EMPLOYEE EMPOWERMENT ON CUSTOMER SATISFACTION IN BANKING SECTOR OF PAKISTAN
Employee empowerment and customer satisfaction is one of those terms that everyone thinks they understand, but few really do. Ask a dozen different people and you’ll get a dozen different answers to the question, “What is employee empowerment?” In fact,
research a dozen organizational theorists and you’ll get as many answers to the same
question. Some writers indicate that empowerment consists of sharing power and
authority. Others say that empowerment occurs when the organization’s processes are
set-up to allow for it. If you keep in mind the secondary dictionary definition of “to give
faculties or abilities to: enable” (Grove, 1971, p.744), with all that this word implies, then
you will be on the right track for the purposes.
Employee empowerment is a key feature of the modern management style. Empowered
employees are expected to perform more effectively as compared to those working in
traditional or authoritarian organizational cultures. Empowered employees are more
motivated as compared to those who just follow the given lines. Employee
empowerment creates sense of belongingness and ownership towards the parent
organization. Empowered employee feel more confident and try to give their best to
their employers, as a result, service quality improves. Improved product or service
quality generally results into higher level of customer satisfaction. Higher level of
customer satisfaction results into a bigger sales volume resulting into an improved
profitability. Every business aims at earning profits; however profits and customer value
go hand in hand. In order to give maximum value to a customer, the service provider is
required to develop a sound understanding of the customer expectations.
In the first part of this thesis, the authors will present the background to the problem,
which will then be specified in the second part. Further, the delimitations of this study
will be stated. After reading this first part, the reader will have gained a better
understanding of the research subject which leads to purpose and related research
questions guiding this study.
1.1 BACKGROUND
Global markets have built a competitive environment in business. If the organizations
want to remain in the market, they must be inventive in lowering costs and value to
customers. So it is essential for an organization to utilize the full potential of its people.
But the employees need power and control to make decisions to fulfill the customer’s
needs.
According to (Cook, 1992) studies shown that people work with full energy when they
feel happy, even they are ready to sacrifice for organizations and give their blood to the
company. But when they feel valued and important. They show their involvement in the
business.
(R Maxwell, 2005) Employees in a service organization and particularly, those who have
frequent contacts with the customer usually serve as representatives of both the
Organization and their products or services to the customer at contact point. The quality
of the service and the satisfaction the customer may derive will be an assessment of the
entire service experience. Employees who are empowered in an organization can either
portray a positive or negative picture to the customers.
1.2 PURPOSE STATEMENT
The purpose of this survey based quantitative research is to determine and identify the
perception of employees about the employee empowerment in banking sector of
Pakistan. At what extent these organizations are practicing employee empowerment,
and how much this empowerment has impact on service quality and customer
satisfaction.
In matters concerning financial commitments, investments and spending customers, not
only need reassurance that their finances are safe, but also that they are valued for
committing their stakes with a particular financial institution. Customers of a bank rely
on the services delivered to them by the bank whether they are saving’ depositing,
taking loans, cashing cheques or buying funds, they count on the employees
responsible for handling issues relating to them, to deliver high service quality in other
to increase their satisfaction.
1.3 SIGNIFICANCE OF THE STUDY
This research will provide a deep view to the implications of employee
empowerment to employees, government, employers, students and the general
public who have an interest in the study.
The readers will be able to understand new relations between different variables
and conceptual understanding of these variables. They will read new concepts in
the context of banking sector e.g. organizational image, effectiveness and
efficiency and building trust.
This research is targeted at the management of organizations within the banking
industry, and industries producing highly intangible-dominant services, as
suggestion regarding employee empowerment, which when practiced can
enhance customer satisfaction and create a good customer- perceived service
quality.
1.4 OBJECTIVES
Main objectives of the study is to determine the impact of employee empowerment on
customer satisfaction in banking sector of Pakistan.
General objectives:
To determine the impact of employee empowerment on effectiveness and
efficiency.
To determine the impact of employee empowerment on service quality.
To determine the impact of employee empowerment on organizational image.
1.5 RESEARCH QUESTION
What is the impact of employee empowerment on customer satisfaction in banking
sector of Pakistan?
CHAPTER TWO
LITRATURE REVIEW
2.0 INTRODUCTION
Inside of today’s unstable public and private sectors, external pressures from political,
environmental, social and technological sources require management to seek out,
evaluate and embrace, new planning, organizational and operating techniques to
remain on track in pursuit of their association’s mission and long-term goals. Among
the myriad of proposed theories, models and plans submitted in the past decade to the
managerial community for possible acceptance and implementation is the concept of
employee empowerment. Within the spectrum of discussion on employee
empowerment, rhetoric inevitably mentions the relevant success or failure of
empowerment as a viable tool to upper management.
According to (Kirkman, 1989) empowerment of employees is continuously growing
today in Europe. Multinationals have a great concern on empowerment of employees.
