CHAPTER 1 INTRODUCTION

1.1 INTRODUCTION Employee satisfaction is the gratification or prosperity that the employees get from their job (Moorhead and Griffin, 1998) or a persons evaluation of the overall quality of his present job (Pool, 1997; Reilly et al., 1991). A great deal of the research on this issue has been dominated by the personenvironment fit paradigm, stating that the more a persons work environment fulfills his or her needs, the greater the degree of job satisfaction (Kristof, 1996; Mottaz,1985). Employee satisfaction is considered within empirical studies either as an overall feeling about the job, or as a related set of attitudes about various aspects of the job (Spector, 1997). Locke (1976) defined employee satisfaction as a pleasurable or positive emotional state resulting from the appraisal of ones job or job experience. Rice et al., (1989) proposed that satisfaction is determined, in part, by the discrepancies resulting from a psychological comparison process involving the appraisal of current job experiences against some personal standards of comparison. Levy-Garboua and Montmarquette (2004) defined employee satisfaction as an index of preference for the experienced job against outside opportunities conditional on information available at time. This definition contains a comparison between the real experience of job in the past and the mental experience of outside opportunities until then. It also contains the comparison between future expectations of own job and outside opportunities in the future (Levy-Garboua et al., 2007). Employee satisfaction is an important variable that is able to give an opinion about general emotion and thinking forms of employees about their job and workplace. Thus, employee satisfaction refers to expectations of the employee about the workplace and his attitudes towards his job, which results in job satisfaction. Togia et al., (2004) views job satisfaction as the extent to which ones needs are satisfied in a job. Multiple theories related to definition of employee job satisfaction have been proposed in the literature. For example, in Herzbergs (1968) motivation-hygiene theory the factors that involved increasing job satisfaction were separate and distinct from factors that led to job dissatisfaction. Factors that led to job satisfaction are called motivators and include achievement, recognition, work itself, responsibility and advancement. Factors that prevent job satisfaction and lead to job dissatisfaction are called hygiene factors and include
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administrative policies, supervision, salary, interpersonal relations and working conditions (Petty et al., 2005). 1.2FACTORS AFFECTING EMPLOYEE SATISFACTION The global approach to measurement of employee job satisfaction is used when the objective is to measure overall aspect to the job. However, facet approaches can specify which specific viewpoints of the job are generating satisfactions or dissatisfaction for the individual. Facets of job satisfaction can involve any aspect of the job such as pay, coworkers, supervisors, organizational factors and work environment (Coomber and Barriball, 2007). Pearson (1991) suggests that employees wait for their job to provide an aggregation of features (eg., pay, promotion and autonomy) for which the employee has certain favorable values. In terms of employee satisfaction, Luthans (1992) has mentioned five dimensions comprising pay, characteristics of job, working conditions, management politics and working colleagues. While pay has been considered an external function, other factors (factors of job characteristics) have been defined as internal factors (Rose, 2003). Mcafee et al., (1995) investigated effects of discretion, outcome feedback and process feedback on employee job satisfaction. They found that providing discretion and outcome feedback alone does not improve employee satisfaction, significantly, but providing employees with discretion and both outcome feedback and process feedback contributes to significant developments on job satisfaction of employees. According to Drummond and Stoddard (1991), employee satisfaction contains an evaluation of various characteristics of the job. These characteristics are working conditions, pay, relationships with co-workers and supervisor, organizational policies and the nature of the job itself. According to Dinham and Scott (2000) and Koustelios (2001), there are various factors-related to job satisfaction, for example job characteristics comprising work overload and time pressure; occupational characteristics namely various types of work; organizational characteristics including role ambiguity and role conflict; background characteristics of employees namely age and gender and personality characteristics comprising locus of control and self-esteem have been studied in relation to both concepts by Sigilis et al., (2006). Kazemzadeh and Bashiri (2005) investigated various studies related to employee satisfaction and identified ten main groups namely; management and personnel relationship, relation between employees, employees motivation, education, wage and salary, other welfare facilities, employees commitment, job promotion, performance, organizations systems and processes. Bodur (2002) suggested that work content, age, gender, educational
