IMPACT OF LABOUR TURNOVER ON THE PERFORMANCE OF SELECTED DEPOSIT BANKS IN ENUGU METROPOLIS, NIGERIA

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ABSTRACT

This study investigated the impact of labour turnover on the performance of selected deposit banks in Enugu Metropolis. There has been the problem of high rates of resignation and dismissal in deposit banks. The objectives of this study are: to identify the cause (s) of labour turnover in Enugu Metropolis, to assess the extent to which labour turnover affect the workload and effectiveness of the remaining bank employees in Enugu deposit banks, to examine the impact of labour turnover on the profitability of deposit banks in Enugu Metropolis and to ascertain the effectiveness of policy used by deposit banks to reduce labour turnover. Survey research design was adopted for the study because questionnaire and oral interview were used as the research instrument for data collection. Out of the 19 deposit banks in Enugu, 4 was purposively selected with a total population of 787 employees and a sample size of 265 drawn from Yamane’s formula at 5% error of tolerance and 95% level of confidence. Hypotheses 1 and 2 were tested using Chi-square while hypotheses 3 and 4 were tested using Z-test statistical tools. The findings show that: poor remuneration is the main cause of labour turnover in deposit banks (X2c = 30.629 > X2t = 21.03), labour turnover has a positive and significant effect on employees’ workload and effectiveness (X2c = 40.750 > X2t = 21.03), labour turnover has a negative impact on profitability of deposit banks (Zc = 2.299 > Zt =1.96) and policy of collective bargaining has a negative and significant impact on labour turnover reduction (Zc = 2.671 > Zt 1.96). The study concluded that dealing with labour turnover calls for collective and continuous efforts of all employers, employees and stakeholders of selected deposit banks in Enugu Metropolis. The study recommended that: Nigerian banks should enhance remuneration of staff in order to reduce labour turnover and cost, they should make sure that most of their staff are exposed to different job descriptions so that staff can work in another department when there is labour turnover, there is need to select the right and capable candidates that can render quality services to customers in order to reduce loss of personal account and good communication should be improve by allowing staff to freely air their mind without threat from their superior. 

TABLE OF CONTENTS

Title Page
Abstract
List of Tables

CHAPTER ONE: INTRODUCTION
1.1       Background of Study
1.2       Statement of the Problem
1.3       Objectives of the Study
1.4       Research Questions
1.5       Research Hypotheses
1.6       Significance of the Study
1.7       Scope of the Study
1.8       Operational Definitions of Terms
            References

CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1       Introduction
2.2.1    Labour Turnover
2.2       Conceptual Review (Concepts)
2.3       Theoretical Review (Theories)
2.3.1    Theories of Labour Turnover and Productivity
2.4       Empirical Review
2.5       Theoretical Framework/Conceptual Framework
2.5.1    Classification of Labour Turnover
2.5.2    Factors Impacting on Labour Turnover
2.5.3    Desirable and Undesirable Labour Turnover
2.5.4    High Labour Turnover
2.5.5    Turnover Cost
2.5.6    How to Calculate Labour Turnover Cost
2.5.7    Some of the Difficulties Encountered during the Replacement of New Employees
2.5.8    Causes of Labour Turnover
2.5.9    Reasons for Labour Turnover
2.5.10  Consequences of Labour Turnover
2.5.11  How to Solve Labour Turnover Rate
2.5.12  Tips for Reducing Labour Turnover
2.5.13  Useful Tips to Improve Employee Morale and Retention in an Organisation
2.6       Summary of the Reviewed Related Literature
2.7       Knowledge Gap in the Reviewed Related Literature
            References

CHAPTER THREE: METHODOLOGY
3.1       Introduction
3.2       Research Design
3.3       Sources of Data Collection
3.4       Population of the Study
3.5       Sample Size Determination
3.5.1    Sampling Technique
3.6       Description of research instrument
3.7       Validity of Research Instrument
3.8       Reliability of Research Instrument
3.6       Method of Data Analysis
References

CHAPTER FOUR:  DATA PRESENTATION AND ANALYSIS
4.1       Introduction
4.2       Presentation of collected Biographical Information of Respondents’ (Section A)
4.2       Presentation of Questionnaire Analyses (Section B)
4.3       Test of Hypotheses
4.4       Discussion of Result
            References

CHAPTER FIVE:    SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1       Summary of Findings
5.2       Conclusion
5.3       Recommendations
5.4       Suggested Areas for further Research
5.5       Contribution to Knowledge
5.6       Limitations of the Study
            Bibliography
            Appendix 

