THESIS PRESENTATION

on
THE EFFECT OF COMPENSATION PRACTICES ON EMPLOYEES
TURNOVER INTENTION: THE CASE OF COMMERCIAL BANK OF
ETHIOPIA ADAMA BRANCH
Presented by Hana Girma(MO/3116/14A)
Adviser d.r Yirgalem
NOV 2023
BODY
Background of the Study
Statement of the Problem
Research Questions and hypothesis
Significance of the Study
Conceptual Framework
Methodology

BB
 Background of the study

The study aimed to investigate the relationship between compensation practice

and employee turnover at CBE adama district.
The focus was placed how compensation practice decrease employee turnover of
commercial bank of Ethiopia and analyze the type of compensation that have
greater effect to the increasing employee turnover intention.

The purpose of the study is

 To analyze the factors contributing
To identify reasons for employee departure, and
Explore the impact of turnover on organizational performance
The problem identified in this study is the high turnover rate of employees
in the banking industry due to inadequate compensation packages. This
issue has negative consequences for organizations, including financial
losses, decreased productivity, and a potential loss of customers. The lack of
skilled and competent manpower exacerbates the problem, making it even
more challenging for banks to fill higher positions. The researcher aims to
address this problem by conducting a study to understand the causes of
turnover intention and develop strategies to retain talented employees in
the banking industry.
Objective of the Study
In order to answer the research basic questions, the study would have
the following general and specific objectives.
 general
to analyze the effect of compensation system of an organization on
employees turnover intention in commercial bank of Ethiopia Adama
branch.
specific
To assess the extent the compensation practice in commercial bank of
Ethiopia Adama branch.
 To investigate the extent of employee turnover intention in commercial
bank of Ethiopia Adama branch.
To explore the relationship between compensation practice and
employee turnover intention in commercial bank of Ethiopia Adama
branch.
To examine the predicting role of compensation practices on the
employees turnover intention in commercial bank of Ethiopia Adama
branch.
 Hypothesis
the folowing hypothesis was drawn by this proposed study on the
effect of compensation practice on employee turnover intention in case
of CBE
Salary payment
 Benefit scheme Has positive effect or not
 Career development
 Employee supervisor relations.
 Non- financial Recognition
 Significant of the study
This study is significant as it will provide organizations with valuable
insights into the relationship between compensation practices and
employees' intention to leave.
 The findings will allow organizations to take proactive measures to
minimize turnover and its negative impact. Additionally,
the study will serve as a reference for other researchers and
organizations, providing a deeper understanding of the factors influencing
employees' intention to leave in a business environment .
 Conceptual framework

Independent variable dependent variable

Financial compensation practices

Salary
Turnover Intention
benefit
Non-Financial compensation
practices

Supervisory Support

Career Growth
Opportunities

Non financial
recognition
Methodology
Research Design
Descriptive research and inferential design
• In order to explain mean and standard deviation
explanatory research design using statistical tools
• Pearson correlation and regression analysis.
Research approach
quantitative research approach is applied
• Closed ended questioner and open ended questionnaires), interviews and
Document Analysis.
• case study methodology
population size
The sample size of 244.66 so approximately 245 employees have been selected from the
population of 630. based on the following calculation
n= N n= 630
1 + N (e) 2 1+630(0.05)2
Where, n= the sample size
N= is the target population or total population size and
e – Is the level of precision or sampling error.
5-point Likert Scale
Sampling Technique
• Stratified sampling technique
• Probability sampling
• Purposive sampling
•Sampling procedure
 sampling test of 30 questionnaires were distributed for pilot testing which helped
the researcher to check on the gaps and modify the questionnaire accordingly.
After appropriateness of the test of questioner data collection from all selected
sample respondent was applied
Hypothesis testing
• reliability test
•N=30
•Cronbach's Alpha

