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TheInfluenceofHRPolicyDimensionsontheJobSatisfactionofEmployeesofPublicSectorBanks.pdf
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
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The Influence of HR Policy Dimensions on the Job Satisfaction
of Employees of Public Sector Banks: A Study on Indian Overseas Bank†
S Baskar*
* Chief Manager (Rtd.), Indian Overseas Bank, Chennai, Tamil Nadu, India. E-mail: [email protected]
© 2016 IUP. All Rights Reserved.
The HR policies in the Public Sector Banks (PSBs) relating to Compensation, Benefits, Promotion, Mobility, Transfer, Contingent Rewards, Training, Staff Accountability, Incentives, etc. have been framed in terms of guidelines issued by the Government of India (GOI), which is the promoter and major shareholder of the PSBs. These policies have a direct bearing on the job satisfaction of employees and cascading effect on the performance of the bank. The research study in Indian Overseas Bank (IOB) revealed that the overall level of job satisfaction of employees in terms of established job factors was found to be at an ambivalent level. While factors like Fringe Benefits (FB) and Operating Conditions (OPC) showed a level of dissatisfaction, factors like Promotion, Contingent Rewards and Pay showed an ambivalent level. Regression analysis on the data showed Performance Management System (PMS) factor as the significant factor among the six factors of bank policy dimensions considered for the study. Conversely, Pearson Correlation Coefficient analysis showed that PMS factor was positively related to factors like Communication, Contingent Rewards and also Pay. However, factors like Trade Union and Communication were found to be negatively related to each other. The research findings not only support the existing literature on job satisfaction but also add to the deficit literature by exploring the influence and relationship of Bank Policy Dimensions for the Job Satisfaction of employees in the Indian context in Public Sector Banks.
Introduction India had a fairly developed commercial banking system in existence at the time of independence in 1947, with 637 commercial banks operating in the country (RBI, 1947). The Reserve Bank of India (RBI) was established in 1935 and became a state-owned institution to serve as a central bank of the country from January 1, 1949. The Government of India (GOI) simultaneously enacted the Banking Regulation Act in 1949 providing a framework for regulation and supervision of commercial banking activity by RBI.
The GOI perceived that loans extended by colonial commercial banks were biased toward working capital for trade and large firms (Joshi and Little, 1996). Hence, “GOI took the view
† The paper is a part of author’s thesis submitted for the award of Ph.D.
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that the banking system has had to serve the goals of economic policies of the country’ particularly concerning equitable income distribution, balanced regional growth, elimination of poverty, employment generation and the control of private sector monopolies in trade and industry.”
As a corollary of the state policy, and at the behest of a report (under the aegis of RBI) by the Committee of Direction of All India Rural Credit Survey (1951), the Imperial Bank of India was taken over by the government and renamed as State Bank of India (SBI) on July 1, 1955 with the RBI acquiring substantial holding of shares. A number of erstwhile banks owned by princely states were made associates of SBI in 1959 (7 banks), like State Bank of Travancore (SBT), State Bank of Hyderabad (SBH), etc. Thus, the beginning of the plan era in 1952 (Five-Year Planning Process) also saw the emergence of public ownership of one of the most prominent of the commercial banks.
There was a feeling that though the Indian banking system had made considerable progress in the 1950s and 1960s, the credit deployment to agriculture, small industries and other plan priorities is negligible with overriding influence of private banks to serve commercial and industry houses including the state-owned SBI and its associate banks.
To meet these concerns, the government introduced the concept of social control in the banking industry in 1969, aimed with an objective to serve with a focus for the development of the economy in conformity with national plan priorities and objectives. In tune with the concept of social control, the Indian banking industry was subjected to nationalization in two phases (1969 and 1980). It was led to the birth of Public Sector Banks (PSBs).
The adverse developments in the banking sectors coupled with ‘current account crisis’ (3% of GDP) in early 1991 and poor macroeconomic performance characterized by a public deficit of 10% of GDP, and an inflation rate of 10% necessitated the GOI and RBI for introduction of financial sector reforms from 1991-92 which has been one of the central issues facing emerging markets and developing economies.
Hence, to improve the operational efficiency and profitability of the banks, particularly PSBs, which had long been characterized as highly regulated and financially repressed, financial sector reforms based on international financial standard were introduced progressively from 1992 and 1998 in two phases in terms of Narashimham Committee recommendations.
These measures paved the way for accelerated performance of the Indian banking sectors, and the PSBs have been playing a dominant role in improving the country’s economy from 1992 to today (Chandrasekhar and Ghosh, 2013) in an environment of competition from private and foreign banks. India’s banking industry is well set to reach US$4 tn by 2020, from the current level of 77 tn (US$1.30 tn) in synchronizing with global financial standards and norms with a dominant role for PSBs (Jagirdar, 2011).
In spite of the impressive growth and massive contribution to nation building after Independence, the stakeholders of PSBs (GOI, RBI and PSBs) have systematically neglected this very workforce during the journey period, on the pretext of overstaffing, low productivity and profitability, by totally overlooking their social contribution to the nation. PSBs have
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increased their manpower by a meager Compound Annual Growth Rate (CAGR) of around 0.5% to achieve a balance sheet growth of 22% during the period of 2007-10 (McKinsey Report, 2010).
McKinsey had made some revealing observations that PSBs would have dearth of talented manpower by way of losing experienced senior executive and middle management at an unprecedented rate due to retirement in the current decade (2010-20). The PSBs suffered further by high levels of attrition too, which is around 20%, especially at junior scales.
There is a leadership capacity gap of at least 12,000-15,000 people in branches, regions, businesses and functions in each bank as leadership pipelines are extremely thin which adversely affects the succession planning. As such, PSBs today are seriously handicapped vis-à-vis their competitors in the marketplace in terms of huge human capital deficit. Overall, the people processes in PSBs appear to be inadequate and HR has become a new risk as diagnosed by the Khandelwal Committee on HR issues of PSBs (2010).
