Human Resource Management Practices and Employee Turnover in Commercial Banks in Kenya

Abstract

The banking industry today continues to suffer an onslaught on employee turnover costs denting its profits hence lowering its returns on investment. Depending on the kinds of operation they engage in, banks heavily rely in human capital to deliver services to their client's. It is therefore prudent to look into Human Resource Management practices in this competitive and dynamic banking sector and how they impact on employee's turnover and thus organizational performance. The objectives of this study were; to establish whether Human Resource Management practices such as Training, Compensation, Performance Appraisal and Recruitment, influence Kenyan commercial bank employees' turnover. The study was guided by three theories: Resource based, universalistic and contingency theory. The study adopted a descriptive research design. The population of interest for this study consisted of 2667 management staff of Commercial banks in Kenya. Quantitative data in this study was collected using self-administered questionnaire comprising of 5-point Likert scale distributed to the sampled persons. To establish the nature and magnitude of relationship between variables, the study applied inferential statistics. The data was presented using tables, charts, graphs percentages and frequencies. In the analysis of data, statistical package for the social sciences (SPSS) technique was employed. The study established that training offered by the banks neither motivate the staff nor impacted employees' turnover reduction. The employees were further not involved in decision making on which training to undertake, while the quality of on and off training affected employee turnover. Remuneration was not comparable to other banking organizations and there was no clear explanation of remuneration policy and its implementation, and this knowledge gap may cause insecurity among the employees. The recruitment process was free and fair to all eligible within and outside the bank and sufficient induction and orientation was undertaken by the banks. Performance appraisal was not found to be used as a system of laying off employees in the banks, though the performance evaluation systems were not favourable to the employees, and that there was conflict of interest between the organization targets and individual targets. The study concluded that among the four variables, staff training, compensation and appraisal had a significant influence on employee turnover in commercial banks. The banks had effective recruitment strategies and these did not affect employee turnover. The study recommends that the commercial banks should re-evaluate the training programmes to ensure value addition for the benefit of the employees. The banks should also evaluate the value of rewards provided to the staff as commensurate to industry standards. It is important that the banks engage the staff in formulation of performance appraisal processes so that they may own them and find themselves recognized and useful to the banks. This would motivate them while undertaking tasks to meet accepted targets, and thus ensure they do not leave the organization.