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T itle: Towards a comprehensive understanding of employee retention…
Title: Towards a comprehensive understanding of employee retention strategies for generational Cohorts of Banassurance in the Banking industry
Research Background
The banking system is liquid for an economy, the banks are significant players in the global economy and strive for profitability, customer satisfaction, and a solid reputation (Paun, Musetescu, Topan, & Danuletiu, 2019). Since 1957, the Malaysian banking sector had suffered recurring volatility as a high number of low-capital financial deposits taking businesses went out of business frequently during recessionary economic years, thus periodically eroding the banking sector. The Malaysian banking sector has seen the country’s economic cycle up and down during the last six decades yet it still supports the robust growth (Chung & Mohd, 2018). Banking has been transformed during the financial crisis into a resilient and competitive industry that includes undergone major cost-cutting and mergers acquisitions of some providers for them to survive (Pozza, Brochado, Texier, & Najar,
2018).
Banking services have been characterized by intangibility, perishability, and nonstandardized service delivery to customers, this can be assessed only during or after the service delivery has taken place (Suki, 2018). The banks have increased their focus on customer retention rate and increased customer product holding, this has impacted the banks’ organizational performance and profitability. Ladhari et al. (2011) described that a five per cent improvement in customer retention could result in an eighty-five per cent growth in a bank’s profitability (Jahan, Hossain, & Fang, 2020). In this circumstance, financial services providers are increasingly offering integrated services, such as savings, credit, insurance, and investment (Estrella-Romon, 2017). Due to the competitive climate created by the financial convergence phenomena, one bank can now provide all types of financial services (Suki, 2018). In other words, it is called a one-stop financial service that bank customers can get all the financial products from the Bank.
Banking exponential has provided various types of channels to elevate the services to their customers, including automated teller machines (ATM), computers’ point of sales (POS) devices, and mobile banking. These phenomena have involved a continuum of physical platforms to electronic and also become a norm in the financial services industry (Suki,
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2018). Kumar and Venkatesan (2005) claim that customers who buy across multiple products have a significantly higher value and stickiness with the Bank as compared to customers with a single product (Pozza, Brochado, Texier, &
Najar, 2018).
In an environment of high uncertainties and looming crises, banks have diversified into wealth management services, they collaborated with investment fund houses and insurance companies to distribute their products. The revenue is deemed as noninterest income (NII) or fee-based income (FBI). With the Malaysian government’s recent economic transformation initiative, the wealth management sector has become complex and varied financial needs of customers, which may raise the demand for more superior and cutting- edge retail financial services (Suki, 2018).
Importantly, the banking industry highly relies on knowledge. Henceforth, knowledgeable and well-equipped employees are necessary to run the organization. When employees have the necessary knowledge, skills, and competencies, they can be turned into human resources (Ray, Bagchi, Alam, & Luna, 2021). The changes in the banking industry to wealth management had created the requirement for skills and transaction systems that differ from conventional lending. The banks have successfully integrated their workforce, financial assets, and other tangible assets as a result of these new technological and organizational problems developed. They have also improved the sales personnel’s ability to deliver professional services in managing the customer account portfolio (Wu & Chen, 2016).
In tandem with the new phenomenon, the banks have transformed the sales culture from a strictly transactional culture that involves attracting, preserving and improving customer relationships into a proactive cross-sell and up-sell of products to their customers. This has emphasised the importance of the sales personnel factor, they are required skilful and experienced to carry out the advisory and consultative roles, such as customer orientation, knowledge, and credibility as significant influences on customers’ intention to cross-buy and avoid any inappropriate selling or mis-selling to customer (Yu, Ruyter, Patterson, & Chen, 2018).
The banking industry is highly regulated, so it is imperative to be abreast and adhere to a code of ethics and compliance with regulations and guidelines provided by The Malaysian Central Bank or Bank Negara Malaysia (BNM). In this context, wideranging initiatives in human capital development and talent have also been launched to fulfil organizational performance goals. The quality and productivity of the workforce represent a key component in the development of a modern and dynamic financial system (Wu & Chen, 2016). As the banking industry has a large impact on the economy, the banks’ performance depends heavily on their talented, and energetic employees. Therefore, a dynamic, competent, and talented employee that can accomplish an organization’s ultimate purpose will be ensured through the effective and efficient use of human resource management strategies (Ray, Bagchi, Alam, &
Luna, 2021).