The bankers have to take note of HR problems: inducting talent in large numbers to retain their market shares, yawning generation gaps, thin leadership pipeline impacting succession planning, escalation of per employee costs in PSBs (which is currently 62% as against 50% globally for most banks), lack of clear role definition, massive re-skilling to unlearn and relearn, proactive feedback on employee performance in place of confidential performance appraisal systems, staff accountability syndrome, dilution of norms for selection of EDs, CMDs and influence of GOI on major HR policy issues of PSBs, as a promoter and major shareholder.
Livelihood was not the only reason for working in any organization. As Henry Ford famously said, “Why is it every time I ask for a pair of hands, they come with a brain attached?”. The people then understood that apart from livelihood, there is something else required, and the something else was termed ‘Job Satisfaction’. Industries are now in the knowledge age and hence people work for ‘Empowerment’ in general, and transformation of HR system in this direction is the key to success of the PSBs.
Jack Welch, Chief Executive of General Electric, said that too often, it is common that we measure everything and understand nothing. The three most important things we need to measure in a business are “customer satisfaction, employee satisfaction and the cash flow”. The customer satisfaction at higher level would increase your market share. The employee satisfaction gets you productivity, quality, pride, creativity and the cash flow which is a vital key of a company. Hence, job satisfaction of employees contributes positively to leverage productivity and customer satisfaction to enhance profitability of a company.
Majumdar (2013), in “A Deloitte Study on Why HR Leaders Need to Think Like Economists”, revealed that it is possible to establish a clear numerical relationship between good human capital management (employees) and enhanced financial results (performance) such as cash flow, profitability and margins, and customer value-added by business levels.
These research reviews provided strong evidence through successive studies over the decades that people work for purpose other than pay, i.e., job factors like fringe benefits, nature of job,
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relationship with co-worker, contingent rewards, supervision, promotion, etc. Conversely, Annual Bankers Conference (BANCON) reports of 2010-2013, RBI study reports, and Khandelwal committee on HR issues of PSBs (2010) are very vocal about “banks policy dimensions on HR areas such as Performance Management System (PMS), Transfer, Training, Government Policies, Staff Accountability and Trade Unions.” These factors have also implicated critical influence on the job satisfaction of employees’ in public sector banks.
A majority of research studies on job satisfaction of bank employees have been focused mainly on traditional job satisfaction factors in the banks, mostly neglecting these critical factors. The research in banking industry would be in an entirety, only when those job factors relevant to the organization of study, i.e., bank policy dimensions on transfer, training, performance management, government policy guidelines, staff accountability, etc. are also studied along with the traditional established job factors of compensation, fringe benefits, supervision, co-worker relations, etc. (Bhattacharya, 2007). Hence, the researcher factored in these variables of bank policy dimensions as identified research gap items.
The present study was carried out in Indian Overseas Bank (IOB), one of the large category public sector banks in India. HR policy of the banks are common to all the PSBs which are framed by the GOI and being implemented by the PSBs in letter and spirit with slight medications based on the ecology and negotiation capacity of trade unions of the individual banks. Hence, the study results would be true reflections on the job satisfaction of employees of all the PSBs.
Literature Review The purpose of literature review is to identify problems, past and current trends, potential relationships between theories and empirical findings and the influence of factors to formulate researchable hypotheses to address the objectives of intended research.
In an interesting perspective, in the Indian context where unions are strong and influential, to think of job satisfaction without unionism would be very unrealistic (Sinha and Sharma, 1962). Virmani (1995) found from a review of in-depth study of eight organizations for “redefining industrial relations” that the principles of collective bargaining need different attitude and it must give way to participation in the development of institutions with various changes in the role of management and its unions, and hence cannot coexist.
Annamalai and Vijayakumar (2002) reported that salary structure, relations with co-workers and superiors, supervision, bank policies and practices as dissatisfied job factors from a study on “job satisfaction among bank employees-cadre-wise”. Job descriptions and objective measurement of individual performance were not drawn in greater details in the banks. Consequently, linkages of performance and incentives were not framed in PSBs (Deshmukh, 2004).
Kavitha (2009) in her doctoral thesis found that PSB bank employees were dissatisfied with pay and pay rise compared to their peers in the private sector. Their satisfaction level was higher for the job factors like relationship with superiors, co-workers, fringe benefits, compared to private bank employees. PSB employees were more dissatisfied with “operating conditions, communication and nature of work”, compared to private bank employees.
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Saiyadain (2009) summarized the findings of several research studies conducted between 1951-1998 and 1965-1997 in various industries including banks/public sector units: the hygiene factors would enhance workers’/clerks’ satisfaction, and the motivators contribute to managers’/ supervisors’ job satisfaction which seem to match with those factors envisioned by Herzberg and others way back in 1957. There was a positive relationship between job satisfaction components towards employee job performance (Anuar Bin Hussin, 2011).
Blessing White studies from 2010 to 2012 revealed that career development opportunities and training, opportunities to apply their talents, and more challenging work were the top influencing factors of job satisfaction of employees in manufacturing, banking/financial services in India.
Payal Chanania (2012) reported that the new generation craves for constant feedback and praises that too in highly visible format as against the traditional reward schemes and pay-for- performance incentives, quoting the findings from international strategic group, ‘Recognition Council’. Social recognition steps in as “the new currency” that fosters employee engagement, motivation and retention.
Chakrabarty (2012) opined that the most important area of HRM in the PSBs was the PMS which in current form was unable to discriminate, and differentiate between performers and non-performers. In any organization, naturally there would be 10-15% of people would be high performers. Banks should focus on the remaining 85%, as any improvement in their performance would have a significant impact on the organization’s performance, as “banking is a team game”, the RBI deputy governor lamented.
Goyal and Joshi (2012) forecasted that “diminishing employee satisfaction results in decreased revenue.” Due to deteriorated compensation structures for bank officers, and staff accountability policies, job satisfaction, motivation and willingness to accept higher assignments, risk-taking and mobility of employees have been significantly impacted (Sharma, 2012).
Meena and Dangayach (2012) reported that employee satisfaction in banks has been recognized to cause major impact on economy and social phenomenon of growth and standard of living. Hence, banks must continuously strive for employee satisfaction in order to stay profitable, and the benefits of employee satisfaction are: organization would benefit in the long run, caring about the quality of their work, delivering superior value to the customer, more employee productivity and profitability.
Indian employees attach a premium to pleasant colleagues in preference to the pay factor as revealed in the global work monitor survey of Ranstad Work Monitor Survey of 2012.
