Research proposal on employee

Turnover in the Bank of Abyssinia S.co

Group assignment

Group members Id No

1. Senait Beyan MBA 07237/06

2. Genet Bayou MBA 07215/06
3. Rukia Getahun MBA 07232/06
4. Meseret Deyas MBA 07247/06
5. Selamawit Abate MBA 07234/06

Jimma University/ABH Services PLC

MBA Programme
Weekend
Course: Business Research Method

Addis Ababa,
June, 2014
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Abstract
Turnover means a termination of membership of an organization by an employer or
employee of the organization. High employee turnover has a negative impact on a
company leading to increase costs and loss of skilled manpower. The main objective of
this study is to investigate the core issues initiating employees for continuous turnover
assess the impact and propose solutions.

The descriptive method will be used in this study and the researcher will use both
primary and secondary data from ex-employees of Bank of Abyssinia with the total
population of 96 and 77 sample size.

Background of the organization

Bank of Abyssinia is one of the private banks found in Ethiopia which was established
on February 15, 1996 in accordance with 1960 Ethiopian commercial code and
licensing & supervision of banking business proclamation no84/1994.

BOA started its operation with an authorized & paid up capital of birr 50million & birr
17.8 million respectively and with only 131 share holders & 32 staff. In about 18years
since its establishment BOA has achieved a significant and remarkable growth in paid
up capitals total asset. It also attracted many professionals’ staff members, valuable
share holders, and large customers from all walks of life. BOA authorized and paid up
capital of birr 632 million and birr 579 million respectively a total deposit balance of birr
8.23billion & total loan & advance of birr 5.1 billion. Currently BOA has 3142 staff &
416,060 account holders and work with known money transfer agents. The bank
following a strong demand for better service and products from all directions on the one
hand ,and ground breaking development in ICT on the other hand .BOA has replaced its
in house IT system with the state of art technology called T-24 & also card banking,
mobile banking & Internal banking service. The bank operates in more than 98
branches all over the Ethiopia.

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 1. Introduction
Employees are important assets of an organization. Having a proper management
strategy an employee will give any manager an exponential return on investment. In
order for the business to be profitable the employee must be productive. In one or
another hand employee turnover affect the stability of the organization difficult to
achieve its objective. In addition to this ,for new employment and requirement require
many especially if there is a high rate of staff turnover, an organization face a huge cost
of requirement and job training .It also affects the competency and productivity of the
organization .To overcome this problem an organization clearly identify reason of staff
turnover and find proper solution.

2. Background of the study

Employees are valuable assets who should, in principle, remain in the organizations
they work in, provided that their required provisions are fulfilled. Any organization incurs
a significant expenditure on employees related to hiring, training and retaining.
Employee turnover affects companies negatively, since the organization risks losing
valuable staffs. Accordingly it is indispensable for employers to retain employees within
their organizations. There are a number of factors that contribute to employee turnover.
They are: dissatisfaction of the employer with the employee due to inadequate
performance, absenteeism from work, tardiness, infringes institution rules drug/alcohol
abuse and disobedience. Employees may quit working due to insufficient remuneration
(availability of higher paying jobs elsewhere), dissatisfaction with working conditions, job
insecurity, lack of career development on the job and poor working conditions.
Moreover, Retirement, end of contract, transfer, re-joining school, resignation due to
poor health, accident, injury on the job and death are the other causes of retirement.
As businesses expand the competition among various companies become intensive; as
a result retention of skilled manpower becomes a great challenge affecting the
sustainability of businesses. The social welfare/security system, especially in the private
sector is very poor in Ethiopia. Voluntary employee turnover occurs when an employee
chooses to leave the organization, mainly due to new jobs openings. In the currently
existing competitive labor market of banking systems in the country, attractive job
opportunities occur to employees. As cost of living is swiftly increasing with each
passing day, employees are seeking better remuneration in other relevant companies.

Within six months (July to December 2013) 74 employees left the bank of Abyssinia. In
the first quarter of 2014 (January to March 2014) 22 employees gave up their jobs
(quarterly reports of the Bank). Employee turnover within nine consecutive months is
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alarmingly high (96 employees). No concrete study has been carried out so far in the
Bank of Abyssinia regarding employment turnover. A standard framework to understand
employee turnover process is lacking within the Bank. Therefore there is a need to
conduct a profound study to identify key indicators for instigating employees to leave the
Bank; so that feasible strategies to reduce employee turnover would be designed. This
study is intended to identify the major reasons for employees turnover, the impact the
turnover exerts on the Bank of Abyssinia and as to what the Bank should do in order to
prevent the turnover.

3. Problem statement
There are a number of costs incurred as a result of employee turnover. Substantial
turnover rates in the workforce end up with a serious impact on an organization's
profitability, and even survival. With considerable growth of private financial institutions,
experienced career bankers are moving from one institution to another with ever
increasing speed. This has created a fierce competition among the financial institutions
to retain the staff they have and appeal for experts and professionals in the sector.