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level, working conditions, location (rural or urban), co-workers, salary and working hours are some of the factors related to job satisfaction. Robbins, (1998) in his article has stated that satisfaction is the contentment felt after a need is fulfilled, while Shajahan and Shajahan, (2004) views it as a general attitude that is determined by job factors namely pay, work, supervision, individual or personal characteristics (demographics) and other social and group factors. Study by Newstrom, (2007) emphasizes that since people bring with them certain drives and needs that affect their performance, therefore understanding how needs stimulate performance and how rewards on such performance lead to the job-satisfaction is indispensable for the managers to design work systems accordingly. Job satisfaction is a popular research topic for the researchers in organization and management studies particularly, organizational behavior (Luthans, 2005:211). Theory is a tool of science since it defines major orientation of a phenomena such as job satisfaction by defining kinds of data to be required and it offers a conceptual scheme or model in which relevant facts are systematically organized, classified and interrelated and summarized into empirical generalizations, predicts facts and finally points to the gaps in the knowledge (Goode and Hatt, 1952). Griffin, (1990) writes that theories are the scientific tools that are used to explain the factors of job satisfaction and explains how these factors interact in the cognitive and physical processes of job-satisfaction on the basis of existing facts. At present the content and process theories have become established explanations for work motivation, furthermore, with the passage of time, factors of job satisfaction and their mutual relations change therefore new models appear as fresh explanations of the old phenomena (Newstrom, 2007) for example, Maslows theory of needs have been enhanced by two-factor theory. In the theoretical approach used to study job satisfaction most of the researchers have identified two groups of variables; environmental factors and personal characteristics of individuals (Saif-ud-Din, Khair-uz-Zaman, and Nawaz, 2010; Moynihan and Pandey, 2007; Shajahan and Shajahan, 2004; Ellickson and Logsdon, 2001). 1.3THEORIES OF JOB SATISFACTION Luthans (1995:13) states that there is nothing as practical as a good theory. Theory is a systematic grouping of inter-dependent concepts and principles resulting into a framework that ties together a significant area of knowledge (Weihrich and Koontz, 1999:13). Precisely, a theory identifies important variables and links them to form tentative
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propositions (or hypotheses) that can be tested through research (Newstrom, 2007:6). Although most of the debates about theories of job-satisfaction start with Maslows theory of Hierarchy of Needs (1943) however, the story begins with the idea of scientific movement or Taylorism by Frederick W. Taylor (1911), which treats human being as Economic-man where Money is the biggest motivator for job-satisfaction. This view was criticized by Elton Mayo and Associates (1924-33) during Hawthorne Studies about the nature of human beings. They found that multiple factors contribute to the motivation and satisfaction of workers including, personal morale, positive interrelationships, management founded on the understanding of individual and group behavior through interpersonal skills like motivating, counseling, leading and communicating (Weihrich and Koontz, 1999:42). Review of literature about the theories of job-satisfaction suggests that theories are commonly grouped either according to the nature of theories or their chronological appearance. Shajahan and Linu Shajahan (2004:90-99) have noted that there are Contenttheories namely; Maslows Needs Hierarchy, Herzbergs Two Factor theory, Theory X and Theory Y, Alderfers ERG theory, and McClellands theory of Needs and Process-theories namely; Behavior Modification, Cognitive Evaluation Theory, Goal Setting theory, Reinforcement theory, Expectancy theory, and Equity theory. This division of theories is acknowledged across the literature. Fred Luthans (2005: 240-256) suggests three classification of theories: Content theories - Needs Hierarchy, Two-Factors, and ERG theories; Process theories- Expectancy theory and Porter and Lawler model; and Contemporary theories - Equity, Control and Agency theories. On the other hand Stephen P. Robbins (2005:48-61) uses chronology and categorizes the theories into Early-theoriesHierarchy of needs, Theory X and Y, Two-Factor theory and Contemporary theoriesMcClellands theory of needs, Goal Setting theory, Reinforcement theory, Job Design Theory, Equity theory and Expectancy theory. It is however, notable that content and process theories have become standard classification. Research on job satisfaction demonstrates that employees generally anticipate stable employment, opportunities for promotion and satisfactory compensation (Clark and Oswald, 1996; DeSantis and Durst, 1996). Few other studies shows that social satisfaction and the characteristics of superiors have effect on employees satisfaction levels (Eskildsen and Nussler, 2000; Martensen and Gronholdt, 2001). Review indicates that job satisfaction is a widely researched area and is influenced by a number of factors and in recent years there has been a shift, where in employers and employee look at the broader perspective of
