ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE

MA PROGRAM IN HUMAN RESOURCE MANAGEMENT

Factors Affecting Employee Retention in the Banking Industry:

The Case of Selected Private Commercial Banks in Ethiopia

By: Mulu Haddis Tedla

A Thesis Submitted to Addis Ababa University School of Commerce in Partial

Fulfillment of the Requirement for a Degree in Master of Arts in
Human Resource Management

Advisor: Solomon Markos (PHD)

May 2018
Addis Ababa
 Declaration

I, Mulu Haddis Tedla, MA student in Human Resource Management (HRM), declare

that the research project titled, Factors Affecting Employee Retention in the
Banking Industry: The Case of Selected Private Commercial Banks in Ethiopia: is
my original work under the guidance and supervision of the research Advisor. It has not
been submitted for any degree in any university. All cited documents have been
acknowledged dually.

Name : _ MULU HADDIS TEDLA Signature: ____________________

Date : _______________________ Place: Addis Ababa, Ethiopia_

Ms. Mulu Haddis Tedla, has conducted the thesis titled, Factors Affecting Employee
Retention in the Banking Industry: The Case of Selected Private Commercial Banks in
Ethiopia: under my supervision and guidance. I therefore certify that this project is her
original & genuine work.

Name :_

Signature : _______________________

Date : _______________________

Place : Addis Ababa, Ethiopia_

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 ADDIS ABABA UNIVERSITY
School of Commerce

Factors Affecting Employee Retention in the Banking Industry:

The Case of Selected Private Commercial Banks in Ethiopia

By: Mulu Haddis Tedla

Approved By: Board of Examiners

1.

Internal Examiner Signature Date

2.

External Examiner Signature Date

ii
 Acknowledgements
Thanks be to the Almighty God for his indescribable gifts!

I further extend my profound gratitude to my lovely sisters, Adanech & Kidist Haddis,
that their continuous support and encouragement was an incentive to reach my destiny.
My special heartfelt appreciation also goes to my colleague, Dagim Mulatu, for his
unreserved facilitation, support, valuable comments and encouragement. Finally, I
would like to acknowledge and to pass my gratitude to my Advisor, Dr. Solomon
Markos, families, friends & colleagues support and valuable comments.

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 Table of Contents
Declaration ..................................................................................................................................... i
Acknowledgements ..................................................................................................................... iii
Table of Contents ........................................................................................................................ iv
List of Tables and Figures ......................................................................................................... vi
Abstract ........................................................................................................................................ vii
CHAPTER ONE: INTRODUCTION ........................................................................................... 1
1.1 Background of the Study ...................................................................................................... 1
1.2 Statement of the Problem .................................................................................................... 3
1.3 Research Question................................................................................................................ 4
1.4 Objectives of the study ......................................................................................................... 5
1.4.1 General Objective .............................................................................................................. 5
1.4.2 Specific Objective ............................................................................................................... 5
1.5 Definitions of Key Terminologies ....................................................................................... 5
1.6 Significance of the Study ...................................................................................................... 6
1.7 Scope of the Study ............................................................................................................... 6
1.8 Organization of the Study .................................................................................................... 7
CHAPTER TWO: LITERATURE REVIEW .............................................................................. 8
2.1 Theoretical Review ................................................................................................................ 8
2.1.1 Why Employee Retention? ............................................................................................... 9
2.1.2 The How of the Employee Retention? .......................................................................... 10
2.2 Factors Affecting Employee Retention ............................................................................. 11
2.3 Empirical Review and Research Gap.............................................................................. 17
2.4 Conceptual Framework ...................................................................................................... 19
2.5 Research Hypothesis........................................................................................................ 19
CHAPTER THREE: RESEARCH METHODOLOGY............................................................ 20
3.1 Research Design and Approach ....................................................................................... 20
3.2 Data Sources........................................................................................................................ 20
3.3 Methods of Data Collection ................................................................................................ 21
3.4 Target Population and Sampling Design ......................................................................... 21

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3.4.1 Target Population ............................................................................................................. 21
3.4.2 Sampling Design .............................................................................................................. 22
3.5 Methods of Data Analysis .................................................................................................. 23
3.6 Validity and Reliability ......................................................................................................... 23
3.7 Ethical Considerations ........................................................................................................ 24
CHAPTER FOUR:
DATA ANALYSIS AND INTERPRETATION .................................................................. 25
4.1 Response Rate .................................................................................................................... 25
4.2 Respondents’ Demographic Characteristics ................................................................... 25
4.3 Staff Rretention Practice in Awash, Wegagen & Lion Bank ........................................ 27
4.4 Descriptive Analysis of Employee Retention Factors ................................................... 28
4.4.1 Analysis of the Mean and Standard Deviation Results .............................................. 28
4.4.2 Analysis of Retention Factor/s per the Degree of Influence ...................................... 32
4.4.3 Analysis of the Inferential Statistics Results ............................................................... 32
4.4.3.1 Analysis of Factors Correlation Results .................................................................... 33
4.4.3.2 Analysis of the Regression Results ........................................................................... 33
CHAPTER FIVE:
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ........................................ 38
5.1 Summary of Major Findings ............................................................................................... 38
5.2 Conclusions .......................................................................................................................... 40
5.3 Recommendations .............................................................................................................. 41
REFERENCES ........................................................................................................................... 43
Annexes ....................................................................................................................................... 47
The Study Questionnaire .......................................................................................................... 48
Interview Questions ................................................................................................................... 51
SPSS Output ............................................................................................................................... 52

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 List of Tables and Figures

List of Tables
Table 3.1: The study’s sample frame & proportion ............................................................ 22
Table 3.2: The Crobach’s Alpha result ............................................................................ 24
Table 4.1: Mean and Standard Deviation Results of the Respondents Perception ........... 29
Table 4.2: Factors Ranking results .................................................................................... 32
Table 4.3: Correlation results ............................................................................................ 33
Table 4.4: Multicollinerity Diagnosis .................................................................................. 34
Table 4.5: The Model Significance Diagnosis ................................................................... 34
Table 4.6: The regression analysis Model Summary ........................................................ 35
Table 4.7: The regression analysis results ...................................................................... 35
Table 4.8: Summary of the Research Hypothesis Results ................................................ 37

List of Figures
Figure 2.1. Conceptual framework .................................................................................... 19
Figure 4.1: Graphical representation gender of the respondents’ ..................................... 26
Figure 4.2: Graphical representation of the ages of respondents’ ..................................... 26
Figure 4.3: Graphical representation of the respondents’ stay with the bank .................... 26
Figure 4.4: Graphical representation of qualification of the respondents’ .......................... 27

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 Abstract
This study examines factors affecting employee retention focusing on private commercial banks
in Ethiopia. The banking sector runs huge finance and employs thousands of work force. The
literature review and the primary data analysis indicated that employee stability challenges are
highly affecting the banking industry. With increase in the number of new banks, bank branches,
financial institutions and the dynamic changes in the business environment; a fierce competition
for labor is continue to challenge employee retention capacity of the banks. In situations like
this, retaining existing employees is very crucial. As the primary purpose of the study is
identifying and analyzing the major factors that affect employee retention ability; the
contributions, associations and significance of compensation, training, career development,
work-life balance and work environment were studied. The study adopted a mixed research
approach and explanatory research design. A total of 283 employees from Awash, Wegagen
and Lion Bank have participated in the study. A self-administered questionnaire & interview
were used to collect primary data and it is analyzed using descriptive and inferential statistics.
According to the statistical analysis findings, compensation & work-life balance highly determine
employee retention ability of the banks under study and this factors demonstrated higher
significance, contribution, positive relationship. Hence, hypothesis in relation to this factors were
also accepted. On top of this, career development, work-life balance & work environment
revealed significant positive relationship with employee retention and the tested hypothesises in
relation to these factors were accepted too. The major findings of the descriptive analysis has
established that majority of respondents do not have an intention to stay with the banks. This
indicated the banks employee turnover will continue to increase, whereas, the banks did not
realized or prepared to mitigate this challenges. Therefore, it is recommended that, in order for
the banks to respond the deteriorating employee intention to stay, they need to reconsider their
understanding, practice and develop comprehensive employee retention policy. Reviews of the
banks compensation package (salary, pay and benefit), improvements on the work-life balance
programs, fairness of career development practices and enhanced work environment are also
recommended.

Key Words – Employee Retention, compensation, training, career development, work-life

balance, work environment.

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 CHAPTER ONE: INTRODUCTION

1.1 Background of the Study

Employees are the most vital & dynamic resource that determine the success of every
organization (Armstrong, 2009; Robert & John, 2010; Daniel, 2010). It is obvious that,
this vital resource, employees, play the greatest role in attaining the organization’s
mission. Retaining this vital resource or the ability to gain employees good will to stay
longer is an essential component to a healthy organization (Lockwood, 2006; Robert &
John, 2010; Kossivi et.al., 2016). This ability overarches all other aspects of human
resource functions. It reflects the organization’s willingness & effort in meeting
employees’ expectations. This effort therefore creates a positive work environment that
strengthens employees’ commitment, sense of belongingness and increase company
morale (Piyali, Rachita, Jagdamba & Shadman, 2013).

Organizations spend much of their time and efforts in searching and hiring competent
employees. However, this effort will be wasted if they are not retained for longer.
Likewise, employee retention is by far efficient than recruiting, orienting and training a
replacements of the same quality. This is because, time and money is invested to equip
the new employees with the necessary skills in order to bringing them up to the existing
employees (Haider, Amran, Chaudhry, Rosman, Omair, Alamzeb, Ahmed, Shaheryar &
Fariha, 2015; Kossivi, Xu, Kalgora, 2016). When they leave after all these efforts, the
organization will be left at complete loss and the organization will be forced to redo the
whole process again. On top of this, the importance of employee retention is
emphasized with the costs of the departing employees and with the shortage of skilled
labor around the world (Daryl & Phil, 2005; Chandranshu & Ruchi, 2012). This holds
true with all positions regardless of the skill requirement. Especially, when the position
involves customer interaction, employee retention has a positive impact (Hinkin &
Tracey 2000).

Researchers also agreed on employee retention importance as globalization, high

local/international competition, increase in knowledge work and frequent advancement
in technology impose many challenges to all countries (Dary & Phil, 2005; Chandranshu
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& Ruchi, 2012; Hussin et.al, 2016; Kossivi et.al, 2016). In such change, employee
retention can serve the organization as a means of preventing loss of talent, knowledge
and loyal customers. However, in this fast growing & highly changing environment
satisfying the sensitive issues of retaining best carrier oriented employee becomes a
shared challenge (Dary & Phil, 2005; Hussin, Ale, Hassana & Hassan, 2016; Kossivi
et.al, 2016). Employee retention will be more challenging with the absence of a valid,
up-to-date insight & understanding of the factors that are affecting it.

