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Ms. Cornel A. Ragen
October 25, 2011
CHAPTER ONE INTRODUCTION 1.1 Background of the Study
According to Sashkin, (1998) Employee empowerment or participative decision making is neither a new or simple management concept. Employee participation is a complex management tool that over 50 years of research has proven that, when applied properly, can be effective in improving performance, productivity and job satisfaction. Employee empowerment is a term used to express the ways in which non-managerial staff can make autonomous decisions without consulting a boss/manager. These selfwilled decisions can be small or large depending upon the degree of power with which the company wishes to invest employees. Employee empowerment can begin with training and converting a whole company to an empowerment model. Conversely it may merely mean giving employees the ability to make some decisions on their own. The thinking behind employee empowerment is that it gives power to the individual and thus makes for happier employees. By offering employees choice and participation on a more responsible level, the employees are more invested in their company, and view themselves as a representative of such. (Patterson, 1998) For employee empowerment to work successfully, the management team must be truly committed to allowing employees to make decisions. They may wish to define the scope of decisions made. Building decision-making teams is often one of the models used in employee empowerment, because it allows for managers and workers to contribute ideas toward directing the company. (Christensen, 2010) Autocratic managers, who are micromanagers, tend not to be able to utilize employee empowerment. These types of managers tend to oversee all aspects of others’ work, and usually will not give up control. A manager dedicated to employee empowerment must be willing to give up control of some aspects of work production. When employees feel as though they have choice and can make direct decisions, this does often lead to a 1
greater feeling of self-worth. In a model where power is closely tied to sense of self, having some power is a valuable thing. An employee who does not feel constantly watched and criticized is more likely to consider work as a positive environment, rather than a negative one. (Christensen, 2010) According to Armstrong (2005) one easy way to begin employee empowerment in the workplace is to install a suggestion box, where workers can make suggestions without fear of punishment or retribution. However, simply placing a suggestion box somewhere is only the first step. Managers must then be willing to read and consider suggestions. They might provide a forum where questions or suggestions receive a response, like a weekly or monthly newsletter. In addition, managers can hold a once monthly meeting open to employees where all suggestions are addressed. Some suggestions have to be approved in order for employees to feel that they are having some impact on their company. Failure to approve or implement any suggestions reinforces that all the power belongs to the managers and not the workers. Employee empowerment of any form can only work when managers are willing to be open to new ideas and strategies. If no such willingness exists, employee empowerment is likely to be non-existent. Bono and Heller (2005), notes that, 'empowerment' isn't just a matter of delegating job authority to the job-holders. It means that 'everyone can take action to enhance his or her work, either in personal or organisational terms'. Instead of the traditional bureaucracy, with its emphasis on control, standardization and obedience, Brown-blessed empowerment can only thrive in the liberated surround of innovation, flexibility, commitment, zero defects and continuous improvement. Employee involvement is creating an environment in which people have an impact on decisions and actions that affect their jobs. Employee involvement is not the goal nor is it a tool, as practiced in many organizations. Rather, it is a management and leadership philosophy about how people are most enabled to contribute to continuous improvement and the ongoing success of their work organization. How to involve employees in decision making and continuous improvement activities is the strategic aspect of 2
involvement and can include such methods as suggestion systems, manufacturing cells, work teams, continuous improvement meetings, Kaizen (continuous improvement) events, corrective action processes, and periodic discussions with the supervisor. (Heizer and Render 2005) According to Armstrong, (2005) for any organization which has not been actively cultivating employee empowerment, it may take considerable time and effort before employees start to respond. Often the first efforts and communications are met with employee derision and mockery. Those who are only interested in trying the latest management fad will give up when met with this response. Armstrong, (2005) states that a good rule of thumb for communications to employees is to enumerate what management considers adequate and then multiple by a factor of ten. When considering employee understanding and acceptance of decisions considerations should be made on how long it takes for the management team to discuss and then make a decision. Problems do arise when employees are not allowed several multiples of time to think about the issue or developments and changes to occur. For management wanting employee empowerment the evidence will not come across the board with wide spread acceptance. A small number will accept the invitation to become more involved, say 3-5 per cent. The rest will be watching every move to see what happens. Every communication, decision and action by management will be viewed as either supporting a move to employee empowerment or not. Probably nothing demonstrates the commitment or lack of commitment to employee empowerment more than promotions and selection for leadership positions. Employees know those that attempt to “shine up while dumping down”, (Patterson 1998).
1.1.1 Banking Sector in Kenya According to the Banking Survey (2010) the Banking industry in Kenya is governed by the Companies Act, the Banking Act, the Central Bank of Kenya Act and the various prudential guidelines issued by the Central Bank of Kenya (CBK). The banking sector was liberalised in 1995 and exchange controls lifted. The CBK, which falls under the Minister for Finance docket, is responsible for formulating and implementing monetary policy and fostering the liquidity, solvency and proper functioning of the financial system. (Banking Survey, 2010) As at December 2008 there were forty six banking and non bank institutions, fifteen micro finance institutions and one hundred and nine foreign exchange bureaus. The banks have come together under the Kenya Bankers Association (KBA), which serves as a lobby for the banking sector’s interest’s .The KBA serves a forum to address issues affecting members (Central Bank of Kenya, 2010). Over the last few years, the Banking sector in Kenya has continued to growth in assets, deposits, profitability and products offering. The growth has been mainly underpinned by; an industry wide branch network expansion strategy both in Kenya and in the East African community region. Automation of a large number of services and a move towards emphasis on the complex customer needs rather than traditional ‘off-the-shelf’ banking products. Players in this sector have experienced increased competition over the last few years resulting from increased innovations among the players and new entrants into the market (Kinusi, 2010). This study seeks to analyze on factors affecting employee empowerment in an organization with a focus to the banking sector. Kwamboka (2009) notes that in Kenyan coperate set ups i.e. in the Banking sector consequently, the reporting staff members wait for the bestowing of empowerment, and the manager asks why people won't act in empowered ways. This leads to a general unhappiness, mostly undeserved, with the concept of empowerment in many organizations. Kwamboka (2009) Empowerment should be thought as the process of an individual enabling himself to take action and 4
control work and decision making in autonomous ways. Empowerment comes from the individual (Kwamboka, 2009). An organization has the responsibility to create a work environment which helps foster the ability and desire of employees to act in empowered ways. The work organization has the responsibility to remove barriers that limit the ability of staff to act in empowered ways (Kwamboka, 2009).
