Impact of Employee Retention to an Organization in Banking sector in Sri Lanka
Effect of Employee Retention to an Organizational Performance in Banking Sector in Sri Lanka
Many factors contributing to employee attrition inside the organisation, both historically and presently. Abundant information exists that elucidates the reasons behind employee retention. As we transition into the advanced era, the preservation of staff has consistently been crucial and is increasingly challenging for enterprises to sustain and retain. It is progressing rapidly. Employee retention is a significant concern that managers and organisations currently encounter (Pregnolato, Bussin, & Schlechter, 2017). The organisation incurs significant expenses in terms of institutional knowledge, as well as the resources of time, money, and effort needed to recruit and educate new employees when key workers are lost. The headhunters face both a potential risk and a significant task in the meticulous selection process from a vast pool of candidates. It is imperative to conduct comprehensive investigations pertaining to both recently recruited workers and individuals who remain actively engaged inside the organisation.The issue of high turnover is increasingly prevalent in the contemporary global business landscape, characterised by intense competition for skilled staff. Certain businesses are compelled to prioritise their retention strategy due to the growing prevalence of enhanced rewards programmes that facilitate individual career advancement.
Problem of the study
This study aims to investigate the impact of career development, reward, work environment, and supervisor support on organisational performance at the banking sector. The results of this study will assist organisations in seeking novel strategies to enhance staff retention. Our study focuses specifically on banks . In order to retain personnel who will benefit both the firm and the individuals, organisations must acknowledge the need of fostering innovation and creating new opportunities as the technological era and new generation progress.
Study Objective
The objective of this study is to examine the impact of employee retention on organisational performance in banks . The key variables and elements examined in this study that are indicative of their influence on employee retention, specifically in terms of their impact on employee retention, are career development, supervisor support, work environment, and rewards. The primary focus of this study will be on commercial banks.
Importance of Conducting the Study
This study will provide suggestions to corporate entities. HR personnel should have the authority to generate new opportunities and challenges for their staff members. The younger cohort exhibits greater technological sophistication, receptiveness to novel opportunities, and a readiness to confront challenges. It is imperative for managers within businesses to undergo training in order to effectively engage with both colleagues and subordinates. By creating an environment that fosters an open culture and provides a platform for employees to freely express their ideas and receive recognition. These organisations should prioritise individuals before solely pursuing financial gains. The human resources department should prioritise the development of innovative tactics and advocate for enhanced incentive schemes within organisations. It is crucial for a firm to give priority to ensuring that employees have a conducive work environment. Additionally, the human resources department should be cognizant of each employee's evolving requirements to uphold employee dedication and address their diverse needs. Staff retention is a primary problem for corporate leaders due to factors such as the scarcity of skilled personnel, limited economic progress, and high employee turnover.
Johnson (2000) refers to retention, as the capacity to retain desired employees for a longer duration compared to competitors. By employing these strategies, organisations can effectively retain their workers and ultimately achieve long-term profitability. Through increased commitment and success, these organisations will expand and cultivate a culture that appreciates diversity, difficulties, and every person. This phenomenon would result in a decrease in employee retention rates and turnover rates.
Employee retention is of utmost importance for banking firms due to a multitude of compelling factors. Primarily, the banking sector relies heavily on the expertise and understanding of its employees. In a domain where the utmost importance is placed on correctness and precision, the retention of competent personnel ensures the uninterrupted provision of services and maintains client trust. Seasoned bankers possess a profound comprehension of market developments, financial regulations, and consumer inclinations. This enables organisations to provide tailored services and solutions, hence enhancing customer happiness and fostering loyalty.
Moreover, the retention of employees has a direct impact on the productivity and operational performance of banking organisations. High turnover rates can lead to increased expenses associated with the recruitment and training of new personnel, as well as disruptions to workflows and institutional knowledge. Conversely, the retention of highly skilled employees fosters a work environment characterised by enhanced innovation, collaboration, and stability. Employees demonstrate a greater inclination to allocate their time and exert their efforts towards enhancing processes, developing new products, and implementing best practices when they experience a sense of comfort and appreciation within their respective professions. This enhances the expansion and competitiveness of the organisation.
Furthermore, the maintenance of banking institutions' reputation and brand image relies on the retention of employees. In the contemporary interconnected society, speculations on elevated rates of employee attrition or dissatisfied workers can rapidly disseminate through social media and online forums, thereby tarnishing the bank's reputation and eroding client trust. A workforce that demonstrates minimal employee attrition and elevated job contentment serves as proof of the bank's dedication to its employees and its endeavours to establish a favourable work atmosphere. Consequently, the bank's attractiveness to clients and potential employees is enhanced, so reinforcing its standing as a preferred employer within the industry.
Figure 1 : Relationship between employee retention and organizational performance
The sampling method employed will be probability sampling. The statistical technique of inferential statistics was utilised in our study of commercial banks in Sri Lanka, which represent a specific demographic. A total of 384 samples are considered. This study is restricted to commercial banks because to the small population size.
Hypothesis
H1: Increased number of career opportunities has a positive impact on employee retention.
H2: Increased number of rewards has a positive impact on employee retention.
H3: Higher level of supervisor support has a positive impact on employee retention.
H4: A good working environment has a positive impact on employee retention.
Conclusion
Therefore, it will be asserted that there exists a relationship between the dependent variable and independent variables, which can be ascertained by examining the significance value. The primary objective of organisational and business development is to enhance productivity by optimising the utilisation of the personnel within a structured framework. The underlying assumption is that dedicated and motivated employees are essential for attaining organisational goals. This position requires the administration of human resource (HRM) procedures to bank evaluate employees' performance and conduct, as well as to retain them for an extended duration. The findings of this research will have a substantial impact on the identification of key factors that influence employee retention within corporate companies .
Experience in Employee Retention to an Organizational Performance in FMCG sector and Banking sector
The banking and fast-moving consumer goods (FMCG) sectors have demonstrated the significance of staff retention in enhancing organisational performance. The maintenance of stable workforce is of utmost importance within the banking sector, given the potential for high turnover rates and the severe rivalry for skilled personnel. Retaining competent personnel reduces costs associated with recruitment and training, while also fostering consistency, so enabling banks to establish stronger relationships with their clients and facilitate sustained expansion. In a similar vein, the retention of highly skilled individuals ensures a comprehensive understanding of client preferences and market dynamics within the fast-moving consumer goods (FMCG) sector, where the ability to innovate and adapt to market conditions is of utmost importance. This intelligence empowers fast-moving consumer goods (FMCG) enterprises to maintain a competitive edge, enhance product development, and promptly respond to evolving trends. Companies in various industries can enhance employee loyalty and engagement, leading to improved overall performance and success, by implementing effective retention tactics. These methods may include offering competitive salary packages, providing career development opportunities, and cultivating happy work environments.
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