Navigating Employee Turnover in Sri Lanka's Banking Industry Amid Economic Turmoil

 

Introduction:

In recent years, Sri Lanka's banking industry has faced unprecedented challenges due to the economic turmoil gripping the nation. As the country grapples with financial instability, the banking sector has witnessed a concerning trend: a significant rise in employee turnover. This phenomenon raises important questions about the industry's resilience and the well-being of its workforce.

The phrase “churn and burn” is commonly used to describe an industry’s high turnover rate. Based on recent data, it’s appropriate to use that phrase when describing the financial services industry.

According to a CAL Research Report, the Private Commercial Banks witnessed a 67.8% turnover rate in the year 2022 when compared with the previous year, with the number being close to 3000 employees, which is one of the highest among all industries. (CAL Research. 2023, March 14)

Understanding the Factors:

Several factors contribute to the surge in employee turnover in Sri Lanka's banking sector. The economic downturn has led to increased pressure on financial institutions to cut costs, resulting in downsizing and reduced employee benefits. Additionally, rising inflation and limited career growth opportunities have left employees disillusioned, prompting many to seek employment abroad or explore other industries.

Recruitment of highly experienced officers from the job market for the key positions

represent a challenging problem. In addition, even though recruitment of junior level staff from school leavers is not a challenging but retention of them is a challenging problem in this sector. (Gunawardhana, C. S., & Damayanthi, N. M. M., 2019)

Impact on Banks:

The high turnover rates have profound implications for banks. Losing experienced staff hampers productivity, disrupts customer service, and erodes institutional knowledge. Furthermore, the constant churn of employees places a strain on recruitment and training processes, diverting valuable resources away from strategic initiatives. (Pattak, D. C. 2023)

Strategies for Mitigation:

Mitigating employee turnover in banks requires a multifaceted approach that focuses on creating a positive work environment, offering competitive benefits, providing opportunities for career growth, and addressing the unique challenges faced by employees in the banking industry. Here are some effective strategies to mitigate employee turnover in banks:

1. Competitive Compensation and Benefits:

• Competitive Salaries: Ensure that employees receive competitive salaries based on industry standards and regional cost of living.
• Comprehensive Benefits: Offer a comprehensive benefits package, including health insurance, retirement plans, and paid time off, to enhance the overall compensation package.

2. Professional Development and Training:

• Training Programs: Invest in training programs that enhance employees’ skills and knowledge, making them more confident in their roles.
• Career Development: Provide clear paths for career advancement within the organization. Employees are more likely to stay if they see a future and opportunities for growth.

3. Work-Life Balance:

• Flexible Work Arrangements: Offer flexible work hours or remote work options where feasible, promoting a healthy work-life balance.
• Paid Time Off: Provide sufficient paid time off and encourage employees to take breaks to prevent burnout.

4. Recognition and Rewards:

• Employee Recognition: Recognize and reward employees for their achievements and milestones. Regular appreciation can boost morale significantly.
• Incentive Programs: Implement performance-based incentive programs to motivate employees to excel in their roles.

5. Healthy Work Environment:

• Workplace Wellness: Promote employee well-being through wellness programs, mental health support, and access to counseling services.
• Open Communication: Foster open and transparent communication between management and employees. Address concerns promptly and proactively.

6. Leadership and Management:

• Effective Leadership: Train managers to be effective leaders, emphasizing empathy, communication skills, and team-building.
• Regular Feedback: Provide regular feedback and conduct performance evaluations to help employees understand their strengths and areas for improvement.

7. Employee Engagement:

• Employee Surveys: Conduct regular surveys to gauge employee satisfaction and identify potential areas of improvement.
• Team Building Activities: Organize team-building activities and social events to strengthen relationships among employees.

8. Retention Bonuses and Perks:

• Retention Bonuses: Offer retention bonuses for employees who stay with the organization for a certain period, incentivizing long-term commitment.
• Additional Perks: Provide additional perks such as gym memberships, childcare services, or commuter benefits to enhance the overall employee experience.

9. Succession Planning:

• Succession Programs: Implement succession planning programs to prepare employees for future leadership roles within the organization, showcasing a clear career path.

10. Exit Interviews and Analysis:

• Exit Interviews: Conduct thorough exit interviews to understand the reasons behind employees leaving and use this feedback to make necessary changes.
• Data Analysis: Analyze turnover data to identify patterns and trends. This analysis can provide insights into specific departments or roles that may need additional attention.

11. Community Involvement:

• Community Engagement: Encourage employees to participate in community service and charitable activities. This fosters a sense of pride and belonging within the organization.

12. Collaboration with Government and Industry Partners:

• Collaboration between the government, banking industry, and educational institutions is crucial. The government can offer incentives to banks that prioritize employee retention and invest in local talent. Industry partnerships can facilitate knowledge exchange and the development of innovative solutions to retain skilled professionals.

13. Embracing Technological Solutions:

• Technology can play a pivotal role in mitigating the impact of employee turnover. Banks can invest in automation and artificial intelligence to streamline operations, reducing the reliance on manual labor. This not only improves efficiency but also allows employees to focus on tasks that require human expertise, enhancing job satisfaction.

By implementing these strategies, banks can create a positive, supportive, and engaging work environment, which in turn can significantly reduce employee turnover rates. Remember that each organization is unique, so it's essential to tailor these strategies to align with the specific needs and culture of the bank.

References:

1.CAL Research. (2023, March 14). Banks Cut 350 Staff in 2022, Turnover Up. Retrieved October 30, 2023, from https://cal.lk/banks-cut-350-staff-in-2022-turnover-up/

2.Gunawardhana, C. S., & Damayanthi, N. M. M. (2019). Factors Affecting Employee's Turnover in the Banking Sector: Evidence from Small Domestic Licensed Commercial Banks in Sri Lanka. Journal of Business and Technology, 3(2), Article 47.Retrieved October 30, 2023 from https://doi.org/10.4038/jbt.v3i2.47

3.Pattak, D. C. (2023). The Detrimental Effects of High Employee Turnover & Constant Change in a Bank's Profitability, Employee Satisfaction, and Customer Retention. LinkedIn. Available at: https://www.linkedin.com/pulse/detrimental-effects-high-employee-turnover-constant-change-msme-rm/ (Accessed: 30th October 2023).