Shiva Kumar (2013) Senior Vice-President, Nokia, gives an interesting perspective on the ‘New-Gen employees’ as a Concorde generation, equating with arrive before they leave, and they are loyal to their careers and not institutions. They thrive on praise and are sensitive to criticism. Attrition is one of the biggest challenges in India which ranges between 15-20%, and “by 2020, 66% of companies would be having new employees.”
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The British Media (2013) reported that “Money can buy happiness”, and the core theme was confirmed in a study by a dozen academics by analyzing an array of robust data from 126 countries, which disclosed that “Money is still a universal motivator and adds to happiness”.
The term ‘employee engagement’ has assumed significance as a variable to job satisfaction since the 2000s and it means different things to different organizations. Some equate it with ‘Job Satisfaction’ (SHRM 2007-2013).
The Towers Watson study (2013) showed that employee benefits have gradually emerged as a powerful tool to attract and retain key talent and are increasingly being leveraged to enhance the employee value proposition.
Nayar (2013), Joint MD of IT major HCL, experimented a concept of “employees first, customers second” over 6 years, which helped to increase the revenues fivefold as the level of ‘employee engagement’ reached a new pinnacle of satisfaction”. He further added that recognizing the centrality of the frontline employees is a challenge which is ignored across the world’ in the businesses.
Mahalingam (2013), an executive coach, seconded the above view as ‘value people first’. This made many in the business circles to wonder why there is so much disconnect between what we know (effective people management makes very good business sense and business cents) and what we do (ignore people management) in our organization. In some organizations, the problem is not with the first line or middle managers; “the bottleneck is always at the top of the bottle”, suggesting that CEO and senior managers demonstrate poor people management day in and day out, simply ingrained as a silent chronic HR culture in the companies.
Objectives The following objectives were framed to evaluate the influence of various aspects of HRM policies and practices on the Job Satisfaction (JS) of employees in IOB:
• To examine the impact of established job factors on the JS of employees viz. Pay, Fringe Benefits (FB), Contingent Rewards (CR), Promotion (PR), Nature of Work (NW), Co-Worker (CW), Operating Conditions (OPC), Supervision and Communication.
• To study the influence of bank policy dimensions identified for the study such as PMS, Transfer, Training, Government Policies on HR Areas, Staff Accountability and Trade Unions.
• To study the relationship between the established job factors and perceived Bank Policy dimensions to ascertain their impact on the JS of employees.
• To make an attempt to understand the performance of the bank with reference to employee job satisfaction in terms of the performance factors of the bank.
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Hypotheses Null hypotheses (H001-H003) were framed to drive the course of research to test the influence of job satisfaction factors, bank policy dimensions, and the relationship between these two factors.
Methodology
Job Satisfaction Concept and Framework Job satisfaction is one of the most widely discussed and enthusiastically studied subjects. However, job satisfaction is among the most difficult constructs to define. Wood (1973) describes job satisfaction as “the condition of contentment with one’s work and it’s in his mind, denoting a positive attitude”. Locke (1973) stated that job satisfaction could be viewed as “a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experience”.
One of the most cited definitions on job satisfaction is that of Spector (1997): “Job satisfaction has to do with the way how people feel about their job and its various aspects”. It has to do with the extent to which people like or dislike their job. Even though several different definitions have been proposed, they all travel in the same direction: the attitude an employee has towards her/his job.
In human services, there is evidence that satisfaction is associated with employee performance and client outcomes (Wiggins and Moody, 1983). Maslow’s Hierarchy of needs (1954) and Herzberg’s two factor theory (1966) of motivation still wield influence on job satisfaction of employees.
Motivation theory is one of the widely accepted and studied theories used to explain human performances in organization. The performance of a worker is directly dependent of motivation and hence increased job performance and in turn upbeat job satisfaction, and vice versa.
Selladurai (1991) and Judge and Bono (2001) suggested that the relationship between job satisfaction and performance is of a cyclic nature, indicating that increased job satisfaction leads to increased job performance and vice versa.
Bhattacharayya (2007) empirically concluded that “Most of the studies in India have attempted to find out the job-satisfaction variables, which have been construed as the motivational variables”, an important practicable thought for the researchers.
Job satisfaction has been positively correlated to both job performance and motivation factors in terms of job satisfaction and engagement that ultimately affect the effectiveness of an organization (Ellickson and Logsdon, 2002; Timmer, 2004, and SHRM JS Surveys, 2007- 2013).
Hence, it is concluded that “motivation influences engagement, leads to productivity of individual to collective performance, in turn job satisfaction, and that motivation, Job Performance (JP) and Job Satisfaction (JS) have a circular cyclic relationship”, mediated by job factors (see Figure 1). These are the guiding concepts for the researcher for the entire gamut of this research.
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Data Collection The primary data was collected by means of a standardized/designed questionnaire survey instrument. The researcher had discussed with senior executives, some senior and junior staff officers, branch managers, clerical and trade unions of IOB in ample measure in person about the study. Besides, mobile phones and e-mails were utilized to inform the purpose of the survey to the respondents, union representatives and other colleagues in various states as the survey focus was Pan-India.
Annual reports of IOB, reports of Bankers Annual Conferences (BANCON), committee reports of RBI, IBA, Strategic HR Consultants, Business magazines, financial dailies and other literature reviews of articles and research paper from journals, besides websites, were the sources for collecting secondary data.
Questionnaire The first part of the questionnaire (see Appendix) contains demographics and general information about the respondents. The second part includes the standardized questionnaire of Spector (1992 and 2007), which contained nine aspects of job satisfaction factors, namely, Pay, Fringe Benefits, Contingent Rewards, Promotion, Co-Worker, Operating Conditions, Nature of Work, Communication and Supervision. Each factor includes 4-items/statements, with a 7-point rating scale (ranging from strongly agree to strongly disagree) to enable the respondents to cast their perception on the influence of JS factors.
The third part was a questionnaire designed for banks’ policy dimensions based on the review of literature, in consultation with three experts in banking/HR-related areas and the research supervisor. Based on their opinions and suggestions, six factors, namely, Training, Transfer, Government Policy Guidelines, Performance Management, Staff Accountability and Role of Trade Unions were identified and finalized with 27 statements. Responses to all items in the survey instrument were on a 7-point Likert scale.
