Effect of Empowerment

Chapter 1

Introduction

In service sector customer and supplier have direct contact so supplier has to make sure that customer is being fully satisfied and his/her demands are fulfilled. Banking field also comes under service industry so employees has to fully satisfy the customers. If employee himself/herself is not satisfied with his/her job then how can customer be satisfied. This study aims to elaborate the effect of empowerment in committing employees with organization. This study tested the effect of empowerment in banking sector of Pakistan. This study is a contribution to theory and practice with an increased understanding on importance of empowerment in committing the employees with the organization. Empowerment involves giving employees the autonomy to make decisions about how they go about their daily activities Carless (2004) Haas (2010). As service industries become more competitive, the importance of empowerment in service industries is increasingly recognized as a key to grab demanding customers. However empowerment is contextual Foster-Fishman (1998). It is a social construct nested in an organization that how an individual achieves personal control, a proactive approach to life and an understanding of the socio-political environment. The success of empowerment can be measured as how employees are being involved and how organizational culture is maintained. The understanding of organizational culture is a key thing in empowerment because empowered employees must take values of organization under consideration. Results of the few empowerment studies conducted in high power distance cultural contexts have been inconsistent Huiet al.(2004; Powpaka, (2008). For example, Robert et al. (2000) failed to obtain conclusive findings. In their study, the empowerment-job satisfaction relationship was revealed to be negative in the India sample, but this relationship was found otherwise in some other samples. On the other hand Bhatnagar (2007) and Chen and Chen (2008) found that some of the sub-dimensions of empowerment were positively correlated to job satisfaction. Given the uncertainty about empowerment in other cultures, this study aimed to investigate how empowerment practices are linked with employee job satisfaction and to predict turnover intention specifically in banking sector. These are important for service organizations because they reflect the quality of service performance. As Pakistan has the strong financing system, it is very necessary to keep important aspects under consideration. In banking sector, employees are the asset and to maintain the quality of asset continuous involvement and satisfaction from them is needed.

In an organization, what makes an employee leave or intend to leave are always become the big question for any company. Several studies have examined less right of involvement and dissatisfaction from job is the reason for their turnover. Job satisfaction determines the pleasurable and positive emotional state resulting from the appraisal of one’s job. It all depends upon the authority. Giving right authority to the right person will never underestimate the performance of employees. Increased turnover results in high financial cost could be in direct or indirect way .It’s essential to get to know the reason behind it and if empowerment is the answer to the problem then giving employees the right is the best solution. As bankers deal with day to day operations. At low level most of the tasks are known by all employees, so by empowering employees will not only help them do their tasks happily but there will be more of a flat structure organization, where power is distributed among employees. Job satisfaction and turnover intention is the vital concern for every organization and finding the effect of “empowerment” on both of them will be a plus because empowerment gives right to the person to perform job activities. In the rest of the paper, a literature review is explained. Then the methodology of path analysis is described and the findings are explained. Finally, limitations and further research are also presented.

One of the most important roles of the service sector is to perform as a booster for economic growth. Corollary to it, privatization is enthusiastically perused as an economic doctrine.   No doubt, privatization assists in the development of capital markets for enlistment of domestic savings, ensuing in greater efficiency and foster quality and quantity in an environment of competition. On the other hand too much privatization means making your country’s cultivated land into barren land which is considered to be real threat. But, if Private investment would be attracted towards labor-intensive actions in which our economies have a comparative advantage and would thus promote growth and alleviate poverty from the country. (Dr. Ishrat ExGovernor SBP). Some problems occurred due toprivatization of banks, fear of unemployment, lack of job security and lack of pension, due to all these reasons stress on job is also increased and ultimately all these reasons leads to job dissatisfaction .Privatization is considered as an effective process for making the banking system more efficient with the ability to mobilize savings and allocate them according to the needs of the economy. Thou, Private banks are facing competition and are trying to facilitate their customer’s in each regard by improving the quality services and new financial stuff. One the most important part of one’s life has been spend in his/her job which is a social reality and they are struggling to achieve their desired positions.  Therefore, the employees working in banking sector also have their Personal goals which they want to achieve in their life which are ma be intangible or tangible. The performance of an employee has a direct effect on job satisfaction for example when an employee has a good working environment, flexibility , and he or she is respected and appreciated with their work than employee is satisfied with his or her job. The banking industry of Pakistan has been passed through several during the last decade which badly affected the reliability of the customers and employees. The employee’s satisfaction towards the job with respect to all the socio-economic factors should be considered. Employees of the Banking industry are the only strongest pillars of its foundation and when they shake the whole arena of bank industry feels aftershocks and the bank has no exceptions to it.  To abstain by this act commercial banks are using management strategies to reduce this act and tries to oblige their employees in the form of incentive, job enrichment, empower them in taking decisions so to reduce employee intention. According to Judge and his colleagues research the personality traits, self-evaluation, training and development correlates with employees job satisfaction and they also revealed that it is also the perception of the employee towards itself. (Judge, Heller, & Mount, 2002).This study is conducted on Employee Empowerment and its impact on Turnover Intention and Job Satisfaction and of employees working in Banking Sector of Pakistan. Turnover Intention and Job satisfaction are significant perspectives related to employment in almost every organization and industry. The reason behind this is empowered and satisfied human resources naturally perform better and influence the improvement of organization and its growth to improve the efficiency and productivity of employees of banks empowerment play important role .This study is about the employees of banking sector of Pakistan.