Term Paper

On
Factors affecting employee turnover and sound retention
strategies in business organization: a conceptual view

Course Code: MBA 601

Course Title: Strategic Management

Prepared By
A. M. Fakhruddin...15202524

Md.Fateh Zaman ...15202525

Asiful Islam Rubel..15202526

Ariful Islam Rubel.....15202527

Prepared For

Chowdhury Abdullah Al-Mamun

Date of Submission: 28-07-2017

University of Information Technology and Sciences (UITS)

 Letter of Transmittal

Date: 28-07-2017
To
Chowdhury Abdullah Al-Mamun

Lecturer, School of Business

University Of Information Technology & Science (UITS)

Sub: Submission of Term Paper

Dear Sir,
I beg to inform you that I am submitting the report on Factors affecting employee turnover and
sound retention strategies in business organization: a conceptual view a study on Estern Bank
Ltd... It was a great opportunity for me, as it gave the chance to enhance my practical knowledge.
This report has been prepared by collecting data from different Primary & secondary sources. I
have tried to give my best effort to collect data and preparing this project report. However it has
positive experience that I have practically learn a lot. I will be pleased to provide any queries that
you have regarding this study.

Sincerely Yours,
A. M. Fakhruddin.. 15202524
Fateh Zaman Onik..15202525
Asiful Islam Rubel..15202526
Ariful Islam Rubel...15202527

University Of Information Technology & Sciences (UITS)

 Acknowledgement

I deeply acknowledge my heartfelt gratitude to the Almighty Allah who has given me
opportunity and strength to complete this work within the desired time. Term Paper is an
important to accomplish by each student of IMBA. I would like to thank my honorable
Supervisor Chowdhury Abdullah Al-Mamun ,University of Information Technology &
Sciences, for his able guidance, valuable comments help during the research period.
 EXECUTIVE SUMMARY
Turnover in the long-term care industry is at a crisis point and threatens quality of care and
quality of life for vulnerable adults who rely on long-term care services. A 2005 national survey
found more than 76 percent of states reported that home care worker recruitment and retention
were major policy issues. In the era of globalization, it has been regarded to be a key issue to
deal with employee turnover for any business organization. Chan et al. (2010) also state
employee turnover as a serious issue, particularly in the area of human resource management. To
fulfill the basic needs and provide a good working environment, good pay and other benefits in
an economic approach is quite multifaceted and burdensome to an organization. Every business
desires to increase the productivity and lessen turnover, thereby leading to be profitable.
Employee turnover supervision is an obligation to attain organizational goals effectively.
However, high turnover would bring devastation to the business in the form of both direct and
indirect costs. Direct costs are referred to costs such as expenses on recruitment, selection,
orientation, workshop and training for the fresh employees. Indirect costs are indicated to
spending on education, condensed self-confidence, stress on the existing worker and the collapse
of social capital. Moreover, high employee turnover will put at risk on reaching the
organizational goal. To combat the challenges in the cutthroat business world, management has
considered employee turnover as a major concern and initiated some measures to retain them in
the organizations.

However, due to the less attention, top management does not concentrate on this major issue.
They are perhaps little capable of realizing the situations about how employee turnover has a
detrimental effect on the productivity of the organization. Therefore, it is more significant to
conduct the research on employee turnover to help business organizations by identifying their
problems, analyzing the information and recommending possible solutions in recent time.

The purpose of this research, therefore, is to find out the various causes and influential factors of
employee turnover in business organization. This study also explores some sound retention
strategies on how an organization can retain employees and minimize the rate of turnover. Based
on previous studies, this research has been performed nationally and globally to uncover a
variety of factors in relation with employee turnover affecting the industry for their productivity.
 Table of content

Title Page no.

Chapter -1
1.1 Introduction 1
1.2 Objectives of the study 2
1.3 Methodology 2
1.4 Types of Data Used 2
1.5. Limitation of the study 3
Chapter 2 - Literature Review
2.1 Factors affecting Employee Retention 4
2.2 Compensation and employee retention
2.3 Reward and recognition 6
2.4 Promotion and Opportunity for growth 6
2.5 Participation in decision-making 6
2.6 Work-life balance and employee retention 6
2.7 Work environment and employee retention 7
2.8 Training and Development and Employee Retention 7
2.9 Leadership and Employee Retention 7
2.10 Job satisfaction 8
2.11 Employee Turnover 9
2.12The concept of turnover 10
2.13 Turnover rates and main trends 10
2.14 When does turnover matter? 11
2.15 Costing turnover 12
2.16 Why people leave an organization 13
2.17 Is it always desirable to retain staff? 14
2.18 Alternative approaches to retention 2
Chapter 3
3.1 Current Scenario of Employee Retention in EBL 26
3.2Employee Turnover Rate in EBL 27
3.3 Reasons for Leaving EBL 30
Conclusions 31
References 32
 Chapter: 1
1.1 Introduction
Long-term health and success of any organization depends upon the retention of key employees.
To a great extent customer satisfaction, organizational performance in terms of increased sales,
satisfied colleagues and reporting staff, effective succession planning etc., is dependent upon the
ability to retain the best employees in any organization. Encouraging employees to remain in the
organization for a long period of time can be termed as employee retention. It is a process in
which the employees are encouraged to remain with the organization for the maximum period of
time or until the completion of the project. Maertz & Campion (1998) stated relatively less
turnover research has focused specifically on how an employee decides to remain with an
organization and what determines this attachmentretention processes should be studied along
with quitting processes. Zineldin, (2000) has viewed retention as an obligation to continue to
do business or exchange with a particular company on an ongoing basis. Denton (2000) has
clearly stated that employees who are happy and satisfied with their jobs are more dedicated
towards their work and always put their effort to improve their organizational customers
satisfaction. Stauss et al., (2001) has defined retention as customer liking, identification,
commitment, trust, readiness to recommend, and repurchase intentions, with the first four being
emotional-cognitive retention constructs, and the last two being behavioral intentions . Panoch,
(2001) forwarded the view that organizations today take great care in retaining its valuable
employees and good employees as they are increasingly becoming more difficult to find . Walker
(2001) was of the view that managing and retaining promising employees is an important
fundamental mean of achieving competitive advantage among the organizations. Cutler (2001)
was of the view that one of the most important demands on management today in any
organization is keeping the most vital and dynamic human resources motivated and dedicated. It
is not important to see who the organization hires but what counts is that who are kept in the
firm. Steel, Griffeth, & Hom (2002) added to this view that the fact is often overlooked, but the
reasons people stay are not always the same as the reasons people leave. Researchers such as
Amadasu( 2003) Taplin et al.(2003) Gberevbie(2008) have found that if appropriate employee
retention strategies are adopted and implemented by organizations employees will surely remain
and work for the successful achievement of organizational goals . In the view of Acton et al.,
(2003) the Human Resource Department plays an active role in retaining its employees. It make
policies for employee betterment such that employee would be satisfied with the organization
and stay with the firm for longer time. This shows that it is not just retention of employees but
also retention of valued skills. This shows that it is not just retention of employees but also
retention of valued skills. Resrarchers such as Cascio(2003) Heneman and Judge(2003)
Gberevbie (2008) have agreed that an organizations inability to formulate and implement
strategies capable of recruiting competent employees and retaining them to achieve
organizational goals is one of the main challenge facing organizations in the area of

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performance. Workforce Planning for Wisconsin State Government (2005) has defined employee
retention as .a systematic effort to create and foster an environment that encourages
employees to remain employed by having policies and practices in place that address their
diverse needs. According to Olowu and Adamolekun (2005) it is becoming more essential to
secure and manage competent human resource as the most valuable resource of any organization,
because of the need for effective and efficient delivery of goods and services by organizations,
whether in public or perivate sector. Therefore, for an organization to realize its goals,
appropriate strategies for employee recruitment and retention are sine-qua-non for enhanced
performance. Researcher such as Kaliprasad (2006) has confirmed that despite the fact that a
company may try to bring all these factors into play to enhance employee retention, an employee
can still choose to leave the workplace because of, for example, bad management. Kaliprasad
(2006) pointed out that an organizations ability to retain its employees completely depends
upon its ability to manage them. He found out four interlinked processes that can be utilized for
an effective human resource management system: the motivational process; the interaction
process; the visioning process; and the learning process. Baker (2006) gave stress on the fact that
hiring new employees are far difficult as well as costlier than to keep the current employees in
the organization. That is why the core issue in any organization is to give a continuous ongoing
effort to identify and try to keep all the best performers irrespective of their age. Gberevbie
(2008) has stated that employee retention strategies refer to the plans and means, and a set of
decision-making behavior put formulated by the organizations to retain their competent
workforce for performance.

