This proposal is on the factors that affect labour turnover of Life insurance Agents in Old Mutual Life Assurance Company Kenya. A Life insurance company relies on a stable Agency force to sell and serve its Life insurance merchandises to enable it do net income from the Life policy. The issue of an Agent affects the service of the policies sold with negative impact on Company ‘s profitableness and investable fund for the state ‘s economic development. Therefore, the aim of this survey is to place the factors, happen out how and to what extent they affect labour turnover of Agents in Old Mutual Life Assurance Company Kenya. It will besides seek to happen solution to the job and do recommendations. This survey will profit the direction and Agency Managers of the company, other Life Insurance companies, current and possible investors in Life insurance companies every bit good as authorities and its Agencies.
The survey will do usage of descriptive research design which will affect field study of targeted respondents of Old Mutual Life Assurance Company Kenya. The mark population will be the regional directors, gross revenues directors and the Agents at its subdivisions in Nairobi totaling approximately 200. A sample of 15 % will be taken utilizing simple random sampling technique. The information will be collected by the usage of questionnaire and analyzed utilizing descriptive statistics which will include tabular arraies, charts, diagrams and frequence distribution measurings such as mean, manner and median.
OPERATIONAL DEFINITION OF TERMS
Life Insurance Life Assurance is an facet of Financial Planning which provides for the payment of a capital amount to the dependents of a policy proprietor on his decease or to the policy proprietor on endurance to policy termination, in consideration of the payment of a smaller, frequently regular, sum to the Life office
Life Insurance Gross saless Agent Life insurance agents specialize in selling policies that pay donees when a policyholder dies. They besides sell other assortments of Life insurance merchandises such as rentes that promise a retirement income, Health insurance and short-run and long-term-disability insurance policies. Agents may specialise in any one of these merchandises, or map as Renaissance mans, supplying multiple merchandises to a individual client. They earn committee and other benefits for their attempt.
Table OF CONTENTS
List OF TABLES
List OF FIGURES
ABBREVIATIONS AND ACRONYMS
LIMRA – Life Insurance Marketing and Research Association
AKI – Association of Kenya Insurers
IIAA- Independent insurance Agents of America
COP – Certificate of Proficiency
OMLAC – Old Mutual Life Assurance Company
Chapter ONE: Introduction
This chapter will concentrate on background of the survey, statement of the job, aims of the survey, the hypothesis or research inquiries, significance, range and restriction of the survey.
1.1 Background to the survey
Life Insurance is an facet of Personal Financial Planning which enables person to supply for his future fiscal demands at old age and that of his or her dependents in the event of unanticipated fortunes. Such unanticipated fortunes are premature decease, Entire Permanent disablement ensuing from Accident or Critical unwellnesss which may cut down or end a individual ‘s income earning capacity.
The hazard of premature decease is one of the major personal hazards faced by most persons. The fiscal effects ensuing from the decease of a breadwinner before equal resources have been established for dependants can be terrible. Life insurance is a major beginning of fiscal protection against premature decease.
There are three chief beginnings of life insurance protection which are separately purchased, Employer-sponsored and Government sponsored life insurance coverage. The reliable beginning is the separately purchased Life insurance protection because the other two may non be available to an person.
Life Assurance is a service premised on a promise to pay a certain sum of money in future in the event of the happening of a declared eventuality which normally depends on the continuance of human Life. Hence, the best signifier of selling this service is one – on – one personal merchandising through a Gross saless Person traditionally called an Agent.
One major job confronting Life insurance Companies in selling their merchandises and hence, profitableness is the high rate of labour turnover of their Agents. A Life insurance company relies on a stable Agency force to sell its Life insurance merchandises. These merchandises are normally long tern traveling for a lower limit of five old ages in continuance. The profitableness of a policy to the Life insurance Company depends on the consistent service of that policy by the Agent. When an Agent leaves an insurance Company when the policies he sold are still in their early old ages, such policies will no longer be serviced. Hence, the Company will lose in footings of future in-flow of investible financess, lost of committee that has been paid in progress to the Agent and payment of resignation values originating from nonchurchgoing policies.
This state of affairs threatens the endurance of Life insurance companies and it has attracted the attending of some authors and research workers. Harmonizing to Leverett et Al ( 1977 ) , the decease of the independent Agency system as it exists today has been predicted for several old ages. Increased competition from newer beginnings, such as the entryway of Life insurance companies into the property-liability field, every bit good as traditional competition from the direct authors of insurance, tends to reenforce the foundation for such a prophesy. The attractive force and keeping of new agents into the independent bureau system is critical to the continued successful being of that system.
