LABOUR TURNOVER AND ORGANIZATION PERFORMANCE

IN THE PUBLIC SECTOR OF TANZANIA:

THE CASE OF NATIONAL MICROFINANCE BANK

LABOUR TURNOVER AND ORGANIZATION PERFORMANCE

IN THE PUBLIC SECTOR OF TANZANIA:

THE CASE OF NATIONAL MICROFINANCE BANK

By

Sizya N Simbila

A Thesis/Dissertation Report Submitted in Partial Fulfillment of the Requirements

for the Award of the Degree of Master of Science in Human Resource Management

(MSc-HRM) to Mzumbe University, Dar es Salaam Campus College.

2013

i

CERTIFICATION

We, the undersigned, certifies that we have read and hereby recommend for

acceptance by the Mzumbe University, a thesis entitled Labor Turnover and

Organization Performance in the Public Sector of Tanzania: A Case of National

Microfinance Bank, in partial fulfillment of the requirements for award of the

degree of Master of Science in Human Resource Management of Mzumbe University

……………………………………..

Major Supervisor

………………………………….

Internal Examiner

………………………………

External Examiner

Accepted for the Board of MUDCC

…………………………………………………………

CHAIRPERSON, FACULTY/DIRECTORATE BOARD

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DECLARATION

I, Sizya N Simbila, declare that this thesis is my own original work and that it has

not been presented and will not be presented to any other university for a similar or

any other degree award.

Signature ___________________________

Date _______________________________

COPY RIGHT

©2013

This thesis is a copyright material protected under the Berne Convention, the

Copyright Act 1999 and other international and national enactment, in that behalf, on

intellectual property. It may not be reproduced by any means in full or in part, except

for short extracts in fair dealings, for research or private study, critical scholarly

review or discourse with an acknowledgment, without the written permission of

Mzumbe University, on behalf of the author.

iii

ACKNOWLEDGEMENT

This work could not have been accomplished if it was not for the assistance, advice,

guidance and cooperation of various persons of whom it would be impossible to

mention each name. However, I feel highly indebted for special reasons to mention

some of them.

First, I return all the praise and glory to the almighty God for giving me and keeping

me both physically and mentally healthy throughout my studies and more

particularly during this research undertaking.

I would like also to extend my best regards to my research supervisor Mr. Edson

Wazoel Lubua under his supervision this paper has materialized. I am as well

indebted for his valuable constructive and intellectual guidance in the preparation

and shaping of several parts of this paper.

My profound gratitude should go to my lovely family Mr. and Mrs. Nasibu Simbila,

my young sister and friends for their remarkable inspiration, support, commitment

and love they showed during the period of my studies.

Finally I remain entirely responsible for all ideas in this study while errors are not

attributable to any of above mentioned personalities.

iv

DEDICATION

This research report is dedicated to the most important people in my life, my beloved

parents Mr. and Mrs. Nasibu Simbila, my beloved young sister Mwivano simbila and

my best friend Lightness kiluwa who were always giving me moral support during

my studies, despite of my late coming back home and sometimes not available when

they needed me most.

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LIST OF ACRONYM AND ABBREVIATIONS

CEO - Chief Executive Officer

HR - Human Resources

HRM - Human Resource Management

NMB - National Microfinance Bank

NSSF - National Social Security Fund

PPF - Parastatal Pension Fund

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ABSTRACT

Labor turnover has been a prevailing problem in Tanzania Public Organization

despite of many interventions carried out to ensure that newly recruited employees

and the current ones are retained in the organization for as long as they are needed. It

is important for an organization’s management to ensure that the organization has the

intellectual capital it needs since human capital is the most important asset of an

organization and the source of competitive advantage, for this matter, it is therefore

crucial to find ways in which skilled and knowledge human resource is retained in

the organization. The objective of the study was to establish the link between labor

turnover and organization performance in Tanzania Public Organizations. The

research used a case study design which was carried at the National Microfinance

Bank. The data collection methods instituted by the researcher comprised of

questionnaires, interviews and documentary sources. A sample of 80 employees was

chosen for this study using random sampling. Data analysis was done using both

qualitative and quantitative methods of data analysis.

The study revealed that labor turnover is more prominent to the lower level staff

where too much work, lack of training opportunities, poor pay, poor working

conditions, lack of clear promotion and training policies, mistreatment by managers

and supervisors and lack of upward growth or promotion were found to be the most

contributing factors for turnover in the lower level employees of the organization.

However, the study came up with several recommendations to prevent the

Organization from having more turnovers in order to compete with its competitors

and remain the leading Bank institution in Africa as per its Vision. The

recommendations included to develop the Organization pay and incentive policy, the

organization should provide learning and development opportunities, to provide

flexible working arrangements, to develop the performance appraisal and lastly to

promote good communication both forward and backward.

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TABLE OF CONTENTS

Pages

CERTIFICATION ...................................................................................................... i DECLARATION ........................................................................................................ ii COPY RIGHT ............................................................... Error! Bookmark not defined.

ACKNOWLEDGEMENT ........................................................................................ iii DEDICATION ........................................................................................................... iv

LIST OF ACRONYM AND ABBREVIATIONS ................................................... v ABSTRACT ............................................................................................................... vi TABLE OF CONTENTS ........................................................................................ vii LIST OF TABLES ..................................................................................................... x

LIST OF FIGURES .................................................................................................. xi

CHAPTER ONE ........................................................................................................ 1 INTRODUCTION AND BACKGROUND OF THE STUDY ............................... 1

1.1 Introduction ................................................................................................ 1

1.2 Background Information ............................................................................ 1 1.3 Statement of the Problem ........................................................................... 2

1.4 General Objectives ..................................................................................... 2 1.4.1 Specific Objectives. ................................................................................... 2

1.5 Research Questions .................................................................................... 3 1.6 Limitations and Delimitations .................................................................... 3

CHAPTER TWO ....................................................................................................... 4 LITERATURE REVIEW ......................................................................................... 4

2.1 Introduction ................................................................................................ 4 2.2 The Concept of Labor Turnover ................................................................ 4 2.3 Performance Management ......................................................................... 5 2.4 Rate of Employee Turnover ....................................................................... 5

2.5 Factors Influencing Employee Turnover in the Public Sector. .................. 6 2.6 Impact of Labor Turnover. ......................................................................... 7 2.7 Motivating and Improving Employee’s Performance ................................ 9 2.7.1 Financial Rewards .................................................................................... 11

2.7.2 Non – Financial Rewards ......................................................................... 13 2.7.3 Fit ............................................................................................................. 14 2.8 Theoretical Review .................................................................................. 15

2.8.1 Organizational Equilibrium Theory ......................................................... 15 2.8.2 Expectation Theory .................................................................................. 16 2.8.2.1 Theory X/Y .............................................................................................. 16 2.9 Conceptual Framework ............................................................................ 17 2.9.1 Variable Descriptions ............................................................................... 18 2.9.2 Hypothesis ................................................................................................ 18 2.10 Relevance of the Study ............................................................................ 19

viii

CHAPTER THREE ................................................................................................. 20 RESEARCH METHODOLOGY ........................................................................... 20

3.1 Introduction .............................................................................................. 20 3.2 Research Design ....................................................................................... 20 3.3 Data and Collection Methods ................................................................... 20 3.3.1 Interviews ................................................................................................. 21 3.3.2 Questionnaires .......................................................................................... 21

3.3.3 Documentary Sources .............................................................................. 22 3.4 Population and Sample ............................................................................ 22

3.4.1 Population ................................................................................................ 22 3.4.2 Research Sample ...................................................................................... 23 3.5 Data Analysis Methods (Plan) ................................................................. 23 3.6 Validity and Reliability ............................................................................ 23

3.6.1 External Validity ...................................................................................... 23 3.6.2 Internal Validity ....................................................................................... 24

3.6.3 Reliability ................................................................................................. 24

CHAPTER FOUR .................................................................................................... 26

STUDY FINDINGS AND DISCUSSION .............................................................. 26 4.1 Introduction .............................................................................................. 26

4.2 Demographic Variables............................................................................ 26 4.2.1 Respondents (Age) ................................................................................... 26

4.2.2 Respondents (Gender) .............................................................................. 27 4.2.3 Respondents (Education Level) ............................................................... 28 4.2.4 Employee Status/ Position ....................................................................... 28

4.3 Factors Influencing the Rate of Employee Turnover in Public Sectors of

Tanzania ................................................................................................... 29

4.3.1 Most Important Factor in Staying with NMB .......................................... 34 4.3.2 Employee Relation ................................................................................... 35 4.3.3 Changes when Appointed as CEO ........................................................... 36 4.4 Findings on How Labor Turnover Affects the Performance of NMB ..... 37

4.4.1 Findings from Primary and Secondary Data ............................................ 38 4.4.2 Findings from Primary Data .................................................................... 38 4.4.3 Findings from Secondary Data ................................................................ 39 4.5 Findings from Ex-staff Members ............................................................. 41

4.5.1 Reasons for Leaving the Organization ..................................................... 41 4.5.2 Signing a Staff Development Bond ......................................................... 42 4.6 Discussion of the Study Findings ............................................................ 43

CHAPTER FIVE ..................................................................................................... 47 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 47

5.1 Summary of Findings ............................................................................... 47 5.2 Conclusion ............................................................................................... 47 5.3 Recommendations .................................................................................... 48 5.3.1 Pay ............................................................................................................ 48

ix

5.3.2 Development and Career Opportunities ................................................... 50 5.3.3 Work Environment ................................................................................... 50 5.3.4 Performance Management ....................................................................... 51 5.4 Limitations and Future Research ............................................................. 52

REFERENCES ......................................................................................................... 55

APPENDICES .......................................................................................................... 62 Appendix 1: Question Guide in Conversational Interview to the Employees

Who Have Left the Fund .............................................................. 62 Appendix 2: Questionnaire to be administered to the Employees of the

Organization regarding their Intention to Leave or Remain ........ 63 Appendix 3: Management and Supervisors’ Interview Guide .......................... 68

x

LIST OF TABLES

Pages

Table 4.1: Age Distribution of the Respondents ................................................. 27

Table 4.2: Gender Distribution of the Respondents ............................................ 27

Table 4.3: Education Distribution of the Respondents ....................................... 28

Table 4.4: Positions Held .................................................................................... 28

Table 4.5: Salary as the Influence of Employee Turnover .................................. 30

Table 4.6: Supervisors Negative Behavior as the Influence of Labor Turnover. 31

Table 4.7: Bad Working Condition as the Influence of Labor Turnover ............ 32

Table 4.8: Career Growth as the Influence of Employee Turnover .................... 33

Table 4.9: Changes When Appointed As CEO ................................................... 37

xi

LIST OF FIGURES

Pages

Figure 2.1: The Conceptual Framework ............................................................... 17

Figure 4.1: Salary ................................................................................................. 30

Figure 4.2: Supervisors Negative Behavior .......................................................... 31

Figure 4.3: Bad Working Conditions ................................................................... 32

Figure 4.4: Career Growth .................................................................................... 33

Figure 4.5: Most Important Factor in Staying with NMB .................................... 35

1

CHAPTER ONE

INTRODUCTION AND BACKGROUND OF THE STUDY

1.1 Introduction

This chapter presents the background of the study. It begins by providing the

background, stating objectives and research questions, limitation and delimitation,

together with the significance of the study.