Retaining an employee for a maximum period takes various measures into

consideration (Ans & Annelies, 2008; Haider et.al, 2015). This begins with the
understanding of the different sort of reasons that arise from the employee and the job.
In this case, organizations have to note the varying reasons behind their employees’
decision to stay or leave whereas; if they fail to adopt & cope up in time, they will end up
with huge problem (Daniel, 2010; Ednah & Geoffrey, 2017). Thus, organizations have
to sense the departure of significant number of employees and alert with the presence
of unresolved problem that need to be traced and addressed. In line with this, the
proposed study intends to identify the factors that affect employee retention in the
private commercial banking industry taking the trends of Awash, Wegagen & Lion Bank.

The Ethiopian private commercial banking industry has started in the year 1994 with
one of the banks in this study, Awash Bank and others, including Wegagen & Lion,
continue joining the industry following its footsteps (National Bank of Ethiopia, NBE).
Currently, it reached 18 and these banks invest billions and hire thousands of
employees opt to lead the market (NBE). However, the major players of the industry
face high competition over the skilled labor with the increase in number of new banks
and their expansion plan (The Ethiopian Business Review, 2014). These emergence
and increase in number turned out to be a curse and a blessing to the banking industry
and the financial sector (Ekra & Mary, 2016). The Ethiopian Business Review (2014),
report underlines, the competition for skilled labor become fierce and continue to highly
challenging the industry. In order to mitigate these fierce challenge, the banks need to
identify the factors behind their staff instability, developed and practiced an improved

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retention scheme. Doing so, the banks can create a favored environment where
competent employees devoted to stay longer and be preferred employer. To this end,
the study attempts to uncover the factors affecting employee retention of the private
commercial banking industry focusing on three banks, Awash, Wegagen & Lion Bank.

1.2 Statement of the Problem

Human capital is a strategic resource essential to the survival as well as the success of
every organization (Armstrong, 2009; Robert & John, 2010). The ability to retain this
capital is crucial; yet it has become a major challenge to many (Dary & Phil, 2005;
Chandranshu & Ruchi, 2012). Especially with the dynamic nature of the resources and
the business environment, the inability to retain employees exposes the organization to
high staff turnover and related losses. Such as: losses in productivity, slips in schedule,
loss of corporate knowledge, loss of talent, corporate secret, profitability, loyal clients
and the opportunity costs (Raymond, 2008; Armstrong, 2009; Robert & John, 2010).

The departing staff will also take valuable knowledge and expertise gained through their
stay. Similarly, they also take their experience, expertise and established relationships
with various stakeholders (Ekra & Mary, 2016; Piyali et. al., 2013). All this losses are
highly affecting the organization. Further to the mentioned losses, the organization also
suffer from direct financial costs that include paperwork/time exit Interview, recruiting
replacement, on boarding, training new employee, temporary workers cost or overtime
for workers who fill the gap, etc. (Robert & John, 2010). All the aforementioned
challenges have become a universal threat to which Ethiopia is not an exception as
witnessed with the banking industry and various stakeholders’ staff mobility challenges.

Accordingly, the Ethiopian Business Review (2014) reported, the increase in number of
new banks and financial institutions joining the business sector is threatening the
sector’s major players with a fierce competition for labor. The report continued to
emphasize on the competitive nature of the staff retentions challenge that the banking
industry’s is experiencing. The report has also noted that staff retention challenges are
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continuing being a major threat to the banking industry. The banks three years (2015-
2017) employee turnover data and the preliminary interview with the studied banks’
Human Resource Department heads reinforce the fact that employee retention
challenges are imposing a continuing threat. According to the reviewed employee
turnover data, the functional staff turnover rate showed an increasing trend with an
average rate of 7.6% or 295 employees. This number would have been eliminated or
reduced, if the reasons behind this turnover have been studied, identified and
recommendations has been adopted and implemented. However, failing to do so the
banks are scarifying and losing a lot.

To see the severity of the banks’ staff retention challenges; it is sufficient to taking one
aspect of the loss i.e. cost. For instance, a 10 years old study conducted by Yared
(2007), has calculated the average staff replacement cost per employee as ETB
6,740.00. Obviously, by now, this cost has increased but for the sake of reflecting the
severity, if an increase of 50% is considered, the replacement cost per employee
reached to ETB 10,110. This cost needlessly escalates the organization's expenses.
This analysis makes it easy to note how staff retention challenges are critical and costly
even before including all other aspects of losses i.e. non-financial or non-quantifiable
losses. Therefore, investigating the factors behind staff retention challenges is worthy to
the banks reputation.

1.3 Research Question

This research addresses the following key research questions:

What is the current staff retention policy and or practice at Awash, Wegagen & Lion
Banks?

What are the determinant factors that affect the banks’ employee retention?

To what extent selected human resource factors (compensation, training, career
development, work-life balance, and work environment) influence the banks’
employee retention.

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1.4 Objectives of the study
1.4.1 General Objective
The general objective of the study is to identify the factors that affect the employee
retention of the private commercial banking industry and analyze their triggered
influence focusing on the trends of Awash, Wegagen and Lion Bank.

1.4.2 Specific Objective

This research intends to attain the following specific objectives:
1. To investigate the private commercial banks, Awash, Wegagen & Lion staff retention
policy and or practice.
2. To identify the major human resource factors that are affecting the banks’ employee
retention.
3. To determine the influence of selected human resource factors: compensation,
training, career development, work-life balance, and work environment on employee
retention.

1.5 Definitions of Key Terminologies

The key terms in this study holds the following conceptual or operational definition.

Employees Retention: is an employer’s effort to retain talented employees by

developing good policies to the achievement of the organizational goals (Chowdhury &
Nazmul, 2017)

Functional Turnover: separation of potential employees for a reason that the

organization could restrain deploying different mechanisms. (Operational Definition)

Compensation is the primary financial and tangible reward received in the form of pay,
incentives, and benefits (Armstrong, 2009).

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Training is an investment on building and developing employees’ skills; all practices
that have a potential to improve people’s capability.(Chandranshu & Ruchi, 2012).

Career Development: is a system, which is organized and planned effort of achieving a

balance between the individual career needs and the organization’s workforce
requirements (Atif et.al., 2014; Biju, 2015)

Work-life Balance are practices concerned with providing scopes for employees to
balance their job or work responsibilities with their personal responsibilities and interests
outside work (Ekra & Mary, 2016).

1.6 Significance of the Study

Primarily the study is meant to be shared with banks considered in the study, other
interested private and government owned banks and emerging financial institutions
such as the insurance sector. The specific significance of the study can be summarized
as follows: The study and the findings will help the banks to rethink on issues related to
long-term retention of staff. It will enabled them to identify properly the factors that
contribute to staff retention and the necessary measures that they should take. Thirdly,
the study and the findings can also be used by the banking sector as an input to support
future similar studies. Finally, as such studies have not been widely carried out in the
past, this study will add to the reference materials for similar studies.

1.7 Scope of the Study

The study targets Awash, Wegagen & Lion Bank employees. In consideration of the
quality, geographically reachability and manageability concerns, the studied samples
were drawn from these banks Head Offices & Main Branches residing in Addis Ababa.
These parts of the banks include all sort of positions that make-up the banks. Emphasis
was also given to the professional employees as their longer stay and availability highly
matters to the banks’ success. Besides, in order to have an updated in-sight on the
status of the banks employee retention, three years data (2015-2017) was accessed.

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Further to the above-mentioned considerations, the study has focused on the extent of
the practical contribution and effects of selected HR factors: compensation, training,
career development, work-life balance, and work environment on the employee
retention. The reason behind this selection was that, many studies considered these HR
factors as a major determinants of staff decision to stay or leave. However, the findings
of these studies’ were highly contradicting and fragmented. Thus, selecting and
studying these factors will establish a clear understanding of their significance and or
relationship with employee retention.

Assumptions:
The study mainly focused on perceptions. It also has observed the following
assumptions for comprehensive analysis, interpretation & recommendation. Similarity of
the regulatory body of private banks i.e. National bank of Ethiopia and the regulations
that governs their actions. Similarity of the labor market that the banks all go and the
labor law that governs them. Similarity of their service & service modality, their basic
facilities and their salary scale more or less are similar

1.8 Organization of the Study

The study includes five major chapters. The first chapter includes the background of the
study, statements of the problem, objective of the study, the research questions, the
research hypothesis, definitions of terms, significant, scope and organization of the
study. The second chapter reviews the theoretical and empirical aspects of all available
related researches on staff retention from within and out of country. The third chapter
discusses the research design & approach, the sources of data & the data collection
methods used in the study, the target population and the sample design used to
determine the sample size, method of data analysis tools, validity and ethical
considerations. The fourth chapter deals with the analysis and presentation of the study.
Finally, the fifth chapter of the study covers the conclusions and the recommendations.

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 CHAPTER TWO: LITERATURE REVIEW

This part of the study reviewed all available and related literatures on the factors that
affect employee retention from both theoretical and empirical angle. This part also
portrays the conceptual framework that guides the study.

2.1 Theoretical Review

Employees are the most vital, dynamic and complex resource who determine the
success & survival of every organization (Armstrong, 2009; Robert & John, 2010;
Daniel, 2010). They are the assets that make or break the organization and termed as
the life-blood of an organization (Kossivi et.al, 2016). Retaining this resource or gaining
the employees’ goodwill to stay longer is essential for the long-term growth of the
organization (Chandranshu & Ruchi, 2012). The suggestion of the most prominent &
powerful businesspersons emphasized this view. Bill-Gates of Microsoft says, “Take
over 20 best people and virtually overnight we become a mediocre company.” Alfred
Sloan of General Motors strengthen this by saying, “take my assets, leave my people
and in five years I will have it all back” (Biju, 2015).

Studies have also concluded that due to the expertise, knowledge, skills & experience;
talented work force is considered as a high worth to the organizations (Mita et. al., 2014;
Asma, Shagufta & Tabinda, 2015). In order to get the most out of the employees and
keep the organization healthy it is unquestionable that an organization has to be able to
retain them. If so, what is employee retention?

Different researchers describe retention as an employer’s effort to retain their talented

employees through developing good policies for the achievement of the organizational
goals (Chowdhury & Nazmul, 2017). Bidisha & Mukulesh (2013) argue that employee
retention is a process in which employees are encouraged to remain with the
organization for a maximum period i.e. until the completion of the project. Mita et.al,
(2014) regarded employee retention as a technique adopted by businesses to maintain
an effective workforce and at the same time to meet operational requirements. Thus,
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employee retention is the responsibility of an organization to keep potential employees
for the reason that they will probably contribute to the firm to reach its destination
(Kossivi et.al, 2016). In summary, employee retention is an effort by a business to
maintain a working environment, which supports the current workforce to remain with
the company. Although many other researchers describe employee retention, almost all
circled around and agreed with keeping these valuable assets, i.e., employees for a
maximum period to the organization long-term wellbeing.

