5.Turning Turnover Around - HR Strategies to Retain the Employees in the Banking Industry

 

 

Once learning what employee turnover is, why it occurs and how it harms the performance, the important question is what exactly can HR do about it? Retention is not a series of arbitrary practices commonly known as HR activities, but a strategic evidence-based system of practices that are aimed at retaining the right people at the right reason. The studies have found that properly designed HR practices may greatly decrease turnover intentions and enhance actual retention particularly when combined as opposed to being separated (Allen et al., 2010; Hom et al., 2017).

In banking where human capital and customer confidence are the most vital resources, retention strategies have been found to be especially important. In this blog, the main HR strategies are described, which is connected to theory and empirical evidence.

 

5.1 Begin with Diagnosis: With Data Not Guesswork.

HR should know who is exiting, whence and the reasons before initiating efforts. According to Hom et al. (2017), it is crucial to make a distinction between the types of turnover (voluntary and involuntary), and the types of employees.

In the case of banks, a healthy diagnosis usually is a combination of:

•            Branch, division, role, tenure and demographic group turnover statistics.

•           Exit interviews and stay interviews.

•           The results of engagement surveys and internal mobility.

It is a diagnosis stage that will assist in determining the predominant problems as pay, workload, leadership, development, culture or external competition. Devoid of this, organizations will run the risk of creating generic engagements activities which are not aimed at the actual exit drivers.

5.2  Competitive and Fair Reward Systems Design.

Loyalty can not be ensured by the pay alone, but the perceived unfair pay is a potent push factor (Allen et al., 2010). Banks should hence, provide external and internal equity. On the outside, the pay and perks of the employees should be aligned with other banks, fintech companies and shared-service centers that compete in the same domain of skills. On the inside, the pay systems must be clear and understandable as to why the difference between grades and positions.

There are indications that reward systems perceived to be equitable and comprehensible by employees would reduce turnover intentions, despite the fact that rival organizations might have somewhat better packages (Al-Suraihi et al., 2021). This is especially applicable in the banking sector, where there might be the perception of inequity based on variable bonuses when the criteria remain unclear. A regulated culture and risk culture are also supported by aligning bonuses with sustainable performance and risk-conscious behaviour.

The non-financial rewards include recognition programs, career growth opportunities and conspicuous appreciation of leaders, which supplement financial rewards and reinforce the psychological contract.

 

5.3  Invest in Career and Talent Management.

Research indicates that low career prospects and underdeveloped development frameworks are the leading reasons behind turnover particularly in high-potential workers (Allen et al., 2010; Al-Suraihi et al., 2021). According to the human capital theory, employees will stay in such a place where they perceive long term learning and growth.

In the case of banks, the development strategies that should be effective will include:

•           It has clear career paths in retail, corporate, risk and operations and digital functions.

•           In house job posting and formal job rotation.

•           High potentials graduate development programs and pools.

•           Mentoring and coaching relationship between senior and junior employees.

According to Charan et al. (2011), systematic development and succession planning establish robust leadership pipelines and also decreases the rate of external hiring. When employees feel that they can move up or move across within the bank, chances of them leaving to advance to other places are reduced.

 5.4  Develop Strong, Nurturing Line Managers.

The line managers are key to retention. Organizational commitment and reduced turnover intentions are closely related to perceived supervisor support (Eisenberger et al., 2002). On the other hand, there is a relationship between abusive or unsupportive supervision and the increase in the exit intentions (Tepper, 2000).

Managerial capability should therefore be addressed by banks as a strategic retention tool. This means:

•           Choosing managers based on more than technical but also on people talent.

•           Coaching, feedback, conflict resolution and inclusion training.

•           Partly basing performance evaluation of managers on retention and team engagement.

A supportive manager can absorb any kind of stress and heavy target in customer intensive departments like in branches or call centers, a poor manager can expedite burnout and resignations. According to the social exchange theory, employees respond to their leaders as they perceive themselves to be valuable and supported in order to return the favour with loyalty and extra-role behaviours (Blau, 1964; Eisenberger et al., 2002).

 5.5  Reorganize Work to Be Well and Flexible.

 The model is the job demands resources model, which says that high work demand when not counteracted by sufficient resources results in burnout and increased turnover (Bakker and Demerouti, 2007). The common demands in the banking industry are the pressure to sell, long working hours, and emotional labour.

Work design basing on retention comprises:

•           Setting realistic performance goals and proper staffing.

•           Enhancing job control and where feasible, autonomy.

•           Monotony should be avoided by introducing job enrichment.

•           Flexible or hybrid working arrangements of appropriate positions.

Studies demonstrate that a high turnover intention is linked to work-family conflict and inaccuracy (Allen et al., 2000). Banks can limit one of the main causes of the departure of talented employees, particularly women, by scaling down scheduling, allowing some employees to work remotely in back-office or analytical jobs, and offering assistance to employees with caregiving duties.

 5.6  Enhance Culture, Voice and Inclusion.

Retention is also closely associated with the way employees are feeling within the organization; being respected, hearing them and treating them equally. According to the organizational justice studies, poor perceptions of fairness in outcomes, processes and interpersonal treatment are major contributors of turnover intentions (Colquitt et al., 2001).

Banks can address this by:

•           Developing a variety of employee voice (surveys, focus groups, town halls) channels.

•           Being visible on feedback, particularly in the work load and ethics concerns.

•           Imposing a zero tolerance to harassment and discrimination.

Supporting diversity and inclusion efforts beyond mere lip service.

The employees will have a greater sense of belonging when they know that their concerns are taken seriously and that promotion, reward and discipline process is indeed fair. This embeddings decreases their interest to quit, even in case it could be in case external opportunities are available (Heavey et al., 2013).

 5.7  Get Realistic Job Previews and Get Onboarding Right.

The first year of employment is the period of high turnover. Part of this premature turnover is due to unrealistic expectations formed at the time of recruitment. Hom et al. (2017) note that it is realistic job previewing, which entails the positive and negative features of the job being described, that helps diminish the shock-based resignations.

In the case of banks, this would include providing the actual picture of the sales pressure, regulatory restrictions and customer demands in an open and fair manner and also much like showing the opportunities of development and support. An organized onboarding program with a special emphasis on socialization, as opposed to compliance training, can allow new hires to form relationships and feel confident within a relatively short period, which will raise the chances of remaining enough time to become fully productive.

 5.8  Bring HR Practices in as Coherent SHRM Bundle.

According to strategic HRM research, as opposed to single and isolated initiatives, bundles of mutually reinforcing practices can be more effective at influencing performance and retention (Allen et al., 2010). As an example, the absence of competitive pay without fair supervision and career opportunities can not stop the turnover; good training without recognition and workload management can leave the employees in dissatisfaction.

High-retention SHRM system may include in the banking industry:

•           Competitive, fair rewards

•           Career visibility and internal mobility.

•           Effective people-management skills of the line managers.

•           Flexible work design and support.

•           Ethical culture and employee voice.

•           The monitoring of turnover trends using data.

As these factors come together, the bank conveys a consistent message that faces people with: we want you to develop here and we are ready to invest in that development. This consistency is stronger than any program or one-off HR promotion.

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.

Charan, R., Drotter, S. and Noel, J. (2011) The leadership pipeline: How to build the leadership-powered company. 2nd edn. San Francisco: Jossey-Bass.

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.

Heavey, A.L., Holwerda, J.A. and Hausknecht, J.P. (2013) ‘Causes and consequences of collective turnover: A meta-analytic review’, Journal of Applied Psychology, 98(3), pp. 412–453.

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.

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.