A figure of surveies have indicated that the keeping rate for agents recruited into the Life insurance industry is really low. Harmonizing to one survey, the two twelvemonth and five twelvemonth keeping rates for 13 big life insurance companies in the United States were 39 and 13 per centum severally. Furthermore, the keeping rate for smaller life insurance companies was found to be even less than for their larger opposite numbers. These figures are non wholly unexpected given the deficiency or insufficiency of preparation and educational plans offered to new life insurance recruits.
LIMRA ( 2009 ) points out that, it has been of great concern to many directors, the fact that merely 5 % of gross revenues representatives who join the industry remain in the industry and become successful gross revenues representatives. Out of the 5 % merely 2 % become high winners in the industry. Despite the fact that those on committees earn more than bulk of the salaried people, it has remained a really ambitious field particularly for the immature people from college and university who would wish to gain good money easy and fast.
Burand ( 2010 ) notes that over clip, agents keeping in the life insurance industry remains a perennial challenge for companies runing within the traditional calling bureau system. Harmonizing to LIMRA ( 2010 ) , 68 % of agents leave companies within their first two old ages.
Many directors presuppose that keeping rates correspond with a company ‘s effectivity in constructing its gross revenues and Organization in general. Company “ bottom lines ” would profit well from increased keeping rates.
1.1.1 Background to the Scope of Study
Old Mutual Life Assurance Kenya belongs to an International long-run nest eggs, protection and investing Group.
The Group provides life confidence, plus direction, banking and general insurance in 33 states ( Africa, Europe, the Americas and Asia ) . It has over 15 million clients and about 55 000 employees. The vision of the group is to be their clients ‘ most sure spouse – passionate about assisting them achieve their lifetime fiscal ends. The group was founded in 1845 and has expanded from their beginnings in South Africa in the last decennary through organic growing and strategic acquisitions. It is listed in the UK, South Africa and three other African exchanges.
Old Mutual Kenya ( OMK ) started making concern in Kenya in the late 1920 ‘s. The vision of the company is the same as its parent company but limited to East Africa. The mission statement of the company is as follows ‘through apprehension and run intoing our clients ‘ demands, we will productively spread out our market for wealth accretion and protection in Kenya ‘ .
1.1.2 Background to the Population Area and organisational Chart
Old Mutual has 16 retail selling mercantile establishments throughout Kenya including 4 in Nairobi. The retail selling arm is under the legal power of the Head of Gross saless who is at the caput office. The caput of gross revenues is portion of the executive direction who reports on the activities of the gross revenues force. The caput of gross revenues is assisted by caput of channels who oversees the activities of the Branch directors in different locations. Under the Branch Manger are Gross saless directors who manage the Agents.
1.2 Problem Statement
The Insurance industry has suffered astronomical losingss ensuing from high rate of labour turnover among Agents particularly the new agents. The new agents are the gross revenues representatives who have been with the company for less than four old ages. Annual study published by LIMRA international in 2004 pointed out that four twelvemonth agents ‘ keeping has non been able to travel above 13 per centums. This translates to 87 per centum of the new agents in the insurance industry go forthing their several companies within the first four old ages of subscribing the contract.
An agent in the insurance industry particularly life insurance starts going profitable merely after the 3rd twelvemonth of their contract in the company. This is because the initial old ages are characterized by immense preparation cost, initial allowances which are non tied to production and forward-earning committee system. This consequences in high disbursals for the house in the early old ages of enrolling an Agent with the hope of reimbursing the cost bit by bit from the future net incomes of the Agent. This implies that most of the insurance companies have been incurring immense losingss because of systematically hapless keeping rate of the new agents. Insurance agents ‘ keeping has become a affair of concern as the Association of Kenya Insurers ( AKI ) highlighted in the 2011 study refering developments of the trussed agents in the insurance industry in Kenya.
AKI study ( 2010 ) observed that deficiency of personal development of many Agents who join insurance industry is an issue that requires attending by the industry if the industry is to stay relevant in the state. Lack of personal development among the agents has been cited as an of import factor that affects agents ‘ keeping in the industry.