2.1.1 Why Employee Retention?

According to different studies, the why of the employee retention is addressed from
differing angles, though they agree on its importance for the success and long-run-
wellbeing of the organization. Accordingly for Piyali et. al. (2013) the ability to retain
human capital is a crucial factor for an organization’s success and creates a positive
work environment that strengthens employees’ commitment to the organization, their
sense of belongingness and increase company morale. Haider et. al. (2015); Kossivi
et.al, (2016), argued that retaining an employee is much more efficient than recruiting,
training and orienting a replacement of the same quality because every organization
invests time and money to equip the newly joined employees with the necessary skills
to make them ready and productive as the existing ones. When these employees leave
then the organization will be left at a complete loss and forced to redo all over again.

Employee retention has positive impact regardless to the position’s skill requirement
whether high level or not; especially, when the position involves customer interaction
(Hinkin & Tracey, 2000). If an organization fails to adopt & cope up with the retention
issues in time, it will end up with huge problem (Daniel, 2010). Robert & John, 2010;
Hussin et. al., 2016; Dary & Phil, (2005), emphasized the importance aligning it with the
costs of departing employees and the shortage of skilled labor around the world.
Lockwood, (2006) builds-up on this; that retention ability serves the organization as a
means of preventing loss of talent, knowledge, customers and or clients who are loyal to
the organization.

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2.1.2 The How of the Employee Retention?
The above arguments take us to studies that claim the need for pointing out the critical
factors resulted in employees departure and the need for deploying proper retention
measures (Chowdhury & Nazmul, 2017; Piyali et. al., 2013). This implies, to retain
employees, the organization has to first figure-out, understand and address the issues
associated with the identified factors. According to (Ans & Annelies, 2008; Haider et.al,
2015; Janet et. al., 2015); the ability to retain employees overarch all other aspects of
human resource functions through which the organization shows its capacity and effort
in satisfying & retaining its valuable employees and or prevents them from leaving.

Other studies claim that employee retention is affected by different factors and
understanding them will assist to improve the organization ability to restrain, and or
nullify all related costs/losses (Armstrong, 2009; Robert & John, 2010). Retaining an
employee for a maximum period takes various measures into consideration (Ans &
Annelies, 2008; Haider et.al, 2015; Janet et. al., 2015). This begins with the
understanding of the different sort of reasons, which arises from both the employee and
the job itself. The actual reasons that people stay or leave vary and the actions that the
organization takes to strengthen the possibility of retaining employees differ depending
on the circumstances (Robert & John, 2010).

Accordingly, researchers agreed on the use of retention assessment and metrics to

trace the factors that are affecting the organization’s retention scheme or retaining
capacity. Robert & John (2010), Mita et.al. (2014) suggested the use of employee
surveys to diagnose the needs or preference of employees and to understand whether
the organization’s retention scheme is accepted or negatively viewed. The other means
suggested is, to use exit interview and or contact ex-employees regularly, especially the
valuable contributors, to get the reasons for their departing and to get information on
how to improve company’s retention efforts. First-year turnover/retention evaluations
were also suggested to gives a clue on the most likely staying employees i.e. employee
who stays for a year are likely to continue; with positive retention beyond the first year.

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These same writers, Robert & John, (2010); Mita et.al. (2014), claim that the
identification of the retention factors and implementation of improvement is not an end;
rather, it has to be backed with a continuous evaluation and follow-up. Tracking of
intervention results and adjustment of intervention efforts such as pilot programs to test
the effect of the intervention before applying them to the entire organization; should also
be part of the evaluation & follow-up. On top of this, the actions to deal with retention
issues have to be custom tailored to each organization. Thus customizing, interventions
to each individual organization, demands a study and identify that specific
organization’s retention problems with the factors that are affecting its retention ability.

2.2 Factors Affecting Employee Retention

Significant numbers of employees leaving the organization might be an
indication/symptom for a presence of a problem where the organization needs to
investigate the factors and take action. Accordingly, different studies come up with the
exploration of the different factors. For instance, Robert & John (2010), Mita et.al.,
(2014) disclose the prevalent myths and realities that facilitates employee retention lays
on human resource and management factors. This are clearly established goals,
effective management, positive organizational views, organizational politics, managerial
favoritism, quality of organizational leadership, work relationships, job and work-life
balance, rewards & compensation, benefits, performance, career training and
development, employer policies and practices.

Other researchers: Ing-Chung, Hao‐Chieh & Chih‐Hsun, (2006); Ans & Annelies,
(2008); Bidisha & Mukulesh, (2013); Piyali et. al., (2013); Sharon & Hlanganipai, (2014);
Haider et. al., (2015); Chowdhury & Nazmul, (2017), similarly pointed out various
factors: recruitment, compensation, job security, training & development program,
promotion & opportunity for growth, supervisor support, work environment, best career
growth opportunities, recognition, autonomy, communication and company justice etc.
as influencing factors.

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It could be observed that researchers has come-up with the various employee retention-
influencing factors although their influence varying from high to low. This implies that
there is no agreement in fixing a right mix of human resource practices as to how to
keep an employee loyal to the organization. This is also depends on the employer’s
emphasis and choice of factors that best suits her/his organization; yet, all begins with
recruitment to create a strong committed work force with a real task to retain them. (Mita
et. al., 2014). Therefore, to have a broader understanding, this study attempts to review
selected HR factors: compensation, training, career development, work-life balance and
work environment in detail and frame their contributions towards employee retention.

Compensation
The primary financial reward is regarded as compensation, tangible reward, received in
the form of pay, incentives, and benefits (Armstrong, 2009). In other words,
compensation is rewarding employees through pay, incentives, and benefits for
performing the organizational work. Compensation is a determinant factor for
employees to choose to work between organizations they often cite better pay or
benefits as the reason for leaving one employer for another (Robert & John, 2010). The
relation between compensation and retention is the subject to many studies yet differ on
their findings; for some, it strongly influences employees’ decision to stay while for
others it does not directly influence or is of little impact.

Sharon & Hlanganipai, (2014); Haider et. al., (2015) put forth that monetary
pay/compensation as the primary factor to retain employees. More specifically, Robert &
John (2010) recognize compensation as one of the key leading human resource
practices with a positive relationship to retention. Compensation is also considered as
employee retention technique, a motivator and one of the key factors to attract and
retain exceptional performers and or those who acquire unique & crucial skill to the
organization (Mita et. al., 2014).
[[

In addition to the above claims, Piyali et. al., (2013); Ednah & Geoffrey, (2017); Ing-
Chung et. al., (2006); each of them come up with different points as to how
compensation boosts retention capabilities: well-organized pay system: skill-based or
12
merit-based, pay rise, transparency of pay decisions, performance related pay, extrinsic
rewards (amount of pay and other benefits), effective wage, long period improved
compensation coupled with quality of work.

To the contrary, High House, Filip & Evan (2003) argued that money may attract
employees but it is not a warranty to keep them. It satisfies yet insufficient to retain
employees; they also argue that money could not be not considered as primary
retention factor. They underline that organizations, apart from offering high
compensation or pay based retention strategy, they can be able to have & implement
very good employee retention strategy. They also recommend that pay only or high pay
package is not sufficient guarantee to bring and or retain employee although low pay
package could be a drive for workers to leave the organization (High House et.al., 2003)

They further point out that high salaries are not essential for an intention to stay but
“good” and “fair” salaries are the ones that have strong correlation. They also underline
that, as long as the compensation is competitive, financial rewards are not the primary
factor in retention. Similarly, Kossivi et. al., (2016), add, compensation couldn’t be
considered as a retaining factor, even though it has a potential to create dissatisfaction
and or being a reason for employee’s departure if it lacks fairness and equity.

In general, the studies contradict in recognizing compensation as a key/primary factor of

employee retention. For some it is recognized as essential factor for retention while for
the others it has little to do with retention. This contradiction leaves a gap on
consideration of compensation’s contribution towards retention. Thus, it is logical to
clarify this gap by studying the practical aspect focusing on the trends of organizations
like the private banking commercial industry.

Training

Armstrong (2009) defines training as the use of systematic and planned instruction
activities to promote learning. It focuses on learning related to present job (Raymond
2008). Training is an investment on building and developing employees’ skills; all
13
practices that have a potential to improve people’s capability has greater returns and
considered as investments in human capital (Chandranshu & Ruchi, 2012). Training is
considered as a key practice in human resource management that determines
employee retention. Khawaja & Nadeem (2013) assert that training is a sign of
organization’s commitment to employees and a reflection of its value adding based
strategy. Accordingly training assists to lower turnover and considered as important
factor in employee retention. On top of this, it allow to cope with the rapidly changing
and fast-paced emerging technologies, keeping skills fresh and staying current has to
be a priority (Atif, Nawaz & Faiq, 2014; Ekra & Mary, 2016).

Studies show that, high growth of an organization is dependent employee’s capability;

training is meant to improve employees’ capability and performance (Khawaja &
Nadeem, 2013). Organizations, therefore has to provide comprehensive training
programs to attain their competitive advantage. Good training practice lets both
employees & organizations achieve their goals and boost the rate of retention
(Chandranshu & Ruchi, 2012; Khawaja & Nadeem, 2013).

To the contrary, Atif et.al., (2014) argue that once the staff get trained and acquire the
necessary skill, they will demand for higher pay, which costs to the organization and or
start to search for another opportunity to switch demanding better pay. Thus, studies
like this one’s doubt training’s contribution towards staff retention claiming the possibility
of motivating turnover. Once again, it logical to sort-out this contradiction investigating
the factor’s influence and relationship with employee retention.

Career Development
Development is growth or realization of a person’s ability, through conscious or
unconscious learning and in many aspects, it indicates the growth and movement by the
learner; it focuses on learning for growth of the individual’s future job (Raymond, 2008).
Atif et.al., (2014); Biju (2015) assert that career opportunities and development is a
process of movements that an individual makes to achieve his career plan. It consists
activities undertaken by the employee and the organization to meet career aspirations

14
and job requirements According to them, career development is a system, which is
organized and planned effort of achieving a balance between the individual career
needs and the organization’s workforce requirements.

Researchers claims that lack of career growth and development opportunities as one of
the reasons for high employee turnover (Mita et. al., 2014; Janet et.al., 2015; Biju,
2015). According to them, career development is one of the most important factors that
has to be considered and or recommended for reducing employee attrition; thus
providing wider career development opportunities makes the employees to stay longer
and enhances their loyalty to the firm. Lockwood (2006) further adds that employees’
decision to stay or leave is related to the career possibilities and how they can become
better prepared to move to other opportunities.

Likewise, Biju (2015) suggests, employees, who feel that they have higher chance of
promotion within are the ones that most likely to stay with the organization. This same
researcher extended, promotion opportunities will not only give the employees a sense
of appreciation and gratitude but also influence their decision stay or leave.
Chandranshu & Ruchi (2012) also argue that career development goes beyond
employees feeling that their employers are investing in them; but also it helped them to
manage their lives too. Similarly, a study concludes that in order to get the utmost
efforts of employees, organizations have to provide the best career growth opportunities
to their employees (Janet, et.al, 2015; Biju 2015).