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satisfaction of its employees than merely the job. Hence a study was conducted among the bank employees in Coimbatore city to identify the factors that lead to employee satisfaction and its impact on outcomes, since the banking sector is growing at a faster rate and the services offered by the banks are augmenting. Offering enhanced services to the customer is their key focus, which could be achieved by keeping their employees satisfied. 1.4 ORIGIN OF BANKING According to Kaptan (2002), in its native form, banking is as old as is the authentic history and the origins of modern commercial banking are traceable in ancient times. The New Testament mentions about the activities of the money changers in the temples of Jerusalem. In ancient Greece, around 2,000 B.C. the famous Temples of Ephesus, Delphi and Olympia were used as depositories for peoples surplus funds and these temples acted as the financial agents until public confidence was destroyed by the spread of disbelief in the religion. In India, the ancient Hindu Scriptures refer to the money-lending activities in the Vedic period. The banker of Smriti period performed most of those functions which banks perform in modern times. Such as accepting of deposits, granting secured and unsecured loans, acting as their customers bailee, granting loans to kings in times of crisis, acting as the treasurer and banker to the state and issuing and managing the currency of the country. India has a well developed banking system. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders, agriculturists and budding Indian industrialists. Indian banks have played a significant role in the development of Indian economy by inculcating the habit of saving in Indians and by lending finance to Indian industry. The commercial banking structure in India consists of Scheduled Commercial Banks and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) of the Act.

1.5 HISTORICAL PERSPECTIVE OF INDIAN BANKING The earliest Indian bank was the Bank of Hindustan set up in 1770. Then in the 19th
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century the Presidency Banks (Bank of Calcutta in 1806, Bank of Bombay 1840 and Bank of Madras in 1843) were set up under a charter. Private Banks was allowed in 1900. In 1921 these banks were amalgamated to form the Imperial Bank of India. In 1935 the Reserve Bank of India was constituted as the apex Bank. Up to 1949, it was a private ownership bank, and then when The Banking Regulations Act 1949 was passed, it came under government control. State bank of India came into existence and became the Bank of Government of India in 1955 with RBI taking control of the Imperial Bank of India. State Bank of India, in turn took over the shares in the private banks floated in the erstwhile princely states. Thus the first phase of nationalization of the banking sector took root in 1949 and culminated in the nationalization of 14 banks in the year 1969. The independence to the first nationalization period was marked by the consolidation of the banking sector. From 566 banks in 1951, the number came down 86 in 1971, as weaker banks were merged with the healthier ones. The Department of Banking was setup under the Ministry of Finance. In 1974, priority sector norms were introduced and commercial banks were given five years to meet the norm of 33 or 1/3 percent of credit. The lead bank scheme was formulated for making banks responsible for the credit need to specific districts. The twin structure of rural branches of commercial banks and cooperative banks however was not sufficient to meet the needs of the rural economy and hence regional rural banks were promoted in 1975. For commercial banks also the accent was on branch expansion into the semi-urban and more importantly the rural areas. Priority sector target was raised to 40 percent for the commercial banks and the focus of lending changed to rural and agriculture lending with social banking becoming the norm in place of profitable commercial banking. Then in 1980, 6 more banks were brought into the nationalization fold. The measure bore fruit with rural branches increasing to more than 45 percent of the total branch network in 1979 from 22.2 percent in 1969. The priority sector lending increased from 15 % to 30.6% during the same period. Came (1991) stated that the liberalization wave did not leave the banking sector unchanged. Unprofitable branch expansion, non-performing priority sector lending loans had left large gaps in the banks balance sheets. High regulatory requirements had also taken their toll and most banks were completely in the red. Capital was infused, operating restrictions were relaxed, competition was promoted, but most importantly the profit motive in banking system was brought in. The current structure of the banking system which has succeeded is a product of these external and internal changes. For well over two decades, after the nationalization of 14 large banks in 1969, no new
