M.Phil.

SYNOPSIS

THE RELATIONSHIP BETWEEN HR PRACTICES AND

EMPLOYEE’S INTENTION TO QUIT: THE CASE OF PRIVATE
COMMERCIAL BANKS IN MALAKAND DIVISION.

SUBMITTED BY IJAZ AHMAD

SUPERVISOR DR. ALTAF HUSSAIN

ASSTT PROFESSOR

DEPARTMENT OF COMMERCE AND MANAGEMENT SCIENCES

UNIVERSITY OF MALAKAND

SESSION 2017-2019

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1. INTRODUCTION

Banking sector have been acknowledged to play an important role in national economy and

considered as a basic pillar that has a remarkable potential and contribution in the growth of

the country’s economy. In today’s competitive and volatile environment, every private

commercial banks are facing severe difficulty of intention to quit, i.e. employees are

continuously involved in intention to quit activities in order to fulfill their top priorities

(Joarder, Sharif, & Ahmmed, 2011).

The devastating effects of intention to quit, when high performers thinks to leave the current

bank and avail opportunities in the market. Haque, Fernando & Caputi (2019) defined

intention to quit as employee’s activity or thought to exit current or existing job and seek new

job in other bank or organization. Employee feels to prefer switching activities if he/she is

not interested to perform job in the current bank/organization because of the factors that

affect intention to quit positively. The private commercial banks are facing HRM challenges,

like, attracting and retaining talented workers in the bank. The main concern of every

business or organization is to acquire and retain human capital (Jeet, 2014).

Human capital is a backbone (Jyoti &Rani, 2019) and provides sustainable support and

competitive advantage to the organization. HR department considered HR practices as crucial

for the organization success and treats cost incurred on HR practices as an opportunity or

asset which in turn can provide support to the organization. The HR department keeps record

of hired employees and designing effective HR strategies to retain current talent and avoid

loss. Management of the private commercial banks have to work and must ensure the HR

practices, such as performance appraisal, fair reward, training, recognition, working

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condition, equal employment opportunity, empowerment and career development are

effectively executed. HR practices are further elaborated below from previous studies.

Hypothesis 1: Human Resources Practices are negatively related to Intention to quit.

Performance appraisal is an excellent tool to judge the performance of employees and rate

them according to the bank’ prevalent policy (Chakrawarti & Gupta, 2019). Every private

commercial banks have certain strategic objectives that are directly influenced by the

employee’s behavior. Poor behavior of an employee may closely concerned to turnover

intention which ultimately devastate the long term objectives of an organization. If both

employees’ behavior and strategic objectives are in line, then it may boost performance

appraisal to the optimal level. The bank have certain performance evaluation standards to

highlight the performance of employees. If good performers are erroneously rated poor then

the option of intention to quit activities may attract them and search to avail opportunities in

the competitive market, while if high performers are rated favorably and reward them fairly

then the intention to quit activities may decreases.

Hypothesis 1 a: Performance Appraisal is negatively related to Intention to quit.

The private commercial bank have designed fair reward system to motivate employees to

achieve the desired level. Taba (2016) argued that fair reward is an important tool which

fulfills the needs of employees, in turn; it leads to employee’s motivation to work hard.

Employees who are interested to quit current job and organization are not giving full

attention to reward associated with their work and performance (Krishnan & Singh, 2010).

Strongly committed employees are closely concerned with fair reward. If highly committed

employees are not properly rewarded as they desired then they are going to quit current bank

and avail opportunities in other organization. Big private banks, like Allied bank, MCB bank,

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Bank Alfalah, United Bank Ltd and Habib Bank Ltd are struggling hard to achieve talented

human capital by designing fair reward system for them in order to outperform competitors

in the banking industry. The most referenced reason to leave current job is fair reward. Fair

reward is the excellent motivator of employees to create win-win situations.

Hypothesis 1 b: Fair reward is negatively related to Intention to quit.

