University American College - Skopje

Topic:
ANALYSES OF THE FACTORS THAT DRIVE TURNOVER IN THE
BANKING INDUSTRY IN NORTH MACEDONIA

CANDIDATE: MENTOR:

Natasha Nedanovska Marjan Bojadjiev, PhD

Student’s No (ID): 10641

Skopje, 2020

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 CONTENT

ABSTRACT..............................................................................................4

INTRODUCTION....................................................................................6

1. LITERATURE REVIEW.................................................................11
1.1. Bank..................................................................................................11
1.2. THEORETICAL CONTENT.........................................................14
1.3. EVALUATION OF FACTORS THAT DETERMINE
TURNOVER.............................................................................................15
1.4. WORK ENVIRONMENT..............................................................16
1.5. JOB STRESS...................................................................................18
1.6. CAREER GROWTH.......................................................................19
1.6.1. COMPENSATION.............................................................................21
1.7. EMPLOYEE....................................................................................21
1.7.1. Employee Turnover............................................................................22
1.7.2. Employee Retention...........................................................................23
1.8. Theoretical Frameworks.................................................................23
1.8.1. Hierarchy Need Theory (1954)..........................................................23
1.8.2. Two Factor Theory (1957).................................................................24
1.8.3. Firm Specific Human Capital (FSHC) Theory..................................25
1.8.4. Theory x and theory y........................................................................26
1.8.5. The goal Theory.................................................................................26
1.8.6. Equity Theory.....................................................................................27
1.8.7. The expectancy Theory......................................................................28
1.8.8. Job Matching Theory.........................................................................30
1.8.9. 3N THEORY - (Needs for Affiliation, Power, and Achievement)
Theory of Motivation.........................................................................30
1.8.10. Synthesis of Theories.............................................................32

2. HYPOTHESIS...................................................................................34

3. METHODOLOGY............................................................................35
3.1. FIRST part of the methodology - the questionnaires:...................35
3.2. SECOND part of the methodology – secondary resources:..........36
3.2.1. Documentary review..........................................................................36

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 3.2.2. Data Analyses Technique...................................................................37
3.2.3. Data Presentation..............................................................................37
3.2.4. Reliability...........................................................................................37
3.2.5. Validity...............................................................................................37

4. RESEARCH FINDINGS..................................................................39
4.1. I SECTION.......................................................................................39
4.2. II SECTION.....................................................................................40
4.3. GRAPHICAL PRESENTATION OF THE RESULTS................42

5. CONCLUSIONS................................................................................47

6. IMPLICATIONS OF THE STUDY:...............................................50

7. RECCOMENTATIONS...................................................................51

8. USED LITERATURE.........................................................................52

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 ABSTRACT

As the world has become a more competitive place for working and
employment, starting with the knowledge and experience, the role of an excellent
employee plays a very big part of important figure whose value is being appreciated
more and more each day. The weight of the tasks is becoming extraordinary and
supreme in today's banking industry. The significance of the employees especially in
the banking industry have gained on their value because of the job they are
performing, the vitality of the role that makes them very important and valuable
employees. Their responsibilities and their reliability is the key of successful bank
working. Therefore, success in the banks depends on the managing and retaining of
the employees. But if not properly taken care of they can be a frequent flow of human
resources compared to other industries and other types of companies.
Today, one of the most important segments of our industry is the banking industry
that develops the national economic. Therefore, the problem that they face nowadays
with the turnover of employees, is a result of the competitiveness of the banks. The
different service they offer the quality of the job that the personnel has to perform
makes them an industry that is more important than any other and is more essential
than the manufacturing industries. Service quality in the banking industry is more
essential than in manufacturing industry enterprises. The intensity of a larger work, in
particular, some of the key positions in management and technical personnel to
conduct regular is higher intensity of the work therefore the turnover that happens in
the banking industry is a serious problem that pushes over the edge the stability of the
banks.
Most important is that bank managers should have the understanding that without
remuneration or individual’s development opportunities, the outflow of the employees
it can be expected very easy. The outflow brings not only the turnover of the
employees but also the secrets of working and customers, this way the bank suffers
severe losses. The cost of human resources in recruiting and finding new staff will be
high, will affect the quality of the work and the stability of the bank (company). The
key management personnel of the banks should be intensified efforts and inter
activeness, avoiding wastage of turnovers caused by executive losses.

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KEY WORDS: banking industry, excellent employees, primarily responsible,
management experience, turnover.

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INTRODUCTION

Since the world economy has reached the recession term, as the statistics in
the World bank say: during and after the pandemic of the virus Covid-19, the baseline
forecast envisions a 5.2 percent contraction in global GDP in 2020, using market
exchange rate weights—the deepest global recession in decades, despite the
extraordinary efforts of governments to counter the downturn with fiscal and
monetary policy support. Over the longer horizon, the deep recessions triggered by
the pandemic are expected to leave lasting scars through lower investment, an erosion
of human capital through lost work and schooling, and fragmentation of global trade
and supply linkages. (The World Bank, 2020)
Europe’s list of personnel has shrink down in just a half a year time before it
was trying to get all the possible working strength in the businesses. The workers
were needed from the West Balkans mostly in the field of medicine and banking
sectors, the field agriculture and hard industry.
The working personnel have a deep impact on the banking industry in the
whole world. Europe’s human resources subsystem has the biggest challenge ever in
these past six months and still has. The risk of disease is getting bigger every day and
the managers have to motivate the workers to stay active in pandemic conditions, with
motives that will keep them safe and satisfied. The situation is maybe a lot worse in
the Balkans (because of the different approach to the pandemic). Since the banking
industry is highly regulated force that stabilizes the economic environment of the
states, the banks keep sensitive, personal information for their clients and have the
priority of confidence. Therefore, in this case of pandemic situation the analyses of
their jobs, declination in job credibility and job losses are highly on the scale of
banking management process. The influence that they have now never has been
bigger, stronger and more important. How North Macedonia handles the situation and
the measurements that are taken to prevent job lose and turnover in the banking
industry is a very important question that this thesis will try to answer, not only in this
pandemic condition but in general with the situation before the Covid-19 and after the
stabilization of the situation with Covid-19.
North Macedonia is a small country in the Balkans that has a narrow but
strong banking capacity. The employees in certain banks are well trained, positive,

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confident, with strict rules to obey that may impact the turnover with positive or
negative influences. Therefore, no matter the situation, the job stability not only in the
banking sector, but it has to be a primate for the greater investments that will cause a
deep impact on the working industry. The management in the banking sector has
activities that influence the motivation and self-estimation of the workers in the
organization – the banking industry. (World Bank public documentation, 2019)
The banking industry in Macedonia has its own challenges, advantages and
disadvantages. These come from many aspects that can be derived out as good or bad
influence on the turnover in the banking industry in the Republic of North Macedonia.
Whether we have strong personnel, weak management or the other way
around - a strong management with not so capable personnel the turnover is
unavoidable in every segment where the human capital is one of the driving forces in
the industry.
The attention that has to be paid regarding this is something that should be
first elaborated, analyzed and then presented for further acknowledgements for both
the employees and the managers of the banking sector.
Like every company, so the banks have the department - Human resources -
where the first evaluations are made, with the capacity and the rights in accordance
with the management system i.e. to qualify, train or disqualify applying personnel in
the bank. HR in accordance with the managers should be able to decide the benefits of
the workers, follow the collegial atmosphere between the employees, create a
motivational and elegant environment, continuously follow up of the employees,
measures for promotions and proposals for growing and vice versa if not satisfied
with someone’s job and his way of solving the problems and suggestions an
alternative for the issue like finding a suitable place, change of the environment and
maybe last on the list finding a proper candidate for the job.
Every modern structurally organized bank organization, regardless of the
number of employees or any other characteristic in general, is a very complex process
that requires special attention in composing work responsibilities and implies effort
and patience in working on the processes related to turnover and banking system in
general as a compete part of the society in the state.
Therefore, human resource management is the process of managing people in
organizations in a structured and thorough way. This covers the areas of staffing
(hiring people), retaining people, determining and managing salaries and allowances,

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managing all segments of changes in the employment of each employee as an
individual or group, overall care from completing the activities to leaving the
company.
The management as a top staff in the organization that is responsible for the
service of human resources in the organization is also designated for conducting
various types of training for the employees. Following the world trends in terms of
brand development and creating an image that will be far recognizable is the job of
the management team of any organization that with the help of human resources
service can reach the culmination of the business and following the vision and the
mission of the company, will be able to rise to a world level brand and organization
with a protected reputation and at the same time this company will be perceived as a
desired place to work in by the individuals who would see their dreams come true in
that environment. (Sattar, Ahmed 2014)
Namely, today's rapid technical and technological development, the changes
that are taking place and which affect more and more industries, the existing change
of the legislation, and the change of programs and rules of work make the training a
necessity for the normal and proper functioning of the organization. Thus, the human
resources management is responsible for the implementation of the training, its
course, whether it achieves the desired results and changes in the prices of those
trainings, i.e. the human resources management should determine not only who will
perform the training but also how much would it costs whether the organization could
cover the costs at all and how much of the invested funds would be returned through
increased performance and new employee skills. Additionally, an important
competence of the employees is the career development of the employees in the
organization as well as the evaluation of the achieved success through which rewards,
penalties, benefits and the like are determined.
In Chapter 1 – Literature review shows the focus of the thesis, the turnover of
employees in the banking sector and the turnover intentions. The study explains why
there are turnovers in the banking industry, which are the main factors of turnover and
the relationship between the employees and the turnover intentions. Stating the main
factors of turnover, the working environment, the job stress, career growth, the
Literature review captures the importance of this thesis.
In Chapter 2 – Hypothesis. The Main hypothesis of the theme is: Analyses of the
factors that drive turnover in the banking industry with special attention to the

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turnover of employees within the bank or the system of banking and the impact of
turnover and turnover intentions (positive and negative influences).

