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Employee Benefits and Retention in the Banking Industry: A Japanese Company’s Case Study

EMPLOYEE BENEFITS AND EMPLOYEE RETENTION IN THE BANKING INDUSTRY: A CASE STUDY OF MITSUBISHI UFJ FINANCIAL GROUP IN TOKYO, JAPAN

EXECUTIVE SUMMARY

The primary goal of the research was to determine the effects of job incentives on turnover at Mitsubishi UFJ Financial Group in Tokyo. The bank engages in the provision of banking and financial services to the residents of Tokyo and also other people through its subsidiary branches. Data was collected using questionnaires from 50 respondents; 48% female and 52% males. The age range of most of the respondents was 36-45 years. They attributed to 52% of the respondents with an education up to a tertiary level. The findings indicated that employee benefits have an effect on retaining employees in the researched financial institution. The benefits range from pension packages, leave and flexible working hours, insurance cover and education benefits. From the results, retention improvement can be achieved through implementation of effective employee benefits. This results from employee satisfaction in the organization. The employees added that the benefits can also be extended to offer transport and commuter allowances to ease access to the office. It is recommended that the government take an active role in ensuring employees go on leave annually, have enhanced salaries to better the pension package, ensure that employees are covered by insurance and also training benefits are available.

CHAPTER ONE

  • INTRODUCTION

The coverage of this chapter is the research topic, problem statement, generalized and particular goals, objectives of the research, and importance of the investigation, as well as the extent and constraints of the analysis. ‘Investigating the effects of employee perks on the rate of preservation’ is the research concentrated.’ The research will be carried out at the Mitsubishi UFJ Financial Group in Tokyo, where workers will be given surveys to gauge their views on the influence of employee advantages on turnover. Qualitative research will be employed to investigate the research objectives in conjunction to surveys.

1.1  STATEMENT OF THE PROBLEM

Research indicates that a company or any business is likely to lose one million dollar upon the departure of at least 10 professional and managerial employees. The main reason behind employee turnover is the issue of payments or the benefits provided. Retention has a significant impact on operations of any organization or department. This is because, experienced or critical employees leave a gap which is not easy to fill because they automatically go away with the experience and knowledge possessed (Akinyomi 2016). Occupational schemes are responsible for attracting and retaining employees. For these reasons, there is a need to investigate on the relationship between the occupational benefits and the rate of employee turnover. Although, most employees believe that retention attracts the provision of pensions, it does not remain a substantive reason in Japan’s occupational sector (Nwachukwu and Chladkova 2017). Most businesses have adopted the terms of providing employee benefits so as to retain employees by enhancing job satisfaction. However, inequality in their provision advances the problem causing a high turnover rate, absenteeism and also plummeting in productivity (Al Mamun and Hasan 2017). The extent to which this trend will continue is unclear.

1.2  OBJECTIVES

  • General Objective:

To establish the effect of employee benefits on the level of employee turnover with reference to the Mitsubishi UFJ Financial Group in Tokyo, Japan.

1.2.2  Specific Objectives:

  1. To evaluate the influence of pension packages on retaining employees
  2. To establish the consequences of leave days on employee
  3. To establish the impacts of health insurance covers on employee
  4. To establish the impact of training opportunities on employee

1.3  RESEARCH QUESTIONS

  1. How does pension packages impact employee retention?
  2. How does leave days affect the employee retention?
  3. To what extent does the insurance covers influence employee retention?
  4. How does the training opportunities in the institution affect employee retention?

1.4  SIGNIFICANCE OF THE STUDY

The research will be conducted at the Mitsubishi UFJ Financial Group in Tokyo. The results will be of benefit to the financial institution because it will clearly understand the effect of employee benefits on turnover and thus develop ways to enhance the staff retention. This research will still be important to the several human resource departments in other country because they will be in a position to develop effective retention plans in the public sector.

