This chapter consists of the background of the study, research purpose, research questions and significance of the study. This chapter also lists the limitations of the study as well as the definition of key terms, for a better understanding of the entire study.
Research Background
Since the global economic crisis in 2008, Honduras as well as other developing countries experienced an economic slowdown. Economic recession plus other social problems have brought instability to the country. Under these circumstances it has been difficult for some organizations to adapt to the changes that come along with the crisis. The country‘s public debt increased in the third quarter of 2014, owing to effects of global economic crisis and the political crisis in the country (ECLAC, 2014).
Human resource development plays an important role when facing the challenges of a recession. Organizations have to make an extra effort to keep the employees motivated and satisfied with their job in order to reach the organizational mission and goals. Job satisfaction and organizational commitment are considered to be key job attitudes that predict desirable work behaviors in the workplace. There are many factors affecting the level or job satisfaction and organizational commitment among employees, it is very important for HR professionals to be aware of these factors. This study focuses on training and development, compensation, job stress and the effect these have on job satisfaction and organizational commitment. Several studies have shown a positive correlation between organizational commitment and job satisfaction, and also a positive correlation between organizational commitment and organizational performance.
One of the roles of human resource professionals is that of training and development.
According to Arthur, Bennett, Edens and Bell (2003), many factors influence the continued need for individual and organizational development, such as, maintaining a competitive advantage in the marketplace, to adapt to change, to improve employee skills and knowledge, to increase productivity and to communicate the goals of the organization to the new employees. Training also helps to improve the employee‘s overall satisfaction and commitment towards the organization. Nowadays organizations are investing a lot on training and development; this is
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because the importance of the human resource cannot be underestimated in an organization.
According to Gammie (1996) organizations that have properly selected their employees and provided effective training for them will have a competitive advantage over those whose poor selection and training methods have allowed the accumulation of ineffective employees.
Therefore, due to the fact that organizations success depends much of the ability to select, train and retain the best employees, this study will examine the effect training and development has on employees‘ job satisfaction and commitment. Other than training and development, compensation and job stress are also important factors that cannot be ignored by organizations and that also affect the satisfaction level of employees.
The way employees perceive their compensation affects the way how they behave in the workplace. The major reason most people work is because they need salary or wages to survive and to satisfy their lower and higher level needs (Dulebohn & Werling, 2007). Intrinsic factors are also important on how employees choose and remain in certain organizations. Therefore, compensation plays an important role on attracting and retaining employees. One of the main problems in Honduras is the increase on the percentage of inflation, which may have an impact on the way employees feel about their compensation. Due to factors like this, it is a challenge for organizations in a developing economy like Honduras to maintain the level of satisfaction when the business environment it‘s not favorable. One of the objectives of this study is to examine how compensation affects organizational commitment.
According to the ―Preliminary Overview of the Economies of Latin America and the Caribbean‖ of 2014 published by the Commision Economica de latinoamerica y el Caribe (ECLAC):
In October, year-on-year inflation stood at 6.3%, having quickened since October 2013 (4.6%). Price rises are largely a temporary effect arising from the increase in the value added tax (VAT) rate from 12% to 15% as part of the fiscal reform approved in 2013.
The category that most affected inflation was food and non-alcoholic beverages, whose contribution to the inflation rate in October stood at 2.4 percentage points. The inflation rate is expected to be 6.5% in December 2014 (p.2).
Lastly, job stress, which is increasingly an important issue for employees, organizations and the societies. This importance is due to the effect it has on employees‘ well-being and their
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performance. The overall stress is caused by factors outside the organization as well as internal factors. Climate, economy and family are some of the external factors, and some internal factors such as, Leadership, company polices, working conditions, workload and long working hours (Bhatti, Shar, Shaikh, & Nazar, 2010). Due to the recession organizations nowadays have to deal with a lot of changes, changes that creates increase stress among employees. Employees are being affected in a physically and emotional way. They experience more anxiety and pressure from the working environment. As Honduras economy is not stable and due to high percentage of inflation people find it very difficult to meet their financial needs which results into stress.
Honduras is a country located in Central America, with a population of approximately 8 million people, considered one of the poorest Spanish speaking countries in Latin America. The data from this study will be collected from employees of Banco Atlántida, The largest and most important commercial bank in Honduras. The population for this study will cover employees from this bank specially does in the branches located in the Atlantic area. This study will follow a quantitative approach, using survey questionnaires as an instrument for data collection.
Banco Atlántida is a Honduran private Bank founded in the year of 1913, in the city of La Ceiba, Atlántida. With many years of existence, Banco Atlántida has been recognized as the leading bank in Honduras, occupying the number one position in the national banking system.