1.2 Objectives of the study

This study on review of literature on retention initiatives undertakes the following objectives: I.
To find out the various research works that have been done in the area of employee retention. II.
To highlight the various factors which affect retention initiatives in an organization? III. To
explore the relation between various factors and job satisfaction.

1.3 Methodology
The study is descriptive in nature and only secondary data has been used in it. The secondary
data consist of the books and various research journals.

1.4 Types of Data Used

Two types of data were used:

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Primary data: The data which is collected by the researcher directly by survey, observation
and experience. For example, if the researcher conducts a survey for the collection of data then it
is known as primary data. All the necessary information is collect by_

Informal discussion with professional of all five banks.

Conversation with the different officials of the bank

In depth interview.

Observing the total environment

Secondary data: Secondary data is the data taken by the researcher from secondary sources,
internal or external. That means the data, which was collected and used previously for another purpose is
called secondary data.

1.5. Limitation of the study

The sources of the report are collected from different desks, various documents of different banks.
Though the entire staff member remains busy all the time for their desk work they helped a lot to manage
and collect the data & information. But it was very difficult to collect information on the client as it is
very sensitive and secret issue for the Banks. Every task has some limitations. So, there have also some
limitations of the study. These are as follows-

Shortage of time period: This report is written within a shorter period of time. So the
time constraint of the study hindering. The course of vast area and time for preparing a
report within the mentioned period is really difficult.
Busy working environment: The officials had some times been unable to provide
information because of their huge routine work. That is why we do not gather vast
knowledge about the critical issues.

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 Chapter 2 - Literature Review
2.0 Literature Review
This chapter will explore literature in the area of employee turnover and retention. It will review
academic literature relating to the research question, factors that contributes to high turnover in
the hospitality industry and outline different methods of retention available to employers. The
first section reviews literature in the area of employee turnover in the hospitality industry and
factors that contributes to high turnover rate in the industry. The second section reviews past
literature in the area of retention and outlines factors that can be employed by the organisation to
retain staff. The hospitality industry is an industry that comprises of businesses that attend to
guests away from home (Chon and Maier, 2009, p. 5). It includes a wide range of businesses,
including hotels, bars, inns, lodgings and clubs, among others, each of which is dedicated to
serving people away from home. Employees turnover has been a crucial problem in the
hospitality industry, some of the reasons cited for high turnover includes low compensation,
inadequate benefits, poor working conditions, work life conflict and employee stress (Pouslston
2009, ONeill and Davis 2011 and Hinkin and Tracey 2000). The hospitality industry is
characterised by high mobility and abnormal working hours as well as frequent interactions with
clients, which require top-notch customer relations and emotional labour by the employees.
These industry characteristics have been cited as part of the reason the industry posts a relatively
high rate of turnover compared to other industries (Mohanty and Mohanty, 2014; Shani, Uriely,
Reichel, and Ginsburg, 2014). The high turnover, low retention and acute shortage of competent
employees in the hospitality sector have significantly impacted the industry (Silva 2006

2.1 Factors affecting Employee Retention

Fitz-enz (1990) recognized that employee retention is not influenced by a single factor, but there
are hosts of factors which are responsible for retaining employees in an organization.
Management need to pay attention to factors such as compensation & rewards, job security,
training & developments, supervisor support culture, work environment and organization justice
etc. According to Osteraker (1999) , the employee satisfaction and retention are the key factors
for the success of an organization. The Retention factor can be divided into three broad
dimensions, i.e., social, mental and physical. The mental dimension of retention consist of work
characteristics, employees always prefer flexible work tasks where they can use their knowledge
and see the results of their efforts which, in turn, helps in retaining the valuable resources. The
social dimension consists of the contacts that the employees have with other people, both internal
and external. The physical dimension consists of working conditions and pay. Stein (2000) ,
Clarke (2001) [Parker and Wright (2001) have rightly observed that organization must utilize an
extensive range of human resource management factors to influence employee commitment and
retention. Walker (2001) identified seven factors that can enhance employee retention:

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(i) compensation and appreciation of the performed work, (ii) provision of challenging work, (iii)
chances to be promoted and to learn, (iv) invitational atmosphere within the organization, (v)
positive relations with colleagues, (vi) a healthy balance between the professional and personal
life, and (viii) good communications. Together, these suggest a set of workplace norms and
practices that might be taken as inviting employee engagement. Kehr (2004) divided the
retention factors into three variables: power, achievement and affiliation. Dominance and social
control represents power. When personal performance exceeds the set standards, it represents
achievement and affiliation refers to social relationships which are established and intensified.
Hytter (2007) found that factors such as personal premises of loyalty, trust, commitment, and
identification and attachment with the organization have a direct influence on employee
retention. She also explained that workplace factors such as rewards, leadership style, career
opportunities, the training and development of skills, physical working conditions, and the
balance between professional and personal life have an indirect influence. Pritchard (2007) was
of the opinion that training and development is one of the important retention programmes
incorporated in an effort to retain their employees. Eva Kyndt , Filip Dochy et al.,(2009) have
found in their study, while investigating employee retention that personal factors such as level of
education, seniority, self-perceived leadership skills, and learning attitude and organizational
factors such as appreciation and stimulation, and pressure of work are of great relevance in
employee retention. Table 1 below shows the various factors of employee retention and the
associated research papers along with the contributing authors.

2.2 Compensation and employee retention

Trevor et al. (1997) has proved that rise in pay has a negative impact on turnover. Davies,
Taylor, & Savery (2001) forwarded the view that compensation to top workers is given by every
organization but very few organizations uses it strategically. They said that Salary and benefits
policies are not being used strategically, within the organization to improve morale, reduce
turnover, and achieve targets within an establishment. Gardner et al., (2004) were of the view
that pay is considered as a motivator as well as employee retention technique. Milkovich and
Newman (2004) have clearly stated that among all types of reward, monetary pay is considered
one of the most important and significant factor in retention. In a research by Moncraz, Zhao and
Kay (2009) it was concluded that although compensation was not one of the top factors
influencing non-management turnover but compensation can act as a critical factor in reducing
managerial turnover and increasing commitment

5
2.3 Reward and recognition
Agarwal (1998) gave an explanation to the term reward as something that the organization
offers to the employees in response of the work as well as performance and something which is
desired by the employees. According to Walker (2001), recognition from bosses, team members,
coworkers and customer enhance loyalty. Watson Wyatt a global consulting firm, conducted a
survey in USA, in the year 2002 among 12750 employees at all levels of job and in all major
industry sectors to know about their attitudes toward their workplace and their employers. It was
found in the survey that recognition is important for workers and they want to listen that their
work followed recognized and appreciated. Silbert (2005) forwarded the view that reward is
important because it has an enduring impression on employees which, in turn, gives the
employees an impression that they are valued in the organization.

2.4 Promotion and Opportunity for growth

Pergamit and Veum (1989) in their study found a close and positive correlation between
promotions and job satisfaction and which in turn helps in retaining employees. Research by
Meyer et al, (2003) has shown internal career development of employees is often the best
predictor of an employee's effective commitment. Prince (2005) argued that talented employees
are required for maintaining a competitive advantage and employees want career growth
opportunities to develop and rise in their career ladder. Such plans include advancement plans,
internal promotion and accurate career previews at the time of hiring. Eyster, et al. (2008) state
that job flexibility along with lucrative career and life options, is a critical incentive for all
employees.

2.5 Participation in decision-making

Hewitt (2002) has mentioned that modern businesses always keeps its employees well informed
about all the important affairs of its business and involves them in decision-making at all levels
which can exploit the talents of its employees. Supporting the view Noah (2008) found in his
research that employee involvement in decision-making helps in creating a sense of
belongingness among the employees, which helps in creating a good congenial working
environment and contributes towards building a good employer-employee relationship.

2.6 Work-life balance and employee retention

Work-life balance is increasingly important for engagement and affects retention. Hyman et al.,
(2003) in their empirical research in the UK found that interventions of work demands into
personal life (e.g. working during the week-end) resulted into heightened stress and emotional
exhaustion among the employees. In a study conducted by the Australian Telework Advisory
Committee (2006) it was found that 70% of businesses that incorporated telework options
reported a number of positive benefits, such as increased business productivity and reduced

6
costs, improved employee flexibility and work life balance, and increased workforce
participation .

2.7 Work environment and employee retention

According to Miller, Erickson & Yust (2001) employees get benefited by work environment that
provide sense of belonging. Wells & Thelen (2002) have stated in their study that organizations
which have generous human resource policies, have a very good chance to satisfy and retain
employees by providing them an appropriate level of privacy and sound control on work
environment which enhances the motivation levels to commit with the organization for the long
term. Ramlall (2003) stressed the need for recognizing the individual needs of an employee in
an organization as it will encourage commitment and provide a suitable work environment.

