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 Impact of Employee Empowerment on Employee’s Performance in the context of the Banking Sector of Nepal





 

ABSTRACT

The purpose of this study is to find out the impact of employee empowerment on employees’ performance. The result shows the significant relationship between empowerment and employee performance. The statistical population of this study is the Banking Sector which covers the 80 employees of 9 banks and data was collected through a questionnaire. The correlation coefficient was used through “ANOVA and SPSS” for data analysis. There are two determinants of Empowerment which are Meaningful work and Competency. Results presented a Positive relationship between Meaningful work and Employee Performance and also there is a Positive relationship between Competency and Employee Performance. Regional banks can use employee Empowerment as their basic component to increase employee performance.

1.  INTRODUCTION

Human resource is the precious asset of an organization. They are the major resource of capabilities that cannot be copied by rivals. Empowerment delegates the employee’s authority and responsibility. Empowerment motivates the employees to apply their capabilities and creativeness by accepting liability for hard work. The best-related outcome of employee empowerment is the job presentation. Employee empowerment is linked with today’s modest environment where the knowledge of employees is essential and institutions are stirring to the dispersed, biological type organizational arrangements (K. Baird and H. Wang). Empowerment is defined in correlation to leadership and freedom of the employee regarding service encounter and is compared to the reverse approach referred to as the production line method which is the conventional method of transferring authority to subordinates by their upper-level management (Deal, 2005). According to Looy, Gemmel and Van Dierdonck (2003) “empowerment mean delegating service employees with enough sovereignty to allow them to handle unpredictable troubles situations such as complaints”. Empowerment suggests employees being more practical and self-sufficient in supporting an organization to achieve their target (Herrenkohl, Judson, and Heffner, 1999). Empowerment means motivating personals to make decisions with the least involvement from the superior (Handy 1993). Spice and Gilbert (1991) suggest the management delegate authority to workers for decision making for most utilization of human assets. Dobbs (1993) acknowledged that empowerment improves the performance of the employee and improves the work environment of the worker. Caring, respectful behavior, and encouraging the employees to improve the quality and interest of the workers in the job. Many managers have been found unsuccessful in creating empowerment by creating direct reporting channels, while if the employees were empowered with a common vision, it would ensure the success of all concerned. Promoting organizational values within the organization and ensuring their enforcement would be an effective and practical model for enhancing corporate performance. Employee empowerment results in better presentation of workers and enhance the quality of service produced. 

Therefore with respect to the banking sector all the qualities of service and product, a bank cannot examine its services and products and prepare disappointing ones before they are presented to the customer (Ashi 2008). Employees, therefore, turn into the voice and face of the organization. It thus follows that it is not enough that the employees be trained to provide quality service, but that they should also know what to do and how to do it. It is also necessary that they have the essential authority for decision-making concerning customer satisfaction. Workers need to be empowered to execute but they also need the support of good management, support systems, technology, and information.

Although more work is done in the manufacturing industry but still there is required to work in the service and financial sector. This paper focuses on the financial sector of Nepal which is considered the backbone of the economy of the country. So this study wants to explore the impact of Employee Empowerment on Employee’s Performance in the context of the Banking Sector of Nepal

1.1: Objectives:

The objective of the research is to make a model between Empowerment and Employee Performance. These are included:

1) To determine the impact of meaningful work on the employee’s performance. 

2) To determine the impact of competency on employee performance. 

1.2: Research Questions:

1) What is the relationship between meaningful works and employee performance? 

2) What is the relationship between employee competencies and employee performance? 

2. Literature Review:

2.1 Empowerment:

Klagge (1998), finds empowerment as the action of allocating proper accountability to workers and creating capabilities for them. Permitting to Vogt and Murrel (1990), empowerment is a period of refining the decision-making capability of the workers over assistance, involvement, preparation, learning, and teamwork. Conger and Kanungo (1988) consider empowerment as an inspirational thought and describe empowerment as the enhancement of a worker’s self-competency. Thomas and Velthouse (1990) clear empowerment such as improved essential job inspiration that affects thoughts or job valuations, that redirect a person’s insights into the job role. Clutterbuck and Kernaghan (1994) clear empowerment such as the “duration of inspiring and permitting workers to takings individual obligation on behalf of some enhancement carried out in the performance of their consigned job as donating to the accomplishment of the whole objective of the association”. Moreover Sibson (1994) as well defined empowerment for example “allocation of ability through the executives to every worker, generally with respect to work practices and procedures.” Ayupp and Chung (2010) highlighted that the empowerment need comprises managing practices that accept an exposed announcement and distribution of information, authority, and prizes in the association. Menon’s (2001) describe empowerment as “stirring decision-making power down the (customary) managerial empowerment.

Employee empowerment is the process of decentralizing decision-making in an organization, whereby managers give more discretion and autonomy to the front-line employees (Kanter, 1979). Empowerment has been described as a means to enable employees to make decisions (Bowen & Lawer, 1992) and as a personal phenomenon where individuals take responsibility for their own actions (Pastor, 1996). 

Wing (1996) uses the term personal empowerment in relation to business consultants and views as a strong self-analytical tool that allows them to understand and address their personal biases, differences of views, and experiences with customers in order to be successful in transform hard work.

