Determinants of Welfare Practices: A Study of Banking Sector

 

Dr. Himani Sharma¹, Dr. Shallu Mehta²

¹Assistant Professor, Haryana School of Business, Guru Jambheshwar University of Science and Technology,  Hisar

²Assistant Professor, Ludhiana Group of Colleges, Chaukimann, Ludhiana

 

ABSTRACT:

Welfare facilities hold a remarkable prominence in the banking sector. These facilities create a stimulating interest in the work force to produce their full capacity and pay a good return to the management in the long run. The main aim of this paper is to explore the major determinants of welfare practices in the banking sector. To achieve this aim, data has been collected from 524 bank employees from the different regions of Punjab state i.e. Majha, Malwa and Doaba. Factor analysis is used to find out the determinants of welfare practices. The results explored the seven determinants of welfare practices viz; perceived importance of welfare practices, imperative amenities, health care facilities, work life balance, educational facilities, employees’ involvement and loan facility. The conclusion reveal that the factors explored are complete blend of welfare practices prevailing in the banks.  The results also depicts that ‘perceived importance of welfare practice’ is the most important factor, whereas, ‘work life balance’ is found to be the least important factor with respect to the welfare practices prevailing in the select banks.

 

 

INTRODUCTION

In today’s ever changing and volatile environment human resource management plays an important role in every leading organization of the world. Impact of human resource practices has been a topic of interest in the field of research but surprisingly very few studies have been conducted on specific human resource practices.  There is dearth of studies on impact of welfare practices on motivation level of employees. Though taking care of many welfare activities is statutory yet pioneer organizations are providing this as a tool to enhance morale, motivation and productivity of employees. Welfare facilities can be segregated as intramural and extramural (Tyagi, 1982) where intramural are provided within an organization and extra mural are provided outside the organization.

 

Welfare measures results in enhancing the efficiency of the employees and performance of the organization (Tiwari, 2014). To retain the employees in long run welfare is used as strategic tool. It can be either in monetary terms or in any kind/forms or in both. The welfare measures need not be in monetary terms only but in any kind/forms. Employee welfare includes drinking facilities, seating arrangement, pantry, crèches, housing facilities, transportation facilities, recreational facilities, insurance against accident, unemployment, health facilities etc. Welfare measures improve health and wellbeing of employees which results into increased engagement level of employees.

 

In Factories Act 1948, Dock Workers Act 1986, Mines Act 1962 etc., laws related to the welfare activities is stated.  The non-statutory welfare varies from one organization to another.  The main purpose of providing the non-statutory welfare is to enhance the quality of work life and to provide job satisfaction to employees. Welfare measures also improve physical and mental health of the employees.  Morale and the motivation level of the employees can also be increased by incorporating the welfare practices in the organisation. (Rajkumar, 2014)

 

Welfare practices play a significant role in any service sector and serves as competitive advantage. As banking sector rely on the human capital it becomes imperative for the sector to look after the welfare of its employees. It leads to reduced absenteeism and enhanced efficiency and motivation of employees. (Tiwari, 2014)

 

LITERATURE REVIEW:

Some of the important theoretical and empirical studies related to welfare practices have been reviewed here.

 

Purohit (2016) explored various factors influencing welfare activities in nationalized banks of Pune. The study observed that welfare practices and job satisfaction are main concerns in any organization.

 

Hangarki and Honnalli (2014) focused on the welfare practices provided in selected nationalized banks of Hyderabad Karnataka Region.  The study revealed that most of the employees are dissatisfied with respect to various facilities viz. transparent communication system, lunch rooms, rest rooms, health camps. Moreover, the study recommended some useful suggestions also. Mathivanan (2014) studied the usefulness of HRM practices of public sector banks. This study proposed that canteen facilities, hospitalisation scheme, holiday schemes, library facilities, etc. must be reviewed for the benefit of the employees. According to Yashik, 2014, employee’s efficiency can be improved by providing house building aid, life insurance coverage, scholarship for employees’ children, national old age pension schemes, etc. Yesuraja and Nandini (2013) conducted a study to evaluate the efficacy of employee welfare measures in ABT industries. It is found that employees are highly satisfied with the welfare measures provided to them in the organisation. Laddha (2012) studied the welfare practices provided by Solapur Janta Sahakari Bank Ltd., Solapur. Majority of the employees were found satisfied from the intramural facilities provided by the bank whereas improvement was required in case of extramural facilities.