Items Cronbach's Alpha Number of Items

Compensation .885 8

Basic Salary .950 5

Benefits .819 7

Career Growth Opportunity .920 4

Supervisory support .939 4

Non-Financial Recognition .888 5

Turnover intention .910 7

Methods of data Analysis and Interpretation
The data was organized, analyzed, and presented by using tables to interpret the
result.
The researcher used descriptive and inferential methods to analyze and interpret
the data’s and answer the research questions.
By (SPSS) version 20 was used to analyze. Specifically, descriptive statistics and
inferential statistics were analyzed using this tool.
Y=B0+B1X1+B2X2+B3X3+B4X4+B5X5……………………….Eq1
Y=dependent variable(employee turnover intention)
X1-n independent variables (X1 is salary, X2 benefit,X3 Supervisory Support,X4
Career Growth Opportunities,X5 Non financial recognition
B0= the constant
B1-n the regression Coefficients change included in Y by each X
e=error term
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
Response Rate
The sample for the study comprised a total of 245 employees in twenty six branches of
commercial bank of Ethiopia Adama city. The respondents for the questionnaire were selected
from these different branches of the Bank.
A total of 245 questionnaires were distributed to respondents, out of which 238 questionnaires
were filled and returned. This represents (97.14%) were collected.
Demographic Information of the Respondents
This include respondents’
• Gender category,
• age group,
• marital status,
• Educational background,
• work experience and salary level.
Descriptive analysis of variance
 One sample t-test
 if p value is less than 0.05 is found to be significantly above the moderate level ( salary,
benefit, supervisory support, career growth opportunity and non financial recognition)
 In case of benefit p value is greater than 0.05 there is no significance b/n the group
 Rule of thumb

Test of Normality

Kolmogorov-Smirnova Shapiro-Wilk

Statistic Df Sig. Statistic Df Sig.

Turnover Intention
.189 238 .234* .954 238 .374

*. This is a lower bound of the true significance.

a. Lilliefors Significance Correction
As Daniel M. (2004), states the cut off points for the interpretation of the strength of
correlation coefficients
Interpretation of correlation coeff icient

Direction of relation Correlation value

Correlation
From To
Positive or Negative
0 0.1 Weak correlation

0.10 0.29 Modest correlation

0.30 0.49 Moderate correlation

0.50 0.79 Strong correlation

0.80 1 Vary strong correlation

 Correlation matrix of employees’ turnover intention with compensation practices

A B C D E F G H
Correlation 1
Salary
Sig. (2-tailed)

Correlation .684** 1
Benefits
Sig. (2-tailed) .000

Correlation .616** .714** 1

Growth Opportunity
Sig. (2-tailed) .000 .000

Correlation .628** .698** .584** 1

Supervisory support
Sig. (2-tailed) .000 .000 .000

Correlation .683** .651** .620** .533** 1

non-financial
Sig. (2-tailed)
.000 .000 .000 .000
recognition
Correlation -.791** -.744** -.711** -.702** -.678** 1
Turnover intention
Sig. (2-tailed) .000 .000 .000 .000 .000

Financial Correlation .963** .977** .736** .778** .685** -.787** 1

Compensation Sig. (2-tailed) .000 .000 .000 .000 .000 .000

Non-Financial Correlation .851** .784** .898** .812** .907** -.797** .837** 1

Compensation Sig. (2-tailed) .000 .000 .000 .000 .000 .000 .000
Multiple linear regression analysis
is used because it enables a researcher to evaluate the effect of the compensation practice at
CBE on employee’s intention to leave or stay in the organization.
Multi colliniarity Test Result

Colinearity Statistics
Model VIF
Tolerance
1 Salary .250 3.996
Benefit .272 3.677
Growth Opportunity .300 3.323
Supervisory Support .307 3.255
Non Financial
.305 3.276
Recognition
Step wise reggresion

Standardized
Unstandardized Coefficients Coefficients
Model
B Std error Beta T-value P-value
1 (Constant)
4.710 .132 60.926 0.000

Salary Mean
-.137 .105 -.135 -2.732 0.007

Benefit Mean
-.051 .106 -.180 -1.647 0.101

Growth opportunity
-.091 .101 -.187 -2.537 0.012

supervisory support
-.069 .106 -.145 -2.820 0.005
non-financial recognition -.047
.054 -.288 -2.187 0.030
R .829
R square .687
Adjusted R square .680(68%)
Std. Error of the Estimate .83

