The Problems with Employee Empowerment in Mashreq Bank an Emirati bank - Research Paper Example

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Research into Employee Empowerment and Satisfaction in the Mashreq Bank Table of Content Executive Summary ….......................................................3 1.0 Introduction...................................................................4 1.1 Background of Mashreq Bank...........................4 1.2 Literature Review..............................................5 1.3 Contextual Information.....................................8 1.4 Problem Statement or Question …....................9 2.0 Research Design..........................................................10 2.1 Variables of Research......................................10 2.2 Hypothesis.......................................................11 2.3 Schematic Diagram ….....................................12 2.4 Methodology....................................................12 2.5 Sample …........................................................12 2.6 Data Collection................................................12 2.7 Data Analysis and Interpretation......................13 2.8 Generalizability................................................13 3.0 Findings........................................................................15 3.1 Results..............................................................15 3.2 Major Inferences...............................................17 3.3 Recommendations.............................................20 Conclusion ….....................................................................20 References …......................................................................21 Appendix.............................................................................22 Executive Summary This paper examines the problems with employee empowerment in Mashreq Bank, an Emirati bank. The paper undertakes a thorough literature review and conducts a survey to identify the actual cause of the the problem with employee empowerment. The research identifies that the main inhibitors to employee empowerment are poor leadership system, unsupportive organizational culture and the nature of the job at the bank. The research identifies that there is a traditional dislike for delegation and consultation between managers in the bank and their subordinates. The research recommends that the board of directors should be encouraged to take a critical look at this issue and support in making reforms by restructuring the bank and encouraging participation of subordinates. 1.0 Introduction This research deliverable is about employment issues in Mashreq Bank. It is structured in three main components. The first part provides an insight into the bank and its problem and formulates the research questions. The second part focuses on the research design and methodology to initiate an inquiry into the problem The third part provides the findings of the research and the study. It gives a detailed account of the the study and the conclusions that were arrived through the study. 1.1 Background of Mashreq Bank Mashreq Bank was opened in the United Arab Emirates in 1967 (Mashreq Bank Overview, 2012). It has served millions of customers since its inception over 40 years ago. The bank continues to operate with its headquarters in Dubai, the growing commercial center and geostrategic location of the Persian-Gulf region. Mashreq Bank has branches in Egypt, Qatar, Kuwait, Bahrain and the Indian-Subcontinent. It has ambitions of expanding further and providing Islamic-oriented banking services in the Middle East and around the world. Mashreq Bank's core competency lies in the fact that it provides its customers with modern products and innovative services. This is evidenced by the fact that it maintains high technological facilities and well trained staff members who continue to provide world-class services to customers of the bank. In 2011, Mashreq Bank made a net profit of 803 million Arab Emirate Dirham. This was from a working capital of 4.4 billion Arab Emirate Dirham and a total asset base of over 84 billion Arab Emirate Dirham [the average parity of the AED to the US Dollar is US$1 to AED3.67 in June, 2012]. This means the bank is a medium sized one that has a respectable capital and financial position in the Middle East and around the world. The bank is ran by a board of directors which is made up of highly respected members of the Emirati community (Mashreq Bank Corporate Governance, 2012). The Board is in charge of supervising and controlling affairs in the bank and setting appropriate benchmarks to minimize risks and promote efficiency. The day-to-day running of the bank is in the hands of Senior Management Committees that undertake the control and dissemination of resources In terms of human resource management, Mashreq Bank seeks to attract and retain the best personnel on the market (Mashreq Bank Careers, 2012). It also seeks to encourage professional development and maintain market driven remuneration for employees. In spite of these efforts to run a successful and attractive company, Mashreq Bank has serious issues that has led to an increase in turnover. Employees often change employments and there are numerous complaints around the company about the poor management and control structures that leads to this trend. 