Employee Retention Practices In Banking Sector
This report aims to analyze the current employee retention situation in the banking sector. According to reports, banks and other financial institutions are among the sectors that are facing critical employee retention issues, with a high turnover rate. Employee retention is a crucial factor in the successful functioning of any organization, as any adverse case results in losses incurred by the organization.
The study initially sheds light on the need to conduct this study, depicting the findings related to employee retention issues, specifically in the banking sector. The Introduction section sheds light on the research objective and questions defining the study’s reason and significance.
The literature review section analyzes three distinct sources that define the gravity of the issue pertaining to employee retention faced by banks, followed by the external implications of why the problem has reached such a critical point and how it can be countered. The final source sheds light on what banks must do to control the situation and employ effective employee retention strategies and techniques.
The study’s recommendations suggest that organizations must remain in line with times and induce strategies that motivate and satisfy employees as the result of such efforts goes in favor of both employers and employees.
Table Of Contents
1.0 – Introduction (A.C 2.1)
1.1 – Key Stakeholders of The Study.
2.0 – Stages Of The Research Process (A.C 1.1)
2.1 – Research Objective.
2.2 – Research Question.
2.3 – Research Process.
2.3.1 – Interviews.
2.3.2 – Surveys 7
2.0 – Literature Review (A.C 1.1, 2.2)
2.1 – Why Are Banks Losing Top Talent (Summary)
2.1.1. – Quality Of Source.
2.2 – Strategies That Can Improve Employee Retention. 10
2.2.1. – Quality Of Source. 10
2.3 – Strategies Organizations Should Employ To Retain Employees 11
2.3.1. – Quality Of Source. 12
2.4 – Comparison Of Sources 12
3.0 – Conclusion & Recommendations (A.C 3.1) 13
4.0 – References 15
1.0 – Introduction (A.C 2.1)
Employee retention refers to the management’s techniques used to persuade employees to continue with the organization for a long time and work towards its goals and objectives. Employee motivation strategies are the basis that motivates employees to remain with an organization and contribute effectively. For any organization to grow, its employees must perform sincerely and efficiently (Dikshit & Jain, 2017).
Employee retention presently is a big concern for organizations, especially owing to the organizational efficiency associated with its employees and the cost businesses incur through repeated recruitment processes in terms of time and money. Today organizations invest in their employees by training them and developing their skills towards organizational efficiency; however, when such employees leave the organization, the result can be disastrous (Petersen, 2019).
The banking sector is one sector that faces challenges in the wake of retaining employees. Being a service-based sector, banks train and develop their employees in financial areas to achieve their business objectives. Employee turnover can be bad for banks as ample amounts of money, time, and training have been put into developing the employee with the required skills. Employee turnover is not just costly in terms of losing an efficient employee; it also means going through the entire recruitment process to find another candidate, besides the time required to train him or her again. According to estimation, the cost of employee turnover is 2.5 times an employee’s salary, besides the loss in terms of productivity, training cost, cultural impact, and engagement decrease (Florentine, 2019).
It is thus important for organizations, banks, in this case, to focus on employee retention strategies and practices as it impacts the investment and time of the organization. Effective retention strategies result in higher employee morale, better productivity, enhanced performance, and improved work quality for the organization.
1.1 – Key Stakeholders of The Study
The key stakeholders of this research include
- Employers – employee retention strategies help employers in numerous ways, e.g., saving the cost of rehiring, savings the hassle of recruiting new employees, etc. Failure of employee retention strategies costs an organization in many ways, as mentioned above. The findings of the research study will help in formulating more effective retention strategies, which will result in effective management of employees, resulting in enhanced performance and retaining of the top talent in an organization.
- Employees – retaining strategies in an organization also favor employees as they are treated fairly, considered as organizations’ assets, are consulted regularly on various organizational matters for their views and reviews, etc. An organization that practices good retention strategies has more satisfied and happy employees, which translates into more efficient performance. Employees’ rights are better-taken care of in terms of training and development, organizational culture, etc. efficient retention techniques in an organization benefit employees equally as it benefits employers.
2.0 – Stages Of The Research Process (A.C 1.1)
Employee retention is a growing matter of concern for every industry, especially the finance industry, e.g., banks. According to a LinkedIn study that researched the bank industry talent retaining issue, considered the analysts and associates working previously in 12 investment banks and had left their organizations in 2015. The study revealed that for banks, top talent averagely remained in their positions for 17 months only during 2015, compared to an average of 26 months in 2005 (Oran, 2017).
