IMPACT OF EMPLOYEE TURNOVER ON FINANCIAL PERFORMANCE OF NEPALESE COMMERCIAL BANKS

Abstract

Financial performance refers to the outcomes of an organization's activities, as they represent the strongest connection to its strategic objectives, customer satisfaction, and economic contributions. It involves the actual results or outputs of an organization, measured against its intended purposes, goals, and objectives. Financial performance typically encompasses three key areas: product performance, shareholder value, and overall organizational outcomes. It is essential to understand how employee turnover affects financial performance. The primary objective of this study is to analyze the impact of compensation management on employee job satisfaction within Nepalese commercial banks. The specific objectives include examining the relationship between pay levels and financial performance in Nepalese commercial banks, evaluating how employee motivation affects financial performance, assessing the impact of the working environment on financial performance, determining whether training and development is linked to financial performance, and investigating how employee turnover influences financial performance. This research adopts a descriptive research design coupled with a causal-comparative approach to explore the impact of employee turnover on the financial performance of Nepalese commercial banks. The findings reveal that training and development have a positive correlation with employee job satisfaction, indicating that increased training programs lead to improved organizational performance. In contrast, employee turnover is negatively related to organizational performance, suggesting that higher turnover rates result in decreased performance. Additionally, a positive relationship was identified between pay levels and organizational performance, demonstrating that better compensation improves performance. Similarly, employee motivation was found to positively impact organizational performance, with higher motivation levels enhancing outcomes. The study concludes that training and development are critical factors for improving financial performance. Other influential factors include the working environment, employee turnover, and pay levels.