Work-Life Balance
According to Ekra & Mary (2016), work-life balance practices are concerned with
providing scope for employees to balance their job/work responsibilities with their
personal responsibilities and interests outside work. In other words, the concept of
work-life balance is about the employees’ achievement of a satisfactory equilibrium
between work and non-work activities. This implies that, they could reconcile the
competing demands of their work and home while meeting both needs.

15
Work-life balance has a direct relation with the employee’s decision to stay or leave the
organization (Mita et. al., 2014). These recommendations include the need for norms on
working hours, role models at the workplace, flexi work hour’s arrangements, effective
talent acquisition and training practices (Ekra & Mary, 2016; Mita et. al., 2014). They
also observed that stress and its various components like emotional exhaustion and job
burnout are the major causes of high employee turnover. To minimize this, there should
be a healthy balance between an individual’s work and his personal life.

Researchers suggested that family-friendly work-life balance policies will assist to

enhance and facilitate flexible working such as: working from home, part time work,
compressed working weeks, annualized job hours sharing, term-time only working and
flextime. (Ekra & Mary, 2016; Mita et. al., 2014). This increases employees focus,
motivation and commitment at work while meeting both employer expectations and
family responsibilities, so that stress levels & turnover intentions will be reduced and
mentally healthy workforce maintained.

For Biju (2015), work-life policies are mechanisms for proper balancing between
personal life and demands of the work like late hours, frequent travel and quick
transfers, which are costly and unfavorable quality of work life to both psychologically
and socially. Armstrong (2009), recommends that in today’s competitive environment
the employee‘s choice for reduced hour schedules is not simply a matter of scheduling.
It involves redesigning work arrangements such as treating individual work arrangement
requests separately while considering group requests too. On top of this, organizations
has to develop a culture that encourages employees to come up with such requests.

Work Environment
Daryl & Phil, (2005), Biju (2015), Kossivi et.al., (2016), suggest a conducive work
environment becomes an essential factor in employee retention because employees
expect an environment, where they can demonstrate their abilities. According to them,
conducive work environment as a flexible atmosphere with adequate resources and
working experience is enjoyable. Thus, if working environment is inferior lacking all

16
basic facilities like: proper lighting, working space, ventilation, open space, restroom,
furniture, drinking water and refreshment, employees will not tolerate the hassle for a
long (Daryl & Phil, 2005; Singh, 2008). In addition to the facilities, bad boss create a
hostile working environment that forces the employees to leave their job.

2.3 Empirical Review and Research Gap

Over the years, staff turnover was the focus of many studies, unlike employee retention.
This is quite common in the case of Ethiopia. Due to the availability and turnovers
inverse relationship with staff retention, this part of the review considered studies on
staff turnover. This is because overcoming staff turnover challenges is a reflection of the
organization’s employee retaining ability and vise-versa. As it is stated by Janet et, al.,
(2015) identifying the root cause of employee turnover is a good approach for the
dilemma of retaining employees. Meanwhile, available studies on staff retention are also
reviewed empirically.

A thesis titled the effect of human resource practice’s on staff turnover of Birhan
International Bank S.C. evaluates the Bank’s employee intent to leave. The findings of
this study established strong relationship between an intention to stay and challenging
employment assignment. The researcher also noted that career opportunities’ high
positive influence on the decision to stay and minimized turnover intention
(Beletshachew, 2017).

Similarly, a survey on employee turnover of Oromia Water Works Design and

Supervision Enterprise concluded that better working condition to be the major reason
for employee to stay with the Enterprise (Aman, 2015). For MA thesis on The Effect of
Reward Practice on Employees’ Turnover Intention, on Metals Industry Development
Institute (MIDI); working environment was the one that showed more significant and
statistically meaningful relationship than other predictors do. In other words, an
improvement on the working environment will decrease employee’s turnover intention.
(Fanaye, 2017).

17
Looking in to studies conducted in other countries; Mary (2009), in her master’s thesis
on factors affecting recruitment and retention of qualified national staff in post conflict
countries INGO workers in South Sudan reveals the highly positive influence of
favorable employment terms (salaries & benefits), conditions of service and role clarity
on employee retention. Another MBA thesis on the University of Nairobi; established
that the use of performance results for career growth as a major factor to determine
employee retention. Meanwhile, the support for staff career growth, employee
promotions by merit, clear definition of employee career path, staff mentorship,
coaching programs and succession planning practices also influenced staff retention
(Harrison, 2012).

The findings of a thesis conducted on retention of staff in Pakistan Karachi Bank,

showed a high contribution and strong relationship between employee motivation and
employees retention (Atif et.al., 2014). Whereas employees training and employee
development showed weak relationship with employees retention. It also concludes
that both variables do not predict employee retention of the banking sector.

In general, unlike the few in country studies, researches of other countries tried their
best to reveal & forwarded various significant findings in the area of employee retention.
Yet, the conclusions on the factors contribution towards employee retention was
contradicting or fragmented. They fall to propose an effective mix or proved blend of
employee retention factors, practices/trends. Bringing this to the Ethiopian context,
where few or no studies on shelf, conducting a study in one of the major financial
sector, banking, is essential to determine the factors that influence employee retention.
To back-up this gap, this study therefore, investigate and put forth its findings on
employee retention focusing on the country’s private banking sector.

18
2.4 Conceptual Framework
Taking the above discussion in to account, a self-developed conceptual framework is
used to illustrate the theoretical constructs of the involved concepts. Accordingly, the
figure below portrays the study’s conceptual framework depicting the dependent and
independent variables that make-up the basis of the study.
Figure 2.1. The Conceptual Frame Work

Independent Variables

Compensation
H1

Training H2
Dependent Variable

H3 Employee
Career development Gr Retention
H4
Work-life balance
H5

Work Environment

Source: Developed by the Researcher based on the literatures reviewed in the study

2.5 Research Hypothesis

The study tests:
H1: There is a significant positive relationship between compensation and employee
retention.
H2: There is a significant positive relationship between training and employee retention
H3: There is a significant positive relationship between career development and
employee retention.
H4: There is a significant positive relationship between work-life-balance and employee
retention.
H5: There is a significant positive relationship between work environment and employee
retention.

19
 CHAPTER THREE: RESEARCH METHODOLOGY

This part of the study discusses the research design, approach, data sources, methods
of data collection, target population, sampling design, validity test, ethical
considerations, methods of data analysis and presentation.

3.1 Research Design and Approach

This study has adopted explanatory research design, as it appeared to be more
appropriate and efficient in yielding maximal information. It has served as a master plan
to specify the methods and procedures for collecting and analyzing the needed
information and ensuring its relevance for solving a problem (Kothari, 1984, Mark, Philip
and Adrian, 2009).

Concerning the research approach, this study uses a mixed research approach i.e.
quantitative & qualitative. The quantitative approach assisted in the systematic and
scientific investigation of the determinants quantitative properties, phenomena, their
relationships, measuring the fundamental connection between the empirical observation
and mathematical expression of attributes (Mark, Philip and Adrian, 2009). The
qualitative approach enriches the quantitative facts by explaining the in-depth meaning
of the constructed factors and the intimate relationship with the researched situational
constraints that shape the enquiry (Kothari, 1984; Mark, Philip and Adrian, 2009).

3.2 Data Sources

To investigate the factors that affect staff retention and to come up with comprehensive
findings, this study has accessed both primary and secondary data sources. The
primary data were collected from the survey participants and key informants i.e. from
Human Resource Heads. For an enhanced view, secondary data was also considered
reviewing all available related sources including: published literatures, annual reports,
company policy, Journal articles, case studies, related reports, research papers, related
online information and other related documents on staff retention.

20
3.3 Methods of Data Collection
Primary data was gathered using questioner & interview. The data collection was a self-
administered where employees’ response were collected using questioner, while key
informants/concerned officials views were obtained through interview.

The major instrument used to collect primary data was structured questionnaire. It was
adopted from previous scholars with minor modification to improve the accuracy, the
validity and reliability issues of the instrument (Christine, 2013; Teseena and Soeters,
2006, as cited by Sharon & Hlanganipai, 2014; Dockel, 2006; and Mobley et. al, 1978;
cited by Asma, 2015, Ekra & Mary, 2016). The questioner was framed in a clear manner
to enable the respondents understanding and ease of answering it. It includes both
closed and open-ended questions arranged in a logical manner. The biographical and
occupational section was used to capture the respondents’ demographic characteristics.
To allow consistency and ease of answering, the study questioner used a 5-point Likert
scale: 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree, 5=
strongly agree. The open-ended questions were also included to get the respondents’
additional view on the study topic.

3.4 Target Population and Sampling Design

3.4.1 Target Population
The population of this study comprises Awash, Wegagen and Lion Bank Head Offices &
Addis Ababa main branch employees. This consideration is worthy that, both parts of
the banks’ comprise all sorts of positions that make-up the banks. On top of this, the
banks’ policies, procedures & practices is applied consistently/uniformly, throughout the
functional units regardless of the geographic settings.

In line with this, the study frames a target population of 970 employees from these parts
of the banks. This frame excludes the top managements perceiving their involvement in
decision-making and enforcement of the findings implementation. Furthermore, it
excludes employees, who hold positions with possibilities of outsourcing, high
availability and less significance as drivers, guards, messengers and cleaners.
21
3.4.2 Sampling Design
To determine the parameters or characteristics of the larger population and draw
suitable sample, this study has deployed stratified random sampling. Accordingly, the
study’s population was divided into sub-populations, called ‘stratum’ that are more
homogeneous individually than the total population (Zikmund, Barry & Mitch, 2009;
Mark et. al, 2009). Due to this, the samples selected from each stratum constitutes
precise and accurate representative (Mark et. al., 2009). This sampling technique suits
this study as its population include homogeneous groups of employees in their parts.

Given the target population of 970 employees; the sampling technique, stratified
random sampling and determination of the strata; the study has adopted; n=N/1+N(e2)
where: n=Sample Size, N=Population, e=Margin of Error, 95% confidence level and 5%
standard of error to appropriately determine the sample size (Mark et. al., 2009).

N=970, e=5%; n=N/1+N (e2); n= 970/1+970(.052) = 283

Thus, the study comprised 283 employees as the sample and each stratum size is
determined per proportion multiplying each stratum with the total sample size (n) and
dividing it with the target population (N) and presented as follows:

Table 3.1: The study’s sample frame & proportion

Total # of % Sample
Strata employees Sample size proportion
Awash Bank
Head Office 488 142 50%
Main Branch 23 7 2%
Sub-Total 511 149 53%
Wegagen Bank
Head Office 213 62 22%
Main Branch 26 8 3%
Sub-Total 239 70 25%
Lion Bank
Head Office 200 58 21%
Main Branch 20 6 2%
Sub-Total 220 64 23%
Grand Total 970 283 100%
Source: Primary Data 2018
22
Accordingly, out of the total 283 employees: 149 employees from Awash Bank, 70
employees from Wegagen Bank and 64 employees from Lion bank, were considered as
the sample of the study.

