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1 Retention Management CHAPTER FOURTEEN Screen graphics created by:
Jana F. Kuzmicki, PhD Troy State University-Florida and Western Region McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

2 Staffing Organizations Model
Vision and Mission Goals and Objectives Organization Strategy HR and Staffing Strategy Staffing Policies and Programs Support Activities Core Staffing Activities Legal compliance Recruitment: External, internal Planning Selection: Measurement, external, internal Job analysis Employment: Decision making, final match Staffing System and Retention Management

3 Chapter Outline Turnover and Its Causes Analysis of Turnover
Nature of Problem Types of Turnover Causes of Turnover Analysis of Turnover Measurement Reasons for Leaving Costs and Benefits Retention Initiatives: Voluntary Turnover Retention Initiatives: Discharge Retention Initiatives: Downsizing Legal Issues

4 Turnover and Its Causes
Nature of problem Types of turnover Causes of turnover

5 Nature of the Problem Employee retention can contribute to organizational effectiveness Turnover is not only costly but may be beneficial Focus of retention strategies Number of employees retained and Who is retained Turnover is inevitable Approach to retention management Gather and analyze employees’ reasons for leaving

6 Types of Turnover Exhibit 14.1: Types of Employee Turnover Voluntary
Avoidable - Could be prevented Try to prevent for high value employees Do not try to prevent for low value employees Unavoidable - Could not be prevented Involuntary Discharge Downsizing

7 Avoidable (could prevent) Unavoidable (could not prevent)
Exhibit 14.1: Types of Employee Turnover - Voluntary -- Employee Initiated Avoidable (could prevent) Unavoidable (could not prevent) Try to Prevent: High-Value Employees High performance Strong KSAOs Valued intellectual capital High promotion potential High training investment High experience Difficult to find replacement Do not Prevent: Low-Value Employees Low performance Weak KSAOs Little intellectual capital Low promotion potential Low training investment Low experience Easy to find replacement No attempt to Prevent: Regardless of Value Retirement Dual career New career Health Child care or pregnancy Elder care Return to school Leave country Take a break

8 Exhibit 14.1: Types of Employee Turnover - Involuntary -- Organization Initiated
Discharge Downsizing Discipline Poor performance Permanent layoff Temporary layoff Site or plant closing, relocation Redundancy due to merger or acquisition

9 Causes of Turnover: Voluntary
Exhibit 14.2: Causes of Voluntary Turnover Behavior of leaving preceded by intention to quit Factors affecting intention to quit Perceived desirability of leaving Often results from a poor person/job or Person/organization match Perceived ease of leaving Represents lack of barriers to leaving and Of being able to likely find a new job Available alternatives Depends on other job options both within and outside organization

10 Exhibit 14.2: Causes of Voluntary Turnover
Desirability of Leaving Low job satisfaction Shocks to employee Personal (nonjob) reasons + Ease of Leaving Favorable labor market conditions General, transferable KSAOs Low cost of leaving + Intention to Quit + Quit Alternatives Internal: New job possibilities External: Job offers +

11 Causes of Turnover: Discharge and Downsizing
Discharge turnover Mismatch between job requirements and KSAOs Employee fails to follow rules and procedures Unacceptable job performance Downsizing turnover Mismatch in staffing levels which leads to an overstaffing situation Factors related to overstaffing Lack of forecasting and planning Inaccuracies in forecasting and planning Unanticipated changes in labor demand and/or supply

12 Analysis of Turnover Measurement Reasons for leaving
Costs and benefits

13 Measurement of Turnover: Formula
Turnover rate Number of employees leaving  average number of employees x 100 Data and decisions Identify time period of interest Determine type of employees that count Determine method to calculate average number of employees over the time period

14 Measurement of Turnover: Breakouts and Benchmarks
Analysis of turnover data aided by deciding on categories of data Type of turnover Type of employee Job category Geographic location Benchmarks Internal - Trend analysis External - Compare internal data with external data Exh. 14.3: Data from job openings and labor turnover survey

15 Measurement of Turnover: Reasons for Leaving
Important to ascertain, record, and track reasons why employees leave Tools Exit interviews Formal, planned interviews with departing employees Postexit surveys Surveys sent to employees soon after their last day Employee satisfaction surveys Surveys of current employees to discover sources of dissatisfaction which may become reasons for leaving Results can provide information to pre-empt turnover Require substantial resources

16 Guidelines: Conducting Exit Interviews
Interviewer should be a neutral person who has been trained in how to conduct exit interviews Training issues How to put employee at ease and explain purpose How to follow structured interview format and take notes How to end interview on positive note Structured interview format should contain questions about unavoidable and avoidable reasons for leaving Exh. 14.4: Examples of Exit Interview Questions Interviewer should prepare by reviewing interview format and interviewee’s personnel file Interview should be conducted in private, before employee’s last day Interviewee should be told interview is confidential

17 Measurement of Turnover: Costs and Benefits
Costs and benefits can be estimated for each of the three turnover types Types of costs Financial Nonfinancial Some costs and benefits can be estimated financially Nonfinancial costs and benefits may outweigh financial ones in importance and impact

