05.LINK BETWEEN LEADERSHIP & STAFF TURNOVER -LEADERSHIP STYLE EVALUATION -REFER TO ONE OF THE COMMERCIAL BANKS IN SRILANKA(UA BANK)

 

Leadership is one of important aspects in any form of activity that involves people. Leadership may make employees either stay or leave the organisation hence it becomes one of factors that influence employee retention. Organisations spend and invest a lot in their employees and this starts from recruitment and selection, training and development, compensation and other Human Resource Management functions. This entails that letting an employee leave your  organization is a costly decision one can ever make. Various studies done regarding to the matter and revealed employee retention by associating it with other factors such as salaries, working hours, training and development, working environment and promotion among others. This study examined the link between leadership and employee retention. The study recommends provision of training to bank managers and supervisors on leadership skills since managing and leading go hand in hand. It further reminds managers and supervisors to seek for feedback from their subordinates on how they perceive leadership styles used in respective banks and make improvements before the employees decide to leave. Leadership is one of important aspects in any form of activity that involves people. Leadership may make employees either stay or leave the organisation hence it becomes one of factors that influence employee retention thus it requires a very serious attention. Organisations are supposed to make sure that they identify and examine important catalysts for individual and organisational performance and ensure that they are proactively managed.

Objective of the article

This study aimed at examining the relationship between leadership style  evaluation and employee  turn over in one of Commercial Banks in Sri Lanka . Assume (UA Bank)

Employee retention

After recruiting an employee, an organisation has to ensure that the employee stays with the organisation to the maximum period of time possible. Employee retention involves a strategic process of ensuring that the organisation continually keeps their employees.. Ahmad and Azumah (2012) explain that the rate of retention is the inverse of the rate of employee turnover and expectedly if a relatively high number of employees stayed at post within a specified period then the retention rate is high and the turnover rate is low.  

                                              Who is a Leader 

“Leadership is a process of social influence, which maximises the efforts of others, towards the achievement of a goal"​

 

Key elements of this definition

•       Stems from social influence, not authority or power​

•       Requires others, and that implies they don’t need to be “direct reports”​

•       No mention of personality traits, attributes, or even a title; there are many styles,    many paths, to effective leadership​

•     It includes a goal, not influence with no intended outcome​

                                                                  Leadership Definitions

 

•     Leadership is the art or process of influencing people so that they will strive willingly and enthusiastically towards the achievement of the organisation's purpose.” Lynch, R. (2009, p. 600)

•     Leadership is a process whereby an individual influences a group of individuals to achieve a common goal.” Northouse, P. (2010, p. 3)

Leadership vs Management 

  

Leadership has many definitions but no real consensus; essentially it is a relationship through which one person influences the behavior or actions of other people. In everyday speech leadership and Management are used interchangeably. Management is about developing, planning and controlling of organizational resources while leadership is about the aligning of people to the expected outcomes of the vision. In order to lead one must be able to manage and hence the two are closely related (Gwavuya, 2011). Leaders use their influence factor to draw people towards achieving goals and to maximize the results in the organization. The influence factor does not mean the leader having power over the followers and controlling or directing them to the goals the leaders want to achieve, rather it is the leaders’ own actions that affect the followers behavior and actions. Generally, followers will emulate the leader’s acts and behaviors thus leading to the achievement of the desired goals (Mat,2008)

Common Leadership Styles

1. Coach - motivational
2. Visionary – progressed focused and inspirational
3. Servant – humble and protective
4. Autocratic – authoritarian and result-focused
5. Laissez-faire / hands-off – autocratic and delegatory
6. Democratic – supportive and innovative
7. Pacesetter – helpful and motivational
8. Transformational – challenging and communicative
9. Transactional – performance focused
10. Bureaucratic – hierarchical and duty-focused

.

 Current Leadership Style Seems in UA bank Seems Transactional Leader Ship

Definition 01: 

Max, W (1947) and then Bernard, B (1981)

This style is most often used by managers. It focuses on the basic management process of controlling,  organising, and short-term planning. 

Definition 02:

Burns, (1978) 

Stated that transactional leadership is given the power to perform certain tasks and reward or punish for the team's performance. It gives the opportunity to the manager to lead the group and the group agrees to follow his lead to accomplish a predetermined  goal in exchange for something else.