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banks had been allowed to be set up in the private sector even though there has been no legal barrier on the entry of new private sector banks. Progressively over this period, the public sector banks have expanded their branch network considerably and catered to the socioeconomic needs of large masses of the population, especially the weaker sections and those in the rural areas. While recognizing the importance and role of public sector banks, there was increasing recognition of the need to introduce greater competition which can lead to higher productivity and efficiency of the banking system. Therefore a stage has now reached when New Private Sector Banks are allowed to be set up with a view to induce competition and market oriented system. Long back the well known nineteenth-century economist David Ricarado, (1952) had stated that a bank was a dealer or transaction in money. The accepting of deposits of money from the public with the purpose of lending or investing these deposits was the main function of a bank has been stressed in the Indian Banking Regulation Act 1949 in which the term Banking has been defined: Accepting for the purpose of lending or investment of deposits of money from public repayable on demand or otherwise, and able to withdraw able by cheque, draft, order, or otherwise (Kaptan, 2002). Types of Banks There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession, etc. On the basis of functions, the banking institutions in India may be divided into the following types: Central Bank (RBI, in India) Commercial Banks i. ii. iii. Nationalized Banks Private Banks Foreign Banks

 Development Banks i. ii. iii. iv. Co-operative Banks Primary Credit Societies Central Co-operative Banks State Co-operative Banks

Specialized Banks

1.6 OBJECTIVES OF THE STUDY To identify the Employee Satisfaction Level among the bank employees To find out the perception of the employees of varied demographic profile regarding the Employee Satisfaction level To identify the factors that discriminate the employee satisfaction level among the employees of different types of banks To explore the impact of the variables of employee satisfaction on employee satisfaction level and the later on employee loyalty and performance 1.7 SCOPE OF THE STUDY The present commercially competitive environment pressures organization and there are changes both in terms of the global nature of work and the diversity of the workforce. Hence employee satisfaction is the key to retain employees and satisfied employees contribute to the organization better than their counterparts. Employee satisfaction is an important variable that is able to give an opinion about general emotion and thinking forms of employees about their job and workplace and refers to expectations of the employee about the workplace and his attitudes towards his job. Luthans (1992) has mentioned five dimensions comprising pay, characteristics of job, working conditions, management politics and working colleagues, while Mcafee et al., (1995) investigated effects of discretion, outcome feedback and process feedback on employee job satisfaction. Satisfied employees are loyal to the organization and show enhanced performance at work. In fast-changing environments, it becomes more difficult to exactly specify roles and responsibilities. To the extent that
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employees are likely to be faced more frequently with surprising and ambiguous decisionmaking situations, organizations must increasingly work out on employees to act in ways that are consistent with organizational objectives and ensure that such activities enhances the satisfaction of the employees. Hence this research focuses in identifying the employee satisfaction level of bank employees and identifies the impact of employee satisfaction on loyalty and performance among Nationalized and Private banks located both in the urban and rural areas in Coimbatore city. 1.8 LIMITATION Any study will be restricted in scope by certain inherent limitation that are participated by choice of research design, sampling procedure etc., like all the survey the research study has certain limitation. The personal details of the employees were not collected during the survey. The study dependents entirely on the responses of employees. Certain banks did not encourage the respondents for filling the questionnaires. The respondents were worried that the management might use the information collected by the research study against them. A few of the questionnaires were incomplete and therefore had to be eliminated.

1.9 CONCLUDING REMARKS The concept of employee satisfaction has gained prominence in the last three decades and has expanded in varied dimensions. Keeping employees satisfied is a challenge faced by organizations in the current globalized scenario. Banks having expanded their scope of operation focuses in keeping their employees satisfied to retain them and render better service to its customers.