In another Pwc survey conducted in 2016, among the major challenges, banks faced in the wake of employee turnover and recruitment was the skill gap that the various banks had to face due to inefficient employee retention strategies (WBR, 2019). Further ineffective retention strategies result into
- shortage of overall employees owed to the bad reputation of banks related to employee care,
- failure to create an exemplary company culture,
- Problems in hiring top talent owed to job seekers having more choices to switch to, etc.
These are only a few reasons why evaluating the major employee retention strategies deficiencies in banks should be studied and explored. For this reason, this study will use a combination of two primary methods, e.g., Interviews and Surveys, to explore why employee turnover has been high in banks and what more these financial institutions require doing to retain their top talent.
2.1 – Research Objective
The key research objective of this study is to explore the reasons that promote a high turnover rate and result in the failure of current employee retention strategies in banks. Owed to the financial nature of bank organizations and the overall economic situation faced in different parts of the world, it is imperative to analyze the reasons behind high employee turnover in banks, explore solutions to this problem, and suggest ways that lead to efficient retention strategies in banks.
2.2 – Research Question
The study aims to explore the following research questions
Q1 – Why Are Banks’ Retention Strategies Not Being Able To Retain Top Talent?
Q2 – What Strategies Should Banks Implement To Retain Its Employees?
2.3 – Research Process
The study aims to explore the gaps in the bank’s retention strategies leading to a high turnover and suggest ways to retain top talent in banks. For the research conducted in this regard, this study will initially explain the reason for the research before analyzing the literature on why the problem has arisen and how it can be tackled. To explore further the reasons behind the need for better retention strategies and how they can be achieved, the primary research method of interviews and surveys will be adopted, which will offer a detailed analysis of the employment situation within banks. The research will follow a mix of primary and secondary sources to evaluate the findings.
2.3.1 – Interviews
Interviews are one major source of collecting primary data and aid considerably in the data collection process. The main aspects being considered in choosing the Interview as a primary data collection method are:
- The cost of the data collection method.
- The accuracy of collected data.
- The efficiency of the collected data.
Interviews Analysis As A Data Collection Source
Table 1. Advantages And Disadvantages Of Interviews
2.3.2 – Surveys
Surveys are one source of primary data collection that can aid in collecting a lot of information in a small amount of time. Also, today, online survey software has made it easier to collect data related to a vast area of research. Additionally, suppose the respondents of the research are in a hard-to-reach area or are dispersed in a large geographical area. In that case, this primary data collection method is the best way to reach them.
Analysis of Survey As A Data Collection Source
Table 2. Advantages and Disadvantages of Surveys
2.0 – Literature Review (A.C 1.1, 2.2)
In the literature review, three main sources have been explored comprehensively to understand the problems banks face regarding employee retention and what can be done to make informed intentional efforts toward enhancing employees in the financial sector.
2.1 – Why Are Banks Losing Top Talent (Summary)
According to Oran (2017), in a Reuters report, it was revealed that despite the attempts of banks to retain their talented employees by means of frequent promotions and good pay, banks are still among the industries that are facing a high percentage of employee turnovers. According to the study, banks are incurring a loss of $1 billion in the wake of replacing employees annually. This employee turnover is voluntary on the part of the top talented employees, and for banks to shift this trend, there is a need to change the culture of banks.
The source also revealed that owing to this loss, the global headcount of the biggest banks worldwide has dropped by 12%, showing the level of losses the banks are incurring. Given the global economic situation and the crisis financial institutions face, banks are finding it equally challenging to retain their existing employers.
The report also reveals that the results could have been more effective while banks are practicing more and more efforts to retain junior staff through frequent analyst promotions, job rotations, and more training opportunities.
2.1.1. – Quality Of Source
This source offers good information, firstly on how grave the retention problem is for banks and, secondly, on what banks are currently doing to tackle the situation, but in vain. The source offers information collected through a survey study conducted by Quinlan & Associates, which is a reliable source. The statistics presented in the study define precisely how difficult the situation banks face and the strategies that have been adopted but have failed to offer the desired results. This will allow searching for new strategies of employee retention that can actually bring about a difference in the end result, or percentage of employees banks are losing on an annual basis.
2.2 – Strategies That Can Improve Employee Retention
According to another survey report by WBR Insights (2019a), banks need help retaining and attracting employees. This indicates that banks need to make critical changes that make their institution more appealing to employees. Also, given that banks are employing retaining techniques and strategies such as competitive pay, promotions, training, and development opportunities, etc., the percentage of employee retention in banks is among the highest in industries worldwide.