A Life insurance company relies on a stable Agency force to sell its Life insurance merchandises. These merchandises are normally long tern traveling for a lower limit of five old ages in continuance. Agents are paid committee for any policy sold. The committee is structured in such a manner that a significant per centum up to 50 % of the premium is paid in the first twelvemonth and between 10 % to 40 % is paid in subsequent old ages up to the 5th twelvemonth or sometimes stop of the policy term. The profitableness of a policy to the Life insurance Company depends on the consistent service of that policy by the Agent.
If an Agent leaves an insurance Company when the policies he sold are still in their early old ages, such policies will no longer be serviced. Hence, the Company will lose in footings of future in-flow of investable financess, loss of committee paid in progress for future services of the Agent and an early oversight of such ‘orphan ‘ policies. The economic system besides suffers because it will be starved of investable financess which aid the economic development of the state.
Old Mutual Life Assurance Kenya has experienced a bead in its figure of Agents in the past old ages. While it had 500 Agents in 2010, they presently have approximately 200. This has besides reflected in the gross of the company from the single life Insurance section of the company. The premium income generated by the Agents for the past four old ages is represented in the undermentioned tabular array.
Table 1. Premium Income of Agents in Old Mutual Life Ass. Co. Kenya ( 2008 – 2011 )
Year
Premium Income ( Kshs ‘ 000 )
Difference
Percentage Difference
2008
386,367
–
–
2009
378,056
( 8,311 )
( 2 % )
2010
376,496
( 1,560 )
( 0.41 % )
2011
349,429
( 27,067 )
( 7.18 % )
Beginning: OMLAC ( 2012 )
The graphical representation of the above state of affairs is shown below.
Figure 1. Premium Income of Agents in Old Mutual Life Ass. Co. Kenya ( 2008 – 2011 )
Beginning: OMLAC ( 2012 )
Life insurance premium from the gross revenues Agent should increase in geometrical patterned advance with positive cumulative consequence on the gross of the company. If the premium from new policies sold is added to the premium of bing policy holders, it should take to increase in premium income from twelvemonth to twelvemonth. However, the contrary is the instance in Old Mutual where premium income from Life insurance Agents has declined from Kshs 386 million in 2008 to Kshs 349 million in 2011. This represents a bead of 9.56 % in premium income in 2011 compared to 2008.
It is against this premises that this survey will concentrate on factors impacting labour turnover of Life Insurance Agents in Old common Life Assurance Company Kenya.
1.3 Aims of the survey
The aim of the survey will include the undermentioned:
1.3.1 General Objective
To look into the factors that affect labour turnover of Life insurance Agents in the Life insurance industry in Kenya.
1.3.2 Specific Aims
To happen out how wage affects the turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya.
To find the effects of preparation on the turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya.
To look into how physical work environment impact labour turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya.
To set up to what extent occupation satisfaction affects labour turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya.
To find to what extent degree of instruction affects labour turnover of Life Insurance Agents of Old Mutual Life Assurance Company Kenya.
1.4 The Research Questions
The survey will seek information to reply the undermentioned research inquiries:
To what widen does wage impact turnover of Agents in Old Mutual Life Assurance Company Limited?
To what extent does developing impact turnover of Agents in Old Mutual Life Assurance Company Limited?
How does physical work environment impact labour turnover of Agents in Old Mutual Life Assurance Company Limited?
How does occupation satisfaction affect turnover of Agents in Old Mutual Life Assurance Company Limited?
To what extent does degree of instruction affect labour turnover of Agents in Old Mutual Life Assurance Company Limited?
The Significance of the Study
The findings from this survey will profit the organisation and its stakeholders, the life insurance industry, authorities and other research workers in this field. The top direction of Old Mutual Life Assurance Company Limited consisting of the Managing Director, the caput of gross revenues and caput of channels who are likely to utilize the findings to understand the grounds behind labour turnover of Agents in the company. It will besides assist the Regional and Gross saless directors of Old Mutual Life Assurance Kenya to better on their direction techniques towards cut downing labour turnover of Agents in their part and gross revenues unit. The Gross saless Agents will besides profit from the survey by utilizing the recommendations to better on their gross revenues public presentation and make the personal willingness to remain with the company
The findings of the survey will besides be of huge benefit to the authorities, particularly the ministry of finance, and the commissioner of insurance who will utilize it to explicate policies that will better keeping of Agents in the Insurance industry. The stakeholders of Old Mutual Life Assurance Limited which include clients, investors and the populace will besides profit from the survey by understanding the factors that affect labour turnover of Agents in the company. Last, it will besides profit other research workers in this field who may utilize this study for farther surveies.
