ACKNOWLEDGEMENT

First and foremost, we would like to thank to our beloved lecturer, Prof Dr Noormala
Binti Dato Amir Ishak for the valuable guidance and advice. She inspired us greatly to work
in this project. Her willingness to motivate us contributed tremendously to our project. We
also would like to thank her for showing us some example that related to the topic of our
project.
Besides, we would like to take this opportunity to thank to our campus that is MARA
University of Technology and our faculty Arshad Ayub Graduate Business School (AAGBS)
for giving me us an opportunity to participate and learn about the MGT700 (Organization
Behaviour) course.
Finally,

an

honourable

mention

goes

to

our

families

and

friends

for

their understandings and supports on us in completing this project. Without helps of

the particular that mentioned above, we would face many difficulties while doing this project.

TABLE OF CONTENTS

DESCRIPTONS

PAGES

1.0 INTRODUCTION

2.0 MOTIVATION FACTOR

3.0 HYGIENE FACTOR

4.0 RECOMMENDATIONS

5.0 CONCLUSION

6.0 REFERENCES

1.0 INTRODUCTION
AirAsia Berhad is one of the most popular organization in Malaysia and is listed on
the mainboard of Bursa Malaysia (BSKL) since 2004. It shows that AirAsia Berhad is one of
the most well-established company in Malaysia. AirAsia Berhad also has been named as the
Worlds Best Low Cost Airline in 2009 and 2010.
AirAsia Berhad started in 2001 with only 2 old aircraft, having brought the then loss
making of AirAsia from one of the most established Malaysian Government Link Company
(GLC) owner that is DRB-Hicom Berhad for a token of MYR1 and MYR40 million in debt
(AirAsia, 2015).
Everyone knows Tan Sri Tony Fernandes is the Group Chief Executive Officer (CEO)
of AirAsia Berhad since December 2001. A leader that was born to improve and lead the
most established Malaysias low-cost airlines was born on 30 April, 1964. Before he become
GCEO of AirAsia Berhad, he was the Financial Controller of Virgin Communications London
that is under Richard Branson, one of the most popular CEO in the world that is also the
owner of Virgin Airlines in USA. Now, from only 2 planes in the hangar, AirAsia Berhad now
has more than 100 aircrafts and is transporting about 30 million people around the world
(For Business Blog, 2015). AirAsia more focusing on South East Asia destinations and now
they have about 9 airline affiliates under them such as AirAsia Indonesia, Thai AirAsia,
AirAsia India and others.
In this study, the theory of motivation is studied in order to see how does Tony
Fernandes and the organization applied the Herzberg Two Motivation Factor Theory towards
its staff in AirAsia Berhad especially in todays era. This study will cover on how Tony
Fernandes motivates all of his employees in terms of both motivational and hygiene factors
that related to Herzberg theory. This study also more focusing on AirAsia Berhad business in
Malaysia.

2.0 MOTIVATION FACTOR

Theory of motivation is one of the components from Frederick Herzberg two factor
theories. Another is hygiene factor. Theory of motivation is defined as the internal sources of
job satisfaction in work content. Job content is what people or employees do in their work.
Theory of motivation is important because it will determine the level of satisfaction that will
result good or bad performance. According to Robbins (2001), motivation is a needssatisfying process, which means that when a person's needs are satisfied by certain factors,
the person will exert superior effort toward attaining organizational goals.
Tony Fernandes has used this Herzberg hygiene-motivation factor in his company
which is Air Asia. He used the motivation factor to increase the performance of his
employees as well as his organization. Some of the motivation factor that he used in his
company:
2.1 Recognized employee needs.
In this motivation factor, Tony Fernandes has practiced empathetic that
means he experienced the hardship that his employees faced. For example,
he used to work on the ground and in the cabin crew. He has learned from the
ground experience and knows all the job specification for all management
level.
Another example is in a situation where his employees in the Air Asia had
lodge a complaint to him. The aircraft maintenance in his company complains
about their jumpsuit attire asked him to redesign the attire. He then tried the
jumpsuit attire and saw the difficulty faced by the aircraft maintenance.
This shown that as employer he really concern about his employees welfare
and condition at work. Therefore, his employees will feel really taken care by
the organization which will lead them to be committed and dedicated to the
organization.
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2.2 Provide opportunity to meet up with higher executive.

