1

Introduction

Looking at how well todays organizations developed, people have been wondering what
has been the backbone of an organization. To speak the truth, job performance by the
employees has contributed to the epic and high ranking of todays many well-known
organizations. Not many realizes this, but employees of an organization work as hard as
they could to get the organization theyre in to get well known by the public in order to
achieve their target and to reach out so that people could receive the message or the
offers theyre offering to their target clients. As employees work their heads off day and
night, writings of how their hard work is their beloved company is yet to be revealed. In
this writing, it will be revealed how and why and what the employees worked and how
their job performance affects their daily routines.
In this section, the researcher will discuss a comprehensive review of information
regarding the topic selected for this research. This includes review from sources such as
books, academic journals, articles and other materials that are related to the topic
studied. This review helps the researcher to get a solid background of study before
starting the research. The background study will form the foundation for the thesis and
provides the researcher with valuable data to begin the research.
1.1 Background of Study
All organization strives to achieve success and excellence, even when facing
competitive challenges from the current environment. Therefore, all companies strive to
develop and retain the best employees. To compete in a global market, all organizations
understand the value of human capital and acknowledge their role on organizational
effectiveness. Human capital is the main asset of an organization, and proper
management of this asset will lead the organization toward success.
An organization wouldnt be as effective as it is if its not because of the
employees efforts on building the foundation of an organization as well as strengthening
it. Employee performance is important as they are the ones who would do all the work
related to their fields in order to achieve certain objectives and demands of an
organization.

Employees who performed well in an organization will benefit the company the most.
But the benefit doesnt go to the company alone, it will also go to the employees. This is
a win-win situation which will bring positive environment to both sides as no loss is
gained when both sides win.
For this study, I am going to focus on the tourism industry in Malaysia, specifically the
hotel and hospitality industry. The tourism sector in our country is thriving and becoming
an important source of national income. The government has mobilized all its agencies
to ensure that the tourism sector is growing rapidly in line with the rapid development of
the country. However, there is still room to spare for a fair and beneficial improvement to
all parties to ensure that all parties benefit from the development of this sector. Looking
from a different perspective, there are many challenges facing this sector in our country
in the near future.
Tourism is the temporary movement of people to other destinations outside of the
workplace and ordinary place of residence, their activities during the stay at the
destination and the services provided to meet their needs. Tourism is considered to be a
luxury, because few people have the time and money only afford to travel. A lot of free
time, the economy is getting better, many transport facilities have combined to enable
more people to go traveling (Matthieson and Wall, 1991).
In the context of today's world, tourism is one of economic and social activity that is
increasingly important. The number of domestic and international tourists is increasing
even, some countries in the world are now developing the tourism sector as key sectors
that generate national income (Inskeep, 1996). Tourism is also a sector that involves the
role of mutual links between governments, non-governmental organizations and the
public (Salah Wahab and Cooper, 2003).
In the Malaysian context, tourism continues to be a major source of foreign exchange,
which contributed to economic growth, investment and employment. A total of 16.4
million tourist arrivals in 2005 has contributed 18.1 billion to income countries

(Malaysia, 2006). The development of the tourism sector in Malaysia has been affected
by changes in the magnitude and potential of the tourism industry in the future. Given
that the tourism industry is now a catalyst for national income, the integrated approach
implemented in the planning and implementation of sustainable tourism (Nurulashila
Khalid, 2006).
Tourism has become a new field of investment can spur the growth of other industries
which serve as a vehicle for the development of mega Malaysia towards a developed
nation by the year 2020. In the tourism system, aspects that should be emphasized is
the existence of travelers, suppliers of goods or travel services, government and also
hosts chosen destination. In other words, all four of these elements need to be involved
in creating a tourism industry. When an individual is traveling, meaning they are travelers
who need services such as accommodation and transportation.
In the market, a component which plays a role in determining the growth and progress of
the tourism industry is a component of the population. On the tour, participants were
categorized into two locals and visitors. When both traveled, triggered term traveler or
visitor. Travelers also be viewed in two aspects, namely those who traveled within the
scope of tourism and those who traveled aims to fulfill other activities. From the
perspective of tourism, people traveling within the scope of tourism known as a tourist.
Employees performance will be the benchmark of how well a company is doing in
economic terms, attitude, profits and many more. Through the employees performance,
a company is able to measure their achievements based on their stated objectives such
as wanting to get first rank amongst the rivals. Through performance assessment, the
employees performance as well strong and weak areas will be identified. This will help
the employees keep track of their current progress and strive to improve their
performance. This will be beneficial for the employees career development.
In todays modern sector, competitive rivalry and rapid increase in technology
cannot be avoided. To survive in the competitive market, organizations need to integrate

