International Journal of Social Sciences and Humanities Vol. 1, December 2012, pp.

8-15

AN EMPIRICAL STUDY ON EMPLOYEE ENGAGEMENT OF EMPLOYEES IN THE BANKING INDUSTRY

Rejoice Thomas Assistant Professor, Department of Professional Studies, Christ University, Hosur Road, Bangalore, Karnataka. 560029. Email: rejoicethomas@gmail.com Abstract
Employee engagement is the level of commitment and involvement an employee has towards their organization and its values. An engaged employee is aware of business context, and works with colleagues to improve performance within the job for the benefit of the organization. It is a positive attitude held by the employees towards the organization and its values. Engagement at work was conceptualized by Kahn, (1990) as the harnessing of organizational members selves to their work roles. In engagement, people employ and express themselves physically, cognitively, and emotionally during role performances. The second related construct to engagement in organizational behavior is the notion of flow advanced by Csikszentmihalyi (1975, 1990). Employee engagement is the thus the level of commitment and involvement an employee has towards their organization and its values. An engaged employee is aware of business context, and works with colleagues to improve performance within the job for the benefit of the organization. The organization must work to develop and nurture engagement, which requires a twoway relationship between employer and employee. Thus Employee engagement is a barometer that determines the association of a person with the organization. The paper focuses on how employee engagement is an antecedent of job involvement and what should company do to make the employees engaged.

The paper uses the Gallup 12 point questionnaire, twelve-question survey that identifies strong feelings of employee engagement and the steps which shows how to drive an engaged employee. 1. Introduction more of the four different categories: job satisfaction, organizational commitment, psychological empowerment, and job involvement. Ellis and Sorenson (2007) point to the inconsistent way in which the term engagement has been applied by business leaders and human resource (HR) professionals over the last 20 years. They highlight the inconsistency of using the term to refer to attitudes or to employee perceptions of specific elements of their work environment or benefits, which they feel have little to do with engagement. They endorse a two dimensional definition of engagement that defines an engaged employee as one who 1) knows what to do at work and 2) wants to do the work. It is their strong view that engagement should always be defined and assessed within the context of productivity, and that the two elements of engagement noted above are necessary for driving productivity. 2. About Banking Industry

Employee engagement has been the focus of growing interest in recent years as research in positive organizational phenomena has expanded. Establishing an engaged workforce is now a high priority for many organizations in both the private and public sectors. Many employers feel that engaged employees outperform others by showing heightened interest in their work and being prepared to go the extra mile for their organization. Employees also benefit, as some studies have shown that engaged employees see their work as more meaningful and fulfilling. Engagement is the extent to which employees put discretionary effort into their work beyond the minimum to get the job done, in the form of extra time, brain power or energy. Engagement is driven by an employees immediate experience of the organization. The factors that build or destroy engagement are driven by the unique situation of each organization and the combinations of factors needed to boost engagement are therefore different between organizations. Engagement as a psychological state has variously embraced one or more of several related ideas, each in turn representing some form of absorption, attachment, and/or enthusiasm. Operationally, the measures of engagement have for the most part been composed of a potpourri of items representing one or

The banking system in India is significantly different from that of other Asian nations because of the countrys unique geographic, social, and economic characteristics. India has a large population and land size, a diverse culture, and extreme disparities in income, which are marked among its regions. There are high levels of illiteracy among a large percentage of its population but, at the same time, the country

INTER. JOUR. SOC. SCI. HUM. DECEMBER 2012

has a large reservoir of managerial and technologically advanced talents. Between about 30 and 35 percent of the population resides in metro and urban cities and the rest is spread in several semiurban and rural centers. In order for the banking industry to serve as an instrument of state policy, it was subjected to various nationalization schemes in different phases (1955, 1969, and 1980). The Indian financial system comprises the following institutions: 1. Commercial banks
a. Public sector b. Private sector c. Foreign banks d. Cooperative institutions (i) Urban cooperative banks (ii) State cooperative banks (iii) Central cooperative banks 2. Financial institutions a. All-India financial institutions (AIFIs) b. State financial corporations (SFCs) c. State industrial development corporations (SIDCs) 3. Nonbanking financial companies (NBFCs) 4. Capital market intermediaries

3.

Conceptual and Theoretical Framework:3.1 Employee Engagement: Kahn (1990:694) defines employee engagement as the harnessing of organization members selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performances.

