1. CHAPTER 10 Separating and Retaining Employees
fundamentals of Human Resource Management 4th edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright
CHAPTER 10
Separating and Retaining Employees
This chapter explores the dual challenges of separating and retaining employees.

2. What Do I Need to Know?
Distinguish between involuntary and voluntary turnover, and describe their effects on an organization.
Discuss how employees determine whether the organization treats them fairly.
Identify legal requirements for employee discipline.
After reading and discussing this chapter, you should be able to:

3. What Do I Need to Know? (continued)
Summarize ways in which organizations can fairly discipline employees.
Explain how dissatisfaction affects employee behavior.
Describe how organizations contribute to employees’ job satisfaction and retain key employees.
After reading and discussing this chapter, you should be able to:

4. Introduction
Every organization recognizes that it needs satisfied, loyal customers.
In addition, success requires satisfied, loyal employees.
Research provides evidence that retaining employees helps retain customers and increase sales.
Organizations with low turnover and satisfied employees tend to perform better.
This chapter explores the dual challenges of separating and retaining employees.

5. Managing Turnover What was the primary reason you’ve ever quit a job?
I Didn’t like my boss or coworkers
I wasn’t a fit with the company culture
Better pay somewhere else
More interesting or challenging work somewhere else
I was fired or laid off
Other
Research indicates that retaining employees helps retain customers and investors.
Organizations with low turnover and satisfied employees tend to perform better.
What was the primary reason you’ve ever quit a job?
Didn’t like my boss
I wasn’t a fit with the company culture
Better pay somewhere else
More interesting or challenging work somewhere else
I’ve never quit a job
Other
Ask students to comment on their answers. Link these comments to the concepts of voluntary and involuntary turnover from the employee’s perspective and functional vs. dysfunctional turnover from the employer’s perspective.

6. Managing Voluntary and Involuntary Turnover
Turnover initiated by an employer.
Often with employees who would prefer to stay.
Turnover initiated by employees.
Often when the organization would prefer to keep them.
Organizations must try to ensure that good performers want to stay with the organization and that employees whose performance is chronically low are encouraged – or forced – to leave.
Both of these challenges involve employee turnover - employees leaving the organization.

7. Table 10.1: Costs Associated with Turnover
In general, organizations try to avoid the need for involuntary turnover and to minimize voluntary turnover, especially among top performers.
Both kinds of turnover are costly, as summarized in Table 10.1.

8. Test Your Knowledge True (A) or False (B)
A manager who decides to fire an employee should quietly take action alone and then let others know afterwards.
Separating employees has financial and personal risks.
True (A) or False (B)
A manager who decides to fire an employee should quietly take action alone and then let others know afterwards.
Separating employees has financial and personal risks.
Answers: 1. B, 2. A.
Because of the critical financial and personal risks associated with employee dismissal, organizations must develop a standardized, systematic approach to discipline and discharge.
These decisions should not be left solely to the discretion of individual managers and supervisors.
Policies that can lead to employee separation should be based on the principles of justice and law and should allow for various ways to intervene.

9. Employee Separation
Organizations must develop a standardized, systematic approach to discipline and discharge.
These decisions should not be left solely to the discretion of individual managers or supervisors.
Policies should be based on principles of justice and law.
Policies should allow for various ways to intervene.
Because of the critical financial and personal risks associated with employee dismissal, it is easy to see why organizations must develop a standardized, systematic approach to discipline and discharge.

10. Interactional Justice
Principles of Justice
Outcome Fairness
A judgment that the consequences given to employees are just.
Procedural Justice
A judgment that fair methods were used to determine the consequences an employee receives.
Interactional Justice
A judgment that the organization carried out its actions in a way that took the employee’s feelings into account.

11. Figure 10.1: Principles of Justice
The sensitivity of a system for disciplining and possibly terminating employees is obvious, and it is critical that the system be seen as fair.
Employees form conclusions about the system’s fairness based on the system’s outcomes and procedures and the way managers treat employees when carrying out those procedures.
Figure 10.1 summarizes these principles as:
Outcome fairness
Procedural justice
Interactional justice

12. Test Your Knowledge
A company whose earnings are very low has to reduce the amount given in raises to avoid laying people off. The amount of the raise for each employee is determined objectively based on their performance. An employee working for this company will most likely feel ____________ and _________________.
High outcome fairness; high interactional injustice
Low outcome fairness; high procedural justice
Low interactional justice, high outcome fairness
Low outcome fairness, low procedural justice
A company whose earnings are very low has to reduce the amount given in raises to avoid laying people off. The amount of the raise for each employee is determined based on their performance. An employee working for this company will most likely feel ____________ and _________________.
High outcome fairness; high interactional injustice
Low outcome fairness; high procedural justice
Low interactional justice, high outcome fairness
Low outcome fairness, low procedural justice
Answer: B
It is possible to be unhappy with the outcome but not feel that it is unfair. For example, a company whose earnings are very low and has to reduce raises to avoid laying people off, the employee may not be happy with the low raise but will not perceive it as unfair because they realize the same is happening to everyone else and there is a good reason – poor performance of the company.