3.5 Methods of Data Analysis

According to Zikumend, et.al, (2009), the data analysis tool has to be dependent on the
data type, weather qualitative or quantitative or both. Likewise, the study used both
qualitative & quantitative data analysis. To align the collected data with the themes of
the respective research questions and objectives; the collected data was edited, coded,
sorted, analyzed, interpreted, summarized and presented in a meaningful manner.

To elaborate this further, the collected questionnaires were edited for completeness and
consistency, coded to allow grouping in different categories and sorted per relevance
then analyzed using Statistical Package for the Social Sciences, SPSS version 21. To
allow understanding and data comparison, the summarized data were presented using
descriptive statistics: frequencies, percentages, mean, mode, standard deviations and
tables. To enrich the findings with explanation, comparison, logical and factual
interpretation; the data obtained through interview and secondary sources were
analyzed qualitatively.

Furthermore, person’s correlation is computed using a linear multiple regression

analysis & test the identified factors/ variables quantitative contribution, association and
or relationship. Finally, major findings and associated results were interpreted and
presented.

3.6 Validity and Reliability

A comprehensive measurement must fulfil the tests of validity and reliability; validity is
the most critical criterion that indicates the degree to which an instrument measures
what it is supposed to measure (Kothari, 1984). To ensure this, the study’s advisor has
evaluated and verified the instrument’s content appropriateness and the measurement’s
scale; peers also has commented.
23
Concerning the reliability, as Zikmund, et.al, (2009), the measure of internal
consistency; a pilot test was conducted distributing 30 questionnaires to the selected
sample employees and analyzed using SPSS version 21. As indicated in the below
table the reliability ratio, the Cronbach’s alpha, for the pilot test revels that the
questionnaire has acceptable reliability i.e. α = 0.87.

Table 3.2: The Crobach’s Alpha result

Reliability Statistics

Cronbach's Cronbach's Alpha Based N of

Alpha on Standardized Items Items
.870 .896 30
Source: Own Survey 2018

Cronbach’s alpha reliability coefficient normally ranges between 0 and 1. George and
Mallery (2003), as sited by Joseph A. Gliem & Rosemary (2003), confirm that
Cronbach’s alpha i.e. α > 0.9 – Excellent, α > 0.8 – Good, α > 0.7 – Acceptable, α > 0.6
– Questionable, α > 0.5 – Poor, and α < 0.5 – Unacceptable”. The closer Cronbach’s
alpha is to one/1, the greater the internal consistency of the items in the scale.
Accordingly, the pilot test result, an alpha of .87, shows the instrument’s internal
consistency as good and reasonable to the objectives of the study.

3.7 Ethical Considerations

This study has observed all ethical considerations. It dually acknowledged all cited
information in both the body and the reference section. In other words, no
review/accessed document is used without acknowledging the sources. Concerning the
questioner respondents’: their consent was requested to ascertain their voluntary
participation. Full description of the study, the purpose/intention, confidentiality and
privacy protection is highlighted with a brief cover letter beforehand. In addition to this,
the survey is kept anonymous/nameless.

24
 CHAPTER FOUR:
DATA ANALYSIS AND INTERPRETATION
This chapter deals with the analysis the collected data of from the three private
commercial banks: Awash, Wegagen & Lion Bank Head offices and their main
Branches in Addis Ababa, Ethiopia. The collected data were analyzed quantitatively
using SPSS version 21 and qualitatively. The survey major findings and associated
results were interpreted and presented in light of the research questions and objectives.

4.1 Response Rate

The study sample has considered a total of 283 employees from three private
commercial banks head office and main branches in Addis Ababa; where, 149
employees from Awash, 70 from Wegagen and 64 from Lion banks of were considered.
Out of the distributed two hundred eighty three questionnaires, 234 were fully completed
and returned back. This makes up 83% of response rate; this was achieved through a
continuous in person visits and reminders. According to Zikmund, et.al, (2009), a
response rate of 50% is acceptable and adequate for analysis as well as for reporting.
Hence, the response rate of 83% is by far higher than the established acceptable rate.
Out of the remaining 17% questionnaires, 8% were partly or wrongly completed while
the 9% was not returned so both were not considered in further processes.

4.2 Respondents’ Demographic Characteristics

The demographic distribution of the respondents’ sought the gender composition, age
groups, educational background and stay/work experience of the respondents. The
outcome is therefore presented with graphs and discussed as follows:

Gender of Respondents

As demonstrated in figure 4.1, the study findings on the gender composition of the
respondents established, approximately 60% male and 40% females respondents
participated in the survey.
25
 Figure 4.1: Graphical representation gender of the respondents’

Source: Own Survey 2018

Age of respondents
The age of the respondents were categorized under four ranges. As depicted in the
graph the below, majority, 89.4%, of the respondents’ fall between age group of 23-39.
The remaining 10.6% accounted for the age groups of 40 and above.
Figure 4.2: Graphical representation of the ages of respondents’

Source: Own Survey 2018

Respondents stay/work experience with the banks

The respondents’ experience/stay within the banks, 24% showed a stay of 1-3 years,
44% of them stayed between 4-6 years while the 30% of them stayed above 7 years.
Figure 4.3: Graphical representation of the respondents’ stay with the bank

Source: Own Survey 2018

26
Respondents qualification/Education Level
In relation to qualification, the larger number of respondents’ were above degree level
i.e. 74% out of which first-degree holders stand at 69%. This fits the purpose of the
study as it is concerned with the professionals. It also involves 16% diploma holders.
Here it is good to note that most of the top managements were not included, as they will
be the users of the findings/outcomes of the study.
Figure: 4.4 Graphical representation qualification of the respondents’

Source: Own Survey 2018

In general, looking in to the demographic statistics of the respondents, the work force
comprises with slightly larger number of male and youth employees while majority of the
respondents represented undergraduates and above. On top of this, the result showed
that quite a number of employees leaving before reaching their third year i.e. there are
employees, who are not staying beyond three years.

4.3 Staff Rretention Practice in Awash, Wegagen & Lion Bank

The interview and open-ended questions part of the survey revealed that employee
retention do not seem to get much attention of the banks’ decision makers but the
challenges for employee retention are continuing. Employee retention strategy, policy
or program are not in place or developed. Employee retention rate is not known or
calculated. The reason behind the bank’s employee stay or leave was not assessed or
identified. Employee retention assessment/metrics, or employee needs surveys are

27
either partially done or not conducted. The reasons for first year turnover was not
assessed or identified. Information such as employee turnover and exit interviews are
used to fulfil procedure such as reporting. As identification by itself is not an end,
reviews of the findings, continuous evaluation, follow-up, tracking of intervention results
and adjustment of the intervention efforts have not taken place. In addition to this,
compensation/salary difference is believed to be the main reason for turnover.
Whereas, replacement is the one practiced to respond turnover, which, is very costly.

Concerning the employee retention factors, the responses of both the key informants
and the respondents acknowledged the influence of all human resource practices.
According to the findings, factors such as the competition for labor, promotion options,
job rotation, team building events, organizational structure, work procedure,
acknowledging contributions were among the suggested factors to affect the banks’
employee retention.

4.4 Descriptive Analysis of Employee Retention Factors

In line with the study’s objective, this part of the study discusses the findings of the
descriptive and inferential statistics.

4.4.1 Analysis of the Mean and Standard Deviation Results

The extent at which the sample group in average agreed or disagree with the raised
statements was analyzed using the mean results. Low mean implied that majority of the
respondents disagree while, higher mean value indicates their agreement. Accordingly,
the perceptions of the respondents were captured using a five-point Likert scale (1-
Strongly Disagree, 2– Disagree, 3 – Neither Agree nor Disagree, 4 – Agree and 5 -
Strongly Agree) and interpreted in accordance with the below detailed Zaidatol et. al.,
(2012), mean scores degree.

• Mean = 1.00 – 2.33  Low,

• Mean= 2.34 – 3.67  Moderate and
• Mean = 3.68 – 5  High
28
 Standard deviation was also used to show the variability of measurements from the
mean (average). The higher standard deviation indicates a wider distribution of the
scores from the mean. This distribution indicates more heterogeneous or dissimilar
spread of scores on a scale. Whereas, if the value is lower, it indicates a narrower
distribution with more similar or homogeneous spread of scores around the mean (Mark
et.al., 2009). Accordingly, employees intention to stay and their perception towards the
studied independent variables are analyzed with the mean & standard deviation results
as follows.

Table 4.1: Mean and Standard Deviation Results of the Respondents’ Perception
Summary Descriptive Statistics
Mean Std. Conclusion on the Mean & Std.
Deviation Deviation
I. Intention to Stay/Employee Retention
I will work with this bank until retirement 2.63 1.109 Moderate with high Std. Deviation
I love the bank, I feel I belong here and no reason will change 2.79 1.055 Moderate with high Std. Deviation
my decision
I will still choose to work in this bank although I got other offers 2.71 1.128 Moderate with high Std. Deviation
Aggregate value 2.71 1.10 Moderate with high Std. Deviation
II. Compensation: Pay/Salary, Benefit
I believe the salary & benefit schema has enabled the bank to 3.55 .893 Moderate with low Std. Deviation
retain employees
The bank offers high salary compared to other banks and or 3.30 .873 Moderate with low Std. Deviation
other industries
Salary and benefit increase or decrease doesn't affect my 2.64 1.015 Moderate with high Std. Deviation
decision to work with the bank
Aggregate mean 3.16 0.93 Moderate with low Std. Deviation
III. Training
The bank training programs are relevant with my job 3.94 .659 High with low Std. Deviation
Training is provided on on-going bases (during changes in work 3.69 .819 High with low Std. Deviation
system or technology) well planned and with qualified trainers.
The training delivered build excellent skills & give us confidence 3.70 .789 High with low Std. Deviation
so that I want to work with the bank for a longer period
Aggregate value 3.78 0.76 High with low Std. Deviation
IV. Career Development
The bank offers career oriented staff development programs to 3.00 .800 Moderate with low Std. Deviation
all staff equally
The bank’s staff development programs create high feeling of 3.29 .788 Moderate with low Std. Deviation
valued

29
Internal staff are first priority in case of vacant higher 3.66 .841 Moderate with low Std. Deviation
positions/promotion so that I want to work with the bank longer
Aggregate value 3.32 0.81 Moderate with low Std. Deviation
V. Work Life Balance
The bank’s working hours are in perfect balance with my 3.32 1.087 Moderate with high Std. Deviation
personal life
My work load is reasonable and it doesn't affect my personal life 3.38 1.094 Moderate with high Std. Deviation
I enjoyed working with this bank and I believe I will continue 3.18 .952 Moderate with low Std. Deviation
working for longer years
Aggregate value 3.29 1.04 Moderate with high Std. Deviation
VI. Work Environment
The work environment is conducive with adequate equipment, 3.88 .758 High with low Std. Deviation
supplies and facility for my work
Employees treated fairly, my expectations are met (I get 3.59 .754 Moderate with low Std. Deviation
adequate support, there is open communication, participation in
decision-making is highly encouraged)
There is high cooperation between peers 4.37 .913 High with low Std. Deviation
Aggregate value 3.95 0.81 High with low Std. Deviation
Source: Own Survey 2018

As indicated in the table above, the findings on employees retention or intention to stay
showed an aggregate mean value of 2.71, a moderate score with a standard deviation
of >1. This results established that the respondents are not sure that they love the
banks’ or feel that they belong there or want to stay longer with the banks. The
standard deviation value indicated high i.e. that the participants’ responses are
heterogeneous and widely spread from the mean.

