The Employee Turnover in the Banking of India and Germany
Print Essay 
3.1.1 Background and reason for choice of topic
The turnover of employees is a phenomena that is extensively studied. Dating back to the 1950s, there exists a massive literature on the reasons of voluntary employee turnover. Researchers have predicted the reasons why many employees leave organizations by developing many a variety of models by bringing together factors that cause turnover and testing empirically the models. (Raikes and Vernier 2004) Retaining and attracting talent is viewed as a key plan to the process of acquiring key success Indirect and direct costs on organizations are largely impacted on by the turnover of employees, the bill is usually approximated to be 50-150% of the salary accrued annually (Mercer 2004).In the sector of banking, staff turnover has impacted negatively on the performance and on the cost of recruitment (Loquercio 2006). The typical price of filling employee vacancy according to CIPD (2009), is increasing. There have been a sum of factors that have been related to turnover over time.
The factor are job content, age, tenure, overall satisfaction, commitment and the intention to remain on the job Mobley et al(1979). (Griffeth etal, 2000) recently updated a meta-analysis of over 800 turnover studies that was carried out in 1995 by Hom and Griffeth. Intentions to quit, job satisfaction, organizations commitment and comparisons of alternatives were some of the factors affirmed. Therefore it can be concluded that the economic expenditure is less than the negative impact. (Mercer 2004) turnover can also lead to some penalties that are intangible: employee and customer dissatisfaction, service quality, low work morale and low productivity. Managers should be keen on the issues of turnover as all consequences mentioned can damage the integrity of organizations reputation. There have existed discrepancy findings in the research findings of the various studies that have been carried out since a good number of the researchers have concentrated on the turnover effects and they have also restricted their studies to certain sectors such as banking and also specific countries. Putting in mind that there is a high turnover of employees in both India and Germany and that both countries play a critical role in the world of business it is essential to review the characteristics and the nature of literature and the other factors that have influenced the issue of turnover in the banking industry of India and Germany.
3.1.2 Purpose and objectives
The purpose of this research is to examine and assess the relationship between the retention strategies and the employee turnover in the banking industry of both India and Germany. The key objectives of this study are:
To assess the link between jobs satisfaction, motivation and the turnover intentions within the banking sectors of India and Germany.
To acquire insight on the turnover of employees in the banking industry.
To discover the Chinese and Western culture between the different turnover intentions and the motivators of work.
Some recommendations, based on the study, were suggested to reduce the turnover employees in both areas.
3.1.3 Outline of sections
The first chapter of this research deals with the background of the study, highlights the framework of the study and also shows the reason for choosing this topic to study. The second section covers the literature review of the literature that is relevant of the employee status of turnover in India and Germany especially in the banking sector. In the main section of the study, the facts are presented, discussions are made and the conclusions presented.
PART 2: LITERATURE REVIEW
This part of the study carries out a literature review in regards to the banking industry in India and Germany on the turnover of employees, national culture, job satisfaction and motivation and the composition of the work force. The voluntary dissolution of employees from organizations according to by Hom and Griffeth (1994) is the definition of employee turnover. Loquercio et al. (2006) also notice that the turnover of staff is the proportion of employees leaving organization during a specific time period but before the time that was dictated on the contract of the employer and the employee elapses. Employee turnover is the average of the employees entering an organization and the prior exit by others Ivancevich and Glueck (1989). According to Kossen (1991) turnover is the amount of movement f employees in and out of the organization. (Abassi & Hollman, 2000) the turnover of employees is the revolution of employees around the labor market, between jobs and occupations, between the unemployment and employment status. In organizations, the turnover that can take place can either be involuntary or voluntary. Involuntary turnover is one that that the employee has no control over it could be due to death, sickness, moving overseas or terminations initiated by the employees whereas voluntary turnover is the termination initiated by the employees. The individuals estimated probability that they will or will not stay in an organization is referred to as turnover as mentioned by (Cotton & Tuttle, 1986). Exits, mobility, quits, migration or succession are some of the terms that have been used for employee turnover (Morrell et. al, 2004). The figure 1 below indicates the framework of the turnover of employees according to Griffeth and Hom (2001).
Figure 1: Framework of Staff Turnover
Obtained from: (Griffeth & Hom, 2001)
Even though there exists many causes of employee turnover in organizations, all of them do not impact negatively on the wellbeing of an organization. Organizations should be able to tell what distinguishes involuntary and voluntary turnover and take charge of cases that they can. (Loquercio et al., 2006) involuntary turnover are according to the choices made by the management such as firing of an employee due to gross misconduct whereas voluntary turnover depends on the decisions made by the employee such as accepting another job offer. Generally all the resignations that have not been initiated by the employer are considered voluntary resignations.