Other hypotheses of this master these are:

 Job satisfaction of employees as reason for turnovers in the banking

industry;
 Employment’s feelings about management in the banks and their
satisfaction with the collegial atmosphere;

 If turnover is possibility what are the reasons for leaving or staying in

the working place;

 Conditions for career advancement and training at a solid level in order

to keep the employees from turnover intentions;

In Chapter 3 – Methodology. This chapter shows the methodological approach to

the thesis supported with questionaries and evaluation of results. The following
structure is covered by the protocol and answers the main questions for the research
(when and where was the research conducted, description of the research instruments
and explanation which employees were given questionnaires and which ones were
given an interview.

Chapter 4 – Research findings. The discussion leaded for the questionnaire

results given in the bar charts that could be seen that that the hypothesis that were
developed in this master thesis and the other relevant thesis, were covered
accordingly. Analyses of the factors that drive turnover in the banking industry, the
turnover of employees within the bank or out of it, and the impacts that lead to
turnover intentions (positive and negative influences) are being properly covered in
this and in the next chapter.

This is better presented in the graphical presentation of the results as part of this
chapter 4.

Chapter 5 – Conclusions. As main analyses are the turnover factors in the

banking industry and the reasons that this becomes one of the most important topics in
the banking industry worldwide, not only in Europe or the Balkans or in Macedonia.

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 With globalization which is cumulative competition, organizations must carry
on to develop physical goods and offer services which are constructed on approaches
formed by employees. These employees are particularly essential to the organization
since their value to the organization is basically intangible and not easily replaceable.
Chapter 6 – Implications of the study. The results of this study can be
considered as a comprehensible input or sources for advance research on studying
among the analyses of the turnover and turnover intentions, the cost of employee
turnover in banking sectors, measurement of employee turnover, evaluate the reasons
of employee turnover and development of retention strategy to reduce employee
turnover. Using motivation, employee participation, proper leadership, compensation
and benefits in proper way organization can reduce or control employee turnover.
Chapter 7 – Recommendations. The study findings revealed although there is a
number of sides on this theme there is always place for new researches in this area of
interest. The turnover becomes more and more interesting for research in every
industry not only in the banking industry, but the theme of the thesis was analyzing
the turnover and turnover intentions in the banking sector. There a lot of changes that
should be made in the banking sector worldwide, in time of pandemic and after it
(how to lower the stress during this kind of catastrophe), can this be overcome with
trainings and lessons for the employee personnel in order not to increase turnover in
the banking sector.
As far as the banks are concerned, they should be considered as safe place to
work even during the global fear of pandemic Covid 19 but with relevant respect to
the employees who are involved in direct contact and their involvement must be
appreciated and valued moreover they should be motivated for doing their jobs with
boost their morale; and not only morale, but a healthy environment for work where no
employee will have to think of turnover and have turnover intentions.

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1. LITERATURE REVIEW

The focus of this thesis is the turnover of employees in the banking sector and the
turnover intentions. This study explains why this phenomenon occurs in the banking
industry and which the main factors that lead to this are. Further, it explains the
relationship between the employees and their intentions for leaving the current
company, employment’s feelings about management staff and their satisfaction with
the collegial atmosphere, even the fact that if turnover is a possibility for them what
would be the reasons for staying at the same workplace or leave it. The partial aspects
are the possibilities for career advancement and training at a solid level in order to
keep the employees from turnover intentions.

1.1. Bank

The term Bank is defined as any institution authorized by the state and licensed
as a bank to accept deposit and pay cheques on demand, pay interest and issue loans,
also act as an intermediary between those who have money the depositors and those
who does not have money - the borrower, provide other financial services to its
customers. A banking industry is one which is containing financial institutions that
are licensed by the state to offer banking services. Services offered by banks include
accepting deposit from customers, making transfer of money through different
financial intermediary, granting loans and ensuring the risk on granted loan is
minimized hence manage risk which may arise on holding various wealth.
A banking industry is defined as financial institutions that operate current
accounts, pay cheques on demand and facilitate customer payment to third parties. For
the case of the study the banking industry was defined as lawfully recognised
institutions publically or private owned engaging in financial transactions like safe
custody activities, investment and returning of cash to its customers being companies
and other institutions as well as individuals (Stovel, Bontis, 2002)

"Employee turnover may be a percentage judgment of the number of

employees a firm must exchange in assumed period of your time to the
standard number of total personnel (Agnes, 1999). A vast concern to most
companies, turnover rate is dear especially in lower disbursing job roles, that the
worker turnover level is highest, therefore the turnover denotes to the amount of

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effort of employees in and out of an organization, generally existing in terms of
the turnover ratio provided the sense of employee turnover as the discontinuance
of association in a corporation by the individual who expected financial
compensation from the organization.
Employee turnover is potentially costly and may have negative implications
whether it is voluntarily, such as resignations or involuntarily or termination
initiated by the employer. The possible negative impact of turnover to
organizations might be due to high cost of recruiting, training and getting new
employees, productivity loss during replacement search and retaining, loss of high
performers or high-skilled workers, and disruption of social and communication
structures added that the effect of turnover towards the organization is not only in
terms of cost of termination, recruitment, selection, and advertising, but it also
reflects the ability of the remaining employees to complete their mounting duties
or accumulated works in the organization. Hence, Samad (2006) expounds that
the personal costs of turnover may impede to employees not only in the form of
loss of friendship and benefits but perhaps a disruption of the family. (Ashrad,
Puteh, 2015)
Many organizations are focusing on the monetary aspects that could drive
turnover intention. However, past researches have indicated that turnover
intention is due to combination of several factors. These numerous factors are
termed or known as push and pull factors or internal and external factors.
Turnover intention occurs when employees are feeling stressful or dissatisfaction
with the organization. Regardless of internal or external factors that drive
turnover intention, organization should have the best remedy to reduce the
number of people leaving.
Employee’s turnover means the variation of labor around the market, between
organizations, contracts and careers, wages, company benefits, employee
attendance, and job performance are all factors that play a significant role in
employee turnover.
There are two main factors that are linked to the employee's evolution through
sequential steps of withdrawal. In turnover procedure everyone generally points
out one reason for his or her turnover choice, but there are continually more
aspects on the rear hand that works as push-cart or dynamic strength for that
element. Although, there is no ordinary structure for understanding the employee

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turnover procedure as a whole, a wide series of factors have been initiated useful
in understanding this activity. It was found that employee aim setting, career
growth, work environment, training and progress; "Employee turnover is a
percentage judgment of the number of employees a firm must exchange in assumed
period of time to the ordinary number of total personnel. A vast concern to most
companies, employee turnover is expensive especially in lower disbursing job roles,
for which the worker turnover level is highest, therefore the turnover denotes to the
amount of effort of employees in and out of an organization, generally existing in
terms of the turnover ratio provided the sense of employee turnover as the
discontinuance of association in an organization by the individual who expected
financial compensation from the organization.
Furthermore, available job alternatives can lead to both a committed and an
exploratory intent search and then quit. Exploratory searching includes activities such
as reading job advertisements, reading about job search practices, and preparing and
sending a resume, or activities that might be considered exploring options while
committed searching includes activities that suggest a commitment to leave such as
contacting former employers, colleagues, recruiters or prospective employers.
(Mc.Knight, Leimar, 2010)
Job stress experienced by employees is also one of the important factor affect how
they committed to the organization. Moore (2000) and Ahuja et al. (2007) stated that
work overload has a strong influence on work exhaustion and Wofford et al., (1999)
added that sooner it causes a number of diseases. According to Thaden (2007), the
situations that cause work overload are when there is insufficient staffing, additional
work handed by down management, or when the increases of work load due to heavy
duties. In this regards, employees are easily became more stressed and decide to quit,
especially during the critical incidents. (https://www.researchgate.net/publication).
Rupp and Cropanzano (2002:92) stated that what makes employee leave the
organization is when they perceive that they receive low level of organizational
support. If organizations fail to provide substantial growth opportunities, the
employees will actively start searching for an alternative job and their search is based
on the perceived opportunities in external market (Mano-Negrin and Tzafrir, 2004).
Similarly, according to Arokiasamy et al., (2010), employees will find better job
offers and intention to leave the organization when they facing job unsatisfactory,
lower perks and rewards, poor organizational support and others. For example in the

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management information industry (MIS), excessive turnover in this area can be
dysfunctional to the organizations due to the shortage of experienced MIS employees
and another factor of high cost of training new employees (Igharia and Greenhaus,
1992).