1.6 Scope of the Research Study
The range of this survey will be found in the Life Insurance industry of Kenya. However, due to clip and limited resources, the focal point will be on Old Mutual Life Assurance Company Kenya. Since this survey is on factors impacting labour turnover of Agents, the research will concentrate on the Agency force of the company which has about 200 Agents countrywide. For the same grounds above, the survey will concentrate on the Agency force in Nairobi which is about 100 in figure. The research worker will take sample from the research population. The period of survey will be up to 30th September 2012.
Chapter Two: LITERATURE REVIEW
2.1 Introduction
This chapter will critically analyse literature related to the survey. This will include the issue of labour turnover in general and its consequence, particular properties of Agents engage in merchandising services and Agent turnover in Life insurance industry.
2.2 Labor Turnover
Labor turnover is the ratio of the figure of employees that leave a company through abrasion, dismissal, or surrender during a period to the figure of employees on paysheet during the same period. One of the 14 rules developed by Henri Fayol is stable labour turnover. He postulated that there should be stableness of term of office of forces in an organisation. This is because a high labour turnover is harmful to the organisation. Employee turnover refers to the rate at which employees leave occupations in a company and are replaced by new hires. A high employee turnover rate implies that a company ‘s employees leave their occupations at a comparatively high rate. Employee turnover rates can increase for a assortment of grounds, and turnover includes both employees who quit their occupations and those who are asked to go forth. Average employee turnover rates differ among industries ; for illustration, in 2006, mean turnover rates in the United States varied between around 15 per centum yearly for lasting goods fabricating employees to every bit high as 56 per centum for the eating house and cordial reception industry, harmonizing to Nobscot Corporation.
Harmonizing to a free-lance author, Shelley Frost, Employee turnover is a natural portion of concern in any industry. Excessive labor turnover decreases the overall efficiency of the company and comes with a high monetary value ticket. Understanding the effects of losing a high figure of employees serves as a incentive to work toward cut downing the labour turnover rate for higher net incomes and a more appealing work environment. The author identified some cost associated with labour turnover as follows.
Each employee who resigns costs the company money. All of the money invested into that employee through preparation, instruction and licensing walks out the door with the employee. When you hire a replacing, the company spends money on those same countries to fix the new hire for the place. The company besides pays to publicize the vacancy and may incur costs for drug testing, physicals and traveling disbursals. The company could pay 1/3 of the annual wage of the new employee in costs.
Labour turnover rates cost the company clip in add-on to money. Directors or human resources staffs spend clip carry oning issue interviews, publicizing the occupation, enrolling campaigners and questioning. Supervisors and co-workers are frequently left to cover until a new employee is hired and get down working. The new employee may take several months to to the full larn the occupation and achieve competence in the place.
When the staff changes often, the employees who stay have a hard clip constructing a positive squad moral force. A group of employees learns to work good together, merely to hold one or more members leave. This leaves the staff in oblivion until a new employee starts. The personality and work moral principle of the new employee may change significantly from the old employee. Labor turnover can ache overall morale of employees.
The overall productiveness of the workplace tends to diminish with high turnover. Since a new employee has a period of accommodation, he wo n’t finish undertakings every bit rapidly as the individual he replaces. Group undertakings that rely on the new squad member may decelerate down, which affects experient employees ‘ productiveness degrees. The loss of impulse when an employee resigns may besides impact morale.
A high turnover rate affects the continuity of service to clients and other employees. This is peculiarly hard in an industry that relies to a great extent on relationships with clients. For illustration, a client who purchases merchandises from a company on a regular footing may turn tired of acquiring a new sales representative or client service contact every few months. Consistent relationships with clients help construct a stronger trueness to the company. The company is besides better able to supply consistent, high-quality service with well-trained staff that does n’t alter frequently.
2.2.3 Life Insurance Agent
Harmonizing to Independent insurance Agents of America ( IIAA ) ( 2009 ) an agent is a individual who performs services for another individual or an organisation under an express or implied understanding and who is capable to the other ‘s control or right to command the mode and agencies of executing the services. The other individual is called a principal. Rosenberg ( 2004 ) expresses the same sentiment in different words by stating that, Insurance agents are sometimes referred to as insurance gross revenues agents whose chief duty is to assist clients take insurance policies that suite their demands.