Research conducted recently in India indicates that turnover is currently around 15% and records that evidence doesnt seem to support the notion that the rate of turnover of employees rises over time. As opposed to retirement or the termination of employee contract by the employer the biggest share of turnover constitutes voluntary turnover. However it is important to take note that there are between sectors and regions for example in India and Germany, the turnover rates at 11.5% in the public sector whereas the banking sector has rates that are higher than 50%.
Another report concentrating on the voluntary sector notes a turnover of 16.7% in the sector of banking and 21% in the overall sectors. Based on this study the turnover of the support employees is higher at 21% as compared to that of the managerial staff at 13.9% in the banking sector of both India and Germany. Loquercio (2005), highlights that it is not so obvious to calculate turnover rates for the sectors of banking therefore he advises that the employer should look into the other factors that are linked to staff rotation and turnover.
High levels of the turnover of employees lead to the ineffectiveness of employees and low performances in the organizations and consequences to negative effects and high costs (Ingersoll & Smith, 2003). Researchers have found out that the turnover rates may impact negatively on the profits made by an organization (Aksu, 2004; Hinkin & Tracey, 2000 among others).
Johnson (1981) pictures turnover as a major problem having a strong bearing on the quality if services and products and suffering recruitment and replacement costs. High turnover can destroy the customer service and quality which acts as the ground for advantageous competition thereby hindering the growth of the business Curtis and Wright (2001). Talented employees are the ones who usually leave the organization as they are the ones that are likely to get opportunities in other places (Hinkin & Tracey, 2000). Since turnover often leads to the loss of employee loss to the other competitors Stovel & Bontis, 2002), it is very crucial for management to prevent turnover and ensure the retention of staff. If job alternatives are available and people are unhappy with their jobs, they will move to the alternative thus voluntary turnover is treated as a managerial problem and hence requires attention. (Hom & Kinicki, 2001). Most of the research conducted have concentrated voluntary rather than involuntary turnover (Wright, 1993).
A review carried out by Griffith at al. (2000) on employee turnover described the factors that affect turnover. The model that has been developed incorporates the factors that explain the process of turnover and it is constituted of eighteen variables related to external environmental factors and job content that explains turnover. It is generally accepted that the process of turnover of employees is the reversal of the retention and the behaviors of Psychology. The model is shown in the figure2 below.
Figure 2: Griffith et al.s Turnover Model
Building on the high turnover in the banking industry, research conducted previously hhhasss come up with aspects that lead to the rate of employee turnover. (Cheng and Brown, 1998). Ongori (2007) puts across two types of factors that are linked to jobs and organizations while Wilton (2011) states that the factors leading to turnover can be grouped into pull and push factors- pull factors classically echo the dissatisfaction of employees with organizations whereas push factors are linked to the employees changing personal circumstances. Both push and pull factors agree that human resource practices and job dissatisfaction can be reasons that lead to the exit by employees. Taylor (2002) and Branham (2005), supports this factors and adds that bad relationships with the supervisor and lack of career development opportunities can also lead to employee turnover.
Griffeth, Hom and Gaertner (2000) Supports Mano-Negrin and Tzafrir (2004) and he further believes that if the balance between the performance of employees and their rewards are not balanced, they will leave the organization they are working for. They however seem to have concentrated on payment only and ignored the potential demands of employees on the other hand, Samuel and Chipunza (2009), Kazlauskaite, Buciuniene and Turauskas, (2006) point out that promotion opportunities, training and development opportunities, organizational commitment and job stress make employees re-evaluate the reasons for staying in an organization. Generally according to Taylor (2002) people leave their jobs due to complex reasons not just one reason.
Taking into account that the issue of employee turnover in the banking industry of Germany and India has not been researched and documented extensively despite the significant contributions made in the research of the topic in both countries. Shortage of skills and labor in both Germany and India are the problems being faced, in the banking industry. Matthews and Ruhs, 2007, p.1).
This fact has been affirmed by many researchers who show that banking in Germany has been consistently seen as an Industry with severe shortage of vocational training and poor employee practices (Hoque, 1999). Moreover work in the sector of banking has been characterized by low wages, long hours of working, low productivity, arbitrary supervision and low trade union density (Mcllwaine et al., 2006). Therefore the sector of banking is consistently under pressure to retain staff that are highly skilled so as to ensure efficiency of services to the customers.
In comparison, India is one of the countries with the competitive strength in World Economic Forum (201...
If you are the original author of this essay and no longer wish to have it published on the SuperbGrade website, please click below to request its removal: