1. Introduction Chapter 1.1 Introduction
The nature of the Business environment and Manager Job has been changed a lot in the last decades. Fierce competition in the market demand a very strong Human rescores along with the quality product and services. One of the major concerns for organizations is to hire efficient employees. Today's workers have different expectations from the companies and less hesitant to leave one job for another if they don't feel those expectations are being met. In fact, many employees see job skip as an opportunity for advancement. Surprisingly, most people do not leave their jobs only for money. While money usually plays some role in a person's decision to leave a company, it is not normally the deciding factor. Insufficient management support is one of the major reasons of employees leave. It is expensive to lose good employees. There are some important issues which organization should consider. Like the costs of termination, the cost of hiring and training a replacement, the vacancy cost until the job is filled and the loss of productivity with a new hire. These staggering figures
1
should be motivation enough for owners and managers to begin to focus on retaining their best employees.
1.2 Origin of the report This report has been prepared as a requirement of the Internship program of School of Business of Independent University. HSBC Bank (The Hong Kong Shanghai Banking Corporation) is the place where I have gathered experience about the operations of the financial institution. The organization
has
been
extremely
helpful
in
acquiring
knowledge regarding various aspects and daily banking activities. This report is the outcome of three-month internship program. The research has been conducted under the supervision of Mr. Sheikh Shiblee Sadek and Ansara Chowdhury from HSBC Bank and Mr. A. Qaiyum Chowdhury from the University, has also approved the topic that I assigned for my internship report.
1.3 Statement of the problem Banking sector is one of the fast growing industries in Bangladesh. Beside the local Bank, many foreign banks also
2
operate here to provide the service. Because of the strong competition the banks are continuously innovating new ways to attract and satisfy their customers. So, they are the first to interact with customers and have a huge impact on a customer’s impression of the institution. Employee turnover, now-a-day is a common problem every where. A bank may face problems when its employee turnover rate is increased. Turnover levels vary from industry to industry, region to region. It has many reasons; sometimes it is the attraction of a new job in a different company that “pull” them out of their current organization, hence on other occasions they are 'pushed' due to dissatisfaction in their present jobs seek alternative employment in other company. Sometimes it is a mixture of both “pull” and “push” factors. The level of employee turnover varies from hiererchy to hierechy and organization to organization and accordingly, the impact of such turnover also varies. Everything depends on the type of labour markets in which it compete. 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. Employee turnover is a great problem when it bears costs. Like—
3
•
Employee recruitment costs
•
Employee 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.
•
Leak of business informatio/secrecy.
Therefore, in the above scenario it is found that an internationally reputed bank likes HSBC is also not an exception. Hence through the research I have tried to know the reasons of employee turnover in HSBC (CGE branch). Also I have tried to find out relevant information about employee turnover.
1.4 Objective of the research: The objective of the research is- “Identify the reasons of employee turn over in HSBC”
Specific objectives •
To identify the causes of employee turnover.
•
To suggest solution of employee turnover.
1.5 Methodology: 4
1.5.1 Sampling Plan: •
Population – All employees of HSBC bank in Bangladesh.
•
Sample
Unit---
employees
of
HSBC
bank
in
CGE
(Nasirabad) Branch, Chittagong. •
Sampling type: Non Probabilistic Sampling.
•
Sample technique: Judgmental Sampling.
•
Sample size: 30 For selecting employees judgmental sampling has been used and selected 30
employees from 56 for the sample
unit. All the respondents are the employees of HSBC bank CGE
Branch,
Chittagong.
To
ensure
representation
responses have been collected from different layers of management.
1.5.2 Methods of Data Collection The report is composed of both primary and secondary sources of data.
Primary Data: Primary data may be collected by the following two tools.
5
1. Questionnaire Method. 2. Direct Interview Method. Data have been collected through questionnaire from the employees of the Bank. Primary data have been also collected by informal interview with the officers. Structured questionnaires were used to collect information from the bank employees.
Secondary Data: The
secondary
data
have
been
collected
from
the
“Employees Job Enlist Record” of HSBC Bank, and from some journals. Also some important information is collected form Internet for the report.
1.5.3 Method for Analysis: In order to analyze and interpret data some tools of statistical analysis has been used .The statistical tools to be followed are – 1. Mean.
2. Percentage. 3. Cross tabulation
1.5.4 Survey period The survey is being conducted from March 10th to April 15th 2008.
1.6 Scope: 6
The scope of the report is limited to all the personnel of HSBC CGE Branch. The report will explore the reasons of employee turnover in HSBC.
1.7 Limitations: Objective of the practical orientation program is to have practical exposure for the students. Our tenure was for only three months which was some how not sufficient for analyzing such a matter. Moreover, it was too difficult for me to give time for preparing this report after working whole day in the bank. Some limitations and inconvenience had appeared as barriers in accomplishing the report. These are as follows: •
The study
is
confined
only
to
HSBC
Bank
CGE
(Nasirabad) Branch. •
The information that collected through questionnaire survey and direct interview could be imprecise because of the biasness of the employees.
•
As the topic is very much sensitive so, unwillingness and fear among most of the junior staffs on disclose any opinion towards their boss.
•
Some variation in views among the amateur and experienced personnel.
•
Insufficient time period.
7
•
Because
of
the
limitation
of
information,
some
assumptions were made. So, there may be some mistakes in the report.
8
2. Organization overview HSBC is a truly unique financial institution that delivers superior growth and financial performance and be the most recognizable brand in the financial services in Bangladesh & worldwide. Through an international network & rapidly growing capability HSBC has achieved a strong competitive position over other banks in Bangladesh. It creates new opportunities for its clients by offering customize services and maintains harmonious banker-clients relationship. It contributes towards formation of national capital, growth of savings and investments in trade, commerce and industrial sectors. At HSBC people realize how busy the customers are in today's fast-paced world. To make the life simpler, they have created different channels to bring banking closer to the customer. Customers no longer have to visit our branches to complete their daily banking transactions. Now they can access a host of services 24-hours a day from wherever they are.
2.1 PROFILE The World’s local bank. Headquarter in London, is one of the largest banking and financial services organization in the world.
9
2.2 Vision Is to become the world’s leading financial services company. “Leading” means preferred, admired dynamic and being recognized for giving the customer a fair deal.
2.3 Mission Is to grow earnings over the long run which will place it favorably in comparison to its peer group. Also on investing in its delivery platforms, its technology, its people and its brand to support the future value of HSBC.
Brand HSBC, a symbol of one of the world’s leading brand for customer, experience and corporate responsibility.
Massage “THE WORLD’S LOCAL BANK”
Parent Company “The Hong Kong and shanghai Banking Corporation Limited is wholly owned subsidiary of HSBC Holdings Plc, the holding company of the HSBC Group. HSBC Group maintains one of the world’s largest private data
communication
network
and
is
reconfiguring
its
businesses for the e-age. Its rapidly growing e-commerce capability includes the use of the internet, PC banking over a private network, interactive TV, fixed and mobile telephones.
HSBC Group The HSBC group is named after its founding member,
10
“The Hong Kong and shanghai Banking Corporation Limited” which was established in 1865 to finance the growing trade between china and Europe.
HSBC Network HSBC’s international network comprises over 10000 offices in 83 countries and territories in Europe, the Asiapacific region, the Americas, the Middle East and Africa.
Quality Emphasis on long term, ethical client relationships. High productivity through teamwork. A confident and ambitious sense of excellence. International in outlook, and character. Creativity and customer focused marketing.
