2. What Really Makes Employees Leave the Banking Sector?

 

Employee turnover is not considered as an accident. Individuals do not just wake up in the morning and just resign without a reason. Rather, turnover is typically the result of a complex of job, organizational and external conditions that accumulate as time goes by. These drivers should be understood when organizations (especially banks and financial institutions) wish to come up with effective retention strategies.

It has been found that job satisfaction, organizational commitment, perceived alternatives and individual characteristics have a strong correlation with turnover intention (Hom et al., 2017). Nevertheless, the general concepts are broken down to the concrete daily lives of employees. This blog discusses the key drivers that drive the individuals to the exit door and specifically on the banking positions, which are usually high tension and customer facing.

2.1 Job Stress, Workload and Emotional Exhaustion.

Job stress has been rated as one of the most commonly used predictors of turnover. The intention to quit is likely to emerge in employees who are subjected to chronic stress particularly when they perceive that the organization is not offering them appropriate support (Ongori, 2007). The sources of job stress in the banking industry include:

•           Physical confrontations in sales and performance goals.

•           There is constant pressure to sell a number of products.

•           High compliance and documentation

•           Documentation and compliance requirements.

•           Month-end/quarter-end peaks.

According to the job demands/resources model, high job demands, which include workload and time pressure do not result in burnout and increased turnover intention when resources such as autonomy, social support and feedback are not provided (Bakker and Demerouti, 2007). Bank employees who have a direct contact with customers also undergo emotional labour as they are required to control their emotions when dealing with complaints, financial anxiety and occasionally aggressive customers. With the course of time, this depletion of emotional energy renders the maintenance of less attractiveness.

2.2  Pay, Benefits and Fairness Perceptions

 

Turnover is not just caused by money alone and that too it is a major cause. One inquiry that has been recurring in the literature is that perceived pay unfairness and not the absolute pay level is highly correlated with turnover intentions (Allen et al., 2010). Employees also make comparisons externally (with other workers in the labour market) and internally (with other employees in the same job category).

Small or domestic banks might present a disadvantage to the staff that works in the bigger or multinationals where higher salaries and bonuses are offered. The literature in the financial services sector has revealed that a lack of promotion opportunities and poor pay among employees are some of the factors that influence them to seek opportunities elsewhere (Islam et al., 2019). Pay systems may even create more stress and dissatisfaction than motivate performance where incentives are heavily sales directed and are seen to be unfair or unachievable.

This can be explained with the help of the equity theory: employees compare the percentage of what they can contribute (effort, skills, time) and receive (pay, benefits, recognition) with those received by others. When they perceive that the ratio is not favorable, motivation to balance the ratio usually involves quitting the organization.

 

2.3  Poor Career Development and Dead Ends.

 

The second large factor is career development. The employees particularly the younger graduates venturing into the banking industry require to see visible advancement as they progress. As soon as the promotion standards are unclear, training is minimal, and the opportunities within the company are limited, individuals start to have a plateau in the career. Studies indicate that inadequate development opportunities and the absence of career advancement are good predictors of turnover especially among high potential employees (Allen et al., 2010; Al-Suraihi et al., 2021).

The human capital theory indicates that people invest in organizations which in turn invest in their aptitudes and career opportunities. In case employees feel that they can have better learning and development with another employer, maybe a rival bank or fintech organization, they might decide to reinvest their human capital in a different place. The need to keep developing, in particular with the banking field where a high level of regulatory complexity is accompanied by a high speed of technological change, is particularly intense.

 

2.4  Supervision and Leadership Style and Quality.

 

Empirical research has substantially backed the popular maxim that people leave managers and not organizations. Turnover intentions are always associated with supervisory behaviour and style of leadership. Unsupportive, abusive or unfair leadership heightens the psychological pressure and drives the employees to seek alternatives (Tepper, 2000). On the other hand, the adverse impact of stress can be mitigated with the help of supportive and ethical leadership and result in greater commitment.

Many areas of their daily experiences, such as task assignment, feedback, training access, and informal recognition, are under the control in front-line supervisors and branch managers in banks. Trust is broken when managers are viewed to favour some employees at the expense of others by not attending to the workload considerations or not attending to numbers without considering people. The social exchange theory posits that in case employees feel that they are not accorded high rates of support and respect by their leaders, they retaliate by becoming less committed and willing to turnover more (Blau, 1964; Eisenberger et al., 2002).

 

2.5  Job Satisfaction, Values and Person Organization Fit.

 

Job satisfaction is another strong predictor of turnover. The studies based on meta-analyses have been able to repeatedly detect negative associations between the internet of turnover and satisfaction: the lesser the satisfaction, the higher the turnover propensity (Hom et al., 2017). Nevertheless, the phenomenon of satisfaction is dependent on a broad range of factors such as work nature, recognition, rapport with coworkers, and consistency between individual principles and organizational culture.