13. Legal Requirements Wrongful Discharge Discrimination
The discharge may not violate an implied agreement.
e.g., employer had promised job security
e.g., the action is inconsistent with company rules
The discharge may not violate public policy.
e.g., terminating the employee for refusing to do something illegal or unsafe.
Employers must make discipline decisions without regard to a person’s age, sex, race, or other protected status.
Evenhanded, carefully documented discipline can avoid such claims.
The law gives employers wide latitude in hiring and firing, but employers must meet certain requirements.
They must avoid wrongful discharge and illegal discrimination.
They also must meet standards related to employees’ privacy and adequate notice of layoffs.
These considerations are discussed on this and the next slide.

14. Legal Requirements (continued)
Employees’ Privacy:
Employers need to ensure that the information they gather and use for discipline is relevant.
Privacy issues also concern the employer’s wish to search or monitor employees.
Employers must be prudent in deciding who will see the information.

15. Organizations such as day care facilities and schools must protect employees’ right to privacy in their lives and on the job while balancing the need to protect children from harm.

16. Table 10.2: Measures for Protecting Employees’ Privacy
Table 10.2 summarizes the measures for protecting employees’ privacy.

17. Test Your Knowledge
Pam Jones worked for 41 years at the same company and had positive performance ratings and personnel records. She needed a calculator for work which she purchased with her own money but was not reimbursed because she lost the receipt. Later, a security guard stopped her as she was leaving work and discovered the calculator in her belongings. After a brief internal investigation, she was fired and it was announced through internal notices that she had committed a theft. The employee sued for libel, saying the company used her as an example to prevent other thefts.
What are the key issues in this case?
As an HR Director, how would you have handled this case?
Read the following passage to the class:
Pam Jones worked for 41 years at the same company and had positive performance ratings and personnel records. She needed a calculator for work which she purchased with her own money but was not reimbursed because she lost the receipt. Later, a security guard stopped her as she was leaving work and discovered the calculator in her belongings. After an brief internal investigation, she was fired and it was announced through internal notices that she had committed a theft. The employee sued for libel, saying the company used her as an example to prevent other thefts.
What are the key issues in the case?
Employee privacy, why were they searching employees on the way out? Could be indicator of poor, distrustful culture.
As the HR Director, how would you resolve this case?
Student’s answers will vary but should indicate a sense of due process for the employee and sensitivity around publicizing this event internally.
This is based on an actual case where the plaintiff one millions from the company.

18. Legal Requirements (continued)
Notification of Layoffs:
Organizations that plan broad-scale layoffs may be subject to the Workers’ Adjustment, Retraining and Notification Act (WARN).
Employers covered by the law are required to give notice before any closing or layoff.

19. Test Your Knowledge
After hiring Bob for a newly created marketing specialist position, his boss assures him that he will be secure in the job until he retires. A year later, that department is eliminated. Bob complains he was guaranteed employment until retirement. Is he right?
No, an employer can hire or fire someone whenever they want.
No, there was no written contract.
Yes, he was given a verbal contract.
After hiring Bob for a newly created marketing specialist position, his boss assures him that he will be secure in the job until he retires. A year later, that department is eliminated. Bob complains he was guaranteed employment until retirement. Is he right?
No, an employer can hire or fire someone whenever they want.
No, there was no written contract.
Yes, he was given a verbal contract.
Answer C, verbal contracts such as this have held up in courts in some states. Employers have to be careful how they frame the positions to employees. They don’t want to overemphasize the fact employment is at will but they also don’t want to make any guarantees they can’t fulfill.

20. Progressive Discipline
Hot-Stove Rule
Progressive Discipline
Principle of discipline that says discipline should be like a hot stove, giving clear warning and following up with consistent, objective, and immediate consequences.
A formal discipline process in which the consequences become more serious if the employee repeats the offense.
Organizations look for methods of handling problem behavior that are fair, legal, and effective.
A popular principle for responding effectively is the hot-stove rule.
The principles of justice suggest that the organization prepare for problems by establishing a formal discipline process in which the consequences become more serious if the employee repeats the offense.
Such a system is called progressive discipline.

21. Figure 10.2: Progressive Discipline Responses
A typical progressive discipline system identifies and communicates unacceptable behaviors and responds to a series of offenses with the actions shown in Figure 10.2 – spoken and then written warnings, temporary suspension, and finally, termination.