HSBC in Bangladesh HSBC incorporated in Bangladesh in December 1996. Started its journey in Bangladesh from anchor tower in December 1996. Now HSBC has 9 offices and 8 branches in • 1. Dhaka • 2. Chittagong • 3. Sylhet
The Line of Business in (HSBC) Investment Practices o Payment and Cash Management 11
o Custody And Clearing o Trade Services Personal Financial Services o o o o
Personal Credit Operation Customer Services Branch Operation Personal Loans
Commercial Banking o Leasing, Finance and Factoring o Payment and Cash Management o Trade Services Human Resources (Salary, Benefit, Appointment etc) Insurance Services Network Service Center
HSBC ASSET PRODUCTS • Home Loan • Home Equity Loan • Car Loan • Personal Installment Loan Travel loan Student loan Life style loan Wedding loan Furniture loan Motorbike loan
12
•
CNG conversation loan
• Partial Secured Loan Other Loan Product Personal Secured Loan Personal Secured Credit HSBC LIABILITY PRODUCTS Current Account Savings Account Savings Plus Power vantage Amanah Account Time Deposit Account Monthly
Interest
Bearing
Time
Deposit
Account HSBC Savings Plan Children’s Savings Plan Education Savings Plan Holyday Savings Plan Peace of Mind Savings Plan Retirement Savings Plan Smart Savers Plan 13
Family Protection Plan PRODUCTS FOR NON RESIDENT BANGLADESHIS •
Foreign currency current account: A non-interest bearing transactional account to be
opened with funds remitted from abroad.
US Dollars,
Pound Sterling and Euro. •
Foreign currency time deposit account: An interest bearing time deposit account. Tenors ranging
from 1 to 12 months. •
Private non-resident taka account: This account can be opened with taka or funds
remitted from abroad. This is a local currency account and can be opened as an interest paying savings account or non-interest bearing current account. •
Wage Earner Development Bond (WEDB) and US Dollar Bond (USDB):
Government bonds issued by the Bangladesh Bank, especially for the NRBs. •
Personal secured credit:
A taka credit facility secured by foreign currency time deposit, WEDBs or USDBs.
14
•
Personal secured loan: A fixed loan secured by foreign currency time deposit,
WEDBs or USDBs.
3. Literature Review Conceptual Learning: Turnover, in a human resources context refers to the characteristic of a given company or industry, relative to rate at which an employer gains and loses staff. If an
15
employer is said to have a high turnover, it most often means that employees of that company have a shorter tenure than those of other companies in that same industry. Similarly, if the average tenure of employees in a particular sector is lower than that in other sectors, that sector can be said to have a relatively high turnover. Like recruitment, turnover can be classed as 'internal' or external. Internal turnover involves employees leaving their current position, and taking a new position with the same organization. Both positive and negative effects of internal turnover exist, and thus this form of turnover may be as important to monitor as its external counterpart. Internal turnover might be moderated and controlled by typical HR mechanisms, such as an internal recruitment policy or formal succession planning. Unskilled positions often have high turnover, and employees can generally be replaced without the organization or business incurring any loss of performance.
The
ease
of
replacing
these
employees
provides little incentive to employers to offer generous employment contracts. However, high turnover rates of skilled professionals can pose as a risk to the business, due to lose of intellectual property such as skills, training, and knowledge. Notably, given the natural specializations of skilled professionals, these employees are likely to be reemployed within the same industry by a competitor. Therefore,
turnover
of
these
individuals
incurs
both 16
replacement costs to the organization, as well as resulting in a competitive disadvantage to the business. (TAYLOR, 2002) High turnover often means that employees are unhappy with the work or compensation, but it can also indicate unsafe or unhealthy conditions, or that too few employees give satisfactory performance (due to unrealistic expectations or poor candidate screening). Low turnover indicates that employees are satisfied, healthy and safe, and their performance
is
satisfactory
to
the
employer.
Many
psychological and management theories exist regarding the types of job content which is intrinsically satisfying to employees and which, in turn, should minimize external voluntary
turnover.
