The influence of employee satisfaction on the performance and efficiency of the banking sector in Sri Lanka

Abstract

Employee satisfaction plays a significant role in organizational performance, specifically in the Banking industry, where accuracy, efficiency, service quality and customer service are highly valued. This study explores the influence of employee satisfaction on the performance and efficiency of Sri Lanka’s banking sector, drawing on survey data from 61 employees employed at public and private sector banks. The findings demonstrate that factors such as compensation, recognition, job security, work-life balance and supportive management contribute to positive morale and commitment of the employees. Employee dissatisfaction led to stress, high turnover, reduced customer service and poor organiza-tional performance, while employee satisfaction enhanced endurance, productivity and loyalty. Also, the findings reflected a strong relationship between employee satisfaction and customer service quality, with motivated staff demonstrating professionalism, responsiveness, and a desire for excellence. Furthermore, strategic human resource management (SHRM) methods help to increase staff retention and engagement, while improving the banking sector's performance. The study applies Maslow’s Hierarchy of Needs, Herzberg’s Two-Factor Theory, Social Exchange Theory, and Expectancy Theory to analyse results. Ultimately, the study indicates that enhancing employee satisfaction is not only a human resource priority but also a strategic requirement for maintaining long-term stability and competitiveness in Sri Lanka's banking sector.