Figure 1: Concept of Job Satisfaction Framework
PERFORMANCE
JOB SATISFACTION
MOTIVATION
ENGAGEMENT
JOB FACTORS
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The interval scale is a standard survey rating scale best suited for opinion or attitude measurement. This kind of Likert-scale is selected based on the recommendation of Kronsnick and Fabrigar (as cited in Maiyaki et al., 2011). They clarified that the range of scale between 5 and 7 is set up to be more reliable than five-point Likert scale and appears to be optimal when measuring a bipolar. This is due to the reason that the scale with more points allows the respondents to articulate their viewpoint more precisely and comfortably.
In addition, Likert scale allows the researcher to make a more subtle distinction among the various respondents’ attitudes regarding a particular item, and the perception level was computed based on normative mean scores. The questionnaire was pretested with 30 employees in IOB and a few changes were incorporated in consultation with the experts and research supervisor.
Sample Frame and Size In the sampling process, within any organization in order to use aggregated psychological climate to predict job satisfaction level, there is a need to ensure that all members of the organization, or a convenient stratified sub-sample of individuals covering all positions, are represented. Without such sampling procedures in place, James et al. (1984) concluded that the use of aggregation is not justified.
The population universe of 28,128 employees for our study in IOB is large (March 2013) (Table 1). Based on the model table of Bartlett et al. (2001), the appropriate sample size for the population of above 20,000 and up to 30,000 was arrived at >379 at 95% confidence level with 5% margin of error. Out of 600 questionnaires mailed, 400 completed questionnaires were used for the analysis.
Table 1: Total Number of Employees in IOB as on March 2013
Officers Clerks Messenger/Peon Sweeper Total Staff
11,768 11,928 2,796 1,636 28,128
Source: Bank Annual Report
The researcher had excluded the messenger and sweeper aggregating 4,432 (15.76%) from the purview of current study as they are not part of clerical cadre directly handling any banking transactions and they have very negligible role in the performance of the bank. The sampling response in the study was “66% out of 600 questionnaires” distributed to the respondents by stratified convenient sampling, to cover all the cadres of clerks, junior, middle and senior management from all the age and gender group of employees.
Data Analysis and Tools Raw data collected from the respondents through the questionnaire were analyzed using the software “Statistical Package for Social Sciences (SPSS) version 18”. Appropriate statistical techniques such as descriptive analysis, numerical statistics such as frequencies, means, standard deviations and inferential statistics like factor analysis, Pearson correlation coefficients and
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regression analysis were employed to analyze the data collected from 400 employees of IOB across the country.
These are standardized techniques being utilized in the HR research over the years (“Human Resource Research Methods”, Bhattacharayya, 2007). The level of influence of established job satisfaction factors (9) had been analyzed and computed and tabulated by utilizing the standardized Spector (2007) rating scales and numerical statistics.
The factor analysis, a multivariate statistical technique, is utilized in the study with a spectrum of analysis (KMO and Bartlett’s Test of Sphericity, Eigenvalues, PCA, RCM and Scree Plot Criterion) for validating the survey instrument of Bank policy dimensions (6 factors) with 27 questions designed for this research study. This technique is helpful to identify the underlying factors that determine the relationship between the observed variables and also to provide an empirical classification scheme of clustering of statements into groups called factors or dimensions by the process of data reduction, groupings summation and significance. It was performed using rotated factor matrix. Principal Component Analysis (PCA) method was used for extraction because it leads to the derivation of uncorrelated statements/factors.
KMO and Bartlett’s Test of Sphericity was found to be significant to carry out the factor analysis for the data obtained as the items measuring the factors of bank policy form empirically separate dimensions. Eigenvalues of factors plotted in the Scree plot showed six factors that could be taken with confidence which can explain the overall variance. The employee’s perception on the rank order preference of bank policy dimensions was analyzed and presented by utilizing descriptive statistics.
Spearman’s correlation coefficient was utilized to compute the relationship of job satisfaction factors with bank policy dimensions. Multiple regression analysis was used to determine the predictors of job satisfaction related to bank policy dimensions. In all cases, research questions were tested at the 0.05 or 0.01 level of significance.
The author has also made an attempt in the study to understand the performance of the bank in terms of employee job satisfaction, which was one of the objectives of the research. For this purpose, the researcher had utilized the secondary data on the performance of the banks from 2007 to 2013 (study period) on key business and financial parameters: growth of Deposits (D) and Advances (A), Business mix (D+A), Current and Saving Deposits (CASA), Profits, Per Employee Productivity, Asset Quality, Net Interest Margin (NIM), Cost of Funds (COF), Return on Assets (ROA), Capital to Risk Asset Ratio (CRAR) and Net NPA Ratio (NNR) and RBI reviews of the individual bank performances in terms of these key business and financial parameters.
Results and Discussion
Influence of Traditional Established Job Satisfaction Factors Out of the nine factors of JS, employees of IOB have perceived the motivational factors such as Fringe Benefits, Contingent Rewards and Promotion prevailing in the bank as dissatisfied and ambivalent respectively (Table 2).
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Table 2: Descriptive Statistics and Job Satisfaction Level of Employees
S. No. Variable Mean Std. Deviation Level
1. Pay 15.86 5.62 Ambivalent
2. Promotion 16.39 3.84 Ambivalent
3. Contingent Rewards (CR) 15.77 4.43 Ambivalent
4. Fringe Benefits (FB) 14.85 5.05 Dissatisfied
5. Operating Conditions (OPC) 13.76 3.73 Dissatisfied
6. Supervision 21.02 4.05 Satisfied
7. Co-Worker 20.31 3.65 Satisfied
8. Nature of Work 21.33 3.57 Satisfied
9. Communication 18.25 4.68 Satisfied
Overall Job Satisfaction-(weighted mean) 163.27 26.99 Ambivalent
The reflections of employees on hygiene factors, viz., Pay and OPC, were also in a state of ambivalent (unsure or neither satisfied nor dissatisfied). The Operating Conditions (OPC) in terms of policies and procedures for guiding the employees in the functional areas of banking, including HR areas, besides working conditions and its effects on the perception of employees, were rated as ‘dissatisfied’ in the current study. The reasons attributed for the negative ratings were staff shortage, too much of work load, shoddy working facilities at rural areas and job stress.
