CHAPTER ONE

INTRODUCTION

Background of the Study

The banking sector in Cameroon plays vital role in the country’s economic development, acting as a conduit for financial transactions, savings mobilization, and investment facilitation. As a significant player in this sector, MUPECI has established itself as a notable institution, providing various financial services to its clients. However, the performance of banks is not solely determined by market conditions and economic factors; it is also heavily influenced by the working conditions of their employees.

Working conditions encompass various elements, including the physical environment, management practices, employee benefits, job security, and work-life balance. Positive working conditions have been linked to higher employee morale, increased productivity, and overall financial performance. Conversely, poor working conditions can lead to job dissatisfaction, higher turnover rates, and decreased productivity, ultimately impacting the micro finance’s financial outcomes. In Cameroon, the banking sector faces several challenges, including limited access to finance, regulatory compliance issues, and a competitive marketplace. The success of micro finances (MFIs) like MUPECI depends not only on their financial strategies but also on their ability to create an environment conducive to employee performance. The Central African Banking Commission (COBAC) regulates the sector, emphasizing the need for micro finances to maintain efficient operations and sound management practices.

MUPECI, established in 2003, has grown significantly and is recognized for its commitment to providing quality financial services. The MFI’s philosophy centers on customer satisfaction, which directly correlates with employee performance. By focusing on employee well-being and creating favorable working conditions, MUPECI aims to enhance its operational efficiency and competitiveness. Despite the growing recognition of the importance of working conditions, there is limited empirical research specifically examining the relationship between these conditions and employee financial performance in the context of Cameroonian micro finances. Previous studies in other regions have demonstrated that factors such as supervisor support, job resources, and work-life balance significantly influence employee performance. Exploring these relationships within the context of MUPECI can provide valuable insights into how working conditions impact financial outcomes.

Micro finances play a major role in stimulating economic growth and development in the country. In order to grow, micro finances must focus on maintaining their market share in an increasingly competitive market. This can be through establishing of branches in the country, so that they can provide services closer to their customers. The performance of an MFI depends on many things but mostly its dependents on its employee’s performance. The way employees perform in these established branches will determine the overall performance of the commercial bank (Khan, 2015). Efforts have been done by many micro finances in making sure that employee’s job performance is increased. These efforts were through the introduction of performance management system that involves systematic process for improving organizational performance by developing the performance of individuals and teams (Njuguna & Owuor, 2016). It is a means of getting better results by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements. Processes exist for establishing shared understanding about what is to be achieved, and for managing and developing people in a way that increases the probability that it will be achieved in the short and longer term. It focuses people on doing the right things by clarifying their goals. Through the performance management system, it was discovered that good management; motivation and rewards system can boost employee’s performance (Njuguna & Owuor, 2016).

Such efforts have also been practiced by various commercial banks such as Access, Akiba and Equity banks use training, development and mentoring of local staff as an extremely important part of the Bank’s strategy to improve employee performance. Despite such effort and the good management, beneficial rewards such as bonuses and good working conditions, employee performance is still a big problem issue to the bank especially in the new branches they establish upcountry (Ramadhani, 2022).

Many researches have attempted to analyze the factors affecting employees’ performance, studies like Okorely (2010), Eyera (2012), Nayab (2013), Hassan (2012), Kairuki (2015), most of these researches have been conducted to commercial bank headquarters and old existing branches, but little has been done in assessing performance of employees in new branches, therefore the study assessed factors affecting employees’ performance in the new commercial bank branches. The current study focused on how goal setting, employee involvement, interpersonal relationship as well as team work affects employees’ performance in the new commercial bank branches.

In the banking industry, employee performance is a vital aspect of company success. The overall banking sector has expanded significantly over the years and the effectiveness of these institutions depends on the work of Its personnel (Achi & Sleilati, 2016). Customers’ delight is a top priority in this fiercely competitive market; therefore, banks must work hard to deliver top-notch customer service. Bank staff members that behave well are more likely to provide customers with exceptional service, resulting in higher client satisfaction, engagement, and loyalty. Also, the effectiveness and profitability of all banking institutes depend greatly on employee performance. Banks have intricated procedures that require qualified and knowledgeable banking staff to carry out duties all financial duties smoothly and effectively. Employees that act well seem to be more probable to finish assignments quickly and efficiently, resulting in enhanced output and profit for the bank.

