CARLOS VII, Pretendiente
MUNICIPIOS CATALANES
Faculty of Economics, FON-First Private University, Skopje, Republic of Macedonia
[email protected] / [email protected]
Abstract: The process of managing the performances of employees in banks is a factor that increasingly affects of organizational effectiveness. Performance management, has been imposes as dominant managerial paradigm, in terms, of creating the conditions for competitiveness of the banks and their success in the market.
In this paper, is elaborated the question of the impact of employees dedication and their commitment to work in banks on increasing their financial performance in the Republic of Macedonia.
In this study, primary data were obtained using a structured questionnaire, and data analysis was performed using the statistical program SPSS (Statistical Program for Social Sciences).
Key words: management, financial performance, employees, banks 1. Changes in the modern banking
Modern banking is sector of the economy which is channging constantly and accomodating towards the global flows. Today, the banks do permanent inovations, offers new services, make conections and consoliditation into bigger and more complex entities, intorduce new techologies, which in the condiotions of liberalization and intensive competition are changing faster than in the past.
Using the technological solutions machineries are taking over more and more the routine transactions. Drawing a cheque, electonic transmition od money or spending the credit for buying a car, simply, encloses moving of some parts of some database of informations from one computer file or account into another, and the automatic equipment performs these task faster and faster,more acccurate and more convinient then the people were doing in the past. This bank automaticy is so fast and big so the bank operative costs seems more like fixed costs,and less more like variable costs.
That transit towards the creation of bigger fixed costs have dramatic effects into the optimum size which is necessary for one bank so it can achieve maximum operative efficency in condition of manifacturing with lowest costs and delivery of the bank service.
Namely, the new bank trend of automate services, those banks that are intersted in competitive and sustainableprofit, have to increse thir volume of opeartions, sothat they can lower the fixed costs for product unit. But banking is the insdustry of building relations with the clients!
Automation can replace humans into the performance of the routine bank activities, but clients are not machines and they require in terms of strong competition in the sector, research and satisfying their needs properly by the banks. In fact, innovations and new technical solutions are creating the people and they are the essential factor of creating the competitiveness. Keeping this factor for bank success is of course important challenge for every manager.
This refers us to researching the human potential in banks, its attachment to the institution and ways for its utilization in the creations of the competiveness of the bank. Can the bank increase their competiveness by investing in their employer attachment to the bank? Does the bank employee’s devotion create completive advantage in one small bank marker, like the one in R. Macedonia?
2. Employee’s dedication and their devotion towards the banks in which they are working Numerous authors that are dealing with the issues in terms of managing with the performance of the employee’s state range of essential factors that are affecting onto the organizational performances. In that context they bring the concept of organizational commitment and dedication which shows the strength of the individual's identification with particular organization and involvement in it.
Commitment to the organization is defined as the degree to which employees are identifying with the organization and its goals, as well as their desires and aspirations for maintaining the membership in the
organization.111 It refers to the emotional attachment of the employees for a particular organization, identification with the organization and the involvement in it.112
Researches in the last years primarily are based on a multi-dimensional model of attachment towards the organization that was appointed by Allen and Meyer in 1990. That model assumes that commitment is consisting of three components:113
- Affective or emotional attachment is manifestingas an employee identification with the organization and association with the organization. It shows a sense of employees loyalty to a particular organization;
- Instrumental or permanent attachment occurs when an employee believes that staying in the organization is best for his/her interestand he/she is aware of the cost of leaving the organization. They are hesitating regarding leaving early because they can confront with loosing large bonuses or losing the position they are having at their work place;
- The normative commitment to the organization is based on the feeling of moral obligations for staying in the organization. It develops through out the socialization and it is the result of the internalization of the values to which is proper to be attached to the organization.
According to that, affective attached employees are working in the organization because they love that, those whose attachment to the organization is based primarily on the instrumental attachment are working because they need that, and high normative attached employees feel that they have to stay within the organization because they see that behavior as morally right. This means that that attachment to the organization can be determined with some degree of desires, needs and obligations which the individuals feels toward the organization they are working for.114 Hence, the relationship of individuals towards the organization can be better understood if we take into consideration the intensity of the three components of the commitment, respectively if we treat the commitment as multidimensional model.