Dismissals
should
also
depend
negatively on the cost of monitoring since firms with high monitoring costs would be expected to monitor their workers less intensely. Employees resign for many different reasons. 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 pulls and push factors. For a fourth 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. It is important to appreciate that the reasons people give for their resignations are frequently untrue or only partially true. 17
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. (Robbins, 2005) The major methods of costing employee turnover are described above. Obtaining accurate information on reasons for leaving is harder. Where exit interviews are used it is best to conduct them a short time after the employees hand in their notice. The interviewer should not be a manager who has had responsibility for the individual and who will not be involved in future reference writing. Confidentiality should be assured and the purpose of the interview explained. Alternative approaches involve the use of confidential attitude surveys which include questions about intention to leave and questionnaires sent to former employees on a confidential basis around six months after their departure. (TAYLOR, 2002)
Empirical learning: Turnover is a fact of life. Bankers may think they have it awful, but virtually every industry faces turnover challenges. The national fast food chains run an at unbelievable 85% – 120% annual turnover. While the turnover rate is consider 18
“high” today, it should be accepted that some normalized rate in the 10% – 15% range would be expected for even a high performer. The good news about turnover is that the economy is doing well and employees have options. Great companies do achieve lower turnover. While turnover is a fact of life, some companies have simply put this issue to bed. Low turnover alone does not drive better performance – While great companies typically have low turnover, it’s important to note that low turnover does not necessarily make you a great company. It is found that there is no mathematical correlation between a bank’s turnover rate and its ROA or efficiency ratio. Performance has too many variables for turnover alone to be a primary driver. Turnover is not an HR issue, it’s a business design issue – If bankers expect the HR department to solve the turnover issue, they will be sorely disappointed. Instead, bankers should get to the real strategic issues about why someone would work at their bank instead of anywhere else. Humans naturally want to work for winning teams, a bank with a clear strategy that been drilled down into the culture has a lot better shot at reducing turnover. The costs of turnover are real and painful. Bankers intuitively accept that turnover is costly, but few banks ever make real attempts to measure this cost. Experts say that it costs 20% of an employee's annual salary to replace the lowest production worker and five times the annual salary to replace executives. One of 19
the universal truths in business is that no one likes to work for
a
wicked
person.
While
the
Human
Resources
department cannot be expected to solve the employee turnover issue, it certainly can be the coordinator and catalyst for going after the problem. However to face this problem the first thing HR can do is to make the turnover issue visible and the costs real. Making visual report will keep management focused quarter to quarter on the issue. Another practice the HR can do is to conduct exit interviews with employees to learn and to know the reason behind their leave. (TAYLOR, 2002) There is no set level of employee turnover above which effects on the employing organization becomes damaging. Everything depends on the type of labor markets in which the company competes. It is possible to sustain high quality of service provision despite having a high turnover rate. By contrast, where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic from a management point of view. This is especially true of situations in which organizations are losing staff to direct competitors or where customers have developed relationships with individual employees as is the case in many professional services organizations. Again, it has been noticed that some employee turnover positively benefits organizations. This happens when a poor performer is 20
replaced by a more effective employee, and can happen when a senior retirement allows the promotion or acquisition of a young, energetic employee Turnover is one of those issues that floats around every year at the bank but never seems to get a groundswell of action to address it. It’s because most bankers have wrongfully assumed there’s some mystic practice that HR can follow to address the issue. Going forward, bank managers should jump in feet first and get involved in the business issue of keeping employees, and HR can start this process by making the facts about turnover more visible with senior management. (RANKIN, 2006)
21
4. Findings and Analysis: Analyzing the data collected through the questionnaire survey with the bank personnel some findings has been explored.
Employees intention about switching the existing jobFrequency Yes Not sure No
Percentage
3
10%
18
60%
9
30%
N=30
100%
From the chart it is evident that, while one third of the employees showed strong commitment towards the organization. A significant proportion of the employee exhibited no organizational commitment. In addition 60% of the employees were uncertain about staying in the existing job, which revealed their lack of loyalty towards their existing job. This group of employees might be actively responsible for the further turnover. Therefore the low level of loyalty of the employees is the core cause for employee turnover in HSBC (CGE Branch).