Banks with a focus on staff development, review meeting, and coaching are more likely to increase financial growth and output. Strong employee performance can boost a bank’s credibility along with improving financial profit and brand image (Khan et al., 2017). Since the banking sector is tightly controlled, preserving client trust and confidence hinges on maintaining an excellent reputation. A positive organizational climate that preserves professional norms and values can be fostered by productive employees, which will benefit a bank’s standing. Banks that spend on their staff members by offering them the knowledge and financial education they need are more likely to accomplish greater client fulfillment, operational efficiency, and economic performance. In order to succeed and develop over the long run, banks must put employee performance first. Actually, organizational performance depends on employee performance, and productivity depends on employee performance. Therefore, the management of banks needs to determine factors influencing employee performance for producing goods and services for the customers, and the contributions of workers are crucial if a company is to survive in a dynamic marketplace.

All organizations, both public and private entities rely on some form of communication to send their messages across to their target audience, or inform their target audience of the mission and vision of their entity. Employees mostly hype performance at the workplace When effective communication is at its ultimate. For instance, when the information about an organization’s policies and procedures are at its optimum level with openness and accuracy; and also, when the information provided is adequate, factual and has good feedback (Peter, 2018).

Meanwhile, only sizable modern age organizations have placed value on effective workplace ways of communicating. It is assumed by some management members that communication is the simplest task for everyone to execute but research has shown that communication thus makes and unmakes the existence of an organization. In most organizations, managers often leave that aspect of effective communication to the human resource department as their focus only reaches for the operational activities. In MUPECI for example, the manager only concentrates on target achievement thereby forgetting that free flow of information and how well the staff understand this information dissemination boost their morale to work harder in maximizing revenue. Likewise, there becomes a huge problem when managers within an organization always assume that they have had sufficient communications with their staff just by way of instructing them on their daily schedules.

According to Kang and Sung (2017), two-way communication has a positive impact on workers who perform profitably at work. They form some kind of belief pertaining to their work which intends to satisfy the socio-emotional. Relating this to the study done by Paluku (2016), employees are able to determine the organizations readiness to appreciate and reward effective and efficient performance by workers. Ambunya (2020) opined that management with an organization have resorted to use workplace journal or publication to dialogue with employees. nonetheless major related channels of communication are not used effectively. He mentioned that in-house publications may not have any strategic bearings to sustain an organization; rather, encouraging two-way communication does the trick to dominate the workforce. Femi (2014) perceived that performance within an organization could be improved significantly by way of sharing information with employees and involving them in policy making. However, this recuperates general employee satisfaction and productivity within an organization. In some cases, the communication gap that exists between managers and employees makes them generally not trustworthy, respected or valued to be responsible in their field of work. In his studies, it was argued that the largest valuable resources within an entity are the employees; therefore, it is the responsibility of managers to encourage two-way flow of information to optimize organization’s performance as well as employee productivity. This makes communication very essential for all stakeholders as it assimilates most managerial purposes. Ethically, communication is needed internally to initiate plans for expansion; to also consolidate resources effectively with less cost; to select, nurture and appraise members of an organization. Conversely, communication is needed externally to serve as awareness creation for management to do business with their stakeholders such as; suppliers, government agencies and many others. The essence of communication is very vital and cannot be left unattended; it is that kind of mechanical system, which determines the growth of an organization in all aspects during this modern stage.

All organizations, both public and private, rely on a range of working conditions to influence employee performance and productivity. These conditions broadly include communication, physical work environments, and social dynamics, all of which interact to shape the workplace experience. Effective communication is a cornerstone of organizational success. For instance, when policies and procedures are communicated with clarity and openness, employees perform optimally (Janich, 2018). Research highlights that employees value communication that acknowledges their contributions and fosters socio-emotional fulfillment (Paluku, 2016). However, many organizations fail to establish effective two-way communication channels, which results in misunderstandings, decreased trust, and diminished morale.

In addition to communication, the physical environment of a workplace plays a vital role. Elements such as office layout, lighting, ventilation, noise levels, and ergonomic furniture directly impact employees’ comfort, health, and efficiency. As noted by Ajala (2012), a conducive physical environment reduces stress and improves focus, thereby enhancing productivity. Poor physical conditions, however, can lead to fatigue, absenteeism, and high turnover rates.