These conditions lead to error and mistakes causing operational risks which lead to perpetuation of frauds, noncompliance of system and procedures, and increase in Non-Performing Assets (NPA), as being felt in IOB as well in other public sector banks. According to Indian employees, the top three reasons for stress at workplace include unclear or conflicting job expectations, inadequate staffing (lack of support, uneven workload in group) and lack of work-life balance (Towers Watson Study, 2013).
The employees were satisfied with the human relation aspects prevailing in the bank, i.e., relationship with co-worker, nature of work, supervision and communication. As such, the null hypothesis formulated is rejected as there was significant influence implicated by five aspects of JS factors (S. No. 1-5 of the Table 2) with overall level of JS of employees also in an ambivalent state.
Perceptions of Respondents on the Influence of Bank Policy Dimensions Descriptive Analysis was utilized to rank the importance of bank policy dimensions (Table 3), which had shown that the scores in four factors, namely, PMS, Staff Accountability, Transfer and Training Policies, were below average rating and people were in agreement with the importance of these factors for their satisfaction. Each factor was brought to the level of
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Table 3: Perceptions of Respondents on the Influence of Bank Policy Dimensions
S. No. Factors Factors Ranking Mean Values
Descending
1. Trade Unions 1 4.47
2. Government Policy Guidelines 2 4.36
3. Performance Management System (PMS) 3 3.47
4. Staff Accountability 4 3.46
5. Bank Transfer Policy 5 3.42
6. Training Policy 6 2.64
Perceived Bank Policies Average 3.64
each element taking the average of all the elements in each factor. Thus, it allows us to simplify, in understanding, where employees are in strong agreement, least in agreement, and also where employees are not in agreement. Based on the ratings of the respondents, one could say that overall, the perception of employees towards bank policy dimensions is somewhat agreeable, as the score for overall perception towards perceived bank policies is 3.64. The score is more than 3, and 3 represents neutrality; however, the overall score of 3.64 falls towards the agreeable side.
Trade union/officers association was rated as top ranking factor, followed by Government Policy Guidelines for employees’ satisfaction under bank policy dimensions. Nagarajan (Bancon 2003) reported that HRM policies and practices have been evolved primarily through reactive processes in PSBs between ‘the management and trade unions’. The trade union and officers association wielded undue influence in the execution of transfer policy of clerical and officer’s cadre.
Sharma (1980) studied the relationship between job satisfaction and union involvement which showed that of all the variables, union involvement turned out to be the best predictor of variations in job satisfaction. It was due to prevailing environment in the PSBs that employees are in the habit of approaching the trade union and officers association for majority of the HR issues rather than the management including vigilance and disciplinary cases where union people are appearing for employees as defense representatives.
Further, Government Policy Guidelines, which were ranked at No. 2, have impacted recruitment, promotions, placement, mobility, performance evaluation, incentives and staff accountability in the PSBs. It is clear that the undue influence of the government in the HR portfolio through bank board’s has not gone down well with the employees/senior management who have larger stakes in overall HR management strategies of the PSBs.
The agenda for HR management has been dictated and influenced by GOI, and trade unions/associations as per the observations of Khandelwal Committee (2010) and Chakrabarty (2012) on HR issues of PSBs.
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PMS was construed as a crucial ‘motivating factor’ in addressing the major HR issues in promotion, transfer, training, placement, incentives, career, and leadership development was ranked third in this study. It was in conformity with its significance for employee’s satisfaction as revealed from various studies.
Staff accountability was perceived as a distress factor affecting the employee morale, work- life balance and decision making. No bank anywhere in the world, other than PSBs in India, has a policy that every loan loss should be scrutinized with a view to fixing accountability on all the officials who had been associated with the loan and other transactions. The perceptions that bonafide actions of officers and other employees enjoy the protection in PSBs from accountability are only on paper (Viswanathan, 2002).
The present staff accountability policies are also visibly associated with risk aversion tendencies on the part of the officers due to the fear psychosis of an external and internal vigilance mechanism prevailing with a Damocles’ sword, which acted as an antithesis to the motivation in the PSBs (Krishnamurthy, 2012; and Sharma, 2012).
Bank transfer policy was rated at 4, construed as a factor of distress (mean 3.42) due to the fact that its implementation is highly non-transparent, ad hoc and annualized with post promotion negotiation with trade unions. Employees appearing for promotions would be under cloud on transfer policy before appearing for promotion.
Training policies were relegated to last position as the most dissatisfied job aspect as competency mapping, appropriate training, methodology and the level of competency acquired and its utility in the field after training have not been evaluated (Gopal and Radhakrishnan, BANCON, 2011; and Shilpi Singh, 2013). Therefore, the null hypothesis is rejected, as the employees in IOB perceived that the bank policy dimensions would significantly impact their satisfaction levels.
Bank Policy Dimensions and Their Relationship with Job Satisfaction Factors The regression analysis indicated that the beta coefficient of the component of PMS had revealed positive value of 0.162 (Table 4), which means Performance Management Policy alone had the ability to predict the level of job satisfaction and impact the satisfaction of employees. It was due to PMS which embodied the Government Policy Guidelines on promotions, placement, mobility, transfer, training, incentives and staff accountability policies and followed in letter and spirit annually (applicable to all PSBs). As such, it was implied that the respondents have not considered other factors, i.e., accountability, training, transfer and government policy, as significant factors.
Conversely, Pearson Correlation Coefficient analysis employed in the study revealed that PMS and communication were related positively (r = 0.129; p > 0.05) with each other. PMS and communication might reciprocate each other with PMS promoting the employees for better communication in the organization and vice versa, with employees’ perception on communication as one of the JS factors also satisfactory (Table 2). PMS was related positively
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Table 4: Beta Values and Significance Level of Predictive Variables
Coefficientsa
Unstandardized Standardized Model Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) 163.410 16.051 – 10.181 0.000
Accountability 0.709 1.333 0.039 0.532 0.595
Training –0.259 0.659 –0.036 –0.393 0.695
Govt. Policy 0.094 0.862 0.008 0.109 0.913
PMS 1.465 0.660 0.162 2.220 0.027*
Trade Union –1.281 0.927 –0.096 –1.382 0.168
Perceived Bank –0.251 0.378 –0.079 –0.662 0.508 Policy Dimensions
Note: a Dependent Variable: Overall Job Satisfaction; and Significant at 0.05 level.
with contingent rewards (r = 0.108; p > 0.05) and also with pay (r = 0.112; p > 0.05) which were not held in good stead (Table 2) in the bank.
