THE CHALLENGES OF LABOUR TURNOVER IN NIGERIA BANKING SECTOR (A CASE STUDY OF INTERCONTINENTAL BANK PLC)

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.

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