1.2 Problem Statement
Empowerments is the process of enabling or authorizing an individual to think, behave, take action, and control work and decision making in autonomous ways. It is the state of feeling self-empowered to take control of one's own destiny be it work oriented or at personal life level (Patterson, 1998). A research study on employee empowerment states employee empowerment is a two sided coin. For employees to be empowered the management leadership must want and believe that employee empowerment makes good business sense and employees must act. However the study notes that some employers, mangers and those in leadership positions feel threaten at some point as most of the empowerment process come as away of delegating responsibilities or work (Kwamboka, 2009). According to Kwamboka, (2009) communication is observed to be a barrier to employee empowerment. The study states that for an organization to practice and foster employee empowerment the management must trust and communicate with employees. Employee communication is one of the strongest signs of employee empowerment. Honest and repeated communication from elements of the strategic plan, key performance indicators, financial performance, down to daily decision making. Murithi (2009), states that employee empowerment becomes a problem when organizational leadership fail to initiate or to take actions to encourage employee empowerment it is then up to then left to employees to decided if they wish to take advantage of the opportunity or not. It is not unusual for only a small minority to accept
the challenge initially. Also it is very likely that some fraction will never respond. It is the large middle group that must be convinced to practice employee empowerment. Kiruii, (2009) a study on the importance of creating a feeling of employee empowerment within an organization, explains the flat organization model and provides a case study analysis of a small firm who transitioned their employees from a hierarchical organizational style to a flat organizational style. The paper discusses the application of these changes within the organization. Though the transition to flat organization may benefit most organization, it is still a transitional situation that requires special understanding of employee empowerment as well as interactions. Smaller firms of coarse will find this transition easier while larger firms may need to create quasi flat systems that better serve multi-factorial production systems and require the system to work together in a streamlines fashion, without one area of production causing unintended problems for another. Employee empowerment is clearly one of the biggest reasons why employees express happiness and comfort within a system, and the study was not clear on the flat organizational model which is thought to be the right way to create such empowerment, there is need for transition to be done effectively and communicated well to all levels. As private and public organizations seek to be part of the governments realization of vision 2030 there is increasing emphasis placed on participative management mainly because decisions are becoming more complex and managers will be required to integrate the knowledge of specialists in different functional and technical areas. (Dipesh, 2010) Moreover, those that are entering the workforce today have higher expectations of being involved in management decisions. (Dipesh, 2010) With the pressure of worldwide competition, organizations which wish to remain competitive must use the potential of all their members. Management has the obligation to create the environment that fosters employee empowerment, employees have the duty to accept the opportunity and demonstrate they are willing and capable (Kwamboka 2009)
There is minimal research implications of employee empowerment for internal locus of control, self efficiency and self esteem of individuals as this can help or hinder the employee empowerment process. There is hardly empirical research that has been conducted to analyse factors affecting employee empowerment in the banking sector in Kenya. Hence the study sought to analyse the factors affecting employee empowerment in Kenya banking sector. 1.3 Objectives of the Study 1.3.1 General Objective The general objective was to carry out an analysis on factors affecting employee empowerment in an organization with a focus on the banking sector in Kenya. 1.3.2 Specific Objectives i. To investigate whether training influences employee empowerment in an organization. ii. To establish the extent to which reward influences employee empowerment in an organization. iii. To determine whether the organization structure influences employee empowerment in an organization. iv. To find out how organization culture influences employee empowerment in an organization. 1.4 Research Questions
i. ii. iii.
Does training influences employee empowerment in an organization? What is the extent to which reward influences employee empowerment in an organization? Does organization structure influence employee empowerment in an organization?
iv. How does organization culture influence employee empowerment in an organization?
1.5 Justification This study was meant to carry out an analysis on factors affecting employee empowerment in an organization with a focus on the banking sector in Kenya. Banking sectors is considered to be a driving force to countries progressiveness and its performance can be used to read the mood of an economy (Kinusi, 2010). Organization management the study was considered important as it will contributes to generation of knowledge and information for decision making that would improve methods and practices in human recourse planning to ensure employee empowerment as a role/function. The study provides data that can help the organization management to enhance on the strategic and vision plans. Government of Kenya The government of Kenya also stands a chance to benefit as being the number one employer in the country through the Ministry of Public Service and its state corporations. The data provided in the study is helpful in monitoring the organization achievements toward the millennium development goals as well as visions 2030 objectives. Other Researchers The information will also provide data to assist researchers, development practitioners, academicians, policy makers, planners and programme implementers to monitor and evaluate existing practices in human resource and whether and how employee empowerment can be developed or addressed. 1.6 Scope of the Study According to Central Bank of Kenya, (2010) bank licensing in the country as at March 2010 there were 44 licensed commercial banks and 1 mortgage finance company. The study considered collecting data regionally within the banking outlets in Nairobi central business district area. Focus groups were varied levels of positions within the banking industry.
1.7 Definition of Terms
Employee A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed (Arthur, 1995). Empowerment Empowerment refers to increasing the spiritual, political, social, or economic strength of individuals and communities. It often involves the empowered developing confidence in their own capacities (Arthur, 1995). Organization An organization is a social arrangement which pursues collective goals, controls its own performance, and has a boundary separating it from its environment (Harrison, 2005). Training and Development Harrison (2005) states that in the field of human resource management, training and development are fields concerned with organizational activity aimed at bettering the performance of individuals and groups in organization settings. Reward Management The term reward management covers both the strategy and the practice of pay systems. Traditionally, human resource or personnel sections have been concerned with levels and schemes of payment whereas the process of paying employees - the payroll function - has been the responsibility of finance departments. Organisation Structure Structure is a valuable tool in achieving coordination, as it specifies reporting relationships (who reports to whom), delineates formal communication channels, and
describes how separate actions of individuals are linked together. (Nelson and Pasternack, 2005) Organisation Culture Organizational culture describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It is the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. (Hill and Gareth, 2001)
CHAPTER TWO LITERATURE REVIEW 2.1 Introduction
This chapter highlights the relevant literature and other studies carried out in the area by various institutions and personalities. It evaluates and correlates their findings which could be useful for further study on the same topic; the study is triggered by the desire to find out factors influencing employee empowerment in an organization.
2.2 Theoretical Literature 2.2.1 Expectancy Theory
According to Vroom (1964) in a general approach expectancy theory is about the mental processes regarding choice, or choosing. It explains the processes that an individual undergoes to make choices. In organizational behaviour study, expectancy theory is a motivation theory first proposed by Victors Vroom of the Yale School of Management. Expectancy theory predicts that employees in an organization will be motivated when they believe that: The reward they are receiving is adequate to offset the amount of work being done. These predicted organizational rewards are valued by the employee in question. This theory emphasizes the needs for organizations to relate rewards directly to performance and to ensure that the rewards provided are those rewards deserved and wanted by the recipients. This theory is used to indicate an approach to empowering the employees. Vroom (1964) defines motivation as a process governing choices among alternative forms of voluntary activities, a process controlled by the individual. The individual makes choices based on estimates of how well the expected results of a given behavior are going to match up with or eventually lead to the desired results. Motivation is a product of the individual’s expectancy that a certain effort will lead to the intended performance, the instrumentality of this performance to achieving a certain result, and the 11
desirability of this result for the individual, known as valence. In this context a motivated employee feel empowered on work performance. Rao, (2000) states that in order to enhance the performance-outcome tie, managers should use systems that tie rewards very closely to performance. Managers also need to ensure that the rewards provided are deserved and wanted by the recipients. In order to improve the effort-performance tie, managers should engage in training to improve their capabilities and improve their belief that added effort will in fact lead to better performance Rao, (2000) states that Vroom's theory assumes that behavior results from conscious choices among alternatives whose purpose it is to maximize pleasure and to minimize pain. Vroom (1964) suggested that the relationship between people's behavior at work and their goals was not as simple as was first imagined by other scientists. Vroom realized that an employee's performance is based on individual factors such as personality, skills, knowledge, experience and abilities. Vroom introduces three variables within the expectancy theory which are valence (V), expectancy (E) and instrumentality (I). The three elements are important behind choosing one element over another because they are clearly defined: effort-performance expectancy (E>P expectancy), performance-outcome expectancy (P>O expectancy). E>P expectancy: Our assessment of the probability our efforts will lead to the required performance level. P>O expectancy: Our assessment of the probability our successful performance will lead to certain outcomes (Vroom, 1964) Rao (2000) states that on Vroom’s model is based on three concepts: Valence - Strength of an individual’s preference for a particular outcome. For the valence to be positive, the person must prefer attaining the outcome to not attaining it. Instrumentality – Means of the first level outcome in obtaining the desired second level outcome; the degree to which a first level outcome will lead to the second level outcome. Expectancy - Probability or strength of belief that a particular action will lead to a particular first level outcome.
