HUMAN RESOURCE UTILIZATION AND EMPLOYEE RETENTION IN NIGERIAN BANKING SECTOR

HUMAN RESOURCE UTILIZATION AND EMPLOYEE RETENTION IN NIGERIAN BANKING SECTOR

The study is aimed to ascertain the relationship between human resource utilization and employee retention in the Nigeria Banking Sector.

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The Nigerian Banking sector, during the past 20 years, has experienced a distinctive growth. However, it faces many problems including those related to employee turnover, work environment, and organizational trust. This has resulted in the industry being categorized as a “slave driven” or “hire and fire” industry. Furthermore, the banking industry has for a long time been characterized with operational and structural inadequacies such as weak Board and Management oversight, nonperforming insider-related facilities, declining asset quality and attendant large-provisioning for bad debts, frauds attributable to weak internal control systems, over-dependence on public sector deposits, foreign exchange trading, and a dearth of skilled manpower. Other issues are poor working conditions, a low incentive for workers, high labour turnover, absenteeism, inadequate human resources, restrictive labour relations, low investment in technology, low productivity, denial of legal entitlements, and strained employee-employer relationships. Banks need to anticipate impending shortages of overall talent as well as a shortfall of employees with the specialized competencies, in order to stay ahead of the competition and ensure adequate employee retention.

In a business setting, one of the objectives of employers is usually to decrease employee turnover,  thereby decreasing training costs, recruitment costs and loss of talent. Employee retention is, therefore, the ability of an organization to reduce the turnover of its employees (Fukofuka, 2014). Thus, employee retention can be seen as a careful and necessary effort by organizations to keep employees for longer periods (Frank, Finnegan & Taloy, 2004).

The importance of employee retention cannot be overemphasized.  Olowu and Adamolekun (2005) observed that it is becoming more essential to secure and manage the 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. Mahmood and Zafar (2016) mentioned that retaining a large number of talented employees within an organization will provide an important source of competitive edge for the organization. Olson (2010) stated that employee retention is vital and an organization can see positive results from a motivated workforce.  Latukha (2011) noted that getting employees to stay requires more than motivation, it requires a commitment to self-opportunity, as employees have big aspirations and hopes for their own growth.

There are several studies on employee retention. Mita, Aarti, and Revneeta (2014) defined employee retention as a technique adopted by businesses to maintain an effective workforce and at the same time meet operational requirements. Walker (2001) and Cunningham (2002) found that paying more, additional work responsibilities, superior supports work environment and different incentive plans for the employees also helpful in retaining key employees in the organization. Muindi (2010) found that Leadership styles, especially lack of involvement in decision making and inadequate communication would lead to dissatisfaction in the minds of employees. Breadwell, Holden, and Claydon (2007) found that Leaders and their skill are responsible in creating a culture of retention, therefore the leader has become the main factor which motivates people to stay or leave. Gwavuya, (2011) found that Ineffective leadership would results in poor employee performance, more stress, lack of job commitment and increases turnover. Mushrush (2002) found that non-competitive compensation, unhealthy working conditions, monotony, poor supervision, poor fit between the employee and the job, inadequate training, poor communications, and other organizational practices would result in more employee turnover and hence affects employee retention. According to Ghapanchi and Aurum (2011), retention factors include remuneration and benefits, training opportunities, fair and equal treatment, organizational culture. Allen and Shanock (2013) noted that employee retention is related to colleague socialization.  Andrews and Wan (2009) stated that management style and leadership will lead to an increase in organizational retention capability. Loan-Clarke, Arnold, Crombs, Hartly, and Bosley (2010) noted that autonomy, work-schedule flexibility, and social support, help an organization to keep its employees for a longer period of time. Christeen (2015) identified eight retention factors: management, conducive environment, social support and development opportunities, autonomy, compensation, crafted workload, and work-life balance.

Moreover, Herman (2005) observed a direct relationship between development opportunities and employee retention. In a comparable report, Prince (2005) identified promotion and opportunities for growth as a significant reason for which employees decide to leave or stay in an organization and went further by identifying influential factors pertaining to career growth opportunities, which are: advancement plans, internal promotion, and accurate career previews. Hytter (2007) suggested that there is a correlation between employee retention and reward. Milkovich and Newman (2004) viewed monetary pay among all kinds of compensation as the most relevant factor in maintaining employee retention. Priyanka and Poonam (2015) noted that it is necessary to give the right kind of job to the right people at the right place for the intention of reducing the attrition rate in the organization. The authors further noted that managers must consider the proper utilization of human resources so that they will work with full commitment, dedication, and passion for the aim of achieving the goals of the organization.