 

So, welfare practices play a significant role in determining the efficiency of an employee and it is positively and directly associated with motivation level of employees. Review of literature shows that very few studies has been conducted on welfare practices in the banking sector so this study is an attempt to fill the gap by exploring the dimensions of welfare practices in banks.

OBJECTIVES OF THE STUDY:

The following are the main objectives of the study:

·      To explore the determinants of welfare practices in banks of Punjab State.

·      To find out the most and least important welfare practice prevailing in the banking sector of Punjab.

 

RESEARCH METHODOLOGY:

This paper represents an exploratory effort to explore the determinants of welfare practices in the banking sector. With the help of extensive literature review, the questionnaire was developed comprised of the determinants of welfare practices. The study is primarily based on the primary source of data collection.

 

Data collection instrument:

A self-administered questionnaire containing 27 attributes is used for this purpose which is distributed to 600 employees of public and private sector banks. Responses were recorded on five point likert ranging from strongly agree (5) to strongly disagree (1).

 

Sample Size:

For this study a sample of 600 respondents was used. Multi stage sampling was used for this study. At the first stage, three regions of Punjab i.e. Majha, Malwa and Doaba are selected (200 from each region). After that, each region consists of public sector banks and private sector banks (100 from each bank). At last, the convenience sampling was used for the study. Out of 600 questionnaires, only 524 questionnaires were without discrepancies and thus, found suitable for the final analysis. The detailed overview of the sample is shown in Table 1.

 

Table 1 Sample Overview

Region	Type of Bank		Total
	Public Bank	Private bank
Majha	88	81	169
Malwa	93	89	182
Doaba	86	87	173
Total	267	257	524

Source: Primary Data

 

Tools of Analysis:

Descriptive statistics, cronbach alpha, factor analysis through principal component method with varimax rotation and inter-factor correlation is used in this study. However, before using factor analysis, it is necessary to test either the data collected is suitable for factor analysis or not.  The suitability of factor analysis is determined from numerous measures such as Kaiser-Meyer-Oklin (KMO) Measure of Sampling Adequacy, Bartlett Test of Sphericity, Eigen Values and Percentage of Variance. Statistical Package for Social Sciences (SPSS) version 16.0 for windows has been used to complete the statistical analysis.

 

DATA ANALYSIS AND INTERPRETATION

This section highlights the reliability analysis, KMO and Bartlett’s test, factor analysis, rotated component matrix and naming of factor.

 

Reliability Analysis of ‘Welfare Practices in Banks’

Before exploring the determinants of welfare practices in banks, it is necessary to check the reliability of the variables. Table 2 presents the results of reliability analysis of the variables. The overall reliability of welfare practices is noticed to be 0.865. It is also recommended that alpha coefficient should be 0.7 or above (Nunnally, 1978).  Thus, it is concluded from the reliability analysis that the instrument is highly reliable for continuing the study. 

 

Table 2:  Reliability analysis

HR Practice	No. of items	Cronbach alpha (α)
Welfare Practice	27	0.865

Source: Primary Data

 

KMO and Bartlett’s Test

The accuracy of factor analysis is assessed by investigating sampling adequacy through KMO (Kaiser-Meyer-Olkin) measure of sampling adequacy and by examining the significance of Bartlett test of sphericity as shown in Table 3.  The KMO value of the statistics is 0.832 (>0.5) which is considered good (Kaiser, 1974).  The Bartlett’s test reveals the approximate chi-square value 6217.333 with df = 351 and p ≤ 0.000 which shows that the correlation matrix is not an identity matrix.

 

Table 3    KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy		0.832
Bartlett's Test of Sphericity	Approx. Chi-Square	6217.333
	df	351.000
	Sig.	0.000

Source: Primary Data

 

Factor Analysis for ‘Welfare Practices in Banks’

After examined the level of relationship between welfare practices in banks and checking the sampling adequacy, factor analysis is carried out to investigate the linear relationship of some underlying factors.  Thus, this section is devoted to the results of data analysis to find out the factors affecting welfare practices in banks.  For this purpose, factor analysis has been employed which controls the level of dimensions and reduces the data for further analysis.  It is obtained with the help of principal component method and rotated component matrix.

 

Table 4 demonstrates the Eigen values, percentage of variance and cumulative variance explained by 27 variables.  The factors with an eigen value more than 1.00 are retained according to the Kaiser rule (Kaiser, 1960). Thus, seven factors come out illuminating 65.649 percent of total variance (>60 percent)  (Hooper, 2012).

