Sixth International Conference On Advances In Economics, Social Science and Human Behaviour Study - ESSHBS 2017
Author(s) : IREEN AKHTER , SHAKILA YASMIN
Satisfied employees are likely to work heart and soul. As a result productivity and quality of work are supposed to be high which in turn should help a company to achieve its financial objectives. Studies such as Hassan, et. al, (2013); Harter, et. al, (2002); and Huselid (1995) suggest that in achieving financial objectives employee satisfaction plays the significant role. But Keiningham et. al. (2006); Pritchard and Silvestro (2005); Silvestro (2002); Bernhardt et. al. (2000) and others found insignificant or no association between employee satisfaction and financial performance. Therefore, the results of empirical studies are inconclusive. This study has investigated whether employee satisfaction pays off in terms of organizational performance in the context of the banking sector of Bangladesh. Private commercial banks operating in Bangladesh have been taken as subjects of the study. Organizational performance has been measured by normalized profitability. To determine normalized profitability return on asset data from published annual reports have been used. To measure employee satisfaction, questionnaire survey has been conducted on mid-level executives and managers of selected banks. Survey has been conducted on top and bottom 20% banks. The research hypothesis is aggregate employee satisfaction score of the top 20% companies are significantly higher than that of the bottom 20% companies. This study shows positive association between EOS (overall employee satisfaction) and financial performance. On average employees of top performing banks have higher levels of satisfaction with their jobs than their counterparts in low performing banks. But low R-square value indicates that the eight dimensions of employee satisfaction can explain variability in financial performance only at a very limited scope. Among the eight dimensions of satisfaction, only three that is, banks with high employee morale (EM), better feedback and review process (FeedRev), and good work-life balance (WLB) have better financial performance. The other five hypotheses, that is, banks scoring better career opportunities (CO), compensation and benefits (CB), knowledge sharing (KS), senior leadership (SL) and fairness and respect (FairRes) are not better in terms of financial performance. As the results are inconclusive of any causal relationship between employee satisfaction and financial performance, future studies can focus on taking other factors influencing financial performance and test if employee satisfaction has a moderating role on financial performance.