Human resource utilization, on the other hand, refers to the effective and efficient use of human resources in an organization in order to achieve the desired growth and development of any organization. Ocheni, Atakpa, and Nwankwo (2013) noted that human resource utilization implies maximum use of competent staff, their employment at strategic places and the creation of enabling environment for the practice of acquired skills. The authors further mentioned that effective training is the only panacea towards enhancing good staff utilization and productivity in the Nigerian public service. Obadan (2000) sees utilization as a useful engagement of staff in his area of specialization for effectiveness and efficiency. Therefore, human resource utilization is seen as a key factor in the growth and development of an organization

Despite the fact that there have been several studies on employee retention, however, one thing that has been least discussed is from the perspective of human resources utilization. Hence, there is a dearth of scholarship in the relationship between human resources utilization and employee retention. Second, there is insufficient literature on the moderating role of organizational culture and the intervening role of a workplace environment, on human resources utilization and employee retention. Moreover, studies that have utilized structural equation modeling (SEM) to quantify the relationship between human resources utilization and employee retention is scant. Therefore, this study aims to investigate the relationship between human resources utilization and employee retention in the Nigerian banking sector, by adopting organizational culture as a moderating variable, while the workplace environment is recognized as an intervening variable. The study will involve the use of structural equation modeling, as a statistical technique since human resource utilization is a line activity, therefore, organizations should ensure that there a functional human resources department that will always be responsive to the manpower needs of the organizations’ department that will always be responsive to the manpower needs of the organizations.

1.2 Statement of the Problem

The Nigerian banking sector over the years has been havings problems of a high rate of employee turnover and increased voluntary resignations. Indeed, increased voluntary resignation leads to loss of a valued employee, and losing a valued employee reduces organizational productivity, increases expenses associated with recruitment, hiring and training a replacement and also provides an opportunity to competitors to utilize the skills, abilities and critical knowledge of an experienced and competent employee (Nwokocha & Iheriohanma, 2012). Specifically, lack of optimum utilization, overutilization and underutilization lead to dissatisfaction of employees and feeling of dissatisfaction may be responsible for the reason why employees quit their jobs. A vacuum is created whenever a well-trained and well-adapted employee leaves the organization. Thus, the organization loses key skills, knowledge and business relationships. One of the biggest challenges managers are facing, is their inability to adequately fulfill their responsibilities of creating and sustaining an environment that fosters employee retention.

Furthermore, employees require reinforcements, direction, and recognition to enable them to remain satisfied in their positions. According to Kadiri, Isiaka and Jimoh (2017), employees in the Nigerian banking system are highly pressured to improve their present performance while little or no room is given for the development of talent to improve future performance. This banking job pressure, when not addressed, brings about job insecurity, absenteeism, burnout, and resignation. Chiekezie, Emejulu, and Nwanneka (2017) stated that the rate of employee turnover, which is increasing in the Nigerian banking system; leads to a situation whereby employees continuously move from one bank to another in a short period of time. Employee turnover is costly, lowers productivity, kills morale, losses customers to competitors and tends to get worse if it is not urgently addressed, hence, constitutes challenges (Akinruwa, Ajayi & Akeke, 2014).

Several employee retention strategies have been suggested by various scholars. Mehta, Singh,  Bhakar, and Sinha (2010) suggested that finding and retaining the best employees is every company’s challenge, as such, it could be envisaged that in the future, successful organizations would be those that adapt their organizational behaviour to innovation, creativity, and flexibility; achieved by employee loyalty and retention. These would enable the loyal employees to utilize their skills, knowledge, expertise, talent and other attributes for the benefit of the organizations, while going the extra mile to ensure the survival of the organization, through excellent performance. According to Gberevbie (2008), if appropriate employee retention strategies are adopted and implemented by organizations, employees will remain and work for the successful achievement of organizational goals. Oganezi and Lozie (2017) suggested that it is not always about recruiting more employees to close the gap left by previous employees; management should develop an appropriate strategy to keep employees who have achieved a lot for the institution.

In spite of the several studies that have been carried out on employee retention, however, only a few scholarly works considered the perspective of human resource utilization. Hence, there is a dearth in literature in the relationship between Human Resources Utilization and Employee Retention. Second, there is insufficient literature on the moderating role of Organizational Culture, as well as the intervening role of Workplace Environment on Human Resources Utilization and Employee Retention. Moreover, studies that have utilized Structural Equations Modeling (SEM), to quantify the relationship between Human Resources Utilization on Employee Retention is scant. It is based on the fact that this work is structured to examine how Human Resources Utilization will lead to Employee Retention in Nigerian Banking Sector, by adopting Organizational Culture as a moderating variable, while Workplace Environment is recognized as an intervening variable. The study will involve the use of structural equation modeling, as a statistical technique.

