The Key Factors Influencing Bank Employees

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The Key Factors Influencing Bank Employees

Transcript Of The Key Factors Influencing Bank Employees

European Journal of Human Resource Management Studies
ISSN: 2601 - 1972 ISSN-L: 2601 - 1972 Available on-line at: http://www.oapub.org/soc

DOI: 10.46827/ejhrms.v5i1.1010

Volume 5 │ Issue 1 │ 2021

THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA

Andrew Sijai
University College of Technology Sarawak, School of Business Management, Malaysia
Abstract: The COVID-19 pandemic could be the most serious challenge to financial institutions and impacts on bank employee’s performance. While the full impacts are yet to be determined. The aims of this study are to identify and justify the three key factors (compensation and benefits, employee recognition, training and development) used were significant contributor towards banking employee performance of all selected banks in Malaysia. This study used survey questionnaires which systematically conducted through online Google survey form to obtain data and information from the respondents of all selected banks. There were about 100 banking employees from the selected banks, and only 82 completely responded to the survey. The study identified four (4) hypotheses which are tested using statistical technique SPSS version 26. The quantitative research system is embraced, and it was more proper. It is considering a few variables incorporates comfort, timing and costs related during pandemic time. Based on rigorous reviewing of the literature, instrument designing and subsequent pilot testing, the outcome revealed that training, recognition and compensation have significant relationships with employee performance. The finding further showed employee recognition is the most closely associated stronger predictor in banking employee performance with unstandardized coefficients Beta value of 0.409 absolute larger than the other two variables, which were 0.308 and 0.128 for compensation and benefits, and training development respectively. The most significant contribution of this study is that it explores for the first time the investigation of key factors influencing banking employee performance during pandemic Covid-19. The study also contributes both on theoretical and empirical value to the banks in gaining competitiveness, retain employee talent and adjusting performance review process for more flexible goal setting in future.
Keywords: bank employee performance, compensation and benefits, employee recognition, training and development

i Correspondence: email [email protected]

Copyright © The Author(s). All Rights Reserved

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Andrew Sija THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
1. Introduction
Covid-19 has generated significant instability and high volatility in global financial services. It’s expected that the adverse impact is likely to continue from the virus’s knockon effects. The human and business impact of the Covid-19 pandemic continues to unfold globally. The rapid pace at which the pandemic is spreading and the global actions taken to curtail it are having an unprecedented impact on employee performance and the way the organizations performing. Given the impact the Covid-19 pandemic has had on employees’ work and professional lives, and on business priorities overall, talent management leaders are debating whether to adjust their performance review process this year. Since the lockdowns began, nearly all financial services companies' employees have been working remotely from their homes, which has involved many individuals working outside the country of their employment. A recent study conducted by Deloitte on over 1,000 respondents from companies operating in China shows that the epidemic will adversely affect business performance in terms of sales volume and cash flows. This will includes the performance of the employees as well due to the changes in the workplace with new way of working to be followed. At this pandemic time, most employers including in the financial service industries valued its employees as the main assets because they know that the success of the organization is very much depend on its employees in terms of their skills, capabilities and knowledge they owned and which can be measured by their performance. In banking industry, employee performance is regarded as an indicator either to conform, terminate, promotion or transfer to another department or branches. Hence, it is important for the banks employer to identify and access its employee’s performance, if deteriorating in work performance found could jeopardize the productivity of the bank as well as other employees. However, the main problem that the banks currently facing is the crucial questions of what were the key factors perceived most critical by the banking employees in affecting their performance during Covid-19 pandemic. There has been a lack of study and observed information on this that could guide the employer’s effort in enhancing overall work performance among employees.
Other issues we discovered in this study were assessing employees against objectives that ignored the impact of Covid-19 on productivity, employee morale and resourcing seems unprofessional and unfair. Many employers out there still hold formal review on their employees or should they adjust how they assess their employee performance to account for disruption? It was believed that the bank is facing a shortage talents and skills working under the new normal. It is essential to provide and design the right type of training programs to curtail the deteriorating in banking employee performance. As requested by central Bank of Malaysia (BNM), all commercial banks in Malaysia must constantly train their employees in facing any obstacles and challenge ahead, this includes banks products, credit and risk management knowledge, compliance, regulation and laws etc. and also the new way of working in the new normal. Banking employees must be well equipped with the new standard operating procedures