2.8 Training and Development and Employee Retention

Messmer (2000) found that one of the important factors in employee retention is investment on
employee training and career development. Organization always invests in the form of training
and development on those workers from whom they expect to return and give output on its
investment. Tomlinson (2002) forwarded the view that organizations can keep the leading edge
in this competitive world by having their employees well trained in the latest technologies. Garg
& Rastogi (2006) explained that in todays competitive environment feedback is very essential
for organizations from employees and the more knowledge the employee learn, the more he or
she will perform and meet the global challenges of the market place. Handy (2008) has
mentioned that proper innovation, and assimilation of new knowledge is essential for survival in
any work environment. Thus knowledge is the most expensive asset of any firm

2.9 Leadership and Employee Retention

Eisenberger and associates (1990) suggested that employees perception regarding an
organization is strongly influenced by their relationship with the supervisor. McNeese-Smith
(1995) mentioned in his study on Leadership behavior of hospital directors found that there is
significantly positive relation between productivity, work satisfaction and organizational
commitment of staff. Brunetto and Farr-Wharton (2002) were of the view that supervision of the
immediate manager increases the level of job satisfaction in the public sector employees. Chung-
Hsiung Fang, Sue-Ting Chang, Guan-Li Chen (2009) has found that leadership style can affect
organizational commitment and work satisfaction positively and work satisfaction can affect
organizational commitment and work performance positively. 4.9 Job Security and Employee
Retention Abegglen (1958) found during the study of Japanese workers that employment
features like lifetime employment and seniority system, job security lead to high commitment,
job satisfaction as well as retention of employees in an organization .Researchers such as
Ashford et al., (1989) Davy et al., (1991) conducted studies on job security and job satisfaction
and found that that job dissatisfaction is the outcome of insecurity among employees. Rosenblatt

7
and Ruvio, (1996) conducted a research on the job insecurity and found that job performance and
organizational commitment are negatively correlated with job insecurity.

2.10 Job satisfaction

Hoppock (1935) was of the view that job satisfaction is any combination of psychological,
physiological and environmental circumstances, which cause a person truthfully, satisfied with
his/her job. Locke (1976) defined job satisfaction as a pleasurable or positive emotional state
resulting from the appraisal of ones job or job experience. Feldman and Arnold (1983) have
defined job satisfaction as, Job satisfaction will be defined as the amount of overall positive
affect (or feelings) that individuals have towards their jobs. Davis et al., (1985) stated that job
satisfaction is a combination of positive and negative feelings that workers have towards their
work. When a worker joins a business organization, he brings with him the needs, desires and
experiences which he expects from his job. Job satisfaction represents the extent to which
expectations matches with the real awards. Job satisfaction is closely linked to that individual's
behavior in the work place. Researchers such as Ashford et al., (1989) Davy et al., (1991) found
in their studies that insecurity among employees leads job dissatisfaction. Rain, Lane & Steiner
(1991) states that job satisfaction is correlated to life satisfaction which means that people who
are satisfied with life will tend to be satisfied with the job and people who satisfied with job will
tend to satisfied with their life. Lane et al.,(2010) and Vidal at al.,(2007) in their
researches/studies found that job satisfaction is a complex phenomenon which is influenced by
factors like salary, working environment, autonomy, communication and organizational
commitment. According to Reichheld (1996) there are three criteria that have impact upon how
hard employees are working. They work hard when: (1) they have job pride, (2) when they find
their jobs interesting and meaningful, and (3) when they are recognized for their work and
benefit from the work they have accomplished. A relevant research by Spector (1997) and
Hirschfeld (2000) indicate that the different aspects of job satisfaction could be split according to
Herzbergs two dimensions. The intrinsic satisfaction refers to job tasks and job content such as
variety, autonomy, skill utilization, self-fulfillment and self-growth. Murray (1999) has clearly
stated that job satisfaction has direct effect on level of absenteeism, commitment, performance
and productivity. Furthermore, job satisfaction not only improves the retention of employees but
also reduces the cost of hiring new employees. Sokoya (2000) in his investigation on job
satisfaction level among the public sector managers found that income or compensation is the
most valuable determinant of job satisfaction. In a study by Al Aameri, (2000) it was found that
satisfied employees tend to be more productive, creative, and committed to their employers, and
recent studies have shown a direct correlation between staff satisfaction and patient satisfaction
in health care organizations.

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2.11 Employee Turnover
Many researchers have tried to answer the question as to what determines people's intention to
quit by investigating possible antecedents of employees intentions to quit. Until date, there has
been little consistency in findings, which is partly due to the diversity of employed included by
the researchers and the lack of consistency in their findings. Therefore, there are several reasons
why people quit from one organization to another or why people leave organization.

Chruden (1980) Testa (2008in their studies have found that high turnover rates of skilled
professionals can pose as a risk to the business or organization, due to human capital (such a
skills, training and knowledge) cost. Notably, given the natural specialization of skilled
professionals, these employees are likely to be reemployed within the same industry by a
competitor. Price & Muller (1981) in their study on 1091 registered nurses in seven hospitals
found that job dissatisfaction influenced actual turnover indirectly through its direct effect on
turnover intention. Costly et al. (1987) found that the main causes of high labor turnover in an
organization are poor personnel policies, poor recruitment policies, poor supervisory practices,
poor grievance procedures, or lack of motivation. All these factors indicate that there is no
proper management practices and policies on personnel matters hence the employees are not
recruited scientifically, promotion policy of the organization is not communicated to the
employees properly, no grievance procedures are there in the organization and as such the
employees decides to quit. Zedeck and Mosier, (1990) has mentioned that the issue of employee
turnover is very crucial and important to managers, researchers and individuals. Jackson, (1981)
and Stear (1991) have stated in their studies that high turnover is caused by unhappiness with the
work, inadequate compensation, unsafe and unhealthy conditions, unrealistic expectations,
inappropriate processes or tools, and poor candidate screening. Other causes are lack of career
opportunities and challenges, dissatisfaction with the job-scope or conflict with management.
From the point of view of Susskind at el., (2000) turnover problem should be dealt with careful
strategies exclusively concentrating on human resource problems. Zuber, (2001) found that
employees are more likely to stay when there is a predictable work environment and vice versa.
Zuber also stated that instable organization have a high degree of employee turnover. Kevin et
al. (2004) have stated that although, there is no standard framework for understanding the
employees turnover process but a wide range of factors are useful in predicting employee
turnover. Henry Ongori (2007) concluded in his study that employees are the long-term
investments in an organization and as such management should encourage job redesign, task
autonomy, task significance and task identity, open book management, empowerment of
employees, recruitment and selection must be done scientifically with the objective of retaining
employees and decreasing employee turnover.

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2.12The concept of turnover
According to recent surveys, attracting and retaining key talent is considered as a key strategy
to achieve financial success (Raikes and Vernier 2004). The impact of turnover is widely
considered to have direct and indirect costs on organisations, with the bill costing anywhere
between 50 and 150% of an annual salary (Mercer 2004). In the humanitarian sector as well, the
negative impact of staff turnover on the performance of relief aid agencies, and ultimately on
what is delivered to beneficiaries, is mentioned as a key challenge to address (Richardson 2005;
EPN 2005; Loquercio 2005), with the cost of a successful recruitment estimated at around 15'000
sterling by both the ICRC and VSO (Loquercio 2006).

2.13 Turnover rates and main trends

But what are the trends and rates for turnover? First, to calculate the crude turnover rate the
generally used formula is:

Total number of leavers over period x 100 Average total number employed over period

The total figure includes all leavers, even people who left involuntarily due to dismissal,
redundancy or retirement. It also makes no distinction between functional (i.e. beneficial )
turnover and that which is dysfunctional. This means that it is useful for benchmarking purposes
but of little practical use to identify precisely problems within an organization (CIPD 2004).
Griffeth and Hom (2001) offer to focus on the part of turnover that is of real concern to an
organization by differentiating between voluntary and involuntary turnover. In other words, did
the employee choose to leave the job or was it a decision made by the employer? Then, voluntary
resignations are further distinguished between functional (exit of substandard performers) and
dysfunctional (exit of effective performers). Finally, unavoidable resignations over which the
employer has no influence are also left aside (family move, childbirth, serious illness or death).
This leaves the group of avoidable resignations as the key focus. It also implies that to allow an
informed decision, turnover rates have to be calculated down to department level, to identify
which areas are most problematic.