Sighting these issues, the source defines retaining strategies that will help to lure and retain top talent, especially in the wake of the digital era we live in today.
The source suggests that transforming the entire workplace, in terms of culture, technology induction, rapid changes in the work environment, the level of flexibility, branding, benefits, etc., is necessary. These are the areas that banks require to focus on if they wish to overcome the employee retention situation faced in the industry.
2.2.1. – Quality Of Source
This source also offers accounts of what banks need to apply to control the employee attracting and retaining aspects. The source suggests that transforming the entire bank culture is one way of retaining talent, incorporating a culture that is preferred by employees and shaping it towards the benefits of the bank. One aspect defined in this regard is the millennial population of employees that are not motivated by benefits packages or leadership positions but rather by making a positive contribution towards the organization or other people in general. Figure1. Below is what attracts millennials, according to a study by an organization.
Figure 1. Millennial Job Preferences
2.3 – Strategies Organizations Should Employ To Retain Employees
According to Forbes Human Resources Council (2016), six strategies that have been proven to offer results in terms of retaining employees, according to six top Human Resource executives are
- Conduct Regular Stay Interviews – do not wait for employees to leave to analyze what went wrong, be proactive.
- Empower The Teams – offer full ownership of actions to everyone at all levels as much as possible.
- Offer them a Chance for Anonymous Communication – Build a mechanism where people can define their thoughts without being identified.
- Refrain From Micro Managing – micro-managing is not required if you hire talented managers. Let them work in their own space and let employees answer one boss.
- Check In With Employees – Regularly check your employees for thoughts and ideas and how they perceive the entire organizational culture, strengths, career prospects, etc.
- Practice Transparency – though leaders fear this, it is a definite way to enhance employee loyalty.
2.3.1. – Quality Of Source
This source offers experienced recommendations from experts dealing with hands-on situations in the workplace. Since these experts deal irregularly with employees, they have more insight into how they feel and have real-life solutions as well.
2.4 – Comparison Of Sources
All three sources considered in this study agree that banks need to transform their internal culture on the whole to retain their employees. After repeated attempts to retain employees through salaries, positions, promotions, etc., which offer little results, the only option left is to change the organization’s culture.
All three sources present different views of the banks’ employee retention issue. While the first source defines the grave nature of banks’ issues and what strategies have failed to offer results, the second source stresses the external factors that banks should consider related to employee retention, such as hiring millennials, inducing technology, etc. The third source, however, explains what internal strategies should be adopted, such as freedom of work, transparency, anonymity, etc.
These three sources were selected to offer detailed analysis that could help recommend solutions to the problem. The findings from the sources are defined briefly in Table 3. Below
Table 3. Analysis Of Sources
3.0 – Conclusion (A.C 3.1)
The sources analyzed in the study clearly state that the problem faced by banks is serious, and immediate effective measures are to be taken. Banks need to ensure that efficient retention strategies are employed and regular checks are made to check the effectiveness of those strategies. The literature review clearly revealed that waiting for an employee to leave before taking any retention-related action might be a lost cause in the end. Not only do organizations compete with competitors in the market, but they also have to compete to retain top talent in their organizations. Timely reviews should be conducted using multiple ways to remain updated on the satisfaction level of employees. Regular interaction with them should be ensured too, both at anonymous and direct levels, to get insights on their job and organization-related expectations.
4.0 – Recommendations
Recommendations in this regard after analysis of literature to banks include
- Focusing on changing the environment or business culture. This can include reviewing employee work style, the level of autonomy, the number of answerable bosses, the level of creativity or rules to follow, a clear description of the job and strict adherence to it, work/life balance, etc. This will aid not just the employer by resulting in employee retention but will offer more satisfaction to employees as well, enhancing their performance.
- There is a need to recruit individuals from all age groups, millennials, Generation X, and new entrants, as all offer their own merits and demerits. There is a requirement to focus on what motivates each type of employee as the preferences and choices of the different groups differ largely. In this manner, employers will have access to all talent groups, while employees will get a chance to display their individual talent.
- The process of assessing employees should start from the point of recruiting to the end, and at intervals, regular feedback from employees should be received, both clearly and anonymously, to assess where things start to go wrong and take timely actions to counter them and avoid the turnover of employees. This will allow employees to stay aware of the situation in a timely manner and counter problems as they surface, while employees will be saved from going through the stress they want to avoid.
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