Career development is human resource practices which is related to the satisfaction of

workers, as they feel value and happiness from the high-ups and bank. Either employees or

bank have their certain goals. The goal of Private Commercial Banks is to take productive

decisions in order to earn solid profit than rivals, while the goal of employee is to earn

financial reward along with career growth. Every employees are closely concerned to their

interest of career development in a way to achieve well reputable position and high fringe

benefits. Market leaders or big Private Commercial Banks are now focusing on the career

development of its employees, as their success is directly linked to its employee’s interest

and commitment (Shujaat, Sana, Aftab, & Ahmed, 2013).

Hypothesis 1 c: Career development is negatively related to Intention to quit.

Compensation in monetary term is crucial but it is not enough and sufficient to retain the

talented workers. Recognition is a non-monetary term plays an important role like monetary

compensation. Workers needs recognition to uplift their services. Recognition in the form of

appreciation, good feedback and praise from the high-ups is essentials to boost workers

interest in the work. Recognition is a motivational tool to keep employees interest in the

organization. Some employees needs to be recognized by the bank or organization. In this

regard, the private Commercial banks have designed reward/award system on monthly,

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quarterly, semiannually or annual basis in order to appreciate high performers and discourage

intention to quit (Zaitouni, Sawalha, & Sharif, 2011).

Hypothesis 1 d: Recognition is negatively related to Intention to quit.

The organization main objective is to productively use its human capital for the sake of

profitability- it is possible to provide extensive training programs to its employees in order to

achieve the due desired target (Ashar, Ghafoor, Munir, & Hafeez, 2013). According to

Mahomed & Rothmann (2019), Training is exercised by the organization to make

knowledgeable their employees in current job. Regular training process may polish skills and

attitude of employees to perform job effectively. Continuous training affects Private

Commercial Banks’ productivity positively and it have a competitive edge over its

competitors (Imran &Tanveer, 2015). Well aware employees are creative and knows the

tactics of how to perform work and completed within the time frame. Well trained employees

are not going to quit current job, because they feeling unwell to attain new organization and

getting continuous training about work in new organization. They prefer current job because

they are well trained and have full command on work. Continuous training program

accelerate the employees’ motivation and morale.

Hypothesis 1 e: Training is negatively related to Intention to quit.

An environment that affects the activities of the employees in the organization either in a

positive or negative way (Chong, Khor, Ooi & Tan, 2013). Every private commercial banks

have poor working condition, such as, late sitting, ignorance of their legal rights, imposition

of unnecessary pressure, and poor environment. Poor working condition is directly linked to

high intention to quit. There is strong negative relations between working condition and

intention to quit. Good working condition matters in the Private Commercial Banks.

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Hypothesis 1 f: Working condition is negatively related to Intention to quit.

Equal employment is an indicator to make sure that the internal working environment of

Private Commercial Banks are free from prejudice and unlawful discrimination. In a tough

competitive environment, Private Commercial Banks are treating its employees with respect

and value and eliminate all the unfair activities from the banks. Discrimination has a

detrimental effects on the employee’s performance. It can devastate the interest of employees

to work for the organization or bank (Chong, Khor, Lee, Ooi, & Tan, 2013). Every Private

Commercial Banks in Pakistan are involved as an equal opportunity employer by providing

equal opportunity to all the employees and new comers to discourage intention to quit

activities.

Hypothesis 1 g: Equal employment opportunity is negatively related to Intention to quit.

The key characteristic of modern management style is to empower the talented and trust

worthy workers in the organization, ultimately, the empower employees performs duty more

efficiently and effectively as compared to those who deserves, but deprived from

empowerment by the management of an organization. Empowerment in real sense may

create true sense of ownership and belongingness. Those employees that are empowered by

the bank are more confident than those who are not empowered by the bank (Naeem, & Saif,

2010). Employee’s empowerment leads to self-efficacy of the employees and retain them in

the bank. This study include those HR practices which have significant impact on lowering

intention to quit.

Hypothesis 1 h: Empowerment is negatively related to Intention to quit.

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2. Research Objectives

The objective of this study is to investigate the intention to quit phenomenon in the private

commercial banks of Malakand division, which experiences relatively high intention to quit

rate and to examine a deep relationship between HR practices (i.e. performance appraisal,

fair reward, career development, recognition, training, empowerment, working condition and

equal employment opportunity) and employee’s intention to quit.

