpur to be the top tenth Best Shopping Cities
in the world by CNN's Travel Survey (Prime Min-
ister Department, 2013). This study is developed
as a means to examine the practice of Human
Resources Management practice that concentrate
on factors such as compensation and performance
appraisal. Lodging business provide accommoda-
tion for those who are away from homes and in
many circumstances the industry uses human to
deliver hotel products and services. Therefore, to
employ the best service deliverer is seen to be vital.
A number of reviews of literature suggest that
there are many factors that can enhance employee
job performance. Some of the strategies are work-
ing environment (culture, belief), physical environ-
ment (facilities, equipment), rules and regulations
2 LITERATURE REVIEW
In the 21st century, the need to match compen-
sation and organizational strategy has become
 
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