Tony Fernandes also motivates his employees in his organization by inspiring
open communication. This means that all his employees can communicate
directly with him or his panel executives whether to present idea or
suggestion on how the organization can be more productive and efficient.
Besides that, his employees also can meet directly with him in order to show
the work progress and consult him if there are some problems with their work.
This also can motivate his employees to maximize their performance in
conducting work. Furthermore, his employee will feel like they are part of the
organization and their existence in the organization is important. Hence, his
employees will tend to contribute more towards the organization.
Comparing to others organization in airline industry such as Virgin Atlantic
Airlines, the founder of the brand which is Richard Branson did not use face
to face interaction which practice by Tony Fernandes but he prefer to use
another medium to interact with his employees such as email which he prefer
to call it as chatty letters. However, he also encourages his employees to
write back by leaving comments and give ideas.

2.3 Offer a wide range of incentives.

In addition, Tony Fernandes also motivates his employees by offering them
with various incentives and bonus. For example, Tony Fernandes has
introduce ESOS (Employee Share Ownership Scheme) which is use to
motivates his employees by awarding bonuses based on each employees
contribution to his organization productivity and also to increase loyalty.
Besides, Tony Fernandes also provides his employees with non-financial
reward such as yearly free flights coupons in order to increase performance
and loyalty to his employees. By doing this, it can enhance the sense of
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ownership in the employees self. Therefore, they will tend to work hard and
maximize their performance toward contributing to the organization as they
feel the organization is their organization.

On top of that, this has shown how good Tony Fernandes as leaders and his own
ways to motivate his employees are exciting and attractive. By referring to the Herzberg
hygiene-motivation two factor theory, he has create his own way in motivates his employees
in maximizing their performance when conducting work.

3.0 HYGIENE FACTOR

Hygiene factor is one of the component from Frederick Herzberg two factor
theories. Hygiene factor is the gauging element into job dissatisfaction. This
means, if the hygiene factor is not fulfilled by the company, the employees might
facing a job dissatisfaction. Air Asia BHD always look at this aspect very carefully.

It is not worth to make their employees to be dissatisfied at the beginning of

their career at the organization.
3.1 Air Asia Company Policy.
Air Asia is a very ethical organization (AirAsia Code of Conduct,
2015). That means they never breaks the law. All the employees are well
informed that the company will not tolerate with any activities that void
the law. This will increase the motivation of the employees as they know
they will never break the law while doing their job.
Besides that, Tony Fernandes stand by this motto, employees come
number one, customers come number two (BBC, 2010). The motto clearly
stated that he always take employees matters seriously. They will never
neglect or ignore any suggestions, critics and recommendation given by
the employees. They believe that the employees is the quarterback of the
company.
3.2 Working Condition.
The working condition in Air Asia is very flexible. Even though they
run their business every day, the employees only have to work for five
days a week (AirAsia Careers, 2015). This means they get two days to
relax and spend their time with friends and families. Not all people
nowadays want to work six days a week or even worst seven days a week.
Besides that, Air Asia also allocate compassionate leave for the
employees if maybe there are some personal urgency or family
emergency (AirAsia Careers, 2015). In this case, Air Asia also acknowledge
that family members of the employees should gain the attention when it is

needed. It is a sad thing if the parent of the employee get sick, but the
child could not be by their side.
3.3 Status and Security.
In terms of security, Air Asia always make sure all the employees
are safe while they are working. That is why during the flight, there are
some rules and regulation that usually explained by the stewardess before
the plane take off. This is not only for the passengers, but also the crew of
the airplane.
Furthermore, Air Asia also cover the cost for personal accident and
term life insurance coverage. The insurance also covers any health
consultation and services cost of the employees families. This shows that
Air Asia wants their employees to stay healthy.

