Putting people rst

Employee retention and organizational performance

usiness organizations come in all shapes and sizes and often exhibit more differences than similarities. But one factor common to all is that success is highly dependent on the skills, knowledge and experience of the employees within them. The late Ray Kroc obviously recognized this when pointing out that any company is only as good as the people it hires. Given his considerable involvement in creating the McDonalds fast food empire, it is pretty certain this American knew a thing or two about what makes folk tick.

Why retention is important

There is no doubt that attracting and retaining key employees should be a top priority for any company worth its salt. For many though, this issue lies well down the pecking order behind countless other things mistakenly deemed more important. Some organizations remain rooted in the Dark Ages by their belief that coercive tactics provide the best means of keeping the workforce on board. By adopting an iron-sted approach, such companies invariably succeed only in driving people towards the door marked exit. Whether it is down to naivety or obstinacy, or any other reason for that matter, the consequences of failing to implement effective employee retention strategies can seriously damage even the most procient of companies. Finding the right people is seldom easy and requires considerable investment in both time and money. When someone quits the rm, it means that the lengthy merry-go-round of identifying, hiring and training a suitable replacement has to begin all over again. Losing a talented employee can also negatively impact on performance. And if the individual concerned subsequently falls into the lap of a competitor, the rm is then handed a double whammy for its troubles. Amazingly, though, many senior managers simply bury their head in the sand and fail to appreciate the link between staff turnover and how their rm performs.

Measures to enhance worker loyalty

The more astute operators will be fully aware that a high turnover of labor is likely to have negative consequences. Leaders within such organizations appreciate that workers are most productive when they are content with their lot. Keeping employees sweet will therefore go a long way to helping any company to provide a quality service to customers and achieve its business goals. In order to improve the prospect of stability within the employee ranks and help keep talented individuals on board, rms must develop strategies that address:

DOI 10.1108/14777281111096816

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Rewards People like to know that their contributions are properly acknowledged and offering a generous pay and benets package is an accepted way for companies to fulll this desire. Rewards must, however, be attractive in order to satisfy and motivate the employee. Ensuring that pay levels are appropriate to rank is likewise important and can further blunt any notions that the grass may be greener elsewhere. This is important given the level of inuence co-workers can wield in relation to whether to stay or leave. Autonomy Granting workers some freedom to utilize their own initiative in relation to routine tasks is another effective motivational tool. Since individuals like to believe they have some degree of control over work-related decisions, it is also useful to involve them in the decision-making process. Such an overt expression of trust has the added bonus of making people feel more valued. Image Any organization must strive to ensure that it is viewed favorably by key stakeholders like employees. A positive reputation is a priceless asset that is difcult to acquire yet easy to destroy. One way of protecting this valuable resource is to deliver on promises made to the workforce about their welfare and working conditions.

Companies must also be frank and honest when an employee has to be red. Communicating the reasons behind the decision reduces the likelihood that others will become disillusioned as a result.

How caring pays for Zenith

Zenith Bank is one organization that clearly recognizes that business success is heavily reliant on the human factor. It is therefore hardly surprising to discover that this Nigerian company boasts a whole range of initiatives geared up to improving employee retention. These initiatives include:
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A strong focus on training and career development. Generous contributions to employee retirement funds that are far in excess of levels stipulated by the federal governments Contributory Pension Act of 2004. This simultaneously means that workers are asked to allocate a much lower percentage of their salary to the fund than is legally required. Provision of welfare services. Zenith offers transportation to and from work for its employees, who also enjoy access to the companys network of hospitals and medical centers. Communication. Employees are consulted about issues that concern them and the bank also keeps them informed about important issues through formal and informal communication channels.

Furthermore, the organization has devised and implemented various policies and practices which indicate leadership faith in the workforces ability, while other initiatives serve to portray employees as friends and partners. Actions always speak louder than words and Zenith remains rmly committed to guaranteeing that any promise made to its people doesnt end up becoming an empty gesture. As signals of intent go, perhaps the most telling of all is how the company distributes its capital resources. While a sizeable percentage of gross income is used to pay shareholder dividends, this is dwarfed by the amount allocated to employee remuneration.

For many though, this issue lies well down the pecking order behind countless other things mistakenly deemed more important.

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 Amazingly, though, many senior managers simply bury their head in the sand and fail to appreciate the link between staff turnover and how their rm performs.

Prioritizing employee interests and making rational decisions about retention strategies has paid off handsomely. Since its foundation in 1990 as a private limited liability company, Zenith has grown to become one of Nigerias leading nancial institutions. It was oated on the countrys stock market four years later and quickly became one of the most widely held stocks. The proof of any pudding is always in its eating and the organization has posted some impressive results. For instance, the ve-year period to 2005 brought signicant year-on-year increases in gross earnings and prot before tax, which helped Zenith to achieve its goal of delivering higher returns on shareholder investment.

Comment
Keywords: Employees, Organizational performance, Human resource management The review is based upon: Organizational retention strategies and employee performance of Zenith Bank in Nigeria, by Daniel Eseme Gberevbie. In this interesting piece, the author explores how employee retention impacts on how a company performs. He points out the signicant costs associated with high staff turnover and suggests various measures an organization can take to create a more satised and loyal workforce. An extensive case study of Zenith Bank serves as a valuable illustration of the many signicant points made.

Reference
Gberevbie, D.E. (2010), Organizational retention strategies and employee performance of Zenith Bank in Nigeria, African Journal of Economic and Management Studies, Vol. 1 No. 1, pp. 61-74, ISSN 2040-0705.

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