1.5  LIMITATIONS OF THE STUDY

  1. Collaboration: Some employees may be unwilling to responds to the
  2. Confidentiality: Some may feel as if their rights to privacy are infringed especially managers and directors.
  3. Inaccessibility of Participants: Top position staff like the directors and managers may not be available for the questionnaires as a result of the busy

CHAPTER TWO

2.0  Introduction

This chapter will comprise of a theoretical analysis of the past studies as well as a critical review of the studies.

Review of Past Studies

2.1  Employee Benefits

Employee benefits refers to the indirect financial compensations received by the employee or staff which are not part of the salary. They can also be referred to as the rewards from the employer and ranges from retirement benefits, legal insurance, and payment for unworked hours such as leave which are based on the performance of an employee or the cost of the services (Ugoani, 2016). Irrespective of the position an employee holds in an organization, there are those incentive plans and benefits which are not as a result of performance which are made available to the staff.

The remunerations given in addition to the salary may also be in form of service such as monthly or annul leaves and holidays (Siddiqi & Tangem 2018). Benefit practices and policies are meant to provide a remuneration package that is able to attract potential candidates as well as retaining high employees who are experienced. According to the policies and practices, the benefits should also cater for the employee needs for satisfaction and contentment so as to increase their commitment and performance in the organization. According to the welfare, it is necessary for the employees to get compensations for improvement and comfort form the employer (Ngatuni & Matolo 2018). The services which may provide comfort to the employees include, plans on how the employees will commute to the workplace especially for those who live too far, recreational facilities, and medical facilities

The availability of the employee benefits is dependent on the labor market at different occupational levels (Nwachukwu & Chladkova 2017).  For the development of the corporate industrial relations, the employee benefits play a significant role. A sufficient working environment is important for the employees as stated in the two factor theory which focuses on hygiene as well as motivation (Hale 1998). The theory states that the motivation and the productivity of the employees depends on the hygiene factor in the working environment. By the use of the stimulus-response factor, the employee motivation can be assessed through several aspects such as level of absenteeism, turnover rates and the time the employees get to work. On productivity and performance, an assessment can be done by analyzing the frequency of faults in the operations and the time taken to complete an assigned task (Hale 1998). Although these factors depend on the personal assets of a staff, the managing team should be keen on the stimuli that can affect the motivation and performance of employees such as hygiene.

Another theory applicable in this context is the expectation theory by Vroom. It states that is the nature of staff or employees to expect rewards both material and spiritual in their work.

The quantity or the degree of rewards from an employer’s plays a major role in productivity in terms of quantity and quality produced by the employees. Therefore, it is essential to identify the stimuli that can provide motivation to the staff. The welfare demands for the employees can be classified into security, physical, social and self-actualization demands (Stewart & Kamins 2015).

According to Maslow hierarchy theory, the physical-demands may include annual bonuses,

vacations, paid leaves, housing allowances as well as emergency and saving subsidies. The demands related to security than can be offered by the employer include compensations for occupational illnesses, group insurance cover, child-care services for women, free transportation and also supply of goods and services at a discounted price. Social demands may range form, travel subsidies in foreign countries, entertainment time, leaves which can be maternal or paternal. The last group of demand which is self-actualization may involve provision of adequate training, chances for promotion and flexible working hours so as to improve the self-esteem of the workers.

During the adoption of the employee benefit policy, it is important for the organization to consider some issues. First is the reason behind the policy, the benefits to be offered, the particular group that will receive the benefits, the cost of the program, the likely achievement that will be experienced upon the implementation of the programme and influence of such a programme on competitor performance (Akgunduz and Eryilmaz 2018).). In the human resource department, awareness creation to the employee on the existence of the benefits is important. For the benefits to be provided to have a huge impact in the organization, it is good to do some research so as to determine the impact. Information about the benefits also requires to be clearly discussed with the staff in a truthful way without any bias (Moon, et al. 2019).

2.2  Types of Employee Benefits

There are several types of staff incentives which can either be mandated by the state and the federal government or chosen by an organization. The benefits can be grouped into voluntary or mandatory benefit programs. The mandated include those that a company must have as directed by the government such as social security, insurance and compensation of the workers. The employer is not normally in a position to change the mandated benefit programs unless a certain process is followed to change the existing laws. Voluntary benefit programs on the other hand are dependent on the type of organization and may include retirement benefits, insurance protection and payments for time not worked such as maternal and paternal leaves.