2.2.2 Goal Theory
Goal theory holds that goals are important regulators of human behavior and posits a strong relationship between goal difficulty and performance, with harder goals resulting in a greater effort than easier goals (Martin and Manning, 1995). Goal theory is normally used to empower employee in a given task, it’s also used in motivating workers to performance and productivity improvements. The theory examines goal-setting activities from an individual perspective. Ivancevich, (1998) says that goal setting is designed to improve an individual's ability to set and achieve goals. Goals are the object of an action or what a person intends to accomplish. Goal setting theory was proposed initially by Locke (1968) and was based on the understanding of goal setting as a cognitive process of some practical utility. Locke's (1968) view is that an individual's conscious goals and intentions are the primary determinants of behavior. The theory places specific emphasis on the importance of conscious goals in explaining motivated behavior. Tetlock and Kim, (1987) states that depending on the type of goal given, one can go about achieving it differently. A directional goal is one where individuals are motivated to arrive at a particular conclusion. Thinking can be narrowed to selecting beliefs. The lack of deliberation also tends to make one more optimistic about achieving the goal. An accuracy goal is one where people are motivated and empowered to arrive at the most accurate possible conclusion. These occur when the cost of being inaccurate is high. People invest more effort in achieving accuracy goals, as any deviation costs, and a large deviation may well more. Their deliberation also makes them realize that there is a real chance that they will not achieve their goal. When we have an accuracy goal we do not get to a 'good enough' point and stop thinking about it people tend to continue to search for improvements. Both methods work by influencing our choice of beliefs and decisionmaking rules (Tetlock and Kim, 1987). Erez and Zidon, (1984) emphasized the need for acceptance of and commitment to goals. They found that as long as they are agreed, demanding goals lead to better performance 13
than easy ones Erez, (1977) also emphasized the importance of feed back. As Robert, Smith and Cooper (1992) point out goals inform individuals to achieve particular level of performance, in order for them to direct and evaluate their actions, while performance feedback allows the individual to track how well he or she has been doing in relation the goal, so that, if necessary adjustments in effort direction or possibly task strategies can be made. Erez, (2002) notes that there are at least five ways to convince people that goal attainment is worthwhile: These include (a) eliciting a public commitment to goals, (b) communicating an inspiring vision, (c) using an empathy box analysis (Latham, 2001) to understand and alter the perceived consequences of goal commitment, (d) providing financial incentives for goal attainment, and (e) expressing confidence that the goal will be achieved. Under Jack Welch’s leadership, General Electric (GE) was well known for its encouragement of “stretch goals” which challenge employees to achieve objectives that they do not yet know how to reach (Kerr and Landauer, 2004). GE was also renowned for the threatening policy of firing the bottom 10 percent of employees on annual performance ratings. Given the high task complexity, stress, and work overload that increasingly characterizes modern workplaces, Erez, (2002) investigated performance differences depending on whether difficult tasks are framed as a challenge providing an opportunity for self-growth, or as a threat regarding which effective strategies to deal with it are not readily available. As hypothesized, challenge appraisals yielded consistently better performance than threat appraisals. However, those who viewed the task as a threat performed better when they had learning goals rather than performance outcome goals. Finally, difficult performance goals induced high adaptation to change when the work context was perceived as challenging, but poor adaptation and performance when the work context was perceived as threatening. Regardless of whether people adopt a difficult learning or performance goal, errors are bound to occur during the process of goal pursuit. 14
From a psychological perspective, errors also provide important information that can enable learning and potentially reduce or eliminate future errors. Michael Frese and colleagues (Frese et al., 1991) thus developed the concept of error management, whereby errors encountered during the learning process are construed as opportunities to learn what does not work. In summary, goals are generally best framed positively rather than negatively. Goals can empower individuals at work when well practiced. Especially when goals are challenging, it is important to help people to frame them as a challenge from which they may learn, rather than a threat in which failure is foreseeable. It is prudent for managers to emphasize that errors along the path to goal attainment are a natural part of the learning process. This can reduce emotional distraction and promote the deep learning employees need to effectively tackle novel challenges as they arise.
2.2.3 Equity Theory
Equity Theory attempts to explain relational satisfaction in terms of perceptions of fair/unfair distributions of resources within interpersonal relationships. Equity theory is considered as one of the justice theories. It was first developed in 1963 by John Stacey Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others (Adams, 1965). The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization; this includes the work done by the employees and the behavior brought by the employee as well as their skills and other useful experiences the employee may contribute for the good of the company. Equity theory proposes that individuals who perceive themselves as either underrewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. It focuses on determining whether the 15
distribution of resources is fair to both relational partners. Equity is measured by comparing the ratios of contributions and benefits of each person within the relationship. Partners do not have to receive equal benefits (such as receiving the same amount of love, care, and financial security) or make equal contributions (such as investing the same amount of effort, time, and financial resources), as long as the ratio between these benefits and contributions is similar. Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs, Equity Theory acknowledges that subtle and variable individual factors affect each person’s assessment and perception of their relationship with their relational partners (Guerrero et al., 2007). According to Adams (1965), anger is induced by underpayment inequity and guilt is induced with overpayment equity (Spector 2008). Payment whether hourly wage or salary, is the main concern and therefore the cause of equity or inequity in most cases. In any position, an employee wants to feel that their contributions and work performance are being rewarded with their pay. If an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers, which may result the employee not performing well at work anymore. It is the subtle variables that also play an important role for the feeling of equity. Just the idea of recognition for the job performance and the mere act of thanking the employee will cause a feeling of satisfaction and therefore help the employee feel worthwhile and have more outcomes. Spector, (2008) notes that an individual will consider that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. Thus, all else being equal, it would be acceptable for a more senior colleague to receive higher compensation, since the value of his experience (an input) is higher. The way people base their experience with satisfaction for their job is to make comparisons with themselves to the people they work with. If an employee notices that another person is getting more recognition and rewards for their contributions, even when both have done the same amount and quality of work, it would persuade the employee to be dissatisfied. This dissatisfaction would result in the employee feeling underappreciated and perhaps worthless. This is in direct contrast with the idea of equity theory, the idea is to have the 16
rewards (outcomes) be directly related with the quality and quantity of the employees contributions (inputs). If both employees were perhaps rewarded the same, it would help the workforce realize that the organization is fair, observant, and appreciative. Equity theory has been widely applied to business settings by Industrial Psychologists to describe the relationship between an employee's motivation and his or her perception of equitable or inequitable treatment. In a business setting, the relevant dyadic relationship is that between employee and employer. As in marriage and other contractual dyadic relationships, Equity Theory assumes that employees seek to maintain an equitable ratio between the inputs they bring to the relationship and the outcomes they receive from it (Adams, 1965). Equity Theory in business, however, introduces the concept of social comparison, whereby employees evaluate their own input/output ratios based on their comparison with the input/outcome ratios of other employees (Carrell and Dittrich, 1978). Inputs in this context include the employee’s time, expertise, qualifications, experience, intangible personal qualities such as drive and ambition, and interpersonal skills. Outcomes include monetary compensation, perquisites, benefits, and flexible work arrangements and empowerment. Employees who perceive inequity will seek to reduce it, either by distorting inputs and/or outcomes in their own minds directly altering inputs and/or outcomes, or leaving the organization (Carrell and Dittrich, 1978). Thus, the theory has wide-reaching implications for employee morale, efficiency, productivity, and turnover.
2.3 Conceptual Framework
A conceptual framework is used in research to outline possible courses of action or to present a preferred approach to an idea or thought. Kakutani (2009) the conceptual framework aims to update and refine the existing concepts to reflect the changes. It is a theoretical structure of assumptions, principles, and rules that hold together the ideas comprising a broad concept. The figure 2.1 below is the study’s conceptual framework.
Figure 2.1 Conceptual Framework
Reward EMPLOYEE EMPOWERMENT Organisation Structure
The frame work has been further explained below.