1.2 Background Information

Human resources are the most valuable asset in any organization (Mark, Kam-Ki,

Yi-Ping, 2002). Therefore, there is a need of improving their qualities while

maintaining good talents so as to provide the institution with industrial strategic

benefits. Together, with the importance of maintaining employees, there are numbers

of challenges which are encountered which makes policy and administrative

provision necessary.

Dalton et al (1982) defines turnover as a dysfunctional aspect of organization;

therefore, he categorize it among aspects which requires management attention

(McConnel, 1999). Turnover has consequences on the performance of employees,

(Anderson & Buchhols, 2001). Hence it should carefully be managed so as to reduce

its rate and keep adverse impact under control.

Apparently, turnover affects the well-being of both employee and the employer since

s/he has to recruit and train to new employees. These activities increase operation

costs. On the other hand, the employees who leave the organization affect the

working morale of others and increase anxiety about the future.

Different studies suggest a relationship between job performance and the rate of

turnover in the organization (Michael & Lian, 2012). There is a high chance for poor

performers to quit their job than good performers (Ryan &Todd, 2009). Based on the

impact of turn over to the organization, it is necessary to determine other factors that

2

cause voluntary turnover in an organization and how turnover affects the

performance of an organization.

High turnover can be harmful to the company’s performance and productivity if

skilled workers are often leaving and the workers population contains a high

percentage of novice workers. This is especially the case if those leaving are either

key to its success and continuity or do so because they think they have been treated

unfairly, which could result in tribunal claims, (Onadele, 2011)

1.3 Statement of the Problem

Labor turnover threaten the sustainability of any organization. As a global challenge

as well as mandatory confrontation of the technological and environmental diversity

which organizations have to face. The consciousness of hiring, monetary and time

cost recorded when highly frequent labor turnover occurs; thereby affecting

productivity, which makes this a problem that begs for answers.

Organization loses not just financially or in productivity when they have an

employee with huge human capital permanently departing from their organization

this could have been due to avoidable or unavoidable reasons. (Onadele, 2011). This

study looks into how the effects of voluntary or involuntary labor turnover have been

impacted on the performance level of the organization.

1.4 General Objectives

This study evaluates impacts of employee turnover to the performance of the public

sector of Tanzania

1.4.1 Specific Objectives.

(i.) To determine the rate of employee turnover in the public sector of

Tanzania

(ii.) To determine factors influencing employee turnover in the public

sector.

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(iii.) To describe impacts of labor turnover to the performance of public

sector of Tanzania.

1.5 Research Questions

(i.) What is the rate of employee turnover in the public sector of

Tanzania?

(ii.) Which factors influence employee turnover in the public sector?

(iii.) What are the impacts of labor turnover to the performance of public

sector of Tanzania?

1.6 Limitations and Delimitations

It is envisaged that, due to the wide spread of the intended respondents to be covered

in this study, the researcher faced some financial problems, commuting time during

visiting the employees, and reluctance in responding to questionnaire.

(i.) Time is a limiting factor to gather enough information as the researcher is

involved with work, and studies. This is a big challenge in the course of

carrying out this study, as the researcher has to accomplish these tasks within

given time frame, to overcome this, the researcher had to make some extra

time and sometimes use weekends to make sure all the information are

gathered successful.

(ii.) Financial constraints in such a way that, several follow-ups was made to the

respondents so as to collect the questionnaires and involve hiring some

manpower to move around for such activities to supplement the limited time

the researcher had.

(iii.) Reluctance in responding to questionnaire. It is also a problem because some

of the respondents did not fill the questionnaires at all while others give

wrong and insufficient information to the study, the researcher had to find

other respondents from different offices of NMB situated within one region

and ask them to fill the questionnaires, that helps much in collecting data and

completion of the study.

4

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

Employee turnover is increasingly becoming a global concern where employees are

leaving their employers and seek employment elsewhere for different reasons. This

chapter provides for the theoretical and empirical literature on the labor turnover,

where review of supporting theories is also provided.

2.2 The Concept of Labor Turnover

By definition employee turnover is the rotation of workers around the labor market;

between firms, jobs and occupations; and between the states of employment and

unemployment. The term “turnover” is defined by Price, (1977) as: the ratio of the

number of organizational members who have left during the period being considered

divided by the average number of people in that organization during the period. It

means when a person quit from the given job for any reason it is called as employee

turnover.

Managers refer to turnover as the entire process associated with filling a vacancy:

Each time a position is vacated, either voluntarily or involuntarily, a new employee

must be hired and trained. However, two types of employee turnover happen in

companies, voluntary and involuntary.

Voluntary employee turnover involves employee’s intention to quit the job or decide

to give resignation from job. It can be due to better opportunity, job dissatisfaction,

and supervisor’s bad behavior, less chances of growth or any other individual

reasons. And involuntary employee turnover is that when an organization fires

employees by itself. It can be like retirement cases, organization needs to cut cost,

restructure or downsizing, low performers firing from the job or dismissals just and

other factors.

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2.3 Performance Management

By definition Performance Management is a systematic process for improving

organization performance by developing the performance of individuals and teams as

a means of getting better results from the organization teams and individuals by

understanding and managing performance within an agreed framework of planned

goals, standards & competence requirements (Armstrong, 2007).

Organization approach to clarify, assesses, implement and continuously improve the

organizational strategy, and its execution encompasses strategic frameworks,

performance management indicators, methodologies and processes that help

organizations with the formulation of their strategy and enable employees to gain

relevant insights, which allows them to make better-informed decisions and learn (

Marr,2009).

The process of managing the execution of an organization’s strategy, it is how plans

are translated into results. Performance Management comprises the methodologies,

metrics, processes, software tools, and systems that manage the performance of an

organization (Cokins, 2004)

The organization need performance management because of Faulty Strategy

execution: Research reveal increasing rate of job turnover at the executive level due

to failed strategies and despite their best formulated plans, when executives adjust

their strategies, they cannot get their employees to execute the revised strategy while,

new strategies may be planned and the performance system may typically not

changed to reflect new emphasis on what is really important.

2.4 Rate of Employee Turnover

It has been observed that employee turnover, especially amongst public sector

organizations, is becoming a problem which costs a lot of money, efforts and energy.

This problem might be a major obstacle for HR professionals in formulation of their

HR policies.

6

Turnover vary from external environmental factors such as economy and its impact

on turnover such as employment level, inflation (Pettman, 1975; Mobley, 1982) to

the organizational variables such as type of industry, occupational category,

organization size, payment, supervisory level, location, selection process, work

environment, work assignments, benefits, promotions, and growth (Mobley, 1982;

Arthur, 2001)

2.5 Factors Influencing Employee Turnover in the Public Sector.

The reason of turnover vary from external environmental factors such as economy

and its impact on turnover such as employment level, inflation (Pettman, 1975;

Mobley, 1982) to the organizational variables such as type of industry, occupational

category, organization size, payment, supervisory level, location, selection process,

work environment, work assignments, benefits, promotions, and growth (Mobley,

1982; Arthur, 2001).

The other turnover factors are related to the individual work variables such as

demographic variables, integrative variables like job satisfaction, pay, promotion and

working condition (Pettman 1975; Mobley, 1982; Arthur, 2001). The last

perspective is the individual nonworking variables such as family variables (Pettman,

1975; Mobley, 1982).

There is a consistent negative relationship between age and turnover. Younger

employees have a higher probability of leaving (Porter and Steers, 1973; Price, 1977;

Horner et al., 1979; Muchinsky & Tuttle, 1979). Younger employees have more

chances, low family responsibility, and no lost chances in the existing organization.

Similar to age, length of service is contributing to turnover decision; the shorter the

period of service, the higher is the turnover. Mangione (1973), The length of service

is one of the best predictors of turnover.

7

Hom & Griffeth (1995) maintained that employees decided to leave their

organization when they become dissatisfied with their Jobs. Likewise, (Meyer &

Herschovitch, 2001) argued that when employees were dissatisfied with their jobs,

their desire to remain in their organization started to erode. In fact, initial

consequences of these negative effects, in the form of low job satisfaction were

turnover cognitions.

Reggio (2003) had asserted that both low levels of job satisfaction and organizational

commitment are related to higher rates of turnover.

2.6 Impact of Labor Turnover.

The term ‘turnover’ refers to employee movements that create vacancies within an

organizational unit (Beach, Brereton & Cliff 2003). These vacancies may be the

result of resignations, transfers, retirements, dismissals, or the completion of fixed

term contracts.

(Hale,1998) stated that employers cited recruitment costs of 50% to 60% of an

employee’s first year’s salary and up to 100% for certain specialized, high-skill

positions. (Bowen & Shuster, 1986) stated that while all constituting elements of an

organization are important for its success, it is its enhanced ability to attract and

retain the best quality talents that separates it from the others.

Labor turnover is also commonly classified as either functional or dysfunctional.

(Allen & Griffeth, 1999) assert that functional turnover is characterized by a situation

where high-performance employees remain with the organization while poor

performance employees leave.

Van As (2001) points out that mobility can lead to organizational renewal and

change, can clean out ‘deadwood’, making it easier to introduce new ideas, can

prevent complacency, and create mobility opportunities for existing staff.

Dysfunctional turnover is characterized by high-performance employees leaving and

poor performance employees staying. The literature generally reports on the

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dysfunctional consequences of labor turnover to the organization. The literature on

the negative consequences of attrition breaks attrition costs down into direct and

indirect costs. Direct costs are those that occur in the short term after the resignation

and are relatively easy to quantify.

Swanepoel et al. (2000) assert that the direct costs of replacing an employee

comprise recruitment and advertising costs, agency fees, applicant expenses,

relocation expenses and all employment office expenses. Some of the components of

indirect costs of turnover are: loss of knowledge (KPMG Management Consulting,

1998); productivity impacts (Michaud, 2000); lowered morale of remaining staff

(Tziner & Birati, 1996); loss of momentum in the organization (Van As, 2001); loss

of organizational memory (Hansen, Nohria & Tirney, 1999; Van As, 2001) and

customer dissatisfaction (Koys, 2001).