The cognitive aspect of employee engagement concerns employees beliefs about the organization, its leaders and working conditions. The emotional aspect concerns how employees feel about each of those three factors and whether they have positive or negative attitudes toward the organization and its leaders. The physical aspect of employee engagement concerns the physical energies exerted by individuals to accomplish their roles. Thus, according to Kahn (1990), engagement means to be psychologically as well as physically present when occupying and performing an organizational role. Employee engagement has been defined as emotional and intellectual commitment to the organization (Baumruk 2004, Richman 2006 and Shaw 2005) or the amount of discretionary effort exhibited by employees in their job (Frank et al 2004). Truss et al (2006) define employee engagement simply as passion for work, The CIPD Annual Survey report (2006c) defines engagement in terms of three dimensions of employee engagement: Emotional engagement being very involved emotionally in ones work; Cognitive engagement focusing very hard whilst at work; and Physical engagement being willing to go the extra mile for your employer. 4. Literature Review

About 92 percent of the countrys banking segment is under State control while the balance comprises private sector and foreign banks. A major problem Public Sector Banks have to face once IT implementation reaches its optimum level is staff retention. While the private sector banks have been recruiting trained and experienced IT professionals, it may not be possible for Public Sector Banks to do likewise. They will have to train their existing staff to function effectively in the new environment. And once the requisite skills are acquired by employees, they may have trouble retaining staff. Public Sector Banks can only allocate limited capital resources to computerization. They will have to choose between high cost of computerization at metro and urban centers and low cost computerization at rural, semiurban branches The number of bank management staff and employees in India is vast (223,000 in SBI; 81,252 in SBI Associates; 581,000 in nationalized banks; 57,241 in old private sector banks; 1,620 in new private sector banks, and 13,510 in foreign banks operating in the country). The total is 957,623, with the number of staff employed in cooperative and rural banks equally large. (The Indian Banking Sector on the Road to Progress- G. H. Deolalkar) Indian banks are highly unionized and productivity benchmarks are not clearly established.

Employees who are engaged in their work and committed to their organizations give companies crucial competitive advantagesincluding higher productivity and lower employee turnover. Thus, it is not surprising that organizations of all sizes and types have invested substantially in policies and practices that foster engagement and commitment in their workforces. Highly engaged employees are 1.3 times more likely to be high performers than less engaged employees. They are also five times less likely to voluntarily leave the company. A positive attitude held by the employee towards the organization and its values. An engaged employee is aware of the business context, and works with colleagues to improve performance within the job for the benefit of the organization. The

THOMAS: AN EMPIRICAL STUDY ON EMPLOYEE ENGAGEMENT OF EMPLOYEES IN THE BANKING INDUSTRY

organization must work to develop and nurture engagement, which requires a two-way relationship between employee and employer. (Institute of Employment Studies) Saks (2006) argues that organizational commitment also differs from engagement in that it refers to a persons attitude and attachment towards their organization, whilst it could be argued that engagement is not merely an attitude; it is the degree to which an individual is attentive to their work and absorbed in the performance of their role. According to May et al (2004) engagement is most closely associated with the constructs of job involvement and flow. According to Maslach et al, six areas of work-life lead to either burnout or engagement: workload, control, rewards and recognition, community and social support, perceived fairness and values. May et als (2004) findings support Maslach et als (2001) notion of meaningful and valued work being associated with engagement, and therefore it is important to consider the concept of meaning.

According to Saks (2006), a stronger theoretical rationale for explaining employee engagement can be found in social exchange theory (SET). SET argues that obligations are generated through a series of interactions between parties who are in a state of reciprocal interdependence. Saks (2006) argues that one way for individuals to repay their organization is through their level of engagement. The Gallup Organization (2004) found critical links between employee engagement, customer loyalty, business growth and profitability. The Towers Perrin (2003) study of engagement identified both emotions and rationality as core components. They found that emotional factors are linked to an individuals personal satisfaction and the sense of inspiration and affirmation they get from their work and from being a part of their organization. According to Robinson (2006), employee engagement can be achieved through the creation of an organizational environment where positive emotions such as involvement and pride are encouraged, resulting in improved organizational performance, lower employee turnover and better health.