Research Questions

Q1: Does HR practices and employee’s intention to quit have any relation?

Q2: Does performance appraisal and employee’s intention to quit have any relation?

Q3: Does fair reward and employee’s intention to quit have any relation?

Q4: Does career development and employee’s intention to quit have any relation?

Q5: Does recognition and employee’s intention to quit have any relation?

Q6: Does training and employee’s intention to quit have any relation?

Q7: Does working condition and employee’s intention to quit have any relation?

Q8: Does equal employment opportunity and employee’s intention to quit have any relation?

Q9: Does empowerment and employee’s intention to quit have any relation?

Problem Statement

Employee’s intention to quit is very common and overmuch in today’s banking sector and

bears heavy cost when experienced employees are leaving the bank. In the private

commercial banks of Malakand division, about 60% employees are involved in switching

activities either for salary rise or poor working condition. The banks fluctuating prevalent

policy is also one of the main cause to accelerate intention to quit.

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Every private commercial banks are continuously involved in formulating new policies, and

before that, it was not communicated well to the staff members. New policies increases work

load along with the management demand. All staff members of private commercial banks are

unable to accept such policies and ultimately go for intention to quit.

Employees are the backbone of organization and without them, the organization cannot

operate at all. Staff members of private commercial banks from manager to teller services

officer are playing an important role to maintain service delivery and provide services to their

valuable customers beyond expectation. High intention to quit activities directly hit the bank

reputation and the customer lost confidence while visiting the bank branch.

Significance of the Study

The first contribution of this study is to investigate the relationship between HR practices and

intention to quit in the private commercial banks of Malakand division. This study will help

to better understand the readers and consider as a guide to various private commercial banks

of Malakand division. This study will provide in deep relationship between HR practices,

such as, performance appraisal, fair reward, career development, recognition, empowerment,

working condition, equal employment opportunity and training, and intention to quit.

The second contribution of this study is to highlight outcomes of intention to quit which may

suffer the bank performance. In addition, through this study, the private commercial banks

will enable to avail outcomes of HR practices which may strengthen the roots of banks.

The third contribution of this study is to provide proactive measures to common practices,

such as, imposition of unnecessary pressure on employees, late sitting, un-realistic

performance and poor working environment of private commercial banks of Malakand

division which may positively reflect employee’s intention to quit.

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 With the help of this study, the readers/businessman will easily be guided effectively to take

some productive decisions which will enables the Private commercial banks of Malakand

Division to design and implement effective HR practices to influence their employees and

retain them in the Bank for a long.

3. RESEARCH METHODOLOGY

Population, Data Collection and Sample

The target population and the sample for this study will consist of employees working in

private commercial bank of Malakand division. In Malakand division, Batkhela, District

Malakand; Timergara, District Dir (L); and Swat, District Swat markets are diverse and have

a tough competitions among Private Commercial Banks. By using convenience sampling

technique, various Private Commercial Banks operating in Batkhela, Timergara, and Swat

will be selected as a sample. Questionnaire method will be used to collect data. Questionnaire

will be divided into two parts: the first part will be of demographic information (i.e. gender,

age, marital status, education, basic salary) of the respondents and the second part will be of

employee’s intention to quit and HR practices. The questionnaire will be adopted from the

concerned source (Chong, Khor, Ooi & Tan, 2013). The participant will complete

questionnaire form in their respective bank branch. A likert scale from 1 (strongly disagree) to

5 (strongly agree) will be used to rate the responses.

Variables of the Study

In this study, HR practices will be considered as independent variable which has eight

dimensions i.e. performance appraisal, fair reward, recognition, training, empowerment,

career development, working condition and equal employment opportunity while employee’s

intention to quit will be considered as dependent variable.

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Data Analysis Tools/ Techniques

The data will be analyzed through SPSS version 20. Pearson correlation tests, and regression

analysis will be used. Descriptive statistics such as mean, average, percentage, standard

deviation and frequencies of the variables will be used.

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