1.2. THEORETICAL CONTENT

Turnover may be a concept that has been studied from three main perspectives.
The first perspective is based on turnover models, where the turnover is viewed as a
consequence of employees’ job satisfaction and organizational commitment.
The second perspective is based on the leadership literature and leader–member
exchange theory, whereas the third is based on organizational support theory.
The next section presents these three perspectives:
Turnover models:
The role of job satisfaction and organizational commitment:
In the present study, turnover is regarded as a termination from the employees’ side
without any involvement or pressure from the employer’s side. With regards to
employee turnover, some of the researchers were among the first to report that job
satisfaction and organizational commitment contribute independently to the prediction
of turnover intentions/cognitions. Later on, following a meta-analysis of antecedents
and correlates of employee turnover, Griffeth, Hom, and Gaertner (2000) concluded
that organizational commitment predicted turnover better than job satisfaction.
Some researchers present the view that organizational commitment develops through
job satisfaction which organizational commitment mediates the influence of job
satisfaction on turnover intentions. Other authors have stated the reverse relation;
namely that organizational commitment precedes job satisfaction. However this view
has not been supported by later researchers (Williams, Hazer 1986).

Impact of leadership on employees and employee behavior:

Turnover may be a concept that has been studied from three main perspectives.
The first perspective is based on turnover models, where the turnover is viewed as a
consequence of employees’ job satisfaction and organizational commitment.
In this master thesis the turnover is reviewing all the concepts for turnover no taking
in consideration all the researchers and their presentations whether they support the

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turnover where the employee is leaving because of bad working conditions or the
turnover is happening by employees mistakes or the turnover is a consequence of
decision for chance and bringing “young blood” to the bank/the company.

1.3. EVALUATION OF FACTORS THAT DETERMINE

TURNOVER

Employee turnover is costly. In addition to replacement fees, there are

hidden costs like productivity loss, workplace questions of safety, and morale
damage. An improved selection process that assesses candidates' turnover risk
and motivational fit early within the hiring process helps reduce turnover that
translates into organization profitability.
“The cost of turnover is extremely high; it’s estimated that losing an
employee can cost 1.5-2 times the employee’s salary. Depending on the
individual’s level of seniority, the financial burden fluctuates.
Not only are you forced to dedicate time and resources to recruiting, onboarding
and training a new hire after an employee leaves, your business simultaneously
takes a hit internally while the role remains unfilled. These expenses are known
as the cost-per-hire and cost-of-vacancy, respectively. It’s estimated that two-
thirds of all sunk costs due to turnover are intangible, including lost productivity
and knowledge, which are part of the cost-of-vacancy. Only 33 percent is lost to
recruitment efforts, or the cost-per-hire.
However, the most substantial impact of turnover is not a cost at all, but
the damage done to your remaining employees. Your people are absolutely
essential to your business’s success. Without them, you’d be forced to work more
jobs than you already do (startup culture, right?) and forego all plans to scale. In
short, a high turnover rate cuts much deeper than meets the eye. Take  a
glance at a number of the hidden costs related to turnover.” (Price, 2001).

 The True Cost of Employee Turnover

It is estimated that the cost of employee turnover  can range from 40-400% of
an employee’s annual salary. The total cost of turnover includes money, time and
other hidden or “soft” costs, which when combined, are often much more substantial
than expected. This post details the various components of the true cost of turnover,
along with suggestions for keeping this large, elusive cost under control.

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1.4. WORK ENVIRONMENT

If working situations are insufficient or the place of work has absence of

important accommodations such as proper lighting, furniture, restrooms and other
health and safety provisions, employees will not be willing to put up with the problem
for long time. Organizational uncertainty has been shown to have a noticeably degree
of turnover. Suggestions are that employees are more expected to stay when there is
an expectable work environment and vice versa. In organizations where there is a high
level of ineffectiveness there is also a high level of staff turnover. For the employer
losing of a particular key worker may reduce the potential for realization of plan
achievement and financial assurance can drop in the company for a certain period of
time.
Main causes of turnover are salaries, working environment and safety of job.
Turnover mainly gets up from discontent from the job place. In opposing, employee
also strapped to go away job thanks to the frustration in their present workplace
(Cohn, Fehr, 2014)
It is said that the working environment has a positive association with job satisfaction,
where the better the working environment, the more it will increase job satisfaction.
The investigation of the relationship of the working environment on the job
satisfaction proved that a sound working environment has a positive relationship with
job satisfaction while a rigid type of working environment will reduce job satisfaction
while a flexible environment tends to have a higher job satisfaction. The conclusion is
clear: working environment has a significant impact on the relationship towards job
satisfaction.
Hence, the company is recommended to manage its employees’ career in order
for them to excel in the future. One of the ways is by creating an employee
segmentation process that will help to guide the career advancements of employees.
Through this career development, the employees can create their work life balance as
they can plan their work and have a balance life compared to the previous job that
they perform. With today's diverse labour force, one size does not fit all employees.
The company must cooperate with employees to help them acquire the skills to move
forward in their career with the help by their managers and to receive a pay rise. A
career plan allows the company to motivate and better understand the aspirations of

16
their employees. In order to create work life balance and reduce stress that might be
faced by the employees, the employees need to know their job description as that will
be the determinants of what are the tasks that they need to perform. If the employer
has not given job tasks that are not related to the employee responsibilities, the worker
has a right to ignore the direction from the employer by explaining politely to them
that the job is not included in the job description. With this clear job description,
employees will feel less stressful in the workplace so that they can balance their work
and life activities. Other than that, person based skill is one of the methods to reduce
stress as the company need to hire employees based on the skills that they own. The
skills must be aligned with the position that has vacancy in the company so the
employer will not select the wrong person to fill up the vacancy. If this happens, then
the employees might face challenges as they do not have any skills to perform the job.
For example, for the job vacancy of a sales person, the employer need to find
candidate that have a strong selling skills and they cannot simply give the position to
the candidate that have in other business skills. (www.iiste.org ISSN 2224-607X
(Paper) ISSN 2225-0565 (Online) Vol.4, No.3, 2014)
In addition, it must be taken into account that a smooth contribution to the
achievement of a good and productive working environment has a smooth
communication and transparency among employees. Clear communication is one of
the important ways to reduce stress caused by dissatisfaction and frustration. The
employees and employers should be feeling comfortable with conversations about
positive and negative situations. Comfortable communication can reduce the problems
in the workplace. When there is no clear communication among employees, the goals
of their performance cannot be reached. A good career can be a good start for any
employees. No employees want to jump from one company to another without any
upgrades – intellectual, personal or financial.
Everything that is mentioned in this paragraph briefly explains the essence of the
compensation due to each employee and the factors that influence the determination
of the amount of salary.
a) Good working environment
Dane and Brummel (2014) argued that a good working environment tends to reduce
the turnover intention of the employee. The good working environment, makes the
employees feel good about their job and more important satisfied with the job they are

17
doing. If the working environment is good, and the job is low stressed the turnover
intention may be low.
b) Bad working environment
Most of the turnover intentions are caused by bad working environment, low salary,
stressful work, pressure while working, bad environment, no breaks during working
hours, no motivation employees are the reasons for turnover intention and employee
turnover. (Research Gate Net, A model for turnover intention in the banking industry in
Malaysia, 2015)

1.5. JOB STRESS

The determination of high rates of mergers, acquisitions, increasing economic

interdependence among countries due to globalization, technical development, and
rearrangement have changed the organizational work over the last century and these
factors in time have caused pressure, excessive work demand, role conflicts,
ergonomic deficiencies and challenging customer relationship are causes of stress
(Giga and Hoel, 2003). The stress is also considered as a conservation of all of the
incentives to a person, or an oddity between individual and environment. Nowadays,
in grotto organizations and companies, stress is considered as an integral part of daily
work. Namely, even one of the most important questions you can get in a job
interview is "Do you know how to work during a stressful situation?" and if your
answer is yes - then that is another advantage that brings you closer to the desired job
position, while if you do not know how to work under stress - then you will be
perceived as insufficiently competent for most job positions. This is due to the fact
that stress during work is an inevitable factor. It is this phenomenon that can lead to
large losses of the company through making wrong and irrational decisions by
employees. Therefore, nowadays, companies are increasingly investing in various
trainings that are intended for employees and aim to teach them how to deal more
easily with stress. And what exactly is the word "stress"? (Bojadzioski 2009) "Stress
is any circumstance that -places special physical and / or psychological demands on
the individual, so that they elicit an unusual or unusual response." However, stress can
also be positive, for example when you win the lottery or a surge of happiness. From
here it can be seen that every person reacts differently in stressful situations. There are