As indicated in Table 4.1, the aggregate mean value of the second variable,
compensation showed 3.16, a moderate score indicating that the respondents neutral
perception towards to the statements raised. They disagreed that the banks pay higher
salaries compared to other banks so they do not believe that the compensation,
salary/pay/benefits, schemes enabled the banks to retain employees. The standard
deviation value i.e. <1, showed a lower spread of responses among the observations.

As per Table 4.1, Training showed high aggregate mean result, 3.8, indicating that the
respondents have positive response towards training. The standard deviation for this
factor showed <1 indicating the scores deviation from the mean is low. Accordingly, the
30
findings on training showed that majority of the respondents are pleased with the banks
training, i.e. they valued the training delivered, agreed that the trainings are well
planned and conducted by a qualified trainers. They have also agreed that the trainings
offered are very relevant, provided on on-going bases and during changes in work
system or technology. They also perceived that the trainings delivered build excellent
skills & give them confidence so they do not consider this factor to affect or change their
decision to stay.

According to Table 4.1, the aggregate mean value for career development fall under
moderate score 3.32 indicating that the respondents have neutral response to the
statements raised. Accordingly, the respondents disagree with the career development
programs fairness or the consideration that internal staff being first priority when vacant
higher positions/promotion arises. Hence, they perceived this program did not create
feeling of valued and they do not intend to work with the banks for longer. The standard
deviation for this factor showed a low value <1, indicating similar perception among
respondents.

The aggregate mean for work life balance in Table 4.1 established moderate value,
3.29, with neutral responses towards the raised statements. The respondents agreed
that working hours are not in balance with their personal life. The workload is not
reasonable and it affected their personal life so they are not sure to work with the banks
for longer. The standard deviation showed high, >1, indicating a widely spread or
heterogeneous perceptions.

As per Table 4.1, the banks’ work environment revealed an average mean score, 3.9,
that the respondents have desirable response to the raised statements. It indicated their
satisfaction with the banks’ work environment. Availability of conducive environment
with adequate equipment, supplies, facility for their work and high cooperation between
peers. Whereas, their perception on how fair employees treated, if their expectations
fulfilled, getting adequate support, open communication, participation in decision-
making is highly encouraged moderate with a mean value of 3.59. The standard
deviation of these factors was of < 1 indicating a low deviation with a more
homogeneous perceptions among the participants.
31
 4.4.2 Analysis of Retention Factor/s per the Degree of Influence

Part - IV of the survey, has requested respondents to rank the factor that most influence
their intention to stay/employee retention among the studied factors/independent
variables: compensation, training, career development, work-life balance and work
environment. Accordingly, their order of preference ranked work environment and
compensation as the most influencing factor. Whereas, the number of respondents who
ranked work environment first exceeds compensation’s as shown and discussed in the
table below.
Table 4.2: Factors Ranking Results
Frequency Percent Rank Remark
Valid Work Environment 112 47.9 1st • Majority respondents’ rank it first
Compensation 83 35.5 2nd • relatively ranked 1st by few so sated 2nd,
Career Development 85 36.3 3rd • Relatively many of respondents rank it 3rd
Work-Life Balance 72 30.8 4th • Ranked 3rd by few so re-re-ranked 4th
Training 82 35.0 5th • Ranked 4th but re-ranked 5th
N 234
Missing 0
Source: Own Survey 2018

Consequently, in order to make the meaningful interpretation, Table 4.6 presented the
readjusted ranking results. As a result, work environment has kept its rank, first, scoring
a higher frequency of 47% than compensation which goes second by 35%. Similarly,
career development kept its rank third and work life balance re-ranked 4th with 36.3%
and 30.5% respectively. Training was re-ranked as fifth with 35% to affect their decision
to stay and work. Thus, the respondents’ perception established, among the other
factors, changes on work environment & compensation to highly affect their decision to
stay with the banks and or work with the banks for a longer period.

4.4.3 Analysis of the Inferential Statistics Results

One of the primary objectives of this study was examine the relationship between
employee retention and selected human resource factors compensation, training, career
development, work-life balance and work environment. To this end, inferential statistics
i.e. correlation and regression analysis, have been considered and the results are
interpreted as follows.

32
 4.4.3.1 Analysis of Factors Correlation Results
In order to confirm the relationship between the variables, this study used one of the
basic and useful measure of association i.e. correlation analysis. The magnitude
(intensity of relationship -1 to +1) and the direction of the relationships (+ve/-ve) is
examined using the Persons correlation coefficient (Mark et.al., 2009). Likewise, the
significance level, p-value, is labeled as “Sig.” in the SPSS output and helped to
statistically determine the significance of the results during a hypothesis test. If the
significance value is less than 0.05 (p<0.05) then the relationship is statistically
significant. If the significance value is greater than 0.05 (p>0.05) then the relationship is
not statistically significant.

Table 4.3: Correlation results

Intention Career Work-life Work

Compensation Training environment
to stay development balance
Pearson
Intention to stay 1
Correlation
Pearson
Compensation .445**
Correlation
Pearson
Training .343** .229**
Correlation
Career Pearson
.469** .354** .489**
development Correlation
Pearson
Work-life balance .558** .302** .379** .505**
Correlation
Pearson
Work environment .270** .448** .439** .406** .377** 1
Correlation
**. Correlation is significant at the 0.01 level (1-tailed). N = 234 Sig. (1-tailed) = 0
Source: Own Survey 2018

4.4.3.2 Analysis of the Regression Results

The study used regression analysis to measure the relative strength and determine
statistical significance between the independent variables (compensation, training
career development, work-life balance and work environment) and the dependent
variable (employee retention) exclusively focusing on the trends of Awash, Wegagen &
Lion banks (Mark et.al., 2009). In order to scrutinize the significant effect of the
independent variables on the dependent variable multiple linear regression analysis was
employed. This is because the study comprises one dependent variable and two or
more independent variables (Kothari 1984). Meanwhile, it is mandatory to confirm the
model’s adequacy and fitness form a statistical perspective before running the
33
regression analysis. To this end, multicollinearity, the overall statistical acceptability or
significance, linearity and normality was tested.

Multicollinearity verifies that the independent variables are not highly correlated with
each other, tested using VIF/Variance Inflation Factor and tolerance. If the results of
VIF are below 10 and the tolerance value greater than 0.1 then there is no possibility of
multicollinerity among this variables (Hair et al., 2006). As presented in the table below,
the collinearity statistics results (VIF<10 and Tolerance >0.01), the dependent variables
are not prone to this assumption so that regression analysis can be conducted.
Table 4.4: Multicollinerity Diagnosis
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) .756 .379 1.995 .047
Compensation .433 .083 .300 5.215 .000 .756 1.323
Training .160 .099 .098 1.615 .108 .680 1.471
Career development .251 .097 .167 2.600 .010 .606 1.649
Work-life balance .423 .065 .392 6.541 .000 .694 1.441
Work environment .187 .094 .123 1.985 .048 .653 1.532

In addition, the overall statistical acceptability or significance of the model was proved
as indicated in the below ANOVA table. The ANOVA helped to determine the model’s
significance in predicting the dependent variable, staff retention. The findings
established a significant value .000, i.e. p<.005 inferring that the model is significant.
This reveals that the variation explained by this model is not because of a chance.

Table 4.5: The Model Significance Diagnosis

ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 99.440 5 19.888 34.513 .000b

1 Residual 131.383 228 .576
Total 230.823 233
a. Dependent Variable: Intention to stay
b. Predictors: (Constant), Work environment, Work-life balance, Compensation, Training , Career development

34
In addition to the multicollinerity and the overall statistical acceptability or significance,
both linearity and normality were tested and proved that the model fits for conducting
multiple linear regression (refer annex). Following these, regression analysis was
conducted, the regression model summary showed, how much of the variance in the
dependent variable employee retention is accounted by the independent variables
(compensation, training, career development, work-life balance, work environment).

Table 4.6: The Regression Analysis Model Summary

Model R R Square Adjusted R Std. Error of the
Square Estimate
1 .716a .513 .479 .718
Source: Own Survey 2018

Likewise, R, the coefficient of multiple correlation, in the above table showed the degree
of association that the selected factors (compensation, training, career development,
work-life balance, work environment) have with employee retention/intention to stay
have i.e. 0.716. In addition, the R square, the coefficient of determination, established
that the extent to which changes in the dependent variable could be explained by the
change in the independent variables. Similarly, 51% of the variation in the dependent
variable, employee retention, is explained by the independent variables (compensation,
training, career development, work-life balance, work environment). Thus, the model
proved to fit and adequately predict the relationship between the variables.

Table 4.7: The regression analysis results

Coefficientsa

Model Unstandardized Standardized t Sig.

Coefficients Coefficients

B Std. Error Beta

(Constant) .756 .379 1.995 .047

Compensation .433 .083 .300 5.215 .000

Training .160 .099 .098 1.615 .108
1
Career development .251 .097 .167 2.600 .010
Work-life balance .423 .065 .392 6.541 .000
Work environment .187 .094 .123 1.985 .048
Source: Own Survey 2018

35
The regression coefficients in the above table demonstrates that the relative extent of
the influence that each independent variable has on the dependent variable and through
which the most contributing predictor/dependent variable is revealed. Accordingly,
unstandardized beta coefficient was considered to explain the strength of each
predictor/independent variable influence on the criterion employee retention.

Accordingly, the beta value of each independent variable in the above table established
that compensation, β= 0.43 with P<0.05; training β= 0.18 with P>0.05; career
development β= 0.25 with P<0.05; work-life balance β= 0.42 with P<0.05 and work
environment β= 0.19 with P<0.05.

Among the tested predictors, the compensation’s beta coefficients indicated statistically
meaningfully & more significant predictor of employee retention. Work-life balance
followed with a closer significant result. Thus, a certain change on compensation
(salary/pay/benefit) will increase or decrease the banks’ employee retention or their
employees’ intention to stay, by 43%. In addition, a certain change on work-life balance
will increase or decrease the banks employee retention or their intention to stay by 42%.
Hence, the overall result established that compensation & work-life balance to have the
greater rate of influence than the other predictors considered in this study.

