EMPLOYEE COMPENSATION AND WORKPLACE CONTINUANCE COMMITMENT IN THE BANKING SECTOR IN NIGERIA

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EMPLOYEE COMPENSATION AND WORKPLACE CONTINUANCE COMMITMENT IN THE BANKING SECTOR IN NIGERIA

 

CHAPTER ONE:  INTRODUCTION

1.1 Background of the Study

Employee is a paid worker in an organization under certain terms and conditions of service. Based on contractual obligation, the employee is expected to demonstrate his/her willingness to give time, energy and work hard to receive pay. The point of emphasis is that to what extent employee commitment enhances organizational effectiveness in banking industry. Reichers (1985) remarked that no organization can perform at its peak level unless each employee is committed towards the organization’s goal and work as an effective member of the team. Commitment is a process of identification with the goals of an organization.
An organization is effective when set goals are achieved. Drucker (1977) explained that effectiveness is the extent to which the desired result is realized. It is possible to improve the organizational effectiveness through operational procedures, which are always mediated by the interactions of employees. Thus, the organization can never escape employees’ commitment. The fact is that organizational effectiveness is critical to the success of any business. In order to achieve increased and sustainable business results, organizations need to develop a strategy and engage employees usefully. The same is applicable to organizations that render banking services such as Commercial, Investment, Merchant, Mortgage banks and so forth.
Bank is an organization that provides various financial services of keeping or lending money to customers. Kock and Macdonald (2003:6) emphasized that “The average consumer needs a checking account, ATM services, small savings account, some brokerage services, an auto loan, insurance, and a home mortgage. Almost every financial firm can offer most of these services and the competition is fierce. Banks are finding it difficult to compete in the market for these products because the intense competition is driving the price for services to the bare minimum.” In view of intense competition and high technological development in the banking industry, employee commitment to achieve bank organizational goals is paramount.
To have impact on performance management, it is important to understand employees’ perception of effective management, since the process requires high involvement of employees’ commitment. Banks’ ability to perform efficiently means to obtain accurate information concerning its customers’ financial prospects, write effective contracts and to enforce them. This depends in part on the property rights, legal, regulatory, and contracting environments in which banks operate. Such an environment includes accounting practices, chartering rules, government regulations, and the market conditions. Differences in these features across political jurisdictions can lead to differences in the efficiency of banks across jurisdictions (Demirgüç-Kunt, Kane, and Laeven, 2007).
Bank business requires serious minded employees who are fully committed with honesty, loyalty and faithfulness to work towards the achievement of organizational set objectives/goals.  Sometimes, there are cases of customers being robbed after withdrawal of cash from bank. Disgruntled employees might give information to robbers to rob customers who may withdraw huge amount of cash. This may be rare cases; however occurrence of situations like this can damage the image of the particular bank. No committed bank employee can betray its customer. Besides, employee commitment to support the banking activities will also avoid shady deals that can cause bank distress. Therefore, employee commitment to bank organization is important if the bank will make headway among competitors. Hence, the researcher examines the extent of employee commitment and effectiveness of bank organizations in Nigeria. Sometimes the operating efficiency of a commercial bank is self-advertising based on attention given to customers and other enterprising aspects of bank services.
Some banks commenced operations as a private limited liability company. During the commencement period of operation, there is no seat for customers to sit and wait like that of Diamond bank back in March 1991. That is, customers were attended to as soon as possible. But is there still that kind of quick attention giving to customers with fewer queues in present days? Employee commitment means different approaches to different people, which depends on the type of organization. Some talk about affective, normative and continuance commitments while others concerned with internalization, identification and compliance commitments. It all depends on the organization policies and objectives based on which employees are motivated with sense of direction to work hard to job expectation. George and Jones (1996:85) remarked that “Committed employees give a big contribution to organizations because they perform and behave on achieving organization’s goals.
Furthermore, workers who are committed to their organization are happy to be members of it, believe in and feel good about the organization and what it stands for, and intend to do what is good for the organization.” Besides, employee commitment reduces withdrawal behaviour, such as lateness, absenteeism and enhances organizational performance. Lo et. al. (2009) noted that employees with sense of commitment are less likely to engage in withdrawal behaviour and more willing to accept change. Thus, employees who maintained high level of commitment have job satisfaction and self-fulfillment.
Organizational effectiveness is critical to success in any banking system. To achieve increased and sustainable business results, there is need for bank organizations to execute strategy and engage employees. Hence, bank managers on their part, need to focus attention on engaging employees in the right direction through human resource management systems, the structure and capabilities to make plans that are intended to achieve set objectives. Thus, maintaining organizational effectiveness in banks means capacity to achieve higher financial performance, higher customer satisfaction and higher employee retention. An organization that can sustain such arrangement will achieve increased business results. Therefore, it is motivating to examine the extent of employee commitment and its impact on organizational effectiveness in Nigerian banking system.
The study of employee commitment and organizational effectiveness in banking industry is a timely subject matter. The reason is that a change caused by the political concepts of carry-go syndrome has infiltrated the minds of many people in Nigerian work environment for pecuniary gains. Therefore, it is intriguing to assess the impact of employee commitment with regards to identification, loyalty and strong desire to maintain membership in order to give unflinching support to achieve organizational set goals. According to Buchanan (1974) commitment is viewed as partisan, affective attachment to the goals and values of the organization, to one’s role in relation to goals and values, and to the organization for its own sake, apart from its purely instrumental worth.