It is extremely difficult to place exact estimates on the total financial impact of labor

turnover, particularly as lost intellectual capital is almost un-measurable (Fitz-enz &

Phillips, 1998). Much of the literature estimates the financial cost of the labor

turnover of a knowledge worker to be equal to more than a year’s salary (Michaud,

2000). The American Management Association (1997) reports the costs of the loss of

a knowledge worker at between six and eighteen months salary. Branch (1998)

believes the cost to be 150% of the departing person’s salary. In summary, it is clear

from the literature that turnover of knowledge workers in general has a large negative

impact on organizations.

Abbasi and Hollman (2000) sought to determine the impact of employee turnover on

an organization and found that excessive employee turnover often engenders far

reaching consequences and at the extreme may jeopardize efforts to attain the

organizational objectives. (Elangovan, 2001) has argued that there is a reciprocal link

between organizational commitment and turnover intention, i. e. lower commitment

increases turnover intention, which lowers commitment further.

9

Abdul et al, (2008) revealed that job satisfaction and organizational commitment had

a negative effect on turnover intentions, whereas perceived alternative job

opportunities had a significant positive correlation with turnover intentions and is the

major factor associated with turnover intention among it Professionals in Pakistan.

(Van Dick et al. 2004) have also identified job satisfaction as a predictor of turnover

intention; however, they argue that it is a mediating variable between organizational

identification and turnover intention. According to their study, organizational

identification feeds into job satisfaction which, in turn, predicts turnover intention.

(Zheng & Lamond, 2009) found out that training, size, length of operation and the

nature of the industry are significantly related to turnover.

2.7 Motivating and Improving Employee’s Performance

There is increasing evidence that particular organizations are beginning to

acknowledge that distinctive HR practices lead to better knowledge worker

performance. Thomson and Heron (2002) found the importance of job designing as

an important dimension of fulfilling the psychological contract, is associated with

higher levels of knowledge creation, affective commitment and organizational

citizenship behavior.

Hansen et al. (1999) cite that the performance review of consultants at Ernst &

Young include evaluating their contributions and utilization of knowledge assets.

The consultancy firm, Bain & Co, rewards staff for sharing knowledge and help

given to others. Research also reveals that there is a relationship between the type of

reward given and performance based on knowledge sharing (Hansen et al, 1999;

Keegan, 1998; Roberson & O’Malley, 2000; Swan et al, 1999).

Some researchers have identified standard of HR practices that are vital for the

retention and reduction of voluntary turnover of knowledge workers (Lee & Maurer,

1997; Kinnear & Sutherland, 2000). Others focus on the key areas of compensation;

note that the traditional approaches to work remuneration and reward are no longer

appropriate in a post-industrial knowledge economy (Despres & Hiltrop, 1995). Most

favored retention strategies for knowledge workers focused on a portfolio of

10

practices which includes the freedom to act independently, appropriate job design,

certain types of financial rewards based on recognition of achievements,

development opportunities, and access to leading edge technology (Kinner and

Sutherland, 2000; Thompson and Heron, 2002).

Thurow (2000:140) says that, “The old career ladders are gone. The old lifetime

employees are gone. If career ladders don’t exist within one company, they must

exist across different companies if they are to exist at all. Kalra (1997) argues that

HR policies and practices designed for career development need to shift from

conventional training and development to an integrative, continuous process of

capability development, with the responsibility shifting increasingly to the individual

(Beck, 2000).

Butler and Waldrop, (2001), argue that while traditional career paths may be based

primarlily on a firm’s interest, there is now a shift to sculpting jobs based on the

deeply embedded life interests of knowledge worker professionals. An individual

will need to retool and develop a portfolio of career overtime to remain employable.

Despres and Hiltrop (1995) characterize knowledge workers as having careers

external to an organization through years of education, rather than internal training

and career schemes.

Cappelli (2001) and Kalra (1997) similarly argue that retention efforts require a shift

from broad programmes to highly targeted initiatives. Cappelli cites how prudential

Insurance customizes certain jobs to both categories of employees and individuals.

This required rethinking of compensation, job design and job customization and

hiring practices.

Market driven retention mechanisms may include a “hot skills” premium; staggered

signing bonuses; job redesigning to retain specific skills; defined employee tenure;

tailoring jobs to individual needs; and adaptation to attrition, for example by

outsourcing and cross-training

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2.7.1 Financial Rewards

The financial rewards include salary, benefits and bonus system. With regards to

salary, this is a monetary compensation for an employee’s effort to the firm; the

employee performs a service and is paid for it accordingly (Bratton & Gold, 2003).

Salary is often referred to as base pay, and can be based on two main approaches,

market pricing or job evaluation (Bratton & Gold, 2003; Lawler, 1983).

Market pricing approach is to base salary on an industry rate for a specific job, while

the job evaluation approach is to base salaries by determining a value for all the jobs

in a firm before comparing them to the market (Bratton & Gold, 2003). This kind of

policy implies that the person doing the job is only worth as much as the job itself is

to the organization. But, in many respects it also assures that the reward cost is

similar to what other organizations are paying people doing the same kind of job that

is the personnel costs are not out of line with those of the organizations competitors

(Lawler, 1983).

An alternative to base pay is performance pay including paying individuals for the

skills they possess, often referred to as knowledge based pay or skill-based pay

(Bratton & Gold, 2003). Lawler states that using skill-based pay will not

dramatically change the pay situation since the skills people have generally match

the nature of the job. On the other hand it can result in identifying whether or not the

employee has more or less of the skills needed for the job. This can be used to

determine whether or not the employee is entitled to the pay offered, such as first

entrees that do not have the skills and have to earn the right to be paid whatever the

job-related skills are worth (Lawler, 1983).

Using skill-based pay can produce a climate of rewarding when employees increase

and develop their skills. This in turn can create a knowledgeable and flexible

workforce. This flexibility often leads to lower staffing levels, fewer problems when

turnover occurs and also a higher retention rate because employees like the

opportunity to utilize and be paid for a wide range of skills (Lawler, 1983).

12

A skill based pay system can evidently be an effective means of retaining knowledge

workers but is by no means a simple effort since skill assessment can be difficult to

accomplish. A negative aspect of performance-based pay as presented by Bratton &

Gold (2003) is of a symbolic nature, it can convey an absence of trust as people are

only rewarded as they perform and must be measured for everything they do or do

not do.

On the other hand, a bonus system is an incentive for retention that is often based on

some kind of performance. A goal is set and if reached is often rewarded in monetary

forms (Firth et al. 1999).

A difficult aspect of bonus systems is specifying what kind of performance is

desired and how it is determined (Lawler, 1983). It could for example vary from

being based on generated revenues, market share and other things that can be

translated into value. Poorly designed and administered reward systems can do more

harm than good but when performance can be effectively related to bonus pay it can

help motivate, attract and retain key contributors.

However, (Firth et al. 1999) show empirical evidence that there is a weak link

between performance and bonuses among top management. This can be used to

demonstrate a system that does more harm than good as it drains firm’s capital by

giving employees more than they give back. (Blakemore et al. 1987) concluded that

firms that apply a bonus system could improve their retention ability when

structuring it with base pay but that workers with risk-averse characteristics tend to

be more attracted to such firms.

The other financial reward is benefits. Benefits are often considered to be an indirect

monetary compensation. Even if they are not rewards given in cash they constitute an

economic value to the recipient (Kempton, 1995). One way of describing benefits is

to view them as activities used in order to satisfy employee demands and

expectations of firms. Bratton and Gold (2003) state that benefits are a “part of the

total reward package provided to worker in addition to base and performance pay”.

13

Benefits should match individual employee demands brought forth by documenting

their needs. This can also add value to the recipient as it makes the employee

participative and therefore more understanding of the value being offered. (Bratton &

Gold, 2003) If firms can consider the diverse needs among workers when providing

benefits they can enhance their value because they match the individual need.

Traditional wisdom tells us that benefits can foster retention. However, Bratton and

Gold (2003) state that there are issues about whether or not benefits are appropriate

for retention. To date there is not enough research to draw this conclusion and due to

an absence of empirical evidence managers constantly scrutinize benefits. But,

Bratton and Gold still argue that benefits can be used in a proactive symbolic way by

firms to show their care of employees.

2.7.2 Non – Financial Rewards

The non-financial rewards that can be used in retention include challenging work,

development and career opportunities. According to Jamrog (2002) knowledge

workers are more interested in challenge than in tenure. For several reasons it is

expected of workers with high levels of ability and experience to seek challenging

work than other less knowledgeable workers (Trank, 2002).

In order to increase an individual’s level of competence after having attained a high

degree of achievement the environment must provide additional challenges. High

achievers may also prefer challenging situations because they provide them with the

opportunity to differentiate and test themselves against their peers (Kanfer et al.,

1996). Providing challenges other than the work itself can be a way to stimulate high

achievers, which can be done through opportunities such as further training and

career paths (Trank et al., 2002).

Promotion is not only a way to provide employees with more challenging work but

also a means to recognize them publicly which often motives those who wish to be

differentiated and are driven by competition (Trank et al., 2002).

14

There are recent trends among the younger employees that they put less emphasize

on job security and more emphasize on having challenging work that provides them

with a possibility to learn (Lawler, 2005). Lawler goes on by saying that today’s

global competition; the rise of technology and an increasing demand for knowledge

workers has made loyalty contracts unrealistic. Today’s employees are demanding

substitutes for the security that loyalty contracts represent. They want jobs that give

them the chance to develop skills and learn because this keeps them attractive in the

market, should they want to change firms (Lawler, 2005). Developing employees as

a retention strategy can seem contradictive in this sense, but at the same time firms

must adapt to the changes of relevant knowledge in the market.

With regards to development and careers opportunities, training employees has long

ensured skilled, motivated and competent employees within firms and is an integral

part of HRM (Frank et al. 2004). One way of evoking retention is to provide

opportunities to advance within the organization, enabling employees the chance to

pursue a career (Lindmark & Önnevik, 2005). (Hall, 1984) describes the term career

as “the individually perceived sequence of attitudes and behaviours associated with

work-related experiences over the space of the person’s life.” Based on Halls

description of career we find that development entails altering an individual’s

perception and behaviour. Any activity that changes an employee’s performance,

adaptability, attitude or identity is considered a development, be it job experience,

assignments, feedback, socialization or training (ibid.). We now find that

development is not only bound to task-related activities but rather any change that

enhances an employee’s career outcome.

