EFFECTS OF HUMAN RESOURCE MANAGEMENT PRACTICES ON RETENTION OF EMPLOYEES IN THE BANKING INDUSTRY IN ACCRA, GHANA

Abstract

Human resource is the most valuable resource in every organisation and they contribute immensely to organisations the world over. It is therefore imperative for organisations to institute appropriate measures to retain adroit employees. Effectual HRM practices can help organisations to retain their valued employees. The banking industry in Ghana particularly suffers the risk of labour turnover due to intensive competition. This empirical study examined the effects of HRM practices on the retention of employees in the banking industry in Accra, Ghana. Specifically, it looked at how compensation, career management, work-life balance and employee engagement impact on employee retention. The study also sought to examine the moderating effect of job satisfaction on the relationship between HRM practices and employee retention. The study followed an explanatory cross-sectional survey design and was undertaken in the Accra Metropolitan Area. The study was carried out in 13 out of the 26 banks in Ghana. Both Ghanaian/local and foreign banks were included in the sample. Stratified random sampling was used to select a sample size of 342 employees from the various banks. Both descriptive and inferential statistical techniques were used to analyse the data. A Binary Logistic Regression analysis was conducted to test how well the HRM practices could predict employee retention. The findings of this study highlight the fact that HRM practices such as compensation, work-life balance and employee engagement are vital to employees and indeed influence employee retention in the banks. Also although work-life balance and employee engagement are recent additions to research on HRM issues, they both significantly predicted employee retention. However, surprisingly career management did not have a significant effect on employee retention. It was also evident that job satisfaction could not moderate the interaction between HRM practice and employee retention. To improve employee retention in the banks it is recommended that, even in the face of competition the banks must pay attention to its human resource so that they can achieve a competitive advantage through them. The banks should provide some level of flexibility because work-life balance appears to be important to the employees. Furthermore, it is recommended that employees should be given some level of empowerment and challenging assignments that will require them to make use of their full potential. Also, the banks should collaborate with universities and other academic institution for research on problems confronting them so as to derive the best solutions for human resource management. In future, other researchers should undertake longitudinal studies to assess the practices that affect retention. Also future studies should employ mixed methods in order to obtain greater insights into the specific HRM practices especially from the perspective of HR managers of the banks.

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