Low salary and benefit packages, unfair treatments and unproductive relationships with
superiors and colleagues, low career growth, workload and poor working environment
are among the main reasons for staff turnover. As the economy grows and the labor
market offers increasing opportunities elsewhere, many dissatisfied employees in
several institutions and organizations leave in search of economic benefits and more
favorable work arrangements. Such a trend over the last few years has resulted in an
unstable labor market, especially for middle and higher level experts, managers and IT
specialists.

It is evident that the existing system for retention of employees in the Bank of Abyssinia
faces problems. This research will intend to assess the employee turnover in the Bank
and raises the following basic research questions:

1. What are the main reasons for assessing employee turnover in the Bank of
Abyssinia?
2. What are the problems Bank of Abyssinia is facing with regard to employees
turnover?
3. What does the human resource retention policies and procedures in the bank
look like?
4. What is the effect of the current employee turnover on Bank of Abyssinia of
Ethiopia?
5. What are the solutions to ameliorate the existing problems?

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4. Research objective

4.1 General objectives

Employee turnover has not been exhaustively studied in the Bank of Abyssinia. High
employee turnover has a negative impact on a company leading to increased costs and
loss of skilled manpower. Identifying the means of reducing employee turnover is worth
studying for the benefit of organizations. The objective of this research is therefore to
investigate the core issues instigating employees for continuous turnover, assess the
impacts and propose solutions.

4.2 Specific objectives

- To identify the prime reasons for turnover of employees in the Bank of Abyssinia
- To assess the impact of employees turnover in the Bank
- To design a strategy for employees retention (recommend tangible
approach/means to minimize/control employees turnover of the Bank)

5. Significance of the study

The outcome of the research will benefit the Bank of Abyssinia, the society which is
making use of the bank services (better and expedited services), the government for
building up increased returns (tax from the bank), the researchers (enriching the
knowledge and initiation for further detailed studies).

6. Scopes and limitations of the study

The Bank of Abyssinia operates in more than 43 branches in Ethiopia with about 2000
employees. This study will be conducted in few selected branches of the Bank located
in Addis Ababa. The outcome of the research however is expected to be useful and
applicable to all branches in the country.

7. RELATED LITRATURE
What is turnover?

‘Turnover means a termination of membership of an organization by an employer or

employee of the organization’ (Morell, Clarke & Wilkinson, 2001:220). This means turn
over can be Voluntary or involuntary. Voluntary turnover is the turnover that is initiated
by employees whereas involuntary turnover is initiated by employer. We refer to

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voluntary employee turnover as negative, since the organization, against their will, risk
losing valuable staff.

On this proposal we focus more on Voluntary turn over. Since the involuntary turnover is
under the control of employer.

Turnover rate can be briefly described as how fast the employers recruit and lose
employees (Chikwe, 2009). It is used to measure the effectiveness of recruitment
(Mondy, 2010) and is sometimes considered as one of the indicators of organizational
performance (Cho, Woods, Jang, & Erdem, 2006). Mondy (2010) clearly defined
turnover rate as how many new recruitments were hired to replace resigned employees.
By these definitions, turnover ‘occurs’ only when a replacement is successfully hired.

Anonymous (1989) suggests that Worker turnover is also a serious problem in

construction and warrants attention. Poor supervision, unproductive relationships with
the boss, poor planning, and generally poor management are the prime reasons cited
by the workers for turnover. As in the case of absenteeism, this too can be minimized by
planning, supervising, and the application of good management principles. Lower
turnover offers a broad range of productivity gains. One other significant cause of
turnover is the attractiveness of nearby jobs offering extended overtime

Becker (1975) indicated that higher paid employees are less likely to resign than lower
paid employees. Human capital theorists say that firms pay skilled employees more
than their unskilled counterparts, because skilled employees have higher marginal
productivity. There is some evidence to support a negative relationship between wage
or salary level and turnover.

Harman et al .., (1999) that negative job attitudes (e.g., low levels of job satisfaction) is
one of the causes of leaving. In their seminal work, March and Simon (1958) proposed
a psychological explanation of turnover that is based on individuals’ utility functions:
When outcomes (such as pay or promotion opportunities) are too low relative to the
employee’s expectations, an employee becomes dissatisfied and motivated to leave.

Causes of employee Turnover

Compensation and benefit

Most people work for a living. It is rational that employees demand an appropriate level
of compensation for their effort. Such compensation may be offered in monetary (direct)
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reward, such as salary and bonus, or bundled with other non-monetary (indirect) reward
such as medical insurance (Mondy, 2010).

Career development

In addition to compensation and benefit, career development is one of the other factors
that make employee to stay in the organization.

Supposed alternative employment

Perceived alternative employment opportunity, also known as perceived ease of

movement, is the perception of the availability of job alternatives (Lee & Mitchell, 1994).

This opinion is availability of vacancies and unemployment rate, employees shift from
one organization to another easily.

Job satisfaction

Job satisfaction reflects how much the individual dissatisfied with his/her job. The nature
of the job poor working condition of the organization leads to the employee to dissatisfy
on his /her job.