Robinson et al (2004) model of the drivers of employee engagement. West (2005) argues that when individuals feel positive emotions, they are able to think in a more flexible, open-minded way and are also likely to feel greater self-control, cope more effectively and be less defensive in the workplace. Right Management (2006) defines true engagement as every person in the organization understanding and being committed to the success of the business strategy, and that this goes beyond more than just simple job satisfaction and incorporates aspects of commitment, pride and advocacy about the organizations products and brand. Meere (2005) describes three levels of engagement: Engaged - employees who work with passion and feel a profound connection to their organization.

They drive innovation and move the organization forward; Not engaged employees who attend and participate at work but are timeserving and put no passion or energy into their work; and Disengaged employees who are unhappy at work and who act out their unhappiness at work. According to Meere (2005), these employees undermine the work of their engaged colleagues on a daily basis. 5. Objectives of study Different studies and theories have brought out various factors as relevant in the context of employee engagement of employees. The basic objective of this study is to provide an analysis of these factors that appear to be relevant in the context of employee engagement of employees in the banking industry under the Indian context.

INTER. JOUR. SOC. SCI. HUM. DECEMBER 2012

These factors s are analyzed mainly in terms of the perceptions that the employees hold on such factors. 1. To understand the engagement of employees in the Indian banking industry 2. The importance of employee engagement within the Indian banking sector 6. Scope of the study he scope of the study is confined to around 250 The samples of the employees working in different banks in the city of Bangalore. The study is aimed at considering the level of employee engagement of the employees in the Indian banking industry 7. Period of the study The collection of the data began from the month of September 2011 and was completed by January 2012. The study covers a period of four and half months which was utilized for collecting the primary data, analysis of data and preparing the final repor report. 8. Research Methodology The fundamental success of any research is purely depends on construction of sound research design. A research design is purely and simply the framework or plan for a study that guides the collection and analysis of the data. The researcher esearcher has adopted descriptive research with convenience sampling method without any stratification for the study. The researcher considered 235 respondents for the study. 9. Sampling technique Universe :- employees working in the banking industry in the age group of 23 45 years Sampling unit:- the sampling unit was limited to the city of Bangalore Sample size:- 235 samples taken Sampling Design: - Convenience sampling method without any stratification to o obtain a uniform size of respondents. Statistical tools: - the constructed schedules and questionnaire were used for the survey purpose. The questionnaire comprised of closed ended questions. The structured questionnaires are used for individual interviews ws and the focus group studies. The
1) I care about the future of my company Undecided DisAgreeing Agreeing 0 50 100

recorded observations of the individuals and the group have been used while data interpretation. Statistical techniques :- statistical techniques like drawing percentages for generalizations, use of table for tabulating the primary , qualitative and quantitative data and use of graphs for better pictorial representation of the analysis has been made use of. Plan of analysis: - primary information of both qualitative and quantitative nature is obtained by administering the questionnaire. The questionnaire contains projective and direct queries and is interpreted as per the set characteristics in the concepts. The information obtained by observation is also interpreted according to the set concepts. The intention behind each and every direct and indirect query has been dealt in the concept of each table. 10. Profile of Geographical area of study The study was conducted in the city of Bangalore, Karnataka. Bangalore is a cosmopolitan city with a population of 6.52 million and the literacy level of 83.91%. The official language of the state is Kannada, though being a cosmopolitan city many languages are spoken here. 11. Data collection The data has been collected from primary and secondary sources. Primary data was collected using a questionnaire uestionnaire with 12 questions. The questionnaire was administered to the employees working in the banking industry to study the employees engagement level. In order to have adequate representation of both the genders, effort was taken to ensure that the questionnaire was circulated to both the genders. The data was collected in a structured manner. Secondary data was collected from previous dissertations, research papers, journals, magazines, text books and websites. 12. Analysis of study: The data collected from the primary source were entered and checked for transcription errors. Analysis of data involves a number of closely related operations with the purpose of summarizing the collected data and organizing these in such a manner that they will yield answer r to the research questions.
2) I am proud to work for my company

15 35 185
150 200 Undecided DisAgreeing Agreeing

18
0

68 149
50 100 150 200

INTER. JOUR. SOC. SCI. HUM. DECEMBER 2012

3) I have a sense of personal accomplishment from my job Undecided DisAgreeing Agreeing 0 50 100

4) My company is a good place to work Undecided DisAgreeing

25 32 178
150 200

18 37 180
0 50 100 150 200

Agreeing

5) My company inspires me to do my best work Undecided DisAgreeing Agreeing 0 50 100

