Employee Turnover and Organizational Performance. A Case Study of Equity Bank Uganda Limited

Abstract

This study examined the effect of employee turnover on organisational performance in Equity Bank Uganda Limited. Specifically, it assessed the impact of different levels of employee turnover, the direct financial costs of turnover, and the effect of knowledge loss and skill drain on organizational performance. The study employed a case study research design. In addition, a mixed-methods approach was employed. This approach combined both qualitative and quantitative research methods to gather a more holistic perspective on the research problem. A total of 148 respondents were selected using a stratified random sampling technique, ensuring representation across different departments within the bank. Primary data was collected using structured questionnaires administered to employees of Equity Bank Uganda Limited. The collected data was analysed using descriptive statistics, correlation analysis, and multiple regression analysis. The study revealed a significant positive correlation between employee turnover and organisational performance (r = 0.408, p < 0.01), indicating that higher turnover negatively affects performance. Direct financial costs due to turnover showed the strongest correlation with organisational performance (r = 0.878, p < 0.01), highlighting the financial burden of hiring and training new employees. Knowledge loss and skill drain were also significantly correlated with organisational performance (r = 0.773, p < 0.01), suggesting that the departure of experienced employees disrupts operations. Regression analysis showed that direct financial costs (β = 0.703, p < 0.001) had the most substantial impact on performance, followed by knowledge loss and skill drain (β = 0.221, p < 0.001). To mitigate the negative effects of employee turnover, management should implement competitive retention strategies, such as career development programs and performance-based incentives, to reduce turnover rates. Financial management teams should allocate sufficient resources for employee retention to minimise excessive recruitment and training costs. Additionally, knowledge management systems should be established to facilitate knowledge transfer and minimise skill gaps when employees leave.