Recent research in the UK (CIPD 2005b) shows that turnover currently is around 15% and notes
that evidence doesn't seem to support the view that turnover rates are increasing over time.
According to the report, the biggest share is made of voluntary turnover, as opposed to
termination of the contract by the employer or retirement. However, there are wide differences
between regions and sectors. Industries such as retailing, hotels, restaurants or call centers often
have rates superior to 50% while the public sector average is at 11,5%. Regions with lower
unemployment rates will experience higher turnover. Rates can also significantly vary within the
same organisation in the same location and is often related to the type of position but also
contextual factors which will be addressed under retention.

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Another UK based report (People Count 2005) focusing on the voluntary sector mentions an
overall turnover rate for the voluntary sector of 21%, and 16,7% for the international
development sector. According to this research, turnover is lower for managerial employees
(13,9% in the international development sector) than for operational/support employees (21%).
Here as well, voluntary turnover makes up most of the turnover (12,4% vs. 2,1% for end of
contract and the rest for redundancies and dismissals). However, as underlined by Loquercio
(2005), calculating turnover rates for the humanitarian sector is not so obvious. Because many
relief aid agencies still largely rely on fixed term contracts, which are usually not included in the
calculation of turnover, turnover rates are bound to be of little use for any analysis. The problem
is acute for key management posts which are often filled by expatriates and international cadres,
and where humanitarian agencies of necessity (or circumstance) often end up rotating staff,
with the result that even those with open ended contracts change from one assignment to the
other, often on a yearly basis. Therefore, Loquercio argues that it is necessary to rely on other
indicators to monitor problems related to turnover and staff rotation, offering among others the
average duration of field missions, vacancy rate and seniority of staff. According to his research,
the average duration of a mission for an expatriate ranges from 5,2 months (MSF-France) to 10,1
months (ICRC). Finally, Loquercio notes that the highly unpredictable staffing needs, related to
the difficulty of forecasting humanitarian crises adds the problem of surge capacity to the
previously mentioned HR problems.

2.14 When does turnover matter?

One of the key questions around turnover is "what is excessive turnover?" While consultancies
tend to make turnover a major issue to tackle (Raikes and Vernier 2004), a lot of UK based
companies don't consider turnover to be such a serious problem, or only to have a minor negative
impact (CIPD 2005a). It is however true that at the same time, these organizations recognized
retention to be one of their most pressing challenges while few had attempted to calculate
turnover costs. First, it should be noted that some employee turnover positively benefits
organizations. For the CIPD (2005b), this happens "whenever a poor performer is replaced by a
more effective employee, and can happen when someones retirement allows the promotion or
acquisition of welcome 'fresh blood'. Moderate levels of staff turnover can also help to reduce
staff costs in organizations where business levels are unpredictable month on month. In such
situations "when business is slack it is straightforward to hold off filling recently created
vacancies for some weeks" (CIPD 2005b). Gray et al (1996) add that turnover is considered by
economists to be a necessary component of an efficient labour market and can ensure increased
productivity by ensuring better matches between jobs and workers. "It wouldn't make sense to
claim that turnover will generally hurt beyond a defined level" says CIPD (2005b), adding that
"where it is relatively easy to find and train new employees quickly and at relatively little cost, it
is possible to sustain high quality levels of service provision despite having a high turnover rate.
By contrast, where skills are relatively scarce, knowledge important, relations with
customers/stakeholders are close and important, where recruitment is costly or where it takes

11
several weeks to fill a vacancy, turnover is likely to be problematic from a management point of
view." However, Hinkin et al. (2000) show in their article that even for jobs that do not require
very elaborate skills, a retention strategy can positively affect the engagement, turnover and
ultimately financial performance, especially, for positions that involve strong interaction with
customers.

For the humanitarian sector, Loquercio (2005) sees several benefits in rotating expatriate staff.
By allowing breaks in between assignments, rotation of staff can allow to protect aid workers
from burnout. Exposing staff to different contexts over a short period of time can support the
development of experience and also allows this experience to travel and crossfertilize with
others. Limiting the duration of assignments can help to bring new blood and new ideas in a
given context while ensuring the preservation of neutral and impartial analysis and action. The
use of fixed term contracts can allow more flexibility to adapt staffing to operational and funding
levels. Rotating staff and turnover provide more opportunities for career advancement.
However, the author recognises that negative general impact turnover can have and these are
discussed below. The point here is that each agency needs to measure its natural turnover rate
(CIPD 2005a) in order to determine when it is worth doing something.

2.15 Costing turnover

Looking more closely at the cost and impact of turnover, we need to include here both direct and
indirect costs. There are differences in what exactly should be included, but if we only keep
broad categories, we can mention (CIPD 2005b) Administration of the resignation
Recruitment costs Selection costs Cost of covering during the period in which there is a
vacancy Administration of the recruitment and selection process Induction training for the
new employee CIPD (2005b) says that "many of these costs consist of management or
administrative staff time (opportunity costs), but direct costs can also be substantial where
advertisements, agencies or assessment centres are used in the recruitment process." Direct costs
are easier to calculate, however, according to research, it only constitutes the tip of the iceberg.
The most important costs are related to the wider impact of turnover. This includes the cost of
mistakes, efficiency loss for new staff and departing ones, loss of knowledge and delays in
ongoing projects. For example, Gray et al. (1996:121) reported that for nurses in the UK, the
average efficiency loss over the first 6 months of employment was estimated to be 30%,
climbing to 50% in some cases. Estimations of recruitment and turnover costs in the UK are
provided below (from CIPD 2005a).

Finally, even though measuring the costs of turnover can appear in some cases as subjective,
CIPD (2005b) reminds that "measurement of the costs to the employer as a result of turnover is
vital in building the business case for thorough and effective recruitment and retention initiatives.
These costings can be a powerful tool for winning line manager and Board-level support for
people management activities in these areas."

12
In the humanitarian sector, according to discussions held at EPN (2005), the impact of turnover
on humanitarian agencies' work output is such that the overall quality of the work delivered is
compromised, despite standards being set and a desire to raise them through accountability.
Costs related to turnover are not fundamentally different in the humanitarian sector. Here again,
one can mention direct costs such as: Costs and time related to the recruitment, selection and
training of new staff Costs related to departure, such as medicals, visas, briefing, handover or
flight tickets. These costs are always incurred but will be higher when staff rotation is quick.
Separation costs with debriefing and administrative procedures are also mentioned. Indirect
costs, which are also substantial according to Loquercio (2005) include: The impact of role
overload and open vacancies on staff morale. Initial inefficiency, mistakes and short
productive time incurred by frequent staff rotation Loss of knowledge, especially informally
captured knowledge and the negative impact on the continuity of programmes. Loquercio does
however make a distinction between emergencies and longer term contexts, considering the
impact of staff turnover in emergencies as less detrimental because substitution approaches are
more often used in such cases. In terms of strategic HR management, EPN 2005 also noted that
if because of high staff turnover, those recruited that showed promise are lost to the system, a
problem in terms of renewal of future senior managers will emerge.

2.16 Why people leave an organization

Push and pull factors
If we look now at the reasons behind employees' resignations, CIPD (2005b) identifies different
reasons. It says that sometimes, it is the attraction of a new job or the prospect of a period outside
the workforce which 'pulls' them, on other occasions they are 'pushed' due to dissatisfaction in
their present jobs to seek alternative employment. Sometimes it is a mixture of both pull and
push factors. For another group, reasons for leaving are entirely explained by domestic
circumstances outside the control of any employer, as is the case when someone relocates with
their spouse or partner. But the CIPD also draws attention to the fact that the reasons people give
for their resignations are frequently untrue or only partially true. "The use of exit interviews is
widespread yet they are notoriously unreliable, particularly when conducted by someone who
may later be asked to write a reference for the departing employee. They are reluctant to voice
criticism of their managers, colleagues or the organization generally, preferring to give some less
contentious reason for their departure." Among the main reasons advanced for resignation,
research strongly suggests that push factors are a great deal more significant in most resignations
than most managers appreciate. In fact, says this paper (CIPD 2005b), "it is relatively rare for
people to leave jobs in which they are happy, even when offered higher pay elsewhere", adding
that "most staff have a preference for stability." People leave when they are not committed and
motivated anymore and lack of training or career opportunities can contribute to that.

13
Turnover in humanitarian agencies
The situation doesn't seem to be much different in the humanitarian sector. Dissatisfaction with
the employing agency is presented as a factor leading to resignation, a situation that can be the
result of diverging values between employee and employer, lack of support and transparency on
the side of the agency or inadequate management (Loquercio 2005). EPN 2005 also noted that
"the poorly managed relief worker leads to disillusionment and results in high staff turnover".
Beyond that, some issues seem to be more specific to the humanitarian sector, (Loquercio 2005):
Quality of life: working in conflict areas with a heavy workload, limited comfort and privacy is
seen as lifestyle that is accepted only for a certain amount of time by most aid workers.