18
different sources of stress in the functioning of a company, so they are divided into
three groups: stress caused by the performance of tasks, stress arising from the
functioning of the company and stress caused by factors that are outside the company.
On the other hand, it is very important to look at the whole situation from the opposite
angle. Just as there are job positions with an extreme level of stressful moments, so a
worker can find himself in a job position where stress is completely left out, and that
equates to boredom - insufficient workload. Insufficient workload is characterized by
boredom, demotivation, absenteeism, apathy. This is followed by the optimal level of
load, which is characterized by the appearance of high motivation, energy, clear
perception and serenity. In the end are the most stressful job positions that are specific
to the occurrence of insomnia, irritability, increased number of work errors and
indecision. Thus, we can clearly see that moderate job stress is even productive. The
negative relationship between stress and productivity is obvious. Prolonged stress
leads to effects with contradictory consequences such as reduced attention, difficulty
concentrating, which in turn leads to difficulty in making certain decisions, and then
losses in the firm. But, as I mentioned above, stress can be functional and
dysfunctional, that is, mobilizing and paralyzing. Thus, with increasing stress, the
worker's productivity increases to a certain extent, and then begins to decline and lead
to reduced productivity and the occurrence of burn-out syndrome. This phenomenon
is characterized by emotional exhaustion, depersonalization, and personal failure.
From here, things get trickier, and this is where the true love of success comes in. At
this point can be concluded that the knowledge of job related stress (job stress), the
series of reasons that lead to job related stress (stressors), lack of commitment in the
organization and job frustration make employees to quit.

1.6. CAREER GROWTH

Larson (2004) says that the career evolution creates stress on employee’s
understandings of the value of his or her career prospects. Obstacles in career
development can appear at any time during an employee’s active period which serves
as stressor for them. These stressors can contain an array of problems like being
trapped at an edge, bereft of any expectations of improvement or pressures of
downsizing (Smith and Cooper, 1994). Career progress is far more significant than
salary in Europe or America but it is calculated correspondent to salary in Asian
context (Europhia, 2008). “Moving Up or Moving Out” counts career growth as basic

19
for turnover (Europhia, 2008). High employee turnover could also be due to no
prospective chance for progressions or promotions. Employees prefer other
companies which can offer them with higher posts and increased recompense
packages (Rampur, 2009). In modern theories of career development in the
workplace, it is described as a catalyst for the realization of individual and
organizational interests. The conditions that are created with the open opportunity for
career growth of the individual, enable his professional development and enrichment
of the skills he possesses in order to perform the work tasks more appropriately. This
directly increases the competitive advantage of the company in the market in which it
operates. This is how the career advancement of the employees contributes to the
progress of the company and vice versa. "Human resource management studies the
career from the point of view of its management, which ensures the normal
functioning of the organization" (Bojadzioski, 2009).The lifespan of a career is
divided into several stages. The first stage is the preparation for work and it is
characterized by the period when the young person is trained for the desired
profession during his studies. This period is very important to predict the further
course of someone's career, and this can be done by analyzing the grades obtained
during schooling, as well as student behavior. The second phase is called entering the
organization. This phase starts from the moment when the young candidate is
employed in the new job - in his first job position. This stage also marks the beginning
of an individual's career. During this period, the young person gets to know the work
environment and colleagues and adapts to work tasks. While the third phase is called
the period of early career and is characterized by stabilization of the workplace and
gaining a certain credibility in the company. At this stage, both hierarchical and
financial progress begin. The fourth stage is called the mature career stage. During
this period, the employee has a stable and confirmed status in the company and
individuals usually try to maintain a well-established reputation. The last, fifth stage is
called the late career stage. During this period the individual begins to slowly retire
from work responsibilities and his activity decreases. Also, this period is characterized
by feelings of fulfillment and satisfaction with the work in the past. The employee in
this age should transfer his knowledge to the new employees and prepare for
retirement (Bojadzioski, 2009).

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1.6.1. COMPENSATION

One mutual reason that causes high employee turnover rate is low salary and
profits packages. When a worker is engaged during a low-wage position with
restricted benefits, there's little encouragement to remain if a comparable employer
offers even a considerably higher rate of pay. "While lower paying job roles involve a
general high average of turnover rate, they need a habit of to cost firms less per
additional employee than do higher paying job roles. However, they sustain the cost
more often. For these reasons, most companies emphasis on employee retention
strategies irrespective of pay levels." (Beam, 2009).
Workers who make more, but whose incomes drop short of the going market
rate, may be underestimated at their current companies and look for a company that
will recompense them with what they're worth.
Proper valorisation of the work of the employee is essential for the results of the
operation of a particular company to be positive. One of the motivating factors - if not
the most important, is exactly the amount of salary, ie receiving a fair salary in
relation to the work tasks that are performed. Proper management of employee pay
can be used as a powerful tool in the overall management process of the organization
(attracting quality staff, retaining existing employees and maintaining a high level of
satisfaction). Furthermore, the proper payment of employees can contribute to their
maximum engagement in the performance of work tasks and their additional
engagement. However, there are special factors for determining the amount of wages,
such as the cost of living, the state of the labor market, wage-related legislation, labor
productivity, the financial condition of the enterprise and the organization of workers
in unions and other organizations. If in proportion to the stated factors, the employer
manages to adjust the salaries of the employees to a compatible level, then the feeling
of valorization of labor will be satisfied and the company will be able to easily
advance and achieve the desired results through human capital. (Firth at al, 2004).

1.7. EMPLOYEE

An employee is someone who in an exact period is employed by the employer

to perform service on behalf of the employer, or a person who is hired to provide
services as a part of an independent business. Employees are asset to any

21
organization, they are very important component to any organizational unit because
effective and efficient work place is reached through the employees. One can say that
performance and productivity of most organization could not be realized without well
maintained employees.
The hiring and placing of the right candidate at the most optimal place by having the
right skills, at the right time is the secret of success to every organization .The good
long term well maintained relationship between employer and employee have so
many advantages to the organization as well as for the employee. The employer will
reap the following, ensure sustainability and competitive advantage over competitors
and this is going to promote stable and good organizational culture and will bring
motivation among employees because they will start to see themselve as part of the
organization. One can be concluded, that staffing and maintaining well trained and
committed employees in any organization is a guarantee of the management for
ultimate prosperity in a long term. Therefore, dissatisfied and non-happy employee
won’t be in a good position to remain longer in a particular organization (Bojadzioski,
2009).

1.7.1. Employee Turnover

Labour turnover via human resources theories is the rate at which an employer
add new and lose employees. In simple definition one can say that it is "how long
employees tend to stay" or "the rate of traffic through the revolving door”. Labour
turnover is measured for individual companies and for the whole industry as well as
the banking industry. If the organization is said to have a higher rate of turnover than
its competitors in the industry, it means that the employee of that company have a
shorter average tenure in staying with that organization than other companies of the
same industries.
High turnover can bring a negative impact to the bank productivity if skilled
workers leave and the company remains with new employees that firstly have to be
trained than to be expected in time to work as the ones that had left.
High turnover may be a disadvantage to the organization productivity if talented and
skilled employees leave the organization and leave the high population of the
organization with less skilled labour all the time. It is a definition that staff turnover as
a measure to calclulate the loss of staff that creates job opening that need to be filled.
(Khan, 2014). Other definition that elaborates the employee turnover is considered as

22
a percentage of employees leaving organization for any reason per year. Price (1989),
defines labour turnover rate as leaving of existing employees from the organization
and entrance of new employees into the organization.
Otherone defineas the labour turnover as an innovative process by which
employee steadily discover what the employer is like, and in what kind of relationship
are they in a making a decision accordingly to leave or stay. The decision is a product
of several experience, the last one of which may be the last grass or the one that
pushes employees over the edge.(Clarke ed al. 2010).

1.7.2. Employee Retention

The retention of employees is the capability of the organization to keep its best
workers and be able to maintain low turnover, it also refers to polices, procedures and
practise which let the employee to stay in an organization for quite long time. Every
organization invests time and money to attract the best talent and keep them, to make
this input an asset with a value and to make them to be like the existing employees.
Employees retention takes into account various ways and measures so that employee
fill valued and hence decide to stay in an organization for the maximum period. In
addition, employee retention has the advantage of cost effective effect because
retaining the employee can reduce numerous costs associated with turnover and
protect loss of experienced staff members who can be hired by competitors. (Stovel,
&. Bontis, 2002).

1.8. Theoretical Frameworks

1.8.1. Hierarchy Need Theory (1954)

Maslow is one of the human resources theorists. He claims that the needs of
human capital can be listed into five levels from the upper level to the lowest, named
physiological needs, safety needs, belonging and love needs, esteem need as well as
self-actualization. The same are grouped into two parts. The first one contain three
needs which can be satisfied externally and the second part consist two needs that can
be satisfied internally when employer fails to meet the needs of employee at any stage

23
or any level as far as the hierarchy is concerned, then lack of fulfilments in the
individual professional lives arise (Bhatti, Qureshi, 2007).
This can cause the employees to try to full fill their needs on their own and
others can try to find a new employer. The theory fails to take into account that the
human needs have no end and in the real sense the organization cannot be able to
satisfy all employee needs. So, Maslow hierarchy needs Theory by Abraham Maslow
is used to guide the study because sometimes employees leave the organization no
matter what motivation and reward they are given. NBC is one of the organizations
which are faced by that challenge.

