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Impact of Employee Relations in Banks

Paper Type: Free Essay Subject: Business
Wordcount: 2248 words Published: 6th Dec 2017

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Employee relationship management find conflict among employees as major drawback for organization to progress with its endeavors. Most of the time conflicts occur due to different cultures that people come from and less knowledge on Johari window way by the theory help people to work through their stereo types. Another reason for conflict is the of work, for example some employee are task oriented and other have artistic view and people oriented i.e. task oriented employee would want to finish the job in whatever manner but an artistic employee would prefer to do the job in particular manner or include certain individual.

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Employee performance and motivation problems

Performance of the employee can play a major role for success or failure. Employees under performing would cost the organization fortune especially in a banking industry where competition is increasing every day. Employee poor performance could be caused by two main issues, first, is the employee skilled enough to handle the task? has the company motivated the employee in question enough to handle pressure the task present? and is the employee capable to do the job? Secondly, another cause is the system to do the task for instance managerial behavior, effect of coworkers’ behavior and resource distribution. http://performance-appraisals.org/faq/causesproblems.htm

Unmotivated employee will not positively influence the performance of the banks. To bring about good performance everyone has to give all the effort to the organization and more importantly they should be motivated. Employee becomes unmotivated because the banks processes are too ambiguous hence providing a lot hardship, the bank is experiencing continuous conflict and behavior effect.

Turnover and retention concerns

This is another employee relation challenges that also especially banks encounter. Generally turnover causes are economic issue and labor market condition they affect significantly the turnover rate. But also non-competitive compensation, poor fit of employee and the job, very poor working condition and monotony increases employee turnover. Employee more often may seek for better green pasture to improve their living standard. Sometime some employee find the job to be too monotonous hence their morale goes down and as result affect the performance of the organization. Turnover cost for many banks are very high which include direct cost such as recruitment, selection and training of the new employees. Indirect cost include reduced productivity, increased of workload for remaining employee as they have to cover and overtime expense for the colleague.


Overcoming employee relations challenges

For turnover and retention problems most banks conduct training on their employees so that for example the job becomes less monotonous and challenging. Banks that have low employee turnover they are said to be employee oriented and they come up with well compensation package they always hire the right people for the job.

An interaction with the employees regularly is required so that the manager can understand they core problems. Distribution of right resource to perform task can increase performance of employees and reward systems can always boost morale of employees. The employer should come with new approaches and practical tips for the banks success.

Employee relations in collaboration with human resource management can avoid conflict before they happen by understanding and identifying the strength and weakness of the employees. Employers should assign jobs to employees that fit their skill sets. For team conflict employer should pick a team leader who is capable to handle pressure that teammate present. Banks should see if the employees who are involved in conflict are affecting the performance and productivity of the organization, once the parties involved in the conflict are identified then it will be easy to solve problems.


Advantage of maintaining good employee relation in banks

There are advantages for organization good relationship with its employees apart from increase the general performance; the company will also enjoy the following.

Reduced Absenteeism

For many banks in Tanzania, they have managed their employees with authoritarian style whereby absenteeism of the employee will not be tolerated. This is because many banks in Tanzania are privately owned hence even the unions cannot bring total impact on any company’s wrong doing. Therefore good employee relation will bring benefits to the bank by reducing the cause that mounts absenteeism such as continuous employee conflict and job satisfaction.

Improving motivation and morale

A good employee relation in banks would be able to increase motivation and morale. A motivated group of employee would be able to bring very beneficial result that most banks are always relishing to accomplish. By avoiding things that would discourage motivation this is a hard-working process but very crucial to the success of the business. We have witnessed most banks in Tanzania have provided their employees with a positive working environment. Also personal incentives always do trick of raising employees motivation and morale.

Loyalty is increased

Most banks in Tanzania have managed to gain loyalty from their employees as most banks have been able to install good procedure that suit employee’s specification. Employees would not be certain if they leave what they experience from other banks. Bank that trains its employees more often will be able to increase confidence of employees and hence increase their loyalty to the company. The bank would be able to get competitive edge if employees are engaged. Engaged employees would take less sick day as they know they influence in the organization.

Reducing turnover

Good employee relation will reduce the employee turnover as the employee issues that contribute to employee turnover are eliminated. Skilled employees who are not paid well would want to move on, but a good employee relationship management will not let that happen. The employee will be given what he/she needs since they are crucial to the banks performance. Employee relationship management would be able to have saved recruitment and selection cost that would come as result of high rate employee turnover. Losing the most skilled employees to competitors it’s like giving out your own gun to be shot with.