The aspiration to having a family is often incompatible with the realities of field based life.

Many young adults see their engagement with the aid sector as a limited period of their
professional life, fearing that their market value could suffer from prolonged absence from their
home country. Others can give up for lack of career opportunities.

These dynamics are illustrated in the figure below (from Loquercio 2005):

Referring to issues of expatriate assignments but for private companies, an American survey
(Price Waterhouse Coopers 2005) found out that "for dual career couples, 59% of respondents
considered that the management of dual careers was the fundamental reason for refusing an
expatriate assignment". Planning weaknesses, poor information systems, lack of management
support at field level, conflictual atmosphere, poor involvement of staff in decision making, lack
of transparency in management and stress and burnout are also cited in Henry (2004b).

2.17 Is it always desirable to retain staff?

For whom do we want retention?
Before looking at possible ways to retain staff, one needs to ask the following question: is it
always a positive thing to retain staff. Hansen (2005) argues that there is a need to seriously
distinguish between voluntary and involuntary turnover, claiming that turnover was inadequately
labelled as a money- sucking evil, turning turnover reduction into an end it itself while
disconnected from business outcomes. To illustrate the case, the author gives the example of the
SAS institute, a successful organisation where, while voluntary turnover is low, involuntary
turnover is much higher than in the rest of the sector. The article implies that most companies
experience a general managerial reluctance to discharge poor performers, partially for fear of
employee lawsuits. Addressing the issue of talent, a report by Deloitte (2004) supports this point

14
by writing that "today, a significant share of the workforce is disengaged, as a result of
downsizing, employer demands and job disenchantment". But because of economic
circumstances people stay put in their jobs, waiting for a better opportunity to come up before
leaving their employer. While it is true that it is worrying for their performance to see such a
proportion of disengaged staff within organizations, not the least because of the detrimental
effect on morale, organizations bear their share of responsibility for this situation. The same
report says that companies place too much attention on acquiring talent, often ignoring
employees once they have been signed up. It argues focusing on acquiring and retaining staff is
not enough, especially when the strategy adopted tries to bribe talent to stay. Instead, it needs to
develop, deploy and connect their employees. In fact, it's not the fact that employees stay or
are "retained" with the organization which is important, it's why they stay. As noted by Hansen
(2005), optimal turnover is not the lowest turnover you can achieve. Optimal turnover produces
the highest long-term levels of productivity and business improvement. So, there are two key
points to note here: 1) First, organizations need to identify which positions, profiles and skills
are most important to them and where turnover is most detrimental to their organization. They
can then focus on reducing turnover for these selected categories. 2) Second, retaining staff that
have lost motivation is detrimental for an organization. But since the degree of motivation is to a
large extent the result of an organizations management and HR actions, by increasing the
"engagement" of their employees, organizations can achieve a double benefit: increased
productivity together with higher retention rates.

Engagement
So, how does engagement happen? Employees need the will: the sense of mission, passion and
pride that motivates them to give that all- important discretionary effort. And they need the way:
the resources, support and tools from the organization to act on their sense of mission and
passion" says a report by Towers Perrin (2003). The link between employee engagement and
performance is illustrated in this report with the figure below. In principle, the humanitarian
sector should be able to count on a stronger engagement of its employees, due to the more
"noble" nature of its work. But relief aid agencies still need to develop a sense of belonging to
the organization says Henry (2004b).

Approaches to improving retention

It now makes sense to take a closer look at the different approaches proposed to improve
retention of staff. It might sound obvious to say, but there is no "one size fits all" to addressing
retention issues, because each organization has a different management approach and
organizational culture.

15
Therefore, the first step in designing a retention strategy is finding out why people leave, why
they stay and what could make them stay. As observed by Hinkin et al. (2000), when a
significant share of employees only stay for a limited time with an organization, it is often the
symptom of underlying problems that need to be identified in order to determine what the most
adequate measures would be. Exit interviews are commonly used for this purpose, but they have
two shortfalls. First, they come too late in the process, and second, as mentioned earlier, they
might not be reliable if conducted too soon after the resignation, especially when conducted by a
line manager of the departing employee (CIPD 2005b). It is therefore recommended to guarantee
confidentiality and conduct the interview some time after resignation. More constructively, staff
surveys should be conducted at regular intervals to poll employees' attitude and gather
information allowing to shape a retention strategy. Indeed, specialists consider that building
engagement, and hence retention is a process that needs continuous updating (Towers Perrin
2003).

It's all connected

When addressing retention, one needs to realize the connections between recruitment,
motivation, management of staff, communication HR policies and retention. Any approach needs
to balance and adapt the different aspects of a retention policy according to the needs of the
situation it is addressing. It also should be able to provide different incentives according to the
profile of the employee and the stage of its professional and private life. For the humanitarian
sector, this is well illustrated by the People in Aid Code of good practice (People in Aid 2003)
and its 7 principles :

Human Resources Strategy: Human resources are an integral part of our strategic and
operational plans

Staff Policies and Practices: Our human resources policies aim to be effective, fair and
transparent

Managing People: Good support, management and leadership of our staff is key to our
effectiveness

Consultation and Communication: Dialogue with staff on matters likely to affect their
employment enhances the quality and effectiveness of our policies and practices

Recruitment and Selection: Our policies and practices aim to attract and select a diverse
workforce with the skills and capabilities to fulfil our requirements

Learning, Training and Development: Learning, training and staff development are promoted
throughout the organization

Health, Safety and Security: The security, good health and safety of our staff are a prime
responsibility of our organization.

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 Sung and Ashton (2005), on their side, look at High performance work practices as a set of
complementary work practices which can not only improve performance, but also increase
engagement, performance and retention. These practices are split between three broad categories:

High employee involvement practices aiming at encouraging a greater level of trust and
communication between employers and employees, through involving them more in the
organization, and empowerment. Common practices include circulating information, staff
association, staff surveys or self managed teams.

Human resources practices target the creation of skills within the organization through practices
such as appraisals, job performance feedbacks, review of training needs, training or mentoring.

Reward and commitment practices aim at creating a greater sense of belonging and
commitment to the organization. Such practices include performance pay, flexible job
descriptions, job rotation, family friendly policies or non-pay benefits.

Finally, Deloitte (2004) argues that organizations need to concentrate on developing, deploying
and connecting their employees. This means developing the skills, not just through formal
training but by learning how to learn, where to find the information (the report mentions that A
well known MIT study found that people are five times more likely to ask a co- worker for
information than to consult an intranet, database or company computer system.) or action
learning supported by coaching and mentoring (the report cites a study showing that 67% of
respondents consider that they learn most when working together with a colleague on a task).
Deploying means finding a fit between the skills and the job. This implies sometimes
redesigning job descriptions or encouraging mobility. When vertical mobility is not possible,
employees need lateral experiences that promise challenge and growth, says the report. It argues
that by encouraging greater mobility, organizations inspire a more engaged workforce and
promote greater strategic flexibility. The report also suggests that successful talent
management includes strategies to stay engaged with alumni because individuals granted
latitude by their employers to explore new territory often make their way back with renewed
vigor and insights. Connecting implies helping to develop rich networks, both internal and
external. For example, informal discussions around the coffee machine are said to be the
founding principle of communities of practice. In order to build talent, the report argues that
the first step is to define which jobs are critical, then the skills required achieving important
strategies. But at the same time, a focus on talent shouldnt mean to block the development of
other employees. For this paper, we will organize the different aspects that can positively
influence retention according to the 7 points of the People in Aid code.

17
 1. Human resources strategy
Human resources are an integral part of our strategic and operational plans. Even though the
humanitarian sector relies on its staff for the success of its operations, and expects them to work
hard in difficult circumstances, it doesnt have a good reputation in terms of their treatment,
something that ALNAP (2002) clearly describes as an unsustainable approach for the
development and retention of a pool of qualified and experienced aid workers. It is therefore not
surprising that recruitment and retention of experienced managers should remain the most
burning issue for relief aid agencies, as observed by Henry (2004b). While it might be attributed
to bad planning, or sometimes the employment of non-specialists in HR departments, ultimately,
it has to do with the fact that HR is often seen by agencies as a service department of secondary
importance vis a vis operational desks, meant to provide staff rather than participate in strategic
planning and orientation for the whole agency (Henry 2002b). It can be related to a lack of
commitment on the side of agencies, but also to structural problems related to funding. The
donors tendency to squeeze overhead costs to the minimum is impacting on the funds that can
be allocated for HR purposes says Henry (2004a). Few agencies have qualified HR personnel
and career planning is difficult because of the project based funding. "Cheap" HR management is
however not an option adds Henry, as it would put relief agencies' existence at risk. Therefore, to
improve the situation for this first point, action is required at agency level to recognize the
strategic role of the HR function and integrate it in strategic planning. There is also a need to
address the issue of funding, so that poor HR practices do not negatively impact on the quality of
agencies' programmes.

