CHAPTER I

THE RESEARCH PROBLEM

This chapter presented the general information of the study,

it consists of introduction, theoretical framework, conceptual

framework, statement of the problem, hypothesis, and significance of

the study, scope and limitation, and the definition of terms.

In recent years, Cagayan de Oro has experienced a surge in

infrastructure development. Notably, the hospitality industry has

undergone rapid expansion, driven by an increasing number of tourists,

business travelers, and a growing population. Consequently, the city has

emerged as a prime destination for investments in hotels and

restaurants. Cagayan de Oro is set to solidify its position as a major

player in the Philippine hospitality industry with the upcoming

development and groundbreaking of several high-profile hotel chains

and restaurant accommodations. These new businesses are expected to

make the city an even better place for travelers and tourists. The

restaurant industry is always changing. Success depends on a leader's

ability to handle challenges like changing market needs, evolving

customer preferences, high employee turnover, and operational

problems. According to the study by Assaf et al. (2011), the restaurant

industry demonstrates a high level of competition alongside

opportunities for growth. This is attributed to the prevalence of small

are responsive to economic and social trends. In recent years, these

challenges have been further accentuated by global events, economic

instability, and increasing competition, emphasizing the growing

importance of effective leadership. To navigate the challenges in the

restaurant industry, Entrepreneurs must use new and flexible

management methods. One such method that has gained attention is

transformational leadership. In a study by Jovičić Vuković et al. (2018),

transformational leaders are recognized as individuals who lead change,

have a visionary approach, trust their teams, demonstrate values-based

leadership, prioritize continuous learning, and show skill in managing

complexity, ambiguity, and uncertainty. Additionally, as indicated by the

research of Elkhwesky et al. (2022), transformational leadership has

been thoroughly examined in relation to employee satisfaction and

engagement in the hospitality industry. Amidst the various challenges

that the restaurant industry faces, this research aims to explore how

transformational leadership, a leadership style focused on inspiring,

motivating, and empowering employees, can play a key role in

addressing these issues and fostering a culture of resilience, innovation,

and long-term success in operating a restaurant business. The restaurant

industry faced a big challenge during the COVID-19 pandemic. The tough

economic conditions required entrepreneurs to use their best skills to manage

their businesses. Being creative and innovative was important for overcoming
 these challenges and improving the business situation (Abrasel, 2021).

Restaurant owners have started thinking about how their businesses can

overcome challenging times like these. Some studies have shown that external

challenges such as the pandemic are not the only reasons why it's difficult to

retain employees and keep the business running. High employee attrition is

often linked to the emotional and mental well-being of the employees. As

supported by the study of Bowman & Stern (1995) The psychological responses

of employees to organizational change, particularly their commitment to

change, are expected to serve as mediating factors in the relationship between

transformational leadership and positive outcomes, including their perceived

quality of life. Changes at work can be very stressful for employees, and, as a

result, they may use various coping strategies (Bowman & Stern, 1995). High

employee attrition is often caused by poor management. It is absolutely crucial to

have dedicated management that prioritizes both guest satisfaction and the

welfare and safety of employees. This requires motivating, inspiring, and teaching

employees to strive for excellence through hard work and passion. The qualities of

this leader could greatly benefit any management team According to the study

of Yang (2012), it has been suggested that transformational leadership may

serve as a mechanism to alleviate workplace stresses and bolster employees'

dedication to the organization.

Theoretical Framework

The Transformational leadership theory was developed in the late

20th century by Burns (1978) during his analysis of political leaders. Burns defined

transformational leadership as the kind of leadership that takes place when one or

more individuals engage with others in a manner that raises both leaders and
followers to higher levels of motivation and morality. He believed that

transformational leadership could raise followers from a lower level to a higher

level of needs which agrees with Maslow’s hierarchy of needs. Bass (1985) refined

and expanded Burns’ leadership theory. According to Bass, a leader motivates us

to do more than we originally expected to do. He said that this motivation could be

achieved by raising the awareness level about the importance of outcomes and

ways to reach them. Bass also said that leaders encourage followers to go beyond

self-interest for the good of the team or the organization. Moreover, the study of

Judge & Piccolo (2004) expanded the concept of transformational leadership. He

argued that transactional and transformational leadership are separate but

effective leaders demonstrate characteristics of both.

Conceptual Framework

The study will examine the influence of Transformational

Leadership in reducing the Employee Attrition in Cagayan de Oro’s

Restaurant Industry. Figure 1 shows the schematic diagram of the

variables in the study. The primary purpose of the paper is to determine

and evaluate the significance Transformational Leadership not only

addressing issues and challenges but also fostering a culture of resilience,

innovation, and long-term success of a Restaurant.

Figure 1. The Schematic Diagram of the Study

ATTRITION

LEADERSHIP

Statement of the Problem

The restaurant industry faces various challenges. According to Wong, Kim,

Kim, & Han (2021), the quality of employees' work life and well-being is a

critical issue during crises, as work conditions and economies can change

unexpectedly over time, leaving employees vulnerable not only physically

and financially, but also emotionally. For instance, hotel employees are

under extreme stress and anxiety due to the stressors raised from an

unstable and challenging work environment since the COVID-19 outbreak.

