Abstract:
This paper argues that employee empowerment promotes organizational performance.
On the basis of a positive relationship between employee empowerment and financial
performance of service firms identified by the existing literature, a research question was
probed in this study to find out whether the high income growth rate of private sector
commercial banks is due to a high degree of employee empowerment in those banks. This
study attempted to answer this question by measuring the degree of empowerment in the
state and private sector commercial banks in the country. Degree of empowerment was
measured in terms offour factors: Power to make decisions that influence organizational
performance. Information sharing on key aspects of organizational performance,
Knowledge that enables employees to contribute to organizational performance, and
Rewards based on organizational performance. The study, which was based on a
questionnaire survey covering a sample of hundred front line employees in four banking
institutions, concluded that the private sector bank employees are highly empowered than
state sector bank employees. Thus it was suggested, when other factors remain constant,
the high income growth rate of private sector banks has been contributed to some extent
bv the high degree of employee empowerment. The empowered state of mind of private
sector hank employees would help to delight customers by exceeding their expectations.
Increased customer satisfaction, customer retention, and expansion of market share might
have resulted in the increased financial performance. The implication of the study for
managers and executives is that they need to introduce planned change in their
organizations with the aim of disseminating power, information, knowledge, and rewards
among subordinates; the process often referred to as empowerment of employees.
