Factors Affecting Employee Retention in the Banking Industry: The Case of Selected Private Commercial Banks in Ethiopia
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Date
2018-05-11
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Addis Ababa University
Abstract
This study examines factors affecting employee retention focusing on private commercial banks
in Ethiopia. The banking sector runs huge finance and employs thousands of work force. The
literature review and the primary data analysis indicated that employee stability challenges are
highly affecting the banking industry. With increase in the number of new banks, bank branches,
financial institutions and the dynamic changes in the business environment; a fierce competition
for labor is continue to challenge employee retention capacity of the banks. In situations like
this, retaining existing employees is very crucial. As the primary purpose of the study is
identifying and analyzing the major factors that affect employee retention ability; the
contributions, associations and significance of compensation, training, career development,
work-life balance and work environment were studied. The study adopted a mixed research
approach and explanatory research design. A total of 283 employees from Awash, Wegagen
and Lion Bank have participated in the study. A self-administered questionnaire & interview
were used to collect primary data and it is analyzed using descriptive and inferential statistics.
According to the statistical analysis findings, compensation & work-life balance highly determine
employee retention ability of the banks under study and this factors demonstrated higher
significance, contribution, positive relationship. Hence, hypothesis in relation to this factors were
also accepted. On top of this, career development, work-life balance & work environment
revealed significant positive relationship with employee retention and the tested hypothesises in
relation to these factors were accepted too. The major findings of the descriptive analysis has
established that majority of respondents do not have an intention to stay with the banks. This
indicated the banks employee turnover will continue to increase, whereas, the banks did not
realized or prepared to mitigate this challenges. Therefore, it is recommended that, in order for
the banks to respond the deteriorating employee intention to stay, they need to reconsider their
understanding, practice and develop comprehensive employee retention policy. Reviews of the
banks compensation package (salary, pay and benefit), improvements on the work-life balance
programs, fairness of career development practices and enhanced work environment are also
recommended.
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Keywords
Employee Retention, compensation, training