2. Staff policies and practices

Our human resources policies aim to be effective, fair and transparent. The CIPD (2005b)
advises to "bend over backwards to ensure that you do not and are never seen to discriminate
against employees on any unfair grounds. A perception of unfairness, whatever the reality when
seen from a management point of view, is a major cause of voluntary resignations. While the
overall level of pay is unlikely to play a major role unless it is way below the market rate,
perceived unfairness in the distribution of rewards is very likely to lead to resignations." The
concept of "psychological contracts" can be useful here to illustrate this point. Psychological
contract refer to the perceptions of employee and employer as to what their mutual obligations
are towards each other, even though these obligations are often informal and imprecise: they may
be inferred from actions or from what has happened in the past, as well as from statements made
by the employer, for example during the recruitment process or in performance appraisals. Some
obligations may be seen as 'promises' and others as 'expectations'. The important thing is that
they are believed by the employee to be part of the relationship with the employer" (CIPD 2004).
In fact, the psychological contract is based on employees' sense of fairness and trust, and their
belief that the employer is honoring the 'deal' between them. In the humanitarian sector, this is
especially strong, with field staff usually dedicating to an agency more than just their

18
professional life. This self-perceived strong personal investment is matched by expectations of
fairness and adequate recognition on the side of the employer. Because of the distance with
headquarters, field based line managers have a particularly important role to play. Henry (2004b)
adds that in order to build loyalty, base pay is not the determining factor, but rather efficiency,
ethics and the professionalism of an agency. Unfortunately, as in other industries, line managers
often fail to show the basic people management skills that would allow to succeed here. Another
point, which is maybe more acute in the humanitarian sector because of the high turnover is
related to training. Some agencies appear reluctant to invest in training their staff, fearing that if
that person doesn't stay with them at the end of the contract, they will have lost their investment.
In reality, training is both meant to be beneficial quickly when it is adapted to the needs.
Moreover, not (or reluctantly) training staff is probably an incentive for them to leave, because
such a policy can be perceived as unfair and endangering the employability of the employees.

3. Managing people
Good support, management and leadership of our staff is key to our effectiveness. It is
common to hear that people join companies and leave managers. This is unfortunately also true
in the humanitarian sector. In all sectors, people want competent managers. Both in terms of
technical skills (know what they're talking about), fairness and people management skills.
Because they are the persons who impact most on their work experience, managers are also often
the factor that will make the difference between staying and resigning. Consultants in the
corporate sector have proposed that line managers be made accountable for staff turnover in their
teams and reward managers whose record at keeping people is good by including the subject in
appraisals (CIPD 2005b). It was also proposed to train line managers in effective supervision
before appointing or promoting them and offer re- training opportunities to existing managers
who have a poor record at keeping their staff. This is not least challenging for humanitarian
agencies, where many programme managers with leadership responsibilities have a
predominantly technical background and have often not had a real opportunity to formally
develop people skills (Loquercio 2005). Investing in training, particularly management
development, is therefore also a key priority for humanitarian agencies, something that should
not only benefit employees but also facilitate the life of managers and help them to gain more
confidence. Humanitarian agencies probably could also make progress in terms of recognition
and support, acknowledging better and more openly success and staff commitment and
demonstrating and expressing more clearly that they care about their staff.

4. Consultation and communication

Dialogue with staff on matters likely to affect their employment enhances the quality and
effectiveness of our policies and practices. CIPD (2005b) recommends to "ensure wherever
possible that employees have a 'voice' through consultative bodies, regular appraisals, attitude
surveys and grievance systems." According to the CIPD, "this helps to ensure that dissatisfied
employees have every opportunity to sort out problems before resigning. Where there is no

19
opportunity to voice dissatisfaction, resigning is the only option." As mentioned earlier, one
concern of staff is work-life balance, something increasingly important to individuals. Agreeing
on such an issue requires consultation and dialogue to accommodate individual preferences,
instead of developing a culture of 'presenteeism' where people feel obliged to work longer hours
than are necessary simply to impress management (CIPD 2005).

5. Recruitment and selection

Our policies and practices aim to attract and select a diverse workforce with the skills and
capabilities to fulfil our requirements. Recruitment is one of the key aspects for retention. If the
selection process is deficient, it can lead to employees leaving earlier than their employer would
like them to, thus increasing turnover costs. It could also allow poor performers enter and stay in
the organization, driving down its performance. To tackle recruitment issues, Adamsky (2005)
gives the following advice:

Hire better recruiters, because they are the gate of the organization and are meant to attract
talents in the organization.

Brand the organization, because employment branding gaining and marketing a reputation
for being a good employer allows to more easily hire the candidates you really want.

Aggressively pursue top talent and attract them to your organization

Create better employee referral programs so that employees support HR for attracting talents in
the organization.

Look at talent as opposed to workforce planning

Induction and transparency

Although "branding" and the concept of the employer brand can be used to attract people to an
organization, it takes more than an image to make people stay, especially with nonprofit
organizations where salary levels can be less attractive than in the corporate sector and potential
candidates are more likely to respond to other factors. During the recruitment process and in
interviews, organizations often raise expectations to a level that cannot be satisfied, leading
people to compete for and subsequently to accept jobs for which they are in truth unsuited (CIPD
2005b). Organizations do this in order to ensure that they fill their vacancies with sufficient
numbers of well-qualified people as quickly as possible. However, over the longer term the
practice is counter-productive as it leads to costly, avoidable turnover and the development of a
poor reputation in local labour markets. In the high turnover industries in particular, a great deal
of employee turnover consists of people resigning or being dismissed in the first few months of
employment. Even when people stay for a year or more, it is often the case that the decision to
leave sooner rather than later is effectively taken in the first weeks of employment. Poor
recruitment and selection decisions, both on the part of the employee and employer, are usually

20
to blame, along with poorly designed or non-existent induction programmes (CIPD 2005b). The
advice here is to give prospective employees a 'realistic job preview' at the recruitment stage,
taking care not to raise expectations only to dash them later. The first week of employment is
crucial in determining whether someone will stay or not. That's why it should be well planned
(Breuer 2000). This point is also advocated by Loquercio (2005) who recommends investing in
the induction and orientation of new employees in order to facilitate their integration by
explaining the technical language and jargon of the organization, helping to understand the
values, power structures and unwritten rules of the agency.

Terms and conditions of service

At the recruitment stage, sharing terms and conditions of service can encourage potential
employees to at least consider the organization. Below a certain level, it might even be difficult
to find candidates. However, even if it is true that badly designed pay systems can de-motivate
employees, getting pay right does not appear to be a solid guarantee of commitment. Research
(Mercer 2004) shows that when looking at factors influencing commitment and motivation,
pay only gets 65% of the votes, behind "Being treated with respect (85%), work/life
balance (79%), providing good service to others (74%), quality of work colleagues (74%)
and type of work (73%). Variable pay gets only 34%. This implies that although it is
necessary to provide a decent and comparable package, it's not the winning factor, and financial
incentives even less so. By the way, another survey conducted in the UK (Towers Perrin 2003)
shows that a large proportion of employees don't think that top performers are better rewarded
than average performers, which might be an explanation. Taking an extreme position, one could
even say that a high salary can encourage people to stay when they are not committed and the
organization would actually be better off without them. In reality, this is unlikely to be the case
for humanitarian agencies, such as the volunteer based organization MSF, where salaries are
more modest. For humanitarian agencies, Henry (2004b) says that for those engaged in the long
term, benefits are more important than pay. They can include tax free salary, health and
retirement benefits, return or end of contract allowances, longer holiday, baggage allowance, per
diem, insurance or facilitating accompanied status.

Growing the pool

Recruitment policies reflect and influence the approach towards the development of staff. Given
that it is both recruitment and retention of experienced managers that remains the most burning
issue for relief aid agencies, we can conclude that the pool is too small.