1.2 Literature Review There have been several outrages and 'venting outs' by sections of the staff of Mashreq Bank. The trends in these complaints seem to define the actual problems relating to turnover and employee dissatisfaction about the system as it operates at Mashreq bank. IBS Journal (2011) identifies that in the quest to promote a very technologically advanced system, Mashreq Bank changed its entire system within a very short time. In other words, the information system, technological infrastructure and other things were changed by the company in a sudden event. This was done is such a short time that employees were not able to get adequate training (IBS Journal, 2012). This means that most employees were lagging behind when the new systems were put in place. It made them less efficient and this caused their motivation to be affected. Worse of all, IBS Journal indicates that the management of Mashreq Bank had limited consultation with the staff members. This implies that staff members are just instructed but not given any form of consultation in top level organizational decision making. Douglas McGregor identified that there are two types of managers: the Theory X and Theory Y managers (1966). In this definition, he states that the Theory X manager believes that employees are lazy and they need to be told what to do at all time. They think that employees need to be forced to work in a very autocratic setting where the managers make all the decision for employees to follow. A Theory Y manager on the other hand grants a degree of autonomy to employees and allows employees to take part in the management process by consulting them. From the trends in Mashreq Bank it could be seen that the management tends to tilt towards a Theory X kind of leadership rather than a Theory Y system. Bass builds on this concept and introduces the idea of a transactional leader and a transformational leader. A transactional leader is one that sees his relationship with employees as a strict exchange of money for the services of the employee. After the day's work, that is the end of it. On the other hand, the transformational leader aligns the objectives and expectations of the employee with that of the organization. This way, the employees attain their personal needs and aspirations like job security, professional development and the like as they continue to honor the requirements of their job. Again, it appears that there is a major deficiency in Mashraq Bank because the bank fails to strongly link the personal demands and aspirations of the employees with the bank's own needs. Consumer complaints from a number of customers are raised on the Qatar Living website (2008). This produced a long chain of reactions that indicates that there are fundamental issues with the leadership and control of the organization which can be traced to the organizational culture of Mashraq bank. One of the contributors to that forum stated that there is a lack of co-ordination. Another stated that there is poor supervision. And this indicates that the chain of command at Mashraq Bank is quite problematic. A more important set of complaints were taken from the current and past employees who posted on the Glassdoor.com forum (2012). This reflected the actual feelings and actions of the employees in the organization. There were several findings that were collated from the forum. Some of them are listed below: 1. Problematic leadership. 2. Aging leadership 3. Senior employees with over 10 years experience in the bank place obstacles in the way of new ideas. 4. Racism and internal politics 5. Poor balance of work life. 6. Uncompetitive salaries and bonus. 7. Abusive management 8. Poor commitment of the leadership to improving the quality of service. 9. Limited training and development opportunities for employees. 10. Lock-in period for foreigners which forces them to stay with the company for no less than three years under UAE laws. Due to these apparent issues, there are problems with employee empowerment in the organization. Employee empowerment is defined by Scott as “transferring on-going job related authority and responsibility from management to workers” (2005 p49). He states that employee empowerment comes with the idea of delegation and providing a sense of autonomy for employees. This can best be done by setting clear goals and a framework within which employees can operate. Employee empowerment builds a sense of ownership, initiative and responsibility amongst employees and helps the organization to grow (Messmer, 2011). On the other hand, it ought to be steeped in the corporate culture of the organization if it needs to work efficiently. Corporate culture includes a set of values, attitudes and standards that distinguishes one organization from another (Gitman and MacDaniel, 2008 p164). 1.3 Contextual Information With the issues identified with the leadership of the organization, this research will attempt to find the actual situation as it exists on the ground in Mashreq Bank in relation to employee empowerment as a tool to job satisfaction. From the literature review and background research, it is apparent that there are issues raging within Mashreq Bank which makes it difficult for employee empowerment to be attained and this leads to high turnover and reduces employee satisfaction. However, there are questions about the extent to which this problem goes and how it exists in the bank as well as how it could be positively resolved. 1.4 Problem Statement or Question This research identifies the role of poor employee empowerment in relation to the causes of poor employee motivation and the high rate of turnover within Mashreq Bank. In attaining this end, the following objectives would be examined: 1. A critical evaluation of the effects of management and leadership control of Mashreq bank on employee empowerment which leads to poor satisfaction and motivation. 2. An assessment of the effects of the organizational culture and systems of Mashreq bank on the employee empowerment problems and its effects on motivation and job satisfaction. 3. The examination of the effects of the nature of working conditions in Mashreq on employee empowerment. 2.0 Research Design This section of the essay provides a research methodology that indicates how the study is conducted to address the three objectives identified above. 