There are two types of agents as classified by LIMRA ( 2007 ) , some agents are confined or trussed agents who chiefly work for an insurance company and merely sell that companies ‘ merchandises, the other class of agents called independent or free spear Agents, are those who work for assorted insurance companies and sell insurance merchandises of many insurance companies. The independent or free spear Agents are normally registered and licensed companies popularly referred to as agents.
2.2.4 Qualification for going an Insurance agent
Frankas ( 2010 ) says that, for Insurance gross revenues agents occupation, most companies and independent bureaus prefer to engage college graduates-especially those who have majored in concern or economic sciences, high school alumnuss are on occasion hired if they have proven gross revenues ability or have been successful in other type of work. In fact, many entrants to insurance gross revenues agent occupations transfer from other businesss.
Harmonizing to LIMRA ( 2007 ) , College preparation may assist agents hold on the proficient facets of insurance policies and basicss and processs of selling insurance. As per the recommendation of AKI ( Association of Kenya Insurers ) ordinances, every insurance agent must hold done C.O.P ( Certificate of proficiency in insurance ) which is a proficiency certification to transact insurance concern in Kenya. Assorted employers are besides puting greater accent on go oning professional instruction as the diverseness of fiscal merchandises sold by insurance agent ‘s additions. ( Holt, 2010 ) .
An Insurance gross revenues agent who shows ability and leading may go a gross revenues director in a local office. As noted by U.S Bureau of Labor statistics ( 2010 ) a few progress to bureau director. However, many agents who have built up good patronage prefer to stay a gross revenues agent. Some peculiarly in the belongings and casually field-establish their ain independent bureaus or securities firm houses.
2.2.5 Resourcing schemes
George ( 1990 ) has pointed out that earlier choosing an agent at that place has to be a great procedure than merely interview. He asserts that pre-hire appraisal like proving and name centre simulations have become indispensable tool in the industry.
Tett ( 2000 ) of employment Technologies Corporation says that, for the insurance industry to win in bettering agents keeping at that place has to be simulation centres where the appliers would be given the chance to see what they expect to happen in the field and how gross revenues are like.
Harmonizing to Ashly ( 2000 ) it is good to command ; the flow of less-interested campaigners before they reach the interview phase. Sometimes the applicant knows better than the engaging specializer that he or she is non the right trying the occupation. Tom ( 2009 ) , and Peter ( 1999 ) agree that accepting agents without look intoing their involvements in the initial choice phase leads to hapless keeping of the agents. Nevertheless Srivivas ( 2003 ) warns against trusting excessively to a great extent on the simulation. He says that simulation can be really effectual for supplying people with some exposure to what the occupation is likely to be. On the same note Banks ( 2010 ) disputes the other writers by indicating out that simulation are excessively unreal such that good campaigners get left behind because they do hapless simulations Wright ( 1992 ) asserts that simulation is merely good to give a occupation presentation.
2.2.6 Agents Wage
Harmonizing Armstrong, ( 2006 ) Wage is the compensation an employee receives in return for his or her part to the organisation.
Luthans ( 1992 ) asserts that Remuneration occupies an of import topographic point in the life of an employee, his or her criterion of life and position in society. Groholdt ( 2001 ) points out that, Motivation, trueness, and productiveness depend upon the wage he or she receives. For the employer excessively, employee wage is important because of its part to the cost of production, besides, many conflicts ( in the signifier of work stoppages and lock outs ) are fought between the employer and the employees on issues associating to rewards or fillip.
Life insurance gross revenues professionals typically earn all or most of their income through committee, which means that they get a certain per centum of every sale they make every bit good as residuary income when clients continue to do payments. For this ground, an agent has the possible to gain much more than he would at an mean hourly occupation. As with any other commission-based occupation, if an agent fails to execute, he will non be able to gain anything. Even if he does sell a significant sum of insurance one month, he may non be able to prolong these gross revenues Numberss from month to month, and this may ensue in an unstable degree of income. Cravens, Ingram, Loforge and Youngs, ( 1993 ) , explored the relationships between compensation/control systems and public presentation and keeping. Their consequences indicate that the type of control system, that is direction control versus committee control, is correlated to several steps of success and agents keepings.
They found out that gross revenues performed and agent ‘s keeping was more affected by committee control than by direction control.