2.7.3 Fit

The major fit retention strategy is the corporate culture. HR practices may provide

significant competitive advantage opportunities when they are used to create a

unique (difficult to imitate) organizational culture that institutionalizes organizational

competencies throughout the organization (Bowen & Ostroff, 2004). Organizational

culture is defined as the shared set of beliefs about how things work; values that

indicate what are worth doing, and norms about how people should behave (Trice &

15

Beyer, 1993). Culture may assist firms in heeding the threat of turnover because once

employees acclimate themselves within the firm it may be difficult to leave and find

a suitable fit within another firm (Coff, 1997). Chatman (1991) argues that fit

between employee and organizational values has a great impact on retention.

Generally it is more expensive to replace key contributors than weak performers,

which suggests that a cost-effective HRM strategy should strive to retain those who

drive the company forward. Completely avoiding employee replacement costs is

unavoidable but increasing the retention rate can delay them (Sheridan, 1992).

Sheridan found that organizations that emphasize interpersonal relationships were

more successful in minimizing employee turnover than those that emphasize work

task values.

2.8 Theoretical Review

Employee turnover is most studied phenomenon in the past whereby several theories

have been written and are available to explain why employees voluntarily decide to

leave the current job or organization. These include the Theory of Organizational

Equilibrium (March and Simon 1958), the Expectation Model (Porter and Steers

1973), and Theory X/Y (McGregor, 1999),

2.8.1 Organizational Equilibrium Theory

In the study of voluntary employee turnover the organizational equilibrium theory by

(March and Simon 1998) has great influence. March and Simon stated that,

“Turnover occurs when individuals perceive that their contributions to an

organization exceed the inducements they received from that organization” this

incentive effects on two things like intent to leave and employee’s ease of movement

it is more related to individual level factors. Theories linked with satisfaction and

alternatives have, “served as the origin for much of the literature on employee

turnover” (Hulin et al. 1995). According to this theory an employee is always faced

by two sided reactions, “pull” and “push” that impact on his turnover decision like

higher salary, better opportunity, organizational goodwill just to mention a few.

These things attack on employee as, “pull” to away from the organization. But on the

16

other hand some psychological forces always, “push” employee towards new

employment (Josefek & Kauffman 2003).

2.8.2 Expectation Theory

This theory as suggested by Porter and Steers (1999) states that, “the discrepancy

between what a person encounters on the job in the way of positive or negative

experiences and what he expected to encounter. An employee’s expectations may

include rewards, advancement and relations with colleagues and supervisors. Basic

theme of this theory is that when an employer fails to fulfill an employee’s

expectations this will definitely lead towards voluntary employee turnover.

2.8.2.1 Theory X/Y

McGregor in his book, The Human Side of Enterprise, made a distinction between

two types of managers: Theory X and Theory Y (McGregor, 1999). Managers

characterized as Theory X operate under the assumption that most people have an

inherent dislike for work, have little ambition, are not self-directed, value security

over all else, and, as a result, need to be coerced and supervised very closely if they

are to work toward the goals of the organization. (Jex, 2002) In contrast the Theory

Y manager operates under the assumption that work is a natural part of peoples’ lives

and most people seek greater meaning in it. Under the normal conditions, many

people will seek out responsibility and will creatively solve organizational problems

if they are allowed to do so. As a result, individuals are capable of some degree of

self-control and will work toward the goals of the organization to the extent that they

find doing so personally rewarding. (Jex, 2002)

For McGregor, Theory Y assumptions were the most appropriate and tended to

create positive self-fulfilling prophecies. That is, when people were treated well at

work, the likelihood was that they would respond positively and as expected.

(Schermerhorn, Hunt, & Osborn, 2002)

17

2.9 Conceptual Framework

This is the section that formulation and development of the structure of the

relationships of the variable is performed. The logical connection of the variables is

delineated; assumption and propositions used to develop the explanatory theoretical

framework are included.

The purpose of the conceptual framework is to analyze the variables which

contribute to the problem and hence show light on what variables do contribute in

employee turnover and performance in Tanzania public organizations.

Figure 2.1: The Conceptual Framework

Independent Variable

Intervening Variable

Dependent Variable

Source: Researcher’s construction (2013).

Employee

Performance

Career opportunity

Labor Turnover

Working

environment

Reward

18

2.9.1 Variable Descriptions

(i.) Labor turnover

Under this study labor turnover is a dependent variable, which was checked for a

relationship with performance as an independent variable.

(ii.) Career Opportunities, Working Environment And Rewards

In this study these variables stands as intervening variable because they stands

between our dependent variables which is labor turnover and independent which is

performance.

(iii.) Employees Performance

Under this study employees performance is an independent variable, it depends on

the dependent variable which is Labor turnover and other intervening variables

which are career opportunities, working environment and reward. These variables

influence the performance of the employees and organization.

2.9.2 Hypothesis

Hypothesis is the set of propositions put forward as an explanation for the occurrence

of some specific group of phenomena, either asserted merely as provisional

conjecture/guess to guide some investigation accepted as highly probable in the light

of established fact, Kothari (2004).

(i.) Hypothesis one

Ho: Labor turnover has no relationship with performance of the organization.

Ha: Labor turnover has the relationship with performance of the organization.

(ii.) Hypothesis two

Ho: career opportunities, working environment and reward does not stands between

labor turnover and performance.

Ha: career opportunities, working environment and reward stands between labor

turnover and performance.

19

(iii.) Hypothesis three

Ho: Employees performance does not depend on labor turnover, career opportunities,

work environment and reward.

Ha: Employees performance depends on labor turnover, career opportunities, work

environment and reward.

2.10 Relevance of the Study

Labor turnover does not just create costs, some level of labor turnover is important to

bring new ideas, skills and enthusiasm to the labor force. A natural level of labor

turnover can be a way in which business can slowly reduce its workforce without

having to resort to redundancies. (Jim Riley, 2012).

The chapter opened by defining the concepts of the study and thereafter reviewed the

theme for the objectives, employee intention to leave, causes of employee intention

to leave, and impact of labor turnover. The chapter also has covered the conceptual

framework that governs the formulation and development of the structure of the

relationships of the variable and establishes the variables which will govern this

proposed study. In order to get the variables contributing to establishing the link

between employee turnover and Performance in public organizations in Tanzanian, it

is essential to establish the independent variables, dependent variables and

intervening variables. Under this study performance is the dependent variable, which

is connected to a relationship with career opportunities, working environment and

rewards as independents variables while intervening variable being labor turnover.

20

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter presents the research methodology in terms of the strategies employed

in collecting data and information in relation to the study, procedures used, sampling

procedures as well as techniques used for data analysis.

3.2 Research Design

The essence of research design is to guide the researcher on the type of data to

collection, how to collect data and how to analyses them in order to answer the

research problem. Acker et al (2002) defined a research design as the detailed blue

print used to guide a research study towards achieving its intended objectives. The

choice of the research design to be used depends on the research questions. These are

usually based on categorization of “who, what, where, how and why” questions (Yin,

2003).

This study employs a case study research design which focuses on a single area and

allows variety of data collection method to be deployed. This type of study design

allows the researcher to intensively explore and analyze information over the life of a

single unit (Tripath 2002).

3.3 Data and Collection Methods

This study employs both secondary as well as primary data. Primary data gathered by

using semi structured questionnaires that was prepared to reflect the category of

employees under consideration. Other questionnaires were administered using the

interview method. Secondary data were gathered through documentary reviews

available to the researcher and also the uses of online scholarly articles were useful

to the researcher.

21

3.3.1 Interviews

Conducting interview represents one of the essential sources of gathering

information for a case study. The researcher uses a semi-structured interview

approach. Semi- structured interviews is a mix of more or less structured questions

where the interview is designed in such a way that the respondents were free to bring

up other issues that hey feel will be of interest to the subject. The intention was to

interview explore factual data, from the people interviewed, regarding employee

satisfaction and its benefits to the National Microfinance Bank.

3.3.2 Questionnaires

A questionnaire is a group of written questions used to gather information from

respondents and it is regarded as one of the most common tools for gathering data in

the social sciences and business. A questionnaire usually consists of a number of

measurement scales and elicits demographic information from respondents. A

questionnaire has its advantages and shortcomings. However, questionnaires are

easier to administer thereby making it possible to reach a large population. The

Questionnaires are also easy to analyze especially in quantitative studies

In this study, fifty (50) questionnaires were provided to seek respondents views

related to labor turnover which leads to organizational commitment. The questions

were mixed, close-ended and open-ended. The questions mainly focus on labor

turnover. However, the reasons as to why the researcher used this method were as

follows:

i. Flexibility-This means that, the researcher was able to repeat or refine the

question whenever the response indicates that the respondent misunderstood

the question. It also allowed the researcher to obtain personal information

easily

ii. Non-verbal behaviors- In this, the interviewer was present so as to observe

non-verbal behaviors due to the fact that she can collect supplementary

information about the respondent’s personal characteristics and environment

22

which helped in interpreting the results. Thus assisted the researcher to assess

the validity of respondent’s answers and hence accurate and relevant data

were obtained.

iii. Control over the environment- In this, the interviewer was able to

standardize the interview environment. Interviews were conducted in a

private and non noisy place and time convenient to the respondent. By having

a favorable environment and time, helped the respondent to give out correct

information to the interviewer which helped the researcher to obtain the

relevant information from the respondent.

3.3.3 Documentary Sources

In this study the researcher uses documentary sources as one of the method of data

collection. According to Merriam, (1998) there is no single source of information

that can provide a comprehensive and complete perspective on the study. It is

therefore important for this case study research to use multiple sources of data to get

as broad a view as possible about each specific issue under study. The secondary data

enable to get a deeper understanding of the subject’s history and development.

3.4 Population and Sample

3.4.1 Population

Population is a group which the researcher is interested in gathering the information

from, as well as drawing conclusion on (Crowl, 1993). In this study, the target

populations are employees of National Microfinance Banks in Dar es Salaam.

23

3.4.2 Research Sample

The sample size for this study include 5 directors, 15 managers, 20 supervisors, and

30 frontline employees at Headquarters, Ilala, Kinondoni, and Temeke NMB

regional offices, as well as 10 ex-employees who had resigned. Thus a total of 80

respondents were covered through interviews and questionnaires.

3.5 Data Analysis Methods (Plan)

In this study the researcher uses quantitative techniques in analyzing the data

available through primary and secondary data sources. Quantitative data analysis was

done using summary table and figures. On the other hand qualitative data were done

using matching of information, explanation building and comparison to establish

reasons on what had been observed at the case. However, all collected data were well

analyzed and processed, whereby, collected data were edited for accuracy, data were

also coded to reduce responses to a small number of classes which contain the

critical information for efficient analysis, and data were also classified according to

attributes and class-intervals and tallied. Thereafter, rates of response for each item

were calculated and computed into percentage. For non-numerical data, information

was summarized and then displayed by using tables.

