HR Factors That Affect Quality of Customer Service in the Banking Industry - Essay Example

HR Factors that Affect Quality Service in the Banking Industry in the UAE (National Bank of Abu Dhabi) of the of the professor: Abstract The banking industry and its survival and success depend a lot upon how the customers perceive the banks and the banking industry. The goal of the banks aimed at getting customer satisfaction has become more important as a strategy for the bank to retain the customers after the onslaught of the global recession. In any business that acts in a B2C environment satisfying the customers is the ultimate motive of the companies’ and the only way to form a sustainable business in the long run. However it is easier said than done. This is because it is quite difficult to understand what the customer actually wants and so it is very difficult to give the customers the thing that they actually want. This factor become and acts as a challenge for the businesses which gives customer satisfaction a lot of emphasis. There have been different studies in the past that has aimed at studying the minds of the customers however still date the minds of the customers has remained a mystery. In the present study the aim to study the customer satisfaction of the customers of the banks of United Arab Emirates. In particular the study focuses on the customer satisfaction of the customers of national bank of Abu Dhabi. In analyzing the factors behind the customer satisfaction and the quality of customer service provided by the employees of the bank the role of human resource in particular is identified. The study is aimed at studying if the human resource factors at all determine the quality of service provided by the employees of the bank to the customers. In order to understand the function of hr in ensuring that the quality of customer service is upheld the research focuses to study the matter both on the qualitative and quantitative lines. As process of trying to find the impact the research first tries to find out the view of different researchers regarding the issue. After doing the literature review in order to analyze the view point of different researchers on the matter the next step that has been taken to carry the research forward is to analyze the primary data that is collected through survey of the customers to understand whether the customers are satisfied with the quality of the customer service provided by the banks. After analysis of the customer service that the bank provides to the customers of the bank the factors of the human resource and the effect that human resource has on the quality of service that the employees of the bank provides to the customers of the bank. As per the research it is found out that the lack of quality customer service results from the fact that the employees of the bank do not feel ownership of the bank and these results from the fact they lack motivation and proper training is not provided to these employees. The management of the bank also does not put great emphasis on the level of customer service nor does the bank try to promote the level of customer service. Discussion Customer satisfaction and service quality level are two essential factors in today’s competitive environment. HR factors play a critical role in terms of enhancing quality level of customer service. Training and development programs can be considered as an important aspect when it comes to developing talented base of individuals. In banking industry, service quality needs to be superior since it denotes brand image or brand perception in consumer minds. This study is centered towards identifying all those HR factors which affect customer service level in current scenario. High performance of individuals can be sustained through incorporating best HR practices. Training and development programs are an initiative through which skills and expertise of team members can be improved along with eradicating their loopholes (Price, 2007). These programs help in upgrading skill set or knowledge base of employees. In this research paper, there has been a proper analysis conducted on financial institutions located in UAE. National Bank of Abu Dhabi has been chosen as the financial institution to conduct a thorough analysis on its service quality features (Munusamy, Chelliah and Mun, 2010). The problem statement of this particular research study is that HR practices are viewed as an essential component which hinders quality level of customer service. This is descriptive form of research study where selected sample is approached to contribute their opinions in context of research problem. Questionnaire survey is the best medium to access sample respondents. In any industry, human resource can be regarded as the most valuable asset (Das and Teng, 2009). Skills management and knowledge base development is exhibited by industry so as to retain best talent within the system. It has been observed that top management plays a vital role in acquisition of talent as well in their retention. In any organization, top management should be able to analyze issues and resolve them in least time possible. This study identified this role of top management towards quality of customer service. Special skills and competencies can be incorporated within employees with the support of human resource managers, but ultimately it shall require proper guidance from top management. However it is always a challenge to incorporate such competencies which is essential for risk management and credit appraisal. Competency level of human resources can be improved to a great extent with implementation of information technology. This shall serve as a medium to eliminate human errors and upgrade level of service quality. In future years, HR models needs to be designed in a manner that it can anticipate change, analyze complexities and shape overall business success. National Bank of Abu Dhabi might not comprise of only Emiratis and this leads to communication gap between team members. This ineffective communication channels are also responsible for affecting quality level of customer service. The research paper has great deal of significance in real world because it outlines certain crucial HR factors and its direct impact on