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Questions: What Is The Particular Relationship That Exists Between The Employee Turnover And Profitability Of The Firm? How Can The Factors That Affect Australia And New Zealand Banking Group Limited (ANZ) And Macquarie Banks? What Is The Particular Relationship Between The Satisfaction Of The Employees And The Organizational Performance In Respect To Profitability? Answers: Introduction In the current business environment, financial institutions like banks are the pivot points in the economy. The major factor that controls the success of a particular organization is the performance of the employees and is regarded as a valuable asset in the hands of the management. Therefore, it can be deduced from the discussed literature that the success of the economy is based upon the success of the vastly growing financial sector and the success of the banks in turn depend on the success of the performance of the employees. This particular study aims to find out the relationship between the employee performance and organizational performance in the banking industry. To understand the relationship between the employee and customer satisfaction and organizational performance in the banking industry, three banks have been selected which are of the names Commonwealth Bank, Macquarie Bank and ANZ bank. The four significant ratios that have been calculated are return on assets, return on equity, employee turnover ratio and profitability margin. These ratios will help in finding out the relationship between the different components of the research, effectively (Montague, Larkin, Burgess, 2016). Problem Statement The problem statement that has been developed in the particular study is that the ascertainment of the relationship between the customer satisfaction, employee satisfaction and organizational performance helps the management of a particular organization to reliably assess and improve the performance of the organization like the banks. This requires the clear understanding of the factors that affect the employee and the customer satisfaction that is essentially linked with the performance of the organization. Therefore, the problem statement that can be developed in regards to this particular study is that ascertainment of the particular components of employee and customer satisfaction affects the organizational performance of the banks (Boersma, 2015). Research aim and research questions The aim of the research that has been tried to achieve in this particular project is as follows: The scrutiny of the relationship between the satisfaction of the employees and the customer satisfaction and the performance of the banking sector in Australia The careful consideration and the evaluation of the major factors that affect satisfaction of the customers and employees The measurement of the performance of the organization on the basis of the ratios like the return on equity, return on assets and the net profit margin and employee turnover ratio Literature Review The literature that has been discussed constitutes of the suggestions and predictions in regards to the researches that have been conducted by the different researchers. The experts state that the elements of job satisfaction and client loyalty do play a major role in the establishment of the operational activities of the banks. It has been evidently found out that, organizations facilitating better working conditions by the employees have essentially resulted in the improvement of the organizational performance. Precisely, happy and satisfied employees deliver work that consists of an optimum degree of quality (Boedker, 2017). The employee turnover indicates the rate at which the employees leave the organizations in comparison with the hiring of the new employees. This leads to the incurrence of higher costs in relation to the human resource departmental activities. Many researches that have been executed indicate that the reasons for employee turnover are emotional stress or work pressure (Gitman, Juchau Flanagan, 2015). The loyalty of the customers also depend on the availability of the customer facilities provided by the banks like the ATM machines, checking of the interest rates provided by the banks and other related services. Losing a particular customer may result in a huge loss by business. Thus, it is the primary duty of the management to retain the already existing base of employees and expanding the base by attracting new customers (Klettner, Clarke Boersma, 2014). The banking organizations put a constant effort to increase the value of the organization and reduce the risk levels by mitigating the undervaluation of the banks in the market. The profitability of an organization or a bank can be computed from the financial disclosures that have been provided in the annual report of the company (Liu, 2015). The success of the organization depends on the integration of a number of key conditions within the company. One of the major key factors have been the employees. The employees are one of the key stakeholders of the organization that retain the capacity to elevate the revenues incurred by the company and in case the conditions are not suitable for the employees may affect the revenues incurred by the organizations. Hence, the profit of the bank or the performance of the organization depends largely on the employee satisfaction and customer satisfaction. Thus, it is very important to analyze the customer satisfaction, employee satisfaction in order to properly ascertain the profitability of a firm (Liu, Cutcher Grant, 2017). The performance of the banks can be analyzed with the help of the significant ratios like the return on assets, return on equity, employee turnover ratio and profitability margin of the banks (Frijters, 2015). Methodology The methodology that has been undertaken in order to research and analyze the required relationship between the mentioned elements is secondary data. Secondary published data has been considered in order to reflect the correlation between