Social dynamics are another critical aspect of working conditions. Interpersonal relationships, teamwork, and organizational culture significantly affect employee motivation and engagement. According to Oyefusi (2022), workplaces that foster collaboration, mutual respect, and inclusivity see higher levels of employee satisfaction and performance. Conversely, environments with unresolved conflicts or a lack of support from management may experience reduced morale and inefficiency. At MUPECI Bamenda and Douala, challenges in communication, physical environments, and social dynamics may hinder optimal employee performance. This study aims to examine these dimensions collectively to identify strategies for improving employee outcomes.

1.1 Statement of the problem

Working conditions encompass multiple factors that influence employees’ ability to perform effectively. However, many organizations, including MUPECI Bamenda and Douala, focus narrowly on operational tasks while neglecting these critical dimensions. For example, communication gaps between managers and employees can lead to role ambiguity and decreased motivation. Similarly, poor physical work environments, such as inadequate lighting or cramped office spaces, may result in discomfort and reduced productivity. Social issues, such as weak teamwork and unresolved conflicts, further compound these challenges by eroding trust and collaboration. Despite the critical role of employees in the banking sector, many commercial banks continue to face challenges related to poor employee performance. These challenges often stem from unfavorable working conditions, such as inadequate compensation, long working hours, lack of career development opportunities, and unhealthy workplace cultures. Such issues can lead to reduced productivity, high employee turnover, and diminished customer satisfaction.

While several studies have been conducted on employee performance, there is limited focus on how specific working conditions influence performance in commercial banks. This gap in research necessitates a thorough examination of the issue to provide actionable insights for management and policymakers.

Employee Interaction is a principal and essential endeavor in organizations as stated by (Saravakos & Sirakoulis, 2014). They further asserted that the sustainability of an organization is based on effective communication among employees and relationships develop based on effective communication. Working environments differ from all angles as well as their culture, economic and social development. In this context some of these organizations have cumbersome reporting lines, which are difficult for the employee to abide by; such as conflicting authorities, and obligations thereby making some subordinates become answerable more than a superior Intra- communication facility such as intercoms and memos are mostly ignored by some organizations and this deprives subordinates from knowing the vision and mission of an organization. Considering the problems stated above, the study intends to aid organizations by expounding on the way effective communication would improve employee performance. Studies have shown that effective communication helps employees to coordinate activities, achieve goals. It is also vigorous in socialization, decision-making, problem solving and change management processes. This again ensures that members of an organization or institution are working towards a common goal and purpose. Most organizations have challenges and continue to find the most effective channels for communicating with their constituents.

Role clarity has become an issue as employees had to move and share offices with colleagues in different units. There were some misalignments in job grades leading to confusion as to seniority and reporting hierarchy. This is as a result of a case where management refuses to listen to the complaints of lower employees.

Some tasks distract MUPECI management from developing and designing an effective communication strategy that is self-sustaining and provides effective feedback from employees. The absence of such a strategy or effective communication channel tends to under-utilize the expertise and vital information from the employees, which could be a critical input for formulating an effective communication strategy to reduce or eliminate apathy in performing their roles. To what extent do these communication gaps affect the work performance of employees and the organizational performance as a whole? The effect of poor communication on employees and the organization needs empirical evidence. It is for this reason that this study is set to fill that gap in literature. This study addresses these gaps by examining the effects of communication, physical conditions, and social dynamics on employee performance, offering insights into creating a holistic and productive work environment.

1.2.RESEARCH QUESTIONS

1.2.1Main Research Question

What is the effect of working conditions on employee performance at MUPECI Bamenda and Douala?

1.2.2 Specific Research Questions

• What is the effect of formal communication on employee performance?
• How does the physical work environment influence employee performance?
• How do social dynamics within the workplace affect employee performance?

1.3 OBJECTIVES OF THE STUDY

1.3.1 Main Objective

• To examine the effect of working conditions on employee performance at MUPECI Bamenda and Douala.

1.3.2 Specific Objectives

• To determine the effect of formal communication on employee performance.
• To assess how the physical work environment influences employee performance.
• To evaluate the extent to which social dynamics affect employee performance.