According to Anthony (1999) training involves learning and teaching employees due to a need for development of skills and knowledge. Training encompasses three main activities: training, education, and development. It is noted that in most organizations, they encompass three separate, although interrelated, activities: Training: This activity is both focused upon, and evaluated against, the job that an individual currently holds. Education: This activity focuses upon the jobs that an individual may potentially hold in the future, and is evaluated against those jobs. Harrison (2005) states that in the field of human resource management, training is a field concerned with organizational activity aimed at bettering the performance of individuals and groups in organization settings. It has been known by several names, including employee development, human resource development, and learning and development. Employee Development was seen as too evocative of the master-slave relationship between employer and employee for those who refer to their employees as partners or associates to be comfortable with. Human Resource Development was rejected by academics, who objected to the idea that people were resources an idea that they felt to be demeaning to the individual. Chattered Institute of Personnel Development (CIPD) settled upon Learning and Development, although that was itself not free from problems, "learning" being an over general and ambiguous name. Moreover, the field is still widely known by the other names (Harrison, 2005)
The stakeholders training are categorized into several classes. The sponsors of training and development are senior managers. The clients of training and development are business planners. Line managers are responsible for coaching, resources, and performance. The participants are those who actually undergo the processes. The facilitators are Human Resource Management staff. And the providers are specialists in the field. Each of these groups has its own agenda and motivations, which sometimes conflict with the agendas and motivations of the others. 19
It is the assumption of this study that employees are well empowered through training and development. By so doing it is also assumed that it can help resolve labour turnover as a result of lack of empowerment. Arthur (1995) states that training an employee to get along well with authority and with people who entertain diverse points of view is one of the best guarantees of long-term success. Talent, knowledge, and skill alone won't compensate for a sour relationship with a superior, peer, or customer. 2.3.2 Reward/Compensation Reward is what employee gets in return for services rendered. According to Armstrong and Tina (2005) one of the aims of broad brushed reward strategy is to use the approach to the development of employment relationship and the work environment which will enhance commitment and engagement so as to provide more engagement and opportunities for people to be valued and recognized in an organization. The philosophy of reward management recognises that it must be strategic in the sense that it addresses longer-term issues relating to how people should be valued for what they do and what they achieve. Reward strategies and the process that are required to implement them have to flow from the business strategy (Armstrong and Tina, 2005). Reward management adopts a ‘total reward’ approach which emphasises the importance of considering all aspects of reward as a coherent whole which is integrated with other Human Resource initiatives designed to achieve the motivation, commitment, engagement and development of employees. An example is the introduction of intergraded approach to reward management such as personal development and spelling out career opportunities. Armstrong and Tina, (2005) notes that empowerment and staff motivation should be accompanied with justified pay. Amodt, (2007) observed that the basis for rewards systems are conditioning principles, which state that employees will engage in behavior for which they are rewarded and avoid behavior for which they are punished. Thus, if employees are rewarded for not 20
making errors, they are more likely to produce high quality work. If employees are rewarded for the amount of work done, they will place less emphasis on quality and try to increase the quantity. If employees are not rewarded or compensated for any behavior, they will search for behaviors which will be rewarded. Unfortunately, these might include absenteeism and carelessness which result in low performance. Rewards need to be effective in encouraging employees to work towards the needs and the objectives. Rewards need to be effective in encouraging employees to work towards the needs and the objective of the organization. To be effective, remuneration systems need to be based on a sound understanding of how people at work are motivated. Research has shown that rewarding employees will often lead to increased motivation and performance (Amodt, 2007). A successful incentives program will not only increase profits, but also inspire staff loyalty and raise morale. The manner in which reward is observed in any given organization stands to influence the manner to with the employees are motivated in their work environment. Organizations are required to take continuous stock of both the economic landscape and their workforce profile. They can and must identify measures that are financially credible ones and can help them retain their talent and emerge in an unpredictable future in the best-possible shape. 2.3.3 Organization Structure According to Nelson and Pasternack, (2005) Organizational structure refers to how individual and team work within an organization are coordinated to achieve organizational goals and objectives. Nelson and Pasternack (2005) observe organization structure to be a form of employee empowerment however the further state that it doesn’t end at the organization structure since not all members of an organization are normally reflected in the structure as individual work needs to be coordinated and managed to lower levels. Structure is a valuable tool in achieving coordination, as it specifies reporting relationships (who reports to whom), delineates formal communication channels, and describes how separate actions of individuals are linked together.
Pasternack (2005) Organizations can function within a number of different structures, each possessing distinct advantages and disadvantages. Although any structure that is not properly managed will be plagued with issues, some organizational models are better equipped for particular environments and tasks and this is where employee empowerment comes in. Organizations can be regarded as people management systems. They range from simple hierarchies along traditional lines to complex networks dependent on computer systems and telecommunications. Human resource managers can encourage organizations to adopt strategies (for their structures) which foster both cost-effectiveness and employee commitment. Organizational structures can be classified into a number of types, including functional, divisional, matrix, federations and networks. (Bradt, 1998) According to Gunneson, (1997) empowerment is portrayed in the structure by making the structure functional and relates to the capacity of an organization to operate profitably while adapting to given environment to meet the complex needs of a dynamic and competitive environment. Traditional organisational structures are being tested by demands for greater adaptability and flexibility. Highly bureaucratic or mechanistic (Burns & Stalker, 1961) organisational structures are making way for more organic structural approaches. Drucker, (1999) indicates that throughout the many discussions on the merits of various organisational structures it is also made clear that in reconfiguring an organisation to enhance its performance, there is no one appropriate or ideal structure. Further, there is agreement that many organisations have hybrid structures in which a several different structures happily co-exist and as a result staff in such structure feel empowered as demarcations are clearly cut.
2.3.4 Organization Culture According to Khan, (2005) the success of any company depends in part on the match between individuals and the culture of the organization. Organizational culture is the set of operating principles that determine how people behave within the context of the company. Underlying the observable behaviors of people are the beliefs, values, and assumptions that dictate their actions. Khan, (2005) further states that as culture is developed based on traditions, beliefs, rituals, information and language (communication) to develop an organizational culture of empowerment one need to understand how all these factors come about. The primary issues are the development of a shared vision, full understanding by all involved of the mission, setting of clear goals and the setting of clearly understood boundaries for decision making, The outcome to be sought is an improved level of staff competency and the competency development of course needs to be focused on satisfying both internal and external customers. Any competency development program adopted needs to include strong levels of support in the form of mentoring for development of operational skills, organizational cultural support and the encouragement of risk-taking and empowering staff in full capacities. According to Burman and Evans, (2008) leadership and culture affect the level of empowerment in an organisation rather than management and describe the difference to be an influence to impact on the productivity level. When one wants to change an aspect of the culture of an organization one has to keep in consideration that this is a long term project. For companies with very strong and specific culture it is harder to empower any how as there are set cultures to be followed.