the satisfaction of the employees and the financial performance of the organizations. The financial performance of the three selected banks namely, Commonwealth Bank, ANZ Bank and Macquarie Bank have been examined in regards to the five years from 2012 to 2016 (Static.macquarie.com., 2018). Data Collection The data has been collected from the annual reports of the banks from the year of 2012 to 2016. The financial accounting disclosures provided in the accounting statements have helped in arriving at the desired results. (Commbank.com.au., 2018) Data Analysis The analysis has been conducted with the particular approach that the results obtained from the computations deduce the particular condition of the relationship between the different elements of customer behavior and customer loyalty and organizational performance. The secondary data that has been collected, has been used for the purpose of arriving at the required conclusion. (Shareholder.anz.com., 2018) Findings and analysis Financial Year 2012 2013 2014 2015 2016 Commonwealth Bank of Australia Return on Assets 1.02 1.04 1.12 1.09 1.02 Return on Equity 18.68% 18.05% 18.41% 17.90% 16.38% Full time equivalent employee 44844 44969 44329 45948 45129 Change in Employee turnover -2.02% 0.28% -1.42% 3.65% -1.78% ANZ Return on Assets 0.91 0.93 0.99 0.9 0.63 Return on Equity 14.61 14.75 15.62 14.19 9.92 Full time equivalent employee 46554 50152 50328 49866 48239 Change in Employee turnover -7.44% 7.73% 0.35% -0.92% -3.26% Macquarie Bank Return on Assets 0.47 0.56 0.83 0.94 1.07 Return on Equity 6.46 7.53 11.09 12.67 14.22 Full time equivalent employee 12056 11678 12300 13897 13431 Change in Employee turnover 4.34% -3.14% 5.33% 12.98% -3.35% Commonwealth Bank of Australia Financial Year Employee turnover ratio(X) ROA(Y) ROE(Z) 2012 -2.02% 1.02 18.68% 2013 0.28% 1.04 18.05% 2014 -1.42% 1.12 18.41% 2015 3.65% 1.09 17.90% 2016 -1.78% 1.02 16.38% ANZ Financial Year Employee turnover ratio(X) ROA(Y) ROE(Z) 2012 -7.44% 0.91 14.61 2013 7.73% 0.93 14.75 2014 0.35% 0.99 15.62 2015 -0.92% 0.9 14.19 2016 -3.26% 0.63 9.92 Macquarie Bank Financial Year Employee turnover ratio(X) ROA(Y) ROE(Z) 2012 4.34% 0.47 6.46 2013 -3.14% 0.56 7.53 2014 5.33% 0.83 11.09 2015 12.98% 0.94 12.67 2016 -3.35% 1.07 14.22 Correlation = employee turn over and profitability (ROA) Correlation = employee turn over and profitability (ROE) Commonwealth Bank of Australia 0.395538013 0.050583577 ANZ 0.311716614 0.286727495 Macquarie Bank 0.118272642 0.137072014 r = 01 As it can be concluded from the above table the correlation between the employee turnover ratio and profitability for the three selected banks show that all the banks have a positive correlation. However, it should be noted here that the value for a particular correlation to be significant, the value must be greater than 0.5. In case of the Commonwealth Bank of Australia, the correlation shows a significant value of 0.050583577. This means that the relation between the employee turnover and profitability in Commonwealth Bank of Australia is highly influential and the increase in the employee turnover will affect the profitability of the firm by a higher degree. Thus, the above obtained values reflect that the correlation between the employee turnover and profitability that depends on the ROA and ROE in all the banks, is positive. However, the impact is not significant enough in case of the ANZ bank and the Macquarie Bank. Mean, median and mode Employee Turnover ROA ROE Mean 35581.33333 0.901333 14.032 Standard Error 4359.547556 0.051213 0.994871229 Median 44969 0.94 14.61 Mode 63744.33333 1.02 15.766 Standard Deviation 16884.45508 0.198346 3.853119701 Sample Variance 285084823.4 0.039341 14.84653143 Kurtosis -1.601295797 0.407656 -0.38180704 Skewness -0.745164383 -1.17873 -0.694359159 Range 38650 0.65 12.22 Minimum 11678 0.47 6.46 Maximum 50328 1.12 18.68 Sum 533720 13.52 210.48 Count 15 15 15 From the above table, it is evident that the mean for the employee turnover is 35581.333333 whereas the mean for the ROA and ROE has been 0.90133 and 14.032 respectively. The median for the employee turnover has been a satisfactory vale of 44969 while that of the ROA and ROE has been 0.94 and 14.61 respectively. This indicates the fact that these are the values that appear at the trend centers and can be utilized to evaluate and measure the trend of the particular data set. Similarly, the mode of the employee turnover as well as the ROA and ROE signify that the obtained values appear with the highest frequency in the generated data set. Therefore, such a value can be reliably used for the further estimations. Discussion The particular hypothesis that can be developed from the above findings and conclusions is that the change in the employee turnover though has a positive correlation with the profitability of the bank there is no significant change in the variables except Commonwealth Bank of Australia. In case of Commonwealth Bank of Australia, the employee turnover has a high degree of influence over the profitability of the firm. H1: The employee turnover ratio and the profitability of the bank are positively correlated but such a change is not significant except in the case of CBA Conclusion The conclusion that has been obtained from the above conducted research is that the relationship between the employee turnover and performance of the operations though has a positive correlation does not imply a significant effect except in the case of CBA. Thus, the intended conclusions have not been arrived at. This may be due to a number of limitations that the research may be subjected to. The data that has been collected belongs to the five financial years from 2012 to 2016. A longer range of data collected and analyzed would have given more conclusive results. Moreover, the data results reflect the outcomes across the three selected banks. Therefore, in order to obtain a more reliable and effective results the elimination of the limitations of the research is necessary. 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