The first factor accounts for 23.499 percent of variance, the second factor 12.720 percent, third factor 10.541 percent, fourth factor 6.299 percent, fifth factor 4.455 percent, the sixth factor 4.216 percent and the seventh factor accounts 3.920 percent of variance respectively. All the residual factors are not influential.  It means that near about 66 percent of information is retained by the six factors and approximately 34 percent of information is lost out of the twenty seven original variables.

Table 4     Factor Analysis for ‘Welfare Practices in Banks’

Variables	Initial Eigen Values			Extraction Sums of Squared Loadings
	Total	% of Variance	Cumulative %	Total	% of Variance	Cumulative %
V 1	6.345	23.499	23.499	6.345	23.499	23.499
V2	3.434	12.720	36.219	3.434	12.720	36.219
V 3	2.846	10.541	46.760	2.846	10.541	46.760
V 4	1.701	6.299	53.059	1.701	6.299	53.059
V 5	1.203	4.455	57.514	1.203	4.455	57.514
V 6	1.138	4.216	61.730	1.138	4.216	61.730
V 7	1.058	3.920	65.649	1.058	3.920	65.649
V 8	0.838	3.105	68.754
V 9	0.765	2.835	71.589
V 10	0.723	2.679	74.268
V 11	0.693	2.566	76.834
V 12	0.659	2.439	79.273
V 13	0.575	2.131	81.404
V 14	0.548	2.031	83.435
V 15	0.512	1.895	85.330
V 16	0.488	1.806	87.136
V 17	0.457	1.693	88.829
V 18	0.407	1.509	90.338
V 19	0.383	1.419	91.756
V 20	0.359	1.329	93.086
V 21	0.347	1.284	94.370
V 22	0.323	1.197	95.567
V 23	0.281	1.042	96.608
V 24	0.268	0.992	97.600
V 25	0.243	0.901	98.501
V 26	0.210	0.778	99.279
V 27	0.195	0.721	100.000

Source: Primary Data

 

Extraction Method: Principal Component Analysis

 

Rotated Component Matrix        

Table 5 illustrates the rotated component matrix which shows the factor loadings of all the welfare variables. If we notice the 1^st row, we can see that among all the seven factors, W2 has the highest factor loading (0.697), it means that the first variable assigns to the second factor.  Thus, in this way, it is discovered that W1 factor is the combination of V20, V21, V22, V23, V24 and V25 variables.  W2 factor is the combination of V1, V2, V3, V4, V5 and V6 variables. W3 factor is the combination of V8, V9 and V10 variables.  W4 factor is a combination of V7, V17, V18 and V19 variables. W5 factor is the combination of V11, V12, V13 and V14 variables.  W6 is the combination of V26 and V27 variables.  And the last factor W7 comprises V16 and V17 variables.

 

 

Table 5    Rotated Component Matrix

Variables	W1	W2	W3	W4	W5	W6	W7
V1	0.291	0.697	0.015	-0.127	-0.155	0.045	0.239
V2	0.168	0.787	0.029	0.09	0.051	0.142	-0.013
V3	0.120	0.817	0.170	0.037	0.03	0.066	-0.022
V4	0.006	0.791	0.270	0.000	0.06	-0.013	-0.053
V5	0.082	0.707	0.189	0.309	-0.077	0.091	-0.159
V6	0.061	0.514	0.428	0.325	0.104	-0.265	-0.060
V7	-0.009	0.203	0.353	0.622	0.140	0.104	-0.154
V8	0.124	0.374	0.605	0.184	0.186	-0.146	-0.05
V9	0.216	0.202	0.743	0.037	-0.105	0.097	0.082
V10	0.096	0.250	0.729	-0.053	0.048	0.159	0.132
V11	0.156	-0.059	0.442	0.053	0.480	-0.013	0.175
V12	0.194	-0.065	0.252	0.047	0.671	0.042	0.097
V13	0.145	0.122	-0.097	0.074	0.809	0.066	0.021
V14	0.101	-0.022	-0.062	0.158	0.649	0.04	0.252
V15	0.166	0.013	0.089	0.086	0.148	-0.116	0.762
V16	0.153	-0.082	0.114	0.085	0.248	0.086	0.743
V17	0.074	0.195	-0.118	0.636	0.006	0.274	0.303
V18	0.032	-0.221	-0.148	0.573	0.204	0.228	0.228
V19	0.000	0.105	0.103	0.766	0.067	0.062	0.023
V20	0.770	0.095	0.153	0.013	0.06	-0.037	0.117
V21	0.829	0.058	0.134	0.03	-0.028	0.008	0.118
V22	0.788	0.107	-0.076	0.131	0.095	0.017	0.106
V23	0.794	0.133	0.102	0.06	0.089	0.052	0.098
V24	0.793	0.142	0.037	-0.029	0.213	-0.08	-0.025
V25	0.726	0.078	0.195	-0.167	0.269	-0.031	0.013
V26	0.083	0.114	0.081	0.151	0.089	0.884	-0.031
V27	-0.203	0.098	0.068	0.381	0.055	0.732	-0.011
Source: Primary Data Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization

