2011
Submitted By:
Faisal Shakeel 10108
Imran Rasool 10112
Babrus Ali 10145
Rana Asif 10118
[
HOW FLEET BANK FOUGHT
EMPLOYEE FLIGHT
]
Case study WAC, Analysis and Recommendation
Submitted To:
Sir. Ahmed Fareed
How Fleet Bank Fought Employee Flight
Date: 16/11/11 Page 2
Table of Contents
Summary ... 3
Introduction and Background: ... 4
Issues, Challenges and Causes: ... 4
Solution: ... 6
Recommendations: ... 8
Conclusion: ... 10
How Fleet Bank Fought Employee Flight
Date: 16/11/11 Page 3
Summary
FleetBoston Financial is the U.S based company who expand its business through
mergers and acquisitions. With enjoying constant growing assets, business and handsome profits, company is facing the issue of high turnover rate despite having a narrow labor market.
However, the situation of employees is also discussed and the reasons of their low performances and turnover are extracted. Fleet realized and faced different causes and challenges, after
implementing Mercers methodology, for high turnover. With gradual analysis and
implementation of different situations, Fleet came across towards some realities which they not aware off before. It came in front that employee’s attributes has the major combined affect on turnover and afterwards, employee is affected by organizational characteristics and practices. There are few important checks that organization has to follow for employee’s performance and awards on the basis on their results which motivate them to stay. On the other hand there is a basic need of proper training and development for employee’s career and their work load should be kept in balance. There should be lateral communication process among top to the bottom of the organization so problems and issues can be identify at the time of their generation and resolved at the same time. Constant feedback is yet another aspect through which we can get updated and in touch with employees. It is realized that promotion and development of a strong organizational culture is immensely required where employees can share their views and ideas so they feel the part of the family and get associated with the organization; which ultimately
provides the desire outcome of low turnover rate. The need of flexibility in job and timing is also being addressed; just as shifts timings should be rotating and promotions should be in place internally after every 6 months or year for the top 3 employees or on their monthly evaluation, without any biasness.
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Introduction and Background:
What are the company’s main assets, is it their instruments and tools or image to consumers or constant profitability or employees? If we ask this question to thousands owners, most of them would answer employees. Employee’s performances always play a critical role in any organization’s success or failure. If they are happy and satisfied, they would lead, fight and work hard to achieve company goals and targets but meanwhile if they are not satisfied, they would end the company’s desires in a disastrous way. It is a company’s responsibility to manage, retain and satisfy its employees in order to get desired outcome and use its human asset as its competitive advantage.
FleetBoston is pioneer in the field of human resource management. As with the increasing number of acquisitions, mergers and employee’s turnover, Fleet managed its organization structure through basic functions of human resource management with the help of internal and external company analysis and thorough measurement labor force behavior.
FleetBoston bank is a financial company who runs and constantly expands its business by providing financial assistance and getting a merger or an acquisition. FleetBoston Financial was the United State’s seventh largest financial company but after the acquisition by Bank of
America, it became U.S’s second largest financial services institute having 60,000 employees in total.
In era of 1994 to 2003, Fleet kept growing immensely through acquisition, simultaneously, with increasing numbers of workforce and assets. Fleet realized that its major issue is high turnover rate which they resolved through different techniques discussed in the case.
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Issues, challenges and causes are described and explained below:
1. One of the major issues of Fleet was high and increasing turnover rate as it reached to the level of 25% and 40% in some departments, like customer service representatives, annually. Despite the fact that Fleet is operating in tight labor market, it was still a high rate of turnover. In 1997 when the company held a survey and conducted interview sessions with employees, they found that the reason of high turnover is insufficient pay rates and heavy workloads. But, later they found that what employees says, does not reflect their practices. In other words, what employees think that certain things can motivate their behavior, does not match with the actual motivation indicators? So it was a challenge to identify the actual reason of high turnover.
2. Job security was one of the basic causes of high turnover. Due to constant merger and acquisition, employees saw it as a major threat for their job because of large number of applicants and workforce available. Employees therefore, prefer to switch to external opportunities in time, in order to do not get layoffs or termination.
3. Employees attributes was the major cause of turnover and retention also. These attributes includes promotion, experience, job status, pay growth, and performance appraisal. Fleet analyzed reason of leaving was high performing employees were remained constant at their current position for past two or three years and students who completed their undergraduates or graduates degree. They were neglected and not supported by career development facilities.
4. Pay level had smallest affect on turnover but it became one of the largest causes when it comes to the increment of pay levels in previous years. Employees look for incentives, perks and other financial time to time rewards to keep them motivated.
5. Yet another issue which Fleet faces and realized that management stability was a tough situation to handle. Increase in turnover of managers and supervisors results in high number of employee’s turnover. If managers and supervisors leave, they expect their loyal employees to also leave. If not, than subordinates might think that there is more outside opportunity due to which they are leaving and so they should also avail those opportunities. Or subordinates having close attachment or other professional attachment
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to supervisors will lead to dissonance and disconnection in the group or department which ultimately results in subordinate’s turnover.
6. Revision of hiring criteria was also required as there were some loop wholes needed to be fulfilled and despite of heavy investment in this area, there needed a strategic
development and implementation of new ideas and strategies. As there was major numbers of newly hired employees were getting out of the organization and were switching off.
7. There was a challenge to bring new strategies and ideas to retain employees, so they can be get motivated and do not think about leaving. Few little steps in small areas which mainly get neglected but has a combined affect on turnover rate and workforce performances.
The main issues and causes of high turnover which needs immediate corrective actions includes motivational aspects of an employee; how he get motivated towards organizational goal and retention, and other employees attributes which been disturbed and need some serious way to solve out. Organizational characteristics and practices come on second step as some employees prefers flexible timing, balance workload and balance work life, and also does include
innovation in office work.
