Bahrain Development Bank’ Employee Turnover

Abstract

The purpose of this study is to provide organizational managers insight on the fundamental aspects that they should take into account in promoting the rate of employee retention and commitment. The study adopts the case study approach by evaluating the opinion of Bahrain Bank Employees on the factors that trigger their decision to quit the workplace. The study’s result indicates the existence of different voluntary causes of employee turnover. Thus, organizational managers must put effective measures to curb the voluntary causes of turnover.

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Introduction

The purpose of this paper is to investigate the causes of employee turnover in organizations in Bahrain Development Bank that operates in the Kingdom of Bahrain. The banking industry in the Gulf countries has undergone remarkable growth in the recent past. The positive performance in the GCC banking industry is underlined by most banks reporting of year-on-year growth in their revenue and profit. Revenues in the UAE, Oman, and Qatar banking sectors grew by double digits while that of Bahrain grew by a single digit (Leichtfuss, 2015). Despite the growth projections, the banking industry in the GCC is not free from cases of employee turnover. Some of the GCC countries, such as UAE and Oman, have undertaken extensive studies on how to improve their competitiveness. One of the focus areas relates to human capital.

Research problem

The Bahrain Development Bank has not been shielded from low industry performance. One of the critical challenges that have contributed to the poor performance in the Bahrain Development Bank is the failure to implement effective human resource practices (Zahran, 2008). Over the past three years, the company has experienced a significant increase in the rate of employee turnover.

Currently, no study has been conducted to evaluate the causes of employee turnover in the Bahrain banking sector. This aspect might affect the bank’s capacity to undertake human resource development, such as employee training, because of a lack of insight into the causes of the problem. The Bahrain Development Bank mainly focuses on achieving financial growth by implementing different strategic measures such as financial control and market expansion. Despite the integration of such infrastructure, the bank’s capacity to achieve sustainable development might be hindered by the failure to incorporate the employees’ needs.

Research question

This research paper is based on the following research question.

  1. What are the causes of employee turnover in the Bahrain Development Bank?

Justification of the research

Understanding the causes of employee turnover is critical in the Bahrain Development Bank Board of Management’s quest to steer the firm to achieve sustainable development. Gaining such understanding will provide essential intelligence on how to deal with the problem. Subsequently, the Bahrain Development Bank will avoid the cost associated with employee turnover.

Employee turnover increases an organization’s cost of operation through the additional cost incurred in recruiting workers to fill the resultant vacant job positions (Gieter, Hofmans, & Pepermans, 2011). Amongst the inherent factors that increase the firm’s cost of operation due to the high rate of voluntary employee turnover is the legal requirement for the firm to pay the end-of-service benefits [ESB].

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As a member of the GCC countries, the Kingdom of Bahrain has a legal obligation to ensure that all banks operating in the Kingdom adhere to the ESB, which entails the payment that an organization is required to pay employees after leaving their work. Zahran (2008) asserts that ESB accrues “over time and is calculated based on the length of service of an employee and their final wage at the time of their leaving” (p. 2). Therefore, a high rate of employee turnover means that the Bahrain Development Bank is poised to incur the high costs of employee turnover because of the ESB requirement. Therefore, this study will lead to the creation of knowledge to organizational managers on the sources of employee turnover, coupled with how to deal with the problem.

Literature review

Organizations encounter different challenges arising from internal and external environments. One of the internal sources of challenge entails establishing and retaining a strong human capital base. Organizations managers must focus on establishing a link between the organization and employee goals. Failure to establish such a link might trigger employee turnover (Park & Shaw, 2013). The causes of employee turnover vary across different economies around the world (Gieter et al., 2011).

A study conducted in 2011 in New Zealand shows that the global hospitality industry is characterized by the highest rate of employee turnover that ranges between 60% and 300% (Burkus, 2011). This aspect highlights a relatively high rate of employee turnover. A high rate of employee turnover negatively affects an organization’s performance because of the reduction in labor productivity. Therefore, organizational managers must understand the specific causes of employee turnover in their respective industries. Past studies show that voluntary causes of employee turnover are triggered by different personal, push, and pull factors.