Similarly, trade union and communication were found to be negatively related (r = –0.136; p > 0.05) to each other. Higher scores on trade union related to low communication, which indicated people showing less communication with the organization when there is increased proximity with the trade union and vice versa. Incidentally, trade union scored first rank among the respondents under bank policy dimensions, suggesting that “the greater the job satisfaction, the less favorable was the attitude towards the union”. The null hypothesis had been ‘retained’ as there was no significant relationship between a majority of the job satisfaction factors and perceived bank policy dimensions among the employees of IOB.
Impact of Job Satisfaction on the Performance of IOB The secondary data of business and financial parameters of IOB from 2008 to 2013 revealed that the growth of CASA deposits (SB plus Current Account) came down from 29.4% as at the end of March 2009 to 27.1% as at the end of March 2013. The overall growth in current deposits (CA) was insignificant during this period. The disbursement trend in credit has shown that there was near stagnancy in agriculture at 15.8% during this period, where it was 45% and 27% for industry and services sectors respectively as of March 2013.
The business per employee which was at 5.83 cr in 2008 rose to 14.17 cr as on March 2013 (Table 5). With alarming increase in credit growth, flow of credit to various sectors rose from 2011 to 2013, but keeping the staff component at around 26,000 as constant, in real terms, the workload of the employees increased manifold.
The net NPA ratio which was at 0.60% as of March 2008 rose to reach a level of 2.50% in 2013. It was due to higher slippages of loan accounts amounting to 5,601 cr, and it touched
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
59
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The IUP Journal of Bank Management, Vol. XV, No. 4, 201660
the level of 8,914 cr as of March 2013, from the level of 1,616.90 cr in 2007, affecting the profitability and image of the bank among the stakeholders as well as in the market. Business growth and profitability indicators showed rapid increase during the year-ended March 2011, and declining trend was witnessed in the later years, the notable being negative growth in profit (–5.66%) as of March 2013.
The soundness indicators, namely, CRAR had shown a mixed trend during this period, and it declined to 11.85% as of March 2013. Conversely, Cost of Funds (COF) had shown an increasing trend.
Though the overall performance of the bank depends on various factors such as economy slowdown, government policy guidelines, global meltdown, and customer service, employee’s satisfaction level would also notably influence the performance of the bank as evidenced from the reflections of performance data in the current study.
Further, certain secondary data forms a benchmark reading to confirm/ensure the relevance of statistical study. The concept of research is to develop contextual knowledge (how this field draws on and connect to others), the methods (the tools of enquiry), and the ability to tie it to the big picture. Finally, ways were found to link the specific item of interest to larger issues, by looking across subjects from diverse fields for an answer or combine ideas from different lessons in the indented project.
In the present study also, based on a review of various literatures, it has been interpreted that the level of job satisfaction may be one of the reasons influencing the performance factors of the bank. This rationale was supported by the studies on Khandelwal Committee Report on “HR Issues of Public Sector Banks”, 2010, Conference Papers presented in BANCON Conferences – 2011-2013, RBI Deputy Governors’ speeches on HR Conferences on PSBs from 2010-2015, etc. and reflections from corporate leaders on HR policy implications on the performance of their industries progressively over the years as revealed from the review of literature cited.
Incidentally, a majority of HR policy prescriptions for PSBs are based on these reports/ BANCON Conferences, by the Government of India who is the major shareholder and promoter of these banks. Thus, the answer for one of the objectives of the study is that job satisfaction level of employees does influence the performance factors in Indian Overseas Bank.
Conclusion Based on the findings, the following conclusions are drawn:
• The research revealed that overall job satisfaction level of employees in IOB in terms of traditional JS factors has been in an ‘ambivalent level’ and bank policy dimensions were at an ‘average level’.
• The happier and positive side of the studies is that employees of IOB are satisfied with human aspects in their banks which were due to satisfied co-worker relations, supervision, and communications flow in the bank.
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
61
• The declining trend in growth of CASA deposits (SB plus Current Account) during the study period has been a reflection of deficient customer service in the bank.
• The employees perceived fringe benefits, OPC as dissatisfactory factors, besides pay, promotion and contingent rewards at an ambivalent level.
• Staff accountability was perceived to be a high distress factor affecting the employee morale, work-life balance and decision making on the part of junior, middle and senior management in the bank—a cause for concern to the top management of the PSBs, RBI and GOI.
• PMS would predictably drive employee engagement to performance which leads to satisfaction as perceived by the employees. The study revealed the emergence of PMS as a crucial ‘motivating factor’ to address the major HR issues in promotion, transfer, training, placement, skill mapping and leadership development.
• The research findings indicated that job satisfaction level does influence the performance growth indicators in IOB.
• The study findings could be well replicated in other PSBs, as the prevailing HR policies are more or similar in all the PSBs.
The research findings of the study “not only support the existing literature on job satisfaction but also add to the deficit literature by exploring the influence and relationship of Bank Policy Dimensions for the Job Satisfaction of employees in the Indian context in Public Sector Banks”.
The study findings also supported the model of job satisfaction umbrella which is an offshoot of B2B International Ltd., “White Paper on Employee Satisfaction at Work” (2010). The model stems from the theories of both Maslow’s Hierarchy of needs, and Herzberg’s two factor theory, with ‘Hygiene’ factors at the base of the pyramid and ‘satisfiers’ (motivators) at the top (see Figure 2).
Figure 2: Job Satisfaction Pyramid
Satisfiers (Motivators)
To p
M an
ag em
en t Policy D
im ensions
Hygiene Factors
The IUP Journal of Bank Management, Vol. XV, No. 4, 201662
The researcher declares that an organization successfully meets each of these engagement factors, mediated by policy dimensions, and top management becomes more attractive to new budding employees and becomes more engaging to its existing staff.
