Employee Empowerment in Banking Retention
Employee Empowerment in Banking Retention
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Sajjad Akbar
HOD-Management Sciences, APCOMS, Pakistan
Zeb Jan
Dean APCOMS, Pakistan
Abstract
The research examines the role and impact of Capacity development, Employee Empowerment
and Promotion in Employee retention. It is the quantitative study exploring various aspects of
the focal area under taken. Self structured questionnaire tool has been used with a Cronbach’s
Alpha Reliability score .872, sample size is n = 74 and Correlation and Regression analysis is
applied to check the relationship and strength of the variables via well designed research
software Statistical Package for Social Sciences (SPSS).The sector selected is the Banking sector
because it is the backbone of any country’s economy and growth.
Introduction
Most of the HRM strategies are focused on employee satisfaction and retention as HR is the
only active resource in an organization which brings competitive edge to the business.
Organizations must provide employees the opportunities to groom their talents and knowledge
for achieving the organizational goals for mutual benefit (Stephen Covey, 2012).
The organizations that have violated and ignored the humane aspect of their business have
suffered heavy losses fine example is of Enron the largest energy providing company of United
States of America knocked out because it did not follow the business ethics and exploited its
people to follow mal practices of business. For more than a decade the Organization dynamics
are the focus of HR practitioners hence providing the strong genesis to re research on the
importance of training and development, people empowerment and management. Although
much has been said and done on the aforesaid study but the results computed add fresh
research flavor to the previous study.
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Individuals keep on developing their capabilities with frequent exposure to variety of situations
and added experience. This enhancement in the professional capabilities drives individual to
secure more challenging jobs carrying higher professional and financial values. Organizations on
the other hand apply all their resources and energy to acquire best of the best employee within
their reach. This creates the need for integrating individual professional needs with
organization need through T&D strategies. According to HR gurus’ T&D should bring some
notable positive changes for instance professionalism seen in workers behavior or new skill
learnt like computer and IT knowledge. Training and job rotation moving employee from one
job to another enhances creativity and employees feel variety in their work. It improves
employee performance leading to organization profitability. The Whole Job Concept or Job
Enlargement allows employees to give suggestion in devising challenging jobs, increase
motivation and organization commitment. Such a delegation aid in employees growth and
quality of work (Kossen, 1994).
Employee binding programs is a healthy exercise for smooth business operation. Employee
empowerment is employee participation in the organization matters, more importantly in
decision making process.
Employee Retention is the most important aspect for the management. It is the trust and faith
managers should have in the employees to build the air of harmony and peace for smooth
business operations. The studies reveal that employees who are committed and dedicated to
the organization are likely to perform according to the standards and demands of the job. They
are stronger in dealing with the ups and downs of the business have polished stress handling
skills (Hartline and Witt, 2004).
Problem Statement
How capacity development, employee empowerment and promotion effect employee
retention?
Research Objective
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Significance
A large number of studies have established the importance of training and development,
employee empowerment and promotion in the employee retention for the companies to
achieve edge over competitors. The current research is focused to establish that training and
employee empowerment have significant role to play in employee retention.
Planning for future demands that employee empowerment is also applied with other HR
strategies to beat competitors for business progression (Gates, 2012).
This means that the role of a leader will be delegate authority to their team members and in
this process decision making is an important task of a leader, who will be delegating this
authority to his/her team members to appropriately use this authority the employees will be
needing to develop their capacity so as to carry out informed decision making.
Literature Review
Capacity Development
Human beings have distinct qualities and needs. When the Human Capital is recruited in the
business training starts the same day, workers bring in their knowledge, skills and experience
related to the jobs they perform. Some workers rely on organizational knowledge and training
to play the role, so companies must include in their SOPs and company manuals On the Job
Training and Off Job Trainings. Managers who invest in the employees to change and adapt
their behavior, skills and knowledge concerning the business would experience positivity and
employee retention (Frazis, Gittleman & Joyce, 2000).
