Effect of Expectancy theory on Employee Retention in the Banking Sector

 Effect of Expectancy theory on Employee Retention in the Banking Sector

Introduction to Expectation theory

Every employee inside an organisation aspires to receive acknowledgment for their extensive work hours and diligent efforts, which ultimately yield exceptional outcomes. Expectation theory, as a prominent theory in the field of motivation, posits that employees are more likely to be motivated to engage in additional labour when they perceive that the value they assign to a possible reward will ultimately satisfy a need or aim. Expectation theory posits that employees are faced with three alternatives as they strive to attain a reward based on their performance. The constituents in question encompass expectancy, instrumentality, and valence. Lately, there has been a decrease in the focus on motivating employees to strive for organisational goals and attain improved incentives. This forms the basis of the article's contention that expectation theory is necessary to enhance workers' self-assurance and efficiency while carrying out job-related duties. The research design employed in this study was a descriptive theoretical approach. The study posited that companies might apply expectation theory as a means to incentivize employees to exert greater effort in pursuit of a reward, hence facilitating the achievement of organisational goals.

It is a hypothesis that has sparked conversations about how to motivate workers in every given organisation to achieve high performance and productivity that meets employer expectations. Despite being utilised and implemented by businesses and HR departments, the theory has made its way into organisations to address employee motivations by incorporating a sociological perspective.

Although the theory appears one-dimensional at first, it then discusses the reality that one crucial component of a society's organisational structure is its workforce. It can be applied in both public and private establishments where products and services are created and provided to satisfy customers or the general public.

Employers strive to produce, manufacture, and offer services to people in order to make noteworthy profits in private organisations where profit-making is crucial. They also take into account labour costs and other associated operational costs to ensure that the workforce operates in accordance with the plan-out strategy. A crucial aspect of these characteristics is that companies view workers and employees as one of the functional resources (Bussin et al., 2019) that enable production. The job specification, job description, and job responsibilities that an employee is required to accomplish at for maximum productivity and outcome are presented with assistance from the employers.

Their link demonstrates how employers and employees play a significant role in determining how output at any particular time leads to a favourable result. Other elements like the machine and the surroundings would be ambiguous and ineffectual without these components. Similar to what is seen in the private sector, governmental institutions and organisations can also discuss this, as employees play a significant role in addition to the employer.

The expectation theory illustrates that employee performance is not the only factor that determines an organization's level of productivity where  employers' actions also play a role in helping employees reach their goals by inspiring and encouraging them to work hard both during and after work hours. Expectancy theory addresses the sociological perspective of an employee's decision to take specific actions in order to receive rewards or be motivated, even though it acknowledges the individual decision or choice of an employee towards productivity and individual performance (Sonnentag & Frese, 2002). Employee recognition on the job (Luthans & Stajkovic, 2006), can also function as a manner of rewarding employees, in addition to financial incentives. Every person at a company has aspirations and objectives for themselves. An employee's actions might be evaluated in terms of how or what inspired them to make the necessary efforts to satisfy a demand or objective through their performance and productivity. 

Usefulness of the theory in addressing issues and performance  in  the Banking Sector

When workers feel that their efforts will produce positive results, they are more inclined to stick with the company. This means that, in the banking industry, workers will stick around if they believe their efforts will pay off in the form of cash incentives, recognition, and career progression.

First and foremost, workers in the banking industry need to understand a direct connection between their contributions and their compensation. This implies that banks must to set up clear mechanisms for evaluating employee performance that are connected to material benefits like bonuses, job advancement, and professional growth possibilities. Employee commitment to the company is higher when they feel that their efforts will be acknowledged and rewarded.

Second, expectancy theory highlights how crucial it is for workers to believe they are competent and capable of accomplishing their objectives. In the banking industry, this means giving staff members the assistance and training they need to ensure they have the knowledge and tools needed to do their duties well. Furthermore, providing employees with chances for skill development and career growth can boost their confidence in their abilities and motivate them to stick with the company.

The theory emphasizes the importance of valence, or the perceived worth of the benefits provided by the company. This could entail offering competitive pay packages, alluring benefits, and a happy work atmosphere in the banking industry. In addition, banks have the ability to cultivate an environment that values gratitude and acknowledgment in order to raise the perceived worth of sticking around.

Comparison of Banking sector against FMCG sector

The application of expectation theory in employee retention varies between the banking and FMCG sectors due to disparities in organisational structures, work environments, and employee motivations. The theory's focus on the correlation between exertion, achievement, and results is particularly relevant in the banking sector, where employees often handle intricate financial goods and services. In this scenario, employees  be motivated to remain employed by the organisation if they see that their contributions would yield favourable performance evaluations, rewards, or opportunities for career advancement. The presence of a well-defined hierarchical framework inside banking institutions may enhance the perceived likelihood of career progression, hence fostering employee retention. On the other hand, the use of expectation theory can emphasise the need of granting employees a feeling of independence and recognition for their efforts in the FMCG business, characterised by rapid production and distribution cycles. If employees in this sector perceive that their endeavours will yield tangible outcomes such as successful product launches or market launches, they may be more likely to remain in their positions. In addition, fostering a favourable work environment and offering opportunities for skill development can elevate employees' expectations and inspire them to remain committed to the company despite challenges such as intense competition and changing client preferences. While Expectancy theory is applicable in several industries, its implementation in the banking and FMCG sectors requires a nuanced understanding of employee objectives and organisational dynamics to effectively address retention challenges.

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