A quantitative analysis of the relationship between empowerment practices and service quality outcomes

Australian banks have focused their attention on service quality as a strategic tool for increasing organizational effectiveness and gaining a competitive advantage. Many forms of organizational change have been prescribed by researchers and practitioners alike, involving such techniques as redesign, restructuring, re-engineering and total quality management (TQM). The underpinning concept in all of these change programmes is empowerment of workers (Conger Kanungo, 1988; Forrester, 2000). The literature, however, shows very little research that tests the relationship between empowerment practices and service quality. This paper reports on a cross-sectional study based on a survey instrument developed for quantitative data collection. Based on a stratified sample selected from a target population consisting of three major banks. The study achieved a response rate of 40%. Quantitative analysis based on multivariate analysis techniques indicates that empowerment practices when simultaneously implemented, have a favourable effect on employee well being, productivity, performance and service quality. Based on the results of the study we conclude that a holistic approach must be taken to implement empowerment practices into banks in order to maximize service quality improvements. The results of this study show that empowering the workforce is a powerful strategy that substantially improves service quality in the banks studied. It is important that management understand the need to implement empowerment practices in a holistic and planned manner where practices are successful in promoting employee autonomy.