Compensation System and Employee Turnover at Bank Alfalah

Abstract

Turnover is a major problem faced by the banking sector. High costs are associated with training and development of employees and when employees leave the organization, it is a very costly affair. It is therefore very important to make sure that organizations are able to retain employees so that the costs linked with turnover are kept at a minimum. Bank Alfalah is one of the leading banks in Pakistan. It has a very diverse range of products and services aimed at different segments of the market. However despite achieving excellence in its operations in Pakistan, it is faced with the ugly problem of employee turnover. In recent times, the turnover has become a serious problem for the top management of the bank as it is proving very expensive. This research helps to decipher the reasons due to which employees are leaving Bank Alfalah and joining other banks. Amongst these reasons the most important is the ineffective compensation system. The researchers have found out that many employees Bank Alfalah leave for just a minor monetary gain. Hence the Bank needs to come up with a proper retention program through which they will be able to hold on to their key employees. Other recommendations given by the researchers include the use of realistic job previews to prevent job dissatisfaction, a career orientation and career development program and most important a more effective compensation system which especially caters to the problems of having market competitive salaries and timely delivery of increments.