This bank provides international quality products through the most extensive service network in the country (www.bancatlan.hn).
Research Purposes and Questions
Training and development, job stress and compensation are well known antecedents of Job satisfaction and organizational commitment. However, little research has been conducted on the relationship of these variables as it applies to the financial sector in Honduras. This study aims to study the relationship of the variables mentioned before. Thus the purpose of this study is firstly, to examine the effect of training and development, compensation and job stress on job satisfaction. Secondly, to investigate the mediator effect of job satisfaction between training and development, compensation, job stress and organizational commitment.
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According to the study purposes the following research questions were formulated:
1. How compensation, training and development and job stress affect employee satisfaction?
2. What is the mediator effect that job satisfaction has between compensation, Training and Development, job stress and organizational commitment?
Significance of the Study
Financial Institutions are very important and have a great influence on the Honduran economy. Despite the fact that the Honduran economy experiences a slowdown the financial industry is one of the most dynamic sectors nowadays (ECLAC, 2014). As organizations try to fight the crisis and gain a competitive advantage over their competitors is it very important for managers and HR professionals to know the impact of training and development, compensation and job stress on job satisfaction and organizational commitment. Little research has been made in the financial industry in Honduras; hence the objective of this research is to give more information, to know more in deep about the real situation of the employees in the banking industry. According to the results, suggestions will be made which can lead them to make the necessary changes to improve employees‘ job satisfaction and organizational commitment.
Definitions of Terms Job Satisfaction
―Job Satisfaction is defined as a pleasurable or positive emotional state stemming from a person‘s appraisal of his or her work, including day-to-day activities, responsibilities, and relationships with colleagues‖ (Bouckenooghe, Raja & Butt, 2013, p. 109). This mediating variable will be measure by adapting Hackamn‘s 15-item scale, Job Diagnostic Survey (JDS).
Organizational Commitment
―Organizational commitment can be defined generally as a psychological link between the employee and his or her organization that makes it less likely that the employee will voluntarily leave the organization‖ (Allen & Meyer, 1996, p. 252). Organizational commitment is also defined as the degree of identification and involvement individuals have towards a particular
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organization, and the strong desire to remain with the organization (Mowday, Steers & Porter, 1979). Organizational commitment will be measure by using a 23- item scale developed by Allen and Meyer (1990). This measure includes the three components of organizational commitment - affective, continuance, and normative commitment.
Training and Development
Refers to the planned effort by an organization to facilitate learning in order for the employees to acquired job-related competences, skills, attitudes and behavior that help employees to perform daily activities and prepares them for future jobs or positions (Noe, 2013).
A scale of 18 items will be used to measure training and development. This scale is adapted from Bartlett (2001).
Job Stress
It is the excessive pressure employees feel by the amount of job they are asked to do in a designated period of time, also pressure from the degree of difficulty of the work they are asked to do, which challenge their ability and knowledge (Acas, 2014). A scale of 16-items developed by Lin and Rashid (2010) will be used to measure this variable. This scale includes three dimensions, these are, role ambiguity, role conflict and role overload.
Compensation
It is defined as the total financial or non-financial rewards that an employee receives as an exchange for their work performed (Milkovich & Newman, 2005; Yahya & Tan, 2015).
According to them the rewards are usually given based on the value of job, level of responsibility, efforts, and performance. A scale of 17 items developed by Heneman and Schwab (1985) will be used to measure compensation; this scale includes four dimensions- Pay Level, benefits, raises, and administration.
Commercial Bank
Commercial Banks are financial institutions that provide services to people and businesses.
Some of the main services provided by commercial banks are: acceptance of deposits, lending
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money, offering investment products like saving accounts and certificates of deposit. Other services include the acceptance of payments (rent, insurance), money transfer facility, acceptance of tax proceeds and tax returns, and many more (www.wikipedia.org).
Research Limitations
First, this study focuses on the investigation of the relationship of training and development, compensation, job Stress, job satisfaction and organizational commitment in a commercial bank in Honduras. Other factors that affect commitment in the bank industry or other industries are not under the scope of this study.
Secondly, this study focuses on a specific financial institution in Honduras. It will cover only those employees of the Branches of Banco Atlàntida located in the Atlantic area. Since it only focuses in this specific institution, the results may not be generalized to other financial institutions.
Due to the fact that the researcher relied on the HR manager to distribute and collect the questionnaires, the researcher will not have complete control over the random selection of participants. Thus, this will be a limitation for this study.
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