2.2.7 Agent Training
Employee development is something that most people imagine as intrusive all-day group preparation Sessionss. Unfortunately, this dreaded attack to employee development is merely the antonym of how employee development should happen and experience to employees. Employee development can attest itself in many signifiers of preparation, ratings, educational plans, and even feedback. If executed right, the effects of preparation on agent public presentation can frequently promote growing within the worker and the organisation itself. One of the larger facets of developing Agent ‘s accomplishments and abilities is the existent organisational focal point on the Agent to go better, either as a individual or as a subscriber to the organisation. Harmonizing to Organizational Behavior by Robert Kreitner and Angelo Kiniki, ( 2009 ) it ‘s been shown that employees that receive regular, scheduled feedback, including preparation, along with an addition in outlooks, really have a higher degree of worker end product. Kreitner and Kiniki refer to this as the “ Pygmalion Effect. ”
The hope is that agents who receive preparation in line with their single or organisational ends will go more efficient in what they do. Organizations should look at the positive effects of preparation on agent public presentation, and see agent development as a targeted investing into doing the front line worker stronger. More significantly, development programs that include “ train-the-trainer ” ( developing that trains agents to go trainers of a accomplishment ) can supply exponential benefits to the organisation. This preparation can be anything from how agents can make their ain occupations better to these agents being groomed to replace their supervisor. In add-on, agents who are invested as a trainer might be farther inclined to remain with the organisation, and perchance cut down agent turnover.
Along with back uping the organisation, agents might acknowledge that most types of agent development provide them benefits. Agent development plans that range from enfranchisements to education reimbursement, to even basic gross revenues accomplishments preparation, have a certain cost to the organisation that can easy be considered a benefit to the agent. Such consciousness on the portion of the agent can besides take to greater trueness to the organisation every bit good as enhanced occupation satisfaction. Training and instruction that can be added to the agents resume are large ticket points in footings of compensation programs, and should be treated as such.
Beyond agent preparation and enfranchisement classs, ratings and reding Sessionss are another signifier of agent development. They provide public presentation feedback and let agents to be cognizant of alterations to both their work ends and the overall aims of the organisation. Agents who do non have feedback on a regular footing normally end up feeling as though they might be forgotten by their supervisor, and this form may even take to feelings of dissent among the Agency force. Traveling back to the Pygmalion Effect, agents who have consistent cognition of their degrees of public presentation, and who feel that their supervisors are puting outlooks on them, by and large perform better on an single footing.
Agents are required to go to meetings, seminars and plans to larn about new merchandises and services, learn new merchandising accomplishments and receive proficient aid in developing new histories. Churchill, Ford, Hartley, and Walker, ( 1998 ) explored function variable, accomplishment, motive, personal factors, aptitude, and organizational/environmental factors in the keeping of agents. The survey found that, on norm, individual forecasters or gross revenues public presentation accounted for less than 4 % of the fluctuation in salesperson public presentation. Aptitude accounted for less than 2 % accomplishment degrees somewhat more than 7 % , motive accounted for 6.6 % function perceptual experiences was by far the best forecaster, accounting for every bit much as 14 % of the fluctuation in public presentation. Personal variables ( age, tallness, and sex, completion, and dressing ) accounted for 2.6 % while organisation and environmental factors accounted for about 1 % . They concluded that personal features, while of import, are non every bit of import as the act uponing factors such as, preparation, company policies, accomplishment degrees, and motive.
2.2.8 Physical Work Environment
The physical work environment can be identified as a topographic point or location where person works. Performance experts agree that the physical work environment has a important impact upon employee public presentation and productiveness. By physical work environment we mean the edifice constructions, office layout, tools, furniture, infinite, noise degree and surrounding of the workplace that impact favourably or unfavourably single public presentation. The work environment besides includes policies, regulations, civilization, resources, working relationships, work location, and internal and external environmental factors, all of which influence the ways that employee execute their occupation maps. It is widely accepted that the work environment has an impact – positive or negative – on productiveness. The work environment strongly influences the extent to which employees are engaged in their work and committed to the organisation. Disengaged workers produce second-rate consequences ; extremely engaged workers produce extraordinary consequences. Agents spend a higher per centum of their work clip on the field. However, they besides have a base where they do some signifier of analysis and planning. Hence the work environment has some influence on their ego regard and trueness to the company. Harmonizing to William ( 2008 ) to be able to set up whether the client is insurable, agents do analyze and analyse accounting records to find fiscal position of constitution and fix fiscal studies refering operating processs.