their employees to the changes in the industry and improve their human resources in
term of performance, motivation, commitment and skills to better improve organizational
effectiveness. A good and consistent feedback system should also be considered in
order to better improve the quality of its main asset in the organization.
There are many areas that can affect organizational effectiveness. These include
performance appraisal, employee training, employee commitment and motivation.
Employees who received proper training, have high commitment and motivation will
certainly lead to high performance and contribute to organizational effectiveness. These
factors need to be considered in ensuring organizational goals and objectives are
achieved. Human capital is an organizations main asset and therefore, organizations
need to put serious investment if they desire to achieve success in the competitive
industry.
The increase in the number of tourists in a tourist area with many related attractions
available in the tourist destination. Unique charm and distinctive is the magnetic force
that attracts a person to travel to the destination. Tourists prefer to travel to a destination
that has the characteristics of natural attractions such as Mount Kinabalu.
Besides tourism destination is characterized by cultural attractions can also attract
tourists to travel in this tourist destination. For example, the state of Malacca, which has
elements of folk history and unique culture such as Portuguese and the Baba Nyonya
that none of the other states in Malaysia is known for causing the state tu be dubbed the
Historical City of Melaka.
Service component is an important component of the tourism industry in a country. This
is due to the influx of tourists deciding factor in a place closely linked to the tourism
component of the services offered by the tourism industry. The higher the service
facilities offered by the tourism industry a higher number of tourists coming to this tourist
area. Service component includes all forms of facilities used by tourists during their stay
in a tourist destination. Elements of the services needed by tourists in the tourist

destination of their visit is to support them throughout their lives are in tourist
destinations. However there are still some complaint that is being heard from some
tourist, which indicates that the service can still improve.

Among the components of service required by travelers for their support during their
stay in life is perfect tourist destination. As the tourists themselves carry out the intent of
the original residence, then it also means tourists visiting the place. There is clearly an
important sector of accommodation for tourists. The accommodation sector also offers a
variety of accommodation and food to tourists. Among the types of accommodation on
offer to tourists is shaped not get paid or have low fees as hostels or boarding school.
Component or promotional information is also important in the tourism industry to
promote the activities and experiences available to tourists during their stay in the tourist
destination. To increase the arrival of tourists in a tourism destination management must
provide information that is offered before and during the tourist travel in the destination.
Information to be promoted is like activities and experiences offered, attractions that can
encourage tourists to travel to these destinations, transport and cost required to reach
these tourist destinations and places of accommodation available in the area The
tourism. In addition, the management should promote the backdrop of a tourist
destination such as language and culture, used by the locals to help tourists
danberinteraksi communicate with the locals. The management must remember that
today's travelers are more experienced and educated in choosing a tourist destination
they want to visit.

