3 Retention of Human Resources How do we retain people?Why People Stay or Leave—Links, Fit, and SacrificeCulture and ValuesPositive, distinctive company that is well-managed, and offers exciting challenges.Attractive JobFreedom and autonomy, exciting challenges, and career advancement and growthCompensation and lifestyleDifferentiated pay package, high total compensation, geographic location, and respect for lifestyle
4 Drivers of Retention Do people leave jobs? Do people leave people? What here can the immediate manager control?Drivers of Retention
7 Managing Retention Retention Measurement and Assessment Employee SurveysAttitude survey—focuses on employees’ feelings and beliefs about their jobs and the organization. (Go over and USE these results!)Exit InterviewsAn interview in which individuals are asked to identify reasons for leaving the organization.Key in getting “the real story”Retention Evaluation and Follow-UpRegular review of turnover data (consistent metric)Tracking of intervention results and adjustment of intervention efforts (performance to plan)
8 Suggestions for Improving Retention Retention InterventionsProvide realistic job previews during the recruiting processImprove the selection process so that there is a better person-job fit for new hiresConduct effective job orientation and initial trainingOffer competitive, fair, and equitable compensationProvide an adequate benefits packageOffer career development and training (not enough to have this in place, employees have to “see it”)Engage in fair and nondiscriminatory employee relations
9 Three Major Indices for Managing Retention Retention Assessment and MetricsEmployee SurveysExit InterviewsFirst-Year Turnover Evaluations
11 Components of the Psychological Contract The unwritten expectations employees and employers have about the nature of their work relationships. Affected by age of employee and changes in economic conditions.Focuses on expectations about “fairness” that may not be defined clearly by employees.Employers provide:Competitive compensation and benefitsCareer development opportunitiesFlexibility to balance work and home lifeEmployees contribute:Continuous skill improvementReasonable time with the organizationExtra effort when neededIs this realistic in this market, competition, time/age and this generation?
12 Psychological Ownership A concept related to the Psych Contract is Psychological OwnershipWhen individuals feel that they have some control, responsibilities and rights in the organization.Fiduciary Ownership vs. Psychological OwnershipWhat is Psych Ownership?Optimal and potentially destructive forms of ownershipHow do we attain each in employees?Do we want Psych Ownership?
13 Job Satisfaction, Loyalty, and Commitment In addition to Psych Ownership, we want to generate:Job SatisfactionA positive emotional state resulting from evaluating one’s job experience.Organization Commitment (Loyalty)The degree to which employees believe in and accept organizational goals and desire to remain with the organization.Continuance commitmentAffective commitmentNormative commitment
14 Factors Affecting Job Satisfaction and Organizational Commitment IndividualFactors
15 Job Satisfaction, Loyalty, and Commitment (cont’d) AbsenteeismAny failure to report for work as scheduled or to stay at work when scheduled.Involuntary absenteeismUnavoidable with understandable cause (e.g., actual illness)Voluntary absenteeismAvoidable without justifiable cause (e.g., feigning illness)Men vs. WomenMeasuring absenteeism:
18 Employer Absenteeism Control Actions (cont’d) Disciplinary approachIncreasingly severe disciplinary action leading eventually to dismissalPositive reinforcementRewarding attendance with prizes and bonusesCombination approachUse of both discipline and rewards to motivate employee attendance.“No fault” absenteeismReasons for absence do not matter. Absenteeism in excess on normal limits can trigger disciplinary action and lead to eventually to dismissalPaid time-off programsTime-off is not categorized by type. Absences in excess of employer-paid time-off are unpaid.
19 HR Metrics: Measuring Absenteeism U.S. Department of Labor formula:Other Measures of Absenteeism:Incidence rate—the number of absences per 100 employees each dayInactivity rate—the percentage of time lost to absenteeismSeverity rate—The average time lost per absent employee during a specified period of timeHow do we know if absenteeism is a problem? Dollarize?
20 HR Metrics: Measuring Absenteeism (cont’d) Calculations of the costs of absenteeism should usually include:Lost wagesBenefitsOvertime for replacementsFees for temporary employees, if incurredSupervisor’s timeSubstandard productionOverstaffing necessary to cover absences
21 Employee Turnover Turnover The process in which employees leave the organization and have to be replaced.Impact of TurnoverInability to achieve business goalsLoss of “image” to attract other individualsHigh costs of turnover and replacement
22 Types of TurnoverInvoluntary turnover—terminations for poor performance or work rule violations.Voluntary turnover—employees leave by choice.Functional turnover—lower-performing or disruptive employees leave the organization.Dysfunctional turnover—key individuals and high performers leave at critical times.Uncontrollable turnover—employees leave for reasons outside the control of the organization. (environmental jolts- Lee, Mitchell, Holtom et alControllable turnover—occurs due to factors that could be influenced by the employer.*Hint: Communicating downsizing should be done very carefully as you will have Dysfunctional Turnover
23 HR Metrics: Measuring Turnover (cont’d) How do you know if turnover is a problem? Measure and dollarize!Industry turnover ratesWays to Measure Turnover:Job and job levelsDepartment, units, and locationReason for leavingLength of serviceDemographic characteristicsEducation and trainingKnowledge, skills and abilitiesPerformance ratings/levels.
24 HR Metrics: Measuring Turnover (cont’d) Computing the Turnover Rate:Costs of TurnoverSeparation costsReplacement costsTraining costsHidden costs
25 Simplified Turnover Costing Model by Job Type $20,00040%$28,000203$ 3,500$70,000