Figure 1: Hierarchy Need Theory

1.8.2. Two Factor Theory (1957)

The two factor theory known as Herzberg motivation hygiene theory and dual
factor theory, states that there are certain factors in the workplace that cause job
satisfaction while a separate factors cause dissatisfaction. The theory was developed

24
by the psychologist known as Fredrick Herzberg. He tried to extend the Maslow’s
needs hierarch theory. The two factor theory also called dual factor theory and the
motivation hygiene result of motivation are basing on on a study that was made in the
1950’s. The study should show which factors in the workplace positively and
negatively affect the motivation of the employees, i.e. which factors lead to job
satisfaction or job dissatisfaction. Furthermore, Herzberg discovered that the degree
of motivation that is felt by employees indicate to that when people talk about feeling
good or satisfied they consider feature intrinsic in job (primarily intrinsic job
elements), for example recognition, achievement, advancement, responsibility, growth
and vice versa hygiene factors (extrinsic elements of the work environment – job
dissatisfiers) as company policy, supervision, working conditions, salary and
benefits.) (Herzberg, 1957).

1.8.3. Firm Specific Human Capital

(FSHC) Theory

The Firm Specific Human Capital (FSHC) is one of the human resource theory that
was pioneered by Becker (1975). The theory declared that firms need to incur the cost
of training and provide incentives to staff members that moment when the staff
training will be lowered by high resigning rates. According to this theory the incentive
will be weaker when firm’s specific and general training are less separable, as
employees have lower opportunity costs of quitting (Lynch, 1993). Therefore the firm
effectiveness and productivity falls as turnover increases.
Even if FSHC is raised through learning by practise the accumulation remains
positively related to employees tenure. So a higher turnover rate will still lead to
lower productivity and direct loss of human capital. In addition to the second
mentioned, the result is an employee who leaves the firm and other negative effects of
the turnover on productivity. There are some effect during the period of vacant and
training, which cause loss of certain amount of output. The cost used in administering
resources used in separation recruitment and training could have been concentrated on
other process of production.
The high rate of turnover can badly affect the employees morale hence affect the
whole organization. The controlled experiment made by Sheehan (1993) recorded that
the employees who leave the organization affect the insight of those who stay in the

25
firm and the result is negative effect on firm productivity. The output, justified (from
employer point of view) the involuntary job separation can cause unplanned voluntary
employee quitting and this is so-called snowball effect. Therefore, this theory is used
to identifie the reasons which cause employees to leave the organization.

1.8.4. Theory x and theory y

In 1960 the human resource theorist Douglas McGregor proposed two theories by
which is viewed the employee motivation. He called the theories as Theory X and
Theory Y and any of them claim that the management is a main role in insuring the
collection of factors of production - including people, for the benefit of the economy
for the organization. Theory x contends that people by nature do not like to work and
they usually find a way to avoid work - they are lazy and not reliable so in order to
make them work they must have follow up and supervision at a maximum and
effective control use of force, so if all fails then they must be punished.
But if we look at the other side – The Theory Y, than we can notice that this one
tends to be positive and it shows that people have the ability to direct themselves, the
ability to know that they need to achieve some goals so they put the plan of work,
what should be done at what time and what they need to achieve. There is no need for
maximum supervision no needs to be coerced. This theory is showing some
weaknesses because people need to be guided by policy and procedures so that they
can accomplish the set goal and no need to be forced to take their responsibilities
(McGregor, 1960).

1.8.5. The goal Theory

The goal setting theory was developed by Latham and Locke in 1979. It states
that “performance and motivation are high when individuals had set specific goals
which are challenging but acceptable and when the individual who performed the task
get feedback on the performance. Locke found that specific and challenging goals can
lead to a better performance than vague or easy goals, so having a goal that is too easy
is not a motivating force. Challenging goals are more motivating than easy goals,
because it is much more of an accomplishment to achieve something that you have to
work for. One can conclude that the goal seating is a powerful way of motivating

26
people and motivating yourself. So the value of goal setting is like management by
objectives. Goal setting is incorporated within the organization and the theory is
accepted as one of the most valid and useful theories of motivation in different
sectors. The goal setting theory assumes that all employees are motivated when their
goals set and achieved or when in some cases have been involved in setting the goals.
The theory has weakness because for the matter of fact every individual has his own
factors that make the employee motivated to work (Latham and Locke, 1979).

Figure 2: the goal Theory as Developed by Latham and Locke

1.8.6. Equity Theory

Equity theory was developed on work behavior by psychologist knows as J.

Stacy Adam in1960’s. who emphasise that employees have to maintain equity
between what they input to the job to get output (Adams 1963). The theory declares
the checking of fairness or measure of fairness, equal balance of effort made by the
employee and the reward to it is to be two way in traffic game and that means the give
and take, the input and output ratio consideration. The theory believes that individuals
value fair consideration which cause them to be motivated, the fair treatment between
employee of the same organization regarding the ratio of input and output and the
contribution made by the employee for the organization. The theory suggests that
individuals do compare efforts and rewards with their fellow in the organization and
they have the reference of others in regarding to what is being realized from the effort

27
made, like “is it fairy distributed”. The insight of individuals about the fairness of the
reward compared to the other employees influences their degree of motivation. Equity
theory concentrates on determine whether the distribution of resources is fair among
the employees. The theory suggests that individuals who see themselves as under
rewarded will tend to be in sorrow, the sorrowfulness will lead to effort to restore
equity within the relationship. It can be concluded that an employee needs to feel that
the contribution and work done are being taken into consideration when rewarding
vice versa if the employee feel not fairy considered or rewarded or underpaid the
result will be employee to feel intimidated towards the organization and perhaps their
fellow employees, this can cause employee to be underperformer. The equity theory
was criticized by (Huseman, Hatlfield & Miles, 1987) they argued that employee
might see equality or inequality not only on or the contribution they made on their
input towards the work done and the outcome resulted but also in the factor of the
principal system that determine those inputs and outputs.
(Huczynski and Buchan,2007) argues that the more the extreme the employee
observe that he is either less or more paid, the higher the pressure and the stronger the
motivation to act is. The equity theory is concentrating on productivity, job
satisfaction and turnover reason, it sees the turnover as an outcome of underpayment
conditions. The theory has not taken into consideration factors such as psychological
reasons and band and poor organization climate that may stimulates the employees to
move to other employers and because of that reasons the theory was not considered in
guiding the study.

1.8.7. The expectancy Theory

In 1964 Victor Vroom developed the expectancy motivation theory which

explains the behavior process of the employees – why they choose one behavior than
the other. His theory explains that the motivation of employees can be triggered if
they expect that the effort, they use on performing the job will result in a desirable
reward. The reward given from the performance will be able to satisfy vital need.
Vroom expectancy theory separates: effort which arises from motivation, performance
and outcomes and he realize that an employee’s performance is based on individual
factors like skills, knowledge, personality, ability and knowledge. He stated that
effort, performance and motivation are linked with person’s motivation. The
commission-based pay has resulted in commission compensation structure leverage

28
theory which make employees to earn as much as they can, based on the job done, i.e.
sales that were achieved. It makes sure that employees always expect future pay raise
and future promotion and this can make maintain the hard working so as to achieve
personal goals. The opposite is presented with the case when the employee is
expecting little compensation and no future opportunity growth in consideration for
the work done with very little effort. After a long run the employee will decide to look
for a new job which will offer an opportunity for high compensation and growth.
Also, the theory identified three major factors that determine employee motivation as
expectancy, valence and instrumentality (Mullins, 2001). According to Mullins,
motivation works well when there is functional relationship between the effort that
was expended, the perceived outcomes and the expected reward (the one that will be
related to the performance). From the above explanations one can concluded - that
basing on this theory the essence of labor turnover in banking industry in Tanzania
can be examined and evaluated based on the workers conditions in terms of on-going
expectations and future condition, for example, expectation on increase of pay, basing
on the economic condition of the country, expectation on compensation and reward
which might boost the employee working morale. However, if the employer fail to do
this the labour turnover may hit the organization. The theory helps to explain why a
number of workers are not motivated and this theory highlights that unmotivated
workers will do only what they are told to do without stretching themselves that
maybe this is the minimum work that can be done. Also, the theory is explaining that
employees will do extra job for the organization if they expect to get more fringe
benefit and incentives from the employer. It has to be pointed that the theory has some
weaknesses e.g. it won’t work in practice without managers participation, also, leaders
must ensure that they take into consideration on what each employee value as
motivation, and there must be available all rights and resources to make employee
work successful. In addition, mangers must be able to keep their promises so that
employees will keep trust that they will be rewarded if the perform is at a certain
level. The theory assumes that employees always act out of interest and their desire
for rewards. It eliminates the possibility that employees can be motivated by other
factors many employees are motivated to do the right or being part of a certain team,
leaving behind the reward. Because the theory does not account for this it can lead an
employer missing out an excellent motivation tool. Due to that weakness, the study
did not adopt this theory (Wroom, 1964).