22
Relationship between nature of job and the related satisfaction level— Satisfaction level
Stress Challengi ful ng
Interesti Borin ng g
Highly Satisfied
33.33 %
33.33%
33.33%
------
Satisfied
67%
33%
------
------
Neither Satisfied nor Dissatisfied
-----
------
------
100%
Dissatisfied
67%
------
------
33%
Highly Dissatisfied
85%
------
------
15%
natur e of job
The chart above, exhibits employees relative satisfaction level with the nature of their existing job. Surprisingly, irrespective to the level of satisfaction majority of the 23
employees perceive their job as stressful. This high job stress is one of the major causes for employee turnover. In addition there is a prevalence of a group to whom the job is just boring. This group may propel the level of turnover in long run.
Hectic work schedule---Type Of Work
Frequency
Percentage
Target Oriented
9
30%
Routine work
6
20%
15
50%
Both
From the table it is found that, maximum employee’s job is a combination of both target oriented and routine work. Besides performing the routine work, attaining the target put enormous pressure on them, so soon this tight schedule become burden some, which is likely to be responsible for employee turnover.
Involuntary turnover--24
Year 2006 2007
No Of Employees 5 7
Average turnover 6
From the analysis it is found that over the year involuntary turnover is increasing due to inability to attaining the target. Average turnover is 6, which is very high relative to the level of workforce.
5. Recommendation Organizations must have a planned approach in order to provide successful solutions to employees' concerns. It needs to become part of company culture, if the organization demonstrates to employees that they are willing to make an investment in them ensuring positive results to follow. If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. Even after this new hiring cannot guarantee the same efficiency from the new employee. Management requires time to judge his capabilities and work nature. The
25
loss is even graver if the efficient employees of the organization switch to their major competitors. For all these and many other reasons organization need to retain employees. For retaining employees, Management need to understand the requirements of the employees and at the same time should make them clear about the expectations of the company from them. The company management should make their employees accountable for their respective jobs and make them feel that they are very important for the smooth processing of that process HSBC can take the following steps to reduce their turnover rate and make a long time commitment with the employees. Career Development Program Every individual is worried about his/her career. HSBC can provide them conditional assistance for certain courses which are also beneficial from business point of view. For getting admitted to such program, Management can propose them to sign a bond with the company, like they cannot leave the company for 2 years or something after the successful completion of the course. Performance based Bonus
26
To get more work out of the employee, HSBC can make a provision of Bonus. By this employee will be able to relate himself with the company’s profit and hence will work hard. This bonus should be productivity based. Making the employees easily accessible to managers HSBC should make the employee easily accessible to the management. Top Management expectations should clearly communicate to the employees, so they can perform their job better. Employee empowerment HSBC Management can increase sense of belongingness of each employee so that they can also feel themselves as important as their officers in higher hierarchy. If employees can develop this sense of belongingness then, they will reconsider leaving the company. Loyalty Bonus HSBC can introduce a Loyalty Bonus Program in which Management can reward employees after a successful completion of a specified period of time. This can be in the form of Money or Position.
27
Involve in the decision making Involve in the decision making can bring a significant employee satisfaction. Employees can feel they are a part of the whole process. Also this involvement can create a sense of responsibility to be more attentive in the planning process. Gifts at some Occasions Management can give some gifts at the time of one or two festivals to the employees making them feel good and understand that the management is concerned about them. Surveys HSBC should conduct regular surveys for feedbacks from employee about their satisfaction as well as other issues and suggestions. This will make them feel of their importance and the caring nature of the company. Some of the suggestions might be of real good use for the company. For a company, the workforce is like an intellectual property, both in terms of skills and money. A trained and content workforce can lead a company to new heights while an opposite one can hamper it badly. So Management needs to take the necessary steps to minimize
28
the employee turnover
and
create
a bond
with
the
employees.