Table 4.11 Regression Coefficients

 Table 4.12: Step-wise regression of independent variables

Unstandardized Standardized
Coefficients Coefficients
Adjus
Model ted R
R squar
B Beta T P-value R Square e
(Constant) 4.665 67.649 .000
1 Salary .791 .625 .624
-.375 -.791 -19.853 .000
(Constant) 4.819 68.202 .000
2 Salary -.274 -.577 -10.740 .000 .818 .669 .666
Growth Opportunity -.150 -.298 -5.544 .000
(Constant) 4.801 68.268 .000
3 Salary -.210 -.443 -5.749 .000 .823 .677 .673
Growth Opportunity -.151 -.301 -5.654 .000
supervisory support -.059 -.161 -2.425 .016
(Constant) 4.743 63.226 .000
4 Salary -.192 -.405 -5.155 .000 .826 .683 .678
Growth Opportunity -.104 -.206 -2.961 .003
supervisory support -.063 -.173 -2.616 .009
Non-Financial recognition -.045 -.140 -2.105 .036

Table 4.12: Step-wise regression of

independent variables
 SUMMARY, CONCLUSIONS AND
RECOMMENDATIONS
SUMMARY
•he financial compensation includes salary and benefit practices as independent variables, one sample t-test result
revealed that in case of salary practice The employees aggregate agreement rated is significantly different from
moderate level of agreement and highly appreciated by employees. On the other hand, benefit practice as one form
of compensation to employees is not significantly appreciated by the employees at a moderate level. As the overall
aggregate of financial compensation (salary and benefit) practice is M=3.57.we can conclude financial compensation
practice is not significantly above the moderate level. Even if the salary practice is significantly above the moderate
level.
•In summary of the non-financial compensation practices one sample t-test result indicates employee’s appreciation
to the non-financial compensation practice of the bank is appreciated by employees of the CBE significantly above the
moderate level. The compensations include growth opportunity, Supervisory support and non-financial recognition.
Respectively, the one sample t-test result indicates that the agreement level of the sample mean with regards to
career growth opportunities is highly appreciated by employees of the CBE significantly above the moderate level. In
the case of Supervisory support it is significantly appreciated by the employees of the bank above the moderate
level.In the same manner; employees respond to the non-financial recognition practice of the bank is significantly
appreciated above the moderate level.
•One sample t-test shows that on aggregate, the employee’s level of agreement towards their turnover intention is

significantly below than the moderate level. That mean it is not appreciated by its employees.
•A correlation analysis result shows that turnover intention due to other reasons being constant; all
the selected independent variables have a strong inverse (negative) relation with employee’s
turnover intention. the overall compensation practice has influenced 68% of the employee’s
turnover intention Where salary practice influences is the highest by 62.4%, followed by Growth
Opportunity(with additional 4.2% effect), Supervisory support (with additional 0.7% effect), Non-
financial recognition (with additional 0.5% effect) and Benefit practice has no significant effect on
turnover intention.
•Interviewees believe the bank has a good compensation practice that is appreciated by its
employees. They strongly believes that the loan opportunity and Growth opportunities plays a vital
role in retaining their employees. But since the banking industry is growing there is high need of
experienced workforce, as a result retaining employees have a competition. in order to overcome
this the bank still have to work on the gaps of compensation practice to make it more effective
•CBE is undertaking a study to improve its compensation practice, especially salary of employees
and planning to provide a better benefit practice that is equal or more than what the industry is
offering.
 conclusions
Based on the findings of the study, the following conclusions were drawn:
•From research finding the conclusion is that the current compensation practice offered by the bank has negatively
significant effect on turnover intention of its employees. The regression unstandardized Beta coefficients specially confirms
that for a one step increase on the level on salary, the turnover intention of employees would decrease by 0.192, one-scale
increase by the Growth Opportunity would reduce turnover by 0.104. in similar manner supervisory support and Non-
Financial recognition will have an effect of reducing turnover by 0.063 and 0.045 respectively if a step improvement in both
compensation practices is done.
•Even if it is relatively less there steel have a turnover intention, these shows Employees are not rewarded well as they
should be, taking in to account their experience, education and training they have. But still the compensation practice offered
by the bank is appreciated by its employees and mainly Employees give much concern to financial compensation (salary).
•due to the dynamic nature of competition it should not be undermined that at any time employees may be attracted to more
compensation practice if offered by other competitors of the bank under study, so that compensation practice needs to be
improved periodically in order to offer more competitively attractive benefit packages that can attract, retain its potential
candidates and even more significantly reduced the turnover intention.
•From the result of the interview we can conclude that the bank has a good compensation practice that is appreciated by its
employees and in order to make it more effective The bank needs to have a reactive compensation that considers the current
high need of experienced workforce in the market and the environment in the banking industry.
 Recommendations

