CHAPTER - I

INTRODUCTION

1.1 Introduction
The achievements of organizations have been transcribed on contributions made by engaged
employees. Engaged employees means employees’ involvement tangibly, mentally and
passionately in performance of their roles in the organization. These employees become the
financial drivers of an organization. The employees, who are involved in their work, give
superior performances by extending themselves and continuously endeavouring to
outperform. Augmenting employee engagement has grown in organizations through the
sphere. Organization’s healthy work culture and communication practices make employees
cultivate and advance their potential to become engaged. Now-a-days competitors can copy
the performance of the services and products provided but they cannot imitate the vigour,
dedication and absorption of the employees at the workplace. It is because employees create
sustainable competitive advantage resulting in long-term return on investment. If employees
are properly engaged, they will try to stretch themselves beyond what is expected from them
for an outstanding contribution. Employee engagement is more an inner convention than a
physical one.
Employees choose how they perform and the extent to which they are engaged. Engaged
employees feel inspired by their effort, they absorb customers by their tactics and they
preserve attention about the upcoming challenges of the organization. This is only possible
when the employees are psychologically and enthusiastically attached to their work. These
attachments reproduce the level of commitment among the employees towards their
organization and its values. The levels of commitment enable the employees to be aware of
the prospect of the organization and encourage them to invest unrestricted efforts for the
organization. Therefore, the employees who are conscious about the organization situation
and work like team members are said to be engaged.
Around the turn of the century, many major consulting firms traced the term employee
engagement. Outwardly the time was developed and engagement was ambiguous. But why
was that so? Why did organizations become attentive in employee engagement after the turn
of the century?”It is difficult to come up with an unambiguous answer. It can only be
guessed that “a set of changes that were and still are taking place in the world of work
constitute the background for the emergence of the term, engagement in organization”. “The
change of the world’s work (world at work, 2008) is from traditional to modern”. Earlier in
the traditional world of work the employee enjoyed life-time employment, individual work,
but gradually looking at the continuous change of work, the company wants diversity in
manpower. That’s the reason the employee has to strive hard to survive in the current
employment situation. Organizations focus more on team work than on individual work in
today’s world of work.
All the above changes require a considerable psychological variation and involvement on the
part of employees. In other words, we can say that more than ever, employees need
psychological capabilities in order to thrive and to make an organization survive. So, the
challenge today for an organization is to engage the employees and activate their minds and

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hearts at each stage of their work. Therefore, employee engagement has appeared as a
serious driver of organization for its victory in today’s competitive marketplace.
Engagement has a key link to customer satisfaction, company reputation and overall
stakeholder value. Hence, to increase a competitive edge, organizations are evolving plans
for human resource to employee engagement and to employee commitment.
1.2 Prominence of Employee Engagement and HR Initiatives
Mike Rickheim (2013) said that organizations appeared in the form of declining economic
environment over the past three years. In this situation, organizations instead of doing cost
reduction, have shifted their interest towards investing for growth. He found that “twenty-
four percent of organizations are investing for growth in the coming years, while only 16
percent said that they were doing this over the past three years, representing a significant
shift towards investment”. “But many companies, though, are dodging their stake, cautiously
entering the growth mode while still maintaining a rigorous focus on cost containment”.
Further he said that organizations will invest capital in those talents, who are ready to
establish their effort in their work completely. He also anticipated that establishing effort is
nothing but involvement towards the work, which gives birth to the term engagement. Hence
he observed that “engagement is not just a warm, fuzzy thing. It is about giving people the
tools they need to succeed in their career, which in turn drives the outcomes that the
organizations are seeking in the marketplace.”
Employee engagement is a sunshade term that arrests any number of aspects including job
satisfaction. It is a notion that helps to cultivate strong positive attitudes among people
towards their work. It is an important management topic nowadays. “The significance of
employee engagement topic is established by its optimistic concerns for the organization and
employees – work engagement is a positive experience in itself”(Shaufeli et al., 2002). There
are several positive consequences from construction of employee engagement. Both the
practitioners and academic literature appears to be more or less dependable concerning the
paybacks of employee engagement.“Almost all major consultancy firms stated that there is a
connection between employee engagement and profitability increase through higher
productivity, increased sales, customer satisfaction and employee retention” (Bakker and
Leiter, 2010).Harter et al., (2002)found “a positive consequence in work engagement which
is associated with customer satisfaction, productivity, profit, employee turnover. Schaufeli
and Salanova (2007) also indicate that “employee engagement is associated with positive
work attitudes, individual health, extra-role behaviours and performance.”
Employee engagement places a major role in confirming that, people continuously stretch
themselves even when times are hard for an organization. This role sometimes comes into the
picture in-terms of organizational commitment, belongingness, job satisfaction and employee
involvement. Accomplishments of all these roles have associations with higher level of
productivity, more customer satisfaction and low rates of absence. It is an idea that helps to
develop strong positive attitudes among people towards their work. To increase the positive
attitude, the significance of HR initiatives is also a matter of concern for the organization. It
is so, because HR initiatives and employee engagement are connected to employees. HR
initiative drivers involve training, performance management, workforce health and happiness,
work / life stability and leadership expansion platforms that become principal for an
employee to be effectively involved as a useful resource for an organization.