2.2.1  Health Insurance Covers

Medical covers are a major benefits that can help retain employees. The increasing costs of the medical services has led to most organizations taking the step of cushioning their employees by putting in place insurance plans for them. When such benefits are offered the employees feel valued and cared for by the organization and result to a low turnover rate which may negatively affect an organization. The medical covers may include general care, mental illnesses, dental and optical care. The delivery of healthcare or medical services are assured by the Health Maintenance Organizations which work closely with most businesses for the care of the employees. The Health Maintenance Organizations gets the employees enroll and the employers pays for the employees. Enrollment is voluntary for the employees. The central principle under which HMO operates is that of healthcare prevention through premium payments which maintains the cost of seeking medical care low (Moon, et al. 2019). Health insurance covers protects employees for sudden medical expenses which may be too expensive to meet due to their uncertainty and the rising cost of the living standards (Jean, et al. 2020).  Insurance covers also reduce the mortality rate which may be caused by an individual’s inability to seek medical care or medications. (Eisenberg et al, 2004). The reduction in mortality and improve health conditions of the employees increases their productivity as well as reducing retention as a result of illnesses.

2.2.2  Retirement Benefits

Retirement benefits can also be referred to as pension. It is the amount of money paid to a retired employee from a certain organization at different intervals for a certain period. Pensions are normally managed by trustees within a legal framework so as to ensure that the funds are not mismanaged. To encourage the employees on having pension programmes the taxes that are supposed to be placed on the funds are deferred (Bellmann et a l. 2018). Different organizations offer different retirement benefits such as 401 savings or the pension funds. For the 401k plans, the employer contributes a certain amount to the employee’s savings account or matches a certain employee contribution to a specific amount. The pensions enables the employers to plan for their employees after they are not able to continue with the job or when they attain a retirement age. It is normally a deduction o the employee’s pay as a savings plan for the future (Bellmann et a l. 2018). The savings by form the employee by the employer is used to pay staff after retirement (Park and Pierce 2020).

2.3  Leave Days

Employee annual leave is a mandatory benefit which the employer has no choice but provide it. Although the annual leave period varies from different employers, the employees are entitled to a compensation for the time not worked for. Employees are entitled to take leave on public holidays in addition to their annual leave and still receive full pay (Moon, et al. 2019). The period of the leave varies but their presence is of great benefit to both an organization and the employee as well. Some employees may pay for used leaves while others do not and thus call for legal action.

Paternal and maternal leaves are also important types of leaves to parents. The leave can either be paid or unpaid and serves as a motivation to the employees because it satisfies the social demands (Park and Pierce 2020). Annual leaves are common to employees who have worked in an institution for more than a year. The leave provides ample time for employees to do their own research ad publication of activities which can directly or indirectly have an impact on the organization. It also helps reduce stress and monotonous nature of various jobs (Park and Pierce 2020).

Vacations differ from leaves and may include holidays and sick time. Mostly vacations are not paid for by the employer only if there are specific condition or requirements put that call for payment. Vacations are approved by human resource managers or supervisor in the specific departments (Wang 2020). They are accrued on a monthly basis.

2.4  Employee Retention

For a long-term success of any business, there is a need to retain employees. Therefore, development of a proactive approach to deal with employee retention is important. Employee turnover is based on several factors and takes time, resources and courage. Benefits and rewards have proved to reduce the retention rate. This is because, benefits provide good working environment and job satisfaction of the employees. The major impact of retention is financial costs associated with training as well as recruiting employees (Wang, et al. 2020). Poor working conditions such as unequal pays, reduced promotional chances, and poor hygiene can lead to job dissatisfaction and thus increasing the retention rate (Park and Pierce 2020).

The department responsible for employee retention is the human resources department. It has to have appropriate strategies to attract, retain, motivate and develop talent through training of the employees. For a business to experience positive growth there is a need to attract as well as retain employees who are skilled and experienced to the organization operations Identification and management of employee talents helps in the improvement of exceptionally capable employees who may impact the business positively (Wilke, et al. 2018).