Person-organization (P-O) fit theory is the theory that posits that individuals have higher chances of staying longer in organizations whose values and goals they share with those of the organization (Kristof, 1996). Misfit can arise in banking when the employees in the organization believe in the value of the advisory and relationship-based client service but have to operate within a culture characterized by high transaction; or when employees in the organization believe in participative decision-making but are faced by high hierarchy and low voice. In the long run, employees who do not fit into the culture in terms of identity can develop an internal conflict and disengagement that eventually causes exit.

 

2.6  Work-life Balance and Flexibility.

 

The work-life balance has turned out to be a key issue in modern HRM. The work-family conflict is also caused by long working hours, working in the weekend and the necessity to be always available via email and mobile phones, which has been observed to fuel turnover intentions (Allen et al., 2000). The banking products, especially in the corporate and investment departments, have been linked to heavy workloads and long working hours.

The exposure to remote and hybrid work models increased during the COVID-19 pandemic. Staff has become more conscious of the opportunities of flexible time and have been more categorical of cultures which equate physical presence with commitment. In the cases when banks are slow to provide flexibility in the right positions, or the workload precludes healthy work-life integration, the employees might seek out organisations that accommodate their non-work lives and wellbeing better.

 

2.7  Respect, Organisational Justice and Politics.

 

The sense of fairness is also a significant factor in deciding the turnover. Organisational justice studies define distributive (fairness of results), procedural (fairness of procedures) and interactional justice (fairness in the treatment of others). Perceptions of low justice are linked with low commitment and high turnover intention (Colquitt et al., 2001).

When there is something political or biased in the decision making process to give out promotions, bonuses or assign tasks in a banking environment, employees may feel exploited or marginalized. Discrimination, harassment or lack of respect are especially harmful experiences. To other employees, particularly those who are under-represented, quitting is a means of getting out of a toxic environment and safeguarding their self-respect.

 

2.8 External Conditions in the Labor Market and the other alternative opportunities.

Lastly, the external labour market conditions are highly influential in turnover. Even the best employees can be tempted to leave provided they have good offers in the hands of other employers. According to Hom et al. (2017), perceived job alternatives and ease of movement have the potential to predict actual turnover.

Bank of America and other financial services organizations are also competing with technology companies and global shared-service centers on the same talent in data analytics, risk modelling and digital product design. Where such organizations are in a position to pay more and have more adaptable cultures or quicker career development, external moves might be viewed by the bank employees as a logical part of their career plan. Even small internal frustrations can lead to exit decisions in tight labour markets where the demand of skills is higher than the supply of skills.

 

2.9 References 

Allen, D.G., Bryant, P.C. and Vardaman, J.M. (2010) ‘Retaining talent: Replacing misconceptions with evidence-based strategies’, Academy of Management Perspectives, 24(2), pp. 48–64.

Allen, T.D., Herst, D.E.L., Bruck, C.S. and Sutton, M. (2000) ‘Consequences associated with work-to-family conflict: A review and agenda for future research’, Journal of Occupational Health Psychology, 5(2), pp. 278–308.

Al-Suraihi, W.A., Samar, M., Ibrahim, I. and Alshaibani, A. (2021) ‘Employee turnover: Causes, importance and retention strategies’, European Journal of Business and Management Research, 6(3), pp. 1–10.

Bakker, A.B. and Demerouti, E. (2007) ‘The job demands–resources model: State of the art’, Journal of Managerial Psychology, 22(3), pp. 309–328.

Blau, P.M. (1964) Exchange and power in social life. New York: Wiley.

Colquitt, J.A., Conlon, D.E., Wesson, M.J., Porter, C.O.L.H. and Ng, K.Y. (2001) ‘Justice at the millennium: A meta-analytic review of 25 years of organizational justice research’, Journal of Applied Psychology, 86(3), pp. 425–445.

Eisenberger, R., Stinglhamber, F., Vandenberghe, C., Sucharski, I.L. and Rhoades, L. (2002) ‘Perceived supervisor support: Contributions to perceived organizational support and employee retention’, Journal of Applied Psychology, 87(3), pp. 565–573.

Hom, P.W., Lee, T.W., Shaw, J.D. and Hausknecht, J.P. (2017) ‘One hundred years of employee turnover theory and research’, Journal of Applied Psychology, 102(3), pp. 530–545.

Islam, M.A., Munyoro, G. and Ganyaupfu, E.M. (2019) ‘Factors influencing employee turnover in the banking sector’, International Journal of Management, 10(5), pp. 34–45.

Kristof, A.L. (1996) ‘Person–organization fit: An integrative review of its conceptualizations, measurement, and implications’, Personnel Psychology, 49(1), pp. 1–49.

Ongori, H. (2007) ‘A review of the literature on employee turnover’, African Journal of Business Management, 1(3), pp. 49–54.

Tepper, B.J. (2000) ‘Consequences of abusive supervision’, Academy of Management Journal, 43(2), pp. 178–190.