3.6 Validity and Reliability

Validity is concerned with whether the instrument “measures what it is supposed to

measure” (Leedy & Ormrod, 2001: 31) and whether it will lead to valid conclusions

about Labor Turnover and Performance in Tanzanian Public Organizations. Since

quantitative and qualitative research was conducted, the following issues around

validity are evident.

3.6.1 External Validity

External validity refers to generalizability, i.e. the ability for the research to be

generalized across people, settings and times, (Leedy & Ormrod, 2001), Large

sample sizes were used in conjunction with a random sampling methodology which

is probability based, thus it is possible to generalize the results of the study.

24

3.6.2 Internal Validity

Internal validity refers to the extent to which the instrument allows inferences about

the causal relationships between data elements (Leedy & Ormrod, 2001). There are

various types of internal validity, namely: content validity, construct validity and

criterion-related validity (Leedy & Ormrod, 2001). Content and construct validity is

relevant and therefore discussed here. Content validity was addressed by ensuring

that there are adequate questions to completely cover all the relevant aspects

identified in the literature review. Questionnaire wording / understanding across

different cultural boundaries may weaken face validity. This was also addressed by

translating and conducting face-to-face interviews in English or Kiswahili language,

depending on the respondent’s choice, in an effort to reduce misinterpretations.

Construct validity was addressed by means of questionnaire piloting. This ensure that

constructs are clear, unambiguous and do not result in bias as a result of phrasing.

Each construct is developed to add value to the study, and is selected to ensure

convergence with the literature review. The task of rank ordering large numbers of

items can be unduly onerous for respondents, which has a negative impact on the

validity and reliability of the data (Stacey, 2006). This also addressed by using partial

rank ordering in the questionnaire in order to reduce respondent fatigue.

3.6.3 Reliability

Reliability is defined as the extent to which similar research conducted in future will

result in similar outcomes (Leedy & Ormrod, 2001). Equivalence: bias may be

introduced by contact between researcher and respondent. This will be reduced by

using a structured, closed questionnaire. By constructing the survey questionnaire

derived from the SERVQUAL model, as well as the literature review, it is possible to

enhance internal consistency through the use of rank order scales (Leedy & Ormrod

2001) rather than content analysis resulting from open questions. Errors of

equivalence and stability will be also reduced since responses will be selected from a

limited range of clearly defined service attributes.

25

A quantitative research methodology using a random sampling technique and

adequate sample sizes will reduce the potential for sampling error and ensure that the

outcomes have a greater degree of reliability. The study was only conducted in the

city of Dar es salaam.

Conclusively, all the variables that are covered qualitatively shows to have

significant positive impact on employee intention to leave and retention strategies

employed by the Fund. As well the samples were appropriate and sufficient to

indicate patterns and perceptions of employee intention to leave and retention

strategies employed by the Fund.

26

CHAPTER FOUR

STUDY FINDINGS AND DISCUSSION

4.1 Introduction

This chapter is concerned with data analysis and presentation. The researcher was

using both qualitative and quantitative approaches for this process whereby data was

analyzed and reported in terms of numerical numbers (quantitatively) and words

(qualitatively). Tables, charts and graphs were also used so as to ease the process and

make clear understanding to the research end users.

In order to design appropriate interventions for reducing labor turnover in Tanzania

Public organizations and to promote higher performance among employees, it is

necessary to understand the current situation within the institutions, in terms of staff

concerns, measures that have been instituted to address labor turnover problems, and

how successful they have been. This context will help identify specific, and

continuing, areas of concern as well as good practices which will help us come up

with suggestions for targeted interventions which are responsive, appropriate and

feasible.

4.2 Demographic Variables

In this study the demographic variables which the researcher used in the study

includes age of the respondent, gender, education and also employee’s

status/position. The researcher uses these variables to know if they can influence the

study.

4.2.1 Respondents (Age)

It is important to know age categories of the respondents because it helps to identify

which age group is more affected to the problem and also help us as a researcher to

27

come up with suggestion for targeted intervention which are feasible and also

appropriate.

This part presents the demographic results in age of the respondents. The following

age groups were studied; the age group between 18-25 yrs, 26-40 yrs and 40-55 yrs.

The demographic results as presented below in Table 4.1 indicate that, the age group

between 26-40 yrs has a highest percentage that is, it has a large number of

employees who leave the organization. In this study age explains the variability in

turnover and is linked to many other factors. Age alone contributes little to the

understanding of turnover behavior.

Table 4.1: Age Distribution of the Respondents

Age of the respondent No of respondent Percentage (%)

18-25 yrs 04 05

26-40 yrs 45 56

40-55 yrs 31 39

Total 80 100

Source: Study Findings, (2013)

4.2.2 Respondents (Gender)

This part presents the demographic results in gender of the respondents. The

demographic results as presented below in Table 4.2 indicate that female gender has

a highest percentage than male gender; it shows that the big numbers of the

employees who leave the organization are female. Work environment can be the

influence and force the female employees to feel insecure, shy and also inferior

working with male manager and also male supervisors.

Table 4.2: Gender Distribution of the Respondents

Gender No of respondent Percentage (%)

Female 55 69

Male 25 31

Total 80 100

Source: Study Findings, (2013)

28

4.2.3 Respondents (Education Level)

The education level under this study was presented under the following categories;

post graduate, degree, diploma, certificate and below collage level. With regards to

highest level of education reached as presented in Figure 4.3 it shows that of the

respondents who had degree level of education has highest percentage than other

categories. This is because the degree holders in the company are so many and the

competition is very high when it comes to promotion and available top position,

many fees like they are in a wrong position and also that the company favors others

for promotion and they feel left out.

Table 4.3: Education Distribution of the Respondents

Education No of respondent Percentage (%)

Post graduate 15 19

Degree 40 50

Diploma 20 25

Certificates 5 6

Below collage level 0 0

Total 80 100

Source: Study Findings, (2013)

4.2.4 Employee Status/ Position

With regards to the employee’s status and position of the respondents in the

organizations, 50% of the respondents showed to occupy managerial and supervisory

positions while 50% of the respondents occupied other positions in the organizations.

Table 4.4: Positions Held

Position No of Respondents Percentage %

Managers & Supervisors 40 50

Total 80 100

Source: Study Findings, (2013)

29

4.3 Factors Influencing the Rate of Employee Turnover in Public Sectors of

Tanzania

Employee’s turnover amongst public sectors organization is becoming a huge

problem which led to lost of money and energy. Employees choose to leave the

organization for many different reasons sometimes it is the attraction of a new job or

prospect of period outside the workforce that pulls them, also poor relationship with

a line manager. Labor turnover involves employees leaving their organization for

many reasons being internal or external reasons.

However, general reasons forwarded as to why labor turnover prevails in the

National Microfinance Bank were; too much work, training opportunities are not

competitively given out, they have a poor pay, have poor working conditions,

working with risky departments such as inspectors, lack of clear promotion and

training policies, mistreatment by the Supervisors and the desire for upward growth

or promotion.

(i.) Salary

The employees of NMB contribute to one of the reasons for employees’ turnover is

low salary, that the organization give them low salary which is not appropriate to the

work their doing. In figure 4.1 shows that 50% of the respondents agree that salary

influence the rate of employee turnover, 30 percent says maybe and other 20 percents

didn’t agree.

30

Table 4.5: Salary as the Influence of Employee Turnover

Responses Percentage %

Agree 50

Disagree 20

Maybe 30

Total 100

Source: Study Findings, (2013)

Figure 4.1: Salary

Agree

Maybe

Disaagree

Slice 4

Source: Study Findings, (2013)

(ii.) Supervisors Negative Behavior

Employees of NMB agrees that supervisors negative behavior contribute to the

employee turnover, 40% of the employee agrees completely that supervisors negative

behavior is a factor for labor turnover, 27% agree to some extent, while 30%

disagree to some extent and only 3% disagree completely.

31

Table 4.6: Supervisors Negative Behavior as the Influence of Labor

Turnover

Responses Percentage

Agree to some extent 27

Completely agree 40

Completely disagree 3

Disagree to some extent 30

Total 100

Source: Study Findings, (2013)

Figure 4.2: Supervisors Negative Behavior

agree to someextent

completely agree

completelydisagree

disagree to someextent

Source: Study Findings, (2013)

(iii.) Bad Working Condition

This factor also contribute to the rate of employees turnover, in the study the

employee of NMB work under bad condition, the employees feel insecure with their

jobs and want the organization to commit to their employees.

32

Table 4.7: Bad Working Condition as the Influence of Labor Turnover

Responses Percentage

satisfied to some extent 20

Completely satisfied 19

Completely dissatisfied 05

Dissatisfied to some extent 56

Total 100

Source: Study Findings, (2013)

Figure 4.3: Bad Working Conditions

satisfied to someextent

completely tosome extent

completelydissatisfied

completelydissatisfied

Source: Study Findings, (2013)

(iv.) Career Growth

Career development in NMB is somehow low; employees’ get inadequate training

and also only few of them have been given the opportunity to develop their career by

33

receiving training and development and not all. The table below shows how the

employees respond to career growth; only 45% were satisfied on how organization

handles their employee’s career and development.

Table 4.8: Career Growth as the Influence of Employee Turnover

Responses Percentage %

They are satisfied 45

The organization take career development very seriously 30

Career development aligned to the company’s goal 25

Total 100

Source: Study Findings, (2013)

Figure 4.4: Career Growth

satisfied to someextent

completely tosome extent

completelydissatisfied

completelydissatisfied

Source: Study Findings, (2013)

34

4.3.1 Most Important Factor in Staying with NMB

If the employee was offered another job the forwarded major factors that will

contribute to employee’s decision to leave are illustrated in Figure 4.6 as career

development opportunities with 33.3%, level of challenge or responsibility with

31.7% and work/life balance with 19.0%. Also, respondents had viewed other factors

that were important to them in determining whether they stay or leave their current

job. They selected communication at the organization 3.2% and compensation and

benefit 9.5% and recognition by supervisor and team 3.2%.

35

Figure 4.5: Most Important Factor in Staying with NMB

31.70

3.20

33.30

19.00

9.50

3.20

-

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Level of challenge and

responsibility

Communication Career development

opportunities

Work/life balance Compensation and

Benefits

Recognition beyond

supervisor and team

Source: Study Findings, (2013)

4.3.2 Employee Relation

With regards to employee relation, 36% showed that they are not involved in

decision making of major changes in the organization, 58.9% of the respondents

were not happy with the supervisors / subordinates feedback mechanism practiced by

the organization as per few observed responses below.

