Leveraging employee relationship management to foster agility: The mediating role of employee empowerment in the Indian banking sector

Organizational agility is a prerequisite for ensuring enhanced corporate performance in the face of technological developments. However, the supplementary role of employee relations and empowerment practices in organizational agility has not been widely explored. FinTech introduction in the banking sector has added to its already dynamic work environment. The study aimed to investigate the effect of Employee Relationship Management (ERM) on Organizational Agility (OA) & Employee Empowerment (EE), and Employee Empowerment on Organizational Agility, and evaluate whether EE has a mediating effect on the relationship between ERM and OA. Structural Equation Modelling over the SmartPLS4 software was used for analysis. A structured questionnaire was distributed to 200 employees in back-office operations departments of the top four banks with the highest market capitalization on the National Stock Exchange, India. Employees from branches operating in metropolitan cities were selected. Results underscore the human asset’s prominence in the banking sector’s sustenance, showing a significant positive direct effect of EE on OA (P value: 0.000, Path Coefficient: 0.627), ERM on OA (P value: 0.025, Path Coefficient: 0.718), and on EE (P value: 0.000, Path Coefficient: 0.718). EE also shows a mediating effect in the influence of ERM over OA (P value: 0.000, Path coefficient: 0.45).The results bridge the gap in knowledge about the prominence of the Resource-Based Theory by investigating the role of employees in enhancing the banking sector’s ability to adjust operations in line with technological advancements.