Addressing increasing staff turnover

One of the criteria in social performance management (SPM) is the social responsibility of the microfinance institution to its staff. MFIs cannot just be focusing on its social mandate without taking into consideration the plight of its staff. The main assumptions are, on the one side, staff that enjoys working with an institution will have a tendency to work longer; and on the other side, the institution will try to keep the staffs who are effective in their work. These assumptions and the expectations of each side should match; otherwise, there will be conflict and tension in the workplace.

One of the indicators that reflect harmony in the workplace is the staff turnover rate. Among Cambodian MFIs, we can say it is manageable as data from annual reports showed the range of staff turnover rates. The table below shows the Number of Staff 2012 and Staff Turnover Rate which were directly quoted from the annual reports. From these data, the actual number of staff separated from the institution, for whatever reason, was computed and placed in the column titled Number of Staff Separated.

Table: Staff turnover rate of selected MFIs


Number of Staff 2012

Staff turnover rate

Number of staff separated





























Source: MFI published 2012 annual reports

Separation may either be voluntary or involuntary. Involuntary separation means termination of employment at the instance of the institution for reasons such as non-performance or violation of the provisions of the contract or internal code of ethics that requires penalty of dismissal. Voluntary separation is at the instance of the staff for whatever reason that does not violate his or her employment contract.

What would be the reasons for a staff to resign from an institution? The reasons can be considered as “guesses” as there are no studies yet on the issue. At best, what we get are anecdotal stories of people who left an institution or transferred to a new one. Among the personal reasons of staff in leaving their employment are the following:

  • Attraction of better working condition and remuneration package from other institution. This includes promotion from the present position of the staff;
  • Shift in another industry or another company in different line of business that is perceived to provide more benefits and professional satisfaction in the long run;
  • Realization of an entrepreneurial streak that led to the setting up of own business, or if there is enough resources, own company;
  • Seeking personal enhancement by studying, taking graduate course or special courses; and
  • Simply resting from any kind of work.

Internal to the institution, the reasons boil down to staff performance. Staffs resign, or if not, they are fired if their performance is below the expectations of the management. Low performance can be traced to four main reasons:

  • First, the staff cannot do the work, which is a function of hiring. Even before the staff is hired, the officer responsible for hiring should have done its job of making sure that the staff is qualified, knows the position and work description.
  • Second, the staff does not know what to do, which can be attributed to mismatched expectations. An institution may have expectation that the staff knows the whole gamut of his line of work, while the staff is specialized in only a part or a phase of his supposed work.
  • Third, the staff does not want to do the work, which results when there is no motivation for the staff to work. Either there is no incentive for him to go beyond the normal output, or there is no leadership in the institution that provides inspiration for him to be motivated.
  • Finally, the staff does not know how to do the work, which is a function of skills. He knows the work theoretically but does not know how to do it properly. Here training and mentoring will address the need for enhanced skills.

So how do we address the issue of increasing staff turnover? We should approach it from the point of view of social performance management where the institution takes good care of its staff as it is concerned with its clients. Your institution may be providing higher remuneration package and benefits, but it is also good to include the following staff-related actions:

  • Ask your staff. Make sure that you get feedbacks from your staff using whatever means – satisfaction survey, small group talks, suggestion boxes, grievance mechanism and whatever means to get them to share what they think about how they feel about the institution.
  • Address their concerns. It is one thing to ask, and another thing to really resolve the issues raised. It does not mean that all the concerns raised will be dealt with in their favor, but there should be real efforts to understand and respond to the concerns. If the staff feels that the feedbacks are not even read, then say goodbye to staff satisfaction.
  • Give a clear career path. Merit-based promotion of the staff will motivate them to move upward.
  • Be transparent. Share information about the institution. Some institutions provide regular updates to its staff on the latest developments either through a bulletin board or an electronic newsletter. Without updates, staff will be guessing and they will get their information from the grapevine, which in most cases are half-truths or may even be untrue.
  • Provide a mechanism for staff to be stakeholders. Most Cambodian MFIs have facility for the staff to buy equity shares of their institution. If it is possible to allow more shares to the staff, it would be one of the best means to make the staff develop loyalty.

These are but some actions points. Staffs are an investment, which is why we call them human resource. If we have a continuing program to make our staff happy, turnover rates will further be lowered.

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