2.4 Empirical Literature
Strong wind of change have forced companies, which have been limited to local and national markets with their limited environmental conditions, to move to big arenas of Olympics where competition is at a global level. The competitors are numerous and competition is quite tough under the conditions of these new competition areas. In this arena there is no place for protectionism, doping and any irrational behaviour. Under these conditions companies have to design and shape their organization structure, management understanding, company competences and outputs according to new competition conditions in order to compete. The conditions such as customers demand, environmental pressure, quality standards etc. and their partnership, have caused tendency to transform similar characteristic make-up of the companies under the same market conditions (Ataman, 2003). Because of this tendency, the market shares and the profit margins have been decreased by increasing the pressure on the sales price due to increase of similar products in the same market and the priority given to similar products with the minimum price (Kırım, 2005). The Human Resource of company, different from components of others is of the type that cannot be copied/imitated. For this reason, it has a strategic role to be effective to gain differentiation competence of company and to differentiating. However, human resource in company has to meet the requirements for this role in terms of qualifications and power in order to take over such a role. Employee empowerment, which is one of the concepts of new management, gaining from different knowledge, skill and talent of the employees at the highest level, plays an important role in internal and external customer satisfaction. Employee empowerment, which came up in 1990s, is known as one of the new management concepts (Hanold, 1997; 2002). However, when the relevant literature is analyzed, this concept is understood to have a longer history than previously thought (Nykodym et.al., 1994 Wilkinson, 1998). 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 (Elmuti, 1997). As a matter of fact 24
empowerment was given place in the publications of Pre-1990 that discussed topics such as work enrichment, participative management, employee motivation, total quality -control, individual development, quality circles and strategic planning. Without any doubt, perceptible increase in the number of articles related to employee empowerment was seen after 1990s (Honold, 1997) Empowerment is one of the most effective ways of enabling employees at all levels to use their creative abilities to improve the performance of the organization they work for, and the quality of their own working life. Employee empowerment is a kind of the risk management process whereby a culture of empowerment is developed information in the form of a shared vision, clear goals, boundaries for decision making, and the results of efforts and their impact on the whole is shared competency in the form of training and experience is developed; resources, or the competency to obtain them when needed to be effective in their jobs, are provided; and support in the form of mentoring, cultural support, and encouragement of risk-taking is provided (Chaturvedi, 2008). A more operational-level and process-oriented definition of empowerment was offered by Bowen and Lawler. They define empowerment “as sharing with front-line employees the information about an organization’s performance, information about rewards based on the organization’s performance, knowledge that enables employees to understand and contribute to organizational performance, and giving employees the power to make decisions that influence organizational direction and performance”(Ugbaro and Obeng, 2000). An empowerment from top to bottom or from managers to employees means giving power to employee at four dimensions that consists of authority, specialization, resource and personality. Authority is the power dimension which makes up the essence of empowerment or the body. The other power dimensions are the characteristic which uses authoritative power effectively, supportively, easily and complementary. The authority dimension of empowerment, the right to take decision related to the meaning, the environment and content of the work done by employees; the specialization dimension, 25
the knowledge and skill of decision making/application; the resource dimension, being the most important sharing of knowledge, the possibility of attaining and using resources related to their work; the personality dimension, however, are the self-confidence to use the authority and motivation (Kocel, 2003). When the empowerment in the organization is seen from down to up or when seen from the employee’s point of view, it is seen as something perceived by them or the psychological dimension can be seen. Some of the main factors that determine the empowerment perception are as follows: (meaning) finding the work done by the employee as meaningful(important); (competence) to feel oneself as sufficient, (selfdetermination) the possibility of making choice and (impact) the degree of effectiveness perceived over certain results in the work process (Ugboro & Obeng, 2000). A study by Nykodym, (1994), Kocel, (2003) the qualities of employees, who will be empowered, are important organizational and managerial atmosphere are the principal variables of empowerment. These include the employees not being desirous to development, not having critical thinking skills, not being open to change, not having high self-confidence and not being favourable to co-operation (Ceylan, 2002); the level of feeling important, self-sufficient, and efficient and having authority at work. (Robbins et al, 2002) Whether the organization is flat and whether it has organic structure; performance appraisal, feedback, rewarding (Born & Molleman 1996), human resources procuration, protection training and communication system; the level of authority given to employee by the work definition; The encouragement and motivation to decision making by managers to their subordinates; creating a participation culture and creation of a sharing vision; emphasizing flexibility and autonomy, sharing information, inspiring confidence and the level of managers trust to their subordinates.(Mattews, 2003) A case study by Paterson and Spangs (2006) aimed to find out what characterizes the Brazilian company Semco and the Swedish company Freys hotels as private owned 26
democratic companies, and whether the mechanisms used to apply and carry on the democratic process are sufficient or not to truly make the workplaces democratic. The way this study is conducted, is by analyzing the definition of workplace democracy and its managerial approaches. To be able to map and study the democratic process in the companies, the authors chose to analyze the parts of the organization that sustain democracy. These parts are structure, information/communication process, individuals and decision-making. The theories applied, are theoretical thoughts and definitions of the managerial approaches (empowerment and participation) used to introduce democracy at the workplace. In addition a political framework for analyzing democracy is used. Five previous studies were also highlighted in the theory chapter, in order to reinforce the authors’ choice of theories and give a broaden understanding of the subject studied in this essay. For analysis, seven hypotheses characterizing a democratic company and the use of workplace democracy were tested. The analysis was carried out using collected primary and secondary data from books, articles, interviews and inquiries with employees from Semco and Freys Hotels. Another interview was conducted with Professor Carl Von Otter at the National Institute for Working Life, who explained the meaning of a democratic corporation. The results show that the hypotheses can be used to describe workplace democracy. However, the managerial approaches are not sufficient to make a company democratic since they can be used in order to restrain employee participation. Participation and involvement should be the basic idea that comes with employment. Another conclusion from the study is that the application and success of workplace democracy depends on the national context (Paterson and Spangs 2006)
2.5 Research Gaps
There are concerns in the gathered literature about the perceptions on employee empowerment and other than the stated variable it can be noted that there is minimal understanding of the term empowerment. The study also notes that significant lack of knowledge with regards to employee empowerment, not only at the conceptual level, but at the practice level too. The danger of practicing employee empowerment without an adequate knowledge base is unsafe for organisations; it is confusing and counterproductive, as organisations do not achieve what they set out to achieve. This research is important and may be justified on several grounds. Within the context of intense competition particularly, managers and organisations are constantly seeking new sources of competitive advantage. What is required is a model whereby employees at the front lines are allocated considerable autonomy and responsibility for decision-making and problem-solving and management exists ‘not to direct and control or to supervise, but rather to facilitate and enable. In line with this argument, a number of authors report that employee empowerment came to prominence as a management response to rapid economic and technological change, and an increasingly complex and competitive external environment. Increasing market competition and the need to comply with quality standards and award criteria, have forced organisations to think of ways to meet these demands. As indicated above, one of the ways many organisations choose to do this is to empower their employees. However, the problem is that organisations are introducing employee empowerment without fully understanding what it means or what they are committing themselves to. It is for these purposes that this study introduces variables such as training and development, reward, organization culture and organisation structure.
The study reviewed three theories in relation to employee empowerment, these were expectancy theory which is about the mental processes regarding choice, or choosing. Goal theory which holds that goals are important regulators of human behavior and posits a strong relationship between goal difficulty and performance, with harder goals resulting in a greater effort than easier goals. Equity theory that attempts to explain relational satisfaction in terms of perceptions of fair/unfair distributions of resources within interpersonal relationships. The literature discussed the variable under study where training and development involves learning and teaching employees due to a need for development of skills and knowledge. Reward is what employee gets in return for services rendered. Organizational structure refers to how individual and team work within an organization are coordinated to achieve organizational goals and objectives. The literature also notes that organizational culture is the set of operating principles that determine how people behave within the context of the company. Underlying the observable behaviors of people are the beliefs, values, and assumptions that dictate their actions. According to the reviewed literature it can be noted that globalization, changing competition, conditions and increasing of similar products cause narrowing of market share of the companies and forces them to create new markets by product differentiation. Since it can cause companies to gain differentiation capabilities, human resource has transformed into the strategically competitive element of a company. Employee empowerment causes to benefit from different knowledge, skills and capabilities of human resource at maximum degree Therefore it plays an important role in customer and employee satisfaction.
CHAPTER THREE RESEARCH METHODOLOGY 3.0 Introduction
This section sought to address the research methodology employed in data collection. It identified a research design; bring out the target population as well as a sampling approach that was employed in the identifying the population used in the study.
3.1 Research Design This study adopted a descriptive approach. According to William, (2006), descriptive studies are more formalized and typically structured with clearly stated investigative questions. Descriptive research was used to investigate the factors influencing employee empowerment in an organisation. According to Mugenda and Mugenda (2003) descriptive research determines and reports the way things are. It is restricted to fact finding and may result in the formulation of important principles. 3.2 Population The focus of this study was on the banking industry. This research was carried out within Nairobi region where banking outlets in Nairobi central business district area were considered for the study. According to Central Bank of Kenya, bank licensing in the country as at March 2010 there were 44 licensed commercial banks. Focus group were varied levels of positions within the banking industry such as the Management, Finance Department, Administration, Human Resource and Operations Positions. Of the observed population 36% were from the finance department, Operations Positions 28%, Management/Administrative 20% and human resource 16%. These results stated the varied positions in the organisation.
3.3 Sampling Size and Sampling Techniques
Before the start of data collection, pre-testing of the questionnaire was done to test the reliability of the instruments and the validity of a study (Sekaran, 2003). The validity of 30
qualitative research as determining whether the research truly measures that, which it was intended to measure or how truthful the research results are (Joppe, 2000). Cooper & Schindler (2003), pilot study was thus conducted to detect weakness in design and instrumentation and to provide proxy data for selection of a sample. In order to test reliability of the instruments, internal consistency techniques were employed using the Cronbach’s Alpha. Coefficient of 0.6 – 0.7 is a commonly accepted rule of thumb that indicates acceptable reliability and 0.8 or higher indicates good reliability (Mugenda, 2008).