1.3 Conceptualization of Study Variables

The conceptualization of the study variables is given below: (AVAILABLE IN MATERIAL)

Figure 1.1: Conceptual framework

The dimensions of Human Resources Utilization (optimum utilization, overutilization, and underutilization) were adapted from the works of Verma and Likhitar (2015), while the measures of Employee Retention (career growth and job satisfaction) were adapted from the works Gangaram (2016); Seashore and Taber (1975). The moderating variable (Organizational culture) was adopted from Madueke and Emerole (2017), while the intervening variable (Work Environment) was adapted from the works of Amabile, Conti, Coon, Lazenby, and Herron (1996).

In this conceptualization of the study, the predictor variable, human resources utilization, consisting of three sub-constructs regarded as dimensions, is considered to have a directly proportional influence on employee retention. By implication, if something goes wrong with human resources utilization, or is indeed not optimal, employee retention will be negatively affected and the converse is true. This implies that all activities of human resources utilization should be optimal, so that the necessary information on how employee retention will be ensured, is provided. Employee retention which in this study means a careful effort by an organization to keep employees for longer periods (Frank, Finnegan & Taloy, 2004), consists of career growth and job satisfaction (Gangaram 2016). Information on these sub-constructs, of employee retention, are interestingly considered during the human resources planning stage. During human resources utilization, all that is done is monitoring whether an employee is working optimally, and if not, evaluation (or appraisal) provides a reason why and the manager, on the other hand, adjusts the utilization plan accordingly.

As earlier noted, this proportional relationship between human resources utilization and employee retention could be affected by other factors outside the control of the manager. Factors such as workplace environment have consequences, especially if the environment is toxic. Organizational culture is another factor; as it may affect the values and work attitudes of the employees. Overall, through human resources utilization, the status of various parameters of employee retention is continuously provided, availing the manager an opportunity to make necessary adjustments to achieve retention objectives.

1.4 Aim and Objectives of the Study

The aim of the study is to ascertain the relationship between human resource utilization and employee retention in the Nigeria Banking Sector.

The specific objectives are to:

1. Evaluate the relationship between optimum utilization and career growth.
2. Ascertain the relationship between optimum utilization and job satisfaction.
3. Examine the relationship between overutilization and career growth.
4. Investigate the relationship between overutilization and job satisfaction.
5. Determine the relationship between underutilization and career growth.
6. Ascertain the relationship between underutilization and job satisfaction.
7. Find out if organizational culture significantly moderates the relationship between human resource utilization and employee retention.
8. Find out if the workplace environment significantly intervenes in the relationship between human resource utilization and employee retention.

1.5 Research Questions

In other to accomplish the above-expressed objectives, the accompanying research questions will direct the investigation.

1. What is the relationship between optimum utilization and career growth?
2. What is the relationship between optimum utilization and job satisfaction?
3. What is the relationship between overutilization and career growth?
4. What is the relationship between overutilization and job satisfaction?
5. What is the relationship between underutilization and career growth?
6. What is the relationship between underutilization and job satisfaction?
7. How does organizational culture significantly moderate the relationship between human resource utilization and employee retention?
8. How does workplace environment significantly intervene in the relationship between human resource utilization and employee retention?

1.6    Research Hypotheses

The accompanying null hypotheses were formulated with the end goal of this study.

H₀₁:     There is no significant relationship between optimum utilization and career growth.

H₀₂:      There is no significant relationship between optimum utilization and career job satisfaction.

H₀₃:     There is no significant relationship between overutilization and career growth.

H₀₄:     There is no significant relationship between overutilization and job satisfaction.

H₀₅:    There is no significant relationship between underutilization and career growth.

H₀₆:     There is no significant relationship between underutilization and job satisfaction.

H₀₇:     Organizational culture does not significantly moderate the relationship between human resources utilization and employee retention.

H₀₈:   Work environment place does not significantly intervene in the relationship between human resources utilization and employee retention.

1.7   Significance of the study

The study of human resources utilization and employee retention will be of awesome centrality to researchers, respondents, stakeholders and the general wellbeing and viability of communities.

First, the study promises to bridge the gap in the human resources utilization and employee retention literature, by giving an incorporated perspective of the interactive relationship between human resources utilization and employee retention, with reference to the moderating influence of organizational culture. The incorporation of the work environment as an intervening variable is extremely critical in light of the fact that Nigerian Banks are known to be influenced by both internal and external opinions.  In this way, the investigation has the capability of empowering Managers of Banks to have all the more understanding of the various theories of motivation. Also, this dissertation assures me to be a decent reference material for experts and academics in the field of human resource utilization and employee retention.