3.0  Introduction

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

The research design, target population, design sample, and data collection methods will all be discussed in this chapter.

3.1  Research Design

The term “research design” refers to a conceptual framework for conducting research (Eisenhardt 1986). Descriptive research was performed to look into how employees perceive benefits and how they affect retention. This research design aims at discovering and reporting on the actual occurrences in a research. It is limited to factual discoveries only (Eisenhardt, K.  & Graebner 2007).It may end up helping in the formulation of new policies on employee benefits as well as better retention strategies for organizations especially the Mitsubishi UFJ Financial Group in Tokyo.

All the factors of interest in a research form the research population, which includes individuals and objects from which sample information will be taken from. For this specific study the target population includes the employees at the Mitsubishi UFJ Financial Group based in Tokyo. The financial institution has a total of 1,836 full time workers.

The sample was selected from a list requested from the Human Resource department and stratified random sampling was used. The employees were grouped into three strata based on occupational level that is the senior management, middle and lower units (Ellram 1996).   30 respondents were selected from the three groups to participate in the study survey.

The data used to achieve the study’s objectives was obtained from both secondary and primary sources. The respondents were given questionnaires to fill out in order to obtain primary data. The questionnaires were divided into two sections, one containing the participants’ biographical information and the other containing closed and open-ended questions about the impact of employee benefits on retention. Secondary data was gathered from the internet and review of relevant documents on human resource retention.

 

CHAPTER FOUR: FINDINGS, ANALYSIS AND DISCUSIONS

4.0  Introduction

This chapter includes a presentation of the findings, as well as an assessment and discussion of them. Data is presented in both qualitative and quantitative formats.

4.1  Presentation of the Findings

The participants’ bio-data and general information, such as their age, gender, education level, and management level, were assessed using the research questionnaire.

4.1.1  Age

The respondents below 25 years were the least while the highest were round the age of 36 as indicated in the table below.

1.      Age (Years) Frequencies Percentages
a)      Below 25 3 6
b)      26 – 35 11 22
c)      36 – 45 26 52
d)      Above 45 10 20
Total 50 100.0

4.1.2  Gender

Male respondents constituted 52% and the female were 48%. This indicates that the gender disparity in the institution is relatively low.

4.1.3  Level of Education

The respondent had acquired education up to different levels: primary, secondary and tertiary levels. Respondent who has attended up to a tertiary education level made the largest number in the institutions constituted 72% with the primary level being the least with 10%.

3.      Education Frequencies Percentages
a)      Primary Level 5 10
b)      Secondary 9 18
c)      Tertiary Level 36 72
Totals 50 100.0

4.1.4  Management Level

From the findings, it is clear that a large portion of the employees are at the middle level constituting to 56% of the employees in the sample. The technical officers were more than the senior managers who were only 16%.

 

 

5.      Work Status Frequencies Percentages
a)      Senior Management 8 16
b)      Middle Management 28 56

 

 

c)      Subordinates 14 28
Totals 50                      100.0

4.2  Analysis of the Employee Benefits on retention

4.2.1  Awareness of the Benefits Policy

When participants were asked if they were aware of any employee benefits offered by the institution, the following findings were obtained:

Frequency Percentage
No 26 52
Yes 24 48
Totals 50 100

From the results, there is a small difference in knowledge and lack of knowledge on the employee policies. More than half of the employees did not know about the benefits that is 52% of the employees. For maximum job satisfaction, the presence and existence of the policy needs to be known to the employees so as to reduce turnover.

4.2.2  Benefits and Employee Exit

When asked whether the employee benefits dissatisfaction would lead to the quitting the job, the following responses were indicated.

Response Frequency Percentage

 

Yes 40 80
No 10 20
Totals 50 100.0

From the results, it is clear that in the financial institution the employee value benefits so much that it would lead 80% of them to quit the job. Only 20% said they could not quit due to dissatisfaction with the benefits reason being the salary is enough compensation.