In the organizations where there is a high level of employee affection towards them, several reasons are identified why the employees are attaching to its organization:115
- They are proud of the aspiration and achievements of the organization and they are sharing its values;
- They know what is expected of each employee, how the performances are measured and why that it is important;
- They are in control of their destiny, they taste the high risk and rewarding work environment; - They are receiving recognition for the quality of individual performances;
- They are having fun and enjoying the support within the frames of the highly interactive environment.
In the organizations particular attention should be devoted towards the employees and their affection to the organization they are working for. Leaders have good reason to pay special attention to the loyalty of their employees because it can be a significant competitive advantage.
Employees with high level of affective commitment are less likely to leave the job and will miss work. These employees possess high motivation and higher efficiency in the execution of the work. From the emotional attachment strivings towards the contribution originate from which follows that the workers with high level of affective attachment should be motivated for achieving better labor output which will lead to less inclinable towards leaving the organization. But this can cause restriction for the organization in terms of hiring new employees with different skills and new ideas.
However, these assumptions do not necessarily apply to the employees who are primarily
instrumental related to the organization they are working for, because they remain on their job due to the extremely high cost of leaving the organization. On the contrary, we can assume that because of their inability for election, they may develop a sense of frustration and danger that, still, may result in undesirable form of work behavior.
In this direction Riketta states that part of the employees who primarily have instrumental
attachment to the organization, the employer cannot expect high motivation for working and promptness for
111
S. Robbins, Organizational Behavior, Englewood Cliffs, NJ: Prentice Hall Inc, 2003, p. 88;
112 S. L. McShane, M. A. V. Glinow, Organizational behavior, 4th ed, Mc Graw Hill, USA, 2008, p. 119. 113J. P. Meyer, N. J. Allen, A three-component conceptualization of organizational commitment, Human Resource Management Review,1, 1991, p. 61-98;
114
R.D. Hackett, P. Bycio, P.A. Hausdorf, ”Further Assessments of Mayer and Allen’s, Three- ComponentModel of Organizational Commitment“ , Journal of Applied Psychology 79, 1994, p. 15-23; 115 S. Robbins, Organizational Behavior, Englewood Cliffs, NJ: Prentice Hall Inc, 2003, p. 89.
investing additional effort into implementing organizational aims. However, he says, instrumental attachment to some extent contributes to leaving the organization.116
Normative commitment, however, because of the sense of obligation for the organization motivate the employee to act accordingly with the norms that are prescribed by the organization, so with that it is expected to have similar effects like the affective attachment, just expressed in a weaker measurements.
Despite the numerous discussions that are conducting about the value that employees of the organizations are having, is also discussed to which extent of commitments can be managed and how it can be managed.
Guest in 1992 suggested that the attachment is under the influence of several factors including: personal characteristics; characteristics of the work that is performed; work experience, structural factors and personnel policy.117 This suggests that there is a limit to which the attachment for the organization can be manipulated.
Therefore the way how the employees of the organizations are managed have a strong impact on their bond and organizational performances. Low fluctuation of the employees that leads towards the competitive advantage of the organization is an advantage that the attachment employees of the organizations are having. Hence, taking into consideration the contribution that can give highly trained employee about the productivity of the, keeping that employee should be a priority for that organization.
Organizations can ensure this attachment through involving the employees into the practicesof human resource management such as good communication, increasing their participation in decision making, bigger protection by the management and getting appropriate rewards.118
3. Analysis of the link between employees dedication and their commitment to work in banks with financial performance of banks in the Republic of Macedonia
Along with the elucidation and analysis of theoretical knowledge about the impact of employees dedication and their commitment to work in banks on financial performance of banks in the Republic of Macedonia are need appropriate supplementation with observations of practice and operation of businesses, and in order to indicate the need for changes in the approach to employees dedication and their commitment to work in banks and their competitive advantage in the market struggle.
