Employee Turnover in MFIs: Reasons & Remedies

Sk. Mahmudul Alam, Mahmud (2015): Employee Turnover in MFIs: Reasons & Remedies.

Abstract

At present day’s employee turnover is one of the challenging issues in microfinance sector of Bangladesh. Excessive turnover is not only pricey, but it can create a bad reputation in the MFI sector and among the job seekers. Excessive turnover may be harmful to an MFI's productivity if experienced and efficient employees are often departing and the employee encompasses a high percentage of beginners. The impact of turnover has received substantial attention by the senior management and human resources professionals of the sector. So it is time demand to know the reasons those influence employee turnover and also know the remedies how we can reduce the rate of employee turnover rate. So an attempt was taken by this study to know the reasons and remedies of employee turnover in microfinance sector of Bangladesh. The study found that the average turnover rate of permanent employees in nine reputed MFIs in 2012, 2013 and 2014 were respectively 13.79%, 12.74% and 10.96% and the average turnover rate of contractual employees in seven MFIs in 2012, 2013 and 2014 were respectively 25.43%, 21.92% and 15.93%. The major reasons for employee turnover are: salary and other financial benefit are comparatively less than other MFIs; terminated for corruption or fraudulent; terminated for violation of service rules; no overtime financial benefit; excessive working load; transfer to distant district from home district; for family reason; not having promotion after being deserve it etc. The key remedies for reducing employee turnover are: should fix up a competitive salary and other financial benefit harmonizing with the other competitor MFIs; promotion and salary increment policy should be transparent; should have provision of proper reward for good work and proper punishment for ill work in MFIs; should have financial benefit for overtime work; having automation and online network facilities in all branches; to provide necessary job related training to a new recruited employee; having facility of leave encashment; having provision of financial support or loan for employee at the time of his emergency, transfer to nearest district from home district etc.

• Item Type: MPRA Paper
• Language: English
• Keywords: Employee Turnover, MFIs, Bangladesh, Turnover Rate, Reasons, Remedies
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J28 - Safety ; Job Satisfaction ; Related Public Policy; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects

References

Abassi, SM & Hollman, KW. (2000). “Turnover: the real bottom line”, Public Personnel Management, vol. 2, no. 3, pp. 333-42

Bame, SI. (1993). “Organizational characteristics and administrative strategies associated with staff turnover”, Health Care Management Review, vol. 18, no. 4, pp. 70-86

Barrows, C. (1990). “Employee turnover: implications for hotel managers”, FIU Hosp Rev, pp. 24-31

Barua, Suborna. (2009). “Microfinance industry and problems confronting it”. The Financial Express, Saturday, 31 January 2009, http://www.thefinancialexpress-bd.com/old/2009/01/31/ 57470.html

Cantrell, N & Sarabakhsh, M. (1991). “Correlates of non-institutional food service turnover”, FIU Hosp Rev, pp. 52-9

Causes of Employee Turnover in Micro Finance Institutions in Tanzania. The Case Study of Presidential Trust Fund, Open University of Tanzania

Dailey, RC & Kirk, DJ. (1992). “Distributive and procedural justice as antecedents of job dissatisfaction and intent to turnover”, Human Relations, vol. 45, no. 3, pp. 305-317

Dalton, D. & Tudor, WD. (1981). “Turnover, Transfer, Absenteeism: An Interdependent Perspective”, Journal of Management, vol. 19, no. 2, pp.193-220

DeMicco FJ & Giridharan, J. (1987). “Managing employee turnover in the hospitality industry”, FIU Hosp Rev, pp. 26-32

Denvir A & McMahon, F. (1992). “Labor turnover in London hotels and the cost effectiveness of preventative measures”, Int. J. Hosp. Manage, vol. 11, no.2, pp. 143-54

Dyke, TV & Strick, S. (1990). “Recruitment, selection and retention of managers in the hotel and restaurant industry”, FIU Hosp Rev, pp. 1-9

Firth, L., Mellor, DJ, Moore, KA & Loquet, C. (2004). “How can managers reduce employee intention to quit?” Journal of Managerial Psychology, vol. 19, no. 2, pp. 170-187

Hogan, JJ. (1992). “Turnover and what to do about it”, The Cornell HRA Quarterly, vol. 33, no. 1, pp. 40-45

Mahmud, Khaled and Sharmin Idrish. (2004). “The Impact of Human Resource Management Practices on Turnover of Bank Employees in Bangladesh”. World Review of Business Research, Vol. 1. No. 2. May 2011 Pp. 71- 83

Marulanda et. Al. (2010). “Taking the Good from the Bad in Microfinance: Lessons Learned from Failed Experiences in Latin America”.