This is illustrated by the example of Darfur, where "agencies have become more desperate and
began to make compromises in their recruitment. This has resulted in dropping selection criteria
over time, interviews only being conducted over the phone, and less importance placed on
security and political competencies. Exceptions were made and a high percentage of first timers
were recruited" (EPN 2005). The impact was that inexperienced people were allocated tasks and

21
positions beyond their current abilities. Correspondingly there were high expectations placed
both on themselves and by others for them to perform. This is not unique to Darfur, and it can be
seen in other humanitarian responses. Of particular concern is that people can accept positions
beyond their competency level almost as if tempted to go beyond their ability (EPN 2005). This
in turn can mean that good people are put in positions where they are destined to fail. And staff
shortages and difficulty in recruiting lead to increasing pressure on the staff on site to stay,
almost to the point of manipulation (EPN 2005). One of the main HR headaches in the
humanitarian sector is described as follows: whereas aid workers usually enter the sector when
they are young and still mobile, they are often faced after a few years with personal choices,
mostly related to family issues that can force them to leave the sector or at least make them a lot
less mobile. As a result, humanitarian agencies are confronted with difficulties in filling middle
management positions with adequately skilled and experienced staff (Loquercio 2005). Agencies
can thus be forced to compromise when recruiting or increase the speed of internal promotions
without allowing the necessary time to build experience. Loquercio observes that difficulties are
worse for smaller agencies who have less possibilities to offer internal promotion to their staff
and are therefore more likely to lose them to other agencies. Similarly, agencies who strongly
rely on volunteers often end up losing them to other agencies or sectors of activity (Loquercio
2005). Trying to retain these programme managers is one option, but there is maybe also
something to be done in terms of recruitment policies. If finding the right person is a problem, a
possible solution is to consider potential and transferable skills rather than actual experience or
skills in the requisite role. Recognizing transferable skills acquired in the corporate sector,
agencies should work harder at providing entry routes in the humanitarian sector instead of
insisting that applicants have previous field experience (Loquercio 2005). Indeed, if all agencies
had such an approach, where would experience aid workers come from?

6. Learning, training and development

Learning, training and staff development are promoted throughout the organization. One of
the major reasons why people resign is when they feel that they have stopped learning and
developing personally or professionally. The employer obviously has a key role to play to ensure
that its employees are faced with new challenging tasks and equipped with the skills necessary to
deal with their work. CIPD (2005b) recommends to maximize opportunities for individual
employees to develop their skills and move on in their careers, advising to take sideway moves
that vary experience and make work more interesting. The traditional approach is through career
progression and advancement. This is however not always possible and can be accepted by
employees, as long as the selection process for promotions is seen as fair (CIPD 2004). Other
options include redesigning job descriptions, promoting laterally, when promoting vertically is
not possible. Offering more possibilities for development and training of staff, including by
encouraging taking a year off in order to go back to university is another option (Loquercio
2005). As mentioned by Henry (2004b), humanitarian agencies need to have a coherent training

22
policy and invest in training, even though high turnover can dissuade those who are responsible
for making investment decisions from doing so.

Offering career opportunities

The CIPD (2005b) recommends providing as much job security as possible. According to its
report, employees who are made to feel that their jobs are precarious may put a great deal of
effort in to impress, but they are also likely to be looking out for more secure employment at the
same time. Security and stability are greatly valued by most employees. In this sense, letting
employees know from the beginning that they can grow in your agency is an encouragement to
stay. When talking about offering career opportunities, humanitarian agencies have several
problems. First of all, it is difficult to track the performance of field staff and match their skills
and profile with a new position. Indeed, even if they are followed by HR at headquarters, they
are based in the field and led and appraised by their field based line manager, a person that also
changes on a yearly basis. Given that the quality of appraisals is not always consistent, it makes
the task of the HR managers all the more difficult (Loquercio 2005). However, more could
certainly be done in succession planning, with agencies' tendency to start recruitment at the last
minute being criticized (Henry 2004b). Starting to discuss the next assignment 3 to 6 months
before the end of mission could facilitate planning and signal to field staff that their agency is
interested in further collaboration. When that doesn't happen, perceived job insecurity can push
employees to start looking elsewhere in order to find another job. In terms of succession
planning global networks have an advantage with their internal job market which allows more
mobility to their staff, even though this possibility is not always used to its full potential (Henry
2004a

Short term contracts / agreements

But some serious thinking needs to go into the standard duration of contracts or agreements with
staff, because traditional resourcing practice, with many staff employed on short term
contracts [has] inhibited skills development, individual and organisational learning."
Indeed, rapid staff turnover, especially amongst expatriate staff, and the widespread use of short
term resourcing is one of the main constraints on both staff capacity building and organisational
learning and has ultimately negative effects on the quality of humanitarian relief programs
(Richardson 2005). This practice is not only damaging in terms of staff retention but also for
learning. Indeed, It discourages people from investing in learning because job insecurity is
forcing them to rather concentrate on finding the next job. Obviously, everyone needs time to
learn how to do its job, and then time to perform it well. But when staff are moved on or
rotated too quickly, the opportunity to do this disappears. Frequent changes or high rates of
turnover also make it impossible to ensure systematic handovers between incoming and out
coming staff, with resulting loss of knowledge and frustrations on all sides. It is argued that the
duration of missions is limited by funding constraints (project based funding), the necessity to
include periods of rest and the fact that for international aid workers, staying away too long from

23
their home environment would adversely affect their market value (Henry 2004a). However,
Loquercio (2005) suggests that the duration of assignments should be raised to a standard
minimum of 12 months, and more for key positions such as programme managers or senior
management. The author also cites examples of agencies who give longer term contracts
unrelated to a specific destination. This gives more flexibility to the agency and more benefits for
the aid workers. Donors are also requested to look into the problem and provide more predictable
funding frameworks that would allow giving longer term contracts.

7. Health, safety and security

The security, good health and safety of our staff are a prime responsibility of our organisation.
Health, safety and security issues are probably more acute for aid workers than in the corporate
world. Health aspects can cover both physical and psychological aspects. Expatriates working in
tropical environments are especially exposed to health related problems such as malaria,
diarrhoea, AIDS and other diseases. Good briefing, relevant vaccines, adequate support to avoid
staff getting sick (water filters, cooks well trained for hygiene,...) and quick and good treatment
can help to reduce health related turnover (Loquercio 2005). On the other hand, quick and
adequate response to the different types of stress field staff can be exposed to is also a mitigating
factor. Avoiding presenteeism, learning how to better manage time, providing adequate living
conditions, work/life balance, rest and relief, appropriate support and emotional debriefings
when confronted with traumatic events can make a difference between burnout and remaining fit
for another assignment. During emergencies, it can help to have HR staff coming from the HQ as
part of the emergency response team to strengthen recruitment and assist in the support of both
national and international staff (EPN 2005)

Can retention work in the humanitarian sector?

In other words, we can look at the diagram overleaf cited from Richardson (2005). Not only
does it shows the different elements that can lead to longer term careers and improved
humanitarian capacity, it also reminds us that Oxfam, by adapting a voluntarist strategy to tackle
its turnover problem managed to cut it by more than half, a sign that there is still potential for
improvement in the humanitarian sector.

2.18 Alternative approaches to retention

Retaining knowledge

As we move towards an increasingly service and knowledge based economy, the management of
knowledge workers is becoming a key issue. Research and development departments are now by
far not the only place where crucial knowledge is stored in an organisation. It is therefore
important to make sure this knowledge is retained within the organisation (CIPD 2005c). This

24
can imply putting greater emphasis on the capacities of employees to interact and share their
knowledge with their team-mates so that the risk associated with a potential departure is reduced.
This can be supported by communities of practice or providing space and opportunities for
sharing. It can also mean putting more effort into retaining individuals with key knowledge
assets through retention measures such as career development or better work/life balance (CIPD
2005b) Following this line of thought, Loquercio (2005) underlines the possible role of learning
and knowledge management in mitigating the negative impacts of excessive turnover and staff
rotation. The emphasis is put on helping to map learning needs through the identification of
knowledge domains and knowledge sources, both explicit and tacit. Among the key learning
processes, the role of organizational induction, briefings and handovers is underlined. Peer
support, communities of practice and mentoring are also presented as useful tools. Finally, the
paper draws attention to the often underutilized capacities of local staff who have a much better
and comprehensive institutional memory of the history and action of their agency in a given
context. The paper warns against the dangers of designing a predominantly IT based knowledge
management strategy and underlines the importance of knowledge transfers through people and
social processes.