Introduction of easy working practices

Committed employees would feel unchallenged on the on the repetitive job each and every day. Monotonous working practice would reduce the performance of the employee as they do not feel motivated well enough. A good bank employee relation would introduce new and easy working practice more often. By doing this the bank would be able to increase the banks output. Additionaly, the new practice would be able to consider not waste company’s resources. Hence employees will be more committed thus affecting the quality of service from banks and reduces rejections.


Disadvantage of incompetent employee relation in banks

Sometime most banks fail to tackle problems that relate to employee relation due to the following reason:

Employee relationship management letting the union to get a lot of power would deprive the bank’s ability to succeed as the unions would control the organization position. After the company has realized what is happening then it will be too late. As we have learned that some trade union bring political agenda that they want to champion so that the society can recognized that there is a problem. Therefore employee relation should not union grow its power to influence the fortune of banks but acquire mutual interest for all parties involved.

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Banks that have set up employee relationship management will incur extra cost from the department. Sometimes employee relation does not live to the expectations in such a way that the problems that should be solved by it are still roaming within the organization. The division is supposed to monitor workplace challenges before the union does and solve them before they become a nuisance to the organization. Therefore any failure to tackle means unnecessary costs have been incurred by the banks. Single employer bargaining can be expensive because of the need to maintain a centralized employee relation.

For single employer bargaining, there is inflexibility and makes it hard to accommodate difference in production systems, the service markets, labor market and technologies within centralized bargaining systems. It could also be hard to integrate new businesses within employee relation systems. For employee relation to be effective it requires very effective communication in company. The level of management decision making will increase if the employee relationship management work independently as a result reducing the employee commitment to these decision and local management. (David Farnham, pg 236)

For workplace bargaining, it employee relationship management complicates labor cost control. As this is a bargaining that occurs between the management and union representatives, there are high chances of increasing the danger of wage parity by the unions. Also it requires management to put its best people who have negotiation skills to neutralize the effort of union to have an upper hand on the outcome of negotiation.


In this second easy we have taken analytical view towards employee relation and its real impact on banking sector in the case of Tanzania where we don’t have many of public owned bank where union can also have an impact.

We gave seen how globalization has also brought some problems and fortune to the banking industry. New venture have realized due to globalization for instance the transfer of banking technology to Tanzania form abroad is one factor that globalization has inspired banking industry to progress. On the other hand, the coming of technology would raise concerns over employee job security. The aim of banks to bring new technology is sometimes to cut down cost in the long-run, so this will obviously raise concerns towards employee who fear for their job.

The essay went further to look on the recognition of unions in Tanzania banks and we realized that in Tanzania they very less banks that can be influenced by trade union since many of them are privately owned. The only trade union that employee relations have been able to interact with is Trade Union Congress of Tanzania (TUCTA) where bank such as Tanzania postal bank employee can real much on TUCTA.

The impact of trade unions in banking industry profitability is very high. So banks should come with approaches that would manage the unions in a way that they do not impact negatively on the performance of the organization. We have look on approaches such as Unitarist, pluralist, Marxist and adversarial approach. It is also indicated that employee relation should much be governed by agreements, rules and regulation to handle unions.

As we have realized that not only external factor that are important to organization success but also internal constraint are also crucial to the companies and therefore they should be managed very well using appropriate management styles. It seemingly appears that privately owned banks use authoritarian way of managing to handle internal issues affecting the banks. Other management styles include opportunist and Paternalistic.


This is very important aspect of business and especially in banking industry. Banks should consider taking employee relations very seriously as employees are part and parcel of the organization success or failure. New innovative ideas should be brought forward so that business process and practice could be made simple thus improving organization performance.

Employee relationship management in collaboration with human resource they should come up with ways that will resolve dispute in more modern way even without involvement of trade unions. The management should assess employee relation future trend and research on the potential findings that can be applied in third world countries e.g. Tanzania. The influence of technology should not be left untouched as technology will play a big part in the future employee relation success. The employee relation view should be much flexible to tackle issues that have not been resolved yet with management. Employee relation should help in avoiding unnecessary problems such poor working condition. These are problems that union is working to abolish them but on the other hand they problems that increase unnecessary cost than if they had been tackled beforehand. Employer should engage employee in activities or even during decision making process so that they can be more motivate and very loyal to the organization this should incorporate they payment structure and other compensation packages which seem to be the most coveted things by employees.


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