Md Sohel Rana. (2015). “Job Satisfaction Effecting Factors of Employees in Bangladesh Banking Sector”. International Journal of Economics, Finance and Management Sciences, 2015; 3(4): 352-357, Published online July 1, 2015 (http://www.sciencepublishinggroup.com/j/ijefm), doi: 10.11648/j.ijefm.20150304. 14., ISSN: 2326-9553 (Print); ISSN: 2326-9561 (Online)

Miller, JG & Wheeler, KG. (1992). “Unraveling the mysteries of gender differences in intentions to leave the organization”, Journal of Organizational Behavior, vol. 13, no. 5, pp. 465- 478

Mrope, George & Yustin I. Bangi. (2014). “Examining the Influence of Management Practice and Attitudes on Employee Turnover: A Case of Kibaha District Council”. (ISSN 2321 – 8916), The International Journal of Business & Management, www.theijbm.com

Osmani, S.R. et al. (2011). “Asset Accumulation and Poverty Dynamics: The Role of Microcredit”. Institute of Microfinance (InM)

Park, HY, Ofori-Dankwa, J & Bishop, DR. (1994). “Organizational and environmental determinants of functional and dysfunctional turnover: Practical and research implications”, Human Relations, vol. 47, no. 3, pp 353-366

Quarles, R. (1994). “An examination of promotion opportunities and evaluation criteria as mechanisms for affecting internal auditor”, Journal of Managerial Issues, vol. 6, no. 2, pp. 176-194

Sarker, Debashis. (2013). “Pressure on Loan Officers in Microfinance Institutions: An Ethical Perspective”. Journal of Economics and Sustainable Development, ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online), Vol.4, No.12, 2013

Sattar, Saba & Shehzad Ahmed. (2014). “Factors Effecting Employee Turnover in Banking Sector”. Developing Country Studies, ISSN 2224-607X (Paper) ISSN 2225-0565 (Online), Vol.4, No.3, 2014, www.iiste.org, The Islamia University of Bahawalpur

Shamsuzzoha, AHM & Md. Rezaul Hasan Shumon. (2006). “Employee Turnover-a Study of its Causes and Effects to Different Industries in Bangladesh”. University of Vaasa, Finland

Siwale, Juliana & John Ritchie. (2011). “Failure by Design: The Rise and Fall of a Microfinance Institution in Zambia – a case of Pride Zambia”. Lincoln Business School, University of Lincoln, UK

Trevor, CO, Barry, G & Boudreau, JW. (1997). “Voluntary turnover and job performance: Curvilinearity and the moderating influences of salary growth and promotions”, Journal of Applied Psychology, vol. 82, no. 1, pp.44-61

Wasmuth, WJ & Davis, SW. (1993). “Managing employee turnover: why employees leave”, The Cornell HRA Quarterly, pp. 11-18

YMN. (2011). “Staff Turnover Study for Microfinance Institutions in Yemen”, Consultant Post, Yemen Microfinance Network

http://management.about.com/od/employeemotivation/a/Employee-Turnover.htm

http://management.about.com/od/metrics/g/Turnover.htm

http://smallbusiness.chron.com/employee-turnover-definitions-calculations-11611.html

http://study.com/academy/lesson/what-is-employee-turnover-definition-cost-reasons.html

http://www.cipd.co.uk/hr-resources/factsheets/employee-turnover-retention.aspx

http://www.ehow.com/info_8206028_types-employee-turnover.html

http://www.mra.gov.bd/index.php?option=com_content&view=article&id=104&Itemid=80

http://www.ok.gov/opm/documents/Employee%20Turnover%20Presentation.ppt

https://en.wikipedia.org/wiki/Turnover_%28employment%29