The effect of structural and psychological empowerment on customer orientation

Master's Thesis of International Business Management

Abstract

     In today's business world, any organization that cannot produce faster, cheaper and with higher quality than its global competitors will be removed from the market. In this highly competitive field, organizations can be successful if they use all their human capacity. Today, one of the most important challenges for managers in organizations is insufficient use of intellectual resources, mental power and potential capacity of human resources. It seems that the existence of empowerment, due to providing the right context, leads to benefits for the employees and the organization, and can also cause customer satisfaction. In this research, the impact of structural and psychological empowerment on customer orientation in Parsian Bank branches in Tehran has been investigated. In this research, distinctions have been made between structural empowerment and psychological empowerment as a work attitude, and the role of both in relation to HRM and customer orientation has been defined. The research results indicate that structural empowerment is positively related to psychological empowerment, job satisfaction and organizational commitment. Also, psychological empowerment and job satisfaction and effective commitment moderate the effect of structural empowerment on customer-oriented behavior.

Key words: structural empowerment, psychological empowerment, job satisfaction, organizational commitment, customer orientation.

Introduction

Today, most organizations are managed based on task structures, where power descends from the top of the pyramid to lower levels. Such organizations are not able to make optimal use of their employees and their inherent limitation is more than they can exploit the intellectual resources and creative power provided by employees. (Ahmadi et al., 2013: 20).

What managers are looking for today is finding solutions to work problems, using less scarce organizational resources, and on the other hand, the expectations of today's employees, a sense of ownership, meaningful work, the need for more openness and honesty in work, self-discovery and self-improvement. (Ahmadi et al., 2013: 20).

Empowerment[1] is a concept that can both provide the interests of the organization and create a sense of ownership and pride in employees, and actually create a win-win relationship between the organization and employees, which is the ideal of many organizations and their employees. (Blanchard and Randloff, 1327: 1387)

Removal of the source of the ability of humans, which is not fully used, leaves it available. Capable employees benefit the organization and themselves. They feel more purposeful in their jobs and work lives, and their engagement translates directly into continuous improvement in work systems and processes. In a powerful organization, employees implement their best ideas and innovations with a sense of excitement, ownership and pride, and in addition, they work with a sense of responsibility and prefer the interests of the organization over their own interests. (Ahmadi et al., 2013:21).

2-1 statement of the problem

     Rapid environmental changes force organizations to turn to different management mechanisms to adapt to the environment, and empowerment is one of these mechanisms and plays a key role in the life of organizations. New age organizations have moved away from traditional and hierarchical structures and have turned to horizontal, network or team structures. These structures give more importance to relationships and social dynamics and place humans at the head of affairs (Ahmadi et al., 2019:22). Organizations are looking for employees who can make the best use of advanced technology, find innovations and improve their products and services (Mohammadi, 2001: 175). Today, one of the most important challenges for managers in organizations is the lack of adequate use of intellectual resources, mental power, and the potential capacity of human resources (Scott and Jaff, 2013: 21). On the other hand, today, organizations bear a huge cost due to the lack of commitment of their employees towards the organization and the customer. It seems that the existence of empowerment, due to providing the right context, leads to benefits for both the employees and the organization, and it can also cause customer satisfaction. (Scott and Jaffe, 21:1383).

The purpose of empowerment is to use people's brains like their arms.Until the 1990s, thinkers and researchers of organization and management considered human resource empowerment to mean management actions and strategies such as delegating authority and decision-making power to lower levels of the organization, sharing employees with information, and designing an appropriate organizational structure. This type of view of empowerment is called a mechanical or organizational approach. However, since the 1990s, organizational psychologists introduced human resource empowerment as a complex and multidimensional concept and distinguished between situational characteristics (managers' actions) and employees' perceptions (Mohammadi, 2001:176). Recently, researchers have considered empowerment from the perspective of employees' beliefs and feelings, which is called psychological empowerment. Researchers consider psychological empowerment to be the process of increasing internal job motivation, which includes four areas: feeling influential [2], competence [3], feeling meaningful [4] and autonomy [5] (Shah Heydaripour and Kamalian, 2013).

     On the other hand, from an organizational point of view, the performance resulting from customer orientation is tangible when customer orientation can lead to the customer benefiting directly, both in the short term and in the long term. While most companies consider the value of customer orientation essential for long-term success and profitable relationship with customers, this attitude may fail due to the inability of employees to communicate effectively and usefully with customers. To solve this problem, one of the ways that can be useful is empowering the employees so that they can communicate with the customer and benefit the organization and the customer. Today, customer satisfaction is the guarantee of the organization's success in the competitive environment. In traditional management, all customers were looked at with the same eye, but according to Jack Welch, the former CEO of General Electric: until the 90s, anyone could be a customer, but in the new era, each customer is considered a unique person (Vaezhi and Sabzikaran, 2019).

Nowadays, the goal of every business is to create and maintain customers. Empowered employees can quickly respond to customer requests, handle complaints, and be more involved in the service process. Empowerment is a way to effectively respond to customers' demands and subsequently achieve their desired quality level. (Yahiai Ilaei, 1388:189)

The problem that the banking industry is facing today as a service job is customer orientation, so it can be claimed that the banking industry needs customer orientation. Therefore, if banks want to be customer-oriented, they must have customer-oriented employees. (Yahiai Ilaei, 205: 1388). One of the ways to increase customer orientation of employees is to empower employees, which is presented in this research to solve the problem. Therefore, this research aims to investigate what effect structural and psychological empowerment has on customer orientation? It can be said that in a world full of open and hidden competition, organizations must have four main characteristics in terms of thought, structure, processes and action, which are: be efficient in terms of income and expenditure, be customer-oriented, quick to act and flexible, and continuously improve (Ahmadi et al., 2019: 25). Therefore, in order to achieve these characteristics, the most important tool is the human force, which must be made capable, as Scott Jaffe [6] (1991) says: Today, the main source of competitive advantage does not lie in technology, but in the ability, dedication, commitment and customer orientation of the workforce. The most important resources of an organization can be referred to the results of the mobility and creativity of its employees, and empowerment is the driver of this growing work environment. (Mohammadi, 1381) states that there are many environmental stimuli that encourage organizations to empower their employees, among which the most important ones are: the effects of technology on the work environment, increasing customer expectations, and the necessity of organizations' flexibility (Blanchard and Randloff [7], 132:1387)

As it is clear, customer orientation and adopting a customer-oriented approach for organizations is considered a vital matter, and not paying attention to it leads the organization towards It leads to destruction. (Nazarmand, 2013)

Since the variable relationship between empowerment and customer orientation has not been examined in any research in Iran, it prompted the researcher to test and measure the relationship between structural and psychological empowerment and customer orientation.