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Andrew Sija THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
(SOP) in performing their work. A Gartner survey recently found that 73% of organizations that normally conduct formal reviews at the mid-year point will going ahead with them this year. They believed that performance reviews can be a good way to acknowledge employees’ contributions and provide meaningful feedback, however, during pandemic time, many employees realistically won’t be able to deliver their objectives as agreed in year 2020. For this, many organizations are taking this opportunity to frame new approaches such as focusing ratings on employee contribution and performance, as well as scaling performance ratings based on business unit performance. Based on this, employee recognition and fair treatment could contribute to effectiveness in work performance. As a human, it is normal to have the feeling of being appreciated as this could motivate the employees to work harder and perform better work. While working during pandemic, will lack of appreciation and recognition affect employee’s poor performance? Aside from recognition by employers, compensation is considered a major need for all employees. According to Aminuddin (2018), a good compensation and benefits would maintain talented employees and attract them to contribute display effective and efficient work. However, how far does this compensation and benefits can give satisfaction to the banks’ employees especially during the pandemic time when they are burdened with new normal of working workload? Many employees including those who are working in the financial services has experiencing declining in their pay due to pay cuts, overtime ceased, benefits being cut off and to the extend some employment contract was suspended. For the banking employer, they have to be very cautious about making harsh, unpopular decisions about reduction or termination of staff. This pandemic will pass, but inappropriate decisions or behavior of employer leaders in a time of crisis will have a lasting negative impact on business operations. Thus, it is wisely for the banking employer at this time to professionally strategizing planning its workforce. Hence, the findings of this research definitely could assist the human resource manager/bank manager to understand which factors contribute the most to the banking employee’s performance and to further recommend some solutions on how to improve or motivate bank employee to perform their work.
2. Literature Review
2.1 Employee Performance Human resource literature has considered employee performance from the “extra-role” perspective. “Good soldier syndrome” is evident where employees perform extra-role behaviour without explicit rewards (Organ, 1988). Dahkoul (2018) stated that “employees’ performance is the accumulated result of the skills, efforts and abilities of all the employees contributed in organizational improved productivity leading towards its goal achievement. Improved organizational performance indicates the efforts towards goal achievement while requiring more effort in terms of improved employee performance.” The author further pointed out that employee performance is among the critical factors that contribute significantly in organizational success. Therefore, it can be concluded that the success of an

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Andrew Sija THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
organization is not only achieved by the success of its financial management but as well as managing staff performance. Study investigating the role of employee performance such as by Bommer et al., 2007; Madjar and Ortiz-Waltrers, 2009 has identified the supervisor’s or managers’ views on employee performance, however it did not really consider the employees’ perception and thought. Our study offers a contribution as it captures the employees believe and thought for self-reported measured performance particularly during this pandemic Covid-19. Employee performance is crucial for organizational goals. It is known that employee performance can be influenced by various factors such as training, career development, satisfaction, work motivation and good compensation. However, based on the research done by Pradhan et al (2017), they specify that employee performance is derived from three dimensions of employee behavior and employers opt to measure the performance on the basis of employee work attitude and behavior towards its job. The author further recommended that, employee performance consists of a multicomponent concept and areas which the scope can be extended to the major domain in human resource practice. These dimensions were adaptive, contextual and task performance provide an important impact on employers’ decision toward employees in collecting information especially on personality traits that can be used by the employers to make decision employee performance and finding absolute solutions to strengthen the job performance of the employees. In other words, the success of the organization’s goal is determined by the employee bahaviour. Moreover, research has proven that understanding the human behaviour are difficult and complex due to no specific particular approach could explain it. Based on in-depth consideration and review, we propounded to adopt the Triarchy Model of Employee Performance where in this model the employees’ performances were measured according to the three dimensions namely (1) Adaptive performance, (2) Contextual performance and (3) Task performance. Adaptive performance refers as a component of employees’ performance that referred to the ability of an individual to adapt to a new work environment. For example, working under the new normal during Covid-19 pandemic. It indicates that employee ability to response to work and cope up with any changes in the new situation (Park & Park, 2019). Contextual performance was referring to the organizational activities that were performed not according to pure absolute task or goal specific, in other words, it is more on ad-hoc basis. According to Motowildo and Schmit (1999), contextual performance is merely the willingness of an employee as individual or team such as co-operations, helping others, voluntarily performing and ability to transform the organization performance. On task performance, it is referring to the term on how an employee performs its task, usually it is measured based on response time, accuracy and fulfilment of all specifications. Refers to Arifin et al (2019), their research acknowledged that employee performance is reflected through action or behaviour of employees at the workplace and their study found out that job satisfaction and employee engagement have significant effect on employee performance. Thus, our study concluded that employee performance is influenced by employees’ behaviour while performing their job.