29
 Figure3: Expectancy theory

1.8.8. Job Matching Theory

The theory is all about that job seekers will search for firms and firms will
search for job seekers until there is a suitable match for both. The theory takes into
consideration that both sides need each other - the firm needs employees and the
employees need the firm. However the circumstances for the best condition matching
may change over time, leading to on-going reallocations of employees. Till that date
we still realize that employees in banking industries are searching for jobs and the
increasing numbers of financial institutions are still searching for competent
employees who are highly skilled, highly committed and highly experienced. The
theory fails to identify the type of employees who leave the firm and the reason which
lead them to quit and the impact their resigning will have on the firm. Those
weaknesses made the theory not suitable to guide this study (Jovanovich 1979);
(Burdett 1978).

1.8.9. 3N THEORY - (Needs for Affiliation,

Power, and
Achievement) Theory of
Motivation

David McClelland and his associates proposed McClelland’s theory of

Needs/ Achievement Motivation Theory. This theory states that human behavior
is suffering from three needs - Need for Power, Achievement and Affiliation.

30
Need for achievement is that the urge to excel, to accomplish in reference to a
group of standards, to struggle to realize success ( McClelland 1976)
Need for power is that the desire to influence other individual’s behavior
as per your wish. In other words, it's the will to possess control over others and to
be influential.
Need for affiliation may be a need for open and sociable interpersonal
relationships. In other words, it is a desire for a relationship based on co-
operation and mutual understanding.
The individuals with high achievement needs are highly motivated by
competing and challenging work. They look for promotional opportunities in job.
They have a robust urge for feedback on their achievement. Such
individuals attempt to get satisfaction in performing things better. High
achievement is directly related to high performance. Individuals who are better
and above average performers are highly motivated. They assume responsibility
for solving the issues at work. McClelland called such individuals as gamblers as
they set challenging targets for themselves and they take deliberate risk to achieve
those set targets. Such individuals search for innovative ways of performing job.
They perceive achievement of goals as a gift, and value it quite a financial
reward.
The individuals who are motivated by power have a strong urge to be influential
and controlling. They want that their views and concepts should dominate and
thus, they need to steer. Such individuals are motivated by the necessity for
reputation and self-esteem. Individuals with greater power and authority will
perform better than those possessing less power. Generally, managers with high
need for power end up to be more efficient and successful managers. They are
more determined and constant to the organization they work for. Need for
power shouldn't always be taken negatively. It is often viewed because they got
to have a positive effect on the organization and to support the organization in
achieving its goals.
The individuals who are motivated by affiliation have an urge for a friendly and
supportive environment. Such individuals are effective performers in the team.
These people want to be liked by others. The manager’s ability to make decisions
is hampered if they have a high affiliation need as they prefer to be accepted and
liked by others, and this weakens their objectivity. Individuals having high

31
affiliation needs prefer working in an environment providing greater personal
interaction. Such people have a need to be on the good books of all. They
generally cannot be good leaders (Epsten and Harackiewicz 1992; Lee 1992)

Figure 4: Theory of motivation

1.8.10. Synthesis of Theories

The theory of job matching was discussed by Jovanovich (1979). The theory
was all about that employees search for better firms and firms search for better
employees and the search takes place until the good match between the two is
reached. He also discussed that the employer’s expectation must be reached as well as
employee expectations must be reached too and both should match for the benefit of
each other. Maslow (1954) discussed on the human being needs which can be
motivating tool. According to him, the hierarchy of needs claims that the employee
needs have to be met in sequence and if the employer fails to do so, the employee may
quit and look for other employer who can full fill them. Furthermore, Fairness on
equity was discussed by Adams (1963), he said that employees consider fairness on
equity by comparing effort and rewards in comparison with other related employees.
The insight of individual about the fairness of reward relative to other can influence

32
their level of motivation. Vroom (1964) discussed on expectancy theory he discussed
that employees put forth amount of work and commit equal to what they expect to get
in return. If employee expect to get more and growth in return - he will put more
effort on that job. If the employee is expecting to get little compensation and no
growth opportunities, in return he may put minimal effort this can make even quit and
look for a better compensating organization. The scholar discussed the employee’s
expectations in terms of fairness on equity and rewards, both of them being
motivation factors for employees to stay in an organization or to quit to other
employer. Therefore, the Goal setting theory was discussed by Latham and Locke
(1979), the discussion was all about the employer who should set goals by engaging
employees. For the purpose of motivation an individual must work towards a set goal.
Becker (1975) comes up with the theory of Firm Specific Human Capital he discussed
that an investment in Firm Specific Human Capital creates a rent to proceed
employment that is wedge between alternative market opportunities of the employer
and employee. The theory suggests that the firm will only have an encouragement to
finance specific human capital acquisition since the reward to general human capital
investment is hard for a firm to appropriate. Those theorists discussed the motivation
aspects of employees, claiming that it is an involvement of employee in goal setting
and training investment in regards to organization’s needs. The two factors theory
introduced by Herzberg (1957) was on motivation which indicated that when people
talk about feeling good at work or they are satisfied, they mention intrinsic features of
motivation for example achievement, work itself, recognition, and advancement and
vice versa - hygiene factors (dissatisfying factors). McGregor (1960) introduced
Theory x and Theory y and he proposed two different sets of assumptions about the
people motivation: what motivate people basically or negative and so-called theory x
and the opposite is positive and named theory Y. Theory x is based on the
assumptions that human being are always lazy, they do not want to work they must be
coerced, punished and forced so that thy work. While theory y is based on
assumptions that people work if they need only to have process and procedure in
place and by following those procedure they can work without being pushed.

33
2. HYPOTHESIS

The main hypothesis of this Master thesis is: Job satisfaction of the employees in the
banking industry with special attention to the turnover of employees within the bank
or the system of banking and the impact of turnover and turnover intentions (positive
and negative influences).

Other hypotheses of this master these are:

 Employments feelings about management in the division

 Employment’s proudness regarding the job they are performing

 Employment’s satisfaction with the collegial atmosphere

 If there is a chance, why would a certain employee leave the company

where he or she works

 Are the conditions for career advancement and training at a solid level?

34
3. METHODOLOGY
This chapter presents the research design, the area of study, sample technique,
data collection methods, data analysis, validity and reliability of data. The
methodology is a systematic way to solve the research problem. Methodology in this
thesis enables and gives possibility yo participate in the field by using different
techniques for collection of data for the turnover in the banking industry and turnover
intention as a particular problem.
The methodology of this thesis is divided in two parts:
Firstly, the general conditions where a field research is to be conducted with the
questionnaires and second one - the еvaluation of the factors that determine turnover.
The primary method was performed by handing questionnaires to the
employees in one of the largest and oldest banks in the country and conducting
individual interviews during the end of the summer period when most of the
employees have already returned from vacation. The total number of respondents is
30 employees from three different units / departments in the bank: Human Resources
Department, Accounting Department and branches belonging to the Central region of
our country. Of course, this is a sample because some of the employees were absent
from work, and there were employees who were too busy and did not have time to fill
out the questionnaires or be interviewed.

3.1. FIRST part of the methodology - the questionnaires:

The focus group of the research as I said before, are three units of one of the
largest and most influential banks in the country. Specifically, it is about the Human
Resources Sector, the Accounting Sector and the Branches that belong to the central
area of the country (Veles, Prilep, Bitola, Resen, Krushevo, Demir Hisar). The
research was conducted on 30 respondents, of which 20 filled in questionnaires -
employees of the Accounting Department and employees of the branches in the
Central region and the remaining 10 - employees of the Human Resources
Department, were interviewed. The whole group of respondents consisted of 21
women and 9 men. The age limit is as follows: 24-34 years (7 people), 35-45 years (9

35
people), 46-55 years (8 people), 56-65 years (6 people), of which those employed in
the Human Resources Department have the following structure: 7 women and 3 men,
and belong to the following age limits: 24-34 years (2 people), 35-45 years (5 people),
46 -55 years (2 people) and 56-65 years (1 person).
The questionnaires were secret and voluntary. They were handed over in an
envelope to the respective candidates. The questionnaires consisted of 5 close-ended
questions and 7 questions that were to be transferred to the Visual Analog Scale.
As for the conducted interviews which referred to the respondents from the
Human Resources Department, they were also secret, and conducted consequently
with one employee each. The interviews were semi-structured with a duration of 10-
15 minutes. The questions covered in the interview were the same questions from the
questionnaire plus one bonus open-ended question.
The purpose of this technique was to determine certain hesitations in the
respondents that would potentially occur due to the fact that in this case the name of
the respondent is known.
The close ended questions are:
1. How do you feel about management in the division?
•Satisfied •Can be better •Dissatisfied
2. Do you feel proud about your job?
•Satisfied •Can be better •Dissatisfied
3. Are you satisfied with the collegial atmosphere?
•Satisfied •Can be better •Dissatisfied
4. If there is a chance, why would you leave this company?
•Satisfied •Can be better •Dissatisfied
5. Are the conditions for career advancement and training at a solid level?
•Satisfied •Can be better •Dissatisfied
6. If there is a chance, why would you leave this job? The average answer:
Leaving this country and try to work overseas.
All this is shown in chapter 4.