3.4 Data collection instruments
Main data collection instrument was structured questionnaires. This was because questioning gave the respondents the required opportunity to answer the questions willingly and with an open mind (Mugenda & Mungenda, 1999). Open questions were prepared to give the respondents the liberty to discus their opinions where necessary. The questionnaire avoided leading questions so as to provide flexibility of opinions. The questionnaire was a likert scale in nature. William (2006), a likert scale commonly used in questionnaire, and is the most widely used scale in survey research, such that the term is often used interchangeably with rating scale even though the two are not synonymous. When responding to a Likert questionnaire item, respondents specified their level of agreement to a statement.
3.5 Data Collection Procedures
The administration of the questionnaires was done by the “drop and pick” method that allowed respondents ample time to complete the questionnaires. The respondents approval to participate in the survey were sought before administering, the questionnaire. A letter of identification introducing the researcher was obtained from the institution of learning.
3.6 Reliability and Validity Reliability is a measure of the degree to which a research instrument yields consistent results or data after repeated trials. (Mugenda & Mungenda, 1999) Reliability in research is influenced by random error. As` random error increases reliability decreases the subjects, interviewers fatigue, interviewer bias etc (Mugenda & Mungenda, 1999). Validity is the accuracy and meaning fullness of inferences which are based on the research results. It is the degree to which results obtained from the analysis of data actually represent the phenomena under study. (Mugenda & Mungenda, 1999) validity therefore will have to do with how accurately the data obtained in the study represents the variables of the study. To determine the reliability and validity a pre test on the primary tools were conducted to find out whether there are inadequacies such as luck of enough space to respond or any ambiguous questions.
3.7 Data Processing and Analysis
The data collected was coded and entered into a spreadsheet and analyzed using quantitative techniques so as to gather as much information as possible regarding Internal Promotion. This involved creating statistics namely percentages and frequencies. The data was then presented using tables and charts. Descriptive statistics specifically measures of central tendency (Percentages, and frequencies) was analyze using the aid of Statistical Package for Social Science (SPSS 16.0 version), which was used in this study, offers extensive data- handling capabilities and numerous statistical analysis routines that can analyze small to very large amounts of data statistics (Obure, 2002). Inferential statistics allow one to draw conclusions about the unknown parameters of a population based on statistics which describes a sample from that population. Measurement for each variable was done by having a simple regression for each variable. This indicated the variance shared by the independent variable and the dependent variable. 32
CHAPTER FOUR DATA ANALYSIS, INTERPRETATION AND PRESENTATION
The study sought to establish factors affecting employee empowerment in an organization with a focus on the banking sector in Kenya. This chapter contains the findings of the study and discussion on findings. The findings answer the research questions. Presentations have been made in a statistical form enumerated in tables.
4.2 Responses Rate
The table 4.1 tabulates the response rate of the respondents that participated in the study. The responses were that out of 70 respondents surveyed, 50 questionnaires were returned fully filled. This made the respondents rate to be 71.4% representing the banking sector. Mugenda and Mugenda (2003) argue that a response rate of over (70%) is very good for descriptive research.
Table 4.1: Response Rate
Respondents Questionnaires Administered Banks in Nairobi area 70 Questionnaires filled and returned 50 71.4% Response rate
4.3 Scale Reliability Results
Table 4.2 Indicates that each item had an overall alpha above 0.7. Mugenda and Mungenda (2003) recommend for 0.7 and above thresh hold. This value indicates strong consistency among the three indicators.
Table 4.2 Scale Reliability Results
Item Training and Development Reward/Compensation Organisation Structure Organisation Culture Cronbach’s Alpha .716 .703 .728 .733 No. of Items 4 4 4 4
4.4 Job title in the Organization
In the table 4.3 above on respondent’s job title in the organization 36% were from the finance department, Operations Positions 28%, Management/Administrative 20% and human resource 16%. These results stated the varied positions in the organisation. It can be stated the major functions of the banking sectors were well represented in the study. Table 4.3 Respondents Job title in the Organization Job title in the Organization Management/Administrative Finance Department Human Resource Operations Positions Percentage 26 % 36 % 16 % 28 %
4.5 Level of education Response
The sector under study is mainly comprised by University and Collage graduates as indicated in the table 4.4 above where 48% were undergraduates, masters 32% and doctorate degree holders were 20%. According to Boschken, (1994) a company’s ability to capitalize on its employees’ ideas and know-how, and its commitment to training and education, can enhance productivity and add value.
Table 4.4 Respondents Level of Education
Level of education Response Doctorate Degree Masters Undergraduate Percentage 20 % 32 % 48 %
4.6 Respondents Length of work in the Organization
The table 4.5 above states that 40% of the respondents had served in the organisation for a period of 2-3 years, 24% had served for a period of 1-2 years, those of over 3 years of service were 20% and below 1 year were 16%. As Joskow (1997), showed, under these circumstances the length of the contract will be related to the size of those possible expropriations and consequently the magnitude of the specific investments. This implies that majority of the employees had been in the organization for more than six years and this shows that the organization is quite stable. The study was at a better position to get true positions within the organisation as have services range varied in the organizations studied.
Table 4.5 Respondents Length of work
Length of work Below 1 Year 1 – 2 Years 2 - 3 Years Over 3 Years Respondents 8 12 20 10 Percentage 16% 24% 40% 20%
4.7 Level of familiarity with empowerment issues in the organization
The table 4.6 sought to interpret the respondent’s level of familiarity with empowerment issues in the organization and it was noted that 40% were very familiar, 36% were familiar, 20% were fairly familiar and 8% were not familiar. With the familiarity level at a high of 40% the study was able to come up with concrete results of the study. As observed in the study the level of familiarity with empowerment issues in the organization is seen to be known by many in the organisation considering most seek to be empowered to enable them carry on with their work duties.
Table 4.6 Level of familiarity with empowerment issues in the organization
Very Familiar Familiar Fairly Familiar Not Familiar
40% 6% 20% 8%
4.8 Training influences employee empowerment
The table 4.7 state that 32% of the respondents were undecided stating that they were not very sure whether training influences employee empowerment, 28% were in strong agreement, 24% in agreement, 10% strongly disagreed while 6% disagreed. The results varied considering some banks were more developed that others hence training matters and how they are handled vary. Arthur (1995) states that training an employee to get along well with authority and with people who entertain diverse points of view is one of the best guarantees of long-term success.
Table 4.7 Training influences employee empowerment
Response Strongly Disagree Disagree Neutral Agree Strongly Agree Percentage 10% 6% 32% 24% 28%
4.9 Training approach adopted by the organization influence employee empowerment
Table 4.8 on response on whether training approach adopted by the organization influence employee empowerment, finding show that 32% were undecided or neutral a state of not being sure, 28% in strong agreement, 24% in agreement while 10% strongly disagreed and 6% disagreed. The study notes that with the nature of response achieved training and development approach adopted by the organization influence employee empowerment in varied ways. It is the assumption of this study that employees are well empowered through training and development. By so doing it is also assumed that it can help resolve labour turnover as a result of lack of empowerment. Harrison, (2005) Employee Development was seen as too evocative of the master-slave relationship between employer and employee for those who refer to their employees as partners or associates to be comfortable with. Human Resource Development was rejected by 37
academics, who objected to the idea that people were resources an idea that they felt to be demeaning to the individual. Chattered Institute of Personnel Development (CIPD) settled upon Learning and Development, although that was itself not free from problems, "learning" being an over general and ambiguous name. Moreover, the field is still widely known by the other names
Table 4.8 Response on whether training approach adopted by the organization influence employee empowerment
Response Strongly Disagree Disagree Neutral Agree Strongly Agree Percentage 10% 6% 32% 24% 28%
4.10 The organizations current reward condition
Table 4.9 Summaries rating on the organizations current reward condition and it can be noted that rewards in the observed organizations can be said to be fair considering the nature of response in the below. Armstrong and Tina, (2005) notes that empowerment and staff motivation should be accompanied with justified pay. The philosophy of reward management recognises that it must be strategic in the sense that it addresses longer-term issues relating to how people should be valued for what they do and what they achieve. Reward strategies and the process that are required to implement them have to flow from the business strategy (Armstrong and Tina, 2005).