7 100 128
150

Undecided

6) I understand how my department contributes to company success

DisAgreeing Agreeing 0

54 174
50 100 150 200

7) I understand how my role relates to company goals and objectives Undecided DisAgreeing Agreeing 0 50

8) I am personally motivated to help my company succeed Undecided

31 84 120
100 150

16 74 145
0 50 100 150 200

DisAgreeing Agreeing

9) I am willing to put in a great deal of effort beyond what is normally expected Undecided

10) My company provides me with challenging work Undecided DisAgreeing

17

35 80 120
0 50 100 150

DisAgreeing Agreeing 0

54 164
50 100 150 200

Agreeing

11) Employees have appropriate decision making authority Undecided DisAgreeing Agreeing 0 20 40 60

12) Employees have excellent career opportunities Undecided

55 98 82
80 100 120

DisAgreeing Agreeing 0 20 40

71 74 90
60 80 100

13) Company has a reputation as a good employer Undecided DisAgreeing Agreeing

20
0

40
50 100

14) Employees have resources needed to perform jobs in highhigh quality way Undecided Agreeing 200
0 20

175
150

52
40 60

83

100
80 100 120

15) Ensuring access to a variety of learning opportunities Undecided DisAgreeing Agreeing 0 50 100

30 35 170
150 200

Undecided DisAgreeing Agreeing

16) Consulting employees before making decisions that affect them

82

93 60
0 20 40 60 80 100

Number of Employees

THOMAS: AN EMPIRICAL STUDY ON EMPLOYEE ENGAGEMENT OF EMPLOYEES IN THE BANKING INDUSTRY

17) I speak highly of this organization to my friends Undecided DisAgreeing Agreeing 70 72

74
74 76 78

81 80
80 82

18) I would be happy for my friends and family to use this organization's products/services Undecided

15
0

Agreeing

40
50 100

180
150 200

19) This organization is known as a good employer Undecided DisAgreeing Agreeing 0 50 100

20) This organization has a good reputation generally Undecided DisAgreeing Agreeing 0 20 40

26 50 159
150 200

55

80
60 80

100
100 120

21) I am proud to tell others I am part of this organization Undecided DisAgreeing Agreeing

25 20
0 50 100 150

22) This organization really inspires the very best in me in the way of job performance Undecided

190
200

Agreeing 0 20 40

71 74
60

90
80 100

23) I find that my values and the organization's are very similar Undecided DisAgreeing Agreeing 0 20 40 60 80

24) I always do more than is actually required Undecided

47 78 110
100 120

46 64 125
0 50 100 150

DisAgreeing Agreeing

25) I try to help others in this organization whenever I can Undecided DisAgreeing Agreeing 0 50 100 150

26) I try to keep abreast of current developments in my area Undecided DisAgreeing Agreeing 200 0

25 20 190

30 30
50 100

175
150 200

27) I volunteer to do things outside my job that contribute to the organization's objectives Undecided DisAgreeing Agreeing 0 20 40

28) I frequently make suggestions to improve the work of my team/department/service Undecided DisAgreei Agreeing 0 20

85 55 95
60 80 100

86 43 106
40 60 80 100 120

29) I really care about the future of my company

Undecided DisAgreeing Agreeing 0 20 40 60 80

85 30 120
100 120 140

30) Performing my job is so absorbing that I forget about everything else

Undecide Disagreeing Agreeing
0 20 40 60 80 100

75 35 125
120 140

After the analysis from the study: It was found that about 79% of the employees cared about the future of the company, around 64% were proud to work for the company and around 76% have a sense of personal accomplishment from my job.

Most of the employees in the banking industry around 77% feel that their company is a good place to work. Around 55% of them feel that the company inspires inspir them to do good work.