36
3.2. SECOND part of the methodology – secondary resources:

3.2.1. Documentary review

Documentary review is a technique to obtain various information from various

literature including books, journals, research papers and other documentary source
relating to a certain field of study. Normally, it helps to gather both quantitative and
qualitative and measure the consistency of information obtained through other
techniques. Termination letters of employees, financial reports, human resource
inventory files, department reports and any other documents that had relevant
information to the study were consulted.

3.2.2. Data Analyses Technique

The provided data that are given in the following chapter were carefully checked
for correctness before they were analyzed. The descriptive statistics were given in
Anova and as for the charts and tables - bar charts were used to show the data in
graphical way – as it was learned during the studies. Along the provided analyses the
research was upgraded to more scientific and reliable information (Kohari, 2003).

3.2.3. Data Presentation

The findings were presented by using descriptive statistics including distribution

tables.

3.2.4. Reliability

Reliability refers to the consistence, stability, or dependability of the data. The

reliability of an instrument is increased by identifying the precise data needed and
repeated use of the instrument in field testing. In order to ascertain reliability of this
study a pilot study was conducted to some of the banking employees whereby
questionnaires were distributed to 5 respondents. The results are not provided in this
thesis since the pilot study was intended only to see how to proceed with the research
that was planned to obtain reliable answers during the final process of data collection
for this thesis.

37
3.2.5. Validity

Validity refers to the extent to which a measurement does what it supposed to do.
Data need not only to be reliable but also true and accurate. If a measurement is valid,
it is also reliable but if is reliable, it may or may not be valid. In this study data were
computerized and checked for its accuracy to make sure that they give valid results
(Kohari, 2003).

38
4. RESEARCH FINDINGS

The discussion lead for the questionnaire results given in the bar charts can be
seen that that the hypothesis that were developed in this master thesis and the other
relevant thesis, were covered accordingly. Analyses of the factors that drive turnover
in the banking industry, the turnover of employees within the bank or out of it, and the
impacts that lead to turnover intentions (positive and negative influences).

Within the other research finding other hypothesis are covered that the employees
are mostly satisfied their job, they are proud of their work, most of them are satisfied
with the job they are doing and the position they work on, that there is a good
collegial atmosphere, even more that they are satisfied with the hierarchical
organization of the company and as final they do not consider to change the place of
their work and do not consider turnover.
All of the questions are shown in bar charts where the all above is clearly shown.

4.1. I SECTION

The first impression was that the answers of the interviewed staff and the
respondents who filled in the questionnaires did not differ drastically.
To the first question 21 of the employees answered that they are satisfied with
the current management while the rest of nine people answered that it could be better.
To the second question, many also answered that they feel satisfied and proud
of their work (23), while only 1 employee answered that he is dissatisfied and the rest
6 employees answered that it could be better.
To the third question, 19 employees answered that they are satisfied with the
working atmosphere and that a collegial relationship prevails, while the other 11
answered that there is room for improvement.
As for the fourth question, there is no drastic change in the schedule of
answers and 25 respondents said that they are satisfied with the hierarchical
organization of the company, and 5 people said that it could be better.
To the last question, which is one of the most important and perhaps a
synchronization of all the previous ones, most of the employees (24 people) answered

39
that they do not think that they would be more satisfied in another company, while 6
people answered that they would not be satisfied in another company.
The analyses conducted are shown in bellow in the graphical presentation of the
results.

4.2. II SECTION

In this section I will try to summarize the results of the questions that were to
be transferred to the Visual Analog Scale (for each individual question - average
answer from all 20 respondents).
The following questions follow the main question: I would consider
the option of working in another company due to:

1. Looking for a better position and better career prospects, professional

growth and work opportunities.

•----------x---------------------------------------------------------------------•
Not at all Definitely

2. Looking for a change in career direction

•-------------------x------------------------------------------------------------•
Not at all Definitely

3. Looking for new challenges at work

•--------x------------------------------------------------------------------------•
Not at all Definitely

40
 4. I can’t fit the company’s culture

•--x-----------------------------------------------------------------------------•
Not at all Definitely

5. The company don’t have proper system of promotions (procedural

justice – linked with the equity theory)

•----x----------------------------------------------------------------------------•
Not at all Definitely

6. My boss don’t treat me with respect (Equity Theory)

•--------x-----------------------------------------------------------------------•
Not at all Definitely

7. I can’t grow on this job (Herzberg)

•---------------x------------------------------------------------------------------•
Not at all Definitely

41
4.3. GRAPHICAL PRESENTATION OF THE RESULTS

To the first question 21 of the employees answered that they are satisfied with
the current management while the rest of nine people answered that it could be better.
As shown in Bar chart 1, chart there are any dissatisfied employees and the
employees that were satisfied outnumber the ones that answered that it could be
better.
Bar chart 1. Employee’s feelings about the management of the company

With this the one of the secondary hypotheses is confirmed that employees are
satisfied with their jobs and their feelings are positive regarding the management in
the division. Therefore, and the reason for turnover should be wisely researched in
other segments of working.

To the second question, many also answered that they feel satisfied and proud
of their work (23), while only 1 employee answered that he is dissatisfied and 6 said
that it can be better.
As shown in Bar chart 2 there are is only one dissatisfied employee and the
employees that were satisfied outnumber the ones that answered that it could be
better.

42
 As the results show most of the employees feel satisfied and proud of their
work that confirms the secondary hypothesis that satisfied employees and the main
hypothesis that the Job satisfaction of the employees in the banking industry with
special attention to the turnover of employees within the bank or the system of
banking and the impact of turnover and turnover intentions and the reason for
turnover have a positive result.
To the third question, 19 employees answered that they are satisfied with the
working atmosphere and that a collegial relationship prevails, while the other 11
answered that there is room for improvement.
As shown in Bar chart 3 there are more people satisfied with the working
atmosphere and some of them answered that it could be better, but no one was
dissatisfied.

43
 With this the hypothesis is confirmed that employees are satisfied with the
collegial atmosphere and the main hypothesis that the job satisfaction of the
employees in the banking industry with special attention to the turnover of employees
within the bank or the system of banking and the impact of turnover and turnover
intentions and the reason for turnover have a positive result.
As for the fourth question, there is no drastic change in the schedule of
answers and 25 respondents said that they are satisfied with the hierarchical
organization of the company, and 5 people said that it could be better.
As shown in Bar Chart 4 column chart there are more people satisfied with the
working atmosphere and some of them answered that it could be better, but no one
was dissatisfied.

With this the hypothesis the secondary hypothesis is confirmed that employees
are satisfied with the hierarchical organization of the company and the main
hypothesis that the job satisfaction of the employees in the banking industry with
special attention to the turnover of employees within the bank or the system of
banking and the impact of turnover and turnover intentions and the reason for
turnover have a positive result.

To the last question, which is one of the most important and perhaps a
synchronization of all the previous ones, most of the employees (24 people) answered
that they do not think that they would be more satisfied in another company, while 6
people answered that they would consider to relocate and change the company.

44
 As shown in Bar chart 5 there are more people satisfied with their current job
and would not go to another company, while only some answered that they would go.

Same as in the previous questions the secondary hypothesis can be confirmed

that the employees are satisfied where they are working and only a small portion was
ready to make turnover and the main hypothesis that the job satisfaction of the
employees in the banking industry with special attention to the turnover of employees
within the bank or the system of banking and the impact of turnover and turnover
intentions and the reason for turnover have a positive result.
Furthermore, as for the last, open-ended, bonus question, which was answered
only by the respondents who were interviewed (total of 30 respondents), 10 of the
employees answered that if they had a chance they would leave the bank and look for
a job abroad, 10 respondents answered that they would not want to leave the bank
because here They work for a long time and are already adapted to the conditions, and
10 respondents answered that the current period regarding the pandemic is very
unfavorable for looking for a job, but that if they are given a chance for a job with a
higher salary - they would consider accepting.

In the process of examining the relationship between variables, researchers can

use t-test or ANOVA to compare the means of two groups on the dependent variable
(Green & Salkind, 2012). The main difference between t-test and ANOVA is that t-
test can only be used to compare two groups while ANOVA can be used to compare
two or more groups. In the process of selecting the data analysis technique for this
study, I considered both ANOVA and t-test. The advantage ANOVA has over t-test is

45
that the post-hoc tests of ANOVA allow to better controlling type 1 error (Hopkins,
2000). Therefore, in order to control type 1 error, I chose ANOVA as data analysis
technique for this study.

