Employee Satisfaction: A Case Study at Bank Muamalat ... to test factors that drive towards employee satisfaction. ... rewards and welfare and employee satisfaction ... STUDY AT BANK MUAMALAT MALAYSIA BERHAD ...

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  • Economics World, ISSN 2328-7144

    April 2014, Vol. 2, No. 4, 252-264

    Employee Satisfaction: A Case Study at Bank Muamalat

    Malaysia Berhad

    Asokan Vasudevan, Ibrahim Zahari

    Universiti Tenaga Nasional (UNITEN), Kuala Lumpur, Malaysia

    Employee satisfactions emerge as the central subject in this study because employee satisfaction is one of the most

    important factors in determining the success of an organization. Leading from such probe, this study formulates a

    model to test factors that drive towards employee satisfaction. The study considers the most positive and unique

    factors that most organization has, thus suggests that core factors for employee satisfaction notably are leadership

    style, working environment, employee rewards and welfare, and organization culture. The analysis involved two

    phases of qualitative and quantitative techniques. First, the study is based on the management of Bank Muamalat

    Malaysia Berhad (BMMB) to explore how far the relevant factors opined the literature review synchronized with

    the issue being examined. In the second phase, the study developed a questionnaire, based on the findings to reach

    out 1,216 employees of BMMB in 1999. This study found few differences in the factors that affected employee

    satisfaction. Various independent variables hypothesized were significant. In view of more than one independent

    variable, the multiple regression analysis is adopted in this study. It is assumed that these independent variables:

    leadership style, working environment, employee rewards and welfare, and organization culture, explained the

    employee satisfaction variation. The results show that there is significant relationship between employee

    satisfaction and these independent variables. The statistical package for the social sciences was used to analyze the

    data. It is anyhow the result shows that the independent variable: organizational culturethe most important

    variable that determines employee satisfaction.

    Keywords: HRM practices, Gen-Y, organization performance


    Organization exists to achieve the highest profits and productivity. In many instances, most organizations

    that focused on profit, neglected the factors that contribute to employee motivation or employee satisfaction.

    However, during the company facing downstream of productivity because of external factors such as economic

    downturn and strict competition regardless of local or international companies and also internal factors such as

    high absenteeism, aggressive employee turnover, and high cost of production, they realized the importance of

    their most important assets, that are their employees. In a study of a local university, it is reported that 59.5%

    lecturers have the intention to resign (Nor Salina Saidin, 1994/1995). This will has a very negative impact on

    the institution with respect to the cost of replacements and also overall job interruption. There are various

    Asokan Vasudevan, Lecturer, Graduate Business School, Universiti Tenaga Nasional (UNITEN).

    Ibrahim Zahari, Ph.D., Graduate Business School, Universiti Tenaga Nasional (UNITEN).

    Correspondence concerning this article should be addressed to Asokan Vasudevan, Infrastructure University Kuala Lumpur,

    Jalan IKRAM-UNITEN, 43000 Kajang Selangor, Malaysia. E-mail: asokan@iukl.edu.my.





    models and theories trying to explain the peoples behavior in relation to motivation for work. There are many

    researches and studies since year of 1930s when human behavior scientists, such as Hawthorne, Maslow,

    McGregor, Herzberg, Skinner, Vroom and Rotter including the area of engineering and medical, came out. This

    research is conducted in Bank Muamalat Malaysia Berhad (BMMB) with its employees. Since its establishment

    in year 1999, from the merger and acquisition of two local banks, Bank Bumiputra Malaysia Berhad and

    Commerce Bank Berhad, BMMB that was owned by 100% bumiputra runs the Islamic banking and financial

    business. The total workforce of BMMB is 1,216 employees throughout the whole Malaysia. Its head office

    location is in Jalan Melaka, Kuala Lumpur. Of all the recent developments surrounding the use of employee

    surveys, perhaps none is more exciting than the advent of linkage research. Linkage research involves

    integrating and correlating data collected from employees with data in other key organizational databases. The

    purpose of linkage research is to identify those elements of the work environment and other factors, as

    described by employees, that correlate, or link, to critically important organizational outcomes such as

    customer satisfaction and business performance. Obviously the stronger the linkage between employee survey

    results and other key measures of organizational effectiveness is, the greater the value of employee survey

    efforts is. The purpose of this research is to review the literature that examines the linkage between employee

    satisfaction with the leadership style, working environment, employee rewards and welfare, and organization

    culture. This study found small differences in the chosen variables as indicated above. Various variables in all

    the four dimensions hypothesized, were significant. Most of the respondents were satisfied with the

    organizational culture comparing to other variables.