“People leave because of their bosses, not the company because to me my

supervisor will not appreciate whatever thing I do even if it is beneficial to

the Fund”

36

As Smith (2004) pointed out that when employees are involved in matters related to

the work they are doing (e.g. decision making) they feel the sense of belongingness.

A good manager should care about the level of commitment of his subordinates. The

fact that 58.9% of the employees are not happy with the supervisor/ subordinate

feedback mechanism demoralizes employees and can impair performance or

accelerate employee’s intention to leave.

The major issue covered here is that of employees' trust in the organization and in

organizational leadership. Trust in management tends to get weaker or even lost

when psychological contract is violated. Employees feel a sense of betrayal and

anger if they feel their organization has failed to keep its promises. Thus, the social

exchange between employer and employee is no longer based on a solid foundation

of trust, which has been shown to have a number of benefits for organizations,

including positive effects on attitudes, perceptions, behaviors, and performance

outcomes. Social structure of the organization gets impacted by the negative

behavior of its employees. Empirical evidence from the literature suggests that when

employees perceive an imbalance in the exchange relationship with the employer,

wherein the employee feels that he/she is giving more than he/she is receiving from

the organization, the employee will reduce his organizational citizenship behaviors

(Organ 1988, 1990, Organ et al. 2006).

Respondents were asked if they were satisfied with the methods of conflict resolution

used by the organization; however regarding methods of conflict resolution, all

respondents think that the collaboration between management and the workers union

as the employees’ bargaining unit provides equal rights to either party in conflict

resolution

4.3.3 Changes when Appointed as CEO

At last when the respondents were asked to consider if he/she was appointed to

become Chief Executive of the organization, what changes would he/she consider to

make to improve management, out of 80 respondents, 30 respondents said that they

would develop training and development programs while 25 respondents said that

37

they would develop the performance appraisal and 15 said that they would

communicate all organizational information. Only 10 percent of the respondents said

that they would meet with the staff regularly.

Table 4.9: Changes When Appointed As CEO

Change No of

respondents

Percentage

%

Work with HRM department to develop and improve recruitment

process

0 0.0

Develop training and development programs 30 37.5

Develop performance appraisal 25 31.25

Meet with the staff regularly 10 12.5

Communicate all organizational information 15 18.75

Demonstrate a willingness to listen to staff concerns 0 0.0

Develop a committee to work to improve the relationship between staff 0 0.0

Total 80 100.0

Source: Study Findings, (2013)

4.4 Findings on How Labor Turnover Affects the Performance of NMB

It is important for employers to have an awareness of the rates of labor turnover in

their organization together with an understanding of how these affect the

organization’s performance and ability to achieve its strategic goals.

The results identified in study are presented by the data gathered through interviews

conducted to managers and supervisors. The aim of conducting interviews to

managers and supervisors was to find out how the performance issues are perceived

by the employees of NMB in conjunction with actual retention strategies employed

by the organization to encourage new and current employees to stay in the

organization, managers and supervisors are the immediate people who work closely

with employees. It is why the researcher conducted interviews expecting to get their

views regarding perceived inter-relationship between the organization and its

employees in the day to day operations of the organization.

38

The following are the impact of labor turnover on performance of NMB.

(i.) Productivity

Labor turnover interrupt the production of the company in sales and services to its

customers and that affect also the morale of the remaining workforce.

(ii.) Cost

The cost incurred in the replacement process like recruiting, hiring, training,

advertising new post and socializing new employee including the extra efforts by

supervisors and co workers to integrate them.

(iii.) Performance

Labor turnover also affects the performance of employees and organization as a

result of drop in morale of the remaining workforce.

(iv.) Poor recruitment and selection decision.

When new employee leaves after a short period in the job, poor recruitment and

selection decision are both on the part on the employer and employees are usually the

cause, along with poorly designed or nonexistent induction program.

4.4.1 Findings from Primary and Secondary Data

Findings as per the primary data gathered through interviews conducted to managers

and supervisors and the findings identified from the secondary data which were as

per review of different policies, annual reports maintained by the organization.

4.4.2 Findings from Primary Data

The aim of conducting interviews to managers and supervisors was to find out how

the performance issues are perceived by the employees of NMB in conjunction with

actual retention strategies employed by the organization to encourage new and

current employees to stay in the organization, managers and supervisors are the

immediate people who work closely with employees. It is why the researcher

conducted interviews expecting to get their views regarding perceived inter-

39

relationship between the organization and its employees in the day to day operations

of the organization. Smith (2004) insists that a performance of an organization does

not only depend on a good environment, payment of a good salary and SMART

objectives but the managerial status in a great deal However, knowing workers

satisfaction with their employer is important in explaining if the employees intention

to remain or to go out.

The observed responses from managers and supervisors in this study includes how

much care and concern employer show toward their employees, not only in their

career development, but also in helping them balance their work and family lives.

Fair workplace policies, day-to-day satisfaction and reinforcement from managers,

along with compensation also play a big role. Managers’ observation goes contrary

to real situation as far as staff at non managerial are concerned. Smith (2004) pointed

out that; it’s no surprise that money remains an important issue for working people

and a major motivating factor, although not the most important, it influences a

person’s decision to stay or leave the job. However, only one of the respondents

suggested that despite of all efforts employed by the Fund to retain its employees, it

still ignores the social aspect of an employee such as offering group activities, clubs,

and recognition of employees, social norms and wellness or support programs

Regarding Labor relations, the relationship between employees and management is

good. Management always honor the voluntary agreement entered with the workers

union. The Workers/Management Negotiation Council works smoothly and through

Master Workers Council they are fully involved in the planning and evaluation of the

organization’s targets.

4.4.3 Findings from Secondary Data

In order to establish on how the organization retain their employees, the researcher

has to go through various secondary documents detailing retention strategies. The

only available documents were the financial regulations, voluntary Agreement, and

staff regulations. From the documents the researcher was interest to understand the

relationship between Management and employees, the training and medical facilities,

40

financial assistance and employees benefit plans and lastly the any other retention

strategies.

(i.) Training and Medical Facilities

The organization sponsors staff to long and short term training. The organization also

conducts in house tailored seminars and on the job training. The organization

provides education loans to the members of staff for long term courses. With regards

to medical facilities, the organization provide health benefits through social security

funds like NSSF and PF to all staff, spouses and their children who do not exceed

eighteen years of age or twenty one years if he/she is under full time education.

(ii.) Financial Assistance and Employees Benefit Plans

Loans, salary advances and other financial assistance are available to all confirmed

staff depending on the assessment by management in relation to governing policies.

Furthermore management provide short terms loans as and when applied for to NMB

employees SACCOs for promoting welfare of its members who are NMB

employees. The Fund pays contributions to Parastatal Pension Fund (PPF) or

National Social Security Fund (NSSF) on mandatory basis which qualifies to be

defined benefits plans. Some of the employees are members of the Parastatal Pension

Fund (PPF) and others are members of the National Social Security Fund (NSSF).

For NSSF, the Fund and employees each contribute 10% of employees’ gross salary

to the scheme, on a monthly basis, whereas for PPF, the Fund contributes 15% of

employees’ basic salary to the scheme and the employee contributes 5%. The

employer’s contribution is charged to the income statement when payable.

(iii.) Other Retention Strategies

The retention strategy also consists of non-financial rewards such as uniforms,

housing allowance to non managerial employees. For managerial employees, the

Fund offer benefits such as company car (if not yet loaned personal car), transport

and housing allowances, fuel, company cell phones as well as holiday bonuses. Apart

from this retention packages, the organization is in a process to put in place a

strategic recruitment plan by sponsoring students in tertiary institutions with the

41

undertaking that beneficiaries of such sponsorship would be bonded to work for the

organization after completing their studies for the number of years such sponsorship

lasted. For instance, a student who receives sponsorship for five years would be

required to work for the organization for at least five years before such employee

could seek alternative job elsewhere. As part of the retention practices in the

organization, there is the practice of promotion within the organization which fosters

good succession plan and encourages employees to build a life-long career around

the organization. This will also foster commitment and loyalty amongst the

employees.

4.5 Findings from Ex-staff Members

The following are responses from the interviews conducted with ex-staff members:

The rationale for interviewing ex-staff members was to identify contributing factors

that led to staff resigning from the institution. According to the available records

from the NMB Human Resources Department since year January 2002 to June 2012

a total of forty one staff members had left the Fund It was difficult to locate all

members, as most of them relocated to offices outside the city of Dar es salaam

where the study was based and or changed their mobile numbers. Major results from

this group are presented in the subsequent sub-sections.

4.5.1 Reasons for Leaving the Organization

They all noted that the job content, financial rewards and lack of career opportunities

motivated them to leave. Main emphasis was on job content, which they explained

that: “It was not challenging”. The notch increase in salaries at the same salary scale,

which is the financial reward that they received after obtaining their qualification,

was not sufficient. Three (3) members stated that there were no career opportunities

for them within the institution. Seven (7) ex- NMB staff members said that they were

not given any opportunities to apply the skills and knowledge that they had gained on

their jobs. One member obtained a qualification, which was not in line with her

work; hence, she was not eligible for a notch increase. This was de-motivating.

42

All ex-NMB staff seems to be happy with their new employers, as to what they like

most about their new employer which they did not get from their old employer, the

highly appreciated statement were the; “I get enough good information about our

organization’s business results and performance”, followed closely by the statement

“I am inspired to do my best work every day” and another statement that “I see

strong evidence of effective leadership from the organization’s senior management’.

4.5.2 Signing a Staff Development Bond

One of the interviewees explained that during 2005, NMB introduced a staff

development agreement, which stated that staff members were required to work for

the institution in a full-time capacity for a minimum period of one year for each

academic year completed. This was used as a strategy to retain staff members that are

sent either on scholarships or granted study leaves to attend developmental

programmers.

During the interview members raised concerns about signing the contract as one of

the discouraging factors. All interviewees agreed that signing of the contract will not

motivate them to stay with the institution. Two of the members had worked for the

full period of the agreement; however, others breached the agreement and required to

pay back the money.

One ex-employee noted that other companies were willing to buy them out. Some

ex-members of staff were of the opinion that they would rather “pay out of their

pockets”. All interviewees agreed that NMB should introduce better mechanisms to

retain qualified staff if they intended to become a leading bank in Africa as per its

corporate vision. All interviewed respondents were happy with their new jobs.

As part of their closing statements, ex-members noted that there should be succession

planning, career paths and a staff development plan for staff members that are sent

on specified training programmes. Six (6) members had worked for NMB after

completing their qualifications and they were not given opportunities to apply their

skills and knowledge.