1.2 Problem Analysis

The direction that an organization is heading is steered by people. Goals are set and
objectives of an organization are realized through the effort of its employees. In the hotel
business, employee performance is very important since the employee are the face of

the company. Every service given will be closely scrutinized and each mistake will be
detrimental to the reputation of the company. The performance of an organization is thus
critically dependent upon the effectiveness of employee performance. The human
capital is the differentiator between a good company and a great company.
Thus, there is presently a pressing need for more knowledgeable employees to serve
the hotel industry. The performance of front-line employees is important because they
are the direct point of contact to visitors and as such need the autonomy to deal
effectively with visitors concerns. Therefore, empowerment can boost employees
perfomance (Conger & Kanungo, 1988) as it permits them to decide the best way to
carry out a given task (Gist & Mitchell, 1992).
There are many factors affecting organizational effectiveness. In this study, the
researcher would like to stress on employee performance and the quality of service
provided by the hotel that they are working in. Employee performance and its effect on
the effectiveness of the organization the employee is serving is a topic that has been the
subject of a long debate. It has been said that the success of any company really hinged
upon its people, and their performance at work. (Pfeffer, 1995) Employees are the
backbone of any organization, and as you might expect, studies show that happy
employees are more motivated, productive and committed.
Organizational development is a process by which organizational effectiveness is
achieved through the use of behavioral knowledge and practices. Through the
development process, an organization will be able to improve its quality and productivity.
Organizational development is oriented to improve the system of an organization as well
as its environment. Therefore, it can be concluded that increasing organizational
effectiveness will be able to assist organizational development process.
There are a few factors which affect the performance of an employee, and one of
the factors is job satisfaction. Job satisfaction is at its highest when the job requires
engaging the strongest personal qualities of its employees and is in line with employees
own values and attitudes. Another critical factor is the fit between the employee and the

organization; alignment between the organization's nature and culture directly impacts
employee's performance.
Absence of performance appraisal also affects the organisation negatively. Both
employee and the organization are unable to identify employees weak areas and
therefore, unable to improve them. This will undoubtedly affect productivity negatively
and slow the development of the organization. Employees career development will also
be affected since there is no accurate assessment of their progress and might decrease
their chance of receiving bonus or getting promotions.
Lack of training will cause the employee to be unprepared in handling advanced
technology and new knowledge in their work field. This will reduce the employees
efficiency and also cause more errors and dissatisfied customer. It will be difficult for
organizations to compete with other companies if their human resources are not
equipped with the necessary skills required. Employees incompetence in their work will
eventually reduce their confidence in their work and decrease their motivation to
continue their jobs.
Besides that, employee motivation should be a concern in increasing
organizational effectiveness. Employees who lack motivation in their work will not be
able to use their full potential in their work and therefore reduce their work efficiency.
Lack of motivation will also cause negative behaviours such as tiredness, stress,
absenteeism and decline of productivity. The organization will not be able to achieve
success if its workers are not supporting its goals and objectives.
Employee commitment also plays a role in determining organizational
effectiveness in the long run. Employee with high commitment will definitely lead to
stabilised work force in the organization. Lack of commitment cause the employee to
have no desire to remain in the organization and leave whenever an opportunity arises.
Lack of sense of belonging and loyalty to the company will reduce productivity and
efficiency since the employees have no desire to progress or receive any reward from its
contributions to the company. Lack of commitment can also lead to negative behaviour
such as absenteeism.
The subordinate-supervisor relationship is very much linked to employee
development. The ability to cope with stress effectively is another important factor. There

are some assessments which can help managers better understand the abilities of their
employees, their preferred working style, how to motivate them, and how to develop
their potentials. The ultimate benefit to employees and managers completing this
assessment is learning the ways to be more effective, efficient and fulfilled at work.
As a conclusion, employee performance plays a major role in determining
organizational effectiveness. The researcher proposes that factors such as performance
appraisal, training and development, employee commitment and motivation influence job
performance and will have important effects on organizational effectiveness. The
inability to rectify situation and improve the conditions of employees in an organization
will reduce organizational effectiveness. It is the ability of the parties to manage and
adjust work practices to meet the productivity needs of the firm and the interest of the
workforce is critical. And therefore all organizations need to put an effort in rectifying the
situation.

1.3 Research Questions

The study was conducted to examine the relationship between the independent variable
which is employee performance and dependent variable which is organisation
effectiveness.