Thus, what could be the role of Transformational Leadership in maintaining a

good and healthy working environment for the employees. According to the

study of Alamir et al., (2019) transformational leadership are driven to

provide or make changes in their organizations, which may include

transforming the current structure, influencing subordinates or followers to

accept a new vision and possibilities, and influencing others to instil their

trust in leaders. It was also supported by the study of H. Kim et al (2021) that

Transformational Leadership is a factor that increase in commitment to

change and quality of life at work. Furthermore, this study aims to know

more about the influence of Transformational Leadership on addressing

Solving.

Specifically, this study seeks to answer the following questions:

1. What is the level of Transformational Leadership in

reducing Employee Attrition in a Restaurant Industry?

2. What is the level of Employee Attrition of the

Respondents?

3. Does Transformational Leadership significantly

influence Employee Attrition?

Hypothesis

Based on the Conceptual Framework and the Statement of the Problem, the

Researchers developed one null hypothesis.

Ho1: Transformational Leadership does not have a significant influence

with the reducing Employee Attrition of the restaurants in Cagayan de

Oro City.

Significance of the Study

The researchers want to help the Restaurant Industry in identifying

how Transformational Leadership influence the employee attrition and

give them a short background about how it will affect the Hospitality
 Industry. The result of this study could be highly significant and

beneficial, especially to the following:

Future Researchers – that this study may serve as a guide for future

researchers to use this research as a reference and they can get a literature

review from this. Also, they can create new research, based on the results of

this study.

Restaurant Owners and other Hospitality and Tourism Industry

Employees

That the findings of this study would benefit and help how transformational

leadership can reduce high staff turnover by fostering a positive and engaging

work environment, offering solutions to retain talented employees and reduce

costs associated with recruitment and training.

Tourists - as the ones who have a huge part in this industry, this study will

help to reassert and cater a better experience for for the tourists and guests

in a restaurant.

Human Resource Employees - HR professionals can use the insights from this

study to inform policies and practices that promote leadership development in the

restaurant industry. This study can also guide the HR practitioners in designing

initiatives and programs that focus on employee well-being, professional

development, and long-term engagement.

Future Researchers – that this study may serve as a guide for future

researchers to use this research as a reference and they can get a literature
review from this. Also, they can create new research, based on the results of

this study.

Scope and

Limitation

This research will focus on determining how Transformational

Leadership can influence Employee Attrition in Restaurant Industry. This

study also assessed the independent and dependent variables. Recent

studies and research is used as references in finding out how

Transformation Leadership influence the employee attritition.

This study limits the coverage to restaurant employees’ in

Cagayan de Oro 23-years old and above and who are 6 months and

above working in a restaurant.

Definition of Terms

This study is meant to provide crucial information and

knowledge concerning Transformational Leadership. The terms below

are defined conceptually and operationally for the better understanding

of the reader.

Employee Attrition – gradual reduction of workforce due to various

reasons, such as resignations, retirements, or layoffs.

Restaurant Industry - businesses involved in preparing and serving food

and beverages to customers.

motivating, and empowering employees—can be a key factor in not only

addressing these issues but also fostering a culture of resilience, innovation,

and long-term success

Chapter II

REVIEW OF RELATED LITERATURE AND STUDIES

In this chapter, the researchers have given an overview of the topic that

establishes the relevance of the problem, which can provide important

information about the factors that will influence on tourist loyalty within a

specific destination. The review of the related literature and studies will be

obtained from legitimate sources that provide a better understanding of the

study. Furthermore, it will state a literary perspective that will illustrate the

significance of the destination and allow tourist to value loyalty by returning

to the destination.

Independent Variable: Transformational Leadership

Bass introduced the concept of transformational leadership as a contrast to transactional

leadership and emphasized its focus on motivating followers to achieve exceptional outcomes

by aligning their personal goals with organizational goals (Bass, B. M. (1985). Numerous studies

have found that transformational leadership is positively associated with high levels of job

satisfaction, which in turn can reduce the likelihood of voluntary employee turnover.

According to Bass and Avolio (1994), transformational leaders inspire their followers by
creating a shared vision, encouraging innovation, and showing genuine concern for their

individual needs. These leaders foster a work environment where employees feel valued and

supported, which enhances job satisfaction and reduces the intention to leave the organization

(Bass & Avolio, 1994).

In a study by Givens (2008), it was found that transformational leadership directly impacts

employee satisfaction by promoting a supportive and empowering workplace culture.

Employees who experience transformational leadership are more likely to feel a sense of

belonging and commitment to their organization, leading to lower attrition rates. One of the

key areas where transformational leadership has a significant impact is in enhancing employee

motivation. According to Avolio, Walumbwa, and Weber (2009), transformational leaders

motivate their followers by inspiring them with a clear vision and providing the intellectual

stimulation necessary to achieve high levels of performance. Judge and Piccolo (2004) in their

meta-analysis also found that transformational leadership is strongly correlated with intrinsic

motivation, suggesting that transformational leaders can help employees align their personal

goals with organizational objectives, increasing their commitment and effort at work.Judge and

Piccolo (2004) also found that transformational leadership has a stronger relationship with

organizational commitment compared to transactional leadership, as transformational leaders

foster an emotional investment in their followers, increasing their desire to remain with the

organization.
Bass, B. M., & Avolio, B. J. (1994). Improving organizational effectiveness
through transformational leadership. Sage Publications.