                                                    CHAPTER ONE
INTRODUCTION
1.1       Background of the Study
For an organization to perform effectively does not depend only on the available technical resources, but also on the quality and competence of its employees. Meaghan (2002) states that employees are extremely crucial to the organization since their value to the organization are essentially intangible and not easily replicated.
Every organization has to bear in mind that the difference in the levels of productivity of two or more organizations depends on the contribution of existing employees. For an organization to be successful, employee satisfaction should not be overlooked, because, it is the prerequisite for staff retention. According to Abassi and Hollman (2000), managers must recognize that employees are major contributors of organizational competitive advantage and as such for the competitive advantage to be maintained, labour turnover should be discouraged by management.
Labour turnover is the movement of employees in and out of an organisation.  It can also be seen as the rate at which an employer gains or loses employees.  Owen (2004) opines that labour turnover measures the movement of workers in and out of employment with a particular firm. The issue and interest in measuring such movement arouse when working for an employer (rather than self-employment in craft or agricultural production) became the norm. Labour turnover is measured typically in terms of the separation rate (quits, layoffs, and discharges per hundred employees on the payroll).
High labour turnover can be seen as a devastating phenomenon to any organisations both public and private, whether big or small. Labour turnover affects both firms and employees. Organisations suffer the loss of job specific skills, disruption in production and incur the costs of hiring and training new workers. Employees, on the other hand, experience unsteady salary, unemployment, as a result of moving from one job to another in search of higher pay jobs, new job-specific skills and different career prospects. Some authors were concerned over the high rates of labour turnover in the early part of the century and conducted many studies to understand the causes and consequences of labour turnover (Douglas 1918; Lescohler 1923 and Slichter 1921). Some of these studies focused on the irregularity in labour demand which resulted in seasonal and cyclical layoffs. Others interpreted the high rate of labour turnover as an indication of worker dissatisfaction and labour relations problems. It was seen that labour turnover was costly for the firm (in terms of increased in hiring and training expenditures) and for the workers (in terms of irregularity of income flows). Many studies sought and identified why workers quitted their jobs less frequently was as a result of altered employment relationships (Owen 1995b; Ozanne 1967; and Ross 1958). In the United States, these changes in employment practices began in a few firms around the turn of the 20th century, intensified during World War 1 and became more widespread in the 1920s. These employment practices were sometimes attempts to appraise workers and to prevent unionization. However, others have suggested that the changes in quit behaviour in the 1920s were the result of immigration declines (due to implemented quotas) and slack labour turnover markets (Goldin 2000; Jacoby 1985). Labour economists have also noted that providing various form of deferred compensation (pensions, wages which increases with seniority, etc.) can increase worker effort and reduce the costs of monitoring workers.
High labour turnover can be harmful to a company’s productivity if skilled workers are often leaving and the worker population contains a high percentage of novice (trainee) workers (Hutchinson and Berunvides, 1997). Experts are needed for recruitment, selection and training of new employees whenever there is reduction in the work force (key employees); lots of money that is involved pose a challenge to any organisation to handle high labour turnover. Apart from the negative parts of labour turnover, there are little benefits attached to it, such as the opportunity of being able to replace poorly performed workers with more educated, experienced and skilled workers and the idea of waste reduction (unnecessary expenses caused by improper utilisation resources).
Newstrom and Davis (1997) define turnover as the proportion of employee leaving a job during a given time period. It is the sum of job turnover, which relates to expansion and contraction of establishments or firms and the movement of workers into and out going of jobs in establishments or firms. Workers leave firms and firms hire other workers to replace them regardless of whether firm itself is growing or declining. Grobler; Warnicks; Carrel; Elbert & Harfierd (2006) define staff turnover as the movement of employees out of the organisation, that results from resignation, transfers out of the organisational units, discharges, retirement and death. These authors distinguished between avoidable and unavoidable turnover, without clearly indicating the different between these two types of turnover. However, they mentioned that staff turnover is linked to job satisfaction, with the inevitable result that organisations mostly concerned with the reasons why employees wants to leave an organisation. Staff turnover can be described as the frequent or amount of voluntary termination (Gordon, 1991).

The historical analyses of labour turnover have relied upon two types of data. The first type consists of firm-level data on turnover within a particular workforce or governmental collections (through firms) of data on the level of turnover within particular industries or geographic locations. If these turnover data are broken down into their components (quit, discharges and layoffs), a quit rate model can be employed to analyse the worker-initiated component of turnover as it relates to job search behaviour (Parsons, 1973). The second type of turnover data is derived using employment records or governmental as the source for information specific to individual workers. Analyses of this type of data typically employs a “hazard” model that estimates the probability of a worker’s leaving a job as a function of individual worker characteristics (Carter and Savoca, 1992; Maloney, 1998; Whatley and Sedo, 1998).... 

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