Namely, in this part of the paper is performed checking on theoretical aspects, with particular subject of interest are empirical knowledge and experiences for the connection of multiple factors in the field of human resources with financial performance of banks.
Considering everything mentioned above for the need of analysis was conducted survey of 273 respondents which are working in banks in Republic of Macedonia. Questionnaires were voluntarily filled by staff and were asked to respond freely to questions, which were guaranteed anonymity. The analysis of the data is used statistical program SPSS (Statistical Program for Social Sciences). Using the
2- test and Pearson coefficient proves our hypothesis, while using correlation analysis shows the strength of the relationship between the independent variable (employees dedication and their commitment to work in banks) and the dependent variable (financial performance of banks).3.1 Testing the hypothesis
Hypothesis 1: Employees dedication and their commitment to work in banks, have a positive impact on financial performance of banks.
Hypothesis 2: Employees dedication and their commitment to work in banks, have a negative impact on financial performance of banks.
Table 1: Empirical and theoretical frequencies of variables: Employees dedication and their commitment to work in banks (in rows) and financial performance of banks (Column)
116 M. Riketta, “Attitudinal Organizational Commitment and Job Performance: A Meta Analysis”, Journal of organizational behavior 23, 2002, p. 257-66;
117 D. Torrington, L. Hall., S. Taylor, Human resource Management, Prentice Hall, 7th Ed, 2008, p. 262; 118
R. Nehmeh, “What is Organizational commitment, why should managers want it in their workforce and is there any cost effective way to secure it?” Swiss management center, SMC Working paper, 2009, p. 9.
PPVB * FPB Crosstabulation Count 1 4 1 1 1 8 1 6 9 8 3 5 1 33 1 5 13 6 3 1 29 2 1 14 16 12 3 48 3 8 12 11 6 40 3 5 29 30 67 3 3 14 28 48 1 10 22 50 45 75 70 273 Strongly disagree Disagree Disagree Somewhat Undecided Agree Somewhat Agree Strongly Agree PPVB Total Strongly desagree Desagree Desagree Somewhat Undecided Agree Somewhat Agree Strongly agree FPB Total PPVB * FPB Crosstabulation Expected Count ,0 ,3 ,6 1,5 1,3 2,2 2,1 8,0 ,1 1,2 2,7 6,0 5,4 9,1 8,5 33,0 ,1 1,1 2,3 5,3 4,8 8,0 7,4 29,0 ,2 1,8 3,9 8,8 7,9 13,2 12,3 48,0 ,1 1,5 3,2 7,3 6,6 11,0 10,3 40,0 ,2 2,5 5,4 12,3 11,0 18,4 17,2 67,0 ,2 1,8 3,9 8,8 7,9 13,2 12,3 48,0 1,0 10,0 22,0 50,0 45,0 75,0 70,0 273,0 Strongly disagree Disagree Disagree Somewhat Undecided Agree Somewhat Agree Strongly Agree PPVB Total Strongly desagree Desagree Desagree Somewhat Undecided Agree Somewhat Agree Strongly agree FPB Total
Picture. 1: Empirical and theoretical frequencies of variables: Employees dedication and their commitment to work in banks (in rows) and financial performance of banks (Column)
PPVB Stro ngly A gree Agree Agree Som ew hat Un decide d Dis agree S om ew hat Dis agree Stro ngly disag ree C ou nt 40 30 20 10 0 FPB
Stron gly de sag re e
D esa gree
D esa gree Som e wh at
U nde cided
Agree Som ewha t
Agree Stron gly ag re e PPVB Stron gly A gree Ag ree Ag ree S om ew hat Un decid ed Disag ree Som ew hat Disag ree Stron gly disag ree C ou nt 40 30 20 10 0 FPB
Stron gly de sag re e
D esa gree
D esa gree Som e wh at
U nde cided
Agree Som ewha t
Agree
Stron gly ag re e