It's been a long time: an analysis of job duration in two banks
| Date | 07 October 2013 |
| Pages | 130-146 |
| DOI | https://doi.org/10.1108/EBHRM-08-2012-0009 |
| Published date | 07 October 2013 |
| Author | Vivi Maltezou,Geraint Johnes |
| Subject Matter | HR & organizational behaviour,Global HRM |
It’s been a long time: an analysis
of job duration in two banks
Vivi Maltezou
Surrey International Institute (SII),
Dongbei University of Finance and Economics (DUFE), Dalian, China, and
Geraint Johnes
Lancaster University Management School, Lancaster University, Lancaster, UK
Abstract
Purpose – The purpose of this paper is to use personnel records from two firms in the banking
industry, job duration models are estimated to examine separations in the context of banks based in
Great Britain and Greece.
Design/methodology/approach – The duration models are estimated using parametric and
semi-parametric methods, and allow for frailty.
Findings – The paper finds that it is sustained, rather than instantaneous, perfor mance that is linked
to separations. In common with some earlier studies, the paper finds qualified support for a u-shaped
relationship between performance and se parations – suggesting that poor matc hes are short-lived
and that high-performance workers move on to other employment – but onlyin the case of the British
data. Both of the banks under investigation experienced substantial reorganisation activity over the
time period considered, and the paper finds that the year following this was characterised by increased
separation propensities.
Research limitations/implications – While most of the findings are consistent across the firms in
the two countries studied, the paper finds that single men are more likely than their female
counterparts to quit in the bank based in Britain, but less likely to quit in that based in Greece. The
paper offers some suggestions about why this should be the case.
Practical implications – The study serves to enhance the understanding of the determinants of
attrition amongst workers in the banking industry, and hence offers clues to employersabout how they
can enhance retention of productive workers.
Originality/value – Owing to the availability of data sets, very few studies of this kind exist.
The paper presents evidence based on data gathered from two distinct employers, and hence adds
significantly to the body of literature in this area.
Keywords Personnel economics, Employee turnover
Paper type Research pap er
1. Introduction
Labour turnover has, for many years, attracted the attention of analysts interested in
improving our understanding of labour markets an d business performance. Separation
decisions by workers often represent balancing the benefits of job shopping ( Johnson, 1978)
against those associated with the accumulation of specific human capital
(Becker, 1962). The literature on personnel economics emphasises the role played by
information, and in this context the asymmetry between cur rent and prospective
employers’ information about worker performance is of particular interest (Laze ar,
1986, 1995). More generally, from the viewpoint of firms, turnover is costly in the
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2049-3983.htm
Received 22 August 2012
Revised 3 December 2012
Accepted 4 December 2012
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 1 No. 2, 2013
pp. 130-146
rEmeraldGroup PublishingLimited
2049-3983
DOI 10.1108/EBHRM-08-2012-0009
The authors acknowledge, without implication, useful discussions following presentations at
Lancaster and at the Scottish Economic Society conference, and in particular thank Colin Green,
Paul Sparrow, Ian Walker, two referees and an Associate Editor for helpful comments.
130
EBHRM
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presence of hiring (replacement) costs; at the same time, too little turnover can be
inefficient in that it perpetuates poor worker-firm matc hes.
The present paper is concerned with turnover in a specific industr y, namely the
banking sector. This is an interesting context in which to analyse turnover because
the financial services industry has been much affected by technological and social
changes over the last quarter century. The development of information tec hnology has
led to substitution of capital for labour; social developments have led to an increased
feminisation of the workforce; and at the same time there has been a sustained increase
in the demand for banking services.
We have been fortunate to acquire data sets for banks in two countries of the
European Union – the UK and Greece – that provide some interesting points of
comparison. Financial services play an imp ortant role in both economies, but labour
markets are often deemed, by European standards, to be particularly flexible in the
UK. In many respects, Greece epitomises a mo re traditional labour market. While it
would be both rash and speculative to generalise from the results we obtain for the
single bank for which we have data in each country, we should at the same time be
aware that differences in results across the two banks might in some measure reflect
differences in institutional setting. It should be emphasised that studies of this kind –
based as they are on personnel data that are difficult to obtain – are rare, an d it is
therefore particularly useful to be able to compare, side by side, results obtained from
broadly similar analyses conducted on data for two different firms.
In analysing the determinants of labour turnover for the two fir ms in our study, we
are able to cast light on an important controversy in the current literature – what is the
nature of the relationship between individual worker p erformance and turnover?
There is debate about whether this relationship is negative or non-mo notonic
(u-shaped). Theory is ambiguous on this point – poo r worker-firm matches might
be expected to generate quick separations, but it is equally the case that highly
productive workers might attract outside employment oppo rtunities. We find, for our
British data, convincing evidence in favour of the latter; we fail to find any such
relationship in the case of our Greek data, and there must therefore be some doubt
about how general the u-shaped relationship might be. We are also able to ask and
answer some new questions about the dynamics of this relationship. Specifically, is
turnover related to instantaneous or sustained perfo rmance? A further issue which
we are able to address concerns the impact of company reorganisation activity
on turnover.
The structure of the remainder of the paper is as follows. Section 2 briefly reviews
some relevant literature. Our data are described in Section 3, and the following section
reports on the empirical analysis. The paper ends with a conclusion, some practical
implications and some suggestions for further research.
2. Literature
An important stylised fact about labour turnover is that the hazard is declining.
Alternative explanations of this are provided by Parsons (1972), who focuses on how
specific human capital investments serve to reduce quit rates as tenure rises, and
Mortensen (1978) and Jovanovic (1979), who note that the quality of worker-firm
matches is unknown ex ante so that longer tenures imply better quality matches.
These approaches have been nested within a more general model by Mortensen (1988).
The results that we report later in the present paper confirm a dec lining hazard, but the
rich data sets that we use allow us to focus on an interesting set of control variables.
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An analysis of
job duration
in two banks
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