Solution:
Solutions adopted by Fleet Bank are scheduled in same sequence as issues and challenges are listed above:
1. For tackling high turnover rate and the issue; that what an employee say is different to what he actually do, Fleet used Mercer’s methodology to determine and analyze workforce characteristics and other factors which manipulate employee’s behavior and decision whether to stay or leave. They collected the data form different departments and a lot them key variables which identify and help in manipulating results and apply the conditions on employees and saw their responses; similarly to what consumer responses when he is obliged to make trade-offs between decisions.
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2. On job security Fleet provided solution through mercer’s observation that employees prefer to get experience to make them more marketable. So in this case Fleet decided to provide career development and provide career opportunities within organization, and provide them a reason to stay as they are being provided by a platform where they can enhance their experience and mobility. Fleet decided to compensate those employees who take risk to stay with the company in the case of merger and acquisition.
3. Instead of providing compensation or pay increment, Fleet provided a greater opportunity to built personnel asset by developing experience through internal job motilities. Thus, this provides as a greater saving for future instead of having temporary benefits. For those employees who recently completed their graduates and undergraduates studies, Fleet told their managers and supervisors to make sure these employees do not leave and engage them by providing them greater career opportunities within organization and through orientations, job fairs, and promotions.
4. On the issue of turnover due to no encouragement on performances and constant pay level over the months/year, Fleet provided constant pay increase to those employees who perform constantly and show their worth in the organization.
5. Fleet realized that management stability is very necessary and provided the solution that to do not let subordinates to attach with one manager or supervisor but let them attach with every one and share equal sense of respect, love and encouragement among them. Fleet decided that if there is need for replacement, than replace one manager/supervisor with other well know personality who is same popular and familiar with employees. 6. On hiring criteria, Fleet discovered that it is good to have those new comers who have
past stability and has spent more time on there previous job because it reflects towards longer future stay from an employee.
7. Fleet brought new ideas and plan which they decided to implement strategically and slowly with the analysis of their results, includes:
a. Manageable workload on new comers in first six months. b. Constant feedback process.
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d. Diversity of rewards to diverse workforce; which increases loyalty and eliminate discrimination.
e. Special payments for those employees whose referrals stayed for at least 6 months.
Recommendations:
Fleet Bank took excellent steps towards improvement which is being also reflected through results but if I were at there position I would have taken/suggested few more steps and provides addition to already taken steps. These steps are discussed below:
1. First of all, after reading the case and having a critical analysis, I have found that Fleet Bank lacks the organizational culture which is the key element and basic fundamental of ever grooming organization. There is no sense of loyalty, love, ethical responsibility; as being an old employee or even the new one who take some good lessons through
orientation and personnel development, so it is important to bring that kind of culture into the organization where there is not always the instrumental reason for staying in the organization but there can be self attachment with the organization. But for this
organization has to take few steps to bring this aroma into the roots of the organization. 2. Appraisal and awards are the fundamental expectation of every employee. It is essential
in a business to motivate employees with constant appraisal and awards. Perks, commission and salary increment are always motivating substance through which improvement is guaranteed in many situations. Some employees preferred self-actualization and self esteem. If in an organization there encouragement given to employee in the shape of employee of the year or worker of the month, it would create desire to work and stay in the organization.
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3. The possible solution to get best out of nothing is to motivate employees by giving moral boosting lectures and orientations. There ethical
responsibilities should be delivered and realized to them through workshops or training seminars. Through these kinds of activities we would see a push in employee’s performance and loyalty; at least for a time being. These sessions should be scheduled not only once but on continual basis.
4. Planning needed everywhere from recruiting to firing, as constant review of all policies and strategy is needed. Training of fresh people and molding them to required desires is long term solution and beneficiary as well. Company should focus on fresh people as well and inherit loyalty in them and give them a sense of strong organizational culture. We need to show them that company posses a strong culture of loyalty, love and cohesiveness/bonding for employees and expect the same from them. We should try to bound them by proving employee development and career orientation, and with constant revision of there basic responsibility; which is to be loyal to the company. We need to keep in mind that, are we planning, doing, checking, and adjusting on continual basis? And we need ourselves updated all the time with molding and changing behaviors of employees.
5. Communication, provision of 360 degrees feedback, employee’s performance evaluation and parallel motivation should not be breached at any stage of the organization.
Performance charts should be displayed, so employees can get motivated and excited and always be in the competition in order to get recognized by the organization.
6. One last step should be taken that employee’s health and career plans should be introduced or provide some kind of special benefits through which they always get associated with the organization; such as life/body insurance, employee’s child educational plan, pay increment on marriage or official holidays for one week on marriage and so on… This will create a belief that company does care about their loyal and good performer employees and there is a give and take on both ends.
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Conclusion:
If you are in a business then you have to carry one the rule of give and take. To manage the turnover rate, company has to recognize and appreciate their employees and take care of them. Motivation is a key to success whether it is for the owner or employee. So is the case with Fleet Bank. For retaining employees and keep running a successful business, a company has to have a keen focus on all functions of human resource; as they are the company’s assets, from staffing, training and development, motivation to maintenance, company has encourage all the functions to get the desired outcomes. To understand employee’s behavior it is not always necessary to conduct surveys or interviews, sometimes you have to go beyond this and with methodologies like mercer’s, you have to analyze, think critically, plan, do, check and implement strategically in order to get desired outcomes.
References:
Nalbantian & Szostak, (2004), How Fleet Bank Fought Employee Flight, Harvard Business Review.
Azhar, I. &. (n.d.), Introduction to Human Resource Management, ‘How Fleet Bank Fought Employee Flight’, Human Resource Management.