Building local staff capacity

When looking at the problems associated with the turnover of expatriate staff, one cannot escape
the question of their usefulness, or at least their numbers, when compared with national staff.
Henry (2004a) addresses this points and notes that while expatriates might sometimes be
necessary, their presence is also associated with problems such as high turnover, poor knowledge
of local realities, lack of cultural sensitivity and tensions resulting from expatriate lifestyles.
Mukasa (1999) covers the issue more extensively, analyzing what added value expatriates bring
to international development NGOs, and what potential problems their use can create. The first
basis in questioning their utility is the comparatively high costs they incur compared to national
staff, especially considering that often, their presence is donor rather than needs driven. The
author says that often, expatriates fail to transfer skills to national staff and are often concerned
with short term outcomes that will impress their HQ, rather than long term benefits. In her case
study, the author describes how frequent turnover of expatriates could result in a lack of cohesion
among project activities or their continuity, as new activities were often added to reflect the
interests and expertise of new expatriates rather than following an analysis of local priorities.
Frequent change of expatriates was also said to make it difficult for staff to clearly understand
their role, as it would change from one expatriate to the other. As a result, ownership was also
weaker. Further problems related to the presence of expatriates were mentioned as their limited
cultural awareness and lifestyle, which could alienate them local support. On the other hand, the
development and increasing use of advanced IT technology is allowing easier and more
affordable real time contact between Headquarters and field offices. In a sense, this could mean
that support and control from Headquarters need not necessarily to take the form of a large
expatriate presence in the field, but could allow for more flexible management at a distance. If

25
expatriates are probably to stay, their interaction and relations with national staff could probably
be improved and make better use of the local capacities and its ability to act as a longer term
institutional memory, thanks to longer commitment to the same location and agency.

Chapter 3
Resignation Process in EBL

A confirmed employee may resign from the services of the bank giving 3 (three) months notice
in writing through a proper channel or 3 (three) months basic salary in lieu thereof. The
Management may also ask to resign an employee giving him/her a 3 (Three) months notice or 3
months basic salary in lieu.

Any Partial or full waiver of notice period will be at the discretion of the Managing Director.

3.1 Current Scenario of Employee RETENTION IN EBL

Eastern Bank Ltd. is a second generation bank providing all kinds of banking services to its
customers. The bank has different categories of loan and deposit, cards, SME products and other
products and services to serve its huge number of clients. There are different departments and
divisions in EBL for which a careful HR planning is needed to recruit the best qualified
employee for the job and retain them in the long-run for the constant profitability and growth of
the organization. Employee retention is necessary because frequent job switching creates some
problems for every organization as well as reduces the company reputation. In the year 2016
EBL experienced a considerable percentage of job switching that grabbed the attention of the
Management Committee to focus on the current retention strategy of EBL.

In January 1, 2017 EBL had a total number of 1190 employees. Among the total number of
employees 690 employees had been working as permanent employee and 500 employees had
been working on contractual basis. The following table shows the total number of employees of
EBL as on January 1, 2016:

Table: 1 Total Number of Manpower as on January 1, December 2016

Employee Category Number Total

Permanent Employees 690
1190
Employees on Contract 500

During the year 2016, a total number of 273 employees left the EBL due to different reasons. It
has been seen that among the total 273 resigned employees 190 employees were on contractual
basis and 83 were permanent employees. The following table shows the total manpower left the
EBL during 2008:

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Table: 2 Total Manpower Left the EBL during 2008

Employee Category Number Total So, from the above table it is clear that, the
Permanent Employees 83 trend of employee turnover is quite high
273 among the contractual employees.
Employees on Contract 190
From the above resigned employees the numbers of employees left the EBL from October
2016to January 2017are as follows:

Table: 3 Numbers of Employees Left the EBL from October 2016to January 2017

Employee Category Number

Vice President (VP) 1
Senior Assistant Vice-President 1
(SAVP)
Assistant Vice-President (AVP) 3
Senior Principal Officer (SPO) 8
Principal Officer (PO) 1
Management Trainee Officer (MTO) 1
Senior Officer (SO) 5
Officer 10
Total 30

From the above table it is seen that, from October 2016to January 2017a total number of 30
employees left the EBL due to different reasons. Clearly the above table shows that, the trend of
employee turnover in EBL is quite high in the junior or entry levels of jobs such as in officer and
senior officer level. Among the total 30 resigned employees 22 resigned from the entry level of
EBL.

At present EBL have a total number of 1300 employees. Among them 750 are working as
permanent employee and 550 are working on contractual basis. The following table shows the
number of manpower in EBL as on December 31, 2016:

Table: 4 Total Number of Manpower as on 31 December 2016

Employee Category Number Total

Permanent Employees 750
1300
Employees on Contract 550

3.2Employee Turnover Rate IN ebl (2016)

During the year 2008 EBL recruited a total number of 421 employees. Among the total recruited
employees 171 recruited permanently and 250 recruited on contractual basis.

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Table: 5 Total Manpower recruited in EBL during 2016

Employee Category Number Total

Permanent Employees 171
421
Employees on Contract 250

The total number of employees as on January 1, 2016was 1190 and the total number of
employees as on December 31, 2016were 1300. So the average number of employees during
2016 in EBL was 1245. This would be clearer from the following table:

Table: 6 Average Employeesin EBL during 2008

Total No. of Average

Period Employees Employees
during 2016 during 2016
Jan 1, 2016 1190
1245
Dec 31, 2016 1300

So, from the above it is seen that the turnover rate for the year 200 in EBL was 22% which is
somewhat higher compared to other banking organizations. At present this is the prime concern
for EBL. So, the employee retention rate in EBL during 2016was 78%. The Management
Committee of EBL is trying to increase the current employee retention ratio in order to establish
a steady work environment and to motivate the current employees.

According to the HR Manager of EBL, there are some major reasons for frequent job switching
in EBL. The reasons are:

Rapid expansion of the Banking Industry

Remodeling of Banking Industry
Offering higher benefits to EBL employees by other organizations

The HR Manager believes that employee turnover in an organization has both some advantages
and disadvantages. But frequent job switching creates some major problems for any
organization. So, any organization should implement effective employee retention management
strategy in order to reduce the turnover rate and to motivate the existing employees to make them
completely goal-oriented.

No. of employees left the EBL during 2016

Turnover Rate = ______________________________________

Average Employee in EBL during 2016

= 273/1245 * 100

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= 22%

According to the HR Manager of EBL, employee turnover creates the following advantages and
disadvantages for her organization:

Costs of Turnover perceived by EBL

Lost business opportunities

Loss of amount incurred for employee development
Costs associated with hiring new employees
Loss of company reputation

Benefits of Turnover perceived by

Hiring new talented employees

Replacing with junior employees who costs low
Promotion opportunity for an existing employee. In this regard, sometimes an existing
grade of an employee may not be changed for promotion but functional designation can
be changed.

At present EBL has some attributes like salary which is included in compensation and other
benefits and performance appraisal to motivate and retain its current employees. Beside these,
EBL provides attractive End of Service Benefits (EOSB) to its employees which include the
following:

Provident Fund (PF)

Gratuity
Encashment Facilities of Annual/Privilege Leave
Super Annuation Fund Scheme
Retirement Gift and
Long Service Awards

EBL also provides attractive compensation packages for its employees to motivate them which
include:

Salaries and Increments

Excellent Promotional Benefits
Two types of bonuses including festival bonus and performance bonus

Beside the above issues EBL has an attractive performance appraisal process in order to reduce
the turnover rate and to motivate and guide its employees toward the achievement of self as well
as organizational goal.

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3.3 Reasons for Leaving EBL

An employee may resign from his/her existing position due to internal factors or external factors
or both of them. For the year 2008, most of the employees leave the EBL because of getting
better job in terms of career advancement and higher compensation packages. It has been seen
that almost 40% employees leave the EBL because they had managed better job in terms of
career advancement and about 30% employees leave the EBL because of getting higher
compensation packages.

It has been found that about 87% male and 13% female employees left the EBL during 2016 and
80% of them have secured jobs in other manufacturing and services organizations. The following
further clarifies the reasons for leaving the EBL:

Table: 7 Reasons for Leaving EBL

Reasons In Percentage (%)

Better Jobin terms of career advancement 39.58%
Better Compensation in terms of higher
29.16%
compensation
Tired of monotonous job 2.08%
Leaving for higher studies 4.16%
Deprived of 2.08%
Medical/Health reasons 2.08%
Found internal politics 2.08%
Found no scope for career development 8.33%
Other reasons 10.41%

From the above table it can be easily understood that the most important and frequent reasons for
employee turnover in EBL are getting Better Job in terms of career advancement and higher
compensation in other organizations. The other reasons for frequent employee turnover in EBL
are:

Retirement
Feelings of uncomforted
Going to abroad as permanent immigrant
Personal reasons etc.

30
Conclusions
It has been widely stated in recent years that companies should prepare themselves for a war for
talent. But is this the case for humanitarian and emergency relief agencies? Arguably not, for
with aggressive competitively, the global performance of the sector will suffer with increased
turnover and poorer performance. It would also likely result in the concentration of resources
within a core group of agencies, putting the diversity and independence of humanitarian agencies
at risk. Agencies and donors need to assume their own responsibilities, with a coordinated effort
to alleviate the constraints that the system, and the lack of qualified and experienced managers
incurred by high turnover inflicts on the performance of the sector.

31
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