Second, empirical data will be collated, concentrating on the Nigerian banking sector. The recommendations that will be made when the study comes to its conclusion will be advantageous to the bank managers and employees. Directors of Banks may increase comprehension of how to enhance the utilization of their human resources. Also, organizations outside the banking sector can apply the discoveries and recommendations that will be reached in this study, whenever they are confronted with problems related to constructs under investigation. Besides, it is the expectation of the researcher that discoveries and recommendations which will be contained in this dissertation, could give more understanding to administrative and policy-making institutions, like Central Bank of Nigeria, Nigerian Deposit Insurance Company and Nigerian Interbank Settlement System, to define policies geared towards revamping the banking sector and ensure more financial inclusion for Nigerians.

Finally, the investigation will be of awesome importance to Stakeholders like employees, suppliers, creditors, respondents, and government agencies. The work will elucidate on the strategies for human resources utilization and employee retention in the Nigerian business environment.

 1.8 Scope of the Study

The extent of the investigation characterizes its limits regarding the hypothetical substance, geographical spread, and unit examination.

Content scope: The content scope of this work covers the dimensions of human resources utilization (optimum utilization, overutilization and underutilization) its theories and philosophies, and also the measures of employee retention (career growth and job satisfaction). The scope also covers the moderating role of organizational culture and the intervening role of the work environment, on the connection between the predictor and criterion variables.

Geographical scope: The study element will be confined to the middle management staff, which consist of Branch Managers, Unit Heads (Retail and Commercial units), Operations Managers and Internal Control Unit Heads, of the five Systemically Important Banks (SIBs), in Port Harcourt, based on the classification by the Central Bank of Nigeria (CBN).  The Banks classified by CBN as SIBs are: Access Bank, Zenith Bank, First Bank, United Bank for Africa and Guaranty Trust Bank.

Unit of analysis: The principal unit of analysis in this investigation is the individual level. The middle management staff, which consist of Branch Managers, Unit Heads (Retail and Commercial units), Operations Managers and Internal Control Unit Heads, of the five Systemically Important Banks (SIBs), will form our main respondents.

1.9 Operational Definition of Terms

Employee Retention: the deliberate effort by an organization to be the employees for a long period of time, which could be in the form of the policies and procedures of the organization.

Career Growth: the perception of an employee of the chances of growth and development in an organization.

Human Resources Utilization: the maximum of staff to achieve organizational goals while creating an enabling environment for the development of skills.

Job Satisfaction: the feeling about the entire job by an individual, indicating the level of like or hate for the job.

Under Utilization: when the supervisor is not confident to effectively utilize the employee.

Optimum Utilization: the process of obtaining maximum output from the employees.

Over Utilization: entails over-working an employee who is adjudged to be good by the supervisor.

Organizational Culture: the norms, beliefs, core values, and mindset of the members in an organization.

Workplace Environment: the factors that are imperative determinant of employee retention like role congruity, performance feedback, supervisor’s support, physical and environmental factors.

1.10 Organization of the Study

This dissertation consists of five chapters.

Chapter one contains the constructs (human resources utilization, employee retention, organizational survival, and work environment) around which the investigation revolves. Their importance was highlighted, showing how they are connected in literature, as well as the gap in the literature. This chapter also elaborates on the statement of the problem and conveys the manifestation of employee turnover in the Nigerian Banking industry. The possible connection between the variables is emphasized, and the conceptualization of the study variables, aim, and objectives, research questions, and hypotheses are also stated. The concluding part of the chapter contains the significance of the study, its scope, and limitations of the study.

Chapter two reviews the literature on the key constructs of the dissertation. The chapter begins with the conceptual framework and reveals the concepts of employee retention, human resources utilization, organizational culture, and workplace environment. The chapter delves into the theoretical framework that the study anchors on, comprising the theories of employee retention and human resources utilization.   The chapter further reviews the dimensions of human resources utilization variables and the measures of employee retention variables, as well as the relationship between human resources utilization and employee retention. The chapter concludes with empirical reviews, the gap in the literature and the operational framework of the study, which specifies the connection between employee retention, human resources utilization, organizational culture, and work environment.

Chapter three is the research methodology. It commences with the research design, showing the philosophical underpinning of the study, the population of the study, showing the target population and the accessible population. The chapter explains the sample and sampling technique, showing the sampling frame, sampling technique and how the sample size was determined. This chapter further explains the sources of data, methods of data collection, efforts to ensure the validity of the study instrument and initial test of the reliability of the pilot study. The chapter ends with the methods of data analysis and highlights of ethical considerations.

The results of the study will be presented and discussed in Chapter four. Tables and figures will be used to present the descriptive aspects of the study. This chapter will contain the measurement and structural models as well as the goodness of fit indices, for ensuring the convergence and discriminant validity. Bivariate and multivariate analysis will reveal the relationships between the constructs, thereby testing the hypotheses and providing answers to the research questions. The chapter will end in the discussion of findings.

Chapter five will contain conclusions and recommendations. This chapter will also contain the research implications and contributions to knowledge. The chapter will end with suggestions for further studies, and the last part of the dissertation will comprise of references and appendices.