Managers who provide employees on job training and learn new things would have dedicated
and trustworthy workforce (Benson, 2006). The training programs and its course modules
should pay the company in terms of more skilled, learned, disciplined and punctual workers
otherwise stop the training (Achard, 1938). Colleagues should also be acquainted with self
development training to groom their talent and improve knowledge, skills and attitude
(Truckenbrodt, 2000). According to him managers must acknowledge each and every
employee’s specific abilities and ideas to generate productivity and creativity. Employees
should feel that management is keen to develop them and rely on them then they would
automatically apply extra efforts to meet organizational objectives and more likely to have life
time relationship with the company (Belfour and Wechsler, 1996). The trainers also need to
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learn new ideas, knowledge in order to provide quality workers to the companies (Roush,
1986).
Employee Empowerment
Encourage employee empowerment and self initiative would make employee work in
accordance with department goals to sustain quality. Employees feel importance and
motivated to attain organizational objectives (Loke, 2001). Employees self efficiency be
enhanced such practices should be cancelled which pave authority and power in managers to
ridicule and humiliate junior workers. Increase employee self efficacy need for the betterment
of organization (Conger and Kanungo, 1988).Thomas and Velthouse (1990) provided another
concept that it is an intrinsic task motivation. It entails four conditions i.e. meaningfulness,
competence, impact and choice or self- determination. Deci, Connell and Ryan (1989) explained
these terms. Meaningfulness is the value of the work given with respect to employees ideas.
Competence is the ability of an individual to carry out desired job. Impact is the effect of the
person’s behavior in organization in relation to achieving goals. Workers should be given
confidence and practical appraisal system be designed regarding the job performance (Burke,
1986). Block (1987) asserts employees should have full autonomy on their jobs and their
involvement be high in decision making. Benis and Nanus (1985) advised that jobs should be
challenging and inspiring for employees to do better. Oldham (1976), Kanter (1979), Strauss
(1977) and Hackman and Oldham (1975) shared that rewards should be according to the
performance of the workers secondly, job enrichment and career development opportunities
also empower employees for profitability. Mc Clelland (1975) and House (1988) added that
proper recruitment and training programs imparting technical education and encouraging
management also build empowerment.
Promotion
Employers who support career development and career planning of employees have educated
and skillful workforce (Ahmed and Bakar, 2003) To ensure just employee promotion policy
(JEPP), employee career appraisal be based on abilities, knowledge, effective accomplishment
of tasks and time management (Lin and Yang, 2002). Major problem in employee promotion
and management is the attitude of employees towards the older employees. The management
from top to bottom should show respect towards senior employees, as they are the ones who
can also be a source of positive change within the enterprise. Hospitality organizations should
utilize this key work force of seniors. Their experience and knowledge add to refined taste to
food. Seasoned employees can be trained to be coach or mentor to young employees and help
in organization to sustainable success (Harris and Bonn, 2001). Researchers have revealed that
not only promotion is a source of satisfaction among employees, there are other rewards also
to retain and attract employees. The identified practices are decision autonomy, flexibility in
the work schedules and task impact also are driver of employee performance efficacy. Female
professionals as social worker highlighted that peer support and help is a key in the job
(Carpenter, 1999). While evaluating employee performance for promotion the prerequisite is to
establish an effective communication process to know where employee is lacking and what
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should be done to attain results. Regular feedback regarding employee performance would
provide the direction for maximization of profitability in the enterprise (Buford, 2006).
Organization should facilitate employees in aligning their personal goals with organization’s
goals in order to have “organization fit” in the company. Supervisors should promote
employees on the basis of education, expertise and knowledge for justified promotions. Such
measures would prevent employees in indulging in politics to exert pressure on managers for
promotion and rewards (Sharabi, 2008). Similarly in education sector the emerging education
dimension is Distance Learning, faculty members working on this aspect should be given proper
rewards and promotion to make education common and accessible to everyone. So Distance
Learning Evaluation should be a part of regular Faculty Compensation and Reward System
(Wolcott, 1997).
Employee Retention
Employee Retention is the most vital factor leading to organization growth. Management
should give employees the exciting and significant tasks in order to increase commitment
(Steers, 1977). Job satisfaction is closely linked with staff turnover so employees motivation
programs be developed in order to retain key employees (Sinclair, 1990). Managers should
keep in mind the cost attached to the worker so proper employee funds and budget be
prepared in order to fill their professional needs and demands (Hartline and Witt, 2004).