2.1 Variables of Research Kothari defines a variable as “a concept that can take a different quantitative value” (2004). In other words, there is the need to change or vary certain variables against each other to test an idea and formulate a conclusion in a research. If one variable depends on the consequences of another variable, it is a dependent variable (Kothari, 2004). On the other hand, an independent variable is the pivot or the base that is observed in a research. It is 'what is changed in order to conduct a research into a given phenomenon” (Kothari, 2004). On the other hand, the variables that are flexed or varied are the dependent variables. The independent variable is that variable which is observed and on which the change is based. In this research, the independent variable is employee empowerment. This is because its inadequacy is the main cause of the turnover. The basic assumption is that if the employees are empowered, they would want to remain with Mashreq Bank. If they are not satisfied, they would want to leave the company and this leads to productivity problems and high turnover rates. As such, the essence of the research is to identify the real reason why the employees tend to have a high turnover rate and a high rate of dis-contention at Mashreq Bank. The dependent variables are the suspected causes of the present trend of high turnover and employee dissatisfaction due to the lack of employee empowerment. There are three main causes that the researcher identified in the preliminary research and literature review to be responsible for this trend in the employees' attitude: 1. Rigid management and leadership control practices. 2. Conservative organizational culture and systems and 3. Poor work conditions and systems. These three variables are the dependent variables and they are seen to be the main causes of the poor employee satisfaction at the Mashreq Bank. They are to be tested through the research to identify whether they actually justify the causes of job satisfaction and high turnover or not. 2.2 Hypothesis Hypothesis is a temporal statement that is made at the beginning of an essay, which is tested for its validity or falsity (Kothari, 2004). A hypothesis is made on the basis of some background information and the research is done to prove or disprove that background information by finding methods of inquiry to ascertain whether they are true or not. In this case, the research hypothesis is that: “the lack of employee empowerment at Mashreq Bank is caused by poor leadership control, inappropriate organizational culture and poor working conditions.” 2.3 Schematic Diagram 2.4 Methodology This research is a qualitative research. This is because the variables being tested are subjective in nature. In other words, each person has a different experience with the organization and as such, the research can best serve the interest of the society if it takes how everyone views. Qualitative research is defined as the use of interpretive and material practices to examine an aspect of society (Flick, 2009). In this research, there will be the use of various analytical tools to collect information about the state of affairs to confirm or reject the hypothesis identified. 2.5 Sample For the purpose of the research, the population is the entire staff of the bank over the past five years. This includes the members of staff who have quit working and those who are still working with the company. To ensure fairness, a total of 30% former employees were interviewed alongside 70% current employees of the bank. 2.6 Data Collection Data collection was done through a survey. In the survey, employees were questioned about relevant issues relating to the three hypothesis. This survey was conducted electronically and they included close ended questionnaires. Their responses were used to draw inferences of the cause of high turnover and job dissatisfaction at Mashreq Bank was. A sample of the questionnaire is made available at Appendix 1 below. 2.7 Data Analysis and Interpretation The data from the exercise are collated and analyzed scientifically. This analysis includes the examination of trends and patterns based on majority views and opinions. They give an insight into the kind of trends and feelings that employees have in relation to the business environment of Mashreq bank. The analysis are used to draw inferences and identify the actual preferences and trends in the bank. This is to give a strong indication of whether the hypotheses or pieces of information insinuated at the beginning of the research are valid or not. The frequency of occurrence will give an indication that a given trend is in vogue. If a trend is not so popular amongst the sample studied, the hypothesis will be declared void. 2.8 Generalizability Since a sample is taken from both the former and existing employee class, the results of the findings of the study will give a strong indication of how both the existing and former employees think. And since samples are going to be chosen systematically from different classes of the population, the general views and opinions are likely to be applicable to the wider framework of the bank. However, there could be some disparities in reality. This is one of the inherent limitations of qualitative research. Although steps were taken to choose the sample carefully to avoid bias and promote generalizations, there is still the risk that the findings will not be sufficiently representative of what actually goes on in people's minds. 3.0 Findings The survey was sent to 20 respondents. 14 are current employees of the bank whilst another six are former employee of the bank. All questions were compulsory. Their responses showed a number of trends and the results are as follows. 3.1 Results 3.1.1 Leadership How close is the board of directors to the employees: 18 respondents or 90% stated that the board is very distant from the ordinary employees. The other two respondents indicated that the board is quite close to the employees. Mangers' Imposition of their will on their employees: 80% of respondents stated that management impose their will excessively on employees. 