Interpretive Structural Modelling of Causes of Employee Turnover in Microfinance Industry

  • Dr. Tehmina Fiaz Qazi Hailey College of Banking & Finance, University of the Punjab, Lahore
  • Abdul Basit Lahore Institute of Science & Technology, Lahore
  • Saira Shaukat Institute of Business & Management, University of Engineering & Technology, Lahore
Keywords: Microfinance, ISM, MICMAC, Employees’ Turnover, Microfinance Banks


Microfinance is considered to be one of the best tools to deliver the financial services to the poor people in Pakistan to eradicate the poverty from the roots. This research is aimed to explore the factors that impact causes of employee turnover in microfinance industry in developing countries like Pakistan. Discourse of literature coupled with experts opinion is used for identification of factors. Interpretive Structural Modelling (ISM) is used of structural mapping of factors interconnections. Cross impact matrix multiplication applied to classification (MICMAC analysis) is used for classifying the factors on the basis of driving-dependence power. ISM and MICMAC methodologies are used in order to simplify the complex and conundrum phenomena by representing it into graphical form. These are qualitative methodologies of modelling and analysis for which primary data is collected through matrix type instrument of measurement coupled with semi-structured interview. Results of review of literature show that there are 18 factors causing employees turnover in microfinance industry. ISM results reveal that job insecurity, absence of complementary financial and non-financial services, unrealistic recovery targets and temptation for money laundering are the most critical factors. MICMAC shows that there is no autonomous factor, 4 are in independent, 4 are in dependent and remaining 10 are in linking. This is a valuable study having implications for microfinance investors to use their existing resources, policy makers to design their policies according to the designed framework to gain advantage and decision makers to use their existing resources & means to manage these factors optimistically. The current study was conducted in a developed country such as Pakistan, but it can be effectively extended to neighbouring developing countries with minor changes to the hierarchy structural model.