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1.3 An International Viewpoint on Employee Engagement
A number of international consultancy corporations have measured engagement levels. In
2003, Gallup, a USA-based research company came up with the results of its third global
analysis of nations with respect to specific employee engagement levels in the employee
engagement index in SHRM (2007) Research Quarterly. By using Gallup’s own engagement
survey–Q12, “11 countries were surveyed and found that the United States has the highest
level of engagement with a workforce that was 27% engaged, the next highest was Chile at
25%, then Canada at 24%”. The Gallup Organization (2004) found “critical links between
employee engagement, customer loyalty, business growth and profitability”.
In an extension of the Gallup findings, Ott (2007) reported that “higher workplace
engagement predicts higher earnings per share (EPS) among publicly-traded organizations”.
When compared with industry competitors at the organization level, he found that “more than
four engaged employees for every one actively disengaged, experienced 2.6 times more
growth in EPS than did organizations with a ratio of slightly less than one engaged worker
for every one actively disengaged employee”. The findings can be considered as reliable as
the “variability in differing industries was controlled by comparing each company to its
competitor, and the patterns across time for EPS were explored”.
According to the International Survey Research (ISR) report (2004),“out of 10 different
countries, Australia faired somewhat better with results ranking equal with the Netherlands,
reporting 46% national engagement”. Hewitt Associates (2004) “compared Australia with the
other 12 nations on their levels of engagement in their annual engagement survey. Amy
Adkins (2016) shows in his study that “the highest percentage of engagement among United
States employees in their job is 34.1 %, whereas the average is 33.0%.The findings of the
Hewitt Associates were based on the average engagement score that showed more Asian
countries were included in this sample compared to the Gallup and ISR surveys, which
pushed Australia back to the eighth position, reporting an average engagement score of
56%”. Remarkably, the United States still reported “a higher score than Australia with 60%,
but was ranked seventh overall”. The United States also reported that “the highest scoring
nation was the Philippines with a score of 75%, followed by Taiwan with 68 %”.Each
consultancy firm used a different measure of engagement, had its own method of reporting
their result that included different countries within its sample, and conducted the research in
different years. The findings of the Hewitt Associates study concluded from the above data
that “Australia’s engagement levels are about average when compared to international
rankings”.
1.4 Employee Engagement – An Overview
Hewitt Associates ( 2004 ) defines “employee engagement as those who say - speak
positively about the organization, stay – desire to be an effective member and strive -
continue to perform beyond minimal requirements for the organization”. Employee
engagement initiatives have also become more conventional since Gallup first introduced its
“Q12 employee engagement survey in the late 1990s, with nearly 30 million workers being
assessed on the gadget along with supervisory training”. The survey indicated that “many
organizations progressively measure their managers on engagement metrics and expect them
to maintain the employee engagement level. Engaged employees are more profitable,
productive, focused, have fun and less likely to leave the company because they are