5% said they do not whilst 15% were in-between Adequacy of delegation Powers 75% of the respondents said that the delegations by the senior management is inadequate. Another 25% said it is quite adequate. Sufficiency of consultation between managers and employees 95% of the employees said that the consultation between managers and employees is not sufficient. Another 5% stated that it is quite sufficient. Classification of Immediate Supervisor 85% of the employees called their immediate supervisor a transactional leader whilst 15% called their supervisors transformational leaders. 3.1.2 Organizational culture Frequency of consultation by superiors with subordinates before decision making The overwhelming majority of 80% stated that their supervisors rarely consult with them before relevant decisions are made. Another 15% said they are consulted quite often whilst another 5% stated that the are consulted very often. Rating of Managers' level of control after delegating authority A total of 65% said the rate of control even after delegation is very high. 25% said it is quite high after delegation whilst 10% said it is low. Perception of the Aging Leadership 75% of the respondents stated that they think the leaders of the bank are old. 20% said they are quite old whilst 5% said they are not old. Satisfaction with the Promotion Structure 10% of the respondents were satisfied with the promotion structure. 75% are not satisfied with it whilst 15% are quite satisfied with it. Presence of Groupthink 85% of the respondents think that groupthink is a major part of the affairs of Mashreq Bank. 10% think it is quite an issue in the bank whilst 5% does not think that any such thing really exists. 3.1.3 Nature of job Appropriateness of the Pay Rise System A total of 90% said the pay rise system is not appropriate to what they consider to be idea. 10% said it is quite appropriate. No one said it is appropriate. Bank's Structure and Delegation A total of 70% said that the bank structure has inherent limitations that does not allow delegation to subordinates and autonomy. 20% said the structures are quite an issue whilst 10% said the structure is not really an issue. The adequacy of the bank's technology to support delegation 30% said it is not adequate. Another 10% said it is quite adequate. A total of 60% of the respondents stated that it is very adequate. The role of competition and public regulation in the prevention of delegation 40% of the respondents agreed that competition and banking regulations made it difficult for delegation to take place in the bank. 15% said these two variables are quite an issue. However, 45% stated that it is not an issue in preventing delegation. The Law of Qatar and Inability to quit working for Mashreq Bank 45% of the respondents stated that the law prevents them from switching jobs. Another 30% said the law had some restrictions whilst 25% stated that the law has absolutely no restrictions in their ability to switch jobs. 3.2 Major Inferences From the survey, several inferences come to play. These inferences show that there are some key issues in the organization that keeps the leaders from making appropriate changes that are needed to promote empowerment and enhance employee satisfaction and motivation. From the case, the following issues are identified: 3.2.1 Leadership is a Problem From the study, it is identifiable that leadership is a major problem for the organization. This is because of the following reasons: Distant Board of Directors The board of directors are not connected with issues on the ground. They take advice from the top level management and the senior management committees. These management committees wield power and refuse to delegate them. The board does nothing about it. Autocratic Management The management of the bank are autocratic. They believe in centralizing power and refusing to delegate. This seem to have some cultural connections. As such, they refuse to consult with their subordinates and continue doing this alone without any form of connection with their subordinates. Transactional View of Leadership The autocratic management tradition at the top has led to a situation whereby the subordinate managers also view those under then with a transactional attitude rather than a transformational attitude. 3.2.2 Inherent Issues with the Corporate Culture There is a clear issue that is inherent in the culture of the Mashreq Bank. This issue has made it serious for the bank to empower its employees. Absence of Consultation with Subordinates It is not common for managers to consult with their subordinates. It is not part of the organization's culture and no one seem to be interested in instituting and observing that. Discomfort with Delegation The management of the bank are not very comfortable with the subordinates taking over higher managerial functions. Even when they delegate their authority, they are always reluctant to relinquish control. Aging Management, GroupThink and Internal Politics The employees of the bank think that there is internal politics that is steeped in the concept of groupthink where people are dogmatic because of their long standing alliances. Limited Promotion Systems The promotion of employees is not as fast as most employees expect. This is connected with the refusal of the organization to grant autonomy to subordinates and nurture them to take over from them. 3.2.3 Inherent issues in the Nature of jobs at Mashreq Bank There seem to be some inherent issues in the systems and structures of the bank that stands in the way of employee empowerment. The Bank Structure Limits Delegation With many rules in the Emirati banking sector and more being created, most of the managers are scared to take risks with delegation that could lead them into trouble. Management's Disregard for Technology Although most employees believe that managers can have a high degree of control over employees through the sophisticated technological system, it appears that the management do not want to risk using technology to control employees. Hence, they still refuse to delegate authority even when the technology is adequate. 