Push factors

The push factors are within an organization’s management team’s capacity to control. According to Shukla and Sinha (2013), employees leave an organization due to the existence of organizational instability, such as poor internal communication that increases the level of job dissatisfaction. For example, an organization’s failure to promote the employees’ personal and career development goals might motivate employees to consider leaving their employer. Balaji and Balachandran (2012) further affirm that poor co-worker relationship destroys an organization’s working environment hence motivating employees to leave the workplace. Fleisher (2011) identifies poor reward system and ineffective management practices such as leadership as another push factor that stimulates voluntary employee turnover. The existence of ineffective management practices leads to a reduction in emotional attachment.

Personal and demographic factors

One of the personal factors that influence voluntary turnover entails factors such as age. Young employees are more likely to leave an organization compared to elderly employees (Burkus, 2011). Other employees leave the workplace because of trivial reasons such as dislike for their workmates. Alternatively, the employees’ personal and family expectations, such as career growth and lack of work-life balance, might trigger the decision to quit.

Pull factors

Employees might consider quitting due to the attraction of the organization culture of another firm (Afridi, Kakaquel, & Qamer, 2012). The core organizational culture factor that attracts employees to seek employment from a particular firm includes an aggressive, detail-oriented, stable, team-oriented, and innovative culture. The employees evaluate the alignment of their personal characteristics with the organizational culture (Afridi, Kakaquel, & Qamer, 2012).

Methodology

Theoretical framework

This study is based on the appreciation of the existence of different causes of employee turnover. Past studies have led to the identification of different reasons that explain why employees leave their job. Most of the studies have inclined on two main categories of causes that entail voluntary and involuntary causes. The voluntary causes are further subdivided into functional and dysfunctional factors (Fleisher, 2011).

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The functional causes of employee turnover mainly arise from employees who decide to leave an organization because of poor performance. Functional turnover does not hurt an organization, and replacing such employees is relatively easy. Conversely, dysfunctional turnover is harmful to an organization’s performance because it involves the exit of employees characterized by distinct skills and high performance (Hancock, Allen, Bosco, McDaniel, & Pierce, 2013). Employee training significantly influences other variables that determine employee turnover intention. Examples of such factors include career progression and salary. The following theoretical framework illustrates the relationship between employee salary levels, career progression, and turnover intention.

Training

Variable justification and hypothesis generation

Hypotheses 1: The impact of employee training on turnover intention

The impact of employee training on turnover intention

Z = λ0 + λ1X

Turnover intention= λ0 + λ1Training

  • H0: Training has no impact on turnover intention
  • H1: Training is positively related to employee turnover intention.

Hypothesis 2: Effect of employee training on the employee salary scale

Effect of employee training on the employee salary scale

Salary scale = β0 + β1 Training

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  • H0: Training has no impact on the employee salary scale
  • H1: Employee training is positively related to the employee salary scale.

3.2.3 Hypothesis 3: Effect of employee training on career progression

Effect of employee training on career progression

Y2 = β0 + β5X

  • H0: Training has no effect on employee career progression
  • H1: Employee training is positively related to employee career progression.

Variables examined

  1. Independent variable: Training
  2. Intervening variable: career progression and salary scale
  3. Dependent variable: Employee turnover intention

Sampling and data collection procedure

The objective of this study is to explore the causes of employee turnover in the Bahrain Development Bank. Therefore, the research study involves a case study of the Bahrain Development Bank. The rationale for adopting the case study design is to gain relevant research data. The research study is based on qualitative research approaches by gathering information on the HR practices at the Bahrain Development Bank. The rationale for integrating this technique arises from the exploratory nature of the study.

The target population is comprised of employees working at different levels in the Bahrain Development Bank. A simple random sampling technique is incorporated in selecting the research sample. A sample of 50 respondents was selected. The integration of a simple random sampling technique enabled the researcher to eliminate bias in constructing the study sample. The data used in conducting the research study is collected from primary sources using questionnaires as the core data collection instrument. The use of primary research has enabled the researcher to collect relevant data.

The questionnaires were distributed to respondents using the monkey survey, which entails an online data collection instrument. A 5-point Likert scale was used in analyzing the questionnaire [1 for strongly disagree] and [5 for strongly agree]. The monkey survey online platform enabled the researcher to minimize the cost of conducting the study. The use of the monkey survey increased the rate of response to 96%.