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Andrew Sija THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
2.2 Employee Training and Development Training and development are one of the most pervasive crucial methods for enhancing the productivity of individuals and communicating organizational goals to new employee (Arthur et al., 2003). Training is a key factor of improved organizational performance, because it enhances the level of both individual and organizational performance (Mullins, 2007). It is also very useful in improving managerial provision of feedback (Van den Bossche et al., 2010), and it reconciles the gap between what should happen and what is happening-between desired targets or standards and actual levels of work performance (Mullins, 2007). Ali and Nada (2018) stated that “training provides employees with the needed skills, abilities, and knowledge to perform the jobs according to the organizational procedures. This ends up in enhancing confidence among employees regarding their abilities and satisfaction while performing their jobs.” In addition, Zahid (2013) claimed that training if wisely used can become an efficient tool to improve and increase employee productivity. The author further added that past researchers have provided sufficient evidence regarding the positive effect of training programs on both employees and organizational performance. Citing the remarks from World Bank in 2011, it said training refers to the program with the objectives to assist employees in gaining skills and knowledge that could provide them in improving their job performance. According to Ali and Nada (2018), they emphasized that before the organizational was embarking into training program, it is important to identify the training needs from each employee. The right training and development program can improve employee productivity in the workplace and increase employee performance as well. For example, the program initiated by Asian Institute of Chartered Bankers called Anti-Money Laundering and Counter Financing Terrorism. Grober et al. (2002) identify seven purposes of training and development, the first of which to improve performance where there are unsatisfactory performances by employees who are deficient in skills. They suggest that such employees are the main candidate for training. Based on this assertion, the first hypotheses we developed were:
H1: There is a correlation between training and development with banking employee performance.
2.3 Employee Recognition and Fairness According to Abdullah et. al. (2016), recognition and appreciation play an important role as a motivation factor for improving employee performance. This study defined recognition as a reward given to the employees once they have accomplished certain jobs or achievement on reaching the target. They further explained appreciation is a basic need in human life where each individual need appreciation, craves for it and responds to it which makes appreciation significant to the success of the organization. Referring to Maslow’s physiological needs theory, they explained the human needs or feeling of being appreciated and valued for. This feeling is referred to recognition by the employer to its employee as an individual. Whereas, a study conducted by Husain et al. (2019) defined recognition as employees’ contributions as being valued and cared for. The authors

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AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
indicate that it is essential for the companies to recognize their employees. However, for Amoatemaa & Kyeremeh (2016), they hold that employee recognition referring to acknowledgement of a person’s behaviour either formally or informally, an effort or achievement of which is clearly beyond employer’s normal expectations. Employee recognition can be in the form of appreciation written or verbal appreciation such as appraising employee or writing employee’s name in the organization’s newsletter or board. Expressing recognition to the employees can be also informal such as verbal praises for good performance such as “well done” or “good job’. Apart from employee recognition, fairness is also regarded as one of the factors under recognition that contributes to the employee performance. Fairness to employees refers to the condition of whether the employee is being treated fairly or equally without looking at their age, gender, race and ethnicity. This was further explained in Equity theory where fair treatment received from employers, fairness of organization policies and procedures affected the effort that employees put in line to achieve their needs. This theory also emphasizes on the importance of employees in the organization to the maximum, in return will engender happiness and employee satisfaction in the workplace. Arora et al. (2015) agreed that recognition and praising employees as the most effective motivating factors to improve work performance because “employees want to feel that they are making a contribution at their workplaces.” This could improve employee job satisfaction as well when employees intrinsically motivated and participate eagerly in their jobs for internal reasons. According to Jansen (2011), by recognizing and appreciating work done by employees could brought pure enjoyment and satisfaction on employees which could motivate them to perform better, stay focus, less distraction, less stress when mistakes are made and improved their confidence. Moreover, Gomez-Meijia (2015) in his research pointed out that praise does not cost any cash, only needs a few moments of time. He further stated that employees would have a great change of improvement in performance if they received enough praises from their employer. Undoubtedly, Amoatemaa and Kyeremeh (2016) pointed out that employees’ recognition is a strong motivational tool that could enhance employees’ performance toward achieving a company's goal and objectives. Their study indicates that there is a significant positive relationship between employee recognition and employee performance. Based on this, we found the possibility of relationships between recognition and employee performance in the banking sector. Therefore, the second hypotheses we developed were:
H2: There is a correlation between recognition and fairness with banking employee performance.
2.4 Compensation and Benefits Silva (2009) described that employee compensation includes all forms of pay or reward going to employees arising from their employment. Nonetheless, some employee benefits are mandated by each organization laws throughout the world. This includes items like minimum wages, over time payment and leave. Rifa’I et al. (2019) defined compensation as something that was received by an employee in return of the service provided. It’s