3.3 Recommendations In line with the findings made by the research, the following recommendations are desirable: 1. The board of directors should get more connected to the employees and learn about their problems and issues and encourage delegation. 2. The management should be trained about the benefits of delegation. 3. Middle ranked managers should be taught about the benefits of transformational leadership. 4. Consultation with subordinates should be encouraged through regular meetings and forums. 5. Grooming of younger managers to work with aging managers to break the cycle of groupthink. 6. Promotion systems should be liberalized and encouraged for employees 7. Restructuring of the bank to make delegation compulsory. Conclusion There is lack of employee empowerment at the Mashreq Bank is due to the poor leadership system, inherent issues in the corporate culture and the inherent issues in the nature of the job in the bank. In order to resolve the problems, there is the need for the bank to promote delegation, group younger managers, and entrench consultation in the rules and norms of the bank. References Bass, B. M. (1997) From Transactional Leadership to Transformational Leadership Mahwah, NJ: Erlbaum Publishers. Flick, U. (2009) Designing Qualitative Research London: SAGE Publication. Glassdoor Forum (2012) Mashreq Bank Review by Former and Existing Employees [Online] Available at: http://www.glassdoor.com/Reviews/Mashreqbank-Reviews-E157674.htm [Accessed: 18th June, 2012] IBS Journal (2011) Case Study: Mashreq Bank: Everything Must Go [Online] Available at: http://www.ibsintelligence.com/index.php? option=com_content&view=article&id=15756:case-study-mashreq- bank&catid=147:middle-east-supplement&Itemid=26 [Accessed: 18th June, 2012] Kothari, C. R. (2004) Research Methodology New Delhi: New Age Publishing. McGregor, D. (1966) The Human Side of Enterprise New York: Prentice-Hall Mashreq Bank Careers (2012) Human Resource Unit [Online] Available at: http://careers.mashreq.com/ [Accessed: 18th June, 2012] Mashreq Bank Corporate Governance (2012) Leadership and Management [Online] Available at: http://www.mashreqbank.com/about-us/cg/index.asp [Accessed: 18th June, 2012] Mashreq Bank Overview (2012) About Us [Online] Avalailable at: http://www.mashreqbank.com/about-us/overview.asp [Accessed: 18th June, 2012] Qatar Living (2008) Customer Complaint Against Mashreq Bank [Online] Available at: http://www.qatarliving.com/node/111855 [Accessed: 18th June, 2012] Appendix 1 Dear Sir/Madam, In line with my studies towards my business degree, I will be very grateful if you could take a bit of your time to fill out this survey. I am conducting a study on the influence of leadership, organizational culture and the nature of the job at Mashreq Bank on employee empowerment vis-a-vis job satisfaction and motivation. The idea is to draw inference on whether the leadership, culture and nature of work has an impact on the high rate of turnover at the bank. That is why I am approaching employees of the bank for this survey. I have therefore chosen you because you are either an employee or former employee of the bank. Please note that any information you provide here will be confidential. And as such, it will not be disclosed to anyone without your prior permission or consent. Leadership style Q 1: How close do you think the board of directors of Mashreq Bank are to the ordinary worker? [Very Close] [Quite Close] [Very Distant] Q 2: Do you think that the managers impose their will on employees excessively? [Yes] [Quite] [No] Q 3: Do you think that the senior management committees delegate power to employees in an optimum manner? [Yes] [Quite] [No] Q 4: Are consultation sessions in Mashreq Bank sufficient, in your view? [Yes] [Quite] [No] Q5: How will you classify your immediate supervisor (Transformational: means he respects your personal goals in his leadership role: Transactional: means he is only interested in meeting objectives of the bank)? [Transformational] [Transactional] Organizational culture Q1: In your estimation, what percentage of the time do supervisors consult subordinates before taking decisions relevant to them? [Very Often] [Quite Often] [Rarely] Q2: How will you rate the level of control that your managers exert over you when he delegates work that is normally not part of your duties? [Very High] [Quite High] [Low] Q3: Do you think that the leaders of the Mashreq bank are old? [Yes] [Quite] [No] Q4: Do you find the promotion structure to be satisfactory when compared to other banks nearby? [Yes] [Quite] [No] Q5: Do you think that groupthink is common in delegation and empowerment matters at Mashreq Bank? [Groupthink means that people tend to take decisions based on what others in the group think rather than the fact on the ground] [Yes] [Quite] [No] Nature of job Q1: Do you think that remuneration levels at Mashreq bank rises in appropriately according to your expectations? [Yes] [Quite] [No] Q2: Do you think that the bank's structures encourage delegation and more autonomy? [Yes] [Quite] [No] Q3: Do you think that the technology in the bank is good enough to grant subordinates some space when they are given delegated duties? [Yes] [Quite] [No] Q4: What role do you think competition and public regulations have on the decision of managers to prevent employees from being given delegated powers? Q5: Do you think that the laws of Qatar prevents you from switching jobs? [Yes] [Quite] [No] Read More