Factors Affecting Employee Retention in the Banking Industry: The Case of Selected Private Commercial Banks in Ethiopia

No Thumbnail Available



Journal Title

Journal ISSN

Volume Title


Addis Ababa University


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.



Employee Retention, compensation, training