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engaged”. “Employee engagement is closely linked to employee turnover, customer
satisfaction, loyalty, productivity, safety and profitability criteria” (Harter, et al, 2002).
Studies on employee engagement (Tower Perrin 2003) linked the same to customer impact
and financial results found by Schmidt and Hayes (2002). Schmidt and Hayes (2002)
suggested that “there exists a close relationship between high levels of employee engagement
and lower staff turn-over rates, higher customer satisfaction and loyalty. Therefore the need
to construct career development, growth opportunities, appropriate leadership styles and
work–life balance are deemed important to attract, retain and engage employees”. According
to Watson Wyatt (2005), consulting companies, “as organizations globalize and become more
dependent on technology in a virtual working environment, there is greater need to connect
and engage with employees to provide them with an organizational identity”. According to
the Corporate Leadership Council (2004), “engaged employees are less likely to feel
exhausted and express cynicism towards the organization. They are assets who will guarantee
organizational success”.
1.5 Problem Statement
Employee engagement has become a prevalent managerial concept during the past two
decades. Organizations use different employee engagement tools in order to increase
performance of employees as well as the organization itself. The current study has been
undertaken in the banking industry. Employees at different levels in the banks have different
roles to perform. They contribute differently as per their level in the banks. The involvement
of employees in the banks, also differ looking at their respective job role. The performance
of banks depends on the level of involvement of their employees. In order to explore the
engagement level and factors that contribute to engagement level, the study included the non-
management, lower management, middle management and senior management employees in
both public and private banks in Bhubaneswar city. There are a few studies involving
employees in the banking industry in Odisha. This study used a conceptual framework from
the literature review and applied statistical tools to identify the factors contributing to
engagement of employees in six banks operating in Bhubaneswar city, i.e. Axis, HDFC,
ICICI and SBI, Allahabad, and UCO.
1.6 Background of the Study
Organizations have to understand that in today’s continually changing business scenario, the
most cherished resource that needs to be leveraged is human resource. This means not just
attracting and retaining the talent but keeping them driven and committed to accomplish the
organization goals. The term engagement is characterized as a feeling of commitment,
passion and energy which translate to the high levels of effort, persistence with exceeding
expectations, taking the initiative and increased innovation.
As stated by Macey et al.(2008), “ employee engagement is a concept with a sparse and
diverse theoretical and empirically demonstrated relationship among potential drivers. The
consequences of engagement as well as components of engagement have not been rigorously
conceptualized, much less studied”. David & Associates, (2006) said that as “human capital
becomes a focal point in today’s business, it is important to note that the collective body of
employees’ knowledge, skills, and experience only become valuable if and when employees
apply their capabilities. Employees may decide not to use their full potential. These
disengaged employees not only underperform but may even undermine, what others are

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doing. Engaged employees in contrast, are champions for the company, and desire to create
value at every minute of the day”.
Nowadays, society and organizations perceive extraordinary transformation in an
increasingly global marketplace, with many organizations competing for talented human
resource. As organizations advance into a borderless environment, the capacity to attract and
engage the talent will become progressively significant. In view of these transformations, the
SHRM Special Expertise Panels, (2006), identified a few developments in the Trends Report
that are likely to have a significant impact on employee engagement. The report highlighted
that “due to the increased demand for work/life balance, the shifting relationship between
employers and employees need to be dynamic. The organizations are required to understand
what employees need and want and then determine how to meet those needs”. Alexandria
(2006), a special expertise panel member said in the Society for Human Resource
Management that, “the recent trends are now to focus on employee engagement aspects, like
employee-employer relationship as partnerships and increased demand for work/life balance
between employees”. According to the above expert panel, “the role of human resource is to
establish the link between employee performance and its impact on business goals”.
Currently banks are functioning in an extremely expensive scenario. It is relevant to note that
banks need distinction among themselves. According to the McKinsey Report (2013),
“Reimagining Banking in India: Gearing Up to Meet the New Environment” had made
resilient progress across many metrics such as improving access to banking products and
services, maintain stability in the sector and creating value for shareholders. New challenges
like containing the supersonic velocity of novice products, dearth of appropriate and
advanced skills in sales, lack of commitment to service, increasing piles of credit non-
repayment and inaccurate operations are to be met before banks dream to accomplish greater
heights. Banks essentially require those employees who are committed to their work and
endeavour to take their organizations to superior altitudes. Against this backdrop, the study
is relevant in the services sector, especially in the banking sector, which did not have holistic
work pertaining to the idea of employee engagement.
1.7 Rationale of the Study
“Today banks need innovation in their distribution channels to cater to changing customer
preferences, as well as to improve productivity and cost-efficiency. That can be possible if
employees understand their role, responsibilities and are committed to their work and strive
to take organization to greater heights” (McKinsey and Company, 2013). The Dale Carnegie
Training teamed with MSW Research (2013) studied the functional and emotional elements
that affect employee engagement in the banking industry. The functional elements focus on
work-related activity and emotional elements focus on how an immediate supervisor treats
and speaks to their people. Dale Carnegie Training team have conducted a survey in a
national perspective with a sample of 150 banking employees and revealed that a “little over
one–third of those surveyed were identified as being fully engaged while about one out of
seven were disengaged”. At the same time, “the disengaged and the partially disengaged”
groups totalled to 65% of the workforce”.
The finding is challenging and has its implications in other contexts. Keeping this in view,
the study was conducted in the banking sector whose performance greatly depends on
employees’ involvement in day-to-day banking activities. Precisely, the rationale of the study
is discussed from two important dimensions: theoretical significance and practical inference.