customer service (Mintzberg, 2006). On the other hand, this study would also be beneficial for National Bank of Abu Dhabi in terms of analyzing their strengths and weaknesses. This research study is bound to witness limitation since all respondents cannot be accessed during questionnaire survey and even if accessed they might not reveal proper answers. There is only one data collection technique used for this study and it further limits research scope. Less information about the bank is not suitable for this research study since it would not highlight issues in customer service and its relation with HR factors. The study could have been extended over longer period of time to acquire information regarding service problems and its impact on long term profitability. In intensely competitive banking sector it becomes essential to develop long term customer relationship. PEST analysis of UAE shall reveal further current scenario of the banking industry. Hydrocarbons sector is expected to be the major initiator behind future growth. The government of Abu Dhabi is emphasizing on infrastructural investment in context of tourism, technology, transport, ports and manufacturing. Diversification programs would be implemented in Abu Dhabi and Dubai, and further investments shall be done on large scale projects. Government spending shall increase in these sectors in future years. This would lead to positive impact on banking sector in this region. Liquidity and funding pressures exist on banking system, with deposit ratio above 100%. The major contributors towards banking sector challenge are lowered access towards debt capital market globally and increased costs of domestic deposits. Governmental support of Abu Dhabi is aligned with stabilizing banking operations. Capital funding of approximately AED 16 billion is received by all UAE banks from the government. Government actions have strengthened capital adequacy ratios of almost all UAE banks. There has been surplus federal budget in past few years and government debt has also decreased to 23.9% from 44.6% of GDP. Economic stability of UAE can be denoted by their GDP growth rate. Inflation rate and GDP growth percentage has been outlined in figure 1. Figure 1: GDP growth and Inflation (Source: Global Property Guide, 2015) As per figure1, growth percentage of UAE economy has been by 4.8% and the total economy accounts for AED1.54 trillion. Government’s efforts are centered towards diversifying economy. Banking sector forms the backbone of economy of this region. Inflation rate is slightly higher which indicates restricted consumer spending and more of investment. Social factors reveal that individuals are more inclined towards saving money in banking institutions. Individuals are actively indulged in investing in property or staying focused on earning interests from banks (Deloitte, 2011). This factor is beneficial for growth of banking industry. To be more precise residents shall be encouraged to open accounts in national banks. Higher rate of inflation also means that customer spending will be regulated and banks would gain from increased rate of investment (Africa Analysis Limited, 2002). On the other hand, technological developments are also been included within banking sector of the region. This is being done to reduce human error and improve upon quality level of customer service. Government spending is increasing towards research and development activities, and this is enhancing technical efficiency of the region (Alihodzic, 2013). Findings SWOT SWOT analysis is usually conducted to understand the internal strengths and weaknesses, along with external opportunities and threats. This strategic tool is utilized to analyze an organization and determining market opportunities which can be explored. Questionnaire survey can be well supported with a SWOT analysis in terms of identifying current business scenario. Strength of National Bank of Abu Dhabi can be divided into multiple factors. This bank comprises of strong leading network and it helps in efficiently performing widespread operations. National Bank of Abu Dhabi can be regarded as the second largest lender within United Arab Emirates and the largest lender bank in context of Abu Dhabi. This bank also possesses another major strength which is largest market capitalization (Simerson, 2011). Amongst all the UAE banks, this firm is witnessed to have highest market capitalization. On the other hand, National Bank of Abu Dhabi is highly involvement in brand promotion. These promotional activities enable the bank to acquire desirable market position. It helps in attracting individuals so that investment rate is high and it benefits operational procedure of the bank. National Bank of Abu Dhabi is actively indulged into sponsorship activities of Abu Dhabi Grand Prix. Rating agencies located across the region has given the bank higher credit ratings which is required for long term growth and profitability (Henry, 2011). The distribution network is relatively stronger for National Bank of Abu Dhabi. Its banking network has now expanded to over 120 branches and there are wide array of ATMs inaugurated across UAE. This expanded network is a key aspect behind increased quality level of customer service. The major weakness of the bank is its concentrated business in a specific geographic location. It has restricted the bank to reach to wider consumer market segment and gain high revenue margins. National Bank of Abu Dhabi has limited global presence in relation to other banks. Internationalization is not an area of concern for this bank and in turn it has limited its operational efficiency. Opportunities for the bank are facilitating global presence. Global market place can be easily accessed by this bank and it can be done through acquisition and partnership. The bank can enter into those markets where there are stable economic conditions. Partnerships with financial institutions in these locations would be a key to success for National Bank of Abu Dhabi. Diversifying offerings can also addressed as another opportunity for the bank. This would enable the organization to expand on its customer base. Customers located in different geographical regions shall be focused on innovative product offerings (Cole, 