4.0 RECOMMENDATIONS
Based on the issue and information that has been identified when Tony Fernandes
motivates his employees that related to Herzberg Hygiene and Motivational Factors. There
are several recommendations that can be illustrated in order to improve the situations. We
recommend based on the findings results as below:
4.1 Emphasis on more effective safety and security to avoid accidents.
Air Asia Berhad should learn from their own experience such an example the
QZ8501 incident. From the investigation, the flight did not have permission from the
Indonesian Ministry of Transportation to operate the route on Sundays (Channel
News Asia, 2015). So Air Asia should have a good relationship with several
organization to make sure that their operations going smoothly without any problems.

4.2 Punctuality to penetrate market.

Air Asia always have their problems on the punctuality of flight so it may
cause dissatisfaction to customers. Air Asia also should maintain their schedule of
maintenance especially the aircrafts itself so that it will always well-maintained and
reduce the maintenance cost in the future. Besides that, because of the flight
demand in South East Asia, Air Asia should increase their number of aircrafts in order
to penetrate and expand the market to compete with other competitors in the region.
4.3 Partnership with other airlines.
Partnership is very important because usually business cannot stand by alone
without any support during this competitive market nowadays. One World is an airline
alliance founded on 1st February 1999 and now One World has been third largest
global alliance in terms of passengers with 512.8 million passengers (Star Alliance,
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2014). Malaysia Airlines Berhad (MAB) has become member of One World and it
gives more benefits to them in terms of brand recognition, landing rights and many
more that may save cost in the future. Air Asia Berhad should apply for become
member of airline alliance to increase their reputation in the future.

5.0 CONCLUSION
As the conclusion, Tan Sri Tony Fernandes is such a brilliant leader. His character
and the way of leading people is very different with other leaders. Tony Fernandes believes
that employees are always the main priority. One of his statement, he says that Employees
come number one, customers come number two. If you have a happy workforce theyll look
after your customers anyway. It shows that how important the employees in the
organization itself.
The leadership and management style of AirAsia Berhad shows that the organization
is a well-established company with highly profits. This study also helps to understand how
Tony Fernandes applied the Herzberg Two Motivational Theory to all his employees in order
for them to keep motivate while performing their jobs and tasks anytime. It also explains how
AirAsia Berhad motivates and retains its employees by giving them benefits so that they can
gained satisfaction in the company. The culture and values of the company also important
for all employees that can encourages them a wonderful workplace that satisfy and motivate
to continue striving for excellence.
According to Herzberg Two Factor Theory, the most ideal combinations for Air Asia
Berhad is High Hygiene + High Motivation where employees are highly motivated and the
only have few complaints. Means that it will encouraging employees to take on new and
challenging tasks and becoming experts at a task.

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6.0 REFERENCES
Schermerhorn J. R., Hunt, J. G., Osborn, R. N. and Uhl-Bein, M. (2011). Organizational
Behavior. New York: John Wiley & Sons, Inc.
Retrieved on 1 October 2015. https://forbusinessblog.wordpress.com/
Retrieved on 3 October 2015. http://research-methodology.net/virgin-atlantic-airlinesemployee-motivation-leadership-and-organisational-culture/
Retrieved on 5 October 2015.
http://www.academia.edu/7400913/Leadership_Air_Asia_FINAL_SK
Retrieved on 5 October 2015. http://tonyfernandesleadershipblog.blogspot.my/p/tonyfernandess-motivational-style-and.html
Retrieved on 7 October 2015. An Introduction to Oneworld The alliance that revolves
you. Oneworld. June 2014.
Retrieved on 7 October 2015. http://www.airasia.com/kh/en/about-us/careers.page
Retrieved 7 October 2015. http://www.bbc.com/news/business-11647205
Retrieved on 8 October 2015. http://www.airasia.com/au/en/about-us/airasia-code-ofconduct.page

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