Table 4.9 Rating on the organizations current reward condition
Response Good Fair Poor Percentage 40% 46% 32%
4.11 Reward influences employee empowerment in the organization
The table 4.10 indicates the extent to which reward influences employee empowerment in the organization were noted to be a very high extent by 64% of the respondents, high extent 20% and 16% average extent. The study therefore notes that reward/compensation is considered to be very important and determines how work in the organisation employees performs its functions. Reward management adopts a ‘total reward’ approach which emphasises the importance of considering all aspects of reward as a coherent whole which is integrated with other Human Resource initiatives designed to achieve the motivation, commitment, engagement and development of employees. An example is the introduction of intergraded approach to reward management such as personal development and spelling out career opportunities. Armstrong and Tina, (2005) notes that empowerment and staff motivation should be accompanied with justified pay.
Table 4.10 Extent to which reward influences employee empowerment in the organization
Response Very high extent High extent Average extent Percentage 64% 20% 16%
4.12 Reward that greatly influence employee empowerment
Indicators on reward that greatly influence employee empowerment are noted as incentives pay plan 36% wage surveys 32%, Job evaluation 20% and job analysis 12%. The study notes that the observed organisation have different ways and means of determining how reward is approached and the approaches adopted are of varied level influence. Amodt, (2007) observed that the basis for rewards systems are conditioning principles, which state that employees will engage in behavior for which they are rewarded and avoid behavior for which they are punished. Thus, if employees are rewarded for not making errors, they are more likely to produce high quality work. If employees are rewarded for the amount of work done, they will place less emphasis on quality and try to increase the quantity. If employees are not rewarded or compensated for any behavior, they will search for behaviors which will be rewarded. Unfortunately, these might include absenteeism and carelessness which result in low performance. Rewards need to be effective in encouraging employees to work towards the needs and the objectives. Rewards need to be effective in encouraging employees to work towards the needs and the objective of the organization. To be effective, remuneration systems need to be based on a sound understanding of how people at work are motivated.
Table 4.11 Indicators on reward that greatly influence employee empowerment
Response Incentives pay plan Wage surveys Job evaluation Job analysis 36 % 32 % 20 % 12 % Percentage
4.13 Analysis on Organization Structure
The table 4.13 above indicates that organization structure influence employee empowerment in the organization as noted by 36% in agreement and 20% who strongly agreed. It is noted that the organisation structure is a source of empowerment given that it illustrates who answers to whom or who is entitled to what functions in the organisation. Nelson and Pasternack (2005) observe organization structure to be a form of employee empowerment however the further state that it doesn’t end at the organization structure since not all members of an organization are normally reflected in the structure as individual work needs to be coordinated and managed to lower levels.
Table 4.13 Organization structure influence employee empowerment in the organization
Response Strongly Disagree Disagree Undecided or Neutral Agree Strongly Agree Percentage 20 % 10 % 14 % 36 % 20 %
4.14 Relevance of your organization structure to employee empowerment
The table 4.14 above shows the relevance of the organization structure to employee empowerment and it was noted by 36% to be moderate relevant, 30% very relevant, 18% not relevant and 16% relevant. Some organizations associate there structures to empowerment while others don’t. According to Gunneson, (1997) empowerment is portrayed in the structure by making the structure functional and relates to the capacity of an organization to operate profitably while adapting to given environment to meet the complex needs of a dynamic and competitive environment.
Table 4.14 Relevance of your organization structure to employee empowerment
Response Very Relevant Moderate Relevant Relevant Not at all Relevant
Percentage 30 % 36 % 16 % 18 %
4.15 Organization influence work coordination
Of the observed respondents 40% were not sure whether their organizations influence work coordination. The respondents were in support of there organizations despite of any challenges that might be in existence. According to Gunneson, (1997) empowerment is portrayed in the structure by making the structure functional and relates to the capacity of an organization to operate profitably while adapting to given environment to meet the complex needs of a dynamic and competitive environment. Traditional organisational structures are being tested by demands for greater adaptability and flexibility. Highly
bureaucratic or mechanistic (Burns & Stalker, 1961) organisational structures are making way for more organic structural approaches.
Table 4.15 Organization influence work coordination
Response Disagree Undecided Agree Strongly Agree Percentage 8% 40 % 20 % 32 %
4.16 Analysis on Organization Culture
The table 4.16 above indicates that 46% of the respondents strongly agreed and 34% agreed that organization culture influence employee empowerment. Culture in the organisation is considered to be a way of excising authority and work in the organisation hence it serves an influence to employee empowerment. According to Burman and Evans, (2008) leadership and culture affect the level of empowerment in an organisation rather than management and describe the difference to be an influence to impact on the productivity level.
Table 4.16 Organization culture influence employee empowerment
Response Disagree Undecided Agree Strongly Agree Percentage 10 % 10 % 34 % 36 %
4.17 Rating on the organization culture
The study notes that 46% termed the organisation culture to be fair, 40% good while 14% poor. It can be interpreted that organisation culture its self allows for existence of empowerment in the organisation. According to Burman and Evans, (2008) leadership and culture affect the level of empowerment in an organisation rather than management and describe the difference to be an influence to impact on the productivity level. Table 4.17 Rating on the organization culture Response Good Fair Poor Percentage 40 % 46 % 14 %
4.18 Improved level of staff culture enhance employee empowerment
Findings in the table 4.18 above can be interpreted to show that improved level of staff culture enhance employee empowerment as noted by 56% in strong agreement and 40% in agreement. Culture among employees in an organisation leads to a good working relationship. Khan, (2005) further states that as culture is developed based on traditions, beliefs, rituals, information and language (communication) to develop an organizational culture of empowerment one need to understand how all these factors come about. The primary issues are the development of a shared vision, full understanding by all involved of the mission, setting of clear goals and the setting of clearly understood boundaries for decision making, The outcome to be sought is an improved level of staff competency and the competency development of course needs to be focused on satisfying both internal and external customers. Any competency development program adopted needs to include strong levels of support in the form of mentoring for development of operational skills, organizational cultural support and the encouragement of risk-taking and empowering staff in full capacities. 44
Table 4.18 Improved level of staff culture enhance employee empowerment
Response Undecided Agree Strongly Agree Percentage 4% 40 % 56 %
4.19 Organization culture
The table 4.19 indicates the extents to which companies with very strong and specific culture find it harder to empower any how as there are set cultures to be followed. It is noted that 56% (very high extent), 24% (average extent) and 24% (average extent) showing that set ways and practices of doing things in the organisation make it difficult to practice empowerment. According to Burman and Evans, (2008) leadership and culture affect the level of empowerment in an organisation rather than management and describe the difference to be an influence to impact on the productivity level. When one wants to change an aspect of the culture of an organization one has to keep in consideration that this is a long term project. For companies with very strong and specific culture it is harder to empower any how as there are set cultures to be followed.