43

They all noted that signing a contract does not guarantee that staff will remain with

the institution. Overall impressions from staff members are that they enjoyed

working NMB and all ex-members stated that they would recommend someone to

work for the institution. They stated that the institution does not give sufficient

attention to staff development.

4.6 Discussion of the Study Findings

The study aimed at finding a missing link between labor turnover and performance of

the organization in Tanzania Public organizations where the case study was the

National Microfinance Bank. The research questions asked were:-

(i.) What is the rate of employee turnover in the public sector of Tanzania?

(ii.) Which factors influence employee turnover in the public sector?

(iii.) What are the impacts of labor turnover to the performance of public sector of

Tanzania?

The results of this study were found to be very somewhat compatible with the other

findings as discussed in the literature review. With research question, “factors

influence employee turnover in the public organization”, the findings of this study

show three main aspects that are quite significant in the employees’ frequency of

turnover.

The study shows that relationships between the employees and their superior, their

income in comparison with their workload, career progression and their level of

education play a major role in determining whether they will keep on staying with

the organization or move on to a better paying, more satisfying work environment or

seek much better opportunities in other organizations.

In a study by McGuire, Houser, Jarrar, Moy and Wall (2003), discovered that while

money and incentives seem to be an important aspect in retaining employees in their

workplace, they also found that job satisfaction does not necessarily come from these

two aspects. Instead, they found that respect, recognition, supervisor support, and

organization culture seems to be the reason employees stay longer in one particular

44

organization. Some studies specifically addressed recognition by peers and

supervisors as key indicators of how employees felt about their jobs (Chinnis et al)

(2001), Cronin & Becherer (1999), however, Luthans (2000) found that “employees

place high value on personalized, specific, and instant social rewards such as

attention, recognition, and sincere appreciation. Kangas et al (1999) identified a

supportive environment as the most important indicator of job satisfaction.

With regards to specific research question number two, impacts of labor turnover to

the performance of public sector of Tanzania the above findings revealed that labor

turnover made an impact because there are no clear retention strategies in place to

retain staff members.

Findings from the interviews with top management and ex-staff member’s

respondents that there are no clear retention strategies in the organization, however,

staff members who obtain a vertical higher qualification are eligible for a notch

increase in their salaries. This has been clearly stated in the HR Code under the

section that deals with staff training and development. However, ex-staff members

noted that the notch increase offered was not sufficient this means it cannot hold

water for one’s intention to leave.

Literature that was reviewed states that money alone cannot be an effective motivator

to retain employees; it can be used to retain specific employees for specific purpose

(Dibble, 1999:101). Armstrong, (2006:226), comments that; “employees may expect

to be treated fairly as human beings, to be provided with work that uses their

abilities, to be rewarded equitably in accordance with their contributions, to be able

to display their competence, to have opportunities for further growth, to know what

is expected of them and to be given feedback on how they are doing”. This was

observed to be not practiced in the organization understudy; employees were not

satisfied with the feedback mechanisms practiced in the organization.

45

One ex-staff member explained that he had to apply for a promotion, but resigned

because the process was too long. More than that, ex-staff members noted that

signing an agreement would not make them stay with institution.

Despite of all efforts the organization use to retain its employees still those efforts

are not good enough, the organization still ignores the social aspect of an employee

such as offering group activities, clubs, recognition of employees’ social norms and

wellness or support programs.

The use of goal setting technique as a retention strategy is becoming more popular

among private sector organizations. Davidson (2001: 5) asserts that one of the

strategies adopted by leading organizations in the area of top employee retention

involve instituting goal setting, performance measurement, and skill development

programmes to ensure that employees always know where they stand.

This practice enables individual employees to assess their contribution to the

attainment of the organizational goal. High performing employees can use this

technique as a basis to negotiate for higher salaries or accelerated promotion while

employers also can increase overall productivity using the technique. However the

literature is skeptic on this approach to public sector as these organizations may not

be motivated by this technique due to the bureaucratic nature of the sector which is

characterized by fixed salary incremental rate and promotion based on seniority.

In relation to all the previous studies, the findings of this study seems to correlate

well with previous study that emphasizes supervisor support, career progression,

recognition and sincere appreciation which leads to job satisfaction. This particular

study found that the relationship between the supervisor and the staff seems to be an

important aspect in decreasing the rate of turnover, thus the findings seem to agree

that while monetary benefits seems to be an important aspect in job satisfaction, it

certainly is not the only aspect that an organization should look into in decreasing

turnover. In another study by Mullins (1995), it was identified that remuneration and

performance management is an important aspect of developing Human Resource

46

practices towards retaining employees in the hotel industry. Thus, the findings of this

study found that positions they hold which bring in better income can actually be

substantiated by the previous study by Mullins (1995).

47

CHAPTER FIVE

SUMMARY, CONCLUSION AND POLICY IMPLEMENTATION

5.1 Summary of Findings

The study findings shows that labor turnover is most prominent to the lower level

staff and the most cited reasons for this were too much work, training opportunities

were not competitively given out, poor pay, poor working conditions, lack of clear

promotion and training policies, mistreatment by the senior management and lack of

upward growth or promotion.

The findings demonstrate that employees want to be heard. They want to know that

management listens to what they have to say and see that their ideas are recognized.

Moreover, they want to see their ideas come to fruition.

To improve the above situation, the respondents proposed various strategies that

should be employed by the organization so as to encourage the employees to stay.

The strategies includes, to develop its pay and incentive policy, the organization

should provide learning and development opportunities, to provide flexible working

arrangements, to develop the performance appraisal and lastly to promote good

communication both forward and backward.

5.2 Conclusion

Based on the results of this study, it appears that covered sample of respondents was

not highly satisfied, and the anticipated turnover rate may continue to be higher

compared to the current average turnover rate of 6.3%. Given the strong behavioral

intention (anticipated turnover) it is imperative that management to be more creative

about engaging and retaining their workforce. Measures such as the ones used in this

study can be used to assess the needs of employees on specific units and then target a

retention intervention unique to that unit.

48

The finding of this study suggests that organizational level interventions designed by

the management can impact staff perceptions of job stress, work satisfaction, and

turnover. In the wake of the consistent changes in the work environment, cost-cutting

initiatives, and reduction of workforce, it is recommended that the management

strive to address the personal esteem and professional worth of the staff.

Organizational strategies that address and reduce the staff frustration are needed.

These strategies might include examining ways to reward and recognize employees

for their contribution to the organization’s bottom line, emphasizing the importance

of individual-job-unit match during the interview and orientation process, and

supporting virtual and/or telecommuting to work.

5.3 Recommendations

The realization of the vision “to become a leading bank in Africa” is wholly

dependent on the knowledge, skills and abilities of staff members that are employed.

Based on the result of the study, and from the secondary research materials that I

consulted there are implications that Employee Retention is connected and related to

Employee Recruitment and that the HRM department is highly responsible for

employee retention.

5.3.1 Pay

In order for the reward system to be more effective, the current reward system must

be modified. This starts with the modification of the performance appraisal and then

followed by the modification of the pay-for-performance scheme. The goal is to

integrate performance to the reward system. There is a need to align the performance

appraisal process with the pay-for-performance scheme. According to Sims (2002a)

pay-for-performance or merit pay is a major motivational device for employees at all

levels – managerial, professional, and hourly. In order for it to fully achieve its

capacity to motivate employees, the pay-for-performance scheme must be aligned

with the performance appraisal.

In addition to the modification of the pay-for-performance scheme, the organization

can also integrate a skill-based pay scheme in the reward system. Skill-based pay

49

according to Knouse (2002) compensates employees for the depth and breadth of

skills they obtain that are valued by the organization. The emphasis is on skill

mastery rather than on job performance, which is the focus of more traditional pay

plans, such as merit pay. Skill-based pay programs tend to be found in high

employee involvement organizations, where employees work in teams and actively

participate in managing organizational processes. Skill-based pay is an innovative

reward system that promotes workforce flexibility by rewarding individuals based on

the number, type, and depth of skills mastered (Recardo and Pricone 1996).

The aim of the skill-based pay is to encourage and reward employees who take the

initiative to update their knowledge, skills and abilities. As employees acquire higher

level of expertise, the origination must reward them in order to promote an

environment of ‘continuous learning’. The skill-based pay, instead of being used as

an alternative, will be implemented side by side with pay-for-performance pay. The

goal of this strategy is to encourage better performance and continuous learning in

the organization.

(i.) Bonuses for Obtaining New Skills

In order to encourage the employees to acquire new knowledge, skills and to

develop their skills, the management must give bonuses to those that will

enrich their skills.

(ii.) Spot Bonuses to Reward Valuable Contributions

A spot award is a financial award given to an employee literally on the spot

as soon as the laudable performance is observed. Spot awards have a sound

basis in motivation. For example, to the extent that the rewards are both

contingent on good performance and awarded immediately, they are certainly

consistent with the expectancy approach, and provide the recognition most

people desire (Sims 2002b).

(iii.) Awards and Recognitions

50

The aim of awards and recognitions is to make the employees feel valued and

appreciated. Awards and recognitions are considered as a part of the reward

system. Awards and recognitions are also tools in motivating employees.

Immediate recognition can reinforce the effective behavior of an employee

and can provide some immediate outcomes to reward the employees’ inputs

and efforts. Recognition also underscores the performance-reward-

expectancy link, and it helps appeal to and satisfy the need people have to

achieve and be recognized for their achievement.

5.3.2 Development and Career Opportunities

The organization must commit itself to career development. It must make sure that

career development is focused on the needs related to personal activities and

interests, that the process is flexible, that the evaluation procedures are properly

developed and that the top management supports that process. The organization is

responsible for initiating and ensuring that career development takes place. The

organization’s responsibilities are to develop and communicate career options within

the organization to the employee.

The organization is responsible in advising the employee about the possible career

paths that he or she can take. Another responsibility is supplying information about

its mission, policies, and plans and provide support for employee self-assessment,

training and development. According to Sims (2002a), significant career growth can

take place when individual scheme unite with organizational opportunity. The

organization needs to identify the needs and problems of the employees. The

individual career needs of the employees must be aligned with the organizational

needs. That way, both needs will be satisfied.

5.3.3 Work Environment

The better employees believe they are treated, the more likely they are to want stay

with the organization. The organization must create policies that reflect its values.

These policies must be written down in employee handbooks that will be given to the

employees. The managers and supervisors play important roles in making sure that

51

the work environment is conducive for employees. They are expected to provide

feedback on how the employees are doing; guide employees on dealing with difficult

issues and people; promote flexibility in work; recognize employee contributions;

review salaries; communicate expectations; promote training and development; and

deal with employment issues.

