Employee Retention in Financial Sector

Employee retention is a major issue for organizations, especially in today's competitive labor market. Human Resource Management (HRM) theories provide a theoretical basis to comprehend how employees can be retained and organizational performance enhanced. Several basic HRM theories have evolved over time to meet the need for better employee engagement, satisfaction, and retention. In this paper, we will examine some of the major HRM theories most directly linked with employee retention and their practice implications. 1. Herzberg's Two-Factor Theory Herzberg's Two-Factor Theory, or the Motivation-Hygiene Theory, emphasizes that both worker satisfaction and dissatisfaction are influenced by two sets of different factors: motivators and hygiene factors. Motivators: Internal factors, such as achievement, recognition, responsibility, and personal growth, which can lead to job satisfaction and high performance. Hygiene Factors: These are external factors like pay, conditions of...

Employee retention is not anymore a secondary HR concern. It is a core strategic priority in the banking sector. Banks and financial institutions in a competitive knowledge environment are dependent on experts for innovation, client trust, and regulatory requirement fulfillment. With every favorable compensation, most businesses have high employee turnover rates, particularly within young professionals. This article examines how the HRM theories can be appropriately applied in the financial industry to create sustainable, long-term retention strategies. 1. Maslow’s Hierarchy of Needs (1943) Maslow's theory categorizes human needs into five levels: Physiological (wage, rest) Safety (employment security, health benefits) Belonging (colleague relationships, team culture) Esteem (status, recognition) Self-actualization (growth, purpose, autonomy) In the finance sector, companies are more likely to meet lower levels (wage, benefits) but fail to meet workers' hi...

The financial sector consisting of banks, investment firms, insurance companies, and fintech companies is at the heart of each economy. It boasts the finest talent with the expectation of paying them high remuneration, good reputation, and speed-packed environment. Unfortunately, it has become more challenging to retain them. This piece examines the most significant challenges banks and other financial institutions face retaining employees in light of competitive remuneration and benefits. 1. Long work hours and heavy stress Finance professions, particularly investment banking, auditing, and consultancy are well known for demanding long hours, close deadlines, and high client expectations. Junior investment bankers, for example, work 80–100 hours a week under stress. This leads to: Physical and emotional exhaustion Burnout that lowers productivity Premature resignations, particularly by younger employees A McKinsey (2022) study found that 40% of early-career finance professionals...

Most HR programs have a strong focus on keeping employees for the long term. After all, high employee retention is often considered a sign of a healthy, successful organization. But is it always best to keep employees.at any cost? Retaining high-performing, motivated employees is essential, but retaining every single employee is not always the best choice. A bit of turnover can be a good thing for the business 1. Too Much Retention Can Limit Fresh Thinking When the same employees hold the same jobs for too long, they sometimes stagnate and become opposed to change. In industries like finance or tech, where innovation and adaptability are essential, this can be especially perilous. Unless somebody arrives to shake things up, companies lose out to rivals who are constantly injecting their organizations with fresh blood and fresh skill sets. 2. Not Every Employee Should Be Retained Sometimes organizations focus so intensely on retention that they end up keeping bad performing ...