18 Costs and Benefits for Types of Turnover
Voluntary turnover Exh. 14.5: Voluntary Turnover: Costs and Benefits Exh. 14.6: Example of Financial Cost Estimates for One Voluntary Turnover Discharge Exh. 14.7: Discharge: Costs and Benefits Downsizing Exh. 14.8: Downsizing: Costs and Benefits Costs Benefits

19 Retention Initiatives: Voluntary Turnover
Current practices and deciding to act What do organizations do? Exh. 14.9: Retention Initiatives: Usage and Effectiveness Exh : Retention Initiative Examples Decision process Exh : Decision Process Desirability of leaving Exh : Guidelines for Increasing Job Satisfaction and Retention Ease of leaving Alternatives

20 Guidelines for Increasing Job Satisfaction and Retention
Extrinsic rewards Rewards must be meaningful and unique Rewards must match individual preferences Link rewards to retention behaviors Link rewards to performance Intrinsic rewards Assign employees to jobs that meet their needs for work characteristics Provide clear communication with employees Design fair reward allocation systems Ensure supervisors provide a positive environment

21 Exh. 14.11: Decision Process for Retention Initiatives
Do We Think Turnover Is a Problem? How Might We Attack the Problem? What Do We Need to Decide? Should We Proceed? How Should We Evaluate the Initiatives?

22 Ease of Leaving Two points of attack
Provide organization-specific training Should organization invest in training to provide general or organization-specific KSAOs? Combine training strategy with a selection strategy focused on assessing and selecting general KSAOs Increase cost of leaving by providing Above-market pay and benefits Deferred compensation Retention bonuses Desirable location of company’s facilities

23 Alternatives Approaches to make internal alternatives more desirable than outside alternatives Internal staffing Encourage employees to seek internal job opportunities Provide attractive internal options outside of traditional internal staffing system Responding to external job offers entails developing appropriate policies Decide whether to provide counteroffers or not Determine types of employees to provide counteroffers Decide who will develop counteroffer and nature of approval process

24 Retention Initiatives: Discharge
Performance management Exh : Performance Management Process Manager training and rewards Progressive discipline Five requirements of a progressive discipline system - P. 701 Actions to take Exh : Progressive Discipline Examples: Misconduct and Penalties

25 Exh. 14.12: Performance Management Process
Organization Strategy Work-Unit Plans (1) Performance Planning Goals Competencies (4) Decisions Pay Training/career plans Performance problems Retention (2) Performance Execution Resources Coaching Feedback (3) Performance Appraisal Goal attainment Competency ratings Written comments Feedback

26 Retention Initiatives: Downsizing
Weigh advantages and disadvantages See Exh. 14.8 Staffing levels and quality View retention in two ways Balance a financial quick fix against unlikely return of downsized employees if economic conditions improve Approach reductions in selective or targeted terms, rather than across the board Determine who should be retained, if cuts are made Retain most senior employees Make performance-based decisions Retain “high-value employees” and layoff “low-value employees”

27 Retention Initiatives: Downsizing (continued)
Alternatives to downsizing No layoff or guaranteed employment policy Layoff minimization programs Exh : Layoff Minimization Examples Employees who remain Potential results of ignoring survivors Increased stress levels Critical appraisals of downsizing process Examples of “survivor sickness” Provide programs to meet needs of survivors Enhanced communication programs Morale-boosting events Promotion of EAPs Stress-related training

28 Legal Issues Separation laws and regulations Performance appraisal

29 Legal Issues: Separation
Basic tenet of employee separation Fair and consistent treatment of employees Laws and regulations governing separation process Public policy restrictions on employment-at-will Employment discrimination laws and regulations Affirmative action requirements Employment contract principles Labor contract provisions Civil service laws and regulations Negligent supervision and retention Advanced warning about plant closings

30 Legal Issues: Suggestions for Performance Appraisal Systems
Appraisal criteria should be job-related, specific, and communicated in advance Manager/rater should receive training in overall performance appraisal process and how to avoid rating errors Manager should be familiar with employee’s job description and actual performance Agreement should exist among different raters in evaluating an employee’s performance Evaluations should be in writing Employee should be able to review evaluation and make comments before it becomes final Employee should receive timely feedback about the evaluation and an explanation for any outcome decision Provide upward review of employee’s appraisal Provide appeal system for employees dissatisfied with their evaluations

31 Ethical Issues Issue 1 Consider a circumstance where your organization is doing exit interviews and has promised confidentiality to all who respond. Your supervisor has asked you to give the name of each respondent so she can assess the information in conjunction with the person’s supervisor. What obligation to corporate HR employees have to keep information confidential in such circumstances?

32 Ethical Issues Issue 2 There are numerous negative organizational consequences to firing employees, including the discomfort of the supervisor who delivers the termination information, conflict or sabotage from the departing employee, and the potential for a lawsuit. In response, many supervisors provide problem employees unpleasant work tasks, reduced working hours, or otherwise negatively modify their jobs in hopes that the problem employees will simply quit. What are the ethical issues raised by this strategy?

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