Table 4.19 Organization culture
Response Very high extent High Extent Average extent Percentage 56 % 20 % 24 %
A multiple regression analysis was conducted to determine the relative impact of training and development, reward/compensation, organization structure and organization culture on employee empowerment. The regression model was as shown below in table 4.14. Y = β0+ β1x1 + β2x2 + β3x3 + β4x4 + ε Y= Employee empowerment X1= training and development X2=reward/compensation X3=organization structure X4=organization culture
Regression analysis also produced correlation, coefficient of determination and analysis of variance (ANOVA). Correlation sought to show the nature of relationship between dependent and independent variables and coefficient of determination showed the strength of the relationship (Karl, 2009). Analysis of variance was done to show whether there is a significant mean difference between dependent and independent variables. The ANOVA was conducted at 95% confidence level. Model goodness of fit was used to establish the relationship between employee empowerment and the factors that affects it such as training and development, reward/compensation, organization structure and organization culture. The results showed a correlation value (R) of 0.7989 which depicts that there is a strong linear dependence of employee empowerment 46 on training and development,
reward/compensation, organization structure and organization culture. Cohen (1988) observed that a correlation coefficient of magnitude 0.3–0.5 shows a medium linear dependence between two variables while 0.5 to 1.0 shows a strong linear dependence. With an adjusted R-squared of 0.7045, shows that training and development, reward/compensation, organization structure and organization culture explain 70.45 percent of the variations in employee empowerment while 29.55 percent is explained by other factors not in the model. The Durbin Watson of 1.903 showed absence of serial correlation which might have had a negative effect of the regression model. Verbeek (2004) stated that a value of 2.0 for the Durbin-Watson statistic indicates that there is no serial correlation.
Table 4.20: Model Goodness of Fit
R R Square Adjusted R Std. Error of the DurbinSquare Estimate Watson .7889 .6706 .7045 .8045 1.903 a. Predictors: (Constant), training and development, reward/compensation, organization Structure and organization culture b. Dependent Variable: Employee empowerment
ANOVA statistics was conducted to determine the differences in the means of the dependent and independent variables thus show whether a relationship exists between the two. The P-value of 0.042 implies that employee empowerment has a significant joint relationship with training and development, reward/compensation, organization structure and organization culture which is significant at 95 percent level of significance. This also depicted the significance of the regression analysis done at 95% confidence level. This is a general technique that can be used to test the hypothesis that the means among two or 47
more groups are equal, under the assumption that the sampled populations are normally distributed. Tabachnick and Fidell (2007) states that for hypothesis testing, if the p-value exceed the predetermined alpha (p≤0.05) then the means of dependent and independent valuables is equal signifying a relationship.
Analysis of Variance
Sum of Df 6 40 32 Mean Square 1.394 .445 F 3.135 Sig. .042a Squares 4.18 20.50 14.44
Regression Residual Total
From the data in the above table, there is a positive relationship between employee empowerment and the Predictor variables which are training and development, reward/compensation, organization structure and organization culture. The established regression equation was: Y = 4.176 + 0.713x1 +0.493x2 + 0.563x3 + 0.685x4 p=0.042 The regression results show that, when the training and development,
reward/compensation, organization structure and organization culture have zero values, employee empowerment value would be 4.176. It is also established that a unit increase in training, while holding other factors constant, would result in a 0.713 increase in employee empowerment. This statistic had a t-value of 1.387 at 0.023 showing that the statistic is significant at 95% confidence level.
Holding other factors constant, a unit increase in reward would cause an increase in employee empowerment by 0.493. A t-value of 2.058 was established at 0.047 error margin. This shows that the statistics was significant at 95% significance level. A unit increase in organization structure would lead to a 0.563 increase in employee empowerment. A t-value of 0.551 was established at 95% confidence level (p=0.045). This variable has a lot of influence to employee empowerment within the banking sector. A unit increase in organization culture would lead to a 0.685 increase in employee empowerment. A t-value of 0.469 was established at 95% confidence level.
Regression Coefficient Results
Unstandardized Coefficients B Std. Error 4.146 5.006 0.713 .720 0.493 .697 0.563 .827 Standardized Coefficients Beta .362 .338 .091 T 1.543 1.387 2.058 .551 Sig. .132 .023 .047 .045
(Constant) Training Reward Organization structure
Organization 0.685 0.825 0.432 culture a. Dependent Variable: Employee empowerment
CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS
This chapter gives a summary of the findings, conclusion and recommendations. The research intention was to determine the factors affecting employee empowerment within the banking sector and the following is a summary of findings.
5.2 Summary of Findings
5.2.1 To investigate whether training influences employee empowerment in an organization. The study found out that a good number of the observed banks there employees were very familiar with matters of employee empowerment as observed in the analysis where by majority were very familiar. It was not very clear on how presence or lack training and development influences employee empowerment considering some of the observered banks were doing fine in terms of performance hence it was noted that training prevailed in some organizations while others were on departmental basis. Training and development influences employee empowerment in an organization in the sense that functions and duties in the bank do differ hence one departments training needs can not apply to other departments hence measure of empowerment can not be aligned to be the same. 5.22 To establish the extent to which reward influences employee empowerment in an organization. The extent to which reward or compensation influences employee empowerment in an organization was observed to be at a very high extent by 64% of the respondents. The 50
study therefore notes that reward/compensation is considered to very important and determines how work in the organisation is performed. It is also considered to accompany and responsibility of task assigned in the observed organizations. The study note that reward is a factor that can be considered to act as an influence to employee empowerment but in situations where salaries are well harmonized then it’s not a factor to be of great or major influence. Indicators on reward and compensation that greatly influence employee empowerment are noted as incentives pay plan, wage surveys, Job evaluation and job analysis. 5.23 To determine whether the organization structure influences employee empowerment in an organization. Organization structure influence employee empowerment in the organization. It was noted that the organisation structure is a source of empowerment given that it illustrates who answers to whom or who is entitled to what functions in the organisation. Some organizations associate there structures to empowerment while others don’t. The respondents were in support of there organizations despite of any challenges that might be in existence. The findings show that empowerment is portrayed in the structure of your organization whoever varied opinions were noted considering many noted that the structure is a way of reporting and not necessarily a means of empowerment.
5.2.4 To find out how organization culture influences employee empowerment in an organization.
The findings in the study found that that organization culture influence employee empowerment. Culture in the organisation is considered to be a way of excising authority and work in the organisation hence it serves an influence to employee empowerment. Organisation culture its self allows for existence of empowerment in the organisation. Culture among employees in an organisation leads to a good working relationship. The extents to which companies with very strong and specific culture find it harder to
empower any how as there are set cultures to be followed. It is noted that set ways and practices of doing things in the organisation make it difficult to practice empowerment.
The study concluded that both the employees and the employer are very familiar on matters regarding empowerment. It was not very clear on how presence or lack training and development influences employee empowerment considering some of the observered banks were doing fine in terms of performance. Training and development influences employee empowerment in the banking sector. The regression states that training and development is of great impact to employee empowerment. The study also conclude that extent to which reward or compensation influences employee empowerment in an organization is at a very high extent and that reward/compensation is considered to be very important and determines the level of work willingness. The study concludes that reward/compensation is a factor that can be considered to act as an influence to employee empowerment but in situations where salaries are well harmonized then it’s not a factor to be of great or major influence. It is therefore noted that reward/compensation is of average effect to employee empowerment. The study concludes that organization structure influence employee empowerment within the banking sector. Some organizations associate there structures to empowerment while others don’t. Finally it is concluded that organization culture influence employee empowerment. Culture in the organisation is considered to be a way of excising authority and work in the organisation hence it serves an influence to employee empowerment. Given an individual organization perspective the level at which the variables affect employee empowerment will be varied. For a successful employee empowerment observed variable in the study must be considered by the respective organizations.
The study recommends the following; The findings from the study indicate that there are factors that have an influence on ensuring employee empowerment are observed. The factors are considered to be an influence to the stated or observed variables. Some of the factors put on recommendation are such us; Training should be observed at all levels of management in the organisation considering the nature of department’s operational activities. Reward or compensation should be done in a harmonized way to capture all the job categories in the organisation considering it is a factor that influences employee empowerment. The organizations should ensure that there work/role structures do not conflict with work allocations in the organisation. Finally culture having been observed as a set of performing work in the organisation, the banks should consider carrying out exchange programmes or joint programmes that will uplift work relationship in the sector and come up with cultures that are results/performance oriented.
5.5 Area for Further Study
This work may serve as a basis for further studies in employee empowerment. Due to the nature of banking and competition the study was limited in data availability hence the same study can be adopted in a different organisation or sector set up. The study was also limited to four variables organisation culture, organisation structure, training and reward. More variables can be incorporated in the model.
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