4.3  Impact of Worker Benefits on Retention

The goal of the study was to see how different employee benefits affect major bank employee retention. Among the benefits assessed were: pension/retirement benefits, annual leave, health insurance cover as well as the education or the training benefits. The findings are as indicated in the tables.

4.3.1  Pension and Retirement Benefit

The findings from an assessment on the relationship between pensions and employee retention indicated that, pension packages improves the loyalty of the employees as stated by

65.20% of the respondents. From a score scale, pension packages indicated to reduce employee worries on family security by 80.80%. The pension determined the retention of the employees by 86.40%. The overall percentage of the effect of pension on employees’ retention was 80.30%.

Pension package Score Scale
5 4 3 2 1 Score %Score
a. Pension package increase employee

loyalty to the organization

15 10 7 9 9 50 163/25

0

65.20
Score 75 40 21 18 9 16

3

b

.

Pension package reduces worry

about one’s family security

22 13 10 5 0 50 202/25

0

80.80
Score 110 52 30 10 0 20

2

c. Having a pension package gives some influence over retirement plans 18 20 8 0 4 50 222/25

0

88.80
Score 90 80 24 0 4 22

2

d

.

Pension package determine employees retention in the

organization

30 12 5 0 3 50 216/25

0

86.40
Score 150 48 15 0 3 21

6

Average perception percentage 80.30

 

4.4  Leave and Vacation

A study to assess the relationship between annual leave and employee retention provided the following findings.

Annual leave Score Scale
 

5

 

4

 

3

 

2

 

1

 

Total

Score %Scor

e

 

a.

Annual leave reduces monotony on

jobs

 

48

 

0

 

2

 

0

 

0

 

50

 

246

 

98.40

Score 240 0 6 0 0 246
b. Annual leave reduces stress on jobs 49 0 0 0 1 50 246 98.40

 

 

.
Score 245 0 0 0 1 246
 

c.

Annual leave leads to employee

retention

 

39

 

7

 

2

 

0

 

2

 

50

 

231

 

92.40

Score 195 28 6 0 2 231
d. Average score on annual leave 96.40

From the findings annual leave on employees reduces the monotony as well as job related stress by a high percentage, both had a score of 98.40%. 92.40% was the percentage perception that annual leaves determine the employee retention from an organization. The overall perception on the effect of annual leave was 96.40%.

4.4.1  Insurance Coverage

The findings indicated that the perception that medical insurance helps reduce the healthcare costs was 97.60%. Insurance cover also improved productivity because the employees get committed when there is social security. 97.60% was the percentage perception that insurance covers helps in reducing employee retention.

Health Insurance Score Scale
5 4 3 2 1 Total Scor

e

%Scor

e

a. Health Insurance reduces medical

costs.

48 0 0 2 0 50 244 97.60
Score 240 0 0 4 0 244
b

.

Health Care Coverage enhanced productivity as a result of increased concentration during work 32 10 8 0 0 50 224 89.60
Score 160 40 24 0 0 224
c. Employees with health insurance are more likely to stay with the company. 46 2 2 0 0 50 244 97.60
Score 230 8 6 0 0 244
d

.

Average score on Health

Insurance

94.93

4.4.2  Education

 

An evaluation of the association between employee benefits and retention was undertaken on the basis of complete realization of one’s potential. The following were the results:

 

 

Educational benefit Score Scale
5 4 3 2 1 Total Score

 

%Score
a. Employees can use educational benefits to learn extra knowledge and skills that will help them work more effectively. 49 0 1 0 0 50 248 99.20
Score 245 0 3 0 0 248
b. Employees might use their knowledge for personal gain by taking advantage of educational benefits. 15 5 16 0 14 50 157 62.80
Score 75 20 48 0 14 157
c. Educational benefits    will lead to

enhanced productivity

32 11 7 0 0 50 225 90.00
Score 160 44 21 0 0 225
d. Educational benefits retains

employees in the organization

28 16 2 0 6 50 216 86.40
Score 140 64 6 0 6 216
e. Average score on Education Benefit 79.73

From the findings, it is evident that that the education level of the employees determines the retention rate. Additional skills and knowledge helps in building up the self-esteem of the employees, skills and expertise to perform the business operations. The perception on enhancing productivity was 90.00% and that of retaining the employees as a result of expertise was 86.40%. The average perception of how education affects the retention of the employees was 79.73%.