What is the relationship between employee performance and organisational

effectiveness?
What is the relationship between performance appraisal and organisational
effectiveness?
What is the relationship between employee training and organisational
effectiveness?
What is the relationship between employee commitment and organizational
effectiveness?
What is the relationship between employee motivation and organizational
effectiveness?

1.4 Research Objectives

The main purpose of the study is to examine the relationship which independent variable
will contribute to organizational commitment. The research objective is dividing into two
aspects which are general objectives and specific objectives.

General Objective
To examine the relationship between employee performance and organisational
effectiveness

Specific objectives
To examine the relationship between performance appraisal and organisational
effectiveness
To examine the relationship between employees training and organisational
effectiveness
To examine the relationship between employees commitment and organisational
effectiveness.
To examine the relationship between employee motivation and organisational
effectiveness.

1.5 Significance of Study

Measuring performance is an essential function in business management. Business
owners must have quantitative or qualitative analysis procedures to review their
companies operations. (Patterson, Warr, & West, 2004). Quantitative analysis uses
mathematical calculations to measure performance output. Qualitative analysis allows
business owners to make personal judgments or inferences from business information.
Employee performance is a key cog of a companys success. Employees usually
represent the largest expense for a company, and measuring performance is essential to
the employee management process.
Business owners usually measure employee performance by assessing the
production output of each employee. Employee output represents the amount of goods

or services an employee can produce in a specific amount of time. Employee

performance can also relate to how efficiently a company uses economic resources.
Economic resources include the direct materials and facilities needed to produce
individual products. Poor employee performance can result in wasted resources and
higher business operating costs.
Poor employee performance can decrease a companys competitive advantage in
the business environment. A competitive advantage is when one company can produce
goods or services more efficiently and effectively than another business. Small
businesses usually rely on employees to present a positive image of the company in the
economic marketplace. Employees often represent the company in customer service
functions, such as cashiers, receptionists, customer service agents and other similar
positions.
Business technology can help small business owners improve their employees
performance. Business software can automate traditional manual processes and
eliminate data entry errors in certain functions. Technology can also increase the
production output for employees working in specific departments. For example,
accounting clerks can often process more bills or invoices using accounting software.
Rather than spending copious amounts of time using paper ledgers or journals to record
this information, clerks enter the invoice information into the accounting software for
processing.
Individual employees may not be solely responsible for poor performance.
Business owners using a strict management system can create a difficult work
environment. Business owners may require employees to get approval before making
decisions in their job. This can slow down the companys production process and hinder
the employee from achieving maximum performance. Poorly trained employees can also
decrease the companys overall business performance.

1.6 Organization of Chapters

This is chapter 1, the first out of 5 chapters of the project paper. This chapter presents
the background of the study which includes introduction, problem statement, research
objectives, research questions and significance of the study.

Chapter 2 takes another look of employee's performance toward organizational

effectiveness. This chapter is divided into four facets which includes performance
appraisal,, training, employee commitment and employee motivation. This factors will
be tested against organizational effectiveness. The literatures were extracted from
publication of journals, books and articles of references for this research. The important
points will later be compared with the findings based on previous studies.

Chapter 3 presents the method for the study which is the research design.
Besides that, this chapter will discuss the sources of data, population and sampling such
as selection of respondents, size of respondents and the development of questionnaire
for research and data collection procedure. This chapter ends with a brief description of
the strategies and procedure that are used to analyse data collection from the survey.
Chapter 4 eludes the intepretation of the research findings which are frequency
analysis, correlation and reliability. The results are summarized in a table to facilitate
intepretation. In this chapter the question of whether research objectives have been
achieved will be clarified.

Chapter 5 marks the final chapter in this study. This chapter will discuss the
intepretation of the research findings of the study and the significance of the study. This
chapter also concludes the result finding and suggest recommendations for future
research. The importance to the implication and limitation of study will also be stated.