PSBs have been recognized to cause major impact on economy and social phenomenon of growth and standard of living in the country. Hence, “banks should concentrate continuously on employee satisfaction in order to stay profitable for the benefits of all the stakeholders” and in the process, would be benefitted by employee retention, customer satisfaction and greater employee positive contributions to the organizational effectiveness and performance.
Limitations of the Study
• The researcher strongly believes that the results generated from the study will be highly generalizable to the whole population.
• An instrument was designed to include identified bank-specific factors in the current study and the same was standardized through a careful review by a panel of experts.
• The regional bias may also have influence on answering the questionnaires on some factors.
• The individuals in the population may have chosen not to respond to the survey at all or may not have responded to all of the questions, which is inherent in such type of all-India surveys using questionnaires.
• The focus of the research was only on IOB (Public Sector Bank), where the researcher, as an officer holding various positions up to the level of senior executive (1977 to 2010), has had a good amount of learning exposure to HR dimensions and other related issues.H
References 1. Annamalai S and Vijayakumar T (2002), “Job Satisfaction Among Bank Employees”,
IBA Bulletin, Vol. 25, No. 2, February, pp. 29-34, Mumbai.
2. Annual Reports of IOB for the Period from March 2007 to 2013.
3. Anuar Bin Hussin (2011), “The Relationship Between Job Satisfaction and Job Performance Among Employees in Trade Winds Group of Companies”, Malaysia.
4. Bartlett J E, Kotrlik J W and Higgins C C (2001), “Organizational Research: Determining, Appropriate Sample Size in Survey Research”, Information Technology, Learning, and Performance Journal, Vol. 19, No. 1, pp. 43-50.
5. Baskar S (2015), “Study on Job Satisfaction of Employees vis-a-vis Performance Factors in Indian Overseas Bank” (A Public Sector Bank in India), Ph.D. Thesis, Periyar University, September 3, 253 p, Salem, Tamil Nadu.
6. BCG, IBA and FICCI Research Reports on “Indian Banking 2020; Making the Decades Promise Come True”, 2010.
7. Bhattacharayya Dipak Kumar (2007), Human Resource Research Methods, Oxford University Press, New Delhi.
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
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8. Blessing White Global Reports on “Employee Engagement” for the Year 2011 and 2012.
9. Chakrabarty K C (2012), “Need to Revolutionize Banks’ HR Management”, Text of Address at the HR Conference of Public Sector Banks at Mumbai, June 1.
10. Chandrasekhar and Jayati Ghosh (2013), “Private Banks won’t Help Financial Inclusion”, Business Line, April 15th.
11. Compendium of Conference Papers on Indian Banking, BANCON- 2010-2013.
12. Deshmukh M (2004), “Human Resource Management: Need for Pragmatic Approach Indian Banking-Managing Transformation”, Vol. 1, The ICFAI University Press, Hyderabad.
13. Goyal K A and Vijay Joshi (2012), “Challenges Faced by Indian Banking”, Industry International Journal of Business Research and Management (IJBRM).
14. Indian Overseas Bank Platinum Jubilee Book titled IOB @ 75.
15. Jagirdar (2011), “Performance of Public Sector Banks – An analysis”, Journal of Indian Banker, December.
16. Joshi and Little (1996), “India’s Economic Reforms”, E-Book, pp. 1-31, Oxford.
17. Judge Timothy A and Bono Joyce E (2001), “Relationship of Core Self-Evaluations Traits—Self-Esteem, Generalized Self-Efficacy, Locus of Control and Emotional Stability— With Job Satisfaction and Job Performance: A Meta-Analysis”.
18. Kavitha D (2009), “Job Satisfaction of Employees in Select Commercial Banks”, Ph.D. Thesis, Sri Venkateswara University, Tirupati, January.
19. Khandelwal Committee Reports on “HR Issues of Public Sector Banks”, 2010.
20. Krishnamoorthy T S (2012), “Take Public Sector Banks Out of the CVC Purview”, The Hindu, November 25, Chennai.
21. Locke E S (1973), “Satisfiers and Dissatisfies Among White Collared and Blue Collared Employees”, Journal of Applied Psychology, Vol. 58, p. 67ff.
22. Mahalingam C (2013), “Employees Valued, Yet Ignored”, Business Line Daily, January 1.
23. Majumdar Shyamal (2013), “Why HR Leaders Need to Think Like Economists”, Business Standard, April 25, Deloitte Study.
24. Meena M L and Dangayach G S (2012), “Analysis of Employee Satisfaction in Banking Sector”, International Journal of Humanities and Applied Sciences (IJHAS), Vol. 1, No. 2, ISSN. 2277-4386.
25. Nayar Vineet (2013), “Employees First, Customers Second”, Times of India - Ascent, May 22.
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26. Payal Chanania (2012), “The Power of Social Recognition”, The Hindu, July 18.
27. Saiyadain Mirza S (2009), Human Resource Management, Tata McGraw-Hill Publishing Company Ltd., New Delhi.
28. Selladurai (1991), “Factors Affecting Job Satisfaction and Job Performance Relationship”, American Business Review, pp. 16-21.
29. Sharma J D (2012), “Pilot Study on Globalization, Technology and HR in Banks”, The Management Account Journal, October, pp. 1204-1209.
30. Shilpi Singh (2013), “Face of HR Practices in Today’s Scenario in Indian Banks”, International Journal of Application and Innovation in Engineering and Management, Vol. 2, No. 1.
31. Shiva Kumar D (2013), “New Gen Employees”, Business Line, October 12.
32. SHRM Global Study Reports on “Job Satisfaction and Engagement Surveys”, from 2007 to 2012.
33. Sinha D and Sharma K C (1962), “Union Attitude and Job Satisfaction in Indian Workers”, Journal of Applied Psychology, Vol. 46, pp. 247-251.
34. Spector Paul E (1992), Summated Rating Scale Construction; Quantitative Application in Social Sciences, An Abstract, Sage Publications.
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36. Spector Paul E (2007), “Instructions for Scoring the Job Satisfaction Survey”, pp. 56-60.