5. Conclusion In the present scenario, world is turning into a global village. In this situation, the biggest challenge for a company is to retain its workforce intact especially the efficient employees. Employee retention is more than a buzz word, it is a very real and powerful part of doing
business
in
today's
marketplace. It is becoming more and more difficult to find and retain top talent. The company must recognize and embraces the need of its employees. Satisfied employees can lead to provide better service to the customers and earn greater reputation and profitability for the company.
29
Appendix— Questionnaire: I am a student of Independent University Bangladesh and currently enrolled for my Internship program in HSBC Bank. I am conducting this survey to prepare my Internship Report on “Identify the reasons of employee turnover in HSBC”. The purpose of the survey is to know the reasons of employee turnover in HSBC (CGE Branch). Your participation in this survey is really appreciated and will help me to conduct the survey successfully. It is assured that the information you will provide will be strictly kept confidential and used for educational purpose only. 30
Thank you for your time and cooperation. Sincerely Sultana Pervin Keya Please choose your best option among the choices1. Gender of the respondent?
a. Male 2.
b. Female
Mention your job designation? …………………………..
3.Which level of management best describes your position in the hierarchy? a.Top b.Mid c. First line (low). 4.How long have you been working for HSBC? a.1-2 years b.2-3 years 31
c. 3-4 years d.4-5years e.5years above 5.Did you work for any other companies before joining at HSBC? (If Yes then answer the next question) a. Yes
b. No
How long did you worked for that company? a.less than 1 years b.1-2 years c. 2-3 years d.3-4 years e.more than 4 years 6.What was/were the dissatisfying factor/s with the company you used to work? a.Incompatible salary b.Job position c. Limited opportunity for personal growth d.Other (specify) ______________. 7.Would you switch this job if you get any better offer in any companies? a. Yes
b. Not sure
c. No
8. What sort of job you are currently doing in HSBC?
32
a.Target oriented b.Routine work c. Both 9. How do you perceive the job you are in? a.Stressful b.Challenging c. Interesting d.Boring 10. Are you satisfied with the nature of the job? 5 1
|
4 |
3 |
2 |
| Highly Satisfied Neither satisfied Dissatisfied Highly satisfied nor dissatisfied dissatisfied
11. How do you rate satisfaction level with your existing salary? 1
5
4
3
2
33
|
|
|
Highly Satisfied Dissatisfied Highly satisfied dissatisfied
|
|
Neither satisfied nor dissatisfied
12. How secure do you think your job? 5 1
|
4 |
3 |
2 |
| Highly Unsecured secured unsecured
Secured Neither secured Highly nor unsecured
34
Employees intention about switching the existing job-
Frequency Yes Not sure No
Percentage
3
10%
18
60%
9
30%
35
Emplyees intention
60% 50% 40% Percentage
30% 20% 10% 0%
Yes
Not sure
No
Relationship between nature of job and the related satisfaction level— Satisfactio n level nature of job Highly Satisfied Satisfied
Stressf ul
Challengin Interestin g g
Boring
33.33%
33.33%
33.33%
------
67%
33%
------
------
------
------
100%
Neither ----Satisfied nor Dissatisfied
36
Dissatisfied 67%
------
------
33%
Highly 85% Dissatisfied
------
------
15%
Nature of job and satisfaction level
Highly Satisfied Satisfied Neither Satisfied nor Dissatisfied Dissatisfied Highly Dissatisfied
Hectic work schedule----
Type Of Work
Frequency
Percentage
Target Oriented
9
30%
Routine work
6
20%
15
50%
Both
37
Hectic work schedule
30% Target Oriented 50%
Routine work Both 20%
Involuntary turnover---
Year
No Of Employees 2006
5
2007
7
Average turnover 6
38
Involuntary turnover 8 7 6 5 4 3 2 1 0 2006
2007 No Of Employees
Reference: •
www.hsbc.com
•
www.gmi.org/research/websites.htm
•
www.cipd.co.uk/surveys
39
•
TAYLOR,
S.
(2006)
‘Are
you
keeping
your
employees happy?’ The HR Director. . London: Chartered Institute of Personnel Development.
40