22. Progressive Discipline (continued)
The rules of behavior should cover disciplinary problems such as the following behaviors encountered in many organizations:
Tardiness
Absenteeism
Unsafe work practices
Poor quantity or quality of work
Sexual harassment of coworkers
Coming to work impaired by alcohol or drugs
Theft of company property
Cyberslacking
Creating a formal discipline process is a primary responsibility of the human resource department.
For each infraction, the HR professional would identify a series of responses, such as those in Figure In addition, the organization must communicate these rules and consequences in writing to every employee.

23. Figure 10.3: Typical Stages of Alternative Dispute Resolution
Alternative dispute resolution (ADR) – methods of solving a problem by bringing in an impartial outsider but not using the court system.
Sometimes problems are easier to solve when an impartial person helps to create the solution.
In general, a system for alternative dispute resolution proceeds through the four stages shown in Figure They are briefly summarized on the next two slides.

24. Alternative Dispute Resolution
Open-Door Policy
Peer Review
An organization’s policy of making managers available to hear complaints.
Process for resolving disputes by taking them to a panel composed of representatives from the organization at the same levels as the people in the dispute.

25. Alternative Dispute Resolution (continued)
Mediation
Arbitration
Nonbinding process in which a neutral party from outside the organization hears the case and tries to help the people in a conflict arrive at a settlement.
Binding process in which a professional arbitrator from outside the organization (usually a lawyer or judge) hears the case and resolves it by making a decision.

26. Employee Assistance Programs
Employee assistance program (EAP) – a referral service that employees can use to seek professional treatment for emotional problems or substance abuse.
Many EAPs are fully integrated into employers’ overall health benefits plans.
While ADR is effective in dealing with problems related to performance and disputes between people at work, many of the problems that lead an organization to want to terminate an employee involve drug or alcohol abuse.
In these cases, the organization’s discipline program should also incorporate an employee assistance program (EAP).

27. Outplacement Counseling
Outplacement counseling – a service in which professionals try to help dismissed employees manage the transition from one job to another.
The goals for outplacement counseling are to help the former employee address the psychological issues associated with losing a job while at the same time helping the person find a new job.
An employee who has been discharged is likely to feel angry and confused about what to do next.
If the person feels that there is nothing to lose and nowhere else to turn, the potential for violence or a lawsuit is greater than most organizations are willing to tolerate.
This concern is one reason many organizations provide outplacement counseling.

28. Job Withdrawal
Job Withdrawal – a set of behaviors with which employees try to avoid the work situation physically, mentally, or emotionally.
Job withdrawal results when circumstances such as the nature of the job, supervisors and coworkers, pay levels, or the employee’s own disposition cause the employee to become dissatisfied with the job.
Organizations need employees who are fully engaged and committed to their work.
Therefore, retaining employees goes beyond preventing them from quitting.
The organization needs to prevent a broader negative condition, called job withdrawal.

29. Figure 10.4: Job Withdrawal Process
As shown in Figure 10.4, job dissatisfaction produces job withdrawal.
Job withdrawal may take the form of:
Behavior change
Physical job withdrawal
Psychological job withdrawal

30. The Causes of Job Dissatisfaction
Personal Dispositions
Negative affectivity
Core self-evaluations
Tasks and Roles
Role
Role ambiguity
Role conflict
Role overload
Supervisors and Coworkers
Negative behavior by managers
Conflicts between employees
Pay and Benefits
Pay is an indicator of status in the organization
Pay and benefits contribute to self-worth
Many aspects of people and organizations can cause job dissatisfaction, and managers and HR professionals need to be aware of them because correcting them can increase job satisfaction and prevent job withdrawal.

31. soldier family member civilian employee
Military reservists who are sent overseas often experience role conflict among three roles:
soldier
family member
civilian employee
Overseas assignments often intensify role conflicts.

32. Actions Employees Take When Dissatisfied
Behavior changes
Change the condition
Whistle-blowing
Bring a lawsuit
Lodge complaints
Physical job withdrawal
Psychological withdrawal
Decrease in job involvement
Decrease in organizational commitment
Behavior changes:
Change the condition – use the internal system for making complaints or the grievance process is there isn’t one or if the employee’s actions are ignored they may resort to…
Whistle-blowing – going outside the organization to authorities or regulatory agencies describing the actions of their employer
Lawsuits – filing suit against an employer for unfair treatment or discrimination
Physical job withdrawal: Example?
Arriving late
Calling in sick
Requesting a transfer
Leaving the organization
Psychological Withdrawal:
Decrease in job involvement – the degree to which people identify themselves with their jobs.
Decrease in organizational commitment – the degree to which an employee identifies with the organization and is willing to put forth effort on its behalf.

33. Unpleasant Employees Are Bad for Business
Employees were asked how they react when their coworkers are rude and nasty. Results showed consequences for just about every basic measure of work as this chart shows.