Organization should provide proper job descriptions to the workers to avoid ambiguity and
confusion. Such directions and guidelines facilitate and satisfy workers. Employee satisfaction
leads to organization loyalty (Self and Dewald, 2011). Mentoring is the popular training method
among employees so managers should pay attention to this training method to retain good
employees (Musser, 2001). Friendly and candid environment fosters employee empowerment
necessary in reducing staff turnover rate (Dermody, 2002). Career and training development
opportunities must exist to increase employees abilities and value to attract and retain them
for productive results (Thite, 2010). Trust is the significant factor in building employee-
employer relation. This can be achieved if employers give ear to employees ideas and feelings
to increase their commitment and loyalty (Tan and Lim, 2009). Studies in management prove
that training is the most worth viewed management practice in the eyes of workers. Employees
if trained well and knowledge imparted to them enhances their skills become devoted and loyal
to the organization (Ahmed and Bakar, 2003). Tension and stress at work place also increase
inemployees turnover rate and if environment is also not providing employees what they need
make employees lose the organization (Todor,1980). If employees feel sense of belongingness
towards company would work with efficacy resulting in high organization performance, less
absenteeism and retention of best workers (Barrett and O’Connell, 2001). To gain employee
commitment company’s goals, and employees goals of performance and achieving tasks should
be coherent and in harmony with each other ( Truckenbrodt, 2000).
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Research Methodology
Theoretical Framework
Capacity Development
Employee Retention
Employee Empowerment
Promotion
Figure 1
Theoretical Model
Definitions of Variables
Capacity Development: It is the grooming and polishing of employees’ abilities, talents and
knowledge with the help of training and development programs for the combined organization
welfare.
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Employee empowerment: To engage and involve employees in the decision making process
related with their organizational role and jobs and allowing them use innovative and creative
ideas to perform well and bring value addition in the business.
Promotion: It is a progression of employees moving from junior level to the senior level jobs
within an organization and experiencing different career development and compensation
stages.
Employee retention: Organization’s ability to retain and sustain employees commitment and
trust for longer period of time for mutual benefit purpose.
Hypotheses
Nature of Research
The research is quantitative in nature. Computer statistics test is applied in order to check how
the independent variables i.e. capacity development, employee empowerment and promotion
play a role in dependent variable employee retention.
Sample
The audience or sample belongs to the banking sector of Pakistan. Researcher selected the
audience using random sampling technique. The middle management and officers comprise the
sample. The sample size is n=74.
Research Tool
The tool selected for the research is questionnaire. It is self structured and is base on Likert
Scale i.e. 1-5. Strongly disagree is 1 value on likert scale and 5 is strongly [Link] reliability of
the research tool is measured using Cronbach Alpha and value is .872 and it can be replicated
for future research.
The correlation means the relationship between the variables. If one variable is increasing and
affecting other variable to be increased then the correlation is positive and significant. It means
both the variables are moving in a same direction. Similarly, if one variable is increasing and
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causing other to be decreasing then there is negative and significant correlation. Both the
variables are moving in opposite direction.
Regression
This study has conducted regression analysis to see the interdependence of capacity
development, Employee empowerment, promotion and Employee retention. Result of this
analysis is listed in Table 4.
Reliability Test
Table1:
N %
Cases Valid 74 100.0
Excluded (a) 0 0
Total 74 100.0
Scale Statistics
The space saver method is used. That is, the covariance matrix is not calculated or used in the
analysis. The test indicates that the questionnaire is 87.2% reliable and can be replicated
anywhere in the world with the average value of 55.7% of all items in the questionnaire.
Table 2:
Descriptive Statistics
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Retention (ER)
Capacity 74 1.67 5.00 4.0270 .77146
Development
(CD)
Employee 74 1.33 5.00 3.9640 .80442
Empowerment
(EE)
Promotion (P) 74 1.00 5.00 3.8108 1.05889
Valid N list wise 74
This table shows the average response of the respondents on variables being asked in the
questionnaire. Table represents the mean values of the variables.
Table 3
Correlations
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Table 4:
Regression
To test the proposed hypotheses regression test was carried out to predict the impact of
variables.
