ABSTRACT
This study tends to unravel the challenges of labour turnover in the banking sector. One of the challenges and the most exasperating puzzling trend is the avalanche of labour turnover in banking industry. It is worthy of note, that no organization can continue in business effectively without an enhanced production from its human resources. For effective analysis of the topic, Data were collected both from interview, journal and recent development in the industry via newspapers. The relationship between labour turnover and condition of service was also tested through hypothesis 1 while labour turnover affects banks performance and productivity was tested by hypothesis 2 bearing in mind that intercontinental bank being one of the rescued bank was used as a case study. The study suggested that labour turnover has to be curbed bearing in mind the cost implication and its effect in service delivering institutions like the banking industry also the cost of recruiting new staff to fill the vacant position. The study conclude by calling on president Goodluck Ebele Jonathan to tell Sanusi that bank regulations are not done on the pages of newspapers. Also, that his proclamation are not based on conceptual framework but as the spirit directs’ and most time he contradicts himself. This call is necessitated on the fact that his action has increased the level of turnover ever witnessed in the industry as the employee no longer have confidence on the industry for the fear of the unknown.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The term Human Resource Management (HRM) and Human Resources (HR) has largely replace the term a “personnel management” as a description of the process involved in managing people in organisation with ultimate aim of enhancing an optimum level of productivity in companion to the art of engaging the human resource elements (Labour) in the organization.
The aim of every organization is to obtain the best and highest level of output from its employees (labour). Thus an organization does not engage the service of persons just for the fun of it but for excellent level of productivity.
The higher the productivity level of organization labour, the higher the organizational performance, ratings and propensity of continuity all things being equal.
According to expert in Human Resurges, one of the challenges and mot exasperating puzzling trend is the avalanche of labour turnover in banking sector, couple with
the fact that in some of this institutions, the employee are half awake and half a live (Nnadi 2010:17). No organization can continue in business effectively without an enhance production from its human and material resources.
Turnover is one of the most significant causes of declining productivity and sagging moral in the banking sector; it puts a lot of pressure on managements in form of the cost that it will require to train the new hands that the company may hire.
Labour turnover is a ratio comparison of the number of employee a company must replace in a given time period to the average number of total employee.
A huge concern to most companies; employee turnover is a costly expense especially in lower paying job role, for which the employee turnover rate is highest. Many factors account to employee turnover rate of any bank, and these can stem from both the employer and the employees, wages, company benefits, employee attendance and job performance are all factors that play a significant role in employee turnover.
High turnover can be a serious obstacle to productivity, quality and profitability at firm of all size. Turnover is no less
a problem for major service oriented industry, which often spend million of dollars a year on turnover related costs. For service oriented industry high employee turnover can also lead to customer dissatisfaction. Customers are also likely to experience dips in the quality of service each time their representative change.
The cost of employee turnover for organization has been estimated to be up to 15% of the employee’s remuneration package.
There are both direct and indirect costs,
Direct cost relates to the leaving cost, replacement cost and transition costs. Indirect cost relate to the loss of production, reduce performance levels, unnecessary overtime and low moral.
In general, reducing employee turnover saves money. Money saved from not having to find and train replacement worker can be used elsewhere, including the bottom line of the company’s profit statement. The U.S Department of Labour estimates that it cost about 33 percent of a new recruit’s salary to replace a lost employee. In other word, it could cost
$11,000 in direct training expense and cost productivity to replace an experience employee making $33,000.
High turnover in the banking sector is sometimes welcomed; employers who are poor interviewers may not discover that new employees are actually poor employees until after the workers have been on the payroll for several weeks. Rather than go to the trouble and documentation of firing these underperforming workers, some banks rely on turnover to weed out the bad employees when the learning curve is small and consequence of always having inexperienced workers are minimal, high turnover may not be seen as significant problem.
Intercontinental Bank Plc which is the case study of this research has been chosen considering its size, various sectors and staff strength. Intercontinental Bank Plc is a banking institution that had been known to have achieved its overall goal of customer service excellence, customer retention, employee loyalty, however with global economic recession/meltdown and its impact in financial sector that necessitated the intervention of Central Bank Nigeria. These banks have been termed “rescued bank” and there was mass
exodus of staff as a result of the events that followed the action of CBN Governor.
