Optimism and Employee Performance in the Banking Industry

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Executive Summary

This paper explores the linkage between bank employee levels of optimism and performance outcomes. To date, there has been little empirical evidence assessing the impact that positive psychological capacities, such as the optimism of bank employees, may have on performance. This study was designed to help begin to fill this void. The study sample consisted of 90 bank employees from all areas of a metropolitan bank in the Midwest. Participants completed surveys to determine their current state of optimism. Supervisory performance appraisal data were gathered in order to measure performance outcomes. Results indicated a significant positive relationship between the midlevel managers' measured state of optimism and their supervisors' ratings of their overall work performance. Findings also indicated a positive correlation between self-rated optimism, job satisfaction, and self-rated performance for both midlevel managers and tellers. Suggestions for effectively developing and managing bank employees' optimism to positively impact their performance are provided.

Introduction

The competitive paradigm facing the retail banking industry has shifted. The proliferation of retail branches, coupled with changes which have allowed banks to expand their product lines, has resulted in a dynamic environment in which banks are seeking to differentiate themselves in order to create a source of sustained competitive advantage. Technological developments and organizational redesign have also changed the type of work being performed by bank employees. As noted by Bartel (2004), bank tellers have traditionally served more of a clerical role by simply processing customers' transactions. In today's competitive landscape, the job of a bank teller has been enlarged. Beyond the normal expectation of providing excellent customer service, tellers are also evaluated on their ability to sell various financial products or make referrals to the proper sales personnel. Due to these industry dynamics, banks can no longer rely on traditional sources of competitive advantage such as technology or superior efficiency based upon economies of scale to be successful. Instead, these changes have forced many retail banking operations to fundamentally reformulate how they attain a competitive advantage on a level playing field.

A Resource-Based Perspective

According to the resource-based theory of the firm, organizations can develop sustained competitive advantage only by developing value creating resources and capabilities which are rare and difficult for competitors to imitate (Barney, 1995). Although traditional sources of competitive advantage such as technological supremacy, patent protections, economies of scale and scope, and favorable government regulations create value, the resource-based view would argue that these sources are increasingly easy to replicate. Therefore, these traditional forms of competitive advantage can no longer be leveraged for long-term success. Instead, firms must now consider developing other forms of intangible and more difficult to imitate strategic resources in order to sustain their advantage over time.

The High Performance Work System

Many have argued that the implementation of a progressive set of human resource management policies and practices collectively known as a high-performance work system can lead to the development of a sustained competitive advantage. Consistent with a resource-based view, a conceptual argument can be made that the development of "human capital" within an organization creates value and is an "invisible asset" which might be especially difficult for competitors to replicate. For example, Becker and Gerhart (1996) have argued that human resource (HR) systems consist of policies and practices which have been implemented over time and cannot simply be purchased by industry competitors.

Beyond the conceptual argument, a large amount of empirical evidence would also suggest a strong linkage between high-performance work systems and firm performance. …