Model Summary
ANOVA (b)
Model Sum of df Mean F Sig
squares Square
1 Regression 21.532 3 7.177 31.601 .000(a)
Residual 15.899 70 .227
Total 37.431 73
Coefficients
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The correlation analysis calculated that capacity development is .731 correlated with employee
retention. The hypothesis capacity development is positively and significantly correlated with
employee retention is proved. The correlation between capacity development and employee
retention exist positively and significantly. If training and development is increased, employee
retention would also increase and if there is no capacity development plan or procedure then
the employee retention would also decrease.
The correlation of employee empowerment and employee retention gave a positive value of
.638 indicating again that the relationship is positive and significant. The hypothesis that
employee empowerment has a positive and significant correlation with employee retention is
also proved. High the employee empowerment high the employee retention, low employee
empowerment and low employee retention.
The correlation of promotion and employee retention is -.111 showing that there is negative
and significant correlation between the variables. Hypothesis on promotion correlated with
employee retention could not be proven. If promotion is high then the employee retention
would be low.
The regression analysis computed that capacity development impact on employee retention is
.562 meaning that 56.2% capacity development affect employee retention.
The data statistics revealed that training and development is the most important factor in
employee retention. The employers should provide capacity development opportunities for
employees to gain new and advance business knowledge and application for organizational
development. In the changing and dynamic nature of business environment human work force
is the source of competitive edge. So training and development not only enhances employees
capabilities but also improve organizational performance. In employee retention capacity
development plays an effective role which management should practice.
Employee empowerment is another important strategy which if applied carefully can lead to
the retention of key employees. Employees are responsible to implement management policy
and programs so their suggestions and ideas could help managers to take practical and relevant
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decisions for profitability. Managers should empower employees to take necessary on job
decisions which are pertinent to the business.
Employees should be given importance in initiating their ideas to foster the culture of sharing
and justice. If employees know that their voice is heard and taken in to account in
implementation of business policy or plan they would be loyal and committed to the company.
The results show that promotions are not much valued by, infact the employees demand
empowerment and training be also complemented with promotions or compensation. The
study has revealed that promotion and employee retention are negatively and significantly
correlated with each other. So employers should carefully design employees promotion
strategy. In the research it is indicated that promotion is not the priority of employees the
preference is awarded to training and development and empowerment practices. The study
carried out on banking sector computed that promotions be supplemented with capacity
development and employee empowerment if employee retention and loyalty is needed.
Recommendation
The major recommendation in employee keeping is organizations should give utmost important
to training and development. Employee capacity building exercises and programs be introduced
to increase knowledge, skills and abilities of employees. These things add the efficacy power of
the employee and he performs to the best of his abilities. Employees work hard to make
business successful so they be given full autonomy and empowerment to make on job decisions
which yield better result.
Acknowledgement
The authors like to acknowledge the support and guidance of APCOMS, management and
administration team to allow them carry out this research and all those bankers and managers
who participated in the survey conducted for this study.
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Annexure 1: Questionnaire
Note: Kindly fill out the questionnaire properly as the information given would be used for
academic purpose and it would be kept confidential.
Name: __________________
Organization: ___________________
Department: _____________________
Strongly disagree=1
Disagree=2
Neutral=3
Agree=4
Strongly agree=5
Serial Questions 1 2 3 4 5
No
CAPACITY DEVELOPMENT
1 I am being sufficiently trained by
the organization.
2 My seniors properly guide me
on the job.
3 I am provided mentoring by the
organization whenever required.
4 I feel sufficiently skilled for the
present job
5 My organization encourage me
to avail training opportunities.
6 My management motivates me
for good performance.
EMPLOYEE EMPOWERMENT
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7 I am consulted whenever a
decision is taken about my work.
8 My suggestions related to work
are normally followed and
appreciated.
9 I feel in charge of my work/job.
PROMOTION
10 I feel ready for taking up higher
positions.
11 I see opportunity of promotion
in the present organization.
EMPLOYEE RETENTION
12 I plan to stay for more than one
year with the present
organization.
13 I feel I can contribute to the
organization other than my
work.
14 I am satisfied with my present
job.
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