Human resource management (HRM) has been classified as the most important factor for an organization to determine its viability and growth (Ray, Bagchi, Alam, & Luna, 2021). Human resources apply to every industry regardless of the organization’s size, the organization will have good prospects thanks to a well-designed and maintained HRM system (Nabetin & Pabangou, 2020). The process of hiring, training, appraising, and
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compensating employees is known as human resource management, Dessler (2020) claims this also involves addressing their labour relations, health, safety, and fairness problems. Armstrong (2006) asserts the most significant asset in HRM is the contribution of the workforce to the achievement of the goals of the organization, as such, it has been part of the strategies and coherent approach to management (Ray,
Bagchi, Alam, & Luna, 2021).
De Cieri and Kramar (2008) divided the HRM function into six aspects, such as talent acquisition, job analysis and designs, academy development, compensation scheme, performance management, and finally human relations. Huselid (1995) classified HRM practises into two categories – improving skills and enhancing motivation. To a large extent, Alnaqbi (2011) affirmed that the hiring, training, and development of skills for employees have a financial impact when they are turnover. In the context of motivation-enhancing activities, the productivity of sales personnel can be determined through performance appraisal and compensation (Fahim, 2018).
HRM is conceptually defined in different ways. Osman et al. (2011) claim HRM as systems, procedures, and regulations that affect how employees act, feel and perform. Armstrong (2009) described HRM as a comprehensive strategic approach to hiring, fostering, and supporting employees. Lado and Wilson (1994) also describe HRM is to accomplishing organisational goals, it refers to the unique interconnected actions and procedures utilised to attract, develop, motivate, and retain talent. Dessler and Tan (2006) defined it as creating the policies necessary for successfully and efficiently utilising talent to meet organizational goals as the responsibility of HRM. Williamson et al. (2008) also agreed that HRM provides procedures and guidelines for managing employees and motivating them to apply their skills to fulfil their responsibilities in accomplishing the goals of the organization (Shehata, Montash, & Areda, 2020).
In other words, HRM can be classified as responsible for the management to carry out policies and practices in achieving the organization’s missions while attracting and retaining talent. Through the intentional placement of highly qualified and committed personnel using a variety of integrated cultural, structural, and HR strategies, the organization maintains its competitive edge. There are three main dimensions of HRM which are incorporated knowledge and skills development practices (such as hiring and selection, training academy, and communication), motivating employees (such as incentives and rewards, performance management systems, and involvement in profitability), and practices for empowering (such as increasing job responsibilities, involvement in decision- making, information sharing, and communication) (Shehata, Montash, & Areda, 2020).
Human resources have become an essential asset in today’s organizations. Talented and competent employees can determine the organization’s strategic goals and success. Rosenzweig and Nohria (1994) describe HRM practices are to cultivate the specific culture and conventions of local market circumstances. In this context, the bank management must be skilled and competent to establish ambitious objectives, plans, and guidelines to manage it, especially in the highly regulated banking industry (Shehata, Montash, & Areda, 2020). The researcher understands one of the major factors that significantly affect employee turnover is HRM practises (Basnyat & Lao, 2019). Therefore, effective HRM practices, such as hiring the right staff, offering competitive compensation and benefits packages, and effectively resolving employee grievances, produce positive employee outcomes that raise employees’ levels of commitment and trust in the organization. This enhances the
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organization’s overall service quality and brand image, and to a large extent, it may lower employees’ intentions to leave the organization (Basnyat & Lao, 2019).
For many years, interest in employee job satisfaction has been a hot topic. Employers could guarantee employee performance and retention if they were aware of the elements influencing employee satisfaction. In 1976, Locke showed when an employee’s pay covers their basic living expenses, they tend to be satisfied with their pay and jobs, which lowers the intention to leave their jobs, based on the research on the nature and causes of employee satisfaction that may have an impact on turnover of employees’ pay and satisfaction (Coudounaris, Akuffo, & Nkulenu, 2020). Lately, the strategic management concept is increasingly popular in the organization.
Strategic human resource management (SHRM) emphasises the expanding transition in the HRM function from being prescriptive, reactive, and administrative to descriptive, proactive, and executive. The concept behind SHRM is how HRM tasks including recruiting, choosing, educating, and rewarding personnel should be effectively linked with the organization’s business plan (Fahim, 2018). Therefore, Boxall and Purcell (2003) argue the corporation must maintain the link between HRM and SHRM in its long-term business objectives. In other words, the human resource professional is referred to as a strategic business partner in SHRM, which is the comprehensive set of human capital management behaviours or functions (Fahim,
2018).
In modern organizations, the paradigm in managing the human component is said to be SHRM. A comprehensive set of human resource policies or procedures must be developed and put into place to ensure the organization’s human resources contribute to the attainment of its organisational goals. Armstrong (2006) divided SHRM into three categories: people who carry out the strategic plan, a systematic approach to be followed by the organisation, and human capital as the main focus of competitive advantage for the organization. SHRM is generally responsible for determining the efficiency of the company in carrying out the intents and strategies, including more particular elements of people management in the learning and development (Fahim,
2018).