    Problem Statement

    The thread of reasoning loomed in the background of this study evokes one major problem: customer

    dissatisfaction and increasing of complaints in relations to the products and services of this organization. Thus,

    profitability and productivity decrease (Cascio, 1986). An organizations vision is to achieve the highest

    productivity and maximize the profit (Steinhaus & Perry, 1996; Umstod, Cecil, & Mitchell, 1976). The

    backbone of an organization is their employees that play the important role in ensuring the survival of the

    organization. The performance of the employees will eventually be translated into the performance of the

    organization. Thus, employees should perform their utmost level and ability to be part of the strategic

    direction of the business for any organization. The challenge of the present study is to identify how these

    factors affect employee satisfactions and eventually increase the organizations performance. The purpose of

    this study is to examine the impact from several factors and variables have on the overall employee


    Research Questions

    What are the factors that influence employee statisfaction?

    The Objectives of This Study

    The objectives of this study are the following:

    (1) To investigate with a greater understanding of employee opinions, values, expectations and needs;

    (2) To investigate the survey results which influence management decision making and planning and to

    identify priorities for change;

    (3) To investigate the opinions of bank employees to the satisfaction regarding the overall satisfaction; and



    (4) To investigate the baseline measurement against which to track the employee satisfaction towards the

    management and other employees.


    The following hypotheses will be tested:

    H1: There is a relationship between the employee satisfaction and the leadership style, working

    environment, employee rewards and welfare and organizational culture itself.

    H2: There is a relationship between leadership style and employee satisfaction.

    H3: There is a relationship between working environment and employee satisfaction.

    H4: There is a relationship between employee rewards and welfare and employee satisfaction.

    H5: There is a relationship between organization culture and employee satisfaction.

    ES = 0 + 1LS + 2OC + 3ER + 4WE + e

    Literature Review

    A research on employee satisfaction is important and popular for organization to solicit employee feedback.

    The survey may be conducted and it can be morale boosting for those who may not have any other opportunities

    to confidentially express their views. Employee satisfaction surveys allow for increased productivity, job

    satisfaction, and loyalty by identifying the root causes of employee satisfaction and targeting these areas.

    Employee engagement surveys measure the extent to which employees are passionate about their work and

    emotionally committed to their company and to their coworkers. Organizations may also benefit from

    conducting a more comprehensive organizational assessment survey (Higgs & Ashworth, 1996; Tanur &

    Brigitte, 1995a; Chin & Sheehan, 2004). Listening to employees insights and suggestions for improvement

    provides the organization with valuable information that can be acted upon to increase satisfaction in the

    workplace. Also, employees leaving the organization can provide valuable feedback through employee exit

    interviews. Employee satisfaction, opinion, attitude, engagement, and organizational assessment surveys along

    with exit interviews are all tools that may be used to measure and improve loyalty and commitment (Higgs &

    Ashworth, 1996; Tanur & Brigitte, 1995a; Chin & Sheehan, 2004). The information from these surveys will

    allow you to boost organizational productivity and positively affect your organizations top and bottom lines.

    They are very effective tools for measuring and ultimately improving various relationships within organizations.