Insurance agents in many occasions serve as claim pre-settlements agents by reexamining claims for the clients to be made. Stevenson ( 2007 ) said that they interact with clients to supply information in response to enquiries about merchandise and services and to manage and decide assorted ailments which arise from the clients in the field.
2.2.9 Job satisfaction
Job satisfaction describes how happy an person is with his or her occupation. The happier people are within their occupation, the more satisfied they are said to be. People derive satisfaction from the work they do if it is disputing. Challenging Work enables people to be engaged and energized in their concern. Peoples want to experience that each twenty-four hours a spot more of their possible is realized and utilized as they contribute to the concern ends. Regardless of the existent work that is being done, people by and large want to experience a sense of accomplishment, duty, enjoyment and acknowledgment. Work that many see as demanding, for illustration being a tooth doctor or an air-pilot, may good go everyday and uninspiring if the person is non on a regular basis given the chance to widen him/herself. Similarly, work that for many may be seen as everyday and uninspiring, for illustration a cleansing agent or a supermarket teller can go ambitious by integrating other activities that are meaningful to that individual, into their day-to-day work. In other words, when you increase the range of work to be done, to the degree of the person ‘s capableness, so people by and large become more occupied and energized. An unchallenging occupation makes a worker unsated and could impact his willingness to remain on the occupation. A primary influence on occupation satisfaction is the application of Job design, which aims to heighten occupation satisfaction and public presentation utilizing methods such as occupation rotary motion, occupation expansion, occupation enrichment and occupation re-engineering.
2.2.10 Degree of Education
Degree of instruction plays a critical function in the success of a worker. A individual with low degree of instruction is less likely to win because of the restriction in footings of ability to analyse and grok state of affairss to enable him take determinations. It affects his mind and the people he is able to interact with. It affects the individual ‘s ego regard and assurance. This may impact the public presentation of an agent thereby unable to remain on the occupation for a long clip. The survey conducted by Turner ( 2008 ) on factors act uponing and impacting keeping of agents in the insurance industry in U.S.A. found out that ; several factors impacting life insurance agent production were tested in an attempt to bring forth a prognostic manner of agent and bureau production which straight has impact on their keeping. Surprisingly, formal instruction, professional instruction and preparation showed no consequence on production. It would be of involvement to happen out if this is besides the instance in Kenya.
2.3 Summary of Gap
A Life insurance company relies on a stable Agency force to sell its Life insurance merchandises. These merchandises are normally long tern traveling for a lower limit of five old ages in continuance. Agents are paid committee for any policy sold. The committee is structured in such a manner that a significant per centum up to 50 % of the premium is paid in the first twelvemonth and between 10 % to 40 % is paid in subsequent old ages up to the 5th twelvemonth or sometimes stop of the policy term. The profitableness of a policy to the Life insurance Company depends on the consistent service of that policy by the Agent.
When an Agent leaves an insurance Company when the policies he sold are still in their early old ages, such policies will no longer be serviced. Hence, the Company will lose in footings of future in-flow of investible financess, lost of committee paid in progress for future services of the Agent and an early oversight of such ‘orphan ‘ policies. The economic system besides suffers because it will be starved of investable financess which aid the economic development of the state.
2.5 Conceptual model
Figure 2. Conceptual Model
Wage
Training
Labour Employee turnover of Life Insurance Agents
Physical Work Environment
Job Satisfaction
Degree of Education
Independent Variables Dependent Variables
Beginning Author ( 2012 )
The chance of gaining an income is the primary intent of taking up any occupation. The method and sum of wage has an consequence on labour turnover of agents. Training and development helps in optimising the use of human resource that farther helps the employees to accomplish the organisation ends every bit good as their single ends. Training enhances agents ‘ assurance and encouragements self-esteem which finally enables them to place themselves with the company, accordingly cut downing opportunities of their go forthing the company.
Training and development helps in increasing the occupation cognition and accomplishments of agents at each degree.It helps to spread out the skylines of human mind and an overall personality which decidedly sharpens the accomplishments and competency of the agent in the field.
Age of an agent determines to a great extent the adulthood and attitude in confronting assorted state of affairss in the field and by and large life jobs which agents face on day-to-day bases in their enterprise to beginning for clients to purchase insurance.
Working environment affects employees by and large since working environment would either corrupt an employee or motivate. Once an employee is demoralized decidedly public presentation becomes the casualty which finally may take to an employee discontinuing the occupation or even being sacked.