1.2 STATEMENT OF THE PROBLEM
The challenges of labour turnover is not just a Human Resources issue, it is a crucial issue that affects all area of any organization. In recent times, it has been observed that bank workers’ movement from one bank to another is happening at an alarming rate and has called for serious Concern as this has negatively affected the sector, when an employee leave a bank, the employee takes with him knowledge and experience, that which cannot be monetarily measured and that cannot be easily recreated.
The corporate culture, enduring peculiar business strategies and networks are taken to competing bank/organization. Higher Turnover can cost a company millions of dollars per year and can show down productivity.
Beside, CBN Governor, Mallam Lamido Sanus on August
14, 2009 threw the sledge Hammer on some banks CEOs for wrong exercise of executive responsibility as it affects the bank and economy at large.
The adverse effect of this sledge Hammer is that some of this bank labour (staff) was rationalized through the process called re-engineering or repositioning, thereby causing anxiety to the existing staff about their job and financial security. Many of the bank staff believe that a steady job provide the only security standing between a middle class life style and financial precipice, it therefore, comes as no surprise that employee rated job security as the important thing hence the mass exodus staff of rescued bank to those bank that was termed “strong” and to other viable business organization and public institutions.
1.3 OBJECTIVE OF THE STUDY
The cogent objective of this project is to know the latitude or extent to which employee turnover has affected organization, to x-ray the cause of the problem, to know the retention strategy adoptable and make recommendation on how this trend can be reduced if not totally eliminated.
1.4 RESEARCH QUESTIONS
– Are organization affected by high labour Turnover?
– To what extent does high labour Turnover affect organization’s performance and productivity?
– Can employee turnover be reducing?
– What are retention strategies to be adopted by organization to reduce this trend?
– Are there any positive effect of employee turnover to an organization?
1.5 HYPOTHESES
For the purpose of this study, two research hypotheses are formulated to guide the exercise. These are:
HYPOTHESIS 1
Ho: Labour Turnover have no effect on bank’s performance and productivity.
Hi: Labour turnover affect Bank’s performance and productivity.
HYPOTHESIS 2
Ho: There is no relationship between condition of service and job security on labour turnover.
Hi: There is relationship between condition of service and job security on labour turnover.
1.6 SIGNIFICANCE OF THE STUDY
It is important that employers of labour have an understanding of the rate of labour turnover and how they affect the organization’s performance and ability to achieve their strategic goals. Depending on the size of the business, an appreciation of the levels of turnover across occupations, locations and particular groups of employee (such as identified high performers) can help inform a comprehensive resourcing strategy making sure that new joiners have realistic expectation of their job and receive sufficient induction training that will keep to minimize the number of people leaving the organization within the first six months of employment.
Tools such as confidential exist survey and staff attitude survey can help line managers understand why people leave the organization and enable appropriate action to be taken to forestall it.
Beside, the study will be relevant because it will equip management on ways through which productivity could be improved through effective Human Resource Management and motivation of its labour. Most management focus on demanding performance without first thinking of how they
could on their own put into place certain conducive environment and policies that will be employee friendly for effective and efficient human resource productivity.
This study is important to the student of human resource practitioners as it makes it possible for them to understand the effect of labour turnover on the banking industry, it will also be relevant to future and present researcher’s doing similar work on this area.
1.7 SCOPE OF THE STUDY
The project is delimited to banking industry alone. The choice of Intercontinental Bank becomes imperative because of the employee turnover is most rampant after it was rescued by Central Bank of Nigeria (CBN).
1.8 LIMITATION OF THE STUDY
The major limitation or challenge to this project work is the fact that the researcher is a working class student; this posed serious time challenge to the researcher, as there is little time to attend to the research.
The other challenge encountered was the inability to get authors that have done exclusive write ups on labour turnover. Some books eventually gotten through internet their
prices are very exorbitant, this posed serious financial constraints.
This material content is developed to serve as a GUIDE for students to conduct academic research
THE CHALLENGES OF LABOUR TURNOVER IN NIGERIA BANKING SECTOR (A CASE STUDY OF INTERCONTINENTAL BANK PLC)>
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