Effect of Employee Retrenchment on Performance of Banks: A Case of Barclays Bank (K) Limited

Abstract

Organizations have resulted to retrenchment as a way of solving their financial crises with the hope of cutting down expenses in terms of reducing salary paid to employees. Often this is done without considering the after effects of the practice. This research project aimed at ascertaining the effect of retrenchment on organizational performance. Considering the strategic role of retrenchment, there was urgent need to address various salient issues relating to the process at Barclays Bank and give appropriate recommendations. The researcher employed a descriptive research design carried out as a case study of Barclays Bank. The target population of the study consisted of all employees of Barclays Bank at the headquarters in Nairobi-Kenya. The study took 60 respondents in collecting data with regard to the effect of employee retrenchment on performance of banks. Both primary and secondary data were employed in the study. From the findings, 24 (61%) of respondents indicated that retrenchment of employees affected the performance of Barclays Bank of Kenya while 16(39%) of them indicated that retrenchment of employees did not affect the performance of Barclays Bank of Kenya. The findings revealed that some methods used by managers to cope with the need to retrench and decrementalism resulted in fiscal stress and human resource shrinkage to a great extent. The researcher concluded that retrenchment resulting from cost cutting measures led to loss of skills, commitment, physical and mental health degradation that results from employees withdrawing physically and emotionally. Recommendations were made that when considering possible retrenchments, employers are required to use fair and objective criteria in deciding which employees should be retrenched and which should retain their jobs.