Furthermore, the correlation results in Table, 4-3, has indicated a positive significant
relationship between the dependent variable, employee retention and independent
variables compensation, career development, work-life balance & work environment.
Based on the correlation & regression analysis, the hypotheses related to these
independent variables with p<0.05 were accepted. However, the hypothesis in relation
to training is rejected as the significance level is weak, Sig.(p)=0.108 where is P>0.05.
The hypotheses tests are further analyzed in the Table 4.8 below.

36
 Table 4.8 Summery of the Research Hypotheses Results

Hypothesis Result Remark

H1 There is a significantly positive relationship between • r=0.445 & P<0.01 • There is +ve relationship
compensation and employee retention. • β=0.43 & P<0.05 • The relationship is significant
Thus, H1, is accepted
H2 There is a significantly positive relationship between • r=0.343 & P<0.01 • There is +ve relationship
training and employee retention. • β=0.160 & P>0.05 • The relationship is insignificant
Thus, H2, is rejected
H3 There is a significantly positive relationship between • r=0.469 & P<0.01 • There is +ve relationship
career development and employee retention. • β=0.25 & P<0.05 • The relationship is significant
H3, is accepted
H4 There is a significantly positive relationship between • r=0.558 & P<0.01 • There is +ve relationship
work-life balance and employee retention. • β=0.42 & P<0.05 • The relationship is significant
H4, is accepted
H5 There is a significantly positive relationship between • r=0.270 & P<0.01 • There is +ve relationship
work environment and employee retention. • β= 0.187 & P<0.05 • The relationship is significant
H5, is accepted

In general, the overall hypothesis testing results established that among the tested
independent variables; compensation, career development, work-life balance and work
environment to have strong positive significance/influence towards the banks employee
retention or the employees’ intention to stay. In other words, these factors highly
determine the dependent variable where a change or an improvement in each
variable/factor to highly affect or increase or decrease the banks employee retention
capacity.

37
 CHAPTER FIVE:
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of Major Findings

The purpose of this study is to identify the factors that are affecting employee retention
and to measure the extent of their effect on employee retention. To this end, the study
has considered selected human resource factors, compensation, training, career
development, work-life balance and work environment of selected private commercial
banks (Awash, Wegagen and Lion bank). To explore the findings, the study has
adopted a mixed research approach and explanatory research design. Accordingly, the
data was gathered using interview and structured questioner. The collected data was
analyzed qualitatively and quantitatively. This section therefore, summarizes and
presents the core points and major findings as follows:

• The response rate proved adequate and acceptable, (i.e. 83%) to analyze and
report the findings. The demographic mix of the respondents also confirmed the
study’s purpose the majority accounted from educated (first-degree holders),
young & productive work force with age group between 23-39.

• The aggregate mean score for employees’ intention to stay indicated a low score
of 2.71, indicating that the majority of the respondents disagree to stay with the
banks for longer periods. The standard deviation result is high, P>0.1, indicating
the wide spread scores from the mean (varying perceptions).

• The aggregate mean score for work environment & training showed high, (3.7
and 3.9 respectively) indicating that majority of Sthe respondents are in
agreement with the statements raised and pleased with the provisions of both
factors. Whereas, one item for work environment (mean 3.59) and for the rest of
the studied factors: compensation (3.16), career development (3.32) and work-
life balance (3.29) showed an aggregate mean moderate score indicating that
majority of respondents are marginally in agreement with the raised statements.

38
 While the aggregate standard deviation for compensation, training, career
development and development & work environment showed low (<0.1) similar
perception among respondents whereas, work-life balance showed high >0.1,
which is varying perception.

• The studied employee retention predictors/factors established a correlation with

the person coefficients P<0.01 and r value between 0.270 to 0.558 indicating
their positive relationship with employee retention/intention to stay.

• Based on the results of ANOVA F statistics value .000 i.e. P<0.05 verified the
model used as significant for regression analysis. Accordingly, the collinearity
statistics, the tolerance value >0.1 and VIF value <10 asserted that there is no
possibility of multicollinearity. The linearity test also confirm the viability of the
model.

• The regression model summary result has established, 51.3% of the variation on
employee retention/intention to stay is explained by compensation, training,
career development, work-life balance and work environment.

• Based on the unstandardized coefficients, compensation established the most

contributing factor with β = 0.433 and followed by work-life balance β =0.423 in
predicting employee retention of the banks’

• The statistical significance, relationship of the correlation analysis and the

regression analysis results established the presence of strongly positive
relationship between employee retention and the independent variables;
compensation, career development, work-life balance and work environment.
Thus, the study hypotheses: H1, H3, H4 and H5 are accepted. To the contrary,
H2, the hypothesis in relation to training is rejected as the significance level is
low, 0.108, which is P>0.05.

39
 • In addition to the studied predictors’, job rotation, promotion, teambuilding
events, organizational structure, work procedure, acknowledging contributions
were among the suggested factors to affect their decision to stay with the banks.

• The interview results with the key informants’ i.e. the banks Human Resource
Heads, revealed that employee retention did not get the necessary attention as it
deems. Although there are moves by one of the banks (Wegagen) also almost
no action seemed to be taken to address employee retention challenges.

• In relation to the factors, the decision makers believed that all human resource
factors to have an influence on employee retention. Among these, they consider
compensation (salary, pay and benefit) to be key/primary influencing factor. In
addition to this, they also believed that external factors such as competition for
labor in the industry to affect their employee retention.

• Concerning the employees’ intention to stay, the findings of the descriptive

statistics showed that majority of the respondents do not have an intention to
stay. This implies that employee turnover will increase and continue to threat
the banks.

5.2 Conclusions

The main purpose of the study was to identify and examine the influence of the
employee retention factors taking trends of the private commercial banks (Awash,
Wegagen & Lion Bank) in Ethiopia. The study found out that majority of the
respondents do not have an intention to stay. This implies, employee turnover will
continue to increase. However, the banks neither realized the challenges nor prepared
to mitigate them with proper employee retention schemes.

Out of the studied factors, compensation & work-life balance demonstrated higher
contribution, significance and relationship with the banks employees’ decision to stay.
This established that a change on both factors would highly improve, increase or
40
decrease the capacity of the banks’ employee retention. The remaining predictors:
career development, work environment and training are categorized base on their
significance from medium to least. Moreover, factors such as job rotation, promotion,
team-building events, organizational structure, work procedure, acknowledging
contributions and the competition for staff believed to affect employee retention of the
banks. The regression analysis result also uncovered that 48.7% of the variance in
employee retention is to be explained by other factors than the factors examined under
this study.

Therefore, it can be concluded that, in order for the banks to have an improved
employee retention, they need to reconsider their understanding and practice of their
employee retention. Furthermore, improving compensation (salary, pay, benefits),
crafting family friendly work life balance policy along with career development, work
environment with fair treatment, adequate support, open communication, participation in
decision-making, cooperation between peers could contribute to stabilize the banks’
staff mobility and maintain their employee retention capacity. In line with this, other
factors such as job rotation, promotion, teambuilding events, organizational structure,
work procedure, acknowledging contributions and the competition for skilled staff could
be the area where the banks needed to focus.

5.3 Recommendations

Although there are no hard and fast blend of practices to keep employee loyal and or
committed, an organization has to adopt & cope up with the employee retention issues
in time, otherwise it will end up with huge problem (Daniel, 2010). According to one of
the major findings of this study, most of the respondents’ have no intention to stay and
this signal the bank’s employee retention is at stake. This lack of intention to stay may
lead to high turnover and frequent employee changes, which in turn deteriorates the
banks service quality, credibility, integrity or dependability. Therefore, to tackle these
challenges, it is advisable for the banks to consider the following recommendations.

41
 • As the dynamic and vital nature of human resource calls for a special attention,
the banks’ decision makers should realize the highly deteriorating status of their
employees’ intention to stay and exert high effort to change the situation.
• The banks should focus on establishing a clear understanding and consideration
on the studied factors (compensation, work environment, career development,
work-life balance and training).
• The banks need to design appropriate employee retention strategy/policy and
procedures, which provide improved compensation, greater career development
opportunities, treats every employee equally and fairly, balances both work and
family life, reduce stress and maintain a mentally healthy workforce.
• The banks need to continually assess and improve the existing trends, enhance
the work environment, work-life balance, increase compensation, and establish a
better system.
• The banks should regularly measure employee retention and employee turnover
rate to serve as a benchmark in further improvement processes.
• The banks needed further follow-up to trace the actual reasons behind their
employee decision to stay or leave using employee retention matrix and or need
assessment to strengthen their employee-retention strategies. Similarly, they
need to adopt and incorporate changes by continuously amending their
employee retention policy, procedure and practices to enhance a positive work
environment, company morale, increase employees’ commitment and strengthen
a sense of belongingness.
• As per the findings of this study, 48.7% the variance on employee retention is
accounted by other factors than the studied ones and this may fall on the factors
suggested by the respondents. Hence, it is recommended that the banks to
conduct further studies to explore more determinant factors for an improved mix.
Similar studies could also be carried out in similar or different industries.

In general, adopting the significant predictors compensation & work environment jointly
with the aforementioned recommendations, the banks would be able to change the
current scenario and improve their employees’ intention to stay and or their retention.

42
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Annexes

47
 The Study Questionnaire

ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE

HUMAN RESOURCE MANAGEMENT MASTERS PROGRAM

Factors Affecting Employee Retention in the Banking industry:

The Case of Selected Private Commercial Banks

Dear Esteemed Participant,

I, a student researcher, at Addis Ababa University School of Commerce in Addis Ababa,

Ethiopia, kindly invite you to participate in responding the enclosed master’s thesis survey
questioner.

The questionnaire is designed to collect information on factors affecting employee retention at

Awash/Wegagen/Lion bank. The collected information will be regarded as a primary data for
the academic thesis as a partial fulfillment of a Degree in Master of Arts in Human Resource
Management.

Your participation in this research project is voluntary. You may decline responding, or leave
any questions blank that you do not wish to answer. There are no known risks to your
participation and or your responses and it will remain confidential and anonymous. The
researcher & the research advisor will only access your responses in this questionnaire.

Thus, if you agree, please answer each question, it may take you 10-15 minutes to complete. If
you have any question kindly contact the researcher per the contact detail provided below.

Your participation & cooperation is highly valued.