Determinants of Empowerment based on Literature:

There are two determinants of empowerment based on literature

1) Meaningful of work: 

2) Competency: 

1)  Meaningful of work:

Meaning is the worth one places on the position on a particular work, created on the person’s specific values and principles (Thomas and Velthouse, 1990). That furthermore comprises a fit among the work’s role and the principles, standards, and performances of the specific (Brief and Nord, 1990). Meaning is the worth of work ideas and the individual internal consideration of his or her work (Abdullahi, 2005). Meaningfulness states to ”the essential worth of an effort job, mediated in relationship to a person’s specific principles or standards” (Thomas and Velthouse 1990, 672). A modern study by referring firm Towers Perrin (2003) specifies this meaningful work capability is not individual appreciated to workers; however, that skilled meaningful work through workers can as well offer worth to the association.

2)  Competency:

Competence is the aptitude or proficiency of the specific to accomplish jobs or duties allocated. Gist (1987) describes competence as the person’s faith in their abilities to accomplish actions with talent. Competency is the point at which an individual can be accomplished the work responsibilities or obligations efficiently (Abdullahi, 2005). Thus Competency shapes the self-efficacy confidence to one’s effort and trust in one’s capability to achieve exertion activities with supports. And (Thomas and Velthouse 1990, p.672) “Shapes within the purpose to that a selected will complete work activities competently once he or she exhausting work”. Competency is evident like ”the purpose to that someone will complete job actions skillful whereas he or she tries” (Thomas and Velthouse 1990, 672). McClelland within the initial Nineteen Seventies deliberated and evaluated through, competencies, or precise options, were standard as vital interpreters of worker performance and success, alike as a key like somebody’s hypothetic capability and data appreciative as such that by exams scores or grades (Lucia & Lepsinger, 1999; McClelland, 1973).

2.2 Employee’s Performance:

Performance such as specific conduct is a job of character and conditional variables (such as the job loads, executive, societal, etc.) and in expressions, the outcome of the worker’s undertakings of their responsibilities in a definite interval is the set of activities that individuals display on their works (Hosseinian et al, 2007). Performance is the level that in what way the actions help the determination (Akal, 1992). In the other words performance is “ the degree of consciousness of the resolution” or “consequence level of the action”. That level displays in what manner the resolution or the objective is accomplished (Schermerhorn et al., 1985). Campbell describes the performance as conduct suitable to the determination of the association that can be restrained permitting to the involvement level (Suliman, 2001).

2.3 Hypotheses:

That study has two types of hypotheses, Included:

Hypotheses 1: There is a Positive relationship between meaningful work and employee performance.

Hypotheses 2: There is a Positive relationship between competency and employee performance.

3. Methodology:

In that research, the author defines employee empowerment have a direct relationship with employee performance according to the literature. This research study used primary data that is collected from the banking sector of the Kathmandu district. For the study, 80 respondents provided a complete questionnaire with complete information required in the questionnaire. In the questionnaire, the Likert Scale was used up to point 5. Different econometric techniques were used to analyze the data to check the hypothesis and to achieve the research objectives defined in part 1. Descriptive statistics, correlation, and regression were used to analyze the data to explore the impact of empowerment of employees on its performance in the Banking Sector of Kathmandu which is presented in the last part as an appendix in the paper.

4. METHOD OF DATA COLLECTION 

Data was collected through primary and secondary sources. Instruments used and sources consulted as already indicated, include questionnaires, textbooks, and journal articles. These materials were reviewed to draw relevant information on the research topic and form the basis for the design and formulation of the framework for the study.

5. Findings:

This research examined the impact of employee empowerment on their performance. Nearly all organizations have realized the significance to improve employee’s performance intended for organizational sustainability and growth. All of the establishments anticipate a loyal employee for their organization, who can explain their goals and established the resources for attainment (Carter, J.D.T 2009). Many employees want respect and accountability from their organization. When establishments trust accountability on their workforces and give empowerment to them, it indicates larger flexibility, improved revolution, commitment to variation, and enhanced career satisfaction.

Hypotheses 1: Regression results presented that there was a significant positive relationship between Meaningful work and employee performance (sig=.000 r=.845). R is the multiple correlation coefficients, between the observed and predicted values of Meaningful work of dependent variable employee performance. In the range of 0 to 1 r value is significant.

Hypotheses 2: Correlation results presented that there was a significant positive relationship between Competency and employee performance (sig=.000 r=.980). R is the multiple correlation coefficients, between the observed and predicted values competency of the dependent variable employee performance. In the range of 0 to 1 r value is significant.

6. Discussions and conclusion:

This research is recognizing a solid relationship between employee empowerment and the performance of the employees. Employee performance is anticipated by empowerment and by two determinants of empowerment meaningful work which is established to be a very essential determinant forecasting the performance of employees. Empowerment is explained as the multi-dimensional, social, and procedure. That is multi-dimensional in the sociological, psychosomatic, monetary, and further dimensions. That also happens at several stages, such as separate, collective, and public. According to the definition, Empowerment is a social procedure that is procedure that is a pathway or passage. Other facets of empowerment differ allowing the precise situation and individuals involved, but these stay constant. But additionally, a single key implication of that description of empowerment is the individual and public are essentially associated (Page and Czuba 1999). So, Empowerment can aid corporations to retain their top persons by providing them well exercise, accountability, and a better character to define their organization’s intention (Gal-Or and. Amit 1997).

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