ANOVA test (https://raybiotech.com/learning-center/t-test-anova/)

Question/ Answer Satisfied Could be beatter Dissatisfied

Bank workers 21 9 0
proud of the work 23 6 1
work satisfaction 19 11 0
hierarchy 25 5 0
company change 24 3 3
% Total 74,67% 22,67% 2,67%

Descriptive Statistics Descriptive statistics was conducted to observe the

distribution of the data.

ANOVA
Source of Variation SS df MS F
Between-treatments 1243,2 2 621,6 105,355
Within-treatments 70,8 12 5,9

Total 1314 14    

According to the results shown in the ANOVA test, the hypothesis shows thee
required results and the job satisfaction impact on the turnover intentions. Employees
that are satisfied with management have statistically significant lower turnover
intentions that those that have either lower satisfaction of express dissatisfaction.
The f-ratio value is 105.35593. The p-value is < .00001. The result is significant at p <
.05.

46
5. CONCLUSIONS
The master thesis “Analyses of turnover in the banking sector in North
Macedonia” was focused on identifying the most relevant and most significant factors
that affected the employees’ turnover in the banking industry in North Macedonia.
The analyses of these factors reached the development of relationship between
the level of employees’ turnover and the factors that affected the turnover in the banks
in North Macedonia.
As main analyses are the turnover factors in the banking industry and the
reasons that this becomes one of the most important topics in the banking industry
worldwide, not only in Europe or the Balkans or in Macedonia.
With globalization which is cumulative competition, organizations must carry
on to develop physical goods and offer services which are constructed on approaches
formed by employees. These employees are particularly essential to the organization
since their value to the organization is basically intangible and not easily replaceable.
The interes of every employee is to be in the bank where he/ she awas
admitted as an employee but
It was evidently proven that the hard job, management of the divisions, the
stress that comes with the job in the time of pandemic Covid-19, still are the prevalent
factor for turnover in the banks. Moreover the lack of wish for life change the good
employee surrounding, hierarchy organization and satisfaction with the personal
achievements have made the employees not really interested in changing their
working place. The key role here is the management team who should control
employee turnover for the benefit of the organization success. Majority of the
employees has pointed the stress at the workplace where the job stress was as effect of
the interaction of workforces and the situation of work although views varies about
the reasons and consequence however, it was established that stress is a function of
individual physical characteristics and employed conditions and the strategies to
reduce turnover.
The study has been conducted based on fieldwork through interviewing
bankers (male and female) in different cities in the Republic of North Macedonia. It
was a prolonged process due to the direct interview of the respondents for primary
data collection. Sometimes respondents were found uncooperative with the
interviewer. Making appointments with top ranking employees and taking their time

47
were very difficult task. Sometimes bankers were too much busy with their formal job
duties so they did not attend the interviewer. Even the variables used in this study are
derived from reviewing the literatures and researchers’ own intuition. There can be
other significant variables that are not covered in this study.

The study revealed that the

employee’s turnover intention
as dependent variable is
significantly
The study revealed that the
employee’s turnover intention
as dependent variable is
significantly
The study revealed that the employee’s turnover intention as depend in
significantly correlated to four factors as independent variables. In this regard, the
management of North Macedonia banks should take contingence of the issues so that
employee’s turnover can be curtailed to a great extent. Thus the implication of the
research reveals that it is very important for any banks in The Republic of North
Macedonia to take effective measures to improve the effectiveness of the factors
sociated with the employee turnover. However, the study was confined to only one
bank with a limited sample size as well as some selected variables the results of which
may not be generalized for the other banks of similar character. Thus, further research
is required to consider a large sample size from a geographically dispersed population
on the same sector. In a further study, the researchers may try to explore more
relevant variables in relation to the employee’s turnover in the banking sector of The
Republic of North Macedonia.
Having in mind that Republic of North Macedonia is a small country in the
Balkan Peninsula it is hard to find a job in a bank, this is considered as a good

48
working place. Therefore the turnover in the banking industry is coalified as analytic
approach with impact of positive results.
In addition, organization provides opportunities for employees to progress in
development of their careers and this prevents them from quitting. The study
concluded that the commercial banks staffs receive increased basic pay from their
respective banks as a form of rewarding them which they highly value. The study
concludes that organizations offer monetary rewards to employees whose
performance is high to reduce the number of employees who quit the organization. In
conclusion, the relationship between the employer and the employee in the
commercial banks has kept the rate of labor turnover at low-level dues to good
rewarding system favorable employer rules and regulations as well as open
communication that enhances the relations thus reduced rate of labor turnover.
Employees have tried to work with energy, capability and purpose even if they
are not provided with the support; they need to achieve their tasks with morality. They
are more intensive to avoided stress and at their work place reduce directly affects
their performance. If avoided then turn-over are extraordinarily high and in this
feasible business world of today, if such be the ratio of employee turn-over then
organizations could let-down. This finally indicates to increase the working situations
and the working relationships among employees in the organizations. If the
employees becoming slightly stress through the job. They desired to leave for few
days and taking rest at home. The relation with the employees and Supervisor should
be positive, close and good. It is imperative for the firms to deliver friendly
environment for holding and developing the employees. Development of employees is
the ultimate development of Organization.
As the world has become a more competitive place for working and
employment, starting with the knowledge and experience, the role of an excellent
employee plays a very big part of important figure whose value is being appreciated
more and more each day. The weight of the tasks is becoming extraordinary and
supreme in today's banking industry. The significance of the employees especially in
the banking industry have gained on their value because of the job they are
performing, the vitality of the role that makes them very important and valuable
employees. Their responsibilities and their reliability is the key of successful bank
working. Therefore, success in the banks depends on the managing and retaining of

49
the employees. But if not properly taken care of they can be a frequent flow of human
resources compared to other industries and other types of companies.

50
6. IMPLICATIONS OF THE STUDY:
Based on the results of this study, as well as of previous employee turnover
type studies in different sectors, further research seems desirable in this area. Since
the field of research is always endless, the themes for turnover of employees and the
reasons that could be analyzed in this field of work can be expanded to new borders.

Nevertheless, the results of this study can be considered as a comprehensible

input or sources for advance research on studying among the job satisfaction of the
employees in the banking industry with special attention to the turnover of employees
within the bank or the system of banking and the impact of turnover and turnover
intentions (positive and negative influences). With additional researches for the
satisfaction of the employees of their management, their proudness regarding the job
they are performing, their satisfaction with the collegial atmosphere. Also there is a
chance for a turnover would they accept it or not depending on the previous analyses.

Using motivation, employee participation, proper leadership, compensation

and benefits in proper way organization can reduce or control employee turnover.

Since workforce is acknowledged as life blood of the organization so it is

important to motivate their work by appreciation, take initiative to develop their
career and avoid partiality or favoritism by authority. Then again, it will help the
decision maker to design their job considering physical stress like travelling distance,
huge work pressure and unrealistic target. Private commercial banks can reduce
employee turnover by forming attractive and desired pay packages and comfortable
work environment. Higher authority should focus on the reputation of the company
with harmonious interpersonal relationship among supervisors, subordinates and
coworkers.

51
7. RECCOMENTATIONS
The study findings revealed although there is a number of sides on this theme there is
always a place for new researches in this area of interest. The turnover becomes more
and more interesting for research in every industry not only in the banking industry,
but the theme of the thesis was analyzing the turnover and turnover intentions in the
banking sector. There a lot of changes that should be made in the banking sector
worldwide, in time of pandemic and after it (how to lower the stress during this kind
of catastrophe).
As far as the banks are concerned they should be considered as safe place to work
even during the global fear of pandemic Covid 19 but with relevant respect to the
employees who are involved in direct contact and their involvement must be
appreciated and valued moreover they should be motivated for doing their jobs with
boost their Morale; and not only morale.
In recognizing the value of employees in the whole context of human resources
management, relevant authorities should consider establishing an effective reward
system which is intended to catalyze motivation, commitment, engagement and the
development of the employees while observing fairness, equity, consistency, and
transparency in operating the system. The reward system should be designed by
considering the nature of the workforce, such as age, sex, level of education, and work
experience because these characteristics affect the employees’ interests, satisfaction
and turnover intentions.
Additional researches for the satisfaction of the employees from their
management department, employees proudness regarding the job that the employees
perform, the satisfaction with the collegial atmosphere and the most important to
prevent the turnover (if the employee is really good at his/her job) by additional
motivation.
For early employees aged 30 years and below, career advancement is
significant, for older employees aged 31 to 50 years, ability to manage their careers
and satisfaction from their work is important; and for aged above 50 years employees’
job security is paramount. The last ones fail to know where will they be in the coming
future, and what position will they be holding in the bank. So there must be
implementations of carrier management this will reduce labour turn because employee

52
will be able to see their future regarding life work and be relaxed to deserve their
pension in the bank they spend so many years (Kahvarara, 2018).

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outlook-during-the-covid-19-pandemic-a-changed-world

53
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56