Response rate.
Response rate.

Analysis, discussion, and result interpretation

Descriptive statistics and items reliability

The analysis of the data shows that the standard deviation for the respective variables investigated is below 1. On the basis of the normal distribution curve, the standard deviation must be less than 1.

Hypothesis 1: The impact of employee training on turnover intention

The regression results depict that the value of λ0 is 1.063, which shows that if a firm does not integrate the concept of employee training, the turnover intention will be 1.063. The value of the λ1 in the regression is 0.621, which shows that a 1% change in the level of training would result in a 62.1% decline in turnover intention.

Hypothesis 2: Effect of employee training on the employee salary scale

The regression of coefficient (β1) is 0.532, which shows that an increase in the level of training by 1% would culminate into a 53.2% increase in the employee salary scale. This indicates the existence of a positive relationship between investment in employee training and the salary scale.

Hypothesis 3: Effect of employee training on career progression

The value of the β0 is 0.856, which indicates that if no training is done, the rate of career progression will be affected by 85.6%. The value of the β5 is estimated to be 0.619, which translates into a 1% change in the level of career progression.

Conclusion

The purpose of the study is to examine the causes of employee turnover. From the case study of the Bahrain Development Bank, the study shows that the organization encounters employee turnover due to different voluntary and involuntary causes. From the study, the voluntary causes of turnover are within an organization’s capacity to control. The findings of the study indicate that voluntary causes of turnover can be very costly to an organization’s performance and hence the need for integrating proactive measures in controlling the occurrence of turnover intentions.

To manage the occurrence of employee turnover, the Bahrain Development Bank should consider developing and implementing effective strategic management practices. The firm should mainly focus on human resource management practices such as environmental and people factors. The firm can achieve this goal by entrenching management practices such as employee training, career progression, and equitable and fair remuneration. Conversely, the people factors should be related to the integration of employee-oriented management practices such as teamwork.

References

Afridi, K., Kakaquel, J., & Qamer, F. (2012). How does corporate social responsibility (CSR) impact employee turnover in universities of Khyber PukhtunKhwa? Abasyn Journal of Social Sciences, 5(1), 88-98. Web.

Balaji, V., & Balachandran, A. (2012). HRM practices in employee development, employee turnover, retention, and effective compensation. International Journal of Engineering and Management Research, 2(8), 1-7. Web.

Burkus, D. (2011). Building the strong organization; exploring the role of organizational design in strengths-based leadership. Journal of Strategic Leadership, 3(1), 54-66. Web.

Fleisher, M. (2011). Temporal patterns of functional and dysfunctional employee turnover. Knoxville, TN: University of Tennessee. Web.

Gieter, D., Hofmans, J., & Pepermans, R. (2011). Revisiting the impact of job satisfaction and organizational commitment on nurse turnover intention: An individual difference analysis. International Journal of Nursing Studies, 48(12), 1562-1569. Web.

Hancock, I., Allen, G., Bosco, A., McDaniel, R., & Pierce, C. (2013). Meta-analytic review of employee turnover as a predictor of firm performance. Journal of Management, 39(3), 573-603. Web.

Leichtfuss, R. (2015). GCC banks register double-digit growth in 2014. Web.

Park, T., & Shaw, J. (2013). Turnover rates and organizational performance; a meta-analysis. Journal of Applied Psychology, 98(2), 268-309. Web.

Shukla, S., & Sinha, A. (2013). Employee turnover in banking sector: Empirical Evidence. Journal of Humanities and Social Sciences, 11(5), 57-61. Web.

Zahran, Z. (2008). Perspectives; end of service benefit liabilities in the Gulf Cooperation Council. London, UK: Towers Watson. Web.

Appendix

Table 1: Respondent’s Demographical Information.

Sex Age
 
Males
24
Females 26
Total 50

Table 2: Descriptive Statistics.

N Minimum Maximum Mean Std. Deviation Item Reliability
Training 48 1.50 3.82 2.4451 0.67676 0.909
Salary level 48 1.41 3.45 3.0660 0.6656 0.976
Career progression 48 2.00 3.34 2.456 0.6247 0.963
Turnover intention 48 1.75 4.33 2.7985 0.65675 0.950
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