Conclusion

The transactional style of leadership is viewed as insufficient, but not bad, in developing the maximum leadership potential. It forms as the basis for more mature interactions,  but care should be taken by leaders not to practice it exclusively, otherwise, it will lead to the creation of an environment permeated by position, power, perks, and politics.

 Transactional Negative Impact to the UA Bank

 Factors Affecting Employee Turnover Intention

Staff Turnover ratio increased up to 14% in the year 2020. As per the discussion had with HR Managers it further increased up to 25% in 2021. 

Reasons  highlighted in exit interviews

•    Employees have an alternative  best opportunities with other institutions.

•   Organisation  is not satisfied with employee performance and makes the decision to     fire him or her.

•      Lack of supervision, poor support, and role conflict.

•     Lapses in Information sharing structure.

•     The heavy workload on a single employer.

•     Extra pressure is created on staff members.

Given below the employee   Base  ,recruitments and Resignation base related to  UA    Bank as of December 2020. 

Total workforce- 1275

Staff Recruitments -124

Staff Resignations  -185

Current Identified Issue Discussion 

 The given issues have been caused due to the Transactional leadership style of the organisation

•       Evaluation :

As per the discussion had with SMG HR  UA Bank declared that the staff turnover ratio further increased from 14% up to 25%  for the current year 2021. writers opinion on the issue reveal transactional leadership affects job involvement. This finding implies that the reward system applied by the company and appreciation of the achievements made by the employees contribute to the improvement of employees’ performance. Transactional leadership correlates with job satisfaction. From this finding, it can be concluded that job satisfaction can be achieved if the leader appreciates the achievements made by the employees by applying a reward system. Transactional leadership affects employees’ turnover intention. This condition explains that more intensive the implementation of the reward system and appreciation on employees’ achievements leads to employees’ tendency to stay at their jobs in order to perceive the achievement they made Most of the resignations was due to the insufficient salary package from the company and same was duly connected to the issues discussed above mentioned.

Proposed Leadership Style:

                           Transformational Leadership Style

Given below the issues and solution proposed to the UA Bank from the writer 

Issue From the Transactional Leadership	Solution from the Transformational Leadership
High Employee Turnover •    Lack of supervision, poor support, and role conflict. •   Lapses in Information sharing structure. •  The heavy workload on a single     employer. •   Extra pressure is created on   staff members. •  Insufficient remuneration package.	Idealised Influence/Individualised Consideration • Instill pride in organisational members for being associated with the organisation. •   Display a sense of power and confidence. • Go beyond self-interest for the good of the organisation.  •  Talk about their most important values and beliefs.   •Consider the moral and ethical consequences of decisions.   •  Emphasize the importance of having a collective sense of mission.
S   Suggestions: Well Planned internal or external employer survey to be conducted.(Ex-Grate Place to work) Soft Skills development, Operational efficiency and compliance. A blend of in-house and external training offerings to be commenced Management   to consistently work to develop their employees , establish clear goals and offer  consistent feedback throughout the year to ensure any under performance is detected and corrected early.​ Significant contributions are to be o highlighted and recognized  in order to motivate and retain the high performers, , and to develop leaders from within  company rules.  Forum to be introduced to collect & analyze  employer ideas.	Idealised Influence/Individualised Consideration​ Spend time coaching others.​ Consider employees as having different needs, abilities, and aspirations from others.​ •  Help employees develop their strengths and provide various formal training programs to improve the performance of duties.​

Transformational Leadership

This  leadership is concerned with the development of the fullest potential of individuals and their motivation toward the greater good versus their own self-interests, within a value-based framework (Mary, 2005 in Middleton, Harvey and Esaki, 2015). According to Odumeru and Ogbonna (2013) transformational leadership enhances the motivation, morale, and performance of followers through a variety of mechanisms. These include connecting the follower's sense of identity and self to the project and the collective identity of the organisation; being a role model for followers that inspires them and makes them interested; challenging followers to take greater ownership for their work, and understanding the strengths and weaknesses of followers; so, the leader can align followers with tasks that enhance their performance.  