34. Job Satisfaction
Job satisfaction – a pleasant feeling resulting from the perception that one’s job fulfills or allows for the fulfillment of one’s important job values.
The three important components are:
Values
Perceptions
Ideas of what is important
People will be satisfied with their jobs as long as they perceive that their jobs meet their important values.
Organizations want to prevent withdrawal behaviors.
To prevent job withdrawal, organizations need to promote job satisfaction.

35. Figure 10.5: Increasing Job Satisfaction
As shown in Figure 10.5, organizations can contribute to job satisfaction by addressing the four sources of job dissatisfaction:
Personal dispositions
Job tasks and roles
Supervisors and coworkers
Pay and benefits

36. Appropriate tasks and roles include safety precautions, especially when work could involve risks to workers’ health and safety.

37. Figure 10.6: Steps in the Role Analysis Technique
Role analysis technique: A process of formally identifying expectations associated with a role.
Because role problems rank just behind job problems in creating job dissatisfaction, some interventions aim directly at role elements.
Figure 10.6 shows the steps involved in the role analysis technique.

38. Job Satisfaction: Supervisors and Co-workers
The two primary people in an organization who affect job satisfaction are co-workers and supervisors.
A person may be satisfied with these people for one of three reasons:
The people share the same values, attitudes, and philosophies.
The co-workers and supervisor may provide social support, meaning they are sympathetic and caring.
The co-workers or supervisor may help the person attain some valued outcome.

39. Ask students: “Would a strong sense of teamwork and friendship help you enjoy your work more?”
Co-worker relationships can contribute to job satisfaction, and organizations therefore try to provide opportunities to build positive relationships.

40. Test Your Knowledge
Serena feels her job processing payroll checks is boring and uninteresting. Which intervention would be most appropriate to retain Serena?
Communicating the companies values
Increasing her pay
Expanding her job
Hiring someone she can chat with during the day
Serena feels her job processing payroll checks is boring and uninteresting. Which intervention would be most appropriate to retain Serena?
Communicating the companies values
Increasing her pay
Expanding her job
Hiring someone she can chat with during the day
Answer: C, students answers may vary and can generate a discussion of processes used to ascertain the root cause of problems.

41. Monitoring Job Satisfaction
Employers can better retain employees if they are aware of satisfaction levels, so they can make changes if employees are dissatisfied.
The usual way to measure job satisfaction is with some kind of survey.
A systematic, ongoing program of employee surveys should be part of the organization’s human resource strategy.
This allows the organization to monitor trends and prevent voluntary turnover.

42. Figure 10.7: Example of Job Descriptive Index (JDI)
A widely used measure of job satisfaction is the Job Descriptive Index (JDI).
Figure 10.7 shows several items from the JDI scale.

43. Figure 10.8: Example of a Simplified, Nonverbal Measure of Job Satisfaction
Some job satisfaction scales avoid language altogether, relying on pictures. The faces scale in Figure 10.8 is an example of this type of measure.

44. Exit Interview
Exit interview: a meeting of a departing employee with the employee’s supervisor and/or a human resource specialist to discuss the employee’s reasons for leaving.
A well-conducted exit interview can uncover reasons why employees leave.
When several exiting employees give similar reasons for leaving, management should consider whether this indicates a need for change.
In spite of surveys and other efforts to retain employees, some employees inevitably will leave the organization.
This presents another opportunity to gather information for retaining employees: the exit interview.

45. Summary
Involuntary turnover occurs when the organization requires employees to leave, often when they would prefer to stay.
Voluntary turnover occurs when employees initiate the turnover, often when the organization would prefer to keep them.
Both are costly because of the need to recruit, hire, and train replacements.
Involuntary turnover can also result in lawsuits and even violence.

46. Summary (continued)
Employees draw conclusions based on the outcomes of decisions regarding them, the procedures applied, and the way managers treat employees when carrying out those procedures.
Employee discipline should not result in wrongful discharge, such as a termination that violates an implied contract or public policy.
Discipline should be administered evenhandedly, without discrimination.

47. Summary (continued)
Discipline should follow the principles of the hot-stove rule, meaning discipline should give warning and have consequences that are consistent, objective, and immediate.
A system that can meet these requirements is progressive discipline, in which rules are established and communicated, and increasingly severe consequences follow each violation of the rules.
Organizations may also resolve problems through alternative dispute resolution.

48. Summary (continued)
Circumstances involving the nature of a job, supervisors and coworkers, pay levels, or the employee’s own disposition may produce job dissatisfaction. When employees become dissatisfied, they may engage in job withdrawal.
To prevent job withdrawal, organizations need to promote job satisfaction.
Job satisfaction is related to a person’s values.
Different employees have different views of which values are important.
Job satisfaction is based on perception.