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The theoretical significance has been brought from the existing literature to design a
conceptual model. The practical relevance is the role of important engagement drivers that
have been revealed from this study which could help managers to understand which drivers
contribute more to employee engagement and which drivers less to work further.
1.8 Significance of the Study
In today’s dynamic global market, it has become necessary for organizations to magnify
internationally to gain competitive advantage. Globalization has forced organizations and
human resources functions to redefine their strategies. The management requires capitalizing
on the recent HR changes by devoting time, money and energy. In order to amplify the speed
of the growth, the institutions need to revamp and revisit their HR strategies and update
themselves with the recent armour by channelling resources in the direction of current change
in the domain. Human resource professionals of every organization and those who have
significant concentration in the area of human resource management should realize the
growing prominence of human capital and recognize the need to build up effective human
resource strategies. Today, banks exist and function in a totally changed scenario as
compared to the past. Several public sector banks have become tech-savvy and numbers of
private banks use aggression in their approach every day to promote their products and
services. This progresses has a profound influence on the employees in the banks. To meet
these challenges, both public and private sector banks have to update, engage and channelize
the view to convert employees into energetic and enthusiastic associates in the change
process. Thus it is vital that the study, identifies the engagement drivers that work in public
and private banks to facilitate the employees to execute well.
1.9 Methodology of the Study
This is an exploratory study. It is based on the employee engagement practices and HR
initiatives in public and private sector banks. In total, 340 questionnaires were distributed
among the employees in 6 banks at Bhubaneswar. However, there were 304 valid responses.
The study was based on primary and secondary data. Primary data was collected using the
questionnaires with direct and close-ended questions containing demographic variables and
various factors influencing employee engagement. Secondary data was collected from
published material, annual reports, and computerized database of the banks. The detailed
process of analysis has been discussed in the research methodology Chapter 3.
1.10 Aim of the Study
The aim of the study is to assess the existing research on employee engagement and to
identify the gaps between the employee engagement being accomplished and the desire to do
so. The study also attempts to accumulate the employee engagement drivers and their
consequences in private and public sector banks and supplement the inferences by providing
perceptions into how banks can succeed in the work environment to engage employees. In
this context, the study provides solutions by familiarizing oneself with the employee
engagement concept and its drivers in the banking industry for any subsequent
accomplishment. The study also aims to find the demographic variables and their relationship
with employee engagement and find the factors contributing to employee engagement in each
bank. Also, this study attempts to emphasize the need of HR initiatives that will help the
employees to become more engaged in the organization. The present study will help the
leaders as well to focus on areas where the bank can yield initiatives to increase the
engagement level.

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In summary, it is clear that employee engagement has emerged as a serious driver of
organization success in today’s era. Employee engagement is a parasol that captures any
number of internal as well as external factors. It is an idea that helps to develop strong
positive attitudes as an internal factor among people towards their work. Employee
engagement and various HR initiatives, being part of the human resource management
practices mostly affect the work environment of the organization. Hence it is the principal
responsibility of the employer to ensure better HR initiatives and establish the factors that
would contribute to employee engagement in the work environment.

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