Naming of factors signifying ‘Welfare Practices in Banks’

Table 6 shows naming of factors, variables loaded on the factor, eigen values and percentage of variance explaining the respective factors.  The names and descriptions of factors are shown below:

 

Factor 1: Perceived Importance of Welfare Practices

The first factor is described as ‘perceived importance of welfare practices’ which explains 23.499 percent of variance with eigen value of 6.345.  It includes ‘welfare practices creates efficiency towards work’ with factor loadings 0.77, ‘welfare practices improves physical and mental health’ with factor loadings 0.829, ‘welfare practices increases standard of living’ with factor loadings 0.788, ‘welfare practices brings loyalty towards work’ with factor loadings 0.794, ‘welfare practices promotes healthy relationships’ with factor loadings 0.793 and ‘welfare practices helps in increasing motivation of employees’ with factor loadings 0.726.  This means that factor 1 is the combination of six original variables.

 

 

Factor 2: Imperative Amenities                                                  

Second factor is named as ‘imperative amenities’ explaining 12.72 percent of variance and eigen value is 3.434.  The welfare practices like ‘I am satisfied with filtered drinking water provided in the bank’ with factor loadings 0.697, ‘my bank has an organized pantry facility’ with factor loadings 0.787, ‘I am satisfied with proper seating arrangement in the bank’ with factor loadings 0.817, ‘routine health checkups of employees is done in the bank’ with factor loadings 0.791, ‘my bank has cleaned washrooms’ with factor loadings 0.707 and ‘I am satisfied with proper ventilation and temperature in the bank’ with factor loadings 0.514 is significantly loaded with this factor.  It implies that factor 2 is the blend of six original variables.

 

 

 

Table 6    Naming  and Description of Factors

Factors	Variables	Factor Loadings
W1 Perceived importance of Welfare Practices (Eigen value=6.345, % of variance=23.499)	Welfare practices creates efficiency towards work	0.770
	Welfare practices improves physical and mental health	0.829
	Welfare practices increases standard of living	0.788
	Welfare practices brings loyalty towards work	0.794
	Welfare practices promotes healthy relationships	0.793
	Welfare practices helps in increasing motivation of employees	0.726
W2 Imperative Amenities  (Eigen value=3.434, % of variance=12.72)	I am satisfied with filtered drinking water provided in the bank.	0.697
	My bank has an organized pantry facility.	0.787
	I am satisfied with proper seating arrangement in the bank	0.817
	I am satisfied with proper ventilation and temperature in the bank	0.791
	My bank has cleaned washrooms	0.707
	Routine health checkups of employees is done in the bank	0.514
W3 Health Care Facilities  (Eigen value=2.846, % of variance=10.541)	I am satisfied from the scheme of reimbursement of hospitalization expenses	0.605
	I am satisfied with the scheme of reimbursement of expenses for health check ups	0.743
	Overall I am satisfied from health care facility provided by the bank	0.729
W4 Work Life Balance  (Eigen value=1.701, % of variance=6.299)	Medicine is supplied immediately in the bank at the time of ailment	0.622
	Satisfied from transport facilities provided by my bank	0.636
	I am satisfied from housing facilities provided by my bank	0.573
	I am satisfied from recreational facilities like gyms, sports games etc. provided by my bank	0.766
W5 Educational facilities  (Eigen value=1.203, % of variance=4.455)	Banks provide proper educational facilities to the employees and their family members	0.48
	I am satisfied with the reimbursement of tuition fees of employees children	0.671
	I am satisfied with the scheme for awarding scholarship for higher education to employees children	0.809
	I am satisfied with the provision of honorarium for passing diploma/MBA programme	0.649
W6 Employees’ Involvement  (Eigen value=1.138, % of variance=4.216)	Proper feedback is taken by banks regarding welfare measures	0.884
	I am satisfied with participation of employees in determining welfare requirements	0.732
W7 Loan Facility  (Eigen value=1.058, % of variance=3.92)	I am satisfied with the availability of educational loans for self and children	0.762
	Overall I am satisfied with educational assistance provided by my bank.	0.743
Source: Primary Data

Factor 3: Health Care Facilities

It is the third factor which illuminates 10.541 percent of variance and eigen value is 2.846. Variables like ‘overall I am satisfied from health care facility provided by the bank’ with factor loadings 0.605, ‘I am satisfied with the scheme of reimbursement of expenses for health checkups’ with factor loadings 0.743 and ‘I am satisfied from the scheme of reimbursement of hospitalization expenses’ with factor loadings 0.729 is significantly loaded with this factor.  This means that factor 3 is the mixture of three original variables.

