Part 6: Staffing System and Retention Management Chapter 14: Retention Management

Staffing Organizations Model 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 13-2

Chapter Outline Turnover and Its Causes Analysis of Turnover Nature of the Problem Types of Turnover Causes of Turnover Analysis of Turnover Measurement Reasons for Leaving Costs and Benefits Retention Initiatives: Voluntary Turnover Current Practices Desirability of Leaving Ease of Leaving Alternatives Retention Initiatives: Discharge Performance Management Progressive Discipline Retention Initiatives: Downsizing Legal Issues Separation Laws and Regulations Performance Appraisal

Learning Objectives for This Chapter Be able to differentiate among the types and causes of employee turnover Recognize the different reasons employees leave their jobs Evaluate the costs and benefits of turnover Learn about the variety of techniques companies use to limit turnover See how performance management and progressive discipline limit discharge turnover Understand how companies manage downsizing Recognize a variety of legal issues that affect separation policies and practices

Discussion Questions for This Chapter For the three primary causes of voluntary turnover (desirability of leaving, ease of leaving, alternatives), might their relative importance depend on the type of employee or type of job? Explain. Which of the costs and benefits of voluntary turnover are most likely to vary according to type of job? Give examples. If someone said to you, “It’s easy to reduce turnover—just pay people more money,” what would your response be? Why should an organization seek to retain employees with performance or discipline problems? Why not just fire them? Discuss some potential problems with downsizing as an organizations’ first response to a need to cut labor costs.

Turnover and Its Causes Nature of the problem Minimize costs of turnover Acknowledge benefits of turnover Types of turnover Voluntary: initiated by employees Avoidable Unavoidable Involuntary: initiated by the company Discharge Downsizing

Exhibit 14.1 Types of Employee Turnover

Exhibit 14.2 Causes of Voluntary Turnover

Causes of Turnover Discharge turnover Downsizing turnover Employee fails to follow rules and procedures KSAO/job requirements mismatch Downsizing turnover Lack of forecasting and planning Inaccuracies in forecasting and planning Unanticipated changes in labor demand and/or labor supply

Reasons for Leaving Post-exit surveys Satisfaction surveys Exit interviews Formal discussions with departing employees Conducted by a neutral person Follow a clear structure prepared in advance Knowledgeable interviewers Conducted in private Post-exit surveys Cover the same material as a typical exit interview Can involved both numerical and open-ended responses Satisfaction surveys Evaluate why current employees do not leave

Ex. 14.5: Voluntary Turnover Costs and Benefits Separation costs HR and managerial time Temporary coverage Reduced performance Replacement costs Training costs Benefits Superior replacement New KSAOs Restructuring opportunities Savings from not replacing employee Transfer or promotion opportunities for others Replacement is less costly

Ex. 14.7: Discharge Costs and Benefits Separation costs May be even more time consuming than voluntary turnover Can lead to lawsuits Conflicts with remaining workers Replacement costs Training costs Benefits Departure of low-value employee Higher value replacements Reduced disruption for manager and work unit Improved performance management

Ex. 14.8: Downsizing Costs and Benefits Separation costs Time in managing and implementing layoffs Severance, early retirement, and contract buyout costs Increased unemployment insurance Potential damage in financial markets Benefits Lower payroll and benefits Ability to relocate Improved promotion and transfer opportunities for stayers Flatter hierarchy Increased per-person productivity

Retention Initiatives: Voluntary Turnover Reviews of organizational practices show some key factors that reduce turnover Results come from 1,000s of different workplaces Other results from WorldatWork Survey and 100 Best Companies Most effective initiatives: Retention bundles Benefits Dispute resolution Participative work design Least effective initiatives: Relative pay Sophisticated selection systems Variable pay Training

Retention Bundles Individual practices in isolation aren’t as powerful as systems of practices Rewards for performance matched with wide communication reduce turnover of high performers Neither rewards nor communication are especially effective in isolation Integrated systems include careful selection, adequate training, satisfying conditions, and rewards for retention

Ex. 14.10 Retention Initiative Examples

Retention Initiatives: Desirability of Leaving Extrinsic rewards Make rewards meaningful and unique Match to individual preferences Link to retention behaviors Link rewards to performance Intrinsic rewards Assign employees to jobs that meet their needs Provide clear communication Design fair reward allocation systems Ensure supervisors provide a positive environment Provide work/life balance programs

Retention Initiatives: Ease of Leaving and Alternatives Provide organizational specific training Cost of leaving Provide deferred compensation (e.g., long-term bonuses or pensions) Provide difficult to replace amenities Alternatives Provide internal promotion opportunities Respond to outside job offers

Retention Initiatives: Discharge Performance management process Work with employees to minimize need for involuntary turnover Document performance problems in advance, with clear consequences communicated

Retention Initiatives: Downsizing Alternatives to downsizing No-layoff strategies Attrition (not replacing those who leave) Hiring freezes Non-renewal of contract workers Salary reduction Early retirement Retaining and motivating those who remain Communicate downsizing decisions clearly Involve the current workforce in redesigning jobs Provide job search assistance

Legal Issues Separation laws and regulations Public policy restrictions on employment at will Employment discrimination laws Employment contract principles Labor contracts Advance warnings Severance agreements

Legal Issues Performance appraisal Criteria should be job related, specific, and communicated in advance Manager should be competent in rating performance relative to job requirements Multiple raters should be used Ratings must be documented Ratings should be frequent Appeals systems should be in place

Ethical Issues Issue 1 Issue 2 Imagine your organization is doing exit interviews and has promised confidentiality to all who respond. You are responsible for conducting the exit interviews. Your supervisor has asked you to give her the name of each respondent so she can assess the information in conjunction with the person’s supervisor. What obligations do corporate HR employee have to keep information confidential in such circumstances? Issue 2 Firing an employee has numerous potential negative organizational consequences, including the discomfort of the supervisor who delivers the termination information, conflict or sabotage from the departing employee, and the filing of a lawsuit. To avoid this, many supervisors give problem employees unpleasant work tasks, reduce their working hours, or otherwise negatively modify their jobs in hopes that they will simply quit. What are the ethical issues raised by this strategy?