To achieve their objectives, banking institutions heavily rely on the calibre and proficiency of their personnel. In other words, human resources determine the organization’s success and performance based on employees’ skills, competence, and motivation. Therefore, organizations are to implement human resource practices to support maximizing employees’ competencies, attitudes, and job commitment in the organization. When compared to their competitors, banks’ organisations can be distinguished by their intelligence, flexibility, and competence created by HRM. It helps organizations implement policies and practices for identifying, selecting and training qualified employees. Nancy (2013) describes the employees will make every attempt to work together within their bank’s resource pool (Cherif, 2020).
The individual’s financial or monetary condition will be impacted by the variety of options for financial or monetary actions (Safari & Sesaiah, 2017). The financial decision may take into account personal debt management, risk management, insurance planning, investment planning, retirement planning, tax planning, and even estate planning. As professional financial service providers, they need to equip their sales personnel with in-depth
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knowledge and skills that can provide customers consultation to meet their financial objectives, such as wealth creation, wealth building, and wealth distribution.
In sum, a sales personnel’s responsibility is to assist the customer in making decisions by explaining, recommending, and providing the available options, customer-tailored packages, and action plans. HRM practices can be a collection of internally consistent and coherent procedures intended at fostering and promoting employee competence, motivation, and commitment to success in the banking industry. Importantly, the sales personnel can achieve organisational performance and achieve profitability for the organization.
Problem Statement
The turnover rate of Bancassurance sales personnel has not been attenuated since it was accredited in the banking industry. This phenomenon is affecting the costs of the banking industry’s retention programs. The ongoing rehiring of new sales personnel is not an optimal solution. It might tarnish the organization’s positive reputation. Additionally, theconsequences of high turnover of sales personnel may lead to customer information leakages, staff morale, organizational performance and profitability (Chiat & Panatik, 2019). The turnover can also affect the levels of service quality to customers and customer experiences (Basnyat & Lao, 2019). Unsatisfied customers can lead to customer termination of policy contracts and loss of non-interest income or fee-based income to the bank and the insurance company. Perhaps, it has negative impacts on other employees’ workload and interruption in the workflow (Oruh, et al., 2020). Moreover, theBancassurance sales personnel’s mobility is high and job-hopping is not uncommon (Siew, Wong, & Lim, 2021). In other service organizations, it was observed that the Generation Y and Z employees’ turnover intentions differ (Abate, Schaefer, & Pavone, 2018). There is no generation cohort divide in the turnover phenomenon. However, previous studies indicated different generation cohorts hold different work values and attitudes (Samuel & Rani, 2019). Reconciling the ability to retain sales personnel becomes a major challenge for Bancassurance in the Malaysian Banking Industry.
Several significant research questions for the study were based on the problem statement as follows:
RQ1: What factors influence the performance of Bancassurance sales personnel and organisational outcomes?
RQ2: How are the impacts if individual sales personnel variables are not interrelated towards Bancassurance sales personnel and organization outcomes?
RQ3: How are the external environment influence the sales personnel variables that will affect Bancassurance sales personnel and organization outcomes?
RQ4: How can the effectiveness of sales personnel variables be measured?
RQ5: To what extent job satisfaction mediates the relationship between sales personnel variables and Bancassurance sales personnel and organization outcomes?
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RQ6: To what extent do generations Y and Z moderate the relationship of sales personnel variables with Bancassurance sales personnel and organization outcomes?
1.4 Research Objectives
This study seeks to provide an empirical justification to address the problem statement of the study:
RO1: To establish the influencing factors of Bancassurance sales personnel and organization outcomes.
RO2: To analyse the impacts of individual sales personnel variables if not interrelated on Bancassurance sales personnel and organization outcomes.
RO3: To analyse the influence of the external environment on sales personnel variables towards Bancassurance sales personnel and organization outcomes.
RO4: To investigate the variables associated with the effectiveness of sales personnel variables that impact Bancassurance sales personnel and organization outcomes.
RO5: To investigate if job satisfaction is the mediation effect on sales personnel variables and Bancassurance sales personnel and organization outcome.
RO6: To investigate if generations Y and Z are the moderating effects on Bancassurance sales personnel and organization outcomes.
a. Analyse the errors in the thesis Chapter 1; Title, Research Background, Problem Statement, Research Question based on the above excerpts. Justify your response.
b. Draft out a possible statement for scope of research and limitation.
