The Effect of Low Employee Turnover Ratio on Bank Profitability in Turkey

The Effect of Low Employee Turnover Ratio on Bank Profitability in Turkey

Hasan Dinçer, Ümit Hacıoğlu, Türker Tuğsal
DOI: 10.4018/978-1-4666-6635-1.ch019
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The purpose of this chapter is to emphasize the effect of bank employee turnover on profitability. Researchers so far have commonly studied employee turnover, job satisfaction, and commitment. The current research intends to fill the gap by focusing on the relationship between employee turnover and profitability. In this chapter, firstly, employee turnover, its terminology, and the nature of turnover are defined. This relationship in the banking sector is analyzed and three private banks in Turkey are scrutinized. The main argument of the research is that there is an adverse relationship between employee turnover and bank profitability. Conversely, the results of the study do not thoroughly support the assumption. As a result, findings show that banks minimize the effects of economic crisis by dismissal and not recruiting new employees to replace a quitting worker or recruiting for a new position.
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The studies presented below, taken from the literature, have examined the financial and non-financial parameters on bank performance.

Preeminent studies on bank performance were attached to financial parameters whilst the slender number of studies have been attached to non-financial and behavioral competent in business environment in banking sector (Faberman & Nagypal, 2008).

Employee based parameters on bank performance studies cover employee performance; turnover; neural network solution; satisfaction; loyalty; commitment and profiles; turnover intentions; job satisfaction and employee turnover continuance (Ramaseshan, 1996), (Sexton et al., 2005), (Arndt et al., 2006), (Yee et al., 2010), (Nadiri & Tanova, 2010), (Yi et al., 2011), (Stanley et al., 2013), (Wallace et al., 2013), (Boichuka & Menguc, 2013).

Key Terms in this Chapter

Firm Profitability: The result of the subtraction of cost of goods sold from sales revenue. Profitability can either be gross or net. Gross profit includes general expenses like Research & Development, Sales & Marketing, General & Administrative.

Organizational Commitment: The employee's feeling of attachment to the organization is called organizational commitment. The factors such as role stress, salary, social rights, empowerment, organizational trust, job insecurity, organizational justice and distribution of leadership may have been connected to an employee's sense of organizational commitment.

Banking Sector: The economical facility area of banks; that are financial institutions which accept deposits and passes those deposits into lending activities.

Service-Profit Chain (S-PC): The internal service quality which is related to employee satisfaction; and employee satisfaction is connected to employee retention and employee productivity.

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