    Based on Figure 1, an employee survey will provide improved profitability and organizational

    performance by identifying the root causes of employee behavior (Anderson, Fornell, & Rust, 1995). This

    allows the organization to take action targeted directly at those root causes. Based on the above, the

    assessments conducted by NBRI also assess the thoughts, feelings, and behaviors of employees. These aspects

    are very important to determine the employee satisfaction. It analyzes the root causes resulted in improved

    organizational performance and productivity (Anderson et al., 1995; Steinhaus & Perry, 1996; Anderson,

    Fornell, & Rust, 1997; Balfour & Weschler, 1996). Most of the researchers relying primarily on the judgment

    of their own observations. There are close connection between satisfied employees and satisfied customers.

    Both have positive relationships. This will increase the sales of the products and services; it will also push the

    company to perform better in terms of profitability and productivity (Steinhaus & Perry, 1996; Umstod, Cecil,

    & Mitchell, 1976). For example, reviewing the in-depth profiles of 101 service companies (Zemke, 1989)

    concludes that in many organizations known for exemplary customer service, employees are indeed more

    satisfied because they are treated with the same respect with which they are expected to treat their customers. It



    is highly important to improve employee satisfaction that eventually leads to improving customer satisfaction

    (Allison, 2000; Bernhardt, Donthu, & Kennet, 2000; Davis, 2009; Eskildesen & Jens, 2000).

    Figure 1. Relationship between employees and customers. Source: National Business Research Institute, Retrieved

    from http://www.nbrii.com/Employee_Surveys/.

    In conclusion, most studies on the connection between leadership and individual innovation have explored

    the role of theory-based leadership styles, originally developed for other purposes such as the assessment of

    leaders impact on performance or effectiveness rather than innovation-related outcomes (Bass, 1985). They

    did not attempt to develop models aimed specifically at finding out how leader behavior could stimulate the

    innovative behavior of employees. Leadership models developed for more routine settings may not generalize

    to the leadership of innovative people (Mumford & Licuanan, 2004). Also, the studies that were carried out

    focus on the leaders role in stimulating creativity (Shalley & Gilson, 2004), whereas the role of leaders in

    employees implementation of innovations received little attention. We, therefore, explored how leaders may

    trigger both these aspects of employees innovative behavior. There are various views as to how leadership

    differs from management and entrepreneurship (Basadur, 2004; Basu & Green, 1997). Leadership is seen as a

    subset of managerial activities; others see leading and managing as overlapping roles, yet others describe them

    as different processes. For example, Kotter (1990) differentiates their intended outcomes: Management seeks to

    produce predictability and order, while leadership aims to produce change. In Kotters view, leaders and

    managers are not necessarily different persons, but rather different roles. This also holds for entrepreneurship.

    For example, when organizations grow beyond a few employees, entrepreneurs (should) start worrying about

    how followers must be directed towards specific goals (Shane, 2003).

    Research Methodology

    In reviewing the general business literature, the various studies that the authors have performed, and

    particularly the research that has examined the components of employee satisfaction associated with customer

    satisfaction, and ultimately, business performance, and employee satisfaction has a major impact on the

    How employees and customers drive

    organizational performance

    Positive corporate/

    Brand image

    Greater customer satisfaction

    & Loyalty

    Favorable employee opinions,

    attitudes, &


    Improved organizational




    customer satisfaction. There is a linkage between customer satisfaction and business performance and this is the

    linkage research model (Jack, 1996).

    Figure 2. Linkage research model.

    From Figure 2, it explains the following conclusion:

    Employee and customer satisfaction are strongly and positively linked;

    A leadership value system easily observed by employees and emphasizing customer service and product

    quality, is fundamental to this linkage;

    A leadership value system easily observed by employees and emphasizing customer service and product

    quality, is fundamental to this linkage;

    Specific practices that the organization and its managers derive from this value system include providing

    employees with the support, resources, and training required to perform their jobs effectively, involving them in

    decisions that affect their work, and empowering them to do what is necessary to meet customer objectives and

    expectations (Maslow, 1970; Vroom, 1967);

    Employee retention is positively related to customers satisfaction with the quality of service they receive;

    Quality and customer satisfaction have long-term positive relationships with customer retention, market

    share, and profit-ability;

    Certain practices that increase short-term sales and profits may do so at the expense of employee and

    customer satisfaction;

    Investment in practices that support qua...


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