4.5 Reasons for Employee Exit

Other than the stated employee benefits, there are other factors relating to the benefits that may reduce employee retention in the institution. The table below indicates the results.

The Reasons For Employee

Exits

Score Scale
5 4 3 2 1 Total Scor

e

%Scor

e

a. In adequate benefits 37 3 0 5 5 50 212 84.80
Score 185 12 0 1

0

5 212
b Lack of awareness of 0 25 10 11 4 50 156 62.40

 

 

The Reasons For Employee

Exits

Score Scale
. employees benefits
Score 0 10

0

30 2

2

4 156
c. Discrepancy in employees benefits administration 33 10 0 4 3 50 214 85.60
Score 165 40 0 8 1 214
d

.

Noninvolvement in benefits

decision

0 0 28 1

4

8 50 120 48.00
Score 0 0 84 2

8

8 120 70.20

 

Inadequate benefits and discrepancies in the administration of the employee benefits are also major reasons that may reduce retention. The findings indicated that inadequate benefits and discrepancies in administration constitute 84.80% and 85.60% respectively in the score scale.

Another issue is the employees being unaware of the existence of the employee benefits which was 62.40%.

4.6 Other Employee Benefits on Retaining Employees.

When asked to give other benefits that can help in improving retention, the benefits indicated included: affordable housing and transport allowances to ease access to the office.

 

 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS

The conclusion of the study, as well as the study’s recommendations, are  presented in this chapter.

5.1  Conclusion

The study conducted at the Mitsubishi UFJ Financial Group in Tokyo indicated that employee benefits greatly influence their retention in an organization. Dissatisfaction from the benefits may result to a higher turnover rate. Pension packages have greatly reduced the employee retention in the institution. Pension increases the loyalty of the employees because of the family security provided. Annual leaves also reduce the stress levels as well as job monotony. When the employees are offered leaves, they get back to their jobs motivated thus increasing productivity. Health insurance covers also help in improving employee retention because they feel more secure and are in a position to deal with uncertain health conditions. Educating the

employees also builds on their self-esteem through experience and expertise in the assigned tasks. The benefits are not limited to leave, insurance, pension and education but also includes affordable housing and transport allowances.

5.2  Recommendations

For the specified areas, the following recommendations can be implemented for further action. For the pension package, the financial institution can improve the employee salaries so as to be in a position have a substantial package for their retirement. Policies should be implemented to ensure that employee go on leave for restoration purposes as well as reducing the monotony. This results in a motivated workforce after the leave due to refreshment. The government should also help in ensuring that the employees at different level are medically covered without discrepancies. Trained workforce results in a high productivity and for this reason, employees should be offered training programs and benefits so as to handle assigned chores competently. Improved self-esteem helps to retain employees.

REFLECTIVE ACCOUNT AND CRITICAL REVIEW

When a growth of the economy accelerates, it necessitates the hiring of more qualified and experienced workers. Human Resource Planning is responsible for attracting, training, and maintaining people inside the company (Stewart & Kamins 2015). Human resource managers play an important role in keeping employees by creating a pleasant working environment. Employees who are satisfied with the job are more likely to stay with the company, but if the management is a problem, they might desire to leave. The turnover rate is determined by how managers treat their employees (Siddiqi and Tangem 2018).. Employers and managers that actively take responsibility for altering unsatisfactory working circumstances are more likely to retain their employees. To influence and impact, talented individuals must be identified and others must be provided with training initiatives.  Employee retention is facilitated by service and monetary rewards. Reduced benefits may cause an employee to leave a company. Employee turnover is a serious, so it is critical to develop a successful retention strategy by first figuring out what motivates your employees. Employee benefits tend to increase job satisfaction, which lowers turnover.

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