 

 

 

Factor 4: Work Life Balance

The fourth factor named as ‘work life balance’ which explicates 6.299 percent of variance and eigen value is 1.701.  It is significantly loaded with variables like ‘medicine is supplied immediately in the bank at the time of ailment’ with factor loadings 0.622, ‘I am satisfied from transport facilities provided by my bank’ with factor loadings 0.636, ‘I am satisfied from housing facilities provided by my bank’ with factor loadings 0.573 and ‘I am satisfied from recreational facilities like gyms, sports games etc. provided by my bank’ with factor loadings 0.766.  It implies that factor 4 is the blend of four original variables.

 

Factor 5: Educational Facilities

This is the fifth factor which explains 4.455 percent of variance and the eigen value is 1.203. It comprised the variables like ‘banks provide proper educational facilities to the employees and their family members’ with factor loadings 0.48, ‘I am satisfied with the reimbursement of tuition fees of employees children’ with factor loadings 0.671, ‘I am satisfied with the scheme for awarding scholarship for higher education to employees children’ with factor loadings 0.809, ‘I am satisfied with the provision of honorarium for passing diploma/MBA programme’ with factor loadings 0.649.   This implies that factor 5 is the combination of four original variables.

 

Factor 6: Employees’ Involvement

This is the sixth factor which enlightens 4.216 percent of variance with eigen value of 1.138.  The variables viz; ‘proper feedback is taken by banks regarding welfare measures’ with factor loadings 0.884 and ‘I am satisfied with participation of employees in determining welfare requirements’ with factor loadings 0.732 is significantly loaded with this factor.  It infers that factor 6 includes only two original variables.

 

Factor 7: Loan Facility

The seventh and the last factor is named as ‘loan facility’ which explains 3.92 percent of variance and the eigen value is 1.058.  This factor consists of variables like ‘I am satisfied with the availability of educational loans for self and children’ with factor loadings 0.762 and ‘overall I am satisfied with educational assistance provided by my bank’ with factor loadings 0.743.  It means that factor 7 is the combination of two original variables.

 

Relative Importance of Welfare Practices

Table 7 presents the overall mean and standard deviation (S.D.). The results show that perceived importance of welfare practices is the most important factor with respect to the welfare (mean=3.704) whereas, work life balance (mean=2.791) is the least important factor. Standard Deviation ranges from ±0.676 to ±0.948

 

 

Table 7 Relative Importance of Welfare Practices

Source: Primary Data

 

 

 

FINDINGS AND SUGGESTIONS:

The factors explored through factor analysis are comprehensive combination of welfare practices to be adopted in banks.  While framing welfare policy, banks should firstly consider the importance of welfare practices.  If the particular welfare practice is found essential, only then, that practice should be adopted by the bank. Another important explored factor is imperative amenities.  Employees feel that the basic facilities like clean drinking water, clean washrooms, etc., must be provided in the banks.  They also need timely and proper health care facilities in their respective banks. 

 

Welfare policy in banks must also incorporate some measures related to work life balance so as to ensure reduction in physical and mental stress of the employees.  Provision of educational facilities for the employees and their children must also be taken care by banks. Employees also feel that they should be involved at the time of decision making related to welfare policy and proper feedback must also be taken from them. Moreover, bank employees also want loan facility for themselves and for their children.  Results of the analysis carried out reveals significant findings which are beneficial for banking sector.  Factor analysis showed important points/factors which if implemented in the banks (both public and private) can yield significant results.  Banks must make arrangements for imperative amenities, healthcare facilities, balancing work life of employees, educational facilities, involvement of employees and also loan facilities while designing welfare policy. Additionally, the study reveals that the perceived importance of welfare practice is the most significant factor out of all the explored factors.

 

REFERENCES:

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Received on 10.01.2018                Modified on 11.02.2018

Accepted on 05.03.2018           ©A&V Publications All right reserved