Individual/Organizational Relationships The Psychological Contract Unwritten expectations employees and employers have about the nature of their relationship. Psychological Ownership When individuals feel that they have some control and perceived rights in the organization, they are more likely to be committed to the organization.

Components of the Psychological Contract Employers provide: Competitive compensation and benefits Flexibility to balance work and home life Career development opportunities Employees contribute: Continuous skill improvement and increase productivity Reasonable time with the organization Extra effort when needed

Factors Affecting Job Satisfaction and Organizational Commitment

Job Satisfaction and Commitment Positive emotional state resulting from evaluating one’s job experience. Organization Commitment (Loyalty) Degree to which employees believe in and accept organizational goals and desire to remain with the organization. Continuance commitment: the likelihood that an individual will stay with rather than withdraw from the organization.

Individual Employee Performance Individual Performance Factors Individual ability to do the work Effort level expended Organizational support Performance (P) = Ability (A) x Effort (E) x Support (S)

Components of Individual Performance

Individual Motivation Desire within a person causing him/her to act to reach a goal. Management Implications related to Motivation Consistency in organizational rewards Organizational support for employee efforts Accurate measurement of employee performance Desirability of rewards by employees

Retention of Human Resources Myths About Retention Money is the main reason people leave. Hiring has nothing to do with retention. If you train people, you are only training them for another employer. Don’t be concerned about retention during a merger. If solid performers want to leave, the company cannot hold them. I’m Gone

Retention of Human Resources Why People Stay or Leave—Links, Fit, and Sacrifice Culture and values Positive, distinctive company that is well-managed, and offers exciting challenges. Attractive job Compensation and lifestyle Differentiated pay package, high total compensation, geographic location, and respect for lifestyle

Some Characteristics of People and Jobs

Employee Absenteeism Any failure to report for work as scheduled or to stay at work when scheduled. Involuntary absenteeism Unavoidable with understandable cause (e.g., actual illness) Voluntary absenteeism Avoidable without justifiable cause (e.g., feigning illness)

Reasons for Unscheduled Absences Source: Based on data from “2006 CCH Unscheduled Absence Survey,” CCH, Inc., October 26, 2006, www.cch.com/press/news/2006. All Rights Reserved. Reprinted with permission.

Controlling Absenteeism Disciplinary approach Positive reinforcement Combination approach Paid time-off (PTO) “No fault” policy Controlling Absenteeism

Employee Turnover The process in which employees leave an organization and have to be replaced. Impact of Turnover Inability to achieve business goals Loss of “image” to attract other individuals High costs of turnover and replacement

Types of Turnover Turnover Involuntary Controllable Voluntary Functional Dysfunctional Uncontrollable Controllable

HR Metrics: Measuring Absenteeism U.S. Department of Labor formula Other Measures of Absenteeism: Incidence rate—absences per 100 employees each day Inactivity rate—percentage of time lost to absenteeism Severity rate—average time lost per absent employee during a specified period of time

HR Metrics: Measuring Absenteeism (cont’d) Costs of absenteeism: Lost wages Benefits Overtime for replacements Fees for temporary employees, if incurred Supervisor’s time Substandard production Overstaffing necessary to cover absences

HR Metrics: Measuring Turnover Computing the Turnover Rate Costs of Turnover Separation costs Replacement costs Training costs Hidden costs

HR Metrics: Measuring Turnover Ways to Measure Turnover: Job and job levels Department, units, and location Reason for leaving Length of service Demographic characteristics Education and training Knowledge, skills and abilities Performance ratings/levels

Simplified Turnover Costing Model 20,000 8,000 (40%) 28,000 20 3 3,500 70,000 Teller

FIGURE 3-8 Managing Retention

Possible Retention Interventions Spot cash awards for good work Develop profiles of successful employees and hire to the profile Learning bonuses Focus groups on employee issues Voluntary job sharing Realist job avenues Excellent employee development Payback agreement for moving expenses Clear goals Accurate performance appraisals Competitive benefits Career counseling Mentoring Diverse workplace Sabbatical leaves Facilitate promotion/transfer Reward managers with low turnover “Fair” pay Fulfilling work Avoid hiring those with a history of turnover Tuition reimbursement and promotion for education Retention bonuses Subsidized child/elder care Retrain for promotion/transfer Pay tied to performance Telecommuting Recognize good work Good working conditions Friendly work culture/co-workers Considerate supervisors Improved Retention