Northouse (2001) as cited by Sureshi & Rajeni (2013) identified six quality of a transformational leader which are;

a)      Empowers followers to do what is best for the organisation; 

b)      Is a strong role model with high values; 

c)      Listens to all viewpoints to develop a spirit of cooperation; 

d)      Creates a vision, using people in the organisation; 

e)      Acts as a change agent within the organisation by setting an example of how to initiate and implement change; 

f)      Helps the organisation by helping others contribute to the organisation.

This theory aims at ensuring that there is unity and sense of belongingness to an organisation and therefore makes the organisation as a one happy family. Transformational leaders create friendly environment which creates a room for followers to interact with their leaders and hence be part and parcel of achievement of organisational goals. This theory satisfactorily explains the link between leadership and employee retention since employees tend to stay in an organisation where they are comfortable and feel attached to.  

 This study examined the link between leadership and employee retention. The study recommends provision of training to bank managers and supervisors on leadership skills since managing and leading go hand in hand. It further reminds managers and supervisors to seek for feedback from their subordinates on how they perceive leadership styles used in respective banks and make improvements before the employees decide to leave. Leadership is one of important aspects in any form of activity that involves people. Leadership may make employees either stay or leave the organisation hence it becomes one of factors that influence employee retention thus it requires a very serious attention. Organisations are supposed to make sure that they identify and examine important catalysts for individual and organisational performance and ensure that they are proactively managed.

Managers should also be regularly trained in order to improve their leadership skills because managing and leading go hand in hand. Bank managements should make efforts to seek for feedback from employees to see how they perceive respective leadership styles in banks. This will help to notice how comfortable or uncomfortable employees are with leadership styles used before they decide to quit.  

In reflecting the transformational leadership theory individuals who are offered leadership and managerial role have to ensure that they let employees be part and parcel of their leadership process. This means that employees have to be allowed to give ideas on how an organisation should achieve organisational goals. This is one of the best ways to win their heart and make them loyal to the company. This goes hand in hand with having an effective communication system that allows two-way flow of information; managers should not only focus on giving information but also they should seek feedback from their subordinates. 

Since commercial banks strive for both survival and sustainability, they should also have special strategies that will help in training and mentoring junior staff that are expected to take management and leadership roles in the future. 

Lastly, although leadership plays a significant role on employee retention, yet commercial banks have to pay attention to other factors such as financial incentives that are important in retaining employees. 

 Conclusion 

This study concluded that there is a significant linear relationship between leadership and employee turnover  in UA Bank in Sri Lanka. The findings of this study clearly remind managers and supervisors in  UA Bank to ensure that leadership is given special attention in order to retain their employees. The focus should not be on compensation, promotion and working conditions only but also how leadership is exercised since employees find it comfortable working for a bank that has good and friendly leadership. further to that  the UA bank should change their leadership style in to suitable one in order to retain their existing employees for the considerable period of time .

 Reference List;

UA Bank 2021. Investor Presentations | UA Bank . [online] Available at: <https://www.UA.com/investor-presentations/> [Accessed 20 December  2021].

Keating, S., 2020. Managing vs Leading – Part Eight. [online] Lead Today. Available at: <https://stevekeating.me/2020/02/24/managing-vs-leading-part-eight/> [Accessed 20 Decemer 2021].

Ketkin, I., 2016. What is Transformational Leadership - Irina Ketkin. [online] Youtu.be. Available at: <https://youtu.be/WI67yqo7bPY> [Accessed 20 December 2021].

Lynch, R. (2009) Strategic Management, [5th Ed].  New York: FT Prentice Hall, p.600

Northouse, P. (2010) Leadership: Theory and Practice, [6th Ed]. London: Sage p.3

Sayyadi, M., 2020. The Four Aspects of Transformational Leadership. [online] Blog.SHRM.org. Available at:<https://blog.shrm.org/blog/the-four-aspects-of-transformational-leadership>[Accessed 20 December 2021].

Indeed.com. 2021. What Is the Importance of Leadership?. [online] Available at: <https://www.indeed.com/career-advice/career-development/importance-of-leadership>[Accessed 20 December 2021].