2003). The bank needs to attract customer attention so as to ensure that long term customer loyalty can be obtained. Threats for the bank are high possibility of legal and governmental interventions. This shall disrupt the entire functioning of the bank. Threat of competitors is relatively high for the bank which needs to be addressed appropriately. In financial field, there is increased number of local and global players. Global economic crisis is likely to affect banking industry and in turn might pose a threat for National Bank of Abu Dhabi. In order to understand the quality of customer service that is provided by the employees of the bank and especially the front desk executives of the bank and the Tele-Banking executives of the bank a survey is made to the customers of the bank. As part of the survey the customers were asked several questions that reflected to the different aspects of customer service and customer satisfaction. The questions were asked to identify whether they were satisfied with the customer service that they were receiving from the employees of the bank. Whether they would like to refer their bank to their relatives and whether they are satisfied with the level of customer service that the relationship manager or the customer care executive of the bank provides them. That is the question focused on whether they get a favorable response from the customer care executive or the relationship manager of the bank. After analysis of the answers to the survey question it was generally found that the customers were not satisfied with the level of service that the customer executives of the bank provided. The results of next survey question also went in the same direction as thought of. It was found that most of the customers stated that they would not refer their bank to their friends or relatives. The reason was quite obvious. They did not want their relatives or friends to receive the same level of customer service that they had experienced. In other words poor customer service given by the executives of the bank resulted in the fact that future customers of the bank would be driven back by the existing customers. In other words the company was receiving very bad word of mouth promotions (Lau, Cheung, Lam and Chu, 2013). The result of the third survey is also negative. Most of the customer stated that they were not satisfied with the service that they received from the customer service executives or the relationship manager in case of any difficulties that were faced by them. After the results of the survey are received, the research progress to find the cause of the grievances. The process that is undertaken is by asking some detailed questions to those customers who are not satisfied with the customer service. As a result of the questionnaire it is found that the customers find that the customer service executives lack proper training and initiative to solve the problems of the customers. The relationship manager as well as the customer service executives and Tele banking executives of the banks all point to each other regarding the solution to a particular problem. In fact all of them are left clueless about the solution to the problem being faced by the customers of the bank (Paul, 2011). The customers felt that the employees of the bank lacked initiative when it came to solve their problems however they were ever eager to sell new products of the bank. Some of the customers felt that the employees of the bank failed to empathies with the problems that they actually faced. Some of the customers also complained about the fact that most of the bank executives belonged to foreign countries and thus the customers found it difficult to connect to the executives (Mengi, 2009). The customers felt in general that the employees of the bank were not properly trained to look after the problems of the customers and that they seriously needed more training in how to handle the problems being faced by the customers. A questionnaire is also put forward to the customer service executives of the bank regarding the level of customer service that they provide to the bank. The main aim is to find out how they rate themselves as the providers of customer service. The question also focuses on whether they relate to the problems of the customers, whether they consider it as their priority to respond to the problems faced by the customers and the problems they face in providing customer service to the customers of the bank (Ndubisi, 2006). The aim of asking these questions is to first of find out if there exists a gap in between what the organization and its employees think about the demands of the customers and the customers actually demand in terms of service. The research aims to achieve this by find the difference or similarity in response to the questionnaires that were asked to the employees and the customers (Leung, and to, 2001). The main clue regarding the answer to the question can be found from the similarity or dissimilarity to the answer to the question that considers how is how the customer rates the customer service that they receive. On the other hand the question that is asked to the employees is how they rate themselves as providers of customer service. The similarity or difference in the answers to the questions will help the researcher understand whether there exists a gap in between what are the company’s perceptions about the customer service demand of the customers and what they actually demand (Kumar, Kee, and Charles, 2010). Another reason of asking the questions to the customer service executive and the relationship manager is to find the relation of the human resource practices and the act of the top management in the quality of customer service that is reflected (Kang, and James, 2004). The answers to the questionnaire were on the lines and highlighted the fact that the employees of the bank lacked the motivation that is required to solve the problems of the customers. The employees lacked training and support from the management to engage in customer services (Fogli, 2006). The third set of questionnaire were asked to the human resource head of the bank in order to identify the facts and the human resource practices of the bank that affects the customer service