Employee Turnover And Performance Of Commercial Banks In Kenya

ABSTRACT

Many commercial banks in the world are experiencing high rates of employees’ turnover which have been affecting the overall bank performance. High rates of employee turnover mostly have a negative effects of the profitability of many commercial banks when not managed properly In Kenya, the banking industry has witnessed high employee turnover rates for the past five years and this has affected banks performance in terms of profitability; quality of banks services and level of customer satisfaction (PWC, 2013). The general objective of the study was to determine the effects of employees’ turnover on the performance of commercial banks in Kenya. The study specifically aimed to; establish the effect of employees’ job satisfaction; assess the effect of employees replacement costs; determine the effect of employee productivity and to establish the effect of customer service quality on the performance of commercial banks in Kenya. The study adopted a descriptive research design and the target population therefore comprised of a total of 42 commercial banks. The studies applied a probability sampling design by using a stratified random sampling technique to select the sample size of 12 commercial banks. Out of the 12 selected commercial banks, the study selected 5 management staff from each bank leading to a total of 60 respondents as the total sample size for the study. The main data collection instruments were questionnaires. A pilot study was carried out to test the reliability and validity of the questionnaires. Descriptive statistics data analysis method was applied analyze data aided by Statistical Package for Social Sciences (SPSS) to compute responses frequencies, percentage mean and standard deviation results. Finally Multiple Linear Regression model was employed to establish the significance of the independent variables on the dependent variable. The findings were presented using tables and charts. The study found out that employee’s turnover affected banks performance in terms of growth of loan book; profitability; quality of services and customer satisfaction. The study drew conclusion that employees turnover has a great affect towards realization of increased banks performance. The study recommended that banks management should provide employees with motivation factors like better rewards, increased remuneration, work life balance and good working conditions. The bank management should reduce employees’ replacement costs by employing internal recruitment strategy.