•Efforts started by the enterprise to reduce the turn over as well as using the existing professionals is
requested to continue. Hence, special attention batter be given to human resource development and staff
benefits, through revising benefit packages with external market.
•From the research findings we have seen that growth opportunity practice of the bank is highly appreciated
by employees of the organization. This suggests the growth opportunity practice of the bank must be
continued.
•There should be a known constant compensation evaluation schedule of the bank. In addition to this by
considering the dynamic situations of the market there should be corrective measures in order to cop up the
new scenario of the business.
•The researcher recommends that Employees of the bank should be involved in the process of forming a
compensation decisions, since the effectiveness of the compensation practice depend on the acceptance of
employees involving them enable the management to formulate and decide more effective compensation that
satisfies the need of its employees, as the Sam time enquires turnover related costs. Employs involvement not
only save cost but also creates a sense of belongingness, generates new ideas, and management to see from
employee’s perspective.
 •The salary practice should be set by considering what the other competitors offer for the same level
and type of work, a salary that enable employee to cop up with the ongoing cost of life, a salary that
enable to attract more skilled and competent employees to the organization, equivalent salary scale for
equivalent job level and working conditions (internal and external). And It should help employees to
target there focus on fulfilling objectives of their bank rather than worrying about other life difficulties
not related to the work.
•The bank is known for Loan opportunities such as house and vehicle loans with a minimum interest and long
returning period. This practice has a major impact on turnover intention of the employees and also attracts
new human rescores to the bank. As a result it should be continue in future. And also diversifying titles of the
loan system improves its effectiveness even better.
•a diversified benefit packages with additional benefits than the current practice needs to be implemented
such as emergency child care, wellness (sharing Jim expense ), a laundry service since kipping protocol in
work place is expected from employees specially in the ban.
•Since supervisory support is one variable of compensation the relation between supervisors and employees
have a major impact on turnover intention, work effectiveness and in creating cooperation and coordination
among employees as a hall. Currently the supervisory support of CBE is moderately appreciated by its
employees; as a result the bank should improve its practice by strengthening the positive sides of the current
supervisory support and including other supports by studding competitor’s strategies. As Stephen Goldberg
(2004), states communicating positively and constrictively, let employees know what is expected of them and
let them know you know there priorities, continuously taking feedbacks on haw you should work as a
supervisor (Ethiopian airlines have a best practice on these), frequent positive formal or informal recognitions
creates an effective and positive relation among supervisors and employees, the management as a hall and its
employees.
•Providing a feed back to employees in a way that respects the employee’s dignity and personality should be
considered, science Ethiopians are mostly sensitive to these kinds of issues.
•From findings of the study we can see that both Financial and non-financial compensations have an effect on
employees turnover intention, as a result the researcher recommends the bank has to give equal value to both
practices. And being always one step ahead of its competitors in its compensation strategy insures its guaranty
of not losing its valuable employees.
. Future Research areas
The study was conducted to examine service quality and customers satisfaction in CBE Adama
branches. The sample was drawn only from CBE Adama branch; future research should have to
draw sample of respondents on more number of public and private banks for the purpose of
generalizability of the study. This study only incorporates five factors, may be other factors that
may be perceived as important by employees but they were excluded from the study. Future
researcher may consider other factors, like work environment, convenient working hours, staff
attitude that can influence employees turnover intention. Furthermore, including moderator
factors and looking forward to direct or indirect relationship to ward turnover intention can also
be made in the research models of the new research by other scholars in the future. Finally,
conducting a replication study in other service industry is also.