Sincerely yours,

Researcher: Mulu Haddis,

Mobile: 0911 484608,
Email: mulu20012002@yahoo.com
Advisor: Solomon Markos (PHD),
Email- solomonmarkos5@yahoo.com

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 Personal Data
1. Gender : Male Female
2. Age between : 23-29 30-39 40-49 >50
3. Position : Clerical Supervisory Managerial
4. Qualification : Diploma Degree Masters & above
5. Experience (in years): 1-3 4-6 above 7 years

PART 1: Close Ended Questions

Please mark () in the box of your preferred choice
1  Strongly Disagree
2  Disagree
3  Neither Agree nor Disagree
4  Agree
5 Strongly Agree

1. Intention to stay

What is the employees’ decision on staying longer with the organization? 1 2 3 4 5
1 I will work with this bank until retirement
2 I love the bank, I feel I belong here and no reason will change my decision
3 I will still choose to work in this bank although I got other offers

2. Factors Affecting Employee Retention

I. Compensation (Salary/Pay/Benefits)

Does the Bank’s salary/pay and benefits affect employee decision to stay? 1 2 3 4 5
1
I believe the salary & benefit schema has enabled the bank to retain employees
2 The bank offers high salary compared to other banks and or other industries
3 Salary and benefit increase or decrease doesn’t affect my decision to work with the bank

II. Training

How far employee training is affecting staff retention? 1 2 3 4 5
1 The bank training programs are relevant with my job
2 Training is provided on on-going bases (during changes in work system or technology)
well planned and with qualified trainers.
3 The trainings delivered build excellent skills & give us confidence so that I want to work
with the bank for a longer period
III. Career Development

How far career development affects staff retention? 1 2 3 4 5
1 The bank offers career oriented staff development programs to all staff equally
2 The bank’s staff development programs create high feeling of valued
3 Internal staff are first priority in case of vacant higher positions/promotion so that I want
to work with the bank longer

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 IV. Work-Life Balance

How far work-life balance affects staff retention? 1 2 3 4 5
1 The bank’s working hours are in perfect balance with my personal life
2 My work load is reasonable and it doesn’t affect my personal life
3 I enjoyed working with this bank and I believe I will continue working for longer years.
V. Work Environment

How far the bank’s work-environment affects staff retention? 1 2 3 4 5
1 The work environment is conducive with adequate equipment, supplies and facility for my
work
Employees treated fairly, my expectations are met (I get adequate support, there is open
2
communication, participation in decision-making is highly encouraged).
There is high cooperation between peers,
3
Which one of the factors highly affect your decision to stay/work longer in this bank?
Please rank them in order of your preference 1st 2nd 3rd 4th 5th
1 Compensation (salary/pay, benefit package)
2 Training offered
3 Career Development programs
4 Work-life balance/balance between work and home life
5 Work environment/conducive work environment
PART 2: Comments and Suggestions

1. Is there any other factor that makes you feel valued working with this bank?
…………………………………………………………………………………………………
…………………………………………………………………………………………………

…………………………………………………………………………………………………

2. If you get a chance to improve or change the Bank’s employee retention scheme, what do
you do, what you will change or which factor/s do you improve? How?
…………………………………………………………………………………………………
…………………………………………………………………………………………………

…………………………………………………………………………………………………

3. Please share any suggestions or comments in the space provided below.

…………………………………………………………………………………………………
…………………………………………………………………………………………………

50
 Interview Questions

This structured interview questions to the key informants.

Background questions

1. Brief, about your background. (Education, previous work experience)

2. For how long have you been working with Awash/Wegagen/Lion?
3. Which post do you have?

Main Questions

1. Does the bank has employee retention program/strategy/policy?

2. How effective is it?

3. Have you measured staff retention rate and turnover rate?

4. How do you identify staff retention factors?

5. Have you conducted an exit Interview? Ex-employee interview/discussion, etc and how
frequently is it revised and included with the scheme to improve staff retention?

6. Which identified factors highly affect the bank’s staff retention?

7. How does the bank’s compensation, training, career development, work environment
work life balance affect the bank’s staff retention?

8. Please forward any other comment/suggestion on staff retention.

Many Blessings!

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 SPSS Output
Reliability

Scale: ALL VARIABLES

Case Processing Summary

N %
Valid 30 100.0

Cases Excludeda 0 .0
Total 30 100.0
a. Listwise deletion based on all variables in the
procedure.

Reliability Statistics

Cronbach's Cronbach's N of Items

Alpha Alpha Based on
Standardized
Items

.870 .896 30
Item Statistics

Mean Std. Deviation N

Stay with the bank 2.0000 .78784 30
I will work with this bank until retirement 2.8000 1.18613 30
I love the bank, I feel I belong here and no reason will change my decision 2.9667 1.09807 30
I will still choose to work in this bank although I got other offers 2.9000 1.06188 30
I believe the salary & benefit schema has enabled the bank to retain 3.5000 1.00858 30
employees
The bank offers high salary compared to other banks and or other industries 3.3000 .70221 30
Salary and benefit increase or decrease doesn't affect my decision to work with 2.5000 1.13715 30
the bank
The bank training programs are relevant with my job 4.0333 .41384 30
Training is provided on on-going bases (during changes in work system or 4.1000 .71197 30
technology) well planned and with qualified trainers.
The training delivered build excellent skills & give us confidence so that I want 3.8667 .81931 30
to work with the bank for a longer period
The bank offers career oriented staff development programs to all staff equally 3.1000 .88474 30
The bank’s staff development programs create high feeling of valued 3.4000 .67466 30
Internal staff are first priority in case of vacant higher positions/promotion so 3.9333 .90719 30
that I want to work with the bank longer

52
The bank’s working hours are in perfect balance with my personal life 3.2667 1.01483 30
My work load is reasonable and it doesn't affect my personal life 3.1667 .94989 30
I enjoyed working with this bank and I believe I will continue working for longer 3.4000 .93218 30
years
The work environment is conducive with adequate equipment, supplies and 3.6667 .99424 30
facility for my work
Employees treated fairly, my expectations are met (I get adequate support, 3.5667 .77385 30
there is open communication, participation in decision-making is highly
encouraged)
There is high cooperation between peers 4.1333 .93710 30
Compensation ranked 2.3000 1.57896 30
Training ranked 3.4000 1.22051 30
Career Development ranked 3.5667 .97143 30
Work Life Balance Ranked 3.5000 .97379 30
Work Environment Ranked 2.6667 1.39786 30
Average result of intention to stay/What is the employees’ decision on staying 2.8889 1.04068 30
longer with the organization?
Average result of compensation/Does the Bank’s salary/pay and benefits affect 4.0000 .56731 30
employee decision to stay?
Average result on training /How far employee training is affecting staff 4.0000 .56731 30
retention?
Average result on career development/How far career development affects 3.4778 .66484 30
staff retention?
Average result on work life balance/How far work-life balance affects staff 3.2778 .81218 30
retention?
Average result on work environment/How far the bank’s work-environment 3.7889 .65789 30
affects staff retention?

Summary Item Statistics

Mean Minimum Maximum Range Maximum / Variance N of Items

Minimum

Item Means 3.349 2.000 4.133 2.133 2.067 .298 30

Item Variances .898 .171 2.493 2.322 14.557 .244 30
Inter-Item Covariances .163 -.828 1.138 1.966 -1.375 .060 30
Inter-Item Correlations .222 -.519 1.000 1.519 -1.926 .074 30

Scale Statistics

Mean Variance Std. Deviation N of Items

100.4667 168.909 12.99649 30
53
Ranking/Mode
the Mode
Career Work Life Work Compensation Training
Development Balance Environment
Valid 234 234 234 234 234
N
Missing 0 0 0 0 0
Mode 3 3 1 1 4a

Regression

P-Plot
Model Description

Model Name MOD_1

1 Compensation
2 Training
Series or Sequence 3 Career development
4 Work-life balance
5 Work environment
Transformation None
Non-Seasonal Differencing 0
Seasonal Differencing 0
Length of Seasonal Period No periodicity
Standardization Not applied
Type Normal
Distribution Location estimated
Scale estimated
Fractional Rank Estimation Method Blom's
Rank Assigned to Ties Mean rank of tied values

Applying the model specifications from MOD_1

Case Processing Summary

Compensation Training Career Work-life balance Work

development environmen
t
Series or Sequence Length 234 234 234 234 234
User-Missing 0 0 0 0 0
Number of Missing Values in
System- 0 0 0 0 0
the Plot
Missing

The cases are unweighted.

54
 Estimated Distribution Parameters

Compensation Training Career Work-life Work

development balance environment
Location 3.1638 3.7764 3.3234 3.2949 3.9487
Normal Distribution
Scale .68934 .60819 .66048 .92336 .65383

Compensation

Training

55
Career development

Work-life Balance

Multicollinarity Test

Descriptive Statistics

Mean Std. Deviation N

Intention to stay 2.7080 .99532 234
Compensation 3.1638 .68934 234
Training 3.7764 .60819 234
Career development 3.3234 .66048 234
Work-life balance 3.2949 .92336 234
Work environment 3.9487 .65383 234
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 Correlations

Intention Compensation Training Career Work-life Work

to stay development balance environ
ment
Intention to stay 1.000 .445 .343 .469 .558 .270

Compensation .445 1.000 .229 .354 .302 .448

Training .343 .229 1.000 .489 .379 .439
Pearson Correlation Career .469 .354 .489 1.000 .505 .406
development
Work-life balance .558 .302 .379 .505 1.000 .377

Work environment .270 .448 .439 .406 .377 1.000

Intention to stay . .000 .000 .000 .000 .000
Compensation .000 . .000 .000 .000 .000
Training .000 .000 . .000 .000 .000
Sig. (1-tailed) Career .000 .000 .000 . .000 .000
development
Work-life balance .000 .000 .000 .000 . .000
Work environment .000 .000 .000 .000 .000 .
Intention to stay 234 234 234 234 234 234

Compensation 234 234 234 234 234 234

Training 234 234 234 234 234 234
N Career 234 234 234 234 234 234
development

Work-life balance 234 234 234 234 234 234

Work environment 234 234 234 234 234 234

Model Summaryb

Model R R Adjusted Std. Error Change Statistics

Square R Square of the R Square F df1 df2 Sig. F Change
Estimate Change Change
1 .716a .513 .479 .718 .431 34.513 5 228 .000
a. Predictors: (Constant), Work environment, Work-life balance, Compensation, Training , Career development
b. Dependent Variable: Intention to stay

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 Collinearity Diagnosticsa

Model Dimension Eigenvalue Condition Variance Proportions

Index (Constant) Compens Training Career Work-life Work
ation development balance environment
1 5.878 1.000 .00 .00 .00 .00 .00 .00

2 .047 11.128 .03 .08 .01 .00 .80 .01

3 .030 13.907 .04 .72 .12 .04 .05 .00
1
4 .019 17.411 .07 .03 .01 .84 .12 .12
5 .013 21.128 .26 .09 .10 .05 .02 .86

6 .012 22.422 .61 .08 .77 .06 .01 .00

a. Dependent Variable: Intention to stay

Residuals Statisticsa

Std.
Minimum Maximum Mean Deviation N
Predicted Value .7533 4.6443 2.7080 .65328 234
Residual 1.99581 1.91559 .00000 .75092 234
Std. Predicted Value
2.992 2.964 .000 1.000 234
Std. Residual 2.629 2.523 .000 .989 234
a. Dependent Variable: Intention to stay

58