4.High Employee Turnover in the Banking Sector
Human capital has become the most
valuable resource for any organization since the skills and knowledge possessed
by employees are unique and challenging to replicate. Therefore, employees act
as a key driver of sustainable competitive advantage. On the other hand,
organizations would be nothing without their employees because employees are
the ones who strive hard to deliver their best performance to achieve the
objectives and goals of the organization. For the company's goals to be
achieved, it must attract, develop, and retain workers who do not have the
desire to move or even leave the company. However, retaining employees in any
organization is challenging in today’s competitive work environment for many
reasons. Nevertheless, replacing an employee is becoming more expensive due to
the increasing rate of turnover across the world. Recently, turnover has become
a culture or trend in almost all industries which negatively affects the
company’s overall profitability.
High employee turnover in the Sri
Lankan banking sector can be attributed to several factors.
1. Job stress
The nature of the banking sector
can lead to high pressure and stress, especially during periods of financial instability
or economic uncertainty. This can result in employees seeking less stressful job
opportunities.
2. Low Salaries and Benefits
The remuneration package is a
function of the discrepancy between what employee feels that they should get
and how much pay (Lawler,1971). If a satisfactory remuneration package is
widely applied in an organization and it will improve employees’ satisfaction
on the job and also change attitudes and social behavior of employees. The
remuneration packages in some banks may not be competitive enough to retain
employees, especially when compared to opportunities in other sectors.
3. Limited Career Growth
Limitations in career development
are one of the main reasons contributing to high employee turnover in the Sri
Lankan banking sector. Many employees, especially those in base level positions,
often feel that there are few opportunities to advance within their company.
This may be due to an unclear career development path, insufficient training, a
lack of development program and the company’s structured hierarchy.
In some banks, the promotion process
is very slow, with seniority being prioritized over performance. This can lead
to frustration among junior staff, as they may feel that their talents and
efforts are not adequately recognized or rewarded.
Work-life balance refers to the
interaction between work and the other important aspects of life, such as family,
community, leisure, and personal development. It is about the right balance
between professional responsibilities and personal activities, and this balance
is not fixed. It can change over time.
Maintaining a good work-life
balance positively impacts all areas of life. Employees work better when they make
time for family and personal interests. Work-life balance is where the tensions
between work life and personal life are minimized by having a proper policy, systems,
supportive management and provisions at work workplace and good relations in
personal life. A workplace that promotes work-life balance creates a motivating
and fulfilling atmosphere, ultimately leading to happier employees. Failure to strike
a work-life balance can result in heightened stress levels, burnout, and
ultimately, employee turnover.
5. Economic and political Instability
Due to the current economic crisis,
inflation has risen, and the currency has depreciated, leading to higher living
costs. Many employees are unable to cope with this rapid change and struggle to
manage their expenses with stagnant salaries. As a result, they seek better job
opportunities locally or migrate for higher-paying jobs.
Frequent changes in policies,
taxation, and government interventions in the financial sector create uncertainty.
Employees may feel uncertain about their jobs if banks face regulatory or
financial challenges, leading to higher turnover.
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This article effectively highlights key factors driving high employee turnover in Sri Lanka’s banking sector, including job stress, low salaries, limited career growth, work-life imbalance, and economic instability. It provides valuable insights, supported by relevant theories like Lawler’s remuneration model. To improve, consider adding real-life examples and potential solutions, such as better compensation, career development programs, and flexible work policies. Overall, it’s a well-structured and relevant discussion on a critical HR challenge.
ReplyDeleteThank you Nadeera for your thoughtful feedback! I truly appreciate your insights and suggestions. I completely agree that real-life examples and practical solutions are essential in addressing employee turnover. I've actually discussed these aspects in more detail in my next blog page, where I explore solutions like better compensation, career development programs, and flexible work policies. I'd love for you to check it out and share your thoughts.
DeleteHi Hiranthi,
ReplyDeleteIn this article you have clearly mentioned well about what are the major factors that affect to the high turnover in banking sector.
Hi Nirmani, I'm glad that you found the major factors that caused high turnover in the Sri Lankan banking sector clear and helpful. Thanks for reading and sharing your thoughts.
DeleteYes, Thiranji, I totally agree with you. Strategic solutions like better compensation, clear career pathways, and flexible working arrangements are definitely helpful for talent retention and the company's long-term success. Thank you so much for engaging with the topic.
ReplyDeleteThis is a very organised explanation. High employee turnover refers to a situation where a large number of employees leave their jobs within a specific period, leading to a high percentage of replacements. It can negatively impact banks by disrupting their operations.
ReplyDeleteThank you, Abhaya, for your valuable comment. I agree with you. Indeed, high turnover may negatively impact daily operations and the bank's overall stability. Managing this issue with the right HR strategies is essential to the long-term success of the banking industry. Thanks again for sharing your thoughts.
DeleteThe chapter explains in detail the main causes of high staff turnover in Sri Lankan banks, such as work-life imbalance, low pay, workplace stress, limited career advancement, and unstable economic conditions. It offers a succinct and pertinent examination of the issues affecting retention in the industry.
ReplyDeleteThank you, Nethmi, for your valuable feedback. You have summarized my article very well.
DeleteAttention should be given to the mentioned challenges so that more effective retention strategies can be developed. Your feedback is truly appreciated.