Criteria Used by Commercial Banks in Kenya to Determine Employees to Retrench - Research Paper Example

The paper "Criteria Used by Commercial Banks in Kenya to Determine Employees to Retrench " is a wonderful example of a research paper on human resources. The purpose of this paper was to establish the criteria used by commercial banks in Kenya to determine employees toretrench. The findings of the study suggest that commercial banks use seniority (Last-In-First-Out), employees�individual productivity, misconduct, incapability, early retirement programs, First-In-First-Out (FIFO), and employeeobsolescence as criteria for determining employees to retrench.

The criterion that is most popularly used is an assessment ofemployees� individual productivity. Misconduct as a criterion for retrenchment is also popular and some of the behaviorsthat banks consider as misconduct include fraud, insubordination, regular unauthorized absenteeism, financialmismanagement, leaking out confidential information among others. Early retirement programs are also used to amoderate extent. Last in-First out (LIFO) is used to a moderate extent while incapability as a criterion is used to a lessextent.

It was also found that all banks use the same criteria despite their age, ownership, and size.Keywords: Retrenchment, Criteria, Commercial banks1. Introduction1.1 Background of the studyDuring the last two decades, retrenchment has become the strategy favored by many companies attempting to copewith fundamental structural changes in the world economy. This trend is set to continue with more companies planningto retrench over the next few years.Makawatsakul and Kleiner (2003) observe that for several years, there has been a strong tendency to adopt a downsizingstrategy to deal with the economic pressures in the environment.

Once seen as a short-term measure, downsizing hasbecome the way to increase profitability. Of course, there are many anticipated benefits of downsizing, in terms of theeconomic level and increased operational efficiency of the organization. It can increase productivity, the value of thecompanies� sharesand the profits by reducing the number of employees per unit. However, the hidden costs of this strategy are enormousand, more often than not, underestimated. In fact, they often eliminate all of the anticipated benefits.

Unfortunately,massive downsizing very often seems to generate more problems than it solves, and only rarely does it achieve itsoriginal financial objectives.