Effect of Employee Empowerment on Customer Satisfaction

Effect of Employee Empowerment on Customer Satisfaction 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 youll get a dozen different answers to the question, What is employee empowerment? In fact,  research a dozen organizational theorists and youll 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 organizations 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 e xpectations. 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 customers  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 todays 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 associations 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.