Impact of turnover

Companies do not want to lose valuable employees, and employee turnover can have a
huge impact on their business. Hinkin and Tracey (2000) measured the cost of turnover
in terms of separation cost, replacement cost and lost productivity, etc. In their samples
the overall cost of turnover of one front office attendant ranged from about USD $6000
to USD $ 12,000, in which the lost productivity accounted the largest portion of the cost.
This lost productivity mainly came from the difference between the high productivity of
the departing employees and the missed sales opportunities, and low performance of
new employees when they were at the beginning of the learning curve. High employee
turnover has a negative impact on the organization outcome.

8. METHODOLOGY

This part of the proposal consists of Research Design, Data Collection Method and
Data Analysis

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8.1 Research Design

The descriptive method will be used in this study as the researcher wants to find
existing facts, practices and phenomena as it is and finally interprets it.

8.2 Data collection Method

The method of data collection is the most vital aspect of any research. The data should
reliable and accurate since it has an impact on the result Otherwise, the result of the
study will be invalid.
In order to get relevant data the researcher will use both primary and secondary data.
Primary data will be gathered by questionnaire and interviews from ex-employee of
managerial and non-managerial level staff of the bank. The researcher will also review
exit interview reports.
In order to know why employee turnover occurs within the organization, the researcher
will use both quantitative and qualitative methods of data collection.
The researcher will conduct random stratified sampling to get representative sample.
To get appropriate sample size the researcher will use Solven formulas. i.e.
____ N ____
n= 1+N (e)2

Where:
n = is sample
N = total population
(e) = 0.05 or allowance of random error
Therefore, to find the total sample (n) let’s calculate based on the above formula

____ 96 ____
n = 1+ 96 (0.05)2

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 = ____ 96 ____
1+ 96 (0.0025)

= ____ 96 ____
1 + 0.24

= ____ 96 ____
1.24

= 77.41 (rounded to 77)

In order to get the sample proportion of each sector the researcher will use the following
formula i.e.
_n___
Sample proportion (%) = N

= 77_
96
= 0.802 (rounded to 80%)
By using sample proportion, the researcher can compute each sectors sample size and
the result is presented in the following table.

Table 1

Proportion of Sample Size

Sectors Name Number % Sample

Managerial 12 80 10
Non-Managerial 84 80 67
T 96 77
otal

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The questionnaires will be distributed to the total sample of 77 respondents based on
Stratified sampling techniques of probability sampling.
The researcher will also use secondary data to gather relevant information and facts
about employee turnover from different sources.

8.3 Data Analysis

The searcher will use statistical tools like tables, percentages and figures used to
analyze data gathered by Questionnaires.

9. Time Schedule

The research will be organized in the following time schedule.

Table 2

Research Time Schedule

Time taken
No Activities in

Weeks
1 Selecting the title 1
2 Preparing questioner and interview 8
3 Distributing and collecting data through 2
interview and questioner
4 Preparing of Review related literature 8
5 Analysis Interpretation 2
6 Drawing Summary, Conclusion and 2
Recommendation

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10. BUDGET

This Part of the paper shows activity Schedule & Estimated Cost Break down of the
Research.

TABLE 3
ESTIMATED COST BREAKDOWN OF THE RESEARCH.

Quan Unit cost Total Cost

No Item/Activity Unit tity Birr Cent Birr Cents
1 Stationary materials
Computer paper Desta 5 100 00 500 00
Flush disc No 1 500 00 500 00
Paper Bag - 02 250 00 500 00
2 Service charge
Transport cost 1000 00
lump 1 1000 00
sum
Per 240 2 00 480 00
page
printing
Secretary service & Per 60 10 00 600 00
Printing page
Binding Per
docume 3 50 00 150 00
nt
Miscellaneous Expense 500 00 500 00
Total 4,230 00
3 Contingency (10%) 423 00
Total Expenditure 4,653 00

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References:

Anonymous. (1989). Absenteeism and turnover, Business roundtable.

Becker, G. (1975).Human Capital . New York: National Bureau of Economic Research.

Chikwe, A.C. (2009). The impact of employee turnover: The case of leisure, tourism and
hospitality industry. Consortium Journal of Hospitality & Tourism, 14(1),43-56.

Davidson, M. C. G., & Wang, Y. (2011). Sustainable labor practices? Hotel human
resource managers views on turnover and skill shortages. Journal of Human Resources
in Hospitality & Tourism, 10(3), 235-253.

Harman, W.S., Lee, T.H., Mitchell, H., Felps, W. and Owens, B.P. (1999). The
Psychology of Voluntary Employee Turnover.

Hinkin, T. R., & Tracey, J. B. (2000). The cost of turnover: Putting a price on the
learning curve. Cornell Hotel and Restaurant Administration Quarterly, 41,14-21.

Lee, T. W., & Mitchell, T. R. (1994). An alternative approach: The unfolding model of
voluntary employee turnover. The Academy of Management Review, 19 (1),51-89.Lee,

Mondy, R.W. (2010). Human resources management (11th ed.). Upper Saddle
River,NJ: Prentice Hall

Morell, K., Loan-Clarke, J., & Wilkinson, A. (2001). Unweaving leaving: the use of
models in the management of employee turnover. International Journal of Management
Reviews. Vol.3 , pp. 219–244.

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