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Andrew Sija THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
refers to a benefit given to the employees in appreciation for the services that rendered to the employer. In this term, compensation is referring to the salaries, allowances and monetary rewards. However, Fitrianingrum (2019) added compensation is also awarded to employees in other forms of non-monetary. Non-monetary compensation is referring to the compensation awarded to the employees not in cash terms such as holiday trips. An empirical study conducted by Hamzet et al. (2018) states that it is essential to design an attractive compensation packages and reiterate that effective and appropriate reward system could enhance employee performance and for retention of high performing employees.
Cited from Aminuddin, 2018, we believe that a good compensation structure should be able; (1) to attract employees to work in the banking industry for longer periods, (2) retain efficient and skillful employees, and (3) motivate the employees to perform effectively. According to Darma & Sani (2017), “compensation is defined as the ability and responsibility of a company to contribute to its employees for their achievement of a task and to appreciate their performance.” It is wisely for every bank to strive to improve employee satisfaction by providing a fair and competitive compensation packages. By doing so, banks could expect high job satisfaction from its employees, and it makes employees become more loyal, motivated, feel happy and ultimately will increase their productivity. According to equity theory, when employees are satisfied with their offered compensation, this could lead to high motivational factors which will boost their work performance. Therefore, our research will further find the correlation among compensation and employee performance and to consider whether compensation can be regarded as the strongest factor contributing to employee performance in the banking industry. Based on this assertion, we managed to construct two hypotheses which were:
H3: There is a correlation between compensation and benefits with banking employee performance.
H4: Attractive compensation and benefits offered is most likely the strongest predictor of banking employee performance.
3. Material and Methods
3.1 Population and Sample The population of this study is made up of all selected banks employees in East Malaysia namely Agro Bank Bhd, Bank Kerjasama Rakyat Bhd, Bank Simpanan Nasional (BSN), Hong Leong Bank Bhd, MBSB Bank Bhd, Maybank Bhd, Public Bank Bhd and RHB Bank Bhd. The total number of bank employees from the selected banks above were about 100. The sample size of 82 respondents was selected to represent the total population found to be adequate. The assurance of challenge size was founded on Krejcie and Morgan's table where a sample size of 82 is acceptable as where the given population of 100, a sample size of 80 would be needed to represent a cross-section of the population. The execution of simple random sampling method was applied in this study to represent fair and widespread for the overall population. The closed-ended questionnaire has been

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Andrew Sija THE KEY FACTORS INFLUENCING BANK EMPLOYEES’ PERFORMANCE DURING PANDEMIC COVID-19:
AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
created using Google forms due to some restriction movement imposed by the government due to Covid-19 pandemic. The data were collected through distribution of the survey questions in the google form (link given) to the respective managers of the selected banks via email.

3.2 Measurement Instrument This study is to use a quantitative approach and assisted with SPSS version 26. The questionnaires have been created using google forms and sent directly via email to the respective managers of the selected banks in East Malaysia. Prior to that, a letter on “permission to conduct survey on banking employees” has been submitted to all selected banks concerned. A pilot test was also conducted in a small scale for more in-depth confirmatory study. In doing this, a set of similar questionnaires had been given to random employees of banks from different branches through different link of google survey form. The data obtained were analyzed and reliability test was carried out. The internal consistency found from the reliability test was high. The questionnaires were divided into five sections. Section A: Demographic factors; Section B: Training and Development; Section C: Recognition and fairness; Section D: Compensation and benefits; E: Banking employee performance. For section A, a set of nominal scale questions has been developed for identifying respondent’s profile and demographic data which including gender, position, age, education level and years of banking experiences. For Section B to E, the questions were measured using 5-point Likert Scale. It used to determine whether respondents are agreed with the question asked.

4. Results and Discussion

4.1 Reliability Analysis To explore the generalizability of results, the researcher has used reliability analysis to measure the consistency and stability of data obtained from survey questionnaires. A value that indicates less than 0.6 is poor. Table 1 depicted the result of the reliability test with the value of Cronbach’s Alpha all four variables shows high reliability. The value shows the questionnaire was reliable as the closer the value to 1, the reliable the questionnaire. The questionnaire shows a high reliability based on the alpha score (α=0.842 – 0.927). Pallant (2010) stressed that an alpha score above 0.75 is generally indicating a scale of high reliability. Hence, it is concluded that all the four variables have reliability and acceptable for further analysis.