Empowerment increase employee motivation and positive orientation towards his work
role and finally results in higher productivity.(Watson,2003)over the past few years,
traditional management has gone and new democratic approaches has takes its place.
Employee empowerment, which came up in 1990s, is known as one of the new
management concepts. (Hanold, 1997) However, when the relevant literature is
analyzed, this concept is understood to have a longer history than previously thought
with its roots Human Rights Movement of 1950 and 1960s, empowerment has rather
closely related to the various concepts and techniques designed to democratize the
work-place.
2.1 EFFECTIVENESS & EFFICIENCY
(Conger, Kanangu, 1988) management researchers and practitioners have keen
interest in concept of empowerment and related management practices. This interest is
due to several reasons. First studies on leadership and managerial skills suggest that
the practice of empowering subordinate is a principal component of managerial and
organizational effectiveness. Second analyses of power and control within organization
reveals that the total productive form of organizational power and effectiveness grow
with superior sharing of power and control with subordinates. (Mayers, 1987)
employees are effective performers when they are empowered. Because it is the fact
that the employees who have authority to take decisions perform better. And utilize the
resources of the organization efficiently.
2.2 SERVICE QUALITY
In banking organizations, the general offering in a particular industry is averagely
similar, even though they may engage in different approaches to achieving a
differentiation from the others, to be able to gain more market share and customers in
the industry. According to (Gooronos, 2001), “that almost any retailing bank can provide
an individual with retailing services, but not every bank manages to treat customers in a
way that they are pleased with.” Service providers therefore seek to differentiate
themselves from their rivals by offering customers higher quality of services than their
competitors’, which makes the basis of their competition to be defined by their services.
(K.Sen, 2008)The nature of services as being intangible, heterogeneous, perishable,
produced, and consumed at same time makes it peculiar to deliver, and challenging to
organizations to achieve a differentiation from the others.
2.3 CUSTOMER SATISFACTION
(Spetz, Butler; 2008)In the past years the competition in the banking sector is
increasing. There is more choice for the customers and thereby the banks have to work
harder to attract customers. (Peter, Waterman, 1982) focused that good organizations
align their strategies and goals to the requirement s of their customers’ .One way is to
care employees and empower them. (George 1992)There exists an interaction between
the desired results and customer satisfaction, customer loyalty and customer retention.
CHAPTER THREE
RESEARCH METHADOLOGY
3.0 INTRODUCTION
Research methodology is defined as the analysis of the principles of methods, rules,
and postulates employed by a discipline or the development of methods, to be applied
within a discipline or a particular procedure or set of procedures. It should be noted that
methodology is frequently used when method would be more accurate. Methodology
includes the following concepts as they relate to a particular discipline or field of inquiry:
1. A collection of theories, concepts or ideas.
2. Comparative study of different approaches.
3. Critique of the individual methods.
Methodology refers to more than a simple set of methods; rather it refers to the rationale
and the philosophical assumptions that underlie a particular study. This is why scholarly
literature often includes a section on the methodology of the researchers. Another key,
although arguably imprecise, usage for methodology does not refer to research or to the
specific analysis techniques. This often refers to anything and everything that can be
encapsulated for a discipline or a series of processes, activities and tasks.
Research is the search for knowledge through objectives and systematic method of
finding solutions to a problem. It is an original contribution to the existing stock of
knowledge making for its advancement. It is also pursuit of truth with the help of study
observation comparison and experiment and it is the science of studying how a
research is done. This chapter outlines the various stages of the research
methodology. Namely sampling procedures, data collection methods, questionnaire
design and coding of questionnaire etc.
3.1 RESEARCH STRATEGY
For the purpose of this research, questionnaire-filling strategy is chosen. Primary data
will be collected through the survey questionnaire. The required information was
collected from the selected areas of Lahore in Pakistan, in order to have a complete
knowledge and insight about the activities of the banking.
The study will involve a sampling of 130 individual customers of banking from a Lahore
in Pakistan.
CHAPTER FOUR
4.0 TIME SCALE
The following Gantt chart represents the estimated time the researcher plans on
covering the research.
November December January February
No ACTIVITY
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Submission of proposal & waiting
1
for approval
2 Read literature
3 Introduction & objectives of study
4 Draft literature review
5 Draft methodology
Write questionnaire, send
6
questionnaire
7 Updating chapter 1 & 2 analysis
Draft submission, review of all
8
chapters
9 Conclusion & abstract
10 Final review of all chapters
11 Final draft submission
4.1 TIME
A time resource, available is approximately 3 months (Beginning from proposal
approval) and its management has been planned as shown in the Gantt chart above,
from the Gantt chart.
4.2 COST
The cost of whole research is fully sponsored be researcher. This includes all costs
incurred, inclusive of printing, transport, and communication costs.
4.3 OTHER RESOURCES
Other resources that the researcher is planning to use are SPSS version 16.0 for this
analysis and other statistic analytical tools.
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