1.2 Statement of the Problem   

It is not clear if bank employees are fully committed to organizational success or to enhance personal affluence. Does it mean that some key officials are somehow insensitive to avert financial risks by carrying out bank operations with little or no caution to maintain effective internal control? If this is true, does it mean money laundering activities and other similar organized financial crimes occur as a result of employee inefficiency or lack of commitment? Is this situation responsible for setback on employee job performance and lack of strict adherence to bank regulating laws?
It is based on this puzzled situation that this study intends to examine the attitude of managers, financial rewards, personal ambitions and supervision as possible challenges against employee commitment in banking industry.  According to Madigan, Norton and Testa (1999:03), committed employees would work diligently, conscientiously, provide value, promote the organization’s services or products and seek continuous improvement. In return, they expect a work environment that fosters growth and empowerment, allows for a better balance of personal and work life, provides the necessary resources to satisfy the needs of customers and provides for their education and training as well as that of their co-workers.
The challenges of employee commitment can cause bank distress. Ajayi and Ojo (1981) remarked that 21 out of the 25 indigenous banks that were established collapsed in quick succession due to bad management, inadequate capital, inexperienced personnel, excessive branch expansion, lack of banking regulation and unfair competition from foreign banks. Others included outright fraud, lack of acceptable prudential guideline and lack of right banking orientation among the operators. Most of the bank failures were resolved mainly through self-liquidation.
Current research concerning employee commitment and organizational effectiveness in Nigerian banking industry emphasize the pitfalls of viewing commitment as one-dimensional construct to enhance human resource policy. It may not totally depend on merely carrying out human resource functions, probably offering flexible working arrangements or manpower development on training, will make a significant impact on employee commitment. In a country where the behavioral pattern proves to be bossy on subordinate and sometimes overbearing, it may not work out successfully to achieve desired results. Although employees’ wants and needs cannot be addressed by a single policy, it is ideal to keep issues in better perspective. Commitment is complex and continuous, and requires employers to discover ways of enhancing the work life of their employees.

1.3 Purpose of the Study

The prime objective of this study is to assess the Employee Compensation And Workplace Continuance Commitment in The Banking Sector In Nigeria
. This includes, among other things, the behavioural pattern that is equitable for effective banking organization; the impact of employee commitment on organizational effectiveness in banks; and the influence of human resource practices on the employees’ behaviour in the banking system. Hence, the researcher carried out a survey of selected banks in Yenagoa metropolis to collect usable data to analyze the compounding issues surrounding employee commitment in the banking industry.
To provide empirical evidence from the selected banks, the following specific objectives serve as the focus of this study:

  • To determine how the behavioural pattern is equitable for effective banking system in Nigeria.
  • To examine the impact of employee commitment on organizational effectiveness in Nigerian banking system.
  • To analyze the influence of human resource management practice on the behaviour of employees in Nigerian banking system.