Table 1: Reliability statistics

No Variable

Cronbach’s Alpha (α)

1 Training and Development

.924

2 Recognition and Fairness

.927

3 Compensation and Benefits

.842

4 Banking Employee Performance

.914

Source: Author

Items 7 6 7 5

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AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA
4.2 Frequency Analysis The analysis in Table 2 shows the distribution of respondents’ profile were in terms of gender, age, educational level, designation and year of working experiences. As per in table 2, the summary of respondents for this study according to their profiles in terms of frequency and percentage. Based on this, most of the respondents were male which accounted for 45 (54.9%) and 37 (45.1%) respondents represent by female staff. It was also found that there were 3.7% respondents categorized underage range of 18-25 years old, 43.9% between 26-35 years old, 30.4% between 36-45 years old and 22% were from the age range of 46 years old and above. In terms of educational qualifications, the highest qualification recorded in the banks was Diploma qualification with 37.8%, followed by Degree holders with 34.1%. The SPM/STPM holders were represented by 23.2% while the remaining 4.9% comprised of others qualification. For the designation, the highest frequency was for executives’ level with 48.8%, while the lowest frequency was those of non-clerical represented by only 2.4% respondents and the remaining 36.6% and 12.2% were represented by clerical and manager/HOD level respectively. The review result of years of working experience displayed that most of the respondents (43.9%) have been working for more than 10 years, a figure of 24.4% was for those having been worked for 1-5 years, 25.6% who have been working for 5-10 years and 6.1% for those serving less than 1 year.

Table 2: Summary of the respondent according to their profile

Category

Frequency

%

Category

Frequency

%

Gender

Education level

Male

45

54.9 SPM/STPM

19

23.2

Female

37

45.1 Diploma

31

37.8

Age

Degree

28

34.1

18 – 25 years

3

3.7 Other

4

4.9

26 – 35 years

36

43.9

36 – 45 years

25

30.4

46 years & above

18

22

Designation Non-Clerical Clerical Executive Manager / HOD

Frequency

%

Experience

Frequency

%

2

2.4 Less than 1 year

5

6.1

30

36.6 1-5 years

20

24.4

40

48.8 5-10 years

21

25.6

10

12.2 Above 10 years

36

43.9

4.3 Factor Analysis In testing whether factor analysis was appropriate for the variables construct, KaiserMeyer-Olkin (KMO) and Bartlett test were first conducted, followed by extraction communalities, factor loading, eigenvalues and scree plot. Table 3 reveals the summary of the results.

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AN INVESTIGATION ON SELECTED BANKS IN MALAYSIA

Variables
Training and Development Recognition and Fairness Compensation Banking Employee Performance *p < .05

Table 3: Summary of factor analysis

Item

Eigen

% of variation

loading

value

explained

.755 - .894

4.90

70.0

.804 - .914 .549 - .866 .818 - .901

4.476 3.828 3.756

74.60 54.68 75.12

KMO
.856 .803 .834 .855

BTS
452.821 416.898 244.014 285.761

pvalue .001*
.001* .001* .001*

Based on Table 3 above, to interpret the factor loadings, a value +.50 or greater is considered significant; loading or +.40 are considered more important; loading of +.30 are considered significant (Hair et al., 2006). The extraction communalities indicate all the items in the variables is explained by the factors and exhibited large factor loading ranging from the lowest of .549 to the highest of .914 suggesting that the items correlate very significantly to the factor itself. The percentage of variance for all variables used in this study were explained through from 54.68% to 75.12% of the factor. The eigenvalue of all variables was more than 1 revealed that the analysis of scree plot for all variables goes steeply downward from the first to the last factor, thus indicates that all of the items used in the variables reached statistical significance and supporting the factorability of the correlation matrix.

4.3 Pearson Correlation Table 4 summarized the Pearson correlation analysis of the variables studied. The results show that the independent variables were statistically significant correlated with banking employee performance (dependent variable). Therefore, hypothesis 1, 2 and 3 are accepted. There is a significant relationship between training and development with banking employee performance, r = .711, recognition and banking employee performance, r = .803 and compensation and banking employee performance, r = .768 (p < .05). The result revealed that recognition and fairness is most significant and highly correlated to employee performance.

Table 4: Pearson correlation analysis between variables studied

Variable

1

2

3

4

R

1

1

.803

.707*

.711*

2

.803*

1

.822*

.803*

3

.707*

.822*

1

.768*

4

.711*

.803*

.768*

1

Note: 1 = Training & Development, 2 = Recognition & Fairness 3 = Compensation & Benefits, 4 = Banking

Employee performance

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EmployeesBanksEmployee PerformanceFactorsCompensation