Degree of instruction determines the assurance of an employee in what he or she does. Most of the clip due to self assurance an employee becomes competent and public presentation by and large good, hence the image of the organisation is boosted.
Chapter THREE: RESEARCH METHODOLOGY
3.1. Introduction
This chapter will show the methodological analysis that will be used in order to garner informations that will assist in replying the research inquiries. The chapter will get down by placing the research design that will be used in footings of research scheme and intent. It will so turn to the issue of the population and the sample and trying techniques that will be used. This chapter will besides cover methods that will be adopted to garner informations, the research procedures that will be used and method of informations analysis.
3.2. Research design
Questions can be classified in footings of their intent every bit good as the scheme to be used Robson ( 2002 ) . The intent of the research can be to research, depict or explicate Saunders, Lewis & A ; Thornhill ( 2003 ) . The intent of this survey is to analyze the factors that affect labour turnover of Life insurance Agents in Old Mutual Life Assurance Company Kenya. The descriptive attack will be used since it produces an accurate representation of individuals, events or state of affairss Robson ( 2002 ) . This survey is chiefly descriptive and when carry oning a descriptive survey, a qualitative research attack can be suited since harmonizing to Denzin & A ; Lincoln ( 1994 ) a qualitative survey is one which provides practical solutions in a existent state of affairs. Due to the qualitative attack that will be used while carry oning this survey, a instance survey would be the ideal scheme to use. This is because a instance survey ‘involves an empirical probe of a peculiar coeval phenomenon within its existent life context utilizing multiple beginnings of grounds ‘ Robson ( 2002 ) .
3.3 Population
The mark population as described by Keogh ( 2004 ) is the amount of the units the research worker is interested in analyzing. The mark population will be the Regional Managers, Gross saless Directors and Agents of Old Mutual Life Assurance Company Kenya totaling approximately 233.
Table 3. Target Population
Class
Target Population
Percentage
Regional Directors
8
3
Gross saless Directors
25
11
Gross saless Agents
200
86
Entire
233
100
Beginning OMLAC ( 2012 )
3.4 Sampling Design and Sample Size
The sampling frame will include Regional directors, gross revenues directors and agents of Old Mutual Life Assurance Limited in Nairobi. This is because they are representations of the mark population. In order to find the sample size to be included in the survey, the research worker will utilize chance trying techniques. Probability trying techniques gives everyone in the population an equal chance of being chosen in the concluding sample. The sample is made up of Regional Managers, Gross saless Directors and Agents numbering 113. Harmonizing to Kothari ( 1999 ) , an optimal sample is the 1 that fulfils the demand of efficiency, representativeness, dependability and flexibleness. A sample proportion of 35 % will be drawn from each stratum to fulfill the demand of optimality and representativeness utilizing simple random sampling technique.
Table 3. Sample Size
Class
Sample Target
Sample Ratio
Sample Size
Regional Directors
3
0.35
1
Gross saless Directors
10
0.35
4
Gross saless Agents
100
0.35
35
Entire
113
0.35
40
Beginning Author ( 2012 )
3.5. Data Collection Methods
Harmonizing to Yin ( 2003 ) , the usage of different beginnings of grounds when roll uping informations for instance surveies is a major advantage. The dependability of instance surveies as being representative of the population is doubted in assorted literatures Saunders et Al ( 2003 ) and Yin ( 2003 ) . Triangulation will hence be used to guarantee dependability by obtaining accurate and convincing findings and decisions. The research worker will utilize questionnaires every bit good as secondary informations in the signifier of paperss. Documentary beginnings will be used since they are easy available to the research worker and could assist in indicating out other issues that may non be so clear in the primary informations.
Questionnaires were selected as a method of informations aggregation since they are normally ideal for descriptive and explanatory research Saunders et Al, ( 2003 ) . Descriptive surveies tend to be linked to construction type of interviews since the interviews can be used as a agency to place general forms.
3.6. Research Procedures
An debut will be given to the participants on the intent of the survey and there will besides be an confidence of confidentiality. The questionnaires will be self-administered. The research worker will present and roll up the questionnaires.
3.7. Data analysis Methods
There are different general analytical schemes to take from when analysing instance surveies. This survey will affect both qualitative and quantitative analysis. The quantitative information collected will be summarized, collated and analyzed utilizing statistical techniques. Descriptive statistics will besides be used to depict the informations in footings of frequences, per centums agencies, manner etc.