1.4 Research Questions

The following research questions are raised to answer the issues of Employee Compensation And Workplace Continuance Commitment in The Banking Sector In Nigeria
Is the behavioural pattern equitable for effective banking system in Nigeria?

  • Is there any impact of employee commitment on organizational effectiveness of the banking system in Nigeria?
  • To what extent human resource management practice has impact on employee behaviour in Nigerian banking system?

1.5 Hypotheses

This study proposed the following hypotheses to be verified:
Hypothesis (H1): The behavioural pattern is equitable for effective banking system in Nigeria.
Hypothesis (H2): There is a significant impact of employee commitment on organization effectiveness in Nigerian banking system.
Hypothesis (H3):  There is a significant impact of human resource practices on employee behaviour in Nigerian banking system

1.6   Significance of the Study     

It is vital for any business organization to be effective. Employee commitment is crucial to the effectiveness of any organization. Hence, this research and its finding will be considered as important to give more empirical support to previous studies and explain the impact of employee commitment on bank organizational effectiveness. Thus, the findings of this study would be essential to managerial and non-managerial employees in Nigerian banking industry.
Theoretically, this study would add to the body of knowledge on the general subject of employee commitment and effectiveness in banking organizations. From a practical point of view, it would benefit bank managers in Nigeria to ensure that the employees are engaged in the right direction through human resource management systems to achieve set objectives.

1.7 Scope/Delimitation of the Study

The scope of study covers Employee Compensation And Workplace Continuance Commitmentin The Banking Sector In Nigeria
.  It examines the contributing factors of employee commitment that enhance organizational effectiveness in banking industry by taking an empirical study of selected banks in Yenagoa metropolis. Thus, the study is delimited to examine the extent employee commitment has made impact on organizational effectiveness in banking industry. For this reason, quantitative method is employed to analyze and verify the hypotheses of the study.
The study subjects consist of a limited number of sampling units, which represent the target population of banks in Nigeria. Hence, the researcher designate selected sampling units in ten commercial banks, which involves both managerial and non-managerial employees as representative of the accessible population. This is due to time and cost constraints to carry out the research study by administering questionnaire and cross-examining the respondents to obtain valid and reliable information.

1.8 Limitations of the Study

Limitations are matters and occurrences that arise in a study which are out of the researcher’s control. Because of the unsteady situation of bank crisis in Nigeria, the researcher strives to carry out a thorough study of employee commitment and organizational effectiveness in banks. However, extraneous events place limitations on this study. Hence, the researcher accepts the basic limitations of this study such as financial inadequacies and time pressure. Limitation of financial resources, coupled with other pressing personal demands militated against the researcher’s efforts to cover a good number of banks and their respective branches. The time pressure is another constraint the researcher experienced to carry out the study within a given time-frame. The study was conducted in bank environment where excessive time taken to get response from both managerial and non-managerial employees of the questionnaire administered to them respectively.

1.9 Definition of Terms

  • Effective commitment: The degree to which an individual is psychological attached to an employing organization through feeling such as loyalty, affection, worth, belongingness, pleasure and so on (Jaros et. al., 1993).
  • Bank distress: Umoh (1999) defined bank distress as technically insolvent implying that the bank’s liabilities exceed the assets”.
  • Continuance commitment: Cost perception for leaving an organization leads to the commitment of a members stay in an organization (Allen and Meyer, 1990).
  • Employee commitment:  Is the psychological attachment and the resulting loyalty of an employee to an organization.
  • Employee turnover: The voluntary terminations of members from organizations or the proportion of staff leaving in a given time period prior to the anticipated end of their contract.
  • Money laundry: The deceitful act of legitimizing money obtained from fraudulent activities through bank process to help criminals transfer stolen money to foreign banks
  • Normative commitment: Maintaining loyalty to an organization is the result of socialization, experience, responsibility of repaying the organization can be constructed in a members mind through organization profits (Allen and Meyer, 1990).

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