quality of the bank. The questions that were asked to the human resource head of the bank regarding how the head felt about the customer service of the executives of the bank. The next question focused on what the bank was doing to improve the customer service of the employees of the bank. It was acknowledged by the human resource head that there was some lacking on the customer service provided by the employees of the bank. The bank’s future policy to improve the level of customer service would be based on providing training to the employees and introducing incentive scheme to boost their motivation levels. Also the bank would try to hire more Emiratis in to the bank in future. Recommendations After going through the research it is found that the economy of UAE is a fairly developed economy. The country’s main source of GDP growth and the growth and the growth of the foreign currency reserve of the country is contributed by the export of oil and natural gas. The country is poised to grow and is ambitious and expansionist in its outlook. The country wants to develop physical infrastructure that will help promote the tourism industry of the country. The capital for the rapid growth and expansion is to be provided by the banks of the country. There is a large no. of banks that are in the country. This takes the banking industry of the country to a very good position. However there are about 28 foreign banks and 23 domestic banks in the country. This means that the banking sector in the country very competitive. As the banking sector of the country is very competitive the aim of the banks should be to try and ensure satisfaction of the customers that the banks are serving (Cook, 2008). However it is found that the quality of customer service of the national bank of Abu Dhabi and other major banks of the area is not up to the mark. This is due to the fact that the employees of the bank do not feel ownership of the bank, they are not motivated nor are they provided appropriate training so that they can provide quality customer service to the customers of the bank. In order to improve the situation first of all it is required that the management of the bank changes their perspective regarding the issue of customer service. If the management and the leadership of the bank change their perspective regarding the customer service that is provide by the bank then the perspectives of the employees will also change. The management of the bank need to emphasize on the fact that the banking industry in the country is very competitive and the way to succeed in this industry is to take into consideration the fact that the bank needs to provide good level of customer service to the customers of the bank. The bank should also invest in providing training to the employees of the bank. The additional duty of the management of the bank is to provide the employees of the bank with incentives and motivation so that they take up the issue of the customer service seriously and provide the customers of the bank dedicated customer service. The management of the bank should also provide incentives to the employees of the bank so that they provide effective customer service to the customers and quality customer service to the employees of the bank. The employees of the bank should also provide effective and quality customer service to the customers of the bank. The role of the management of the bank and the value that the management of the bank attaches to the domain of customer service plays a major part in deciding what will be the type of customer service that will be provided by the employees of the bank. Conclusions After conducting the research it can be concluded that the quality of the customer service that is provided by the bank is not up to the mark. As part of the analysis of the macroeconomic factors a pest analysis on the banking industry is performed. As a conclusion to the pest analysis it is found that the factors which provide a threat as well an opportunity of the bank is the level of customer service that the bank provides to the customers. If the level of customer service is good then the bank will be able to retain customers and flourish in the long run. However if the level of customer service is poor then the customers can easily flock to other banks. A swot analysis of the bank tells us that that the bank does not have wide geographical presence and is more concentrated on a particular geographical locale. The bank can effectively use the strength of being the largest bank in the country to dominate the banking industry and counter the threat of the customers flocking to other banks. These results from the fact that the employees of the bank are not motivated enough to provide quality customer service to the employees of the banks. However it is found that the banking industry in the country is fiercely competitive and there is large no. of banks in the industry. The way to retain customers in this competitive landscape is to provide the customers quality customer service. In view of these finding it is recommended that the management of the bank appreciate the importance of customer service in the industry and accordingly helps the employees provide the customers quality level of customer service. They can ensure this by first of all acknowledging the fact that the quality of customer service that the employees of the bank provide to the customers should be of high quality and that the customer service should get a good deal of attention. After acknowledging this fact they should provide the employees with adequate levels of training and motivate them to provide quality customer service to the customers of the bank. References Africa Analysis Limited, (2002). Africa Analysis: The Fortnightly Bulletin on Financial and Political Trends. Johannesburg: Africa. Alihodzic, V. (2013). Brand Identity Factors: Developing a Successful Islamic Brand. Humburg: Anchor Academic Publishing. Cole, G.A. (2003). Strategic management. Singapore: Cengage Learning EMEA. Cook, S. (2008). Customer care excellence: How to create an effective customer focus. London, England: Kogan Page Das, T. K., and Teng, B. (2009). Strategic decision processes and cognitive biases. 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