37. Viswanathan R (2002), “What Ails Public Sector Banks”, The Hindu, Chennai, January 25.
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Appendix
Questionnaire
Please fill up the following with a tick mark in the box.
Name of the employee: (optional):
1. Gender:
Male Female
2. Age (in yrs):
20-30 31-40 41-50 51-60
3. Marital Status: Married Unmarried
4. Qualification: Not a Graduate Graduate Postgraduate
MBA/ MCA JAIIB CAIIB
5. Designation Mother Tongue:
6. Branch Manager: Yes No
7. Present Scale: Sub-Staff Clerical JMG I
MMG II MMG III SMG IV
AGM DGM GM
8. Native State:
Name of Present Workplace:
9. Workplace and Category:
Metropolitan
Administrative Office Branch Urban
Semi urban
Rural
Part I: Personal Information
The IUP Journal of Bank Management, Vol. XV, No. 4, 201666
Appendix (Cont.)
10. Experience:
Less than 5 years 6-10 years
11-15 years 16-20 years
21-25 years 26-30 years
Above 30 years
11. Workplace and Place of Residence:
Same Less than 100 KMs
More than 100 KMs
12. Salary per Month ( ):
Less than 20,000 20,000 to 30,000 30,000 to 40,000
40,000 to 50,000 Above 50,000
13. Family Status: Number of dependents
14. Spouse Employed:
Yes No
15. Living Status:
Living with Family Living Alone
16. Property Status:
Own a House/Flat Do not have own house anywhere
17. Other Assets:
Do not own any vehicle Own a 2-wheeler
Own a 4-wheeler Computer
18. Economic Condition of Your Family:
Surplus Adequate
Balanced Deficit
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
67
1. I feel I am being paid a fair amount for the work I do.
2. Chances for promotion are less on my job.
3. My supervisor is quite competent in doing his/her job.
4. I am not satisfied with the benefits I receive.
5. When I do a good job, I receive the recognition for it that I should receive.
6. Many of our rules and procedures make doing a good job difficult.
7. I like the people I work with.
8. I sometimes find my job meaningless.
9. Communications seem good within this organization.
10. Raises in the pay are too few and far between.
11. Those who perform well on the job stand fair chance of being promoted.
12. My supervisor is
unfair to me.
13. The benefits we receive are as good as most other banks offer.
S. No.
Statement Strongly Agree
Agree Slightly Agree
Don’t Know
Slightly Disagree
Disagree Strongly Disagree
Appendix (Cont.)
Part II: Job Satisfaction
The IUP Journal of Bank Management, Vol. XV, No. 4, 201668
Appendix (Cont.)
S. No.
Statement Strongly Agree
Agree Slightly Agree
Don’t Know
Slightly Disagree
Disagree Strongly Disagree
14. I feel that the work I do is not appreciated.
15. Very rarely my efforts to do a good job is blocked by redtapism.
16. I have to work harder and harder at my job because people who work with me are not competent.
17. I like doing the things I do at work.
18. The goals of this organization are not clear to me.
19. I feel unappreciated by the organization when I think about what they pay me.
20. People get promotions as fast as in other banks.
21. My supervisor shows too little interest in the feelings of subordinates.
22. The benefit package we have is equitable.
23. There are few rewards for those who work here.
24. I have too much to do at work.
25. I enjoy being with my co-workers.
26. I often feel that I do not know what is going on in the organization.
27. I feel a sense of pride in doing my job.
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
69
Appendix (Cont.)
S. No.
Statement Strongly Agree
Agree Slightly Agree
Don’t Know
Slightly Disagree
Disagree Strongly Disagree
28. I feel satisfied with my chances for salary increases.
29. There are benefits we do not have which we should have.
30. I like my supervisor.
31. I have too much paperwork.
32. I don’t feel my efforts are rewarded the way they should be.
33. I am satisfied with my chances for promotion.
34. There is too much commotion and fighting at work.
35. My job is enjoyable.
36. Work assignments are not fully explained.
Part III: Bank Policy Dimensions
1. Training is given to employees who do their job well.
2. Training given to employees is not adequate.
3. Training programs offered are motivating.
4. Training given to employees is effective.
5. Feedback from superiors and top management.
6. PMS is linked to rewards and recognition.
7. Overall satisfaction
of PMS.
The IUP Journal of Bank Management, Vol. XV, No. 4, 201670
S. No.
Statement Strongly Agree
Agree Slightly Agree
Don’t Know
Slightly Disagree
Disagree Strongly Disagree
Appendix (Cont.)
8. Qualification is recognized for promotion.
9. Taking risk and responsibility is recognized in the promotion policy.
10. The policy of transfer and posting is satisfactory.
11. The policy of transfer and posting is transparent.
12. Transfers take place at fixed intervals.
13. Job performance is recognized for promotion.
14. Transfer of an employee above 55 years of age is not acceptable.
15. Transfer of an employee to a far off/ other language area is not acceptable.
16. All employees are fully aware of Ghosh Committee recommendations on transfer.
17. The activities of Trade Union/Officers’ Association are satisfactory and focused on individual’s growth.
18. The functioning of Trade Union/Officers’ Association parties is a hindrance to the growth of organization.
The Influence of HR Policy Dimensions on the Job Satisfaction of Employees of Public Sector Banks: A Study on Indian Overseas Bank
71
Appendix (Cont.)
S. No.
Statement Strongly Agree
Agree Slightly Agree
Don’t know
Slightly Disagree
Disagree Strongly Disagree
19. I will be motivated to improve my productivity if trade unions do not interfere in my transfer and promotion.
20. Trade Unions only can get me transfer to my preferred place.
21. Government policies on promotion and transfer hamper my career growth.
22. Government policies on promotion and transfers shape an employee into a full- fledged banker.
23. Individual banks should be allowed to frame promotion/ transfer policies.
24. Interference/Influence are curtailed when there is a common government policy on promotion and transfers.
25. Staff Accountability Policy of the bank is a demotivating factor for employees.
26. Staff Accountability Policy of the bank is satisfactory.
27. Banks need not have Staff Accountability Policy as there is comprehensive ‘Conduct and Disciplinary Rules’.
Reference # 10J-2016-11-04-01
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