5.3.4 Performance Management

Performance appraisal is the process by which an employee’s contribution to the

organization during a specified period of time is assessed (Sims, 2002). Performance

appraisal is integral to the successful operation of most organizations. During this

process, employees are evaluated formally and informally to determine the nature of

their contributions to the organization. Appraisal occurs during time periods and in

meetings that are scheduled to produce reasoned consideration of contributions, but it

also occurs informally as employee contributions are observed, or when an

evaluation is brought to the attention of others (Dickinson, 1993).

For the organization to be able to execute its mission and objectives successfully, it is

further proposed to adopt either of the following defined performance management

tools

(i.) Management by Objectives

Management by Objectives involves a joint determination by subordinate and

superior of common goals, major areas of responsibility, and results expected; these

measures are used as guides for operating the unit and assessing contributions of

members (Miner, 2002). MBO is the best known of result-oriented methods of

performance planning and review and, in some form; probably the most frequently

used approach to performance planning and review. MBO is a target-setting or

results-oriented approach to performance management. It recognizes that employees

perform better when they have targets, and even better, when they have participated

in setting those targets.

(ii.) Critical Incidents

52

Critical incidents focus the evaluator’s attention on those behaviors that are key in

making the difference between executing a job effectively and executing it

ineffectively. That is, the appraiser writes down anecdotes that describe what the

employee did that was especially effective or ineffective. The key here is that only

specific behaviors, not vaguely defined personality traits are cited. To successfully

conduct a critical-incident appraisal, a rating supervisor must keep a written record of

incidents that show positive and negative ways an employee has acted. The record

should include dates, people involved, actions taken and any other relevant details.

At the time of the appraisal, a manager reviews the record to reach an overall

evaluation of an employee’s behavior. During the appraisal interview, the manager

should give an employee a chance to offer her or his views of each incident record.

The incident method can be used with other methods to document the reasons why

an employee was rated in a certain way (Sims, 2002b).

5.4 Limitations and Future Research

Based on limitations from the current study, the research proposed future research

that would benefit the NMB. A study should be conducted to quantify the cost of

recruitment and the cost of labor turnover over the last five years. Furthermore, an

investigation should be conducted to assess the roles that supervisors and senior

management plays in employee retention.

5.5 Policy implication

From the literature and findings it is apparent that the issue of turnover is being

attended as consequence rather than before the risk has happened. Given the cost

implications and destructive tendencies of turnover to organizations, it is important

that more research be carried out in the area of intention to quit. When managers

perfectly understand why employees want to leave, it is then that a workable

retention strategy can be formulated to arrest such intention. Stated differently, in

order to respond to the problem of turnover, it is necessary to understand its causal

process. As observed in the study findings, NMB has adopted several strategies for

controlling labor turnover, however labor turnover still prevails in the organization

the weakness behind this is that the retention policy only focused on ways to retain

53

employees but ignored the aspect of knowing if such strategies lead to employee job

satisfaction.

The organization should develop a retention policy that will be able to guide on

strategies to use in order to retain the key staff of the organization. Thus a clause on

exit interviews to employees who are leaving the organization for any reason should

be introduced.

There is also the need for organizations to properly align retention practices with the

needs and values of employees. For example, while the management of the

organization under study focused its retention strategy around non-monetary values,

employees preferred pay rise that will commensurate with inflationary trend in the

country.

The Organization should make sure that there are more internal promotions so that

when employees go for further studies they are promoted in relation to their current

skills when they report back. The study revealed that the Organization had retention

strategies focusing on career development through sponsoring employees for further

studies, however, the Organization should introduce a succession planning system in

its succession planning policy which will systematically identify, assess and develop

organization leadership to enhance performance.

Provide a budget for conducting attitude surveys. Such surveys will help to show the

degree to which employees are satisfied with the Human Resource policies and

practices. Organizational strategies that address and also reduce the staff frustration

are needed.

These strategies might include examining ways to reward and recognize employees

for their contribution to the social security bottom line, emphasizing the importance

of individual-job-unit match during the interview and orientation process, providing

work-style benefit packages, and supporting virtual and/or telecommuting to work.

54

Management can also consider targeting interventions that are directed toward

individual unit needs and then measuring the effectiveness of those changes in

relation to behavior and organizational performance.

Organizations especially in the service industry should take the initiative in

addressing problems, which are within their ability to solve. These include

decentralizing authority, promoting communication among different groups,

fostering transparency in decision-making and rewarding excellence. It is important

that academic staff retention not be seen as just requiring an administrative process

of dealing with structures and processes.

An effective process will require confronting the politics of both within the

organization and outside of them, and undertaking bold initiatives which ensure that

these institutions fulfill their mandates and meet their obligations to society. As the

Laurier Institution (2000, p. 10) stipulates:

The most intangible cost, and one that is most difficult to estimate, however,

is that of losing future leaders. If organizations fail to recruit the best

employee minds that loss of talent will not only negatively affect employee

work satisfaction, but will also translate into a cost borne by all individuals

in current and future generations

The Organization should introduce and improve the professional development and

career paths; this can be achieved by having a training programme that includes a

sufficient budget for employees to improve their skills as well as the knowledge

relevant for their jobs. The training policy should have a clause which emphasize on

training which is relevant to employee’s job requirement.

55

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APPENDICES

Appendix 1: Question Guide in Conversational Interview to the Employees

Who Have Left the Fund

1. How many years have you worked for your current employer?

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2. What made you consider changing employer?

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3. Which factors were decisive for your final decision to leave?

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4. What were you content /not so content with at your current workplace?

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5. Which opportunities do you see for yourself at your new workplace?

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6. How do you look upon your career?

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Appendix 2: Questionnaire to be administered to the Employees of the

Organization regarding their Intention to Leave or Remain

Question Question Type of answer

Q 1 Are you a 1 = Man

2 = Woman

Q 2 Which year were you born? 19___

Q 3 What is your position? 1 = Top management

2 = Middle management

3 = First line management

4 = No management position

Q 4 Are you satisfied with what you earn in

total (salary + bonus + benefits) from

your employer?

1 = Completely dissatisfied

2 = Dissatisfied to some extent

3 = Not dissatisfied, nor satisfied

4 = Satisfied to some extent

5 = Completely satisfied

Q 5 A bonus system should be based on 1 = The whole company’s performance

2 = My whole teams’ performance

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3 = My own performance

4 = Other, please specify

Q 6 Are you satisfied with working in this

kind of company?

1 = Completely dissatisfied

2 = Dissatisfied to some extent

3 = Not dissatisfied, nor satisfied

4 = Satisfied to some extent

5 = Completely satisfied

Q 7 1) Are you satisfied with your career

development in this company up to now?

2) Are you satisfied with your potential

career development in this company in

the future?

1 = Completely dissatisfied

2 = Dissatisfied to some extent

3 = Not dissatisfied, nor satisfied

4 = Satisfied to some extent

5 = Completely satisfied

Q 8 1) I feel appreciated by my closest

manager

2) I feel appreciated by the company

management (i.e. on the level of my

managers’ manager and higher up in the

organization)

1 = Disagree completely

2 = Disagree to some extent

3 = Do not disagree or agree

4 = Agree to some extent

5 = Agree completely

Q 9 Do you intend to stay with this

employer?

1 = No, I am about to quit

2 = Yes, but for less than one year

3 = Yes, but for less than three years

4 = Yes, but for less than five years

5 = Yes, for five years or more

Q 10 What would make you seriously

interested in Leaving NMB in order to

start working for a competitor?

Please rank the alternatives according to

how they would influence you in such a

situation:

1 = the most interesting, to 9 = the least

interesting

More challenging tasks

Better pay

Better benefits

Better work environment

Better leadership

Better career opportunities

Better training opportunities

Better working conditions

More healthy work-family balance

The following factors might influence your willingness to remain in this company.

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Please rank them according to how important you think they are from this point of view.

Pay

1= most important, 5 = least important

Q 11 That I have a regular raise in pay

That the criteria for having a pay raise

are Fair

That the procedures for deciding on a

pay raise are fair

That the procedures for deciding on a

pay raise are known by the employees

That I can have the pay raise I deserve,

even if this means that I will have a

higher/much higher raise than my

colleagues

Bonus and Benefits

1= most important, 4 = least important

Q 12 That my company uses a bonus system

That I, complementary to my salary, will

receive various benefits

That I have the possibility to chose from

a range of benefits, i.e. that I can

compose my own benefit package

That I can have the opportunity to

become a share holder in the company

Training and Skill Development

1= most important, 5 = least important

Q 13 That I have access to relevant training

programmes and skill development

activities

That the training and development

offered by my company is relevant for

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my daily work

That the training and development

offered by my company is aligned with

my expectations and my personal

development needs related to work

That my employer organizes continuous

follow-up, feedback-sessions, knowledge

sharing activities after the training

That I feel satisfied with the way

completed training activities are being

rewarded (raise in salary, promotion etc.)

Career Development

1= most important, 5 = least important

Q 14 That I am satisfied with my current

career development in this company

That I am satisfied with my possible

future career development in this

company

That my personal career development is

aligned with the company’s goals

That I, as part of my personal career

development can expect to be promoted

with regular intervals

That my company takes its’ employees

career development seriously

Leadership

1= most important, 5 = least important

Q 15 That my closest manager puts focus on

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the task, pushing the employees to meet

the set goals on time

That my closest manager puts focus on

relations, striving to support the

employees in their efforts to reach the

goals

That my closest manager puts focus on

development, encouraging the employees

to see new opportunities and also to act

upon them

That my closest manager puts focus on

creating a good working atmosphere

That I have a good working relation with

my closest manager

Work and Family Demands

1= most important, 8 = least important

Q 16 That there is a company policy for

handling situations arising from issues in

balancing work and family

That my company, as a part of it’s

benefits, offers financial resources for

child and elder care, on-site child care

and/or family leave

That my company offers access to sports

facilities (such as gyms, swimming etc)

That my company arranges social events

for the employees

That I, if necessary, will have the support

of my colleagues to balance family and

work demands

That I, if necessary, will have the support

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of my closest manager to balance family

and work demands

That my company offers a flexible work

Schedule

That my company leaves it up to me to

decide on matters regarding my own

work

Appendix 3: Management and Supervisors’ Interview Guide

1. In your opinion, what are the main reasons for people leaving?

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2. What HR policies do you have in place to control turnover – what was mean

to work but hasn’t?

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3. Do you collect exit interview data? What do you do with the data?

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4. Do you offer any bonuses linked to company performance?

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5. Do you provide any job security guarantees?

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6. Does your firm have a particular set of values that it strongly promotes?

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7. Do you provide employees with detailed information on organization

performance? What form?

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