INTER. JOUR. SOC. SCI. HUM. DECEMBER 2012

62% of the employees are personally motivated to help their company succeed and 70% of the employees are willing to put in a great deal of effort beyond what is expected from them. Some drivers of engagement were also found during the study: - A two-way relationship between the employer and employee - The importance of the individual being able to align themselves to the products, services and values of the organization - The ability of the organization to communicate its vision, strategy, objectives and values to its staff so that they are clearly understood - Management give staff sufficient elbow room and autonomy to let them fulfill their potential - The employer is highly effective at engaging in twoway communication with its staff, in particular encouraging upward communication - The key role of the immediate line manager/supervisor is recognized as one of the most important conduits to achieving effective employee engagement. Few outcomes of engagement: - Staff is able to get involved in the organization and feel that they are genuinely participating and contributing to its performance - Staff has a pride in their organization and endorses it as a place to work and do business with people outside the organization - Staff demonstrates real commitment to their job and the organization and is prepared to go the extra mile. Few methods to increase employee engagement: Learning cafes short, sharp interactive sessions on key issues, designed to get people doing things differently. Deliberately high-level but a good way of getting peoples input and involvement. Work mats or learning maps great ways of getting everyone discussing issues based around one large sheet of paper. They get people physically as well as emotionally involved. Games A fun, entertaining way to get people engaged in an issue. Need to be carefully developed to hit the right mark. Workouts Working sessions designed to work through and resolve issues. Attendees normally present recommendations to leaders and are empowered to take action or make changes. Appreciative enquiry A great way of framing issues so that what you focus on is doing more of what you do well, rather than trying to address areas of weakness Open space technology An open and involving way of running meetings, large and small. Not everyones

cup of tea but very powerful when used in the right context. Digital storytelling A means of using the latest desktop technology to get teams to engage in the creating the future by creating their own compelling story. The likes of Coca-cola, IBM and the BBC have already used it successfully. Forum Theatre A different take on role-playing where actors play out scenarios under the direction of a team of employees. Great for solving issues around communication, conflict, customer service and working more effectively together. 13. Limitations of study The study was confined to only 235 samples. The study covers only a few banks and the size of employees operating from the city of Bangalore. The sample size of companies and employees may not be large enough to represent the unknown size of the universe. 14. Conclusion Engaged employees lead to increased productivity, retention, customer loyalty and profitability. Savvy organizations focus on both the lead and lag indicators of business success, so business leaders need to know about engagement levels in the same way they need to know about other critical management information, such as financial, productivity and customer data. Robust, business-oriented measurement and analysis is required to identify the key drivers of engagement for your organization. Key insights are provided when organizations know whether employees are engaged to both the jobs that they do and the company that they work for. This knowledge enables organizations to predict behavior and its impact on key business metrics. Measurement without action can do more harm than good. Simply surveying for the current engagement level and then doing nothing with that information often leads to employees feeling that they arent being heard, which in turn can negatively impact morale and trust levels. Identifying and analyzing engagement levels and the drivers of success is the first step. The real challenge is in equipping your business to act and ensuring that change is embedded in your culture so that your workforce remains focused and aligned to the business strategy. An engaged workforce is the key to sustained competitive advantage and accelerated business performance. Reference:

THOMAS: AN EMPIRICAL STUDY ON EMPLOYEE ENGAGEMENT OF EMPLOYEES IN THE BANKING INDUSTRY

Welch, J., & Welch, S. (2006, May 8). Ideas the Welch way: How healthy is your company? BusinessWeek, 126. Ramsay, C. S., & Finney, M. I. (2006). Employee engagement at Intuit. Mountain View, CA: Intuit Inc. Ramsay, C. S. (2006, May). Engagement at Intuit: Its the people. In J. D. Kaufman (Chair), Defining and measuring employee engagement: Old wine in new bottles? Symposium conducted at the Society for Industrial and Organizational Psychology 21st Annual Conference, Dallas, Texas. Robinson, D., Perryman, S., & Hayday, S. (2004). The drivers of employee engagement. IES Report No. 408. Brighton, UK: Institute for Employment Studies. Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33, 692-724. Katz, D., & Kahn, R. L. (1978). The social psychology of organizations (2nd ed). New York: John Wiley & Sons. Van Maanen, J. (1976). Breaking in: Socialization to work. In R. Dubin (Ed.), Handbook of work, organization, and society (pp. 67 130). Chicago: Rand McNally & Co. Abrahamson, M., & Anderson, W. P. (1984). Peoples commitments to institutions. Social Psychology Quarterly, 47, 371-381. Cohen, A. (2003). Multiple commitments in the workplace: An integrative approach. Mahwah, NJ: Lawrence Erlbaum Associates. Meyer, J. P., & Allen, N. J. (1991). A three-component conceptualization of organizational commitment. Human Resource Management Review, 1, 61-89.

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